United States Trustee Region 21 v. Bast Amron LLP

[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 20-12547
____________________
In Re: Mosaic Management Group, Inc.,
Debtor.
___________________________________________________
UNITED STATES TRUSTEE REGION 21,
Plaintiff-Appellee
Cross-Appellant,
versus
BAST AMRON LLP,
Defendant-Appellant
Cross-Appellee.
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2 Opinion of the Court 20-12547
____________________
Appeals from the United States District Court
for the Southern District of Florida
D.C. Docket No. 16-bk-20833-EPK
____________________
Before J ORDAN, B RASHER , and ANDERSON, Circuit Judges.
ANDERSON, Circuit Judge:
Quarterly fees are collected pursuant to 28 U.S.C. § 1930 in
each quarter of a chapter 11 bankruptcy based on the amount of
disbursements made. The United States Trustee collects the fees
in most districts in the country, while an arm of the Judicial Con-
ference does so in six. This case is a challenge to the 2017 legislation
that increased the quarterly fee chargeable for the largest chapter
11 bankruptcies, those distributing $1 million or more in a given
quarter. We must determine whether this increase applied to dis-
bursements in a case pending at the time the law was enacted,
whether the law violated due process rights, and whether the law
is one on the subject of bankruptcies or is a tax such that a consti-
tutional uniformity requirement applies, which in turn requires us
to consider whether the law is nonuniform. The bankruptcy court
determined that the increased fees applied to the instant case and
that the only constitutional violation was a partial uniformity issue.
After thorough review and with the benefit of oral argument, we
conclude that the 2017 legislation applied to this pending
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20-12547 Opinion of the Court 3
bankruptcy case without a due process violation and without of-
fending a uniformity requirement, the only source of which is the
Bankruptcy Uniformity Clause.
I. BACKGROUND
Debtors Mosaic Management Group, Inc., Mosaic Alterna-
tive Assets, Ltd., and Paladin Settlements, Inc. operated in the life
settlement industry, buying life insurance policies from insureds,
and then selling interests in those policies to investors. In 2008, the
debtors filed for chapter 11 bankruptcy in the Southern District of
Florida, a “UST district” in which the U.S. Trustee program oper-
ates. “The six federal judicial districts in Alabama and North Caro-
lina are the only districts in the country that have a Bankruptcy Ad-
ministrator” (“BA districts”) and are not a part of the U.S. Trustee
program, though the Administrator (part of the judicial branch)
performs similar tasks as the U.S. Trustee (part of the executive
branch).
L. Sols. of Chi. LLC v. Corbett, 971 F.3d 1299, 1307 n.3
(11th Cir. 2020).
On June 6, 2017, the bankruptcy court entered an order con-
firming a joint chapter 11 plan. Under the plan, virtually all the
debtors’ assets were transferred to an “Investment Trust” to which
Margaret J. Smith, predecessor to Appellant in this case, was ap-
pointed as “Investment Trustee.” Smith, as Investment Trustee,
managed the Mosaic Investment Trust for the benefit of investors
and creditors with allowed claims. Pursuant to the bankruptcy
plan and confirmation order, the debtors were required to “pay the
United States Trustee the appropriate sum required pursuant to 28
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4 Opinion of the Court 20-12547
U.S.C. § 1930(a)(6) for post-confirmation periods within the time
period set forth in 28 U.S.C. §1930(a)(6), based upon all post-confir-
mation disbursements.” Such payments would be required until
the earlier of the closing of the case or the entry of an order dis-
missing the case or converting it to another chapter under the
Bankruptcy Code.
At the time the bankruptcy plan was confirmed in June 2017,
Section 1930(a)(6) provided,
In addition to the filing fee paid to the clerk, a quar-
terly fee shall be paid to the United States trustee, for
deposit in the Treasury, in each case under chapter 11
of title 11 for each quarter (including any fraction
thereof) until the case is converted or dismissed,
whichever occurs first. . . . The fee shall be payable
on the last day of the calendar month following the
calendar quarter for which the fee is owed.
28 U.S.C. § 1930(a)(6) (2012). The minimum fee set by the statute
was “$325 for each quarter in which disbursements total less than
$15,000,” and gradually increased based on the larger the amount
of disbursements up to “$30,000 for each quarter in which disburse-
ments total more than $30,000,000.”1
Id. Section 1930(a)(7) stated
1 The remainder of the fee schedule in § 1930(a)(6) was as follows:
$650 for each quarter in which disbursements total $15,000 or
more but less than $75,000; $975 for each quarter in which dis-
bursements total $75,000 or more but less than $150,000;
$1,625 for each quarter in which disbursements total $150,000
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that “[i]n districts that are not part of a United States trustee re-
gion,”
i.e., BA districts, “the Judicial Conference of the United
States may require the debtor in a case under chapter 11 of title 11
to pay fees equal to those imposed by paragraph (6) of this subsec-
tion.” 28 U.S.C. § 1930(a)(7) (2012).
A few months later, on October 26, 2017, Congress enacted
the Bankruptcy Judgeship Act of 2017 (the “2017 Amendment”),
which temporarily increased fees for the largest debtors in chapter
11 cases to address a dwindling U.S. Trustee program budget re-
sulting from declining bankruptcy filings and to fund bankruptcy
judgeships. Bankruptcy Judgeship Act of 2017, Pub. L. No. 115-72,
or more but less than $225,000; $1,950 for each quarter in
which disbursements total $225,000 or more but less than
$300,000; $4,875 for each quarter in which disbursements total
$300,000 or more but less than $1,000,000; $6,500 for each
quarter in which disbursements total $1,000,000 or more but
less than $2,000,000; $9,750 for each quarter in which disburse-
ments total $2,000,000 or more but less than $3,000,000;
$10,400 for each quarter in which disbursements total
$3,000,000 or more but less than $5,000,000; $13,000 for each
quarter in which disbursements total $5,000,000 or more but
less than $15,000,000; $20,000 for each quarter in which dis-
bursements total $15,000,000 or more but less than
$30,000,000 . . . .
28 U.S.C. § 1930(a)(6) (2012). This fee schedule was established by legislation
enacted in 2007, when Congress increased fees from the amounts previously
set in 1996. Consolidated Appropriations Act, 2008, Pub. L. No. 110-161, sec.
213(b), § 1930, 121 Stat. 1844, 1914.
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6 Opinion of the Court 20-12547
sec. 1004(a), § 1930(a)(6), 131 Stat. 1224, 1232; H.R. Rep. No. 115-
130, at 7–9 (2017). From 2018 through 2022, if the U.S. Trustee
System Fund had a balance of less than $200 million in the prior
fiscal year, the 2017 Amendment provided that the “quarterly fee
payable for a quarter in which disbursements equal or exceed
$1,000,000 shall be the lesser of 1 percent of such disbursements or
$250,000.” Pub. L. No. 115-72, sec. 1004(a), § 1930(a)(6), 131 Stat.
at 1232. Otherwise, the existing fee schedule remained.
In BA districts, where the Judicial Conference was author-
ized to “require the debtor in a case under chapter 11 of title 11 to
pay fees equal to those imposed by paragraph (6),” 28 U.S.C.
§ 1930(a)(7) (2012), the 2017 Amendment’s fee increase was not im-
mediately implemented. In September 2018, the Conference ap-
proved the new quarterly fee provision “for cases filed on or after
October 1, 2018 for any fiscal year in which the U.S. Trustee Pro-
gram exercises its authority under that statute, and pursuant to any
future extensions of that or similar authority.” Judicial Conference
of the U.S., Report of the Proceedings of the Judicial Conference of
the United States 11–12 (Sept. 2018).
The Investment Trust paid the increased fees imposed by
the 2017 Amendment, having distributed between $750,000 and
$10,000,000 for each of the quarters in fiscal year 2018 and the first
two quarters of 2019. The increased fees resulted in $125,816.69 or
3.5 times more in fees paid than would have been required pursu-
ant to § 1930(a)(6) prior to the 2017 Amendment.
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In September 2019, Smith filed a motion requesting a deter-
mination of the Investment Trust’s quarterly fee liability under
§ 1930(a)(6) and reimbursement of already paid fees that exceeded
the amount that would have been owed prior to the 2017 Amend-
ment. Smith argued that the Amendment did not apply to cases
that had been filed or had their plans confirmed before the Amend-
ment took effect, that it violated the Due Process Clause of the
Fifth Amendment, and that it violated the constitutional tax and
bankruptcy uniformity requirements because the increased fees
had only been imposed in UST districts and not in BA districts.
Nancy J. Gargula, the United States Trustee for Region 21,2 op-
posed the motion.
The bankruptcy court largely denied Smith’s motion but
granted it in part. The court held that § 1930(a)(6) as amended was
mostly uniform—whether either the tax or bankruptcy constitu-
tional requirement applied—because the overarching purpose of
the 2017 Amendment was to eliminate a funding shortfall in the
UST system and develop a reasonable reserve, and it did so by only
effecting a fee increase in UST districts. The court explained that
the Amendment created a partial uniformity problem, however,
because 2% of the fees collected in UST districts were to be paid to
2 Region 21 encompasses the district from which this case originated, the
Southern District of Florida, as well as the rest of the districts in Florida and
the districts in Georgia, Puerto Rico, and the U.S. Virgin Islands. 28 U.S.C.
§ 581(a)(21).
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8 Opinion of the Court 20-12547
the general U.S. Treasury fund (hereinafter the “2% allocation”),
which offset the cost of a temporary bankruptcy judgeship in a BA
district. As a remedy, the court ordered the U.S. Trustee to credit
Smith as Investment Trustee a sum equal to 2% of the quarterly
fees paid since January 1, 2018. Otherwise, the court rejected
Smith’s other challenges to the increased quarterly fees, holding
that the 2017 Amendment applied prospectively to disbursements
made after the effective date of the Amendment regardless of when
the case had been filed or if a plan had been confirmed and that
there was no due process violation.
On May 20, 2020, the parties filed a joint certification for di-
rect appeal in the district court pursuant to 28 U.S.C. § 158(d)(2)(A)
and Federal Rule of Bankruptcy Procedure 8006(c). This Court au-
thorized direct appeal of the matter on July 10, 2020.
During the pendency of this appeal, Smith, the Trustee of
the Mosaic Investment Trust (pursuant to the order of the bank-
ruptcy court), has assigned all of the Investment Trust’s rights, title,
and interests in the current appeal to an investment group, Bast
Amron, LLP.
See D.E. 68. Pursuant to an order in this court, Bast
Amron, LLP, has been substituted as the Appellant-Cross Appellee
in this appeal.
See D.E. 69. Accordingly, in this opinion, we will
hereinafter refer to this party as Appellant-Cross Appellee (or
simply as Appellant) or as Bast Amron. Similarly, Gargula, the
United States Trustee for Region 21, has now been succeeded in
office and her successor, Mary Ida Townson, has become the Ap-
pellee-Cross Appellant in this appeal.
See D.E. 63;
see also Fed. R.
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20-12547 Opinion of the Court 9
App. P. 43(c)(2). In this opinion, we will hereinafter refer to this
party as Appellee-Cross Appellant (or simply as Appellee) or as Re-
gion 21 United States Trustee.
II. DISCUSSION
Each of the two parties challenges the bankruptcy court’s
decision regarding the quarterly fees owed to the U.S. Trustee by
the Investment Trust. These appeals require us to address the fol-
lowing: (a) whether the quarterly fee increase provision in the 2017
Amendment was properly applied to Bast Amron’s case as one that
was pending at the time of, and had its plan confirmed prior to, the
law’s enactment; (b) whether the Amendment violated the sub-
stantive component of the Due Process Clause of the Fifth Amend-
ment; (c) whether it was a valid exercise of Congress’ power “[t]o
lay and collect Taxes, Duties, Imposts and Excises” that “shall be
uniform throughout the United States,” U.S. Const. art. I, § 8, cl. 1;
and (d) whether it was a valid exercise of Congress’ power “[t]o
establish . . . uniform Laws on the subject of Bankruptcies through-
out the United States,”
id. art. I, § 8, cl. 4. We address in turn each
of these purely legal questions
de novo.
See In re Barrett, 543 F.3d
1239, 1241 (11th Cir. 2008) (“In considering this appeal, because the
facts are undisputed, we will review the bankruptcy court’s conclu-
sions of law
de novo.”).
A.
The 2017 Amendment was Properly Applied to this Case
Bast Amron argues that the bankruptcy court erred in hold-
ing that the 2017 Amendment raised fees in the Investment Trust’s
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10 Opinion of the Court 20-12547
case. It argues that the Amendment did not explicitly state that the
fee increase for the largest chapter 11 bankruptcies applied retroac-
tively and that the increased fees affected the Investment Trust’s
and its creditors’ vested rights and expectations, and thus the pre-
sumption against retroactivity requires that the Amendment not
apply. Because Congress clearly expressed the statute’s proper
temporal reach, and because the Trust made disbursements within
that reach, we hold that the bankruptcy court correctly held that
the increased fees imposed by the 2017 Amendment apply in this
case.
1. The initial inquiry is whether Congress expressly pre-
scribed a statute’s temporal reach and, if so, the presump-
tion against retroactivity does not apply, and we must ap-
ply the statute as written.
The Supreme Court has outlined a clear framework for anal-
ysis “when an objection is made to applying a particular statute said
to affect a vested right or to impose some burden on the basis of an
act or event preceding the statute’s enactment.”
Fernandez-Vargas
v. Gonzales, 548 U.S. 30, 37, 126 S. Ct. 2422, 2428, 165 L. Ed. 2d 323
(2006). “We first look to ‘whether Congress has expressly pre-
scribed the statute’s proper reach,’ and in the absence of language
as helpful as that we try to draw a comparably firm conclusion
about the temporal reach specifically intended by applying ‘our
normal rules of construction.’”
Id. (citations omitted) (first quoting
Landgraf v. USI Film Prods., 511 U.S. 244, 280, 114 S. Ct. 1483,
1505, 128 L. Ed. 2d 229 (1994); then quoting
Lindh v. Murphy, 521
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20-12547 Opinion of the Court 11
U.S. 320, 326, 117 S. Ct. 2059, 2063, 138 L. Ed. 2d 481 (1997)). Only
if we cannot ascertain the proper temporal reach of a statute do
“we ask whether applying the statute to the person objecting
would have a retroactive consequence in the disfavored sense of
‘affecting substantive rights, liabilities, or duties [on the basis of]
conduct arising before [its] enactment,’” and if so, the presumption
against retroactivity applies to construe the statute as inapplicable.
Id. (alterations in original) (quoting
Landgraf, 511 U.S. at 278, 114
S. Ct. at 1504).
The question in the first instance is not simply whether Con-
gress explicitly used the word “retroactive” or “pending,” and if
neither was used, then we must analyze the retroactive conse-
quences. Instead, “even absent explicit statutory language mandat-
ing retroactivity, laws may be applied retroactively if courts are
able to discern ‘
clear congressional
intent favoring such a result.’”
United States v. Olin Corp., 107 F.3d 1506, 1512–13 (11th Cir. 1997)
(quoting
Landgraf, 511 U.S. at 280, 114 S. Ct. at 1505). Nor is the
initial question guided by the presumption against retroactivity. “It
is not until a statute is shown to have no firm provision about tem-
poral reach but to produce a retroactive effect when straightfor-
wardly applied that the presumption has its work to do.”
Fernan-
dez-Vargas, 548 U.S. at 40, 126 S. Ct. at 2430 (citing
Landgraf, 511
U.S. at 280, 114 S. Ct. at 1505). This structured analysis “allocates
to Congress responsibility for fundamental policy judgments con-
cerning the proper temporal reach of statutes, and has the addi-
tional virtue of giving legislators a predictable background rule
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12 Opinion of the Court 20-12547
against which to legislate.”
Landgraf, 511 U.S. at 273, 114 S. Ct. at
1501.
2. Congress expressly prescribed the temporal reach of the
2017 Amendment’s provision that increased quarterly
fees, and that reach included the Investment Trust’s dis-
bursements in 2018 and the first quarters of 2019.
Bast Amron’s challenge fails at the first step of this
Landgraf
analysis. The 2017 Amendment clearly provides for the temporal
reach of the quarterly fee amendments it makes in a section entitled
“Application of Amendments”:
The amendments made by this section shall apply to
quarterly fees payable under section 1930(a)(6) of title
28, United States Code, as amended by this section,
for disbursements made in any calendar quarter that
begins on or after the date of enactment of this Act.
Pub. L. No. 115-72, sec. 1004(c), § 1930, 131 Stat. at 1232. The trig-
ger is thus future disbursements made in the quarters after the date
of enactment. Because the 2017 Amendment was enacted on Oc-
tober 26, 2017, disbursements made in the first quarter after enact-
ment, the quarter starting on January 1, 2018, triggered the higher
fees. Nothing states that fees are increased based on when the
bankruptcy case was filed or whether a plan has been confirmed.
Instead, Congress clearly indicated its intent to have the 2017
Amendment and the increased fee provision apply to “disburse-
ments made in any calendar quarter that begins on or after the date
of enactment.”
