Siegel v. Fitzgerald

P R E L I M I N A R Y P R I N T
Volume 596 U. S. Part 1
Pages 464–481
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
June 6, 2022
REBECCA A. WOMELDORF
reporter of decisions
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464 OCTOBER
TERM, 2021
Syllabus
SIEGEL, TRUSTEE OF THE CIRCUIT CITY STORES,
INC
. LIQUIDATING TRUST v. FITZGERALD, ACTING
UNITED STATES TRUSTEE FOR REGION 4
certiorari to the united states court of appeals for
the fourth circuit
No. 21–441. Argued April 18, 2022—Decided June 6, 2022
Congress created the United States Trustee Program (Trustee Program)
as a mechanism to transfer administrative functions previously handled
by bankruptcy judges to U. S. Trustees, a component of the Department
of Justice. Congress permitted the six judicial districts in North Caro-
lina and Alabama to opt out of the Trustee Program. In these six dis-
tricts, bankruptcy courts continue to appoint bankruptcy administrators
under a system called the Administrator Program. The Trustee Pro-
gram and the Administrator Program handle the same core administra-
tive functions, but have different funding sources. Congress requires
that the Trustee Program be funded in its entirety by user fees paid to
the United States Trustee System Fund (UST Fund), largely paid by
debtors who fle cases under Chapter 11 of the Bankruptcy Code. 28
U. S. C. § 589a(b)(5). Those debtors pay a fee in each quarter of the
year that their case remains pending at a rate set by Congress and
determined by the amount of disbursements the debtor's estate made
that quarter. See § 1930(a). In contrast, the Administrator Program
is funded by the Judiciary's general budget. While initially Congress
did not require Administrator Program district debtors to pay user fees
at all, Congress permitted the Judicial Conference of the United States
to require Chapter 11 debtors in Administrator Program districts to
pay fees equal to those imposed in Trustee Program districts. See
§ 1930(a)(7). Pursuant to a 2001 standing order of the Judicial Confer-
ence, from 2001 to 2017 all districts nationwide charged similarly situ-
ated debtors uniform fees.
In 2017, Congress enacted a temporary increase in the fee rates appli-
cable to large Chapter 11 cases to address a shortfall in the UST Fund.
See 131 Stat. 1229 (2017 Act). The 2017 Act provided that the fee raise
would become effective in the frst quarter of 2018, would last only
through 2022, and would be applicable to currently pending and newly
fled cases. The Judicial Conference adopted the 2017 fee increase for
the six Administrator Program districts, effective October 1, 2018, and
applicable only to newly fled cases.
In 2008, Circuit City Stores, Inc., fled for Chapter 11 bankruptcy
in the Eastern District of Virginia, a Trustee Program district. In

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as: 596 U. S. 464 (2022)
465
Syllabus
2010, the Bankruptcy Court confrmed a joint-liquidation plan, overseen
by
a trustee (petitioner here), to collect, administer, distribute, and liq-
uidate all of Circuit City's assets. The liquidation plan required peti-
tioner to pay quarterly fees to the U. S. Trustee while the Chapter 11
case was pending. Circuit City's bankruptcy was still pending when
Congress increased the fees for Chapter 11 debtors in Trustee Program
districts through the 2017 Act. Across the frst three quarters of 2018,
petitioner paid $632,542 in total fees, signifcantly more than the $56,400
petitioner would have paid absent the fee increase in the 2017 Act.
Petitioner fled for relief against the Acting U. S. Trustee for Region 4
(respondent here) contending that the fee increase was nonuniform
across Trustee Program districts and Administrator Program districts,
in violation of the Constitution's Bankruptcy Clause. The Bankruptcy
Court agreed, and directed that for the fees due from January 1, 2018,
onward, the Circuit City trustee pay the rate in effect prior to the 2017
Act. The Bankruptcy Court reserved the question whether the trustee
could recover any “overpayments” made under the 2017 Act. The
Fourth Circuit reversed, holding that the fee increase did not violate the
uniformity requirement of the Bankruptcy Clause because the increase
applied only to debtors in Trustee Program districts in order to bolster
the dwindling UST Fund, which funded the Trustee Program alone.
Held: Congress' enactment of a signifcant fee increase that exempted
debtors in two States violated the uniformity requirement of the Bank-
ruptcy Clause. Pp. 473–481.
