Olech has been in the news in the 7th Circuit of late, and based on the briefing, I was hoping that the Supreme Court would address it in Armour v. Indinapolis. No such luck. The closest we got is this statement in the Chief’s dissent:
Even if the Court were inclined to decide that administrative burdens alone may sometimes justify grossly disparate treatment of members of the same class, this would
hardly be the case to do that.
Oh, and Paul Clement won, again.
Anyway, for an analysis. Interesting lineup. Breyer writes for Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan. The Chief dissents with Scalia and Alito. And Justice Kennedy (bizarrely) assigned this to Justice Breyer. A friend emailed to point out that it is Justice Kennedy who is upholding an economic regulation, and Chief Justice Roberts who would strike one down. What this portends for ACA (if anything), I make no guesses.
Breyer’s approach (no surprise) is supremely deferential for economic regulations:
As long as the City’s distinction has a rational basis, that distinction does not violate the Equal Protection Clause. This Court has long held that “a classification neither involving fundamental rights nor proceeding along suspect lines . . . cannot run afoul of the Equal Protection Clause if there is a rational relationship between the dis- parity of treatment and some legitimate governmental purpose.” Heller v. Doe, 509 U. S. 312, 319–320 (1993); cf. Gulf, C. & S. F. R. Co. v. Ellis, 165 U. S. 150, 155, 165–166 (1897). We have made clear in analogous contexts that, where “ordinary commercial transactions” are at issue, ra- tional basis review requires deference to reasonable under lying legislative judgments. United States v. Carolene Products Co., 304 U. S. 144, 152 (1938) (due process); see also New Orleans v. Dukes, 427 U. S. 297, 303 (1976) (per curiam) (equal protection). And we have repeatedly pointed out that “[l]egislatures have especially broad latitude in creating classifications and distinctions in tax statutes.” Regan v. Taxation With Representation of Wash., 461 U. S. 540, 547 (1983); see also Fitzgerald v. Racing Assn. of Central Iowa, 539 U. S. 103, 107–108 (2003); Nordlinger v. Hahn, 505 U. S. 1, 11 (1992); Lehnhausen v. Lake Shore Auto Parts Co., 410 U. S. 356, 359 (1973); Madden v. Kentucky, 309 U. S. 83, 87–88 (1940); Citizens’ Telephone Co. of Grand Rapids v. Fuller, 229 U. S. 322, 329 (1913).
Indianapolis’ classification involves neither a “funda mental right” nor a “suspect” classification. Its subject matter is local, economic, social, and commercial. It is a tax classification. And no one here claims that Indianapo lis has discriminated against out-of-state commerce or new residents. Hence, this case falls directly within the scope of our precedents holding such a law constitutionally valid if “there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.” Nordlinger, supra, at 11 (citations omitted). And it falls within the scope of our precedents holding that there is such a plausible reason if “there is any reasonably conceivable state of facts that could pro vide a rational basis for the classification.” FCC v. Beach Communications, Inc., 508 U. S. 307, 313 (1993); see also Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 78 (1911).
Justice Thomas wrote FCC v. Beach, btw.
And, of course, Justice Breyer cites Carolene Products!
Moreover, analogous precedent warns us that we are not to “pronounc[e]” this classification “unconstitutional un less in the light of the facts made known or generally assumed it is of such a character as to preclude the as sumption that it rests upon some rational basis within the knowledge and experience of the legislators.” Carolene Products Co., supra, at 152 (due process claim). Further, because the classification is presumed constitutional, the “ ‘burden is on the one attacking the legislative arrange ment to negative every conceivable basis which might support it.’” Heller, supra, at 320 (quoting Lehnhausen, supra, at 364).
Breyer further opines on the lack of burdens of the state to justify such a regulation:
In any event, a legislature need not “actually articulate at any time the purpose or rationale supporting its classification.” Nordlinger, 505 U. S., at 15; see also Fitzgerald, 539 U. S., at 108 (similar). Rather, the “burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.” Madden, 309 U. S., at 88; see Heller, 509 U. S., at 320 (same); Lehnhausen, 410 U. S., at 364 (same); see also Allied Stores of Ohio, Inc. v. Bowers, 358 U. S. 522, 530 (1959) (upholding state tax classification resting “upon a state of facts that reasonably can be con ceived” as creating a rational distinction). Petitioners have not “negative[d]” the Indiana Supreme Court’s first listed justification, namely the administrative concerns we have discussed.
