WILLIAM THOMAS, et al.,
Civ. No. 97-2412 (TFH)
NETWORK SOLUTIONS, INC.
NATIONAL SCIENCE FOUNDATION
REPLY MEMORANDUM IN SUPPORT OF
DEFENDANT NATIONAL SCIENCE FOUNDATION'S
MOTION TO VACATE PRELIMINARY INJUNCTION,
AND MOTION TO DISMISS UNDER FED. R CIV. P. 12(h) AS MOOT,
AND IN OPPOSITION TO PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
Defendant National Science Foundation ("NSF") has moved to dismiss this action based on the recent enactment by Congress of section 8003 of the FY 1998 Supplemental Appropriations and Rescissions Act, Pub. L. No. 105-174, 112 Stat. 58, which ratifies as "authorized and directed" the collection of the 30 percent portion of the fee charged for second-level domain name registration and renewal, held by this Court to have been collected without authority (sometimes referenced hereinafter as "the payment"). See Memorandum Opinion dated April 6, 1998 ("April 6th Memorandum Opinion"). Recognizing this Court's guidance regarding the legal requirements of ratification, NSF's present motion emphasizes the exquisite precision with which section 8003 describes the payment to be authorized, and the incorporation into section 8003 of language specifically referenced by the April 6th Memorandum Opinion from Heinszen v. United States, 206 U.S. 370 (1907), demonstrating Congress's acknowledgment that it was authorizing the collection
by the executive branch of what the Court deemed to be a tax, "collected without authority. " Indeed. as if there could be any mistaking what Congress set out to do in section 8003, the provision refers to this litigation by name, and specifically this Court's holding that the collection required, for its authorization, ratification by Congress.
Notwithstanding the painstaking precision with which the language of section 8003 ratifies the collection of the subject monies, and in what amount, from what source, in what circumstances, for what time period, and for what carefully delineated purpose ("to be expended for the preservation and enhancement of the intellectual infrastructure of the Internet"), and notwithstanding, as well, the statute's express acknowledgment that it arises from, and responds to, this Court's finding of an unconstitutional tax, plaintiffs now come to this Court with the following incredible arguments: (a) that the language of section 8003 is not clear enough, but is instead unclear and equivocal, and is therefore ineffective in ratifying the payment held by this Court to be unauthorized and therefore unconstitutional; (b) that this alleged statutory ambiguity renders section 8003 "ratification by implication", devoid of intelligible guidelines by which the executive branch can know how to proceed, and improperly placed in appropriations legislation because it "retroactively change[s] substantive tax law"; (c) that Congress was hoodwinked and did not understand what it was doing; (d) that the collection of the subject monies was invalid even after the enactment of section 8003 "because Congress did not, and could not have, delegated to [NSF] the blanket authority to devise and levy the Preservation Assessment," Pl. Opp. at 2 (NSF being in agreement that there is nowhere in the language of section 8003 any delegation to NSF of "the blanket authority to devise and levy" fees, taxes, or any other exaction, but simultaneously observing that compliance with the statute does not require the exercise of such "blanket authority," but instead requires NSF to follow the specific
prescription of the statute, and observing as well, ample Supreme Court and D.C. Circuit case law upholding Congress's delegation to the executive branch of the taxing power in statutes far less narrowly drawn than section 8003); and (e) that section 8003 violates the Origination Clause because it was "covertly hatched in conference .... " id. at 3, an argument that, apart from its faulty but irrelevant factual assumption, erroneously assumes as a legal matter that section 8003 is a "revenue- raising bill" for purposes of the Origination Clause.
The dispositions of the cross-motions now before the Court (NSF's motion to dismiss and plaintiffs' motion for summary judgment) turn, collectively, on standard doctrines of statutory construction and substantive constitutional doctrines regarding due process considerations in enacting retroactive tax legislation; the permissible extent of Congress's delegation to the executive branch of its taxing power; and the meaning of the Origination Clause. Plaintiffs' contrived construction of section 8003 ignores long-settled canons of statutory construction, improperly assumes that Congress does not know how to read a judicial decision or that Congress acted wholly irrationally in the face of that decision, and would render the statute a perfect nullity. Moreover, plaintiffs' parade of misapplied constitutional doctrines does not arrive at any colorable basis on which the statute could be invalidated. Section 8003 is valid, and constitutes an effective Congressional ratification of the collection of the payment at issue. This case should therefore be dismissed as moot (plaintiffs' stretch to fabricate a case or controversy having failed), and plaintiffs' motion for summary judgment should be denied.
I.PLAINTIFFS' READING OF SECTION 8003 AS RATIFYING A "USER FEE" BUT NOT A "TAX" (AND COROLLARY ARGUMENT THAT SECTION 8003 DOES NOT RATIFY THE PAYMENT HELD BY THIS COURT TO BE A TAX) MISCONSTRUES THE STATUTE'S PURPOSE AND EFFECT; VIOLATES THE GOVERNING CANONS OF STATUTORY CONSTRUCTION; IMPROPERLY ASSUMES CONGRESS ENACTED FUTILE AND MEANINGLESS LEGISLATION; AND IS ULTIMATELY NONSENSICALA. The Language and Intent of Section 8003 is Crystal Clear
The construction of section 8003 is governed, first and foremost, by the "plain meaning" rule: If the statute is clear and unambiguous on its face, it is to be construed in accordance with its plain meaning Metropolitan Stevedore Co. v. Rambo, 515 U.S. 291, 294 (1995) ("'when a statute speaks with clarity to an issue, judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished"') (quoting Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475 (1992)); Robinson v. Shell Oil Co., --- U.S.---, 117 S. Ct. 843, 846 (1997) ("Our first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. Our inquiry must cease if the statutory language is unambiguous and 'the statutory scheme is coherent and consistent'")(quoting United States v. Ron Pair Enterprises. Inc., 489 U.S. 235, 240 (1989)); Dunn v. Commodity Futures Trading Comm'n, --- U.S. ---, 117 S. Ct. 913, 916 (1997)("absent any indication that doing so would frustrate Congress's clear intention or yield patent absurdity, our obligation is to apply the statute as Congress wrote it") (internal quotation marks omitted).
There is no ambiguity about: what Congress did in section 8003. There is no conceivable doubt concerning the payments to which Congress referred when it "legalized and ratified and confirmed" "[t]he 30 percent portion of the fee charged by Network Solutions, Inc. between September 14, 1995 and March 31, 1998 for registration or renewal of an Internet second-level domain name, which portion was to be expended for the preservation and enhancement of the intellectual infrastructure of the Internet under a cooperative agreement with the National Science Foundation," and then referenced this litigation by name: "which portion was held to have been collected without authority in William Thomas et al. v. Network Solutions, Inc. and National Science Foundation, Civ. No. 97-2412." § 8003. Under the "plain language" rule, the statute could not be clearer.
Even assuming, arguendo, however, that the term 'fee" as used in section 8003 were ambiguous (a purely hypothetical assumption in view of the clear language of the statute), one would merely look, for clarification, to the remainder of the provision. See Bailey v. United States, 516 U.S. 137, 145 (1995); United Savings Assin v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988); Reno v. KoraY, 515 U.S. 50, 56 (1995) ("it is a 'fundamental principle of statutory construction (and, indeed, of language itself) that the meaning of a word cannot be determined in isolation, but must be drawn from the context in which it is used'")(quoting Deal v. United States, 508 U.S. 129, 131 (1993)); Brown v. Gardner, 513 U.S. 115, 118 (1994)("'a word is known by the company it keeps"') (quoting Jarecki v. G. D. Searle & Co., 367 U.S. 303, 307 (1961)). There is no mystery as to why Congress referred to this Court's earlier decision with such specificity. It did so at the express invitation of the Court, which stated in its opinion:
In the present case, Congress has not ratified the Preservation Assessment. The appropriations act cited by defendants [Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, Pub. L. No. 105-65, 111 Stat. 1344 (1997)(hereinafter " 1997 appropriations legislation")] never mentions the assessment or the Intellectual Infrastructure Fund. Therefore, because the Act does not contain the clear recognition of the tax and through specific ratification language, as required by Heinszen [v. United States, 206 U.S. 370 (1907)] it is not an effective ratification of the tax .... [Congress] still retains the power to ratify the collection, even at this late date .... However, if it wishes to effect such a ratification and permit NSF to use the Intellectual Infrastructure Fund, Congress must pass legislation that more explicitly conveys its intentions.
