Tariffs, Takings, and Les Mis
Two quick, but important scoops. First, the Court released its opinion in the highly anticipated tariffs case. Second, PLF is back at SCOTUS (baby!).
The Tariffs Case: 170 Pages, Six Opinions, One Historic Result
Last week the Supreme Court handed down its ruling in the tariffs case, and wow. Historic. Nuanced. A 170-page opinion in all, even though Chief Justice Roberts’ majority opinion was only 21.5 of those. The question: Does IEEPA—the International Emergency Economic Powers Act—authorize the president to impose tariffs? The answer: 6-3 no.
Background: President Trump declared national emergencies over both drug trafficking from Canada, Mexico, and China and a “large and persistent” trade deficit, then imposed tariffs under IEEPA, which authorizes the president to “regulate” trade during an emergency. The tariffs were modified, raised, and reshuffled so many times that even trade experts needed a spreadsheet and a prayer. China’s rate at one point hit 145%, which feels more like eliminating trade than regulating it. Two sets of small businesses harmed by increased costs sued, arguing that IEEPA doesn’t authorize a president to impose tariffs and even if it did, there was no “emergency.” The administration argued that the president’s actions were authorized and, anyway, effectively immune from judicial review. The cases were consolidated and the Supreme Court took them. (N.B. Pacific Legal brought its own suit, but ours was held pending the two consolidated cases in this case.)
The headline: A majority held that tariffs are taxes, taxes are Congress’s job, and the president can’t impose them by invoking an emergency statute with loose wording. Lest we forget, the entire point of the Revolution was that taxes belong with the legislature—it’s not a power that Congress hands over lightly. The word “regulate” appears in countless statutes, and none of those have ever been read to give the executive the power to tax. Congress knows how to delegate tariff authority: It has done so before, explicitly and with careful limits. None of those limits are present here. What’s more, reading “regulate” to include “tax” would create a separate constitutional problem: IEEPA also authorizes the president to “regulate…exportation,” but the Constitution expressly forbids taxing exports.
A little deeper: The Chief, Gorsuch, and Barrett invoked the Major Questions Doctrine—the idea that if Congress wants to hand off an extraordinary power, it has to say so clearly. But they all kind of disagreed about how that doctrine works. ACB argues it’s a canon of statutory interpretation: If someone is delegating a huge power, we’d expect them to be clear about it. If a parent wants to give a babysitter the authority to take the kids to Disneyland, we’d expect them to use clearer language than “Make sure the kids have fun.” Gorsuch, however, thinks the Major Questions Doctrine is a substantive canon that prevents other branches from exercising powers not within their inherent authority without clear authorization, especially because once given, these powers usually cannot easily be clawed back (the president will just veto it!).
Gorsuch wrote the best concurrence. He described “regulate” as a word so broad it captures most of what the government does—broad, yes, but not a clear-enough delegation of the core Article I power to tax. His bottom line that will get forgotten in the news cycle? Congress can delegate the power to impose tariffs; it just has to do so in a clear way that preserves the structure of government. His parting shot to those disappointed by the outcome: Take it up with your elected representatives, where “deliberation tempers impulse,” rather than relying on unilateral action by the president (which felt… pointed).
Justices Kagan, Sotomayor, and Jackson agreed with the result but declined to join the Major Questions Doctrine reasoning. Kagan called it the “so-called major-questions doctrine,” which was a choice. She’d prefer “straight-up statutory construction,” which she thinks would’ve gotten to the same place. Fine. She also had one of her killer Kagan footnotes, even if I’m Team Gorsuch on this one.
Justice Jackson relied on legislative history, because she wants to give effect to “the will of the people.” My own view is that the guiding premise of the Constitution is liberty, not popular vote. But all of the justices got to the same place: IEEPA doesn’t allow tariffs.
Dissent watch: The dissenters—Thomas, Kavanaugh, and Alito— argued that tariffs have historically been a tool to regulate importation, that “regulate” is super broad, and that the Major Questions Doctrine shouldn’t apply in the foreign affairs context. (In recent terms, these justices have been big on MQD! I’m wary of any foreign affairs exception that swallows the rule). Kavanaugh got a little consequentialist, worrying about refunding billions to importers. But the Constitution requires what it requires!
Notably, nobody leaned on the nondelegation doctrine, which the Court just doesn’t seem to have an appetite for lately. I find that odd when so many of the justices appear supportive of unitary executive theory, or the idea that the president has complete control of the executive branch and that control cannot be burdened by Congress. In my mind, the nondelegation doctrine is unitary executive theory for Congress. In any event, the Court took the narrower path. So the underlying question of how much Congress can hand off to the executive branch remains very much alive.
