Tag: amicus briefs

Supreme Court Gives Taxpayers a Muddled Win

This blogpost was co-authored by Cato legal associate Carl DeNigris.

Before the argument on the Arizona immigration case yesterday, the Supreme Court scored a blow for American taxpayers by rejecting the IRS’s attempt to overturn the Court’s prior interpretation of a disputed provision of the Internal Revenue Code, 26 U.S.C. §6501(e)(1)(A).  By avoiding the issue of whether agencies can use their regulatory powers retroactively, however, the Court didn’t go far enough.

In United States v. Home Concrete, the Court ruled that its decision in Colony v. Commissioner of Internal Revenue (1956) – that a taxpayer’s overstatement of tax basis in property is not an omission of income that would otherwise trigger an extended statute of limitations period for assessment – was still controlling.  The IRS had tried to change its interpretation of the relevant regulation but the Court concluded that, despite the government’s contention that the new interpretation was due judicial deference, “there is no longer any different construction that is consistent with Colony and available for adoption by the agency.”  That is, the IRS can’t unilaterally overturn Supreme Court precedent by changing how it interprets statutory language or applies a particular regulation.

But the Court didn’t address the government’s most insidious action here: the IRS sought deference for a regulation that it promulgated in the midst of litigation and which would have been retroactively applied to the taxpayers who were parties to the Home Concrete lawsuit.

In our amicus brief, Cato argued that sanctioning this sort of ad hoc, retroactive rulemaking undermines the rule of law by altering basic assumptions “regarding fairness and reliability of the laws and their application by the courts.”  Yet, with the exception of Justice Kennedy’s one sentence dismissal in dissent, the Court showed no interest in the retroactivity issue.  Moreover, it referred to the government’s blatant attempt at retroactive rulemaking as a mere “gap-filling regulation” with “no gap to fill.”  So while taxpayers won a narrow victory today, the Court’s silence gives little assurance that it remains a bulwark against arbitrary government power.

Perhaps even more importantly, it’s now unclear how courts are to apply an important precedent called Brand X, a 2005 case standing for the proposition that administrative agencies (like the IRS) can adopt regulations contrary to a judicial decision only when the relevant statute’s silence or ambiguity represents a congressional delegation of authority to fill that “gap” to the agency.  In other words, here the IRS acted contrary to clear statutory language as interpreted by Colony Cove, but what about future cases?  We’re no tax or even administrative law specialists, but it does seem that the Court has made a big mess out of Brand X:  When can an agency overturn decisions of the Court?  When can it not?  We’ll have to wait for the next ridiculous agency action to make its way to the Supreme Court to find out.

For more on the case, see here; for more technical administrative/tax law analysis, see here.  One other curious thing about this decision is that it ended up 5-4 but the majority opinion was written by Justice Breyer (who styles himself as the Court’s administrative law expert) and joined by the “conservative” justices – though Justice Scalia concurs only in part – with Justice Kennedy writing the dissent, joined by the remaining three “liberal” justices.

Immigration Laws at the Supreme Court: Constitutional but Bad Policy

For anyone suffering from post-Obamacare-argument Supreme Court withdrawal, this Wednesday the Court takes up Arizona’s controversial Senate Bill (“SB”) 1070.  See my blogpost from when the Court granted review for some background.

SB 1070 is much-misunderstood: it has nothing to do with sexy political issues like racial profiling and everything to do with boring legal ones like whether a given state provision is “preempted” by federal law.  That is, do the various parts of the state law – each one of which the Court will be evaluating independently – conflict with federal law (direct preemption) or intrude in an area exclusively reserved to Congress (implied preemption).

United States v. Arizona shows that there’s a difference between what’s constitutional and what’s good policy. SB 1070 was crafted to mirror federal law rather than asserting new state powers that interfere with federal authority over immigration.  That’s why lower courts only enjoined four of its provisions and why the Supreme Court would not be wrong to resurrect even those four.

But beyond this hyper-technical legal analysis, SB 1070 and copy-cat laws elsewhere – some of which go further than Arizona’s and thus are of more dubious constitutionality – highlight the dysfunction in our immigration system.  Given Congress’s failure to act in this area, state governments have spawned a host of federalism experiments.  Many of these laws are terrible policy for reasons ranging from economic effects to the misuse of law enforcement resources.