(a) The Bankruptcy Clause's uniformity requirement—which empow-
ers Congress to establish “uniform Laws on the subject of Bankruptcies
throughout the United States,” U. S. Const., Art. I, § 8, cl. 4—applies to
the 2017 Act. Respondent contends that the 2017 Act was not a law
“on the subject of Bankruptcies” to which the uniformity requirement
applies, but instead a law enacted pursuant to the Necessary and Proper
Clause, Art. I, § 8, cl. 18, meant to help administer substantive bank-
ruptcy law. Nothing in the language of the Bankruptcy Clause
suggests a distinction between substantive and administrative laws,
however, and this Court has repeatedly emphasized that the Bankruptcy
Clause's language, embracing “laws on the subject of Bankruptcies,”
is broad. Th is Cour t has never disti ng uished between subst an-
tive and admi nistrative bankr uptcy laws or suggested that the
uniformity requirement would not apply to both. Further, the Court
has never suggested that all administrative bankruptcy laws are
enacted pursuant to the Necessary and Proper Clause, nor that the Nec-
essary and Proper Clause permits Congress to circumvent the limita-
tions set by the Bankruptcy Clause. To the contrary, Congress cannot
evade the “affrmative limitation” of the uniformity requirement by
enacting legislation pursuant to other grants of authority. See Railway

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v. FITZGERALD
Syllabus
Labor Executives' Assn. v. Gibbons, 455 U. S. 457, 468–469. In any
e
vent, the 2017 fee provision fts comfortably under the scope of the
Bankruptcy Clause: The provision amended a statute titled “Bankruptcy
fees,” § 1930, and the only “subject” of the 2017 Act is bankruptcy.
Moreover, the 2017 Act does affect the “substance of debtor-creditor
relations” because increasing mandatory fees paid out of the debtor's
estate decreases the funds available for payment to creditors.
Respondent points to purported historic analogues to argue that the
uniformity requirement does not apply where Congress sets different
fee structures with different funding mechanisms for debtors in differ-
ent bankruptcy districts. But the fee increase at issue here is materi-
ally different from the examples cited by respondent. Unlike respond-
ent's examples, the 2017 Act does not confer discretion on bankruptcy
districts to set regional policies based on regional needs. Rather, Con-
gress exempted debtors in only 2 States from a fee increase that applied
to debtors in 48 States, without identifying any material difference be-
tween debtors across those States. Pp. 473–476.
(b) The 2017 Act violated the uniformity requirement of the Bank-
ruptcy Clause. The Bankruptcy Clause confers broad authority on
Congress with the limitation that the laws enacted be “uniform.” The
Court's three decisions addressing the uniformity requirement together
stand for the proposition that the Bankruptcy Clause does not permit
arbitrary geographically disparate treatment of debtors. In Hanover
Nat. Bank v. Moyses, 186 U. S. 181, the Court rejected a challenge to
the constitutionality of the Bankruptcy Act of 1898, which permitted
individual debtor exemptions under different state laws, explaining that
the “general operation of the law is uniform although it may result in
certain particulars differently in different States.” Id., at 190. In the
Regional Rail Reorganization Act Cases, 419 U. S. 102, the Court af-
frmed the constitutionality of legislation which applied only to rail carri-
ers operating within a defned region of the country, noting the “fexibil-
ity inherent” in the Bankruptcy Clause, id., at 158, permits Congress to
enact geographically limited bankruptcy laws consistent with the uni-
formity requirement in response to a geographically limited problem.
In Gibbons, 455 U. S. 457, the Court struck down legislation in which
Congress altered the priority of claimants in a single railroad's bank-
ruptcy proceedings, holding that “[t]o survive scrutiny under the Bank-
ruptcy Clause, a law must at least apply uniformly to a defned class of
debtors.” Id., at 473.
Here, all agree that the 2017 Act's fee increase was not geographically
uniform because the fee increase applied differently to Chapter 11 debt-
ors in different regions. That geographical disparity meant that peti-
tioner paid over $500,000 more in fees compared to an identical debtor

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as: 596 U. S. 464 (2022)
467
Opinion of the Court
in North Carolina or Alabama. While respondent contends that such
dispar
ities were a permissible effort to solve the budgetary shortfall
in the UST Fund, an arguably geographical problem, that shortfall
stemmed not from an external and geographically isolated need, but
from Congress' creation of a dual bankruptcy system which allowed cer-
tain districts to opt into a system more favorable for debtors. The
Clause does not permit Congress to treat identical debtors differently
based on artifcial distinctions Congress itself created. Pp. 476–480.
(c) The Court remands for the Fourth Circuit to consider in the frst
instance the proper remedy. Pp. 480–481.
