NARRATOR: Thanks for joining this episode of the No. 86 lecture series, which continues the conversation in the 85 Federalist Papers about how Federalism works. Today’s episode features Professor Gary Lawson, the Philip S. Beck Professor at Boston University School of Law. He has authored six editions of a textbook on administrative law, co-authored two books on aspects of constitutional history, and authored or co-authored more than seventy scholarly articles. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. - PUBLIUS: Why did the Founders designate only some powers for the federal government but then leave other powers to the individual states? We’re here today with Professor Gary Lawson to discuss how the Founders envisioned a federalist system, and what powers are covered by the “necessary and proper” clause. How has the “necessary and proper” clause been reinterpreted in the last century to allow for huge expansions of federal power, when it was designed to protect the states? GARY LAWSON: After the Revolutionary War, there was not a single country, there were 13 distinct independent nation states recognized by the world community as independent nation states. They got together in kind of a defense and trade agreement called the Articles of Confederation that created certain centralized mechanisms that maybe you could call a government if you wanted to, 50/50 whether it deserved that label, but they were nation states of their own. They each had their own governments, they had their own money, they had their own laws, everything. Then comes 1788. The United States Constitution creates something that went way beyond what the Articles of Confederation had constructed. This thing probably, as of 1788, has enough distinct identity, enough independent powers, that it deserves to be called a government in its own right and can take its place on the world stage as a distinct, independent entity. The United States could be recognized in the councils of Europe as a distinct entity to be dealt with. You still had all those states. They no longer had their international status as sovereigns. That was all now going to be done by the new central authority, but it still had their own governments, they still had their own laws, lots of stuff was still there. If you're creating this new government, here's a chance to think about what do we want it to do? Do we want it to take over everything? Want to just supplant all of the previously independent states? Well, no. There are some things we want that national government to do, but there's a whole bunch of stuff that we can leave to be resolved at a local level. We just give the label federalism to that simple decision that you are not going to confer on this new national government every single power of government that exists. PUBLIUS: Federalism isn’t specifically mentioned in the Constitution. How did the Founders decide what powers to give to the national government, and what to leave to the states? GARY LAWSON: Federalism is a direct consequence of the principle of enumerated national powers. There's no federalism clause in the original constitution. You get one three years later in the tenth amendment, but it wasn't there in 1788. You didn't need one, no more than you needed a separation of powers clause in the Constitution of 1788 because you read off what the Constitution says, it says, "This body can do this and this body can do this and this body can do this." If nothing says any of those bodies can do something else, they can't do the something else. Who can do the something else? Well, either nobody or the pre-existing state governments. The constitution contains, as part of its risk aversion strategy, this division of overall governmental authority among different levels. The national versus the state governments. There's then a second way in which federalism, the role of the states, is built into the constitutional structure. It's a little subtler, but none-the-less important. A part of the national government, the senate, is designed in some respect to represent the interests of the states. Originally, the senate was selected by the state legislatures. Was literally a direct representative of the states. 1917, we shift that to direct election which for most states, had already done on their own. It's not quite as dramatic a move as it may seem in retrospect, but you still have two senators from every state. There's a body of the national government, which the states, as states, are recognized as distinct entities. States also play important roles in the election of everybody else, representatives are elected by states according to census of the states. President is elected by the electoral college, which is done by state. States are given a role in the constitutional amendment process, no amendment to the constitution can happen unless the states, as states, sign on to it by a super majority. Various ways in which states are built into the process, but the larger theme, the larger principle of federalism simply represents a division of governmental authority across different governmental units. PUBLIUS: Almost as soon as the Constitution was ratified, a dispute arose about federal versus state power. Could the new national government charter a national bank? How could such an institution be justified under the Constitution? GARY LAWSON: Anyone who's familiar with Alexander Hamilton, either from a study of American history or from attending Broadway shows knows that one of the big issues in George Washington's administration was whether to go for a bank of the United States, a federal bank. There were arguments of policy about whether that was a good idea. There were also constitutional arguments about whether it was possible, whether the congress had the power to create a bank of the United States. Reason why that's an issue is the national government, the government of limited and enumerated institutional powers. For any institution of government, the congress, the president, the courts, to know whether they can do something, they have to look at the Constitution, see what powers they have been granted, think about whether there are powers that aren't actually listed, but which are incidental according to 18th century fiduciary theory, to the powers that are granted, figure out whether they can do it. Well, if you look at the powers granted to congress, article one vests all legislative powers, hearing granted, in congress. Not all legislative powers. All legislative powers herein granted. There are some kinds of powers that a legislature in the abstract might suppose that it has because they're legislative powers, that the United States congress can't necessarily