COMMONWEALTH OF PENNSYLVANIA; STATE OF NEW JERSEY v. PRESIDENT UNITED STATES OF AMERICA; SECRETARY UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; SECRETARY UNITED STATES DEPARTMENT OF TREASURY; UNITED STATES DEPARTMENT OF TREASURY; SECRETARY UNITED STATES DEPARTMENT OF LABOR; UNITED STATES DEPARTMENT OF LABOR; UNITED STATES OF AMERICA
Nos. 17-3752, 18-1253, 19-1129, 19-1189
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
July 12, 2019
PRECEDENTIAL
President United States of America, Secretary United States of Department of Health and Human Services, United States Department of Health and Human Services, Secretary United States Department of Treasury, United States Department of Treasury, Secretary United States Department of Labor, United States Department of Labor, Appellants in 18-1253, 19-1189 (Except President United States of America)
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(E.D. Pa. No. 2:17-cv-04540)
District Judge: Hon. Wendy Beetlestone
Argued May 21, 2019
Before: McKEE, SHWARTZ, and FUENTES, Circuit Judges.
(Filed July 12, 2019)
Michael J. Fischer [ARGUED]
Aimee D. Thompson
Office of Attorney General of Pennsylvania
1600 Arch Street, Suite 300
Glenn J. Moramarco
Office of Attorney General of New Jersey
Department of Law & Public Safety, Division of Law Richard J. Hughes Justice Complex
25 Market Street, P.O. Box 112
Trenton, NJ 08625
Counsel for Appellees Commonwealth of Pennsylvania and State of New Jersey
Lowell V. Sturgill, Jr.
United States Department of Justice, Civil Division
950 Pennsylvania Avenue, N.W., Room 7241
Washington, DC 20530
Hashim M. Moopan [ARGUED]
United States Department of Justice
Civil Division, Appellate Staff
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Karen Schoen
United States Department of Justice
Civil Division, Appellate Section
950 Pennsylvania Avenue, N.W. Room 7533
Washington, DC 20530
Counsel for Appellants President United States of America, Secretary United States Department of Health & Human Services, United States Department of Health & Human Services, United States Department of Treasury, Secretary United States Department of Treasury, United States Department of Labor, Secretary United States Department of Labor, and United States of America
Mark L. Rienzi [ARGUED]
Lori H. Windham
Becket Fund for Religious Liberty
1200 New Hampshire Avenue, N.W., Suite 700
Washington, DC 20036
Nicholas M. Centrella
Conrad O‘Brien
1500 Market Street
West Tower, Suite 3900
Philadelphia, PA 19102
Counsel for Appellee-Intervenor Little Sisters of the Poor Saints Peter and Paul Home
Jason R. LaFond
Office of Attorney General of Texas
209 West 14th Street, 7th Floor
Austin, TX 78711
Counsel for Amici Curiae in Support of Appellants States of Texas, Alabama, Arkansas, Georgia, Idaho, Louisiana, Missouri, Nebraska, Oklahoma, South Carolina, and West Virginia
Elizabeth N. Dewar
Office of Attorney General of Massachusetts
20th Floor, One Ashburton Place
McCormack Building Boston, MA 02108
Counsel for Amici Curiae States of Massachusetts, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and the District of Columbia
Dariely Rodriguez
Lawyers’ Committee for Civil Rights Under Law
1500 K Street, N.W., Suite 900
Washington, DC 20005
Counsel for Amici Curiae Center for Reproductive Rights, Lawyers Committee for Civil Rights Under Law, California Womens Law Center, GLBTQ Legal Advocates and Defenders, LatinoJustice PRLDEF, Lawyers for Civil Rights, Legal Momentum, Legal Voice, Mississippi Center for Justice, National Center for Lesbian Rights, and Women‘s Law Project
Sara J. Rose
American Civil Liberties Union
313 Atwood Street
Pittsburgh, PA 15213
Counsel for Amici Curiae American Civil Liberties Union, Anti Defamation League, Leadership Conference on Civil and Human Rights, and National Urban League
Thomas W. Hazlett
Stephen J. Kastenberg
Ballard Spahr
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Counsel for Amici Curiae Public Interest Law Center of Philadelphia, Washington Lawyers Committee for Civil Rights and Urban Affairs, Chicago Lawyers Committee for Civil Rights, Lawyers Committee for Civil Rights of the San Francisco Bay Area, and Public Counsel
Jeffrey Blumenfeld
Lowenstein Sandler
2200 Pennsylvania Avenue, N.W., Suite 5
Washington, DC 20037
Robert Dunn
Gibson Dunn & Crutcher
1881 Page Mill Road Palo Alto, CA 94304
Counsel for Amicus Curiae Religious Sisters of Mercy
Miles Coleman
Nelson Mullins Riley & Scarborough
104 South Main Street, Suite 900
Greenville, SC 29601
Counsel for Amici Curiae Ronald J. Colombo, Richard Epstein, Carl H. Esbeck, David F. Forte, Richard W. Garnett, Esq., Professor Robert P. George, Mary Ann Glendon, Michael P. Moreland, Stacy Scaldo, and Michael Uhlmann
Bruce H. Schneider
Stroock Stroock & Lavan
180 Maiden Lane, 38th Floor
