Opinion
Case No. 18-52736 Adv. Pro. No. 19-2120
2021-07-13
IN RE: ASPC CORP., f/k/a AcuSport Corp., Debtor. John B. Pidcock, not individually but as Trustee of the ASPC Creditor Trust, Plaintiff, v. The United States of America, Defendant.
Thomas R. Fawkes, Tucker Ellis LLP, Chicago, IL, Douglas L. Lutz, Cincinnati, OH, for Plaintiff. Jeremy Shane Flannery, Mary Anne Wilsbacher, USDOJ - Office of the U.S. Trustee, Columbus, OH, for Defendant.
Thomas R. Fawkes, Tucker Ellis LLP, Chicago, IL, Douglas L. Lutz, Cincinnati, OH, for Plaintiff.
Jeremy Shane Flannery, Mary Anne Wilsbacher, USDOJ - Office of the U.S. Trustee, Columbus, OH, for Defendant.
OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DOCS. 21 & 23)
John E. Hoffman, Jr., United States Bankruptcy Judge
I. Introduction
This adversary proceeding arises in the Chapter 11 case of ASPC Corp. (the "Debtor"). The plaintiff is John B. Pidcock ("Pidcock") in his capacity as the trustee of the creditor trust established by the Debtor's confirmed Chapter 11 plan, and the defendant is the United States of America. Pidcock challenges the constitutionality of the federal statute under which the United States Trustee assessed quarterly fees against the Debtor. As a result of an amendment to the statute, the Debtor paid much higher quarterly fees than it would have paid under the pre-amendment version of the statute. More to the point, the Debtor paid much higher quarterly fees than it would have paid if it had filed its bankruptcy case in one of the six districts that are not part of the United States Trustee Program. In his motion for summary judgment, Pidcock contends that this differential between what the Debtor paid and what it would have paid in certain other districts means that the amendment violates the Tax Uniformity Clause and the Bankruptcy Clause, two provisions of the United States Constitution requiring that federal laws be uniform throughout the United States. Pidcock also argues that the difference between what the Debtor paid and what it would have paid in other districts, when combined with the purportedly excessive amount of the quarterly fees charged under the amendment, means that the statute violates the Federal Constitution's Takings Clause. In its motion for summary judgment, the United States contends that the amendment does not violate the Federal Constitution.
Because the quarterly fees assessed against the Debtor are user fees—rather than a tax or similar charge—the Tax Uniformity Clause does not apply to the amendment. And the Bankruptcy Clause raises no constitutional concerns for two reasons. First, just as Congress may enact legislation that addresses geographically isolated problems without violating constitutional uniformity requirements, it is also constitutionally permissible for it to resolve a problem that was only present in the districts overseen by United States Trustees—the underfunding of the United States Trustee System Fund. Second, the lower amount of quarterly fees that the Debtor would have paid in districts outside the United States Trustee Program is the result of uneven implementation of the statute, not an unconstitutional lack of uniformity. Finally, the Court concludes that the Takings Clause does not apply and that, even if it did, the quarterly fees assessed against the Debtor are not so excessive that they give rise to a violation of the Takings Clause. The Court therefore denies Pidcock's request for summary judgment and grants summary judgment in favor of the United States.
II. Jurisdiction and Constitutional Authority
The Court has jurisdiction to hear and determine this adversary proceeding under 28 U.S.C. § 1334(b) and the general order of reference entered in this district in accordance with 28 U.S.C. § 157(a). This is a core proceeding. See 28 U.S.C. § 157(b)(2)(A) & (O). Because a dispute over quarterly fees "stems from the bankruptcy itself," the Court also has the constitutional authority to enter a final order in this matter. Stern v. Marshall , 564 U.S. 462, 499, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).
III. Procedural History
The Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on May 1, 2018. The Court entered an order confirming the Debtor's Chapter 11 plan on January 28, 2019. The order confirming the plan provides in relevant part that the:
Debtor shall pay to the United States Trustee all fees required pursuant to 28 U.S.C. § 1930(a)(6) ("UST Fees") prior to or on the Effective Date. Any UST Fees accruing after the Effective Date shall be paid by the Creditor Trust. The Creditor Trustee shall continue to make timely payments to the [United States Trustee] pursuant to 28 U.S.C. § 1930(a)(6) for all periods up to the date the Chapter 11 Case is converted, dismissed, or closed by Final Order of the Court. The Creditor Trust and Creditor Trustee shall also provide the [United States Trustee] with post-confirmation quarterly reports that shall include all of their respective quarterly disbursements.
Case No. 18-52736, Doc. 510 ¶ 5.
By the complaint initiating this adversary proceeding, Pidcock seeks a determination regarding "the Debtor's true liability for quarterly fees payable to the [United States Trustee] pursuant to 28 U.S.C. § 1930(a)(6), and to the extent that th[e] Court determines that the Debtor made overpayments to the [United States Trustee] ... an order requiring the [United States Trustee] to remit any such overpayments to the Creditor Trust." Compl. ¶ 1. The United States filed a motion for summary judgment with a memorandum of law in support (the "United States Memorandum") (Doc. 21), and Pidcock also filed a motion for summary judgment (Doc. 23) and memorandum of law in support (the "Pidcock Memorandum") (Doc. 24). The United States filed an objection (Doc. 26) to Pidcock's motion, and Pidcock filed an objection (Doc. 27) to the United States' motion. Each of the parties responded with a reply to the other party's objection (Doc. 29 and Doc. 30). The United States also submitted several notices of supplemental authority (Docs. 34, 37, 40, 41, 42, 43 & 44). The Court heard oral argument on the motions for summary judgment and took the matter under advisement.
IV. Legal Analysis
A. Summary Judgment Standard
A court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) (made applicable in this adversary proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure ). "On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts." Ricci v. DeStefano , 557 U.S. 557, 586, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009) (internal quotation marks omitted). The parties agree that there are no material facts in dispute in this proceeding. See United States Mem. at 12; Pidcock Mem. at 10.
