Respondents Brief — United States v. Clintwood Elkhorn Mining Co.

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Supreme Court of the United States

UNITED STATES OF AMERICA,

Petitioner,

;

CLINTWOOD ELKHORN MINING COMPANY, ET AL.

Respondents

On Writ of Certiorari to the United States Court of ,

Appeals for the Federal Circuit

BRIEF FOR THE RESPONDENTS :

STEVEN H. BECKER PATRICIA A. MILLETT |

PAUL A. HOROWITZ (Counsel of Record)

SUZANNE I. OFFERMAN THOMAS C. GOLDSTEIN |

BAKER & MCKENZIELLP STEVENC. WU

1114 Avenue of the MONICA P. SEKHON

Americas AKIN GUMP STRAUSS .

New York, NY 10036 HAUER & FELD, LLP |

(212) 626-4100 1333 New Hampshire Ave., ,

Washington, DC 20036 7

(202) 887-4000 7

FEBRUARY 13, 2008 )

——— .

Wicson-Epes Printine Co., INC. — (202) 789-0086 — WASHINGTON, D.C. 20002 .

QUESTION PRESENTED

Whether a taxpayer’s suit under the Tucker Act,

28 U.S.C. 1491(a), seeking damages and interest for a

violation of the Constitution’s absolute preclusion of

congressional tax power over exports, is foreclosed by

the Internal Revenue Code’s tax refund scheme.

Py ee ee

PARTIES TO THE PROCEEDING AND RULE

29.6 CORPORATE DISCLOSURE STATEMENT

Petitioner, the United States of America, was the

defendant in the Court of Federal Claims.

The respondents, who were plaintiffs below, are

the Clintwood Elkhorn Mining Company, the Gatliff

Coal Company, and the Premier Elkhorn Coal Com-

pany. The only parent companies or companies that

own 10% or more of the stock of those parties are

TECO Coal Corporation and TECO Energy, Inc.

iii a

TABLE OF CONTENTS [

I cc sassenseeteesnsons i ‘

Parties To The Proceeding And Rule 29.6 4

Corporate Disclosure Statement...............sssscesseseeees ii F

SD osccdiisticis tatcsconinessnevispescvcenniensecensionn Vv :

YE Ne 1 4

IE TIE AR MROIN ..o..c.cccsscccsccesesccccssessosccccnsssecsees 3 4

aiid lonidelicadatiniinemdatensoesascoeapeses 6 F

Constitutional Claims Under The Export 3

Clause For Monetary Compensation And

Interest May Properly Be Brought Under

ee iii caiahipliniradiatcibinasdsdncnuesesercceccoceeces 6

A. The Unique And Comprehensive

Preclusion Of Congressional Authority In 4

The Export Clause Gives Rise To A Cause a

Of Action Enforceable Under The Tucker .

FR RTS CREE AT SIRE FN BOAO AEs OO 8

1. The Tucker Act Remedies Violations of

Money-Mandating Constitutional

I ita atiiactinaiiideiciceas ndibitiadhaceobideccecsoccencowes 8

2. The Export Clause Mandates Monetary

Compensation for its Violation......................... fs)

a. The Export Clause is a unique and

uniquely comprehensive preclusion of ;

congressional tax POWEF .......:..scsseseeseeeees 10 ¢

b. The Export Clause’s ban on the use

of exports as a source of revenue

requires monetary compensation for

SRR UT iotnihstinbinnsineiiionns lhl did atesthaiidagis 14

_“

3. Tax Legislation Cannot Alter the Export .

Clause’s Money-Mandating Character .......... 20

B. The Tucker Act Remedy Has Not Been

Withdrawn And Is The Remedial Scheme

That Best Enforces The Export Clause............... 25

1. The Tucker Act Remedy Has Not Been

CRI PIN hciccdaccccidicsnesececcscoccsseseees 25

2. Congress’s Power to Impose Its

Administrative Tax Scheme on Export

Clause Claims Is Constitutionally

RASA NEEAS SE ea 28

3. The Design of the Administrative Tax

Scheme Does Not Cover Export Clause

CI ala deiteinttcieherhincinistieiedbicieisdesntsdscasaeiccees 36

a. An individualized refund scheme

does not preclude separate litigation

of broad constitutional questions.............. 36

b. Congress has not intended revenue-

protective procedural constraints to

apply to taxes that are, on their face,

IE a ccbilsdssiicccenscsncccnscscesiccancsoice 39

c. The statutory text is ambiguous............... 43

d. The Export Clause exception to the

administrative refund scheme is

narrow and tightly cabined....................... 45

C. The Export Clause Claim Falls Within

The Plain Terms Of The Interest Statute........... 49

SI UNUUUNA iiiritdesaistiesicasicp bitienicscamieeictadeinesskaniceatinaibigidie 54

Se ae ee ee ee ry Oh ee ee

a OP ee ee! Pe Pe ee ey ee ae eee aN

=~ eZ

ie tee Se

TABLE OF AUTHORITIES

Cases:

A.G. Spalding & Bros. v. Edwards,

Be ae I child bccibiebtctndiccensdsncnsioscos 10, 34

Alabama v. King & Boozer, 314 U.S. 1 (1941).....20

Alexander v. “Americans United” Inc.,

nc cecnislienetindenecncsenmn 37

Alexander v. Sandoval, .

Oe MR IIIED pevcccsnssccdossctesdscodnceessideccebeces 23

Ali v. Federal Bureau of Prisons, 128 S. Ct.

ie, sccspaccensinicinieben 50

3 Amell v. United States,

ji | eee 26

q Ashwander v. Tennessee Valley Auth.,

Be is PIII coeciichnctccgisanciissncbossecensccces weve 27

Baltimore & Ohio R.R. v. United States,

ee BIE Seriistinniidéenisoicnitrpscinticdineacnscess 21

Bivens v. Six Unknown Named Agents of Fed.

_ Bureau of Narcotics,

I iaivecckcccccecctateniscesstionseseneion 22

Block v. North Dakota,

A I a... sesnsosiconseseccsansenvabunings 34

Bob Jones Univ. v. Simon,

I cidade 39, 40

Bonwit Teller & Co. v. United States,

tt REARS SSSR ee ae OP 44

Boston Sand & Gravel Co. v. United States,

I i i cacslieiaaentiendl 53

Bowen v. City of New York,

GS a RE ED tivinsstetscestccrmemnsessvinnsitisiialii 23

Cases — Continued:

Bowen v. Massachusetts,

I I sin nccscccssadoccasencscnseccccsseosesses 18

Bowen v. Michigan Academy of Family

Physicians,

Brennan v. Southwest Airlines Co.,

134 F.3d 1405 (9th Cir.), as amended, 140

i ccswennennntdbains 28

Brown Shoe Co. v. United States,

ER RC 16

Brown v. Maryland,

25 U.S. (12 Wheat.) 419 (1827) 0... 48

Bush v. Lucas,

I ws scansccsneveuseneen 23, 24

Canton R.R. v. Rogan,

i a oss csnsenenanaeons 44

Cary v. Curtis,

44 US. (3 How.) 236 (1845)...........cccccceeeesseeees 29

Chicago, B. & Q. R.R. v. City of Chicago,

a castenssended 18

City of Boerne v. Flores, |

La 21

Close v. Glenwood Cemetery,

107 U.S. 466 (18883) ......... Lciiieinbilopadacepiindicadaibiel 48

Commissioner v. Shapiro,

EI a 40

Cornell v. Coyne, :

ESE TET IO 33

Correctional Servs. Corp. v. Malesko,

I cadena 22

;

‘ a

;

Cases — Continued:

Cyprus Amax Coal Co. v. United States,

205 F.3d 1369 (2000), cert. denied, 532 U.S.

ESS SSSA RAI Se ROTO EER 2, 43

Dooley v. United States,

Pe I IE IED scccnscesoccsccccoceccsncedcccoccsesecests 44

Eastern Enters. v. Apfel, |

i cccncucenntcosesccscsecoesenss 16

EC Term of Years Trust v. United States,

ee ITED eins detaccdacissteisnisscsnscinvceseses 26

Enochs v. Williams Packing & Navigation Co.,

I a i iu crenccsdenicneconiensens passim

Fairbank v. United States,

Be er tinct vsencsscsassansserccctseveces passim

_ First English Evangelical Lutheran Church v.

County of Los Angeles,

rs eaccensonsiinaaens 21

Flora v. United States,

362 U.S. 145 (1960) ............. ieiibbediin biiilakapdoncliaa 37

Grosjean v. American Press Co.,

Re I nin ci cecersnsccesvendoosces 40, 42

Grutka v. Barbour, :

Ee 549 F.2d 5 (7th Cir.), cert. denied, 431 U.S.

: si seasiabolinni 41

7 Hatter v. United States,

a alae 16

Hatter v. United States,

953 F.2d 626 (Fed. Cir. 1992)............... 16, 17, 18

Hibbs v. Winn,

RE RETR lanier tn ee 28

Cases — Continued:

Hinck v. United States,

| __: | TOT Dee 26, 50

Humane Soc’y v. Clinton,

236 F.3d 1320 (Fed. Cir. 2001)................cccc00e 15

Hylton v. United States,

3 U.S. (3 Dall.) 171 (1796)...........cccsseseees 11,13

INS v. St. Cyr,

IN ID icv cccnscecsescccnseoseusotecdooubenes 35

Jacobs v. United States,

Be I PR oc, cccccsecscceccoscsesctéceotos 21, 52

Jones v. Liberty Glass Co.,

Re As 51

Leedom v. Kyne, ,

SF SF BOGE icicssccsesvecccscoscncsccccenesees 41, 49

M’Culloch v. Maryland,

17 U.S. (4 Wheat.) 316 (1819) ..............000.. 20, 29

Marbury v. Madison,

5 U.S. (1 Cranch) 137 (1803)................ 20, 21, 23

McKesson Corp. v. Division of Alcoholic

Beverages & Tobacco,

I HE Sc ciccticcivescencrscscnscwscensesess 17, 47

McNary v. Haitian Refugee Ctr., Inc.,

yD siceicccsecsctsencsicnssescnsessoncessons 38

Minneapolis Star & Tribune Co. v. Minnesota

Comm’r of Revenue,

RT an 42

Mobile County v. Kimball,

_ TEAR a 46

Near v. Minnesota,

Be I IID cits cccctccecivcssnbnmemnedtbeitedabits 42

Cases — Continued:

Nixon v. Missouri Mun. League,

I Soin scciiscsitaccscccnsecossbsiniovesens 45

OPM v. Richmond,

I 38

Pace v. Burgess,

LETTE ES AA UOTE 11

Panhandle Oil Co. v. Mississippi,

etait teinicrcnsnscinoceceedooneees 20

Phillips v. Washington Legal Found.,

i. ic cniseusebnnspebenini 53

' Preseault v. ICC,

ac cadiomeaionll 25

Procter & Gamble Distributing Co. v.

Sherman, |

Be ee re NO ivivsnccsccccccoccocecccesessee 53 -

Quackenbush v. Allstate Ins. Co.,

Re a PI Gitateiccitdiccdssccccosesescossccccosess 23

Ranger Fuel Corp. v. United States,

33 F. Supp. 2d 466 (E.D. Va. 1998)........1, 33, 42

Regional Rail Reorganizaton Act-Cases,

BO i, BOD httitinicinticonscccinscecceesese 27, 46, 49

Rondeau v. Mosinee Paper Corp.,

i ceaasisinenioationii 40

Ruckelshaus v. Monsanto Co.,

ee aon ccecccesccsstecnsenes 25, 49

Schenck v. Pro-Choice Network,

I nic osinirscicéonvescsonenesesoiostieiiiid 52

Schweiker v. Chilicky,

IE Cite TER CIE ccveccccscosscececsccovanscone 23, 24, 48

}

“

~ - ‘ aoe ‘ 5 > Py : 4 < A 2.