New York, NY 10038
Counsel for Amici Curiae American Nurses Association, American College of Obstetricians and Gynecologists, American Academy of Nursing, American Academy of Pediatrics, and Physicians for Reproductive Choice and Health
Allan J. Arffa Melina M. Meneguin-Layerenza
Sierra Robart
Paul Weiss Rifkind Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Counsel for Amici Curiae Planned Parenthood Federation of America, National Health Law Program, and National Family Planning & Reproductive Health Association
Priscilla J. Smith
Yale Law School RRJP Clinic
319 Sterling Place
Brooklyn, NY 11328
Counsel for Amicus Curiae Program for the Study of Reproductive Justice
Leah Bruno
Dentons US
233 South Wacker Drive, Suite 5900
Chicago, IL 60606
Jeffrey S. Feldman
The Feldman Firm
600 West Germantown Pike, Suite 400
Plymouth Meeting, PA 19462
Counsel for Amici Curiae United States Wоmen‘s Chamber of Commerce and National Association for Female Executives
Joshua A. Matz
Kaplan Hecker & Fink
350 Fifth Avenue, Suite 7110
New York, NY 10118
Counsel for Amicus Curiae Church State Scholars
Rhiannon N. Batchelder
Jamie A. Levitt
Morrison & Foerster
250 West 55th Street
New York, NY 10019
Counsel for Amici Curiae American Association of University Women and Service Employees International Union
Richard B. Katskee
Americans United for Separation of Church & State
1310 L Street, N.W., Suite 200
Washington, DC 20005
Counsel for Amicus Curiae Americans United for Separation of Church and State
OPINION OF THE COURT
SHWARTZ, Circuit Judge.
The Women‘s Health Amendment to the Affordable Care Act (“ACA“) mandated that women‘s health insurance include coverage for preventive health care. Through the Amendment, Congress directed the Health Resources and Services Administration (“HRSA“), a component of the Department of Health and Human Services (“HHS“), to issue guidelines setting forth the preventive health care services that women should be provided. Among the services HRSA identified was contraceptive care. Nowhere in the enabling statute did Congress grant the agency the authority to exempt entities from providing insurance coverage for such services nor did Congress allow federal agencies to issue regulations concerning this coverage without complying with the Administrative Procedure Act.
I
A
Enacted as a part of the ACA,
statutory and regulatory scheme was deemed the “Contraceptive Mandate.” Several regulations and litigation followed.
1
The same day that the Guidelines were issued, the Agencies promulgated an interim final rule (“IFR“), followed by a final rule in 2013, to exempt certain religious employers—namely, churches and similar entities—from the Contraceptive Mandate. Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection Affordable Care Act, 77 Fed. Reg. 8,725 (Feb. 15, 2012) (the “Church Exemption“); Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 76 Fed. Reg. 46,621 (Aug. 3, 2011).3 As the Agencies
explained, the “exemption for churches and houses of worship is consistent with their special status under longstanding tradition in our society and under federal law.” Coverage of Certain Preventive Services Under the Affordable Care Act, 80 Fed. Reg. 41,318, 41,325 (July 14, 2015).
The 2013 final rule also separately provided that a nonprofit religious employer who “(1) [o]pposes providing coverage for some or all of the contraceptive services required to be covered on account of religious objections; (2) is organized and operates as a nonprofit entity; (3) holds itself out as a religious organization; and (4) self-certifies that it satisfies the first three criteria,” 78 Fed. Reg. at 39,874, is entitled to an accommodation to avoid “contracting, arranging, paying, or referring for contraceptive coverage,” id. at 39,875. This accommodation process (the “Accommodation“) permits an employer to send a self-certification form to its insurance issuer, which then excludes contraceptive coverage, either in full or in part, from the group health plan and in turn “provide[s] payments for contraceptive services for plan participants and beneficiaries, separate from the group health plan, without the imposition of cost sharing, premium, fee, or other charge on plan participants or beneficiaries or on the eligible organization or its plan.” Id. at 39,876. A third party administrator (“TPA“) may also be used as a claims or plan administrator “solely for the purpose of providing payments for contraceptive services for participants and beneficiaries in a self-insured plan of an eligible organization at no cost to plan participants or beneficiaries or to the eligible organization.” Id. at 39,879. By invoking the Accommodation, the employer was no longer responsible for providing coverage for contraceptive care.