April 6th Memorandum Opinion at 17- 18. That is precisely what Congress did when it enacted this statute. Section 8003 directly refers to (a) this Court's determination that the 30 percent payment had been "collected without authority"; (b) both "the assessment" and the "Intellectual Infrastructure Fund", April 6th Memorandum Opinion at 17'; and (c) the verbatim ratification language of Heinszen, 206 U.S. at 381. There is no doubt that the intention of section 8003, as borne out by its language and reference to this Court's decision, is to do precisely what this Court suggested was necessary to ratify NSF's collection of the subject monies, held explicitly to be an unconstitutional tax. 2/
1/ Section 8003 identifies both the assessment and the Intellectual Infrastructure Fund: "the 30 percent portion of the fee charged by Network Solutions, Inc. between September 14, 1995 and March 31, 1998 for registration or renewal of an Internet second-level domain name, which portion was to be expended for the preservation and enhancement of the Intellectual Infrastructure of the Internet under a cooperative agreement with the National Science Foundation . . . "
2/ Post-enactment letters from two individual members of Congress, stating their personal views of the meaning of the statute (see letters attached to Pl. Opp., Exhibit 5 and 6) do not affect this Court's "plain meaning" construction of the statute. Hudson v. Reno, 130 F.3d 1193, 1201 (6th Cir. 1997) ("remarks made after the passage of a bill are not legislative history, and isolated remarks of a single member of Congress should be given little weight"); Murphy v. Empire of America, FSA, 746 F.2d 931, 935 (2d Cir. 1984) ("isolated remarks [of legislators] are entitled to little or no weight … as distinguished from a legislative committee's formal report on its enactment. . ")(citing
Plaintiffs' claim that "the purported ratification does not encompass the tax at issue," Pl. Opp. at 16, in view of the statute's painstakingly precise description of the payments to which it refers, and in view the statute's explicit reference to this Court's holding that the payments constituted an unconstitutional tax, is incredible. 3/
B. The Question Whether Section 8003 Ratified a "Fee" or a "Tax" Presents a False Conflict, Irrelevant in Construing the Purpose and Effect of the Statute
Plaintiffs contend that section 8003 does not ratify the payment held by this Court to be an unconstitutional tax, "most fundamentally" because "section 8003 makes no mention of any tax." Pl. Opp. at 1. Plaintiffs insist, instead, that the statute ratifies a "user fee". Id. at 2.
At the outset, two preliminary points need be made. First, it is entirely reasonable that Congress would use the word "fee'', not as a legal characterization of the payment, but instead because the payment was called a "fee" in the original provision of the NSF/NSI cooperative agreement under which the very payment addressed in the statute arose in the first place.
Chrysler Corp. v. Brown, 441 U.S. 281, 311 (1979)); Monterey Coal Co. v. Fed. Mine Safety and Health Review Comm'n, 743 F.2d 589, 598 (7th Cir. 1984) ("[t]o give decisive weight to [the principal House sponsor's] remarks -- in the absence of textual support or additional indications in the legislative history -- would be to run too great a risk of permitting one member to override the intent of Congress as expressed in the language of the statute"); cf. Landgraf v. USI Film Products, 511 U.S. 244, 263 n. 15 (1994) ("partisan statements carry little weight as legislative history; "a court would be well advised to take with a large grain of salt floor debate and statements placed in the Congressional Record which purport to create an interpretation for the legislation that is before us") (internal quotation omitted).
3/ Plaintiffs argue, nonsensically, that the statute's explicit reference to the Court's decision is without significance because the statute does not include the date of the decision or its legal citation. Pl. Opp. at 17. There is no hidden ball here. There was only one merits decision issued by the Court in this case, and Congress referred to that decision.
Second, section 8003 nowhere uses the words "user fee," a term of art used for federal budgetary purposes, with specified legal connotations distinct from the plain meaning of the word "fee" in common parlance, which is not subject to the legal requisites of the former term. Compare dictionary definition of "fee" ("'a payment for professional or special service"', Pl. Opp. at 14, quoting American Heritage Dictionary, New College Edition, (1979)) with specific legal criteria for determining existence of a "user fee" (user fee must be commensurate with benefits conferred by the payment, or the nature and value of the service provided by the agency, or defray the regulatory expenses necessary to keep certain services active). See, E.g., April 6th Memorandum Opinion at 1012 (and cases collected therein).
In any event, whether the statute uses the word "fee" or "tax" is irrelevant to the effectiveness of the statute's ratification of the payment at issue. If there were at all a question as to the specific payment to which section 8003 referred -- if perhaps there were two possible payments at issue, one of which could be characterized as a "tax," and the other, a "fee" -- then there might be value in focusing on this hypothetical ambiguity in Congress's use of the term "fee" in section 8003. But whether Congress called "it" a "tax" or a "fee" is insignificant, since there is no ambiguity at all about the specific payments which Congress ratified in section 8003. See discussion, supra. Nor would the label chosen by Congress in designating the payment affect this Court's determination as to whether the statute comported with the nondelegation doctrine or the Origination Clause. See Pl. Opp. at 32-44. Those doctrines apply to all legislation with equal force, whether Congress used the
word "fee" or "tax", the operative analysis revolving around what the statute did, and not what Congress called IT. 4/
In sum, whatever Congress called the payment, section 8003 indisputedly ratified it, and Count One, predicated on the lack of congressional authorization for the subject payment, is therefore rendered moot. 5/
4/ Indeed, neither the courts nor Congress itself have lent dispositive significance to the label used in designating payments to the government for purposes of determining the validity or effect of a statute. See Skinner v. Mid-America Pipeline Co., 490 U.S. 212, 214-15, 222-23 (1989) (upholding as constitutional delegation of Congress's taxing power statutory section entitled "Pipeline safety user fees," directing Secretary of Transportation to establish system of "user fees" to cover costs of administering federal pipeline safety programs):
[W]e need not concern ourselves with the threshold question that so exercised the District Court whether the pipeline safety user 'fees' created by § 7005 are more properly thought of as a form of taxation because some of the administrative costs paid by the regulated parties actually inure to the benefit of the public rather than directly to the benefit of those parties. Even if the user fees are a form of taxation, we hold that the delegation of discretionary authority under Congress' taxing power is subject to no constitutional scrutiny greater than that we have applied to other nondelegation challenges.
Id. at 222-23. See also Florida Power & Light Co. v. United States! 846 F.2d 765, 769, 776 (D.C. Cir. 1988) (upholding statute permitting Nuclear Regulatory Commission to recover its"generic" costs -- "costs which do not have a specific identifiable beneficiary"-- by "collect[ing] annual charges from its licensees", id. at 769 (emphasis added)[citing 42 U.S.C. § 2213, 2214]; even assuming the imposition of the annual fee for generic services was a "tax" rather than a "fee", statute permitting imposition of such fees was constitutional); cert. denied, 490 U.S. 1045 (1989); cf. The National Tobacco Policy and Youth Smoking Reduction Act, S. 5034, 105th Cong., 2nd Sess., § 402 (attached hereto as Exhibit A) (requiring "payments" from tobacco companies, notwithstanding that Joint Committee on Taxation deemed the "payments" a tax, see Report of the Joint Committee on Taxation, June 3, 1998 (attached hereto as Exhibit B) at 9).
5/ Plaintiffs' discussion of cases distinguishing "user fees" from "taxes", Pl. Opp. at 14-15, are, for the same reason, irrelevant to any dispute now pending before this Court. The Court has already rendered a legal determination, based on the factual characteristics in evidence before it of the payment at issue (the source of the payments and the purpose for which it was intended), that the subject payment was a tax. See April 6th Memorandum Opinion at 10-12. There is nothing in the description of the payment as set forth in section 8003 that suggests that Congress did not understand
C. Plaintiffs' Reading of Section 8003 Violates Standard Doctrines of Statutory Construction, Assumes Congress Acted Wholly Irrationally in the Face of the Judicial Decision to Which it Refers, and Impermissibly Renders Section 8003 a Nullity
Statutes are to be construed to avoid, if possible, treatment of any part as mere surplusage. Bennett v. Spear, --- U.S. ---, 117 S. Ct. 1154, 1166 (1997) (referencing the "cardinal principle of statutory construction that it is our duty to give effect, if possible, to every clause and word of a statute rather than to emasculate an entire section")(internal quotation marks, ellipses, and brackets omitted); Dunn v. Commodity Futures Trading Comm'n, 117 S. Ct. at 917 (1997)(applying "the doctrine that legislative enactments should not be construed to render their provisions mere surplusage"). Plaintiffs' construction of section 8003 as ratifying the collection of the subject payment only insofar as it is a "user fee", but not insofar as it is collected from domain name registrants for a general public purpose, 6/ would render the entire statute mere "surplusage". This is so because this Court held that the very payment described with precision in the statute was a "tax," rather than a "user fee." Indeed, the Court dismissed plaintiffs' counts predicated on the characterization of the payment as a user fee. The only grounds on which the payment was held to be unauthorized -- and thus in need of ratification -- was that it was a tax. If plaintiffs' construction of section 8003 were adopted, the provision would accomplish nothing at all. Such a construction would render section 8003 a nullity, insofar as it would preclude this Court (or any court) from giving
the Court's holding that NSF's conduct was unauthorized.
