Wednesday, June 12, 2013

US Supreme Court Rules Against Executive Overreach

While activists on both sides await the pending decisions on DOMA and California's Prop. 8, the US Supreme Court is publishing decisions on other important cases. Many of these are easily over-looked. But they address key issues for every American, nonetheless. Some of these directly or indirectly address federal authority, specifically those of various agencies and bureaus within the executive branch.

The DOMA and Prop. 8 opinions are expected to be published in mid-late July 2013.

Love him or hate him, Ted Cruz is among the more transparent US Senators currently in office. Ted is a constitutional lawyer of no small merits. Among his work prior to becoming a US Senator, he participated in the US Supreme Court trial Heller v The District of Columbia. Ted was on the "winning team" in that decision.

Mr. Cruz sent out an email with commentary regarding some of these important US Supreme Court decisions.

On May 20, 2013, our Republic's highest court issued a unanimous decision on PPL Corporation (et al.) v. The IRS. The tax man lost. The issue was the executive branch's authority to tax income twice. PPL was already paying an amount of apportioned taxes based upon their income. The IRS attempted to tax those same funds, including what was already paid (to the UK) to the US. The Supreme Court ruled that this was double taxation and unconstitutional. Essentially, all taxes based upon revenue paid to the UK had to be deducted before determining taxable income here in the US. The decision amounted to the IRS (part of the executive branch) guilty of regulatory overreach. For emphasis, the decision was unanimous. Thomas and Sotomeyer wrote the consenting opinions.

The U. K. windfall tax’s predominant character is that of an excess profits tax, a category of income tax in the U. S. sense. The Labour government’s conception of “profit-making value” as a backward-looking analysis of historic profits is not a typical valuation method. Rather, it is a tax on realized net income disguised as a tax on the difference between two values, one of which is a fictitious value calculated using an imputed price-to-earnings ratio.

Another unanimous decision handed down by The Court was Horne v The USDA. The US Department of Agriculture is another agency within the executive branch that is often accused of regulatory overreach. In this case, the decision was, again, in favor of individual liberties.

The case refers to the USDA's authority to confiscate grapes and raisins from a producing farm/vineyard under the Agricultural Marketing Agreement Act of 1937. The act in question allows the USDA to take a portion of the crops from "handlers" (those who purchase grapes in order to produce raisins) in order to create a reserve supply of raisins in case of some emergency or public need. The Hornes owned a vineyard that grew grapes, along with some processing equipment used to make raisins from the grapes they produced. The Ninth Circuit  Court ruled that the USDA had the authority to confiscate the grapes or to fine the Hornes for failing to comply. Those fines were done without due process, and were administrative (and punitive) in nature.

The USSC unanimously decided that the USDA overstepped its authority. They further stated that the Ninth Court ruled incorrectly, that the farm owners/producers were not liable for punitive fines. The USSC further ruled that the punitive fines are unconstitutional per the 5th Amendment to the US Constitution. One question that, perhaps, should have been addressed is the USDA's power to tax or confiscate a portion of a person's product. The products are not income until they have been sold. While the opinion seems to address the 5th Amendment's pertinence, it seems to indirectly opine that such confiscation may also be unconstitutional. That issue, however, is not directly resolved nor applied.

The Ninth Circuit has jurisdiction to decide whether the USDA’s imposition of fines and civil penalties on petitioners, in their capacity as handlers, violated the Fifth Amendment. The judgment of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
So, among recent US Supreme Court decisions, we have two unanimous opinions that stated the current administration of the executive branch has overstepped its constitutional authority.

These opinions may come up again in the near future as suits are being filed against the USDA, EPA, and IRS regarding their alleged targeting of individuals and organizations that are perceived to have certain leanings in political ideology.