State of Texas v. USA
This text of 787 F.3d 733 (State of Texas v. USA) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinions
JERRY E. SMITH, Circuit Judge:
Twenty-six states (the “states”) are challenging the government’s1 Deferred Action for Parents of Americans and Lawful Permanent Residents program (“DAPA”) as violative of the Administrative Procedure Act (“APA”) and the Take Care Clause of the Constitution. The district court determined that the states are likely to succeed on their, procedural APA claim, so it temporarily enjoined implementation of the program. Texas v. United States, Civ. No. B-14-254, — F.Supp.3d —, 2015 WL 648579 (S.D.Tex. Feb. 16, 2015). The United States appealed the preliminary injunction and moved for a stay of the injunction pending resolution of the merits of that appeal. Because the government is unlikely to succeed on the merits of its appeal of the injunction, we deny the motion for stay and the request to narrow the scope of the injunction.
I.
In 2012, then-Department of Homeland Security (“DHS”) Secretary Janet Napoli-tano announced the Deferred Action for Childhood Arrivals program (“DACA”), setting forth how officers should exercise “prosecutorial discretion” before enforcing “immigration laws against certain young people.”2 She instructed agency heads [744]*744that five criteria “should be satisfied before an individual is considered for an exercise of prosecutorial discretion”3 but that “requests for relief ... are to be decided on a case by case basis.”4 “For individuals who are granted deferred action ... [U.S. Citizenship and Immigration Services (“USCIS”) ] shall accept applications to determine whether these individuals qualify for work authorization,” but the DACA Memo purported to “eonfer[] no substantive right, immigration status or pathway to citizenship.”5 Of the at least 1.2 million persons who qualify for DACA, approximately 636,000 have been accepted through 2014.6
In November .2014, DHS Secretary Jeh Johnson instructed the same agencies to expand DACA in three areas.7 He also “direct[ed] USCIS to establish a process, similar to DACA,” known as DAPA. He set forth six criteria “for exercising prose-cutorial discretion through the use of deferred action, on a case-by-case basis.”8 Although “[d]eferred action does not confer any form of legal status in this country, much less citizenship[,] it [does] meant ] that, for a specified period of time, an individual is permitted to be lawfully •present in the United States.”9
That designation makes aliens who were not otherwise qualified for most federal public benefits eligible for “social security retirement benefits, social security disability benefits, [and] health insurance under Part A of the Medicare program.”10 Fur[745]*745ther, “[e]ach person who applies for deferred action pursuant to the [DAPA] criteria ... shall also be eligible to apply for work authorization for the [renewable three-year] period of deferred action.”11 “An alien with work authorization may obtain a Social Security Number”; “accrue quarters of covered employment”; and “correct wage records to add prior covered employment within approximately three years of the year in which the wages were earned or in limited circumstances thereafter.” 12 The district court determined that “DAPA recipients would be eligible for earned income tax credits once they received a Social Security number.”13 Texas maintains that DAPA recipients become eligible for driver’s licenses and unemployment benefits.14 Of the approximately 11.3 million illegal aliens15 in the United States, 4.3 million are eligible for DAPA. Texas, — F.Supp.3d at & n. 11, —, 2015 WL 648579, at *7 & n. 11, *15.
The states sued to prevent implementation of the program. First, they claimed that DAPA is procedurally unlawful under the APA because it is a substantive rule thát is required to undergo notice and [746]*746comment, but DHS had not followed those procedures. See 5 U.S.C. § 558. Second, the states asserted that DAPA was substantively unlawful under the APA because DHS. lacked the authority to implement the program even if it did follow the correct process. See 5 U.S.C. § 706(2)(A)-(C). Third, the states contended that DAPA violated the President’s constitutional duty to “take Care that the Laws be faithfully executed.” U.S. Const. art. II, § 3.
The district court held that Texas had standing because it would be required to issue driver’s licenses to DAPA beneficiaries, and the costs of doing so would constitute a cognizable injury. Texas, — F.Supp.3d at — - —, 2015 WL 648579, at *11-17. Alternatively, the court held that Texas had standing based on a theory it called “abdication standing,” under which a state has standing if the government has exclusive authority over a particular policy area but declines to act. Id. at — - —, 2015 WL 648579 at *28-34.16 The court entered the preliminary injunction after concluding that Texas had shown a substantial likelihood of success on its claim that DAPA’s implementation would violate the APA’s notice-and-comment requirements. Id. at —, 2015 WL 648579 at *62. The court did not “address[] Plaintiffs’ likelihood of success on their substantive APA claim or their constitutional claims under the Take Care Clause/separation of powers doctrine.” Id. at —, 2015 WL 648579 at *61. The government’s motion for a stay pending appeal is based on its insistence that the states do not have standing or a right to judicial review under the APA and, alternatively, that DAPA is exempt from the notice-and-comment requirements. The government also urges that, the injunction’s nationwide scope is an abuse of discretion.17
II.
‘We consider four factors in deciding whether to grant a stay pending appeal: ‘(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other par[747]*747ties interested in the proceeding; and (4) where the public interest lies.’ ”18 To succeed on the merits, the government must show that the district court abused its discretion by entering a preliminary injunction.19 A decision “grounded in erroneous legal principles is reviewed de novo,” and findings of fact are reviewed for clear error.20 “A stay ‘is not a matter of right, even if irreparable injury might otherwise result to the appellant.’ ”21
III.
We begin by deciding whether the government has made a strong showing that it is likely to succeed on the merits of its claim that the states lack standing. It has not done so.
