A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s Nicholas R. Parrillo CSAS Working Paper 20-17 Delegations and Nondelegation After Gundy NICHOLAS R. P A R R I L L O A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s abstract. The Supreme Court is poised to toughen the nondelegation doctrine to strike down acts of Congress that give broad discretion to administrators, signaling a potential revolu- tion in the separation of powers. A majority of the Justices have suggested in recent opinions that they are open to the far-reaching theory that all agency rulemaking is unconstitutional insofar as it coerces private parties and is not about foreign affairs. If adopted, this theory would invalidate most of the federal regulatory state. Jurists and scholars critical of rulemaking’s constitutionality base their claims on the original meaning of the Constitution. But these critics face a serious ob- stacle: early Congresses enacted several broad delegations of administrative rulemaking authori- ty. The critics’ main response has been that these early statutes do not count, because they fall into two areas in which (say the critics) the original nondelegation doctrine did not apply, or ap- plied only weakly: noncoercive legislation (e.g., giving benefits) or foreign-affairs legislation. This Article finds that the originalist critics of rulemaking are mistaken to say that no early congressional grant of rulemaking power was coercive and domestic. There is a major counterex- ample missed by the literature on nondelegation, indeed by all of legal scholarship, and not dis- cussed more than briefly even by historians: the rulemaking power under the “direct tax” of 1798. In that legislation, Congress apportioned a federal tax quota to the people of each state, to be paid predominantly by owners of real estate in proportion to their properties’ respective val- ues. Thousands of federal assessors assigned taxable values to literally every house and farm in every state of the Union, deciding what each was “worth in money”—a standard that the legisla- tion did not define. Because assessors in different parts of a state could differ greatly in how they did valuation, Congress established within each state a federal board of tax commissioners with the power to divide the state into districts and to raise or lower the assessors’ valuations of all real estate in any district by any proportion “as shall appear to be just and equitable”—a phrase unde- fined in the statute and not a term of art. The federal boards’ power to revise valuations en masse in each intrastate tax district is identical to the fact pattern in the leading Supreme Court prece- dent defining rulemaking. Thus, each federal board in 1798 controlled, by rule, the distribution of the federal real-estate tax burden within the state it covered. 1288 a critical assessment This Article is the first study of the federal boards’ mass-revision power. It establishes that the mass revisions (a) were o�en aggressive, as when the federal board in Maryland raised the taxable value of all houses in Baltimore, then the nation’s third-largest city, by 100 percent; (b) involved much discretion, given serious data limitations and the absence of any consensus meth- od; (c) had a major political aspect, as the federal boards were inheriting the contentious land- tax politics that had previously raged within the state legislatures, pitting the typical state’s rich commercial coast against its poor inland farms; (d) were not subject to judicial review; and (e) were accepted as constitutional by the Federalist majority and Jeffersonian opposition in 1798 and also by the Jeffersonians when they later took over, indicating the boards’ power was con- sistent with original meaning or, alternatively, with the Constitution’s liquidated meaning. In short, vesting administrators with discretionary power to make politically charged rules domesti- cally affecting private rights was not alien to the first generation of lawmakers who put the Con- stitution into practice. More broadly, this Article is the first in-depth treatment of the 1798 direct tax’s administra- tion. It shows that the tax, measured by personnel, was the largest federal administrative en- deavor, outside the military, of the Constitution’s first two decades. It is remarkable that today’s passionate debate on whether the administrative regulatory state violates the Framers’ Constitu- tion has so far made no reckoning with this endeavor. This Article’s dataset is available at: https://doi.org/10.7910/DVN/IGMJ7E. 1289 the yale law journal 130:1288 2021 author. William K. Townsend Professor of Law, Yale Law School, and Professor of History (secondary appointment), Yale University. For comments on all or parts of the manuscript, I thank Gregory Ablavsky, Bruce Ackerman, Jonathan Adler, Kevin Arlyck, Nicholas Bagley, Jack Beermann, Emily Bremer, Daniel Carpenter, Ronald Cass, Charlotte Crane, Saul Cornell, Kathe- rine Mims Crocker, Blake Emerson, Frank W. Garmon, Jr., Philip Hamburger, Kristin Hickman, Daniel Hulsebosch, Gary Lawson, John Manning, Jennifer Mascott, Jerry Mashaw, Aaron Niel- son, James Pfander, Michael Rappaport, Daphna Renan, Jed Shugerman, Chris Walker, Ilan Wurman, and participants in the Darling Foundation Originalism Works-in-Progress Confer- ence at the University of San Diego, the Fordham Constitutional History Workshop, the George Mason University Nondelegation Roundtable, the Harvard Public Law Workshop, the Power in the Administrative State Workshop Series at the University of Pennsylvania, and the University of San Diego Faculty Workshop. For discussions about the project, I am grateful to Ian Ayres, Michael Blaakman, Maureen Brady, Peter Conti-Brown, Justin Driver, Farley Grubb, Naomi Lamoreaux, Sophia Lee, Scott C. Miller, Claire Priest, David Schleicher, Adam J. White, Robert E. Wright, and Taisu Zhang. I owe special thanks to Frank W. Garmon, Jr. and Carole Shammas, for generously sharing with me the important datasets they respectively created on the direct tax; to Yair Listokin, for in-depth discussions of certain economic aspects of the subject; and to Ju- dith Green Watson, for advising me on the project in light of her extensive research in direct-tax records. For the crucial service of locating sources, I am indebted to the staffs of the Connecticut Historical Society, the Daughters of the American Revolution Library, the Princeton University Library Department of Rare Books and Special Collections, the Rhode Island Historical Society, the Rutgers University Library Special Collections and Archives, the Suffolk County Historical Society, the U.S. National Archives, and the Yale Law Library (especially Julian Aiken and Maryellen Larkin); and to Elizabeth Barnett and Karen Needles. For financial support, I thank Yale Law School and the Oscar M. Ruebhausen Fund. All errors are my own. 1290 a critical assessment article contents introduction 1293 i. federal taxation of real estate in 1798: fundamentals 1318 A. The Direct Tax’s Background, Political Origins, and Substance 1318 B. The Administrative Organization and Scale of the Valuation Apparatus 1327 C. The Federal Boards’ Sweeping Exercises of Power 1339 ii. indeterminacy in the federal boards’ revisions: hamilton’s “very bad business of valuations” 1345 A. The Continental Congress’s Failure at Real-Estate Valuation, 1777-89 1348 B. The Absence of Clear Principles in State Tax Statutes, 1796-98 1350 C. Indeterminacy in Deciding Value from Land’s Annual Income or Historical Sale Prices 1358 D. Indeterminacy in the Federal Legislation of 1798: “No Necessity that the Principles of Valuation Should Be Uniform in All the States” 1366 E. Indeterminacy in Implementing the Federal Legislation of 1798 1370 1. Secretary Wolcott’s Guidance 1370 2. The Federal Boards’ Regulations and Approaches 1372 3. The Connecticut Federal Board’s Sale-Price Research 1379 4. Official Valuations and Population Density 1384 iii. the political aspect of the federal boards’ revisions 1391 A. State Legislative Tax Politics That Federal Boards Inherited 1392 B. Congress’s Options for Handling Intrastate Politics and Its Choice to Delegate 1401 C. Politics and the Structure, Personnel, and Process of the Federal Boards 1405 D. Politics and the Substantive Decisions of Federal Boards 1408 1291 the yale law journal 130:1288 2021 iv. no judicial review of the federal boards’ revisions 1417 A. Equity? 1418 B. Writ of Error? 1419 C. Certiorari? 1419 D. Mandamus? 1421 E. Judicial Review Through Enforcement by Distress, or A�er? 1422 F. Judicial Review Through Enforcement by Sale of Land, or A�er? 1425 G. Conclusion: Statutes as the Sole Source of Review of Valuations 1427 v. constitutional acceptance of the federal boards’ revision power, 1798-1861 1429 A. Acceptance of the Federal Boards’ Rulemaking Discretion in 1797-1800 1430 B. Repeal of the Record-Updating Provisions, 1800-1801 1437 C. The Jeffersonians’ Continuing Implementation of the 1798 Direct Tax, 1801-05 1438 D. Jeffersonian Direct Taxes in the War of 1812 1440 1. The Initial Tax of 1813: Reducing Rulemaking Discretion, for Nonconstitutional Reasons 1441 2. The Permanent Tax of 1815: Increasing Rulemaking Discretion Back to the 1798 Level 1449 3. The Peacetime Pullback of 1816 1453 E. The Civil War Direct Tax, 1861 1454 conclusion 1455 1292 a critical