claim, because it's not given all legislative powers, it's given all legislative power herein granted, so you have to start looking at the herein grants. You start reading for herein grants and you come to article one, section eight, and there's 18 herein grants, whole bunch of herein grants. Things like establishing post offices and post roads. Uniform rules for naturalization. Bankruptcy. Regulating commerce with the Indian tribes. Securing to writers and inventors for limited-time rights to their ... all sorts of things you'll find listed there. Prohibitions on counterfeiting the currency of the United States. You won't find anything in there about banks. You will find the power to borrow money on the credit of the United States, but nothing about creating a bank. Now, could you have written a clause in the Constitution that says not only can they establish post offices and post roads, but they can also establish banks? Sure. Did the Constitution do that? No. Right away, one possible objection is, there's just no power for congress to create a national bank. It's not there. A possible counter to that is found in two corresponding arguments. One textual, one inferential. The textual argument goes to the end of this list of powers. Article one, section eight, you'll go down the first 17 and they list all sorts of these powers then you come to the 18th clause says, "Congress shall have power to make all laws which shall be necessary and proper for carrying into execution the forgoing powers." "Aha," you might say, "Okay, what makes something necessary and proper for carrying into execution the forgoing powers? Could a bank be necessary and proper for carrying into execution, for example, the power to borrow money on the credit of the United States?" After all, if we go to all the existing banks and they say, "Your credit stinks, we're not lending you money," would it be necessary and proper to create our own bank?" Which will then say, "Of course, you created us, naturally we'll lend you money." That would be a textual argument. The inferential argument would be to say, well, since the Constitution is a kind of fiduciary instrument, there are certain things that are incidental to the powers that are granted, that go without saying, that would have to be negatived if you didn't want them and then you would ask, "Hm, is the power to create a bank incidental to any of those existing powers?" You can kind of see how those arguments, when cut in different directions, reasonable people of good will could make both of them. That's what happened. Thomas Jefferson and originally James Madison said, "Hell no, can't do it." Alexander Hamilton said, "Yes, we can," congress agreed with Hamilton, President Washington agreed and signed the law, so we had a bank of the United States. By its own terms, it expired at a limited time span. Fast forward a few years, time to fight the battle all over again. Are we going to have a second bank of the United States? By this point, James Madison had switched sides, not necessarily because he was convinced by the overwhelming force of Hamilton's reasoning, but because, "We've already decided that once, country didn't seem to fall apart, why revisit it again?" Was an argument from president. Any event, congress enacts the second bank bill. This is challenged in court. Comes up to the Supreme Court in 1819 in a case called McCulloch versus Maryland, really presenting two quite fundamental issues. There is an argument, very good one, that McCulloch versus Maryland is the single most important constitutional case ever decided by the United States Supreme Court. It's surely the most important case decided by the Supreme . . . Court about federalism, about the relationship between the national government and the state government. Two parts, as I said, to the legal problem in McCulloch versus Maryland. First part is whether the bank of the United States, this thing created by Congress, actually can legally operate. If it was unconstitutional for Congress to pass the laws creating it, those laws have no force, bank shouldn't be in operation. Second question is, even assuming that the bank can be in operation, what can states, for example the state of Maryland, do to that bank? What the state of Maryland wanted to do to that bank is tax the hell out of it. Maryland imposes a tax on the bank of the United States. Person who works in the bank of the United States says, "Wait a minute, I'm not paying that tax because after all this is an instrumentality of the national government." How can a state tax an instrumentality of the national government? If a state could tax it, could tax it so much that it goes out of existence, wouldn't that effectively nullify the powers of the national government? Those are both issues that are before the Supreme Court in 1819. The second one, the power of the state to tax the bank, actually, incredibly important, but for purposes of this talk, I'm going to have to pass that one over. In your Constitutional Law classes you will, I assume, spend adequate time on that. Let me just plant this thought. If Congress had the constitutional power to create a bank, couldn't it have put into the statute of the bank, by the way, no state taxes of this bank? Congress didn't do that. When the Supreme Court in McCulloch versus Maryland says, "Well the state can't tax that," what if it had come out the other way? Would that have meant the state could tax the bank? Well, it would've meant the state could tax the bank until and unless congress passed a statute that said it couldn't. That's a different topic. Let's go to that first one. PUBLIUS: You mentioned that McCulloch versus Maryland is the most important federalism case ever decided by the Supreme Court. Could you explain the decision and why you think it’s so important? GARY LAWSON: The Supreme Court in McCulloch versus Maryland in 1819 upholds the constitutional power of Congress to pass the bank. Why? Well there's a very good chance that if you read this case in law school, you aren't actually going to read this case in law school. The case is really long, very boring, you'll be very, very unhappy if you have to read this case in law school. What you're likely to read is an edited expert from the case, certain selected portions that whoever writes the textbook thinks are the most important. Be alert to whether the edited portion that you have contains either of the following two arguments which are actually the two most important arguments in the case. Argument number one, the thing that Chief Justice John Marshall led with as the strongest argument in favor of the constitutionality of the bank. It's already been decided. Not decided