Constitution, the Law, and the Courts

September 19, 2019 4:05PM

Justice Department Responds in Steel Tariffs Case

The Justice Department today filed its brief in American Institute for International Steel v. United States before the U.S. Court of Appeals for the Federal Circuit. At issue are President Trump’s steel tariffs. Last month, the Cato Institute filed a brief in support of the appellants, who are businesses that rely on imported steel and have been harmed by the tariffs. 

The government’s response brief, alas, is excellent.

Faced with arguments that the president is unbound, the government points to putative procedural rigor behind the tariffs. In response to arguments that the Constitution empowers Congress—not the president—to regulate foreign commerce, the government stresses the president’s executive authority over foreign affairs. Quite obviously, the Justice Department's brief reflects the work of skilled lawyers.  

Notably, Cato’s brief seems to have registered with the government. On the one hand, the government dismisses Cato's input altogether. In the brief’s first footnote (page 15), the Justice Department alleges that we tried to “expand the issues of the appeal beyond those presented by the appellant in its opening brief,” and, therefore, that the court should not pay attention to our arguments. Notwithstanding this footnote, the government references the Cato Institute by name in the body of the brief and, furthermore, spends an entire subsection (III.B) addressing Cato’s arguments about judicial oversight.

Here, I'd be remiss if I failed to rebut the government's incorrect charge that Cato improperly attempted to expand the scope of the appeal before the Federal Circuit. In a nutshell, Cato's brief demonstrates that the trial court mistakenly denied itself the authority to review the president's steel tariffs. Because all federal courts always have jurisdiction to determine the bounds of their own jurisdiction, Cato's contribution falls squarely within the proper purpose of a friend-of-the-court brief. In its amicus brief, moreover, Cato argues that if judicial review is unavailable, then there can be no "intelligible principle" to limit the president's actions, which is precisely what the appellants claim. Of course, the best evidence for the appropriateness of Cato's brief is the fact that the government spent so many words engaging with Cato’s arguments. It doesn't make much sense for the government to say that we should be ignored, but then to respond to us. As always, actions speak louder than words. 

September 18, 2019 11:09AM

New York Bill Would Enable Visitation Demands On Adoptive Families

Thank you to Naomi Riley for including me in her Wall Street Journal piece earlier this month on a New York scheme to empower birthparents whose parental rights have been terminated to petition nonetheless for court-ordered visitation. The quotes from me:

In many cases adoptive parents do arrange with birthparents for some kind of contact after an adoption is completed. “Some adoptive parents are glad to agree to those conditions, and that’s fine for them. Where they have not, it is a very bad idea to adopt a presumption of enforcing such a long-term obligation on unwilling adopters,” notes Walter Olson, an adoptive parent and a senior fellow at the Cato Institute.

The legislation presents serious logistical concerns as well. What if an adoptive family wants to move across the country? Would the courts be able to prevent them? “Adoptive families are real families and deserve the full rights of other such families unless they have agreed to some other arrangement,” says Mr. Olson.

And more:

In a letter to Gov. Cuomo opposing the bill, the group New York Attorneys for Adoption and Family Formation explained that the law may also violate the due-process rights of adoptive parents. In 2000, they point out, the U.S. Supreme Court struck down a similar Washington state law.

Both houses of the New York legislature have now passed the bill, which is supported by legal services groups like the Legal Aid Society of New York City but opposed by the Adoptive and Foster Family Coalition of New York (AFFCNY), the Council of Family and Child Caring Agencies (COFCCA), “which represents nonprofit foster care agencies statewide, and the New York Public Welfare Association (NYPWA), which represents county government child welfare directors,” as Michael Fitzgerald notes at the Chronicle of Social Change. AFFCNY has more on its opposition here, and notes: “Adoptive families would have no choice but to hire and pay for legal representation for themselves.”

[cross-posted from Overlawyered]

September 11, 2019 5:30PM

Protecting Gun Manufacturers from Frivolous Lawsuits

In 2005, Congress passed the bipartisan Protection of Lawful Commerce in Arms Act (PLCAA) by a nearly two-thirds margin. PLCAA’s purpose was to curb efforts by gun-control advocates to circumvent state legislatures and attack Second Amendment rights through a never-ending series of lawsuits against manufacturers and retailers of firearms to hold them financially responsible for crimes committed using the weapons they make and sell. Although the dubious legal theories behind these lawsuits only rarely resulted in verdicts against manufacturers and retailers, the mounting costs of the lawsuits began to run gun makers and sellers out of business. Litigation-induced bankruptcy, it turned out, was an effective way of restricting Americans’ ability to exercise their Second Amendment right to keep and bear arms. Congress passed PLCAA to end that abuse of the judicial system, providing firearm manufacturers and retailers with immunity against legal claims resulting from the criminal use of their products.