2
Various legal challenges followed. First, in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014), the Supreme Court held that the Accommodation must be extended to closely-held for-profit corporations with sincere religious objections to the provision of contraceptive coverage so that their religious beliefs were not substantially burdened under RFRA,
To ensure compliance with these rulings, the Agencies promulgated another IFR and final rule.4 Coverage of Certain Preventive Services Under the Affordable Care Act, 80 Fed. Reg. 41,318 (July 14,
traded, is majority-owned by a relatively small number of individuals, and objects to providing contraceptive coverage based on its owners’ religious beliefs.” Id. at 41,324. The rule also “allow[ed] eligible organizations to choose between using [the] ESBA Form 700 or the alternative process [of notifying HHS in writing of a religious objection to covering contraceptive services] consistent with the Wheaton interim order.” Id. at 41,323.
In Zubik v. Burwell, 136 S. Ct. 1557 (2016) (per curiam), the Supreme Court addressed the petitioners’ assertions that “submitting [the Accommodation] notice substantially burden[ed] the exercise of their religion, in violation of [RFRA].” Id. at 1559. The Court did not reach the merits of this claim but rather remanded to afford the parties “an opportunity to arrive at an approach going forward that accommodates petitioners’ religious exercise while at the same time ensuring that women covered by petitioners’ health plans receive full . . . contraceptive coverage.” Id. at 1560 (internal quotation marks and citation omitted).
In response to the Court‘s direction in Zubik, the Agencies solicited comments regarding the current procеdure and possible alternatives to the Accommodation. Coverage for Contraceptive Services, 81 Fed. Reg. 47,741 (July 22, 2016). The Agencies reviewed the comments and found that “no feasible approach has been identified at this time that would resolve the concerns of religious objectors while still ensuring that the affected women receive full and equal health coverage, including contraceptive coverage.” Dep‘t of Labor, FAQs About Affordable Care Act Implementation Part 36, at 4 (Jan. 9, 2017), available at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-36.pdf. As a result, the Accommodation remained unchanged.
3
In May 2017, President Donald Trump issued an executive order directing the Agencies to “consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to the preventive-care mandate promulgated under [
B
1
The Commonwealth of Pennsylvania filed suit against various governmental entities5 and sought to enjoin the enforcement of the IFRs. Little Sisters of the Poor Saints Peter and Paul Home (“Little
Court granted Pennsylvania‘s request to preliminarily enjoin the IFRs. See generally Pennsylvania v. Trump, 281 F. Supp. 3d 553 (E.D. Pa. 2017). The Court held that Pennsylvania was likely to succeed on its procedural and substantive challenges under the APA. Id. at 576, 581. The Government appealed, and the District Court granted a stay pending appeal.
While the appeal of the order preliminarily enjoining the IFRs was pending, the Agencies promulgated two Final Rules, which are virtually identical to the Religious and Moral IFRs. See Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57,536 (Nov. 15, 2018);
At Pennsylvania‘s request, the District Court lifted the stay, and Pennsylvania filed an amended complaint, joined New
2
The District Court held hearings and received evidence regarding the Rules. Specifically, the States submitted evidence from health care professionals and state insurance regulators about the Rules’ impact. The evidence addressed the relationship between costs and contraceptive use and the impact the Rules would have on state-funded healthcare services.
Cost is a significant barrier to contraceptive use and access. The most effective forms of contraceptives are the most expensive. After the ACA removed cost barriers, women switched to the more effective and expensivе methods of contraception.10 Because the Rules allow employers to opt out of providing coverage for contraceptive services, some women may no longer have insurance to help offset the cost for these and other contraceptives.
Pennsylvania and New Jersey have state-funded programs that provide family planning and contraceptive services for eligible individuals. For example, Pennsylvania
Women who lack contraceptive coverage and who meet certain income levels may also turn to Title X family planning clinics which “provide access to contraceptive services, supplies, and information to all who want and need them” with priority to low-income persons. Office of Population Affairs, Funding History, HHS, https://www.hhs.gov/opa/title-x-family-planning/about-title-x-grants/funding-history/index.html (last visited May 12, 2019). State and federal governments fund Title X clinics, but recently, federal funding has decreased.
The States expect that when women lose contraceptive insurance coverage from their employers, they will seek out these state-funded programs and services. The States further assert that women who do not seek or qualify for state-funded contraceptives may have unintended pregnancies. Public funds are used to cover the costs of many unintended pregnancies.12 Accordingly,
In addition to this evidence, the Agencies presented spreadsheets that listed the organizations and companies that were previously involved in ACA Contraceptive Mandate litigation. The Agencies offered this evidence to demonstrate the likely universe of employers whom they contend may seek to invoke the Rules and opt out of covering contraceptive care.