Legal scholars always enjoy the opportunity to point out laws that they think are constitutional but bad policy.  It makes them feel intellectually honesty (if they have reason to be defensive in that regard).  Well, immigration is the most obvious place where my constitutional and policy views diverge.  The ultimate solution here isn’t for the Supreme Court to strike down the states’ lawful if misguided legislation, but for Congress and the president to enact a comprehensive national reform.

For more on what’s at stake in the case, see my SCOTUSblog essay from last summer, my forthcoming law review article, and my new colleague Alex Nowrasteh’s recent op-ed.  For the briefs and other background materials, see SCOTUSblog’s case page.

Cato’s Amicus Brief Helps Persuade Supreme Court to Protect Private Property Rights

This blogpost was co-authored by Cato legal associate Anna Mackin.

Today, the Supreme Court agreed to hear Arkansas Game & Fish Commission v. United States, the Fifth Amendment Takings Clause case whose cert petition Cato supported with an amicus brief. In that brief, we joined the Pacific Legal Foundation in urging the Court to preserve a remedy long-recognized in American courts: compensation for government destruction of private property.

Over a year ago, the Federal Circuit blithely ignored this constitutionally guaranteed protection, ruling that so long as it might be characterized as “temporary,” no government flooding of private land can constitute a Fifth Amendment violation. If upheld, this sweeping opinion could prevent recovery for the destruction of private property whenever the government characterizes its own actions as “temporary,” without any assurances of the length of this “temporary” loss.

Notable Supreme Court commentators saw the importance of this case early on, and our amicus brief was featured on SCOTUSblog’s “petition of the day” page. Many thanks to Brian Hodges at PLF for working with Cato on the brief – one of just four filed in the case. Congratulations also and especially to Matthew Miller & Julie Greathouse of Perkins & Trotter, who represent AGFC, for their successful legal strategy.

It is gratifying to see the Court snap up this opportunity to protect private property rights – it is more likely than not that it will reverse the lower court – implicitly validating the position Cato and PLF advanced in this case. We’ll now be filing a brief on the merits that will urge the Court to maintain constitutional protections against government intrusions on private property. The Court will hear the case next term, probably this fall, with a final decision expected by early 2013.

For more on AGFC v. United States, check the case’s SCOTUSBlog page or its Supreme Court docket page. Jonathan Adler also blogged about the case at the Volokh Conspiracy.

Administrative Agencies Are Not a Power Unto Themselves

Cato legal associate Trevor Burrus co-authored this blogpost.

Administrative agencies are accorded huge deference — too much deference — by the courts. Acting as police, prosecutor, judge, jury, and executioner, agencies increasingly act as a law unto themselves and do a majority of the federal government’s work.

Through this arrangement, Congress is put in a win-win situation: the government can delegate decision-making to agencies and avoid political accountability. Because of these concerns, it is vitally important that courts’ deference to agencies not go too far.

In Christopher v. SmithKline Beecham Corp., two former pharmaceutical sales representatives sued to recover overtime pay. The Fair Labor Standards Act, however, exempts “outside salesmen” from overtime requirements and for over 70 years a Department of Labor rule has broadly defined “outside salesman” to include those who perform any part of the work required to sell goods. Pharmaceutical companies, as well as many other businesses, have long organized their business practices around this rule.

When former pharmaceutical employees brought a similar suit in the Second Circuit, the Secretary of Labor filed an amicus brief explaining that the rule would be thereafter changed not to exclude pharmaceutical employees. The Second Circuit deferred to this ad hoc rule change and held for the plaintiffs.

In Christopher, however, the Ninth Circuit refused to defer to the Labor Department’s attempt to change a long-standing rule. Cato thus joined the Washington Legal Foundation and the Allied Educational Foundation on an amicus brief to advise the Court that the Ninth Circuit was, believe it or not, correct. As the Ninth Circuit said, an “about-face regulation, expressed only in ad hoc amicus filings” does not deserve even the broad deference already accorded to agencies. Moreover, we stress that, if such deference were allowed, it would encourage agencies to avoid the regular rulemaking procedures that allow affected parties to give “notice and comment” on the proposed changes.

