Source: https://www.yalelawjournal.org/forum/bad-news-for-professor-koppelman-the-incidental-unconstitutionality-of-the-individual-mandate
Timestamp: 2019-04-25 04:02:02+00:00

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To the contrary, the Necessary and Proper Clause does not authorize the individual mandate. That conclusion straightforwardly emerges from careful study of the Clause’s origin, purpose, and meaning. The results of several such studies are collected in a recent book on the Clause’s intellectual antecedents. We draw heavily on that book in this Essay, though we do not claim that all of the book’s authors would necessarily endorse all of the modern uses that we make of their purely originalist research.
The Necessary and Proper Clause incorporates basic norms drawn from eighteenth-century agency law, administrative law, and corporate law. From agency law, the Clause embodies the venerable doctrine of principals and incidents: a law enacted under the Clause must exercise a subsidiary rather than an independent power, must be important or customary to achievement of a principal end, and must conform to standard fiduciary obligations. Importantly, that first requirement of subsidiarity must be satisfied before one inquires whether a law is important or customary (“necessary”) or within fiduciary boundaries (“proper”).
From administrative law, the Necessary and Proper Clause embodies the principle of reasonableness in the exercise of delegated power. This requires conformance with a set of fiduciary norms similar to those drawn from agency law, including the norms of acting only within delegated jurisdiction and of treating all persons subject to a public agent’s power impartially. Evidence from eighteenth-century corporate law—and the Constitution was widely recognized in the Founding era as a type of corporate charter—confirms these conclusions about the meaning of the phrase “necessary and proper for carrying into Execution,” though for lack of space we do not pursue that aspect of the Clause’s provenance here.
These principles, while perhaps strange-sounding to modern ears, were perfectly obvious to the Founding generation, which is why the standard materials of constitutional research—such as the Convention and ratification debates—seem to say relatively little about them. Moreover, they are consistent with Supreme Court decisions relevant to the application of the Necessary and Proper Clause to the individual mandate. Those principles drove Chief Justice Marshall’s opinion in McCulloch v. Maryland to the point that the opinion is close to incomprehensible without a firm grounding in them. They further explain why the individual mandate is not a law “necessary and proper for carrying into Execution” federal powers, even under post-New Deal case law, for two reasons.
First, the power to order someone to purchase a product is not a power subordinate or inferior to other powers. It is a power at least as significant—or, in eighteenth-century language, as “worthy” or of the same “dignity”—as the power to regulate insurance pricing and rating practices. It is therefore not incidental to other powers exercised by Congress in the PPACA and must be separately enumerated if it is to exist.
Second, the doctrine of principals and incidents and the principle of reasonableness both embody the fiduciary norm that agents exercising delegated power must treat multiple principals subject to those agents’ power impartially. Interpreting the Necessary and Proper Clause to allow Congress to force private dealings with preferred sellers of products fails that basic fiduciary norm, as illustrated by Founding-era concerns about Congress invalidly using the Necessary and Proper Clause power to create monopolies. Therefore, if the individual mandate is constitutional, it is not by virtue of the Necessary and Proper Clause.
To understand why the Necessary and Proper Clause does not validate the individual mandate, it is necessary to understand the Clause’s origins in agency law. Those origins demonstrate that the first question to ask is not whether the mandate is “necessary and proper” to the accomplishment of some permissible governmental end (though it may well be neither of those things) but rather whether the mandate is an exercise of power inferior or subordinate to the federal government’s enumerated principal powers.
The law of agency was central to legal and economic life in the Founding era. Ordinary citizens often employed agents such as managers and brokers in their business affairs, and citizens frequently themselves acted as agents, such as executors or guardians. Accordingly, the general contours of agency law were familiar to a wide range of eighteenth-century Americans.
an interest had to be less important or less valuable than its principal. The term “merely” was often applied to incidents, as was the word “only.” An incident was always subordinate to or dependent on the principal. The courts sometimes phrased the latter requirement by stating that an incident could not comprise a subject matter independent of its principal nor could it change the nature of the grant.
For example, a power to manage lands might carry as an incident a power to make short-term leases but would not carry as an incident a power to sell a portion of the property. The power to sell was independent of, or as “worthy” as, the power to manage.
