Constitution, the Law, and the Courts

June 21, 2019 12:09PM

A Case at the Intersection of the Taxing Power and the Second Amendment

By Ilya Shapiro and Matthew Larosiere

Several years ago, Nick Bronsozian was charged with possession of an unregistered machinegun under a tax law statute. The provision in question, 26 U.S.C. § 5861(d), says that in order to have a machinegun registered, a tax must be paid on it. Simple enough, right? Bronsozian didn’t pay his tax. Case closed. That’s what the government argued anyway, but the situation is more complicated than that.

A subsequently enacted law, 18 U.S.C. § 922(o), prevents the government from registering and accepting tax payments on new machineguns. So Bronsozian was charged and convicted of a felony for not paying a tax that the government would not allow him to pay. If that strikes you as odd, it’s probably because you’ve read the Constitution.

Our federal government is one of enumerated and therefore limited powers. When the government passes a law under its taxing power, it must pass a tax. A series of Supreme Court decisions tells us, quite reasonably, that in order for the government to pass a law as a tax, it must actually be a tax, as opposed to a penalty for conduct (recall the debate over Obamacare’s individual mandate/penalty/”tax”). An essential feature of a tax is that it generates revenue, and the tax Bronsozian was convicted of not paying has been forbidden by law from generating any revenue for more than 30 years. Yet the government still wants to lock people in federal prison for failing to pay it.

Bronsozian moved to dismiss his charge, arguing that § 5861(d) was not a constitutional tax, that charging him for nonpayment of a tax that was impossible to pay was a violation of his due-process rights, and other claims. The district court found for the government, citing a flawed circuit precedent that made a 180-degree reversal from established tax law. He is now appealing to the U.S. Court of Appeals for the Ninth Circuit, hoping to set the record straight.

Because the taxing power gives the government the authority to tax, not ban whatever conduct it sees fit, Cato, joined by Firearms Policy Coalition, has filed an amicus brief supporting Bronsozian. We argue that, as the Supreme Court has repeatedly found, that a tax must be a tax. For a government of enumerated powers to function, those powers must be clearly defined. The fact that a case involves guns—even unpopular guns—is not a reason to smudge the taxing power into a grant to do whatever the government wants.

We also point out what we perceive to be a concerning departure from jurisprudence regarding Americans’ rights more broadly. By refusing to present an analysis of why the machineguns are beyond the scope of the Second Amendment, the courts are glazing over an important constitutional question. If a class of arms can be regulated nearly to the point of a categorical ban—which machineguns may well be—the American people deserve to at least know the constitutional justification.

The case is United States v. Bronsozian

June 21, 2019 11:34AM

In Private Cemetery Case, Supreme Court at Last Buries Rule Denying Property Owners Their Day in Federal Court

This morning, the Supreme Court in Knick v. Township of Scott ruled 5-4 that a government violates the Fifth Amendment's Takings Clause when it takes property without compensation, and a property owner may bring a claim to that effect in federal court at any time. This means an overruling of Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (1985), which required property owners to seek state law remedies in state court  before bringing a federal takings claim.

It’s gratifying that the Court finally overturned the anomalous Williamson County doctrine, which for 34 years denied property owners their day in federal court -- forcing them to go through the courts (and often administrative agencies) of the very states they alleged were taking their property. With no other constitutional right do you have to go through state proceedings before you can get your day in federal court -- and even then most federal courts would just dismiss the case as already adjudicated (res judicata). No more. With this quirky case involving a private cemetery, the Court has rightly interred the state-litigation requirement.

In his majority opinion, Chief Justice John Roberts methodically explains why property owners' claims accrue when the alleged taking occurs and then spends several pages evaluating stare decisis (adherence to precedent) concerns -- which here fall away because of sustained criticism of Williamson County, which has proven unworkable and fomented little reliance interests. This is one of the rare 5-4 cases this term that has split on "conventional" lines (Republican-appointed justices over Democrat-appointed justices), but I doubt it'll provoke the kind of political reaction that most other important cases that split this way do. Except perhaps for the stare decisis point, where progressives are increasingly concerned about the new conservative majority sweeping away their preferred doctrines (leading ultimately to Roe v. Wade). Still, Knick will be cited as an example of that supposed trend, rather than a focal point like Janus or Citizens United.

