Article I, Section 8, Clause 4 — Uniform Laws

ArtI.S8.C4.1.1 Overview of Naturalization Clause

Article I, Section 8, Clause 4 of the Constitution provides Congress with the “power . . . To establish an uniform Rule of Naturalization . . .throughout the United States.”¹ The Supreme Court has described naturalization as “the act of adopting a foreigner, and clothing him with the privileges of a native citizen.”² Pursuant to this authority, Congress may legislate terms and conditions by which a foreign-born national (alien) may become a U.S. citizen.³ Moreover, Congress’s power over naturalization is exclusive; states may not impose their own terms and conditions by which aliens may become U.S. citizens.⁴ Based on this broad power, Congress has enacted a series of laws governing the naturalization of aliens in the United States since the end of the eighteenth century.⁵ These naturalization laws have generally applied to three main categories of aliens: (1) those who have resided in the United States for certain periods of time and applied for naturalization; (2) those born abroad to U.S. citizen parents; and (3) those who derived citizenship after their parents naturalized in the United States.⁶

Congress’s power under the Naturalization Clause is not limited to conferring citizenship. The Supreme Court has recognized the power as also giving Congress the ability to revoke citizenship improperly obtained through fraud or other unlawful means.⁷ Additionally, the Court has recognized that Congress has the power to expatriate an individual who, through some voluntary act, has relinquished his or her U.S. citizenship.⁸

In addition to conferring Congress with power to determine when foreign nationals may obtain U.S. citizenship, the Naturalization Clause is sometimes viewed as contributing to Congress’s power over immigration, including its power to set rules for when aliens may enter or remain in the United States.⁹

Congress’s implied power over immigration is explained in the discussion of the Necessary and Proper Clause (Article I, Section 8, Clause 18 of the Constitution).¹⁰

ArtI.S8.C4.1.2.1 British and American Colonial Naturalization

The American conception of citizenship is informed by the English common law doctrine of jus soli (“right of soil”), in which a person’s nationality at birth is determined by the territory where that person is born.¹ Under English common law, any person born in England or any territory within “the realm of England,” including its American colonies, was considered a subject of the Crown and entitled to certain benefits of “subjecthood” unavailable to others.² A foreign national born outside England and its dominions could only become a subject through private legislation conferring that status.³ Typically, this was an expensive process for the intended beneficiary of the bill, and in practice, private bills, which were subject to fees, were only available to those with substantial wealth.⁴ Otherwise, English law afforded no mechanism by which a foreign national could naturalize and become a subject.⁵ Even so, some of the American colonies developed their own naturalization policies that enabled foreign nationals to enjoy some of the rights and protections traditionally afforded to English subjects.⁶

During the eighteenth century and prior to American independence, the British Parliament passed laws that allowed certain foreign nationals to naturalize and become subjects if they met specific requirements under those laws.⁷ For instance, a 1709 law allowed the naturalization of foreign Protestants who took an oath of allegiance and paid a small fee.⁸ More significantly for the American colonies, in 1740, the British Parliament passed a law that uniformly provided for the naturalization of any foreign national residing in a British colony for at least seven years, effectively superseding the naturalization policies of the individual colonies.⁹ In 1773, a law was passed that allowed foreign-born Protestants who had served two years “in any of the royal American regiments” to be naturalized subject to limitations on office-holding in England.¹⁰ During that same year, England, in an effort to maintain control over naturalization policy, directed governors in the American colonies not to authorize naturalization bills passed by the legislatures in those colonies.¹¹ Thus, by the time of the American Revolution, England had established a uniform naturalization policy that foreshadowed the naturalization laws of the United States in the years to come.