Oe ee Da ae a A RE ST, ee. as

+ meee es

ee TS Se eae Oe. Bt

Se a re at ea i ee AY tee yy? re

Cases — Continued:

Seaboard Air Line Ry. v. United States,

BOE BE, Be LAO vvcccvcccsscoscsccsessccscoseoessoss 52, 53

Small v. United States, ne

Rt oer |

Smith v. Phillips,

LO. | sidiliels 52

Snyder v. Marks, |

Ee i RIOD csvscesinccccscscoccrcccsccscccnséces 28, 29

Sorenson v. Secretary of Treasury,

By ME I hese seciscsccecscvccevccesccososoncsesons 52

South Carolina v. Regan,

RIE CED ksiensccrvevcocosesncsncncscecesseceesons 40

Stone v. INS,

I re Se vc ccrncecciccoscssccccoscscesoocnseccsoese 51

Thames & Mersey Marine Ins. Co. v. United

States, 237 U.S. 19 (1915) .........:....scceceeeeees 10, 24

Thetford Properties IV Ltd. v. Department of

Housing and Urban Dev.,

907 F.2d 445 (4th Cir. 1990) .......................0000 41

Turpin v. Burgess,

Be IID edeticsntccsvcsonsosssccscoscctcosaccosance 11

United States v. A.S. Kreider Co.,

BR ee Oe OED cise ccrcncecsvesccosecccccccessccssncoes 26

United States v. Alvarez-Sanchez,

I oo ciiscncnsecconsosoncscosecesossonnnscda 45

United States v. Dalm,

GG TE. BOG GID oeiieisesiivccsecsccsccossscccccsscccoesess 51

United States v. Emery, Bird, Thayer ‘cpio

ee Pe Sta SUI III cs doenikinnnssncsinissniadnesininidicsion 43

Cases — Continued:

United States v. Hatter,

532 U.S. 557 (2001) ........... eee eeeeeeeeees 16, 34, 46

United States v. Hvoslef,

i ssasecnernessdcesosons passim

United States v. IBM Corp.,

517 U.S. 843 (1996) ...............cccsccccsssssssnee passim

United States v. Janis,

BEE UB. BB ITO ooccccrccccccccccccccccosccccesccccccsesee 40

United States v. Kales,

Re rte BI RIED vnccccccnccccceccccccsscscecccoccssveseses 43

. United States v. Mitchell,

. 463 U.S. 206 (1983) .............ccceceeseseeeeee 9,17, 18

United States v. Navajo Nation,

GBBT U.S. GBB CR0GR) ..nccccccccescssccccccsccccccccsoscocccsee 18

United States v. New York & Cuba Mail

Steamship Co., 200 U.S. 488 (1906)................. 42

United States v. Palmer,

16 U.S. (3 Wheat.) 610 (1818) .................. ee 45

United States v. State Bank,

96 U.S. (6 Otto) 30 (1877).............ccccceeeeseeeeeeeees 44

United States v. Testan,

424 U.S. 392 (1976) ............ccccccceeeeees 9, 14, 40, 46

United States v. U.S. Shoe Corp.,

523 U.S. 360 (1906) .....................ccccccccscoes passim

United States v. Watson, ,

4 GE GEE CIID oscensccsccccccscccccssccsssccccoscsscese 48

3 - United States v. White Mountain Apache Tribe,

3 537 U.S. 465 (20038) ..................cccssssssoeees 9, 14, 23

United States v. Will,

SEE, BOO IOP sncecsscescesesscccscsneconssenscess 16, 18

xii

Cases — Continued:

Ward v. Love County,

BN ID cnicnssccsccsossconrcocssocscosescones 17, 34

Washington Dep't of Rev. v. Association of

Washington Stevedoring Cos.,

I III crcisccecstscnccdcscscosevensescocecsssecs 48

Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

449 U.S. 155 (1980) ..............ccccccccsssscosssseees 35, 53

Whitman v. Department of Transp.,

126 S. Ct. 2014 (2006) ...........ccccccccccsssccesesssocsees 25

Wilkie v. Robbins,

127 S. Ct. 2688 (2007) ...............cccccssscceseeees 22, 26

William E. Peck & Co. v. Lowe,

BE I BRIO vicesicecenseccccocseccscccccecscsssecsers 10

Constitution, Statutes, and Regulations:

Sis MINE: BONUS By ls GG Ei sv ccccocscccccccccccccccccoss 11, 47

U.S. Const. Art. I, § 9, Cl. 2 .csccsccsssssccsssecsesssesseesees 35

U.S. Const. Art. I, § 9, cl. 4 ..........c.ccccesesececccceeeeeees 11

US. Const. Art. I, § 9, cl. 5 oo... ccccssesssseeessseeeees 1

US. Const. Art. I, § 9, cl. 7 ......cccccccccccsceescscsseeeeees 38

Wh AG, TEE BD osc ccccccccccccsccscccccssccccocesscces 15

U.S. Const. Amend. XVI ..0..........:ccccccccssceeesseceseeeee 11

EES EATS a a eS ae ae a eee 1

i sia liaise 1,3

BO I I vi cccccsccscocccocsecccosecstessosescose 1, 33, 46

BF Oe IID ves ccsvesecesccnccccsscveccscceseossossosoosobos 1

Be Ey MITE oncccccececcoascocsesescoscessoosseessnsnonse 52

ii sa ccccictensesnncecniscbostetites 2, 3, 37, 44

Statutes and Regulations — Continued:

ie IID cnicicsccouceeiesnsngdensnes 32, 37, 43

ESET OP RIE IN 33

IT i: csscnsistcissitinenieiieetainimmaiapslipaiaiaiaiiaa 39

FR I oi cccttraccsionisonscnistncios 37, 43, 44, 51

Taner m mee te 22, 39:

EEE ee RARE RRR TE 5 44

Ry SI ni ceceniniihtseatiascinssiobiniladiatl 8, 23

SI is ciccrcsinniesanoitsnsbicncuncdostidh i, 2, 24

| SEES CLL TT eT: g

TAAL AT TLR EE TS 8

I I ca ccincnsnsecenersinasvoiennimiccakinesbihl 14, 15

ai aaialacieieaelidaniaeiiladidl passim

I 8, 34

IIs SII cs ccsrinncieiestacteibiedsieianiipessniibliaddemiadiahcdaa 50

Revenue Act of 1866, ch. 184, § 19, 14 Stat. 98 .....9

Act of Mar. 3, 1887, ch. 359, 24 Stat. 505 ..............9

Revenue Act of 1921, ch. 136, § 1324(b), 42

a 50, 51

Revenue Act of 1924, ch. 234, § 1014, 43 Stat.

SNES ERMIEE OR Sos oo PEO Se RET ER TON Neer ee ee 43

Revenue Act of 1928, Pub. L. No. 70-562,

TENTH TERRI 51

ee. ccanianasdsiodunnensiniond 31

aes ID a rciccnciccccscecececacssensscnbacunevas 33

Be ee I so ceccovcceccvcccasvecseresteensonniite 1

a a eapsloabionin 1

ee os cscesscnnsacsecnnsunnien 37

26 C.F.R. 601.105(b)(5)(i)(a) ...........sscccscccssrcceseseess 37

X1V

Regulations — Continued:

26 C.F.R. 601.105(b)(5)(ii)(D) .......... ce eeeeceeessseeeeeees 37

26 C.F.R. 601.105(b)(5)(viii)(a) ..............cccceeseeeeeees 37

Be iiss caisccscccvisrvincesscnibunnsiuns 37

III oo cccccsncneveccsintocsseneestesiuonenes 37

assis ctanicicetinniessicstsicteniebtiipiniatnssiale 37

Other Authorities:

1 & 2 Max Farrand, ed., The Records of the

Federal Convention of 1787 (Rev. 1937) .... 12, 13

Audit Technique Guide for the Coa] Tax (May,

2005), available at

http://www.irs.gov/businesses/smalJ/article/

id= a 37

Black’s Law Dictionary (5th ed. 1979) ............0006. 43

Erik M. Jensen, The Export Clause, 6 Fla. Tax

Ba ee II itelicichuiscsiercheendpibnadiastubaintsidtasrininnetinccers 13, 18

H.R. Rep. No. 1235, 96th Cong., 2d Sess.

ITE iaiicaicisiechaipstiasa tad Dieicinaihineieiitiinipbasendtnahatinenndcbie 15

H.R. Rep. No. 438, 95th Cong., Ist Sess. (1977) .. 41

I.R.S. Notice 2000-28, 2000-1 C.B. 1116 (2000).....2

James Madison, Notes of Debates in the

Federal Convention of 1787 (Reissued 1987)... 19

Joseph Story, Commentaries on the

Constitution (1833) ...........cccccccccccccsesoese 13, 19, 22

Kristy M. Bowden, Protective Claims for

Refund: Protecting the Interests of

Taxpayers and the IRS, 56 Me. L. Rev. 149

RR ORCAESSTELGIN EH! <A Jo StF ES io wee thidihintaiainsiithuives 28

Other Authorities — Continued:

No. 116, Resp. Br., United States v. New York

& Cuba Mail Steamship Co., 200 U.S. 488

SES IPERE ETUDE POR CP CARON 2 Ay SE cor Ea tle a 42

- No. 97-372, U.S. Br., United States v. U.S.

Shoe Corp., 523 U.S. 360 (1998)....................... 15

No. 99-1978, J.A., United States v. Hatter, 532

LTRS SED RARE se oer 16

Press Release, The White House, Office of the

Press Secretary (Jan. 31, 1996), reprinted in

Tax Analysts, Administration Urges

Treasury to Study Changes for Refund

Limitations Cases, Tax Notes Today, Feb. 2,

TREES AME PO 2 DE MW TRE FF SO 28

R. Paul, Taxation in the United States (1954) .....11

The £. leralist No. 30 (Alexander Hamilton)....... 11

U.S. Opp. to Plitfs. Mot. for S. J’ment., Ranger

Fuel Corp. v. United States, No. 3:98cv370

Seals NODA sicncietsosckoncctiaslnia Lampscchasisatiasasicigcdnininsidithin'ins 32

;

i. re a eee

STATEMENT

1. The command of the Export Clause of the Con-

stitution to Congress is direct and absolute: “No Tax

or Duty shall be laid on Articles exported from any

State.” U.S. Const. Art. I, § 9, cl. 5. Consistent with

the Export Clause, Congress has generally exempted

export sales from federal taxation. See 26 U.S.C.

4221(a)(2).! In 1978, however, Congress levied an ex-

cise tax on coal production and sales, 26 U.S.C. 4121,

and expressly directed that the tax would apply to

sales of coal for export, 26 U.S.C. 4221(a) (excepting

from the export ban the tax imposed “under section

4121”).2

2. In 1998, a number of companies challenged the

constitutionality of the export tax on coal. - In that

case, “the government [did] not provide[] * * * any

basis” for defending the tax as constitutional, and the

court was “not able to discern any basis to distinguish

the Coal Excise Tax from” other taxes previously held

unconstitutional. Ranger Fuel Corp. v. United States,

33 F. Supp. 2d 466, 469 (E.D. Va. 1998). The court

accordingly held that the tax violated the Export

Clause. Ibid. The government did not appeal. Pet.

App. 2a. Seventeen months later, the IRS acquiesced

1 That section provides, in relevant part, that “no tax shall be

imposed under this chapter [governing manufacturers excise

taxes] * * * on the sale by the manufacturer * * * [or] on the first

retail sale[] of an article * * * for export, or for resale by the pur-

chaser to a second purchaser for export.” 26 U.S.C. 4221(a)(2).

2 A tax imposed by Congress on the removal of fuel from re-

fineries and terminals, 26 U.S.C. 4081, does not extend to ex-

ports. 26 C.F.R. 48.4081-3(f(2). IRS regulations ensure that

vaccine exports are not taxed. 26 C.F.R. 48.4221-3(e).

in the decision. See Notice 2000-28, 2000-1 C.B. 1116

(2000).

3. Respondents, Clintwood Elkhorn Mining Com-

pany, Gatliff Coal Company, and Premier Elkhorn

Coal Company (“the Companies”), paid taxes on their

export sales of coal under 26 U.S.C. 4121 and

4221(a). Pet. App. 3a, 9a, 36a. In April 2000, the

Companies filed suit in the Court of Federal Claims

under the Tucker Act, 28 U.S.C. 1491(a), seeking

monetary relief for the government’s violation of the

Export Clause, “including recovery” of the export

taxes paid over the previous six years, Pet. App. 31a,

“such other and further relief as th{[e] Court may

deem just and proper,” and interest, id. at 38a. With

respect to payments made during the three-year pe-

riod immediately preceding the lawsuit (1996-1999),

the Companies also filed administrative refund

claims, pursuant to 26 U.S.C. 6511(a), and the gov-

ernment paid those claims with interest. See Pet. 4;

Pet. App. 3a.

Following the Federal Circuit’s decision in Cyprus

Amax Coal Co. v. United States, 205 F.3d 1369

(2000), cert. denied, 532 U.S. 1065 (2001), the Court

of Federal Claims held that the Companies could

pursue their “claims for damage under the Export

Clause” (Pet. App. 17a) pursuant to the Tucker Act,

rather than proceed under the administrative tax re-

fund scheme. See Pet. App. 13a, 17a.- The court

3 Under 26 U.S.C. 7422(a), taxpayers must file an adminis-

trative claim with the IRS before filing suit to recover “any in-

ternal revenue tax alleged to have been erroneously or illegally

assessed or collected.” That administrative claim must be filed

within three years from the time the return was filed or two

held, however, that the Companies were not entitled

to interest under 28 U.S.C. 2411, because the Com-

panies “are not seeking tax refunds.” Pet. App. 17a.4

4. The court of appeals affirmed in part and re-

versed in part. Pet. App: la-6a. The court first reaf-

firmed its holding in Cyprus Amax that the Export

Clause gives rise to a claim for money damages under

the Tucker Act. Id. at 2a-3a.

The court of appeals also held that the Companies

were entitled to interest on their damages claim un-

‘der 28 U.S.C. 2411. Pet. App. 3a-6a. The court ex-

plained that Section 2411 “is a straightforward rec-

ognition that the.government should pay for its use of

a taxpayer’s money to which the government was not

entitled,” id. at 5a, and that “a tax overpayment is

not fully remedied unless it includes interest for the

time that the money was in the hands of the govern-

ment,” id. at 6a.

SUMMARY OF ARGUMENT

1. In United States v. U.S. Shoe Corp., 523 U.S.

360 (1998), this Court unanimously recognized that

the Export Clause is a uniquely “simple, direct, un-

qualified prohibition” on congressional taxing power

that is unlike any other constitutional constraint on

the government’s taxing authority. Id. at 368. That

comprehensive excision of taxing authority includes

not only the total exclusion of a particular commer-

years from the time the tax was paid, whichever occurs later.

26 U.S.C. 6511.

4 Section 2411 of Title 28 provides for the payment of interest

on “any judgment of any court” rendered against the United

States for any “overpayment in respect of any internal-revenue

tax.”

cial activity — exporting — as a source of federal reve-

nue, but also the denial of congressional authority to

exercise any form of tax regulatory authority over ex-

ports and exporters. Thus, while other constitutional

provisions regulate how Congress can collect tax

revenues, the Export Clause is an unbending and un-

qualified prohibition on the use of exports as either a

source of revenue or object of tax regulatory power at

all.