The takeaway: This opinion is a Rorschach test for anyone who thinks the Court is simple or partisan. Despite this being an allegedly hyper-divided court, or a 6-3 court, or a partisan court, this Court is nuanced, complex, and divided even within similar ideological camps.
Pung v. Isabella County: PLF Goes to the Supreme Court (Again)
Yesterday, the Supreme Court heard Pung v. Isabella County—PLF’s 21st appearance before the justices if you’re keeping score (I am).
Background: In 2023, the Court unanimously ruled in Tyler v. Hennepin County (another PLF case) that when the government seizes your home to recover a tax debt, it can keep only what is owed, not all your equity too. Great! And yet, here we are again.
Isabella County seized the Pungs’ home over a small debt that two courts suggested was never actually owed and sold it at auction for $76,000. However, the fair market value of the home was around $190,000. In fact, the buyer then flipped the home for $195,000. This meant that the Pungs got a fraction of their equity back; more than $100,000 in equity was wiped out overnight. The lower court held that property owners are categorically barred from challenging the amount of compensation they receive back from an auction after a tax foreclosure, even when the auction has suspect processes, because the auction price is necessarily fair market value. The questions before the Court are 1) whether the Fifth Amendment’s Takings Clause requires the government to pay fair market value minus the debt when it seizes and sells your home, or whether the government can sell it for whatever the auction happens to fetch even under suspect auction circumstances and return to you the amount of that sale minus the debt, and 2) is selling a $194,000 home for $76,000 to satisfy a $2,200 debt (that was never actually owed) an excessive fine under the Eighth Amendment?
The short version: The argument was lively, and the egregious facts of the case were doing a lot of hard work. No justices bit on excessive fines.
Favorite moment encapsulated in a meme?
It’s Les Mis in Michigan: Justice Barrett noted that the case had “Jean Valjean vibes,” (still waiting on a Wicked or Hamilton reference) or perhaps worse, since here Jean Valjean hadn’t actually stolen the bread. She was concerned about when the taking occurs, at the time the property owner is dispossessed or sometime later. If later, that would make it easier to say that the property owner is only owed for what the property is sold for. The Solicitor General, however, agreed that the taking occurs at the time of dispossession, meaning just compensation has to be measured by reference to the property value at that time. I think that will end up being a big deal.
Gorsuch got it (although I was surprised neither he nor anyone else took the bait on excessive fines, especially since Gorsuch wrote separately on the issue in Tyler). He seemed to think that wherever the Court landed, it simply could not be true that the government could do this with impunity.
At the beginning of the argument, Sotomayor had some difficult questions about historical practice and the fact that auction price will almost never fetch fair market value, but by the end she seemed genuinely bothered by the facts—a $2,200 contested debt, the government plowing ahead despite knowing it’s likely wrong, a home sold for half its value, then immediately flipped for full price—and asked whether the Fifth Amendment doesn’t have something to say about that. Even Alito, who kept asking “but what did you want the government to do?” seemed receptive when Phil explained that the answer is literally anything other than this. Take the car, take the bank accounts, take the damn Peloton, but don’t seize someone’s house. When you do, you assume a sort of responsibility to not then sell it under unfair circumstances for pennies. That home equity is someone’s college fund.
Kavanaugh was concerned about what would happen on remand (not a bad sign!).
The Chief was concerned with what might happen if the process was totally fair but still didn’t retrieve fair market value (as were many other justices). Doesn’t need to be resolved here.
The more skeptical voices—Kagan and Jackson—worried about disrupting the entire structure of tax foreclosure sales, since auctions almost never fetch fair market value. Fair point. But the ask isn’t to abolish tax foreclosures; it’s simply to let homeowners challenge the process rather than accept a categorical rule that whatever the auction spits out is, even if a product of unfair processes, by definition just compensation.
The only one who didn’t seem moved by the facts was Justice Jackson, who indicated she viewed this case differently from someone whose house had been taken via eminent domain. According to her, the equities of the homeowner being behind on taxes make the taking of large sums more “just.” But culpability does not come into the just compensation analysis. Also, this was all a little surprising from the former public defender! She also seemed to think this was a due process problem rather than a takings problem. My view is that the Takings Clause has its own fairness/process limit built in, but sure, Justice Jackson—due process can come along too!
Watch this space for the opinion. Crossing fingers for liberty.
That’s your two big scoops. More to come.