Being dependent upon or inferior to a principal right or power was a precondition to being an incident but was not itself sufficient. As is illustrated by the above-quoted passages from Blackstone’s Commentaries and Giles Jacob’s widely used A New Law-Dictionary, an additional touchstone for determining the existence of incidents, or incidental powers, was necessity.
The term “necessity,” in this context, had a conventional and well-understood meaning, encompassing three circumstances that could establish that a right or power was potentially (assuming appropriate inferiority to a principal) an incident. First, a right or power was necessary, and therefore potentially an incident, if it was indispensable to the use of the principal; for example, a power to remove corporate officers is incidental to a corporation because it is “as necessary for the well governing [of] a corporation as an incidental power to make by-laws.” Second, a right or power was necessary if its absence would seriously impair the value of the principal; for example, fish (personal property) are incident to the pond containing them (real property) because “they are so annexed to and so necessary to the well-being of the [real-property] inheritance, that they shall accompany the land wherever it vests.” Third, a right or power was necessary if it customarily accompanied the principal; for example, a factor (a person selling goods as an agent for someone else) could have the incidental power to extend credit to the customer if offering credit was customarily a power held by factors for the particular type of goods. The doctrine of necessity made good sense, as these three circumstances reasonably approximated the situations in which parties would likely have intended the incidental right or power to accompany the principal grant. An agency instrument, against the backdrop of the law governing incidental powers, could limit the agent’s powers to those expressly granted (thereby precluding exercise of incidental powers), could confer incidental powers that confirmed or duplicated what the law would have implied as incidental, or could confer specific incidental powers that were either narrower or broader in scope than the common law baseline of incidents.
By the eighteenth century, there was a wide array of adjectives available to drafters of agency instruments to describe an agent’s incidental power. “Some documents relied only on a single standard, such as ‘necessary,’ ‘needful,’ ‘proper,’ and ‘fit.’ Others employed ‘necessary and proper,’ ‘necessary or proper,’ ‘needful and necessary,’ ‘necessary or useful,’ ‘necessary and convenient,’ ‘necessary and expedient’—and so on.” Obviously, of most interest here are grants of “necessary and proper” powers to agents—which is grammatically the most restrictive formula readily available to a drafter in the late eighteenth century because it conjoins (“and”) the separate requirements of necessity and propriety and does not expressly make the agent the judge of either necessity or propriety (by, for instance, allowing the agent to act in such ways as the agent “shall think fit” or “shall judge it necessary and proper”). In this context, necessity described the requisite attachment of the incidental power to its principal end, while propriety described conformance with other fiduciary norms, such as the duty of impartiality, the duty of good faith, and the primary duty to stay within the scope of granted authority.
This common law background of the law of agency informed—and indeed drove—the drafting and ratification of the Necessary and Proper Clause. The Clause was drafted by a five-person Committee of Detail; four members (Oliver Ellsworth, Edmund Randolph, John Rutledge, and James Wilson) were private-law lawyers with extensive practices and the fifth (Nathaniel Gorham) was a businessman and former president of the Continental Congress whose experience included serving as a business agent. An early draft from the Committee of Detail, in Randolph’s handwriting, included a supremacy clause that expressly invoked the doctrine of principals and incidents as a tool of judicial interpretation. The provision was crossed out and replaced by one, in Rutledge’s handwriting, that contained a vicinage and jury trial provision and also the grant of “a right to make all Laws necessary to carry the foregoing Powers into Execu-.” This was the obvious precursor to the Necessary and Proper Clause, and—as written—it was a familiar agency law provision codifying the incidental powers doctrine. The Committee later added the also-familiar words “and Proper,” and the final result was the Necessary and Proper Clause, which was approved by both the Committee and the Convention without significant controversy.