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JERRY E. SMITH, Circuit Judge:
Twenty-six states (the “states”) are challenging the government’s1 Deferred Action for Parents of Americans and Lawful Permanent Residents program (“DAPA”) as violative of the Administrative Procedure Act (“APA”) and the Take Care Clause of the Constitution. The district court determined that the states are likely to succeed on their, procedural APA claim, so it temporarily enjoined implementation of the program. Texas v. United States, Civ. No. B-14-254, — F.Supp.3d —, 2015 WL 648579 (S.D.Tex. Feb. 16, 2015). The United States appealed the preliminary injunction and moved for a stay of the injunction pending resolution of the merits of that appeal. Because the government is unlikely to succeed on the merits of its appeal of the injunction, we deny the motion for stay and the request to narrow the scope of the injunction.
I.
In 2012, then-Department of Homeland Security (“DHS”) Secretary Janet Napoli-tano announced the Deferred Action for Childhood Arrivals program (“DACA”), setting forth how officers should exercise “prosecutorial discretion” before enforcing “immigration laws against certain young people.”2 She instructed agency heads [744]*744that five criteria “should be satisfied before an individual is considered for an exercise of prosecutorial discretion”3 but that “requests for relief ... are to be decided on a case by case basis.”4 “For individuals who are granted deferred action ... [U.S. Citizenship and Immigration Services (“USCIS”) ] shall accept applications to determine whether these individuals qualify for work authorization,” but the DACA Memo purported to “eonfer[] no substantive right, immigration status or pathway to citizenship.”5 Of the at least 1.2 million persons who qualify for DACA, approximately 636,000 have been accepted through 2014.6
In November .2014, DHS Secretary Jeh Johnson instructed the same agencies to expand DACA in three areas.7 He also “direct[ed] USCIS to establish a process, similar to DACA,” known as DAPA. He set forth six criteria “for exercising prose-cutorial discretion through the use of deferred action, on a case-by-case basis.”8 Although “[d]eferred action does not confer any form of legal status in this country, much less citizenship[,] it [does] meant ] that, for a specified period of time, an individual is permitted to be lawfully •present in the United States.”9
That designation makes aliens who were not otherwise qualified for most federal public benefits eligible for “social security retirement benefits, social security disability benefits, [and] health insurance under Part A of the Medicare program.”10 Fur[745]*745ther, “[e]ach person who applies for deferred action pursuant to the [DAPA] criteria ... shall also be eligible to apply for work authorization for the [renewable three-year] period of deferred action.”11 “An alien with work authorization may obtain a Social Security Number”; “accrue quarters of covered employment”; and “correct wage records to add prior covered employment within approximately three years of the year in which the wages were earned or in limited circumstances thereafter.” 12 The district court determined that “DAPA recipients would be eligible for earned income tax credits once they received a Social Security number.”13 Texas maintains that DAPA recipients become eligible for driver’s licenses and unemployment benefits.14 Of the approximately 11.3 million illegal aliens15 in the United States, 4.3 million are eligible for DAPA. Texas, — F.Supp.3d at & n. 11, —, 2015 WL 648579, at *7 & n. 11, *15.
The states sued to prevent implementation of the program. First, they claimed that DAPA is procedurally unlawful under the APA because it is a substantive rule thát is required to undergo notice and [746]*746comment, but DHS had not followed those procedures. See 5 U.S.C. § 558. Second, the states asserted that DAPA was substantively unlawful under the APA because DHS. lacked the authority to implement the program even if it did follow the correct process. See 5 U.S.C. § 706(2)(A)-(C). Third, the states contended that DAPA violated the President’s constitutional duty to “take Care that the Laws be faithfully executed.” U.S. Const. art. II, § 3.
The district court held that Texas had standing because it would be required to issue driver’s licenses to DAPA beneficiaries, and the costs of doing so would constitute a cognizable injury. Texas, — F.Supp.3d at — - —, 2015 WL 648579, at *11-17. Alternatively, the court held that Texas had standing based on a theory it called “abdication standing,” under which a state has standing if the government has exclusive authority over a particular policy area but declines to act. Id. at — - —, 2015 WL 648579 at *28-34.16 The court entered the preliminary injunction after concluding that Texas had shown a substantial likelihood of success on its claim that DAPA’s implementation would violate the APA’s notice-and-comment requirements. Id. at —, 2015 WL 648579 at *62. The court did not “address[] Plaintiffs’ likelihood of success on their substantive APA claim or their constitutional claims under the Take Care Clause/separation of powers doctrine.” Id. at —, 2015 WL 648579 at *61. The government’s motion for a stay pending appeal is based on its insistence that the states do not have standing or a right to judicial review under the APA and, alternatively, that DAPA is exempt from the notice-and-comment requirements. The government also urges that, the injunction’s nationwide scope is an abuse of discretion.17
II.
‘We consider four factors in deciding whether to grant a stay pending appeal: ‘(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other par[747]*747ties interested in the proceeding; and (4) where the public interest lies.’ ”18 To succeed on the merits, the government must show that the district court abused its discretion by entering a preliminary injunction.19 A decision “grounded in erroneous legal principles is reviewed de novo,” and findings of fact are reviewed for clear error.20 “A stay ‘is not a matter of right, even if irreparable injury might otherwise result to the appellant.’ ”21
III.
We begin by deciding whether the government has made a strong showing that it is likely to succeed on the merits of its claim that the states lack standing. It has not done so. We reach only the district court’s first basis for standing — the driver’s license rationale — because it is disposi-tive.22
The states have the burden of establishing that at least one of them has Article III standing.23 First, they must [748]*748assert an injury that is “concrete, particularized, and actual or imminent.”24 “ ‘[Threatened injury must be certainly impending to constitute injury in fact,’ and ... ‘[ajllegations of possible future injury’ are not sufficient.”25 Second, the injury must be “fairly traceable to the challenged action.” Clapper, 133 S.Ct. at 1147 (quoting Monsanto, 561 U.S. at 149, 130 S.Ct. 2743). The states may establish standing based on costs they incur as a reasonable reaction to a risk of harm only if that harm is certainly impending. See id. at 1151. Third, the injury must be “redressable by a favorable ruling.” Id. at 1147 (quoting Monsanto, 561 U.S. at 149, 130 S.Ct. 2743). “When a litigant is vested with a procedural right, that litigant has standing if there is some possibility that the requested relief will prompt the injury-causing party to reconsider the decision that allegedly harmed the litigant.” Massachusetts, 549 U.S. at 518, 127 S.Ct. 1438.