ArtI.S8.C4.1.2.2 Constitutional Convention and Naturalization

Following the American Revolution, individual states established their own policies on the naturalization of foreign-born nationals.¹ While some like Pennsylvania had fairly liberal naturalization requirements,² others like Virginia had more restrictive laws that limited naturalization to aliens who resided in the state for longer periods, who were “free white persons,” or who were not otherwise subject to caps on citizenship admissions.³ Other states, including South Carolina, only conferred citizenship through private legislation rather than through any naturalization law.⁴

Despite these differences, the Articles of Confederation, ratified in 1781, provided that “the free inhabitants” of each state had the right to travel freely to any other state, and were “entitled to all privileges and immunities of free citizens in the several states.”⁵ Thus, a foreign national who became a citizen in one state could obtain citizenship rights in another state simply by relocating and establishing residence in that state.⁶ In essence, the combination of interstate travel and competing state citizenship laws established a form of national citizenship that signaled the future establishment of a constitutional standard for obtaining U.S. citizenship.⁷

The lack of consistency between state citizenship laws led some delegates to the Constitutional Convention to propose a uniform naturalization policy during the debates over the United States Constitution. Charles Pinckney, who served as a delegate from South Carolina, noted that the states had widely divergent citizenship laws, and argued that, “[t]o render this power generally useful it must be placed in the Union, where alone it can be equally exercised.”⁸ Alexander Hamilton, who served as a delegate from New York, wrote in the Federalist No. 32 that naturalization policy should be an exclusive federal power “because if each State had power to prescribe a distinct rule there could not be [a] uniform rule.”⁹

In addition, Virginia delegate James Madison commented in the Federalist No. 42 that “[t]he dissimilarity in the rules [of] naturalization, has long been remarked as a fault in our system, and as laying a foundation for intricate and delicate questions.”¹⁰ He noted, for example, that an alien who acquired citizenship in a state with lenient naturalization requirements (such as a short period of residence) could obtain citizenship rights in another state even if he did not meet the more restrictive naturalization policies of that state, given the “privileges and immunities of free citizens” conferred by the Articles of Confederation.¹¹ Consequently, Madison warned, “the law of one State [would be] preposterously rendered paramount to the law of another, within the jurisdiction of the other.”¹²

Ultimately, there was a consensus at the Convention that there should be a federal naturalization power in the Constitution.¹³ Originally, the proposed language of the text relating to naturalization simply authorized Congress “to regulate naturalization.”¹⁴ Then, a revised draft appeared in the New Jersey Plan, which had been introduced by delegate William Paterson, and declared that “the rule for naturalization ought to be the same in every State.”¹⁵ Following some further modification, the Convention adopted the final draft of the Naturalization Clause, which authorized Congress “[t]o establish an uniform rule of naturalization. . . throughout the United States.”¹⁶

ArtI.S8.C4.1.2.3 Early U.S. Naturalization Laws

Congress established its first uniform rule of naturalization through the Naturalization Act of 1790. The Act provided that any “free white person” who resided “within the limits and under the jurisdiction of the United States” for at least two years could be granted citizenship if he or she showed “good character” and swore allegiance to the Constitution.¹ The law also provided that the children of naturalized citizens under the age of twenty-one at the time of their parents’ naturalization and who were residing in the United States would be considered U.S. citizens.² The children of U.S. citizens who were born outside the United States were deemed U.S. citizens unless their fathers had never resided in the United States.³ Additionally, Congress delegated to the courts the power to administer the naturalization process.⁴

In 1795 Congress amended the naturalization law by requiring an applicant to submit a declaration of intent to become a citizen at least three years before naturalization, and extending the minimum residence requirement to five years.⁵ Then, in 1798, Congress passed the Alien and Sedition Acts, which, among other things, lengthened the period in which to declare an intent to become a citizen to five years, lengthened the minimum residence requirement to fourteen years, and barred the naturalization of any alien from a country at war with the United States.⁶ In 1802, Congress repealed the previous laws and restored both the five-year residence requirement and the three-year declaration of intent period.⁷

In the ensuing years, Congress continued to establish naturalization policies with varying conditions and restrictions.⁸ Despite these differences, naturalization laws uniformly required that an applicant prove residence in the United States for a specific time period before acquiring citizenship.⁹

