Legal News for Weds 7/3 - Kansas Blocks Biden Title IX Protections, SCOTUS Impact on 1/6 Rioters, Firms Respond to New Limits on Agency Powers and Column on Auditing Top 1% of Filers

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This Day in Legal History: Carlin’s Seven Dirty Words Get to SCOTUS

On July 3, 1978, the US Supreme Court delivered a landmark decision in FCC v. Pacifica Foundation, affirming the Federal Communications Commission's (FCC) authority to reprimand New York radio station WBAI for airing George Carlin's "Seven Dirty Words" comedy routine.

The 5-4 ruling centered on Carlin's sketch, which listed words inappropriate for public broadcast. The Court held that the FCC could regulate indecent material on public airwaves during times when children might be listening.

Justice John Paul Stevens, writing for the majority, emphasized that broadcast media have unique accessibility to children and thus require special considerations. This ruling underscored the government's role in safeguarding public morality on airwaves, distinguishing broadcast media from other forms of communication due to its pervasive presence and accessibility. The decision sparked ongoing debates about free speech and government regulation, influencing policies on broadcasting standards and the permissible content on public airwaves.

A federal district court in Kansas has preliminarily blocked an Education Department rule that protects children from discrimination based on gender identity in schools receiving federal funding. Judge John W. Broomes issued the injunction, affecting Alaska, Kansas, Utah, and Wyoming. This rule, which extends Title IX protections to include sexual orientation and gender identity, has now been blocked in 14 states, following similar injunctions last month.

Judge Broomes, appointed by Trump, found that the states are likely to succeed in their claim that the Biden Administration exceeded its authority by expanding the definition of sex discrimination. The states argued that the regulation's definition of sexual harassment would suppress the speech of students who believe sex is immutable and binary, and who use biologically accurate pronouns. Broomes agreed, stating that the rule's definition of sex-based harassment is impermissibly vague under the Administrative Procedure Act.

This decision is a setback for the Biden Administration’s efforts to enhance LGBTQ rights. Since the Supreme Court's 2015 Obergefell v. Hodges decision, which guaranteed same-sex marriage, conservative legal efforts have focused on issues such as transgender bathroom bans, athlete bans, and restrictions on gender-affirming care for minors.

The Department of Justice has not yet commented on the ruling. The case, Kansas v. Dep’t of Education, is represented by the Kansas Attorney General's Office.

Biden’s Title IX Transgender Protections Blocked by Kansas Judge

In light of a recent Supreme Court ruling narrowing a criminal obstruction law, lawyers for Jan. 6 Capitol rioters are preparing to challenge convictions and seek reduced sentences. The Supreme Court's decision requires prosecutors to prove that defendants destroyed or altered documents to convict them under the obstruction statute, impacting over 200 cases related to the Capitol riot.

Attorneys have indicated plans to file motions in the US District Court for the District of Columbia to dismiss charges or seek resentencing for clients who did not handle documents, particularly those linked to the Oath Keepers. This move will significantly affect cases where the obstruction charge was the sole felony. Carmen Hernandez, a criminal defense lawyer, anticipates various creative legal arguments in response to the ruling.

The Supreme Court's 6-3 decision on June 28, which favored Capitol rioter Joseph Fischer, has set a new precedent for interpreting the obstruction statute, originally enacted to address evidence destruction post-Enron scandal. This ruling is a setback for federal prosecutors who had heavily relied on the statute to charge participants in the Capitol attack. Elizabeth Franklin-Best, appealing for Oath Keepers' leader Stewart Rhodes, expects the ruling to substantially impact his sentence, as he was also convicted of seditious conspiracy.

Several attorneys for other Jan. 6 defendants have indicated intentions to seek relief based on the Fischer ruling. The DC courts will likely face an influx of filings for years. The broader immediate impact is somewhat limited as only 249 out of over 1,400 charged individuals were affected by the statute, with 52 cases having obstruction as the only felony.

The Justice Department is still evaluating the ruling's implications, and early signals suggest prosecutors might not concede in all cases. Some defense lawyers are preparing to argue that the initial indictments were flawed under the new interpretation. However, outcomes will likely vary, with hurdles for those who pled guilty before the ruling, and effectiveness depending on individual judges and defendants.

The Supreme Court's re-interpretation of the obstruction statute, requiring proof of document destruction or alteration, is critical. This change affects the foundation of many convictions and challenges the prosecutorial approach, necessitating a reassessment of cases and potentially leading to significant legal revisions and reductions in sentences.

Jan. 6 Rioters to Request Relief After Supreme Court Ruling

US law firms are quickly capitalizing on recent Supreme Court decisions that limit federal agency powers. Within hours of these rulings, firms began sending updates and hosting webinars to explain the implications to their clients. The Supreme Court's decisions, made over three days, restrict agencies' use of internal judges, overturn the Chevron deference principle (which required courts to defer to agency interpretations of ambiguous laws), and revive challenges related to statute limitations, potentially leading to more lawsuits over old regulations.

Experts believe these rulings will significantly boost administrative law challenges, particularly benefiting firms that frequently contest federal regulations. Many lawyers have reported a surge in client inquiries, noting that the end of Chevron deference might lead businesses to pursue more litigation due to increased chances of success. The statute of limitations decision is also expected to result in more legal actions, though some attorneys predict a gradual increase rather than an immediate surge in new cases.

Some attorneys highlight that the post-Chevron landscape is creating uncertainty and questions among clients across various industries. There is an expectation that while some companies may adopt a more aggressive litigation strategy, others might prefer lobbying to challenge regulations, as many corporate clients are cautious about escalating legal expenses.

Overall, the Supreme Court's rulings are reshaping the legal environment, prompting law firms to guide clients through this evolving landscape and capitalize on emerging opportunities.

US law firms smell opportunity as Supreme Court guts agency powers | Reuters

In my column, I argue that the IRS's shift to a broader audit mandate for all high-income taxpayers could undermine tax compliance improvements. The IRS needs to reassess and refine its audit strategies to optimize resources and maximize compliance, particularly among the wealthiest individuals. I propose a hybrid audit strategy that ensures nearly 100% audit coverage for the top 1% of income earners, with progressively lower rates for lower high-income brackets. This approach would be more effective than the current broad mandate, which lacks specific metrics for measuring success and could fail to capture significant non-compliance.

Previously, the IRS had a directive to audit at least 8% of returns for individuals with incomes over $10 million, which was a focused and measurable effort. The new policy, however, aims for broader scrutiny without clear methods to gauge effectiveness, raising concerns about its impact on audit rates and overall compliance. My suggested hybrid approach would combine the precision of the former directive with a progressive audit threshold system, concentrating IRS resources where they can yield the highest return.

Focusing on high-income taxpayers with the greatest potential for avoidance ensures better deterrence of tax evasion. The Treasury Inspector General for Tax Administration's report supports this, showing that audits of high-income individuals are more productive. By defining specific audit coverage thresholds for the highest income brackets, the IRS can optimize its efforts and expand compliance audits down the income brackets.

The critical legal element here is the need for targeted and measurable audit strategies. Specific metrics are essential to ensure the IRS's audit efforts are efficient and effective, allowing the agency to allocate resources where they can achieve the greatest impact on revenue and compliance.

IRS Hybrid Audit Approach Best Bet to Scrutinize Rich Taxpayers

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