Because of its unique scope and function, the Ex-

port Clause can properly be enforced through an ac-

tion under the Tucker Act. The Export Clause’s

command that exports be completely free from taxa- |

tion and excluded as a source of federal tax revenue

mandates monetary compensation for taxes collected

in direct contravention of its terms. Practically

speaking, the only way to enforce a complete exclu-

sion of funds from revenue is to take the full and

equivalent value of those funds back out of the reve-

nue if they have been unconstitutionally collected.

2. That Tucker Act remedy for Export Clause

claims has not been clearly withdrawn. Contrary to

the government’s argument, the test for withdrawal

of federal court jurisdiction over constitutional claims

is not whether one statutory scheme seems to have

more rules than the other, but turns upon which re-

medial provision is better-fsed to enforcing the right

at issue.

The Tucker Act’s specific provision for prosecuting

constitutional damages claims is the best means of

enforcing the Export Clause. The Tucker Act was

explicitly designed to provide a forum, with appropri-

ate procedures and limitations periods, to vindicate

specified constitutional interests. The general ad-

ministrative tax refund scheme, by contrast, cannot

properly remediate Export Clause claims because

that scheme was specifically designed to protect the

very revenue interests that the Export Clause repu-

diates. Nothing in the text or history of the adminis-

trative review provisions evidences Congress’s inten-

tion to take the constitutionally dubious step of carv-

ing Export Clause claims out of the Tucker Act for

singularly restrictive limitation and forcing exporters

to traverse a congressionally designed, time-delayed,

pro-government, and revenue-protective administra-

tive refund procedure before recouping funds taken in

the utter absence of any legitimate congressional tax-

ing authority.

At bottom, the government’s position assumes that

an export tax is no different from any routine tax or

tax dispute. But the central point of the Export

Clause is that exports are profoundly different and

entirely off limits to Congress’s tax powers. That is

both a substantive and procedural excision of con-

gressional power: where Congress completely lacks

the power to tax, it equally lacks the power to insu-

late violations of that prohibition against comprehen-

sive and prompt judicial remediation, or otherwise to

require that any thumb be put on the government’s

side of the remedial scale. —

Finally, as a matter of statutory construction, this

Court has already held that other specialized con-

straints on the review of tax challenges, like the Tax

Injunction Act do not apply when the tax at issue is

unlawful on its face. See Enochs v. Williams Packing

& Navigation Co., 370 U.S. 1 (1962). Neither should |

they apply here.

3. The Tucker Act remedy for an Export Clause

violation includes interest. The plain terms of the in-

terest statute, 28 U.S.C. 2411, embrace “any judg-

ment” of “any court” rendered for “any overpayment”

“in respect of’ an internal revenue tax, and this

Court has directed that “overpayment” be broadly in-

terpreted.

Moreover, the Export Clause, like the Fifth

Amendment’s Takings Clause, would require the pay-

ment of interest in its own right. The only means of

enforcing the Export Clause’s absolute prohibition on

the use of exports as a source of revenue is to return

to the taxpayer the full value of funds unconstitu-

tionally exacted. To permit the government to enjoy

the time value of export taxes would sanction the

very revenue usage of exports that the Export Clause

flatly proscribes.

ARGUMENT

CONSTITUTIONAL CLAIMS UNDER THE EX-

PORT CLAUSE FOR MONETARY COMPENSA-

TION AND INTEREST MAY PROPERLY BE

BROUGHT UNDER THE TUCKER ACT

The central premise of the government’s argument

is that this case involves an ordinary tax challenge to

an ordinary exercise of Congress’s established taxing

power, which Congress plainly intended to be adjudi-

cated through its general administrative tax refund

scheme. There are two fundamental flaws with that

position.

—

First, the starting premise is all wrong. This case

is about the vindication of a constitutional claim un-

der the Export Clause that, by its terms, denies the

very assumption of tax authority and routine tax

treatment that the government presupposes. Con-

gress enacted the Tucker Act as the specific remedial

scheme for constitutional claims, and, because the

Export Clause is money-mandating, the Companies’

Export Clause claim is remediable under the Tucker

Act. .

Second, Congress did not expressly withdraw that

Tucker Act remedy for Export Clause claims and, in

fact, the Tucker Act is better fitted to redressing such

claims. There is substantial doubt that Congress has

the constitutional authority to carve Export Clause

claims out of the Tucker Act and to subject them to

distinct burdens, delays, and constraints in an ad-

ministrative tax scheme that is predicated on the

very existence of the governmental tax power and the

revenue-protective interests that the Export Clause

renounces. Particularly when the export tax at issue

is so plainly beyond Congress’s tax authority that it

cannot colorably be defended as constitutional, Con-

gress likely intended claims aimed at undoing that il-

legitimate exaction to proceed under established

statutory provisions for enforcing the Constitution.

A. The Unique And Comprehensive Pre-

clusion Of Congressional Authority In

The Export Clause Gives Rise To A

Cause Of Action Enforceable Under .

The Tucker Act

1. The Tucker Act Remedies Violations of

Money-Mandating Constitutional Provisions

While the government portrays this as a case of

taxpayers attempting to circumvent the administra-

tive tax scheme (Br. 12-29), that gets the issue back-

wards. The Companies seek compensation for the

violation of a constitutional right guaranteed by the

Export Clause. Congress enacted the Tucker Act

specifically to resolve such constitutional claims.

That Act regulates and controls when a particular

subset of claims — those that are both for money

damages and “founded * * * upon the Constitution” or

federal law — can be prosecuted in federal court

against a particular defendant — the United States.

28 U.S.C. 1346(a)(2), 1491(a)(1). Congress further .

identified which courts under which circumstances

should have jurisdiction over those claims, giving

federal district courts jurisdiction only when the

amount in controversy is less than $10,000, 28 U.S.C.

1346(a)(2), and assigning all other such claims to the

Court of Federal Claims, 28 U.S.C. 1491(a)(1), unless

they fall within the exclusive jurisdiction of another

specialized court, 28 U.S.C. 1491(c). Congress also

adopted a specific six-year statute of limitations that

it considered to be appropriate for the preservation

and prosecution of money-mandating constitutional

claims. 28 U.S.C. 2501. Enactment of the Tucker

Act, moreover, postdates Congress’s adoption of the

administrative tax refund scheme.5 The Tucker Act

thus constitutes a comprehensive remedial scheme

for “any substantive right enforceable against the

United States for money damages.” United States v.

Testan, 424 U.S. 392, 398 (1976).

2. The Export Clause Mandates Monetary

Compensation for its Violation

A source of substantive law is money-mandating if

it “can fairly be interpreted as mandating compensa-

tion by the Federal Government for the damages sus-

tained.” United States v. Mitchell, 463 U.S. 206, 218

(1983). That “fair interpretation’ rule demands a

showing demonstrably lower than the standard for

the initial waiver of sovereign immunity.” United

States v. White Mountain Apache Tribe, 537 U.S. 465,

472 (2003). “[A] fair inference” that damages were

intended “will do.” Jd. at 473. The Export Clause’s

unqualified and absolute prohibition on economic di-

minishment through taxation and complete preclu-

sion of exports as a source of federal revenue “permits

a fair inference,” ibid., that the law provides mone-

tary relief.®

5 The original version of Section 7422 was enacted in 1866 in

substantially its current form. See Revenue Act of 1866, ch.

184, § 19, 14 Stat. 98, 152; see also Flora v. United States, 362

U.S. 145, 155 n.16 (1960). The Tucker Act was not enacted until

two decades later. See Act of Mar. 3, 1887, ch. 359, 24 Stat. 505,

505-08.

6 The government’s suggestion (Br. 34) that the “fairly inter-

preted” standard applies only to the enforcement of statutes and

regulations under the Tucker Act is without merit. The Tucker

Act’s statutory text provides no basis for adopting two different

legal tests for sources of law that the statute treats as equiva-

lents. See, e.g., Mitchell, 463 U.S. at 216-217 (a “claim invoking

a. The Export Clause is a unique and

uniquely comprehensive preclusion

of congressional tax power

“(T]he Export Clause’s simple, direct, unqualified

prohibition,” United States v. U.S. Shoe Corp., 523

U.S. 360, 368 (1998), is as comprehensive a preclu-

sion of congressional power as its language suggests.

The Clause “strictly prohibits any tax or duty,”

whether “discriminatory or not, that falls on exports

during the course of exportation.” United States v.

IBM Corp., 517 U.S. 843, 848 (1996). The prohibition

applies both to direct and indirect burdens on ex-

ports, and includes not just the taxation of imports

themselves, but also the taxation of activities “em-

braced in exportation or any of its processes.” Wil-

liam E. Peck & Co. v. Lowe, 247 U.S. 165 (1918). See

also A.G. Spalding & Bros. v. Edwards, 262 U.S. 66, -

69-70 (1923) (invalidating tax on sales to export car-

rier); Thames & Mersey Marine Ins. Co. v. United

States, 237 U.S. 19, 27 (1915) (tax on marine insur-

ance unconstitutional because insurance “is one of

the necessities of exportation”); United States v.

Hvoslef, 237 U.S. 1, 17 (1915) (tax on ship charters

“was in substance a tax on the exportation”); Fair-

bank v. United States, 181 U.S. 283, 294 (1901) (in-

validating tax on bills of lading as “in effect a duty on

the article transported”).’

the Constitution, a federal statute, or a regulation is cognizable

under the Tucker Act” if “the source of substantive law” is

money-mandating).

7 The Export Clause, however, does not bar non-

discriminatory taxes on “pre-export goods and services,” or on

“activities only tangentially related to the export process.” JBM,

The Export Clause thus is not a mere limitation on

an otherwise plenary grant of taxing power, like the

constitutional requirements of uniformity for “Duties,

Imposts and Excises,” U.S. Const. Art. I, § 8, cl. 1,

and apportionment for “Tax{es]” (other than the in-

come tax), U.S. Const. Art. I, § 9, cl. 4 & Amend. XVI.

Those (and other) constitutional limitations merely

constrain how Congress exercises its granted tax au-

thority. The Export Clause, by contrast, is a straight-

forward and unyielding “restriction on the power of

Congress” that carves one particular economic activ-

ity completely out of Congress’s power and flatly

“disallows any attempt to raise federal revenue from

exports.” JBM, 517 U.S. at 848, 859 (emphasis

_ added). Indeed, this Court has unanimously ex-

plained that the Clause’s unique character as a “di-

rect [and] unqualified prohibition on any taxes or du-

ties distinguishes it from other constitutional limita-

tions on governmental taxing authority” by “com-

pletely denying to Congress the power to tax exports

at all.” U.S. Shoe, 523 U.S. at 360.

The Framers “fully intended the breadth of scope

that is evident in the language.” JBM, 517 U.S. at

860. The Framers, of course, well understood the

federal revenue failings of the Articles of Confedera-

tion and the imperative of independent taxing au-

thority for the national government.* That makes it

517 U.S. at 850; see Cornell v. Coyne, 192 U.S. 418, 427 (1904);

Turpin v. Burgess, 117 U.S. 504, 507 (1886); Pace v. Burgess, 92

U.S. 372, 375 (1875).

8 See, e.g., IBM, 517 U.S. at 874 (Kennedy, J., dissenting)

(citing R. Paul, Taxation in the United States 4-5 (1954)); Hylton-

v. United States, 3 U.S. (3 Dall.) 171, 178 (1796) (Paterson, J.);

The Federalist No. 30 (Alexander Hamilton).

all the more notable that export taxes emerged from

the constitutional drafting and ratification process as

the one and “only one exception” to that authority,

Fairbank, 181 U.S. at 296, and were put completely

beyond the reach of Congress’s affirmative power.

See U.S. Shoe, 523 U.S. at 368 (noting uniqueness of

the Export Clause’s preclusion of congressional ac-

tion); Fairbank, 181 U.S. at 292-293.

Fears of regional discrimination in export tax bur-

dens and of the potentially crippling economic conse-

quences of export taxes inspired virulent and un-

bending opposition, with many members of the Con-

stitutional Convention insisting that empowering

Congress to tax exports would be a constitutional

deal-breaker and “would shipwreck the whole.” 2

Max Farrand, ed., The Records of the Federal

Convention of 1787 (“Convention Records”) 305 (1937)

(Mr. Sherman) (Aug. 16, 1787). Indeed, so unyield-

® See Hvoslef, 237 U.S. at 15 (Export Clause “was one of the

compromises which entered into and made possible the adoption

of the Constitution”); 2 Convention Records 359 (Mr. William-

son) (Aug. 21, 1787) (if the legislature were given the power to

tax exports, “it would destroy the last hope of an adoption of the

plan”); 1 Convention Records 592 (July 12, 1787) (General Pink-

ney expressed “alarm[}] when the taxation of exports was men-

tioned”); 2 Convention Records 305 (Aug. 16, 1787) (“Mr. Gerry

thought the legislature could not be trusted with such a power.

It might ruin the Country. It might be exercised partially, rais-

ing one and depressing another part of it.”); ibid. (“Mr. Mercer

was strenuous against giving Congress power to tax exports.

