The big news from yesterday's two decisions was not that Virginia lacks standing; that was a problem lurking in that case from the beginning, a nettlesome issue going all the way back to Judge Hudson's first opinion (in August 2010) rejecting the United States's motion to dismiss on 12(b)(1) grounds. Virginia would have stood on much stronger ground had it also alleged an injury in fact from the effect of the minimum essential coverage provision's necessarily pushing more Virginia residents onto the state's Medicaid rolls, and thus imposing a significant financial cost on the state. But the Commonwealth failed to do this, instead resting on the claim that it had standing based on the alleged "conflict" between its Virginia Health Care Freedom Act and the individual mandate. This was a weak argument from the beginning, and the Fourth Circuit's holding was entirely unsurprising.
What is surprising--perhaps not on the merits, but in relation to the attention the issue has received to date, from the courts and the parties--is the court's holding in Liberty University v. Geithner that federal courts lack any subject matter jurisdiction over a suit seeking to enjoin enforcement of the individual mandate because such jurisdiction is precluded by the Anti-Injunction Act. In this respect, there are some important points worth noting:
* This is a potential problem in every lawsuit currently challenging the individual mandate. That is, if the Fourth Circuit's analysis is correct, then the Supreme Court would lack jurisdiction to hear any private plaintiff's claim that the minimum coverage provision exceeds Congress's enumerated powers until after a taxpayer was assessed a penalty under ACA 1501, paid the penalty, and sued the federal government for a refund. The case thus would not reach the Supreme Court until somewhere in the neighborhood of 2015 or 2016.
* It is conceivable, though, that the AIA does bar suits brought by state governments. Of course, state governments have problems establishing standing under Article III, as discussed above. But if the states could overcome the Article III hurdle, it might be that they (unlike private plaintiffs) could avoid the AIA bar. (I remember Judge Hudson analyzing this issue in his August 2010 ruling denying the United States's motion to dismiss. Obviously, I need to look at it more carefully now.)
* One solution is that which Kevin Walsh has just proposed, which you can read here. In essence, Congress could pass a law repealing the AIA (since it is a statutory bar to jurisdiction) as applied to the ACA lawsuits. As Kevin documents, such a "retroactive" restoration of jurisdiction appears to be viable, even if there actually was not jurisdiction when the case was initially filed in the district court. (I agree with Kevin that Democrats and the President likely have an incentive to appear publicly to support this. But I am not sure there is quite the bipartisan consensus in fact to which Kevin refers. I can think of several reasons that most Democrats would much rather this case be decided by the Supreme Court in 2013 rather than June 2012.)
* What does the Justice Department do now? It has already essentially flip-flopped on this question--initially arguing that the AIA precluded subject matter jurisdiction, but then changing its tune, most notably in the letter brief it filed with the Fourth Circuit after oral argument. Does it now wish to flip back, given that the argument now seems to have gained greater credibility? Or is there too high a political cost for the administration in appearing to run from a fight on the merits? Or is there just too much to gain politically from delaying Supreme Court review (something the Court might well welcome) and pushing the decision past the 2012 election, such that it is worth taking whatever the hit will be from appearing so irresolute? I'm sure the DOJ lawyers working on this case were happy to have prevailed yesterday. But they simultaneously had a new strategic headache thrown into their laps.
There is much more to say, but I need to look into the various legal questions with more care. For now, it suffices to say that the Fourth Circuit's decision may well have complicated matters considerably, at least if Judge Motz's analysis proves difficult for the Supreme Court to refute.
UPDATE: One other point worth emphasizing: Probably the most important analytic move in Judge Motz's opinion was to hold that the meaning of "tax" for purposes of the Anti-Injunction Act and the meaning of "tax" for purposes of the General Welfare Clause (relevant to whether the individual mandate is a valid exercise of Congress's taxing power) are distinct. More specifically, the category of "taxes" (or exactions) to which the AIA applies is potentially much broader than that under the General Welfare Clause. Most (and perhaps all--I would need to go back and check carefully) of the other judges to have analyzed the AIA issue thus far have treated the issues as one and the same. (Recall Judge Vinson's opinion in October 2010, where he held that the individual mandate imposed a "penalty" rather than a "tax," and thus concluded from this both that the AIA was inapplicable and that the individual mandate could not be justified by the taxing power.) My suspicion is that Judge Motz's analysis on this point will be much harder to refute than the government's claim that the mandate is a valid exercise of the taxing power.