6/ Namely, the "preservation and enhancement of the intellectual infrastructure of the Internet", § 8003; see the April 6th Memorandum Opinion at 11-12 and n. 9 (holding that the payment was a "tax" because "NSI collects the assessment for the government's use on public goals, and not in any way to defray regulatory costs," and because "the assessment is income designed for a public purpose, which is essentially unrelated to the persons paying the fee").
effect to the clear terms of the statute. It would undisputedly and improperly "emasculate an entire section," Bennett v. Spear, 117 S. Ct. at 1167, a result to be avoided wherever possible, id. 7/
Count One of plaintiffs' amended complaint challenged NSF's collection of the 30 percent portion of the subject fee based on the absence of Congressional authorization. Section 8003 has granted that Congressional authorization, whether one construes the payment to be a "fee" or a "tax". Because that statute is constitutionally valid, see sections III-V, infra, Count One is moot, there being no longer any actual case or controversy, and this case should be dismissed.
II.PLAINTIFFS' ATTEMPT TO HAVE THIS COURT NULLIFY SECTION 8003 ON THE GROUNDS THAT IT IS AN "IMPLIED RATIFICATION BY APPROPRIATION" FAILS BECAUSE (A) THERE IS NOTHING "IMPLIED" ABOUT THE RATIFICATION; (B) PLAINTIFFS' THEORY IS PREMISED ON AN IMPROPER ASSAULT UPON THE PROCESS BY WHICH THE STATUTE WAS ENACTED, RATHER THAN ON APPROPRIATE CANONS OF STATUTORY CONSTRUCTION; AND (C) AN APPROPRIATIONS ACT IS A PERFECTLY LEGITIMATE LEGISLATIVE VEHICLE FOR THE ENACTMENT.
Plaintiffs theorize that section 8003 is so ambiguous in ratifying the payment that the statute amounts to "ratification by implication." Pl. Opp. at 19. They then seize upon the inclusion of section 8003 in an appropriations act, asserting that "[a]ny such implied 'ratification by appropriation'
7/ Plaintiffs' reading of the April 6th Memorandum Opinion as requiring Congress to have used the word "tax" in any ratification legislation, see Pl. Opp. at 10, 16, misconstrues that judicial decision. The Court's obvious concern was that the 1997 appropriations legislation, referenced by defendants in their papers, attempted to appropriate $23 million of the funds without even acknowledging that NSI and NSF had collected the money from domain name registrants for a purpose that would benefit all Internet users, and not just the payors, much less authorize, in any form, the collection of the payments. Section 8003 satisfies the requirements noted by this Court that the ratification legislation identify and recognize the existence of the payment held by this Court to have been collected without authority, and expressly authorizes its collection.
must fail where, as here, Congress was not aware specifically of what it was purporting to ratify." Id. This argument fails on three independent grounds.
A. Defendants have already demonstrated that section 8003 could not be more precise in its description of the payment that it specifically "legalize[s]" and ratifie[s] and confirm[s] . . . as if the same had, by prior Act of Congress, been specifically authorized and directed". § 8003; see section I, part A, supra. Because the payment ratified is so precisely identified, and because Congress's intent to authorize collection of the payment is so explicit, there is nothing "implied" about what Congress did in section 8003, and the predicate for plaintiffs' remaining arguments evaporates.
B. The clarity of the statutory language stands as a sufficient rebuttal to the claim that members of Congress were unaware of what they were doing when they enacted section 8003. In any event, plaintiffs' claims that members of Congress were not aware of what they were doing when they voted to enact section 8003 has no place in statutory construction.
Plaintiffs attack the political process by which section 8003 was enacted, referring specifically, inter alia, to (a) rules passed by the House Rules Committee which, plaintiffs opine, precluded members of Congress from understanding what they were voting on, Pl. Opp. at 2, 5; (b) the initial passage of H.R. 3579 "by a razor-thin margin," id at 3; (c) the hour of the evening (6:30 p.m.) during which the language of section 8003 was inserted into a conference report, id. at 4; (d) rules invoked on the Senate floor regarding HR 3579, id. at 6; (e) expressions of dismay by one Senator that he was "'presented with an all-or-nothing vote", id. at 6 (citation omitted), and of disagreement with the legislation by a Congressman in a letter to the Chairman of the House Appropriations Committee, stating that the author was committed to reducing taxes, not imposing them, id. at 6-7, 17-18 (attached to Pl. Opp. as Exhibit 5); (f) a letter from another Congressman presenting his own personal
view of the legislation, id. at 8, 17-18 (attached to Pl. Opp. as Exhibit 6); and (g) other pending legislative proposals, id. at 9.
Plaintiffs further undertake to advise the Court as to "what Congress was or was not aware of when it voted on PER. 3579," Pl. Opp. at 17. According to plaintiffs, "Congress was not aware specifically of what it was purporting to ratify," id. at 19, and "was intentionally misled about the nature of the provision in question," id. at 10 (emphasis in original); see also id. at 21-23. Plaintiffs go on to claim that "Congress was entirely unaware that any tax issues at all were (or could be) implicated in H.R. 3579, _. at 10 (emphasis in original), and that Congress did not know what it was voting on when it voted, id. at 22-23, 26-27.
None of these assertions, even if they were true, has the slightest bearing upon the issue before this Court. Courts do not investigate how laws get passed. "[A]n enrolled act . . . carries on its face a solemn assurance" by Congress and the President that it is "'conclusive proof of the enactment and contents of a statute, and [cannot] be contradicted by the legislative journals or in any other mode."' Field v. Clark, 143 U.S. 649, 672, 674 (1892) (citations omitted). "The respect due to coequal and independent departments requires the judicial department to act upon that assurance …. " Id at 672. As the Court in Field recognized,
'Better, far better, that a provision should occasionally find its way into the statute through mistake, or even fraud, than that every act, state and national, should, at any and all times, be liable to be put in issue and impeached by the journals, loose papers of the legislature, and parol evidence. Such a state of uncertainty in the statute laws of the land would lead to mischiefs absolutely intolerable . . . .'
Id. at 675 (citations omitted).
The clear language of section 8003 renders plaintiffs' speculations that individual members of Congress were unaware of what they were voting on immaterial to the construction of the statute:
[W]e disagree with the District Court's conclusion that Congress was unaware of what it accomplished or that it was misled by the groups that appeared before it. If this test were applied literally to every member of any legislature that ever voted on a law, there would be very few laws which would survive it. The language of the statute is clear, and we have historically assumed that Congress intended what it enacted.
Fritz v. U.S. Railroad Retirement Bd., 449 U.S. 166, 179 (1980); cf. South Carolina v. Baker, 485 U.S. 505, 513 (1988) ("South Carolina argues that the political process failed here because § 310(b)(1) was 'imposed by the vote of an uninformed Congress relying upon incomplete Information.' [citation omitted] But nothing . . . authorizes courts to second-guess the substantive basis for congressional legislation"). Once a law is duly passed, then, it is of no concern to the judicial branch whether "the bill addressed emergency aid to Bosnia'" Pl. Opp. at 3; what hour of the evening certain language was incorporated into a conference report, id.. at 4; that the bill passed "by a razor-thin margin." id at 3; or what rules the Rules Committee issued in the course of its consideration, id. At 3. 8/
8/ Plaintiffs' claims that House and Senate rules were violated in the course of the political process of section 8003's enactment are not suitable for judicial resolution:
[C]omplainants ask us to decide whether or not the rules of the House of Representatives permitted consideration of the Senate resolution so quickly after passage of the House resolution. To resolve this issue would require us not only to construe the rules of the House of Representatives but additionally impose upon the House our interpretation of its rules . . .We conclude that this issue, like most "questions involving the processes by which statutes . . . are adopted" is "[p]olitical in nature" [citation omitted] and is therefore nonjusticiable.
Metzenbaum v. Fed. Energy Reg. Comm'n, 675 F.2d 1282, 1287 (D.C. Cir. 1982) (relying, in part, on U.S. Const. art. I, § 5, cl. 2 ("Each House may determine the rules of its Proceedings"), and distinguishing Yellin v. United States, 374 U.S. 109 (1963) and Christoffel v. United States, 338 U.S. 84 (1949), reversing criminal convictions of witnesses before the House Committee on Un-American Activities for contempt of Congress and perjury, respectively, on the basis of Congress's failure to follow rules relevant to the alleged crime, and United States v. Smith, 286 U.S. 6 (1932), also implicating an individual liberty interest in the position of Chairman of the Federal Power
Even if plaintiffs could establish a factual basis for their unsubstantiated allegation that members of Congress were deliberately deceived, such allegations would be legally irrelevant.