Administrative agencies should not be allowed any more leeway to increase their often unreviewable power.

Obamacare Argument Post-Mortem

Now that I’ve woken from the first full night’s sleep since the Supreme Court’s three-day Obamacare marathon began, I can share my thoughts on how the argument went, in case you haven’t seen my first and second days’ reports for the Daily Caller:

  1. The Anti-Injunction Act: On an argument day that can best be described as the calm before the storm, it quickly became clear that the Supreme Court would reach the constitutional issues everyone cares about. That is, regardless of how the justices resolve the hyper-technical issue of whether the Anti-Injunction Act is “jurisdictional,” this law – which prevents people from challenging taxes before they’re assessed or collected – does not apply to the Obamacare litigation. There were also hints that the Court was skeptical of the government’s backup merits argument that the individual mandate was justified under the Constitution’s taxing power. Perhaps the only surprising aspect of the hearing was how “cold” the bench was; it’s rare for the justices to allow advocates to speak at length without interruption, but that’s what they generally did today. That’s yet another indication that the Court will get past the AIA appetizer to the constitutional entree.
  2. The individual mandate: From Justice Kennedy’s noting that the government is fundamentally transforming the relationship of the individual to the government, to Chief Justice Roberts’s concern that “all bets are off” if Congress can enact economic mandates, to Justice Alito’s invocation of a hypothetical burial-insurance mandate, to Justice Scalia’s focusing on the “proper” prong of the Necessary and Proper Clause – and grimacing throughout the solicitor general’s argument – it was a good day for those challenging the individual mandate.  Paul Clement and Mike Carvin, who argued for the plaintiffs, did a masterful job on that score, showing again and again the unprecedented and limitless nature of the government’s assertion of federal power.  The solicitor general meanwhile, had a shaky opening and never could quite articulate the limiting principle to the government’s theory that at least four justices (and presumably the silent Justice Thomas) were seeking.  While trying to predict Supreme Court decisions is a fool’s game, the wise should take note that if Tuesday’s argument is any indication, Obamacare is in constitutional trouble.
  3. Severability: The most likely ruling on severability is that all of Obamacare will fall along with its fatally flawed individual mandate.  While such a result would be legally correct, it would still be stunning.  Perhaps even more remarkable is that the severability argument proceeded under the general assumption that the mandate would indeed be struck down.  This was not a mere hypothetical situation about which the justices speculated, but rather a very real, even probable, event.  There’s still a possibility that a “third way” will develop between the government’s position (mandate plus “guaranteed issue” and “community rating”) and that of the challengers (the whole law) – perhaps Titles I and II, as Justices Breyer and Alito mused (and as Cato’s brief detailed) – but the only untenable position would be to sever the mandate completely from a national regulatory scheme that obviously wouldn’t work without it.
  4. Medicaid expansion/coercion: The justices don’t want to reach the factually complicated and legally thorny Medicaid issue.  That may be another marginal factor pushing one or more of them to strike down all of Obamacare under a straightforward severability analysis and leave the “spending clause coercion” issue for another day.  This was perhaps the most difficult of the four issues to predict, and having heard argument doesn’t really make that task easier.  A majority of the Court was troubled by the government’s “your money or your life” stance, but it’s not clear what standard can be applied to distinguish coercion from mere inducements.  Then again, if this isn’t federal coercion of the states, I’m not sure what is.

General post-argument reaction: All of my pre-argument intuitions were confirmed, and then some:  The Court will easily get past the AIA, probably strike down the individual mandate, more likely than not taking with it all or most of the rest of the law (including the Medicaid expansion).  Still, it was breathtaking to be in the courtroom to see the Chief Justice and Justices Scalia, Kennedy, and Alito all on the same page.  (For example, when Justice Kennedy’s first question during yesterday’s hearing was, “Can you create commerce in order to regulate it?” – a question hostile to the government – my heart began racing.)  Much as I’d love to think that my briefs helped get them there even a little bit, ultimately it’s the strength of the constitutional claims and the weakness of the government’s positions that prevailed – or will prevail if the opinions that come down in three months follow along the lines set by this week’s arguments.  They may not of course – trying to predict the Supreme Court isn’t a science—but I’m coming out of this week feeling very good.