by a prior court decision mind you, but decided twice before by Congress and the President. Wait, could it possibly be a precedent, that political actors like Congress and the President had made a decision? Why not? McCulloch versus Maryland actually says, "Sure." It doesn't put it in that language because that just wasn't the language that was used at that time. That's the first argument, it's already been settled. Second argument. In order for something to be within the powers of Congress, you either have to find it in the list of enumerations or it's got to be an incidental power contained within the language of the necessary and proper clause. That necessary and proper for carrying into execution the forgoing powers. One of the reasons why I think it makes sense to think of the Constitution as kind of a fiduciary instrument, is that sort of clause, all powers which shall be necessary and proper for carrying into execution, was a standard kind of clause inserted into fiduciary instruments of all kinds. You hire someone to go to France to sell Cannon for you. You have a list of what their powers are and you throw on a clause that says, "Well, anything else you need to do in order to sell the cannons, if it's related to selling the cannons and isn't like completely crazy, go ahead and do it." You throw on a clause like that. It turns out there were a lot of different formulations for how you could identify what powers of your agent were incidental to the powers that you granted them that you're prepared to have them exercise. Now, they had to be incidental. If the agent claimed for example, "Well, you sent me over to sell your cannon, now turns out I sold the whole business out from under you. I sold your farm as well. Oh, and your family homestead along with it." No, the agent didn't have that power and the agent could not plausibly claim that that was incidental to the power to sell your cannons. Why not? Because everybody knew that agents of that kind, maybe would have an incidental power to, oh let's say, extend credit to a customer. That's what's going to be closely enough tied to what you're doing that it's implementing the powers that you have, not a whole fresh new power. If it was whole, fresh, new power, they called it a principle power, it would have to be identified in the instrument. So translate that into the Constitution, there are all these principle powers laid out. Things that the Constitution specifically says Congress can do. Then there's this incidental powers clause, of a kind that shows up in every kind of fiduciary instrument there is. That means it's obviously referring to powers that are incidental. If a power isn't incidental to one of the other granted powers, if it's so important that it's a principle power, you'd have to list it. So right away in the context of the bank that suggests that the key question is, is the power to create a national bank incidental or principle? There are seven pages in McCulloch versus Maryland, discussing exactly that question. Be very alert to whether those seven pages are edited out of any discussion of the case that you see. If they are, go find the original and read those seven pages. Chief Justice Marshall, on behalf of the Supreme Court, takes very seriously the idea that if this isn't an incidental power, if this is a principle power, Congress loses. The bank loses. They can't do it. So he spends seven pages explaining why it's an incidental power. Is he right that it's an incidental power? My own humble opinion is it's a close call. It's a reasonable position either way, right. Doesn't matter for present purposes. What matters is, that's the way the case is analyzed. How is the case usually presented? It's usually presented as, "Well the necessary and proper clause basically lets Congress do anything it wants." Because Thomas Jefferson said, "Well to be necessary, it's got to be absolutely strictly essential." Hamilton said, "Well now, anything that's helpful or useful or convenient is necessary," and Chief Justice Marshall adopted Hamilton's position. Sure. Fine. That wasn't the central question. The central question was whether or not the power involved was principle of incidental. Everything after that was a detail. Alright. What else might there be in the necessary and proper clause? It has to be necessary and proper for carrying into execution. Some other powers. You've got to be able to point to something else in the Constitution that this is carrying into execution. You could do that with a bank. You could do that with things like borrowing money and all the other financial powers of Congress. Central question in McCulloch versus Maryland, what powers are principle what powers are incidental? That idea disappeared from American case law for two centuries. I don't know why. It was so fundamental, so basic, argued by the parties, seven pages in McCulloch versus Maryland, Marshall takes it seriously, then just drops out of the picture. Until 200 years later. In the Obamacare decision, Chief Justice Roberts revives it. That's a whole nother story. PUBLIUS: So what does the “necessary and proper” clause allow Congress to do? Can you elaborate on your distinction between incidental and principle powers? GARY LAWSON: McCulloch versus Maryland is a good illustration of the importance, the centrality of article one, section eight, clause 18. The last clause in this list of powers of Congress. By the way, footnote, article one section eight is not the exclusive list of powers of Congress. It's given some powers in articles three, four and five as well, but most of them, most of the things that Congress can do are contained in article one, section eight. Anyway, at the end of that list comes an incidental powers clause, "Congress has power to make all laws which shall be necessary and proper for carrying into execution the forgoing powers," and, by the way, all other powers vested by the Constitution and other institutions. So congress can implement its own powers, can also implement powers vested in the president and in the courts. What are the contours of this power? One of them I've already suggested. If it's really an incidental powers clause, it's scope. The content of what it can possibly authorize is limited by the fiduciary common law understanding of principle and incidents. What powers are principle powers, what powers are incidental powers. Certain things that conventionally, by custom went along with other things, those were incidents. If you were given power to manage someone's farm, that normally meant you could lease the farm. It did not mean you could sell the farm. Selling the farm was a principle power. If the person wanted to give you