Making sense of the new PACER bill

There is plenty of room for constructive compromise, but it requires everyone to acknowledge that “free” PACER is not actually free.

Last week, the House of Representatives passed the Open Courts Act of 2020, H.R. 8235, by a voice vote. The bill would radically reform access to federal court records by requiring (among other things) that the courts’ PACER system be modernized and its contents made free to the public. The bill drew praise from open courts advocates, and furious pushback from the Judicial Conference and the Administrative Office of the U.S. Courts (AO). Indeed, the Judicial Conference’s reaction was probably the most vigorous response I have seen from the courts in many years.

It is a rare piece of legislation these days that can simultaneously garner bipartisan support and solicit institutional panic from the judicial branch. So it’s worth examining closely. What we find is an opportunity for the court system to improve its transparency and its own performance, albeit not on the schedule or in the manner it would prefer.

The background

The PACER system, developed in the late 1990s to provide the public with electronic access to federal court documents, has long been the subject of both praise and criticism. Lawyers, academics, and big data aggregators recognize the value in being able to access millions of federal court documents, both as a matter of strategic advocacy and as a way of better understanding the operation of the federal court system. But accessing documents through PACER is both clumsy and expensive: users must first secure a specialized billing ID, and then pay a fee per page to download individual documents. (Users who download only a limited number of documents each quarter are exempt from fees.) The court system currently charges users 10 cents per page to download each document; even with a cap of $2.40 per document, the cost can add up fast.

In 2017, two separate federal class action lawsuits were filed, both alleging that the courts have been overcharging PACER users since 2010 and using the proceeds for improper purposes. The first suit, filed in the U.S. District Court for the District of Columbia, alleged that PACER fees violated the E-Government Act of 2002, because the court system was using those fees to finance internal technological improvements that were not directly related to PACER. That suit eventually led to a grant of partial summary judgment for the plaintiffs, with Judge Ellen Segal Huvelle finding in March 2018 that the court system had indeed used some PACER funds improperly. Judge Huvelle’s decision was affirmed by the Federal Circuit in August 2020.

Notwithstanding the lawsuits, court administrators have continued to insist that PACER fees are closely tied to the operation of the electronic records system. A few weeks after the Federal Circuit decision, Judge Audrey Fleissig, testifying before the House Subcommittee on Courts, Intellectual Property, and the Internet on behalf of the federal judiciary, stated that “PACER can never be free” because the court system’s electronic case management and public access systems cost more than $100 million per year to operate.

The bill

This September, Rep. Hank Johnson (D-Ga) and Rep. Doug Collins (R-Ga) introduced the Open Courts Act of 2020 in the House. With bipartisan backing, the bill moved relatively quickly through the House Judiciary Committee.

The bill requires the Director of the AO, in consultation with the General Services Administration (GSA), to develop a modern system for making federal court records available to the public. The AO must present a plan for developing the system within six months after the bill’s passage. The new system must be completed by January 1, 2025, although the bill includes a one-year grace period if the AO certifies that additional time will be needed.

To finance the development of the new system, the bill permits the Judicial Conference “to prescribe a progressive schedule of reasonable additional fees” for private, for-profit PACER users who accumulate more than $6000 in PACER fees each quarter. The fees charged must “be based on a determination of specific and substantial need” by the court system, and all monies obtained through the increased fee schedule must be placed in a Judiciary Information Technology Fund dedicated to the development of the new filing system. If increasing PACER on large private users doesn’t bring in sufficient revenue, the bill also permits the AO to increase filing fees on certain litigants to help cover additional costs.

Once the new system is completed, all records shall be made available to the public for free. To cover the costs associated with providing free access, the bill permits the court system to collect an annual fee from each federal agency equal to the amount that agency paid in PACER fees in 2018 (adjusted for inflation). The bill also instructs the AO to treat costs associated with the new records system as a separate line item in the judiciary’s budget, starting in 2023.

In short, the bill sets out an ambitious timeline for developing a brand new court records management system, and places the responsibility on the AO and the Judicial Conference to build the system, create a multi-tiered fee schedule to pay for it, and train judges and clerks how to use it. This is no small undertaking even under the best of circumstances, so it was unsurprising that the rapid movement of the bill through committee drew the attention of the Judicial Conference and the AO.

It appears that the court system aggressively attempted to stall or reform the bill over the past couple of weeks. According to a letter sent by AO Director James Duff on December 7, in the days leading up to the House vote, representatives from the AO furiously sought intervention from Senate Majority Leader Steny Hoyer, and met repeatedly with Congressional representatives to revise the bill. Nevertheless, on December 8 the House passed the bill by a simple voice vote, and sent it to the Senate for additional consideration.

