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Constitutional Law I
University of Alabama School of Law
Horwitz, Paul

Con Law Spring 2017 Outline

Taxing and Spending 279-94

Art 1 Section 8: “Congress shall have the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States”
Congress has broad authority to tax and spend for the general welfare so long as it does not violate other constitutional provisions- United States v. Butler.

Limited only by the requirement that it shall be exercised to provide for the general welfare of the United States


Tax will be a valid revenue raising measure if it achieves any regulatory effect through the rate structure involved (do X and pay this tax) or its regulatory provisions bear a reasonable relation to its enforcement as a tax measure (seen as a necessary and proper means to achieving a taxation end)
it’s a regulatory tax and invalid unless there is some independent enumerated power if its very application presupposes a taxpayer violation of specified conditions promulgated along with the tax – tax is just a way to penalize you for breaking a law

Example is Child Labor Tax case: duty to pay the tax was conditioned on/arose from the employer violated federal child labor regulations and the law had a clear regulatory purpose and effect

Child Labor Tax Case

Court focused on key distinction: Revenue raising purpose v. Regulatory purpose

Why did this matter?

Right after Hammer
Extent that law was regulatory meant that Congress was using tax power to get around Hammer decision

These cases draw a false distinction between taxes that generate revenue and taxes that are penalties. A tax can be both at the same time. Congress can use a tax law simultaneously to regulate and to generate funds.

NFIB s. Sebelius

Non-formalist ruling; does not depend on Congress’ categorization of what Congress is doing here
Affordable Care Act requires that almost all Americans purchase health insurance or pay a tax penalty.
Acts like a tax because it is collected by IRS when person files taxes, is not larger than the cost of purchasing healthcare, and has no scienter requirement
Court said it was within the scope of Congress’s taxing power
Congress may tax behavior that it wants to discourage: such as going without health insurance.
Construe the penalty as a tax.


Congress has broad power to spend funds to advance the general welfare
Biggest constitutional questions have to do with federal spending and federalism – use of spending power to get the states to do what it wants it to do
Court has held that Congress may place conditions on such grants, so long as the conditions are:

Expressly stated,
Have some relationship to the purpose of the spending program
And are not unduly coercive

South Dakota v. Dole

Statute: cuts 5% of federal highway funds in states where the drinking age is not 21 years old
Congress cannot regulate drinking age directly because 21st amendment gives states the exclusive power to regulate the manufacture, transportation, and consumption of alcohol
Rehnquist’s test (Conditional Spending Test)– Conditional spending measure is constitutional if…

1. Exercise of spending power must be in pursuit of the “general welfare”

Defer substantially to Congress

2 Must be Clear in stating conditions

Condition of receiving money is clearly stated, enabling the States to “exercise their choice knowingly, cognizant of the consequences of their participation”

3. Related to federal interest in particular national program

Must be a tie between the condition and the interest

4. No independent constitutional bar (If conditional spending measure induces the states to violate the Constitution, that’s an independent Constitutional bar)
5. Not be unduly coercive

Condition and its penalty cannot rise to the level of coercion (issue in Butler)

NFIB v. Sebelius

Why is this spending measure a problem?

Spending program/condition is the expansion of Medicaid. Substantial expansion of Medicaid. If fail to comply, risk losing all Medicaid funding.
Coercive: leave the state with no option but to accept it.

Not just a conditional grant for funding but threatens funding already in place
Think of Coercive as being on a spectrum
What are the factors that seem to make a difference?

Size of program
Size of penalty
Lack of notice/novelty and suddenness of the change to an important existing program, altering the pre-existing contract
Importance of Program

Level of funding affected (amount and centrality)
“New law” – unanticipated changed

Basically rewriting the statute

Preemption 324-25

The effect on a state or local law that under the Supremacy Clause, Article VI, Clause 2, is rendered invalid because it conflicts with a federal law. We say that federal law preempts state law or that state law is preempted.
Touchstone of all preemption cases is Congressional intent/purpose (and, to a lesser extent, how one defines the goal of the state law.
Gibbons v. Ogden- New York law granting monopoly to Ogden conflicted with the federal law granting Gibbons a license to engage in the coastal trade, and as a result the New York law was rendered invalid, and Gibbons could carry passengers between New York and New Jersey.
The more narrowly the court reads a federal law, the less it covers and therefore the less conflict with state law (more power for the states to act)
Most of the cases are statutory in nature, what the federal statute say and what did Congress intend, not constitutional
Preemption based on state laws interfering with a federal goal turns on how the court characterizes the federal purpose.
If a court wants to avoid preemption, it can narrowly construe the federal objective and interpret the state goal as different from or consistent with the federal purpose. But if a court wants to find preemption, it can broadly view the federal purpose and preempt a vast array of state laws as it did in Gade.