3
The day the Final Rules were set to go into effect, January 14, 2019, the District Court issued a nationwide injunction enjoining their enforcement. Pennsylvania v. Trump, 351 F. Supp. 3d 791 (E.D. Pa. 2019). The Court found that the States had standing to challenge the Final Rules and established a likelihood of success on the merits of their APA claims. First, the Court held that the States are likely to succeed on their procedural APA claims because the Agencies failed to comply with the notice-and-comment requirement and this defect tainted the Final Rules. Id. at 813. Second, the Court held that the States were likely to succeed on their substantive APA challenges because neither the ACA nor
II13
We first address whether the States have standing.14
A
To establish injury in fact, the alleged injury must be “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Id. at 1548 (quoting Lujan, 504 U.S. at 560). An injury is concrete if it “actually exist[s]” and is not abstract. Id. “For an
1
The States have established that they will suffer a concrete and particularized injury. The States describe that (1) employers will take advantage of the exemptions and women covered by their plans will lose contraceptive coverage; and (2) financially-eligible women will turn to state-funded services for their contraceptive needs and for the unintended pregnancies that may result from the loss of coverage. As a result, the States will suffer a concrete financial injury from the increased use of state-funded services. See Cottrell v. Alcon Labs., 874 F.3d 154, 163 (3d Cir. 2017) (“Typically, a plaintiff‘s allegations of financial harm will easily satisfy each of these components, as financial harm is a classic and paradigmatic form[ ] of injury in fact.” (alteration in original) (internal quotation marks and citations omitted)). The States will suffer this injury in a particularized manner, as each State‘s coffers will be depleted by the expenditure of funds to meet the increased demand for state services. Having concluded that the States have identified a concrete and particular injury, we next examine whether the injury at issue is not conjectural and is actual or imminent.
The record shows that the injury the States expect to sustain is not conjectural. First, the Agencies’ regulatory impact analysis acknowledges that between 70,500 and 126,400 women nationwide will lose contraceptivе coverage as a result of their employers’ invocation of the Religious Exemption, 83 Fed. Reg. at 57,578, 57,581, and fifteen women will lose coverage as a result of their employers’ use of the Moral Exemption, 83 Fed. Reg. at 57,627. See California v. Azar (“California II“), 911 F.3d 558, 572 (9th Cir. 2018) (noting that the Agencies’ own regulatory impact analysis estimates loss of coverage, and therefore “it is reasonably probable that women in the plaintiff states will lose some or all employer-sponsored contraceptive coverage due to the IFRs“), cert. denied Little Sisters of the Poor v. California, No. 18-1192, -- S. Ct. --, 2019 WL 1207008 (June 17, 2019) (Mem.). Second, based on the Agencies’ list of entities who challenged the Contraceptive Mandate, eight employers, not including Little Sisters, between New Jersey and Pennsylvania would likely take advantage of the Exemptions. Massachusetts v. U.S. Dep‘t of Health & Human Servs., 923 F.3d 209, 224 (1st Cir. 2019) (relying on spreadsheet of litigating entities to find “it is highly likely that at least three employers in the Commonwealth with self-insured health plans . . . will use the expanded exemptions“). Accordingly, it is not conjecture to conclude that employers in Pennsylvania and New Jersey will take advantage of the Exemptions and, as a result, women will lose coverage. Id. at 224 n.12 (stating that “it is improbable based on the evidence that no women in the [States] would lose contraceptive coverage” (emphasis omitted)).
The record also supports the District Court‘s conclusion that the injury is imminent. The States have provided evidence showing that the Exemption will result in the expenditure of state funds because some women who lоse coverage will inevitably seek out state-sponsored programs providing contraceptive services; and some women will forego contraceptive use, causing the States to shoulder the costs of unintended pregnancies.
With the ACA, many patients “switch[ed] from a cheaper, less effective [contraceptive] method to a more effective, expensive method that was better for their medical health and personal needs.” App. 272. Contraceptives are not only used for pregnancy prevention. They are the “standard first-line of care for a number of hormonal, and other, disorders, including poly-cystic ovarian syndrome, primary ovarian insufficiency/premature ovarian failure, amenorrhea, dysmenorrhea/chronic pelvic pain, and abnormal uterine bleeding.” App. 292. A “vast majority” of women use intrauterine devices (“IUDs“)—a treatment religious objectors are particularly focused on, App. 350-83—“for purposes other than birth control.” App. 293 (describing 90-95% of patients using IUDs for non-birth control purposes). Contraceptive use “carries long-term health benefits for women[,]” including reducing the risk of ovarian and uterine cancer. App. 294. “Contraception also helps protect the health of those women for whom pregnancy can be hazardous, or even life-threatening.” Amici Curiae Health Prof‘l Orgs. Br. at 16. Thus, removing cost free contraceptive coverage can havе ramifications on women‘s health beyond birth control and unplanned pregnancies.
