II

104TH CONGRESS

2D SESSION S. 1817

To limit the authority of Federal courts to fashion remedies that require

local jurisdictions to assess, levy, or collect taxes, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 23, 1996

Mr. GRASSLEY (for himself, Mr. HATCH, Mrs. KASSEBAUM, and Mr. BOND)

introduced the following bill; which was read twice and referred to the

Committee on the Judiciary

A BILL

To limit the authority of Federal courts to fashion remedies

that require local jurisdictions to assess, levy, or collect

taxes, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fairness in Judicial

5 Taxation Act of 1996’’.

6 SEC. 2. FINDINGS.

7 The Congress finds that—
2

•S 1817 IS

1 (1) a variety of effective and appropriate judi2 cial remedies are available under existing law for the

3 full redress of legal or constitutional violations;

4 (2) the imposition, increase, levying, or assess5 ment of taxes by courts is not necessary or appro6 priate for the full and effective exercise of remedies

7 imposed by Federal courts with appropriate jurisdic8 tion;

9 (3) the imposition, increase, levying, or assess10 ment of taxes by judicial order is—

11 (A) not an appropriate exercise of the judi12 cial power under the Constitution; and

13 (B) incompatible with—

14 (i) the traditional principles of the

15 laws and Government of the United States;

16 and

17 (ii) the basic American principle that

18 taxation without representation is tyran19 nical (because Federal courts are composed

20 of unelected officials who are not answer21 able to the popular will);

22 (4) when a Federal court issues an order that

23 requires or results in the imposition, increase, levy24 ing, or assessment of any tax, the court—
3

•S 1817 IS

1 (A) exceeds the proper boundaries of the

2 limited jurisdiction and authority of Federal

3 courts under the Constitution; and

4 (B) impermissibly intrudes on the legisla5 tive functions of the democratic system of gov6 ernment of the United States;

7 (5) no court should enter an order or approve

8 any settlement—

9 (A) remedying a legal or constitutional vio10 lation by imposing, creating, increasing, levying,

11 or assessing any tax; or

12 (B) that has the effect of imposing, creat13 ing, increasing, levying, or assessing any tax;

14 (6) a settlement agreement or order entered by

15 a Federal court should be fashioned within the

16 framework of the budgetary restraints of any af17 fected State or political subdivision thereof; and

18 (7) the Congress has the authority under sec19 tions 1 and 2 of Article III of the United States

20 Constitution to limit and regulate the jurisdiction of

21 the inferior Federal courts, and such authority in22 cludes the power to limit the remedial authority of

23 such courts.
4

•S 1817 IS

1 SEC. 3. LIMITATION ON FEDERAL COURT REMEDIES.

2 (a) IN GENERAL.—Chapter 85 of title 28, United

3 States Code, is amended by adding at the end the follow4 ing new section:

5 ‘‘§ 1369. Limitation on Federal court remedies

6 ‘‘(a)(1) No district court may enter any order or ap7 prove any settlement that requires any State, or political

8 subdivision of a State, to impose, increase, levy, or assess

9 any tax for the purpose of enforcing any Federal or State

10 common law, statutory, or constitutional right or law, un11 less the court finds by clear and convincing evidence,

12 that—

13 ‘‘(A)(i) there are no other means available to

14 remedy the deprivation of rights or laws; and

15 ‘‘(ii) the proposed imposition, increase, levying,

16 or assessment is narrowly tailored to remedy the

17 specific deprivation at issue;

18 ‘‘(B) the tax will not contribute to or exacer19 bate the deprivation intended to be remedied;

20 ‘‘(C) the proposed tax will not result in a loss

21 of revenue for the political subdivision in which it is

22 assessed, levied, or collected;

23 ‘‘(D) the proposed tax will not result in the loss

24 or depreciation of property values of the taxpayer so

25 affected;
5

•S 1817 IS

1 ‘‘(E) the proposed tax will not conflict with the

2 applicable laws with respect to the maximum rate of

3 taxation as determined by the appropriate State or

4 political subdivision thereof; and

5 ‘‘(F) plans submitted to the court by State and

6 local authorities will not effectively redress the depri7 vations at issue.