Id.;
see In re Cir. City Stores, Inc., 996 F.3d 156, 168
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20-12547 Opinion of the Court 13
(4th Cir. 2021) (“The [2017] Amendment thus makes clear that
Congress intended for the increase to apply to all Chapter 11 quar-
terly fees due in January 2018 or thereafter, without regard to the
case’s filing date.”),
cert. granted sub nom.,
Siegel v. Fitzgerald, No.
21-441, 2022 WL 89272 (U.S. Jan. 10, 2022).
The fee increase provision itself also indicates Congress’ in-
tent and provides for additional temporal language, stating the fee
increase applies “[d]uring each of fiscal years 2018 through 2022” if
certain conditions are met. Those conditions are whether “the bal-
ance in the United States Trustee System Fund as of September 30
of the most recent full fiscal year is less than $200,000,000,” and, for
the individual debtor, whether “disbursements equal or exceed
$1,000,000” for the quarter in question. Pub. L. No. 115-72, sec.
1004(a)(2), § 1930(a)(6), 131 Stat. at 1232. This further supports that
it is disbursements made in the first quarter after enactment and
thereafter that trigger the statute.
The clear reliance of the 2017 Amendment’s application on
future disbursements is bolstered by § 1930(a)(6)’s existing lan-
guage, which tied the payment of fees to “in each case under chap-
ter 11 . . . for each quarter . . . until the case is converted or dis-
missed.”3 28 U.S.C. § 1930(a)(6) (2012). There was nothing in the
3 The 2017 Amendment split § 1930(a)(6) into (a)(6)(A) and (a)(6)(B). Section
1930(a)(6)(A) retained the existing language, including that quoted in the text,
and the fee schedule but had added to it “Except as provided in subparagraph
(B).” Pub. L. No. 115-72, sec. 1004(a)(1), § 1930, 131 Stat. at 1232. Section
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14 Opinion of the Court 20-12547
language of § 1930(a)(6) or the 2017 Amendment that considered
when a particular case was filed or when a plan was confirmed.4 If
disbursements were made in any chapter 11 case in the quarter
1930(a)(6)(B) included the fee increase provision at issue in this case that de-
fined the fee as 1% of disbursements or $250,000 for quarterly disbursements
of $1,000,000 or more if the conditions described above were met. Pub. L. No.
115-72, sec. 1004(a)(2), § 1930, 131 Stat. at 1232.
4 We reject the argument raised at oral argument that the 2017 Amendment
does not apply to pending cases because the introductory phrase in § 1930(a)
read and continues to read, “The parties commencing a case under title 11
shall pay . . . the following filing fees,” implying that “commencing a case” is
the trigger for quarterly fees, including the increased fees. Smith did not raise
this argument in her briefing and thus waived it.
See Walker v. City of Cal-
houn, GA, 901 F.3d 1245, 1280 n.10 (11th Cir. 2018) (Martin, J., concurring in
part and dissenting in part) (“[T]his Court’s longstanding rule is that argu-
ments not briefed to the court and raised for the first time at oral argu-
ment are deemed abandoned.”). Even so, nothing in the introductory clause
negates the 2017 Amendment’s application to “disbursements made in any cal-
endar quarter that begins on or after the date of enactment.” And § 1930(a)(6)
had its own, separate introductory phrase, which stated, “In addition to the
filing fee paid to the clerk, a quarterly fee shall be paid to the United States
trustee.” This introductory phrase indicates that quarterly fees are separate
from filing fees since they are “[i]n addition to” filing fees and paid to a differ-
ent entity. Finally, the only authority offered at oral argument was the district
court decision in
USA Sales, Inc. v. Office of the United States Trustee, which
only used the “commencing a case” language to analyze which conduct was
affected by retroactive application after the court concluded that Congress did
not prescribe the reach of the 2017 Amendment in the first step of the
Landgraf
analysis. 532 F. Supp. 3d 921, 934, 936–37 (C.D. Cal. 2021). We conclude the
opposite on the first step of the analysis for the reasons stated above and thus
do not need to reach the subsequent question in the
Landgraf analysis regard-
ing retroactive effects.
But see infra note 9.
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20-12547 Opinion of the Court 15
starting January 1, 2018, the increased fees applied. The language
of the “Application of Amendments” provision, the increased fee
provision, and the existing language of § 1930(a)(6) are clear, and
there is no plausible construction of that language which would in-
dicate a congressional intent that the 2017 Amendment should ap-
ply only to bankruptcy cases which were initially filed after the date
of enactment.5
5 When asked about this clear language during oral argument, counsel for Ap-
pellant argued that the Supreme Court in
Landgraf held that the effective date
of the statute does not determine this issue. But the Supreme Court did not
go so far. When analyzing the only provision that spoke directly to the ques-
tion regarding retroactive application of 1991 amendments to Title VII—a pro-
vision that stated, “Except as otherwise specifically provided, this Act and the
amendments made by this Act shall take effect upon enactment”—the
Land-
graf Court explained that “[t]hat language does not, by itself, resolve the ques-
tion” because “[a] statement that a statute will become effective on a certain
date does not even arguably suggest that it has any application to conduct that
occurred at an earlier date.” 511 U.S. at 257, 114 S. Ct. at 1493 (footnote omit-
ted). The Court proceeded to analyze specific effectiveness language particu-
lar to certain substantive provisions of the statute.
Id. at 258, 114 S. Ct. at 1493.
It concluded that Congress did not prescribe the reach of the amendments.
Id.
at 280, 114 S. Ct. at 1505. What the Supreme Court did not do, however, was
announce a rule that would require us to bypass relevant temporal language
in a statute. Indeed, it emphasized just the opposite, that we must “respon[d]
to the language of the statute” and consider that “[e]ven absent specific legis-
lative authorization, application of new statutes passed after the events in suit
is unquestionably proper in many situations.”
Id. at 273, 114 S. Ct. at 1501.
The Supreme Court has since further explained that “in the absence of lan-
guage as helpful as” language that “expressly prescribed the statute’s proper
reach,” “we try to draw a comparably firm conclusion about the temporal
reach specifically intended by applying our normal rules of construction.”
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16 Opinion of the Court 20-12547
3. Comparisons to the amendments made to chapter 12 of
the Bankruptcy Code in the 2017 Amendment and to
§ 1930(a)(6) in 1996 do not make the 2017 fee increase’s
application to future disbursements any less clear.
Despite this clear text, Bast Amron asks us to draw two neg-
ative inferences she argues suggest the 2017 Amendment’s inap-
plicability to pending cases: first, from another provision of the
2017 Amendment and, second, from the 1996 amendments to
§ 1930(a)(6). Neither inference is warranted.
First, the 2017 Amendment, in addition to the fee increase in
chapter 11 cases, made amendments to chapter 12 of the Bank-
ruptcy Code—the chapter applicable to family farmers and fisher-
man—with an “effective date” subsection stating such amend-
ments apply in cases “pending on the date of enactment . . . in
which the plan under chapter 12 . . . has not been confirmed on the
date of enactment” and a discharge order has not been entered.
Pub. L. No. 115-72, sec. 1005(c), 131 Stat. at 1234. The chapter 12
amendments also expressly applied to bankruptcy cases com-
menced on or after the date of enactment.
Id. This plain
Fernandez-Vargas, 548 U.S. at 37, 126 S. Ct. at 2428 (internal quotation marks
omitted) (citations omitted). The effective date provision in
Landgraf was am-
biguous and failed to indicate much about Congress’ intent. This is in clear
contrast to the 2017 Amendment’s “Application of Amendments” section, the
fee increase’s clear tie to disbursements on and after January 1, 2018, within a
specific four-year window, and the existing language of § 1930(a)(6) tying
quarterly fees to disbursements.
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20-12547 Opinion of the Court 17
application to pending chapter 12 cases contrasts with the chapter
11 quarterly fee amendments, says Bast Amron. But chapter 11 and
chapter 12 and their respective amendments “address wholly dis-
tinct subject matters”; thus, in comparing to the chapter 12 amend-
ments, a “negative inference does not arise from the silence” of the
chapter 11 amendments.
See Martin v. Hadix, 527 U.S. 343, 356,
119 S. Ct. 1998, 2005, 144 L. Ed. 2d 347 (1999) (“Because §§ 802 and
803 address wholly distinct subject matters, the same negative in-
ference does not arise from the silence of § 803.”);
In re Buffets,
L.L.C., 979 F.3d 366, 375 n.5 (5th Cir. 2020) (stating the court “de-
cline[d] to draw that negative inference” regarding the application
of the chapter 12 amendments). Furthermore, several courts have
correctly highlighted why Congress included the plain language re-
garding the application of chapter 12 amendments to pending
cases: the 2017 Amendment expanded the scope of chapter 12 dis-
charge and thus Congress needed to express its intent to preserve
preexisting discharge orders that established vested rights.
See Buf-
fets, 979 F.3d at 375 n.5. Moreover, the changes to chapter 12 did
not involve an increase in fees, and thus Congress could not express
its clear intention, as here, by simply saying that the increased fees
applied to disbursements made in quarters beginning after the ef-
fective date.
See Pub. L. No. 115-72, sec. 1005(a), (b), §§ 1232,
1222(a), 1228, 1229, 131 Stat. at 1232–34. Thus, this negative infer-
ence is unwarranted.
Second, Bast Amron argues that amendments to § 1930(a)(6)
in 1996 show that Congress knew how to make the application of
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18 Opinion of the Court 20-12547
amendments to pending cases explicit in 2017. It is true that later,
in September 1996, Congress did expressly make the 1996 fee in-
crease applicable to pending cases. However, the initial January
1996 legislation which imposed the 1996 fee increase was written
in a roundabout way that confused courts with respect to whether
it applied to pending cases. By all accounts the January 1996
amendments created confusion in the courts regarding whether
the expansion of quarterly fees beyond the confirmation of a plan
applied to cases then pending.6 Congress thus had to fix the prob-
lem, which it did later in September 1996, with clear language.7 By
6
See In re Huff, 207 B.R. 539, 541 nn.4–5 (Bankr. W.D. Mich. 1997) (citing five-
to-four split of decisions in favor of first 1996 amendment not applying to
pending cases);
see also In re Junior Food Mart of Ark., Inc., 201 B.R. 522, 524
(Bankr. E.D. Ark. 1996) (applying statute to pending cases);
In re Flatbush As-
socs., 198 B.R. 75, 77 n.1 (Bankr. S.D.N.Y. 1996) (same).
7 The second amendment, enacted on September 30, 1996, amended the same
public law as the prior 1996 law. Omnibus Consolidated Appropriations Act,
1997, Pub. L. No. 104-208, sec. 109(d), § 1930, 110 Stat. 3009, 3009-19. The
September 1996 amendment clarified that “the fees under 28 U.S.C. 1930(a)(6)
shall accrue and be payable from and after January 27, 1996, in all cases (in-
cluding, without limitation, any cases pending as of that date), regardless of
confirmation status of their plans.”
Id. sec. 109(d), § 1930, 110 Stat. at 3009-19.
It also amended the quarterly fee schedule in § 1930(a)(6), partially replacing
the one established in 1991; the minimum fee remained ($500 for $15,000 in
disbursements or less) but the maximum fee increased to $10,000 for disburse-
ments of $5 million or more and seven graduated fee levels based on disburse-
ments between the minimum and maximum were defined (replacing the ex-
isting three).
Id. sec. 109(a), § 1930(a), 110 Stat. at 3009-18. This schedule re-
mained until it was amended in 2007.
See supra note 1.
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20-12547 Opinion of the Court 19
contrast, in 2017, Congress used clear language right away—
i.e.,
the clear language regarding its application analyzed above—and
thus there was no need for further amendment.
See Cir. City
Stores, 996 F.3d at 168 (“Unlike the 1996 amendment, the 2017
Amendment plainly applies to all disbursements made after its ef-
fective date.”). We conclude that a negative inference is not war-
ranted from the 1996 amendment.
Rather than draw a negative inference from the 1996 legisla-
tion, we believe that the more recent amendment in 2007 imposing
fee increases indicates that Congress understood in 2017 that it
could increase fees with immediate effect without using the word
“pending.” That is, when Congress increased fees in 2007 (the
“2007 Amendment”), it provided that the new fees “shall take effect
January 1, 2008, or the date of the enactment of this Act, whichever
is later.” Pub. L. No. 110-161, sec. 213(b), § 1930, 121 Stat. at 1914;
see supra note 1. Apparently recognizing that the 2007 increase
was routinely applied to pending cases, Bast Amron’s only sugges-
tion is that the 2007 increase was modest in size compared to 2017.
This distinction does not compel the result it urges. Instead, “[i]n
making its most recent change to the quarterly fees [the 2017
Amendment], Congress operated under this widespread under-
standing that fee increases apply to postenactment disbursements
in pending cases.”
Buffets, 979 F.3d at 374.
4. The 2020 Amendment does not change the analysis.
After briefing was completed in this case, Congress enacted
the Bankruptcy Administration Improvement Act of 2020 (the
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20 Opinion of the Court 20-12547
“2020 Amendment”) in January 2021, setting the fee for quarters
with disbursements of at least $1 million to 0.8% of the disburse-
ments but not more than $250,000 and for quarters with disburse-
ments of less than $1 million to 0.4%. Pub. L. No. 116-325, sec.
3(d)(1), § 1930(a), 134 Stat. 5086, 5088. Congress provided that
amendments made to the quarterly fee provisions apply to
(i) any case pending under chapter 11 of title 11,
United States Code, on or after the date of enactment
of this Act; and
(ii) quarterly fees payable under section 1930(a)(6) of
title 28, United States Code, as amended by subsec-
tion (d), for disbursements made in any calendar
quarter that begins on or after the date of enactment
of this Act.
Id. sec. 3(e), 134 Stat. at 5089. Subparagraph (ii) of this application
provision mimics the same clear language from the 2017 Amend-
ment, but subparagraph (i) also explicitly states that the new fees
apply to “any case pending.”
Id. We decline another opportunity
to draw a negative inference based on the 2020 Amendment. We
do not believe that any negative inference from the 2020 Amend-
ment is sufficient to overcome the language of the 2017 Amend-
ment clearly stating the congressional intent that the 2017 Amend-
ment “shall apply to quarterly fees payable under section 1930(a)(6)
. . . for disbursements made in any calendar quarter that begins on
or after the date of enactment of this Act.” Moreover, although
there was nothing like the confusion in the case law addressing
whether the 2017 Amendment applied to pending cases as
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20-12547 Opinion of the Court 21
compared to the confusion in 1996, there were several lower court
judges who had held that the 2017 Amendment did not apply to
pending cases.8 Thus, it is not surprising that, in the 2020 Amend-
ment, Congress wanted to double down in expressing its intentions
to avoid any remaining doubt.
5. We conclude that the 2017 Amendment applies to this
case.
In sum, we conclude that Bast Amron’s retroactivity chal-
lenge fails at the first step of the
Landgraf analysis. We conclude
that the language of the 2017 Amendment expressed a clear con-
gressional intent that the fee increase “shall apply to quarterly fees
payable under Section 1930(a)(6) . . . for disbursements made in any
calendar quarter that begins on or after” January 1, 2018. We reject
Bast Amron’s several arguments that some negative inference
should be drawn to overcome this clearly expressed intention. Be-
cause Congress’ intent was clear that the 2017 Amendment in-
creased fees for future disbursements made after the statute’s en-
actment, we need not reach the subsequent question in the
Land-
graf analysis of whether there are any retroactive consequences
8
USA Sales, Inc., 532 F. Supp. 3d at 935–37, is the only lower court decision—
holding that the 2017 Amendment is not applicable to pending cases—that has
not been either reversed or abrogated. However, the bankruptcy court in
In
re Buffets, LLC, 597 B.R. 588 (Bankr. W.D. Tex. 2019), had so held before be-
ing reversed by the Fifth Circuit, as had the
In re Life Partners Holdings, Inc.,
606 B.R. 277 (Bankr. N.D. Tex. 2019), before being abrogated by the Fifth Cir-
cuit in
Buffets.
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22 Opinion of the Court 20-12547
warranting application of the presumption against retroactivity.9
Therefore, pursuant to the terms of the 2017 Amendment, the fee
increase was properly applied to this case. The remainder of this
opinion considers arguments that the 2017 Amendment was un-
constitutional.
9 Although we need not actually decide the retroactive effects issue,
i.e., the
second step of the
Landgraf analysis, we note considerable doubt that there
are retroactive consequences even if there was some ambiguity as to the stat-
ute’s reach. As stated, the clear language of the Amendment applies the fee
increase to future disbursements; this is a
prospective effect. Looking retro-
spectively, the increased fees do not “impair rights a party possessed when he
acted, increase a party’s liability for past conduct, or impose new duties with
respect to transactions already completed.”
Landgraf, 511 U.S. at 280, 114 S.