A.
The first requirement is likely satisfied by Texas’s proof of the costs of issuing driver’s licenses to DAPA beneficiaries. “An applicant who is not a citizen of the United States must present ... documentation issued by the appropriate United States agency that authorizes the applicant to be in the United States before the applicant may be issued a driver’s license.” Tex. TRANSP. Code § 521.142(a). Documentation confirming lawful presence pursuant to DAPA would qualify.26 The district court found that Texas would lose at least $130.89 on each license it issues to a DAPA beneficiary,27 and the United States does not dispute that calculation on appeal. It is well established that a financial loss generally constitutes an injury,28 so Texas is likely to meet its burden.
The government attacks that conclusion on two grounds. First, it claims that Texas will be required neither to issue licenses nor to subsidize them. Texas responds that it will have to do so in light of Arizona DREAM Act Coalition v. Brewer, 757 F.3d 1053 (9th Cir.2014), which held that DACA beneficiaries were likely to succeed on their equal-protection challenge to Arizona’s policy of issuing licenses to [749]*749some noncitizens but not to them, id. at 1067, and suggested but did not decide that the policy was preempted, id. at 1063. Although Arizona DREAM Act supports Texas’s position that it cannot legally deny licenses to DAPA beneficiaries, it is not dispositive. Even if we were bound by the decision of another circuit, that court said nothing about subsidizing licenses, and Texas could avoid financial injury by raising its application fees to cover the full cost of issuing and administering a license.
But that does not resolve the matter. The flaw in the government’s reasoning is that Texas’s forced choice between incurring costs and changing its fee structure is itself an injury: A plaintiff suffers an injury even if it can avoid that injury by incurring other costs.29 And being pressured to change state law constitutes an injury.
“[S]tates have a sovereign interest in ‘the power to create and enforce a legal code.’ ”30 Based on that interest, we held that Texas had standing to challenge the FCC’s assertion of authority over an aspect of telecommunications regulation that the state believed it controlled31; three other circuits held that the preemption of an existing state law constitutes an injury32; and the Sixth Circuit held that making the enforcement of an existing state law more difficult qualifies.33 Reviewing that caselaw, the Fourth Circuit explained that a state has standing based on a conflict between federal and state law if “the state statute at issue regulate[s] behavior or provide[s] for the administration of a state program,” Virginia ex rel. Cuccinelli v. Sebelius, 656 F.3d 253, 269 (4th Cir.2011), but not if “it simply purports to immunize [state] citizens from federal law,” id. at 270.
That well-established caselaw is disposi-tive because if pressure to change state law in some substantial way were not injury, states would have no standing to challenge bona fide harms because they could offset most financial losses by raising taxes or fees. Texas’s forced choice between incurring costs and changing its laws is an injury because those laws exist for the administration of a state program, not to challenge federal law, and Texas did not enact them merely to create standing.34
[750]*750' Second, the government urges that Texas will suffer no injury, because the costs of issuing licenses will be outweighed by countervailing economic benefits, including increased, tax revenue, decreased reliance on state-subsidized health care, better financial support for DAPA beneficiaries’ children, increased revenue from vehicle-registration fees, and decreased auto insurance costs. All that may be true, but those benefits are not properly weighed in evaluating standing here. We have addressed the question of offsetting benefits only to a limited extent, holding that individuals lacked taxpayer standing to challenge Louisiana’s issuance of pro-life license plates in part because the extra fees paid by drivers who purchased the plates could have covered the expenses associated with offering them and distributing the funds they raised. Henderson, 287 F.3d at 379-81.
That approach is appropriate, if at all, where the costs and benefits are of the same type and arise from the same transaction because the plaintiff has suffered no real injury. By contrast, other circuits have declined to consider offsetting benefits of different types or from different transactions.35 Our sister circuits’ approach makes sense in that context because attempting to balance all costs and benefits associated with a challenged policy would leave plaintiffs without standing to challenge legitimate injuries, given that defendants could point to unrelated benefits, improperly shifting to the plaintiffs the burden of showing that the costs outweigh them.
Most of the benefits the government cites — increased tax revenue, decreased reliance on state-subsidized health care, and better financial support for DAPA beneficiaries’ children — are wholly separate from the costs of issuing licenses. The other benefits it identifies — increased revenue from vehicle fees and decreased auto insurance costs — -are more closely associated with the costs of issuing licenses, but the caselaw illustrates that they are [751]*751still too far removed to be applied as offsets.
For example, in NCAA, 730 F.3d at 222-23, the Third Circuit held that sports leagues had standing to challenge New Jersey’s plan to license sports betting even though the damage to the leagues’ reputations could have been outweighed by increased interest in watching sports. Likewise, in Markva, 317 F.3d at 557-58, the Sixth Circuit held that grandparents who cared for dependent children had standing to challenge a requirement that they spend more of their own money before obtaining Medicaid benefits, as compared to similarly situated parents, even though the grandparents arguably received more of other types of welfare benefits. Here] as in those cases and others,36 the benefits the government cites concern the same subject matter as the costs but do not arise from the same transaction, so we cannot consider them. Accordingly, Texas has likely asserted an injury that is “concrete, particularized, and actual or imminent.” Clapper, 133 S.Ct. at 1147 (quoting Monsanto, 561 U.S. at 149, 130 S.Ct. 2743).
B.
