A Chink in the Armour of Rational Basis Review for Economic Regulations?

Chief Justice Roberts, in his dissent yesterday in Armour v. City of Indianapolis, Indiana raises unanswered questions about the future of the Court’s review of economic regulations. Roberts disagreed with the majority’s conclusion that the city had a rational basis for the disparate treatment resulting from its retroactive repeal of a sewage tax to the exclusive benefit of taxpayers who chose to pay on an installment plan. The majority cited administrative hassle as a rational basis for the city’s refusal to refund the poor chumps who paid their entire liability up front. To Roberts, that lame excuse could not clear the low hurdle of rational basis review. How hard can it be to “cut the checks and mail them out”?

The most provocative line in a dissent full of great lines may be the only one in which Roberts names the legal standard he applies: “I cannot agree that those reasons pass constitutional muster, even under rational basis review.” Is there a hint in those words that a higher standard could someday govern economic regulations? Perhaps not. After all, the Chief Justice, joined by Justices Scalia and Alito, went on to say that “we give great leeway to taxing authorities in this area, for good and sufficient reasons.” And Justice Thomas, who seems most likely to jettison the rational basis standard, joined in full Justice Breyer’s majority opinion, which spent two pages setting out the traditional standard. But a degree of deference would not be inconsistent with some form of intermediate scrutiny.  And the case did not squarely raise the standard of review question.

Judge Janice Rogers Brown made waves in April when, after faithfully joining an opinion upholding a discriminatory regulation under rational basis review, she suggested in a separate concurrence, that the standard she was bound to apply was impossible to reconcile with the Framers’ political theory and “the constitutional guarantee of liberty.” Those looking to the Supreme Court for reassurance that the rational basis standard is secure may find Chief Justice Roberts’s dissent unsettling–not just for the property-defending result it would have reached, but for the votes it attracted and for its lackluster endorsement of the rational basis test. Although it is unlikely that the Armour dissenters would lead a direct assault on the traditional standard, Chief Justice Roberts’s opinion shows that no such revolution would be necessary to effect a substantial doctrinal shift.  Adding bite to the Court’s review of economic regulations could change outcomes at the margins, where state action falls short of even “rough equality.”

Roberts’s dissent says that “every generation or so a case comes along when this Court needs to say enough is enough.”  The last opinion in which the Court struck down a taxation scheme as a violation of the Equal Protection Clause was Allegheny Pittsburgh Coal Co. v. Commission of Webster County in 1989. The unanimous opinion was authored by the late Chief Justice Rehnquist, and the taxpayer’s brief was written in part by his former clerk, John G. Roberts, Jr.

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