Federal court says RFRA applies to federal bankruptcy law

Wednesday, April 15, 1998

A federal appeals court has held that the Religious Freedom Restoration Act of 1993 is applicable to federal laws even though it was invalidated last year by the U.S. Supreme Court.

The 8th U.S. Circuit Court of Appeals on Monday ruled that when the Supreme Court invalidated RFRA last year it did so only as it applied to states. The appeals court reversed a lower-court decision allowing a bankruptcy trustee to recover tithes from the Crystal Evangelical Free Church in New Hope, Minn.

Between February 1991 and February 1992, Bruce and Nancy Young tithed 10% of their annual income to the church. They later filed for bankruptcy. Both the bankruptcy court and the district court held that the tithes to the church could be recovered by the trustee. But the Youngs filed suit, citing RFRA, which said government must show a compelling public interest to justify any interference in religious practice, and must use the least-restrictive means for doing so if necessary.

The appellate court ruled that allowing the bankruptcy trustee to recover the Youngs' contributions substantially infringed upon their right to free exercise of religion, therefore running afoul of RFRA. Last year, however, the Supreme Court invalidated RFRA, noting Congress simply did not have the constitutional power to enact the law.

The Youngs' case was sent back to the appellate court, which ruled that the Supreme Court opinion in Boerne v. Texas did not address whether RFRA could apply to federal law.

The suggestion that Boerne applied only to the states is one that has been debated since the decision. The debate centers on language in the case that says RFRA is unconstitutional as applied to the states.

Ira C. Lupu, a George Washington University law professor and constitutional scholar, said that the appeals court decision is the first to explore whether the high court meant to invalidate RFRA as it pertained to federal laws.

“A number of lower courts have said that RFRA is unconstitutional, period,” Lupu said. “In re Young is important, however, because it is the first full opinion that grapples fully with the question of whether RFRA applies to federal law.”

The 8th Circuit's opinion revolves around Congress' powers, as stated in Article I of the Constitution, to create uniform laws regarding bankruptcies throughout the country and to make laws “necessary and proper” to enforce those bankruptcy laws.

According to the majority opinion, RFRA is an appropriate congressional action that amends the bankruptcy code. It is allowable, the court said, because of those two powers under Article I. Whether RFRA applies to other congressional powers, such as regulating prisons, taxes or other enumerated powers, was not addressed in the case. Thus, the opinion can be fairly read as only suggesting that the “compelling interest” and “least-restrictive means” tests are used when the federal government is faced with challenges to its bankruptcy laws.

Lupu also said that “there is a hint” in Boerne that RFRA was struck down as it related to federal laws because Congress chose to reject rules of religious liberty as outlined by the Supreme Court, and ended up restoring repudiated rules. Lupu added, however, that he believes Congress cannot apply the RFRA law to states — but can apply it to its own laws, which it has the power to regulate, such as bankruptcies.

Marci Hamilton, a constitutional-law scholar who successfully argued against the federal RFRA, however, believes the court of appeals decision is intellectually void.

“RFRA is already unconstitutional across the board,” Hamilton said “The 8th Circuit simply resorted to weak arguments that the “necessary and proper” clause (in Article I, giving Congress power to execute its enumerated powers) expands enumerated powers of Congress. The court gave permission to Congress to alter relationships between church and state. That is not an appropriate balance of power.”

Hamilton also pointed to language in Boerne that suggests the high court invalidated RFRA in all aspects.

In striking down RFRA, Justice Anthony Kennedy noted: “The proposed amendment [RFRA] gave Congress too much power at the expense of the existing constitutional structure.”

Kennedy concluded that if Congress “could define its own powers,” then the Constitution would no longer be the country's superior law; it would in effect be on the same level as “ordinary legislative acts.”

Hamilton said the Boerne decision concluded that if RFRA was actually good law, it would “make the courts' interpretations of the Constitution superfluous.”

Judge Andrew Bogue of the 8th Circuit filed a dissenting opinion in In re Young, in which he concluded that “RFRA was both beyond the scope of the power of Congress and violative of the separation of powers doctrine.

“In essence Congress, through RFRA, attempts to impose upon the judiciary a standard of review for interpreting constitutional rights which it believes is a better standard than that crafted by the Court itself,” Bogue wrote.

Moreover, Bogue maintained that RFRA is a religious law that has nothing to with enforcing bankruptcy law.

“Before one can say that Congress may permissibly change the Bankruptcy Code to accommodate the provisions of RFRA, … one must assume the constitutionality of RFRA in the first instance,” Bogue said. “But if RFRA does not pass constitutional muster, as I conclude, then Congress is powerless to change the Bankruptcy Code through its power under the Necessary and Proper Clause.

“That is, although Congress has the 'power to make all laws which shall be necessary and proper to make laws which shall be necessary and proper for carrying into execution its bankruptcy power,' it does not have the power to execute its bankruptcy power with a law which is not necessary and proper for that purpose,” Bogue wrote.

The 8th Circuit court also concluded that RFRA does not subvert the First Amendment's principle of separation of church and state. Without much discussion, the 8th Circuit dismissed John Paul Stevens' concurring opinion in Boerne (on different grounds from the majority), in which he concluded that RFRA was a government endorsement of religion in violation of the First Amendment's establishment clause.

The 8th Circuit simply stated that “RFRA, although designed to protect religious rights, has a secular purpose,” and therefore could not be seen as a violation of separation of church and state.

Hamilton said she was surprised that the court “summarily dismissed” Stevens' opinion in Boerne.

“How can you read RFRA as having a secular purpose?” she asked. “The act was drafted and lobbied for by a coalition primarily made up of organized religions.”

The Coalition for the Free Exercise of Religion is a group of about 60 non-profits, most of them religiously affiliated, that created RFRA and has been instrumental in lobbying individual states to pass their own RFRAs.

Lupu also said that the question of whether RFRA subverts the establishment clause is a “harder and much more interesting question.”

Lupu said he found it odd that the appeals court, when analyzing the establishment clause, failed to mention the Supreme Court's 1989 decision in Texas Monthly, Inc. v. Bullock. In that case, the high court invalidated a state law that provided tax breaks to religious magazines. Texas lawmakers were told either to drop the tax exemption or expand the law to include secular magazines.

The attorney for the bankruptcy trustee in the Young case said the 8th circuit misconstrued Boerne and that an appeal to the Supreme Court was possible.

However, Hamilton and Lupu both said it was unlikely the Supreme Court would take up this question quickly.

Numerous district-court opinions have noted that RFRA is unconstitutional, Lupu said. He added that “this is not the last word on whether RFRA violates the establishment clause and the separation of powers doctrine — there will be another.”

Hamilton concluded that Supreme Court will probably wait and see if another circuit weighs in with a “more intellectually rigorous” opinion.