B. The Administration of Bankruptcy Cases and the Quarterly Fee Statutes
The administration of bankruptcy cases across most of the country is overseen by United States Trustees working within the United States Trustee Program, a component of the executive branch's United States Department of Justice. See Clinton Nurseries of Md., Inc. v. Harrington (In re Clinton Nurseries, Inc.) , 998 F.3d 56, 59 (2d Cir. 2021). Out of the 94 districts that make up the federal judicial system, United States Trustees oversee administrative functions in 88 districts (the "UST Districts"), id ., including the Southern District of Ohio. The administrative functions in the six districts located in Alabama and North Carolina (the "BA Districts"), however, are handled by administrators working within the United States Bankruptcy Administrator Program. Id . at 59–60. The bankruptcy administrators are overseen by the judicial branch's Administrative Office of the United States Courts, which in turn is supervised by the Judicial Conference of the United States (the "Judicial Conference"). See In re Buffets, L.L.C. , 979 F.3d 366, 370 (5th Cir. 2020) ; MF Glob. Holdings Ltd. v. Harrington (In re MF Glob. Holdings Ltd.) , 615 B.R. 415, 426 (Bankr. S.D.N.Y. 2020), abrogated on other grounds by Clinton Nurseries , 998 F.3d at 56 ; Acadiana Mgmt. Grp., LLC v. United States , 151 Fed. Cl. 121, 124 (Fed. Cl. 2020). It has been this way since 1986, when Congress launched the United States Trustee Program in every state other than Alabama and North Carolina. Those two states received an exemption from participating in the United States Trustee Program as part of what has been described as "an arbitrary political relic," Buffets , 979 F.3d at 383 (Clement, J., concurring in part and dissenting in part), and the "result of successful lobbying by bankruptcy judges and senators [in] the six federal judicial districts in North Carolina and Alabama," In re John Q. Hammons Fall 2006, LLC , 618 B.R. 519, 522 (Bankr. D. Kan. 2020).
The United States Trustee Program began as a pilot program in 18 federal districts in 1978. See Acadiana , 151 Fed. Cl. at 124 n.4.
In addition to being housed in different branches of the federal government, the two programs are separately funded. From its inception, the United States Trustee Program was funded through annual appropriations that are offset by fees paid by debtors, including fees paid by Chapter 11 debtors based on the disbursements they make each quarter. See Buffets , 979 F.3d at 371. These "quarterly fees," which are deposited into the United States Trustee System Fund, are paid under 28 U.S.C. § 1930(a)(6). Id . Section 1930(a)(6)(A) provides that "a quarterly fee shall be paid to the United States trustee ... in each case under chapter 11 of title 11 ... for each quarter (including any fraction thereof) until the case is converted or dismissed, whichever occurs first." 28 U.S.C. § 1930(a)(6)(A) (emphasis added). "In creating the United States Trustee System Fund and mandating quarterly fees, Congress sought to ensure the trustee program would be paid for ‘by the users of the bankruptcy system—not by the taxpayer.’ " Clinton Nurseries , 998 F.3d at 60 (quoting H.R. Rep. No. 99-764 at 22).
"[D]isbursements ... encompass all payments to third parties directly attributable to the existence of the bankruptcy proceeding[.], ... All ... payments, including the debtor's day-to-day, post-confirmation operating expenses, must be accounted for in the calculation of the trustee's quarterly fee." Robiner v. Danny's Markets, Inc. (In re Danny's Markets, Inc.) , 266 F.3d 523, 526 (6th Cir. 2001).
The Supreme Court has stated that "[t]hough ‘shall’ generally means ‘must,’ legal writers sometimes use, or misuse, ‘shall’ to mean ‘should,’ ‘will,’ or even ‘may.’ " Gutierrez de Martinez v. Lamagno , 515 U.S. 417, 434 n.9, 115 S.Ct. 2227, 132 L.Ed.2d 375 (1995) (citing D. Mellinkoff, Mellinkoff's Dictionary of American Legal Usage 402–403 (1992) for the proposition that "shall" and "may" are "frequently treated as synonyms" and their meaning "depends on context") and B. Garner, Dictionary of Modern Legal Usage 939 (2d ed. 1995) (for the proposition that "[c]ourts in virtually every English-speaking jurisdiction have held—by necessity—that shall means may in some contexts, and vice versa."). The Supreme Court provided two examples of the permissive use of "shall": "Certain of the Federal Rules use the word ‘shall’ to authorize, but not to require, judicial action. See, e.g. , Fed. Rule Civ. Proc. 16(e) (‘The order following a final pretrial conference shall be modified only to prevent manifest injustice.’) (emphasis added); Fed. Rule Crim. Proc. 11(b) (A nolo contendere plea ‘shall be accepted by the court only after due consideration of the views of the parties and the interest of the public in the effective administration of justice.’) (emphasis added)." Id . No suggestion has been made here that "shall" as used in the 2017 Amendment means anything other than that the quarterly fee must be paid.
The United States Bankruptcy Administrator Program was not initially funded with quarterly fees. "Instead, the Bankruptcy Administrator system was funded by the judiciary's general budget." Siegel v. Fitzgerald (In re Circuit City Stores, Inc.) , 996 F.3d 156, 170 (4th Cir. 2021) (Quattlebaum, J., concurring in part and dissenting in part). But then the "Ninth Circuit held that to be unconstitutional, reasoning that Congress' imposition of fees in some districts but not others—without justification—violated" the constitutional requirement that bankruptcy laws be uniform throughout the United States. Buffets , 979 F.3d at 371 (citing St. Angelo v. Victoria Farms, Inc. , 38 F.3d 1525, 1529, 1531–32 (9th Cir. 1994) ); Circuit City , 996 F.3d at 161 ("At their inception, the Bankruptcy Administrator districts were not required to pay quarterly fees. In 1994, however, the Ninth Circuit ruled this distinction unconstitutional, explaining that the statutory imposition of such quarterly fees in certain districts but not in others was without justification and thus contravened the Bankruptcy Clause of the Constitution." (citing St. Angelo )). After St. Angelo , the Judicial Conference requested that Congress amend § 1930 to provide it with the authority to assess quarterly fees in BA districts. See In re Exide Techs ., 611 B.R. 21, 34 (Bankr. D. Del. 2020). In 2000, Congress enacted a statute, 28 U.S.C. § 1930(a)(7), by which it granted the Judicial Conference authority to impose quarterly fees in the BA Districts. See id .
Section 1930(a)(7) originally provided that "[i]n districts that are not part of a United States trustee region [i.e. the BA Districts] ... the Judicial Conference of the United States may require the debtor in a case under chapter 11 of title 11 to pay fees equal to those imposed by paragraph (6) of this subsection." 28 U.S.C. § 1930(a)(7) (emphasis added). Given that the statute was enacted in response to St. Angelo , the expectation was that the Judicial Conference would impose fees, and the statute provided that if it did so, then the fees would be equal to the fees imposed under 28 U.S.C. § 1930(a)(6). The Judicial Conference did as expected and approved quarterly fees in BA Program districts: "To implement [ § 1930(a)(7) ], the Conference approved a Bankruptcy Committee recommendation that such fees be imposed in bankruptcy administrator districts in the amounts specified 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, (Sept./Oct. 2001) at 45–46, https://www.uscourts.gov/sites/default/files/2001-09_0.pdf (accessed July 12, 2021) (the "2001 Report"). Thus, when the BA Districts first imposed quarterly fees, the fees in those districts were equal to the fees in the UST Districts.