996 F. 3d 156, reversed and remanded.
Sotomayor, J., delivered the opinion for a unanimous Court.
Daniel L. Geyser argued the cause for petitioner. With
him on the briefs were Ben L. Mesches, Angela M. Oliver,
Jeffrey N. Pomerantz, and Robert J. Feinstein.
Deputy Solicitor General Gannon argued the cause for
respondent. With him on the brief were Solicitor General
Prelogar, Principal Deputy Assistant Attorney General
Boynton, Masha G. Hansford, Mark B. Stern, Jeffrey E.
Sandberg, Ramona D. Elliott, P. Matthew Sutko, Beth A.
Levene, and Wendy Cox.*
Justice Sotomayor delivered the opinion of the Court.
The Bankruptcy Clause empowers Congress to establish
“uniform Laws on the subject of Bankruptcies throughout
the United States.” U. S. Const., Art. I, § 8, cl. 4. The
Clause's requirement that bankruptcy laws be “uniform” is
not a straitjacket: Congress retains fexibility to craft legis-
lation that responds to different regional circumstances that
*Briefs of amici curiae urging reversal were fled for Acadiana Manage-
ment Group, LLC, et al. by Bradley L. Drell and Heather M. Mathews;
for the Chamber of Commerce of the United States of America by Steven
P. Lehotsky and Paul Lettow; for John Q. Hammons Hotels & Resorts
et al. by Nicholas J. Zluticky, Zachary H. Hemenway, and Michael
P. Pappas; for MF Global Holdings Ltd., as Plan Administrator, by Chris-
topher DiPompeo and Jane Rue Wittstein; and for USA Sales, Inc., by A.
Lavar Taylor.
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468 SIEGEL
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arise in the bankruptcy system. Nor, however, is this uni-
for
mity requirement toothless. The question in this case is
whether Congress' enactment of a signifcant fee increase
that exempted debtors in two States violated the uniformity
requirement. Here, it did.
I
A
Bankruptcy cases involve both traditional judicial respon-
sibilities and extensive administrative ones. Until 1978,
bankruptcy judges handled both. This meant that, in addi-
tion to their traditional judicial function of ruling on disputed
matters in adversarial proceedings, bankruptcy judges dealt
with an array of administrative tasks, such as appointing pri-
vate trustees where appropriate; organizing creditors' com-
mittees; supervising the fling of required reports, schedules,
and taxes; and monitoring cases for signs of abuse and fraud.
See H. R. Rep. No. 99–764, p. 17 (1986).
Concerned that these dual roles were overloading bank-
ruptcy judges and creating an appearance of bias, particu-
larly because judges were responsible for supervising trust-
ees that they themselves had appointed, Congress in 1978
piloted the United States Trustee Program (Trustee Pro-
gram) in 18 of the 94 federal judicial districts. See id.,
at 17–18; Bankruptcy Reform Act of 1978, 92 Stat. 2549. To
“rende[r] the separation of administrative and judicial func-
tions complete,” the pilot program transferred the admin-
istrative functions previously handled by the bankruptcy
courts to newly created U. S. Trustees, housed within the
Department of Justice rather than the Administrative Offce
of the U. S. Courts. H. R. Rep. No. 95–595, p. 115 (1977).
In 1986, Congress sought to make the pilot Trustee Pro-
gram permanent and to expand it nationwide, but met resist-
ance from stakeholders in North Carolina and Alabama.
See The United States Trustee System: Hearing on S. 1961
before the Subcommittee on Courts of the Senate Committee
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on the Judiciary, 99th Cong., 2d Sess., 129 (1986). As a re-
su
lt, Congress opted to expand mandatorily the Trustee Pro-
gram to all federal judicial districts except for the six judicial
districts in North Carolina and Alabama. Congress permit-
ted only those six districts to continue judicial appointment
of bankruptcy administrators, referring to that system as
the Administrator Program. §§ 111–115, 302(d)(3), 100 Stat.
3090– 3095, 3121– 3123. The Administrator Program was
scheduled to phase out in 1992, but Congress extended it by
10 years. § 317(a), 104 Stat. 5115. At the end of those 10
years, however, Congress did not phase out the Administra-
tor Program. Instead, it eliminated the sunset period and
permanently exempted the six districts from the require-
ment to transition to the Trustee Program, while providing
that each district could individually elect to do so. § 501, 114
Stat. 2421–2422 (2000 Act); § 302(d)(3), 100 Stat. 3121–3123.
Each of the six districts continues to participate in the Ad-
ministrator Program.