Texas is likely to satisfy the second requirement by showing that its injury is “fairly traceable to the challenged action.” Id. (quoting Monsanto, 561 U.S. at 149, 130 S.Ct. 2743). As we have explained,37 it is undeniable that DAPA would enable beneficiaries to apply for licenses, but the United States asserts that DAPA’s incidental consequences are not cognizable injuries because the causal link is too attenuated. Massachusetts v. EPA establishes, much to the contrary, that Texas’s injury suffices.
In Massachusetts, 549 U.S. at 526, 127 S.Ct. 1438, the Court held that the erosion of the state’s shoreline gave it standing to challenge the EPA’s decision not to regulate greenhouse-gas emissions from new motor vehicles. The Court noted that the Clean Air Act authorizes judicial review of the EPA’s denial of a rule-making petition, a fact that “is of critical importance to the standing inquiry [because] ‘Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.’ ” Id. at 516, 127 S.Ct. 1438 (quoting Defenders of Wildlife, 504 U.S. at 580, 112 S.Ct. 2130). Moreover, “States are not normal litigants for the purposes of invoking federal jurisdiction,” id. at 518, 127 S.Ct. 1438, because they surrendered some of the sovereign powers necessary to protect themselves from harms such as climate change when they joined the union, id. at 519, 127 S.Ct. 1438. That point was especially relevant because the EPA’s inaction had caused the erosion of Massachusetts’s sovereign territory. See id. “Given that procedural right and Massachusetts’s stake in protecting its quasi-sovereign interests, the Commonwealth [was] entitled to special solicitude in [the] standing analysis.” Id. at 520, 127 S.Ct. 1438.
This case implicates the same concerns. Texas is exercising a procedural right: Just as the Clean Air Act (“CAA”) authorizes judicial review of “final action taken[ ] by the Administrator,” 42 U.S.C. [752]*752§ 7607(b)(1), the APA authorizes judicial review, of “final agency action for which there is no other adequate remedy in a court,” 5 U.S.C. § 704.38 And Texas is protecting its quasi-sovereign interest in not being forced to choose between incurring costs and changing its driver’s license regime.39 Therefore, it is entitled to the same “special solicitude” as was Massachusetts.40
The analysis of the “fairly traceable” requirement in Massachusetts is also highly relevant. The main causation issue was whether the connection between the EPA’s inaction and the state’s injury was too remote. See Massachusetts, 549 U.S. at 523, 127 S.Ct. 1438. The EPA maintained that the injury was not cognizable, because regulating greenhouse-gas emissions from new motor vehicles would have done little to prevent the erosion of the state’s land. Id. at 523-24, 127 S.Ct. 1438. The Court rejected that theory, explaining that the fact “[t]hat a first step might be tentative does not by itself support the notion that federal courts lack jurisdiction to determine whether that step conforms to law” and that “reducing domestic automobile emissions [was] hardly a tentative step,” in any event. Id. at 524, 127 S.Ct. 1438.
The answer here is the same. Although Texas would not be directly regulated by DAPA, the program would have a direct and predictable effect on the state’s driver’s license regime, and the impact would be significant because at least 500,000 po-' tential beneficiaries live in the state. Alternatively, Texas could change its law, but being pressured to do so is itself a substantial injury, as already discussed.
By contrast, where the Supreme Court has found that an injury is not fairly traceable, the intervening, independent act of a third party has been a necessary condition of the harm’s occurrence, or the challenged action has played a minor role. For instance, the plaintiffs in Clapper [753]*753lacked standing to challenge a section of the Foreign Intelligence Surveillance Act that they alleged would lead to the monitoring of their communications. Clapper, 133 S.Ct. at 1155. For the asserted injury to occur, the Attorney General and the Director of National Intelligence would have had to authorize the collection of communications to which the plaintiffs were a party, the Foreign Intelligence Surveillance Court would have had to approve the surveillance, and the government would have had to succeed in intercepting the communications. Id. at 1148. Emphasizing its “usual reluctance to endorse standing theories that rest on speculation about the decisions of independent actors,” the Court held that the plaintiffs had not satisfied the “fairly traceable” requirement.41 Separately, the Court rejected the theory “that a market participant is injured for Article III purposes whenever a competitor benefits from something allegedly unlawful — whether a trademark, the awarding of a contract, a landlord-tenant arrangement, or so on.” Already, LLC v. Nike, Inc., — U.S. -, 133 S.Ct. 721, 731, 184 L.Ed.2d 553 (2013). Myriad factors determine market shares, so it is difficult to trace a competitive injury to a particular decision benefiting a competitor.42
Texas’s claim regarding driver’s licenses suffers from neither of those deficiencies. The only intervening act of a third party is the beneficiaries’ decisions to apply for licenses, but it is hardly speculative that they will do so — driving is a practical necessity in most of Texas, especially to get and hold a job, so many beneficiaries will be eager to obtain licenses. Further, DAPA is the only substantial cause of Texas’s injury. In short, given the “special solicitude” that the Supreme Court directs us to afford to Texas, the parallels between this case and Massachusetts, and the differences between this case and those in which the Supreme Court has not found standing, the states are likely to satisfy the “fairly traceable” requirement.
C.
The third requirement, that the injury be “redressable by a favorable ruling,” Clapper, 133 S.Ct. at 1147 (quoting Monsanto, 561 U.S. at 149, 130 S.Ct. 2743), is easily met here. Enjoining the implementation of DAPA until it undergoes notice and comment could prompt DHS to reconsider its decision, which is all a litigant must show when asserting a proce[754]*754dural right. See Massachusetts, 549 U.S. at 518, 127 S.Ct. 1438.
Thus, the government has not made a strong showing that it is likely to succeed on the merits of its notion that the states lack standing. At least one state—Texas—is likely to satisfy all three requirements, so the government’s challenge to standing is without merit.
IV.