Prior to the enactment of the Bankruptcy Judgeship Act of 2017 (the "2017 Amendment"), Chapter 11 debtors in UST Districts and BA Districts would have paid quarterly fees in accordance with the following schedule:
| Quarterly Disbursements | Quarterly Fee |
| $0 to $14,999.99 | $325 |
| $15,000 to $74,999.99 | $650 |
| $75,000 to $149,999.99 | $975 |
| $150,000 to $224,999.99 | $1,625 |
| $225,000 to $299,999.99 | $1,950 |
| $300,000 to $999,999.99 | $4,875 |
| $1,000,000 to $1,999,999.99 | $6,500 |
| $2,000,000 to $2,999,999.99 | $9,750 |
| $3,000,000 to $4,999,999.99 | $10,400 |
| $5,000,000 to $14,999,999.99 | $13,000 |
| $15,000,000 to $29,999,999.99 | $20,000 |
| $30,000,000 or more | $30,000 |
Consolidated Appropriations Act, 2008, Pub. L No. 110-161, § 213, 121 Stat. 1844, 1914 (2007) (codified at 28 U.S.C. § 1930(a)(6) ) (amended 2017, 2019 and 2021). Under this fee structure, the maximum quarterly fee a debtor would pay would be $30,000 in cases in which disbursements were $30 million or more.
The 2017 Amendment substantially increased the quarterly fees payable in UST Districts in cases with quarterly disbursements of $1 million or more. Enacted to address a decline in bankruptcy filings and a concomitant reduction in the funding of the United States Trustee System Fund, Buffets , 979 F.3d at 371, the 2017 Amendment stated:
During each of fiscal years 2018 through 2022, if the balance in the United States Trustee System Fund as of September 30 of the most recent full fiscal year is less than $200,000,000, the quarterly fee payable for a quarter in which disbursements equal or exceed $1,000,000 shall be the lesser of 1 percent of such disbursements or $250,000.
Bankruptcy Judgeship Act of 2017, Pub. L. No. 115-72, § 1004, 131 Stat. 1224, 1232 (amended 2021). The 2017 Amendment applies to all cases in which debtors make disbursements on or after January 1, 2018—even if those cases were already pending as of the enactment of the amendment. See Bankruptcy Judgeship Act of 2017, Pub. L. No. 115-72, Div. B, § 1004(c), Oct. 26, 2017, 131 Stat. 1232 ("The amendments made by this section shall apply to quarterly fees payable under section 1930(a)(6) of title 28, United States Code, as amended by this section, for disbursements made in any calendar quarter that begins on or after the date of enactment of this Act [Oct. 26, 2017]."). Because October 26, 2017 was the date of enactment, the first calendar quarter to which the 2017 Amendment applied was the one beginning on January 1, 2018. The statutory conditions to the assessment of the new fees were satisfied in the Debtor's case during the second, third and fourth quarters of 2018 and the first quarter of 2019 (the "Relevant Period").
Recall that § 1930(a)(7) was directed at the Judicial Conference rather than debtors and that it provided that the Judicial Conference may require Chapter 11 debtors in BA Districts to pay fees equal to those imposed by § 1930(a)(6). 28 U.S.C. § 1930(a)(7) (amended 2021). It was not until January 12, 2021, that Congress amended 28 U.S.C. § 1930(a)(7) to strike "may" and insert "shall" so that the provision stated that the Judicial Conference "shall require" the increased fees. Bankruptcy Administration Improvement Act of 2020, Pub. L. No. 116-325, 134 Stat. 5086 (2021). The Judicial Conference, however, implemented the fee increase in the BA Districts more than two years before "shall" was inserted into § 1930(a)(7). It did so effective October 1, 2018 for bankruptcy cases filed on or after that date. See Report of the Proceedings of the Judicial Conference of the United States (Sept. 2018) at 11–12, www.uscourts.gov/sites/default/files/201809_proceedings.pdf) (accessed July 12, 2021) (the "2018 Report") (noting that the "Executive Committee ... [a]pproved, on behalf of the Judicial Conference on an expedited basis, imposing quarterly fees in Chapter 11 cases filed in bankruptcy administrator districts in the amounts specified in 28 U.S.C. § 1930(a)(6)(B) for cases filed on or after October 1, 2018 for any fiscal year in which the U.S. Trustee Program exercises its authority under that statute, and pursuant to any future extensions of that or similar authority").
C. The Debtor's Quarterly Fees
Because the Judicial Conference directed that the increased fees in the BA Districts apply only to cases filed on or after October 1, 2018 and the Debtor filed its case before that date, the Debtor would never have owed the increased fees if it had filed in one of the BA Districts. Indeed, the Debtor would have owed significantly less quarterly fees if it had filed its Chapter 11 case in one of the BA Districts. Comparing the quarterly fees that the Debtor paid under the 2017 Amendment with the quarterly fees that it would have paid absent the amendment (and with the fees that it would have paid in the BA Districts), Pidcock calculates the purported overpayments for the Relevant Period as set forth below:
| Period | Disbursements | Fees Under New Schedule | Fees Under Old Schedule/Fees in BA Districts | Difference |
| 2nd Qtr. 2018 | $22,148,443 | $221,484 | $20,000 | $201,484 |
| 3rd Qtr. 2018 | $4,283,800 | $42,838 | $10,400 | $32,438 |
| 4th Qtr. 2018 | $1,956,358 | $19,564 | $6,500 | $13,064 |
| 1st Qtr. 2019 | $1,384,344 | $13,843 | $6,500 | $7,343 |
| Total | $29,772,945 | $297,729 | $43,400 | $254,329 |
Pidcock Mem. at 8.
As this chart shows, under the pre-amendment version of 28 U.S.C. § 1930(a)(6), the Debtor would have been responsible for a total of $43,400 in quarterly fees for the Relevant Period, but under the 2017 Amendment the Debtor paid $297,729, a difference of $254,329. D. The Application of the 2017 Amendment to Pending Cases
Although plaintiffs in cases challenging the constitutionality of the 2017 Amendment have sometimes argued that Congress did not intend the increase in quarterly fees to apply in cases pending as of the date of the 2017 Amendment's enactment, Pidcock does not make that argument here, because the Debtor's case was commenced after the 2017 Amendment's enactment. See Pidcock Mem. at 5 (stating that Pidcock "does not dispute (aside from its constitutionality) the amount of [quarterly] fees assessed by the [United States Trustee], and paid by the Debtor, during the Relevant Period"). That is, Pidcock challenges the application of the 2017 Amendment in the Debtor's case solely on constitutional grounds. The Court will address each of Pidcock's constitutional challenges in turn.