ArtI.S8.C4.1.2.4 Naturalization as an Exclusive Power of Congress

While the first Congress enacted federal laws governing naturalization, the Supreme Court initially appeared to recognize that states retained naturalization powers. For instance, in one early case, Collet v. Collet, the Court in 1792 declared that the states continued to have “concurrent authority” over naturalization, but could not exercise that authority in a manner that conflicted with federal naturalization laws.¹ In United States v. Villato, the Court in 1797 ruled that a Spanish national, Francis Villato, was not a U.S. citizen even though he had taken an oath of citizenship under Pennsylvania law.² Without deciding whether states maintained naturalization powers, the Court simply determined that the Pennsylvania law under which Villato sought to naturalize had been effectively repealed by an amendment to the state’s constitution.³ Accordingly, the Court held, Villato never became a U.S. citizen and could not be criminally charged with treason.⁴

Despite the Supreme Court’s early recognition of state power over naturalization, the Court ultimately determined that the naturalization power rested solely within Congress. For example, in Chirac v. Lessee of Chirac, Chief Justice John Marshall in 1817 declared “[t]hat the power of naturalization is exclusively in [C]ongress does not seem to be, and certainly ought not to be, controverted.”⁵ Therefore, in that case, a French national did not have the ability to own land (a privilege generally extended only to U.S. citizens at the time) based on the fact that he had taken an oath of citizenship under Maryland law because “[C]ongress alone has the power of prescribing uniform rules of naturalization.”⁶ Nonetheless, the Court held that a 1778 treaty between the United States and France permitted French nationals to purchase and own lands in the United States.⁷

ArtI.S8.C4.1.2.5 Collective Naturalization (1800–1900)

While Congress, by the early nineteenth century, had established the general framework for a foreign subject who came to the United States to acquire citizenship, the expansion of the United States into new areas prompted the Federal Government, through statute or treaty, to provide for collective naturalization of the inhabitants of those newly acquired territories.¹ The United States’ acquisition of the Louisiana territory and Florida in the early 1800s raised the question of whether the Federal Government could collectively naturalize designated groups of persons through statute or treaty.²

In American Insurance Co. v. 356 Bales of Cotton, an 1828 case involving a challenge to the legality of admiralty proceedings in a Florida territorial court, the Supreme Court recognized the collective naturalization of Florida inhabitants under an 1819 treaty between the United States and Spain that ceded the territory of Florida to the United States.³ The Court explained that “the ceded territory becomes a part of the nation to which it is annexed,” and that, upon such transfer, the inhabitants of the territory sever ties with their former country and establish a political allegiance with the government that has acquired their territory.⁴ The Court declared that “[t]his treaty is the law of the land, and admits the inhabitants of Florida to the enjoyment of the privileges, rights, and immunities, of the citizens of the United States.”⁵

The notion of collective naturalization through federal statute or treaty continued to play a role throughout the nineteenth century, particularly as the United States engaged in its westward expansion. For example, in 1845, Congress passed a resolution admitting the Republic of Texas into the union “on an equal footing with the original States,”⁶ and all the citizens of the former republic became citizens of the United States.⁷ In 1848, the United States signed a treaty with Mexico that officially ended the Mexican-American War, and, under that treaty, Mexican nationals who remained in the territory ceded to the United States (e.g., modern-day Arizona, New Mexico, and California) could become citizens of the United States.⁸ Additionally, in 1900, Congress established the territory of Hawai’i and conferred citizenship on its residents.⁹

Through legislation, Congress also provided for the collective naturalization of specific groups of people who were present in the United States or its territories. For instance, in 1887, Congress passed the Dawes Act, which authorized the President to allot tribal land to individual American Indians, and conferred citizenship on American Indians who accepted individual land grants.¹⁰ A few decades later, in 1924, Congress passed the Indian Citizenship Act, which declared that all American Indians born within the territorial limits of the United States were U.S. citizens.¹¹ Additionally, in 1917, Congress passed the Jones Act, which provided that all citizens of Puerto Rico, which had become a United States territory in 1898, would become U.S. citizens.¹²

In short, naturalization is not strictly limited to conferring citizenship on individual foreign nationals. Congress also has the power to grant citizenship collectively to designated groups of persons through legislation, such as the naturalization of all residents of an acquired territory or state, or through a treaty provision.¹³

