The Snowball effect, the Domino effect, and even the Streisand effect all demonstrate the accretive impact of small changes. Though without a catchy metaphor, the tendency of Circuit splits to attract new and deviating opinions fits the concept—particularly as applied to the deepening rift between Circuits over the constitutionality of United States Trustee fee increases in the Bankruptcy Judgeship Act of 2017 (the “2017 Amendment”). A recent ruling from the United States Bankruptcy Court for the Southern District of Ohio brings the United States Court of Appeals for the Sixth Circuit a step closer to addressing the issue over a ninth month period in which quarterly fees differed among bankruptcy cases subject to the United States Trustee Program and the Bankruptcy Administrator Program. The constitutionality of this brief disparity has already divided the Second, the Fourth, and the Fifth Circuits.
The Judgeship Act of 2017
The administration of bankruptcy cases within the United States is overseen by two programs: the United States Trustee Program and the United States Bankruptcy Administrator Program. The United States Trustee Program, a branch of the United States Department of Justice, is, by far, the most common administration program and oversees bankruptcy cases in 88 of the 94 federal judicial districts. The six holdouts—all districts in Alabama and North Carolina—remain under the purview of the Bankruptcy Administrator Program, which is ultimately supervised by the United States Judicial Conference (the “Judicial Conference”).
In 2000, after the Ninth Circuit Court of Appeals ruled unconstitutional the disparate funding sources for the United States Trustee Program and the United States Bankruptcy Administrator Program, Congress amended 28 U.S.C. § 1930(a) to provide for funding of both programs through the collection of quarterly fees. However, the two provisions in § 1930(a) were slightly different. Section 1930(a)(6) provided 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). By contrast, section 1930(a)(7) provided that “[i]n districts that are not part of a United States trustee region [i.e. those subject to the Bankruptcy Administrator Program] . . . 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). The permissive language made little...
