E. GRADY JOLLY, Circuit Judge:
In this declaratory judgment action, the State of Texas appeals the district court's order dismissing this action under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Texas's complaint seeks a declaration that an Enforcement Guidance document from the Equal Employment Opportunity Commission ("EEOC") regarding the hiring of persons with criminal backgrounds violates the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-06. The EEOC has instigated no legal proceedings against the State of Texas regarding the subject of felony hiring bans and Title VII.
This appeal requires the court to address only the threshold issues of justiciability and subject matter jurisdiction under both Article III and the APA. In dismissing Texas's complaint, the district court held that Texas lacked Article III standing to bring this action because Texas could not show a substantial likelihood of harm, noting that although the EEOC had the statutory authority to investigate Title VII charges against Texas, it had no authority to bring an enforcement action against the State, that authority belonging only to the Attorney General of the United States. The district court further asserted that Texas's challenge to the EEOC's Enforcement Guidance was unripe, and that, in any event, the court lacked subject matter jurisdiction over the APA claim because the EEOC's Guidance did not constitute "final agency action" under 5 U.S.C. § 704.
Although the parties conflate the issues of standing, ripeness, and "final agency action" under the APA, Texas essentially argues that it has standing because it is an object of the challenged EEOC Guidance, and that the Guidance is a "final agency action" because it creates legal consequences for Texas and all other employers. Texas asserts that the Guidance implements a mandatory regulatory framework for employers and EEOC staff to follow, and that the Guidance purports to preempt Texas state law. In response, the EEOC argues that the Guidance is purely advisory, and thus does not create an actual
After full briefing and argument, we REVERSE the district court's judgment and REMAND this action for further proceedings not inconsistent with this opinion.
Although this appeal presents only a jurisdictional issue, this action ultimately seeks to question whether a bar on hiring felons constitutes an unlawful employment practice under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Title VII makes it unlawful for an employer:
42 U.S.C. § 2000e-2(a).
Texas employs hundreds of thousands of people across various state agencies. Many of these state agencies do not hire convicted felons, felons convicted of particular categories of felonies, or, in some cases, individuals convicted of particular misdemeanors. The sources of these bans stem from both Texas state statutes and longstanding employment policies adopted by the agencies. According to Texas, its agencies apply the hiring bars neutrally "to all job applicants, without regard to their races." Where these exclusions exist, however, Texas applies them categorically and does not undertake an individualized assessment into the nature of the prospective employee's conviction.
Although the EEOC enforces Title VII, its enforcement power is limited in a number of respects that are relevant to this appeal. First, the EEOC has only the limited regulatory authority "to issue, amend, or rescind suitable procedural regulations to carry out the provisions of this subchapter." 42 U.S.C. § 2000e-12(a). In other words, the EEOC cannot promulgate binding substantive interpretations of Title VII. Second, the EEOC lacks the authority to file an enforcement action against a state employer directly. See 42 U.S.C. § 2000e-5(f)(1). The EEOC does, however, have the power to investigate state employers for potential Title VII violations. The EEOC refers any case for which it finds reasonable cause to believe a Title VII violation occurred to the Attorney General of the United States, who then decides whether to bring enforcement action against the state. Id.
Notwithstanding its limitation to only formulating procedural rules, the EEOC holds and advances the view, as expressed through its policy statements, that categorical bans on the hiring of felons can constitute a violation of Title VII when they disproportionately affect blacks and Hispanics. In 2012, the EEOC issued the "Enforcement Guidance on the Consideration
The Guidance then sets out a framework for addressing both whether a hiring policy screens out a Title VII-protected group and whether a policy is "consistent with business necessity." On the first prong, the Guidance lays out various criteria that the EEOC will use to determine whether a hiring policy has a disparate impact, and asserts that an employer's evidence of a racially balanced workforce "will not be enough to disprove disparate impact." On the second prong, the Guidance addresses the "job-related, business necessity" defense by offering employers the details of a screening policy that creates a disparate impact, but nonetheless complies with Title VII because it is narrowly tailored to serve a legitimate business need.
Texas filed suit on November 4, 2013, and filed its amended complaint on March 14, 2014. The amended complaint seeks declaratory and injunctive relief, alleging that the Enforcement Guidance is, in effect, a binding substantive interpretation of Title VII and thus violates the APA. The EEOC moved to dismiss the amended complaint on three jurisdictional grounds: (1) standing; (2) ripeness; and (3) lack of subject matter jurisdiction under the APA. The district court granted the motion to dismiss. Although the district court's opinion cites all three grounds as independent bases for dismissal, the district court addressed only in passing the issues of ripeness and jurisdiction under the APA, and emphasized the lack of Article III standing. Texas filed a timely appeal.
