The Doctrinal Limits of “Necessary” in the Necessary & Proper Clause

A couple days ago, Orin raised an interesting point about Justice Judge Hudson’s opinion in the challenge to the Affordable Care Act to which Kurt Lash and Jonathan have already responded. But I thought I would explain the source of the confusion, which lies not in Judge Hudson’s opinion, but in Chief Justice Rehnquist’s opinion in Lopez.

The key is to understand three uncontestable propositions:

(1) The “economic-noneconomic” distinction established in Lopez qualifies the Substantial Effects Doctrine;

(2) The Substantial Effects Doctrine was first established and developed in NLRB v. Jones & Laughlin Steel, United States v. Darby, and Wickard v. Filburn;

(3) In these New Deal cases, the power of Congress to reach intrastate activity that has a substantial affect on interstate commerce was justified by invoking McCulloch v. Maryland and the Necessary & Proper Clause. In Wickard v. Filburn, the Court wrote: “[E]ven if appellee‘s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce. . . .” In other words, Congress could reach beyond its power of interstate commerce to reach intrastate activity that was not commerce because it was “necessary” to the execution of its Commerce Clause power.

This leads then to a conclusion that is not widely recognized:

(4) The “necessary” prong of the Necessary & Proper Clause is already being limited by a judicially administrable doctrine: the economic-noneconomic distinction. To execute its commerce power under the existing Necessary & Proper Clause doctrine, Congress may only reach intrastate economic activity that substantially affects interstate commerce. According to this settled doctrine, however “necessary” it might otherwise be, it cannot reach intrastate noneconomic activity. Therefore, a claim that Congress can reach inactivity that substantially affects interstate commerce because it is “necessary” goes beyond the outer reaches of the Necessary & Proper Clause as established by Lopez and reaffirmed in Morrison.

The source of the confusion here is that, in Lopez, Chief Justice Rehnquist does not discuss the Necessary & Proper Clause underpinnings of the Substantial Effects Doctrine, though he does expressly traced it back to the New Deal cases cited above. But Justice Scalia makes this clear in his concurring opinion in Raich:

Our cases show that the regulation of intrastate activities may be necessary to and proper for the regulation of interstate commerce in two general circumstances. Most directly, the commerce power permits Congress not only to devise rules for the governance of commerce between States but also to facilitate interstate commerce by eliminating potential obstructions, and to restrict it by eliminating potential stimulants. See NLRB v. Jones & Laughlin Steel Corp. (1937). That is why the Court has repeatedly sustained congressional legislation on the ground that the regulated activities had a substantial effect on interstate commerce. Lopez and Morrison recognized the expansive scope of Congress’ authority in this regard: ‘‘[T]he pattern is clear. Where economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained.’’

This [Necessary & Proper Clause - RB] principle is not without limitation. In Lopez and Morrison, the Court—conscious of the potential of the ‘‘substantially affects’’ test to ‘‘‘obliterate the distinction between what is national and what is local,’ ’’ rejected the argument that Congress may regulate noneconomic activity based solely on the effect that it may have on interstate commerce through a remote chain of inferences. ‘‘[I]f we were to accept [such] arguments,’’ the Court reasoned in Lopez, ‘‘we are hard pressed to posit any activity by an individual that Congress is without power to regulate.’’ Thus, although Congress’ authority to regulate intrastate activity that substantially affects interstate commerce is broad, it does not permit the Court to ‘‘pile inference upon inference,’’ in order to establish that noneconomic activity has a substantial effect on interstate commerce.

To this Justice Scalia proposes a second Necessary & Proper Clause doctrine based on dictum from Lopez:

As we implicitly acknowledged in Lopez, however, Congress’ authority to enact laws necessary and proper for the regulation of interstate commerce is not limited to laws directed against economic activities that have a substantial effect on interstate commerce. Though the conduct in Lopez was not economic, the Court nevertheless recognized that it could be regulated as ‘‘an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.’’ This statement referred to those cases permitting the regulation of intrastate activities ‘‘which in a substantial way interfere with or obstruct the exercise of the granted power.’’ . . .

. . . The regulation of an intrastate activity may be essential to a comprehensive regulation of interstate commerce even though the intrastate activity does not itself ‘‘substantially affect’’ interstate commerce. Moreover, as the passage from Lopez quoted above suggests, Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce. The relevant question is simply whether the means chosen are ‘‘reasonably adapted’’ to the attainment
of a legitimate end under the commerce power. . . .

Supporters of the constitutionality of the mandate mainly rely on this yet-to-be-established doctrine, which I predict will be accepted by the Court in an appropriate case involving intrastate noneconomic activity. But, as Judge Hudson recognized, the mandate goes beyond intrastate activity to reach inactivity, so this is not that case.

Of course, the distinction between economic and noneconomic activity would not limit this new Essential to a Broader Regulatory Scheme Doctrine as it does the Substantial Effects Doctrine. That is Justice Scalia’s point. Because it has not yet been used to decide a case, however, the Court has not had occasion to identify a “limiting doctrine” so this new Necessary & Proper Clause doctrine does not destroy the scheme of enumerated powers.

When Justice Rehnquist devised the economic-noneconomic distinction limiting the Substantial Effects Doctrine of the Necessary & Proper Clause he did so by “looking back” and finding that, in all previous Substantial Effects Doctrine cases, “the pattern is clear”: they all involved the regulation of intrastate economic activity. And this is what Judge Hudson did in Virgina v. Sebelius. He looked back and saw a clear pattern: Every case in which the Necessary & Proper Clause Case was used to reach beyond interstate commerce involved “activity.” Congress never before sought to reach beyond activity to reach inactivity. So that provides the requisite limiting doctrine to the yet-to-be-applied Essential to a Broader Regulatory Scheme Doctrine proposed by Justice Scalia.

Like the economic-noneconomic distinction, such a doctrine would provide a judicially administrable limit to the scope of “necessary” under the Necessary & Proper Clause without requiring a judicial examination of the more or less necessity of a measure, which the Court has refrained from doing (e.g. the passage quoted by Orin in Comstock). It provides a doctrinal line to prevent Congress from reaching matters that are remote from its power over interstate commerce — regardless of the degree of remoteness in any given case, which the courts will not assess.

How does the government attempt to limit the reach of its claimed power? It asserts that the health insurance market is special or unique and therefore different than other sorts of regulatory schemes that Congress might enact. But this attempt to limit the scope of its theory IS based on a judicial assessment of the more or less necessity of the insurance mandate, which is an approach that won’t ultimately limit the power.

Does anyone want to bet serious money on whether Justice Scalia, the father of this newly minted Necessary & Proper Clause doctrine, won’t see all this by the time the case reaches the Court, that he won’t adopt Judge Hudson’s distinction between activity and inactivity as a judicially administrable limit on his doctrinal creation, and that he won’t distinguish Raich (and Wickard) from this case on this ground? I did not think so. Justice Judge Hudson intuited all this in his ruling on Monday.

Orin’s complaint about Judge Hudson’s opinion only looks right if one fails to see that the Substantial Effects Doctrine we are discussing is already a Necessary & Proper Clause doctrine limiting “necessary.” The New Deal Court’s decisions were much clearer and more careful about this than was Chief Justice Rehnquist’s opinion in Lopez. After all, in their youths, the New Deal justices were trained to take enumerated powers seriously.

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