8 ‘‘(2) A finding under paragraph (1) shall—

9 ‘‘(A) be subject to immediate interlocutory de

10 novo review; and

11 ‘‘(B) be reviewed by the court making the find12 ing at least annually with respect to the issues relat13 ed to the finding, whether or not a related order or

14 settlement agreement continues to apply.

15 ‘‘(3)(A) Notwithstanding any law or rule of proce16 dure, any aggrieved corporation, or unincorporated asso17 ciation or other person residing or present in the political

18 subdivision in which a tax is imposed in accordance with

19 paragraph (1) or other entity located within that political

20 subdivision shall have the right to intervene in any pro21 ceeding concerning the imposition of the tax.

22 ‘‘(B) A person or entity that intervenes pursuant to

23 subparagraph (A) shall have the right to—

24 ‘‘(i) present evidence and appear before the

25 court to present oral and written testimony; and
6

•S 1817 IS

1 ‘‘(ii) appeal any finding required to be made by

2 this section, or any other related action taken to im3 pose, increase, levy, or assess the tax that is the sub4 ject of the intervention.

5 ‘‘(b) Notwithstanding any law or rule of procedure,

6 any order of a district court requiring the imposition, in7 crease, levy, or assessment of a tax imposed pursuant to

8 subsection (a)(1) shall automatically terminate or expire

9 on the date that is 1 year after the later of—

10 ‘‘(1) the date of the imposition of the tax;

11 ‘‘(2) the date of the enactment of the Fairness

12 in Judicial Taxation Act of 1996; or

13 ‘‘(3) an earlier date, if the court determines

14 that the deprivation of rights that is addressed by

15 the order has been cured to the extent practicable.

16 ‘‘(c) This section may not be construed to preempt

17 any law of a State or political subdivision thereof that im18 poses limitations on, or otherwise restricts the imposition

19 of a tax, levy, or assessment that is imposed in response

20 to a court order referred to in subsection (b).

21 ‘‘(d)(1) Except as provided in paragraph (2), nothing

22 in this section may be construed to allow a Federal court

23 to, for the purpose of funding the administration of an

24 order referred to in subsection (b), use funds acquired by
7

•S 1817 IS

1 a State or political subdivision thereof from a tax imposed

2 by the State or political subdivision thereof.

3 ‘‘(2) Paragraph (1) does not apply to any tax, levy,

4 or assessment that, before the date of enactment of the

5 Fairness in Judicial Taxation Act of 1996, has, in accord6 ance with applicable State or local law, been used to fund

7 the actions of a State or political subdivision thereof in

8 meeting the requirements of an order referred to in sub9 section (b).

10 ‘‘(e) The court shall provide written notification to

11 a State or political subdivision thereof subject to an order

12 referred to in subsection (b) with respect to any finding

13 required to be made by the court under subsection (a) be14 fore the beginning of the fiscal year of that State or politi15 cal subdivision.

16 ‘‘(f) There shall be a presumption that the imposi17 tion, increase, levying, or assessment of taxes is not a nar18 rowly tailored means of remedying deprivations of Federal

19 or State rights.

20 ‘‘(h) For purposes of this section—

21 ‘‘(1) the District of Columbia shall be consid22 ered to be a State; and

23 ‘‘(2) any Act of Congress applicable exclusively

24 to the District of Columbia shall be considered to be

25 a statute of the District of Columbia.’’.
8

•S 1817 IS

1 (b) CONFORMING AMENDMENT.—The chapter analy2 sis for chapter 85 of title 28, United States Code, is

3 amended by adding after the item relating to section 1368

4 the following new item:

‘‘1369. Limitation on Federal court remedies.’’.

5 (c) STATUTORY CONSTRUCTION.—Nothing contained

6 in this Act and the amendments made by this Act shall

7 be construed to, beyond the scope of applicable law, make

8 legal, validate, or approve the use of a judicial tax, levy,

9 or assessment by a district court.

Æ