First, we consider whether Texas has Article III standing.
Our discussion here begins with "a basic question that underlies all three elements of standing — `whether the plaintiff is [itself] an object'" of the challenged agency "rule." Contender Farms, 779 F.3d at 264 (quoting Lujan, 504 U.S. at 561, 112 S.Ct. 2130). If a plaintiff can establish that it is an "object" of the agency regulation at issue, "there is ordinarily little question that the action or inaction has caused [the plaintiff] injury, and that a judgment preventing or requiring the action will redress it." Lujan, 504 U.S. at 561-62, 112 S.Ct. 2130. "[W]hether someone is in fact an object of a regulation is a flexible inquiry rooted in common sense." See Contender Farms, 779 F.3d at 265.
We have no question but that Texas is an "object" of the challenged Enforcement Guidance, which, as we shall later see more fully, has a regulatory effect on employers. With the narrow exception of some federal agency employers, the Guidance purports to apply to all employers (including state agencies) that conduct criminal background checks as part of their hiring process. Indeed, the EEOC effectively concedes that Texas — or any other employer subject to Title VII, for that matter — is an object of the Guidance at issue, but nevertheless argues that Texas lacks standing to mount a legal challenge to the Enforcement Guidance because, being purely advisory, the Guidance does not impose any obligations on Texas or expose it to any legal consequences. In making this argument, the EEOC erroneously conflates the question of standing under Article III with the question of "final agency action" under the APA. Although the two inquiries may engage similar concerns, constitutional standing analysis is ultimately separate from the question of whether "final agency action" exists within the meaning of § 704 of the APA. See, e.g., Holistic Candlers and Consumers Ass'n v. Food & Drug Admin., 664 F.3d 940, 943-45 (D.C. Cir.2012) (concluding that the plaintiffs established constitutional standing, but nonetheless finding that the plaintiffs failed to show "final agency action" under the APA); see also Bennett v. Spear, 520 U.S. 154, 177-78, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (noting that constitutional standing and "final agency action" are separate inquires).
As Texas is an object of the Guidance at issue, there is no reason to deviate from the presumption that Texas has constitutional standing to challenge it. The district court found that Texas lacked an injury sufficiently concrete and imminent to confer standing because Texas did not allege that any enforcement action had been filed against it by the Department of Justice ("DOJ"). An enforcement action is not, however, the only injury sufficient to confer constitutional standing upon Texas. Texas alleges several injuries that it is currently suffering because of the Guidance. First, Texas asserts that the Guidance imposes a mandatory scheme for employers regarding hiring policies. If we take these allegations as true, the Enforcement Guidance amounts to an increased regulatory burden on Texas as an employer, and "[a]n increased regulatory burden typically satisfies the injury in fact requirement." See Contender Farms, 779 F.3d at 266 (citing Ass'n of Am. R.R.s v. Dep't of Transp., 38 F.3d 582 (D.C. Cir.
Texas further asserts that the Enforcement Guidance effectively preempts state laws that bar employee-applicants with certain criminal histories from being considered for specific jobs, such as school teachers or state law enforcement officers. Regardless of whether the Guidance actually preempts Texas's laws regarding hiring bans, the Guidance does, at the very least, force Texas to undergo an analysis, agency by agency, regarding whether the certainty of EEOC investigations stemming from the Enforcement Guidance's standards overrides the State's interest in not hiring felons for certain jobs.
The APA provides 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." 5 U.S.C. § 702. An aggrieved party is entitled to seek this review, however, only if the agency action is "made reviewable by statute" or, relevant to this appeal, whether the action is "final agency action for which there is no other adequate remedy in a court." Id. § 704. In this circuit, the "final agency action" requirement is a jurisdictional threshold, not a merits inquiry. See Peoples Nat'l Bank v. Office of the Comptroller of the Currency of the United States, 362 F.3d 333, 336 (5th Cir.2004) ("If there is no `final agency action,' a federal court lacks subject matter jurisdiction." (citing Am. Airlines, Inc. v. Herman, 176 F.3d 283, 287 (5th Cir.1999))).