power to sell the farm, they had to say so. Power to extend money on credit to customers. That was normally incidental to the power of a agent or factor sent over seas. By the end of the 18th century, 100 years earlier, it wouldn't have been incidental because that wasn't the customer. It would've been considered a principle power. At the moment in time when the Constitution is ratified in 1788 there is lots of settings in which courts had figured out in different contexts what kind of powers are principle, what kind of powers are incidents. It's fairly obvious that the necessary and proper clause was included as part of that backdrop. Just a little note in case anyone is suspicious that we're making this up, the actual language of the Constitution, including the necessary and proper clause, is put together by a committee of five people, the Committee of detail. Four of them were lawyers who spent most of their time drafting and applying agency instruments, fiduciary instruments. The fifth was a businessman, who spent most of his time applying and executing agency fiduciary instruments. They knew this stuff. This was not alien to them. This was their bread and butter. This is what they did for a living. If in fact, it's this incidental power's clause, what can we glean from its text? Couple of interesting things about the way that it's written. Incidental powers clauses in the 18th century came in lots of different flavors depending on how much authority you wanted to give to your agent. You could say your agent can do anything that's necessary. You could say that your agent could do anything that the agent thinks is necessary. Depending upon how you frame it that would suggest broader scope for finding things incidental versus narrower scope for finding things incidental. The necessary and proper clause in the Constitution is actually drafted on the stricter, narrower side of that spectrum. It says, "Laws that are incidental powers for carrying into execution other powers, must be necessary and proper." Not just necessary, some instruments said that, not just proper, some instruments said that, necessary and proper both of those things. It turns out those terms map onto, very elegantly, some of the 18th century principles of agencies law. Necessary meant, having a certain connection to the powers in question. Proper meant consistent with the usual run of fiduciary duties. The law also says that the laws enacted by Congress under that provision, "Shall be necessary and proper." Not, "Congress thinks shall be necessary and proper." There are about half a dozen provisions in the Constitution that are written in terms of what some actor thinks or believes or wants to be so. Necessary and proper clause is not one of them. It's not written that way. It talks about laws which shall be necessary and proper, that suggests a fairly strict and judicially enforceable conception whether something's principle or incident. It also must be for carrying into execution the forgoing powers or some other power. Suppose Congress passes a law saying, "You know we're kind of unhappy at the way that the president is executing the laws. So we're going to pass a statute claiming that it is necessary and proper for carrying into execution the forgoing powers, that says that any action taken by the president that has any legal effect, must be done while the president is riding a mule through the Grand Canyon, singing an aria from Carmen." Is that really for carrying into execution the forgoing powers? No, it's for stifling the carrying into execution the forgoing powers. Anything Congress does as an incidental power has to be incidental to carrying into execution something in it. All of this, at least, I think, is what you would conclude if you were approaching the necessary and proper clause as a matter of original meaning. Trying to figure out as of 1788, what exactly does this say? Does any of this bear even the remotest resemblance to modern law in 2018? Mostly not. There's a small, tiny hint of some resemblance in some narrow areas, but mostly not. Particularly since the New Deal, since the 1930s. Federal courts have systematically understood the necessary and proper clause to be, not quite an unlimited, but close to an unlimited grant of authority to Congress. In essence they construe it as, "If Congress believes it is necessary and proper, that's good enough for us." The cases all talk about extreme deference, approving Congress's choice as long as there is a rational base for it. That's the essence of modern law. PUBLIUS: So is the necessary and proper clause basically defunct now? Are there any areas where states still guard their own sovereignty? GARY LAWSON: Couple of places where the necessary and proper clause turns out to have a little bit more bite. Suppose Congress wants to pass a National Gun Registry law. How's it going to enforce that? You've got state officers who hand out gun licenses within their states, why not just make them put everything into the Federal Registry? Can Congress order state governments to be unwilling participants in the administration of federal law? 1997 the Supreme Court of the United States said, "No." Why not? Because the only source of authority Congress can point to, there's no, conscript state officers into your gun registry clause in the Constitution. It would have to be the necessary and proper clause. Congress would have to say, "It's necessary and proper for carrying into execution the forgoing powers." Supreme Court says, "It's not proper." For something to be proper it's gotta be consistent with the overall structure and theme of the Constitution which includes federalism, which includes the states as independent authorities. Congress can't draft state executive officials under the necessary and proper clause. That's just not proper. That's at least, the Supreme Court holding. Fast forward two decades, exactly the same argument is being used, successfully, thus far, by state officials who don't want to be conscripted into enforcing federal immigration laws. So, cuts in a a lot of different directions but that's the one area in which something resembling the original meaning of the necessary and proper clause still has bite. Otherwise, not so much. If I were to suggest something to watch over the next decade to see if there are going to be any large scale shifts in constitutional doctrine, that's where I would look. All sorts of reasons why you might, maybe, possibly, see some modest revival of something resembling the original meaning of the necessary and proper clause, but that would be a complicated story. NARRATOR: Thank you for listening to this episode of the No. 86 Lecture series. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class! - Transcript [for YouTube - no speaker names/verbatim] Thanks for joining this episode of the No. 86 lecture series, which continues the conversation in the 85 Federalist Papers about how Federalism works. Today’s episode features Professor Gary Lawson, the Philip S. Beck Professor at Boston University School of Law. He has authored six editions of a textbook on administrative law, co-authored two books on aspects of constitutional history, and authored or co-authored more than seventy scholarly articles. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. - Why did the Founders designate only some powers for the federal government but then leave other powers to the individual states? We’re here today with Professor Gary Lawson to discuss how the Founders envisioned a federalist system, and what powers are covered by the “necessary and proper” clause. How has the “necessary and proper” clause been reinterpreted in the last century to allow for huge expansions of federal power, when it was designed to protect the states? After the Revolutionary War, there was not a single country, there were 13 distinct independent nation states recognized by the world community as independent nation states. They got together in kind of a defense and trade agreement called the Articles of Confederation that created certain centralized mechanisms that maybe you could call a government if you wanted to, 50/50 whether it deserved that label, but they were nation states of their own. They each had their own governments, they had their own money, they had their own laws, everything. Then comes 1788. The United States Constitution creates something that went way beyond what the Articles of Confederation had constructed. This thing probably, as of 1788, has enough distinct identity, enough independent powers, that it deserves to be called a government in its own right and can take its place on the world stage as a distinct, independent entity. The United States could be recognized in the councils of Europe as a distinct entity to be dealt with. You still had all those states. They no longer had their international status as sovereigns. That was all now going to be done by the new central authority, but it still had their own governments, they still had their own laws, lots of stuff was still there. If you're creating this new government, here's a chance to think about what do we want it to do? Do we want it to take over everything? Want to just supplant all of the previously independent states? Well, no. There are some things we want that national government to do, but there's a whole bunch of stuff that we can leave to be resolved at a local level. We just give the label federalism to that simple decision that you are not going to confer on this new national government every single power of government that exists. Federalism isn’t specifically mentioned in the Constitution. How did the Founders decide what powers to give to the national government, and what to leave to the states? Federalism is a direct consequence of the principle of of enumerated national powers. There's no federalism clause in the original constitution. You get one three years later in the tenth amendment, but it wasn't there in 1788. You didn't need one, no more than you needed a separation of powers clause in the Constitution of 1788 because you read off what the Constitution says, it says, "This body can do this and this body can do this and this body can do this." If nothing says any of those bodies can do something else, they can't do the something else. Who can do the something else? Well, either nobody or the pre-existing state governments. The constitution contains, as part of its risk aversion strategy, this division of overall governmental authority among different levels. The national versus the state governments. There's then a second way in which federalism, the role of the states, is built into the constitutional structure. It's a little subtler, but none-the-less important. A part of the national government, the senate, is designed in some respect to represent the interests of the states. Originally, the senate was selected by the state legislatures. Was literally a direct representative of the states. 1917, we shift that to direct election which for most states, had already done on their own. It's not quite as dramatic a move as it may seem in retrospect, but you still have two senators from every state. There's a body of the national government, which the states, as states, are recognized as distinct entities. States also play important roles in the election of everybody else, representatives are elected by states according to census of the states. President is elected by the electoral college, which is done by state. States are given a role in the constitutional amendment process, no amendment to the constitution can happen unless the states, as states, sign on to it by a super majority. Various ways in which states are built into the process, but the larger theme, the larger principle of federalism simply represents a division of governmental authority across different governmental units. Almost as soon as the Constitution was ratified, a dispute arose about federal versus state power. Could the new national government charter a national bank? How could such an institution be justified under the Constitution? Anyone who's familiar with Alexander Hamilton, either from a study of American history or from attending Broadway shows knows that one of the big issues in George Washington's administration was whether to go for a bank of the United States, a federal bank. There were arguments of policy about whether that was a good idea. There were also constitutional arguments about whether it was possible, whether the congress had the power to create a bank of the United States. Reason why that's an issue is the national government, the government of limited and enumerated institutional powers. For any institution of government, the congress, the president, the courts, to know whether they can do something, they have to look at the Constitution, see what powers they have been granted, think about whether there are powers that aren't actually listed, but which are incidental according to 18th century fiduciary theory, to the powers that are granted, figure out whether they can do it. Well, if you look at the powers granted to congress, article one vests all legislative powers, hearing granted, in congress. Not all legislative powers. All legislative powers herein granted. There are some kinds of powers that a legislature in the abstract might suppose that it has because they're legislative powers, that the United