In any event, Knick represents the culmination of many years of challenges to Williamson County, and years of effort to put property rights (and takings claims specifically) on the same procedural footing as other rights enumerated in the Bill of Rights. Congratulations to our friends at Pacific Legal Foundation for bringing this case and many others that led up to it. Cato has been delighted to support these efforts every step of the way. See here for more background and to read Cato's brief.

June 20, 2019 12:11PM

Of Course a Memorial Cross Doesn’t Establish Religion

This morning, the Supreme Court ruled in American Legion v. American Humanist Association that a 100-year-old cross WWI memorial in Bladensburg, Maryland, doesn't "establish" religion. That's the correct result (read Cato's brief), but the mish-mash of opinions -- it took a paragraph to explain which justice was joining which aspect of the decision -- leaves Establishment Clause jurisprudence in the muddled state it's been for decades.

That is, much like in the Ten Commandments cases in 2005, the cross here survived largely because it's really, really old. Justice Alito's majority opinion does well not to apply the much-ballyhooed Lemon test -- looking to purpose and effects of government action, as well as "entanglement" with religion -- but lost votes when he began to squeeze it. Still, with Justice Gorsuch (joined by Justice Thomas) saying that Lemon is now "shelved" and Justice Kavanaugh noting that "the Court no longer applies the old test articulated by Lemon," it's pretty clear that this nearly 50-year-old case is pretty much obsolete, at least in cases involving religious symbols (and probably in all Establishment Clause cases, as Justice Kavanaugh describes).

Then why not go further and scrap it explicitly? This area of law has long been plagued with judicial hand-waving at nebulous standards, producing results good for a particular case but without real guidance about the kinds of actions regarding religion that governments can take (or allow to be taken on government property). 

James Madison, arguably the most influential framer of the Constitution, strongly opposed state religion because colonial Virginia was teeming with religious persecution. Preachers were jailed for simply publishing their religious views, and the official state religion was integrated with many parts of the government. This had a profound effect on Madison. When he wrote his draft of the First Amendment, Madison envisioned the Establishment Clause as the culmination of his philosophy on religion and government, with liberty of conscience as the centerpiece. His purpose was to ensure that people could exercise their faith free from compulsion. The Establishment Clause, thus, was a shield to defend “individual liberty of conscience.”

As Justices Thomas and Gorsuch explain in their concurrences, the Court in future should return to the original public meaning of the Establishment Clause, which ensures liberty of conscience and protects people from truly “established” state religions that coerce belief and support. A non-coercive, harmless monument -- a cross memorial, or a Star of David, or any other religious symbol -- is not an establishment of religion. As seven justices correctly found here, tearing down an old war memorial instead establishes an anti-religious orthodoxy, with a mandate that religious symbols be eradicated from public life.

The Framers did not intend for that to happen, but maybe the fact that we're fighting over things like this is a good indication that nobody in America is really trying to establish religion any more -- compelling religious worship, on penalty of state law -- that the danger to the freedom of conscience comes more from government mandates and regulations that infringe on the free exercise of systems of belief, religious and secular alike.

June 19, 2019 1:19PM

Looking Back: Charles Reich and His Era

Charles Reich, who died Saturday at 91, had a brief run in popular culture as author of "The Greening of America," the bestseller that endeavored to sell the 1968 outlook to middle-class readers as the coming thing ("Consciousness III"). His reputation was to prove much more durable in the world of law, where as a young professor he penned what was to become the most cited Yale Law Journal article ever: "The New Property," published in 1964. In it, Reich argued that courts should treat welfare benefits, public employment, and government contracts and licenses as types of property to which current holders were presumptively entitled, at least absent some sort of formalized adversary process. The phrase "new property" invited a comparison to plain-old-property in such forms as real estate, of the rights to which the courts were (with Reich's approval) becoming less solicitous over this same period, as in 1978's Penn Central Transportation v. New York City, which authorized the government to take development rights without compensation.