"'[W]hen a statute speaks with clarity to an issue, judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished."' Metropolitan Stevedore Co. v. Rambo, 515 U.S. at 294 (quoting Estate of Cowart v. Nicklos Drilling Co., 505 U.S. at 475). "We cannot base our decision . . . on such sheer conjecture about the ebb and flow of the legislative and lobbying process .... 'It is delicate business to base speculations about the purposes or construction of a statute upon the vicissitudes of its passage.' " Monterey Coal Co. v. Fed. Mine Safety and Health Review Comm'n, 743 F.2d at 597 (quoting Pine Hill Coal Co. v. United States, 259 U.S. 191, 196 (1922)). Plaintiffs' impressions and dissatisfactions with the political process are irrelevant. Because the language of section 8003 is clear and unambiguous, section 8003 is not a "ratification by implication. "
C. Because section 8003 explicitly ratifies the payment at issue, appropriations legislation was a legitimate vehicle for enactment of the provision. In Robertson v. Seattle Audubon Society, 503 U.S. 429 (1992), the Supreme Court explicitly held that an appropriations act can modify substantive law, so long as the "intent to modify [is] not only clear, but express". Id. at 440. See also United States v. Will, 449 U.S. 200, 222 (1980); United States v. Dickerson, 310 U.S. 554, 555 (1940); Associated Electric Coop. v. Morton, 507 U.S. 1167, 1174 (D.C. Cir. 1974)(Congress may effect a ratification though an appropriations bill, but Congress must be especially clear about its intention to do so), cert. denied, 423 U.S. 830 (1975); Nevada v. Watkins, 914 F.2d 1545, 1557 (9th Cir. 1990)
Plaintiffs' "no-repeal-by-implication-through-appropriations-act" cases are inapposite. First, section 8003 does not purport to repeal anything. Instead, it ratifies, and it does so in the precise language of operative Supreme Court precedent and in accordance with this Court's guidance. Second, plaintiffs' cases concern circumstances in which nebulous and indirect language in appropriations statutes, omitting to make any specific reference to the subject of the alleged repeal, were found ineffective to carry out the explicit Congressional mandate that such repeal would require as a matter of law. 9/
Moreover, plaintiffs' citations to Ex Parte Endo, 323 U.S. 283 (1944) (habeas corpus case) and Greene v. McElroy, 360 U.S. 474 (1959) (loss of job through withdrawal of security clearance absent procedures required under due process) are not relevant here. Plaintiffs' indiscriminate use of the term "unconstitutional" should not be permitted to obfuscate a pivotal distinction between the instant case and the Greene and Endo situations. In those cases, the challenged Executive Branch actions involved individual rights guaranteed by the Constitution against the entire federal government. In this case, by contrast, the nexus to the Constitution is NSF's judicially-determined lack of authority. Congress could not authorize, and thus could not ratify, arbitrary detention of a
9/ See, e.g., TVA v Hill, 473 U.S. 153 (1978) (amendment to Endangered Species Act would require express language indicating Congressional intent to so amend the statute), West River Elec. Ass'n v. Black Hills Power & Light Co., 918 F.2d 713, 715, 716, 719 (8th Cir. 1990) (continuing appropriations act, prohibiting generally the use of appropriated funds by any federal "'[d]epartment, agency or instrumentality . . . to purchase electricity in a manner inconsistent with State law,"' did not constitute the "'clear congressional mandate, specific congressional action"' required to demonstrate Congress's "'clear and unambiguous"' purpose to defer its constitutionallybased exclusive jurisdiction over Air Force base to state utility commission, and was insufficiently specific, as well, without any corroborating legislative history, to amend the "extensive and carefully- crafted body of federal procurement law" in the Competition in Contracting Act, requiring full and open competition; appropriations act made no reference to either federal enclaves or the federal procurement statute).
loyal American citizen (Endo), or a denial of an individual's security clearance without due process of law (Greene). Congress can, however, authorize the imposition of taxes, and so, as this Court indicated, can also ratify the payment held by this Court to be a tax.
Plaintiffs' claim that section 8003 constitutes a "ratification by implication," improperly included in an appropriations act, is groundless because the language of the statute directly, expressly, and explicitly ratifies the payment at issue.
III.PLAINTIFFS' CLAIM THAT SECTION 8003 MUST BE NULLIFIED BECAUSE IT WOULD OTHERWISE RETROACTIVELY "EFFECT A SUBSTANTIVE CHANGE IN LEGISLATIVE POLICY" (A) ADOPTS AN ERRONEOUS LEGAL STANDARD FOR ASSESSING WHETHER RETROACTIVE LEGISLATION OFFENDS DUE PROCESS; AND (B) IGNORES CONGRESS'S PREVIOUS STATEMENTS OF "LEGISLATIVE POLICY" APPROVING THE SOURCE AND PURPOSE OF THE INFRASTRUCTURE FUND
Plaintiffs claim that section 8003 must be nullified because "retroactive legislation such as section 8003 cannot properly be construed to effect a substantive change in legislative policy, but rather can address only administrative or technical legislative deficiencies . . . ." Pl. Opp. at 23. Plaintiffs' statement proceeds on premises both legally and factually erroneously. 10/
A. Section 8003 Does Not Violate the Due Process Clause
Plaintiffs adopt their erroneous standard for determining whether retroactive tax legislation comports with due process from a dissent in a Supreme Court decision dismissing an appeal for want
10/ Plaintiffs present the "retroactivity" issue as one of "statutory construction," omitting to present the question in constitutional terms. Pl. Opp. at 23-24. It may be plaintiffs' position that there is no due process violation in section 8003. In all of the "retroactive taxation" cases to which plaintiffs refer, however, see id., the question before the Court was whether the retroactive tax violated due process. It is unclear why the retroactive aspect of section 8003 would have independent legal significance to plaintiffs, the government, or this Court, if potential underlying constitutional concerns were not present.
of a substantial federal question, Van Emmerik v. Janklow, 454 U.S. 1131 (1982). If there is any relevant precedential value to that case, it lies in the Court's decision to leave in place the state's four percent tax on utility services, effective 1981 and retroactive to 1969, id. at 1131. See Hicks v. Miranda, 422 U.S. 332, 344 (1975) (Supreme Court's dismissal of appeal for want of substantial federal question constitutes a decision on the merits); Muench v. Israel, 715 F.2d 1125, 1139 (7th Cir. 1983). There is no basis, then, for plaintiffs' suggestion that the validity or effectiveness of section 8003 turns on whether the statute "constitutes a change in legislative policy." Van Emmerik v. Janklow, 454 U.S. at 1133 (White, J. dissenting)
The Supreme Court has repeatedly upheld retroactive tax legislation against a due process challenge. See, e g., United States v. Carlton, 512 U.S. 26 (1994); United States v. Hemme, 476 U.S. 558 (1986); United States v. Darusmont, 449 U.S. 292, 296-97(1981) (per curiam); Welsh v. Henry, 305 U.S. 134 (1938); United States v. Hudson, 299 U.S. 498 (1937); Milliken v. United States, 283 U.S. 15 (1931); Cooper v. United States, 280 U.S. 409 (1930). 11/ The operative test is not whether the statute "constitutes a change in legislative policy," Pl. Opp. at 23 but whether "retroactive application is so harsh and oppressive as to transgress the constitutional limitation." United States v. Carlton, 512 U.S. at 30; Welsh v. Henry, 305 U.S. at 147; United States v. Hemme, 476 U.S. at 568-69. The "harsh and oppressive" limitation, however, "'does not differ from the prohibition against arbitrary and irrational legislation' that applies generally to enactments in the
11/ "'It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way."' Pension Benefit Guaranty Corp. v. Gray, 467 U.S. 717, 729 (1984) (quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976) (citing Ferguson v. Skrupa, 372 U.S. 726 (1963)); Williamson v. Lee Optical Co., 348 U.S. 483, 487-88 (1955)).
sphere of economic policy. " United States v. Carlton, 512 U. S. at 30-31 (quoting Pension Benefit Guaranty Corp. v. Gray, 467 U.S. 717, 733 (1984)).
The due process standard to be applied to retroactive tax statutes, therefore, is the same as that generally applicable to retroactive economic legislation, that is, "[whether] the retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means," United States v. Carlton, 512 U.S. at 30-31:
Provided that [retroactive application is so supported], judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches.... "To be sure, retroactive legislation does have to meet a burden not faced by legislation that has only future effectsBut that burden is met simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose."