With this background, it is easy to see how a Committee filled with agency lawyers, and a Convention filled with lawyers and citizens who dealt regularly with agency law, would draft and ratify the Necessary and Proper Clause with little fanfare. The provision would have been recognizable to anyone familiar with agency law as a clause incorporating the principle of incidental powers, subject to the full range of fiduciary duties with respect to those powers. Importantly, there is nothing in the language, origin, or purpose of the Necessary and Proper Clause suggesting that its embodiment of the incidental powers principle was intended to be broader than the common law baseline of incidents. Quite to the contrary, the choice of the relatively restrictive “necessary and proper” language indicates that the common law represents the upper rather than the lower boundary of the range of incidental powers conferred by the Clause.
The analysis above explains, and justifies, the Federalists’ repeated claims that the Necessary and Proper Clause added no new powers to the federal government but was simply “declaratory of a truth which would have resulted by necessary and unavoidable implication from the very act of constituting a federal government.” In other words, the Necessary and Proper Clause is a rule of construction indicating that the federal government’s implied powers are limited to a relatively strict common law baseline, including the requirement that any powers implied for executing enumerated powers must be incidental. That latter requirement, in particular, is indispensable to an understanding of the Supreme Court’s most important decision construing the Necessary and Proper Clause.
Professor Koppelman evidently believes that the constitutionality of the individual mandate begins and ends with McCulloch v. Maryland. He is absolutely right about that. He simply has the wrong beginning and ending.
Professor Koppelman gets the beginning wrong because he starts his analysis in the middle of the McCulloch opinion instead of where Chief Justice John Marshall began. Marshall’s famous discussion in McCulloch of the causal connection required by the word “necessary” was preceded by a seven-page analysis of the constitutionality of a federal corporation under the Necessary and Proper Clause. Those seven pages dealt with an issue that Marshall recognized had to be addressed before he decided whether a corporation was a causally “necessary” (or otherwise “proper”) means for implementing federal powers. The threshold question was whether the power to incorporate was incidental or principal.
In McCulloch, the Court held that incorporation of a bank was a “necessary and proper” means for executing the principal powers to tax, borrow, regulate commerce, and maintain a military. The Court was careful to explain, following an argument laid out by William Pinkney on behalf of the Second Bank of the United States, that incorporation was “not, like the power of making war, or levying taxes, or of regulating commerce, a great substantive and independent power, which cannot be implied as incidental to other powers.” Instead, incorporation “must be considered as a means not less usual, not of higher dignity, not more requiring a particular specification than other means.” Accordingly, “[n]o sufficient reason is, therefore, perceived, why it may not pass as incidental to those powers which are expressly given, if it be a direct mode of executing them.” Chief Justice Marshall straightforwardly applied basic agency principles: if the power to incorporate could not be an incident, then it could not be implied under the Necessary and Proper Clause. But because corporations are always means to ends rather than ends in themselves, the power to incorporate does not have the high dignity or superior status of the powers enumerated in Article I, Section 8; therefore, incorporation can be an incident. If there were any doubt about the criteria for incidence employed in McCulloch, Marshall himself resolved it later the same year, when explaining McCulloch to the general public. He specifically affirmed, as a test of incidence, the requirement that an incident be less “worthy” than the enumerated powers it supported.
The fact that incorporation was lesser to the commerce or borrowing power was, as Chief Justice Marshall recognized, a threshold requirement before inquiry could proceed on questions of necessity and propriety. If the power to incorporate were as dignified as the principal powers, it would not matter how helpful or customary for executing those powers the bank might be. By the same token, it was not sufficient to uphold the constitutionality of the Bank simply to demonstrate that the power to incorporate was of this lesser dignity. As Marshall wrote, “It can never be pretended that those vast [enumerated] powers draw after them others of inferior importance, merely because they are inferior.” Rather, incorporation of a bank also had to be “necessary and proper” for executing federal power.
None of this is to say that McCulloch was not a “nationalizing” decision that was perceived to, and did in fact, offer a relatively expansive reading of national powers. In particular, its holding that state taxation of the national bank was preempted even in the absence of a preemptive congressional statute was a major expansion of the Supremacy Clause. Our point is simply that McCulloch’s treatment of the Necessary and Proper Clause understood the Clause to incorporate the doctrine of principals and incidents and recognized that the causal efficacy of proposed means was the second rather than the first inquiry called for by the Clause. The first inquiry is whether the proposed means can even be an incident.
