Retroactivity of Legislation (Update)

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legislation is "retroactive" when it applies new legal consequences to conduct that occurred before the legislation took effect. Congress and state legislatures generally may enact legislation that has retroactive effects when their intent to do so is clear. In Landgraf v. USI Film Products (1993), the leading recent case on retroactivity of legislation, the Supreme Court held that the civil rights act of 1991, enacted to restore the scope of civil rights laws the Court had narrowly interpreted in 1989, did not apply to claims arising before the act's effective date. The Court applied a presumption against statutory retroactivity and, the act's restorative purpose notwithstanding, held that Congress had not clearly indicated an intent that the provisions at issue apply retrospectively. (No similar clear-statement hurdle or presumption against retroactive application applies to judicial decisions, which are governed by a general rule in favor of retroactive application, except on habeas corpus review.)

There is no general constitutional prohibition against retroactive legislation; the Constitution does, however, prohibit certain types of retroactive legislation. The various constitutional anti-retroactivity provisions reflect fundamental considerations of fairness, including protection of reasonable reliance and settled expectations, and the rule of law principle that behavior should be governed by rules publicly fixed in advance. Retroactive laws can deprive persons of fair notice of the illegality of contemplated behavior, and create opportunities for legislative retribution or favoritism against identifiable groups.

Among the constitutional prohibitions on retroactive legislation are the ex post facto clauses of the Constitution, which prohibit retroactive application of certain federal and state laws. The Supreme Court since calder v. bull (1798) has construed those prohibitions to apply only to new penal laws that disadvantage the defendant. Laws violate the prohibition on ex post facto laws if they punish acts that were noncriminal when committed, increase the punishment for or aggravate an existing crime after it was committed, or deprive an individual of a defense that was available when the conduct occurred. Retroactive application of new sentencing guidelines or mandatory sentence provisions, and elimination of "good time" credits for time served in prison are examples of measures the Court has invalidated under the ex post facto clause, whereas the Court upheld a statute that decreased the frequency of routine parole suitability hearings to persons convicted before its enactment. Justice clarence thomas in a recent concurring opinion suggested that Calder be reexamined and the ex post facto clauses be applied to civil legislation as well as criminal, but no other member of the Court joined in that suggestion.

With the ex post facto clause unavailable to address civil retroactive legislation, other constitutional provisions, including the guarantee of due process, the contract clause, and the takings clause, set the relevant limitations. The contract clause imposes constitutional constraints on the states' ability retroactively to impair "the Obligation of Contracts." The contract clause protects against state laws that impair governmental or private contracts; by its terms the clause does not apply to federal laws. Its principal purpose was to prevent debtor relief laws, thereby ensuring that new legislation could not vitiate obligations previously incurred.

Until the nineteenth century, the contract clause was the principal ground for judicial invalidation of state legislation infringing on private business and property interests. The Court has traditionally been most skeptical of states' efforts to relieve themselves of their own contractual obligations. By the close of the nineteenth century, however, the contract clause largely lost its practical importance as an impediment to retroactive legislation. States increasingly framed their own contractual obligations so as to preserve their latitude to modify contractual provisions, thereby avoiding contract clause problems. During the Great Depression, the Supreme Court in home building & loan association v. blaisdell (1934) upheld even a retroactive debtor relief law as an economic emergency measure, concluding that such a public purpose justified the law, and characterizing it as preserving the value of creditors' accrued rights. Following Blaisdell, invalidations of legislation under the contract clause have been rare.

Although the contract clause does not apply to federal legislation, the due process clause of the Fifth Amendment has been interpreted to place similar limitations on federal government power to legislate to impair private or governmental contracts, or to impose retroactive civil liability. Under the due process clause, the Court asks whether the law in question is rationally related to a legitimate governmental purpose. During the Lochner era, the Court skeptically reviewed economic regulation, and repeatedly relied on substantive due process to invalidate economic legislation that interfered with settled economic expectations of corporations and private property owners. The Court in railroad retirement board v. alton railway co. (1935), for example, voided as a substantive due process violation a federal law that required the railroad to establish a pension fund retrospectively covering even some employees who no longer worked for the railroad. Since the 1930s, however, the Court has not invalidated any law as retroactive in violation of substantive due process. In one leading case, Usery v. Turner Elkhorn Mining Co. (1976), the Court upheld legislation requiring employers to provide benefits to coal miners who contract black lung disease, including miners who had stopped working long before the legislation was enacted, as a rational way to spread the costs of the disease, even though the law admittedly upset the employers' settled expectations.

A fractured majority in Eastern Enterprises v. Apfel (1998) signaled that the current Court's tolerance of retroactive legislation has its bounds. A four-member plurality, in an opinion by Justice sandra day o'connor, held that a federal law requiring companies that had engaged in mining, even if they no longer did so, to fund lifetime health benefits for former miners was a regulatory taking of the employers' property in violation of the takings clause of the Fifth Amendment. Although the law did not involve the physical invasion of property that has traditionally been the focus of takings clause jurisprudence, the plurality believed that the employers' economic interests sufficed to trigger a takings analysis, and that the law fell short of the clause's requirement of "justice and fairness." Under a three-part analysis looking to the law's economic impact on employers, the degree to which it interfered with employers' investment-backed expectations, and the nature of the governmental action in singling out certain classes of employers to bear an unanticipated burden based on conduct long past, the plurality concluded that the law amounted to a taking. It imposed "a severe retroactive liability on a limited class of parties that could not have anticipated the liability"—a liability that the plurality viewed as "substantially disproportionate to the parties' experience."

The remaining five members of the Court in Eastern Enterprises believed that the statute was properly analyzed under the due process rather than the takings clause. Justice anthony m. kennedy concurred in the judgment in part on the ground that the law violated substantive due process. Noting that "[s]tatutes may be invalidated on due process grounds only under the most egregious of circumstances," Kennedy nonetheless concluded that the law at issue was "far outside the bounds of retroactivity permissible under our law." Kennedy dissented, however, from the plurality's takings analysis on the ground that the law implicated no identified property interest, but merely monetary liability. The four remaining Justices would have upheld the law as fundamentally fair and therefore consistent with due process.

Eastern Enterprises demonstrates that there is current vitality to the non-retroactivity principle in the context of civil legislation. Both the plurality and Kennedy, however, emphasized the exceptional nature of the legislation at issue in that case, suggesting that they contemplate that most legislation may still apply retroactively consistent with the Constitution, provided that the intent of Congress or the state legislature in that regard is clear.

Cornelia T. L. Pillard