United States v. Carlton, 512 U.S. at 30-31 (quoting Pension Benefit Guaranty Corp. v. Gray, 467 U.S. at 729-30)(internal quotations from Usery v. Turner Elkhorn Mining Co., 428 U.S. at 16-17 omitted). See also Usery v. Turner Bighorn Mining Co., 428 U.S. at 15-16 (this standard applies "even though the effect of the legislation is to impose a new duty or liability based on past acts") (citing Lighter v. United States, 334 U.S. 742 (1948); Welsh v. Henry, 305 U.S. 134 (1938); Funkhouser v. Preston Co., 290 U.S. 163 (1933)).
In the instant case, retroactive application of section 8003 has achieved the legitimate legislative purpose of ensuring that NSF would be deemed by the judicial branch to have obtained the necessary Congressional authorization to have collected from second-level domain name registrants the payments needed to preserve and enhance the intellectual infrastructure of the Internet. It was entirely rational that Congress deemed those registrants uniquely suited to derive the greatest benefit from that preservation and enhancement effort, many of whom profit
significantly from their domain name registration. The legislation does not offend the "'prohibition against arbitrary and irrational legislation' that applies generally to enactments in the sphere of economic policy." United States v. Carlton, 512 U.S. at 30-31 (quoting Pension Benefit Guaranty Corp. v. Gray, 467 U. S. at 717).
One factor specifically considered by courts in assessing whether a retroactive statute is "harsh and oppressive" is whether it abrogates vested rights. See Canisius College v. United States, 799 F.2d 18, 25 (2d Cir. 1986); Patlex Corp. v. Mossinghoff, 758 F.2d 594, 602 (Fed. Cir.), modified on other grounds, 771 F.2d 480 (Fed. Cir. 1985). In Canisius College, the court held that a provision in the 1984 Deficit Reduction Act, retroactively validating previously unlawful FICA taxes paid on amounts contributed to employee retirement annuity contracts, did not violate due process. Canisius C: College v. United States, 799 F.2d at 27. The court's holding was based, in part, on the court's subsidiary finding that "no vested right of [plaintiff] was impaired by retroactive application of the 1984 [tax] provision." Id. at 25. The court distinguished, in a manner particularly relevant here, Forbes Pioneer Boat Line v. Bd. of Comm'rs, 258 U.S. 338 (1922) (cited by plaintiffs both in their first opposition to NSF's motion, filed May 6, 1998, at 5 n.1, and in Pl. Opp. at 24 n.6), since plaintiffs in this case have not procured a final judgment, and have no vested interest in a refund of the payment at issue merely by virtue of their having filed a complaint:
In Forbes, the plaintiff steamboat company had received a favorable final judgment in an action brought to recover tolls that had been unlawfully collected on passages through the lock of a canal. The state legislature enacted a law the day the judgment was issued purporting to retroactively validate the collection of tolls; the Forbes Court found the law unconstitutional. Canisius contends that the 1984 provision is similarly unconstitutional because it deprives Canisius of its right to a refund of FICA taxes. But Canisius, unlike the Forbes plaintiff, has no final judgment establishing such a right, nor does it have any other basis for claiming a vested right to such a refund.
Id. at 25-26 (emphasis added)(citing United States v. Heinszen, 206 U.S. 370, 390-91 (1907) (Congress could ratify admittedly unlawful collections of duties even after plaintiff had brought action to recover the duties paid); Western Union Telegraph Co. v. Louisville & Nashville Railroad Co., 258 U.S. 13, 20 (1922) (where telegraph company had brought suit alleging right to easement under eminent domain statute, company did not have right so far vested under state law as to preclude change in statute that destroyed any such right of easement); Taxpayers For The Animas-La-Plata Referendum v. Animas-La Plata Water Conservancy District, 739 F.2d 1472, 1477 (10th Cir.1984) (Supreme Court has not hesitated to uphold legislation which has mooted pending lawsuits and nullified accrued causes of action)).
A second factor relevant in determining whether retroactive tax legislation violates due process is "whether the taxpayer relied on prior law so that, had he been able to foresee enactment of the legislation, he would have acted to avoid the tax." Canisius College v. United States, 799 F.2d at 26. In United States v. Carlton, 512 U.S. 26 (1994), the Supreme Court held that retroactive application of an amendment to the federal estate tax statute limiting the availability of certain deductions for proceeds of stock transactions comported with due process, notwithstanding the executor's contention (and the Court's assumption) that the executor detrimentally relied on the preamendment version of the statute (costing the estate $2,501,161, id. at 28):
Although Carlton's reliance is uncontested -- and the reading of the original statute on which he relied appears to have been correct -- his reliance alone is insufficient to establish a constitutional violation. Tax legislation is not a promise, and a taxpayer has no vested right in the Internal Revenue Code.
Id. at 33. 12
In this case, of course, plaintiffs can show no "detrimental reliance" whatsoever: This is not not a situation where tax liability is imposed after the fact on economic consequences of choices made with no advance warning that there might be a cost later imposed. The fee was imposed and paid upon registration.
Plaintiffs have failed to meet their burden to demonstrate that "the legislature has acted in an arbitrary and irrational way." Pension Benefit Guaranty Corp. v. Gray, 467 U.S. at 729 (1984) (internal quotations omitted). "Considering the absence of either vested interests or taxpayer reliance, Congress' decision to address its concern by making retroactively lawful the taxes already collected is neither irrational, nor a harsh and oppressive way of 'apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens"'. Canisius College v. United States, 799 F.2d at 27 (quoting Welch v. Henry, 305 U.S. at 146 and citing Graham & Foster v. Goodcell, 282 U.S. 409, 417-18, 426-29 (1931) (upholding constitutionality of retroactive statute designed to preclude necessity of refunding taxes that over three years earlier had been collected after limitations period had expired); Rafferty v. Smith, Bell & Co., 257 U.S. 226,
12/ The Court further explained why retroactive taxation should not be assumed to offend due process:
Taxation is neither a penalty imposed on the taxpayer nor a liability which he assumes by contract. It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens. Since no citizen enjoys immunity from that burden, its retroactive imposition does not necessarily infringe due process....
United States v. Carlton, 512 U.S. at 33 (quoting Welch v. Henry, 305 U.S. at 146-47).
231-32 (1921) (retroactive validation by Congress of duties unlawfully collected some four years earlier held constitutional)). Congress has not acted arbitrarily in ratifying collection of the payment from those who register web site names on the Internet to fund enhancements to the Internet. The retroactive ratification does not divest plaintiffs of any previously-enjoyed vested right. There are no "detrimental reliance" concerns here, much less of the dimensions present in United States v. Carlton, 512 U.S. 26 (1994)(where the executor had detrimentally relied on valid tax laws in effecting stock transactions to produce tax deductions later annihilated by the retroactive tax legislation at issue), since the payments here were knowingly and willingly paid, and plaintiffs would not have acted differently had they known of the impending passage of section 8003. Section 8003, construed to ratify the payment at issue, does not violate due process, and plaintiffs' suggestion otherwise is unsupported.
B. Section 8003 Does Not, In Any Event, Effect a Substantive Change in Legislative Policy
In any event, section 8003 does not, in fact, represent a change in legislative policy (even if such consideration had legal relevance, which it does not). Congress had three times earlier indicated its awareness and approval of the collection of money for the Internet Intellectual Infrastructure Fund -- twice in the legislative history of the National Science Foundation's Fiscal Year 1998 appropriations and once in a report accompanying a still-pending authorization bill.
House Report 105- 175, accompanying the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, 1 1998 (H.R. 2158), committed to the Committee of the Whole House on the State of the Union and ordered to be printed on July 11, 1997, stated, in pertinent part:
The Committee is aware that the Foundation has a cooperative agreement with a company to provide internet domain name registration services and to collect fees to recover the cost of such registration. The fees collected in this process, to the extent they are in excess of costs, are to be placed in a fund to support internet research. The Committee expects to be fully informed as to the Foundation's plans for the disposition of this fund prior to any final actions.
Id. at 95-96 (attached hereto as Exhibit C).
House Report 105-297 from the Conference Committee on H.R. 2158, dated October 6, 1997, stated in pertinent part:
Through a cooperative agreement, the National Science Foundation has authorized the collection of fees for the registration of internet domain names. Under the terms of that agreement, a fund for the intellectual infrastructure of the internet has been established. For purposes of justifying the Foundation's requests for appropriations, the Foundation has included networking activities, such as the domain name registration activity, within its research facilities portfolio. The conferees concur that these activities should be considered research facilities.
Accordingly, the conferees direct the Foundation to credit up to $23,000,000 of the funds collected in the "intellectual infrastructure" fund to the Foundation's Research and Related Activities account for Next Generation Internet activities, pursuant to the authority to credit "receipts for scientific support services and material furnished by National Science Foundation supported research facilities."
Id. at 134 (attached hereto as Exhibit D).
