Three Cases Highlight the Importance of Judicial Branch Procedural Rules in Resolving Policy Disputes

Policy debates normally focus on substance. Is climate change real? How can business entities weigh environmental, social, and governance (ESG) factors into their decision-making?

In contrast, policy litigation is often. at best, substance neutral. In disputes under the federal Administrative Policy Act (APA), courts are precluded from making substantive decisions and are limited to questions of whether agencies acted appropriately in reaching their decision. But even beyond these questions, “who decides” issues often end up dominating in-court debates with the press often characterizing courts as “red” or “blue,” depending on what party appointed relevant judges. 

While this may not be fair, the past two weeks have provided three examples of where arcane court rules have the potential to affect big-picture policy disputes. These cases involve the Judicial Conference of the United States, a lottery held by the Joint Panel on Multidistrict Litigation (JPML), and a dispute between the US Supreme Court and the Fifth Circuit Court of Appeals on mechanics of administrative stays. Below, we break down these issues and highlight their significance for the broader regulatory community.

Limitations on Venue and Policy Cases

We have previously discussed the recent trend of policy-related cases being filed in the Northern District of Texas (see here and here), where policy-motivated litigants chose to file cases in certain divisions of federal trial courts with only one judge, essentially guaranteeing the specific judge who would adjudicate their case at the trial court level.

The Judicial Conference of the United States, a federal court administrative body, recently announced a rule under which certain major cases “will be randomly assigned to a judge within an entire district rather than only within the division where lawsuits were filed.” (For more information, see here.)

According to a statement released by Sixth Circuit Judge Jeffrey Sutton in his capacity as chair of the Judicial Conference, the cases would include policy-focused declaratory judgment actions and actions seeking nationwide injunctions where the stakes of the case extend beyond the division where the case was filed. The Judicial Conference’s decision follows both the filing of the cases which we previously discussed and pressure from politicians, including New York Senator Chuck Schumer, who issued a letter seeking a change like this last summer.

While the full document for this policy has not yet been released, the Judicial Conference of the United States announced that the rule would go into effect for all new case filings. Stay tuned for further developments.

JPML Determines SEC ESG Rules Litigation Should Proceed in the Eighth Circuit

On March 6, the US Securities and Exchange Commission (SEC) approved new rules requiring public companies to disclose extensive climate-related information in their registration statements and periodic reports. (See here for a fact sheet on this rule and here for our broader discussion of it.)

Shortly after the rules were approved, nine separate petitions challenging the new SEC rules were filed in six federal courts of appeals. The SEC has requested that the federal JPML use a decades-old lottery process established by federal statute to choose which among these courts will hear the consolidated appeals. (For more information, see here.) Under this process, each court of appeals where any dispute has been filed has an equal chance of being the court selected to hear the consolidated appeals. On March 21, the JPML announced that the appeal would be heard in the Eighth Circuit, a venue perceived to be favorable to challengers of the SEC rules because 10 of the court’s 11 active judges were appointed by Republican presidents. 

Appellate Courts and Stays

A third example is provided by a recent Supreme Court procedural ruling permitting Texas’s Senate Bill 4, which authorizes Texas police to arrest people suspected of illegally crossing the border and state judges to order these persons to be deported, to enter into effect even though the only meaningful analysis of the law — conducted by a Texas federal court — found it to be likely unconstitutional.

While the decision was made on an emergency basis and no written decision has been issued, a concurring opinion authored by Justice Amy Coney Barrett and joined by Justice Brett Kavanaugh, along with two dissents — one authored by Justice Sonia Sotomayor and joined by Justice Ketanji Brown Jackson, and a second authored by Justice Elena Kagan — provide insight into the decision. We break down these below.

Here is some background on the procedural posture of this case, which is checkered. After the Texas legislature passed Senate Bill 4, but before it entered into effect, the Biden Administration and two private organizations challenged the law in federal court in Austin. The trial court found that the law was barred by the Supremacy Clause of the US Constitution because it conflicted with “key provisions of federal immigration law, to the detriment of the United States’ foreign relations and treaty obligations.” Accordingly, the court issued an injunction precluding the law from going into effect. 

Texas appealed to the Fifth Circuit and requested a stay of the district court’s ruling enjoining the law while the Fifth Circuit considered the appeal. The next day, the Fifth Circuit issued a one-line administrative order temporarily permitting the law to go into effect while it decided whether to grant the requested stay. The Biden Administration challenged the administrative order, and Justice Samuel Alito again paused the law from going into effect to allow the Supreme Court to consider the challenge.

The Supreme Court then issued an unsigned order rejecting the Biden Administration’s request to reverse the Fifth Circuit’s order, meaning the law may go into effect until the Fifth Circuit decides whether to grant a full stay pending appeal.

In her concurrence, Justice Barrett argued that the decision to let a challenged law go into effect merely “reflects a first-blush judgment about the relative consequences of staying the lower court judgment versus letting it go into effect,” and suggested that the Supreme Court should not review a lower court’s decision on an administrative stay unless the lower court had delayed so long on sorting out an administrative stay dispute that it was effectively converted to a full stay pending appeal.

In contrast, Justice Sotomayor emphasized that the Court’s decision here allowed Texas to “immediately enforce its own law imposing criminal liability on thousands of noncitizens and requiring their removal to Mexico” in a manner that could affect foreign relations. Maintaining the status quo, in Sotomayor’s view, required the court staying the law — even if the Fifth Circuit had not yet chosen to do so. 

Hours after the Supreme Court’s ruling, the Fifth Circuit agreed to hear the stay issue on an expedited basis — in fact, the next morning. Depending on the Fifth Circuit’s ruling, the case may head back to the Supreme Court another time in short order, at least this time with a reasoned decision from the Fifth Circuit evaluating whether the Senate Bill 4 should be enjoined from taking effect pending final resolution of the litigation. 

More will surely come on this case, so stay tuned. 

Members of the firm’s EnvironmentalEnergy & Cleantech, and ESG teams regularly monitor state and federal regulatory reform efforts. Contact us with questions about how these efforts or programs affect you.


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