divI've written over the years about both sides of Reich's work. In Schools for Misrule (2011) I explored his durably influential 1964 article at some length as an example of academic thinking that indisputably helped to shape real-world jurisprudence. Part of its ingenuity was in couching in seemingly sober and cautious terms an idea whose implications (especially welfare rights) were otherwise controversial, so as to appeal to moderates and also to the sorts of thinkers who would soon be termed libertarian. (The New York Times, in its obituary, says that "The New Property" article "defended an individual’s right to privacy and autonomy against government prerogative," which sounds either Cato-ish or positively anodyne.) As I put it: 

Many of the social problems Reich discussed were in the air, so to speak, in the early 1960s. In applauding "individualism," in raising doubts about the "magnification of government power" and the "dependence" it might instill in recipients, Reich might even have been seen as working in a vein similar to that of Milton Friedman, who had just two years earlier (in 1962) been in the public eye with his book Capitalism and Freedom. In one of the most celebrated chapters of that book, Friedman had detailed at length the abuses of occupational licensure and proposed its abolition. And as part of his longtime interest in "negative income tax" proposals, Friedman too criticized some paternalistic and intrusive social-welfare rules that were aimed in part at monitoring and uplifting recipients' way of life. 

Reich's idea of making it easier to sue over license denial might come across as a less-drastic alternative to Friedman's idea of doing away with professional and occupational boards. And you might argue that by advancing the concept of a right to welfare, Reich was echoing Friedman's critique of welfare bureaucracy. In short, so long as you didn't examine matters too closely, Reich and Friedman might almost come off as co-thinkers in seeking to constrain the size and power of government....

The Supreme Court's speedy adoption of the "new property" idea in the years that followed became the stuff of law-school legend. 

Later experience showed, I believe, that the two scholars were by no means on the same track: making it easier to sue over license revocation isn't much like recognizing freedom to engage in an occupation, and restricting welfare agencies from cutting off benefits they believe to have been fraudulently obtained isn't very much like what a negative income tax (or universal basic income) tries to do. Reich's remedies did not really operate to curtail big government, while they did advance the power and role within it of lawyers and those comfortable with legal process. In that way too, Reich outran his peers at capturing the spirit of his era.  


June 19, 2019 6:01AM

Iowa Channels Colonel Jessup in Prosecuting Truth‐​Telling

“You can’t handle the truth!” So says Jack Nicholson’s cantankerous Colonel Nathan R. Jessup in A Few Good Men upon the prosecutor’s needling inquisition into the death of a young Marine. So also say the paternalistic officials of Davenport, Iowa to tenants who seek to learn whether their eviction was motivated by what they would consider to be a good or bad reason. The Supreme Court has long held that “hurtful” speech—even outright hate speech—shares the same level of First Amendment protection as a friendly greeting. Two years ago in Matal v. Tam, the Court summarized the law thus: “Speech may not be banned on the ground that it expresses ideas that offend.”

Well, Iowa courts seem to disagree with the U.S. Supreme Court. Theresa Seeberger of Davenport leased a single-family residence to Michelle Schreur and her 15-year-old daughter. After a history of late payments and other bad feelings, Seeberger finally decided to evict the two when the daughter got pregnant. When Schreur asked for the reason for the eviction, Seeberger listed some general grievances and then said that “[n]ow you’re going to bring another person into the mix.” While there are no local laws against evicting tenants for this reason, Davenport prohibits landlords from informing evictees of potentially discriminatory reasoning (family status being a protected category for this purpose).

The Iowa appellate court upheld fines (in the tens of thousands of dollars) that the Davenport Civil Rights Commission imposed on Seeberger, reasoning that her statement to Schreur was “commercial speech” and that the law prevents “landlords from subjecting prospective tenants to the stigmas associated with knowingly being discriminated against.” The Iowa Supreme Court allowed that ruling to stand.

But the government can’t use its desire for politeness as a weapon to “protect” residents from an offensive or derogatory opinion, especially in areas as important as eviction. Prodded by certain voices in the academy, a growing segment of the American public believes that the First Amendment does not in fact protect “hate” speech (whatever that means). This despite a long line of Supreme Court opinions that protect, among other things, callous protests near a fallen soldier’s funeral, the hurtful exclusion of gay organizations from a St. Patrick’s Day parade, and neo-Nazi marches designed to intimidate Holocaust survivors. We doubt there is anything different about the “commercial” context that should allow for the restriction of speech far less offensive than some of the things said in the non-commercial marketplace of ideas.