In addition to having standing, the states must seek to protect interests that are “arguably within the zone of interests to be protected or regulated by the statute ... in question.”43 Under “the ‘generous review provisions’ of the APA,”44 that “test is not meant to be especially demanding; in particular, there need be no indication of congressional purpose to benefit the would-be plaintiff.”45 “We apply the test in keeping with Congress’s ‘evident intent’ when enacting the APA ‘to make agency action presumptively reviewable,’ ” and “the benefit of any doubt goes to the plaintiff.”46 The states would fail the test only if their “interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.”47'
The government has not made a strong showing that the interests the states seek to protect fall outside the zone of interests of the Immigration and Nationality Act (“INA”). “The pervasiveness of federal regulation does not diminish the importance of immigration policy to the States,” which “bear[ ] many of the consequences of unlawful immigration.” Arizona v. United States, — U.S. —, 132 S.Ct. 2492, 2500, 183 L.Ed.2d 351 (2012). In recognition of that fact, Congress permits states to deny many benefits to illegal aliens.48 Knowing that they may not enforce laws that, conflict with federal law, see, e.g., Arizona, 132 S.Ct. at 2510, the states seek only to be heard in the formulation of immigration policy before it imposes. substantial costs on them. “Consultation between federal and state officials is an important feature of the immigration system,” id. at 2508, and the notice-and-comment process, which “is designed to ensure that affected parties have an opportunity to participate in and influence agency decision making,”49 facilitates such communication. The states easily satisfy the zone-of-interests test.
V.
In deciding whether the United States has made a strong showing that judicial [755]*755review is precluded, we are mindful that “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”50 But judicial review is unavailable “to the extent that — (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law.” 5 U.S.C. § 701(a).
“[O]nly upon a showing of ‘clear and convincing evidence’ of a contrary legislative intent should the courts restrict access to judicial review.” Block v. Cmty. Nutrition Inst., 467 U.S. 340, 350, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). That “standard is not a rigid evi-dentiary test but a useful reminder ... that, where substantial doubt about the congressional intent exists, the general presumption favoring judicial review of administrative action is controlling.” Id. at 351, 104 S.Ct. 2450. “Whether and to what extent a particular statute precludes judicial review is determined not only from lts express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved.” Id. at 345, 104 S.Ct. 2450.
The United States maintains that 8 U.S.C. § 1252(g)51 expressly prohibits judicial review, but that provision is not “a sort of ‘zipper’ clause that says ‘no judicial review in deportation cases unless this section provides judicial review’ instead, it “applies only to three discrete actions that the Attorney General may take: her ‘decision or action’ to ‘commence proceedings, adjudicate cases, or execute removal orders.’ ”52 It is inapplicable here because (1) the states are not bringing a “cause or claim by or on behalf of any alien,” and (2) the action does not “aris[ej from the decision or action by the Attorney General to commence proceedings, adjudicate cases, or execute removal orders against any alien.” § 1252(g).
Nor does the government’s broad and exclusive authority over immigration policy mean that review is implicitly barred.53 The INA has numerous specific jurisdiction-stripping provisions54 that [756]*756would be rendered superfluous by application of an implied, overarching principle prohibiting review.55 Such a conclusion would be contrary to AAADC, 525 U.S. at 482, 119 S.Ct. 936, in which the Court noted that § 1252(g) does not “impose a general jurisdictional limitation; and that those who enacted IIRIRA were familiar with the normal manner of imposing such a limitation.”56
Moreover, judicial review of an action brought by states to enforce procedural rights under the APA is consistent with the protections Congress affords to states that decline to provide benefits to illegal aliens. As we have explained,57 Texas, as permitted by § 1621, subsidizes driver’s licenses to, inter alia, lawfully present aliens but declines to issue them to those unlawfully present. And the state seeks to participate in notice and comment before the Secretary changes the designation of 500,000 aliens residing there in such a way that would cause the state to incur substantial costs.
The Supreme Court’s discussion of deferred action in AAADC suggests that judicial review may be available if there is an indication that deferred-action decisions are not made on a case-by-case basis. There, a group of aliens sought to stop deportation proceedings against them, but § 1252(g) deprived the courts of jurisdiction. AAADC, 525 U.S. at 487, 119 S.Ct. 936. Noting that § 1252(g) codified the Secretary’s discretion to decline “the initiation or prosecution of various stages in the deportation process,” id. at 483, 119 S.Ct. 936, the Court observed that “[pjrior to 1997, deferred-action decisions were governed by internal [Immigration and Naturalization Service (“INS”) ] guidelines which considered [a variety of factors],” id. at 484 n. 8, 119 S.Ct. 936. Although those guidelines had since been rescinded, the Court noted that “there [was] no indication that the INS has ceased making this sort of determination on a case-by-case basis.” Id. The United States has not rebutted the strong presumption of reviewability with clear and convincing evidence that the INA precludes review.58
The Secretary does, .nonetheless, have broad enforcement discretion and maintains that deferred action under DAPA — a grant of “lawful presence” and subsequent eligibility for otherwise unavailable benefits — is a presumptively un-reviewable exercise of that discretion.59 [757]*757“The general exception to reviewability provided by § 701(a)(2) for action ‘committed to agency discretion’ remains a narrow one, but within that exception are included agency refusals to institute investigative or enforcement proceedings, unless Congress has indicated otherwise.”60 When, however, “an agency does act to enforce, that action itself provides a focus for judicial review, inasmuch as the agency must have exercised its power in some manner. The action at least can be reviewed to determine whether the agency exceeded its statutory powers.” Chaney, 470 U.S. at 832, 105 S.Ct. 1649.