Such taxes were impolitic, as encouraging the raising of articles

not meant for exportation.”); id. at 359 (Mr. Elseworth) (Aug. 21,

1787) (“The taxing of exports would engender incurable jealous-

ies.”); ibid. (Mr. Gerry) (he “was strenuously opposed to the

power over exports * * * [as] [i]t will enable the Gen! Govt to op-

press the States, as much as Ireland is oppressed by Great Brit-

ing and far-reaching was this opposition that propos-

ais to require a super-majority before taxing exports

or to ban them only when imposed for “the purpose of

revenue” were defeated. 2 Convention Records 359

(Aug. 21, 1787). The Framers thus intended “not

merely that exports should not be made a source of

revenue to the national government, but that the na-

tional government should put nothing in the way of

burden upon such exports.” Fairbank, 181 U.S. at

292-293. 10

Accordingly, after heated debate, the Framers re-

solved, as the Constitution’s text reflects, that con-

gressional power be “wholly taken away to intermed-

dle with the subject of exports.” Joseph Story, 2

Commentaries on the Constitution § 1011 (1833). In

that “great point[] the hands of the Legislature were

_ absolutely tied.” Convention Records 220 (Mr. King)

(Aug. 8, 1787). Without that explicit constitutional

protection for exports, “the Constitutional Convention

would have imploded.” Erik M. Jensen, The Export

Clause, 6 Fla. Tax Rev. 1, 3 (2003).

ain”); ibid. (“Mr. Butler was strenuously opposed to a power

over exports; as unjust and alarming to the staple States”); id.

at 361 (Mr. Sherman) (Aug. 21, 1787) (“It is best to prohibit the

National legislature in all cases.”).

10 See Hylton, 3 U.S. at 176 (Paterson, J.) (“It was, however,

obviously the intention of the framers of the Constitution, that

Congress should possess full power over every species of taxable

property, except exports.” (emphasis added)); id. at 174 (Chase,

J.) (“general power is given to Congress” over taxes “without any

restraint, except only on exports”) (emphasis added); id. at 181

(Iredell, J.) (exports are a “particular exception” to congressional

taxing power).

b. The Export Clause’s ban on the use

of exports as a source of revenue

requires monetary compensation

for its violation

By its plain terms and historic design, the Export

Clause is a constitutional protection against a par-

ticular category of monetary exactions and, more spe-

cifically, is a textual immunity against Congress’s use

of the tax power to deprive exporters of money or to

use a particular activity — exporting — as a source of

federal revenue. That absolute prohibition against

both the imposition of the tax and the retention of

funds as a source of revenue creates a “fair infer-

ence,” White Mountain, 537 U.S. at 473, that the Ex-

port Clause requires the repayment of funds unlaw-

fully exacted. That is because the core nature of an

Export Clause claim “seek[s] the return of money

paid by [the plaintiff] to the Government,” which be-

speaks a money-mandating claim: See Testan, 424

U.S. at 400; see also id. at 401 (where “the plaintiff is

* * * suing for money improperly exacted or re-

tained,” no further inquiry into money-mandating

character is necessary).

This Court’s decision in U.S. Shoe, moreover,

- seemed to take as a given that the Export Clause

mandates relief for its violation. In determining that

the Harbor Maintenance Tax, 26 U.S.C. 4461, vio-

lated the Export Clause, this Court expressly held

that the Court of International Trade properly exer-

cised jurisdiction under 28 U.S.C. 1581(i). Id. at

366.11 That provision, like the Tucker Act, “is in-

tended only to confer subject matter jurisdiction upon

the court, and not to create any new causes of action

not founded on other provision of law.” H.R. Rep. No.

1235, 96th Cong., 2d Sess. 47 (1980); see also Hu-

mane Soc’y v. Clinton, 236 F.3d 1320, 1328 (Fed. Cir.

2001). By expressly upholding jurisdiction for mone-

tary relief against the United States in U.S. Shoe,

this Court thus necessarily assumed — without any

noted disagreement by either the Solicitor General or

any Justice of this Court — that the Export Clause

gives rise to an action for relief. See No. 97-372, U.S.

Br., U.S. Shoe, supra (acceding to jurisdiction).!2

There was good reason for that lack of objection.

The Export Clause prohibits the financial diminish-

ment of exporters’ revenues in the same manner that

the Judicial Compensation Clause, U.S. Const. Art.

Ill, § 1, protects against the financial diminishment

of judicial salaries. And this Court has unanimously

expressed “no doubt whatever as to * * * [the jurisdic-

tion] of the District Court” under the Tucker Act over

a suit by federal judges alleging the unconstitutional

11 Section 1581(i) gives the Court of International Trade ex-

clusive jurisdiction over “any civil action commenced against the

United States *** that arises out of any law of the United

States providing for * * * revenue from imports or tonnage” and

the “administration and enforcement” of such a law. 28 U.S.C.

1581(i)(1) & (4).

12 The government overreads U.S. Shoe when it argues (Br.

32) that this Court expressly foreclosed Tucker Act jurisdiction

in a manner that is somehow relevant to this case. This Court

explained only that relief under the Tucker Act was unavailable

solely because Congress had textually directed that challenges

to the tax should proceed through the Court of International

Trade. U.S. Shoe, 523 U.S. at 365-66 & n.3.

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reduction of their salaries. United States v. Will, 449

U.S. 200, 210-211 & n.10 (1980).

Indeed, in United States v. Hatter, 532 U.S. 557

(2001), this Court exercised jurisdiction over Tucker

Act claims challenging the imposition of Social Secu-

rity taxes on judicial salaries. The Court did so,

moreover, while acknowledging and without any Jus-

tice questioning the court of appeals’ underlying ju-

risdictional ruling that the Judicial Compensation

Clause is money-mandating and, thus, that the

judges could proceed under the Tucker Act rather

than through the administrative tax refund proce-

dure. See id. at 564; Hatter v. United States, 953

F.2d 626, 628 (Fed. Cir. 1992); see also No. 99-1978,

J.A. 36, Hatter, supra (complaint notes that several of

the judges had not filed administrative refund

claims).!3

While those decisions did not address the precise

jurisdictional question at issue here, the specific con-

sideration of jurisdiction in U.S. Shoe and Will and

the assumption of Tucker Act jurisdiction in Hatter

constitute a pattern of jurisdictional exercise that

cannot be disregarded lightly.'4

13 In Hatter, the Solicitor General abandoned before this

Court the argument it made in the Claims Court and makes

here — that a challenge to taxes is not cognizable under the

Tucker Act and has to proceed through the administrative tax

refund procedure. See Hatter v. United States, 21 Cl. Ct. 786,

788-789 (1990), rev'd, 953 F.2d 626 (Fed. Cir. 1992).

14 See Eastern Enters. v. Apfel, 524 U.S. 498, 522 (1998)

(plurality) (Court should not “disregard the implications of an

exercise of judicial authority assumed to be proper in previous

cases.”); Brown Shoe Co. v. United States, 370 U.S. 294, 307

(1962).

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Like the Judicial Compensation Clause and the

Takings Clause, the Export Clause protects a purely

pecuniary and economic interest in “mandatory and

unconditional terms.” Hatter, 953 F.2d at 628.5 A

critical function of the Export Clause, moreover, is to

“disallow[] any attempt to raise federal revenue from

exports,” IBM, 517 U.S. at 859 (emphasis added), a

purpose unique to the Export Clause. That categori-

cal excision of the government’s power to exact funds’

and to use a particular activity as a source of revenue

can only be meaningfully enforced if monetary com-

pensation — removal of the unconstitutional tax reve-

nues from the Treasury — is provided for a violation

of the Clause.'6 Liability for monetary compensation

thus “naturally follows” from the Export Clause’s

protection against financial diminution by taxation

and “furthers the purpose[] of’ the Export Clause to

wall off exports as a source of revenue. Mitchell, 463

US. at 226, 227.17

16 This Court has long held that the Takings Clause provides

a substantive cause of action against the United States under

the Tucker Act. See Regional Rail Reorganization Act Cases,

419 U.S. 102, 126 (1974); cf. Jacobs v. United States, 290 U.S.

13, 16 (1933) (“[The Tucker Act claim] rested upon the Fifth

Amendment. Statutory recognition was not necessary.”).

16 Cf. McKesson Corp. v. Division of Alcoholic Beverages &

Tobacco, 496 U.S. 18, 39 (1990) (if a tax were “beyond the

State’s power to impose” or “taxpayers were absolutely immune

from tax, * * * [t]he State would have had no choice but to ‘undo’

the unlawful deprivation by refunding the tax previously paid

under duress”); Ward v. Love County, 253 U.S. 17, 24 (1920) (“no

statutory authority was essential to enable or require the county

to refund the money” when a tax was unconstitutionally col-

lected in contravention of controlling Supreme Court precedent).

17 The government stresses (Br. 33) that the Fifth Amend-

ment’s Takings Clause and the Judicial Compensation Clause

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Indeed, the constitutional history of the Export

Clause precludes any suggestion that the Framers in-

tended the Clause to be merely hortatory or that ex-

porters would be helpless to undo the effects of

unlawful exactions by obtaining monetary compensa-

tion for such transgressions. Southern delegates to

the Constitutional Convention were particularly con-

cerned that their exporters would become victims of

“targeted duties” because of the South’s compara-

tively smaller population and its status as “the pri-

mary exporter of goods, largely textiles, tobacco, and

;

related products.” Jensen, supra, at 8; see also 2

Convention Records 307 (Mr. Gerry). That concern

extended beyond the harm caused by the lost tax

funds alone and included fears about the potentially

use the term “compensation,” which the Export Clause does not.

That is true, but proves nothing. The constitutional question is

whether the provision at issue can fairly be understood to man-

date monetary relief for a violation, Mitchell, 463 U.S. at 218,

which is a functional, not a linguistic, inquiry, see United States

v. Navajo Nation, 537 U.S. 488, 506 (2003) (“the availability of

such damages may be inferred”); see also Bowen v. Massachu-

setts, 487 U.S. 879, 923 (1988) (Scalia, J., dissenting) (to create

Tucker Act jurisdiction, law need “not, in so many words, man-

date damages”). Indeed, there is no question that the Four-

teenth Amendment’s Due Process Clause compels monetary re-

lief in the particular circumstance of state governmental takings

of property, even though the word “compensation” appears no-

where in that constitutional provision. See Chicago, B. & Q.

R.R. v. City of Chicago, 166 U.S. 226, 239 (1897). Moreover, the

operative language of the Judicial Compensation Clause is not,

as the government argues (Br. 33), the “language requiring the

payment of funds from the federal treasury,” but the mandatory

prohibition of diminishment. See Will, 449 U.S. at 18-19; Hat-

ter, 953 F.2d at 628. Furthermore, the Takings Clause’s “com-

pensation” language makes it less, not more, financially protec-

tive than the Export Clause. U.S. Shoe, 523 U.S. at 368-369.

;

“

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devastating economic harm that export taxes could

cause by depressing prices in the domestic market for

goods the exporters could no longer sell competitively

overseas. See James Madison, Notes of Debates in

the Federal Convention of 1787, at 501 (Mr. Clymer)

(Aug. 21, 1787) (“The middle States may apprehend

an oppression of their wheat flour, provisions &c. and

with more reason, as these articles were exposed to a

competition in foreign markets not incident to Tobo.

rice &c.”). Joseph Story echoed that concern: “The

obvious object of these provisions is, to prevent any

possibility of applying the power to lay taxes, or regu-

late commerce, injuriously to the interests of any one

state, so as to favour or aid another.” 2 Commentar-

ies on the Constitution, supra, § 1011, at 469-470. “If

congress were allowed to lay a duty on exports from

any one state,” Story warned, “it might unreasonably

injure, or even destroy, the staple productions, or

common articles of that state.” Ibid. For that reason,

Story concluded that the Export Clause’s protection

“extends not only to exports, but to the exporter.” Id.

§ 1012 (emphasis added). “Congress can no more

rightfully tax the one, than the other.” Ibid.

Given (i) how critical the Export Clause’s protec-

tion was to adoption of the Constitution, (ii) the very

specific concern that export taxes not provide a

source of revenue for the government, JBM, 517 U.S.

at 859, and thus not be retained in the federal Treas-

ury, and (ili) the particularized pecuniary interests

the Clause was designed to protect against congres-

sional action, the Framers would have considered fi-

nancial compensation to be necessary and, indeed,

indispensable to prevent Congress from retaining ex-

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port taxes as “federal revenue,” ibid., reaping the fi-

nancial benefits of its own defiance of an explicit and

absolute foreclosure of congressional power, and con-

ditioning the exporters’ right to remuneration on

Congress's good graces. The Framers well knew that

_ “the power to tax involves the power to destroy,”

M’Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 431

(1819) (Marshall, C.J.), and for that very reason

many conditioned their support for the Constitution

on jealous protection of exporters against federal

taxation. While Justice Holmes later assured that

“[t]he power to tax is not the power to destroy while

this Court sits,” Panhandle Oil Co. v. Mississippi; 277

U.S. 218, 223 (1928) (Holmes, J., dissenting), over-

ruled in part by Alabama v. King & Boozer, 314 U.S.

1 (1941), that would be an empty assurance if the vic-

tims of congressional defiance of the Constitution

could not obtain compensation for the harm caused

by a constitutionally forbidden tax. See Marbury v.

Madison, 5 U.S. (1 Cranch) 137, 179 (1803) (“Suppose

a duty on the export of cotton, of tobacco, or of flour;

and a suit instituted to recover it. Ought judgment to

be rendered in such a case? Ought the judges to close

their eyes on the constitution, and only see the

law?”).