Ct. at 1505. When the bankruptcy petition was filed in 2008 and the plan con-
firmed in early 2017, the debtors and creditors may have had particular expec-
tations of the magnitude of quarterly fees, but “they always expected to pay
some of those fees,” and “[t]he mere upsetting of their expectations as to
amounts owed based on
future distributions does not make for a retroactive
application.”
Buffets, 979 F.3d at 375;
Cir. City Stores, 996 F.3d at 169 (“Alt-
hough . . . the Amendment increases the quarterly fees that large Chapter 11
debtors will pay, such debtors were reasonably expected to pay fees pursuant
to some formula.”). “Nor does [the Amendment] encumber vested property
rights under confirmed plans, as some degree of ‘variability in the final
amount available to plan distributees’ is expected in complex bankruptcies.”
Buffets, 979 F.3d at 375 (citation omitted) (quoting
In re CF & I Fabricators
Utah, Inc., 150 F.3d 1233, 1239 (10th Cir. 1998)). Indeed, the parties to the
confirmation plan could not have reasonably expected quarterly fees to for-
ever remain constant given fees had increased effective the same year the
bankruptcy petition was filed in 2008 and just over a decade earlier in 1996,
and the increased fees always applied to pending cases.
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20-12547 Opinion of the Court 23
B.
The 2017 Amendment Does Not Violate Substantive Due
Process
In addition to the retroactive arguments, Bast Amron chal-
lenges the 2017 Amendment on substantive due process grounds.
It argues that vested rights were impaired with an illegitimate leg-
islative purpose by way of irrational means and without notice. In
particular, Bast Amron argues that the increased fees have been
collected to create a surplus and thus are excessive when compared
with the needs of the U.S. Trustee system, that the increased fees
are shouldered by current debtors for the benefit of future debtors
who will not have to pay the higher fees once the statutory period
expires, and that the debtors and creditors had no notice of the ret-
roactive increase in fees. We readily conclude there is no due pro-
cess violation.10
Bankruptcy legislation, like the 2017 Amendment, is subject
to the same rational basis review applied to economic and social
legislation.
See In re Wood, 866 F.2d 1367, 1370 (11th Cir. 1989).
“This is not a rigorous test and is generally easily met.”
United
States v. Ibarguen-Mosquera, 634 F.3d 1370, 1382 (11th Cir. 2011).
10 Quite tellingly, Bast Amron cites no case holding the substantive component
of due process is violated by legislation of which the parties did not have notice
or that imposes an allegedly excessive fee. Instead, Bast Amron cites only the
two bankruptcy cases reversed and abrogated by the Fifth Circuit in
Buffets
and cases that generally address whether a law was impermissibly retroactive
(which the 2017 Amendment is not,
supra Section II.A).
See Opening Br. at
26–30;
see also Reply Br. at 33–34 (citing no authority).
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24 Opinion of the Court 20-12547
“We must simply determine whether ‘any set of facts may be rea-
sonably conceived to justify legislation.’”
Id. (quoting
TRM, Inc. v.
United States, 52 F.3d 941, 945 (11th Cir. 1995)).11
Congress enacted the 2017 Amendment to achieve a legiti-
mate goal—
i.e., addressing the shortfall in the budget of the U.S.
Trustee System Fund and funding bankruptcy judgeships—in a ra-
tional manner,
i.e., increasing fees for the largest bankruptcies for
a four-year period.
See H.R. Rep. No. 115-130, at 7–9. The budget-
focused purpose is further supported by the provision in the 2017
Amendment that only triggers the higher fees if a certain budget
threshold has not yet been met. Pub. L. No. 115-72, sec. 1004(a),
§ 1930(a)(6), 131 Stat. at 1232 (increasing fees “if the balance in the
United States Trustee System Fund as of September 30 of the most
recent full fiscal year is less than $200,000,000”). And Congress’
decision “to have large debtors shore up the system’s finances as
their cases typically place greater burdens on the system” was rea-
sonable.
Buffets, 979 F.3d at 380 (citation omitted). This is enough
to satisfy constitutional scrutiny.
Bast Amron’s labelling the increased fees as excessive does
not change our analysis given the reasonableness of the 2017
11 The same test would apply had we concluded that the 2017 Amendment
had any retroactive effect.
See Swisher Int’l, Inc. v. Schafer, 550 F.3d 1046,
1057 (11th Cir. 2008) (“When a statute has a retroactive effect, the government
must also prove that the statute’s retroactive application furthers a legiti-
mate legislative purpose.”).
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20-12547 Opinion of the Court 25
Amendment.
See Buffets, 979 F.3d at 380–81 (noting the 2017 “in-
crease caps the fees at 1% of disbursements, which is a much lower
percentage than some small debtors pay,” like those with distribu-
tions of $15,000, who would be charged $650, the equivalent of a
4.33% fee (footnote omitted));
cf. Swisher Int’l, Inc., 550 F.3d at
1057 (rejecting a due process–based argument that a law “im-
pose[d] retroactive liability that is disproportionate to [the peti-
tioner’s] participation in the . . . program” because the law served
legitimate legislative purposes and Congress chose rational means).
And the lack of notice about the 2017 Amendment to debtors or
anyone else does not alter this substantive due process analysis ei-
ther.
Cf. United States v. Carlton, 512 U.S. 26, 34, 114 S. Ct. 2018,
2023, 129 L. Ed. 2d 22 (1994) (holding the lack of notice of a new
tax law did not establish a due process violation because “a tax-
payer ‘should be regarded as taking his chances of any increase in
the tax burden which might result from carrying out the estab-
lished policy of taxation’” (quoting
Milliken v. United States, 283
U.S. 15, 23, 51 S. Ct. 324, 327, 75 L. Ed. 809 (1931))). Therefore, the
increased fees charged in this case did not violate the Due Process
Clause.
C.
The Tax Uniformity Requirement Is Inapplicable to the 2017
Amendment’s Increase in Quarterly Fees, Which Are User
Fees
Congress has the “Power To lay and collect Taxes, Duties,
Imposts and Excises . . . ; but all Duties, Imposts and Excises shall
be uniform throughout the United States.” U.S. Const. art. I, § 8,
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26 Opinion of the Court 20-12547
cl. 1. Bast Amron argues that the quarterly fees imposed by
§ 1930(a)(6) and amended by the 2017 Amendment violate this
clause’s uniformity requirement. It agrees, however, that legisla-
tion is not subject to the uniformity requirement for taxes if it im-
poses a “user fee.” We hold that the quarterly fees are merely user
fees, not taxes, and thus this constitutional provision did not re-
strict Congress in its enactment of the 2017 Amendment.
The quarterly fees are user fees because they are assessed
against the users of the chapter 11 bankruptcy trustee systems and
are “intended to reimburse the United States for its costs in connec-
tion.”
See United States v. Sperry Corp., 493 U.S. 52, 60, 110 S. Ct.
387, 393, 107 L. Ed. 2d 290 (1989). Bast Amron, echoing its due
process argument, urges that the increased quarterly fees paid by
debtors are excessive and disproportionate to the services they re-
ceived from the U.S. Trustee. But a user fee may “defray the cost
of a federal program by recovering a fair approximation of each
beneficiary’s share of the cost,” and the 2017 Amendment’s new fee
scheme—calibrating the largest debtors’ fees at 1% with a cap at
$250,000—is a fair approximation.
See Massachusetts v. United
States, 435 U.S. 444, 460, 98 S. Ct. 1153, 1163–64, 55 L. Ed. 2d 403
(1978);
e.g.,
Sperry Corp., 493 U.S. at 61–64, 110 S. Ct. at 395–96
(holding a 1.5% tribunal user fee was not unconstitutionally exces-
sive as to constitute a taking (citing
Massachusetts, 435 U.S. at 462,
463, 468, 98 S. Ct. at 1165, 1168)).
We, therefore, hold as our sister circuits that have addressed
this particular issue have unanimously held: the quarterly fees are
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20-12547 Opinion of the Court 27
user fees on which the Constitution does not impose the uni-
formity requirement applicable to taxes.
See Buffets, 979 F.3d at
376 n.7 (“[T]he increased fees are user fees, which means they are
not general taxes to which the Uniformity Clause applies.” (citation
omitted));
Cir. City Stores, 996 F.3d at 164 (“Put succinctly, because
the Uniformity Clause only applies to taxes, as the U.S. Trustee
maintains and as the Fifth Circuit correctly ruled, that Clause is in-
applicable here.”).
D.
The 2017 Amendment is a Uniform Law On the Subject of
Bankruptcies
Congress has the power to establish “uniform Laws on the
subject of Bankruptcies throughout the United States.” U.S. Const.
art. I, § 8, cl. 4. The most involved question in this case is whether
the 2017 Amendment violates this clause. Bast Amron argues that
the Bankruptcy Uniformity Clause (hereinafter “Bankruptcy Uni-
formity Clause” or “Bankruptcy Clause” or “Clause”) applies to the
2017 Amendment to 28 U.S.C. § 1930(a)(6) because they are laws
on the subject of bankruptcies and that the Amendment is substan-
tively nonuniform because it imposed higher fees in only UST dis-
tricts and not BA districts. Appellee-Cross Appellant also separately
appeals part of the bankruptcy court’s decision, arguing in the first
instance that the Bankruptcy Clause does not apply and, if it does,
she argues that the bankruptcy court erred in holding that 2% of
the fees collected pursuant to the 2017 Amendment make the law
partially nonuniform.
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28 Opinion of the Court 20-12547
We address these appeals in two main sections. First, we
hold that the 2017 Amendment and the quarterly fee provisions it
amended are laws on the subject of bankruptcies and thus the uni-
formity requirement of the Bankruptcy Clause applies. Second, we
hold that the 2017 Amendment is uniform and fully complies with
the requirements of the Bankruptcy Clause because the flexibility
inherent in the Clause cautions us against a strict inquiry that
would make dispositive Congress’ use of two different statutory
vehicles to impose quarterly fees—
i.e., § 1930(a)(6) to mandate the
fees in UST districts and § 1930(a)(7) to permit them in BA dis-
tricts—and requires that we consider the historical operation of the
two vehicles together to set equal fees in UST and BA districts for
nearly two decades. For these reasons, and those explained below,
we reject Bast Amron’s appeal on the uniformity issue but hold in
favor of the Region 21 United States Trustee on her separate appeal
challenging the bankruptcy court’s holding with respect to the 2%
allocation.
As an initial matter, however, we want to be clear that we
do not address whether there is a constitutional nonuniformity
problem as a result of the mere fact of the existence of the bank-
ruptcy administrator program in the BA districts of Alabama and
North Carolina and the U.S. Trustee program in every other dis-
trict. Bast Amron did not ask our Court or the bankruptcy court
to strike down any law based on an argument that the existence of
two trustee systems is nonuniform, and thus we will not address
this additional constitutional question.
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20-12547 Opinion of the Court 29
Addressing this additional question would violate the “estab-
lished practice [to] interpret[] statutes to avoid constitutional diffi-
culties.”
Off. of Senator Mark Dayton v. Hanson, 550 U.S. 511, 514,
127 S. Ct. 2018, 2021, 167 L. Ed. 2d 898 (2007). Indeed, “the judicial
preference for avoiding constitutional questions when possible” is
strong in this case because there are immense implications of ven-
turing into a complex inquiry that could lead to the nullifying of an
important feature of bankruptcies across the country that has ex-
isted for decades.
See Harbourside Place, LLC v. Town of Jupiter,
Fla., 958 F.3d 1308, 1315 (11th Cir. 2020) (citing
Camreta v. Greene,
563 U.S. 692, 705, 131 S. Ct. 2020 (2011)). Moreover, the parties did
not brief the issue of the constitutionality of the two systems,12 and
12 Bast Amron’s last-second attempt in a footnote in its reply brief (and in its
Rule 28(j) correspondence) to recast the history of briefing in this case is woe-
fully inadequate to raise the broader question of the constitutionality of the
two trustee systems. Bast Amron states in its reply brief that it “repeatedly
challenged the divergence between the two systems as unconstitutionally
non-uniform,” and cites briefing before the bankruptcy court and the opening
brief before this Court.
See Reply Br. at 27 n.12. We have carefully examined
each citation to which Bast Amron refers, both in its briefs on appeal and in its
briefs to the bankruptcy court. However, those citations are to portions of its
briefs that either argue about the constitutionality of the 2017 Amendment or
make a conclusory assertion that there is no justification in the form of geo-
graphically isolated problems. At most, Bast Amron has merely referenced
the existence of the two systems, and merely assumed the unconstitutionality
thereof without providing any argument showing why or how the mere ex-
istence of the two systems is unconstitutional. For example, it has identified
no nonuniformity other than the fee structure, and makes no argument that
the mere existence of the dual systems somehow creates nonuniformities that
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30 Opinion of the Court 20-12547
we generally do not address questions not briefed.
See United
States v. Jernigan, 341 F.3d 1273, 1283 n.8 (11th Cir. 2003) (“Under
our caselaw, a party seeking to raise a claim or issue on appeal must
plainly and prominently so indicate. Otherwise, the issue—even if
properly preserved at trial—will be considered abandoned.”). We
decline to create an additional constitutional difficulty on our own
without the required briefing from any party.13
See Buffets, 979
F.3d at 379 (“Our normal reluctance to hold unconstitutional a dec-
ades-old feature of federal bankruptcy law should grow into a
violate the flexible uniformity requirement. The focus of Bast Amron’s brief-
ing is clear: it challenges only the 2017 Amendment and disparate fee struc-
ture—not the mere existence of the dual systems.
See Brown v. United States,
720 F.3d 1316, 1332 (11th Cir. 2013) (“Merely making passing references to a
claim under different topical headings is insufficient.”). Like in
Buffets, “[n]ei-
ther side addresses the decision more than three decades ago to create two
separate systems,” “[n]or was the original 1986 law addressed in the bank-
ruptcy court decision in this case.” 979 F.3d at 379 n.14. We readily conclude
that Bast Amron has failed to fairly raise a constitutional challenge to the mere
existence of the dual systems, either in the bankruptcy court or in this Court.
Thus, we address only the particular issues outlined above.
13 Thus, like the majorities in
Buffets and
Circuit City Stores, we decline to
address the issue that was pivotal for their partially dissenting colleagues.
Buf-
fets, 979 F.3d at 384–85 (Clement, J., concurring in part and dissenting in part)
(“Two laws are not a uniform law, so I would hold that the permanent division
of the country into UST districts and BA districts violates the Bankruptcy
Clause and would order Buffets to pay the lower fee.”);
Cir. City Stores, 996
F.3d at 175 (Quattlebaum, J., concurring in part and dissenting in part) (“Ac-
cordingly, while the constitutionality of the two types of bankruptcy systems
is not before the court, I would nonetheless hold that the amended quarterly
fee statute, as applied . . . , violates the Bankruptcy Clause.”).
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20-12547 Opinion of the Court 31
refusal when no party is asking us to do so.” (footnote omitted)).
This is especially true in light of the enormous consequences of any
decision that the existence of the two systems is unconstitutional,
and the enormous complexity of the issue. With respect to the lat-
ter, the necessary inquiry would include an intensive analysis of the
history of the origin of the two systems, the congressional rationale
therefor, an extensive and complicated analysis of the operation of
each system, and a comparison thereof to determine whether there
is a resulting nonuniformity in violation of the flexible Bankruptcy
Uniformity Clause.
Therefore, we proceed to answer only the questions raised,
starting with whether the 2017 Amendment is a law on which the
Bankruptcy Clause imposes a uniformity requirement.
1. The 2017 Amendment is a “Law[] on the subject of Bank-
ruptcies.”
The Bankruptcy Clause of the Constitution grants Congress
the authority to establish “uniform Laws on the subject of Bank-
ruptcies throughout the United States.” U.S. Const. art. I, § 8, cl. 4.
The Supreme Court has stated “[t]he subject of bankruptcies is in-
capable of final definition.”
Ry. Lab. Execs.’ Ass’n v. Gibbons, 455
U.S. 457, 466, 102 S. Ct. 1169, 1175, 71 L. Ed. 2d 335 (1982) (altera-
tion in original) (quoting
Wright v. Union Cent. Life Ins. Co., 304
U.S. 502, 513–14, 58 S. Ct. 1025, 1031–32, 82 L. Ed. 1490 (1938)).
The inability to finally define the subject of bankruptcies is one in-
dicator of the Clause’s broad scope, which empowers Congress to
enact a wide range of laws that come within the subject.
See
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32 Opinion of the Court 20-12547
Hanover Nat’l Bank v. Moyses, 186 U.S. 181, 187, 22 S. Ct. 857, 860,
46 L. Ed. 1113 (1902) (“The framers of the Constitution were famil-
iar with Blackstone’s Commentaries, and with the bankrupt laws
of England, yet they granted plenary power to Congress over the
whole subject of ‘bankruptcies,’ and did not limit it by the language
used.”);
Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 370, 126 S. Ct.