Senate Report 105-110 from the Committee on Labor and Human Resources to accompany S. 1046, the "National Science Foundation Authorization Act of 1997", filed under authority of the order of the Senate of October 9, 1997 and ordered to be printed October 15, 1997, stated:
DOMAIN NAME REGISTRATION FEE
In January 1993, NSF entered into a 5-year cooperative agreement to provide domain name registration services to Internet users. In 1995, NSF amended the agreement to authorize the collection of fees for registration services. Under the current agreement, 30 percent of the revenue generated from domain name registration fees are deposited into an account for preservation and enhancement of the Internet. The account currently contains nearly $35 million. The committee believes that these funds should be utilized by the National Science Foundation, in addition to funds otherwise appropriated to the Foundation, in support of research and development activities associated with the Next Generation Internet. The committee expects that the Foundation will actively work to include EPSCoR institutions in these efforts.
ICI. at 9 (attached hereto as Exhibit E). 13/
Plaintiffs' suggestion that section 8003 indicated a change of legislative policy is erroneous.
IV.SECTION 8003 DOES NOT VIOLATE THE NONDELEGATION DOCTRINE BECAUSE IT IS DEVOID OF ANY LANGUAGE DELEGATING TO NSF "THE POWER TO ENACT TAX LEGISLATION," AND BECAUSE IT AUTHORIZES AND DIRECTS NSF TO COLLECT A SPECIFIED SUM FROM A SPECIFIED SOURCE OVER A SPECIFIED PERIOD FOR A SPECIFIED PURPOSE (AND FURTHER IDENTIFIES THE SUM WITH RESPECT TO A SPECIFIC JUDICIAL DECISION IN A SPECIFIC LITIGATION), THEREBY PROVIDING INTELLIGIBLE GUIDELINES BY WHICH THE COURT CAN ASCERTAIN WHETHER NSF HAS SATISFIED THE WILL OF CONGRESS
Plaintiffs assert that section 8003 unconstitutionally delegates to NSF and NSI the power to enact tax legislation. Pl. Opp. at 32-33 ("the question [before this Court is] ….whether Congress could ever have delegated the authority to NSF/NSI to devise and enact - to legislate -- such a tax law") (emphasis in original); id. at 35 ("NSF and NSI effectively
13/ On May 12, 1998, S. 1046, as amended, was incorporated into its House-passed counterpart measure, H.R. 1273, and that bill was passed by the Senate 99-0.
enacted a tax law ...."). Plaintiffs tell the Court, "Congress can never delegate the unfettered power to legislate." Id. at 33 (emphasis in original). Plaintiffs premise their argument primarily upon three New decisions (one out of the Western District of Missouri), that dealt with problems non-existent in the statute to be construed here. See part A, infra. In any event, however, both the Supreme Court and the D.C. Circuit have placed in the appropriate context the two remaining decisions so heavily relied upon by plaintiffs, see Pl. Opp. at 34-36:
Though in 1935 we struck down two delegations for lack of an intelligible principle, A.L.A. Schecter Poultry Corp. v. United States, 295 U.S. 495 (1935), and Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), we have since upheld, without exception, delegations under standards phrased in sweeping terms.
Loving v. United States, 517 U.S. 748, 771 (1996); Florida Power & Light Co. v. United States, 846 F.2d 765, 776 (D.C. Cir. 1988) ("it appears that in only two cases in all of our jurisprudence has the congressional delegation to an agency been invalidated on the ground that Congress has delegated power without sufficient standards, specifically, Schecter (no standards provided to define when President should exercise delegated power to prohibit transportation of certain oil in interstate commerce, described as a 'delegation running riot' in Justice Cardozo's concurrence [citations omitted] and Panama Ref. Co. v. Ryan [citation omitted] (Congress abdicated its legislative function by giving President virtually unlimited legislative authority over the economic system)"), cert. denied, 490 U.S. 1045 (1989).
Most important, however, plaintiffs' argument that section 8003 does not afford guidelines sufficient to adequately guide the agency is inapposite because all of the conduct that the provision ratifies has already occurred.
Under the governing law and the statutory language at issue, plaintiffs' argument that section 8003 delegates to NSF and NSl the power to enact tax legislation is vacuous.
A. Section 8003 is Narrowly Drawn and Confers No Discretion Upon NSF
Section 8003 "authorize[s] and direct[s]" NSF to have collected the 30 percent portion of the registration and renewal fees charged by NSI under the cooperative agreement between September 14, 1995 and March 31, 1998 for registration or renewal of an Internet second-level domain name, and clarifies that those funds were to be expended for the carefully particularized purpose of preserving and enhancing the intellectual infrastructure of the Internet. 14/ The statute does not confer upon NSF any discretion to determine whether such fee will be imposed, for what period of time, in what amount, from what source, or for what purpose. This is so whether one analyzes either (a) the statute as enacted, or (b) a would-be prospective corollary, enacted before such sum had been collected (relevant to the analysis because section 8003 "legalized and ratified and confirmed [the collection of the 30 percent portion of the fee] as fully to all intents and purposes as if the same had, by prior Act of
14/ Section 8003(a) states:
SEC. 8003. RATIFICATION OF INTERNET INTELLECTUAL INFRASTRUCTURE FEE. (a) The 30 percent portion of the fee charged by Network Solutions, Inc. between September 14, 1995 and March 31, 1998 for registration or renewal of an Internet second-level domain name, which portion was to be expended for the preservation and enhancement of the intellectual infrastructure of the Internet under a cooperative agreement with the National Science Foundation, and which portion was held to have been collected without authority in William Thomas et al. v. Network Solutions, Inc. and National Science Foundation, Civ. No. 97-2412, is hereby legalized and ratified and confirmed as fully to all intents and purposes as if the same had, by prior Act of Congress, been specifically authorized and directed.
Congress, been specifically authorized and directed", and relevant, as well, because plaintiffs argue that the statute could not have done prospectively what it set out to do retroactively, see Pl. Opp. at 38-40):
NSF and NSI are hereby authorized and directed to collect, between September 14, 1995 and March 31, 1998, a 30 percent portion of the fee charged by NSI for registration or renewal of an Internet second-level domain name under a cooperative agreement between NSF and NSI, which portion shall be expended for the preservation and enhancement of the intellectual infrastructure of the Internet.
Neither the version of the statute as enacted, nor its prospective corollary, contain any language delegating to NSF the power to make decisions about the circumstances in which to collect the funds, or in what amount, for what time period, from what source and for what purpose. Plaintiffs' claim that section 8003 delegates "the unfettered power to legislate," Pl. Opp. at 33, is dramatic but baseless.
Irrelevant to the governing statutory construction of section 8003 -- the question now before this Court -- are plaintiffs' arguments going to the issue that this Court has already decided. See Pl. Opp. at 36 ("the enacting of a tax law is precisely what NSF and NSI took it upon themselves to do here"; "NSI and NSF invented this tax on their own"). Plaintiffs' views on the defendants' past conduct have no bearing on the legal question posed by plaintiffs in response to NSF's motion to dismiss, i.e., "Does section 8003, as a matter of law, delegate to NSF the power to enact tax legislation?" Since the statute does not do so, but only authorizes and directs the collection of the 30 percent portion of the subject fee in specified circumstances, from a specified source, for a specified period, and for a specified purpose, the
statute does not violate the nondelegation doctrine notwithstanding any allegations of previous unauthorized acts on the part of NSF and NSI.
Equally irrelevant to any pending legal question is plaintiffs' claim that "it was actually NSI -- a private contractor -- that proposed the passage, and the amount, of the Internet tax. " Id. at 36. Plaintiffs hypothesize, "by NSF's reading, there would be nothing to prevent or limit an agency's enlistment of a private entity to devise and impose such laws, subject to agency approval." Id. (providing a quarter-page block quote from Schecter Poultry Corp. v. United States, 295 U.S. 495 (1935) to show that delegation to private entities of legislative power i unconstitutional). None of this has any bearing on the question whether the plain language of section 8003 comprises an unconstitutional delegation of Congress's power to legislate taxes. There is no evidence in the statutory language to support plaintiffs' incredible construction, and that construction is erroneous as a matter of law.
