Legal Sidebari
Congressional Court Watcher: Recent
Appellate Decisions of Interest to Lawmakers
(July 4–July 10, 2022)
July 11, 2022
The federal courts issue hundreds of decisions every week in cases involving diverse legal disputes. This
Sidebar series selects decisions from the past week that may be of particular interest to federal lawmakers,
focusing on orders and decisions of the Supreme Court and precedential decisions of the courts of appeals
for the thirteen federal circuits. Selected cases typically involve the interpretation or validity of federal
statutes and regulations, or constitutional issues relevant to Congress’s lawmaking and oversight
functions.
Some cases identified in this Sidebar, or the legal questions they address, are examined in other CRS
general distribution products. Members of Congress and congressional staff may click here to subscribe to
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Decisions of the Supreme Court
No Supreme Court opinions or grants of certiorari were issued this week. The Supreme Court’s next term
begins October 3, 2022.
Decisions of the U.S. Courts of Appeals
Topic headings marked with an asterisk (*) indicate cases in which the appellate court’s controlling
opinion recognizes a split among the federal appellate courts on a key legal issue resolved in the opinion,
contributing to a non-uniform application of the law among the circuits.
Banking: The D.C. Circuit held that the Federal Deposit Insurance Corporation (FDIC)
did not exceed its regulatory authority when it decided that proposed payments to former
executives of a troubled financial institution would constitute prohibited “golden
parachute” payments, even though the FDIC had not been presented with a precise dollar
amount that the executives would receive (Bauer v. FDIC).
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Bankruptcy: The Second Circuit held that two Bankruptcy Code provisions, 11 U.S.C.
§ 362(a)(1) and (a)(2), which automatically stay most debt-collection actions by creditors
when a debtor declares bankruptcy, were violated by a foreclosure sale of a property in
which the debtor had a possessory interest (In re Fogarty).
Criminal Law & Procedure: In considering the retroactive effect of the Supreme
Court’s 2019 decision in Rehaif v. United States, which held that knowledge of felony
status is an essential element of the crime of possessing a firearm as a felon under 18
U.S.C. § 922(g)(1), the Fifth Circuit held that Rehaif established a “new rule” of law in
certain circumstances. Where the petitioner had been convicted under § 922(g)(1) before
Rehaif, and the jury had not been instructed that the prosecution needed to prove he was
aware of his felony status, the circuit court applied Rehaif retroactively because the action
was an initial petition brought for collateral review under 28 U.S.C. § 2255 by a criminal
defendant who sought to vacate or set aside his § 922(g)(1) conviction. The court
differentiated this case from those decided by other circuits that concluded that Rehaif
does not provide a basis for a second or successive motion under § 2255 (United States v.
Kelley).
Freedom of Information Act (FOIA): Reversing the district court, the Second Circuit
held that the Secret Service properly withheld release of schedules and visitor
information from the campaign and transition of President-elect Donald Trump. Because
the Secret Service obtained these records to provide security to the future President, and
the sharing of the records was subject to an understanding of confidentiality, the court
ruled that the records were not “agency records” covered by FOIA. Even if the records
were covered, the court ruled that they were still protected from release by FOIA
Exemption 7(c), which limits disclosure of records compiled for law enforcement
purposes when their release could reasonably be expected to constitute an unwarranted
invasion of privacy (Behar v. Dep’t of Homeland Security).
Health: A divided Seventh Circuit permitted a hospital to move forward with its suit
under 42 U.S.C. § 1983, seeking to compel Illinois, in its administration of the state’s
Medicaid program, to enforce a provision of the Medicaid Act (42 U.S.C. § 1396u-2(f))
that requires Medicaid-managed care organizations to make timely payments to health
care providers. The circuit court decided that § 1396u-2(f), which was enacted as an
exercise of Congress’s Spending Clause power, included necessary rights-creating
language to be enforceable through a § 1983 suit. In reaching this decision, the court
cited a 2021 case in which it had similarly held that a different statute enacted under
Congress’s Spending Clause power created an enforceable right under § 1983; the
Supreme Court has agreed to review that earlier decision (Health & Hospital Corp. of
Marion County, Indiana v. Talevski) in its coming term (St. Anthony Hosp. v. Eagleson).
*Immigration: A day apart, the Fifth and Sixth Circuits issued conflicting decisions on
the lawfulness of a Fall 2021 Department of Homeland Security (DHS) memorandum
setting forth immigration enforcement priorities and guidance for immigration officers.