An administrative action is "final agency action" under the APA if: (1) the agency's action is the "consummation of the agency's decisionmaking process;" and (2) "the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." Bennett, 520 U.S. at 177-78, 117 S.Ct. 1154 (internal quotation marks omitted). "In evaluating whether a challenged agency action meets these two conditions, this court is guided by the Supreme Court's interpretation of the APA's finality requirement as `flexible' and `pragmatic.'" Qureshi v. Holder, 663 F.3d 778, 781 (5th Cir.2011) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149-50, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). The standard of review is de novo. Id. at 780. The parties do not appear to contest that the Enforcement Guidance is the "consummation" of the EEOC's decisionmaking process. Thus, this appeal turns on the second prong of the Bennett test, and the court must determine whether the EEOC Guidance constitutes an agency action "by which rights or obligations have been determined," or, in the alternative, "from which legal consequences will flow." Bennett, 520 U.S. at 178, 117 S.Ct. 1154.
The EEOC contends that the Guidance does not create "legal consequences" because the EEOC lacks the authority to bring an enforcement action against Texas directly; that is, it can only refer a case to the U.S. Attorney General for prosecution following an EEOC investigation. Texas, however, asserts that the Guidance creates legal consequences that go beyond the mere threat of investigation and agency referral. Specifically, Texas argues that the Guidance itself creates legal consequences because it binds EEOC staff to a specific course of action, and asserts that an employer who adheres to one of the Guidance's two "safe harbor" provisions will avoid a finding of liability before the EEOC, and thus will avoid DOJ referral and enforcement. See Cohen v. United States, 578 F.3d 1, 9 (D.C. Cir.2009) ("When `the language of the [agency] document is such that private parties can rely on it as a norm or safe harbor by which to shape their actions, it can be binding as a
The alleged safe harbor provisions read as follows:
The Enforcement Guidance clarifies what sort of individualized assessment is required by the second provision,
Reviewing the parties' arguments, we find that the Guidance imposes "legal consequences" in the sense that the EEOC has committed itself to applying the Guidance when conducting enforcement and referral actions; in particular, the Guidance suggests that its provisions are to be taken as conclusive, and offers only two escapes from an adverse EEOC determination. Moreover, the promulgation of the Guidance is an agency action by which "rights and obligations" have been determined: the agency has committed itself to following the Guidance, and has assured employers that if they conform their conduct to the Guidance's "safe harbor" requirements, they will not be deemed to be in violation of Title VII by EEOC investigators. Such an exoneration by EEOC investigators would, in turn, ensure that Texas is protected from referral of its case to the U.S. Attorney General for prosecution, and, ultimately, from a potential finding of injunctive and/or monetary liability in a DOJ-led prosecution.
In defending the Guidance against the scrutiny of the federal courts, the EEOC comes down hard and often on the mantra that the Guidance is not final agency action because the EEOC cannot directly bring an enforcement action against Texas, since only the U.S. Attorney General can enforce Title VII against a sovereign state.
The EEOC does not dispute that its staff would use the Guidance when conducting their official duties under Title VII. Nor does it dispute that, if employers will conform their conduct to reflect the "safe harbors" set forth by the Guidance, such employers would virtually always escape adverse EEOC determinations on charges of felony hiring discrimination, and thus effectively be immunized from a DOJ-backed enforcement action. Still, the EEOC points to two cases of this court, Luminant Generation Co., L.L.C. v. United States Environmental Protection Agency, 757 F.3d 439, 442 (5th Cir.2014), and Belle Co., L.L.C. v. United States Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), judgment vacated by Kent Recycling Servs., LLC v. U.S. Army Corps of Engineers, ___ U.S. ___, 136 S.Ct. 2427, 195 L.Ed.2d 776 (2016), which it argues preclude a holding that the Enforcement Guidance is "final agency action."