The reaction

The court system’s reaction was swift and strong. On December 9, less than 24 hours after the House passed the bill, the Judicial Conference issued a press release opposing the Open Courts Act in its current form. The press release argues that the bill “will have devastating budgetary and operational impact on the Judiciary and out ability to serve the public by imposing radical and costly changes on the Third Branch’s electronic case management system without adequate funding.”

In particular, the Judicial Conference and AO insist that the legislation will cost the courts approximately $2 billion over five years. Others, including the Congressional Budget Office, dispute that number; the CBO calculates a net cost of only $9 million over the next ten years.

In sharp contrast to court administrators, transparency advocates were ecstatic about the move. Articles like this piece in Reason and this op-ed in the Wall Street Journal take dead aim at the clumsy PACER interface and the the court system’s use of PACER as a type of paywall/golden goose for its other IT infrastructure projects.

Who is right?

Everyone is, at least in part. The court system is right that a brand new system will be difficult to implement on the aggressive timeline set out in the bill, and the rollout will surely be costlier than Congress and the CBO anticipate. Moreover, the legislation requires the judiciary — which, as a co-equal branch of the federal government, already receives only 1 percent of the annual federal budget — to once again kill its single golden goose and do more with less. At the same time, Congress and open courts crusaders are right that the PACER system, as currently used, is clumsy, inaccessible, and was operating at least partially in violation of federal law.

But where, as here, everyone is a little dissatisfied, it may signify an opportunity for real progress. The courts need to embrace the institutional benefits of an accessible, transparent public records system — benefits that include increased legitimacy, public understanding of the courts, and consistency with constitutional values like due process and freedom of the press. And Congress, for its part, needs to understand that it cannot simply wish (or demand) such a system into existence without making real, hard choices about timing and funding.

Put differently, there is plenty of room for constructive compromise, once all parties acknowledge that “free” PACER will not actually be free. The real questions are: what should we budget for it, and who should pay for it? As I have previously noted, there are vastly different models for publicly subsidized services, and Congress and the courts need to work together to determine whether they want PACER to most closely resemble a public restroom (ugh), public transportation, or a public school bake sale. Finding the right model is essential to the success of any future public court records program.

Congress has an answer for financing the construction of the new electronic records system. Under the Open Courts Act of 2020, the development of the new system will be paid for by fees charged to large, private, for-profit users — i.e., data aggregators and large law firms. Of course, in the case of law firms those costs are mostly passed along to the clients. And since many large law firm clients are companies with their own litigation budgets, basic economics means that much of those costs will also be passed along to consumers in the form of higher prices for goods and services. So in the end, who pays to build the new PACER system? We all do, just with a couple of degrees of separation.

But Congress also needs a coherent strategy to properly fund the new system once it is in place, and to address the budget shortfall from the loss of current PACER revenue. The simplest solution is for Congress to make up the revenue through direct appropriations. The current bill, however, doesn’t address the shortfall, other than permitting the courts to periodically reassess the fee schedules specifically provided for. But the loss of $145 million in annual revenue, totaling nearly 2 percent of the court’s entire annual budget, is not insignificant. It is worthy of extended discussion should the Senate take up the bill seriously in the coming weeks.

For its part, the Judicial Conference indicated that it wishes to continue “discussions in the next Congress to bring forward a bill that the two branches could potentially both support.” But this may trulym be wishful thinking. The Open Courts Act has already been sent to the Senate Judiciary Committee, and it’s not at all clear that delaying discussion until the next Congress is in the cards.

More pressingly, the Judicial Conference and AO have not offered their own vision of what a new public records system should look like. Instead, they have asked Congress to wait for the General Services Administration to study the issue, with the anticipation of a first phase GSA report in the spring. But only a first phase report? It risks playing out too slowly even for a new Congress. At least behind the scenes, then, one can hope that the AO is developing its own proposal to act as an alternative to the development cost overruns it predicts. That proposal may never have to become public, although it needs to be available in a sufficiently concrete form to impress upon the Senate a need to thoughtfully consider more than the single proposal laid out in the current bill.

The courts may well want to take this route. The current PACER scheme was born out of the courts’ interdependence, as the Judicial Conference and the AO recognized that PACER fees were one (relatively small) income stream over which the judiciary had substantial control. But the court system is a public organization that cannot help but respond (at least somewhat) to public pressure, and most of the public views PACER fees much differently than do court administrators.

In the end, the court system cannot simply hope that this issue will fade away. The lawsuits, combined with current Congressional action, make clear that the courts will need to either develop a viable, transparent alternative to PACER or have one thrust upon them. They would be wise to choose the former.

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