E. The Tax Uniformity Clause Does Not Apply to the 2017 Amendment.
Article I, Section 8, Clause 1 of the United States Constitution grants Congress the power to "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States[.]" U.S. Const. art. I, § 8, cl. 1. The proviso at the end of this Clause has been described as the "Tax Uniformity Clause." See, e.g. , In re Mosaic Mgmt. Grp., Inc. , 614 B.R. 615, 620, 623 (Bankr. S.D. Fla. 2020). Pidcock argues that the fees imposed by the 2017 Amendment violate the Tax Uniformity Clause "to the extent they constitute taxes ...." Pidcock Mem. at 24. Quarterly fees, however, are not taxes. Nor are they duties, imposts, or excises. Instead, quarterly fees are user fees payable by those who use the bankruptcy system, and as such they are not subject to the constitutional constraints imposed by the Tax Uniformity Clause. See Buffets , 979 F.3d at 376 n.7 (holding that quarterly fees are "user fees, which means they are not general taxes to which the Uniformity Clause applies"); Circuit City , 996 F.3d at 164 ("[B]ecause the [Tax] Uniformity Clause only applies to taxes, as the U.S. Trustee maintains and as the Fifth Circuit correctly ruled, that Clause is inapplicable here."); SCI Direct, LLC v. Vara (In re SCI Direct, LLC) , 2020 WL 5929612, at *8 (N.D. Ohio Sept. 22, 2020) (holding that "quarterly fees are user fees, payable only by debtors or others in ongoing chapter 11 cases, for the purpose of funding the bankruptcy system they are using" and that they "are not subject to the constitutional restrictions imposed by the [Tax] Uniformity Clause."); In re Clayton Gen., Inc. , No. 15-64266-WLH, 2020 Bankr. LEXIS 842, at *27–29 (Bankr. N.D. Ga. Mar. 30, 2020). The Tax Uniformity Clause therefore does not apply to quarterly fees.
F. The 2017 Amendment Does Not Violate the Bankruptcy Clause.
The Bankruptcy Clause of the United States Constitution grants Congress the authority to enact "uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const. art. I, § 8, cl. 4. "A law enacted under the Bankruptcy Clause is properly within Congress's power only if the legislation meets two criteria: (i) the law must be ‘on the subject of Bankruptcies’ and (ii) the law must be uniform throughout the United States." MF Glob. Holdings , 615 B.R. at 443 ; see also Exide , 611 B.R. at 34. For the reasons explained below, the Court concludes that the 2017 Amendment constitutes a law on the subject of bankruptcies and that it is uniform throughout the United States.
This clause is sometimes referred to as the "Bankruptcy Uniformity Clause" or the "Uniformity Clause." See USA Sales, Inc. v. Office of the United States Trustee , 70 Bankr.Ct.Dec. 19, 2021 WL 1226369, at *14 n.40 (C.D. Cal. Apr. 1, 2021). In order to avoid confusion with the Tax Uniformity Clause discussed above, the Court will describe U.S. Const. art. I, § 8, cl. 4 as the "Bankruptcy Clause."
1. The 2017 Amendment Is a Law on the Subject of Bankruptcies.
First, the 2017 Amendment is a law on the subject of bankruptcies within the meaning of the Bankruptcy Clause. Given that the statute imposes fees in bankruptcy cases, this would seem to be beyond doubt. The United States, however, contends that the 2017 Amendment "supports bankruptcy matters but is not itself a law on the subject of bankruptcy and is not subject to the Bankruptcy Clause's uniformity component." United States Mem. at 17. According to the United States, the 2017 Amendment was enacted under the Necessary and Proper Clause, which is not subject to the Bankruptcy Clause's uniformity requirement. But as the MF Global court pointed out, "Congress stated that it was enacting the 2017 Amendment under the Bankruptcy Clause." MF Glob. Holdings , 615 B.R. at 446. And "the sponsor of the bill containing the 2017 Amendment, Rep. John Conyers, Jr., informed Congress that it had the power to enact the 2017 Amendment pursuant to Article 1, Section 8, Clause 4 of the Constitution —i.e. , pursuant to the Bankruptcy Clause." Id .
Consistent with this statement of congressional intent, courts have concluded that the 2017 Amendment is a law on the subject of bankruptcies. See Clinton Nurseries , 998 F.3d at 64 (noting that the argument that the 2017 Amendment is not a law on the subject of bankruptcies "has been repeatedly rejected by other courts"). In fact, all the courts that have decided the issue have agreed on this point. This includes the courts that have ruled that the 2017 Amendment is constitutional under the Bankruptcy Clause. See SCI Direct , 2020 WL 5929612, at *9–10 ; MF Glob. Holdings , 615 B.R. at 444–45 ; Mosaic Mgmt. , 614 B.R. at 623–24 ; Clayton Gen. , 2020 Bankr. LEXIS 842, at 20–27; Exide , 611 B.R. at 37 ; see also Buffets , 979 F.3d at 377 ("The consensus view of bankruptcy courts that Chapter 11 fees are Bankruptcy Clause legislation is likely correct. But we need not decide the question because, even assuming it is, we find no uniformity problem."). It also includes those that have determined the 2017 Amendment to be unconstitutional under the Bankruptcy Clause. See Clinton Nurseries , 998 F.3d at 64–65.
This makes sense because, in order for a Chapter 11 plan to be confirmed, quarterly fees must either be paid or the plan must provide for their payment on the effective date of the plan. See 11 U.S.C. § 1129(a)(12). Given that amounts paid to the United States Trustee cannot be paid to creditors, "the fee increase has a direct effect on what creditors receive—less than before." Buffets , 979 F.3d at 377 ; see also Mosaic Mgmt. , 614 B.R. at 623 (concluding that the 2017 Amendment is a law "on the subject of Bankruptcies" because, among other things, "[t]he amount of the fee due to the [United States Trustee] directly impacts distributions to other creditors."). And the Supreme Court has defined "bankruptcy" broadly to include the " ‘subject of the relations between an insolvent or nonpaying or fraudulent debtor and his creditors, extending to his and their relief.’ " Ry. Labor Execs.’ Ass'n v. Gibbons , 455 U.S. 457, 466, 102 S.Ct. 1169, 71 L.Ed.2d 335 (1982) (quoting Wright v. Union Cent. Life Ins. Co. , 304 U.S. 502, 513–514, 58 S.Ct. 1025, 82 L.Ed. 1490 (1938) ); see also MF Glob. Holdings , 615 B.R. at 445 ("[I]n the words of Gibbons , [the 2017 Amendment] does ‘nothing less than to prescribe the manner in which the property of [chapter 11 debtors] is to be distributed among [their] creditors.’ ") (quoting Gibbons , 455 U.S. at 467, 102 S.Ct. 1169 ). Not only that, but § 1930 "is literally titled ‘[b]ankruptcy fees.’ " SCI Direct , 2020 WL 5929612, at *9. " Section 1930 only imposes fees in bankruptcy cases, and the fees are used to fund the [United States Trustee] Program which is part of the bankruptcy system." Id. ; Clayton Gen. , 2020 Bankr. LEXIS 842, at *20–21 ("[T]he fees only apply in bankruptcy cases, and the amendment's only subject is bankruptcy, and the fees go to pay for the U.S. Trustee, whose only job is to be involved in bankruptcy cases."); Exide , 611 B.R. at 35–36 (" Section 1930 fees are only applied in bankruptcy cases, and thus the section's only subject is bankruptcy."). Nor is it significant that § 1930 is codified in title 28 rather than title 11. For as the Exide court pointed out, "[w]hether a law is ‘on the subject of bankruptcies' does not hinge upon whether the provision is included in the Bankruptcy Code." Id . at 36. Indeed, as the Exide court also noted, the Supreme Court has held that a statute codified in title 45 of the United States Code, which governs railroads, was a law on the subject of bankruptcies. See id. (citing Gibbons , 455 U.S. at 465–67, 102 S.Ct. 1169 ). For all these reasons, the Court concludes that the 2017 Amendment is a law on the subject of bankruptcies within the meaning of the Bankruptcy Clause.
