Like Nevada, many states rely very heavily on sales tax income to fund government services. In the olden days, states required businesses within their borders to remit a percentage of their sales as taxes to the state government. These taxes, of course, are passed along to the customer, who often sees them added on to total purchase prices on their sales receipts.

When the vendor of the product lives out of state, this poses a big problem for the state government. As of the Court’s decision in Quill Corp. v. North Dakota (1992), states have been stymied in their attempts to force vendors to collect and remit these taxes. In-state consumers are still required to pay the taxes, of course. But it is incredibly difficult to enforce this kind of requirement when the state has no idea how much money any particular individual rightly owes.

Enter Direct Marketing Association v. Brohl. The Supreme Court has just granted certiorari in this case, which deals with Colorado’s attempt to get around the restrictions in Quill. The SCOTUSblog page for the case lays out some of the details. Although the Court of late has denied certiorari on direct tax remission law challenges, the Court’s willingness to hear this case is an important development.

Paper Topic #24: Are the case facts in Brohl different enough from those in Quill to mandate a different finding? Given the holding in Quill, coupled with the changing nature of the internet economy, is it likely that the Court will feel pressure to adopt a new strategy here? If Congress stepped in to force remote retailers to remit state sales taxes, would that change the calculus in Quill?

Suggested Reading: Haile, A. J., Gamage, D., & Shanske, D. (2013). A Potential Game Changer in E-Commerce Taxation. State Tax Notes, 67(10).

Late in the Obama administration, a very interesting separation of powers issue developed out of the saga over the chemical weapons attack in Syria. The issue arose after President Obama asserted his authority to conduct military action in Syria without congressional approval, but decided to seek such approval anyway.

There is a good deal of debate as to whether the president actually has to go to Congress for approval. One member of the Obama’s own party seemed to think so …

Some prominent Republicans stepped in to defend the President Obama’s power to initiate such actions:

There’s an update to this, of course. President Trump has also launched military strikes against Syria, also without any updates to the original AUMF. Earlier this year, a new Senate resolution was initiated that would limit President Trump’s war powers. Learn more about that here.

Paper Topic #13: How much power does the President have to go around the wishes of Congress in the war on Terror? How much power does the President still have to deal with issues of fighting ISIS and dealing with the enemy combatants from the various campaigns in the war on terror? Does the Court’s recent jurisprudence on the separation of powers issue in foreign policy give us any hints?

Suggested Reading: Vladeck, S.I. 2011. “The Supreme Court, the War on Terrorism, and the Separation of Powers. Human Right Magazine 38(1).

The Supreme Court’s decision in MBZ v. Clinton (2012) is an example of a three-way separation of powers battle. Amanda Frost over at SCOTUSblog summarizes the debate this way:

“Federal law requires the Secretary of State to record the birthplace of an individual born in Jerusalem as “Israel,” which is at odds with State Department policy. The question for the Court in M.B.Z. v. Clinton … is whether that law interferes with the President’s constitutional authority to recognize foreign nations, and whether that dispute between the branches is a political question beyond the power of the courts to decide.”

More details can be found in this National Journal article.

The Court’s decision in MBZ v. Clinton (2012) did little to clear up the dispute between the executive branch and the legislative branch; however, it did assert the power of the judiciary to decide the dispute. Read Lyle Denniston’s astute commentary on the Court’s decision.

Paper Topic #12: As Lyle points out, the question remains as to whether Congress has the power to legislate about how a birthplace is listed on a passport. How will the lower courts answer this question? Is § 214(d) of the Foreign Relations Authorization Act constitutional? What implications will the decision have for striking a balance in this foreign policy separation of powers game?

Suggested Reading: Hand, A. (2012). Forbidden Territory or Well-Defined Boundaries-MBZV Clinton and the Overzealous Application of the Political Question Doctrine. Duke J. Const. L. & Pub. Pol’y Sidebar, 7, 61.

In the arena of domestic affairs, there has been a lot of separation-of-powers debate surrounding the attempts of Congress to reform the financial system. In Free Enterprise Fund v. Public Company Accounting Oversight Board (2009), the Court struck down an arrangement in Title I of the Sarbanes-Oxley Act. Here’s a quick summary of the act from the SEC’s website:

“On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the “Public Company Accounting Oversight Board,” also known as the PCAOB, to oversee the activities of the auditing profession.”

In a 5-4 decision, the Court held that the Act violated the separation of powers doctrine. This is because it gave broad powers to the PCAOB (an entity of the executive branch) while simultaneously keeping the President from appointing or removing the members of the PCAOB. Read this CS Monitor article decribing the separation of powers issue in Free Enterprise Fund v. PCAOB.

As a 2012 article in Compliance Week explains, the most recent attempt at financial sector regulation, known as “Dodd-Frank”, is facing a similar legal challenge. The suit’s main points are that the CFPB was established with too much independence—that Congress cannot set the CFPB budget (its funding is determined as a total portion of the Federal Reserve’s budget); that the president cannot remove the CFPB director except in special circumstances; and that the courts must give CFPB decisions extra deference.