ArtI.S8.C4.1.3 Post-1900 Naturalization Doctrine Generally

The Supreme Court repeatedly affirmed Congress’s broad and exclusive power over naturalization into the twentieth century and the modern era. In United States v. Ginsberg, the Court in 1917 declared that “[a]n alien who seeks political rights as a member of this nation can rightfully obtain them only upon terms and conditions specified by Congress,” and that “[c]ourts are without authority to sanction changes or modifications; their duty is rigidly to enforce the legislative will in respect of a matter so vital to the public welfare.”¹ Similarly, in Schneiderman v. United States, the Court in 1943 recognized that “[t]he Constitution authorizes Congress ‘to establish an uniform Rule of Naturalization,’ and we may assume that naturalization is a privilege, to be given or withheld on such conditions as Congress sees fit.”² Decades later, in Fedorenko v. United States, the Court in 1981 maintained that “[t]his judicial insistence on strict compliance with the statutory conditions precedent to naturalization is simply an acknowledgment of the fact that Congress alone has the constitutional authority to prescribe rules for naturalization.”³ In its 2001 decision in Nguyen v. INS, the Court acknowledged “the wide deference afforded to Congress in the exercise of its immigration and naturalization power.”⁴

Exercising this broad power, Congress continued to enact legislation governing the naturalization of aliens. Like early U.S. naturalization laws, these laws similarly required naturalization applicants to establish continuous residence in the United States and good moral character during specified periods, among other requirements.⁵ The Immigration and Nationality Act (INA) of 1952, as amended, establishes the modern framework governing the naturalization of aliens in the United States.⁶

ArtI.S8.C4.1.4.1 Citizenship and Children Born Abroad

Apart from the general requirements for the naturalization of aliens in the United States, and the collective naturalization of certain classes of aliens, Congress has also addressed the naturalization of children born abroad to U.S. citizen parents. The concept of naturalization of foreign-born children may be traced to early English laws that allowed children born abroad to English subjects to inherit the rights of their parents.¹ The Supreme Court has recognized that this concept of “nationality by descent” is rooted in statute rather than common law.² According to the Court, “[p]ersons not born in the United States acquire citizenship by birth only as provided by Acts of Congress.”³

From the outset, Congress has conferred citizenship on children born outside the United States to U.S. citizen parents. Under the original Naturalization Act of 1790, children of U.S. citizens born outside the United States were considered U.S. citizens unless their fathers had never resided in the United States.⁴ For the next two centuries, Congress continued to pass legislation providing for the naturalization of children born abroad to U.S. citizens if specified requirements were met.⁵ These requirements included, among others, establishing a parent’s residence in the United States before the child’s birth; and, with respect to some earlier laws, proving the child’s continuous residence in the United States for specified periods if one of the parents was not a U.S. citizen.⁶

ArtI.S8.C4.1.4.2 Naturalization and Rogers v. Bellei

In the 1971 case of Rogers v. Bellei, the Supreme Court considered a constitutional challenge to a requirement under the Immigration and Nationality Act (INA) that a child born abroad to a U.S. citizen parent and an alien parent maintain citizenship by residing in the United States continuously for five years between the ages of fourteen and twenty-eight.¹ The plaintiff, Aldo Mario Bellei, was born in Italy to an Italian father and a U.S. citizen mother in 1939.² Despite his birth abroad, Bellei acquired his U.S. citizenship under the Equal Nationality Act of 1934 (the law in effect at the time of his birth) because his U.S. citizen mother had established her residence in the United States before Bellei’s birth.³ Bellei, who lived most of his life in Italy and periodically visited the United States, eventually lost his U.S. citizenship in 1962 because he failed to satisfy the INA’s continuous residence requirement.⁴

Bellei argued that the INA’s residency condition violated his constitutional rights.⁵ A federal district court agreed, ruling that the requirement was unconstitutional in light of the Supreme Court’s decisions in Schneider v. Rusk and Afroyim v. Rusk.⁶ In Schneider, the Supreme Court had held that a separate INA provision revoking the citizenship of a naturalized U.S. citizen who subsequently resided in her former country of nationality for three years violated due process under the Fifth Amendment because there was no similar restriction against foreign residence for native-born U.S. citizens.⁷ In Afroyim, the Court invalidated an INA provision that terminated the citizenship of a naturalized U.S. citizen who voted in a foreign election, holding that, under the Fourteenth Amendment, a U.S. citizen has a constitutional right to remain a citizen unless he voluntarily relinquishes citizenship.⁸