2. The Uniformity Requirement of the Bankruptcy Clause
The Bankruptcy Clause grants Congress the authority to enact "uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const. art. I, § 8, cl. 4. Pidcock contends that the 2017 Amendment is not uniform throughout the United States and that it therefore violates the uniformity requirement of the Bankruptcy Clause. The majority of courts, including two courts of appeal, have held that the 2017 Amendment does not violate the Bankruptcy Clause. See Circuit City , 996 F.3d at 164–67 ; Buffets , 979 F.3d at 377–80 ; Hammons , 618 B.R. at 524–26 ; MF Glob. Holdings , 615 B.R. at 447–48 ; Mosaic Mgmt. , 614 B.R. at 623–24 ; Exide , 611 B.R. at 36–37 ; Clinton Nurseries of Md., Inc. v. Harrington (In re Clinton Nurseries, Inc.) , 608 B.R. 96, 108–117 (Bankr. D. Conn. 2019), rev'd , Clinton Nurseries , 998 F.3d at 59 ; SCI Direct , 2020 WL 5929612, at *9–10 ; Clayton Gen ., 2020 Bankr. LEXIS 842, at *20–27; Acadiana , 151 Fed. Cl. at 131–32. A minority, including one court of appeal, has held that the 2017 Amendment violates the Bankruptcy Clause. See Clinton Nurseries , 998 F.3d at 65–69 ; In re Life Partners Holdings, Inc. , 606 B.R. 277, 286–88 (Bankr. N.D. Tex. 2019), abrogated by Buffets , 979 F.3d at 378–80 ; In re Circuit City Stores, Inc ., 606 B.R. 260, 269–270 (Bankr. E.D. Va. 2019), rev'd , Circuit City , 996 F.3d at 169 ; In re Buffets, LLC , 597 B.R. 588, 595–96 (Bankr. W.D. Tex. 2019), rev'd , Buffets , 979 F.3d at 378–80.
The Supreme Court has held that the Bankruptcy Clause's uniformity requirement is " ‘geographical, and not personal.’ " Hanover Nat'l Bank v. Moyses , 186 U.S. 181, 188, 22 S.Ct. 857, 46 L.Ed. 1113 (1902). And a review of Supreme Court case law shows that the Court has interpreted the provision flexibly. In Moyses , the Supreme Court held that the incorporation of state exemptions into the 1898 Bankruptcy Act was constitutional. Id . at 189–90, 22 S.Ct. 857. In a subsequent case, the Supreme Court held that the Bankruptcy Act's incorporation of state fraudulent conveyance statutes was constitutional despite the fact that the laws "may lead to different results in different states." Stellwagen v. Clum , 245 U.S. 605, 613, 38 S.Ct. 215, 62 L.Ed. 507 (1918). Later still, in Blanchette v. Connecticut General Insurance Corporations , 419 U.S. 102, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974), the Supreme Court concluded that the Bankruptcy Clause "does not deny Congress power to take into account differences that exist between different parts of the country, and to fashion legislation to resolve geographically isolated problems." Id . at 159, 95 S.Ct. 335. The Blanchette Court acknowledged that the " ‘problem dealt with (under the Bankruptcy Clause) may present significant variations in different parts of the country.’ " Id . (quoting Wright v. Vinton Branch of Mountain Tr. Bank , 300 U.S. 440, 463 n.7, 57 S.Ct. 556, 81 L.Ed. 736 (1937) ). The Supreme Court also said that "the uniformity clause was not intended ‘to hobble Congress by forcing it into nationwide enactments to deal with conditions calling for remedy only in certain regions.’ " Id . (quoting In re Penn Cent. Transp. Co ., 384 F. Supp. 895, 915 (Reg'l Rail Reorg. Ct. 1974) ).
Blanchette involved the constitutionality of the Regional Rail Reorganization Act (the "Rail Act"). The parties challenging the Rail Act relied on the fact that it applied only in one statutorily defined region of the United States: "The argument is that the uniformity required by the Constitution is geographic ... and since the Rail Act operates only in a single statutorily defined region, the Act is geographically nonuniform." Id . at 158, 95 S.Ct. 335. According to the Supreme Court, "[t]he argument has a certain surface appeal but is without merit because it overlooks the flexibility inherent in the constitutional provision." Id . The problems addressed by the Rail Act, the Court explained, were the problems of the rail carriers operating in the statutorily defined region, and "these were the problems Congress addressed." Id . at 159, 95 S.Ct. 335.
Only once has the Supreme Court held a law to be unconstitutional under the Bankruptcy Clause. In Gibbons , the Court considered a bankruptcy law providing that a liquidating railroad's employees who were not being hired by another railroad would receive "employee protection benefits" entitled to administrative expense priority. Gibbons , 455 U.S. at 466, 102 S.Ct. 1169. According to the Supreme court, a "law can hardly be said to be uniform throughout the country if it applies only to one debtor and can be enforced only by the one bankruptcy court having jurisdiction over that debtor." Id . at 471, 102 S.Ct. 1169. "By its specific terms ... [the statute] applies to only one regional bankrupt railroad, and cannot be said to apply uniformly even to major railroads in bankruptcy proceedings throughout the United States." Id . The Gibbons Court continued:
"If a claim is accorded administrative-expense priority under section 503(b), that claim is paid in the first level of priority, ahead of, inter alia , the unsecured creditors; no other claim is paid until every administrative-expense claim is paid in full." Alabama Surface Mining Comm'n v. N.P. Mining Co. (In re N.P. Min. Co.) , 963 F.2d 1449, 1450 (11th Cir. 1992).
Our holding today does not impair Congress' ability under the Bankruptcy Clause to define classes of debtors and to structure relief accordingly. We have upheld bankruptcy laws that apply to a particular industry in a particular region. See 3R Act Cases , 419 U.S. 102 (1974). The uniformity requirement, however, prohibits Congress from enacting a bankruptcy law that, by definition, applies only to one regional
debtor. To survive scrutiny under the Bankruptcy Clause, a law must at least apply uniformly to a defined class of debtors. A bankruptcy law ... confined as it is to the affairs of one named debtor can hardly be considered uniform. To hold otherwise would allow Congress to repeal the uniformity requirement from Art. I, § 8, cl. 4, of the Constitution.
