Trump’s “immigrant wealth test”: a case study in APA analysis
As an LGBTQ+ and gender equity advocate, I’ve become kind of obsessed with the Administrative Procedure Act’s “arbitrary and capricious” standard, which plays a big role in most challenges to Trump Administration challenges. It’s had a starring role in the recent SCOTUS rulings on DACA and the Census, as well as a notable role in the recent ruling on contraceptive coverage.
This week I’ve been poring over the recent circuit court rulings on the DHS “public charge” rule—truly among the most sweeping and morally repugnant of the Administration’s moves to date—and in particular at the APA arbitrary-and-capricious analysis in these cases. This standard can both a powerful and a malleable one, depending on the factual record and the court’s approach. It can relate in complex ways with other, substantive claims such as the APA contrary-to-law provision and claims under Equal Protection and Due Process.
As a case study, I simply present here excerpts from the three recent circuit court rulings in the public charges cases that have addressed the arbitrary-and-capricious issue. Neither the SCOTUS orders in these cases to date, nor the Fourth Circuit’s latest ruling rejecting an APA contrary-to-law claim, have addressed the arbitrary-and-capricious claims. The Second, Seventh, and Ninth Circuit panel rulings on this issue prevent strikingly different approaches that should be instructive to other civil rights and progressive advocates bringing APA challenges.
City and County of San Francisco v. USCIS (9th Cir. 2019) (stay order)
…We begin with the observation that DHS addressed at length the costs and benefits associated with the Final Rule. … DHS’s analysis began by stating, “This rule will impose new costs on this population applying to adjust status . . . that are subject to the public charge ground of inadmissibility.” 84 Fed. Reg. at 41,300. It estimated the direct costs to the federal government of the rule to be $35,202,698 annually. Some of these direct costs to the federal government would be offset by “individuals who may choose to disenroll from or forego enrollment in a public benefits program.” Id. DHS estimated the reduction in federal transfer payments would be about $2.47 billion annually. Id. at 41,301. It further estimated that there would be a reduction in state transfer payments of about $1.01 billion annually. Id. DHS also acknowledged that the Final Rule would impose direct and indirect costs on individuals and entities. The first of these, it suggested, were “familiarization costs,” which was “a direct cost of the rule.” Id. Organizations that work with immigrant communities would similarly experience indirect costs of familiarization. Id.
18 Indeed, DHS’s notice is quite comprehensive. In no fewer than 216 pages (which DHS estimated would take sixteen to twenty hours to read), DHS explained the changes proposed, estimated costs and savings, and addressed scores of comments on topics ranging from potential public-health concerns to whether DHS should consider immigrants’ credit scores. See generally 84 Fed. Reg. at 41,292–508.
Elsewhere, DHS responded to comments claiming that the Final Rule would cause aliens to disenroll from or forego enrollment in public benefit programs and that this “would be detrimental to the financial stability and economy of communities, States, local organizations, hospitals, safetynet providers, foundations, and healthcare centers.” Id. at 41,312; see also id. (suggesting that the Final Rule would increase the use of hospital emergency rooms). DHS identified three categories of aliens who might be affected by the Final Rule. First, there are aliens who are entitled to public benefits and seek to immigrate or adjust status. Their receipt of some public benefits are simply not covered by the rule. DHS noted, for example, that “emergency response, immunization, education, or [certain] social services” are not included in its revised definition of “public benefits.” Id. On the other hand, there are public benefits to which such an alien is entitled but which will be considered by DHS in its determination whether such alien is a “public charge.” DHS “acknowledge[d] that individuals subject to this rule may decline to enroll in, or may choose to disenroll from, public benefits for which they may be eligible under PRWORA, in order to avoid negative consequences as a result of this final rule.” Id. DHS could not estimate how many aliens in this category would be affected by the Final Rule “because data limitations provide neither a precise count nor reasonable estimate of the number of aliens who are both subject to the public charge ground of inadmissibility and are eligible for public benefits in the United States.” Id. at 41,313.
The second category of aliens are those who are unlawfully in the United States. These are “generally barred from receiving federal public benefits other than emergency assistance.” Id. (footnote omitted). Nevertheless, DHS announced that it will not consider “for purposes of a public charge inadmissibility determination whether applicants for admission or adjustment of status are receiving food assistance through other programs, such as exclusively state-funded programs, food banks, and emergency services, nor will DHS discourage individuals from seeking such assistance.” Id.