3. Tax Legislation Cannot Alter the Export

Clause’s Money-Mandating Character

The United States does not appear to dispute that,

at bottom, the Export Clause is money-mandating,

because it concedes (Br. 34) that, if there were no

statutory tax-refund scheme, “[t]he Export Clause

might be enforceable by alternative means under the

Tucker Act.” The government’s argument instead

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(see, e.g., Br. 35) is that Congress’s enactment of tax

legislation strips the constitutional provision of its

fundamentally money-mandating character. That

cannot be right.

To begin with, whether a constitutional provision

is money-mandating is a question of constitutional

law — one for this Court to resolve. See, e.g., First

English Evangelical Lutheran Church v. County of

Los Angeles, 482 U.S. 304, 315 (1987); Jacobs v.

United States, 290 U.S. 13, 16 (1933) (“Statutory rec-

ognition [i]s not necessary.”); see generally Marbury,

5 U.S. at 177 (“[I]t is emphatically the province and

duty of the judicial department to say what the law

is.”). Congress cannot change the meaning of the

Constitution through legislation. See, e.g., City of —

Boerne v. Flores, 521 U.S. 507, 536 (1997); Baltimore

& Ohio R.R. v. United States, 298 U.S. 349, 368

(1936). The Export Clause was intended either to

have the particular force and effect for which it was

adopted, protecting exporters and requiring the re-

moval of unlawfully collected funds from the revenue

stream, or to be an unenforceable admonition, the en-

forcement of which was left entirely in the hands of

the Congress the Clause purports to bind. Either

way, the Constitution’s meaning does not turn on and

off as Congress passes and repeals remedial statutes.

That is particularly true when, as here, the consti-

tutional provision at issue is itself a specific negation

of congressional authority to act. It would stand the

Constitution on its head to conclude that Congress

can use its general taxing authority to alter the

money-mandating scope or character of a constitu-

tional provision that is itself an explicit exception to

| ;

‘

and wholesale denial of legislative authority. See 2

Commentaries on the Constitution, supra, § 1011

(Congress’s power is “wholly taken away to inter-

meddle with the subject of exports”); see also Hvoslef,

237 U.S. at 13 (Export Clause forbids “legislation

nominally conforming to the constitutional restric-

tion, but in effect overriding it”).

The government relies heavily (Br. 35-38) on this

Court’s modern hesitation to imply judicially new

private rights of action under the Constitution pur-

suant to Bivens v. Six Unknown Named Agents of

Fed. Bureau of Narcotics, 403 U.S. 388 (1971). See,

e.g., Wilkie v. Robbins, 127 S. Ct. 2588, 2597 (2007).

But that mixes apples and oranges. The question

under Bivens is whether the Court should reach out

as a “common-law tribunal” and, without any specific

congressional direction, craft a tort remedy against

individual federal officials in their personal capacities

that evades long-established sovereign immunity

principles and triggers sensitive separation-of-powers

concerns. See Wilkie, 127 S. Ct. at 2598, 2600.

Moreover, under Bivens, the Court takes such a step

based on nothing more than an instrumental hunch

(for which the judiciary is not particularly well-

suited) about the effective deterrence of government

officials, combined with a very “general” assignment

of jurisdiction to decide cases arising under the Con-

stitution, see 28 U.S.C. 1331, that itself gives no sig-

nal that Congress intended any remedial litigation

against the government or government officials. Cor-

rectional Servs. Corp. v. Malesko, 534 U.S. 61, 66

(2001); see Wilkie, 127 S. Ct. at 2598.

;

Here, the question is altogether different. In the

Tucker Act, 28 U.S.C. 1346(a)(2) & 1491(a), Congress

has already made the judgment that federal courts

should adjudicate claims against the United States

for damages arising from money-mandating provi-

sions of the Constitution. Congress has picked the

defendant — the United States — and has waived the

United States’ sovereign immunity from suit and as-

signed jurisdiction to the federal courts. Accordingly,

Congress has specifically charged the federal courts

with determining, for purposes of Tucker Act juris-

diction, whether a constitutional provision is money-

mandating — a straightforward question of constitu-

tional interpretation for which the judiciary is

uniquely well-suited. See Marbury v. Madison, su-

pra. Congress having done so, the “federal courts

have a ‘virtually unflagging obligation * * * to exer-

cise the jurisdiction given them,” Quackenbush uv.

Allstate Ins. Co., 517 U.S. 706, 716 (1996), and “must

be careful not to assume the authority to narrow the

waiver that Congress intended, or construe the

waiver unduly restrictively,” Bowen v. City of New

York, 476 U.S. 467, 479 (1986).18

Bush v. Lucas, 462 U.S. 367 (1983), and Schweiker

v. Chilicky, 487 U.S. 412 (1988), are of no help to the

government (see Pet. Br. 36-37). In those cases, the

Court declined, in the absence of any legislative di-

18 By the same token, the fact that this Court is equally re-

luctant to imply statutory causes of action, see Alexander uv.

Sandoval, 532 U.S. 275, 287 (2001), had no bearing on the

Court’s separate determination that a statute need only create a

“fair inference” that monetary relief is available to trigger

Tucker Act jurisdiction, White Mountain, 537 U.S. at 472-473.

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rection, to infer a Bivens remedy that would have

conflicted with a pre-existing statutory remedy. See

Schweiker, 487 U.S. at 423-425 (social security

claims); Lucas, 462 U.S. at 388-388 (federal employee

grievances). Here, by contrast, the court of appeals

simply followed Congress’s statutory command and

undertook the question of constitutional interpreta-

tion statutorily assigned to it, attaching to its deter-

mination that the Export Clause is money-mandating

only the jurisdictional consequences that Congress it-

self specifically prescribed in 28 U.S.C. 1491(a).

Chilicky and Lucas are particularly inapt for a

second reason. Those cases each found “special fac-

tors counseling hesitation” in the creation of a Bivens

remedy, Chilicky, 487 U.S. at 423; Lucas, 462 U.S. at

377, due to Congress’s unique competence and exper-

tise in crafting a remedial scheme for the particular

claims at issue. But when it comes to claims enforc-

ing the Export Clause — particularly claims where the

unconstitutionality of Congress’s action is so patent

that the government makes no effort to defend it —

Congress lacks any relevant expertise or competence

and, in fact, has proven its disinclination, and per-

haps even its institutional inability, to police cate-

gorical prohibitions on its own power. Instead,

throughout the Nation’s history, it has been this

Court that “has strictly enforced the Export Clause’s

prohibition against federal taxation of goods in ex-

port,” IBM, 517 U.S. at 849, against congressional in-

cursion. See U.S. Shoe; IBM; Thames & Mersey;

Hvoslef; Fairbank. Where, as here, the Constitution

specifically and comprehensively disarms Congress

from acting, “special factors counsel[] hesitation,” Lu-

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cas, 462 U.S. at 377, in permitting Congress to divert

challenges to its facially unconstitutional actions

away from the Tucker Act’s established remedial

scheme for violations of money-mandating constitu-

tional prohibitions, and into a taxing scheme that is

predicated on the very regulatory tax power that the

Export Clause expressly rejects. In short, the exis-

tence of a refund scheme enacted as part of the tax-

ing power that Congress does possess cannot change

the money-mandating character of a constitutional

provision defining the taxing power that Congress

does not possess.

B. The Tucker Act Remedy Has Not Been

Withdrawn And Is The Remedial

Scheme That Best Enforces The Export

Clause

1. The Tucker Act Remedy Has Not Been

Clearly Withdrawn

When, as here, the Tucker Act is available to en-

force a constitutional provision, this Court requires

Congress to express “an unambiguous intention to

withdraw the Tucker Act remedy.” Ruckelshaus v.

Monsanto Co., 467 U.S. 986, 1019 (1984). The statute

must manifest the “clear and unmistakable congres-

sional intent [that is] necessary to withdraw Tucker

Act coverage.” Preseault v. ICC, 494 U.S. 1, 14

(1990); cf. Whitman v. Department of Transp., 126 S.

Ct. 2014, 2015 (2006).

The administrative refund scheme does not ex-

pressly or unambiguously withdraw Tucker Act ju-

risdiction over Export Clause claims. Instead, the

government argues that the administrative refund

scheme is mandatory because it is a more “finely re-

ticulated” regime (Br. 7, 8, 13, 25) than the Tucker

Act. That is incorrect on three levels.

To begin with, this Court’s most recent decisions

have twice denominated those provisions the type of

“general” remedial provisions that are themselves

displaced by statutory schemes that have been spe-

cifically tailored to a particular type of tax claim,

similar to the Tucker Act’s unique capacity to vindi-

cate the Export Claus’s sui generis substantive con-

straint on congressional tax power. See Hinck uv.

United States, 127 S. Ct. 2011, 2016-17 (2007); EC

Term of Years Trust v. United States, 127 S. Ct. 1763, ©

1766-68 (2007).

In addition, the rule that the more general statute

is preempted is not iron-clad and only applies “in

most contexts.” Hinck, 127 S. Ct. at 2015. When, as

here, Congress has indisputably transgressed an ex-

press and unqualified preclusion of its own power,

there is “a good countervailing reason” for “[r]esisting

the force of’ an alternative remedial scheme that was

specifically designed to protect the very type of reve-

nue interest that the Export Clause rejects. EC Term

of Years, 127 S. Ct. at 1767.

Finally, and in any event, the question is not, as

the government assumes, which statutory regime has

the largest number of rules. It is which statutory

provision is “better-fitted” to resolve the type of claim

at issue, EC Term of Years, 127 S. Ct. at 1767, and

whether “special considerations required different

treatment” for the claim, United States v. A.S. Krei-

der Co., 313 U.S. 443, 447 (1941). See also Amell v.

United States, 384 U.S. 158, 159, 165-166 (1966) (con-

tractual claims asserted by government maritime

te) Se ee EO, SD Oe ee

workers could be prosecuted under the Tucker Act

rather than the Suits in Admiralty Act, which “pro-

vides only two years for claimants to file suit, and

also requires exhaustion of administrative remedies,”

because the claims were more akin to civil servants’

claims than to maritime claims). Resolution of that

question “should go in the direction of constitutional

policy.” Regional Rail Reorganizaton Act Cases, 419

U.S. 102, 133 (1974).

The Tucker Act suit is better designed to enforce

the Export Clause and is the remedial route Congress

most likely intended, for two reasons. First, there is

substantial constitutional doubt about Congress’s au-

thority to carve Export Clause claims out of the

Tucker Act and impose unique constraints and limi-

tations on their vindication as part of Congress’s gen-

eral authority to regulate tax litigation, and the stat-

ute should be construed to avoid that constitutional .

question.'9 Second, Congress did not clearly express

its intent to displace the Tucker Act remedy for this

unique type of constitutional claim, particularly

where the taxing provision is facially and indisputa-

bly unconstitutional. 3

19 See INS v. St. Cyr, 533 U.S. 289, 299-300 (2001) (Where

“an otherwise acceptable construction of a statute would raise

serious constitutional problems, and where an alternative inter-

pretation of the statute is ‘fairly possible,” this Court “is obli-

gated to construe the statute to avoid such problems.”) (quoting

Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 341 (1936)

(Brandeis, J., concurring)).

Oe ee eR ak. Pe PEN re Pe ee Fe ee te ees OLS Me, SESE ee

2. Congress's Power to Impose Its Administra-

tive Tax Scheme on Export Clause Claims Is

Constitutionally Doubtful

The government asserts time and again that the

administrative tax refund scheme should contro] be-

cause its procedures were deliberately crafted and

“uniquely tailored” (Br. 7) by Congress to constrain

tax challenges in a way that protects the govern-

ment’s interests in revenue collection and “fiscal

planning” (Br. 40; see id. at 24, 38-39). But that is

exactly the problem. That government-protective ap-

proach to tax controversies may be all well and good

for challenges to taxes that at least arguably fall

within Congress’s otherwise plenary taxing author-

ity. The government, however, identifies no basis for

imputing to Congress the constitutionally dubious in-

tention to extend its confessedly pro-government and

“revenue-protective” process, Hibbs v. Winn, 542 U.S.

88, 104 (2004), into areas that the Constitution spe-

cifically walls off from congressional tax authority

and revenue usage.”°

20 See Snyder v. Marks, 109 U.S. 189, 194 (1883) (noting that

the tax refund scheme is a “system of corrective justice” with

“stringent measures” designed to protect revenue); Brennan v.

Southwest Airlines Co., 134 F.3d 1405, 1411 (9th Cir.) (purpose

of Section 7422 is to “protect the Treasury”), as amended, 140

F.3d 849 (1998); Press Release, The White House, Office of the

Press Secretary (Jan. 31, 1996), reprinted in Tax Analysts, Ad-

ministration Urges Treasury to Study Changes for Refund Limi-

tations Cases, Tax Notes Today, Feb. 2, 1996 (President ac-

knowledges that the refund scheme’s time limitations “at times

may produce harsh results”); see generally Kristy M. Bowden,

Protective Claims for Refund: Protecting the Interests of Taxpay-

ers and the IRS, 56 Me. L. Rev. 149 (2004) (discussing complexi-

ties in the operation of the administrative refund scheme, in-

;

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No doubt, the Necessary and Proper Clause em-

powers Congress to establish administrative and ju-

dicial procedures and to otherwise “use all proper and

suitable means, not specially prohibited, in the rais-

ing and disbursement of the revenue.” M’Culloch, 17

U.S. at 324.2! The problem here is that sweeping ex-

port taxes within the general taxing authority is

“specially prohibited,” and the end of raising revenue

through export taxation is not “legitimate,” is not

“within the scope of the constitution,” and does not

“consist with the letter,” let alone, the “spirit,” of the

Constitution’s careful insulation of exports from Con-

gress’s taxing power. Id. at 324, 421. Congress’s gen-

eral taxing authority thus does not empower it to

erect tax-specific procedural barriers to enforcement

of the Export Clause’s explicit preclusion of congres-

sional tax power.

