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Archive for the ‘Commerce Clause’ Category

Let’s assume that McCulloch had contained the iconic statement that Chief Justice Marshall later explained in his “Friend” essays was what he actually meant:

“Let the power be legitimate, let it be an enumerated power within the scope of the constitution, and all direct means and incidental powers which are appropriate, which are plainly adapted to the execution of that enumerated power, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

How would Obamacare have fared under McCulloch properly construed in this way?

The first question would be whether the Obamacare statute was an exercise of the Commerce Power by what Marshall regarded as “direct” means. The answer here is clearly “no” because the Affordable Care Act is not actually a regulation of interstate commerce, but rather new set of rules governing intrastate sales of health insurance.

Indeed, we have a Balkanized state system of health insurance regulation that precludes interstate sales of health insurance policies. Congress could have enacted a direct regulation of interstate commerce that struck down these intrastate regulations to create a genuine interstate health insurance market, but it chose not to do so. Instead, it sought indirect change of the interstate healthcare market by promoting intrastate sales of health insurance through the “guaranteed issue” and “community rating” provisions. These provisions cannot be direct means of exercising the Commerce Power because they do not implement any regulation of interstate commerce.

This leads to a second question, namely whether the “guaranteed issue” and “community rating” provisions are justified as incidental powers under the Necessary & Proper Clause. Again the answer must be “no” because again they are not supporting or perfecting any regulation that executes the Commerce Power by direct means. Thus, they are not “necessary” in either the restrictive (“indispensable”) or expansive (“convenient”) sense because they are not tethered to any actual exercise of the Commerce Power. The issue of whether they are also “proper” does not even come up.

The only justification for the “guaranteed issue” and “community rating” requirements is that they are rationally related to the permissible goal of expanding health insurance coverage. This would be a legitimate “object” within the scope of the Preamble, but not the type of legitimate “end” that Marshall was talking about in McCulloch because expanding health insurance coverage is not itself the exercise of an enumerated power, only a goal to be achieved through an enumerated power.

To be sure, ever since the New Deal, Congress has been able to regulate intrastate activities that have a substantial effect on interstate commerce, and my revision of Marshall’s iconic statement above would not undermine this doctrine when the intrastate regulation is needed as an incidental power for supporting or perfecting the interstate regulation. Indeed, the Substantial Effects Doctrine can be viewed legitimately as a method of construing the Necessary & Proper Clause to determine if the intrastate regulation is in fact supporting or perfecting the interstate regulation.

But you still need a specific interstate commerce regulation, not just some amorphous goal involving interstate commerce, before asking whether it is necessary and proper to regulate intrastate activity that has a substantial effect on interstate commerce. Congress, for example, could have passed a statute that directly prohibited the interstate sale of health insurance policies that lack “guaranteed issue” and “community rating” provisions. Under United States v. Darby, which proscribed the interstate shipment of lumber manufactured by workers lacking certain minimum wages and maximum hours, Congress would have a plausible precedent for further prohibiting the sale of intrastate health insurance policies lacking “guaranteed issue” and “community rating” provisions.

The issue then would have been whether the prohibition on such intrastate policies was a necessary and proper means for supporting or perfecting the direct prohibition on such interstate policies. If we had an existing interstate market for health insurance policies, then the intrastate prohibition would likely be upheld under Darby as a proper exercise of an incidental power for enforcing the interstate prohibition. The fact that no such interstate market exists, however, would expose the intrastate prohibition as a mere pretext for regulating intrastate activity.

By this analysis the “guaranteed issue” and “community rating” requirements of Obamacare are themselves unconstitutional even without resorting to the individual mandate. The individual mandate is just one more step removed from the Commerce Power in that it is not itself a direct regulation of interstate commerce or an incidental power for executing such a regulation.