The Supreme Court held that applying the INA’s residency condition to Bellei did not violate the Fourteenth Amendment’s Citizenship Clause, which provides that “[a]ll persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”⁹ The Court determined that the protections against involuntary expatriation under the Fourteenth Amendment applied only to those who were “born or naturalized in the United States.”¹⁰ The Court noted that Bellei, who had lived in Italy most of his life, was not born or naturalized in the United States, and had not been subject to the jurisdiction of the United States.¹¹ The Court distinguished these facts from Schneider and Afroyim, where the plaintiffs had naturalized and resided in the United States.¹² The Court declared that the Fourteenth Amendment “obviously did not apply to any acquisition of citizenship by being born abroad of an American parent.”¹³ Thus, the Court explained, it was “necessarily left” to Congress, under its power “to establish an uniform rule of naturalization,” to determine when a person born abroad to U.S. citizen parents may become a citizen.¹⁴

Given “[t]he reach of congressional power in this area,” and the Court’s prior recognition of that power, the Supreme Court held that imposing the INA’s residency condition on Bellei was not “irrational, arbitrary, or unfair.”¹⁵ The Court stated that “Congress has an appropriate concern with problems attendant on dual nationality,” particularly when a child’s non-U.S. citizen father chooses to raise his family in his home country rather than the United States.¹⁶ In those circumstances, the Court noted, “[t]he child is reared, at best, in an atmosphere of divided loyalty.”¹⁷ In light of these concerns, the Court determined that Congress may require a person born abroad to establish a sufficient connection to the United States to enjoy the benefits of citizenship.¹⁸ The Court concluded that it was reasonable for Congress to impose a conditional period of residence for aliens born abroad to U.S. citizen parents, and that the INA provision containing this requirement was constitutional.¹⁹

The Supreme Court’s decision in Bellei underscores that Congress has broad power over naturalization, and that it may set forth the terms and conditions in which an alien may become a U.S. citizen as long as those terms are not “unreasonable, arbitrary, or unlawful.”²⁰

ArtI.S8.C4.1.4.3 Naturalization and Sessions v. Morales-Santana

More recently, in Sessions v. Morales-Santana, the Supreme Court in 2017 considered a legal challenge to Immigration and Nationality Act (INA) provisions that set forth the manner in which a child born abroad to a U.S. citizen parent and an alien parent could acquire citizenship.¹ These provisions generally required the U.S. citizen parent to have accrued at least five years of physical presence in the United States prior to the child’s birth.² The INA extended this rule to children born out of wedlock to a U.S. citizen parent and an alien parent.³ If a child was born abroad to an unwed U.S. citizen father and an alien mother, the father could transmit citizenship to the child if he had accrued five years of physical presence in the United States before the child’s birth.⁴ The INA, however, created an exception for unwed U.S. citizen mothers, who could transmit citizenship to the child so long as they had accrued just one year of physical presence in the United States.⁵

Luis Ramon Morales-Santana was born in the Dominican Republic to an unwed U.S. citizen father and an alien mother, but he could not acquire citizenship from his father because his father had not yet accrued five years of physical presence in the United States at the time of Morales-Santana’s birth.⁶ Noting that the INA allowed unwed U.S. citizen mothers to transmit citizenship so long as the mother had accrued one year of physical presence, Morales-Santana argued that the gender-based distinction between unwed U.S. citizen fathers and mothers violated his U.S. citizen father’s right to equal protection.⁷

The Supreme Court agreed, ruling that the government failed to show an “exceedingly persuasive justification” for the gender-based distinction between unwed mothers and fathers.⁸ According to the Court, the distinction was based on “overbroad generalizations” about the respective roles of husbands and wives.⁹ Specifically, the Court observed, the statute rested on the long-held notion that, for unmarried parents, the mother is considered to be the child’s natural and sole guardian because she is more qualified than the father to take responsibility for the child.¹⁰ The Court rejected the government’s contentions that the gender-based distinction ensured that children born abroad have sufficiently strong connections to the United States and reduced the risk of statelessness (i.e., lacking a country of citizenship) for foreign-born children.¹¹