Nor does the Export Clause vest Congress with the

authority to impose pro-government and revenue-

protective administrative procedures on export tax

challenges. In fact, it does the opposite. This Court

“a

;

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‘

cluding unpublished procedures, that result in denials of re-

funds to diligent taxpayers); see id. at 152 (in one context,

“courts are finding that the only option available to the taxpayer

to maintain their right to a refund was to follow a procedure

that does not exist in the Internal Revenue Code or in its regu-

lations”).

21 See Snyder, 109 U.S. at 194 (tax recovery scheme was “en-

acted under the right belonging to the government to prescribe

the conditions on which it would subject itself” to suit “in the

collection of its revenues”); Cary v. Curtis, 44 U.S. (3 How.) 236,

245 (1845) (the constitutional power to impose and collect reve-

nue includes the power to identify procedures for presenting

“any conflict which might arise” and “to prescribe the manner of

trial” for its resolution).

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has twice explained that, just as affirmative grants of

power to Congress should be “construed as to give full

efficacy to those powers,” the Export Clause’s explicit

restriction on congressional power should “in like

manner * * * be enforced in accordance with its letter

and spirit, and no legislation can be tolerated which,

although it may not conflict with the letter, destroys

the spirit and purpose of the restriction imposed.”

Hvoslef, 237 U.S. at 15; Fairbank, 181 U.S. at 290.

Indeed, “[iJt would be a strange rule of construction

that language granting powers is to be liberally con-

strued and that language of restriction is to be nar-

rowly and technically construed.” Fairbank, 181 U.S.

at 289. Accordingly, the specificity of the Export

Clause overrides any authority otherwise granted by

the general words of the other taxing clauses or the

Necessary and Proper Clause, and limits Congress to

the enactment of measures that give effect to, rather

than undermine or nullify, the Export Clause’s “sim-

ple, direct, [and] unqualified prohibition.” U.S. Shoe,

523 U.S. at 368. 22

History confirms that the Export Clause sweeps

broadly and proscribes regulating exports and ex-

porters through the tax system. See JBM, 517 U.S. at

859 (Export Clause “specifically prohibits Congress

from regulating” exports through exercises of the tax

power). The Framers specifically considered and re-

22 Congress, accordingly, can provide an administrative re-

fund scheme as an optional means for exporters to vindicate

their Export Clause claims without having to initiate judicial

action, and the Companies in this case, in fact, availed them-

selves of that opportunity with respect to the latest three years

the export taxes were imposed. Pet. 4; Pet. App. 3a.

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jected an amendment that would have limited the

Export Clause’s prohibition to taxes imposed “for the

purpose of revenue.” 2 Convention Records, supra,

359 (Aug. 21, 1787). As this Court explained in Fair- —

bank, that reveals that the Export Clause excludes

exports “not merely * * * [as] a source of revenue,”

but from subjection to Congress’s regulatory tax

power in any manner and for any purpose. 181 U.S.

at 292; see id. at 293 (history of the Clause requires

that the “national government should put nothing in

the way of burden upon such exports”).

While the Tucker Act would give the Export

Clause the same full and fair opportunity for vindica-

tion that other constitutional damages claims against

the United States receive, the administrative tax re-

‘fund scheme would obstruct and substantially un-

dermine, rather than carry into effect, the Export

Clause’s comprehensive withdrawal of congressional

tax power.

First, and at the most elemental level, the refund

scheme’s revenue-protective model stands in diamet-

: rical opposition to the Export Clause’s simple and

E straightforward command “disallow[ing] any attempt

to raise federal revenue from exports.” JBM, 517 U.S.

at 848, 859 (emphasis added). While the financial

impact of proceeding under a revenue-protective

scheme, with its built-in time lag for the govern-

; ment’s interest (see Pet. Br. 24) and risks of proce-

dural bar, see 26 C.F.R. 301.6402-2, may or may not

be significant in any given case, “[t]he question of

power is not to be determined by the amount of the

burden attempted to be cast.” Fairbank, 181 U.S. at

291. If Congress has the power to impose minor, tax-

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Pe eS eee ee RY Re Ne ON ee NL aE Ng: NEON Te AU Sg APE ey Cel g NPE POST Ep TE re PP ROS CCAR EEC Reay IP OE Ma bye eee Ce

specific constraints on the vindication of Export

Clause claims, it equally has the power to impose

disabling limitations. Indeed, “[t]he question is never

one of amount but one of power,” ibid., and the Ex-

port Clause leaves no room for Congress to treat ex-

port taxes like ordinary taxes, or to use its tax power

to regulate exports or exporters.

Second, the refund scheme limits exporters to re-

covering only the measure of funds that were uncon-

stitutionally exacted. There is no provision for recov-

ering the type of economic damages to business that

the Framers were so concerned could result from the

taxation of exports. Consequently, exporters would

be forced to proceed simultaneously on two different

tracks to recover all of their damages for a single con-

stitutional violation. In addition, exporters must

wait at least half a year before even initiating suit to

vindicate their constitutional rights, limit their dam-

ages, and recover their funds, 26 U.S.C. 6532(a)(1),

with the government enjoying all the revenue bene-

fits of the prohibited funds and perhaps collecting

even more in the interim. Indeed, in the Ranger Fuel

case, in which the coal export tax was held to be un-

constitutional, the IRS failed to act at all on the ad-

ministrative refund claim, and the government de-

layed for months after the filing of the complaint, be-

fore “tak[ing] no position on the constitutionality of

the coal excise tax” and requesting further postpone-

ment of the question while the government continued

to try and “determine whether to defend the constitu-

tionality of the coal excise tax,” U.S. Opp. to Pltfs.

Mot. for S. J’ment. at 2, Ranger Fuel Corp. v. United

States, No. 3:98cv370 (E.D. Va.), and, incidentally,

retained and collected more export taxes. To be sure,

some provision is made for interest, but its terms

(like the administrative refund scheme itself) are

sharply skewed in the government’s favor.?°

There is, moreover, no justification for imposing

such limitations on recovery — the net effect of which

is to retain export taxes in the federal revenue — or

administrative hurdles to relief in Export Clause

cases. An agency has no expertise either in questions

of constitutional law or in the resolution of the rele-

vant constitutional facts (such as whether the item

taxed was in the stream of export commerce or quali-

fies as a user fee, see, e.g., U.S. Shoe, 523 U.S. at 367-

69; Cornell v. Coyne, 192 U.S. 418, 428 (1904)). In

addition, when, as here, Congress made explicit its

intent to tax coal exports, see 26 U.S.C. 4221(a), an

administrative agency has no authority to declare the

law unconstitutional.”4

In short, rather than help to “enforce[] [the Export

Clause] in its spirit and to its entirety, Fairbank, 181

U.S. at 289, as the Tucker Act does, the administra-

tive refund scheme would ensure that the govern-

ment will enjoy some (constitutionally proscribed)

23 See 28 U.S.C. 2411 (interest ceases 30 days before refund

check is issued); 26 C.F.R. 301.6611-1(g); 26 U.S.C. 6621(a) (ty-

ing interest rate to federal short-term rate plus specified per-

centage points, while sharply lowering the applicable interest

rate for corporations).

2% Cf. U.S. Shoe, 523 U.S. at 364 (when constitutionality of

tax was challenged, the agency responded “with a form letter”

asserting that the tax was a user fee); Ranger Fuel, 33 F. Supp.

2d at 467-468 (when presented with Export Clause challenge to

the coal tax, the IRS simply took no action for 15 months).

= ye Pe ay he ee ke ee ee at ee ee ee ee ee Le ae eee eae -

revenue benefits no matter how patently unlawful

and indefensible the export tax is.

Third, and to be sure, the Export Clause does not

preclude Congress from subjecting exporters’ claims

to the same general, tax-neutral and revenue-neutral

limitations on recovery as other constitutional provi-

sions, such as the Tucker Act’s six-year statute of

limitations. See 28 U.S.C. 2501. See Block v. North

Dakota, 461 U.S. 273, 292 (1983) (“A constitutional

claim can become time-barred just as any other claim

can.”). But the question here is quite different:

whether, having established a tax-neutral procedure

for the litigation of damages claims arising under the

Constitution, Congress may carve the Export Clause

out for “less liberal[]” treatment (Pet. Br. 27), impos-

ing singularly pro-revenue and _ government-

protective burdens and limitations on that Clause’s

constitutional enforcement, thereby treating that

prohibitory Clause as though it were as amenable tv

regulation through the general tax scheme as claims

under constitutional provisions that grant Congress

taxing power. See Spalding, 262 U.S. at 70 (Export

Clause gives exports “liberal protection”).

Congress cannot. “[DJjoing what the Constitution

permits gives no license to do what it prohibits.” Ev-

ans uv. Gore, 253 U.S. 245, 255 (1920), overruled on

other grounds, Hatter, 532 U.S. at 567-571. Con-

gress’s general power to control constitutional litiga-

tion against the United States must be exercised con-

sistently with Article I’s specific constraints on con-

gressional power, and it cannot impose procedural

constraints on judicial review that, in operation,

weaken or negate the strict prohibitions of the Export

;

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Clause, any more than it could use its affirmative leg-

islative powers to circumvent the constitutionally

prescribed limitations on suspension of the writ of

habeas corpus, Art. I, § 9, cl. 2. See INS v. St. Cyr,

533 U.S. 289 (2001).

In short, the deliberate design of the administra-

tive tax refund scheme is to protect the government’s

retention of revenue, to put claims on a timeframe

that is comfortable for the government (see Pet. Br.

24), to limit the claims permitted, to restrict the

available remedies, and to force individuals to protest

tax payments one at a time, return-by-return. While

Congress’s hands were supposed to be “absolutely

tied” by the Export Clause, JBM, 517 U.S. at 860

(quoting 2 Convention Records, supra, at 220), forcing

all Export Clause claims through that administrative

process would untie Congress’s hands and transform

a comprehensive preclusion of congressional power

into little more than a borrowing program. The gov-

ernment could take all the revenue it wants from ex-

. port taxes and obtain “all the beneficial use of the

fund[s],” subject only to the obligation to pay back

those funds — but no damages and limited interest —

months or years later, as refund claims are processed

piecemeal, year by year, within whatever framework

of restrictions, stringent limitations, and constraints

Congress might choose to impose. Webb’s Fabulous

Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 163-164

(1980).25 At the same time, the failure of the exporter

25 See also Webb’s, 449 U.S. at 162 (“[I]f the [government]

were entitled to the interest, its officials would feel an inherent

pressure and possess a natural inclination to defer distribution,

for that interest return would be greater the longer the fund is

;

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;

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to comply with any of the “procedural requirements

on postdeprivation relief’ that Congress has broad

“freedom to impose” (Pet. Br. 40) could leave all the

revenue from that constitutionally unauthorized ex-

action in the government’s hands. It is doubtful that

the Framers intended that Congress’s general powers

under the Constitution would permit such ready cir-

cumvention of the Export Clause. “[W]hat cannot be

done: directly because of constitutional restriction

cannot be accomplished indirectly by legislation

which accomplishes the same result.” Fairbank, 181

US. at 294.

3. The Design of the Administrative Tax

Scheme Does Not Cover Export Clause

Claims

This Court, however, need not resolve the substan-

tial constitutional question of whether Congress may

impose special, governmentally favorable tax proce-

dures in areas where the Constitution specifically

and completely debars Congress from exercising any

tax power. That is because the relevant statutory

provisions can fairly be read to preserve and prefer

the Tucker Act remedy over the Companies’ Export

Clause claim.

a. An individualized refund scheme

does not preclude separate litiga-

tion of broad constitutional ques-

tions

The administrative refund procedure is designed

to handle individualized, as-applied, return-specific

;

: %

held; there would be, therefore, a built-in disincentive against

distributing the principal to those entitled to it.”).

challenges to tax assessments and to determine, on a

case-by-case basis whether money should be re-

funded. See 26 U.S.C. 6511(a) (referring to claims for

refund for “an” overpayment); 26 U.S.C. 6511(b)(1)

(referencing the filing of “a” claim); 26 U.S.C. 7422(a)

(same); 26 U.S.C. 6532(a)(1) (“the claim”). Refund

decisions govern only the particular tax return at is-

sue, and may not control the disposition of a return

for the same tax filed the next year. Flora v. United

States, 362 U.S. 145, 193 & n.16 (1960); Alexander v.

“Americans United” Inc., 416 U.S. 752, 778, 780-781

(1974) (Blackmun, J., dissenting). Nor do such indi-

vidualized administrative refund procedures have the

capacity to establish broadly applicable rulings about

the scope of congressional taxing power. Instead, the

IRS administrative scheme is designed to address

factual and technical compliance issues, resolved by

auditors in local district offices, who generally lack

the authority or legal training needed to resolve such

constitutional questions.2° (Br. 24 (noting that the

26 See generally 26 C.F.R. 601.105(e). The original review of

excise claims “is a primary function of examiners in the Exami-

nation Division of the office of each district director.” 26 C.F.R.

601.105(b)(1). “[S]ubstantially the same procedure is followed

*** as when taxpayers’ returns are originally examined.” 26

C.F.R. 601.105(e)(2). The review generally focuses on highly

technical matters. See Audit Technique Guide for “v9 Coal Tex

(May, 2005), avai'able at, http://wwy sses/s

/article/0,,id=139335,00. html. Technical cites can wy x cbtained

from the National Office on “technical or procedural” subjects,

but it is given only for specific cases and never to a general class

of cases. 26 C.F.R. 601.105(b)(5)(i)(a), (21)(b) & (viii)(a). Appeal

to a regional office is available, but “the appeal procedures do

not extend to cases involving solely the failure or refusal to

comply with the tax laws because of * * * constitutional * * *

grounds.” 26 C.F.R. 601.106(b).