990, 1000, 163 L. Ed. 2d 945 (2006) (explaining that “[t]he Framers
would have understood that laws ‘on the subject of Bankruptcies’
included laws providing, in certain limited respects, for more than
simple adjudications of rights in the res,” including courts’ “histor-
ical[] . . . power to issue ancillary orders”).
Legislation is within the Bankruptcy Clause’s reach if it
touches on “the ‘subject of the relations between an insolvent or
nonpaying or fraudulent debtor and his creditors, extending to his
and their relief.’”
Gibbons, 455 U.S. at 466, 102 S. Ct. at 1175 (quot-
ing
Wright, 304 U.S. at 513–14, 58 S. Ct. at 1031–32). Section
1930(a)(6), which the 2017 Amendment altered, affects the rela-
tions between debtors and creditors, limiting the amount of funds
made available to satisfy debts and afford relief. The 2017 Amend-
ment itself does the same by further limiting funds for some debt-
ors and creditors. Therefore, the 2017 Amendment is a law on the
subject of bankruptcies to which the uniformity requirement ap-
plies.
Region 21 United States Trustee attempts to make a distinc-
tion based on “administrative” or “auxiliary” laws, arguing that
statutes authorizing bankruptcy appellate panels, local rules, and
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20-12547 Opinion of the Court 33
the quarterly fees are not subject to the Bankruptcy Clause. We,
like every other court to have addressed similar arguments from
the government, reject this contention.
See In re Clinton Nurse-
ries, Inc., 998 F.3d 56, 64 & n.6 (2d Cir. 2021) (“The Trustee’s argu-
ment has been repeatedly rejected by other courts.”) (collecting
cases);
Buffets, 979 F.3d at 377 (observing that “every bankruptcy
court dealing with a challenge to the 2017 Amendment has rejected
the analogy” “to the different local bankruptcy rules that districts
apply or the Bankruptcy Appellate Panels that only some circuits
use”). That is, while the validity of laws other than the 2017
Amendment to which Appellee analogizes are not before us, the
“administrative” nature of the 2017 Amendment and § 1930(a)(6)
does not except them from the reach of the Bankruptcy Clause.
The 2017 Amendment “has a direct effect on what creditors re-
ceive—less than before,”
Buffets, 979 F.3d at 377, and thus comes
within the Bankruptcy Clause’s broad definition of “Laws on the
subject of Bankruptcies.”
See Gibbons, 455 U.S. at 466, 102 S. Ct.
at 1175. Therefore, we must determine whether the 2017 Amend-
ment is uniform under the Clause.14
14 Because we conclude that the Bankruptcy Clause applies and, as explained
below, hold that the law is uniform, we need not reach Appellee’s extended
argument regarding the Necessary and Proper Clause as a source of congres-
sional power to which a uniformity requirement does not apply.
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34 Opinion of the Court 20-12547
2. The 2017 Amendment is uniform in the sense contem-
plated by the Bankruptcy Clause.
Broad is the subject of bankruptcies, and “inherent[ly]”
“flexib[le]” is the uniformity requirement that goes with it.
Blanchette v. Conn. Gen. Ins. Corps., 419 U.S. 102, 158, 95 S. Ct.
335, 366, 42 L. Ed. 2d 320 (1974). In the simplest terms, all “[t]he
uniformity clause requires” is that congressional enactments “ap-
ply equally to all creditors and all debtors.”
Id. at 160, 95 S. Ct. at
367. Otherwise, the Supreme Court has described the uniformity
requirement as “not [being] a straightjacket” for congressional ac-
tion.
Gibbons, 455 U.S. at 469, 102 S. Ct. at 1176. Indeed, since the
country’s founding, “the tendency of legislation and of judicial in-
terpretation has been uniformly in the direction of progressive lib-
eralization in respect of the operation of the bankruptcy power.”
Cont’l Ill. Nat’l Bank & Tr. Co. of Chi. v. Chi., R.I. & P. Ry. Co.,
294 U.S. 648, 668, 55 S. Ct. 595, 603, 79 L. Ed. 1110 (1935). Thus,
strict and “formalistic approaches to uniformity in bankruptcy . . .
‘overlook[] the flexibility inherent in the constitutional provi-
sion.’”
In re Schafer, 689 F.3d 601, 609 (6th Cir. 2012) (quoting
Schultz v. United States, 529 F.3d 343, 354 (6th Cir. 2008) (quoting
Blanchette, 419 U.S. at 158, 95 S. Ct. at 366)). That is, although the
Supreme “Court has recognized that ‘the Bankruptcy Clause itself
contains an affirmative limitation or restriction upon Congress’
power,’ . . . a strict reading of this statement ‘overlooks the flexibil-
ity inherent in the constitutional provision,’ and improperly cabins
the reach of Congress’[] authority.”
Schultz, 529 F.3d at 354
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20-12547 Opinion of the Court 35
(citation omitted) (first quoting
Gibbons, 455 U.S. at 468, 102 S. Ct.
1169; then quoting
Blanchette, 419 U.S. at 158, 95 S. Ct. at 366).
“The Supreme Court has made clear that perfect uniformity is not
required.”
In re Reese, 91 F.3d 37, 39 (7th Cir. 1996) (Posner, C.J.)
(citing
Gibbons, 455 U.S. at 469, 102 S. Ct. at 1176).
The extent of the uniformity requirement’s flexibility is ap-
parent from the fact that the Supreme Court has only once held
that a law was unconstitutionally nonuniform and has spoken of
only one other possible kind of violation.
See In re McFarland, 790
F.3d 1182, 1194 (11th Cir. 2015) (“
Gibbons, after all, was the first
(ever!) opinion
enforcing bankruptcy uniformity against Congress,
yet the Supreme Court still deployed the ‘not a straightjacket’ lan-
guage . . . .”). That is, in
Railway Labor Executives’ Ass’n v. Gib-
bons, the Court held that employee protection provisions of a stat-
ute only applicable to Rock Island and Pacific Railroad Co. were
unconstitutional because they “applie[d] to only one regional bank-
rupt railroad, and [could not] be said to apply uniformly even to
major railroads in bankruptcy proceedings throughout the United
States.” 455 U.S. at 471, 102 S. Ct. at 1177–78. The uniformity re-
quirement is thus understood to prohibit private bankruptcy bills,
as
Gibbons makes clear, as well as restrictions based on regionalism
that do not address a geographically isolated problem, as the Su-
preme Court has stated in other discussions.
See Blanchette, 419
U.S. at 159, 95 S. Ct. at 366;
Buffets, 979 F.3d at 378 (“Aside from
prohibiting such ‘private bankruptcy bills,’ which does not describe
the fee increase, the uniformity requirement forbids only
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36 Opinion of the Court 20-12547
‘arbitrary regional differences in the provisions of the Bankruptcy
Code.’” (quoting
Reese, 91 F.3d at 39)).
These two limited circumstances under which legislation
may be a Bankruptcy Clause violation are consistent with the
Framers’ intent in providing for the Clause in the interest of a func-
tioning national economy. Though the Framers’ intent in includ-
ing the uniformity requirement is notoriously limited compared to
other constitutional provisions, we know that their “primary goal
was to prevent competing sovereigns’ interference with the
debtor’s discharge,” and they “plainly intended to give Congress
the power to redress the rampant injustice resulting from States’
refusal to respect one another’s discharge orders.”
Katz, 546 U.S.
at 373, 377, 126 S. Ct. at 1002, 1004. “As James Madison observed,
‘[t]he power of establishing uniform laws of bankruptcy is so inti-
mately connected with the regulation of commerce, and will pre-
vent so many frauds where the parties or their property may lie or
be removed into different States, that the expediency of it seems
not likely to be drawn into question.’”
Gibbons, 455 U.S. at 465–
66, 102 S. Ct. at 1175 (alteration in original) (quoting The Federal-
ist No. 42, at 285 (N.Y. Heritage Press 1945)). With this broad con-
cern about state interference with the interactions of creditors and
debtors across a national economy, “[t]o survive scrutiny under the
Bankruptcy Clause, a law must at least apply uniformly to a defined
class of debtors.”
Id. at 473, 102 S. Ct. at 1178.
Bast Amron argues that this requirement has not been met
because an unjustifiable disparity was created by the 2017
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20-12547 Opinion of the Court 37
Amendment and § 1930(a)’s separate treatment of UST and BA dis-
tricts—
i.e., making the fee increase mandatory in UST districts but
permissive in BA districts, with respect to which the Judicial Con-
ference delayed actual implementation of the increase. “[T]he flex-
ibility inherent in the constitutional provision,”
Blanchette, 419
U.S. at 158, 95 S. Ct. at 366, as we explain below, leads us to con-
clude that the uniformity requirement was satisfied in this case be-
cause the 2017 Amendment contemplated increased fees for the
class of debtors distributing $1 million or more in a quarter regard-
less of the location of the bankruptcy proceedings.15
The 2017 Amendment does not, as Bast Amron argues, dis-
criminate based on UST or BA districts. Its terms state nothing
about UST districts or BA districts. Of course, the statute that the
2017 Amendment amended provided for two different vehicles for
the imposition of fees in UST districts and BA districts. That is, 28
U.S.C. § 1930(a)(6)(A), as amended in 2017, provided that “a quar-
terly fee shall be paid to the United States trustee” in UST districts,
while § 1930(a)(7) provided with respect to BA districts, that the
Judicial Conference “may require the debtor . . . to pay fees equal
to those imposed by paragraph (6).” 28 U.S.C. § 1930(a)(6)(A), (7).
15 Because we conclude that the class of debtors is not limited to UST districts,
and we conclude that that class was treated uniformly regardless of location,
we avoid the issue that the Second Circuit in
Clinton Nurseries perceived with
the decisions of the Fourth and Fifth Circuits, which conceptualized the class
of debtors as solely within UST districts. 998 F.3d at 69 & n.15.
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38 Opinion of the Court 20-12547
But the flexibility of the Bankruptcy Clause permits Congress to
choose how to provide for the implementation of a uniform law.
That is, the decisions to use two different statutory provisions to
establish quarterly fees for every district in the country comes well
within the flexible range of permissible bankruptcy legislation. As
we demonstrate below, we conclude that our inquiry cannot turn
merely on the difference between the words “shall” and “may”; a
flexible inquiry cannot be so rigid and particular about the mechan-
ics of the legislative text. Indeed, we think Congress’ increase in
quarterly fees in all districts in the country by way of two statutory
provisions does not implicate the concerns of the Framers in decid-
ing to enact the uniformity requirement.
More consistent with the Supreme Court’s counsel that the
Bankruptcy Clause is not a straightjacket, and in light of the Fram-
ers’ concern with interests not implicated at all in this case, we ex-
amine several important legal developments and the legislative rec-
ord, which indicate that Congress understood that by amending
§ 1930(a)(6), it was also increasing fees chargeable by way of
§ 1930(a)(7), which contemplates “fees equal to those imposed by
paragraph (6).” In particular, the Judicial Conference indicated its
understanding was the same as Congress’, relaying to Congress
that the Conference would maintain its role in the implementation
of uniform quarterly fees whenever those fees would increase.
That is, we conclude that the uniformity requirement does not re-
quire that Congress increase fees by mandating them in all districts
in the country.
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20-12547 Opinion of the Court 39
We first explore the basis for this understanding and the his-
tory of the two different vehicles for implementation of quarterly
fees that in fact historically operated together to set equal quarterly
fees everywhere. Then, we discuss how the legislative history of
the 2017 Amendment indicates Congress operated under the as-
sumptions supported by the prior history. Finally, we explain why
the 2017 Amendment was uniform, despite the Judicial Confer-
ence’s departure from the historical norm.
a.
The history of 28 U.S.C. § 1930(a) and quarterly fees
indicates equal fees were charged throughout the
United States from 2001 to 2017.
Before 2000, quarterly fees were not collected in Alabama
and North Carolina’s districts because they had not joined the U.S.
Trustee program; that is, quarterly fees were authorized to be col-
lected only in UST districts, where the U.S. Trustee operated, leav-
ing BA districts (
i.e., Alabama and North Carolina’s districts) with-
out quarterly fees. The intention was originally to have all states’
districts join the program, but Alabama and North Carolina’s dis-
tricts were given extensions of time to become UST districts, the
result being that those states’ districts did not have the quarterly
fees like the rest of the country for some time.16
16
See Bankruptcy Judges, United States Trustees, and Family Farmer Bank-
ruptcy Act of 1986, Pub. L. No. 99-554, sec. 302(d)(3), 100 Stat. 3088, 3121–22
(setting deadline as October 1, 1992); Judicial Improvements Act of 1990, Pub.
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40 Opinion of the Court 20-12547
In a challenge based on the quarterly fee disparity resulting
from the second extension of time for Alabama and North Caro-
lina’s districts, the Ninth Circuit in
St. Angelo v. Victoria Farms,
Inc. held that the extension provision—
i.e., the provision that al-
lowed Alabama and North Carolina’s districts to remain as BA dis-
tricts without quarterly fees being collected—was unconstitution-
ally nonuniform. 38 F.3d 1525, 1531–33 (9th Cir. 1994),
amended,
46 F.3d 969 (9th Cir. 1995). Congress gave no reason for the ex-
tended deadline, such as whether it was addressing a geograph-
ically isolated problem, and the effect of the law left “the relation-
ship between creditor and debtor in states other than North Caro-
lina and Alabama [as] governed by a different, more costly system.”
Id. at 1532. To remedy the nonuniformity, the Ninth Circuit struck
down the provision providing for the extension “rather than 28
U.S.C. § 1930 in its entirety, . . . leav[ing] in place a uniform law
governing bankruptcy throughout the nation.”
Id. at 1533.
Legislation was proposed and enacted to address
St. Angelo;
the issue identified by the Ninth Circuit continued because Ala-
bama and North Carolina’s districts never joined the U.S. Trustee
program. Thus, a couple years after the Ninth Circuit’s decision,
the Judicial Conference issued a report regarding § 1930 that
acknowledged that “chapter 11 debtors in bankruptcy administra-
tor districts [we]re not subject to an additional quarterly fee that is
L. No. 101-650, sec. 317(a)(1), 104 Stat. 5089, 5115 (setting deadline as October
1, 2002).
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20-12547 Opinion of the Court 41
levied on chapter 11 debtors in the United States trustee districts.”
Judicial Conference of the U.S., Report of the Proceedings of the
Judicial Conference of the United States 10 (Mar. 1996). “On rec-
ommendation of the Bankruptcy Committee, the Conference
agreed to take appropriate action to institute quarterly chapter 11
fees in bankruptcy administrator districts comparable to those in
effect in United States trustee districts so that the revenues go to
the judiciary.”
Id. The Bankruptcy Committee recommendation
explained the basis for the quarterly fee proposal: “the implemen-
tation of the quarterly fees in bankruptcy administrator districts
would
eliminate any [
St. Angelo v. ]
Victoria Farms problem and, if
it is provided that the judiciary could retain the fees, the judiciary
would obtain much-needed revenues that could, among other
things, be used to offset the costs of operating the bankruptcy ad-
ministrator program.” Judicial Conference of the U.S., Report of
the Committee on the Administration of the Bankruptcy System
4–6 (Mar. 1996) (emphasis added);
see also id. at 4 (“Currently,
debtors in the United States trustee and bankruptcy administrator
districts pay the same fees when filing for bankruptcy, but chapter
11 debtors in bankruptcy administrator districts are not subject to
the additional quarterly fee that is levied on chapter 11 debtors in
United States trustee districts.”).
In 1999, in a prepared statement submitted to Congress on
behalf of the Judicial Conference, the Honorable Harvey F. Schle-
singer, United States District Judge for the Middle District of Flor-
ida, explicitly addressed how the proposed legislation discussed in
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42 Opinion of the Court 20-12547
the Conference’s 1996 records would address the constitutional
uniformity concerns raised in
St. Angelo. He explained that “the
proposed language”—that was ultimately enacted into law (
i.e.,
“the Judicial Conference of the United States may require the
debtor in a case under chapter 11 of title 11 to pay fees equal to
those imposed” by § 1930(a)(6))—“
authorizes the Judicial Confer-
ence to implement fees in the bankruptcy administrator program
in the judicial districts in the states of Alabama and North Carolina
similar to those currently imposed by 28 U.S.C. § 1930(a)(6).”
Mul-
tidistrict, Multiparty, Multiforum Trial Jurisdiction Act of 1999 and
Federal Courts Improvement Act of 1999: Hearing on H.R. 2112 &
H.R. 1752 Before the Subcomm. on Cts. & Intell. Prop. of the H.
Comm. on the Judiciary, 106th Cong. 27 (1999) (statement of Hon.
Harvey F. Schlesinger, J., U.S. Dist. Ct. M.D. Fla.) (emphasis
added). Continuing his explanation to Congress, Judge Schlesinger
stated:
At its March 1996 proceeding, the Judicial Conference
determined that implementing the establishment of
chapter 11 quarterly fees in the bankruptcy adminis-
trator districts would eliminate any [
St. Angelo v.]