PLCAA is a common-sense law. Product liability suits are usually focused on actual manufacturing defects. A good backyard grill effectively grills meat, but if it blows up due to a manufacturing defect, then a tort suit is warranted. A good gun shoots reliably and accurately and doesn't blow up in your hands. While gun manufacturers should and are liable for guns that malfunction, they shouldn't be liable for making reliable and accurate guns that can be used for mayhem, of course, but can also be used for self-defense and sporting purposes. Similarly, a swimming pool would be a bad pool if it failed to effectively hold water, but if it is a good swimming pool that holds water it also inevitably increases the risk of drowning. Like a swimming pool, a gun's good qualities are inexorably tied to the dangerous ones.

Despite PLCAA’s protections, victims of the mass shooting at Sandy Hook Elementary School and their family members are attempting to hold Remington, a gun manufacturer, responsible for the crimes of the killer because the rifle he used was made by Remington. They argue that the killer chose the Remington rifle from his mother’s legally owned collection of guns because Remington’s advertisements for the rifle connect it with the military, a subject the killer was interested in. The lawsuit claims these advertisements constitute an “unfair trade practice” under Connecticut law and therefore fit into a narrow exception to PLCAA’s protection. This exception applies only when sellers violate a law regulating the sale or marketing of their products and that violation leads to a crime committed with a gun they sell. The evidence shows, however, that Congress didn’t intend this exception to apply to lawsuits based on vague claims of “unfair trade practices.” In fact, this is exactly the type of lawsuit the PLCAA was intended to prohibit. A sharply divided Connecticut Supreme Court, however, decided that the exception applied and allowed Remington to be sued.

Remington is now petitioning the U.S. Supreme Court to review the Connecticut decision and restore the scope of PLCAA’s protections to what Congress intended. Cato, together with the Firearms Policy Coalition, the Firearms Policy Foundation, the Madison Society Foundation, the Independence Institute, and a coalition of law professors, has filed a brief in support of Remington’s petition. We argue that lawsuits like this one are not a new phenomena—drowning political opponents in litigation costs to restrict the exercise of constitutional rights is the same strategy that opponents of the Civil Rights movement used to prevent newspapers from exposing abuses in the Jim Crow South. In 1964, the Supreme Court stepped in to halt these abusive lawsuits and protect the press’s ability to exercise its First Amendment rights in the landmark case of New York Times v. Sullivan. Just as the Supreme Court protected First Amendment rights against abusive suits in Sullivan, Congress protected Second Amendment rights against abusive suits with the PLCAA. Remington is now asking the Supreme Court to give the PLCAA a fair interpretation and prevent it from becoming a dead-letter.

In Sullivan, the Court understood that newspapers exercising their First Amendment rights were being sued under vague and amorphous legal standards. Lawsuits that attempt to hold firearms manufacturers liable for gun crimes based solely on advertisements that evoke themes common in American arms culture, such as self-defense and the military, are similarly problematic. Firearms manufacturers have a First Amendment right to advertise their products with imagery and themes that have a close relationship with the exercise of Second Amendment rights. Congress passed the PLCAA to safeguard these rights. We urge the Court to support Congress’s efforts to protect Americans’ constitutional rights by restoring the full scope of PLCAA’s protection.

August 29, 2019 12:00PM

Puerto Rico Financial Oversight Board Was Unconstitutionally Appointed

By 2016, Puerto Rico’s government was in dire financial straits. To avoid bankruptcy, Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), creating a board responsible for restructuring the island territory’s substantial public debts. But there are serious questions regarding the constitutionality of this Financial Oversight and Management Board for Puerto Rico (the “Board”).

Under PROMESA, the president chooses six of the seven members of the Board from “secret lists submitted to [him] by the House and Senate leaders.” But in view of the Board members’ selection process and responsibilities, the U.S. Court of Appeals for the First Circuit held that they are “principal federal officers” who must be nominated by the president and confirmed by the Senate, rather than “inferior officers” whose appointment does not go through the same constitutional rigmarole.

Under the Constitution’s Appointments Clause, the president “shall nominate” principal federal officers, “and by and with the Advice and Consent of the Senate, shall appoint” them. But that is not what happened here. PROMESA’s appointment scheme raises serious separation-of-powers concerns because it positions the legislative branch to assume a role the Constitution exclusively reserves to the executive.