B. Even if this Court Were to Construe Section 8003 as a Congressional Delegation of the Taxing Power, Such A Delegation Would Not Run Afoul of the Nondelegation Doctrine
The Supreme Court long ago considered and rejected plaintiffs' argument that delegation to the executive branch of the authority to collect taxes -- and even to determine the amount of the tax, a power well beyond the level of delegation found in section 8003 -violates the nondelegation doctrine. In J.W. Hampton. Jr. & Co v. United States, 276 U.S. 394 (1928), plaintiff challenged as an unconstitutional delegation of Congress's taxing power a statute granting the executive branch broad powers to increase and decrease duties imposed
pursuant to the statute. Id. at 404 is The statute conferred upon the President considerable discretion in determining if, when, and to what extent, he would "proclaim" the subject increases and decreases in the rates of duty, identifying as relevant to his deliberation factors susceptible to both objective and subjective assessment. 16/ Noting the foundational
15/ The statute at issue stated, in pertinent part,
[I]n order to regulate the foreign commerce of the United States and to put into force and effect the policy of the Congress by this act intended, whenever the President, upon investigation of the differences in costs of production of articles wholly or in part the growth or product of the United States and of like or similar articles wholly or in part the growth or product of competing foreign countries, shall find it thereby shown that the duties fixed in this act do not equalize the said differences in costs of production in the United States and the principal competing country he shall, by such investigation, ascertain said differences and determine and proclaim the changes in classifications or increases or decreases in any rate of duty provided in this act shown by said ascertained differences in such costs of production necessary to equalize the same.
Id. at 401 (citation omitted).
16/ The statute provided that
in ascertaining the differences in costs of production, under the provisions of subdivisions (a) and (b) of this section, the President, in so far as he finds it practicable, shall take into consideration (1) the differences in conditions in production, including wages, costs of material, and other items in costs of production of such or similar articles in the United States and in competing foreign countries; (2) the differences in the wholesale selling prices of domestic and foreign articles in the principal markets of the United States, (3) advantages granted to a foreign producer by a foreign government, or by a person, partnership, corporation, or association in a foreign country, and (4) any other advantages or disadvantages in competition.
Id. at 401-02 (citation omitted).
significance to our system of government of the separation of judicial, legislative and executive powers, id. at 406 ("it is a breach of the national fundamental law if Congress gives up its legislative power and transfers it to the President"), the Court enunciated the relevant test in evaluating plaintiffs' allegation that section 8003, authorizing and directing the collection of a 30 percent portion of a registration or renewal fee paid in a specified circumstance from a specified source, over a specified period, to be used for a specified purpose, violates the nondelegation doctrine:
'The true distinction, therefore, is, between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.'
Id. at 407 (citation omitted). See also id. at 408-09.
The Supreme Court re-emphasized the breadth of Congress's constitutional authority to delegate under its taxing power in Skinner v. Mid-America Pipeline Co., 490 U.S. 212 (1989). That case held to be a constitutional delegation of Congress's taxing power a statute directing the Secretary of Transportation to establish a system of user fees to cover costs of administering federal pipeline safety programs. Id. at 314-15, 221-24. Like the statute in our case, the statute in Skinner placed multiple restrictions on the Secretary's discretion to assess pipeline user fees; "Congress may wisely choose to be more circumspect in delegating authority under the Taxing Clause than under other of its enumerated powers, but this is not a heightened degree of prudence required by the Constitution", id. at 223. See also Field v. Clark, 143 U.S. 649, 683-89 (1892) (longstanding practice of Congress delegating authority
to the President under the Taxing Clause "is entitled to great weight"); 26 U.S.C. §§ 7805(a), (b)(Congressional delegation to the executive branch of the authority to "prescribe all needful rules and regulations for the enforcement of [the Internal Revenue Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue" and the authority to determine "the extent, if any, to which any ruling or regulation, relating to the internal revenue laws, shall be applied without retroactive effect"). 17/ Our Circuit is in accord. Florida Power & Light Co. v. United States, 846 F.2d 765, 776 (D.C. Cir. 1988)(upholding statute permitting Nuclear Regulatory Commission to recover its "generic" costs -- "costs which do not have a specific identifiable beneficiary"-- by "collect[ing] annual charges from its licensees", id. at 769 [statutory citation omitted] and granting NRC discretion to determine whether to collect these charges from all of its licensees, or instead, from only one category of licensee, power reactor operators; "we see nothing in the statute or legislative history which would deprive the Commission of wide discretion in this matter," id. at 770), cert. denied, 490 U.S. 1045 (1989). 18/
17/ The delegation in 26 U.S.C. §§ 7805(a), (b) is "without doubt the result of entirely appropriate delegations of discretionary authority by Congress." Skinner v. Mid-America Pipeline , .supra, 490 U. S. at 222.
18/ Plaintiffs cite Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) and Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) for the general proposition that "[t]he courts have not shrunk" from invalidating Congress' attempts to "abdicate" its inherent legislative powers. Pl. Opp. at 13-14. Panama Refining and Schechter Poultry represent the only two occasions since 1892 where the Supreme Court invalidated statutes on grounds of unlawful delegations of Congress' legislative function. Milk Industries Foundation v. Glickman, 132 F.3d 1467, 1473 (D.C. Cir. 1998). In any event, however, for the reasons discussed in Part A and C herein, the delegation concerns addressed in those cases are absent here.
Plaintiffs' argument that section 8003 unconstitutionally delegates to NSF the power to enact tax legislation is contrary to the plain meaning of the statutory language and contrary to the governing case law construing similar statutes. 19/ For these reasons, plaintiffs' argument can be disregarded.
C. Section 8003 Provides NSF with Exquisitely Precise Guidelines Regarding the Collection of the Payment at Issue
Plaintiffs next attempt to convince the Court that section 8003 is an unconstitutional delegation of authority on the purported ground that the statute "delegate[d] taxing authority to NSF without any guidelines whatsoever." Pl. Opp. at 38; see generally id. at 37-41. That argument is incredible because the statutory language at issue could not have directed NSF with any greater precision, because the statute confers virtually no discretion; and because, under the governing case law, the argument has no support.
In determining whether a Congressional delegation of discretionary authority under one of Congress's enumerated powers violates the separation of powers doctrine, a court must first determine whether Congress has provided the federal agency with standards guiding its actions such that the court could ""'ascertain whether the will of Congress has been obeyed.""" Skinner v. Mid-America Pipeline Co., 490 U.S. at 218, quoting Misretta v. United States, 488 U.S. 361, 379 (1989), quoting Yakus v. United States, 321 U.S. 414, 426 (1944). See also American Power & Light v. SEC, 329 U.S. 90, 105 (1946) (it is "constitutionally sufficient if
19/ Plaintiffs' argument is contrary, as well, to this Court's April 6, 1996 Memorandum Opinion at 16-18, stating that NSF's collection of the sum found to be an unconstitutional tax could, in fact, be subject to Congressional ratification under certain specified circumstances. (Under plaintiffs' mistaken theory, it could never be so, for any ratification would comprise an unconstitutional delegation of the taxing power.)
Congress clearly delineates the general policy, the public agency which is to apply it, and theboundaries of this delegated authority"). Congress's delegation to a federal agency of discretionary authority under its taxing power is subject to no greater constitutional scrutiny than that which is applied to any other nondelegation challenge. Skinner v. Mid-America Pipeline Co., 490 U.S. at 222-23; see also J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 409 (1928). 20/
In applying section 8003, a court could, with little difficulty, ascertain "'whether the will of Congress has been obeyed.""" Skinner v. Mid-America Pipeline Co., 490 U.S. 212, 218 (1989) (citations omitted). Was there, or was there not, collected a part of the fee charged by NSI between September 14, 1995 and March 31, 1998 for registration or renewal
20/ In Skinner, the lower court had relied on National Cable Television Assn. v. United States, 415 U.S. 336 (1974), and FPC v. New England Power Co., 415 U.S. 345 (1974) (both cited in this Court's April 6, 1998 Memorandum Opinion) to find that the statute violated the nondelegation doctrine because, it found, the assessments made under the statute were "taxes" rather than "fees", and Congress had not provided to the agency the requisite level of guidance. Id. at 217- 18. The Court responded,
>We find no support . . . for Mid-America's contention that the text of the Constitution or the practices of Congress require the application of a different and stricter nondelegation doctrine in cases where Congress delegates discretionary authority to the Executive under its taxing power. In light of this conclusion, we need not concern ourselves with the threshold question that so exercised the District Court whether the pipeline safety users "fees" created by § 7005 are more properly thought of as a form of taxation because some of the administrative costs paid by the regulated parties actually inure to the benefit of the public rather than directly to the benefit of those parties. Even if the user fees are a form of taxation, we hold that the delegation of discretionary authority under Congress' taxing power is subject to no constitutional scrutiny greater than that we have applied to other nondelegation challenges. Congress may wisely choose to be more circumspect in delegating authority under the Taxing Clause than under other of its enumerated powers, but this is not a heightened degree of prudence required by the Constitution.