Third are those aliens and U.S. citizens who are not subject to the Final Rule, but erroneously think they are and disenroll from public benefits out of an abundance of caution. Id. Disenrollment by this category of persons should not be influenced by the Final Rule because their receipt of public benefits will “not be counted against or made attributable to immigrant family members who are subject to this rule.” Id. DHS understood “the potential effects of confusion” over the scope of the Final Rule that might lead to over-disenrollment. DHS stated that it would “issue clear guidance that identifies the groups of individuals who are not subject to the rule.” Id. The Northern District of California pointed out that DHS’s response “fails to discuss costs being borne by the states, hospitals, or others, other than to say DHS will issue guidance in an effort to mitigate confusion.” City & Cty. of San Francisco, 2019 WL 5100718, at *34. The court further criticized DHS for “flatly refus[ing] to consider the costs associated with predicted, likely disenrollment of those not subject to the public charge determination.” Id. at *35. We think several points must be considered here. First, the costs that the states, localities, and various entities (such as healthcare providers) may suffer are indirect. Nothing in the Final Rule imposes costs on those governments or entities; the Final Rule does not regulate states, localities, and private entities. Disenrollment will be the consequence of either (1) the free choice of aliens who wish to avoid any negative repercussions for their immigration status that would result from accepting public benefits, or (2) the mistaken disenrollment of aliens or U.S. citizens who can receive public benefits without any consequences for their residency status. DHS addressed both groups. DHS said it did not have data to calculate the size of the first group (and, presumably, the value of the benefits from which they will disenroll), and it had no way to estimate the second. 84 Fed. Reg. at 41,313. DHS stated that it would try to compensate for the latter group’s error by publishing clear guidance, and it also noted that other organizations, public and private, would have an incentive to provide accurate information to persons who might mistakenly disenroll. Id. at 41,486.
Second, DHS did acknowledge the indirect costs the Final Rule might impose “downstream . . . on state and local economics, large and small businesses, and individuals. ...” It did not attempt to quantify those costs, but it recognized the overall effect of the Final Rule, and that is sufficient. See Irvine Med. Ctr. v. Thompson, 275 F.3d 823, 835 (9th Cir. 2002) (“[T]he Secretary acknowledged that some Medicare beneficiaries would possibly have to shoulder an additional financial burden as a result of the repeal of the carry-forward provision. This acknowledgment did not render the Secretary’s rulemaking statement or reliance upon it arbitrary, however.” (internal citation omitted)).
Third, DHS is not a regulatory agency like EPA, FCC, or OSHA. Those agencies have broad mandates to regulate directly entire industries or practices, sometimes on no more instruction from Congress than to do so in the “public convenience, interest or necessity,” 47 U.S.C. § 303 (FCC), or as “appropriate and necessary,” 42 U.S.C. § 7412(n)(1)(A) (EPA). When Congress has vested such broad regulatory authority in agencies, the Supreme Court has sometimes insisted that the agencies perform some kind of a cost-benefit analysis. … By contrast, DHS is defining a simple statutory term—“public charge”—to determine whether an alien is admissible. Its only mandate is to regulate immigration and naturalization, not to secure transfer payments to state governments or ensure the stability of the health care industry. Any effects on those entities are indirect and well beyond DHS’s charge and expertise. Even if it could estimate the costs to the states, localities, and healthcare providers, DHS has a mandate from Congress with respect to admitting aliens to the United States.
…
Even had DHS been able to calculate the indirect costs that states, localities, and healthcare providers might bear as a result of the Final Rule, it is not clear what DHS was supposed to balance. Rather, it was sufficient—and not arbitrary and capricious—for DHS to consider whether, in the long term, the overall benefits of its policy change will outweigh the costs of retaining the current policy.