VENT a Ee Ne LS ORT ED OE PP POR, TOT MRT AS Te aE eS Te eT he a See

purpose of the administrative scheme is to provide

“specific facts” that allow the IRS to conduct “an ad-

ministrative investigation” of a taxpayer’s claim))

Beyond that, even if the IRS agreed that Congress

had exceeded its power, the most it could do is grant

refunds one at a time as a matter of enforcement dis-

cretion — and the authority to do even that in advance

of judicial invalidation of the tax is debatable when,

as here, Congress specifically directed that coal ex-

ports be taxed and the money is already in the Treas-

ury. Cf. U.S. Const. Art. I, §-9, cl. 7 (“No Money shall

be drawn from the Treasury, but in Consequence of

Appropriations made by Law.”); OPM v. Richmond,

496 U.S. 414, 428 (1990). In any event, any such ad-

ministrative decisions would offer no protection

against the continuing legal obligation to pay the

taxes, the need to expend time and resources repeat-

edly paying them and then pursuing the refund proc-

ess, the lost time-value of the money, or the risk of a

change in agency position.

In an analogous context, this Court unanimously

held in Bowen v. Michigan Academy of Family Physi-

cians, 476 U.S. 667 (1986), that the need to ensure

judicial review of “substantial statutory and constitu-

tional challenges” to an agency program, id. at 680,

strongly counseled against interpreting a “reticulated

statutory scheme” for review of individual social se-

curity benefit determinations as foreclosing federal

court jurisdiction over a challenge to the legality of

an agency regulation itself, id. at 675. See also

McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479,

491-94 (1991) Gurisdictional limitation on review of

“a determination respecting an application” for im-

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migration status does not bar review under general

federal question jurisdiction statute, 28 U.S.C. 1331,

of a constitutional challenge to “a group of decisions

or a practice or procedure employed in making deci-

sions’). Likewise here, it is doubtful that Congress

intended the individualized administrative refund

procedure either to decide or to preclude definitive

judicial resolution of facial and far-reaching chal-

lenges going to the core of Congress’s constitutional

taxing power. Indeed, “there would be a serious

question about the reasonableness of a system that

forced a [taxpayer] to bring a series of backward-

looking refund suits to establish repeatedly the legal-

ity of [a] claim.” Bob Jones Univ. v. Simon, 416 U.S.

725, 748 n.22 (1974).

b. Congress has not intended reve-

nue-protective procedural con-

straints to apply to taxes that are,

on their face, unconstitutional

Even with respect to exercises of recognized taxing

authority, this Court had repeatedly held that

broadly worded statutory restrictions on taxpayers’

prosecution of such claims do not apply when the

challenged tax unquestionably falls beyond Con-

gress’s authority. In Enochs v. Williams Packing &

Navigation Company, 370 U. S. 1 (1962), this Court

addressed the Tax Injunction Act’s sweeping com-

mand that “no suit for the purpose of restraining the

assessment or collection of any tax shall be main-

tained in any court,” 26 U.S.C. 7421(a). Although the

Act’s “language could scarcely be more explicit,” Bob

Jones, 416 U.S. at 736, this Court held that the Act

does not apply to taxes that are so wholly without

es —

foundation that “it is clear that under no circum-

stances could the Government ultimately prevail.”

Enochs, 370 U.S. at 7; see South Carolina v. Regan,

465 U.S. 367, 374 (1984).

Accordingly, when, “under the most liberal view of

the law and facts, the United States cannot establish

its claim,” and the government itself does not “claim

that [the tax] is valid,” Enochs, 370 U.S. at 7-8, the

Court has concluded that permitting a taxpayer suit

to go forward outside traditional limitations on tax-

payer litigation cannot affect any legitimate govern-

mental interest in tax collection, Commissioner v.

Shapiro, 424 U.S. 614, 628 (1976). Cf. United States

uv. Janis, 428 U.S. 433, 441-442 (1976) (holding that

“the usual rule with respect to the burden of proof in

tax cases” does not apply “where the assessment is

shown to be naked and without any foundation”).

Rather, when the tax is, on its face, in excess of the

power granted to the Congress by the Constitution,

the assessment is, in the eyes of the law, only “in the

guise of a tax,” Grosjean v. American Press Co., 297

U.S. 233, 250 (1936), and may be procedurally

treated as such.??

By the same token, statutorily satan exhaus-

tion requirements generally do not apply when a

27 The question whether the government has any chance of

ultimately prevailing “is to be determined on the basis of the in-

formation available to it at the time of the suit.” Shapiro, 424

U.S. at 627. This type of injunction was not an available rem-

edy for the Companies here, however, because the plaintiff still

must establish irreparable harm, ibid., which an ongoing obliga-

tion to pay money generally does not establish. See, e.g., Ron-

deau v. Mosinee Paper Corp., 422 U.S. 49, 60 (1975); Bob Jones,

416 U.S. at 745.

party seeks to enjoin agency action that is “in excess

of its delegated powers and contrary to a specific pro-

hibition” in the law, where that prohibition is “clear

and mandatory.” Leedom v. Kyne, 358 U.S. 184, 188

(1958). That is so because, when government officials

act in plain and undisputed violation of direct and

unqualified prohibitions on their authority — whether

those directives are rooted in statute or the Constitu-

tion — the central rationale for exhaustion collapses.

The agency can claim neither expertise nor efficiency

when it acts wholly outside its lawful bounds, and, by

definition, factfinding has little relevance to halting

violations of the law that are plain on their face.28 At

the same time, when the Political Branches are heed-

less of or defy a “simple, direct, unqualified [constitu-

tional] prohibition” on their authority, U.S. Shoe, 523

U.S. at 368, the need for direct judicial intervention

reaches its apex.?9

Accordingly, before forcing the Companies to liti-

gate within the administrative tax refund framework,

with its revenue-protective procedures, Congress

likely intended that that the tax at issue would have

28 See Thetford Properties IV Ltd. v. Department of Housing

and Urban Dev., 907 F.2d 445, 448-449 (4th Cir. 1990) (“Of

course, in the rare case when a statute is patently unconstitu-

tional or an agency has taken a clearly unconstitutional posi-

tion, exhaustion may not be required.”); Grutka v. Barbour, 549

F.2d 5, 8 (7th Cir.) (“the raison d'etre of the exhaustion doc-

trine[] fis) simply irrelevant when the Board has clearly

breached the bounds of its proper authority as a matter of law,”

and the violation is plain because the statute is unconstitutional

on its face), cert. denied, 431 U.S. 908 (1977).

29 See Black Lung Benefits Revenue Act of 1977, H.R. Rep.

No. 438, 95th Cong., Ist Sess. 73 (1977) (explaining that the

usual exemption for “exports” will not “apply to this coal tax”).

at least a colorable claim to validity and thus could,

with some legitimacy, be defended as a “tax” as Con-

gress employed that term in the statutory refund

provisions. In this case, however, the government

was unable, even after a year of study, to muster any

constitutional defense for the export tax, and the dis-

trict court was unable to discern any justification for

it either. Ranger Fuel, 33 F. Supp. 2d at 469. There

is no question that a tax used to impose a prior re-

straint on speech may be enjoined as foreclosed by

the Constitution, see Minneapolis Star & Tribune Co.

uv. Minnesota Comm’r of Revenue, 460 U.S. 575

(1983); Grosjean, 297 U.S. at 250, without imposition

or exhaustion of six-month-long, revenue-protective

procedures, cf. Near v. Minnesota, 283. U.S. 697

(1931). So likewise may a facially unconstitutional

export tax — a tax that was also of substantial con-

cern to the Founders — be challenged through the or-

dinary mechanism for constitutional litigation, with-

out any procedural thumb on the government’s side

of the scale. At a minimum, the Court should require

a clear statement of congressional intent to insulate

such facially unconstitutiona]) measures from ordi-

nary judicial review.*°

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30 The Government’s reliance (Br. 16) on the requirement of a

pre-payment protest in United States v. New York & Cuba Mail

Steamship Co., 200 U.S. 488 (1906), is misplaced for three rea- |

sons. First, that case involved a Tucker Act claim “founded” %

upon a statute, not (as the Government asserts (Br. 16)) “an Ex-

port Clause claim under the Tucker Act.” See No. 116, Resp. Br. |

15, Cuba Mail, supra (“This action [is] based upon the act of

May 12, 1900.”); id. at 18 (“[T]he petitioner may therefore en-

force by an action under the Tucker Act the right given it by the

Act of May 12, 1900.”); Hvoslef, 237 U.S. at 7 (the claims in both

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c. The statutory text is ambiguous

The administrative refund statutes, by their

terms, do not naturally embrace Export Clause chal-

lenges to Congress’s foundational taxing authority.

To begin with, given the straightforward and un-

qualified constitutional prohibition on export taxes

and the fact that, by definition, the ad valorem tax at

issue here was imposed on exported coal when it was

alread; _n the stream of international commerce, it is

far from clear that the coal tax constitutes an “inter-

nal” revenue tax, within the meaning of 26 U.S.C.

Hvoslef and Cuba Mail, see id: at 9, were “based upon” refund

statutes). The plaintiffs in both cases raised the Export Clause

simply to satisfy the statutory element of proof of an “erroneous

or illegal assessment and collection.” Hvoslef, 237 U.S. at 7;

Cuba Mail, 200 U.S. at 494-495; No. 116 Resp. Br. 18, Cuba

Mail, supra. Thus, at most, Cuba Mail “stands for the unre-

markable proposition that a taxpayer suing to recover under a

refund statute must satisfy all the requirements attendant to

that statute.” Cyprus Amax, 205 F.3d at 1375. Second, Cuba

Mail did not address any jurisdictional questions under the re-

cently enacted Tucker Act and, indeed, this Court later ex-

plained that jurisdiction was assumed in that case. See United

States v. Emery, Bird, Thayer Realty Co., 237 U.S. 28, 32 (1915).

Tellingly, the Court gave no indication that, if a pre-payment

protest were not an element of the cause of action, there would

have been any jurisdictional problem with proceeding under the

Tucker Act, notwithstanding the existence of the separate, post

hoc administrative refund provisions. Third, no question of

Congress’s authority to impose procedural constraints on Export

Clause challenges was involved. The long-since abandoned re-

quirement of a protest at the time of payment, see Revenue Act

of 1924, ch. 234, § 1014, 43 Stat. 253, 343, was the product of

judge-made common law, not statute, defining the elements of a

common-law tort claim for recovery against a collector in his

personal capacity. See United States v. Kales, 314 U.S. 186, 198

(1941).

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6532(a)(1) and 7422(a). Compare Black’s Law Dic-

tionary 732 (5th ed. 1979) (defining “internal reve-

nue” as “revenues from internal sources by way of

taxes as contrasted with revenues from customs and

foreign sources”), with U.S. Shoe, 523 U.S. at 365-366

(explaining how an export tax could be understood to

fall under a statutory reference to “imports” and thus

‘ could be considered a “customs duty”); see also 28

U.S.C. 1340 (establishing district court jurisdiction

over claims arising under any Act of Congress “pro-

viding for internal revenue” or “revenue from im-

ports”); Canton R.R. Co. v. Rogan, 340 U.S. 511, 515

(1951) (export “acts begin and end at water’s edge”);

Dooley v. United States, 183 U.S. 151, 153-155 (1901)

(discussing the foreign commerce aspect of exports).*!

In addition, Congress’s use of the terms “credit” or

“refund” in defining the type of claims that are sub-

ject to its tax refund scheme, 26 U.S.C. 6511(a) & (b),

7422(a), can naturally be read to presuppose some

colorable claim of authority to have collected the

money in the first instance. Where, by contrast,

money is taken in the complete absence of any lawful

authority — for example, if an IRS agent picks a tax-

payer’s pocket during an audit — the monetary relief

sought would not commonly be described as a “tax re-

fund.”32

31 The fact that the underlying tax provision is codified in Ti-

tle 26, by itself, does not make it an “internal revenue tax,” as

the government itself argued in U.S. Shoe. See 523 U.S. at 367.

32 See United States v. State Bank, 96 U.S. (6 Otto) 30, 36

(1877) (recognizing “implied contract” claim “where the money

or property of an innocent person has gone into the coffers of the

nation by means of a fraud” by a Treasury official); see also

Bonwit Teller & Co. v. United States, 283 U.S. 258, 265 (1931)

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Congress’s reference to “any” recovery of internal

revenue taxes does not help the government. This

Court has held that, in the absence of clearer con-

gressional direction, the word “any” should not be

read to sweep in questionable and legally sensitive

applications “that Congress likely did not consider.”

Small v. United States, 544 U.S. 385, 390 (2005). In-

stead, “general words” like “any” must “be limited”

in their application “to those objects to which the leg-

islature intended to apply them.” United States v.

Palmer, 16 U.S. (3 Wheat.) 610, 631 (1818) (Marshall,

C.J.).33

d. The Export Clause exception to the

administrative refund scheme is

narrow and tightly cabined

The government argues (Pet. 25; Br. 28 n.7) that

permitting Export Clause claims to proceed under the

Tucker Act will permit taxpayers to circumvent the

administrative tax refund scheme by alleging any

constitutional defect in a tax. The short answer is

that this Court — speaking unanimously — had no

trouble understanding that the sui generis nature of

the Export Clause’s “simple, direct, unqualified pro-

hibition * * * distinguishes it from o!r constitu-

tional limitations on governmental taxing authority.”