The First Circuit did not see it this way. Although it deemed the Board members “principal federal officers,” it applied an archaic doctrine to uphold their appointments. Under the “de facto officer” doctrine, acts performed by an officer that has assumed official duties without having been properly appointed to an office are valid even though it is later discovered that the officer’s appointment is legally deficient.

But this ancient doctrine is inapplicable to this case. Here, it is not the appointment of individual Board members against a valid appointment process that is in question. By all accounts, the appointment of each Board member did not violate any of PROMESA’s express prescriptions. Instead, it is PROMESA’s appointment process itself that is constitutionally suspect. In such case, the “de facto officer” doctrine has no real bearing, because no officer can be validly appointed in the first place.

Supreme Court precedent confirms, again and again, that the Board members are indeed “principal federal officers” who must be nominated by the president, and only then Senate-confirmed for appointment. That’s because they (1) occupy a “continuing” position established by federal law, and (2) “exercise significant authority pursuant to the laws of the United States.” While (1) is obvious, perhaps (2) is less so. And so it bears emphasizing that the Board, under PROMESA, has ultimate authority over the fiscal future of a U.S. territory of more than three million inhabitants. If that authority is not “significant,” we don’t know what is.

Cato has thus filed an amicus brief supporting several of Puerto Rico’s creditors before the Supreme Court, in their argument to overturn the decisions of the Board and invalidate its statutory authority. If PROMESA is allowed to stand, and the Board’s decisions are upheld, this will signal to the executive and legislative branches—both complicit in this perilous scheme—that anything goes, that they are free to strike at the heart of our constitutional structure without any pushback from the one branch left to preserve the ever-fragile separation of powers.

The Supreme Court will hear argument in Financial Oversight & Management Board for Puerto Rico v. Aurelius Investment, LLC on October 15.

August 28, 2019 11:37AM

Arizona Levies Unconstitutional Tax to Pay for New Sports Facilities

Arizona needed to raise money to update its sports facilities, but polling indicated that a new tax for this purpose was politically unpalatable. The state legislature had an idea: it would tax the tourism industry through hotel and rental car surcharges. The initial draft of the tax exempted Arizonans from the surcharge, but a smart legislative counsel observed that this just might be unconstitutional because it treated in-staters differently than out-of-staters. Instead, when Arizona levied a new tax on rental vehicles, it exempted long-term rentals, replacement rentals, bus rentals, and a whole slew of other vehicle rentals that are used primarily by locals, leaving the tax in effect on the short-term rentals favored by visitors. This tax would be voted into place by individual counties.

On the day Maricopa County (Phoenix) voted to enact the surcharge, pamphlets circulated claiming, “it will cost Arizona residents next to nothing. As much as 95% of the new . . . taxes will be borne by visitors.” These predictions have borne true; businesses reported that 72-87 percent of surcharge tax revenue has come from out-of-staters.

Saban Rent-A-Car, a Maricopa County business, paid the surcharges and sued for a refund in Arizona Tax Court. It made arguments based on the Commerce Clause of the U.S. Constitution—that the law interfered with interstate commerce—as well as state constitutional claims. The Tax court rejected both grounds. Arizona’s intermediate appellate court affirmed the tax court decision on Commerce Clause grounds. A divided Arizona Supreme Court also affirmed. Saban now seeks review in the U.S. Supreme Court.

This case raises two issues. First: the power of the states to regulate within their borders. The history of the Commerce Clause shows that it was written specifically to address discriminatory state legislation targeting out-of-state commerce. A necessary corollary to Congress’s power to regulate interstate commerce is the Dormant Commerce Clause, which prohibits states and their political sub-units from discriminating against out-of-state commerce. Over the years, the Supreme Court has invalidated taxes on trains carrying freight out of state, laws allowing additional harbor fees on ships carrying out-of-state goods, and taxes on out-of-staters shipping liquor into a state.

The second issue, to quote a Revolutionary War slogan, is “no taxation without representation!” Arizona has passed a tax that disparately impacts visitors from out-of-state who are not represented in the Arizona legislature. This ordinarily is not a problem. When a tax applies equally to all, visitors’ objections will be readily voiced by residents, who are equally effected. But when the tax is designed to fall on visitors, their lack of representation becomes a problem because their interests are opposed to the citizens of the state. For out-of-staters, this amounts to taxation without representation.

Cato has thus filed an amicus brief supporting Saban Rent-A-Car’s petition. The Arizona rental-car surcharge violates the Commerce Clause and impermissibly taxes out-of-staters without adequate representation of their interests in the state legislature.