Id . at 473.
As the Sixth Circuit has explained, the Supreme Court concluded that the " ‘uniformity requirement was drafted to prohibit Congress from enacting private bankruptcy laws.’ " Schultz v. United States , 529 F.3d 343, 352 (6th Cir. 2008) (quoting Gibbons , 455 U.S. at 472, 102 S.Ct. 1169 ). "The lesson, in short, is that ‘[t]o survive scrutiny under the Bankruptcy Clause, a law must at least apply uniformly to a defined class of debtors.’ " Id . (quoting Gibbons , 455 U.S. at 473, 102 S.Ct. 1169 ); see also Gibbons , 455 U.S. at 469, 102 S.Ct. 1169 ("The uniformity requirement is not a straightjacket that forbids Congress to distinguish among classes of debtors."). Like the Supreme Court, the Sixth Circuit has "rejected formalistic approaches to uniformity in bankruptcy, because doing so ‘overlooks the flexibility inherent in the constitutional provision. ...’ " Richardson v. Schafer (In re Schafer) , 689 F.3d 601, 609 (6th Cir. 2012) (quoting Schultz , 529 F.3d at 354 ) (quoting Blanchette ., 419 U.S. at 158, 95 S.Ct. 335 ).
Just as Congress has the power "to fashion legislation to resolve geographically isolated problems," Blanchette , 419 U.S. at 159, 95 S.Ct. 335, so too should it have the power to resolve a problem—the underfunding of the United States Trustee System Fund—that was only present in the UST Districts. Or, as the Fifth Circuit put it: "Just as it did in addressing the failure of railroads in the industrial heartland, Congress confronted the problem of an underfunded Trustee Program where it found it: in the Trustee districts." Buffets , 979 F.3d at 378. "By increasing fees for large debtors in those districts, Congress sought to remedy a shortfall in the program's funding. Only debtors in Trustee Districts use trustees, so Congress could ‘solve "the evil to be remedied" ’ with a fee increase in just the underfunded districts." Id . (quoting Blanchette , 419 U.S. at 160–61, 95 S.Ct. 335 ). Several other courts have followed this line of reasoning. See Circuit City , 996 F.3d at 166 ("Just as it had successfully addressed the failure of certain railroads, Congress was confronted here with a U.S. Trustee problem. The 2017 Amendment drew a program-specific distinction that only indirectly has a geographic impact. ... Because only those debtors in Trustee districts use the U.S. Trustees, Congress reasonably solved the shortfall problem with fee increases in the underfunded districts"); Hammons , 618 B.R. at 525 ("Like the Rail Act at issue in Blanchette , the 2017 Amendment was designed to solve ‘the evil to be remedied’—here, the depletion of the UST System Fund. The lack of a concurrent fee increase in North Carolina and Alabama did not render the amendment itself non-uniform, because the UST system does not operate in those states; as in Blanchette , ‘the evil ... has no existence’ there. Like the Rail Act, the 2017 Amendment operates on a uniform class of debtors (here, Chapter 11 debtors within the UST system) and applies with the same force and effect in every place where such debtors are found."); MF Glob. Holdings , 615 B.R. at 447–48 ("The 2017 Amendment applies to all chapter 11 debtors in UST Districts and addresses a specific geographical problem limited to UST Districts: the depletion of the UST Fund."); Mosaic Mgmt ., 614 B.R. at 624 ("[T]he [2017] Amendment is aimed almost exclusively at eliminating a funding shortfall in the UST system and developing a reasonable reserve for the same. ... In light of this overarching purpose of the [2017] Amendment, the Court focuses on whether subsection 1930(a)(6), as amended by the [2017] Amendment, is uniform. Because the [2017] Amendment effected a fee increase only in districts where the UST is active, and in all of such districts, the [2017] Amendment is uniform."); Exide , 611 B.R. at 37 ("[The 2017 Amendment] addresses a geographically isolated problem that is confined to UST districts, namely the depletion of the UST System Fund. The quarterly fees collected in the BA districts do not go into the UST System Fund; nor are the funds in the UST System Fund used to support the BA system. Thus, the decline in the UST System Fund is only a problem in UST districts. Section 1930(a)(6) applies with the same force and effect in every place where the subject of it is found and it is designed to solve the problem to be remedied. It was proper for Congress to increase the fees in those districts to solve that problem.") (footnote omitted); SCI Direct , 2020 WL 5929612, at *10 ("[T]he 2017 [A]mendment applies to a specific class of debtors: chapter 11 debtors in UST Program Districts who make qualified disbursements during the years 2018– 2022.... [T]he law remedies a geographically isolated problem that is unique to UST Program Districts, i.e . the depletion of the UST System Fund."). In sum, Congress had the power to fix the underfunding problem where it found it.
Plus, § 1930(a)(6) and 1930(a)(7) apply uniformly to the class of Chapter 11 debtors making disbursements of a million dollars or more a quarter. Section 1930(a)(6) sets the fees for such debtors in UST Districts, and § 1930(a)(7) authorizes the Judicial Conference to establish the same fees for those debtors in the BA Districts. This is nothing like the statute in Gibbons , which was targeted at a single debtor.
Pidcock points out that § 1930(a)(6), which applies in the UST Districts, uses the mandatory "shall" but that § 1930(a)(7), which applies in the BA Districts, used the permissive "may" (until Congress amended the statute in 2021). And "[t]herein lies the exact problem that [he] is attempting to remedy through this adversary proceeding," Pidcock writes. "On the one hand, Congress has mandated the imposition of substantially increased fees in UST districts, while permitting , perhaps even encouraging, but not outright requiring the [Judicial Conference] to impose the same fees in BA districts." Pidcock Mem. at 19–22, 23 (emphasis in original). That is the line taken by the Second Circuit when it said that "[w]e cannot ... simply overlook Congress's decision to use the permissive ‘may’ in § 1930(a)(7)." Clinton Nurseries , 998 F.3d at 66.
But why should the distinction between "may" and "shall" bear so much weight in the uniformity analysis when the line between them here is razor thin? Consider how small the difference is between them in this context. On the one hand, we have a statute that requires debtors to pay fees in the UST Districts ( § 1930(a)(6) ), and on the other hand we have a statute that authorizes the Judicial Conference to impose the same fees in the BA Districts ( § 1930(a)(7) ). When it enacted the 2017 Amendment, Congress continued to do what it had done since enacting § 1930(a)(7) in the first place: Address the uniformity problem identified in the St. Angelo decision by authorizing the Judicial Conference to set the same fees in the BA Districts that were established in the UST Districts. By providing that the Judicial Conference may require Chapter 11 debtors to pay fees "equal to those imposed by paragraph (6) of this subsection" Congress directed that, if the Judicial Conference imposes fees, then the fees must be equal to those imposed by § 1930(a)(6). See Exide , 611 B.R. at 37–38 ("Congress provided that if the Judicial Conference did implement any fees for the BA system, then those fees had to be equal to the fees in UST districts."). And the Judicial Conference had always chosen to impose fees since § 1930(a)(7) was enacted in response to St. Angelo . Congress thus mandated that Chapter 11 debtors pay fees in § 1930(a)(6) and directed in § 1930(a)(7) that if the Judicial Congress imposes fees—and, again, it always had since § 1930(a)(7) was enacted—then the fees must be equal to those imposed under § 1930(a)(6).