The Northern District of California also found that DHS did not sufficiently respond to certain public-health concerns. ... DHS not only addressed these concerns directly, it changed its Final Rule in response to the comments. 84 Fed. Reg. at 41,297. With respect to vaccines, DHS stated that it “does not intend to restrict the access of vaccines for children or adults or intend to discourage individuals from obtaining the necessary vaccines to prevent vaccine-preventable diseases.” Id. at 41,384. The Final Rule “does not consider receipt of Medicaid by a child under age 21, or during a person’s pregnancy, to constitute receipt of public benefits.” DHS said that would address “a substantial portion, though not all, of the vaccinations issue.” Id. Accordingly, DHS “believes that vaccines would still be available for children and adults even if they disenroll from Medicaid.” Id. at 41,385.
Both the Northern District of California and the Eastern District of Washington expressed concern that the Final Rule was a departure from the 1999 Field Guidance, which raised the vaccine issue, and that the 1999 Field Guidance had “engendered reliance.” City & Cty. of San Francisco, 2019 WL 5100718, at *37; see also Washington, 2019 WL 5100717, at *19. The question is not whether an agency can change a policy that people have come to rely on; clearly, it can. The real question is whether the agency has acknowledged the change and explained the reasons for it. DHS knew well that it was adopting a change in policy; that was the whole purpose of this rulemaking exercise. See Encino Motorcars, 136 S. Ct. at 2126 (holding that a Department of Labor regulation was “issued without . . . reasoned explanation” where there was “decades of industry reliance on the Department’s prior policy” and the new rule was “offered [with] barely any explanation”); INS v. YuehShaio Yang, 519 U.S. 26, 32 (1996) (distinguishing “an irrational departure from [established] policy” from “an avowed alteration of it”). “[I]t suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.” Fox Television Stations, 556 U.S. at 515. Because DHS has adequately explained the reasons for the Final Rule, it has demonstrated a strong likelihood of success on the merits
Cook County v. Wolf (7th Cir. 2020)
The review called for by State Farm is narrow in scope and does not permit us to substitute our own policy judgment for that of the agency. We ask only whether the agency’s “decision was based on a consideration of the relevant factors” and was not “a clear error of judgment.” 463 U.S. at 43.
In response to its notice of proposed rulemaking, DHS received a whopping 266,077 comments, the vast majority of which opposed the proposed rule. In the preamble to the final rule, DHS summarized significant issues raised by the comments and changes it made in the final rule. We assess the validity of DHS’s decision-making process based on this record.
Cook County urges that the Rule is arbitrary and capricious in a number of ways: (1) DHS failed meaningfully to evaluate and address significant potential harms from the Rule, including its substantial chilling effect on immigrants not covered by the Rule; (2) DHS failed to give a logical rationale for the duration-based standard; and (3) DHS added factors to the totality-of-the-circumstances analysis that are “unsupported, irrational and at odds with the Final Rule’s purported purpose.” Numerous amici underscored these points and explained how the Rule will lead to arbitrary results, cause both direct and indirect economic harms, burden states and localities that have to manage fallout from the Rule, and disproportionately harm the disabled and children.
We look first at DHS’s dismissal of concerns about the Rule’s chilling effect on legal immigrants and family members who fall outside its scope. DHS acknowledged a “plausible connection” between the Rule and needless disenrollment by exempt noncitizens (including refugees, asylees, and victims of domestic violence) in covered public benefits, and by covered immigrants in noncovered benefit programs. 84 Fed. Reg. at 41313. DHS also said that it “appreciates … the potential nexus between public benefit enrollment reduction and food insecurity, housing scarcity, public health and vaccinations … and increased costs to states and localities.” Id. Nonetheless, it brushed off these impacts as “difficult to predict” and refused to “alter this rule to account for such unwarranted choices.” Id. Even though these consequences are foreseeable, the Rule does not literally compel them, and so DHS asserted that they could be addressed through additional public guidance.
DHS may think that these responses are unwarranted, but it does not deny that they are taking place and will continue to do so. Moreover, the record indicates that the target population is responding rationally. DHS’s system of counting and stacking benefits is hardly transparent, and so a rational person might err on the side of caution and refrain from seeking medical care, or food, or housing, even from a city, state, or tribe rather than the federal government. And the risk that the Rule may become more stringent at any time and operate retroactively against the use of benefits already used is a real one. DHS trumpets its view that the Rule stops short of its lawful authority and that it could promulgate a more restrictive rule if it so chooses. In response to comments on the proposed rule, DHS used discretionary language: “DHS believes it is a reasonable approach to only designate Medicaid at this time,” id. at 41381 (emphasis added); and “DHS will not consider [Healthy Start] benefits at this time,” id. at 41390 (emphasis added). It warned that it may “updat[e] the list of benefits through future regulatory action.” Id. at 41387. Immigrants thus reasonably anticipate that their receipt of benefits that are currently not covered could eventually hurt them if DHS alters the Rule in the future.