Victoria Farms problem and by providing that the ju-
diciary could retain the fees much-needed revenues
could be used to offset the cost of operating the bank-
ruptcy administrator program. If a quarterly fee were
implemented in the bankruptcy administrator dis-
tricts through which the judiciary could retain the
fees, any surplus exceeding the costs of the
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20-12547 Opinion of the Court 43
bankruptcy administrator program would be dedi-
cated to the judiciary to offset costs of the judicial sys-
tem.
Id. at 26–27;
see also Judicial Conference of the U.S., Report of the
Committee on the Administration of the Bankruptcy System 6
(Mar. 1999) (“The Bankruptcy Committee reaffirmed its support
for the following . . . legislative proposals on the basis that their en-
actment would provide enhancements to the bankruptcy system
and the efficient administration of justice: . . . amend 28 U.S.C.
§ 1930(a) to extend the quarterly fee in chapter 11 cases to districts
served by bankruptcy administrators . . . .”). Thus, the Judicial
Conference understood, and conveyed to Congress this under-
standing, that the permissive language that would authorize (but
not require) the Judicial Conference to impose quarterly fees
would satisfy the demands of constitutional bankruptcy uni-
formity, the rational inference being that the Judicial Conference
was also conveying to Congress the intention of the Conference to
impose the same fees in the BA districts such that the fees would
be uniform.
Congress acted to address these concerns when it added to
§ 1930(a) paragraph (7), which provided—just as the proposed lan-
guage did that the Judicial Conference explained would satisfy the
uniformity issue with quarterly fees—“the Judicial Conference of
the United States may require the debtor in a case under chapter
11 of title 11 to pay fees equal to those imposed by paragraph (6)”
in BA districts (the “2000 Amendment”). Federal Courts
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44 Opinion of the Court 20-12547
Improvement Act of 2000, Pub. L. No. 106-518, sec. 105, § 1930(a),
114 Stat. 2410, 2412.17 Thus, “Congress fixed th[e] problem” iden-
tified in
St. Angelo “with a law empowering the Judicial Confer-
ence to set fees in [BA] districts that were ‘equal to those imposed’
in [UST] districts.”
Buffets, 979 F.3d at 371. While the statute did
not mandate that the Judicial Conference exercise that power, it
stated the Judicial Conference may set fees “equal to those im-
posed” by the U.S. Trustee—
i.e., giving the Judicial Conference the
power to collect quarterly fees in the remaining districts.18 How-
ever, the clear inference is that Congress—having enacted the leg-
islation that was proposed by the Judicial Conference and explained
by the Conference as satisfying the Bankruptcy Uniformity
Clause—contemplated that the Judicial Conference would act to
equalize the fee requirement.
The Judicial Conference did in fact exercise its power pursu-
ant to § 1930(a)(7) in 2001. Judicial Conference of the U.S., Report
of the Proceedings of the Judicial Conference of the United States
45–46 (Sept./Oct. 2001) (hereinafter 2001 Judicial Conference
17 This 2000 Amendment also made permanent the operation of the BA system
in Alabama and North Carolina districts.
See Buffets, 979 F.3d at 370 n.1.
18 Bast Amron implies that § 1930(a)(7), by referencing § 1930(a)(6), does not
set the fee schedule for BA districts but rather sets the maximum. We disagree
with that reading. Instead, in 2000, Congress plainly granted the Judicial Con-
ference the power to charge “fees
equal to those imposed by paragraph (6),”
not any other power.
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20-12547 Opinion of the Court 45
Report). In doing so, the Conference explained that the 2000
Amendment “authorize[d] the Conference to impose quarterly
fees in chapter 11 cases in bankruptcy administrator districts com-
parable to those already being charged in United States trustee dis-
tricts.”
Id. at 46. “To implement this statute, the Conference ap-
proved a Bankruptcy Committee recommendation . . . .”
Id. The
Committee had stated, “Until recently, only United States trustees,
and not bankruptcy administrators, had statutory authority to col-
lect quarterly fees in chapter 11 cases,” but
St. Angelo identified the
constitutional issue and the Conference proposed legislation that
was ultimately signed into law. Judicial Conference of the U.S.,
Report of the Committee on the Administration of the Bankruptcy
System 9–10 (Sept. 2001). Thus, the Judicial Conference acknowl-
edged what it had conveyed to Congress prior to the enactment of
the 2000 Amendment: the 2000 Amendment satisfied the Bank-
ruptcy Clause’s uniformity requirement because quarterly fees
could be—and now, in fact, would be—collected in all districts.
The Conference’s method of implementing the statutory
quarterly fee collection power was to approve the recommenda-
tion “that such fees be imposed in bankruptcy administrator dis-
tricts in the amounts specified in 28 U.S.C. § 1930,
as those amounts
may be amended from time to time.” 2001 Judicial Conference Re-
port at 46 (emphasis added);
see Judicial Conference of the U.S.,
Report of the Committee on the Administration of the Bankruptcy
System 10 (Sept. 2001) (recommending “[t]hat the Judicial Confer-
ence impose quarterly fees on chapter 11 cases filed in bankruptcy
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46 Opinion of the Court 20-12547
administrator districts in the amounts specified in 28 U.S.C. § 1930,
as those amounts may be amended from time to time” after ex-
plaining history of quarterly fee disparity (emphasis added)). There
is an indication, in voting to approve the Committee recommen-
dation, “that the Judicial Conference may have intended for its one-
time vote to encompass all future fee increases.”
See Cranberry
Growers Coop. v. Layng, 930 F.3d 844, 856 n.51 (7th Cir. 2019).
We conclude the legislative history of the 2000 Amendment
indicates that Congress understood that § 1930(a)(7) would operate
in tandem with § 1930(a)(6) and its fee schedule—that is, that as of
2001, equal fees were to be imposed in all districts in the country,
with a likely understanding that any “amend[ments]” to “those
amounts” in § 1930(a)(6) “from time to time” would automatically
be the quarterly fee amounts imposed in BA districts.
With this foundation, Congress enacted the 2007 Amend-
ment by simply amending the schedule in § 1930(a)(6) and stating
the new fees would be effective January 1, 2008. Pub. L. No. 110-
161, sec. 213(a), § 1930(a)(6), 121 Stat. at 1914. Indeed, the legisla-
tive history of this 2007 Amendment supports the conclusion that
there was a continued understanding of Congress and the Judicial
Conference that § 1930(a)(6) and (a)(7) operated together to set
equal fees in every district. In March 2007, Congress asked the Ju-
dicial Conference about a decline in bankruptcy filings, leading to
reduced fee revenues, and what proposals “the case trustees and
U.S. Trustees [had] to generate additional fee revenue.”
Financial
Services and General Government Appropriations for Fiscal Year
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20-12547 Opinion of the Court 47
2008: Hearing on H.R. 2829 Before the Subcomm. of the S. Comm.
On Appropriations, 110th Cong. 103 (2007) (Additional Committee
Questions).19 The Judicial Conference responded by explaining a
proposal of the Department of Justice, of which the U.S. Trustee’s
office is a part, to increase quarterly fees set by 28 U.S.C. § 1930(a).
Id. at 103–04. The Judicial Conference stated explicitly,
This proposal would affect the Judiciary in that
paral-
lel Chapter 11 quarterly fees are also collected in the
six bankruptcy administrator districts in Alabama and
North Carolina.
The Judiciary would most likely in-
crease quarterly fees in those districts, parallel to the
increases proposed by the Department of Justice to
the U.S. trustee quarterly Chapter 11 fee increases, to
maintain national parity between the two programs.
Such fees are deposited as offsetting receipts to the
fund established under section 1931 of title 28, United
States Code. Aside from a
parallel increase in the
Chapter 11 quarterly fee in the bankruptcy adminis-
trator districts, this proposal would not affect the Ju-
diciary.
19 The Honorable Julia S. Gibbons, Circuit Judge for the U.S. Court of Appeals
for the Sixth Circuit, as Chair of the Budget Committee of the Judicial Confer-
ence, and James C. Duff, Director of the Administrative Office of the Courts,
had testified before the U.S. Senate Subcommittee of the Committee of Ap-
propriations on March 21, 2007, and the question described above was “sub-
mitted to the judiciary for response subsequent to the hearing.” 110th Cong.
1, 96.
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48 Opinion of the Court 20-12547
Id. at 104 (emphasis added). Congress indicated no different under-
standing when it enacted the 2007 Amendment pursuant to the Ju-
dicial Conference’s implicit adoption of the DOJ proposal, which
simply rewrote the fee schedule in § 1930(a)(6) with higher fees,
effective January 1, 2008.
See U.S. Dep’t of Justice, U.S. Trustee
Program Fiscal Year 2008 Budget Request 9 (2007) (proposing the
exact fee schedule adopted by Congress in the 2007 Amendment);
supra note 1. In other words, in 2007, Congress simply increased
the fees set out in § 1930(a)(6) pursuant to the understanding as
presented by the Judicial Conference that the fees would remain
“parallel,” to “maintain national parity,” and thus continue to be
uniform across all bankruptcy districts. And the Judicial Confer-
ence indicated no different understanding once the 2007 Amend-
ment was enacted. In its March 2008 report, the Bankruptcy Com-
mittee of the Judicial Conference noted that it had “received re-
ports on recent legislation increasing the chapter 11 quarterly fees
collected by the United States trustee program,” and stated nothing
more. Judicial Conference of the U.S., Report of the Committee
on the Administration of the Bankruptcy System 8 (Mar. 2008).
This silence at least suggests that the Committee—having worked
for several years on quarterly fee legislation for BA districts—saw
no uniformity issue with the 2007 Amendment, which makes sense
in light of the prior Judicial Conference decision that the fees in BA
districts would reflect the § 1930(a)(6) fees as “amended from time
to time.”
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20-12547 Opinion of the Court 49
Bast Amron does not dispute that the fees in the 2007
Amendment applied to BA districts automatically.20 Indeed, the
parties have not presented, nor has our research discovered, any
case law regarding the application of the 2007 Amendment’s fee
increase in BA districts. We reasonably conclude from this silence
and the lack of controversy that there was no controversy in the
BA districts over having the new 2007 Amendment fees applied au-
tomatically, just like in UST districts. For the purposes of deter-
mining what Congress could assume when it increased fees again
in 2017,
i.e., the increase at issue in this case, we think this void in
the case law around 2007 is telling—neither Congress nor anyone
else had reason to believe that amending § 1930(a)(6) again in 2017
would not operate as it did in 2007 to increase fees uniformly in all
bankruptcy districts.
And while the case law is absent, archived court websites
and contemporary dockets provide some confirmation of what
Congress’ and the Judicial Conference’s silence suggests—that the
increased fees from the 2007 Amendments were collected in BA
districts consistent with the legislation’s effective date. Websites
from each of the BA districts provided notice that the new fees
20 Again—as stated with regards to its arguments discussed in Section II.A—
Bast Amron only points to the 2007 Amendment’s modest increase in fees
compared to the 2017 Amendment.
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50 Opinion of the Court 20-12547
were chargeable as of January 1, 2008, in each BA district.21 In ad-
dition, our review of quarterly fee statements and similar filings in
BA districts for the first quarter of 2008 generally show the new fees
were paid.22 We think this provides a reasonable basis, in light of
21
See U.S. Bankr. Adm’r, N.D. Ala., https://web.ar-
chive.org/web/20080205071347/https://www.alnba.uscourts.gov/ (ar-
chived Feb. 5, 2008) (“Effective January 1, 2008, the quarterly fee schedule was
amended. . . . Fees under the new schedule are first due from chapter 11 debt-
ors to the United States Bankruptcy Court by the end of April 2008.”);
U.S.
Bankr.
Ct.,
W.D.N.C., https://web.ar-
chive.org/web/20080214061719/http://www.ncwb.uscourts.gov/ (archived
Feb. 14, 2008) (“Effective January 1, 2008 - Statutory Increase In Chapter 11
Quarterly Fees.”);
U.S. Bankr. Adm’r, M.D. Ala., https://web.ar-
chive.org/web/20090223180056/http://www.almba.
uscourts.gov/banews.htm (archived Sept. 23, 2008) (“The Judicial Conference
of the United States has authorized an increase in the assessment of quarterly
fees in all chapter 11 cases. The increased fees became effective for the quarter
beginning January 1, 2008.”);
U.S. Bankr. Adm’r, S.D. Ala., Q. Fee Schedule,
https://web.archive.org/web/20100527092125/http://www.alsba.
uscourts.gov/Documents/IncreaseFees.pdf (archived Feb. 10, 2008) (listing
chapter 11 quarterly fee schedule “Effective 1/1/08”);
U.S. Bankr. Ct.,
M.D.N.C., https://web.archive.org/web/
20080923052231/http://www.ncmb.uscourts.gov/ (archived Sept. 23, 2008)
(“Chapter 11 Quarterly Fees Increase Effective January 1, 2008 (click for more
information)”);
U.S. Bankr. Adm’r, E.D.N.C., https://web.ar-
chive.org/web/20080516044103/https://www.nceba.uscourts.gov/ (ar-
chived May 16, 2008) (stating “
New: Chapter 11 Quarterly Fee Schedule Effec-
tive January 1, 2008” and linking reader to a chart that compares old and new
fees and the dollar amount increase).
22
See, e.g., Quarterly Fee Statement at 1,
In re S. Media Commc’ns, Inc., No.
08-BK-10238 (Bankr. S.D. Ala. Apr. 18, 2008), ECF No. 33 (reporting no
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20-12547 Opinion of the Court 51
the absence of case law, that the 2007 Amendment increased fees
for all districts in the country, BA and UST alike, without any new
congressional action other than the 2007 Amendment increasing
the § 1930(a)(6) quarterly fees.
Thereafter, but before the 2017 Amendment was consid-
ered, no different interpretation was adopted by Congress or the
Judicial Conference.23
disbursements and a fee of $325 for quarter ending March 31, 2008); Quarterly
Fee Statement at 1,
In re Beyl, No. 08-BK-80255 (Bankr. N.D. Ala. Apr. 21,
2008), ECF No. 93 (reporting $54,685.48 in disbursements and a fee of $650 for
quarter ending March 31, 2008); Quarterly Fee Statement at 1,
In re Air Dev.,
LLC, No. 08-BK-10001 (Bankr. M.D. Ala. Apr. 29, 2008), ECF No. 29 (reporting
$9,200 in disbursements and a fee of $325 for quarter ending March 31, 2008);
Monthly Report for the Month of March 2008 at 18,
In re Snead, No. 08-BK-
00070 (Bankr. E.D.N.C. June 3, 2008), ECF No. 99 (reporting $27,541.59 in dis-
bursement and a fee of $650 for the quarter ending March 31, 2008); Chapter
11 Quarterly Fee Statement at 1,
In re Ameritrans, LLC, No. 08-BK-80200
(Bankr. M.D.N.C. July 8, 2008), ECF No. 70 (reporting $114,483.87 in disburse-
ments and a fee of $975 for quarter ending March 31, 2008).
Compare Chapter
11 Quarterly Fee Statement at 1,
In re Okwara Props., LLC, No. 07-BK-32376
(Bankr. W.D.N.C. May 29, 2008), ECF No. 56 (reporting $900.72 in disburse-
ments and $250 in fees for quarter ending March 31, 2008, coinciding with pre-
2007 fee schedule),
with Chapter 11 Quarterly Fee Statement at 1,
Okwara,
No. 07-BK-32376 (Bankr. W.D.N.C. Sept. 19, 2008), ECF No. 90 (indicating
$303,040.69 in disbursements and $4,875 in fees for calendar quarter ending
June 30, 2008, coinciding with new fee schedule).
23 There were other indications that any uniformity problem with regard to
§ 1930(a)(6) and (7) and the collection of quarterly fees had long been resolved.
In 2009, the Bankruptcy Committee recommended to the Judicial Conference
that, in light of the
St. Angelo opinion, additional changes should be made in
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52 Opinion of the Court 20-12547
We pause to summarize the history of quarterly fee legisla-
tion and collection before 2017. The Ninth Circuit issued an im-
pactful decision in
St. Angelo, identifying a constitutional, Bank-
ruptcy Clause uniformity problem with a disparity that existed
BA districts, including the enactment of legislation to grant “the same powers
and duties for bankruptcy administrators that are granted to United States
trustees.” Judicial Conference of the U.S., Report of the Committee on the
Administration of the Bankruptcy System 3–4 (Mar. 2009). In doing so, the
Committee expressed an understanding that quarterly fees caused no further
issue, stating:
The Committee observed that the Ninth Circuit Court of Ap-
peals, in
St. Angelo . . . determined that the existence of two
estate administration oversight programs caused a Uniformity
Clause violation.
Even though both programs now collect fees
from debtors in chapter 11 cases, the Committee believes that
the judiciary should pursue the same powers and duties for
bankruptcy administrators that are granted to United States
trustees . . . .
Id. at 3 (emphasis added). And in 2010, in considering amendments to bank-
ruptcy laws for small business, Congress heard testimony that mentioned the
joint structure in which UST and BA districts both charged quarterly fees by
way of § 1930(a) without controversy.