Without insurance to defray or eliminate the cost for the more-effective contraceptive methods, women will use “less expensive and less effective methods,” App. 245, and both Pennsylvania and New Jersey “anticipate[] that women who lose contraceptive coverage through employer plans—whether the plan of their own employer or that of another family member—may seek contraception from other sources, including state-funded programs.”15 App. 299; App. 317. Thus, the State-funded programs will be tapped to provide coverage for financially eligible women whose employers invoke the Exemptions.
Furthermore, some women who lose contraceptive coverage may either fail to qualify for state services or elect to forego the use of contraceptives altogether. “Women who stop using contraception are more likely to have unplanned pregnancies and to require additional medical attention.” App. 312. The costs of such unintended pregnancies are often shouldered by states, costing hundreds of millions of dollars. Therefore, the evidence supports the conclusion that the loss of contraceptive coverage may also result in unintended pregnancies for which the States will bear associated health care costs.
For these rеasons, “[t]he expanded exemptions are expected to result in greater financial expenditures” by the States on contraceptive services. App. 318. This anticipated substantial impact on state finances presents an imminent injury. Thus, the District Court properly found that the States showed an imminent injury in fact.
B
The States’ imminent injury is causally connected and fairly traceable to the Exemptions. The States will suffer financial injury when employers in Pennsylvania and New Jersey take advantage of the Exemptions, leaving female employees without contraceptive coverage and prompting financially eligible women to turn to state-funded services. See Texas v. United States, 809 F.3d 134, 159 (5th Cir. 2015) (“For Texas to incur injury, DAPA beneficiaries would have to apply for driver‘s licenses as a consequence of DHS‘s action, and it is apparent that many would do so.“), aff‘d by an equally divided court, United States v. Texas, 136 S. Ct. 2271 (2016) (Mem.) (per curiam). In other words, the States will not experience an increased demand for servicеs and the resulting financial burden unless the new Exemptions, which create a void in contraceptive coverage, go into effect. See id. at 160 (“Far from playing an insignificant role, DAPA would be the primary cause and likely the only one. Without the program, there would be little risk of a dramatic increase in the costs of the driver‘s-license program.“). Thus, there is a link between the Exemptions and the impact on the States’ fiscs.
C
The District Court also correctly concluded that an injunction would redress the financial injury the States face from the Rules. Enjoining the Final Rules until their legality is adjudicated on the merits will avoid the imminent financial burden the States face if they are not enjoined. Massachusetts, 923 F.3d at 228 (“[A]n injunction preventing the application of these exemptions would stop the alleged fiscal injury from occurring, making it not only ‘likely,’ Spokeo, 136 S. Ct. at 1547, but certain that this injury would not occur for as long as the exemptions are enjoined.“); see Massachusetts, 549 U.S. at 526 (“The risk of catastrophic harm, though remote, is nevertheless real. That
For these reasons, the States have standing to bring this suit.17
III
Having determined that the States have standing, we now address whether they are entitled to a preliminary injunction. The decision to grant or deny a preliminary injunction is within the sound discretion of the district court.18 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24, 33 (2008). To obtain a preliminary injunction, the movants must:
demonstrate (1) that they are reasonably likely to prevail eventually in the litigation and (2) that they are likely to suffer irreparable injury without relief. If these two thrеshold showings are made the District Court then considers, to the extent relevant, (3) whether an injunction would harm the [defendants] more than denying relief would harm the plaintiffs and (4) whether granting relief would serve the public interest.
K.A. ex rel. Ayers v. Pocono Mountain Sch. Dist., 710 F.3d 99, 105 (3d Cir. 2013) (alteration in original) (quoting Tenafly Eruv Ass‘n v. Borough of Tenafly, 309 F.3d 144, 157 (3d Cir. 2002)); accord
A19
To promulgate binding regulations, agencies engage in what is known as notice-and-comment rulemaking.
1
The Government first argues that provisions within the Health Insurance Portability and Accountability Act of 1996 (“HIPAA“) grant the Agencies discretion
The Secretary, consistent with section 104 of [HIPAA], may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this [subchapter]. The Secretary may promulgate any interim final rules as the Secretary determines are appropriate to carry out this [subchapter].
First, the APA only allows a subsequent statute to modify or supersede its procedural requirements “to the extent [the statute] does so expressly.”
Second, the statutory reference within the Regulation Provision sheds light on the scope and purpose of its IFR sentence. As the Court of Appeals for the Ninth Circuit points out, § 104 of HIPAA aims to assure regulatory coordination between the Agencies’ Secretaries for matters over which they share responsibility. See California II, 911 F.3d at 579-80 (citing
The Agencies also lacked good cause for dispensing with notice of and comment to the IFRs. An agency has “good cause” to forego APA procedures where following them would be “impracticable, unnecessаry, or contrary to the public interest.”21
When they issued the IFRs, the Agencies claimed good cause to waive notice and comment based on (1) the urgent need to alleviate harm to those with religious objections to the current regulations; (2) the need to address “continued uncertainty, inconsistency, and cost” arising from “litigation challenging the previous rules“; and (3) the fact that the Agencies had already collected comments on prior Mandate-related regulations. 82 Fed. Reg. at 47,813-15; see also 82 Fed. Reg. at 47,855-59. None of these assertions meet the standard for good cause.
