Supreme Court News

by William Funk⁽¹⁾

The Supreme Court's 1997 term went out with a bang, with almost fifteen percent of the Court's opinions being released in the last week of the term. The total number of decisions continues to be low but seems to be creeping upward; this year there were 95 signed opinions compared to last year's 91 and the prior year's 83. The Court remains "conservative," with Justices O'Connor and Kennedy the swing votes, and with Justices Stevens, Ginsburg, and Souter least often in the majority in the 5-4 cases.

Court invalidates Line Item Veto Act

It remains to be seen whether the 1997 term was notable for outstanding cases, but one of its outstanding cases was the so-called Line Item Veto case, Clinton v. City of New York, 118 S.Ct. 2091. Justice Stevens wrote the 6-3 opinion, with Justices Breyer, Scalia, and O'Connor dissenting. In the simplest terms, the Court held the Line Item Veto Act unconstitutional, but in the course of that decision the Court's analysis involves both administrative law and separation-of-powers issues.

The case actually involved two different exercises of the Line Item Veto, one a veto of spending authority and one a veto of a limited tax benefit. Justices Scalia and O'Connor believed that there was no standing to challenge the veto of the tax benefit, because the persons challenging the veto were not the ones to whom the tax benefit would accrue. Instead, the challengers were persons who hoped to do a deal with the beneficiary, which the vetoed tax benefit would have made possible. The majority, however, found the elimination of this benefit would redound to the economic detriment of the challengers, because its elimination made the deal impossible for them. Overcoming the standing issue, which had derailed the earlier Line Item Veto case, Raines v. Byrd, 117 S.Ct. 2312 (1997)(although not Justice Stevens, who alone dissented from the earlier finding of no standing and who then went on to explain why he believed the Line Item Veto Act was unconstitutional), the Court moved to the merits, and its analysis is neither long nor complicated:

Thus, under the plain text of the statute, the two actions of the President that are challenged in these cases prevented [two sections of law] "from having legal force or effect." . . . In both legal and practical effect, the President has amended two Acts of Congress by repealing a portion of each. . . . There is no provision in the Constitution that authorizes the President to enact, to amend, or to repeal statutes.

Hence, the Act is unconstitutional.

The government, citing Field v. Clark, 143 U.S. 649 (1892), had argued that the President's actions did not amend or repeal any law, rather his action was merely the exercise of power delegated to him by the Line Item Veto Act to rule certain spending and taxing provisions not in effect. In Field, the Tariff Act of 1890 had exempted a number of articles from duty, but it had also directed the President to suspend the exemption whenever he determined that the exporting country imposed unequal and unreasonable duties on American products. Similarly, the government argued, the Line Item Veto Act authorized the President to cancel taxing or spending provisions when he determined that their cancellation would reduce the deficit, not impair essential government functions, and not harm the national interest.

The majority, however, was not convinced, identifying "three critical differences" between the Tariff Act and the Line Item Veto Act. First, it said that the condition justifying the suspension of the tariff exemption did not exist at the time the Tariff Act was passed, whereas there would be no change in the deficit status in the few days between passage of a taxing or spending provision and the exercise of the "line item veto." Actually, it is not at all clear that the conditions mentioned in the Tariff Act did not exist at the time of passage of the Act; the Court did not cite any basis for its statement that they did not, and nothing in Field suggests they were not. Second, the Court said that under the Tariff Act, the President had no discretion; he had a duty to suspend the tariff exemption upon his finding, whereas under the Line Item Veto Act he had full discretion whether or not to "veto" particular provisions, any number of which might meet the three conditions. Of course, Field was an early delegation case, when the question of delegation of discretionary powers was still in doubt, but that issue has now been long decided in favor of the power to delegate discretionary power to the President. Third, the Court said, the President in exercising his power under the Tariff Act was merely exercising the policy that Congress had articulated in that Act, whereas under the Line Item Veto Act the President was nullifying the policy adopted by Congress in passing the affected taxing and spending provisions. One could, however, equally say that the President was merely exercising the policy adopted by Congress in the Line Item Veto Act. Finally, the Court mentioned that Field and other tariff and import cases involved foreign affairs, where the President's power is greater.

