Evading Legislative Jurisdiction

In the last few years, and mostly unnoticed, courts have adopted a different approach to issues of legislative jurisdiction. Instead of grappling with the difficult question of whether Congress intended a law to reach beyond U.S. borders, some courts have side-stepped it entirely. Courts have done so by redefining extraterritoriality. Significant and contentious decisions in the Ninth and D.C. Circuits paved the way by holding that not all regulation of overseas foreign conduct is extraterritorial. And then suddenly, in 2010, the U.S. Supreme Court may have unintentionally breathed life into the practice. In its landmark Morrison v. National Australia Bank decision, the Court suggested that legislation focused on domestic conditions may not be extraterritorial, even if the legislation regulates overseas foreign activity. This Essay laments the birth of this troubling new approach, where established law is jettisoned and legislative jurisdiction analysis is evaded. The Essay's aim is largely descriptive: it summarizes an important development and reveals how courts have lapsed into error. But it goes beyond the descriptive to also critique the new practice. Redefining extraterritoriality not only subverts established doctrine, it removes an important safeguard to the difficulties that extraterritorial regulation creates. More problematically, the practice undercuts principles that have been foundational in both domestic and international law. INTRODUCTION At one time, the fundamentals of the law of legislative jurisdiction were mostly settled. As a general matter, the law shielded each state from the intrusion of others, ensuring that each could pursue its own economic and social objectives. Extraterritorial regulation--the regulation of foreign conduct outside the United States--although tolerated under certain circumstances, was disfavored and in tension with basic international law principles. To be sure, significant and vigorous debate existed at the margins over the extent to which constitutional provisions constrained congressional action and over how courts should interpret a statute's geographic reach in the face of congressional silence. But while those debates played out at the periphery, the core doctrine remained untouched. (1) Even when globalization rendered territorial limits to law less important as a descriptive matter, the heart of the doctrinal analysis remained intact. Absent contrary evidence, Congress was presumed to have exercised only its territorial jurisdiction. What once was set, however, has softened. In the last few years, and largely unnoticed, courts have taken a different tack. Instead of wrestling with the difficult questions of whether Congress intended a law to apply to foreign conduct and, if so, whether doing so is constitutional or consistent with international law, some courts have sidestepped the issue of legislative jurisdiction entirely. They have done so by redefining extraterritoriality itself. Significant decisions in the Ninth and the D.C. Circuits paved the way by holding that not all regulation of overseas foreign conduct is extraterritorial. (2) And then in 2010, perhaps unintentionally, the U.S. Supreme Court seemed to breathe life into the practice. The Court suggested that legislation "focus[ed]" on domestic conditions is not extraterritorial, even if the legislation regulates foreign activity. (3) This Essay laments the birth of this troubling new approach. Unlike a number of recent articles that have sought to develop comprehensive frameworks for addressing extraterritorial regulation (4) or to refashion this area of law, (5) the Essay's goal is more modest. It seeks to limn an important development and reveal how courts have lapsed into error. In so doing, it also aims to clear away some of the confusion that has festered in the lower courts. Part I summarizes the law of legislative jurisdiction and the doctrinal principles that courts use to determine whether Congress intended to regulate conduct occurring outside U. …