First, the Agencies’ desire to address the purported harm to religious objections does not ameliorate the need to follow appropriate procedures. All regulations are directed toward reducing harm in some manner.23 See United States v. Reynolds, 710 F.3d 498, 512-13 (3d Cir. 2013). Thus, “[a] need to regulate affected parties does not create the urgency necessary to establish good cause.” Id. at 511. “As with any other administrative agency conclusion, we require some statement of facts or circumstances that justifies the existence of good cause (e.g., an imminent, externally imposed deadline or the existence of an emergency).” Id. at 512. The Agencies fail to cite any facts or impending deadlines sufficient to raise “good cause” here.
Second, the need to address uncertainty is likewise insufficient to establish good cause. Uncertainty precedes every
Third, the Agencies’ previous solicitation and collection of comments regarding other rules concerning the Contraceptive Mandate cannot substitute for notice and comment here. If the APA permitted agencies to forego notice-and-comment concerning a proposed regulation simply because they already regulated similar matters, then the good cause exception could largely obviate the notice-and-comment requirement. Furthermore, the IFRs did not make a minor change. The IFRs create exemptions from the Contraceptive Mandate with unprecedented scope and makе the Accommodation wholly voluntary. Such a dramatic overhaul of the Contraceptive Mandate regulations required notice-and-comment under the APA.
For these reasons, the Agencies did not have good cause to ignore the APA‘s notice and comment requirement.
B
The Government also contends that, even if the IFRs were procedurally deficient, the Agencies’ subsequent use of notice-and-comment rulemaking to finalize the Rules cured any procedural defects. Under our precedent, however, “post-promulgation notice and comment procedures cannot cure the failure to provide such procedures prior to the promulgation of the rule at issue.” NRDC, 683 F.2d at 768; see Reynolds, 710 F.3d at 519 (“Any suggestion that the postpromulgation comments to the Interim Rule can satisfy [the purposes of notice-and-comment rulemaking] misses the point.” (internal citation omitted)); Sharon Steel Corp. v. EPA, 597 F.2d 377, 381 (3d Cir. 1979) (“We hold that the period for comments after promulgation cannot substitute for the prior notice and comment required by the APA.“).
APA notice-and-comment procedures serve several goals, including “(1) to ensure that agency regulations are tested via exposure to diverse public comment, (2) to ensure fairness to affected parties, and (3) to give affected parties an opportunity to develop evidence in the record to support their objections to the rule and thereby enhance the quality of judicial review.” Prometheus Radio Project v. FCC, 652 F.3d 431, 449 (3d Cir. 2011) (quoting Int‘l Union, United Mine Workers of Am. v. Mine Safety & Health Admin., 407 F.3d 1250, 1259 (D.C. Cir. 2005)). The comment process also allows each agency to “maintain[ ] a flexible and open-minded attitude towards its own rules,” Reynolds, 710 F.3d at 511 (alteration in original and citation omitted) (quoting Prometheus Radio, 652 F.3d at 449); see also Azar v. Allina Health Servs., 139 S. Ct. 1804, 1816 (2019) (“Notice and comment ... affords the agency a chance to avoid errors and make a more informed decision.” (internal citation omitted)). To preserve the integrity of this process, “[t]he opportunity for comment must be a meaningful opportunity,” Prometheus Radio, 652 F.3d at 450 (alteration in original), to have interested parties share their views, and to have the agency consider them with an “open mind,” Reynolds, 710 F.3d at 517-19.
The notice and comment exercise surrounding the Final Rules does not reflect any real open-mindedness toward the
Lastly, even setting aside the Agencies’ lack of open-mindedness, the IFRs also impaired the rulemaking process by altering the Agencies’ starting point in considering the Final Rules. In NRDC, our Court rejected the EPA‘s argument that the opportunity for pоst-promulgation comment remedied the EPA‘s initial failure to promulgate a rule through notice-and-comment rulemaking:
allow agencies to circumvent [our case law] and the[t]o allow the APA procedures in connection with the [new rule] to substitute for APA procedures in connection with [the initial, procedurally defective rule] would allow [the] EPA to substitute post-promulgation notice and comment procedures for pre-promulgation notice and comment procedures at any time by taking an action without complying with the APA, and then establishing a notice and comment procedure on the question of whether that action should be continued. This would
In sum, because deficits in the promulgation of the IFRs
compromised the procedural integrity of the Final Rules, the
States have demonstrated a likelihood of success in showing
that the Final Rules are procedurally defective, and in turn,
violate the
C
There are also serious substantive problems with the
Final Rules. More specifically, neither of the statutes upon
which the Agencies rely, the
The Agencies argue that their authority under the
A group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for— . . .