The Trustee Program and the Administrator Program han-
dle the same core administrative functions, but have differ-
ent funding sources. Congress requires that the Trustee
Program be funded in its entirety by user fees paid to the
United States Trustee System Fund (UST Fund), the bulk
of which are paid by debtors who fle cases under Chapter
11 of the Bankruptcy Code. 28 U. S. C. § 589a(b)(5). Those
debtors pay a fee in each quarter of the year that their case
remains pending at a rate set by Congress. The fee varies
according to the amount of funds paid out (“disbursed”) from
the bankruptcy estate to creditors, suppliers, and other par-
ties during that quarter. See § 1930(a).
In contrast, Congress does not require the Administrator
Program to fund itself. Instead, the Administrator Program
is funded by the Judiciary's general budget. In re Circuit
City Stores, Inc., 996 F. 3d 156, 160 (CA4 2021). Initially,
Congress did not require Administrator Program district
debtors to pay user fees at all. After the Ninth Circuit held
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Opinion of the Court
that system unconstitutional, see St. Angelo v. Victoria
F
arms, Inc., 38 F. 3d 1525, 1532–1533 (1994), amended, 46
F. 3d 969 (1995), Congress provided that “ `the Judicial Con-
ference of the United States may require the debtor in a case
under chapter 11 [fled in an Administrator Program district]
to pay fees equal to those imposed' ” in Trustee Program
districts, 2000 Act § 105, 114 Stat. 2412 (enacting 28 U. S. C.
§ 1930(a)(7)). Congress directed that any such fees be de-
posited into a fund that offsets appropriations to the Judicial
Branch. 114 Stat. 2412. The Judicial Conference adopted a
standing order in 2001 directing Administrator Program dis-
tricts to charge fees “in the amounts specifed in 28 U. S. C.
§ 1930, as those amounts may be amended from time to time.”
Report of the Proceedings of the Judicial Conference of the
United States 46 (Sept. /Oct. 2001). Under this standing
order, for the next 17 years, the Judicial Conference matched
all Trustee Program fee increases with equivalent Adminis-
trator Program fee increases, meaning that all districts na-
tionwide charged similarly situated debtors uniform fees.
In 2017, concerned with a shortfall in the UST Fund, Con-
gress enacted a temporary, but signifcant, increase in the
fee rates applicable to large Chapter 11 cases. See Pub. L.
115–72, Div. B, 131 Stat. 1229 (2017 Act). The increase was
set to take effect only if the UST Fund balance dropped
below $200 million as of September 30 of the most recent
fscal year. If that condition was met, the increase applied
on a quarterly basis to any debtors with a disbursement
of $1 million or more during that quarter, regardless of
whether their case was newly fled or already pending when
the increase took effect. For those debtors, the maximum
fee was increased from $30,000 a quarter to $250,000 a quar-
ter. § 1004(a), id., at 1232. The statute provided that the
fee raise would become effective in the frst quarter of 2018
and would last only through 2022.
Despite the Judicial Conference's standing order, and un-
like with previous fee increases, the six districts in the two
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States participating in the Administrator Program did not
i
mmediately adopt the 2017 fee increase. Only in Septem-
ber 2018 did the Judicial Conference order Administrator
Program districts to implement the amended fee schedule.
Even then, however, two key differences remained between
the fee increase faced by debtors in Trustee Program dis-
tricts as opposed to those faced by debtors in Administrator
Program districts. First, the fee increase took effect for the
six Administrator Program districts as of October 1, 2018,
while the increase took effect for the Trustee Program dis-
tricts as of the frst quarter of 2018. Second, in Administra-
tor Program districts, the fee increase applied only to newly
fled cases, while in Trustee Program districts, the increase
applied to all pending cases.
In 2021, Congress amended the statute governing parity of
fees between Trustee Program and Administrator Program
districts, § 1930(a)(7), to replace the word “may” with “shall.”
See Pub. L. 116–325, § 3(d)(2), 134 Stat. 5088. As a result,
the statute now provides that the Judicial Conference “shall
require” imposition of fees in Administrator Program dis-
tricts that are equal to those imposed in Trustee Program
districts. § 1930(a)(7). This change “confrm[ed] the long-
standing intention of Congress that quarterly fee require-
ments remain consistent across all Federal judicial districts.”
§ 2(a)(4)(B), id., at 5086.