We begin our review of this authority by noting that the Supreme Court recently vacated this court's judgment in Belle Co., and remanded the case for this court to reconsider its holding in the light of U.S. Army Corps of Engineers v. Hawkes Co., Inc., ___ U.S. ___, 136 S.Ct. 1807, 195 L.Ed.2d 77 (2016). In Belle Co., this court had held that the Army Corps of Engineers' "affirmative" jurisdictional determination ("JD"), which asserted that the plaintiff's property development was subject to the Clean Water Act's ("CWA") permitting requirements, did not create legal consequences. See Belle Co., 761 F.3d at 394. The court had reasoned that the agency's determination of its own authority
In Hawkes Co., however, the Supreme Court rejected such reasoning and effectively reversed our decision in Belle Co. Under nearly identical facts, the Court concluded that the Corps' issuance of an "affirmative" JD, which, as in Belle Co., asserted that a petitioner's property is subject to the CWA's permitting requirements, is a "final agency action" under the APA because it creates legal consequences. Hawkes Co., 136 S.Ct. at 1814. This is so, the Supreme Court observed, because if the Corps had issued a "negative" JD — that is, a JD stating that the plaintiff's property did not contain "waters of the United States" — the plaintiff would have been entitled to a five-year period of protection from any government-brought CWA enforcement action. Id. In short, the determination to issue the affirmative JD denied the plaintiffs the benefits that would have flowed from a negative JD, and thus this effect constituted "legal consequences" to the plaintiffs resulting from the affirmative JD. Id.
In reaching this holding, the Supreme Court once again emphasized that a "pragmatic" approach must be taken when deciding whether an agency action is "final," and thus subject to court review:
Id. at 1815 (internal citations omitted).
As the above passage applies to this case, an agency action can create legal consequences even when the action, in itself, is disassociated with the filing of an enforcement proceeding, and is not authority for the imposition of civil or criminal penalties. Instead, "legal consequences" are created whenever the challenged agency action has the effect of committing the agency itself to a view of the law that, in turn, forces the plaintiff either to alter its conduct, or expose itself to potential liability. In Hawkes Co., this agency action was the issuance of a JD asserting that the plaintiff's land was subject to the CWA's permitting requirements, thus depriving the plaintiff of the agency-created safe harbor and forcing the plaintiff to submit to the agency's view or risk liability. Here, it is the EEOC's promulgation of the Guidance,
As we earlier noted, the EEOC also points to a second Fifth Circuit decision as suggesting a finding that the Guidance is not final agency action. See Luminant, 757 F.3d 439. In Luminant, the plaintiff, an energy company, received two notices of violation ("NOVs") from the EPA, asserting that two of its Texas-based power plants were emitting pollutants in violation of multiple provisions of the Clean Air Act and the state-level implementation plan. This court held that a challenged EPA notice of violation ("NOV") was not "final agency action" because the relevant federal statute, the Clean Air Act, and not the NOV, set out the parties' obligations. Luminant, 757 F.3d at 442. Specifically, the court reasoned that "adverse legal consequences will flow only if the district court determines that Luminant violated" the Clean Air Act. Id. Phrased differently, the court asserted that, so long as the EPA took no further action, "Luminant would have no new legal obligation imposed on it and would have lost no right it otherwise enjoyed." Id.
To the extent that the Supreme Court's decision in Hawkes Co. does not also undermine the Fifth Circuit's reasoning in Luminant (principally, the Supreme Court's emphasis on a "pragmatic approach" to assessing whether APA review is appropriate, instead of reliance on formalistic criteria, such as whether the agency decision itself imposes penalties or is binding on a court), we find Luminant distinguishable from the instant case. The agency document in Luminant merely expressed the agency's opinion about the legality of the plaintiff's conduct; it did not, as here, commit the administrative agency to a specific course of action should the plaintiff fail to comply with the agency's view. Furthermore, the agency action in Luminant was limited to a fact-specific situation and a particular violator. In contrast, the Guidance here provides an analytical framework that applies across the board to all employers — including the hundreds of state agencies at issue in this suit, which employ hundreds of thousands of employees — and binds EEOC staff in later
Finally, other factors distinguish the Guidance from the type of agency action that this court previously has indicated does not create legal consequences. For example, the Enforcement Guidance does not simply repeat the relevant provisions of Title VII. Instead, the Guidance purports to interpret authoritatively both the meaning of "disparate impact" in the context of employer hiring policies regarding criminal convictions and the scope of the "job related, business necessity" defense. This court has always considered such a distinction important when deciding whether agency action is "final" under the APA. See Resident Council of Allen Parkway Vill. v. U.S. Dep't of Hous. & Urban Dev., 980 F.2d 1043, 1056 (5th Cir.1993) (finding that the Department of Housing and Urban Development's "internal and informal" interpretation of the relevant statutory term did not constitute "final agency action" under the APA, but adding that "[w]ere HUD to formally define the phrase [at issue] ... [the plaintiffs] would undoubtedly have the right to review HUD's final agency action under § 702 [of the APA]").
