FEA v. ALGONQUIN SNG, INC.
Legal provision: 19 U.S.C. 1862
Argument of Bork
Chief Justice Warren E. Burger: We will hear arguments in 75-382, Federal Emergency Administration against Algonquin.
Mr. Solicitor General.
Mr. Bork: Mr. Chief Justice and may it please the Court.
We are here on writ of certiorari to the Court of Appeals for the District of Columbia.
That Court with one judge dissenting, reversed the District Court's determination that Section 232 (b) of the Trade Expansion Act of 1962 empowers the President in certain cases to use the system of license fees to control or to adjust the imports of oil and other commodities into this country.
The reasoning of the majority of the panel was that Section 232 (b) is a delegation by Congress to the President of the power only to impose quotas, but not to license fees.
Hence, the Court upheld the contentions of the respondents that the fees at issue here are without warrant of the law.
Before coming to the merits of that discussion, I will just briefly as requested by the Court, the question of whether these suits are barred by the Anti-Injunction Act, neither we nor the respondents believe that they are so barred.
Our position is simply that Anti-Injunction Act applies only with respect to taxes imposed by the Internal Revenue Code of 1954 and the Internal Revenue Code of 1939 and we think that both that the taxes are in the legislative history, support that view.
Justice Harry A. Blackmun: Has that defense been raised under along the line?
Mr. Bork: It was discussed below Justice Blackmun, but it was --
Justice Harry A. Blackmun: Certainly here there is no disagreement about it as I gather?
Mr. Bork: There is no about disagreement about it, but we request it was discussed by the Court.
The Anti-Injunction Act is in the 1954 Code and it is contained in Chapter 76 of subtitle (f) which is now -- Section 7851 of that code which is quoted at page 20, footnote 13 of our brief, our main brief, provides that subtitle (f) which includes the Anti-Injunction Act applies to any tax imposed by this Title and of course the fees at issue here are not imposed by that Title.
There is says, the subtitle (f) does not apply to taxes imposed under the 1939 Code except as subsections (b) and (c) provide and subsection (c) provides, in fact that Chapter 76 of subtitle (f) applies to the 39 code and that carries with the Anti-Injunction Act.
So, I think the clear implication is that the Anti-Injunction Act applies outside the 54 Code only when specifically made applicable and it is specifically made applicable only to the 1939 code.
Hence we think it is not applicable of the fees here, whichever else they are, certainly note taxes imposed by the 1954 Code of the 1939 Code.
Respondents have made additional arguments in this direction in their brief and we can accept one of them and we prefer not to accept the other.
Their first argument is that these fees are not taxes and hence do not fall under the Anti-Injunction Act.
That argument is in some attention with their argument later on in the brief that they are taxes and cannot be delegated, but in any event, we agree that they are not taxes and do not fall under the Anti-Injunction Act for that reason.
The other argument is that the Anti-Injunction Act would not apply to a petition for review FEA regulations in the Court of Appeals because Court of Appeals' jurisdiction for that purpose is given by the FEA Act.
However, the repeal of the statute in a policy is so basic as that expressed in the Anti-Injunction Act that I think are going to be expressed and there are certainly no intimation that those are to repeal the Anti-Injunction Act in the FEA Act.
So that I think that argument is incorrect, but the other two I think are correct in support of the notion that there is no application of the Anti-Injunction Act here.
With that I would like to turn to the merits if I may and discussed directly the President’s power under Section 232 (b) to impose license fees for the importation of foreign oil and perhaps I should say a word about why the President shifted from the imposition of quotas to the use of license fees.
Quotas have been used for some time in this field and had been found rather unsatisfactory for one thing there are quite rigid.
They specify particular amounts and as demand changes, domestic demand changes, they provide much too much protection for the domestic industry or much too little protection to domestic industry and it becomes an administrative nightmare constantly adjusting the size of a quarter, whereas a fee sets the margin of encouragement you wish to give to domestic industry, in this case for national security purposes, and as domestic demand changes, imports increase or decrease, but the margin remains there and you are given the amount of protection you desire.
Well, Section 232 (b) states that the Secretary of the Treasury must advise the President when he so finds that an article is being imported in such quantities or in the said circumstances as to threaten to impair the National Security and the President unless he disagrees, shall take such action and for such time as he deems necessary to adjust the imports of such article and its derivatives, so that such import will not threaten to impair the national security.
Here the finding was made by the Secretary of State concerning Oil and Petroleum Products.
I should state in passing perhaps that this section of the statute has never been used in its history for any commodity other than oil.
Here the Secretary of the Treasury made that finding, the President agreed and he placed license fees on importation of oil to lessen the amounts in which it was imported.
Now, I take it that respondent do not challenge the finding that there was a threat to national security and indeed the language of the Court of Appeals suggest that they agreed that there was?
So all we are talking about is the language of the statute.
Now, I read the respondents in the Court of Appeals read it as if it said the President shall take such action as he deems necessary to adjust the imports provided that the only action he shall deem necessary as quotas.
That is not what the statute says.
If it were a quota statute only it would be quite easy to write it that way.
Many delegations of power in this field are written as quotas.
This is deliberately given very broad application, such action as he deemed necessary.
So the plain text of the statute supports the President’s power to use license fees.
They are certainly without doubt a means of adjusting imports.
They have been used in the history of this Republic from the beginning, monetary exactions have been used from the beginning as a means of adjusting imports.
Now, we turn to the legislative history, defined and it bears out that plain meaning of the statute rather clearly and I think no other conclusions is really possible.
This national security provision appeared in this present form in the Trade Agreements Extension Act of 1955.
The Senate Committee on Finance had before them number of proposals to control imports of various kinds of products.
Oil was certainly by no means the only kind of product that was considered.