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(recovery of overpayment of taxes allowed by the Commissioner

through an “accounts stated” action is not barred by refund pro-

cedure’s limitations period).

33 See also Nixon v. Missouri Mun. League, 541 U.S. 125, 132

(2004) (“any” means “different things depending upon the set-

- ting”); United States v. Alvarez-Sanchez, 511 U.S. 350, 357

(1994) (“[Rjespondent errs in placing dispositive weight on the

bread statutory reference to ‘any’ law enforcement officer * * *

without considering the rest of the statute.”).

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U.S. Shoe, 523 U.S. at 368. Moreover, Congress’s

general ban on the imposition of manufacturers’ ex-

cise taxes on exports, see 26 U.S.C. 4221(a), should

ensure that few Export Clause challenges will arise

in the future.

Beyond that, only those constitutional provisions

that are independently deemed to be money-

mandating will support Tucker Act jurisdiction. Tes-

tan, 424 U.S. at 398. While that class includes export

taxes, this Court’s recent confirmation that the Ex- —

port Clause means what it says, see U.S. Shoe, supra,

and IBM, supra — and the fact that only a small

handful of Export Clause cases have arisen since

1787 anyhow — strongly suggests that Tucker Act ju-

risdiction over Export Clause claims will have no dis-

cernible impact on the administrative tax refund

process. The Tekings Clause is also money-

mandating, Regional Rail, 419 U.S. at 126, but that

has no relevance here because “taxation for a public

purpose, however great,” is not a “taking of private

property.” Mobile County v. Kimball, 102 U.S. (12

Otto) 691, 703 (1880). Finally, following this Court’s

decision in Hatter, the Judicial Compensation Clause

will only give rise to a constitutional claim if Con-

gress imposes a discriminatory tax on judges’ com-

pensation, see 532 U.S. at 567, 571, which would pre-

sumably be a rare event.*4

34 Nor has the narrow exception to the Tax Injunction Act

recognized in Enochs for challenges to taxes that lack any color-

able legal defense, 370 U.S. at 7-8, led to artful evasion of gen-

eral limitations on the adjudication of tax claims, presumably

because Congress is not in the habit of enacting such measures.

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Contrary to the government’s argument (Pet. 25),

no court has held that either the Direct Tax or Uni-

formity Clause, U.S. Const. Art. I, § 8, cl. 1 & § 9, cl.

4, is money-mandating, nor would such a decision fol-

low from this case. Those provisions simply regulate

how federal taxes that Congress has the power to

adopt are to be designed. Neither is the type of abso-

lute preclusion of congressional taxing authority or

explicit exclusion of a particular activity from the

federal revenue stream that the Export Clause is.

Accordingly, a violation of either provision would

not imply that the government had obtained funds

that are constitutionally excluded from federal reve-

nue or wholly beyond Congress’s authority to collect

at all. Instead, such violations may be remedied —

and the same money still collected — by adjusting and

increasing the coverage of the tax to make it “propor-

tional” or “uniform.” In other words, the essence of a

tion Clauses is not that its funds are completely im-

munized from taxation and should be disgorged as an

illegitimate source of revenue per se (as the claim

would be under the Export Clause), but that the bur-

den of legitimate tax collection should have been allo-

cated more widely or proportionately. Cf. McKesson,

496 U.S. at 39-40 (where a State imposes an uncon-

stitutionally discriminatory tax, it “retains flexibility

in responding to this determination,” and “may re-

formulate and enforce the Liquor Tax during the con-

tested tax period,” by “assess[ing] and collect[ing]

back taxes from petitioner's competitors” or otherwise

“calibrating the retroactive assessment to create in

hindsight a nondiscriminatory scheme’).

Moreover, “logic sometimes must defer to history ~

and experience,” United States v. Watson, 423 U.S.

411, 429 (1976) (Powell, J., concurring), and the fact

that the government’s predicted impact on the tax

scheme has failed to materialize at all in the eight

years since the Federal Circuit first held that an Ex-

port Clause challenge could proceed under the Tucker

Act belies the suggestion that courts are incapable of

distinguishing between constitutional limitations on

authority granted to Congress and complete and un-

qualified denials of congressional power to intermed-

dle with a particular economic activity. Indeed, the

government's argument ignores Chief Justice Mar-

shall’s admonition in an early tax case not to “treat/]

a prohibition which is general, as if it were confined

to a particular mode of doing the forbidden thing.”

Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 444

(1827); see also Washington Dep't of Rev. v. Associa-

tion of Washington Stevedoring Cos., 435 U.S. 734,

749 (1978) (distinguishing between constitutional

provisions that “state a prohibition” and those that

“merely grant[{] specific power to Congress”); Fair-

bank, 181 U.S. at 296 (same as Brown).

According distinct status to challenges based on an

absolute and unqualified preclusion of congressional

power makes sense, moreover. Where Congress has

the constitutional power to act, its actions are pre-

sumptively constitutional, Close v. Glenwood Ceme-

tery, 107 U.S. 466, 475 (1883), and it has the con-

comitant power to establish reasonable rules and

procedures for the review of governmental action, see

Chilicky, 487 U.S. at 423 (where Congress creates a

“Government program,” it can “provide[] what it con-

siders adequate remedial mechanisms for constitu-

tional violations that may occur in the course of its

administration”). When, however, Congress has no

power to act and its authority has been specifically

withdrawn by the Constitution, measures adopted in

express defiance of that prohibition necessarily dispel

any such presumption, and there is no apparent

source of authority for Congress to erect specific pro-

cedural obstacles to judicial review of that action.

Finally, and in any event, nothing in this case re-

quires the Court to go any further than the exception

to ordinary tax litigation and exhaustion principles

that this Court already recognized in Enochs, supra,

and Leedom, supra, for facially unconstitutional and

indefensible tax laws. Presumably the government

does not contend that constitutionally indefensible

laws arise with any frequency or that taxpayers can

easily meet that exacting standard for review. Giv-

ing the Tucker Act that narrow scope, “it is entirely

possible for the Tucker Act and [the tax refund

scheme] to co-exist.” Monsanto Co., 467 U.S. at 1018.

Indeed, “it is the duty of the courts” to give effect to

both statutes where, ‘as here, it is possible to do so.

Regional Rail, 419 U.S. at 133.

C. The Export Clause Claim Falls Within

The Plain Terms Of The Interest Stat-

ute

The court of appea!s’ holding that the Companies

are entitled to interest is compelled by the plain

terms of the interest statute, 28 U.S.C. 2411. As

relevant here, Section 2411 provides that “interest

shall be allowed” on “any judgment of any court * * *

for any overpayment in respect of any internal-

”

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revenue tax.” (Emphases added.). As enamored as

the government is with the sweep of the word “any”

in the tax provisions (see Br. 15), its argument ig-

nores that word here, even though in this setting all

of the surrounding contextual indicia confirm that

Congress meant “any” to signal broad coverage. See

Ali v. Federal Bureau of Prisons, No. 06-9130, slip op.

5 & n.4 (Jan. 22, 2008) (“any” has expansive meaning

where there is “no basis in the text for limiting the

phrase” and no “other circumstances * * * counteract

the effect of expansive modifiers”).

Contrary to the government’s argument (Br. 44),

Section 2411 is not “an integral part” of the adminis-

trative tax scheme. Unlike the provision at issue in

Hinck — which inextricably combined a “shorter stat-

ute of limitations” with “a standard of review” “in the

same statute,” 127 S. Ct. at 2016 — Section 2411 is

not even housed in the Internal Revenue Code. In-

stead, it is located in Title 28, which governs judicial

procedure broadly, and is part of a chapter entitled

“United States As Party Generally,” 28 U.S.C. ch. 161

(emphasis added). Moreover, because Section 2411’s

textually general interest provision was crafted by

Congress decades after Congress created the admin-

istrative tax refund procedure in 1866, see Revenue

Act of 1921, ch. 136, § 13824(b), 42 Stat. 227, 316,

Congress plainly did not view that interest provision

as part of a single “refund-remedy package” (Pet. Br.

44 n.12).%

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The government’s effort (Br. 43) to limit “over-

payment” to the recovery of taxes “erroneously or il-

legally assessed,” as those terms are used: in 26

U.S.C. 7422(a), also fails. The government’s argu-

ment might have fared better in 1921, when the

original version of Section 2241 allowed interest only

“for any internal-revenue tax erroneously or illegally

assessed,” see § 1324(b), 42 Stat. at 316 — language

that paralleled the contemporaneously passed prede-

cessor to Section 7422(a), see § 1318, 42 Stat. at 314-

15. But, in 1928, Congress replaced that narrow lan-

guage with the modern interest provision, which

. permits interest more broadly “for any overpayment

in respect of any internal-revenue tax.” Revenue Act

of 1928, Pub. L. No. 70-562, § 615. 45 Stat. 791, 877..

“When Congress acts to amend a statute, we presume

it intends its amendment to have real and substan-

tial effect.” Stone v. INS, 514 U.S. 386, 397 (1995).

This Court, moreover, has stressed that “overpay-

ment” should not be construed as “a word of art,”

Jones v. Liberty Glass Co., 332 U.S. 524, 532 (1947).

This Court’s decision in United States v. Dalm, 494

U.S. 596 (1990), undercuts, rather than aids, the gov-

ernment’s position (see Pet. Br. 43). Putting aside

that the Court was not interpreting Section 2411 in

that case, the Court gave “overpayment” in 26 U.S.C.

6511 the same “commonsense interpretation” that

the court of appeals here gave “overpayment” in Sec-

tion 2411, explaining that it applies “when a taxpayer

pays more than is owed, for whatever reason or no

reason at all.” Dalm, 494 U.S. at 609 n.6. While the

Court noted in Dalm that “overpayment” “encom-

passes” erroneously, illegally, or wrongfully collected

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taxes under Section 7422, ibid., the Court nowhere

said that “overpayment” is limited to those situations

or, more generally, that the particular procedural ve-

hicle through which a claim is prosecuted has any-

thing to do with whether the claim itself is for an

“overpayment.”

Indeed, Congress’s own definition of “overpay-

ment” belies the government’s attempt to narrow it to

“erroneously or illegally assessed” tax payments.

Congress has specified that earned-income credit in

excess of tax liability is an “overpayment,” 26 U.S.C.

6401(b)(1), despite the fact that individuals may be

eligible for such credit even if no tax is “assessed

[against] or collected” from them at all. Sorenson v.

Secretary of Treasury, 475 U.S. 851, 863 (1986) (such

“overpayment” occurs “independent of the individ-

ual’s actually having made any payment’).

Finally, as in the Takings Clause, the Export

Clause itself requires the payment of interest on ex-

port taxes. See Jacobs, 290 U.S. at 16.56 In Seaboard

Air Line Ry. v. United States, 261 U.S. 299 (1923),

this Court explained that the Takings Clause re-

quires the payment of interest, so that “no specific

[statutory] command to include interest is neces-

sary.” Id. at 306. The Court reasoned that the owner

whose property was taken “is entitled to the damages

inflicted by the taking,” and that interest is part of

36 Although controlling Federal Circuit precedent precluded

the Companies from arguing below that interest was constitu-

tionally required, see Resp. C.A. Br. 8 n.7, this Court can affirm

the judgment on any ground supported by the record. Schenck

v. Pro-Choice Network, 519 U.S. 357, 384 n.12 (1997); Smith v.

Phillips, 455 U.S. 209, 215 n.6 (1982).

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that right to “just compensation safeguarded by the

Constitution.” Id. at 305; see also Phillips v. Wash-

ington Legal Found., 524 U.S. 156, 165, 168 (1998)

(“interest * * * follows the principal,” and “attaches

as a property right incident to the ownership of the

underlying principal”).

By the same token, the Export Clause’s specific

and unqualified prohibition on the use of exports as a

source of tax revenue and insulation of exporters

from the task of such revenue generation can only be

given effect if Congress is denied the time value of

the funds that it has wrongfully collected through ex-

port taxes, and the exporter is “put in as good posi-

tion pecuniarily as he would have been if his property

had not been ta[xed].” Seaboard, 261 U.S. at 304; see

Boston Sand & Gravel Co. v. United States, 278 U.S.

41, 48 (1928) (interest might be naturally included

when damages claim arises from “the detention of

money’). The “present use of * * * money is itself a

thing of value,” Procter & Gamble Distributing Co. v.

Sherman, 2 F.2d 165, 166 (S.D.N.Y. 1924) (Learned

Hand, J.), and failure to compensate for it will result,

as it did in Webb’s, 449 U.S. at 163, in an “exaction”

that “is a forced contribution to general governmental

revenues,” contrary to the specific and unqualified

‘command of the Export Clause that exports not pro-

vide a source of tax revenue.

CONCLUSION

For the foregoing reasons, the judgment of the

court of appeals should be affirmed.

Respectfully submitted.

STEVEN H. BECKER PATRICIA A. MILLETT

PAUL A. HOROWITZ (Counsel of Record)

SUZANNE I. OFFERMAN THOMAS C. GOLDSTEIN 5

BAKER & MCKENZIELLP STEVEN C. WU 2 A

1114 Avenue of the MONICA P. SEKHON ;

Americas AKIN GUMP STRAUSS

New York, NY 10036 HAUER & FELD, LLP ‘

| 1333 New Hampshire Ave., 2

V ashington, DC 20036

FEBRUARY 13, 2008

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