B
In 2008, Circuit City Stores, Inc., fled for Chapter 11
bankruptcy in the Eastern District of Virginia, a Trustee
Program district. In 2010, the Bankruptcy Court confrmed
a joint-liquidation plan, overseen by a trustee (petitioner
here), to collect, administer, distribute, and liquidate all of
Circuit City's assets. The liquidation plan required peti-
tioner to “ `pay quarterly fees to the U. S. Trustee until the
Chapter 11 Cases are closed or converted.' ” In re Circuit
City Stores, 606 B. R. 260, 263 (2019). In 2010, when the
plan was confrmed, the maximum quarterly fee was $30,000.

472 SIEGEL
v. FITZGERALD
Opinion of the Court
Circuit City's bankruptcy was still pending when Congress
raised
the fees for Chapter 11 debtors in Trustee Program
districts through the 2017 Act. Across the frst three quar-
ters after the fee increase took effect, petitioner paid
$632,542 in total fees. Id., at 267, n. 20. Had Congress not
increased fees, petitioner would have paid $56,400 over that
same period. Ibid.
Petitioner fled for relief against the Acting U. S. Trustee
for Region 4 (respondent here, represented by the Solicitor
General) in the Bankruptcy Court of the Eastern District of
Virginia. Petitioner objected that the fee increase under
the 2017 Act was nonuniform across Trustee Program dis-
tricts and Administrator Program districts, in violation of
the Constitution's Bankruptcy Clause. The Bankruptcy
Court agreed, and directed that for the fees due from Janu-
ary 1, 2018, onward, the trustee pay the rate in effect prior
to the 2017 Act. Id., at 270–271. The court reserved the
question whether the trustee could recover any “overpay-
ments” made under the 2017 Act. Ibid.
A divided panel of the Fourth Circuit reversed. The court
agreed that the uniformity requirement of the Bankruptcy
Clause applied to the 2017 Act, but it interpreted the Clause
as forbidding “only `arbitrary' geographic differences.” 996
F. 3d, at 166. In the court's view, the fee increase permissi-
bly applied only to Trustee Program districts because the
UST Fund, which funded that program alone, was dwindling.
Therefore, the court reasoned, Congress' effort to remedy
that problem was not arbitrary. Judge Quattlebaum dis-
sented in relevant part, interpreting the Bankruptcy Clause
to preclude disparate treatment of bankruptcy districts un-
less the treatment was “aimed at addressing issues that are
geographical in nature.” Id., at 175. In Judge Quattle-
baum's view, the difference between Trustee Program dis-
tricts and Administrator Program districts was arbitrary, as
there was nothing “geographically distinct about Alabama or
North Carolina that justifed a different approach in those
states.” Ibid.
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Opinion of the Court
This Court granted certiorari, 595 U. S. ––– (2022), to re-
solve
a split that had developed in the lower courts over the
constitutionality of the 2017 Act.
1
II
A
The Bankruptcy Clause empowers Congress to establish
“uniform Laws on the subject of Bankruptcies throughout
the United States.” U. S. Const., Art. I, § 8, cl. 4. The frst
question before the Court is whether the 2017 Act is subject
to the Bankruptcy Clause's uniformity requirement at all.
Respondent contends that the 2017 Act was not a law “on
the subject of Bankruptcies” to which the uniformity re-
quirement applies, but, rather, a law meant to help adminis-
ter substantive bankruptcy law. Respondent interprets the
Bankruptcy Clause as extending only to laws that “alter the
substance of debtor-creditor relations,” such as laws that set
priorities for claims or exempt property from an estate.
Brief for Respondent 25. In respondent's view, the Neces-
sary and Proper Clause, U. S. Const., Art. I, § 8, cl. 18, sup-
plies the authority for Congress to pass a law auxiliary to a
substantive bankruptcy law.
Nothing in the language of the Bankruptcy Clause itself,
however, suggests a distinction between substantive and ad-
ministrative laws. This Court has repeatedly emphasized
that the Bankruptcy Clause's language, embracing “[l]aws
on the subject of Bankruptcies,” is broad. For example, the
Court has recognized that the “subject of bankruptcies is
incapable of fnal defnition,” and includes “nothing less than
`the subject of the relations between [a] debtor and his credi-
tors.' ” Wright v. Union Central Life Ins. Co., 304 U. S. 502,
1
Compare In re John Q. Hammons Fall 2006, LLC, 15 F. 4th 1011 (CA10
2021) (2017 Act is unconstitutional); In re Clinton Nurseries, Inc., 998
F. 3d 56 (CA2 2021) (same), with In re Mosaic Mgmt. Group, Inc., 22 F. 4th
1291 (CA11 2022) (2017 Act is constitutional); In re Circuit City Stores,
Inc., 996 F. 3d 156 (CA4 2021) (same); In re Buffets, L.L.C., 979 F. 3d 366
(CA5 2020) (same).