(3) with respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the [HRSA].
(4) with respect to women, such additional preventive care and screenings not described in paragraph (1)25 as provided for in comprehensive guidelines supported by the [HRSA] for purposes of this paragraph.
The Agencies’ reliance on the language that directed
HRSA to create the guidelines concerning women‘s preventive
health care and the use of the phrase “as provided for in” such
guidelines does not advance their position. The Agencies
contrast
The Agencies’ interpretation of “comprehensive” as authorizing them to issue guidelines that exempt entities from complying with the Mandate likewise fails. Put simply, the discretion the statute grants HRSA to issue comprehensive guidelines concerning services to be provided does not include the power to exempt actors from the statute itself. This is borne out by the fact that the word “comprehensive” is also used to describe the children‘s preventive care guidelines, and those guidelines do not exempt any statutorily required party from providing services. See HHS, Preventive Care Benefits for Children, https://www.healthcare.gov/preventive-care-children (last visited May 8, 2019). Congress was obviously aware of the existing children‘s guidelines when it drafted the Women‘s Health Amendment, and Congress‘s use of “comprehensive” to describe both sets of guidelines conveys that it intended them to cover the same type of subject matter, namely health care services for the identified groups. See F.A.A. v. Cooper, 566 U.S. 284, 292 (2012) (“[W]hen Congress employs a term of art, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken.” (internal quotation marks and citation omitted)).
Other portions of the
Because
227
The Agencies’ effort to cast
A prima facie
(1) a follower is forced to choose between following the precepts of his religion and forfeiting benefits otherwise generally available to other [persons] versus abandoning one of the precepts of his religion in order to receive a benefit; or (2) the government puts substantial pressure on an adherent to substantially modify his behavior and to violate his beliefs.28
Real Alternatives, Inc. v. Sec‘y Dep‘t of Health & Human Servs., 867 F.3d 338, 371 (3d Cir. 2017) (alteration in original) (internal quotation marks and citation omitted). The Supreme Court has directed that, when considering a requested accommodation to address the burden, “courts must take adequate account of the burdens a requested accommodation may impose on nonbeneficiaries.” Cutter v. Wilkinson, 544 U.S. 709, 720 (2005) (referring to third parties who may face collateral consequences from accommodating an observer‘s burden).29 The Accommodation fulfills this directive as it provides a means for an observer to adhere to religious precepts and simultaneously allows women to receive statutorily- mandated health care coverage.
the self-certification form does not trigger or facilitate the provision of contraceptive coverage because coverage is mandated to be otherwise provided by federal law. Federal law, rather than any involvement by the [employers] in filling out or submitting the self-certification form, creates the obligation of the insurance issuers and third- party administrators to provide coverage for contraceptive services. . . .
[And] the submission of the self-certification form does not make the [employers] “complicit” in the provision of contraceptive coverage.
Geneva Coll. v. Sec‘y of U.S. Dep‘t of Health & Human Servs., 778 F.3d 422, 437-38 (3d Cir. 2015) (emphasis omitted), vacated and remanded sub nom. Zubik, 136 S. Ct. 1557.30
The religious objectors who oppose the
Accommodation mechanism disapprove of “what follows
from” filing the self-certification form, but under Free Exercise
jurisprudence, we examine the conduct of the objector, not
third parties. Id. at 439-40. Here, through the
Accommodation process, “the actual provision of
contraceptive coverage is by a third party,” so any possible
burden from the notification procedure is not substantial. Id.
at 442. For these reasons,
Contrary to the Agencies’ assertions in the Rule, the
Supreme Court has not held that the Accommodation imposes
substantial burdens on religious rights. Hobby Lobby ruled
that closely-held corporations are entitled to take advantage of
the Accommodation process rather than facing fines for non-
compliance with the contraceptive mandate, observing that the
Accommodation was a less restrictive alternative to forcing
objectors to choose between
Furthermore, the Religious Exemption and the new
optional Accommodation would impose an undue burden on
nonbeneficiariеs—the female employees who will lose
coverage for contraceptive care. The Agencies downplayed
this burden on women, contradicting Congress‘s mandate that
women be provided contraceptive coverage. “No tradition,
and no prior decision under RFRA, allows a religion-based
exemption when the [A]ccommodation would be harmful to
others—here, the very persons the contraceptive coverage
requirement was designed to protect.” Hobby Lobby, 573 U.S.