The Supreme Court will decide whether to take up Saban Rent-A-Car v. Arizona Department of Revenue when it returns from its summer recess.

Thanks to Cato legal associate Michael Collins for his assistance with this post.

August 27, 2019 4:14PM

Trump’s Emergency Economic Powers: “Case Closed”?

On the campaign trail a few years back, Hillary Clinton declaimed: “We need a president who is ready on Day 1 to be commander in chief of our economy.” We got a good laugh out of that here at Cato—what a megalomaniacal misconception of the job! When President Trump embraced the role last Friday, it somehow seemed less amusing. “Our great American companies are hereby ordered to immediately start looking for an alternative to China,” he brayed, sending the markets into a Twitter-driven tailspin

Media Name: hereby_ordered.png

Where does Trump derive the authority for that “order”? On Saturday, he followed up with a statutory citation for the haters: “try looking at the Emergency Economic Powers Act of 1977. Case closed!” 

True, President Trump makes a lot of crazy threats he never carries out: from revoking birthright citizenship, to closing the border, to using the same 1977 Act to hammer Mexico with across-the-board tariffs, as Trump threatened to do in May. There’s a pattern here: the president sounds his barbaric yawp over the roofs of the world, but before long, backs it down to an ineffectual grumble. In this case, the cycle took all of two days: “I have the right to, if I want,” Trump insisted Sunday, but “I have no plan right now. Actually, we’re getting along very well with China.” OK, then: never mind! 

But we’d be fools to shrug this episode off as another unsettling, but ultimately meaningless Trumpian brainspasm, like nuking hurricanes or buying Greenland. For decades now, Congress has defined national emergencies downwards, investing the executive branch with dangerous new powers the president can trigger by saying the magic words. Trump has only begun to explore the possibilities, and there may be more competent would-be authoritarians waiting in the wings.

The statute Trump specified, the International Emergency Economic Powers Act of 1977 (IEEPA), gives the president an imposing array of unilateral powers to deploy against “any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States” if he “declares a national emergency with respect to such threat.” Granted, Trump’s definition of “emergency” may differ from yours, mine, and the dictionary’s. “For many years, this has been going on,” he explained Sunday, “in many ways, that’s an emergency.” But if history is any guide, federal judges will be extremely reluctant to second-guess “the wisdom of the President's judgment concerning the nature and extent of [the] threat.”

So, “case closed”? Could Trump order U.S. companies to pack up and come home? Not quite; but he could make it extremely difficult for them to do business in and with China. The IEEPA gives the president staggeringly broad powers to block transactions and freeze assets in which any foreign government or foreign national has an interest. And Trump’s not wrong to think he might get away with using the law as a trade-war bludgeon. A Congressional Research Service report published two months before Trump first started threatening to use IEEPA to hike tariffs, opined that such a use was unlikely, but probably permissible.  

The National Emergencies Act of 1976, the framework statute that was supposed to rein in presidential emergency powers, won’t be much help either. It originally allowed Congress to terminate presidential emergencies by majority vote, but thanks to a 1983 Supreme Court decision, the law now requires termination via joint resolution, subject to the president’s veto. Under the current emergency-powers regime, then, the president gets to do what he wants unless a congressional supermajority can be assembled to stop him. 

The good news is that Trump’s norm-busting on emergency powers has spurred a bipartisan reform effort in Congress. On July 24, the Senate Homeland Security and Governmental Affairs Committee moved an important emergency-powers reform bill forward by an 11-2 majority. That bill, Senator Mike Lee’s (R-Utah) ARTICLE ONE Act, would amend the National Emergencies Act to void new emergency declarations within 30 days unless Congress affirmatively approves them. Once approved, new emergency declarations require annual reapproval by Congress. The A-1 Act thus changes the current default setting—the president proposes, and the president disposes—to one in which any emergency edicts he issues rapidly expire without legislative sanction.    

The A-1 Act also addresses IEEPA abuse: thanks to an amendment offered by Senator Tom Carper (D-DE) and approved by voice vote, it would restrict the president’s ability to use the 1977 law to hike tariffs. The IEEPA, it clarifies, “does not include the authority to impose duties or tariff-rate quotas or… other quotas on articles entering the United States.”  

That’s an important change, but it comes with a pretty significant exception: even under the Carper amendment, the president can use the IEEPA for blanket bans of “all articles, or all of a certain type of article, imported from a country from entering the United States.” Nor would authorities claimed under the IEEPA sunset 30 days after the declared emergency. The A-1 Act exempts IEEPA emergencies from the new framework; they remain renewable at-will by the president unless affirmatively repealed by Congress over the president’s veto. 