There was zinc and lead, and fluorspar and so forth.
Now, one of these amendments that was before them was by Senator Neely which provided for a quota system on oils in Section 1 and provided for a general power to take such action with respect to any products he thought necessary in Section 2.
This was replaced, the Neely Amendment was replaced by what we have here which was then the Byrd-Millikin Amendment.
Now, that was a compromise of all these raised proposals, some of them are giving broad power, some are requiring quotas, some of them applying to different products by name and the Byrd-Millikin Amendment is quite broad in the sense and it simply says when there is a finding by the Director of the Defense Mobilization about effective imports on national security being threatening, the President is given powers to take such actions as it is deemed necessary.
So as to all products they adapted the second Section of the Neely Amendment as a compromise in this Byrd-Millikin Amendment, adapted the same form of approach.
Now, the significance of that is when you realize that the Byrd-Millikin Amendment in this respect is identical to the approach of the Neely Amendment is that Senator Martin, who was a co-sponsor of Neely said that during the hearing that Neely gave the President the power to take such action as is necessary and that included the power to impose import quotas or to increase duties.
Now, by a common utilitarian proposition, if the Neely Amendment gave that power in the Byrd-Millikin, it is the same as the Millikin Amendment, then the Byrd-Millikin Amendment which we have before us now in the form of 232 (b) gives that power to use monetary exactions, but there is more evidence.
In the floor debate, Senator Millikin stated that his amendment gave the President the power not only to use quotas, but also to use tariffs and import taxes.
Senator Barkley who was a member of the Finance Committee said the power is to use quotas or to take such other steps as the President deemed desirable, he clearly thought there was something other than quotas that could be used.
Senator Bennett said the power included tariffs, quotas and stockpiling.
Senator Byrd in the colloquy with Senator Saltonstall which the Court of Appeals misinterpreted said the Amendment put other commodities on the same basis as agricultural commodities were already on.
Now, Senator Byrd have just been discussing with Senator Thye the President’s power under the Agricultural Adjustment Act to use duties as well as quotas to affect the size of imports.
Now, respondents reply in their brief as I understand it is that in the discussion of the Agricultural Adjustment Act, Senator Byrd referred to the use of quotas.
I do not know what to make of that because the Act does provide for the use of duties for use of monetary exactions.
Unless the respondents are suggesting that Senator Byrd did not understand the Agricultural Adjustment Act, and therefore, his misunderstanding of that Act must be carried over into the legislative history of this Act, but there is really no basis in the floor debate to say that Senator Byrd displayed a misunderstanding of the Agricultural Adjustment Act, it is an odd thing to attribute to him.
Justice Potter Stewart: The Agricultural Adjustment Act as I understand it is explicit in authorizing duties, is it not?
Mr. Bork: That is quite correct.
Justice Potter Stewart: Unlike this statute.
Mr. Bork: Unlike this, but that is right.
That is why I think it is interesting that he was saying we now put these on the same basis as agricultural products.
Chief Justice Warren E. Burger: As in understood this Act is much broader, that is powers of the President are much broader that he may do anything he deems necessary?
Mr. Bork: I do not really claim that he may do anything he may deem necessary.
I think the meaning of --
Chief Justice Warren E. Burger: It has been used in some such language, does it not?
Mr. Bork: Or steps that he deems necessary, but I think Mr. Chief Justice that we are talking about an area in which he may deem things necessary.
After all this is in Title XIX about Customs and so forth and now the respondents here have suggested that he can close filling stations or he can declare, if you read it literally, he can declare daylight saving time the year around or that he can repeal Internal Revenue Acts that apply to oil producers in this country and so forth.
I think all of that is, well, I understand the motivation for that kind of liberal reading, but it just does not square with the legislative history or with the purpose of the statute or whether it is placed in Title XIX, I think we are effectively talking about the use of monetary exactions or quotas.
Chief Justice Warren E. Burger: Can you suggest any statutes giving executive powers that are in any broader language than this to take such action as he deems necessary and do we have other statutes that are broader than that?
Mr. Bork: Well, there is broader authority in general under the Trading with the Enemy Act which is discussed at page 51 of our opening brief.
Chief Justice Warren E. Burger: It comes generally under the emergency type of statute?
Mr. Bork: Well, during time of war or declared national emergency which he can declare I suppose, directs plenty of control over properties, etcetera, it is just not bad as almost without standards whereas I think this statute does have standards, it does have criteria.
Justice Potter Stewart: Just to adjust the inputs?
Mr. Bork: Well, yes Mr. Justice Stewart, but in some subsection C, there are a list of topics that the President should consider in making the decision.
The Trading with the Enemy Act as I understand it, does not have that kind of guidance for the President and in that sense it is a less confined delegation of power.
Justice Thurgood Marshall: Mr. Solicitor, to oversimplify you say that it is restricted to tariffs and quotas, Congress could easily have said that?
Mr. Bork: Oh it could easily but --
Justice Thurgood Marshall: The Congress preferred to use that broad language now what we do with that?
Mr. Bork: Well, I suggest Mr. Justice Marshall, of course they did mention the possibility of stockpiling and there may be other restrictive actions.
You see the statute says, for example, when goods are imported in such amounts or under circumstances.
Now, I suppose if it was not a question of amounts, but a question of the circumstances, perhaps there is dumping occurring of foreign products in one part of the country, perhaps the President could use an anti-discrimination measure against -- if national security was affected.
Justice Thurgood Marshall: Just limited it to the floor, is it not?
Mr. Bork: I did not mean to do that Mr. Justice Marshall.
I meant to say that I think it is limited to things the President does acting on imports rather than some domestic action he might take like repealing the income tax laws which would affect the level of imports obviously.