The Supreme Court thus held that the one-year physical presence provision for unwed U.S. citizen mothers was unconstitutional, and invited Congress to “settle on a uniform prescription that neither favors nor disadvantages any person on the basis of gender.”¹² In the meantime, the Court determined, the standard five-year physical presence requirement should apply to both unwed U.S. citizen mothers and fathers of children born abroad.¹³

The Supreme Court’s Morales-Santana decision shows that, while Congress has broad power over naturalization, the terms and conditions that Congress sets forth for obtaining citizenship may be subject to constraints imposed elsewhere in the Constitution.

ArtI.S8.C4.1.5.1 Denaturalization (Revoking Citizenship) Generally

The concept of naturalization typically concerns the grant of citizenship to a person who has lived in the United States for a specified time period and meets certain other requirements; to groups of people in newly-acquired territories who acquire citizenship by statute or treaty; and to children born outside the United States who become U.S. citizens upon birth to a U.S. citizen parent, or who derive their citizenship upon their parents’ naturalization in the United States. Congress has also addressed the concept of denaturalization, which refers to the revocation of citizenship from a naturalized U.S. citizen.

Congress’s power over denaturalization derives from its power “[t]o establish an uniform rule of naturalization,” and from its power “to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or any Department or Officer thereof.”¹ In describing the theory of denaturalization, the Supreme Court has stated that “[a]n alien has no moral nor constitutional right to retain the privileges of citizenship if, by false evidence or the like, an imposition has been practiced upon the court, without which the certificate of citizenship could not and would not have been issued.”² Thus, “there must be strict compliance with all the congressionally imposed prerequisites to the acquisition of citizenship. Failure to comply with any of these conditions renders the certificate of citizenship ‘illegally procured,’ and naturalization that is unlawfully procured can be set aside.”³

The Naturalization Act of 1906 was the first law to provide for denaturalization.⁴ It authorized judicial proceedings against a naturalized U.S. citizen “for the purpose of setting aside and canceling the certificate of citizenship on the ground of fraud or on the ground that such certificate of citizenship was illegally procured.”⁵ The Act provided that if a naturalized U.S. citizen returned to his native country or went to another foreign country and established a permanent residence there within five years of being admitted as a U.S. citizen, such facts were “prima facie evidence” that he or she lacked the intention to become a permanent citizen of the United States at the time of filing the naturalization application.⁶ Absent “countervailing evidence,” the naturalized citizen’s permanent residence in the foreign country would “be sufficient in the proper proceeding to authorize the cancelation of his certificate of citizenship as fraudulent, . . .”⁷

ArtI.S8.C4.1.5.2 Early Denaturalization Jurisprudence

In a 1913 case, Luria v. United States, a naturalized U.S. citizen, George Luria, challenged a court order setting aside, as fraudulently and illegally procured, his certificate of citizenship under the denaturalization provisions of the 1906 Act.¹ The U.S. Government claimed that Luria, who was born in Russia, had established permanent residence in South Africa shortly after obtaining his certificate of citizenship in the United States and thus lacked the intention of becoming a permanent U.S. citizen when he naturalized.² Luria argued that, although the Naturalization Act of 1906 authorized the denaturalization of someone who established a permanent residence in a foreign country, this restriction should not have applied to him because he had naturalized under a prior law that did not require applicants to produce a declaration of their intention to reside in the United States.³

The Supreme Court disagreed, explaining that, before 1906, naturalization laws still imposed certain duties and obligations on the applicant, such as a declaration of intention to become a U.S. citizen and renounce any allegiance to a foreign government, and proof that the applicant had resided in the United States for at least five years at the time of the application.⁴ The Court determined that these prior laws “clearly implied” that they were not intended to apply to someone “whose purpose was to reside permanently in a foreign country, and to use his naturalization as a shield against the imposition of duties there, while by his absence he was avoiding his duties here.”⁵