It was not enough for DHS simply to nod at this argument; it called for a serious explanation. The importance of the chilling effect is not the number of disenrollments in the abstract, but the collateral consequences of such disenrollments. DHS failed adequately to grapple with the latter. For example, commenters predicted that disenrollment and under-enrollment in Medicaid, including by immigrants not covered by the Rule, would reduce access to vaccines and other medical care, resulting in an increased risk of an outbreak of infectious disease among the general public. To recognize the truth in that prediction, one need only consider the current outbreak of COVID-19—a pandemic that does not respect the differences between citizens and noncitizens.
There is also the added burden on states and local governments, which must disentangle their purely state-funded programs from covered federal programs. The federal government has no interest in the way that states and localities choose to spend their money. There is no reason why immigrants should not continue to benefit from the state programs without being penalized at the federal level. The Rule will force states to make their own public welfare programs more robust to compensate for a reduction in the availability of federal programs. DHS touts the savings to the federal government from the Rule, primarily through a significant reduction in transfer payments to the states (including, it should be noted, for persons who disenroll unnecessarily because of the chilling effect), but at the same time it expects the states to fill the gaps and continue to provide critical services such as preventive healthcare. See, e.g., id. at 41385 (“In addition, local health centers and state health departments provide preventive services that include vaccines that may be offered on a sliding scale fee based on income. Therefore, DHS believes that vaccines would still be available for children and adults even if they disenroll from Medicaid.”). It assumes this while simultaneously denying that the Rule will have “substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government.” Id. at 41481.
Cook County also asserts that DHS failed to give a logical rationale for its chosen durational threshold. In its notice of proposed rulemaking, DHS proposed an array of thresholds that would apply before benefits can be counted against a noncitizen in the public charge analysis. Those lines came under sharp criticism for being arbitrary, confusing, and an unacceptable proxy for undue reliance on public support. Id. at 41357–58.
In the final Rule, DHS opted for the single threshold for both monetizable and nonmonetizable benefits of 12 months (stacked) over a 36-month period. … The INA does not call for total self-sufficiency at every moment; it uses the words “public charge.” DHS sees “lack of complete self-sufficiency” and “public charge” as synonyms: in its view, receipt of any public benefit, particularly one related to core needs such as health care, housing, and nutrition, shows that a person is not self-sufficient. See id. at 41356. This is an absolutist sense of self-sufficiency that no person in a modern society could satisfy; everyone relies on nonmonetary governmental programs, such as food safety, police protection, and emergency services. DHS does not offer any justification for its extreme view, which has no basis in the text or history of the INA. As we explained earlier, since the first federal immigration law in 1882, Congress has assumed that immigrants (like others) might face economic insecurity at some point. Instead of penalizing immigrants by denying them entry or the right to adjust status, Congress built into the law accommodations for that reality. Also, as numerous commenters on the Rule pointed out, the benefits it covers are largely supplemental and not intended to be, or relied upon as, a primary resource for recipients. Many recipients could get by without them, though as a result they would face greater health, nutrition, and housing insecurity, which in turn would likely harm their work or educational attainment (and hence their ability to be self-sufficient).
Finally, Cook County contends that the Rule adds irrational factors into the public-charge assessment, including family size, mere application for benefits, English-language proficiency, lack of disability, and good credit history. With respect to language, we note the obvious: someone whose English is limited on the date of entry may be entirely competent five years later, when the person first becomes eligible for benefits under the Welfare Reform Act and related laws In almost all cases, an immigration official making a determination about whether someone is likely to become a public charge will be speculating about that person’s family size, linguistic abilities, credit score, and the like no fewer than five years in the future.
Even if we grant that these new factors carry some minimal probative value, it is unclear to us, and DHS nowhere explains, how immigration officials are supposed to make these predictions in a nonarbitrary way. Worse, for many people the relevant time is not five years—it is eternity, because the Rule calls for officials to guess whether an immigrant will become a public charge at any time. There is a great risk that officials will make their determination based on stereotype or unsupported assumptions, rather than on the type of objective facts called for by the Act (age, present health, family status, financial situation, and education or skills).