In addition to relying on this court's precedents, the EEOC also leans heavily on AT & T Co. v. Equal Employment Opportunity Commission, 270 F.3d 973 (D.C. Cir.2001), in asserting that its Enforcement Guidance is not "final agency action." In AT & T, the D.C. Circuit considered whether language in the EEOC's compliance manual regarding the calculation of pregnancy leave was "final agency action" under the APA. The litigation ultimately concerned whether the plaintiff employer was required to give former employees credit towards their pensions for time missed due to pregnancy before the passage of the Pregnancy Discrimination Act of 1979 (the "PDA"). The plaintiff employer challenged language in the EEOC's compliance manual that stated that denying full work credit for pre-PDA pregnancy leave was "past discrimination" sufficient to constitute a "present violation of Title VII." Id. at 974-75. The plaintiff employer also challenged several letters that the EEOC sent to the plaintiff suggesting that its practices violated Title VII. The plaintiff argued that the EEOC's actions, taken as a whole, made clear that it reached a conclusion concerning the plaintiff employer's policy, and that that conclusion was "final agency action" under the APA. Id. at 975.
The D.C. Circuit disagreed, however, and held that the EEOC's conduct, including its statement in the compliance manual, was not "final agency action" under the APA. Id. at 976-77. In making this determination, the court noted that the EEOC "has not inflicted any injury upon [the plaintiff employer] merely by expressing its view of the law — a view that has force
The EEOC contends that, like the compliance manual in AT & T, Enforcement Guidance is not "final agency action" because it has the force of law only to the extent that a court presiding over any enforcement action agrees with it. In dwelling on this point, however, the EEOC evades the obvious differences. Most notably here, the Enforcement Guidance purports to bind the agency itself. Indeed, the D.C. Circuit recognized in AT & T that, had the policy guidance at issue in that case intended to bind EEOC staff in their official conduct, instead of merely expressing the agency's views with respect to employers' actions, the Court would likely have reached a different conclusion:
AT & T, 270 F.3d at 975-76 (emphasis added) (internal citations omitted).
The policy guidance in AT & T provided little to no insight concerning what the EEOC itself was obligated to do as a result of the agency's expressed viewpoint. In contrast, the Guidance here provides an exhaustive procedural framework for EEOC officials to follow.
For this reason, the EEOC errs in relying on AT&T to suggest that agency actions are "final" under the APA only when federal courts are later bound to give deference to the agency's interpretation of the statute at issue. Of course, such a method is one way to show final agency action, but it is only one way. See, e.g., Hawkes Co., 136 S.Ct. at 1815; Frozen Food, 351 U.S. at 44-45, 76 S.Ct. 569. It is also sufficient that the Enforcement Guidance has the immediate effect of altering the rights and obligations of the "regulated community" (i.e., virtually all state and private employers) by offering them a detailed and conclusive means to avoid an adverse EEOC finding, and, by extension, agency referral and a government-backed enforcement action.
Finally, we address the major prop of the EEOC's argument: because the EEOC has only investigatory authority over state employers, no action that the EEOC might take with respect to state employers can be "final" for the purposes of review under the APA. Implicit in this argument is the clear suggestion that, although EEOC investigations undoubtedly subject employers to practical harms, no "legal consequences" sufficient to invoke APA jurisdiction flow from the mere initiation of an investigation into an employer's hiring practices.
We can certainly agree that an agency's decision to investigate a specific regulated entity, including the issuance of subpoenas related to that investigation, normally does not constitute "final agency action." See Jobs, Training, and Servs., Inc. v. E. Tex. Council of Gov'ts, 50 F.3d 1318, 1324 (5th Cir.1995) (citing Veldhoen v. U.S. Coast Guard, 35 F.3d 222, 225 (5th Cir.1994)). Texas is not, however, simply challenging the prospect of an investigation by the EEOC. Instead, it is challenging the Enforcement Guidance itself, which represents the legal standards that the EEOC applies when deciding when and how to conduct such an investigation, and what practices may require charges. The Guidance is an agency determination in its final form and is applicable to all employers nation-wide; it is not an intermediate step in a specific enforcement action that may or may not lead to concrete injury. Indeed, when previously concluding that the threat of agency investigation is not a "legal consequence," this court has relied heavily on the notion that such an investigation is merely an initial, relatively inconsequential step towards a definitive declaration of the petitioner's legal rights and obligations regarding the dispute that prompted the investigation. See Stockman v. Fed. Election Comm'n, 138 F.3d 144, 155 (5th Cir.1998) (citing Veldhoen, 35 F.3d at 226). When, as here, the agency action being challenged is the promulgation of agency rules that mandate such investigations across the entire regulated community, and provide a specific, detailed "safe harbor" practice by which the regulated community may avoid adverse agency findings and eventual DOJ-led prosecution, the agency has already acted definitively by altering both its own obligations and the rights of the regulated entities it oversees.
