The Silent Power: Federal Corporations as Constitutional Law

Join us for a seminar with Caitlin Tully (NYU Law) on "The Silent Power: Federal Corporations as Constitutional Law".

Abstract:
Scholars and courts have long viewed unenumerated powers and rights as constitutionally dubious. This skepticism has produced far-ranging effects: most recently, it has undergirded the Court’s invalidation of privacy rights. Many others have contested the presumption against unenumerated law, including a recent wave of scholarship which criticizes “enumerationism.” These efforts have been hampered, however, by the fact that they are unable to point to a concrete example of a tacit power or right that is entirely independent from an enumerated power or right. This Article demonstrates – for the first time – that at least one such power exists: the power to charter corporations. Trillions of dollars circulate through the federal corporate form. Yet scholars often assume that the Constitution has nothing to say about corporations. The doctrine of federal incorporation, meanwhile, is confused: courts analogize federal corporations to state corporations or federal agencies, despite obvious inconsistencies, or avoid them altogether. As this Article demonstrates, however, the Framers understood the power to charter as an independent power with its own prerogatives and limits, and there was little doubt about the power’s constitutionality following ratification. In fact, as this Article shows, the Marshall Court constructed doctrine defining this pre-existing power across three cases: Dartmouth College v. Woodward, McCulloch v. Maryland, and Osborn v. Bank of the United States, establishing an independent threshold for the creation of federal corporations: “constitutional” purpose. Congress has effectively relied on this tacit, but independent, legal power for over two centuries. This Article provides the first comprehensive account of the doctrine of federal incorporation and its current use, as well as an index of all federal corporations from the Founding to the present. In addition, this Article makes two important interventions. First, by clarifying the legal basis of federal incorporation, the existence of the charter power may offer alternative rationales for the constitutionality of federal legislation; alternatives to existing constructions of administrative law; and a coherent way to analyze large transactions which currently defy categorization. Second, as the current Court considers whether to invalidate existing jurisprudence which endorses “implied” rights, the existence of the charter power cuts against the theoretical case for doing so. Challenging the presumption against the legitimacy of unenumerated powers and rights, the charter power demonstrates that, in at least one case, a “silent” power was concrete, constrained, and original.