See Could Bankruptcy Reform Help
Preserve Small Business Jobs?: Hearing Before Subcomm. on Admin. Over-
sight & Cts. of S. Comm. on the Judiciary, 111th Cong. 78–79 (2010) (supple-
mental testimony of Hon. Thomas B. Bennet, U.S. Bankr. J., U.S. Bankr. Ct.
N.D. Ala.) (describing how reforms “would cause a loss of revenues . . . for the
funding mechanism for the two groups given significant responsibilities under
the Bankruptcy Code: the United States Trustee Program (U.S. Trustee) and
the Bankruptcy Administrator Program (Bankruptcy Administrator) . . . due
to funding of each by quarterly fees imposed in Chapter 11 cases,” and explain-
ing the fee schedule, while citing § 1930(a)(6)–(7)).
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20-12547 Opinion of the Court 53
because quarterly fees were charged in UST districts but no such
fees were charged in BA districts. The Judicial Conference consid-
ered this uniformity problem and recommended that the Confer-
ence be granted the power to charge quarterly fees in the six BA
districts. Congress granted that exact power in the way the Judicial
Conference proposed—with merely permissive language in the
statutory text authorizing the Conference to charge fees—and all
concluded this satisfied the post-
St. Angelo, lingering uniformity is-
sue with quarterly fees, obviously contemplating that the fees
would be equal everywhere. Then, the mechanism enacted into
law by way of § 1930(a)(7) proved that such expectation was war-
ranted when the Judicial Conference exercised its power to start
collecting fees “in the amounts specified in 28 U.S.C. § 1930, as
those amounts may be amended from time to time” in 2001, and
Congress raised fees in 2007 by merely amending the fee schedule
in § 1930(a)(6), thus setting fees for UST and BA districts alike. This
was the historical foundation for congressional action in 2017.
b.
The 2017 Amendment’s legislative history indicates
no different understanding than that supported by the
history of prior amendments to 28 U.S.C. § 1930(a).
The congressional, Judicial Conference, and U.S. Trustee
program documents related to the 2017 Amendment indicate that
the fee increase was enacted to satisfy the requests of both the Ju-
dicial Conference and the U.S. Trustee related to, primarily, fund-
ing bankruptcy judgeships in both UST and BA districts and bol-
stering the funding of (and replenishing the shortfall in) the U.S.
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54 Opinion of the Court 20-12547
Trustee program. In March 2017, the Bankruptcy Committee of
the Judicial Conference recommended that Congress authorize
four additional bankruptcy judgeships (all in UST districts) and con-
vert 14 temporary judgeships (one in a BA district and the rest in
UST districts) to permanent status. Judicial Conference of the U.S.,
Report of the Committee on the Administration of the Bankruptcy
System 5, 13 (Mar. 2017). In April 2017, the Conference transmit-
ted to Congress these recommendations with draft legislation. Ju-
dicial Conference of the U.S., Report of the Committee on the Ad-
ministration of the Bankruptcy System 3 (Sept. 2017). “On May 17,
2017, a bill embodying this recommendation and providing for the
adjustment of quarterly fees paid on disbursements made in chap-
ter 11 cases to fund the judgeships (H.R. 2266) passed the House.”
Id. Thus, from the Judicial Conference’s perspective, quarterly fees
were to be increased to help fund bankruptcy judgeships, largely in
UST districts, but one in a BA district.
As to the U.S. Trustee, its director, in testimony before the
House committee, commented on budgetary issues in the U.S.
Trustee program and stated, “We are grateful to this Committee
for favorably acting on our proposal to increase quarterly fees paid
into the U.S. Trustee System Fund. If enacted, it will ensure that
appropriations made to the Program will be fully offset by reve-
nues.”
A Time to Reform: Oversight of the Activities of the Justice
Department’s Civil, Tax, and Environment and Natural Resources
Divisions and the U.S. Trustee Program: Hearing before the Sub-
comm. on Regul. Reform, Com. & Antitrust L. of the H. Comm.
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20-12547 Opinion of the Court 55
on the Judiciary, 115th Cong. 13 (2017) (statement of Clifford J.
White, III, Dir. Exec. Off. for U.S. Trustees). Thus, both the Judi-
cial Conference and the U.S. Trustee program sought quarterly fee
increases to advance goals that would further bankruptcy admin-
istration.
Importantly, in requesting an increase in fees in 2017, nei-
ther the Judicial Conference, nor the U.S. Trustee program, con-
veyed a concern about uniformity or a desire to increase fees in a
new way that would disregard the prior 17 years of equal quarterly
fee collection in the country. In other words, the 2017 Amendment
simply amended § 1930(a)(6)—which facially applied only to the
UST districts, but Congress reasonably expected § 1930(a)(6) to ac-
tually operate in tandem with § 1930(a)(7) to increase fees in all
bankruptcy districts—just as had been done with respect to the
2007 Amendment.
The increase in quarterly fees was further explained by
members of Congress as a mechanism for funding the bankruptcy
judgeships and U.S. Trustee program. We think these debates re-
veal no different understanding of the operation of § 1930(a)(6) and
(a)(7) than the one established in the near two decades prior. We
note, however, that in these debates, representatives sometimes la-
beled the quarterly fees as U.S. Trustee-related fees.24 While it is
24
See 115 Cong. Rec. H4246 (daily ed. May 17, 2017) (statement of Rep. Robert
Goodlatte) (“This bill is based on a comprehensive study of judicial resource
needs conducted by the Judicial Conference and is supported by the
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56 Opinion of the Court 20-12547
apparent that these members spoke about the quarterly fees in
terms of those collected by the U.S. Trustee—in other words, they
did not mention that the quarterly fees were collected in both UST
and BA districts—we do not think this changes the conclusions to
be drawn from the existing legal framework or the understanding
that had been established before 2017. That is, given that the uni-
formity issue of fee collection in BA and UST districts had been re-
solved, the label attached to quarterly fees is irrelevant.
What is relevant for the uniformity question in this case is
that this limited congressional record further supports that Con-
gress maintained the understanding established over the course of
the last several years. The fact that there is no dispute in the 2017
Administrative Office of the U.S. Courts. . . . Importantly, this bill will not
present any new costs for the taxpayers. The Bankruptcy Judgeship Act in-
cludes an increase in the quarterly U.S. Trustee fees for large chapter 11 debt-
ors . . . .”);
id. at H4247 (statement of Rep. John Conyers) (“I am pleased to
report that H.R. 2266 pays for all of these judgeships without having to require
consumer debtors to bear that expense. The cost of this legislation is offset by
increasing the quarterly fees that the largest 10 percent of chapter 11 debtors
pay to the United States Trustee System Fund, a proposal initially made by the
Obama administration as part of the President’s budget request for 2017.”);
id.
at H4248 (statement of Rep. Shelia Jackson Lee) (“With respect to the Confer-
ence’s current request for additional bankruptcy judgeships, the weighted case
filings have increased by more than 55 percent for most of these districts since
the last time additional judgeships were authorized in 2005, according to the
Conference. In addition, all 14 of the temporary bankruptcy judgeships that
the bill converts to permanent status are set to lapse as of May 25, 2017. To
offset the cost of this legislation, H.R. 2266 increases the quarterly fee payable
that chapter 11 debtors pay to the United States Trustee System Fund . . . .”).
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20-12547 Opinion of the Court 57
record regarding charges in BA districts is a strong indication that
the issue—so hotly debated earlier—was now resolved. Congress
understood in 2007 that an increase in fees by way of § 1930(a)(6)
also meant increasing fees chargeable by way of § 1930(a)(7), and
there is no indication of a different understanding in 2017. The dis-
cussions regarding the 2017 Amendment indicated certain goals
were to be met with increased fees related to bankruptcy admin-
istration, including primarily judgeship funding in UST districts,
with one in a BA district, and U.S. Trustee program funding. And
it makes sense that a BA district was included in the funding pur-
poses because the Judicial Conference had sought general bank-
ruptcy administration goals without concern for a BA-UST distinc-
tion or a concern for a lack of uniformity in the collection of quar-
terly fees. There was an established practice of equal fees in all dis-
tricts. The uniformity issue had been solved long ago.25
25 The Bankruptcy Committee Report in 2018 that led to the Judicial Confer-
ence’s adoption of the new fees in BA districts surprisingly states that “[t]he
application of chapter 11 quarterly fees in districts under the USTP is set forth
in 28 U.S.C. § 1930(a)(6). The fee does not apply to chapter 11 cases in BA
districts.” Judicial Conference of the U.S., Report of the Committee on the
Administration of the Bankruptcy System 18 (Sept. 2018). The Committee
expressed concerns that the 2017 Amendment would chill filings and preclude
some reorganizations, but it did not express a concern about the purposes for
which the increased fees would be collected, though it mentioned them.
Id.
at 19. For the purposes of this case, the expressions of the Committee before
2017 indicated a different understanding of the uniform collection of quarterly
fees—that is, different from the understanding expressed in this 2018 Report.
We think that these new concerns raised in 2018 are not reasons to reevaluate
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58 Opinion of the Court 20-12547
In sum, we conclude that Congress enacted the 2017
Amendment with the understanding that the quarterly fees would
be increased uniformly across all bankruptcy districts. We con-
clude that this is the most plausible inference in light of the struc-
ture of the statutory provisions and the foregoing history. As noted
above, § 1930(a)(7) was enacted in 2000 with the clear understand-
ing that it would—despite its permissive language—operate in tan-
dem with § 1930(a)(6) in that the Judicial Conference would set fees
in the BA districts equal to those in the UST districts so as to resolve
any lack of uniformity. And, as noted above, Congress had in 2007
increased fees uniformly across all bankruptcy districts simply by
amending the fee schedule in § 1930(a)(6). Thus, in 2017, when
Congress amended the § 1930(a)(6) fee schedule—just as it had
done in 2007—Congress reasonably expected the increase would
the reasonable understanding of Congress in 2017. As we explain below, we
are satisfied that there is no ongoing uniformity issue.
In any event, the Committee did later back away from this newer 2018
view when it acknowledged that “[a]s a result” of
St. Angelo, the Judicial Con-
ference recommended legislation,
i.e., the 2000 Amendment, and then “ap-
proved fees in BA districts in the amounts specified in 28 U.S.C. § 1930, as
those amounts may be amended from time to time.” Judicial Conference of
the U.S., Report of the Committee on the Administration of the Bankruptcy
System 22 & n.3 (Mar. 2019). Importantly, it stated, “As a result, chapter 11
quarterly fees in BA districts have
generally remained in lockstep with those
in USTP districts.”
Id. at 22 (emphasis added). It explained that the 2017
Amendment “generated concerns among Committee members,” leading to
the change.
Id. Again, we do not think these subsequent discussions change
the pre-2017 Amendment analysis.
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20-12547 Opinion of the Court 59
be applied uniformly across all bankruptcy districts just as had been
done for the past 17 years. Nothing in the 2017 Amendment’s stat-
utory language suggests otherwise; there is no language suggesting
that the new fees would be applicable only in the UST districts or
otherwise suggesting an unprecedented view regarding the joint
operation of § 1930(a)(6) and (a)(7). Nor is there a basis in the 2017
language or in the legislative history to suggest a change in the con-
gressional understanding of almost two decades—
i.e., that the Ju-
dicial Conference would implement equal increases in the BA dis-
tricts. A contrary conclusion would assume that Congress had a
radical change of mind; we decline to engage in such an assumption
in the absence of any support therefor in the language or legislative
history of the 2017 Amendment and in the face of the strong his-
torical evidence supporting our conclusion with respect to the con-
gressional understanding.26
26 We note that the 2020 Amendment—which replaced the word “may” in
§ 1930(a)(7) with the word “shall,” Pub. L. No. 116-325, sec. 3(d)(2), § 1930,
134 Stat. at 5088—stated that this “confirm[ed] the longstanding intention of
Congress that quarterly fee requirements remain consistent across all Federal
judicial districts,”
id. sec. 2(a)(4)(B), 134 Stat. at 5086. Although the Supreme
Court has cautioned against placing much weight on subsequent legislative
history as indicative of earlier congressional intent, the Court has also indi-
cated that it can be considered.
Fed. Hous. Admin. v. Darlington, Inc., 358
U.S. 84, 90–91, 79 S. Ct. 141, 145–46, 3 L. Ed. 2d 132 (1958). We rely primarily
on our own analysis of the structure of the two statutory provisions and the
historical record of the congressional understanding of their operation in
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60 Opinion of the Court 20-12547
c.
Congress did not violate the Bankruptcy Uniformity
Clause in enacting the 2017 Amendment notwith-
standing the permissive language in § 1930(a)(7).
Bast Amron relies upon two facts to support its argument
that the 2017 Amendment violates the Bankruptcy Uniformity
Clause: (1) the fact that § 1930(a)(6) uses the word “shall,” while
§ 1930(a)(7) uses the word “may”—meaning that the 2017 Amend-
ment increasing the fees was mandatory in the UST districts but
only permissive in the BA districts; and (2) the fact that the Judicial
Conference delayed implementation of the increase in BA districts
for about nine months. Bast Amron argues that the resulting dis-
parity in treatment of debtors and creditors in UST districts as com-
pared to otherwise similar debtors and creditors in BA districts vi-
olates the uniformity requirement because there is no geograph-
ically isolated problem in the UST districts or in the BA districts to
warrant the disparate treatment. As noted above, the increased
fees became effective in UST districts as of January 1, 2018, but did
not become effective in the BA districts until about nine months
later.
We reject Bast Amron’s argument for several reasons. As
explained above, Congress reasonably expected that the 2017
Amendment would apply uniformly across all bankruptcy dis-
tricts—as had identical action in 2007 and as had been the
tandem to produce uniform fees, which coincides precisely with Congress’ ex-
press restatement in 2020 of that “longstanding intention of Congress.”
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20-12547 Opinion of the Court 61
consistent practice for 17 years after the uniformity problem was
identified by the Ninth Circuit in
St. Angelo and “fixed” with the
2000 enactment of § 1930(a)(7). However, departing from its past
practice for 17 years, the Judicial Conference delayed implementa-
tion of the 2017 increase. So, the narrow legal issue before us is as
follows: When Congress increased fees in 2017 with a reasonable
expectation that the fees would be applied uniformly across all
bankruptcy districts, is there a violation of the Bankruptcy Uni-
formity Clause merely because the preexisting statutory provision
for the application of the fee increase in the BA districts (
i.e.,
§ 1930(a)(7)) was couched in permissive terms, and merely because
the Judicial Conference—contrary to its historical practice—de-
layed implementation of the increase in BA districts for about nine
months?
For several reasons, we answer that narrow legal issue in the
negative. First, as explained more fully above, Supreme Court case
law has established that the Bankruptcy Uniformity Clause is inher-
ently flexible and provides no straightjacket for congressional ac-
tion.
See supra Section II.D.2.
Second, no one has suggested that there would have been a
violation had there been immediate action by the Judicial Confer-
ence and no disparity resulted. In other words, no one has argued
that—in the absence of any disparity at all—there would neverthe-
less have been a violation merely because § 1930(a)(7) used the
word “may” (
i.e., was not expressed in mandatory terms or was
otherwise dependent on additional action) while § 1930(a)(6) used
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62 Opinion of the Court 20-12547
the word “shall” (
i.e., was mandatory). And no plausible argument
could be made to that effect in light of the inherent flexibility of the
Bankruptcy Clause. To so hold would be a paradigmatic example
of a constitutional straightjacket governing the manner and word-
ing of legislation. Established Supreme Court precedent makes
clear that the Bankruptcy Uniformity Clause is no such straight-
jacket.
Thus, the constitutional problem, if any, has to be attributa-
ble to the actions—or lack of action—of the Judicial Conference.
But it is clear—and the Supreme Court has so held—that the Bank-
ruptcy Clause imposes its limited constraint on congressional
power.
See Gibbons, 455 U.S. at 468, 102 S. Ct. at 1176 (“[T]he
Bankruptcy Clause . . . contains an affirmative limitation or re-
striction upon Congress’ power: . . . uniformity in the applicability
of legislation . . . .”). And inaction by an arm of another branch of
government, tasked with administering or enforcing a law, does
not modify legislation enacted by Congress.
Cf. Dist. of Columbia
v. John R. Thompson Co., 346 U.S. 100, 113–14, 73 S. Ct. 1007,
1014, 97 L. Ed. 1480 (1953) (“The failure of the executive branch to
enforce a law does not result in its modification or repeal.”).27 Our
27 There is no dispute that Congress properly entrusted to the Judicial Confer-
ence the authority to collect quarterly fees in BA districts. Nor is there a dis-
pute regarding the nature of the Judicial Conference’s duties with respect to
the operation of the pre-2020 version of § 1930(a)(7). Thus, we do not attempt
to cabin the duties of the Judicial Conference in this context as only quasi-
administrative or quasi-judicial. We simply observe, for the purposes of the
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20-12547 Opinion of the Court 63
distinction between the actions of Congress, which are subject to
the constraints of the Bankruptcy Clause and the actions of the Ju-
dicial Conference finds strong support in the well-established Su-
preme Court case law holding that bankruptcy provisions recog-
nizing and honoring state law exemptions do not violate the Bank-
ruptcy Clause, notwithstanding that that results in different treat-
ment of otherwise comparable debtors in different states.
