Carl Nichols, appearing at Senate Judiciary for his confirmation hearing last year. Photo: Diego M. Radzinschi / ALM

President Donald Trump's personal attorney and U.S. House lawyers said Tuesday they were unable to reach an agreement over how to proceed in the president's bid to prevent federal lawmakers from seeking copies of his New York state tax returns.

The impasse threw further uncertainty into Trump's push to bar House Democrats from seizing on a New York law, passed only weeks ago, that opened a path for lawmakers to request the tax returns from state finance officials. Trump, defying norms, has refused to release his state and federal tax returns, despite promises that he would do so.

The two sides, along with the New York state attorney general's office, were directed to the negotiation table by U.S. District Judge Carl Nichols of the District of Columbia, a Trump court appointee who joined the bench just a few weeks ago.

At a court hearing Monday, Nichols said the case presented him with a procedural “conundrum,” as the Democrat-controlled House Ways and Means Committee has not yet made any request for Trump's New York tax returns. But Nichols also noted that New York officials could provide Trump's tax returns to House Democrats without notifying the president, rendering the case moot before it could be fully heard.

Nichols ordered the two sides to try to negotiate a process that would preserve the president's ability to challenge any production of his state tax returns to House Democrats. About a half hour before their 6 p.m. deadline, the lawyers said they could not reach such a compromise.

House general counsel Douglas Letter, in a joint court filing with Trump's lawyer and the New York state attorney general's office, stressed that Congress enjoys broad legislative immunity that should shield it from the president's push for an injunction. Any such order issued against the committee, Letter argued, would mark the first time—”as far as counsel for the House is aware”—that a court has overridden that immunity and stopped a body of Congress from taking legislative steps.

“This is of particular concern where the injunction against a body of Congress would be issued at the behest of the President, raising glaring separation of powers concerns; this is precisely what the Framers of the Constitution wished to guard against,” Letter said.

Trump's lawyer, William Consovoy of the Washington firm Consovoy McCarthy, proposed that the House Ways and Means Committee be required to provide 14 days' notice of any request for the president's state tax returns. Consovoy also offered an alternative: New York should notify Nichols of any request it receives from the House and wait 14 days before providing Trump's tax returns.

William Consovoy of Consovoy McCarthy at a meeting of the Federalist Society. Washington, D.C. April 17, 2018. Photo: Diego M. Radzinschi/ALM

Andrew Amer, a special litigation counsel for the New York attorney general's office, argued that the state's offices fell outside Nichols's jurisdiction as a trial judge in Washington. Trump's claims against New York, he argued, should be dismissed or at the very least be transferred to Manhattan federal district court.

Still, if Nichols set an expedited schedule for hearing arguments on the jurisdiction question, Amer said the commissioner of the New York finance department would temporarily hold off on responding to any request for Trump's state tax returns.

That respite would end a week after Nichols's ruling on the jurisdiction issue, Amer said, giving Trump a “reasonable opportunity to take whatever steps he deems necessary to protect his interests” if the judge rules for New York. If Nichols rules against New York, Amer said, the state's proposal would give the parties time to meet and consider next steps.

Trump's lawsuit takes aim at the Trust Act, a New York law enacted earlier this month that allows state finance officials to turn the president's tax returns over to Congress. The law, according to the president's lawyers, was “enacted it to discriminate and retaliate against President Trump for his speech and politics,” in violation of his First Amendment rights. Consovoy has argued that House Democrats lack a valid legislative purpose for seeking the president's tax returns.

A co-sponsor of the New York bill said the measure was one step to give the U.S. Congress another oversight tool as a co-equal federal branch of government. “This is an important juncture in our history where we have a White House stonewalling Congress and preventing it from undertaking its oversight responsibility,” State Sen. Brad Hoylman, a Manhattan Democrat, said in May.

The case is one of several in Washington and New York courts that confront the secrecy of Trump's financial records.

Two federal appeals courts are weighing trial judges' orders that said congressional committees are permitted to obtain records from Trump's longtime lender Deutsche Bank and his accounting firm Mazars USA. Separately, the House has sued the Trump administration to obtain six years' worth of the president's federal tax returns.

A lawyer for Trump on Tuesday threatened to sue California over a new state law, signed by the governor, that requires presidential candidates to submit their tax returns in order to appear on the ballot.

Trump has maintained that he is being audited but otherwise would release his tax returns. “I don't mind releasing. I'm under a routine audit, and it will be released. As soon as the audit's finished, it will be released,” Trump said shortly before the 2016 election.

 

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