Some features of DAPA are similar to prosecutorial discretion: DAPA amounts to the Secretary’s decision — at least temporarily — not to enforce the immigration laws as to a class of what he deems to be low-priority aliens.61 If that were all DAPA involved, we would have a different case. DAPA’s version of deferred action, however, is more than non-enforcement: It is the affirmative act of conferring “lawful presence” on a class of unlawfully present aliens.62 Though revocable, that new designation triggers eligibility for federal63 and state64 benefits that would not otherwise be available.65
“[A]lthough prosecutorial discretion is broad, it is not ‘unfettered.’ ”66 Declining to prosecute does not convert an act deemed unlawful by Congress into a lawful one and confer eligibility for benefits based on that new classification. Regardless of whether the Secretary has the [758]*758authority to offer those incentives for participation in DAPA, his doing so is not shielded from judicial review as an act of prosecutorial discretion.67 And as shown above,68 neither the preliminary injunction nor compliance with the APA requires the Secretary to prosecute deportable aliens or change his enforcement priorities.
Our conclusion is bolstered by the Supreme Court’s description of deferred action in AAADC:
To ameliorate a harsh and unjust outcome, the INS may decline to institute proceedings, terminate proceedings, or decline to execute a final order of deportation. This commendable exercise in administrative discretion, developed without express statutory authorization, originally was known as nonpriority and is now designated as deferred action .... Approval of deferred action status means that ... no action will thereafter be taken to proceed against an apparently deportable alien, even on grounds normally regarded as aggravated.[69]
Unlike the claim in AAADC, the states’ procedural claim does not involve a challenge to the Secretary’s decision to “decline to institute proceedings, terminate proceedings, or decline to execute a final order of deportation,” nor does deferred action pursuant to DAPA mean merely that “no action will thereafter be taken to proceed against an apparently deportable alien.” Under DAPA, “[d]eferred action ... means that, for a specified period of time, an individual is permitted to be lawfully present in the United States,”70 a change in designation that confers eligibility for federal and state benefits on a class of aliens who would not otherwise qualify.71 Therefore, DAPA “provides a focus for judicial review, inasmuch as the agency must have exercised its power in some manner. The action at least can be reviewed to'determine whether the agency exceeded its statutory powers.”72
[759]*759c.
“There is no judicial review of agency action Vhere statutes [granting agency discretion] are drawn in such broad terms that in a given case there is no law to apply.’ ”73 For example, “[t]he allocation of funds from a lump-sum appropriation,” Vigil, 508 U.S. at 192, 113 S.Ct. 2024, is one of “those rare circumstances where the relevant statute ‘is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.’”74 The district court did not rule on the substantive APA claims, and we do not decide whether the Secretary has the authority to implement DAPA. We do note, however, that even granting “special deference,”75 the INA provisions cited by the government for that proposition cannot reasonably be construed, at least at this early stage of the case, to confer unreviewable discretion.
The INA expressly identifies legal designations allowing defined classes of aliens to reside lawfully in the United States76 and eligibility for “discretionary relief allowing [aliens in deportation proceedings] to remain in the country,”77 including narrow classes of aliens eligible for deferred action.78 The Act also specifies classes of aliens eligible79 and ineligible80 for work [760]*760authorization, including those “eligible for work authorization and deferred action,” supra note 78. Although the Secretary is given discretion to make immigration decisions based on humanitarian concerns, that discretion is authorized for particular family relationships and specific forms of relief.81 Congress has developed an intricate process for unlawfully present aliens to reside lawfully (albeit with legal status as opposed to lawful presence) in the United States on account of their child’s citizenship.82 Moreover, judicial review of many decisions is expressly limited or precluded, supra note 54, including some that are made in the Secretary’s “sole and unre-viewable discretion.”83
Against that background, we would expect to find an explicit delegation of authority to implement DAPA — a program that makes 4.3 million otherwise removable aliens eligible for lawful presence, work authorization, and associated benefits — but no such provision exists.84 Perhaps the closest is § 1324a(h)(3),85 a definitional provision86 that does not mention lawful presence or deferred action.
Likewise, we do not construe the broad grants of authority in 6 U.S.C. § 202(5),87 8 U.S.C. § 1103(a)(3),88 or § 1103(g)(2)89 as [761]*761assigning unreviewable “decisions of vast ‘economic and political significance’ ”90 to an agency. Presumably because there is no specific statutory basis for DAPA, the United States suggests that its authority is grounded in historical practice, but that “does not, by itself, create power.”91 Even assuming that an amalgamation of historical practice,92 congressional acquiescence, the immigration context, and the INA provide authority for DAPA, it would be bold and premature for us to conclude that an as-yet-undefined delegation is beyond the scope of judicial review.
Our decision in Perales is not to the contrary. There, we .recognized that the IMS’s decision not to grant pre-hearing voluntary departures and work authorizations to a group of aliens was committed to agency discretion because “there is nothing in the [INA] expressly providing for the grant of employment authorization or pre-hearing voluntary departure ... to [that class of aliens].” Perales, 903 F.2d at 1047. “An agency’s inaction in such a situation is necessarily exempt from judicial review because there are no meaningful standards against which to judge the agency’s exercise of discretion.” Id. In this case, however, issuing work authorizations to DAPA beneficiaries is an affirmative action, and whether the Secretary has the authority to do so remains an open question.
And even assuming the Secretary has that power, it is the designation of lawful presence itself — the prerequisite' for work authorization under DAPA — that causes Texas’s injury because a document showing legal presence makes one eligible for a driver’s license.93 The Secretary’s authori[762]*762ty to grant lawful presence was not at issue in Perales. Moreover, in Perales, id. at 1048, the Attorney General had explicit statutory discretion to authorize pre-hear-ing voluntary departures' — discretion the INA does not specifically confer here.
The government asserts that 8 C.F.R. § 274a.12(c)(14),94 rather than DAPA, makes aliens granted deferred action eligible for work authorizations. But if DAPA’s class-based deferred action program, on which work authorizations are contingent, must be subjected to the notice-and-comment process, then work authorizations may not be validly issued pursuant to it until that process has been completed. And again, it is DAPA’s version of deferred action itself — the designation of “lawful presence” — that causes Texas’s injury.95
VI.