The Court does not make clear, however, why these differences, if indeed they are differences, undermine the government's central argument that the Line Item Veto Act merely delegates power to the President which he then exercised. Indeed, the Court denied that it was even deciding any question about the limits of delegable power, saying that the "excellent briefs" on the subject do "not really bear on the narrow issue that is dispositive of these cases," that the Line Item Veto Act violates the Presentment Clause of the Constitution, by allowing the President to "veto" individual provisions of a bill. The three dissenters agreed with the government, viewing the issue as a delegation issue and upholding the Act as a permissible delegation under traditional delegation doctrine principles.

As written, the Court's opinion hardly addresses the real issues in the case, but it certainly reflects a basic antipathy to an apparent structural change in the way appropriations and special tax bills would be considered by Congress and the President, even while it concedes that Congress could pass appropriations and special tax bills that would themselves grant the President discretionary authority over their provisions. Accordingly, while the case may sound the death knell on "line item veto" bills, it is likely to have little impact on any other separation-of-power doctrine.

Court decides another "standing" case, this time in favor of plaintiffs

In recent years, the Court, especially in environmental cases, has interpreted standing requirements strictly. Earlier in the 1997 term, the Court decided Steel Company v. Citizens for a Better Environment, 118 S.Ct. 1003 (1998), holding that citizen suit provisions in environmental laws cannot authorize suits by citizens solely for civil penalties, because civil penalties, which are deposited in the Treasury, provide no redress for the citizens' injury. In Federal Election Comm'n v. Akins, 118 S.Ct. 1777 (1998), however, the Court seemed to retreat from its past strictness, thereby earning a dissent from Justice Scalia, the author of most of the Court's recent standing cases, along with Justices Thomas and O'Connor.

The Federal Election Campaign Act imposes, in addition to its better-known expenditure and contribution limits, extensive recordkeeping and reporting requirements on groups that meet the Act's definition of a "political committee." That definition encompasses any committee, club, association or other group of persons which receives more than $1000 in contributions or makes more than $1000 in expenditures in a year "for the purpose of influencing any election for Federal office." The Act, however, also defines a "communication" by a group "to its members" as not an expenditure for the purpose of influencing an election, if the group is a membership organization or corporation that is not organized primarily for the purpose of influencing the nomination or election of an individual.

The Akins case revolves around a complaint filed by opponents of the American Israel Public Affairs Committee to have the FEC find AIPAC in violation of the Act for failing to comply with the Act's recordkeeping and reporting requirements. AIPAC's position was that it was not a "political committee" subject to the Act, because its expenditures were made for the purpose of communicating with its members. The FEC, however, found that the persons who belonged to AIPAC were not "members" within the meaning of the Act, so that the "communications with members" exception did not apply. Nevertheless, the FEC found the Act inapplicable to AIPAC because in the FEC's view only groups with a "major purpose" to nominate or elect candidates can be a "political committee," and AIPAC was primarily an issue-oriented lobbying organization, not a campaign-related organization. When the FEC dismissed its complaint, the group opposing AIPAC sought judicial review.

The FEC defended by arguing that the group lacked both prudential and constitutional standing. As to prudential standing, the Court noted that the Act specifically provides for judicial review by "[a]ny party aggrieved by an order of the Commission dismissing a complaint filed by such party," and "[h]istory associates the word 'aggrieved' with a congressional intent to cast the standing net broadly." Moreover, the Court reiterated the test repeated earlier this term in National Credit Union Administration v First National Bank & Trust Co., 118 S.Ct. 927 (1998), that a plaintiff satisfies prudential standing if the injury asserted is "arguably within the zone of interests to be protected." Here, the Court found that the Act intended to protect not just candidates and political parties but also voters.

