In State of Texas v. U.S. Department of Health & Human Services, (WD TX, July 12, 2023), a Texas federal district court refused to dismiss a challenge by the state of Texas and a pharmacy company to the Department of Health & Human Service's July 14, 2022, Guidance to Nation's Retail Pharmacies: Obligations under Federal Civil Rights Laws to Ensure Access to Comprehensive Reproductive Health Care Services. Texas claims that the Guidance is an attempt to pre-empt Texas' abortion bans. Plaintiffs contend that the Guidance exceeds HHS's statutory authority and violates the Administrative Procedure Act. HHS alleges the plaintiffs lack standing. According to the court:
Plaintiffs’ standing in this case turns on the answer to a single question: does the Pharmacy Guidance require pharmacies to dispense drugs for abortion purposes? Defendants argue now that the Pharmacy Guidance only “addresses situations in which a pharmacy would fail to fill a prescription for non-abortion purposes.” What’s more, Defendants argue that “Texas cannot point to any language in the guidance that purports to require pharmacies to dispense drugs for abortion purposes.” Thus, in Defendants’ view, because the Pharmacy Guidance is not about abortion, it “does not conflict with, or purport to preempt, Texas laws that restrict abortion.” But that argument perfectly evidences agency smurfing—an executive branch breaking up a policy goal into silos, hoping to sever the threads that link the compartmentalized pieces to the executive’s goal....
This administration has, before and since Dobbs, openly stated its intention to operate by fiat to find non-legislative workarounds to Supreme Court dictates. This Court will not play along with such a breach of constitutional constraints.
Earlier in its opinion, the court set out at greater length its concern about "smurfing":
A recent trend among federal agencies appears to be borrowing a technique common among money launderers to avoid judicial review. The technique known as “smurfing” in the financial arena occurs when the launderer divides a large transaction—which might otherwise trigger a bank’s reporting requirements—into various smaller transactions to avoid detection....
Agency smurfing, similar to financial smurfing, occurs when the executive branch smurfs one policy goal into multiple, supposedly “unreviewable” and “unchallengeable” pieces. Consider an executive branch, who, immediately following a Supreme Court decision, seeks to achieve a policy goal contrary to the Court’s holding. The executive branch knows, however, that courts will likely view that policy goal as incompatible with the Supreme Court’s reasoning. In its efforts to avoid scrutiny, and eventual discovery of their true purpose, the executive branch breaks up the policy goal into separate, seemingly unrelated and innocent pieces—an executive order here, a press release and guidance there.
Mayo Pharmacy, a co-plaintiff, also alleged violation of its free exercise rights under RFRA. The court held that the case was brought in the wrong venue to assert that claim, and it transferred that claim to the District of North Dakota where venue lies. ADF issued a press release announcing the decision.