The Necessary and Proper Clause grants Congress incidental powers for executing the principal powers granted elsewhere in the Constitution. As McCulloch illustrates, for a power to fall under the Necessary and Proper Clause, it must truly be incidental. However, the power to compel the purchase of a product from another private party is not a “less worthy” or less substantial power than the power to regulate commerce—just as the power to sell real estate is not “less worthy” or less substantial than the power to manage the property. The power to compel commerce will not follow, as a mere incident, the principal power to regulate commerce. Accordingly, it is unnecessary to analyze whether the individual mandate is an important or customary (“necessary”) and fiduciarily sound (“proper”) means for implementing federal powers (though we will address the latter point in a different context in the next Part). Such analysis is only required when one is dealing with an incidental power.
The power to compel the purchase of a commercial product is fundamentally different than the power to create a corporation. It is an extraordinary power of independent significance, or “high dignity,” that would be enumerated as a principal power if it were granted at all to the federal government. If the point is not obvious, one need only compare it to the one limited circumstance in which the Necessary and Proper Clause does, in fact, authorize Congress to force people to engage in “commercial” transactions: exercises of the power of eminent domain.
During the Founding era—and for nearly a century afterwards—there was substantial doubt whether the federal government had an independent power of eminent domain at all. The Constitution does not contain an express eminent domain clause. Indeed, President James Monroe said in 1822 that “very few would concur in the opinion that such a power exists.” The rationale for the position of Monroe and almost everyone else is easy to discern: the power to condemn property is a very substantial, significant power. It is certainly plausible that eminent domain power is too substantial and significant to be considered an incidental rather than principal power.
The Supreme Court did not acknowledge a federal eminent domain power until 1876. When the Court finally recognized a federal power of eminent domain, it initially justified the power in terms of the inherent rights of sovereignty, suggesting that the power did not need to be traced to any particular constitutional source. This is inconsistent with first principles of the Federal Constitution; all federal power must be traced to some enumerated grant. Accordingly, beginning in 1896, the Court made clear that the federal eminent domain power was located in the Necessary and Proper Clause, so that Congress could condemn land when it is necessary and proper for executing federal power.
The 1876-1883 cases suggesting an inherent federal power of eminent domain were, however, correct in one limited respect that is vital to the individual mandate: eminent domain has always been a traditional aspect of sovereign power. Indeed, one might fairly say that, as “a right belonging to a sovereignty,” eminent domain has been an incident of sovereign power by custom. That alone would not necessarily confer it on a government of limited and enumerated powers (since agency instruments, such as constitutions, can always exclude incidental powers altogether or limit them more strictly than the common law baseline), but it does provide good reason to construe the Necessary and Proper Clause to include a power so closely and intimately tied to the very nature of sovereignty.
There is no such historical or conceptual warrant for “liberally” construing the Necessary and Proper Clause to include a general power to compel commercial transactions among private parties, such as the purchase of health insurance (or broccoli), as opposed to the limited, circumscribed, historically grounded power of eminent domain. But what about a kind of “reverse eminent domain,” in which the government compels private persons to purchase products from the government itself? It is in fact quite commonplace for the government to force people to pay money to the government in exchange for some set of goods and services selected by the government. It is called taxation, and it is specifically enumerated as a principal power of the federal government. Indeed, the specification of such a power as a principal power counsels very strongly against inferring any other power to compel transactions as an incident under the Necessary and Proper Clause.
Put simply, because there was an open question for a century whether the federal government had a power of eminent domain, and because the power to, in a sense, force transactions through taxation is specifically enumerated as a principal power, there cannot plausibly be an open question whether the federal government has a general incidental power to force purchases of commercial products by one private citizen from another. Eminent domain represents the outer reaches of the power to coerce transactions under the Necessary and Proper Clause—and the Clause reaches that far only because of the unique role of eminent domain as a customary incident of sovereignty.