Because the United States has not made a strong showing that judicial review is precluded, we must decide whether it has made a strong showing that DAPA does not require notice and comment. The government does not dispute that DAPA is a rule96; it urges instead that DAPA is exempt as an “interpretative rule[], general statement! ] of policy, or rule[ ] of agency organization, procedure, or practice,” § 553(b)(A), or “a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts,” § 553(a)(2). “The APA’s. notice-and-eomment exemptions must be narrowly construed’ ” and if a rule is “substantive,” all “notice-and-eomment requirements must be adhered to scrupulously.” 97
The government’s main argument is that DAPA is a policy statement. We consider two criteria to determine whether a purported policy statement is actually a substantive rule: whether it (1) “impose[s] any rights and obligations” and (2) “genuinely leaves the agency and its decisionmakers free to exercise discretion.” 98 There is some overlap between [763]*763those criteria “because ‘[i]f a statement denies the decisionmaker discretion in the area of its coverage ... then the statement is binding, and creates rights or obligations.’ ”99 “While mindful but suspicious of the agency’s own characterization, we ... focus[ ] primarily on whether the rule has binding effect on agency discretion or severely restricts it.”100
Extrapolating from the implementation of DACA,101 the district court determined that “[njothing about DAPA
‘genuinely leaves the agency and its [employees] free to exercise discretion,’ ”102 a finding that is reviewed for clear error. Although the DACA Memo instructed agencies to review applications on a case-by-case basis and exercise discretion, the court found that those statements were “merely pretext” because only around 5% of the 723,000 applications have been denied.103 “Despite a request by the [district] [c]ourt, the [g]overnment’s counsel did not provide the number, if any, of requests that were denied [for discretion[764]*764ary reasons] even though the applicant met the DACA criteria....”104 The court’s finding was also based on a declaration by Kenneth Palinkas, the president of the union representing the USCIS employees processing the DACA applications, that “DACA applications are simply rubberstamped if the applicants meet the necessary criteria,” id,.; DACA’s Operating Procedures, which “contains nearly 150 pages of specific instructions for granting or denying deferred action,” id. at-, 2015 WL 648579 at *55 (footnote omitted); and mandatory language in the DAPA Memo, id. at —, — n. 103, 2015 WL 648579 at *39, *56 n. 103.
The agency’s characterization of both the DACA and DAPA criteria exudes discretion — using terms such as “guidance,” “case-by-case,” and “prosecutorial discretion.” 105 But a rule can be binding if it is “applied by the agency in a way that indicates it is binding,” 106 and the states offered evidence from DACA’s implementation that DAPA’s discretionary language was pretextual. The programs are not completely analogous, however: Many more persons are eligible for DAPA,107 and eligibility for DACA was restricted to a younger population — suggesting that DACA applicants are less likely to have backgrounds that would warrant a discretionary denial. The DAPA Memo also contains more discretionary criteria: Applicants must not be “an enforcement priority as reflected in the [Prioritization Memo]; and [must] present no other factors that, in the exercise of discretion, makes the grant of deferred action inappropriate.” 108 Despite those differences, there are important similarities: The Secretary “directed] USCIS to establish a process, similar to DACA, for exercising prosecutorial discretion,” 109 and there was evidence that the DACA application process itself did not allow for discretion, regardless of the approval rate.
We are attentive to the difficulty of evaluating an agency’s discretion where the action involves issuing benefits to self-selecting applicants, as distinguished from imposing obligations on a regulated industry. Although a person who expected to be denied DACA relief for discretionary reasons would be unlikely to apply, the self-selection issue is mitigated by the district court’s finding that “the [government has publicly declared that it will make no attempt to enforce the law against even those who are denied deferred action (absent extraordinary circumstances).” Tex[765]*765as, — F.Supp.3d at —, 2015 WL 648579 at *50.
Moreover, the court did not rely exclusively on DACA’s approval rate. It also considered the detailed nature of the DACA Operating Procedures and the declaration from Palinkas that, as with DACA, the DAPA application process itself would preclude discretion: “[R]outing DAPA applications through service centers instead of field offices ... created an application process that bypasses traditional in-person investigatory interviews with trained US-CIS adjudications officers” and “prevents officers from conducting case-by-case investigations, undermines officers’ abilities to detect fraud and national-security risks, and ensures that applications will be rubber-stamped.”
There was conflicting evidence on the degree to which DACA allowed for discretion. Donald Neufeld, the Associate Director for Service Center Operations for USCIS, declared that “deferred action under DACA is a ... case-specific process” that “necessarily involves the exercise of the agency’s discretion” and purported to identify several instances of discretionary denials.110 Although he stated that officials made approximately 200,000 requests for more evidence after receiving DACA applications, the government does not know the number, if any, that pertained to discretionary factors rather than the objective criteria. Likewise, the government did not offer the number of cases service center officials referred to field offices for interviews.111 The United States has not made a strong showing that it was clearly erroneous to find that DAPA would not genuinely leave the agency and its employees free to exercise discretion.112
A lack of discretion does not trigger notice-and-comment rulemaking if the rule is one “of agency organization, procedure, or practice,” § 553(b)(A); agencies and their employees are of course expected to adhere to such rules. We use “the substantial impact test [as] the primary means ... [to] look beyond the label ‘procedural’ to determine whether a rule is of the type Congress thought appropriate for public participation.”113 “An agency [766]*766rule that modifies substantive rights and interests can only be nominally procedural, and the exemption for such rules of agency procedure cannot apply.”114 DAPA modifies substantive rights and interests — conferring lawful presence on 500,000 illegal aliens in Texas forces the state to choose between spending millions of dollars to subsidize driver’s licenses and changing its law.