At best the individual mandate is a secondary incidental power for perfecting other incidental powers (“guaranteed issue” and “community rating”) that are not themselves means for executing an enumerated power. This is Jefferson’s proverbial “House that Jack Built” – piling necessities upon necessities – made worse by the fact that one of the “necessities” of Obamacare, namely preventing the adverse selection caused by the “guaranteed issue” and “community rating” requirements, was created by the Obamacare statute itself.

Of course, under modern Commerce Clause jurisprudence, one no longer has to show how an incidental power is needed to execute an enumerated power; it is enough if the incidental power regulates an intrastate activity that substantially affects interstate commerce, and the incidental power is rationally related to one of the goals found in the Preamble.

Nonetheless, I would argue that this construction of the Necessary & Proper Clause constitutes a improper judicial amendment of the Constitution (at least as applied in interstate commerce cases), and I think it can be attributed in large measure to the linguistic sleight of hand whereby Marshall’s legitimate “end” is no longer an enumerated power, but any of the Preamble’s “objects.” In any event, this linguistic sleight of hand is what has made Obamacare possible thus far, and we can only hope that the Supreme Court will strike down this House that Jack Built and force Congress to start over.

Copyright © 2012 Anthony W. Hawks. All rights reserved.

The decision in McCulloch v. Maryland was handed down on March 6, 1819, and it did not take long for Marshall’s critics to mount a newspaper campaign denouncing the decision, particularly what they viewed as Marshall’s erroneously expansive reading of the word “necessary” in the Necessary & Proper Clause.

The first two news articles, signed by “Amphictyon” (believed to be Judge William Brockenbrough of Virginia) were published three weeks later, prompting two reply articles by Marshall under the pseudonym of “A Friend of the Union.” The debate continued with four additional articles by Marshall’s fiercest critic, Virginia Supreme Court Justice Spencer Roane (signing as “Hampden”), which in turn led to nine more essays by Marshall, this time as “A Friend of the Constitution.” For 150 years the full extent of this debate was unknown, but all of these articles were finally collected and published in 1969 by Stanford Law Professor Gerald Gunther in John Marshall’s Defense of McCulloch v. Maryland.

This ideological battle was a replay of the earlier struggle between the restrictive Jefferson-Madison-Randolph view of “necessary” as “indispensable,” on the one hand, and the expansive Hamilton view of “necessary” as merely “convenient,” on the other. In McCulloch, Marshall appears to have sided with Hamilton by equating “necessary” with “convenient” or “useful” to uphold the creation of the Second Bank of the United States.

But Marshall also equated “necessary” with “needful,” requisite,” “essential,” and “conducive to,” which created a conundrum that has distorted interpretations of the Necessary & Proper Clause ever since. How can something be “essential” yet “merely convenient” at the same time? Was Marshall just being too clever by half, straddling both sides of a linguistic fence, or was he actually far more respectful of the restrictive Jefferson-Madison-Randolph view than is generally understood?

As the “Friend” essays make clear, McCulloch was fundamentally an affirmation that the purpose of the Necessary & Proper Clause was to import the English common law doctrine of incidental powers, whereby lesser powers are implied if needed (“necessary”) to execute the enumerated principal powers, as long as they are employed in a manner consistent with the “letter and spirit” of the Constitution (“proper”).

Here is Marshall speaking as A Friend of the Constitution: “[E]verything necessary to give full effect to the grant, everything essential to the perfect enjoyment of the thing granted, passes by implication.” He traces this doctrine to the venerable English jurist Sir Edward Coke, whom Marshall quotes as saying that “when the law doth give anything, it giveth, implied by whatsoever is necessary for the taking an enjoying of the same. And, therefore, the law giveth all that which is convenient, … as much as is necessary.”

Coke’s use of both the words “necessary” and convenient” in the foregoing quote was a balancing act that Marshall further described as follows: “When so used, they signify neither a feigned convenience nor a strict necessity, but a reasonable convenience, and a qualified necessity; both to be regulated by the state of the parties, and the nature of the act to be done.”