But I think it is an extravagant and amusing suggestion.
No I did not mean to say that only tax quota.
There are ranges of other restrictions that they were allowing him, of course they act on imports.
Now, we have discussed on our brief, Congressman Cooper discussed this in the house, nothing to the contrary was said in the debates.
The respondents keep stressing the fact that they can find a man who were not talking about this only use the word “quota.”
They never find anybody who says it is restricted to quotas.
It is limited to quotas.
There is no power to impose duties.
They just found the use of quota.
We have a number of examples in which it is perfectly clear that people are talking about monetary exactions as well as quotas.
Now in 1958, the Office of Defense Mobilization submitted a report to as sub-committee of the House, Ways and Means Committee which committee is in charge of this matter and that report explicitly stated that the legislative history of this provision indicated that President was authorized to impose new or increased tariff duties or quotas and after that report was submitted, this very provision was reenacted in the Trade Act of that year.
Now, it was again reenacted in Section 232 (b) this time of the Trade Expansion Act of 1962 where it is currently located and in 1970, this House voted to amend that statute to take away the President’s power to impose duties, fees, or charges and that memo was deleted on the floor of the Senate and was not enacted.
And finally I think the Cabinet, in 1973 the President used the fee power on oil, that this unsuccessful 1973 Amendment would have denied him and after the exertion of that power under Section 232 (b), Congress went ahead and reenacted it in the Trade Act of 1974.
So I found it almost incredible to think that Congress did not know that it was enacting a power which on its face gave the power to impose license fees and which they have been told, involved tariffs or duties or fees which the President had exercised before they reenacted it.
I think there can hardly be a clear demonstration.
Now, the Court of Appeals suggested that this statute should not be read broadly because, although it was written broadly, that was odd because other statutes were written narrowly.
I think it is a very odd mode of statutory construction to say that a broad statute must be narrowed because look there are narrow statutes all around it.
I think the comparison indicates that when they wrote a broad statute, they meant to write a broad statute.
In any case, as I have just pointed out to you Mr. Chief Justice, there are other statutes that are quite broad.
This Trading with the Enemy Act is broader.
Now, at the end I want to come to two of respondent’s arguments.
I think they tend to raise two arguments of constitutional dimension which do not, first of which they suggest would affect the way in which we read the statute.
They do not suggest the statute is unconstitutional, but they suggest we alter its meaning in order to avoid deciding whether it is unconstitutional and I think there are fatal defects on that suggestion.
The suggestion is that this unconstitutional delegation to the President of congressional power and in order to avoid that we read it the way they want to read it.
The odd thing about that is that if it were too broad a delegation of legislative power, it is difficult to see why respondents think that quotas remain valid, although fees do not, but they attempt to salvage that point by saying the quotas are laid under the commerce power while these license fees are laid under the taxing power and that for reasons which are not disclosed and are certainly not obvious the Tax Delegation Doctrine is much more stringent when applied to a delegation of taxing power.
I do not think this is by the way a delegation of the taxing power.
I think this is a commerce power.
It is common to use monetary exactions as modes of regulation under the commerce power.
It is not necessary.
This is in light of the taxing power.
Now, as I have mentioned before, of course when they argue --
Justice Mr. Justice Rehnquis: Mr. Solicitor General Bork, what authority does Congress rely on to levy an ordinary tariff, is it the power to tax or the power of commerce law?
Mr. Bork: The ordinary tariff, I believe Mr. Justice Rehnquist is the power of tax, but in common parlance it is called taxes under commerce power to regulate in the past.
In any event when arguing as I said under the --
Justice John Paul Stevens: Mr. Solicitor General, give me an example or two.
I just do not have any in mind?
Mr. Bork: Well, I confess that there is a case in the 30s that may be in the bottom, I am not sure, I have to find that out.
Justice John Paul Stevens: We have some spending power just --
Mr. Bork: Well.
Well we have some in the brief.
I am sorry to say that --
Justice John Paul Stevens: On the use of monetary exactions to regulate commerce?
Mr. Bork: Yes.
Yes and I wish it had not slipped my mind because it is a commerce case in the 20s or 30s.
I will try to think of it as I go along here when we get back up in which at that point was addressed in the courts that there is no reason you cannot use monetary exactions through the commerce power.
But here, respondents are saying that although this thing is not a tax under the Anti-Injunction Act, is it a tax when we get to delegation doctrine.
They have a concept of tax which is kind of accordion like and it collapses and unfolds according to current needs of the analysis.
I do not think it is a tax, but I do not think it matters.
Worse than that I think respondent’s argument is in consistent in terms of constitutional policy.
Look at that brief, at page 34, note 44, they give us the reason why delegation doctrine applies more stringently when taxes are involved.
The reason turns out to be Chief Justice Marshall’s statement of the power to tax involves the power to destroy, and therefore, we have to control this thing much more carefully, but then it is too bad they put it that was because at page 26, note 30, they are arguing a different point and there they say that 232 (b) is the very statute, although it gives no power to tax which is too dangerous for the President to have, it does give him the power to place a complete embargo and destroy the commerce.
Now, they say the power to destroy does not imply the power to tax.
Now, so far as I can make out the argument runs something like this.
The President cannot have the power to tax because it involves the power to destroy, but he already has the power to destroy and that is why he cannot have the power to tax.
Now, the dominant characteristic of that position I think is kind of in coherence.
There is really no reason rooted in constitutional policy why delegation doctrine should be applied more stringently to an import fee than to the power to embark or set a quota and I suppose that is the reason that this Court held in Hampton & Co. against United States, and held unanimously that there is no distinction.
It was there argued, but the delegation of the President to raise import duties is unconstitutional although other kinds of delegation would not be and Mr. Chief Justice Tuff and the unanimous Court said there was no such distinction between delegations under the commerce power and those under the power to levy taxes and fix custom duties.