The District of Columbia Circuit has enunciated a more intricate process for distinguishing between procedural and substantive rules.115 The court first looks at the “effect on those interests ultimately at stake in the agency proceeding.” 116 “Hence, agency rules that impose ‘derivative,’ ‘incidental,’ or ‘mechanical’ burdens upon regulated individuals are considered procedural, rather than substantive.” 117 Further, “a procedural rule generally may not ‘encode [ ] a substantive value judgment Or put[] a stamp of approval or disapproval on a given type of behavior,’ ”118 but “the fact that the agency’s decision was based on a value judgment about procedural efficiency does not convert the resulting rule into a substantive one.”119 “A corollary to this principle is that rules are generally considered procedural so long as they do not ‘change the substantive standards by which the [agency] evaluates’ applications which seek a benefit that the agency has the power to provide.”120
Applying those standards here yields the same result as does the substantial-impact test. Although the burden DAPA imposes on Texas is derivative of issuing lawful presence to beneficiaries, it is still substantial — Texas has a quasi-sovereign interest in not being forced to choose between incurring millions of dollars in costs and changing its laws. Moreover, DAPA establishes the “substantive standards by which the [agency] evaluates applications which seek a benefit that the agency has the power to provide” — a critical fact requiring notice and comment.121 Further, [767]*767receipt of those benefits implies a “stamp of approval” from the government.
' Section 553(a)(2) exempts rules “to the extent that there is involved'... a matter relating to ... public property, loans, grants, benefits, or contracts.” § 553(a)(2). We construe the public-benefits exception very narrowly as applying only to agency action that “clearly and directly relate[s] to ‘benefits’ as that word is used in section 553(a)(2).”122
To the extent that DAPA relates to public benefits, it does not do so “clearly and directly.” Although § 553(a)(2) suggests that “rulemaking requirements for agencies managing benefit programs are ... voluntarily imposed,”123 USCIS, which is the agency tasked with evaluating DAPA applications, is not such an agency. Neither USCIS nor any other agency within DHS confers public benefits on DAPA beneficiaries. Further, lawful presence is an immigration classification, not a grant of money, goods, services, or any other kind of public benefit that has been recognized, or was likely to have been recognized,124 under this exception.125 To the extent that lawful presence triggers eligibility for public benefits, receipt of those benefits depends on compliance with programs managed by other agencies. See supra notes 10-14 and accompanying text.
In summary, the United States has not made a strong showing that it is likely to succeed on the merits. We proceed to examine the remaining factors of the test for obtaining a stay pending appeal.
VII.
The remaining factors also favor the states. The United States has not demonstrated that it “will be irreparably injured absent a stay.” Planned Parenthood, 734 F.3d at 410 (quoting Nken, 556 U.S. at 426, 129 S.Ct. 1749). It claims that the injunction offends separation of powers and federalism, but it is the resolution of the case on the merits, not whether the [768]*768injunction is stayed pending appeal, that will affect those principles.
The government urges that DHS will not be able to determine quickly whether illegal aliens it encounters are enforcement priorities, but even under the injunction, DHS can choose whom to remove first; the only thing it cannot do is grant class-wide lawful presence and eligibility for accompanying benefits as incentives for low-priority aliens to self-identify in advance. And the government’s allegation that the injunction is delaying preparatory work is unpersuasive. Injunctions often cause delays, and the government can resume work if it prevails on the merits.
The states have shown that “issuance of the stay will substantially injure” them. Id. (quoting Nken, 556 U.S. at 426, 129 S.Ct. 1749). A stay would enable DAPA beneficiaries to apply for driver’s licenses and other benefits, and it would be difficult for the states to retract those benefits or recoup their costs even if they won on the merits. That is particularly true in light of the district court’s findings regarding the large number of potential beneficiaries, including at least 500,000 in Texas alone.
The last factor, “whére the public interest lies,” id. (quoting Nken, 556 U.S. at 426, 129 S.Ct. 1749), leans in favor of the states. The government identifies several important interests: It claims a stay would improve public safety and national security, provide humanitarian relief to the family members of citizens and lawful permanent residents, and increase tax revenue for state and local governments. To the contrary, however, and only by way of example, on March 16, 2015, the Attorney General, in opposing a motion to stay removal in an unrelated action, argued to this very panel that “granting a stay of removal ... would impede the government’s interest in expeditiously ... controlling immigration into the United States.”126 Presumably, by referring to “the government’s interest,” the United States is referring to “the public interest.”
The states say the injunction maintains the separation of powers and ensures that a major new policy undergoes notice and comment. And as a prudential matter, if the injunction is stayed but DAPA is ultimately invalidated, deportable aliens would have identified themselves without receiving the expected benefits. The public interest favors maintenance of the injunction, and even if that were not so, in light of the fact that the first three factors favor the states and that the injunction merely maintains the status quo while the court considers the issue,127 a stay pending appeal is far from justified.128
VIII.
The government maintains that the nationwide scope of the injunction is an [769]*769abuse of discretion, so it asks that the injunction be confined to Texas or the plaintiff states; But partial implementation of DAPA would undermine the constitutional imperative of “a uniform Rule of Naturalization”129 and Congress’s instruction that “the immigration laws of the United States should be enforced vigorously and uniformly.”130 A patchwork system would “detract[ ] from the ‘integrated scheme of regulation’ created by Congress.” 131 Further, there is a substantial likelihood that a partial injunction would be ineffective because DAPA beneficiaries would be free to move between states.
The motion to stay the preliminary injunction or narrow its scope pending appeal is DENIED.
Related
Cite This Page — Counsel Stack
787 F.3d 733, 2015 U.S. App. LEXIS 8657, 2015 WL 3386436, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-of-texas-v-usa-ca5-2015.