A full understanding of the doctrine of incidental powers then explains the conundrum above and harmonizes the meaning of “necessary” in both its restrictive and expansive meanings. Since most, if not all, powers can be executed in a variety of ways, none of which by themselves are absolutely indispensable, Congress is restricted to those “proper” means that actually execute the enumerated power, but it is given a choice as to which “proper” means are most expedient or convenient to use in a given situation.

In other words, the Necessary & Proper Clause authorizes any means that might be necessary or essential as long as they are proper; and for Marshall, “proper” meant that (1) they could not be expressly prohibited by the “letter” of Constitution (e.g. the Bill of Rights); nor (2) implicitly prohibited by the “spirit” of the Constitution (e.g. structural principles of separation of powers and federalism, or unenumerated rights retained by the people).

The choice of means within these constraints is left to Congress’s discretion. It is in this sense that “necessary” is both “essential” and “convenient”: Congress can choose the most convenient means from among any means that might be essential if such means were the only one available, as long as the means chosen meet the standards above for propriety.

To underscore this point, Marshall added the restriction in McCulloch that Congress was also precluded from passing laws so attenuated from the enumerated power as to be nothing more than a “pretext of executing its powers … for the accomplishment of goals not entrusted to the government.” If Congress did any of these things, then McCulloch made clear that “it would become the painful duty of this tribunal … to say that such an act was not the law of the land.”

In explaining how incidental powers could be implied under the Necessary & Proper Clause, Marshall made two important distinctions in his “Friend” essays. First, he was careful to distinguish between what he called a “direct” means for executing an enumerated power and incidental powers that help perfect the use of the enumerated power. A direct means would be a statute that, for example, executed the Tax Power by actually laying and collecting taxes, or that executed the Postal Power by establishing post offices and post roads. An incidental power would be a second statute that supported or perfected the first statute by criminalizing tax evasion or mail fraud.

Second, Marshall differentiated between the ultimate goals or “objects” of the Constitution and the powers (both enumerated and incidental) granted by the Constitution to achieve those goals. In his initial “Friend of the Constitution” essay, Marshall identified the “objects” of the Constitution, not as the enumerated powers themselves, but as the grand purposes set forth in the Preamble: “to form a more perfect union, establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to themselves and their prosperity.”

The point of enumerating specific powers was to set forth those principal powers that the Framers believed would be collectively sufficient to achieve any of the “objects” in the Preamble. The point of the Necessary & Proper Clause was to ensure that those (express) principal powers could be executed by whatever (implied) incidental powers might be needed to supplement and perfect the direct means for executing the principal powers – assuming that the incidental powers themselves did not result in a violation of the Constitution or a pretext for violating the Constitution.

If the enumerated principal powers were not enough to achieve one of the Preamble’s goals, either because they were insufficient in themselves, or because the only available incidental powers were improper or pre-textual, then Congress has only one choice: formally add another enumerated power under the Article V amendment process, not add a principal power under the guise of an implied incidental power.

In terms of Obamacare, a direct means of executing the Commerce Power would be a statute that actually regulated interstate commerce by requiring health insurance policies sold across state lines to contain “guaranteed issue” and “community rating” provisions. An incidental power would be a criminal or civil sanction against any insurer that failed or refused to comply with this requirement. In the next post, I will examine how the actual Obamacare statute fares under the doctrine of incidental powers and Marshall’s insistence on distinguishing direct means v. incidental powers, on the one hand, and objects v. powers, on the other.

Copyright © 2012 Anthony W. Hawks. All rights reserved.

During the recent Supreme Court oral arguments on the Obamacare individual mandate, Chief Justice John Marshall was invoked no less than three times: once by Justice Sotomayer to suggest that Marshall’s opinion in Gibbons v. Ogden allowed Congress to police itself with respect to the Commerce Clause; once by Solicitor General Verrilli to assert that Congress’s reliance on a individual mandate  was well within the broad discretion over choice of means that Marshall upheld in McCulloch v. Maryland; and once by the challengers’ attorney, Paul Clement, who argued that the “great Chief Justice” would never have extended McCulloch so that Congress could force people to make deposits in the disputed Second Bank of the United States.