In the second place, as I have mentioned, these things are laid under the commerce power and not the power to tax and finally I would suggest that there is no delegation doctrine issue in this case and the suggestion that we avoid problems of delegation doctrine by reading a statute contrary to its intent in this language is therefore a device that we need not resort to.
The delegation doctrine cases which stuck down statutes, the Panama Refining case and the Schechter Poultry case, even if we assume that they have not been undercut and certainly a case like Southwestern Cable case suggest that they have been funk in at least in some dimension, but even if we assume they have not been undercut and still stand as perfectly good law, they are not applicable here.
One can just compare the statutes.
In Panama Refining Section 9 (c) of the National Industrial Recovery Act gave the President completely unguided discretion whether or not to make it criminal, the interstate shipment of hot oil.
Unlike the statute before is now; Congress provided no criteria whatever for whether or not he should make it criminal required no findings as a predicate to his action and declared no policy.
The President was not only unfettered, he was completely unguided.
Now, in Schechter Poultry, Section 3 of the national Industrial recovery Act authorized the President to impose codes of fair competition on industries.
But when we look at the statutes, the power was to regulate industry and always all together had nothing to do with competition or fair competition.
There was no policy guidance and in fact all that Congress had done with him to the President is commerce power and left him to legislate it at will.
Nothing of that sort has happened here, not remotely.
The Congress here provides criteria for the President.
They provide criteria which are as definite as the subject matter admits them.
The fact as I say are listed in 232 (c) and here unlike those cases, the Secretary of the Treasury is required to make a study and a finding prior to the President’s decision.
Now, I discussed already the fact that the respondents try to make this case sound like Schechter by talking about the various things that the President might and I think I have adequately suggested why the legislative history and the placement of the statute confine it, so there is not anything like Schechter.
I have no time to discuss their final constitutional argument which is the uniformity requirement as to duties.
You will find substantive arguments as to that and are included in our brief.
I would suggest here only that the issue is not really properly before the Court because it is not alternative means, an alternative ground for sustaining the judgment below.
The judgment below really requires the District Court to hold that no fees at all may be exacted.
This theory would support a judgment which eliminated the exemptions from the fees which introduced the uniformity, but we could exact fees.
So a different judgment would be required and for that reason I think that argument is not proper before the Court at this time.
In short, what we have here is an energy crisis that endangers the national security.
We have an energy crisis which Congress foresaw and provided for quite deliberately and repeatedly delegated the President the power to cope with this threat by unlimited means.
The President responded, and I suggest neither the Court of Appeals reasoning nor the argument of respondents here withstand analysis nor provide any reason to take this delegated power away from the President and we ask that the judgment below be reversed.
Chief Justice Warren E. Burger: Thank you Mr. Solicitor General.
Mr. Attorney General.
Argument of Francis X. Bellotti
Mr. Francis X. Bellotti: Mr. Chief Justice and may it please the Court.
In accordance with the Court’s instructions, we have briefed the Anti-Injunction Act and in order to prevent overlapping of arguments we have separated i.e. our plan is that I would take ten minutes.
I am not sure we are going to need that much time Mr. Chief Justice to argue the Anti-Injunction Act and Mr. Dondis will address himself to arguing that the President and the Federal Energy Administrator lacked the authority to impose the license fees on imported petroleum.
Justice Harry A. Blackmun: Mr. Attorney General, why are you so concerned about the Anti-Injunction Act here?
Mr. Francis X. Bellotti: I do not know Your Honor, except that we were asked to brief it and argue it and the basis of request to this Court, we have done that and I have come down here to argue it and I am not at all sure that that is an essential argument at this point.
Chief Justice Warren E. Burger: The Solicitor General agrees with you.
Thus, there is no debate on that any longer?
Mr. Francis X. Bellotti: There is no debate Mr. Chief Justice.
Justice Potter Stewart: Court to ask the parties to?
Mr. Francis X. Bellotti: Yes, Your Honor, and the parties cannot confer a jurisdiction upon this Court and I am not at all sure.
Justice Potter Stewart: (Voice Overlap) my brother Blackmun had directed that question?
Chief Justice Warren E. Burger: But the answers of some members of the Court were concerned about it and want to do hear and they are not heard?
Mr. Francis X. Bellotti: I will do whatever it please the Court, Mr. Chief Justice.
I will be here to sit down or ague the Anti-Injunction Act.[Laughter]
Chief Justice Warren E. Burger: You may make your own election and see if any questions will prolong your argument on the subject.
Mr. Francis X. Bellotti: Thank you Mr. Chief Justice, I will just take a few minutes on this.
I think there is simply the license fee is imposed here are not a tax.
They are some sort of a high breed and I might add that we at no point claim they are a tax even in Mr. Dondis’ argument.
We may claim there is something in the nature or a high breed, in the nature of ability -- an attempt to exercise a tariff of power which resides with Congress.
It would be anomalous to --
Justice Byron R. White: So always there were any difference with respect to the rules of that delegation with respect to tax.
Those rules would not apply because this is not a tax?
Mr. Francis X. Bellotti: This is not a tax.
We never contend that there is a tax Mr. Justice at any point in our argument.
To attempt to apply the Anti-Injunction Act which is Internal Revenue Code Title XXVI to the Trade Laws of the United States would be anomalous.
The very purpose and I suppose very simple purpose of the Anti-Injunction Act is to make sure that we have a guarantee of revenue to run our government.
That is totally outside the intent of this Act with which we are dealing in this licensees which are regulatory in nature.
Justice Mr. Justice Rehnquis: General Bellotti, what if an action were brought to enjoin the enforcement of tariffs enacted by Congress, would that be subject to the Anti-Injunction Act?
