Pildes: Hanging In on Bailing Out

Rick Pildes sends along this guest post:

    A number of us have been trying to work out the implications of the Court’s NAMUNDO decision for the next constitutional challenge to Section 5. I now want to address Armand Dernfer’s brief analysis, which I had promised to do.
    Armand, like Nate Persily, is focused on the potential significance the statute’s escape valve, the bailout option, will have for the next case. But they are making quite different arguments; though the differences are subtle, they are important. Armand argues that how effective bailout turns out to be could well affect the Court’s ultimate conclusion as to whether Section 5 is constitutional. The easier bailout is, or the more often areas manage to bailout of the statute, the more likely the Court is to find the new Section 5 to be constitutional. In essence, Armand envisions that the Court will address the facial constitutionality of Section 5, but that the Court might uphold it if the bailout system turns out as a general matter to be an effective, meaningful option. Nate’s suggestion instead was that the Court might never address the facial constitutionality of Section 5 because the Court will entertain only as-applied challenges. As a practical matter, a great deal is at stake in the difference, including whether Congress would have to revisit the Act in the wake of the Court’s next decisions.
    In principle, Armand’s view has some legal weight. If Congress were to redesign bailout, for example, and make it a more frequently used option, that could affect the Act’s constitutionality. That is partly why many of us urged Congress to examine the bailout option in more detail in 2006. Way back in 1982, Congress decided bailout had not been working as intended; it amended the Act in 1982 to make bailout easier. But as it turned out, those amendments had almost no practical effect. It’s still not entirely clear why. There are a number of possibilities, including that the statutory formula is inappropriately onerous; that there are practical obstacles to collecting information necessary to bailout that Congress was not and is not aware of; that there is ignorance about the existence of the bailout option; and that it is too politically charged for jurisdictions to take the initiative to seek bailout. At the least, I would have preferred (as I testified) that Congress explore the reasons and then, if necessary, decide how the statute might be best structured. As I said in my earlier post, the more minimal the actual burden of bailout, the less significant the coverage formula becomes, which could well affect the Court’s constitutional judgment.
    Though Armand’s analysis seems plausible in principle, I do wonder, however, about whether it could play out in practice. I see two practical obstacles. One is that it depends on how much additional experience with the bailout process emerges before the Court faces the next constitutional challenge to the Act. If that challenge emerges relatively soon, the record regarding bailout won’t look any different, or much different, than it was in the Court’s recent decision. Only if enough time passes before the Court next faces the issues, and enough jurisdictions seek and obtain bailout, would the record be significantly different.
    Second, the Court’s decision expands the number of jurisdictions that can seek bailout, but it does nothing to change the content of what’s required for bailout, and Congress did nothing on that front either. The decision has no effect on the large, principal entities the Act covers, the 9 states and the approximately 900 counties. If those areas continue not to bailout in the next several years, just as they have not bailed out in meaningful numbers since 1982, then even if time passes before the Court faces the next challenge, bailout might look just as non-minimal an act then as it looks now. Perhaps some smaller jurisdictions that could not seek bailout before will now bailout successfully. But I wonder how much bailout will look to the Court like a truly meaningful escape valve in a way that affects the constitutionality of Section 5 if it continues to be the case that none of the main covered entities manage, for whatever reason, to bailout.
    In sum, Armand’s argument seems legally plausible to me, but I think the practicalities will stand in the way of that argument being able to be made effectively in the next few years. The wise course, it seems to me, would be for Congress to examine why bailout has not turned out as envisioned and, if there are inappropriate statutory barriers to proper bailout, to address those. I do not expect Congress to do that, however.

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