Id. at 222-23.
of an Internet second-level domain name under the cooperative agreement? If so, did the sum collected comprise 10 percent, 30 percent or 75 percent of the fee so charged? Were the sums collected intended to be expended for the preservation and enhancement of the intellectual infrastructure of the Internet, or was the money placed in a fund for research on robots? And if a court were still confused about the identity of the fees referenced by Congress, the court could refer to the judicial decision in William Thomas et al., v Network Solutions, Inc. and National Science Foundation, Civ. No. 97-2412, which would spell it out in detail. Indeed, in enacting section 8003, Congress delimited the scope of NSF's discretion with far greater specificity than in delegations previously upheld by the Supreme Court. See Lichter v. United States, 334 U.S 742, 778-86 (upholding delegation of authority to War Department to recover "excessive profits" earned on military contracts); Yakus, 321 U.S. at 420, 426-27 (upholding delegation of authority to the Price Administration to fix prices of commodities that "will be generally fair and equitable and will effectuate the purposes" of the congressional enactment); FPC v. Hope Natural Gas Co., 320 U. S. 591, 600-01 (1944) (upholding delegation to Federal Power Commission to determine just and reasonable rates), National Broadcasting Co. v. United States, 319 U.S. 190, 194 (1943) (upholding delegation of Federal Communications Commission to regulate broadcast licensing as "public interest, convenience, or necessity" require).
Plaintiffs' disapproval of NSF's and NSI's previous activities, see Pl. Opp. at 37-38 ("NSF imposed the tax at issue in a delegation 'vacuum' wholly devoid of intelligible standards. NSF and NSI have not even attempted to provide any rational basis for the 30% tax they decided to impose") has no legal significance to any aspect of the statutory construction
question now pending before this Court. That question is, "Does section 8003 include intelligible guidelines to NSF sufficiently clear, under the governing case law, to permit a court to 'ascertain whether the will of Congress has been obeyed"'? Skinner v. Mid-America Pipeline Co., 490 U.S. at 218 (citations omitted). Also immaterial is plaintiffs' presentation of the query whether "Congress could have passed legislation expressly granting NSF and its private contractor NSI the unfettered power to secretly devise, impose and enforce whatever Internet tax they deemed fit -- whether it be $30 or $500 or $5000 per registration." Pl. Opp. at 40. Such a query, although rife with drama, is not ripe for decision by this Court under Article III because it references a factual scenario that never occurred under a statute that was never passed:
"If there is one doctrine more deeply rooted than any other in the process of constitutional adjudication, it is that we ought not to pass on questions of constitutionality . . . unless such adjudication is unavoidable." Spector Motor Service v. McLaughlin, 323 U.S. 101, 105 (1944). It has long been the Court's "considered practice not to decide abstract, hypothetical or contingent questions . . . or to decide any constitutional question in advance of the necessity for its decision . . . or to formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied . . . or to decide any constitutional question except with reference to the particular facts to which it is to be applied.... " Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 461 (1945).
Clinton v. Jones, ---U.S. ---, 117 S. Ct. 1636, 1642 n.11 (1997). Cf. Metzenbaum v. Fed. Energy Reg. Comm'n, 675 F.2d 1282, 1283, 1289 (D.C. Cir 1982) ("a statute is not facially invalid simply because it is possible to contemplate circumstances in which the application of the statute could result in unconstitutional deprivation when '[t]here is no evidence to support the claim' that the terms of the statute 'in themselves' produce that result", dismissal for lack of ripeness is appropriate where nothing in the record shows that appellants suffered any
injury thus far, and the law's future effect remains wholly speculative) (quoting Buckley v. Vale, 424 U.S. 1 (1976)).
The language of section 8003 does not require this Court to render a determination of constitutional dimensions. See National Cable Television Ass'n. v United States, 415 U. S. 336, 342 (1974) (construing Independent Offices Appropriation Act narrowly in its delegation of discretionary authority to executive agency to determine fees imposed on, inter alla, cable television operators, so as to avoid alternative construction so broad as would invoke question whether requirements of Schecter and Hampton were met; "the hurdles revealed in those decisions lead us to read the Act narrowly to avoid constitutional problems); see also Arizonans for Official English v. Arizona, --- U.S. ---, 117 S. Ct. 1055, 1074 (1997)("[fjederal courts, when confronting a challenge to the constitutionality of a federal statute, follow a "cardinal principle': They 'will first ascertain whether a construction . . . is fairly possible' that will contain the statute within constitutional bounds") (quoting Ashwander v. TVA, 297 U.S. 288, 348 (1936) (Brandeis, J., concurring).
Section 8003 does not delegate unfettered power. In fact, it delegates virtually no discretionary authority at all, much less discretion so broad and amorphous as to violate the separation of powers doctrine for lack of specific guidelines provided to the agency. Because section 8003 sets forth clear, intelligible guidelines in directing that the 30 percent portion of the fee be collected, that statute does not violate the nondelegation doctrine.
V.SECTION 8003 IS NOT A "BILL FOR RAISING REVENUE" WITHIN THE MEANING OF THE ORIGINATION CLAUSE OF THE U.S. CONSTITUTION; EVEN IF IT WERE, HOWEVER, IT WOULD COMPLY WITH THE REQUIREMENT TEAT IT ORIGINATE IN THE HOUSE OF REPRESENTATIVES.
Plaintiffs' attempt to manufacture an "Origination Clause" problem with enactment of section 8003 is based on a student-authored law review article that criticizes the rejection by numerous District and Circuit Courts of constitutional challenges to the Tax Equity and Fiscal Responsibility Act of 1982, Pl. Opp. at 42, and on a series of cases that held that the assessments collected under 18 U.S.C. § 3013 for the Crime Victims Fund violated the Origination Clause because the assessment provision originated in the Senate, Pl. Opp. at 4243. All of the cited cases lack precedential value because the United States Supreme Court, in upholding the constitutionality of section 3013, said explicitly:
Section 3013 is not a "Bil[l] for raising Revenue." We therefore need not consider whether the Origination Clause would require its invalidation if it were a revenue bill.
United States v. Munoz-Flores, 495 U.S. 385, 401 ( 1990) (citations omitted). Thus, far from "leav[ing] intact the . . . reasoning" of the lower court cases cited by plaintiffs, as Pl. Opp. At 42 n. 12 would have it, the Supreme Court never reached the question whether the legislation would have violated the Origination Clause had it been a revenue-raising measure.
Here, as in Munoz-Flores, there is no need to consider those points because H.R. 3579 is no more a "Bil[l] for raising Revenue" than was the legislation creating the Crime Victims Fund considered in Munoz-Flores. Both in Munoz-Flores and here, the language of the
statute "clearly evidences Congress' intent" to provide funds primarily to support a particular program. Munoz-Flores, 495 U.S. at 400. That distinguishes the law in question from "a statute that raises revenue to support Government generally" that would be within the meaning of Article I, section 7 of the Constitution. Id. at 398. 21/ As its title states, H.R. 3579 was a bill "[m]aking emergency supplemental appropriations for the fiscal year ending September 30, 1998, and for other purposes" (112 Stat. 58). The Conference Report states that section 8003 was added in response to the invitation of this Court to "permit the NSF to proceed with the use of these funds as intended by" the Fiscal Year 1998 Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act.
Even if, as plaintiffs suggest, the Supreme Court's holding in Munoz-Flores left undisturbed the portions of the lower court decisions that held that a provision had improperly originated in the Senate because it was a non-germane Senate measure attached to the House Joint Resolution in the Senate, that reasoning is not relevant here. Section 8003 was first considered in a joint House and Senate Conference Committee as part of its consideration of a House bill and was first published in a document of the House of Representatives (H.Rept. 105-504, April 30, 1998). "[F]ederal courts should not undertake an independent investigation into the origination of the statute at issue here. The enrolled bill ... bore the
21/ Plaintiffs conveniently fail to mention that the measure involved in all the cited cases, like section 8003, was intended to support a particular program that was connected with the activities of those from whom the fees were collected. Plaintiffs seek to distinguish the principle by asserting that the Internet was not "created" by section 8003. Pl. Opp. at 42 n. 12.
indication 'H.J. Res. 648.' The designation "H.J. Res." attests that the legislation originated in the House.... We should no more gainsay Congress' official assertion of the origin of a bill than we would gainsay the official assertion that the bill was passed by the requisite quorum...." Munoz-Flores, 495 U.S. at 410 (Scalia, J. concurring.).
Congress has thus directed that the Internet Intellectual Infrastructure Fund be used by the NSF to support Next Generation Internet research. Congress' clear intent should now be given effect by this Court.
For the foregoing reasons, NSF's motion to dismiss should be granted, and plaintiffs' motion for summary judgment should be denied.
WILMA A. LEWIS, D.C. BAR # 8637
United States Attorney
LISA S. GOLDFLUSS, D.C. BAR # 417787
Assistant United States Attorney
Judiciary Center Bldg.
555 Fourth Street, N.W., Tenth Fl.
Washington, D. C. 20001
Attorneys for Defendant