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513–514 (1938). Without purporting to defne the full scope
of
the Clause, the Court has interpreted the Clause to have
“granted plenary power to Congress over the whole subject
of `bankruptcies,' ” and observed that the “language used”
did not “limit” the scope of Congress' authority. Hanover
Nat. Bank v. Moyses, 186 U. S. 181, 187 (1902).
Nor has this Court ever distinguished between substan-
tive and administrative bankruptcy laws or suggested that
the uniformity requirement would not apply to both. Re-
spondent argues that each of this Court's prior cases on the
uniformity requirement has addressed what he terms “sub-
stantive bankruptcy laws,” Brief for Respondent 24, but
these cases do not establish that the uniformity requirement
only applies to such “substantive” laws. This Court has
stated that “the powers of the general grant” of the Neces-
sary and Proper Clause must be added to the Bankruptcy
Clause's “specifc grant” of power to Congress to legislate on
the subject of bankruptcies. Wright, 304 U. S., at 513. The
Court has never suggested, however, that all “administra-
tive” bankruptcy laws, Brief for Respondent 13, are enacted
pursuant to the Necessary and Proper Clause, nor that the
Necessary and Proper Clause permits Congress to circum-
vent the limitations set by the Bankruptcy Clause. To the
contrary, the Court has held that Congress cannot evade the
“affrmative limitation” of the uniformity requirement by
enacting legislation pursuant to other grants of authority.
Railway Labor Executives' Assn. v. Gibbons, 455 U. S. 457,
468–469 (1982) (rejecting the contention that Congress could
“enact nonuniform bankruptcy laws pursuant to the Com-
merce Clause,” because doing so “would eradicate from the
Constitution a limitation on the power of Congress to enact
bankruptcy laws”).
Not surprisingly, all courts to have considered this ques-
tion to date (even those that have found the 2017 Act consti-
tutional) have accepted that the statute is subject to the
Bankruptcy Clause's uniformity requirement. See In re
Clinton Nurseries, Inc., 998 F. 3d 56, 64, and n. 6 (CA2 2021)
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Opinion of the Court
(collecting cases). The 2017 fee provision amended a statute
titled
“Bankruptcy fees.” 28 U. S. C. § 1930. The provi-
sion's effect is to set fees that must be paid by a bankruptcy
trustee from the debtor's estate in a bankruptcy proceeding.
The only “subject” of the 2017 Act is bankruptcy. Moreover,
and importantly, the 2017 Act does affect the “substance of
debtor-creditor relations”: Increasing mandatory fees paid
out of the debtor's estate decreases the funds available for
payment to creditors. As a result, the obligations between
creditors and debtors are changed.
Respondent also argues that historic and modern congres-
sional practice support the notion that bankruptcy fees are
wholly exempt from the uniformity requirement. This ar-
gument glosses over the nature of the practices at issue.
The historic examples respondent cites concern uniform fed-
eral laws allowing for local variation by delegating discretion
to districts to establish their own procedures for certain
bankruptcy matters, including fees, in view of local needs
and conditions. See An Act to Establish an Uniform System
of Bankruptcy Throughout the United States, § 47, 2 Stat. 33
(1800) (providing “[t]hat the district judges, in each district
respectively, shall fx a rate of allowance to be made to the
commissioners of bankruptcy”); An Act to Establish a Uni-
form System of Bankruptcy Throughout the United States,
§ 6, 5 Stat. 446 (1841) (establishing that district courts may
“prescribe a tariff or table of fees and charges”). Similarly,
the contemporary laws respondent cites are uniform laws
allowing for local determination of governing rules. See,
e. g., 28 U. S. C. §§ 158(b)(1), (6) (providing that district courts
may, but need not, participate in the bankruptcy appellate
panel for its circuit if the circuit has created one). As dis-
cussed below, see infra, at 476–478, the uniformity require-
ment does not demand that Congress forbid or eliminate
such local variation or choice.
The fee increase at issue here is materially different from
these laws. It does not confer discretion on bankruptcy dis-
tricts to set regional policies based on regional needs.
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Rather, Congress exempted debtors in only 2 States from a
fee
increase that applied to debtors in 48 States, without
identifying any material difference between debtors across
those States. The only difference between the States in
which the fee increase applied and the States in which it
was not required was the desire of those two States not to
participate in the Trustee Program. The historical record
therefore provides no support for respondent's argument
that the uniformity requirement does not apply where Con-
gress sets different fee structures with different funding
mechanisms for debtors in different bankruptcy districts.