The constitutional requirements were, however, more difficult. The first problem was the nature of the injury. The plaintiffs argued that they were deprived of information that would be valuable to their members as voters, because AIPAC would have to disclose information to the FEC if it were a political committee. While some lower courts have recognized "informational injury" as a basis for standing, the Supreme Court has never directly addressed the issue, except in the context of cases involving statutes specifying that persons have a right to particular information, such as under the Freedom of Information Act or the Federal Advisory Committee Act. The majority, in an opinion by Justice Breyer, did not see any distinction between those cases and the case before it; if the plaintiffs prevailed, the AIPAC information would have to be made available to the public. The Court distinguished United States v. Richardson, 418 U.S. 166 (1974), which denied standing to a group seeking disclosure of the Central Intelligence Agency's expenditures under the Constitution's Accounts Clause (requiring a "regular statement and account of the receipts and expenditures of all public money . . . be published from time to time."). The Court interpreted Richardson as analyzing only whether the plaintiffs satisfied taxpayer standing under Flast v. Cohen, 392 U.S. 83 (1968), which was not relevant to the present case.

The Court did acknowledge that there was an argument that the FEC case only presented a "generalized grievance." After all, the plaintiffs' harm was one suffered equally by all voters, and the Court conceded that "[w]hether styled as a constitutional or prudential limit on standing, the Court has sometimes determined that where large numbers of Americans suffer alike, the political process, rather than the judicial process, may provide the more appropriate remedy for a widely shared grievance." The Court, however, suggested that the context in which it had made this kind of statement involved not only widely shared injuries, but also injuries of an "abstract and indefinite nature - for example, harm to the 'common concern for obedience to the law.'" Here, the Court concluded, the injury was concrete, rather than abstract and indefinite, because the plaintiffs were interested in particular information that would be helpful to them as voters, and the fact that this interest might be widely shared did not disqualify it for Article III purposes.

There still remained a question whether the asserted injury was "caused" by the FEC's interpretation and whether a judicial determination to the contrary would "redress" the injury. The FEC argued that what was involved was an enforcement action, and that it could exercise prosecutorial discretion and not proceed against AIPAC for a violation, even if the FEC's interpretation was corrected. The Court held, however, that the fact that the agency might exercise its prosecutorial discretion "does not destroy Article III 'causation,' for we cannot know that the FEC would have exercised its prosecutorial discretion in this way." And, "[f]or similar reasons, the courts in this case can 'redress' respondents' 'injury in fact.'"

Turning to the merits, the Court decided not to decide, but to vacate the lower court decision and to remand it to the FEC for reconsideration in light of new proposed FEC regulations defining membership in political committees, adopted after the FEC's decision in this case, which relied on an earlier definition of membership.

The dissent focused on whether the claim involved a generalized grievance and thereby did not raise a case or controversy subject to Article III. First, the dissent takes the majority to task for its distinguishing of Richardson. As the dissent makes clear in extended quotations, the Court in Richardson clearly considered whether the plaintiffs there, by reason of their being voters, had standing to seek to compel the publication of CIA expenditures. Thus, the majority's dismissal of the case as irrelevant to the present case was at best disingenuous. Second, the dissent takes issue with the majority's novel separation of "generalized grievances" into two subsets - the widely shared but concrete injury and the abstract and indefinite injuries. The dissent argued that the real question is whether the injury is undifferentiated. Mass torts and the deprivation of the right to vote to large numbers of persons may be widely shared injuries, but the each person suffers a particularized injury, specific as to them. On the other hand, in Richardson and in the present case, the harm suffered by the plaintiffs - the unavailability of certain information -"was precisely the same as the harm caused to everyone else." Finally, the dissent argued in terms virtually indistinguishable from the majority opinions in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), and Steel Co. v. Citizens for a Better Environment, 118 S.Ct. 1003 (1998), that principles of the doctrine of the separation of powers compelled a conclusion of no standing here. Otherwise, it would create "[a] system in which the citizenry at large could sue to compel Executive compliance with the law [;] a system in which the courts, rather than the President, are given the primary responsibility to 'take Care that the Laws be faithfully executed.'"