More recent cases no longer use the language of principals and incidents to describe analysis under the Necessary and Proper Clause, but their holdings are broadly consistent with that framework. For example, in the line of cases permitting Congress to use the Necessary and Proper Clause to regulate intrastate conduct as part of a comprehensive scheme of regulating interstate commerce, the “necessary and proper” power in those cases—the power to regulate production of items for which there is a commercial market—is not qualitatively different or substantively more significant than the underlying power to regulate commerce. To be sure, one could fairly argue that those decisions misapplied the original meaning of the Necessary and Proper Clause, but those arguments would involve issues not raised here. If there was a problem with those decisions, it was not that the exercised powers could not, in their very nature, be incidents. That is precisely the problem with the individual mandate.
The Court’s most recent case on the Necessary and Proper Clause, United States v. Comstock, points to five “considerations” as justification for its decision: “(1) the breadth of the Necessary and Proper Clause, (2) the long history of federal involvement in this arena, (3) the sound reasons for the statute’s enactment . . . , (4) the statute’s accommodation of state interests, and (5) the statute’s narrow scope.” In other words: (1) What does the meaning of the words of the Clause indicate? (2) Is the statute a long-understood traditional incident of an enumerated power? (3) Is the statute a reasoned exercise of public fiduciary authority? (4) Does the statute adhere to the state-federal balance created by Article I’s system of enumerated, limited powers? (5) Is the statute of the magnitude of an incidental power, or of a greater power? Properly framed, all of those factors point in the same direction as does this Essay.
The private law background that informs the Necessary and Proper Clause elegantly dovetails with a distinct but related public law background that reinforces the fiduciary understanding of the Clause. The fiduciary norms embodied in the Clause foreclose the individual mandate, even if one somehow can classify the mandate as an exercise of an incidental power.
The Constitution is a delegation of powers to various governmental actors. By the time of the Founding, there was a substantial body of English administrative law governing delegations of power. One of the most basic principles underlying this law was that grants of discretionary authority had to be exercised reasonably, even when a reasonableness requirement was not spelled out in the grant.
notwithstanding the words of the commission give authority to the commissioners to do according to their discretions, yet their proceedings ought to be limited and bound with the rule of reason and law. For discretion is a science or understanding to discern between falsity and truth, between wrong and right, between shadows and substance, between equity and colourable glosses and pretences, and not to do according to their wills and private affections.
Discretion, even when textually unlimited, had to be exercised reasonably and in a disinterested and impartial fashion.
Other decisions applied a similar principle regarding exercise of even very broadly worded grants of discretion. For example, in Keighley’s Case, a statute authorizing a sewer commissioner to make rules “after your own wisdoms and discretions” was held to require the agent to exercise discretion “according to law and justice.” Other cases extended the principle beyond sewer commissions to include other delegations of power. This constraint on the exercise of delegated power, which in England has come to be called the principle of reasonableness, was firmly established as a general norm by the end of the seventeenth century.
[T]he Act could never intend that any of the householders should pay a rate of 1s. 6d. in the pound in order to have their houses buried under ground, and their windows and doors obstructed. . . . [H]ad Parliament intended to demolish or render useless some houses for the benefit or ornament of the rest, it would have given express powers for the purpose, and given an equivalent for the loss that individuals might have sustained thereby.
The constraints on government discretion were simply part of what it meant to exercise delegated public power. Accordingly, when the Federal Constitution vested “executive Power” in the President and “judicial Power” in the federal courts, those grants of power carried with them the principle of reasonableness as an implication.
The Necessary and Proper Clause is, inter alia, a textual vehicle for making clear that the principle of reasonableness also applies to Congress’s powers. While it is possible that such a conclusion would follow even in the absence of such a clause, the text of the Necessary and Proper Clause removes all doubt. It was not open to a drafter in the late eighteenth century simply to say that “the principle of reasonableness shall apply to Congress,” because the label “the principle of reasonableness” did not then exist; the use of the term “reasonableness” did not become prominent until relatively recently. Nor was the doctrine generally described by any other readily identifiable label. The contours of the doctrine, however, were very well described by the phrase “necessary and proper for carrying into Execution.” The case law through the eighteenth century applying what later came to be called the principle of reasonableness established that discretion in governmental actors must be exercised impartially (Rooke’s Case, Keighley’s Case), with attention to causal efficacy (Keighley’s Case), in a measured and proportionate fashion (Leader v. Moxon), and with regard for the rights of affected subjects (Leader v. Moxon). Those requirements for governmental action are well encapsulated by a provision stating that laws for executing powers must be “necessary and proper.”In particular, the word “necessary” is a good way to describe fiduciary norms of efficacy and proportionality, while the word “proper” is a good way to describe fiduciary norms of impartiality, regard for rights, and adherence to jurisdictional limits.