Laws that stop us from telling the truth strike at the heart of the First Amendment and foreshadow a brave new world in which a paternalistic and inevitably puritanical state determines to prohibit that which offends, upsets, disgusts, hurts, demeans, insults, stigmatizes, or, dare we say, “triggers.” Cato has thus joined with the Hamilton Lincoln Law Institute to file an amicus brief in support of Seeberger’s petition for review by the U.S. Supreme Court, seeking reversal of a state court ruling that undermines core tenets of First Amendment jurisprudence.

Far from protecting the Schreurs of the world from the “stigmas associated with knowingly being discriminated against,” statutory prohibitions against informing tenants of discriminatory motivations behind their eviction can only do more harm than the truth—depriving people of an honest answer to a very basic question: Why are you terminating my lease?

The Supreme Court will decide whether to take up Seeberger v. Davenport Civil Rights Commission in September upon returning from its summer recess.

June 18, 2019 4:00PM

Article III Court Should Hear Challenge to SEC’s Unconstitutional Enforcement Proceedings

How many constitutional infractions must one endure at the hands of the government before getting the chance to be heard in an Article III court? According to the Securities and Exchange Commission, the answer is at least two.

In April 2016, the SEC commenced an enforcement proceeding against Michelle Cochran for alleged violations of federal accounting regulations. The proceeding took place before an administrative law judge who was reported at the time to have said to defendants that “they should be aware he had never ruled against the agency’s enforcement division.” True to his word, the SEC judge issued an initial decision ruling in the SEC’s favor. Ms. Cochran was fined $22,500 and banned from practicing as an accountant for at least five years.

But before the SEC could finalize its order against Ms. Cochran, the Supreme Court held in Lucia v. SEC that administrative law judges are “inferior officers” subject to the Constitution’s Appointments Clause. Because SEC judges had not been appointed by the “President alone…Courts of Law, or…Heads of Departments”—as required for all “inferior officers” by Article II—the Supreme Court invalidated all ongoing administrative enforcement proceedings before the SEC, including the one against Ms. Cochran.

After Lucia, the SEC attempted to cure this constitutional defect by “ratifying” its administrative law judges’ prior appointments, thereby comporting with constitutional procedures. The problem is that the SEC’s Appointments Clause “solution” entails a violation of the Constitution’s Removal Clause. As a matter of constitutional law, the agency jumped from the frying pan into the fire.

In Free Enterprise Fund v. PCAOB, the Supreme Court held that “officers” of the United States may not be insulated from presidential control by more than one layer of tenure protection. Yet the SEC’s judges enjoy employment protections, and they are removable by SEC commissioners, who also enjoy employment protections. That is, the SEC’s administrative law judges are “officers” with at least two layers of tenure protections, and, therefore, run afoul of the Supreme Court’s reading of the Removal Clause in Free Enterprise Fund.

In its Lucia brief, the SEC acknowledged this constitutional quandary. Notwithstanding this concession, and although the SEC has the discretion to bring its enforcement proceedings in an original action before a federal district court, the agency reassigned Ms. Cochran’s case to a new administrative law judge. As a result, the SEC knowingly subjected Ms. Cochran to a second unconstitutional enforcement proceeding, which remains ongoing.

Enough is enough. In January, with the help of the New Civil Liberties Alliance, Ms. Cochran filed suit against the SEC in a federal district court in Texas. She argued that she should not have to undergo a second unconstitutional enforcement proceeding. To be clear, she’s not asking the court to void the SEC’s charges against her or otherwise diminish the SEC’s enforcement power. Ultimately, Ms. Cochran seeks only for a federal court—and not an unconstitutional administrative law judge—to try the SEC’s case against her. Simply put, she wants her day in a court that passes constitutional muster.