Luria also challenged the 1906 Act’s denaturalization provision itself, arguing that it violated his right to due process by characterizing his permanent residence in a foreign country within five years of becoming a U.S. citizen as “prima facie evidence” of a lack of intention to become a permanent U.S. citizen.⁶ The Court rejected Luria’s argument, reasoning that the 1906 Act “goes no farther than to establish a rebuttable presumption which the possessor of the certificate is free to overcome” with evidence of his intention to reside permanently in the United States.⁷ Recognizing a legislature’s power to craft rules of evidence in civil and criminal cases, the Court determined that the rebuttable presumption created by the 1906 Act was reasonable and did not violate Luria’s right to due process.⁸

The Court also rejected Luria’s contention that the 1906 Act violated his right to equal protection by discriminating between the rights of naturalized U.S. citizens, who were subject to the foreign residence restriction, and native-born U.S. citizens, who were not subject to such restriction.⁹ The Court explained that the Act “does not in anywise affect or disturb rights acquired through lawful naturalization, but only provides for the orderly cancellation, after full notice and hearing, of certificates of naturalization which have been procured fraudulently or illegally. It does not make any act fraudulent or illegal that was honest and legal when done, imposes no penalties, and at most provides for the annulment, by appropriate judicial proceedings, of merely colorable letters of citizenship, to which their possessors never were lawfully entitled.”¹⁰ The Court thus upheld Luria’s order of denaturalization.¹¹

In the following decades, federal immigration laws concerning denaturalization remained largely unchanged from the 1906 Act.¹² In 1952, however, the INA established a new framework governing denaturalization. The INA authorized the “revoking and setting aside” of a naturalization certificate that had been “procured by concealment of a material fact or by willful misrepresentation.”¹³ The INA also listed certain categories of naturalized citizens who would be considered to have obtained citizenship through “concealment of a material fact or by willful misrepresentation,” including a person who returned to his or her native country or any other foreign country within five years of naturalization, and established permanent residence in that country.¹⁴ The INA further provided that any person who claimed U.S. citizenship through the naturalization of a parent or spouse would be deemed to lose citizenship if there was a revocation of the parent’s or spouse’s citizenship because “the order and certificate of naturalization were procured by concealment of a material fact or by willful misrepresentation.”¹⁵

ArtI.S8.C4.1.5.3 Limits to Congress’s Denaturalization Power

Despite Congress’s broad power over denaturalization, the Supreme Court has recognized certain limitations to this power, particularly with respect to the evidentiary requirements to sustain a person’s denaturalization such as the burden of proving that citizenship was unlawfully obtained, and the standard that governs whether a person seeking citizenship concealed a material fact relating to his or her eligibility for citizenship.¹ In imposing these limitations, the Court has recognized the “value and importance” of citizenship, and declared that the consequences of denaturalization are “more serious than a taking of one’s property, or the imposition of a fine or other penalty.”² Thus, according to the Court, “such a right once conferred should not be taken away without the clearest sort of justification and proof.”³

ArtI.S8.C4.1.5.4 Unlawful Procurement of Citizenship

In Schneiderman v. United States, the Supreme Court in 1943 considered a legal challenge by a U.S. citizen, William Schneiderman, to his denaturalization under the 1906 Act based on the charge that he had “illegally procured” his citizenship by failing to disclose his membership in the Communist Party.¹ The government had argued that Schneiderman’s membership in the Communist Party disqualified him from naturalization because he was not “attached to the principles of the Constitution of the United States, and well disposed to the good order and happiness of the same.”²

The Supreme Court held that, in a denaturalization proceeding, “the facts and the law should be construed as far as is reasonably possible in favor of the citizen,” and that the government bears the burden of presenting “‘clear, unequivocal, and convincing’” evidence that citizenship was unlawfully procured, rather than “‘a bare preponderance of evidence which leaves the issue in doubt.’”³ Applying this standard, the Court determined that Congress, in creating the “attachment to the Constitution” requirement for naturalization, had intended to deny naturalization to those who advocated the use of force or violence against the government, but not to those who simply subscribed to certain principles or beliefs, however unpopular or “distasteful.”⁴ The Court ruled that Schneiderman’s membership in the Communist Party failed to clearly establish that he was not “attached to the principles of the Constitution” because there was no evidence that he advocated the use of violence against the government.⁵