States congress can't necessarily claim, because it's not given all legislative powers, it's given all legislative power herein granted, so you have to start looking at the herein grants. You start reading for herein grants and you come to article one, section eight, and there's 18 herein grants, whole bunch of herein grants. Things like establishing post offices and post roads. Uniform rules for naturalization. Bankruptcy. Regulating commerce with the Indian tribes. Securing to writers and inventors for limited times rights to their ... all sorts of things you'll find listed there. Prohibitions on counterfeiting the currency of the United States. You won't find anything in there about banks. You will find the power to borrow money on the credit of the United States, but nothing about creating a bank. Now, could you have written a clause in the Constitution that says not only can they establish post offices and post roads, but they can also establish banks? Sure. Did the Constitution do that? No. Right away, one possible objection is, there's just no power for congress to create a national bank. It's not there. A possible counter to that is found in two corresponding arguments. One textual, one inferential. The textual argument goes to the end of this list of powers. Article one, section eight, you'll go down the first 17 and they list all sorts of these powers then you come to the 18th clause says, "Congress shall have power to make all laws which shall be necessary and proper for carrying into execution the forgoing powers." "Aha," you might say, "Okay, what makes something necessary and proper for carrying into execution the forgoing powers? Could a bank be necessary and proper for carrying into execution, for example, the power to borrow money on the credit of the United States?" After all, if we go to all the existing banks and they say, "Your credit stinks, we're not lending you money," would it be necessary and proper to create our own bank?" Which will then say, "Of course, you created us, naturally we'll lend you money." That would be a textual argument. The inferential argument would be to say, well, since the Constitution is a kind of fiduciary instrument, there are certain things that are incidental to the powers that are granted, that go without saying, that would have to be negatived if you didn't want them and then you would ask, "Hm, is the power to create a bank incidental to any of those existing powers?" You can kind of see how those arguments, when cut in different directions, reasonable people of good will could make both of them. That's what happened. Thomas Jefferson and originally James Madison said, "Hell no, can't do it." Alexander Hamilton said, "Yes, we can," congress agreed with Hamilton, President Washington agreed and signed the law, so we had a bank of the United States. By its own terms, it expired at a limited time span. Fast forward a few years, time to fight the battle all over again. We going to have a second bank of the United States? By this point, James Madison had switched sides, not necessarily because he was convinced by the overwhelming force of Hamilton's reasoning, but because, "We've already decided that once, country didn't seem to fall apart, why revisit it again?" Was an argument from president. Any event, congress enacts the second bank bill. This is challenged in court. Comes up to the Supreme Court in 1819 in a case called McCulloch versus Maryland, really presenting two quite fundamental issues. There is an argument, very good one, that McCulloch versus Maryland is the single most important constitutional case ever decided by the United States Supreme Court. It's surely the most important case decided by the Supreme . . . Court about federalism, about the relationship between the national government and the state government. Two parts, as I said, to the legal problem in McCulloch versus Maryland. First part is whether the bank of the United States, this thing created by Congress, actually can legally operate. If it was unconstitutional for Congress to pass the laws creating it, those laws have no force, bank shouldn't be in operation. Second question is, even assuming that the bank can be in operation, what can states, for example the state of Maryland, do to that bank? What the state of Maryland wanted to do to that bank is tax the hell out of it. Maryland imposes a tax on the bank of the United States. Person who works in the bank of the United States says, "Wait a minute, I'm not paying that tax because after all this is an instrumentality of the national government." How can a state tax an instrumentality of the national government? If a state could tax it, could tax it so much that it goes out of existence, wouldn't that effectively nullify the powers of the national government? Those are both issues that are before the Supreme Court in 1819. The second one, the power of the state to tax the bank, actually, incredibly important, but for purposes of this talk, I'm going to have to pass that one over. In your Constitutional Law classes you will, I assume, spend adequate time on that. Let me just plant this thought. If Congress had the constitutional power to create a bank, couldn't it have put in to the statute of the bank, by the way, no state taxes of this bank? Congress didn't do that. When the Supreme Court in McCulloch versus Maryland says, "Well the state can't tax that," what if it had come out the other way? Would that have meant the state could tax the bank? Well, it would've meant the state could tax the bank until and unless congress passed a statute that said it couldn't. That's a different topic. Let's go to that first one. You mentioned that McCulloch versus Maryland is the most important federalism case ever decided by the Supreme Court. Could you explain the decision and why you think it’s so important? The Supreme Court in McCulloch versus Maryland in 1819 upholds the constitutional power of Congress to pass the bank. Why? Well there's a very good chance that if you read this case in law school, you aren't actually going to read this case in law school. The case is really long, very boring, you'll be very, very unhappy if you have to read this case in law school. What you're likely to read is an edited expert from the case, certain selected portions that whoever writes the textbook thinks are the most important. Be alert to whether the edited portion that you have contains either of the following two arguments which are actually the two most important arguments in the case. Argument number one, the thing that Chief Justice John Marshall led with as the strongest argument in favor of the constitutionality of the bank. It's already been decided. Not