“As a whole, Dodd-Frank aggregates the power of all three branches of government in one unelected, unsupervised and unaccountable bureaucrat,” said former White House Counsel C. Boyden Gray, attorney for the plaintiffs and founder of Boyden Gray & Associates.

“Dodd-Frank is to financial reform like a tsunami is to a slightly dry lawn—all-enveloping, hugely destructive, and pretty much unaccountable to whoever unleashed it,” said Sam Kazman, CEI’s general counsel. (The rest of the article is here.)

Part of the problem with Dodd-Frank, according to its critics, is that it violates the nondelegation doctrine in much the same way that Sarbanes-Oxley did. Read this short analysis by Professor Bainbridge.

Indeed, a lawsuit challenging the constitutionality of Dodd-Frank on separation of powers grounds is in the works. As one conservative analysis explains,

“The challenge to Dodd-Frank is … serious. As former White House Counsel C. Boyden Gray and his co-author, Adam White, wrote in a recent Weekly Standard cover story: “Dodd-Frank is a gift to big banks,” and “Even if we take President Obama, Sen. Dodd, Rep. Frank, and the rest of Dodd-Frank’s supporters at face value when they protest that they actually intended to rein in Wall Street banks, the laws they passed accomplish the opposite result. Intentional or not, a kiss is still a kiss.”

“Dodd-Frank’s kiss is intensified by an unconstitutional regulatory structure. The Consumer Financial Protection Bureau grants its director czar-like power, combining the authority with little legislative, executive or judicial oversight. Similarly, Dodd-Frank’s Orderly Liquidation Authority authorizes unaccountable corporate death panels, which are unrestrained by meaningful judicial scrutiny, while the Financial Stability Oversight Council has unchecked power to define “too big to fail.” In each instance, Dodd-Frank ignores our Constitution’s mandate for separation of power into three branches of government, housing it instead in one unaccountable agency.” (The rest of the article is here.)

The case State National Bank of Big Spring v. Mnuchin is currently at the U.S. Supreme Court awaiting a decision on a petition for a writ of certiorari. Here is a summary of the case and links to relevant court documents from the perspective of one of the challengers of Dodd-Frank, the Competitive Enterprise Institute.

The decision to keep the new agencies independent from the Fed and other executive agencies accountable to the President was a conscious one. As this HuffPo article explains:

“Specifically, Dodd’s bill takes away the Fed’s regulatory power in some key areas. “I really want the Federal Reserve to get back to its core enterprises,” Dodd said. “We saw over the last number of years when they took on consumer protection responsibilities and the regulation of bank holding companies, it was an abysmal failure. So the idea that we’re going to go back and expand those roles and functions at the expense of the vitality of the core functions that they’re designed to perform is going in the wrong way.” …

“Dodd said that despite removing a fair amount of regulatory authority from the Federal Reserve, the bill shouldn’t be seen as a criticism of Chairman Ben Bernanke himself. “This is not about ego,” he said. “It’s about putting together an architecture that works.” …

“Dodd’s bill protects the independence of financial accounting standards …”

Topic #11: Given what we know about the Supreme Court’s separation of powers and nondelegation jurisprudence, will these independent agency provisions from Dodd-Frank survive judicial review? Is it even possible for the Congress to develop a mechanism for creating truly independent watchdog groups?

Suggested Reading:

• Hills Jr, R. M. (2013). Exorcising McCulloch: The Conflict-Ridden History of American Banking Nationalism and Dodd-Frank Preemption.
• Steinmeyer, D. J. (2014). Does State National Bank of Big Spring v Geithner Stand a Fighting Chance. Chi.-Kent L. Rev., 89, 471.
• State National Bank of Big Spring v. Lew (2015) [No. 13-5247, D.C. Circuit].

Blog Post #10

You may remember hearing about the ATF’s controversial program, nicknamed “Fast & Furious.” Here’s John Stewart to give you the rundown:

As you might imagine, this controversy has made its way to the courts. The case is Committee on Oversight and Government Reform, US House of Representatives v. Holder.  The district court judge denied a motion to dismiss the case. Read this story from Politico summarizing the judge’s reaction to the administration’s arguments. Most recently, the Judge has allowed the Department of Justice more time to show why these particular documents should be subject to the “deliberative process” privilege (or, executive privilege to keep secret the deliberative process the DOJ went through in regards to this program). The current situation is summed up nicely in this article Daniel Wilson, which you should read.

Paper Topic #10: Given what we know from previous cases like U.S. v. Nixon (1974), will this claim of executive privilege hold up? Does it matter that the president himself has (as far as we can tell) very little to do these documents, personally?

Suggested Reading: Klukowski, Kenneth A. 2011. “Making Executive Privilege Work: A Multi-Factor Test in an Age of Czars and Congressional Oversight. Cleveland State Law Review, 59:31.

PS. In the midst of the case, the Attorney General moved to certify a question in the case to the Court of Appeals.