The failure to raise the fees in the BA Districts for a period of time was not the result of Congressional action but instead was, depending on how it is viewed, the product of either failed implementation by the BA Districts or delayed implementation by the Judicial Conference. As previously noted, the Judicial Conference stated in the 2001 Report that it was implementing § 1930(a)(7) by imposing fees in the BA Districts "in the amounts specified in 28 U.S.C. § 1930, as those amounts may be amended from time to time." The 2001 Report could be read as providing a clear directive to the BA Districts that their quarterly fees must match the United States Trustee fees set forth in § 1930(a)(6). Under this view, the reason that the quarterly fees were lower in the BA Districts than in the UST Districts following the enactment of the 2017 Amendment was the BA Districts' failure to follow the directive set forth in the 2001 Report. See Exide , 611 B.R. at 38 (holding that the Judicial Conference's direction in 2001 that quarterly fees be imposed equal to those specified in § 1930(a)(6) "as those amounts may be amended from time to time" made the 2017 Amendment self-executing in BA districts). In other words, the fact that the increased fees were not automatically implemented in BA districts is not the result of legislative action, but instead is the result of failed implementation by the BA Districts. Another way to look at it is to assume that the Judicial Conference needed to take the action it took in the 2018 Report in order for the higher fees to be implemented in the BA Districts and that it just took time for the Conference, which typically meets only twice a year, to do so. Under this alternative view, the fact that quarterly fees did not immediately increase in the BA Districts and then did so only for cases commenced on or after October 1, 2018 is the result of the Judicial Conference's implementation of the statute, not an unconstitutional lack of uniformity.
In short, the failure to raise the fees in the BA Districts during the Relevant Period was not the result of Congressional action but instead was the product of either a failure to implement or delayed implementation. And actions that were or were not taken as part of the implementation of the statute do not make the statute non-uniform. See MF Glob. Holdings , 615 B.R. at 448 n.20 ("While the Judicial Conference separately resolved to delay the imposition of the increased fees and limited the increase to new cases, non-uniform implementation of a uniform law does not render the law non-uniform."); SCI Direct , 2020 WL 5929612, at *10 n.17 (same); Exide , 611 B.R. at 38 ("The fact that the [2017 Amendment was] not automatically implemented in BA districts is not a result of legislative action, but instead the result of implementation of the statute.").
Inconsistent implementation is always a possibility as long as there are two systems for the administration of bankruptcy cases. So the real problem—if there is one at all—is the division of the country into UST Districts and BA Districts. But counsel for Pidcock confirmed during oral argument that he is not challenging the constitutionality of the dual system. Hr'g at 2:07:50 (Counsel on behalf of Pidcock stating: "We did not attack the dual system. We have not sought to have Your Honor rule the dual system unconstitutional."). And the "normal reluctance to hold unconstitutional a decades-old feature of federal bankruptcy law should grow into a refusal when no party is asking us to do so." Buffets , 979 F.3d at 379. Given this, the Court is unwilling to find that an implementation problem renders the 2017 Amendment non-uniform.
According to the Second Circuit, "[t]o allow Congress to use [the dual system]" is to rely on the flawed argument that "Congress can justify treating bankrupts differently because it has chosen to treat them differently (higher fees because different programs)." Clinton Nurseries , 998 F.3d at 69 (quoting Buffets , 979 F.3d at 383 (Clement, J., concurring in part and dissenting in part). But this is not a situation where Congress fixed the fees in the UST Districts at one level and established the fees in the BA Districts at another level. That would have been constitutionally non-uniform. Congress was not treating debtors differently. Instead, debtors were treated differently as the result of either the BA Districts' failure to implement the increased fees or the Judicial Conference's delay in implementing them.
One last point relating to the Bankruptcy Clause before moving on to the Takings Clause. Under the 2017 Amendment, two percent of the quarterly fees collected in the UST Districts was not earmarked for the United States Trustee System Fund, but instead was to be deposited into the "general fund of the Treasury." Bankruptcy Judgeship Act of 2017, Pub. L. No. 115-72, § 1004(b), 131 Stat. 1224, 1232 (2017) (providing that "2 percent of the fees collected under section 1930(a)(6) of such title shall be deposited in the general fund of the Treasury"). Pidcock relies on Mosaic Management in support of his argument that it was unconstitutional for the statute to provide for this two percent to be deposited into the general fund. Pidcock Mem. at 28–29. According to the Mosaic Management court, "[i]t is hard to see how this small part of the [United States Trustee] quarterly fee is a user fee as it is not necessarily associated with the debtors' use of the bankruptcy system." Mosaic Mgmt ., 614 B.R. at 623. But "[d]esignating 2% of quarterly [United States Trustee] fees for the U.S. Treasury was intended to offset the cost of eighteen temporary bankruptcy judgeships, [which is] another bankruptcy-related expense to be borne by the users rather than the U.S. taxpayers." MF Glob. Holdings , 615 B.R. at 443 ; see also Buffets , 979 F.3d at 382 ("[J]ust about all of the money from the fees going to the general fund support court services in Trustee districts (in the form of new judges)."); Exide , 611 B.R. at 31 ("[T]he deposit of 2% of fees collected into the general fund of the U.S. Treasury is rational. The increased fees are meant to offset not only the [United States Trustee] appropriations but also the costs of the 18 new bankruptcy judgeships created by the 2017 Amendment. ... The efficient administration of justice is a legitimate legislative purpose and creating new judgeships is rationally related to that purpose."). The Court therefore concludes that it is constitutional for two percent of the quarterly fees collected in the UST Districts to be deposited into the general fund of the Treasury.
G. The 2017 Amendment Does Not Violate the Takings Clause.
The Takings Clause of the Fifth Amendment provides that "nor shall private property be taken for public use, without just compensation." U.S. Const. amend. V. Pidcock asserts that the 2017 Amendment violates the Takings Clause for two reasons: (1) because of its alleged "nonuniform application"; and (2) because the quarterly fees assessed under § 1930(a)(6) are "substantially in excess of the actual costs of the [United States Trustee] Program." Pidcock Mem. at 10.