B
Having determined that the 2017 Act falls within the
ambit of the Bankruptcy Clause, the Court must now decide
whether the Act was a permissible exercise of that Clause.
1
Although the Bankruptcy Clause confers broad authority
on Congress, the Clause also imposes a limitation on that
authority: the requirement that the laws enacted be “uni-
form.” The Court has addressed the uniformity require-
ment on three occasions. Taken together, they stand for
the proposition that the Bankruptcy Clause offers Congress
fexibility, but does not permit arbitrary geographically dis-
parate treatment of debtors.
The Court frst addressed the uniformity requirement in
rejecting a challenge to the constitutionality of the Bank-
ruptcy Act of 1898, which permitted individual debtor ex-
emptions, including homestead and wage exemptions under
state laws. Moyses, 186 U. S. 181. The Court in Moyses
held that the Bankruptcy Clause's uniformity principle does
not require Congress to eliminate existing state exemptions
in bankruptcy laws. Id., at 188. The Court explained that
the “general operation of the law is uniform although it may
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as: 596 U. S. 464 (2022)
477
Opinion of the Court
result in certain particulars differently in different States.”
Id.
, at 190.
Next, in the Regional Rail Reorganization Act Cases, 419
U. S. 102 (1974), the Court affrmed the constitutionality of
the Regional Rail Reorganization Act of 1973, which applied
only to rail carriers operating within a defned region of the
country, where “[n]o railroad reorganization . . . was pending
outside that defned region.” Id., at 159–160. The Court
descr ibed the “flexibi l ity i nherent” i n the Bankr uptcy
Clause, id., at 158, which “does not deny Congress power to
take into account differences that exist between different
parts of the country, and to fashion legislation to resolve geo-
graphically isolated problems,” id., at 159. Because the Re-
gional Rail Reorganization Act “operate[d] uniformly upon
all bankrupt railroads then operating in the United States,”
it was consistent with the Bankruptcy Act's uniformity prin-
ciple. Id., at 160. Put simply, Congress may enact geo-
graphically limited bankruptcy laws consistent with the uni-
formity requirement if it is responding to a geographically
limited problem.
While the uniformity requirement allows Congress to ac-
count for “differences that exist between different parts of
the country,” id., at 159, it does not give Congress free rein
to subject similarly situated debtors in different States to
different fees because it chooses to pay the costs for some,
but not others. In Gibbons, 455 U. S. 457, the Court struck
down the Rock Island Railroad Transition and Employee As-
sistance Act (RITA), in which Congress altered the order
of priority of claimants in a single railroad's bankruptcy
proceedings. The Court recognized that the Bankruptcy
Clause “contains an affrmative limitation or restriction upon
Congress' power,” namely, the uniformity requirement. Id.,
at 468. RITA exceeded this limitation, the Court explained,
because it singled out one railroad and did not apply to other
similarly situated railroads that were engaged in bankruptcy
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Opinion of the Court
proceedings. Id., at 470. The Court reasoned that unlike
the
Regional Rail Reorganization Act, RITA was “not a re-
sponse either to the particular problems of major railroad
bankruptcies or to any geographically isolated problem: it is
a response to the problems caused by the bankruptcy of one
railroad.” Ibid. For that reason, RITA “cannot be said to
apply uniformly even to major railroads in bankruptcy pro-
ceedings throughout the United States.” Id., at 471. The
Court emphasized that its “holding . . . does not impair Con-
gress' ability under the Bankruptcy Clause to defne classes
of debtors and to structure relief accordingly” and summa-
rized that “[t]o survive scrutiny under the Bankruptcy
Clause, a law must at least apply uniformly to a defned class
of debtors.” Id., at 473.
In sum, our precedent provides that the Bankruptcy
Clause offers Congress fexibility, but does not permit the
arbitrary, disparate treatment of similarly situated debtors
based on geography.
2
Here, there is no dispute that the 2017 Act's fee increase
was not geographically uniform. The only remaining ques-
tion is whether Congress permissibly imposed nonuniform
fees because it was responding to a funding defcit limited to
the Trustee Program districts. Under the specifc circum-
stances present here, the nonuniform fee increase violated
the uniformity requirement.
All agree that the fee increase applied differently to Chap-
ter 11 debtors in different regions. Debtors in Alabama and
North Carolina, unlike debtors in the remainder of the coun-
try, paid no fee increases for the frst three quarters of 2018.