On July 5, 2022, the Sixth Circuit reversed a district court’s nationwide preliminary
injunction that sought to block enforcement of the guidance. (The panel earlier issued a
stay blocking the injunction from going into effect pending the appeal.) The Sixth Circuit
concluded that (1) the state governments challenging the memo likely lacked standing to
bring suit; (2) the memo was likely not considered final agency action subject to review
under the Administrative Procedure Act (APA); (3) the guidance’s detention and removal
priorities did not contravene two immigration statutes because, although those statutes
used mandatory language in discussing immigration officers’ arrest, detention, and
removal responsibilities, those statutes did not displace DHS’s long-standing discretion in
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enforcing the nation’s immigration laws; and (4) beyond the likelihood that DHS would
succeed on the merits in its legal defense of the policy, other factors supported reversing
the injunction (Arizona v. Biden).
The next day, the Fifth Circuit affirmed a district court’s vacatur of the DHS memo,
differing from the Sixth Circuit in its resolution of the key legal issues. In a per curiam
opinion, the panel concluded that the state government plaintiffs in the case before it had
standing, the memo was final agency action reviewable under the APA, and the detention
and removal priorities set forth in the memo contravened the mandatory language of the
governing statutes. Observing the Sixth Circuit reached a different conclusion, the Fifth
Circuit said its decision was informed by controlling circuit precedent and the benefit of a
complete trial record (Texas v. United States).
Immigration: The Ninth Circuit held that 8 U.S.C. § 1182(a)(9)(C)(i)(II), which renders
permanently inadmissible an alien who illegally re-enters the United States after being
removed, applies retroactively to those who unlawfully reentered before April 1, 1997,
provided they failed to apply for adjustment to legal status before that date (Vega v.
Garland).
National Security: The D.C. Circuit ruled that the Department of Commerce could hold
a company strictly liable for aiding and abetting violations of the Export Controls Act of
2018 under implementing regulations. The court concluded that the Act’s text, circuit
precedent, and deference given to executive branch decisions in matters of national
security and foreign affairs all supported the Department’s interpretation of its regulatory
authority (Fed. Express Corp. v. U.S. Dep’t of Commerce).
Securities: The D.C. Circuit vacated a 2020 Securities and Exchange Commission (SEC)
order that sought to consolidate the public dissemination of equity market data into a
single consolidated plan and prescribe rules involving the plan’s governance. Currently,
collection and dissemination of this data involves three plans administered by self-
regulatory organizations (SROs), which mainly include national securities exchanges. To
address concerns about conflicts of interest, the SEC’s order required that the committee
overseeing the new consolidated plan include specified categories of non-SRO market
participants as voting members. The circuit court held that this requirement was not a
reasonable interpretation of Section 11A of the Securities and Exchange Act. Because the
court decided that the order’s provision on non-SRO involvement was not severable, the
court vacated the entire order. The court largely upheld, however, a related order directing
SROs to propose a new plan regarding equity market data (Nasdaq Stock Market LLC v.
SEC).
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Separation of Powers: The D.C. Circuit upheld a congressional committee’s authority to
subpoena financial records of former President Donald Trump. Applying the framework
established by the Supreme Court in Trump v. Mazars USA, LLP, however, the court
ruled that the subpoena must be narrowed. The case began when then-President Trump
sued to block his financial and accounting firms from complying with various House
committee subpoenas for his personal financial records. Lower courts upheld the
subpoenas, but the Supreme Court reversed and remanded, announcing a nonexhaustive
four-part test for evaluating congressional subpoenas for certain presidential documents.
A House committee reissued a subpoena for the now-former President’s financial records
and, before doing so, issued a memorandum explaining the legislative purpose for its
demand. The district court, applying the Mazars framework with reduced scrutiny, upheld
aspects of the subpoena but narrowed its reach. On appeal, the D.C. Circuit decided that
the Mazars framework governed review of the subpoena of the now former President’s
financial records, at least given the unique circumstances of this case, where the reissued
subpoena mirrored the one issued when former President Trump was in office. The court
also ruled that, when assessing the legislative need for the subpoenaed information, it
could consider not only the justification proffered when the subpoena was issued
originally, but also the more fulsome justification offered by the committee when it was
reissued. Applying Mazars, the court held that the subpoena was overbroad, but the
committee could appropriately demand information about (1) payments made to
President Trump or his business interests from foreign or domestic governmental actors
during his tenure in office; (2) President Trump’s lease agreement with the General
Services Administration for the Trump Old Post Office Hotel; and (3) alleged omissions
and misrepresentations made by President Trump in financial disclosures as a candidate
and as President (Trump v. Mazars USA, LLP).
Tax: The Fourth Circuit held that a business entity is a distinct person from its agents
under 26 U.S.C. § 7602, which bars the Internal Revenue Service (IRS) from issuing a
summons “with respect to any person” against whom a Department of Justice (DOJ)
criminal referral is in effect. As a result, the court held that the IRS was not barred from
issuing a summons for tax information to a business entity whose lone agent was subject
to a DOJ criminal referral (Equity Investment Associates, LLC v. United States).
Author Information
Michael John Garcia
Deputy Assistant Director/ALD
Disclaimer
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