Finally, for links to all of Cato’s briefs and my last series of op-eds on the Obamacare litigation, see Monday’s blog post.

Obamacare at the Supreme Court

As most readers are no doubt aware, the Supreme Court this week takes up six hours of argument in the Obamacare litigation.  Constitutional claims that were originally dismissed as “frivolous” and “easy” are now getting three days of hearings – unprecedented in the modern era. The Court has thus signaled what the American people have known all along, that the government’s breathtaking assertion of power goes beyond anything attempted in the history of the Republic.

Rather than repeat my previous writings on the subject, here’s a sketch of each of the four issues the Court will examine, along with a link to my recent op-ed on the subject (this month I’ve written on three of the four) and the relevant Cato amicus brief:

  1. Whether the challenge to the individual mandate is barred by the Anti-Injunction Act. –- 90 minutes on Monday – op-ed and brief.
  2. Whether Congress has the power to enact the individual mandate. –- 2 hours on Tuesday – op-ed and brief.
  3. Whether and to what extent the mandate, if unconstitutional, is severable from the rest of the law. –- 90 minutes – op-ed (with Richard Epstein and Mario Loyola) and brief.
  4. Whether the new conditions on all federal Medicaid funding (expanding eligibility, greater coverage, etc.) constitute an unconstitutional coercion of the states. – 1 hour – brief.

Are there any constitutional limits on what the federal government can do in the name of regulating interstate commerce? The government hasn’t offered any and we’ll see this week whether that’s good enough for the Supreme Court.

Here further is an analytical point-counterpoint I did with University of California-Irvine Law School dean Erwin Chemerinsky previewing the arguments, and here are a series of blogposts by Cato adjunct scholar Tim Sandefur doing the same.  Finally, you can view Cato’s recent conference on the subject here (individual mandate panel) and here (Medicaid expansion panel).

Let’s hope that the Court says that we have a government of laws rather than men, allowing Congress then to get back to the hard work of crafting a true national health reform that both improves the system and stays within constitutional bounds.

May the odds be ever in liberty’s favor!

Not Everything Can Be a Federal Crime

Cato legal associate Carl DeNigris co-authored this blogpost.

Over the last few decades, the number of federal crimes has exploded. The U.S. criminal code has grown so large and so expansive that no one is exactly sure how many federal crimes are actually on the books, with estimates ranging from 4,000 to 300,000. As Justice Scalia has noted, “It should be no surprise that as the volume increases, so do the number of imprecise laws.”

Many individuals and organizations from across the ideological spectrum have voiced concern over this growing trend, recognizing that broadly defined crimes lack the clarity traditionally required before depriving citizens of their liberty.

The expansion of 18 U.S.C § 1001, which criminalizes the knowing and willful making of materially false statements in “any matter within the jurisdiction of” the United States, exemplifies this broadening scope. Cory King was prosecuted under this statute for making a false statement to a state official wholly unconnected to any federal agency or investigation. Yet, the Ninth Circuit held that Mr. King violated § 1001 because the subject matter of his statement was one over which a federal government agency possessed regulatory authority.

King has now asked the Supreme Court to hear his case. Cato has joined the National Association of Criminal Defense Lawyers and the Texas Public Policy Foundation on a brief supporting him and arguing that the Ninth Circuit stretched § 1001 beyond its proper jurisdictional reach. Such an unbounded interpretation risks greater over criminalization and further misuse of the federal criminal code.

Moreover, since § 1001 is a “process crime” that focuses on offenses “not against the particular person or property, but against the machinery of justice itself,” an excessively broad construction would undermine the integrity of the criminal justice system. Wider application of such crimes facilitates pretextual prosecutions, in which “the operating philosophy seems to be that, if the government cannot prosecute what it wished to penalize, it will penalize what it can prosecute.”

Such an arbitrary and far-reaching application of the criminal code – the federal criminal code, at that – has no place in a free society.

The Court will decide whether to take up King v. United States sometime this spring.