We repeat ourselves to say that, in publishing the Enforcement Guidance at issue, the EEOC has enacted a policy statement couched in mandatory language that is intended to apply to all employers. At no point in this litigation has the EEOC contended that it does not intend to follow the Guidance to its full extent when carrying out its official duties. By nevertheless arguing that the Guidance cannot be reviewed, the EEOC exploits the limitations of its enforcement authority, while denying that state agencies will face legal consequences should they fail to follow the Enforcement Guidance's directives.
The EEOC's Guidance may well be a valid exercise of its authority. That conclusion has yet to be determined. To wholly deny judicial review, however, would be to ignore the presumption of reviewability, and to disregard the Supreme Court's instruction that courts should adopt a pragmatic approach for the purposes of determining reviewability under the APA. Abbott Labs., 387 U.S. at 140, 87 S.Ct. 1507 (stating that there is a presumption that judicial review is available to one wronged by agency action); see also id. at 149, 87 S.Ct. 1507. Accordingly, we find that the Guidance is "final
To conclude, the district court erred in dismissing this action on justiciability and subject matter jurisdiction grounds. The district court's judgment is therefore REVERSED, and this action is REMANDED to the district court for further proceedings not inconsistent with this opinion.
REVERSED and REMANDED.
PATRICK E. HIGGINBOTHAM, Circuit Judge, dissenting:
I am not persuaded that this controversy meets Article III's demand of ripeness, injury, and adversarial engagement. Nor am I persuaded that we have been called upon to review an action of the EEOC with sufficient finality to support our jurisdiction. Texas seeks to challenge an EEOC "Enforcement Guidance" document that the EEOC cannot enforce against it. This description should be enough to resolve this case. I must dissent.
On April 25, 2012, the EEOC issued the "Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964." The Guidance sets forth the EEOC's legal position that "[a]n employer's use of an individual's criminal history in making employment decisions may, in some instances, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964." The Guidance's principal observation is that blanket bans on hiring individuals with criminal records — or "criminal record exclusions" — have a disparate impact on minorities. As the majority recounts, the Guidance thus warns that blanket "criminal record exclusions" may violate Title VII unless they are "job related and consistent with business necessity."
On November 4, 2013, the State of Texas filed a complaint seeking "[a] declaratory judgment holding unlawful and setting aside" the Guidance; and "[a] declaration and injunction that" the Department of Justice — the sole government body that can sue a state employer — "may not issue right-to-sue letters to persons seeking to sue the State of Texas or any of its constituent agencies or state officials based on the interpretation of Title VII that appears in" the Guidance. The EEOC moved to dismiss for lack of jurisdiction. The district court granted this motion, concluding that (1) Texas lacks standing to challenge the Guidance; (2) the Guidance is not a "final agency action"; and (3) Texas's challenge to the Guidance is not ripe. Texas appealed to this Court.
This Court lacks subject-matter jurisdiction if Texas does not have standing to
The history of Title VII and the creation of the EEOC provides critical context for this case. Congress enacted Title VII of the Civil Rights Act of 1964 to prohibit employers from "fail[ing] or refus[ing] to hire ... any individual ... because of ... race, color, religion, sex, or national origin."
Congress, however, did authorize the Attorney General to file suit upon "reasonable cause to believe that any person or group of persons is engaged in a pattern or practice of resistance to the full enjoyment of any of the rights secured by [Title VII]."
Notably, Congress did not give the EEOC the power to sue state agencies or employers. Rather, "[i]n the case of a respondent which is a government, governmental agency, or political subdivision, if the Commission has been unable to secure from the respondent a conciliation agreement acceptable to the Commission, the Commission shall take no further action and shall refer the case to the Attorney General who may bring a civil action against such respondent in the appropriate United States district court."
