Prescient History from the Records of the Constitutional Convention on the Origination Clause (8/10/15)

Note:  I have appended to the end of this blog the legal background for the brouhaha, drawn principally from the bipartisan Senate Finance Committee Report.  Readers not familiar with the background might want to reach that before wading into this discussion.

On Saturday, I blogged on a recent denial of a petition for rehearing en banc in Sissel v. U.S. Dept. of Health and Human Services, ___ F.3d ___, 2015 U.S. App. LEXIS _____ (D.C. Cir. 2015), here, denying petition for rehearing en banc from the earlier panel decision in Sissel v. U.S. Deparatment of Health and Human Services, 760 F.3d 1 (D.C. Cir. 2015), here.  That blog entry is The Constitution's Command that Revenue Bills Originate in the House - What Does It Mean? (Federal Tax Procedure Blog 8/8/15), here.

Normally, denials of rehearing (whether panel or en banc) are summary one-liners.  But the judges got stirred up in this case.  All who expressed an opinion agreed that as to the bottom-line result -- the ACA did not violate the Origination Clause.  But, the dissenting judges thought that the reasoning to the result was worthy of the Court's en banc consideration.  I won't get back into the Origination Clause again.  I did not say much about it in the prior blog and will not revisit that decision.

Something did, however, catch my eye in reading the opinions.  I am (was) a history major in college.  One of my favorite courses in college was U.S. Constitutional History, taught by Dr. George C. Rogers at the University of South Carolina.  One of the sources we used in the course was Max Farrand's The Records of the Federal Convention of 1787.  These are described here as:

One of the great scholarly works of the early twentieth century was Max Farrand's The Records of the Federal Convention of 1787. Published in 1911, Farrand's work gathered the documentary records of the Constitutional Convention into four volumes--three of which are included in this online collection--containing the materials necessary to study the workings of the Constitutional Convention. According to Farrand's introduction, at the close of the convention, the secretary, William Jackson, delivered all the materials to the president of the convention, George Washington, who turned these papers over to the Department of State in 1796. In 1818, Congress ordered that the records be printed. which was done under the supervision of the Secretary of State John Q. Adams, in 1819. 

Farrand's Records remains the single best source for discussions of the Constitutional Convention. The notes taken at that time by James Madison, and later revised by him, form the largest single block of material other than the official proceedings. The three volumes also includes notes and letters by many other participants, as well as the various constitutional plans proposed during the convention.

Farrand's collection of the records of the Constitutional Convention are important source materials.  Hence, it is frequently cited in cases and scholarly discussions of the convention and the meaning of the Constitution coming out of the Convention.

So, in reading the opinions on the denial of the petition for rehearing in Sissel, I was not surprised to see that both sides referred to Farrand's Records.  And, beyond that, one part of the discussion caught my attention because it sheds light on current events.  In discussing the trajectory of the Origination Clause, the majority opinion notes that the consideration of the Origination Clause was not extensive, but certain key considerations of the Clause "occurred in its [the Convention's] closing weeks, between mid-August and early September 1787."  One representative at the Convention proposed that the Origination Clause provide:  "All bills for raising or appropriating money . . . shall originate in the House of Representatives, and shall not be altered or amended by the Senate."  The majority opinion then discusses the issue this language raised (bold face supplied by JAT):

Two days later, a coalition of delegates came together to strike the Clause from the draft of the Constitution, and succeeded in doing so by a vote of 7-4. 2 Farrand's Records at 210-11 (Aug. 7, 1787); id. at 214 (Aug. 8, 1787). The Clause's opponents saw it as a needless landmine, one that could seriously weaken the new national government by investing too much power in what they viewed as the less independent, less expert, and less responsible of the two chambers of Congress, while generating pointless gridlock and mortally weakening the Senate. See, e.g., id. at 224 (Aug. 8, 1787) (summarizing objections of Pinkney, Mercer, and Madison, the last of whom "was for striking it out: considering it as of no advantage to the large States as fettering the Govt. and as a source of injurious altercations between the two Houses"); id. at 274-80 (Aug. 13, 1787) (summarizing additional objections of Wilson, Morris, Madison, Carrol, Rutledge, and McHenry to a similar version of the Origination Clause five days later).

The Constitution's Command that Revenue Bills Originate in the House - What Does It Mean? (8/8/15)

The Constitution provides (Article I, § 7): “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”  This provision is referred to as the Origination Clause.