Mr. Francis X. Bellotti: I would say that would not Mr. Justice Rehnquist.
Justice Mr. Justice Rehnquis: Even though levied under -- even though Congress was exercising its taxing power?
Mr. Francis X. Bellotti: No, the Anti-Injunction Act applies, in my judgment, very simply to taxes imposed under the Internal Revenue Code Title XXIV and no others.
Congress was not directly involved in the imposition of these fees.
It was not for the purpose of rising revenue in spite of the fact that are raised probably the most massive amounts of revenues more than any other tariff power in the United States.
In 1974, the year before this, all of the commodities that were entered into this country amounted to $4.8 billion.
If this program, this license fee program had reached its ultimate conclusion it would have anticipated $4.8 billion.
However, the Court has said that, has defined the tax as that which is in the condition to be collected as a tax and claimed by the proper official to be tax.
The license fee scheme falls on both of these counts.
It is not collected by an Internal Revenue officer under the color of office.
It is not deposited in the general funds of the treasury.
It is collected by the Federal Energy Administrator and deposited it in suspense account and may without appropriation be used for refunds and payments incident to the implementation of the license fee program.
I am not sure Mr. Chief Justice and Mr. Justices how much longer we want to go into any follow-up presentation of the Anti-Injunction Act.
I think very simply it does not apply to taxes outside the Internal Revenue Code and obviously the very purpose of the Act to perpetuate and to make sure the security of revenue does not apply all here.
Chief Justice Warren E. Burger: (Inaudible) questions Mr. Attorney General, or you may either argue the other points or you may delegate and assign that time to your colleague.
Mr. Francis X. Bellotti: In the interest Mr. Chief Justice, having no overlapping arguments I will give my time to Mr. Dondis.
Chief Justice Warren E. Burger: Mr. Dondis.
Argument of Harold B. Dondis
Mr. Harold B. Dondis: Thank you, Your Honor and may it please the Court.
The license fee now before the Court, involves the broadest exercise of the Tariff Power in the history of the American Republic.
In fact, we would have to go back to as the judge said, stand time to determine his broad and executive power as is claimed in this case.
The statute is a simple one.
It does not mention the tariff on its face.
It states, the President can take such action and put such deemed time as he deems necessary to adjust the imports of an article and so forth so that it will not threaten to impair the national security.
I will get back to the exact wording and the exact meaning of that statute, but I would like to emphasize our position that the Court should give this a very narrow and careful construction because in effect, the statute under the interpretation of the government undermines the whole tariff structure of the United States.
Chief Justice Warren E. Burger: What do you say was the objective of Congress in this particular section?
Mr. Harold B. Dondis: It was to put on a quota Your Honor.
It was written in the background of complete discussion of the quote problem.
It was put in essentially for the oil companies who worry about competition abroad.
Chief Justice Warren E. Burger: To adjust and regulate imports, is that not the objective?
Mr. Harold B. Dondis: Yes, but I will explain the term the word “adjust.”
I do not just want to plunge into that problem.
I would like to give you a little bit of the background.
I certainly want to answer your questions directly.
I will say though that the first measure under the statute was a voluntary quota program.
The Senate and Congress as whole overwhelmingly discussed it as a quota program and it was designed to protect the oil companies substantially because they had great many imports which was threatening prices in America.
However, it was extended to all articles.
Now, I think you should understand that since the statute does not mention a tax at all, that once it is construed to include the tax, there is no limit on it and that is important --
Justice Byron R. White: Is your position that this is a tax?
Mr. Harold B. Dondis: This is a license fee Your Honor which has reach that reaches farther, much broader than a tariff and I will explain why it does.
Justice Byron R. White: It is not a tax so to speak?
Mr. Harold B. Dondis: I have to accept the nomenclature of the government as in licensed tax, but it has all the instance of the tariff and something more.
Justice Thurgood Marshall: I have to change my notes here.
I heard the Attorney General say that it was not a tax?
Do I have to change my notes?
Mr. Harold B. Dondis: Yes, I will explain why I do not think it is a tax.
It is a very minor point, but let me try to explain it now.
Chief Justice Warren E. Burger: (Inaudible) you may find yourself under the Anti-Injunction Act?
Mr. Harold B. Dondis: No, I do not think you would Your Honor because I do not like to argue that question, but there is a clear right of appeal under the Federal Energy Act in any event.
I do not have that problem.
The reason why I think I better answer that question.
The reason why it really has a sweep far broader than a tax is that the money is paid in the fund.
They are moneys exacted on imports.
So, in that sense it is certainly a tariff and has all the incidents and the economic effect of a tariff.
But the moneys are paid into a fund and the government allows exemptions based upon various parts of the country.
So that certain parts of the county because of these exemptions do not pay as high a license fee as others, the result is that the imposition is not uniform and it is in violation of the Uniformity Clause of the Constitution.
Now, I believe and I can only speculate that the government set this up as a license fee system in order to avoid that problem.
Justice John Paul Stevens: Mr. Dondis did you make this argument in the lower court?
Mr. Harold B. Dondis: Yes.
Justice John Paul Stevens: But the District Court did not pass -- the Court of Appeals did not pass on the same?
Mr. Harold B. Dondis: No, I do not think they finally characterizes it.
I think they accepted --
Justice John Paul Stevens: What is your response to the Solicitor General’s argument that we may not consider it because it would not sustain the judgment before us?
Mr. Harold B. Dondis: On the uniformity provisions?
Justice John Paul Stevens: Yes.
Mr. Harold B. Dondis: Oh well, I simply say that they -- the government has chosen the form of the system and I am personally convinced that it was chosen to get around the Uniformity Act.