See
McFarland, 790 F.3d at 1194–95 (citing
Owen v. Owen, 500 U.S.
305, 306, 308, 111 S. Ct. 1833, 1834–35, 114 L. Ed. 2d 350 (1991));
see also Gibbons, 455 U.S. at 469, 102 S. Ct. at 1176 (“Congress can
give effect to the allowance of exemptions prescribed by state law
without violating the uniformity requirement.” (citing
Moyses, 186
U.S. at 189–90, 22 S. Ct. at 861)). In the exemption situation, as in
the instant case, the resulting disparity is attributable to an actor
other than Congress. Indeed, the disparity resulting from state law
exemptions was foreseeable and quite certain; by contrast, the dis-
parity which resulted from Judicial Conference inaction in this case
discussion in the text regarding the flexibility afforded to Congress by the
Bankruptcy Uniformity Clause, that Congress provided that the Judicial Con-
ference be an actor for the collection of quarterly fees—
i.e., to administer or
enforce a statute.
Cf. In re Fid. Mortg. Invs., 690 F.2d 35, 39 (2d Cir. 1982)
(holding Congress excluded the Judicial Conference from the Administrative
Procedure Act “as an auxiliary of the courts,” though “the Conference was
performing an administrative function when it set the bankruptcy fees” (citing
Duplantier v. United States, 606 F.2d 654, 663–64 (5th Cir. 1979))).
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64 Opinion of the Court 20-12547
was inconsistent with the Judicial Conference’s past practice and
was inconsistent with what Congress reasonably expected.28
For this reason, we believe it follows,
a fortiori, that there is
no violation of the uniformity requirement in the instant context.
This is also true in yet another sense. In the state law exemption
context, the disparity was not only expressly and knowingly au-
thorized by Congress, the disparity is ongoing and permanent. By
contrast, in the instant context, the disparity was not only unex-
pected by Congress, but also was remedied by Congress in the 2020
Amendment.
See supra note 26. In other words, when it became
apparent to Congress that a disparity had developed, Congress
28 Of course, we recognize that the settled law in the exemption situation is
based on the preexisting laws of the several states, which are separate sover-
eigns. Although of course different, it is also true, however, that the Judicial
Conference is part of the Judiciary, a separate branch of our government from
Congress. We do not suggest the analogy is perfect; rather, we suggest that it
provides strong support in that it illustrates the flexibility of the uniformity
requirement, the fact that it does not compel perfect uniformity, and the fact
that the focus of the Clause is on congressional action.
See Moyses, 186 U.S.
at 190, 22 S. Ct. at 861 (“The general operation of the law is uniform although
it may result in certain particulars differently in different states. Nor can we
perceive in the recognition of the local law in the matter of exemptions . . .
and the like, any attempt by Congress to unlawfully delegate its legislative
power.”). In the context here—
i.e., the reasonable understanding of Congress
that it was increasing fees uniformly across all bankruptcy districts notwith-
standing its permissive language—we believe that the reliance of Congress
that the Judicial Conference would act as it had historically acted falls well
within the flexibility tolerated by the Bankruptcy Clause.
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20-12547 Opinion of the Court 65
promptly ensured that there would be no disparity in the amount
of trustee fees by striking the word “may” and substituting the
word “shall” such that § 1930(a)(7) would read that the Judicial
Conference “shall require the debtor . . . to pay fees equal to those
imposed by paragraph (6).” Because the well-established Supreme
Court case law in the state law exemption context holds that even
that ongoing and permanent disparity does not violate the flexible
uniformity requirement, we believe it follows,
a foritori, that there
is no violation in the context of the instant temporary disparity
which was promptly remedied by Congress when it unexpectedly
occurred.
In addition to the strong analogy to Supreme Court case law
in the state law exemption context, the Seventh Circuit has ad-
dressed an analogous issue.29 In the wake of
Gibbons, the Seventh
Circuit upheld a statute (the “Milwaukee Act”) that, by its terms,
might have been read to confer on employees of only one debtor,
the Milwaukee Railroad, the right to
immediate benefits in a reor-
ganization.
In re Chi., Milwaukee, St. Paul & Pac. R.R. Co. (Mil-
waukee R.R.), 713 F.2d 274, 279 (7th Cir. 1983) (Posner, J.).
29
See also In re Exide Techs., 611 B.R. 21, 38 (Bankr. D. Del. 2020) (“The fact
that [the increased fees in 2017] were not automatically implemented in BA
districts is not a result of legislative action, but instead the result of implemen-
tation of the statute.”);
In re Clayton Gen., Inc., No. 15-64266, 2020 U.S. Bankr.
LEXIS 842, at *24 (Bankr. N.D. Ga. Mar. 30, 2020) (“[I]t is not that Congress
enacted a non-uniform statute; the problem is that the Judicial Conference ap-
plied it in a non-uniform way.”).
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66 Opinion of the Court 20-12547
Although the complicated facts of the Seventh Circuit’s decision
are substantially different from those of the instant case, that court
does seem to have perceived a nonuniformity problem in a statute
that it resolved by assuming that the court interpreting the statute
would exercise its equitable power to defer benefits payable under
the statute such that the nonuniformity was eliminated. The court
observed that it was “
well-nigh inevitable that, irrespective of any
compulsion the Milwaukee Act might have laid on it, the reorgan-
ization court, with the [Interstate Commerce] Commission’s con-
sent, would have used its equitable powers to defer the payment of
benefits” in the Milwaukee Railroad bankruptcy.
Id. at 280 (em-
phasis added). “And if the statute need not be read to require de-
ferral of statutory benefits but
can be read merely to have assumed
without requiring that the reorganization court would use its
preexisting equitable powers to defer such benefits, the statute it-
self creates no lack of uniformity in the bankruptcy laws.”
Id. at
281 (emphasis added). The
Milwaukee R.R. court was thus observ-
ing that Congress did not have to facially provide for uniformity by
stating that every applicable railroad bankruptcy would be subject
to the same benefits-related provisions or that the reorganization
court
must provide for deferment of payments; rather Congress
could comply with the Bankruptcy Clause by choosing the words
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20-12547 Opinion of the Court 67
and provisions of the statute in light of the likely course of action
of the judicial body tasked with interpreting the statute.30
In 2017, too, Congress could rely on the Judiciary,
i.e., the
Judicial Conference and bankruptcy administrators, to do what,
under the circumstances, was likely and had been done for nearly
two decades.31 Congress did not need to facially provide for certain
uniformity by, for example, demanding that the Judicial
30 The Supreme Court mentioned the Milwaukee Act in
Gibbons but declined
to opine on it:
The Milwaukee Road is in an income-based reorganization.
That railroad is subject to its own employee protection re-
quirements under §§ 5 and 9 of the [Milwaukee Act]. As with
the case of §§ 106 and 108 of RITA, these sections of the [Act]
apply only to one railroad. We have no occasion in these cases
to consider the constitutionality of these provisions of the [Mil-
waukee Act]. Nevertheless, it is no argument that RITA is uni-
form because another statute imposes similar obligations upon
another railroad, as the United States appears to contend. The
issue is not whether Congress has discriminated against the
Rock Island estate, but whether RITA’s employee protection
provisions are uniform bankruptcy laws. The uniformity re-
quirement of the Bankruptcy Clause is not an Equal Protection
Clause for bankrupts.
455 U.S. at 470 n.11, 102 S. Ct. at 1177 n.11 (citation omitted).
31 Again, as with the comparison to the exemption situation, our analogy here
is to emphasize the flexibility afforded by the Bankruptcy Uniformity Clause
and its inquiry into congressional action, not to cabin or recast the nature of
the duties of the Judicial Conference in this context as simply quasi-judicial.
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68 Opinion of the Court 20-12547
Conference now impose quarterly fees. Congress, instead, could
legislate in light of the strong likelihood that the Judicial Confer-
ence would act as it had previously acted. And, certainly, if an act
like the Milwaukee Act that came close to being a private bill like
the one in
Gibbons can be read to avoid a uniformity issue by ref-
erence to the existing legal framework,
a fortiori, can the 2017
Amendment be thus construed when Congress legislated reasona-
bly expecting the increased fees to apply uniformly in all bank-
ruptcy districts.
Having concluded that the actions—or lack of action—by
the Judicial Conference do not cause the congressional legislation
to be in violation of the Bankruptcy Clause, the legal issue before
us is further narrowed: Does a violation of the Bankruptcy Clause
result merely because § 1930(a)(7) uses the word “may” while
§ 1930(a)(6) uses the word “shall,” and a disparity occurs attributa-
ble to the lack of action by a non-congressional actor? For Bast
Amron to prevail, it must establish that the answer to this question
is in the affirmative. However, we conclude that the answer to the
question is clearly “no,” especially in light of our conclusion that
Congress enacted the 2017 increase with the understanding that it
would apply uniformly across all bankruptcy districts. We con-
clude that the well-established inherent flexibility of the Bank-
ruptcy Clause is inconsistent with the premise that a violation
would occur because of the mere use of the word “may” in
§ 1930(a)(7). This is especially true in the instant context, in which
Congress reasonably expected the fees to apply uniformly,
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20-12547 Opinion of the Court 69
notwithstanding the fact that the Judicial Conference did not act as
reasonably expected. We do not believe that the Bankruptcy
Clause should be construed to require that Congress legislate with
the precision which Bast Amron’s position assumes. Indeed, the
Supreme Court has told us that the Clause is no such straightjacket
on the language with which Congress can legislate. We agree with
the Sixth Circuit that the “formalistic” approach necessarily as-
sumed by Bast Amron’s position “overlooks the flexibility inherent
in the constitutional provision.”
Schafer, 689 F.3d at 609 (quoting
Schultz, 529 F.3d at 354 (quoting
Blanchette, 419 U.S. at 158, 95 S.
Ct. at 366)).
We note that our analysis is different from that employed by
our sister circuits. The recent Second Circuit decision,
Clinton
Nurseries, 998 F.3d at 65–67 & n.9, the recent Tenth Circuit deci-
sion in
In re John Q. Hammons Fall 2006, LLC, 15 F.4th 1011, 1022–
23 (10th Cir. 2021), and the Fifth Circuit decision in
Buffets, 979
F.3d at 378–79 & n.10, addressed and rejected the related argument
that the statutory term “may” in § 1930(a)(7) actually means “shall”
in this context. The Fourth Circuit in
Circuit City Stores, 996 F.3d
at 167 n.10, declined to rule on that issue. We too need not rule on
that issue. We need not decide whether the word “may” in
§ 1930(a)(7) is the actual equivalent of a mandatory “shall.” Rather,
we decide today only that—in enacting § 1930(a)(7) and the 2017
Amendment—Congress reasonably expected the Judicial Confer-
ence to implement the legislation such that the quarterly fee struc-
ture would apply uniformly across all bankruptcy districts. We
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70 Opinion of the Court 20-12547
hold today only that Congress’ pre-2020 permissive language in
§ 1930(a)(7) and the 2017 Amendment—enacted with that reason-
able expectation—do not violate the Bankruptcy Uniformity
Clause, in light of the inherent flexibility of that Clause, and in light
of the fact that Congress promptly remedied the resulting disparity
when it unexpectedly occurred.
Our analysis is also different from the holdings of the major-
ity opinions in the Fifth Circuit
Buffets decision and the Fourth Cir-
cuit decision in
Circuit City Stores. Both of those decisions held
that the 2017 Amendment satisfied the Bankruptcy Uniformity
Clause because that Clause forbids only arbitrary geographic differ-
ences. Both decisions held that the 2017 Amendment did not draw
such an arbitrary distinction based on the residence of debtors; ra-
ther, both decisions held that it “drew a program-specific distinc-
tion that only indirectly has a geographic dimension.”
Buffets, 979
F.3d at 378;
Cir. City Stores, 996 F.3d at 166 (citing and paraphras-
ing this quotation from
Buffets). In light of our resolution of this
case, we need not address the analysis of
Buffets and
Circuit City
Stores. Like the Fourth and Fifth Circuits, we believe that the 2017
Amendment was not an arbitrary distinction based on the resi-
dence of debtors, but our conclusion in this regard relies upon the
reasons set out in this opinion, which are different from the analysis
of those circuits.32
32 We also note that a circuit split has developed as to whether the trustee fee
disparity in UST districts as compared to BA districts qualifies as an exception
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20-12547 Opinion of the Court 71
to the uniformity requirement pursuant to the so-called geographically iso-
lated problem exception. The exception was recognized in the Supreme
Court
Blanchette decision. In
Blanchette, the Court rejected a challenge under
the Bankruptcy Uniformity Clause, holding that:
The uniformity provision does not deny Congress power to
take into account differences that exist between different parts
of the country, and to fashion legislation to resolve geograph-
ically isolated problems.
419 U.S. at 159, 95 S. Ct. at 366. The Fourth and Fifth Circuits, in
Circuit City
Stores and
Buffets, relied on the geographically isolated problem exception in
rejecting the challenge to uniformity, holding that the increase in trustee fees
which applied only in the UST districts was not an “arbitrary distinction based
on the residence of the debtor[s] or creditors.”
Buffets, 979 F.3d at 378. On
the other hand, the Second Circuit in
Clinton Nurseries and the Tenth Circuit
in
Hammons held that the geographically isolated problem exception was not
applicable in the instant context.
Hammons, 15 F.4th at 1024–25. We need
not address this debate over the applicability
vel non of the geographically iso-
lated problem exception to the instant context. Rather, we rely upon the anal-
ysis set forth in this opinion which does not rely on the geographically isolated
problem exception.
However, the Second and Tenth Circuits seemed to implicitly assume
that the geographically isolated problem exception was the only exception to
the uniformity requirement. That is, after rejecting that exception, they just
assume that a violation occurs.
See Clinton Nurseries, 998 F.3d at 69 (“In sum,
we cannot evade a finding of non-uniformity through either a contortion of
the statutory text or an application of the ‘geographically isolated problem’
exception.”);
Hammons, 15 F.4th at 1025 (“The Bankruptcy Clause precludes
increasing fees based just on the location of the bankruptcy court. That is
what the 2017 Amendment does. Thus, we hold that the 2017 Amendment’s
fee disparities fail under the uniformity requirement of the Bankruptcy
Clause.” (citation omitted)). We reject that conclusion as inconsistent with
the inherent flexibility of the uniformity requirement, and with the well-estab-
lished Supreme Court case law holding that the disparity resulting from the
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72 Opinion of the Court 20-12547
varying state law exemptions does not violate the flexible Bankruptcy Uni-
formity Clause. Rather, we believe that the challenge to the trustee fee dis-
parity in this case fails for the reasons set forth in this opinion.
To the extent that the holdings of the Second and Tenth Circuits might
be deemed to cast doubt on our decision, we note the following. Neither the
Second Circuit panel nor the Tenth Circuit panel was presented with, or in
any event did not focus on, the history of the 2000 enactment of § 1930(a)(7)
and the clear intent of Congress that that would “fix” the uniformity problem
by providing uniform fees across all bankruptcy districts, nor the 2001 to 2017
history including the 2007 Amendment which—like the 2017 Amendment—
increased only the fees set out in § 1930(a)(6) but which Congress intended to
apply uniformly across all bankruptcy districts and which was in fact applied
in that uniform fashion. As noted in the text, we need not decide in the ab-
stract whether the word “may” in § 1930(a)(7) is the actual equivalent of a
mandatory “shall.” However, we do respectfully submit that a proper analysis
of the Bankruptcy Uniformity Clause issue in this case requires consideration
of the intention of Congress in enacting the 2017 Amendment. The intent of
Congress was that the 2017 Amendment should apply uniformly across all
bankruptcy districts. Also, we respectfully submit that the mere fact that
§ 1930(a)(7) uses the word “may” and the mere fact that the Judicial Confer-
ence temporarily delayed implementation of the increase should not mean
that Congress has violated the Bankruptcy Uniformity Clause. To so hold
would be inconsistent with the inherent flexibility of the Bankruptcy Uni-
formity Clause. Moreover, neither the Second Circuit decision nor the Tenth
Circuit decision fully accounts for the well-established Supreme Court case
law that recognizes the inherent flexibility of the Bankruptcy Uniformity
Clause.
Also, and significantly, neither the Second Circuit decision nor the
Tenth Circuit decision acknowledges or takes into account the strong analogy
between the instant context and the well-established Supreme Court case law
holding that the disparity which results from the varying state law exemptions
does not violate the flexible uniformity requirement. In both contexts, Con-
gress has expressly allowed such potential differences by expressly deferring
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20-12547 Opinion of the Court 73
In sum, we conclude for the foregoing reasons that the 2017
Amendment was not in violation of the Bankruptcy Uniformity
Clause.
d.