2 Basic Categories: (key is discerning congressional intent)

Express Preemption

The federal law explicitly preempts state law. (it will have a preemption clause)
Ex. Law states that no state may impose any other requirement on the ability to practice law in the state. The federal law expressly preempts any state law providing different or additional requirements.
Cipollone v. Liggett Group, Inc.- involved the ability of states to allow liability against tobacco companies. It illustrates that express preemption provisions require judicial interpretation as to what specific types of state law are preempted.

Implied Preemption

(frequently) there is no express preemption language and a court must interpret the federal statute to determine whether Congress intended to preempt state law.

3 Forms:

Field Preemption

Where the federal government so fully regulates the field that any state regulation, whether or not it actually conflicts with the federal regulation, is seen as incompatible with exclusive federal regulation.
United States v. Locke- court found that federal ports and waterways safety act, governing the design, construction, alteration, repair, etc., occupied the entire field, so that Congress left no room for state regulation of these matters.
Rice v. Santa Fe Elevator Corp.- scheme of federal regulation may be so pervasive as to make reasonable the presumption that Congress meant for the law to be the only regulation in the field. Assumed to preclude state laws on the same subject.
Often found in foreign policy and immigration- Arizona
Criteria that are crucial in determining whether there is field preemption

Is it an area where the federal government traditionally has played a unique role?
Has Congress expressed an intent in the text of the law or in the legislative history to have federal law be exclusive in the area?
Would allowing state and local regulations in the area risk interfering with comprehensive federal regulatory efforts?
Is there an important traditional state or local interest served by the law?

Direct Conflict Preemption

Mutually exclusive: When a person can’t comply with both the state and the federal laws at the same time, such as Gibbons v. Ogden.

FL Avocado example (287)

Federal regulation about certification of avocado as mature
State regulation providing for minim

m the grant to Congress of the power to regulate interstate commerce
Congress is dormant about this because it has not legislated on the issue

Arguments against having a dormant commerce clause

No specific textual authority
Overly restrictive of state government
Unnecessary because if state law was passed that imposed undue burden, Congress could just pass a law that preempts the state law

Why have it, then?

Concern that Congress won’t be able to oversee all the state and local laws that are potentially out there burdening interstate commerce
Give the job to private plaintiffs and the courts to spot these issues
Framer’s intention to impose or have such a limit
Necessary for the protection of the economy
Political representation arguments

Cardozo: DCC presupposes that people of US have a national unity and should sink or swim together with economic state

and earlier cases

Gibbons: says that there are arguments for a DCC doctrine but ultimately rules of preemption grounds
Similar to CC history

Categories. Key question: whether the state or local law discriminates against out-of-staters or whether it treats in-staters alike.

2 Categories are where the law is in serious trouble (both treated as virtually per se invalid – almost always struck down) Proof of either a protectionist purpose for the law or a substantial discriminatory impact is sufficient to establish that a law is discriminatory.

will decide whether there is sufficient evidence of discriminatory purpose and/or effect and several factors are important

A. A law is likely to be found discriminatory if its effect is to exclude virtually all out of staters from a particular state market, but not if it only excludes one group of out of staters.- Clover leaf Creamery
B. A law is likely to be found discriminatory if it imposes costs on out of staters that in staters wouldn’t have to bear. –Hunt
C. Court is more likely to find discrimination if it believes that a law is motivated by a protectionist purpose, helping in staters at the expense of out of staters. The central purpose of the dormant commerce clause is to prevent such protectionist legislation.
1. Facially discriminatory (very strong presumption of invalidity)

State or local law is facially discriminatory when reading the law, you can know that it treats out of state interests differently than in state interests
Philadelphia v. New Jersey, Dean Milk Co. v. Madison
Maine v. Taylor- better way then struck down

2. Discriminatory (generally fatal- virtually per se invalidity)

On analysis, the law is protectionist in purpose or effect
Clear that state aimed to or had the effect of protecting in state interests as against out of state interests
Maine v. Taylor- better way then struck down

3. Non-discriminatory, even handed, but still has some indirect burden on interstate commerce (court generally does not want to get into this area

Maine v. Taylor- better way then struck down doesn’t apply
Pike balancing test- Pike v. Bruce Church

Where the state regulates evenhandedly to effectuate a legitimate local public interest, and the effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.