Moreover, the fee increase only applied to newly fled cases,
and not pending cases, in those two States. That geographi-
cal disparity meant that petitioner paid over $500,000 more
in fees compared to an identical debtor in North Carolina
or Alabama.
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as: 596 U. S. 464 (2022)
479
Opinion of the Court
Recognizing that the 2017 Act caused such disparities, re-
spondent
contends that those disparities were a permissible
effort to solve a particular geographical problem: the budget-
ary shortfall that befell the UST Fund, which supports the
Trustee Program but not the Administrator Program. Re-
spondent argues that this problem justifed Congress' impo-
sition of fee increases specifc to Trustee Program districts
in order to replenish the UST Fund's coffers. It is true that
Congress' stated goal in raising fees in Trustee Program dis-
tricts was to address this budgetary shortfall. That short-
fall, however, existed only because Congress itself had arbi-
trarily separated the districts into two different systems
with different cost funding mechanisms, requiring Trustee
Program districts to fund the Program through user fees
while enabling Administrator Program districts to draw on
taxpayer funds by way of the Judiciary's general budget.
The problem Congress sought to address here is thus dif-
ferent from the problem facing the debtors in the Regional
Rail Reorganization Act Cases. There, a “national rail
transportation crisis” prompted Congress to respond with
the Regional Rail Reorganization Act of 1973. 419 U. S., at
159. That crisis arose when eight major railroads located in
the Northeast and the Midwest entered reorganization pro-
ceedings. Id., at 108. Congress responded accordingly
with legislation tailored to those regions. Id., at 108–109.
The problems prompting Congress' disparate treatment in
this case, however, stem not from an external and geographi-
cally isolated need, but from Congress' own decision to cre-
ate a dual bankruptcy system funded through different
mechanisms in which only districts in two States could opt
into the more favorable fee system for debtors.
The Bankruptcy Clause affords Congress fexibility to
“fashion legislation to resolve geographically isolated prob-
lems,” id., at 159, but as precedent instructs, the Clause does
not permit Congress to treat identical debtors differently
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Opinion of the Court
based on an artifcial funding distinction that Congress itself
created.
The Clause, after all, would clearly prohibit Con-
gress from arbitrarily dividing States into two categories
and charging different fees to States in different categories
unrelated to the needs of, or conditions in, those States.
The Clause does not allow Congress to accomplish in two
steps what it forbids in one.
2
A few observations on the limits of this decision are in
order. The Court does not today address the constitutional-
ity of the dual scheme of the bankruptcy system itself, only
Congress' decision to impose different fee arrangements in
those two systems. The Court's holding today also should
not be understood to impair Congress' authority to structure
relief differently for different classes of debtors or to respond
to geographically isolated problems. The Court holds only
that the uniformity requirement of the Bankruptcy Clause
prohibits Congress from arbitrarily burdening only one set
of debtors with a more onerous funding mechanism than that
which applies to debtors in other States.
C
The parties dispute the appropriate remedy. Petitioner
seeks a full refund of fees that it paid during the nonuniform
period. Respondent argues that any remedy should apply
only prospectively, or should result in a fee increase for debt-
ors who paid less in the Administrator Program districts.
2
Respondent further argues that any uniformity violation should be at-
tributed to the Judicial Conference and not to Congress, because Congress
expected the Judicial Conference to implement the 2017 Act's fee increase
in Administrator Program districts. As respondent sees it, it is the Judi-
cial Conference's failure to implement the fee increase that is responsible
for the disparate fees, not the 2017 Act itself. Respondent provides ample
evidence that Congress likely understood, when it passed the 2017 Act,
that the Judicial Conference would impose the same fee increase. That
said, prior to the 2021 amendment, the fee statute did not require the
Judicial Conference to impose an equivalent increase. It is that congres-
sional decision that led to the disparities at issue here.
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481
Opinion of the Court
The parties raise a host of legal and administrative concerns
w
ith each of the remedies proposed, including the practical-
ity, feasibility, and equities of each proposal; their costs;
and potential waivers by nonobjecting debtors. The court
below, however, has not yet had an opportunity to address
these issues or their relevancy to the proper remedy.
“[M]indful that we are a court of review, not of frst view,”
Cutter v. Wilkinson, 544 U. S. 709, 718, n. 7 (2005), this Court
remands for the Fourth Circuit to consider these questions
in the frst instance.
***
For these reasons, the judgment of the Court of Appeals
for the Fourth Circuit is reversed, and the case is remanded
for further proceedings consistent with this opinion.
It is so ordered.
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Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
None