The D.C. Circuit recently denied rehearing en banc in a case involving the Affordable Care Act which was drafted in the Senate and passed by the Senate as a substitute for a revenue raising bill that did originate in the House.  Sissel v. U.S. Dept. of Health and Human Services, ___ F.3d ___, 2015 U.S. App. LEXIS _____ (D.C. Cir. 2015), here, denying petition for rehearing en banc from the earlier panel decision in Sissel v. U.S. Deparatment of Health and Human Services, 760 F.3d 1 (D.C. Cir. 2015), here.

In denying rehearing, concurring and dissenting opinions discussed the application of the Origination Clause.  Both the concurring and dissenting opinions found that the Origination Clause was not violated.  The dissenting opinion just thought that the issue was worthy of en banc review.

I have revised my text in the Federal Tax Crimes book to add the following after quoting the Origination Clause (I omit the footnotes citing the Sissel rehearing decisions and original panel decision, and include only footnote at the end):

This command in the Constitution appears clear.  But, as we learn in this class, when words are involved, it is all about interpretation of the words.  What do the Origination Clause’s words mean?  The issue is not commonly presented seriously in mainstream tax legislation.  But, in some outlier – albeit very important – cases it is presented.  For example, it recently arose in litigation involved the attempts to defeat the Affordable Care Act (“ACA”) because some of its provisions do raise revenue.  The House passed a revenue bill that was not the ACA and sent it to the Senate.  The Senate substituted the ACA which was completely different from the revenue bill passed by – originated in, if you will – the House.  The ACA provided for large amounts of revenue to fund much of the cost of the ACA.  Did the ACA violate the Origination Clause?  Facially, in a literal sense, yes.  But by interpretation of the provision, it did not run afoul of the Origination Clause.  It is not necessary for this class to enter into an extended discussion because the Origination Clause is not presented in most mainstream tax legislation.  But, generally, the ACA was not deemed to violate the Origination Clause for one of the following reasons: 

1. Under a purposive approach, the bill's primary purpose was to regulate health insurance and not to raise revenue.  The revenue in question was to spur conduct (acquisition of health insurance) rather than raise revenue (although raising revenue was an incidental effect, the Origination Clause is not implicated by such incidental effects). 

2. The Senate amendment adding the ACA was a bill that originated in the House and thus met the requirements of the Origination Clause. 

3. The ACA raised revenue for specific program purposes and not for general revenue purposes and thus met the requirements of the Origination Clause. 

These explanations may or may not be satisfying, but in the end it would be the rare revenue raising measure that proceeded to final enactment would not meet the requirements of the Origination Clause. n14  

 n14 Since the Senate amendments must be passed by the House, the House can has a procedure – called “blue-slipping” to reject and return to the Senate revenue bills that were not originated in the House.  This process is described in the Wikipedia entry titled Blue slip at: https://en.wikipedia.org/wiki/Blue_slip.  Of course, for bills that did originate in the House and were simply amended in the Senate (as the ACA), even by full substitution, the blue-slip process would not apply.

If It's A Tax, What About the Origination Clause? (9/14/12)

One of our first topics in my Federal Tax Procedure class is the roles of the various players -- Congress, the Executive Branch and the Courts (OK, the grand jury as well).  And, one of the first topics it the Origination Clause.  The Origination Clause is Section 7, Clause 1, of the Constitution which says:

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills

Wikipedia, here,  provides this background on the Origination Clause (footnotes omitted):

This establishes the method for making Acts of Congress. Accordingly, any bill may originate in either House of Congress, except for a revenue bill, which may originate only in the House of Representatives. In practice, the Senate can simply circumvent this requirement by substituting the text of any bill previously passed by the House with the text of a revenue bill.  When the Senate sends an appropriation bill to the House, the House may return it to the Senate with a blue slip, thereby settling the question in practice. Either House may amend any bill, including revenue and appropriation bills. 

The Origination Clause stemmed from an English parliamentary convention that all money bills must have their first reading in the House of Commons. It was intended to ensure that the "power of the purse" lies with the legislative body responsible to the people. The clause was also part of a compromise between small and large states. The latter were unhappy with equal representation in the Senate.

The Volokh Conspiracy has this discussion of the Origination Clause as a new line of attack on the "tax" as pronounced by the Supreme Court for the individual mandate in the Affordable Care Act.  Randy Barnett, New Obamacare Challenge: The Origination Clause (The Volokh Conspiracy 9/13/12), here.  Here are excerpts of the press release related to the new attack.