Now, we could not appeal from a tariff because that is what the government did not have.
It had what they call a license fee system which is very comparable because that which was invalidated by this Court in the CATV and NAPCO cases.
All I can say is we can only appeal from what they have given us.
Justice John Paul Stevens: I may not understand your argument.
Is your non-uniformity argument one that is intended to demonstrate that is not a tariff because it is not uniform or it is the one that is demonstrated, intended to demonstrate the relief should be to eliminate the lack of uniformity?
Mr. Harold B. Dondis: No, it is one to demonstrate that this statute should be very carefully and narrowly construed and if there is a constitutional question, then the tariff should be construed as to avoid and not allow a license tax system at all.
Justice John Paul Stevens: There is no constitutional question derived from the non-uniformity point unless we decided it is a tariff?
Mr. Harold B. Dondis: Well, I would think it would apply in the case of a license fee system.
Justice John Paul Stevens: Why the constitution requires a license fee system to be uniform?
Mr. Harold B. Dondis: Because if a license fee has all the effects of a tariff Your Honor, I think it would have to bring down --
Justice John Paul Stevens: But for example could not the President say we will have no imports at all through the west coast or the east coast, one or the other, just close up certain ports to the import of oil, could that be done?
Mr. Harold B. Dondis: I think he could do that subject to the restrictions of the Due Process Clause.
Obviously, he would kill a lot of people as he did that.
I think the Due process Clause takes over at some point.
Justice John Paul Stevens: Do you make a due process argument here?
Mr. Harold B. Dondis: No, we are not a constitutional question.
Justice John Paul Stevens: I do not understand, the thrust of your non-uniformity argument, I really do not have it yet?
Mr. Harold B. Dondis: Well, I can only say we are bringing before the Court a question of the interpretation of the statutes and we say the statute must be interpreted narrowly --
Justice John Paul Stevens: It is supposed to be interpreted to require uniform treatment of all parts of the country, if there were for example?
Mr. Harold B. Dondis: Yes, and this program not only provides the uniform treatment and this is not what the government has done.
I do not think the government should profit more.
Justice John Paul Stevens: If they had quotas administered by different ports of the country, they have to be uniform in every port, is what you say?
Mr. Harold B. Dondis: Yes, they could hardly do that.
They have not set up such a system.
But one aspect of the program is that it has unlimited tax, there is no limit in the statute itself.
As a result it has become the highest tariff in history and it is -- the tariff on oil as many times the very high tariff law was established by Smoot-Hawley Act.
Now, another aspect of it is that the government used this statute to abolish a tariff and this was invalidated by the Court of Appeals.
So the government apparently claims that it includes the right to abolish a tariff and mind you, this applies to the entire, all articles that can come into the United States.
The government apparently asserts that power provided it makes the finding in the national security.
Justice Byron R. White: There is quite a difference, does it not?
Mr. Harold B. Dondis: Pardon.
Justice Byron R. White: That makes some difference on this?
Mr. Harold B. Dondis: But how much difference Your Honor.
The government claimed along and it is very hard to dispute that the national security is not something that can be reviewed in this Court.
The government claimed below it had to provide no hearings on the question and as a matter of fact in these days of total law, it is doubtful that there are any commodities that would not be within this clause.
If you look under the Trading of the Enemy Act, for example, in the commerce, they have a list of commodities.
They have almost every conceivable commodity affecting the public interest.
Justice Byron R. White: What would have hurt client the most, an embargo or just license fee?
Mr. Harold B. Dondis: The license fee is a devastating.
We never objected to the quota.
The licensing –-
Justice Byron R. White: How about in embargo?
Mr. Harold B. Dondis: Well, I am not sure what an embargo could be put on.
That would be a real due process question because we would not have lights here, we will freeze to death.
Justice Byron R. White: Maybe, but what about under the statute, would the President have the power to do it?
Mr. Harold B. Dondis: The President has the power of quota and it is a very large reconic power.
There is no question, but I submit Your Honor --
Justice Byron R. White: I just wonder if you want to narrow construction whether you want to construe it narrowly to exclude quotas?
Mr. Harold B. Dondis: No.
Justice Byron R. White: Narrowly to exclude license fees?
Mr. Harold B. Dondis: There is no way because the word “restrict” clearly implies quotas and because the statutory history again and again refers to quotas.
There was no doubt that this was enacted under a background of quotas.
No doubt, but I suggest that one reconic power does not imply another and I also suggest Your Honors that you have never implied a tax.
Never in the history of this Court from language which does not explicitly provide for a tax and here there is no such language, there is not language that mentions a measure of tax nor a method of calculation of the tax.
There is not such thing.
Justice Thurgood Marshall: To buy that argument, we have to find that this is actually a tax?
Mr. Harold B. Dondis: What is that?
Justice Thurgood Marshall: Before we can buy that argument, we have to agree with you that it is a tax?
Mr. Harold B. Dondis: No, I do not think so.
I think that the two of them whether it is a license fee or a tariff they are equally lethal.
Justice Thurgood Marshall: Well, if we find that this is not a tax, what good is your present argument?
Mr. Harold B. Dondis: I think it is in violative of the tariff clause and it is not within the power granted to Congress.
Justice Mr. Justice Rehnquis: Do you say that Congress could have not done this?
Mr. Harold B. Dondis: I mean, I am sorry, the power granted by Congress obviously.
I did not mean that.
I would like to point out that if the President has his power, he does not have to use the elaborate mechanism of Title XIX of the U.S. Code which involves all the technical requirements of tariffs and very importantly it involves the recommendation of the International Trade Commission which is a basic body for governing tariffs.
In other words, if you take all the powers, taken together under this statute as claimed by the government that is an unlimited tariff, a power to abolish a tariff, of finding it probably includes almost any article there is in Congress.