Petitioners go on to propose various other forgiveness systems that would have included refunds for at least some of those who had already paid in full. They argue that those systems are superior to the system that the City chose. We have discussed those, and other possible, systems earlier. Supra, at 8–9. Each has advantages and disadvantages. But even if petitioners have found a supe rior system, the Constitution does not require the City to draw the perfect line nor even to draw a line superior to some other line it might have drawn. It requires only that the line actually drawn be a rational line.
If the Supreme Court ever held a limbo competition, Justice Breyer would be the champion, because he is so flexible at bending over backwards–so long as the limbo pole is the state.
In this case, “in the light of the facts made known or generally assumed,” Carolene Products Co., 304 U. S., at 152, it is reasonable to believe that to graft a refund sys tem onto the City’s forgiveness decision could have (for example) imposed an administrative burden of both col lecting and paying out small sums (say, $25 per month) for years. As we have said, supra, at 7–9, it is rational for the City to draw a line that avoids that burden. Petitioners, who are the ones “attacking the legislative arrangement,” have the burden of showing that the circumstances are otherwise, i.e., that the administrative burden is too in substantial to justify the classification. That they have not done.
The word “rational” was used 30 times in a 13 page opinion. I counted three citations to Carolene Products (though none to footnote four).
The Chief differed, arguing that “administrative hassle” and avoiding a “fiscal challenge” were not rational bases:
In seeking to justify this gross disparity, the City explained that it was presented with three choices: First, it could have continued to collect the installment plan payments of those who had not yet settled their debts under the old system. Second, it could have forgiven all those debts and given equivalent refunds to those who had made lump sum payments up front. Or third, it could have forgiven the future payments and not refunded payments that had already been made. The first two choices had the benefit of complying with state law, treating all of Indianapolis’s citizens equally, and comporting with the Constitution. The City chose the third option. And what did the City believe was sufficient to justify a system that would effectively charge petitioners 30 times more than their neighbors for the same service—when state law promised equal treatment? Two things: the desire to avoid administrative hassle and the “fiscal challeng[e]” of giving back money it wanted to keep. Brief for Respondents 35–36. I cannot agree that those reasons pass constitutional muster, even under rational basis review
The reason we have rejected this argument is obvious: The Equal Protection Clause does not provide that no State shall “deny to any person within its jurisdiction the equal protection of the laws, unless it’s too much of a bother.”
But wouldn’t the “bother” be a rational basis on which equal protection could be denied for a non-suspect regulation?
The Chief just doesn’t buy the basis provided by the City:
. One cannot evade returning money to its rightful owner by the simple expedient of spending it. The “fiscal challenge” justification seems particularly inappropriate in this case, as the City—with an annual budget of approximately $900 million—admits that the cost of refunding all of petitioners’ money would be approximately $300,000.
This closing–especially the bit about “Enough is enough”–reeks of unprecedentedness:
Our precedents do not ask for much from government in this area—only “rough equality in tax treatment.” Allegheny Pittsburgh, 488 U. S., at 343. The Court reminds us that Allegheny Pittsburgh is a “rare case.” Ante, at 14. It is and should be; we give great leeway to taxing authorities in this area, for good and sufficient reasons. But every generation or so a case comes along when this Court needs to say enough is enough, if the Equal Protection Clause is to retain any force in this context. Allegheny Pittsburgh was such a case; so is this one. Indiana law promised neighboring homeowners that they would be treated equally when it came to paying for sewer hookups. The City then ended up charging some homeowners 30 times what it charged their neighbors for the same hook-ups. The equal protection violation is plain. I would accordingly reverse the decision of the Indiana Supreme Court, and respectfully dissent from the Court’s decision to do otherwise.
Update: More from InverseCondemnationBlog:
The last article got us to thinking: if the primary reason that the Court held that the refusal to provide refunds was not irrational was that it was too much administrative hassle to cut the checks, doesn’t that mean the tail is wagging the dog? Aren’t the mechanics of returning the money secondary — or even irrelevant — to the question of whether the City can legally keep it? If the Court can conclude that it is not irrational to keep money because it is too much humbug to return it, doesn’t that just take you in a big logical circle?