at 764 (Ginsburg, J., concurring). As the Agencies recognize,
the record shows that thousands of women may lose
contraceptive coverage if the Rule is enforced and frustrate
their right to obtain contraceptives. Id. at 727 (citation
omitted);
In short, the status quo prior to the new Rule, with the
Accommodation, did not infringe on the religious exercise of
covered employers, nor is there a basis to conclude the
Accommodation process infringes on the religious exercise of
any employer. For these reasons,
D
Because the States demonstrated a likelihood of success
on the merits as to their APA claim, we next turn to the
remaining equitable factors. To obtain a preliminary
injunction, a plaintiff must “demonstrate that irreparable injury
is likely in the absence of an injunction.” Winter, 555 U.S. at
22 (emphasis omitted). Because the States cannot collect
money damages undеr the
E
Having determined that a preliminary injunction is
warranted, the final question we address is whether the District
Court abused its discretion by enjoining the Final Rules
nationwide. “Crafting a preliminary injunction is an exercise
of discretion and judgment, often dependent as much on the
equities of a given case as the substance of the legal issues it
presents.” Trump v. Int‘l Refugee Assistance Project, 137 S.
Ct. 2080, 2087 (2017) (per curiam). While courts are vested
with the power to issue equitable relief with a nationwide
reach, see Texas, 809 F.3d at 188 (quoting
Mindful of these considerations, the District Court did
not abuse its discretion in concluding that a nationwide
injunction is necessary to afford complete relief to the States
and that it is not “more burdensome to the defendant than
necessary to provide such relief.32 Groupe SEB USA, Inc. v.
Euro-Pro Operating LLC, 774 F.3d 192, 206 (3d Cir. 2014)
(internal quotation marks and citations omitted). First, our
APA case law suggests that, at the merits stage, courts
invalidate—without qualification—unlawful administrative
rules as a matter of course, leaving their predecessors in place
until the agencies can take further action. See, e.g.,
Prometheus Radio, 652 F.3d at 453-54 & n.25 (vacating
procedurally defective rule and leaving the prior rule in effect);
Council Tree Commc‘ns, Inc. v. FCC, 619 F.3d 235, 258 (3d
Cir. 2010) (same). Congress determined that rule-vacatur was
not unnecessarily burdensome on agencies when it provided
vacatur as a standard remedy for APA violations. See
Second, a nationwide injunction is necessary to provide the States complete relief. Many individuals work in a state that is different from the one in which they reside. See Amici Curiae Massachusetts, et al., Br. at 24 (“Mass. Amici Br.“) (stating that 14% of the workforce in New Jersey and 5.4% in Pennsylvania work out of state, comprising more than 800,000 workers in total). An injunction geographically limited to the States alone will not protect them from financial harm, as some share of their residents who work out-of-state will lose contraceptive coverage originally provided through employers in non-enjoined states who will exempt themselves. Women covered by these plans who live in the States will seek state- funded services, and a state specific injunction will not be sufficient to prevent the resulting financial harm.
Out-of-state college attendance further exacerbаtes the States’ injury. As the Moral Exemption points out, “[o]nly a minority of students in higher education receive health insurance coverage from plans arranged by their colleges or universities.” 83 Fed. Reg. at 57,564; 83 Fed. Reg. at 57,619. Instead, most of these students remain on their parents’ employer-based plans. Mass. Amici Br. at 26. The States host many such students at their colleges. “Each year, for example, Pennsylvania takes in more than 32,000 first-time out-of-state students alone—the second most of any state in the country.” Mass. Amici Br. at 25 (citing Nat‘l Ctr. For Educ. Statistics, Residence and Migration of All First-Time Degree/Certificate- Seeking Undergraduates, Digest of Education Statistics (2017)). In the absence of a nationwide injunction, students attending school in the States may lose contraceptive coverage from their parents’ out-of-state plans, again leaving programs within the States to pick up the bill.33 In light of the impact of these interstate activities, the District Court did not abuse its discretion in concluding that a nationwide injunction was necessary to afford the States complete relief.34
V
For the foregoing reasons, we will affirm the District Court‘s order granting the nationwide preliminary injunction.
Notes
Massachusetts, 549 U.S. at 523 n.21. Just as it was unnecessary for Massachusetts to identify specific coastline that would be flooded by the agencies’ inaction, it is unnecessary for the States to identify a specific woman who would be impacted by the Government‘s action where in both instances, the record provided a basis to infer specific imminent injury.the likelihood that Massachusetts’ coastline will recede has nothing to do with whether petitioners have determined the precise metes and bounds of their soon-to-be-flooded land. Petitioners maintain that the seas are rising and will continue to rise, and have alleged that such a rise will lead to the loss of Massachusetts’ sovereign territory. . . . Our cases require nothing more.
710 F.3d at 512-13.[m]ost, if not all, laws passed by Congress requiring agencies to promulgate new rules are designed to eliminate some real or perceived harm. If the mere assertion that such harm will continue while an agency gives notice and receives comments were enough to establish good cause, then notice and comment would always have to give way. An agency will invariably be able to point to some continuing harm during the notice and comment period antecedent to the promulgation of a rule.