No review as a national security provision completes a convention of the tariff power then I suggest you that the President -- the government is right here as a whole tariff power lock, stock and barrel and Congress has given it up completely and I suggest further that 1862 (b) will eventually swallow the entire tariff structure.
I admit it will happen slowly.
Here it has been applied only to oil, but I think tomorrow --
Justice Byron R. White: You agree I suppose that this is just a question of statutory --?
Mr. Harold B. Dondis: Yes, I do.
Justice Byron R. White: And that if whichever way we decided in a way that Congress does not prove, they can pretty quickly change the situation?
Mr. Harold B. Dondis: I do not think they can Your Honor.
They try to put a mark --
Justice Byron R. White: You mean they have the power, you think as a matter of politics they could not, is that it?
Mr. Harold B. Dondis: Yes, they try to put on a moratorium on this enormous fee for five months and they could not override a veto.
I do not think if -- for one thing the very existence of the tariff creates vested interest throughout the country.
This immediately, for example, this tariff hurt the east very greatly.
It would probably create a vested interest in the Midwest immediately and those senators would not actually be very loathe to override a veto.
So I think once Congress gives up the power, I doubt that it can get it back so easily unless it makes some mammoth kind of deal with the President.
But it certainly was unable to get this back even though a majority of Congress and the House disapproved of it.
This is why I am saying Your Honor that this Court has never presumed a tax will exist when it is not mentioned in the statute and this would be a precedent if it does so.
Justice John Paul Stevens: Mr. Dondis, perhaps the answer is in the paper.
If you win, where does the money go?
What happens to the $4 billion?
Mr. Harold B. Dondis: Well, I think it would have to be refunded?
Justice John Paul Stevens: To whom?
Mr. Harold B. Dondis: To those who paid it.
We had a problem with that in the Circuit Court.
The government wanted to refund very large share of it to the oil companies and we made a motion opposing that in the Circuit Court and the government changed its mind.
But the government does claim a right to rebate this which is another example of the vast powers that they have.
Justice Lewis F. Powell: May I come back to your discussion of what might happen in Congress?
If the Congress had expressly authorized the imposition of these fees, are you arguing it would be unconstitutional?
Mr. Harold B. Dondis: I do not ask the Court quite to get to that problem.
I realize that it was a Schechter problem.
There are no standards in this Act or no really workable standards in the Act of the term national security.
If you look on the 1862 (c) --
Justice Lewis F. Powell: Before we get to standards, I am interested in the power of Congress and what do you think Congress has intended here?
How do you interpret the failure of Congress in 1974 when this language was re-enacted just a year after the President had imposed fees?
Mr. Harold B. Dondis: Oh! That is quite easy.
Justice Lewis F. Powell: That is bearing upon your argument?
Mr. Harold B. Dondis: That is quite easy and there are two reasons.
First, the government had abolished the tariff and also had put exemptions on the fees.
So the tariff was not being felt by that time.
The Circuit Court mentioned that.
Also, the Congress in 1974 mentions specifically that it had not gotten to the problem of the oil tariff.
Much important, Your Honor, is the 1962 statute.
Look at that! That specifically gave the government the power which the government now claims today.
It specifically gave the tariff for security reasons and that was rejected in 1962 and Senator Byrd gave up a very complete analysis of that, of the reasons why it was rejected.
That is a far more important indication because during the 60s and in 1958, the protectionists tried to add the tariff power to this section and were unable to and only in 1970 when for the first time after 15 years the government, the President’s Task Force reported that perhaps a tariff could be put on, did Congress attempt legislation the other way?
It abandoned the 1970 legislation because President Nixon promised not to put one on.
It was not until 1973 that he put a mild one on and a bite of it as the Circuit Court said, the bite of it was not felt and was not dealt with in 1974.
Justice Lewis F. Powell: But do you draw any distinction in principle between the fees imposed in 1973 and those imposed in 1975?
Mr. Harold B. Dondis: They were very, very minor as originally --
Justice Lewis F. Powell: From principle, is that the same?
Mr. Harold B. Dondis: In principle, they are the same, but I would for example point to my own experience.
We were readying a suit to question that, but we are doing it very leisurely.
It was not a great threat and I think many members, representatives indicated, he did not even know it was on during one of the hearings.
Justice Lewis F. Powell: Do you not think the Congress was aware that these 1973 fees were in effect?
Mr. Harold B. Dondis: I think they were generally aware and not greatly considering about the whole problem.
They had had no bite whatsoever by that time in the Circuit Court.
Justice Lewis F. Powell: So do you think the Congress had been aware that the President would have set the power perhaps the increase amount of the fee?
Mr. Harold B. Dondis: Well, it happened very suddenly in the early 1974 and Congress was very shocked by it.
Justice Lewis F. Powell: So you just think the Congress really did not know what it was doing?
Mr. Harold B. Dondis: I am sorry.
Justice Lewis F. Powell: Well, the question is not very helpful, you can forget it.[Laughter]
Mr. Harold B. Dondis: I do not think Congress was aware of it.
I am not going to have much time to answer all the position by the government.
I would like to address the word “such action as he deems necessary.”
I do not think that is an utterly expansive power.
The government takes a different position in its brief than the Solicitor General has taken here.
The term “such action as he deems necessary” is very common words in statutes.
They do not mean that they expand the power, the basic power given in the statute.
All they mean is that the President or the legislative official can take such measures as he deems necessary in order to use the basic power.
For example, Federal Power Act has a separate section which says a Commission shall have power to perform any in all acts necessary or appropriate to carry out the provisions of this act.
And in the NAPCO case, in which Your Honors, in a unanimous decision invalidated the license fee.