My purpose here is not to argue whose side Marshall would have chosen, but rather to show how Obamacare illustrates the ease with which the Supreme Court can “amend” the text of the Constitution with imprecise language that attempts to interpret that text.  (For a compelling argument that Marshall would indeed have struck down the individual mandate, read Federalism & Separation of Powers – ‘Health Laws of Every Description’: John Marshall’s Ruling on a Federal Health Care Law by Robert G. Natelson & David B. Kopel.)

The imprecise language here is from McCulloch itself, and it can be found in what is perhaps the most iconic statement of law ever written by the “great Chief Justice”:

“Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

For nearly two centuries now, this language has been the lodestar for interpreting the Necessary & Proper Clause, which empowers Congress “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers” that are specifically enumerated in Article I, Section 8 and elsewhere in the Constitution.

Now look closely again at the beginning of Marshall’s quote and notice that he said the “end” should be legitimate, even though the Necessary & Proper Clause refers only to executing an enumerated power and nothing about using those powers to achieve legitimate “ends”.  By using an amorphous word like “end” instead of the specific textual word “power”, Marshall created a precedent that later enabled the Supreme Court to substitute “end” for “power” in the context of Commerce Clause cases that arose during the New Deal.

The “end” to which Marshall was referring was the execution of an enumerated power itself, not any goal or purpose that Congress might want to attain through an enumerated power.  But this changed in Commerce Clause cases following the 1937 decision in N.L.R.B. v. Jones & Laughlin Steel Corp.  Now the Necessary & Proper Clause was no longer tethered to “means” that actually “execute” the power to regulate interstate commerce; henceforth it would authorize any “means” that might achieve the goal or purpose that Congress was hoping to accomplish through the Commerce Power.

If you accept this linguistic sleight of hand – where Marshall’s notion of a legitimate “end” is magically transformed from the execution of an enumerated power to any permissible policy goal that Congress wants to achieve – then the argument for upholding the individual mandate is easy to make, reducible to a simple syllogism:

1st Premise: The primary goal or “end” of Obamacare’s Patient Protection and Affordable Care Act (Public Law No. 111-148 ) is to expand health insurance coverage for individuals to the greatest extent practicable.

2nd Premise:  The principal means for achieving this goal are the so-called “guaranteed issue” (no denials for pre-existing conditions) and “community rating” (no higher premiums for medical condition or history) reforms of the health insurance market.  The effectiveness of these reforms, however, creates an “adverse selection” problem (foregoing insurance until medical care is needed) that undermines the effectiveness of the statute as a whole by bankrupting insurers who must implement the guaranteed issue and community rating reforms.

3rd Premise:  The individual mandate counteracts the adverse selection problem by requiring virtually all individuals, but especially healthy ones, to buy health insurance before they need medical care.

Conclusion:  The individual mandate is constitutional because it is a necessary secondary means for ensuring that the primary means of guaranteed issue and community rating achieve the legitimate end of expanding health coverage.

Leave aside the startling fact that this argument gives Congress an unlimited power to fix any problem that Congress itself creates in trying to realize a constitutional goal; look instead at what Marshall actually meant to say in McCulloch:

Let the [power] be legitimate, let it be [an enumerated power] within the scope of the constitution, and all [direct means and incidental powers] which are appropriate, which are plainly adapted to [the execution of that enumerated power], which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

How do we know that this is what the “great Chief Justice” meant to say?  Because he told us in his public defense of McCulloch presented in a series of 11 essays published in the spring and summer of 1819, shortly after McCulloch was decided.  These essays, and how Obamacare would fare under this corrected reading of the Necessary & Proper Clause, will be the subject of the next post.

Copyright © 2012 Anthony W. Hawks. All rights reserved.

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