decided by a prior court decision mind you, but decided twice before by Congress and the President. Wait, could it possibly be a precedent, that political actors like Congress and the President had made a decision? Why not? McCulloch versus Maryland actually says, "Sure." It doesn't put it in that language because that just wasn't the language that was used at that time. That's the first argument, it's already been settled. Second argument. In order for something to be within the powers of Congress, you either have to find it in the list of enumerations or it's got to be an incidental power contained within the language of the necessary and proper clause. That necessary and proper for carrying into execution the forgoing powers. One of the reasons why I think it makes sense to think of the Constitution as kind of a fiduciary instrument, is that sort of clause, all powers which shall be necessary and proper for carrying into execution, was a standard kind of clause inserted into fiduciary instruments of all kinds. You hire someone to go to France to sell Cannon for you. You have a list of what their powers are and you throw on a clause that says, "Well, anything else you need to do in order to sell the cannons, if it's related to selling the cannons and isn't like completely crazy, go ahead and do it." You throw on a clause like that. It turns out there were a lot of different formulations for how you could identify what powers of your agent were incidental to the powers that you granted them that you're prepared to have them exercise. Now, they had to be incidental. If the agent claimed for example, "Well, you sent me over to sell your cannon, now turns out I sold the whole business out from under you. I sold your farm as well. Oh, and your family homestead along with it." No, the agent didn't have that power and the agent could not plausibly claim that that was incidental to the power to sell your cannons. Why not? Because everybody knew that agents of that kind, maybe would have an incidental power to, oh let's say, extend credit to a customer. That's what's going to be closely enough tied to what you're doing that it's implementing the powers that you have, not a whole fresh new power. If it was whole, fresh, new power, they called it a principle power, it would have to be identified in the instrument. So translate that into the Constitution, there are all these principle powers laid out. Things that the Constitution specifically says Congress can do. Then there's this incidental powers clause, of a kind that shows up in every kind of fiduciary instrument there is. That means it's obviously referring to powers that are incidental. If a power isn't incidental to one of the other granted powers, if it's so important that it's a principle power, you'd have to list it. So right away in the context of the bank that suggests that the key question is, is the power to create a national bank incidental or principle? There are seven pages in McCulloch versus Maryland, discussing exactly that question. Be very alert to whether those seven pages are edited out of any discussion of the case that you see. If they are, go find the original and read those seven pages. Chief Justice Marshall, on behalf of the Supreme Court, takes very seriously the idea that if this isn't an incidental power, if this is a principle power, Congress loses. The bank loses. They can't do it. So he spends seven pages explaining why it's an incidental power. Is he right that it's an incidental power? My own humble opinion is it's a close call. It's a reasonable position either way, right. Doesn't matter for present purposes. What matters is, that's the way the case is analyzed. How is the case usually presented? It's usually presented as, "Well the necessary and proper clause basically lets Congress do anything it wants." Because Thomas Jefferson said, "Well to be necessary, it's got to be absolutely strictly essential." Hamilton said, "Well now, anything that's helpful or useful or convenient is necessary," and Chief Justice Marshall adopted Hamilton's position. Sure. Fine. That wasn't the central question. The central question was whether or not the power involved was principle of incidental. Everything after that was a detail. Alright. What else might there be in the necessary and proper clause? It has to be necessary and proper for carrying into execution. Some other powers. You've got to be able to point to something else in the Constitution that this is carrying into execution. You could do that with a bank. You could do that with things like borrowing money and all the other financial powers of Congress. Central question in McCulloch versus Maryland, what powers are principle what powers are incidental? That idea disappeared from American case law for two centuries. I don't know why. It was so fundamental, so basic, argued by the parties, seven pages in McCulloch versus Maryland, Marshall takes it seriously, then just drops out of the picture. Until 200 years later. In the Obamacare decision, Chief Justice Roberts revives it. That's a whole nother story. So what does the “necessary and proper” clause allow Congress to do? Can you elaborate on your distinction between incidental and principle powers? McCulloch versus Maryland is a good illustration of the importance, the centrality of article one, section eight, clause 18. The last clause in this list of powers of Congress. By the way, footnote, article one section eight is not the exclusive list of powers of Congress. It's given some powers in articles three, four and five as well, but most of them, most of the things that Congress can do are contained in article one, section eight. Anyway, at the end of that list comes an incidental powers clause, "Congress has power to make all laws which shall be necessary and proper for carrying into execution the forgoing powers," and, by the way, all other powers vested by the Constitution and other institutions. So congress can implement its own powers, can also implement powers vested in the president and in the courts. What are the contours of this power? One of them I've already suggested. If it's really an incidental powers clause, it's scope. The content of what it can possibly authorize is limited by the fiduciary common law understanding of principle and incidents. What powers are principle powers, what powers are incidental powers. Certain things that conventionally, by custom went along with other things, those were incidents. If you were given power to manage someone's farm, that normally meant you could lease the farm. It did not mean you could sell the farm. Selling the farm was a principle power. If the person wanted to give you power to sell