All but three of the 34 currently active national “emergencies” rest on the 1977 law. The case for an IEEPA carve-out is that the bulk of those 31 are fairly uncontroversial, and requiring yearly congressional reapprovals would be cumbersome. That case was far more compelling before President Trump started threatening to weaponize IEEPA against major trading partners and the American consumer. 

Even so, the ARTICLE ONE Act would constitute a major improvement over the current emergency powers regime, and a possible foundation for future reforms. The courts are unlikely by themselves to impose the necessary restraints. It’s Congress that got us into this mess, and it’s going to be up to Congress to get us out. 

August 27, 2019 9:58AM

The Presidency Didn’t Get More Powers When Congress, to Its Discredit, Failed to Provide Relief to the Dreamers

In 2012 President Obama announced the policy known as DACA (Deferred Action for Childhood Arrivals), which provided lawful status to about 1.5 million people brought to the United States illegally as kids. In 2014, he announced a follow-up policy known as DAPA (Deferred Action for Parents of Americans and Lawful Permanent Residents). While there was no significant challenge to DACA, a group of states challenged the legality of DAPA. Cato filed amicus briefs in their support at the district court, circuit court, and Supreme Court. Throughout the litigation, Cato maintained that it supported DAPA as a policy matter—we were joined by several law professors along the way—but the president lacked the authority to pursue this change in the law unilaterally.

After Justice Antonin Scalia died in 2016, the Supreme Court split 4-4 on Texas v. United States, leaving an injunction against DAPA in place. After President Trump was elected, he announced DAPA’s termination and, eventually, a suspension of DACA. A number of plaintiffs, individual and institutional, argued that ending DACA was unlawful. In other words, the administration was required to continue enforcing DACA even if it thought it was unconstitutional (let alone if it simply wanted to reverse a policy determination). Several lower courts blocked the president from winding down DACA, holding that the executive branch failed to justify its actions. The Supreme Court has granted review to determine whether the rescission of DACA was lawful.

Having sat out the lower-court litigation, Cato has gotten back involved, with an amicus brief joined by Prof. Jeremy Rabkin and co-authored by Prof. Josh Blackman (also a Cato adjunct scholar). Once again we support DACA as a policy matter—and say so explicitly on the front cover—but, as with DAPA, the president can’t change the laws unilaterally. The appealed rulings are wrong because DACA goes beyond executive power under the Immigration and Naturalization Act (INA). But even if the Court declines to reach that holding, then the INA itself violates the nondelegation doctrine as applied here.

First, two general INA provisions can’t bear the weight of this foundational transformation of immigration policy, while DACA can’t be supported by any “implicit” congressional acquiescence either. Moreover, it shouldn’t matter if Congress has stood by idly when previous presidents exercised materially different deferred-action policies. These arguments are sufficient to confirm the attorney general’s conclusion that DACA is unlawful. But even if the Court disagrees—or declines to reach that issue—the executive branch still provided adequate grounds to justify rescission.

That is, second, the attorney general reasonably determined that DACA is inconsistent with the president’s duty of faithful execution. Admittedly, his letter justifying the rescission is not a model of clarity. But it need not be. This executive-branch communication provides, at a minimum, a reasonable constitutional objection to justify DACA rescission. Specifically, it invokes the “major questions” doctrine, which is used “in service of the constitutional rule” that Congress cannot delegate legislative power to the executive branch, as Justice Neil Gorsuch described in his dissent in Gundy v. United States this past June. Here, the Court should accept the executive’s determination of how to avoid a nondelegation problem: by winding down a discretionary policy.

Cato scholars support comprehensive immigration reform, of which a DACA-type policy is only one part. But we also have an interest in preserving the separation of powers that maintains the rule of law at the heart of the Constitution’s protections for individual liberty.

No president can unilaterally rewrite laws—in conflict with the laws passed by Congress and in ways that go beyond constitutionally authorized executive power. Nor does the president acquire more powers when Congress refuses to act, no matter how shameful the congressional inaction is. Such unlawful executive actions both set back prospects for long-term reform and, more importantly for a lawsuit, weaken the rule of law.

The separation of powers prevents the president from expanding his own authority. Those same dynamics ensure that a subsequent president can reverse his predecessor’s unlawful actions that self-aggrandize executive power. Reversing the lower-court rulings in Department of Homeland Security v. Regents of the University of California, which argument the Supreme Court will hear November 12, would restore the immigration debate to the political process—exactly where it belongs.