That general power was present and the Circuit Court said that that did not expand the powers.
Now, the government takes the broadest possible, let me say, I need the government’s brief, they take the possible, the broadest possible decision.
They say the present trends of choice with respect to the corrective actions that he make, may take under the provision is subject to only one limitation.
The President must deem the action to be necessary to accomplish the prescribed objective adjusting the imports of the article to eliminate the threat to the national security.
The statute does not otherwise limit in any way the nature of the action that the persons may take.
Now, the Solicitor General seems to backed down from that position as obviously he must.
For example the President would not be allowed to use subsidies to adjust imports.
He certainly could not put on a depletion allowance.
Under this –-
Chief Justice Warren E. Burger: You cite anymore here than whether he has exercised here, the power is valid?
Mr. Harold B. Dondis: I think you have to decide -- well, what I am trying to say Your Honor is that this General Clause does not mean much such action as he deems necessary.
The Solicitor General admits that that just cannot be true.
Otherwise the President could occupy Saudi Arabia for that purpose.
The important part of the statute is the word “adjust.”
The statute says the President can take such actions as he deems necessary to adjust the imports of an article.
Now, that word “adjust” is a very specific word used throughout the code and I have looked hi and lo through the code, I can find no use of the word adjust that means an indirect adjustment of the type that the government contends for.
It usually means a kind of a manual, exact and precise change.
As a matter of fact, the Court below said it meant withdrawal of goods from the warehouse.
Now, the government has produced no statute in which the term adjust refers to an indirect, uncertain amount of change in imports and I do not think that is what it means.
Justice John Paul Stevens: Does the change in import even though it is indirect, nevertheless an adjustment in an import?
Mr. Harold B. Dondis: I think it is a change, but I do not call it an adjustment because the word “adjust” is a verb and I think it implies something definite and certain.
Now, for example in this case, on the first year imports, the President did not indicate whether they would change imports at all and within a few months have they --
Justice John Paul Stevens: Do you take the position that the license fees will have an impact or no impact on the level of --
Mr. Harold B. Dondis: A very uncertain impact.
For example, in this situation--
Justice John Paul Stevens: It is certain as to whether it has any impact at all or just uncertain as to amount?
Mr. Harold B. Dondis: Yes, uncertain as to amount and even in some situation as to whether have any impact at all.
In this situation, it had not impact.
The imports went up during the period of this fee.
Justice Potter Stewart: Do you think the demand is probably inelastic?
Mr. Harold B. Dondis: That is right.
Absolutely inelastic and furthermore, my time is up, but furthermore the --
Justice Potter Stewart: You think it is absolutely inelastic?
Mr. Harold B. Dondis: In this situation I think it is Your Honor.
Justice Byron R. White: (Inaudible) The purpose of the fee may have been to raise the price?
Mr. Harold B. Dondis: That is right.
It was to raise the domestic price so that consumption of all oil in America would go down and incidentally the foreign consumption would go down.
Justice Byron R. White: It may be that the domestic price of oil would encourage domestic production?
Mr. Harold B. Dondis: Yes, but it is the most indirect method.
This is not what I call an adjustment of imports.
He can do the same thing by rationing gasoline in U.S. or he could have put a used tax on oil in the U.S.
Chief Justice Warren E. Burger: But the Congress did not do it.
The President said, you gave him power in broad language.
He could have rationed gas probably, but --
Mr. Harold B. Dondis: Not under this statute Your Honor.
I do not think --
Chief Justice Warren E. Burger: -- several other things, but he elected to do this one.
Now, your time is up Mr. Dondis.
Mr. Harold B. Dondis: Thank you Your Honor.
Chief Justice Warren E. Burger: Do you have anything further Mr. Solicitor General?
Rebuttal of Bork
Mr. Bork: Just a few matters Mr. Chief Justice.
I would like to point out in the first place that the tariff on oil is in effect in this case involves in no way the assertion of the power to remove any tariff.
The tariff laws are not at stake in this case.
Secondly, in reply to a question from Mr. Justice Powell, we discussed the 1962 unsuccessful amendment tool in this law which would have given the President explicit power to lay duties and impose quotas.
The reason that was not passed because it was not like this statute.
In the first place, it was not a national security statute.
The President was empowered to do anything when the national interest was involved, a much broader statute and furthermore, there were no criteria in the statute for when he should any of these things.
If there was a statute like Schechter, the NIRA in any sense it was that statute and that was why it was rejected by the Congress.
Justice Byron R. White: Mr. Solicitor General, you probably have said in your brief or in your argument and I thought that, what do you think is the basic purpose of the fees?
Mr. Bork: The fees Mr. Justice White was to have a method of providing, cutting down foreign imports and developing American production which would provide a known market.
Justice Byron R. White: Main purpose as to when -- certainly to whatever impact it might have had to limit imports that was part of the purpose, I take it?
Mr. Bork: It was to limit imports to decrease American dependence for the national security reasons on foreign oil.
Justice Byron R. White: So they wanted to raise the price and encourage domestic production among other things?
Mr. Bork: That is correct.
That is one of the purposes and to achieve something resembling enough independence so that the national security purpose of the nation would not be absolutely dependent upon foreign oil.
But Mr. Justice Stevens I was asked about the question of whether one of the uses of monetary exactions and regulation of the commerce power, I was not sufficiently prepared for that, but apparently the answer is rather Board of Trustees, the University of Illinois against United States 289 U.S. 48 which this case lays that doctrine that because the taxing power is a distinct power.
It does not follow the duties.
It may not be imposed in the exercise of the power to regulate commerce.
The contrary is well established in Gibbons against Ogden.
So, I think it is – that is all I wish to say.
Chief Justice Warren E. Burger: Thank you gentlemen.
The case is submitted.