As for the alleged non-uniform application of the statute, Pidcock contends that "[f]or a charge to qualify as a permissible user fee under the Takings Clause, it must ... not be discriminatory," and for this proposition he relies on Massachusetts v. United States , 435 U.S. 444, 98 S.Ct. 1153, 55 L.Ed.2d 403 (1978). Doc. 27 (Pidcock's Opposition to the United States Motion) at 24. But Massachusetts did not involve a challenge to a user fee under the Takings Clause; rather, the Supreme Court was evaluating a user fee in the context of state immunity from federal taxation. See Massachusetts , 435 U.S. at 466–67, 98 S.Ct. 1153 ("So long as the charges do not discriminate against state functions, are based on a fair approximation of use of the system, and are structured to produce revenues that will not exceed the total cost to the Federal Government of the benefits to be supplied, there can be no substantial basis for a claim that the National Government will be using its taxing powers to control, unduly interfere with, or destroy a State's ability to perform essential services."). Pidcock therefore applies the wrong standard when he argues that the alleged discriminatory nature of the quarterly fees means that they violate the Takings Clause. In any event, as already explained, Congress did not discriminate against the Debtor. All Congress did was establish the fees in the UST Districts and authorize the Judicial Conference to set the same fees in the BA Districts. Congress did not treat debtors in UST Districts and BA Districts in a non-uniform manner. The failure to implement or delay in implementing the higher fees in the BA Districts was the source of the different treatment; problems with implementation of the statute do not give rise to a violation of the Takings Clause.
Further, under controlling Sixth Circuit law, the Takings Clause does not even apply here. See McCarthy v. City of Cleveland , 626 F.3d 280 (6th Cir. 2010). In McCarthy , the plaintiffs claimed that monetary fines imposed against them by the city for their violation of motor vehicle laws constituted an unconstitutional taking. Not so, the Sixth Circuit held in McCarthy : "[A]ll circuits that have addressed the issue have uniformly found that a taking does not occur when the statute in question imposes a monetary assessment that does not affect a specific interest in property." Id . at 285. And it continued: "We agree with these analyses and hold that the Takings Clause ‘is not an appropriate vehicle to challenge the power of [a legislature] to impose a mere monetary obligation without regard to an identifiable property interest.’ " Id . at 286 (quoting Swisher Int'l v. Schafer , 550 F.3d 1046, 1056 (11th Cir. 2008) ). Quarterly fees are just that—monetary obligations imposed without regard to an identifiable property interest. Pidcock's Takings Clause challenge therefore must fail.
Even assuming for the sake of argument that the 2017 Amendment targeted an identifiable property interest, it still would not violate the Taking Clause. As already discussed, quarterly fees are user fees, and the legal framework that some courts have used for analyzing user fees under the Takings Clause was set forth in Buffets . True "user fees are not takings under the Fifth Amendment." Buffets , 979 F.3d at 381 (citing Koontz v. St. Johns River Water Mgmt. Dist ., 570 U.S. 595, 615, 133 S.Ct. 2586, 186 L.Ed.2d 697 (2013) ). Still, labeling an item a fee does not necessarily make it one; if the purported user fee is excessive, then the fee could be held to be a taking. See Exide , 611 B.R. at 32 ("User fees are not takings under the Fifth Amendment unless the fees are so excessive that they do not reflect a ‘fair approximation of the cost of benefits supplied’ by the government.") (quoting United States v. Sperry Corp. , 493 U.S. 52, 60, 110 S.Ct. 387, 110 S.Ct. 387 (1989) ). A "user fee is not a taking when it is a ‘reasonable’ amount ‘imposed for the reimbursement of the cost of government services.’ " Buffets , 979 F.3d at 381 (quoting Sperry , 493 U.S. at 63, 110 S.Ct. 387 ). A fee is reasonable if it is a " ‘fair approximation of the cost of benefits supplied’ " to the debtors. Id . (quoting Sperry , 493 U.S. at 60, 110 S.Ct. 387 ). The fee "need not be ‘precisely calibrated’ to the debtor's use of the [United States] Trustee Program." Id . (quoting Sperry , 493 U.S. at 60, 110 S.Ct. 387 ). "Acknowledging that reality, the Supreme Court has allowed percentage-based fees to serve as a proxy for how much a party uses the service." Id . (citing Sperry , 493 U.S. at 62, 110 S.Ct. 387 ).
Applying this framework, every court that has addressed the issue has concluded that the 2017 Amendment does not violate the Takings Clause. See Buffets , 979 F.3d at 381–382 ; SCI Direct , 2020 WL 5929612, at *11–12 ; MF Global Holdings , 615 B.R. at 441 ; Exide , 611 B.R. at 32 ; Clinton Nurseries , 608 B.R. at 121–22. On top of that, the dissent in Buffets agreed with the majority that the 2017 Amendment does not violate the Takings Clause. See Buffets , 979 F.3d at 385.
The analytical approach taken by these courts is sound. The Sperry decision on which they so heavily rely involved awards made by the Iran-United States Claims Tribunal. A federal statute required the Federal Reserve Bank of New York to deduct a fee from awards made by the Tribunal to American citizens and to deposit the fees into the United States Treasury in order to reimburse costs the United States incurred in connection with the Tribunal. The fee was 1.5% of the first $5 million of an award and 1% of any amount of the award over $5 million. The Supreme Court rejected the challenge to the fee under the Takings Clause, stating: "This Court has never held that the amount of a user fee must be precisely calibrated to the use that a party makes of Government services." Sperry , 493 U.S. at 60, 110 S.Ct. 387. The Sperry Court added that "the Government [does not] need to record invoices and billable hours to justify the cost of its services. All that we have required is that the user fee be a ‘fair approximation of the cost of benefits supplied.’ " Id . (quoting Massachusetts , 435 U.S. at 463 n.19, 98 S.Ct. 1153 ). And in a nod to Congress, the Supreme Court said: "[W]e are convinced that on the facts of this case, 1½% does not qualify as a ‘taking’ by any standard of excessiveness. This was obviously the judgment of Congress and we abide by it." Id . at 62, 110 S.Ct. 387.
Even if the Takings Clause applies, Pidcock has failed to demonstrate that the increase in quarterly fees is so excessive as to constitute a taking. Quarterly fees are capped at 1% of disbursements or $250,000, whichever is less, so they are payable at a rate less than the 1.5% the Supreme Court upheld in Sperry as permissible "by any standard of excessiveness." Id . at 62, 110 S.Ct. 387 ; see also In re Kindred Healthcare, Inc ., No. 99-3199 (MFW), 2003 WL 22327933, at *5 (Bankr. D. Del. Oct. 9, 2003) ("Congress assumed that larger cases tax the [United States Trustee] system more than smaller cases and that the size of the case can be determined by the amount of disbursements made by the particular debtor. Both assumptions are logical."). For all these reasons, the Court concludes that the 2017 Amendment does not violate the Takings Clause.
V. Conclusion
For the reasons stated above, the United States is entitled to summary judgment and the United States Motion is therefore GRANTED . The Court will enter a separate judgment entry in favor of the United States and against Pidcock.