Turning first to Article III, the want of an adversarial engagement here is palpable. "Under Article III, § 2, of the Constitution, the federal courts have jurisdiction over this dispute between appellant[] and appellee[] only if it is a `case' or `controversy.' This is a `bedrock requirement.'"
"[T]he `irreducible constitutional minimum' of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."
The facts here are also distinguishable from this Court's recent decision in Texas v. United States.
Texas's challenge is also not ripe. At least since Abbott Laboratories v. Gardner, the Supreme Court has recognized that a party may raise a pre-enforcement challenge to an agency action.
Texas responds that the facts are irrelevant because "the whole point of this suit is that the [Guidance] is facially invalid — irrespective of the factual circumstances in which EEOC or DOJ might invoke it."
Moreover, the Supreme Court rejected an argument almost identical to the one raised here in a previous dispute between the State of Texas and the Federal Government. In Texas v. United States, Texas argued that its pre-enforcement challenge to the Voting Rights Act was fit for review because it "asked [the Court] to hold that under no circumstances" was the relevant conduct subject to the Act.
Texas's challenge is also not ripe for the independent reason that it is uncertain whether the Guidance will ever be enforced against it. Even assuming the EEOC intends to sue every private employer who does not comply with the Guidance, it can only refer a case against the State of Texas to the Attorney General. The possibility that the Attorney General may act on that referral — and because of the non-binding Guidance — is not enough to make Texas's challenge ripe. As the Supreme Court has oft-repeated, "[a] claim is not ripe for adjudication if it rests upon `contingent future events that may not occur as anticipated, or indeed may not occur at all.'"
Apart from these two constitutional hurdles, I am not persuaded that the Guidance is a "final agency action." "As a general matter, two conditions must be satisfied for agency action to be `final': First, the action must mark the `consummation' of the agency's decisionmaking process — it must not be of a merely tentative or interlocutory nature."
Texas argues that these "[t]wo circumstances" create legally binding "safe harbors." That is, Texas urges that the EEOC has effectively promised not to bring an enforcement action against any employer with a "criminal record exclusion" that fits within one of the "[t]wo circumstances." The EEOC responds that the Guidance merely expresses its view of the law and carries no legal consequences. The majority embraces Texas's position, relying heavily on the Supreme Court's recent decision in United States Army Corps of Engineers v. Hawkes Co.
In Hawkes, the Court considered whether an "approved jurisdictional determination," or JD, issued by the U.S. Army Corps of Engineers qualifies as a final agency action. The Corps issues JDs in conjunction with the enforcement of the Clean Water Act, which prohibits inter alia the discharge of pollutants into "the waters of the United States" without a permit. A JD advises a property owner whether her piece of property contains "waters of the United States." It is "binding for five years on both the Corps and the Environmental Protection Agency, which share authority to enforce the Clean Water Act." As the Court noted, this is significant because "[t]he Clean Water Act imposes substantial criminal and civil penalties for discharging any pollutant into waters covered by the Act without a permit from the Corps."
The facts here are far different. A negative JD is a legally binding promise that
There is, however, a more fundamental distinction between Hawkes and the instant case. When the Corps issues a JD, it informs a specific party that it is or is not subject to the Clean Water Act. There is a direct engagement between the two parties concerning a specific tract of land that produces a binding determination with salient and valuable consequences. In this case, the EEOC has not taken any action against Texas — it has issued a general statement of its view of the law. As the D.C. Circuit stated in a similar case:
These concerns are compounded by Congress's decision that the Attorney General — not the EEOC — should determine whether and when to act against a state employer. Hence, allowing Texas to proceed not only deprives the EEOC of resources that are designated for enforcement actions against private employers — it interferes with the discretion of one of the highest-ranking members of the Executive Branch. "For the court to find here final agency action subject to judicial review, therefore, would disrupt the administrative process" in more ways than one.
The majority's opinion is not without purchase, but some basic principles bear repeating:
This case forcefully demonstrates the importance of respecting the limits of Article III. The State of Texas seeks to challenge an "Enforcement Guidance" that the EEOC lacks the ability to enforce against it. This Court should not allow such a nakedly political suit to proceed. That the Attorney General of a State may wish to jumpstart a political fight with the incumbent political party is far from unusual. It is also without surprise that the State's suit here extends an invitation to the judiciary to join the fray. But this is an invitation we must decline. With its "cases" and "controversies" command, Article III walls in and walls out. Chief Justice Marshall taught that we have a duty to decide — but that includes a duty to not do so in the absence of jurisdiction.