On March 25, 2019, the district court dismissed her case for lack of subject-matter jurisdiction, concluding that Congress intended to preclude district court jurisdiction over Ms. Cochran’s constitutional claims and channel those claims through the administrative process. Ms. Cochran has appealed the district court’s order to the U.S. Court of Appeals for the Fifth Circuit.

Cato, joined by the Cause of Action Institute and Competitive Enterprise Institute, yesterday filed a brief in support of Ms. Cochran. We argue that the district court misconstrued (and thereby trivialized) Ms. Cochran’s serious ongoing constitutional injury. In addition, we argue that parties like Ms. Cochran may never get any opportunity to seek or obtain redress for their constitutional injury, and even if they do it will be too late to undo or remedy the injury. Because this case alleges a colorable constitutional claim of ongoing ultra vires government action, and because Congress cannot have intended to strip district courts of jurisdiction over such a claim, the Fifth Circuit should allow Ms. Cochran’s case to proceed in the district court.

For more background on this case, see Cato’s briefs in Lucia v. SEC and Free Enterprise Fund v. PCAOB.

June 18, 2019 9:07AM

Again Pointing Out Executive‐​Power Abuses in the New Bump Stock Ban

By Ilya Shapiro and Matthew Larosiere

Before the tragic mass shooting in Las Vegas, almost nobody in the United States had ever heard of a “bump stock.” What was, and always has been, a gun-range novelty was suddenly the subject of national discussion. In the months following the tragedy, Congress considered and ultimately rejected a law banning these devices. Eager to seize political capital, however, the Trump administration sought to ban them anyway.

The administration faced one problem, though: the Constitution. As anyone who’s seen School House Rock can tell you, only Congress can write new laws. Never to let something like a written constitution get in their way, the administration tried to make new law by “reinterpreting” an existing law: the National Firearms Act of 1934 (NFA), which heavily regulates “machineguns.”

For decades, Congress, the executive branch, and the people shared a common understanding: the definition of “machinegun” in the NFA was clear, applying only to weapons that fired continuously from a single function. Be it with a button, a lever, or a traditional trigger, a “machinegun” fires continuously upon the performance of a single function. Bump stocks, which require substantial and continuous user input to fire, had never been considered “machineguns.” President Trump announced that his administration was changing course. The president expressly declined to go through Congress, instead directing officials to redefine bump-stock devices as “machineguns.” In turn, the Bureau of Alcohol, Tobacco, and Firearms (ATF) broke from decades of precedent and granted itself a new power to ban a widely owned firearm accessory.

This expansion of regulatory authority, motivated by political expediency, cannot stand. Whether one agrees that bump stocks should be regulated or not, this change is about far more than bump stocks. ATF has asserted the complete authority to ban any new class of weapons that were never covered by the 1934 law. This approach impermissibly expands the executive branch’s power to rewrite criminal laws and the casual approach to ignoring the Constitution would certainly not stop with the ATF if allowed to stand.

The new rule, making felons of an unknowable number of Americans, took effect on March 26, 2019. Gun owners and advocacy groups filed lawsuits in several federal districts, including one that ended up in the U.S. Court of Appeals for D.C. Circuit in which Cato also filed.

Another case is now before the U.S. Court of Appeals for the Tenth Circuit. It was brought by the New Civil Liberties Alliance on behalf of Clark Aposhian, who lawfully purchased a bump stock. Our brief here addresses issues that no other amicus discusses: that the executive branch cannot use the administrative process to accomplish legislative goals that Congress declined to enact.

The implications of this case extend far beyond bump stocks. Regardless of what public opinion is at this moment, the law means what it says. The executive branch has the power to interpret existing law, not create new ones. The administration argues, essentially, that the clear political motive here doesn’t matter, and that nothing prevents them from inventing their own definitions of the terms that define a “machinegun.” That simply isn’t the case. Administrative interpretations are supposed to do just that—interpret existing law—not give new meaning to an old one.

If the government really wants to regulate bump stocks, it needs to do so by passing a new law, not by assigning new meaning to an old one. The Founders weren’t short-sighted; there’s a reason laws that affect the entire nation have to come through Congress, not through politically motivated bureaucratic reimagination.

The Tenth Circuit will hear argument in Aposhian v. Barr this summer.