The 2% allocation of collected quarterly fees to the
general Treasury fund does not make part of the 2017
Amendment nonuniform.
The bankruptcy court concluded that the 2017 Amendment
was partially nonuniform because of the allocation of 2% of the
quarterly fees collected in UST districts for “national purposes”
to a separate governmental body. And as pointed out in the text above, the
instant situation should be,
a fortiori, from the state law exemption case law.
Congress expressly allowed for state law exemptions knowing they were dif-
ferent, whereas Congress anticipated that the Judicial Conference would pro-
vide for equal trustee fees. Moreover, the state law exemption cases involve
an ongoing permanent disparity, whereas the instant case involves only a tem-
porary disparity which Congress promptly remedied when it unexpectedly oc-
curred. Although neither the Second Circuit nor the Tenth Circuit decisions
address the analogy to the state law exemption situation, they both distinguish
the geographically isolated problem exception because Congress itself created
the potential for the trustee fee disparity in contrast to simply finding a preex-
isting geographically isolated problem. However, that distinction is not oper-
ative with respect to the state law exemption analogy because Congress ex-
pressly created the potential for both the trustee fee disparity and the state law
exemption disparity.
In sum, we reject the implication in the Second and Tenth Circuit de-
cisions that the failure to qualify for the geographically isolated problem ex-
ception necessarily means that a uniformity violation has occurred. We be-
lieve that the analysis set forth in this opinion explains why there has not been
a violation of the flexible Bankruptcy Uniformity Clause in this case.
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74 Opinion of the Court 20-12547
rather than for the administration of UST district bankruptcies. In
her separate cross-appeal, the Region 21 United States Trustee chal-
lenges this aspect of the bankruptcy court’s decision. For the rea-
sons fully discussed above, the 2017 Amendment does not violate
the Bankruptcy Uniformity Clause; the congressional legislation
did not create a disparity in the treatment of debtors and creditors
which triggers a violation of the Clause.
A fortiori, the allocation
of the 2% of the quarterly fees collected in the UST districts—that
concerned the bankruptcy court—does not violate the Clause. We
need not address whether, in other circumstances, the allocation of
fees collected—as opposed to the manner in which the fees are im-
posed—might be relevant. Accordingly, we uphold the separate
appeal of the Region 21 United States Trustee, and reverse only this
aspect of the bankruptcy court’s decision focused on the 2% alloca-
tion.
e.
We conclude that the 2017 Amendment is uniform.
We hold that the 2017 Amendment is uniform in its entirety
for the purposes of the Bankruptcy Clause. We summarize our
holding as follows. The law satisfies the uniformity requirement
because—consistent with the flexibility inherent in the require-
ment—Congress properly enacted a law in 2017 understanding it
would increase fees for all districts. That is, the flexible approach
to bankruptcy uniformity means that Congress could merely
amend the fee schedule in 28 U.S.C. § 1930(a)(6), directly applicable
to UST districts, with the understanding that the new schedule
would apply through § 1930(a)(7) to BA districts. A violation of the
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20-12547 Opinion of the Court 75
uniformity requirement does not result merely because the Judicial
Conference departed from its prior practice and failed temporarily
to implement the fee increase. In other words, the position that
the Constitution requires that Congress must write the statute such
that it mandates that the new fees apply in BA districts is too strict
and narrow an interpretation in light of the inherent flexibility of
the Bankruptcy Clause. We are always very cautious before de-
claring an act of Congress unconstitutional.
See Blodgett v.
Holden, 275 U.S. 142, 148, 48 S. Ct. 105, 107 (1928) (Holmes, J.)
(noting that to declare an act of Congress unconstitutional “is the
gravest and most delicate duty that this Court is called on to per-
form”). This is especially so in the instant context in which the Su-
preme Court has established that the relevant constitutional provi-
sion—
i.e., the uniformity requirement—is flexible, where Con-
gress did not intend any nonuniformity at all, and where Congress
promptly remedied the nonuniformity that unexpectedly ap-
peared. Therefore, the uniformity requirement of the Bankruptcy
Clause is satisfied. Accordingly, we affirm the judgment of the
bankruptcy court in all respects except with respect to its holding
that the 2% allocation of the funds collected constituted a partial
violation of the Bankruptcy Clause. With respect to that 2% allo-
cation holding, we uphold the separate appeal of the Region 21
United States Trustee and reverse the bankruptcy court.
III. CONCLUSION
To summarize, we hold that the 2017 Amendment properly
applied in this case because Congress clearly expressed its intent to
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76 Opinion of the Court 20-12547
this effect. We also hold that the 2017 Amendment does not violate
substantive due process and is not a tax subject to the Tax Uni-
formity Clause. Finally, we hold that the 2017 Amendment pre-
sents no violation of the Bankruptcy Uniformity Clause. Accord-
ingly, the judgment of the bankruptcy court is affirmed in all re-
spects, except we reverse the bankruptcy court’s holding that the
2% allocation of fees collected constituted a partial nonuniformity
in violation of the Bankruptcy Uniformity Clause. We remand for
proceedings not inconsistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
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20-12547 [Jordan, J., Concurring] 1
JORDAN, Circuit Judge, concurring.
This is a hard case, made all the more difficult by the Su-
preme Court’s “flexible” approach to the Constitution’s Bank-
ruptcy Uniformity Clause, U.S. Const. art. I, § 8, cl. 4.
See, e.g.,
Blanchette v. Connecticut Gen. Ins. Corps., 419 U.S. 102, 159–60
(1974). With that said, I join Judge Anderson’s opinion in full and
add the following.
There is no challenge here to the existence of the two differ-
ent bankruptcy systems in the United States. Importantly, each of
these systems has a different funding mechanism—the general ju-
dicial budget funds the bankruptcy administrators in Alabama and
North Carolina while fees paid by debtors primarily fund the trus-
tee program administered by the Department of Justice in the other
districts.
See Matter of Buffets, LLC, 979 F.3d 366, 371 (5th Cir.
2020);
In re Circuit City Stores, Inc., 996 F.3d 156, 160–61 (4th Cir.
2021);
In re ASPC Corp., 631 B.R. 18, 24 (Bankr. S. D. Ohio 2021).
If the underlying constitutionality of the two systems is accepted,
it seems to me that Congress could have sought to remedy a fund-
ing shortfall in the trustee system by increasing fees only in that
system without running afoul of the Bankruptcy Uniformity
Clause.
See Matter of Buffets, 979 F.3d at 378–80;
In re Circuit City
Stores, 996 F.3d at 166–67;
In re John Q. Hammons Fall 2006, LLC,
15 F. 4th 1011, 1026–27 (10th Cir. 2021) (Bacharach, J., dissenting).
The Second and Tenth Circuits, which have held that the 2017 leg-
islation violates the Uniformity Clause, may have relied in part on
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2 [Jordan, J., Concurring] 20-12547
their suspicions about the constitutionality of the dual bankruptcy
system.
See In re Clinton Nurseries, Inc., 998 F.3d 56, 69–70 (2d
Cir. 2021);
In re John Q. Hammons, 15 F. 4th at 1024–25.
Moreover, I doubt that Congress violated the Uniformity
Clause in 2017 by allowing (rather than requiring) the Judicial Con-
ference to increase fees in the bankruptcy administrator districts.
After all, had the Judicial Conference increased the fees in the bank-
ruptcy administrator districts immediately after the enactment of
the 2017 legislation the permissive language would not have re-
sulted in any constitutional harm to debtors in the trustee districts.
If there was a constitutional violation, then, that violation occurred
only when the Judicial Conference failed to immediately increase
the fees in bankruptcy administrator districts in 2017, thereby caus-
ing a temporary fee disparity in the two types of districts that lasted
until 2018. I don’t know if this matters in the constitutional calcu-
lus, but offer it for whatever it is worth.
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20-12547 [Brasher, J., Concurring] 1
B RASHER , Circuit Judge, concurring in the result:
I concur without reservation in Parts I, II.A, II.B, and II.C of
the Court’s scholarly opinion. I concur in the result as to Part
II.D—whether the 2017 Amendment violates the Bankruptcy Uni-
formity Clause. Although I believe that the substantial variance in
fees as between the Trustee and Bankruptcy Administrator districts
amounts to an unconstitutional lack of uniformity, I also think the
investment group’s requested remedy—a refund of the higher fees,
which were imposed in 94% of the districts—is inappropriate be-
cause it is demonstrably at odds with Congress’s intent. Accord-
ingly, although the investment group has identified a constitutional
infirmity, it has not identified an appropriate remedy.
As an initial matter, I agree with our sister circuits that have
held that the variance in fees is unconstitutional.
See In re John Q.
Hammons Fall 2006, LLC, 15 F.4th 1011, 1022–25 (10th Cir. 2021);
In re Clinton Nurseries, Inc., 998 F.3d 56, 64–70 (2d Cir. 2021). I see
no need to rehash their reasoning in full. As both the Tenth Circuit
and Second Circuit have explained, the 2017 Amendment created
a non-uniformity by mandating a change to quarterly fees in Trus-
tee districts without requiring Bankruptcy Administrator districts
to match that change.
See Hammons, 15 F.4th at 1022–23;
Clinton
Nurseries, 998 F.3d at 66–67. Additionally, the 2017 Amendment
changed the quarterly fees payable to the Trustee under Subsection
(a)(6) “for
disbursements made in any calendar quarter that begins
on or after the date of” its enactment. Bankruptcy Judgeship Act,
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2 [Brasher, J., Concurring] 20-12547
Pub. L. No. 115-72, § 1004(c), 131 Stat 1224, 1232 (2017) (emphasis
added). In other words, the change applied to all subsequent dis-
bursements, even in pending cases like the one here. But Subsec-
tion (a)(7) said only that “the Judicial Conference . . . may require
fees equal to those imposed in paragraph (6) of this subsection.”
This discretionary language referred only to the amount of the fees,
not the timing. It therefore left room for the Judicial Conference to
apply the fee change only to cases
filed after the Amendment was
enacted. And that is exactly what the Judicial Conference did.
Although Congress plainly anticipated that the Judicial Con-
ference would impose the fees without delay, the statute’s text did
not compel that result. Instead, cases pending in Bankruptcy Ad-
ministrator districts escaped the effects of the change, while those
pending in Trustee districts did not. Accordingly, the disparity in
treatment between the two systems is attributable at least as much
to the statute’s language as the Judicial Conference’s implementa-
tion.
Of course, the Bankruptcy Clause has some inherent “flexi-
bility,”
Blanchette v. Connecticut Gen. Ins. Corps., 419 U.S. 102,
158 (1974), such that “the uniformity requirement is not a straight-
jacket.”
Ry. Lab. Executives’ Ass’n v. Gibbons, 455 U.S. 457, 469
(1982). But the flexibility principle is not so broad that it covers
meaningfully reducing payments to creditors based purely on the
location of the pending bankruptcy case. Congress may use the
bankruptcy laws to remedy geographically isolated problems, draw
distinctions among classes of debtors, or incorporate non-uniform
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20-12547 [Brasher, J., Concurring] 3
state laws.
See Gibbons, 455 U.S. at 469;
Blanchette, 419 U.S. at
158–59. But “a law must
at least apply uniformly to a defined class
of debtors.”
Gibbons, 455 U.S. at 473 (emphasis added).
This law doesn’t meet that test. Subsections (a)(6) and (a)(7)
treat two groups of Chapter 11 creditors and debtors differently,
even though they are “identical in all respects save the geographic
locations in which they filed for bankruptcy.”
Hammons, 15 F.4th
at 1024–25;
Clinton Nurseries, 998 F.3d at 68–69. And as our sister
circuits gave observed, that difference in treatment is unsupported
by any rationale—such as a localized problem or a difference in
state law.
Id. Accordingly, although this is a difficult question, I
think the difference in treatment is substantial enough to violate
the Bankruptcy Clause’s uniformity provision.
That said, I cannot agree with the remedy the investment
group requests here—a retrospective refund of their fees.
See Ham-
mons, 15 F.4th at 1026;
Clinton Nurseries, 998 F.3d at 69–70. When
a statute creates an illegal disparity in treatment, “there exist two
remedial alternatives: a court may either declare the statute a nul-
lity and order that its benefits not extend to the class that the legis-
lature intended to benefit, or it may extend the coverage of the stat-
ute to include those who are aggrieved by the exclusion.”
Califano
v. Westcott, 443 U.S. 76, 89 (1979) (cleaned up) (quoting
Welsh v.
United States, 398 U.S. 333, 361 (1970) (Harlan, J., concurring in re-
sult)). Usually, “the preferred rule . . . is to extend favorable treat-
ment” to the disadvantaged class.
Sessions v. Morales-Santana, 137
S. Ct. 1678, 1701 (2017);
see, e.g.,
Gibbons, 455 U.S. at 471–73
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4 [Brasher, J., Concurring] 20-12547
(holding that a railway could not be subject to a burdensome bank-
ruptcy law that did not apply to other debtors);
Westcott, 443 U.S.
at 90 (stating that extension of welfare benefits to unconstitution-
ally excluded recipients was more consistent with Congress’s plain
intent than suspension of the benefit program);
Iowa-Des Moines
Nat. Bank v. Bennett, 284 U.S. 239, 247 (1931) (holding that a
county could not charge a bank tax rates higher than those imposed
on its competitors).
But an exception to the “preferred rule” arises when Con-
gress “would have willed” that the favorable treatment be nullified
“had it been apprised of the constitutional infirmity.”
Morales-San-
tana, 137 S. Ct. at 1701 (quoting
Levin v. Com. Energy, Inc., 560
U.S. 413, 415 (2010)). Such an intent may be inferred where the fa-
vorable treatment was meant to be an “exception” to the “general
rule . . . applicable to a substantial majority.”
Id. For example, in
Sessions v. Morales-Santana, children born abroad to unwed U.S.-
citizen mothers had to meet a shorter physical presence require-
ment before becoming citizens than those born to unwed U.S.-cit-
izen fathers.
Id. at 1686. This distinction was based on the anti-
quated notion that mothers would be more involved than fathers
in their children’s lives, so the Court concluded the law violated
equal protection principles.
Id. at 1692, 1698. But the longer physi-
cal presence requirement was most consistent with Congress’s in-
tent for the statutory scheme, and the children subject to it com-
prised a “substantial majority” of children born abroad.
Id. at 1700–
01. Accordingly, as a remedy, the Court applied the more onerous
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20-12547 [Brasher, J., Concurring] 5
requirement prospectively to the favored minority instead of ex-
tending the less onerous requirement to the disfavored majority.
Id. at 1701.
The investment group argues that the proper remedy for the
non-uniformity in fees is to refund and reduce the fee in the eighty-
eight judicial districts administered by the Trustee program to
match the lower fees in the six judicial districts administered by the
Bankruptcy Administrator program. But I believe that, as in
Mo-
rales-Santana, the investment group’s proposed remedy contra-
venes the intent of Congress. Here, as the Court’s opinion ful-
somely explains, Congress raised the fee in the Trustee districts to
solve that program’s budget problem and attempted to ensure uni-
formity by authorizing the higher fee in the Bankruptcy Adminis-
trator districts as well. Accordingly, the “general rule” is the higher
fee that applies to disbursements in the eighty-eight U.S. Trustee
districts—which comprise a “substantial majority” (94%) of the
country.
See id. The six Bankruptcy Administrator districts were—
for a time—a small “exception” to that general rule.
Under these circumstances, I cannot agree with the invest-
ment group’s proposed remedy. Ordering a refund of the higher
fees collected in Trustee districts would extend the special treat-
ment Congress inadvertently afforded to creditors in the Bank-
ruptcy Administrator districts, despite its manifest intent to raise
the fees in all districts. Here, it makes little sense to treat the eighty-
eight districts like the six districts as a remedy for a lack of uni-
formity. Instead, it is plain to me that the remedy that most accords
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6 [Brasher, J., Concurring] 20-12547
with Congress’s intent would be for the Judicial Conference to ap-
ply the general rule—the higher fee—in the Bankruptcy Adminis-
trator districts.
The Second Circuit did not address the proper remedy, but
the Tenth Circuit rejected my analysis because bankruptcy courts
in Alabama or North Carolina are outside its jurisdiction.
See Ham-
mons, 15 F.4th at 1026. I disagree with this reasoning. The Judicial
Conference, not local judges in Alabama and North Carolina, sets
the fee. And I see nothing that would prevent someone challenging
the fee’s uniformity—such as the investment group in this case—
from making the Judicial Conference a party to the litigation to ef-
fectuate a remedy. That is true whether the litigation takes place in
Florida, Colorado, New York, or anywhere else. But the invest-
ment group never joined the Judicial Conference as a party to this
case. We accordingly cannot bind it with our judgment,
see Hans-
berry v. Lee, 311 U.S. 32, 40 (1940), and the investment group is left
without a remedy.
Ultimately, the Supreme Court will resolve this issue. In the
meantime, because the investment group’s only requested remedy
is inconsistent with Congress’s intent and the Supreme Court’s case
law, I concur in the result of Part II.D.
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