DHS also never explains why it chose not to take into account the possibility that an immigrant might, at some point in the future, be able to repay the value of public benefits received. Someone who seeks to adjust status will be penalized for having previously received public benefits without being given the opportunity to refund the government the cost of those benefits. This is new: the regulations governing deportation on public-charge grounds require a demand and a failure to pay. See 64 Fed. Reg. at 28691.
All of this convinces us that this Rule is likely to fail the “arbitrary and capricious” standard. The Rule has numerous unexplained serious flaws: DHS did not adequately consider the reliance interests of state and local governments; did not acknowledge or address the significant, predictable collateral consequences of the Rule; incorporated into the term “public charge” an understanding of self-sufficiency that has no basis in the statute it supposedly interprets; and failed to address critical issues such as the relevance of the five-year waiting period for immigrant eligibility for most federal benefits.
The fundamental flaw of this justification is that while DHS repeatedly contends that the non-citizens using these programs would be unable to provide for their basic necessities without governmental support, it does not provide any factual basis for this belief. See, e.g., 83 Fed. Reg. at 51,159; 84 Fed. Reg. at 41,354, 41,366, 41,375, 41,381, 41,389. While the 1999 Guidance was developed in consultation with the benefits-granting agencies, DHS does not claim that their expertise again informed its decision that people who use non-cash benefits would be otherwise unable to meet their basic needs.34 Of course, DHS is free to change its interpretation and we do not suggest it is under any obligation to consult with its sister agencies in so doing. But what DHS may not do is rest its changed interpretation on unsupported speculation, particularly when its categorical assumptions run counter to the realities of the non-cash benefits at issue. The goals and eligibility criteria of these benefits programs belie DHS’s assumption and show that these programs are designed to provide supplemental support, rather than subsistence, to a broad swath of the population – as INS recognized in 1999.
34 In response to a comment directly asking whether any such consultation took place, DHS invoked the deliberative process privilege. 84 Fed. Reg. at 41,460.
DHS also suggests that Medicaid is included because “the total Federal expenditure for the Medicaid program overall is by far larger than any other program for low-income people,” 84 Fed. Reg. at 41,379, which DHS takes as evidence that it is “a more significant form of public support” for individuals than other benefits, Appellants’ Br. at 43; see 83 Fed. Reg. at 51,160. We are not persuaded that the difference in dollars expended is an appropriate indicator of a non-citizen’s level of self-sufficiency; rather, it seems plain to us that the difference is due to the high cost of providing healthcare in the United States. Cf. Public Citizen, Inc. v. Mineta, 340 F.3d 39, 58 (2d Cir. 2003) (“The notion that ‘cheapest is best’ is contrary to State Farm.”). The size of the government expenditure on Medicaid may be relevant to a policy debate about the costs and benefits of the program, but it has little bearing on whether Medicaid recipients should be considered “public charges.”
Accepting help that is offered to elevate one to a higher standard of living, help that was created by Congress for that precise purpose, does not mean a person is not self-sufficient – particularly when such programs are available not just to persons living in abject poverty but to a broad swath of low- and moderate-income Americans, including those who are productively employed. DHS goes too far in assuming that all those who participate in non-cash benefits programs would be otherwise unable to meet their needs and that they can thus be categorically considered “public charges.” Its unsupported and conclusory claim that receipt of such benefits indicates an inability to support oneself does not satisfy DHS’s obligation to explain its actions. See Gen. Chem. Corp. v. United States, 817 F.2d 844, 855 (D.C. Cir. 1987) (rejecting agency’s “conclusory” explanation and noting that “[s]uch intuitional forms of decisionmaking . . . fall somewhere on the distant side of arbitrary” (internal quotation marks omitted)); see also State Farm, 463 U.S. at 51.
Casa de Maryland v. Trump (4th Cir. 2020)
In this case, the district court ruled only on the APA “contrary to law” claim, and did not reach the plaintiffs’ APA “arbitrary and capricious” claim or constitutional claims. The Fourth Circuit’s 2-1 opinion reversing the preliminary injunction therefore also did not address these claims.