the farm, they had to say so. Power to extend money on credit to customers. That was normally incidental to the power of a agent or factor sent over seas. By the end of the 18th century, 100 years earlier, it wouldn't have been incidental because that wasn't the customer. It would've been considered a principle power. At the moment in time when the Constitution is ratified in 1788 there is lots of settings in which courts had figured out in different contexts what kind of powers are principle, what kind of powers are incidents. It's fairly obvious that the necessary and proper clause was included as part of that backdrop. Just a little note in case anyone is suspicious that we're making this up, the actual language of the Constitution, including the necessary and proper clause, is put together by a committee of five people, the Committee of detail. Four of them were lawyers who spent most of their time drafting and applying agency instruments, fiduciary instruments. The fifth was a businessman, who spent most of his time applying and executing agency fiduciary instruments. They knew this stuff. This was not alien to them. This was their bread and butter. This is what they did for a living. If in fact, it's this incidental power's clause, what can we glean from its text? Couple of interesting things about the way that it's written. Incidental powers clauses in the 18th century came in lots of different flavors depending on how much authority you wanted to give to your agent. You could say your agent can do anything that's necessary. You could say that your agent could do anything that the agent thinks is necessary. Depending upon how you frame it that would suggest broader scope for finding things incidental versus narrower scope for finding things incidental. The necessary and proper clause in the Constitution is actually drafted on the stricter, narrower side of that spectrum. It says, "Laws that are incidental powers for carrying into execution other powers, must be necessary and proper." Not just necessary, some instruments said that, not just proper, some instruments said that, necessary and proper both of those things. It turns out those terms map onto, very elegantly, some of the 18th century principles of agencies law. Necessary meant, having a certain connection to the powers in question. Proper meant consistent with the usual run of fiduciary duties. The law also says that the laws enacted by Congress under that provision, "Shall be necessary and proper." Not, "Congress thinks shall be necessary and proper." There are about half a dozen provisions in the Constitution that are written in terms of what some actor thinks or believes or wants to be so. Necessary and proper clause is not one of them. It's not written that way. It talks about laws which shall be necessary and proper, that suggests a fairly strict and judicially enforceable conception whether something's principle or incident. It also must be for carrying into execution the forgoing powers or some other power. Suppose Congress passes a law saying, "You know we're kind of unhappy at the way that the president is executing the laws. So we're going to pass a statute claiming that it is necessary and proper for carrying into execution the forgoing powers, that says that any action taken by the president that has any legal effect, must be done while the president is riding a mule through the Grand Canyon, singing an aria from Carmen." Is that really for carrying into execution the forgoing powers? No, it's for stifling the carrying into execution the forgoing powers. Anything Congress does as an incidental power has to be incidental to carrying into execution something in it. All of this, at least, I think, is what you would conclude if you were approaching the necessary and proper clause as a matter of original meaning. Trying to figure out as of 1788, what exactly does this say? Does any of this bear even the remotest resemblance to modern law in 2018? Mostly not. There's a small, tiny hint of some resemblance in some narrow areas, but mostly not. Particularly since the New Deal, since the 1930s. Federal courts have systematically understood the necessary and proper clause to be, not quite an unlimited, but close to an unlimited grant of authority to Congress. In essence they construe it as, "If Congress believes it is necessary and proper, that's good enough for us." The cases all talk about extreme deference, approving Congress's choice as long as there is a rational base for it. That's the essence of modern law. So is the necessary and proper clause basically defunct now? Are there any areas where states still guard their own sovereignty? Couple of places where the necessary and proper clause turns out to have a little bit more bite. Suppose Congress wants to pass a National Gun Registry law. How's it going to enforce that? You've got state officers who hand out gun licenses within their states, why not just make them put everything into the Federal Registry? Can Congress order state governments to be unwilling participants in the administration of federal law? 1997 the Supreme Court of the United States said, "No." Why not? Because the only source of authority Congress can point to, there's no, conscript state officers into your gun registry clause in the Constitution. It would have to be the necessary and proper clause. Congress would have to say, "It's necessary and proper for carrying into execution the forgoing powers." Supreme Court says, "It's not proper." For something to be proper it's gotta be consistent with the overall structure and theme of the Constitution which includes federalism, which includes the states as independent authorities. Congress can't draft state executive officials under the necessary and proper clause. That's just not proper. That's at least, the Supreme Court holding. Fast forward two decades, exactly the same argument is being used, successfully, thus far, by state officials who don't want to be conscripted into enforcing federal immigration laws. So, cuts in a a lot of different directions but that's the one area in which something resembling the original meaning of the necessary and proper clause still has bite. Otherwise, not so much. If I were to suggest something to watch over the next decade to see if there are going to be any large scale shifts in constitutional doctrine, that's where I would look. All sorts of reasons why you might, maybe, possibly, see some modest revival of something resembling the original meaning of the necessary and proper clause, but that would be a complicated story. Thank you for listening to this episode of the No. 86 Lecture series. 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