One of the most basic fiduciary norms is the obligation to treat all principals with presumptive equality when there is more than one principal. In pre-Founding times, the principle had full application to public as well as private fiduciaries. In Keighley’s Case, for instance, the sewer commissioners could not impose the full costs of projects or repairs on only some of the affected landowners, even when the governing statutes seemed to provide that discretion. Nor under Leader v. Moxon could the paving commissioners repair a road by burying one person’s house. Discretionary authority had to be exercised with an eye toward the interests of all affected persons.
The individual mandate is precisely what the principle of reasonableness was designed to prevent. The purpose of the individual mandate is to force people who choose not to buy a particular type of insurance from government-favored oligopolists to buy the unwanted product in order to subsidize other people. It is analogous to, for example, compelling physicians, under penalty of fine, to devote fifteen hours per week to providing health care to favored individuals. It is also analogous to relieving distress in the automobile industry by compelling citizens to buy cars. Congress cannot use the Necessary and Proper Clause to force one class of citizens to buy a product to help others.
Although the individual mandate is unprecedented, the Founders were familiar with a related, although less intrusive, commercial regulation: the government-chartered monopoly. When the government chartered a monopoly, it limited the market to one provider—although, unlike under the individual mandate, citizens remained free to choose not to purchase goods or services from the monopolist. Grants of monopolies were unpopular, since by erecting a system of commercial favoritism, they violated the government’s fiduciary obligation to treat citizens impartially, and they were held to violate common law.
In this case, the laws which Congress can make . . . must not only be necessary, but proper—So that if those powers cannot be executed without the aid of a law granting commercial monopolies . . . such a law would be manifestly not proper, it would not be warranted by this clause, without absolutely departing from the usual acceptation of words.
The conclusion is clear: if a commercial monopoly—which citizens may avoid by not purchasing the product monopolized—is constitutionally void as “improper,” then far more “improper” is a mandate for the benefit of political favorites, which none but other political favorites may avoid.
In sum, the individual mandate of the PPACA cannot be justified under the Necessary and Proper Clause. The original meaning of the Clause shows that it can, at most, be used to recognize an incidental power—that is, a power which is “less worthy” than the expressly granted, enumerated powers that it purportedly implements. The power to compel a private individual to engage in commerce with a private corporation is not lesser than the power to regulate voluntary commerce; it is a far greater power. Chief Justice Marshall’s analysis in McCulloch v. Maryland confirms that the Necessary and Proper Clause includes only incidental powers; if the power is not incidental, then the constitutional inquiry ends there, and it does not matter whether the asserted power may be useful.
Further, the legal understanding of how “proper” was used at the time of ratification includes the principle of reasonableness as a limitation on all congressional actions. The paradigm example of an unreasonable action was the creation of a monopoly. A fortiori, coerced commerce with congressionally favored oligopolists is constitutionally improper and void. Again, if the individual mandate is constitutional, it is not by virtue of the Necessary and Proper Clause.
Gary Lawson is Professor of Law and Michaels Faculty Research Scholar at Boston University School of Law. David B. Kopel is Research Director at the Independence Institute, an Associate Policy Analyst at Cato Institute, and an Adjunct Professor of Advanced Constitutional Law at Denver University, Sturm College of Law. The authors are grateful to Andy Koppelman for constructive comments and to Rob Natelson and Guy Seidman for uncovering much of the material on which they rely.
Preferred citation: Gary Lawson & David B. Kopel, Bad News for Professor Koppelman: The Incidental Unconstitutionality of the Individual Mandate, 121 Yale L.J. Online 267 (2011), http://yalelawjournal.org/forum/bad-news-for-professor-koppelman-the-incidental-unconstitutionality-of-the-individual-mandate.

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