Standing has been described as one of the more confusing areas of the law. Akins at first glance may be seen as adding to that confusion - after all, it appears to reject the analysis and doctrine of earlier cases. Nevertheless, Akins may be viewed as clarifying a particular, troubling issue. As the majority implied, it has been unclear whether the "generalized grievance" prong of standing doctrine is constitutionally or prudentially based. Although some cases suggest a constitutional, Article III basis, other cases explicitly articulate it as founded on a prudential basis, see, e.g., Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 475 (1982); Warth v. Seldin, 422 U.S. 490, 499 (1975). The majority, by separating this "generalized grievance" into two subsets, identifies which subset is constitutionally based and which may be prudentially based. Where the injury is abstract and indefinite, the Court suggests that there simply is no constitutionally cognizable injury, and hence Congress could not grant judicial review of such an injury. However, where the injury is concrete, but widely shared, even shared by all people, only the prudential limitation would apply, and where, as here, Congress explicitly provides for review, that provision resolves the prudential question. For the most part it would seem that the majority's abstract and indefinite injury and the dissent's undifferentiated injury will overlap, but as the present case demonstrates, they are not necessarily identical in coverage.

Court decides two Takings Clause cases in the non-real property context

In recent years, the Court has breathed new life into the Takings Clause in the real property context. In the last two weeks of the just past term, however, the Court took the Takings Clause's new vigor beyond the real property context in two cases. In Phillips v. Washington Legal Foundation, 118 S.Ct. 1925 (1998), the Court in a 5-4 decision found Texas's Interest on Lawyers Trust Account (IOLTA) program an unconstitutional taking. In Eastern Enterprises v. Apfel, 118 S.Ct. 2131 (1998), the Court rendered a 5-4 judgement without a majority opinion, finding provisions of the Coal Industry Retiree Health Benefit Act of 1992 an unconstitutional taking.

In the IOLTA case, the Court determined that interest on clients' trust accounts was the property of the client. It recognized that the existence of a property right derives from state law, but it concluded that Texas follows the general rule that "interest follows principal." The fact that the Texas legislature had adopted its IOLTA program did not alter this general rule. Quoting Webb's Fabulous Pharmacies, Inc. v. Beckwith, 499 U.S. 155 (1980), the Court stated: "a state by ipse dixit may not transform private property into public property without compensation simply by legislatively abrogating the traditional rule that earnings of a fund are incidents of ownership of the fund itself and are property just as the fund itself is property. In other words, at least as to confiscatory regulations (as opposed to those regulating the use of property), a State may not sidestep the Takings Clause by disavowing traditional property interests long recognized under state law."

In the Eastern Enterprises case, Congress had passed the Act in order to assure funding for retired coal miners' health benefits, in light of the inadequacy of the collectively bargained funds. The solution, in part, was to assess companies that had left coal mining with the retirement health benefits obligations of former employees. Stressing the retroactive nature of this new obligation, and thereby distinguishing the case from a number of other challenges to federally required pension and health funds, the plurality (the Chief Justice and Justices Scalia, Thomas, and O'Connor) found the obligation to be a taking without just compensation and therefore invalid. Justice Kennedy concurred in the judgement but believed that the Act violated substantive due process rather than the Takings Clause, also largely because of its retroactive character. The dissenters agreed with Justice Kennedy that the right analysis was under substantive due process, not the Takings Clause, but could not agree that the Act was fundamentally unfair in its application.

1. Professor, Lewis & Clark Law School; Editor-in-Chief, Administrative & Regulatory Law News.

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