ArtI.S8.C4.1.5.5 Concealing Material Facts When Procuring Citizenship

Apart from considering the government’s burden of proof in denaturalization cases, the Supreme Court has also considered, under the Immigration and Nationality Act’s (INA) denaturalization provision, the standard for assessing whether facts concealed by a naturalization applicant are “material.”¹ In a 1960 case, Chaunt v. United States, a Hungarian national, Peter Chaunt, challenged the government’s claim that he had fraudulently procured his naturalization by concealing and misrepresenting his record of arrests in the United States, and that his arrest record was a “material” fact under the denaturalization statute.² The Court suggested that, to meet the materiality threshold, the government had to show that either (1) the omitted facts “would have warranted the denial of citizenship,” or (2) their disclosure “might have been useful in an investigation possibly leading to the discovery of other facts warranting denial of citizenship.”³

The Court determined that Chaunt’s arrests, which related to minor offenses (e.g., distributing handbills in violation of a city ordinance) occurring more than five years before his naturalization application, did not affect his qualifications for citizenship.⁴ The Court also rejected the government’s contention that the disclosure of the arrests would have led to an investigation revealing Chaunt’s communist affiliations, warranting the denial of citizenship on the ground that he lacked the requisite attachment to the Constitution.⁵ The Court noted that Chaunt had disclosed in his naturalization application that he was a member of the International Worker’s Order (reportedly linked to the Communist Party), and that it was thus questionable whether the disclosure of his arrest record would have led to an investigation of any communist affiliations.⁶ The Court thus ruled that the government failed to prove by “clear, unequivocal, and convincing” evidence that Chaunt procured his citizenship by “concealment of a material fact.”⁷

However, in Fedorenko v. United States, the Court in 1981 held that the failure of a Ukrainian national, Feodor Fedorenko, to disclose in his naturalization application that he had served as a concentration camp guard following his capture by German forces during World War II warranted his denaturalization.⁸ The Court reasoned that Fedorenko’s misrepresentations about his wartime activities were material because, had those facts been known to immigration officials, he would have been ineligible for initial admission into the United States.⁹ Consequently, the Court determined, because Fedorenko obtained his immigration visa through fraud, he could not establish that he was lawfully admitted to the United States for permanent residence, as required for naturalization under the INA, and thus, his citizenship was “illegally procured.”¹⁰

Further, the Court rejected Fedorenko’s claim that a district court could, as an exercise of discretion, decline to enter a judgment of denaturalization against a person who procured his citizenship unlawfully.¹¹ The Court stated that “once a district court determines that the Government has met its burden of proving that a naturalized citizen obtained citizenship illegally or by willful misrepresentation, it has no discretion to excuse the conduct.”¹²

Eventually, in its 1988 decision in Kungys v. United States, the Supreme Court clarified the test for determining whether a concealment or misrepresentation is “material” under the INA’s denaturalization provision.¹³ In that case, the Court considered whether willful misrepresentations by a naturalized German national, Juozas Kungys, about the date and place of his birth were material for purposes of his denaturalization proceeding.¹⁴ The Court rejected the notion that a misrepresentation or concealment is material if it would more likely than not have produced an erroneous decision, or would more likely than not have triggered an investigation, as the Court had suggested in Chaunt.¹⁵ Instead, the Court held that materiality is established if the government presents “clear, unequivocal, and convincing” evidence that the misrepresentation or concealment “had a natural tendency to produce the conclusion that the applicant was qualified” for citizenship.¹⁶

Applying this standard, the Court held that Kungys’s misrepresentation of the date and place of his birth was not material for purposes of his denaturalization proceeding because there was no indication that it had the natural tendency to influence the immigration official’s decision whether to confer citizenship.¹⁷ The Court determined there was no suggestion that Kungys’s date and place of birth were “themselves relevant to his qualifications for citizenship,” or that knowledge of his true date and place of birth would “predictably have disclosed other facts relevant to his qualifications.”¹⁸

The Court also noted that, apart from showing a material misrepresentation or concealment, the government in a denaturalization proceeding must show that the naturalized citizen procured citizenship as a result of the misrepresentation or concealment.¹⁹ The Court held that proof of a misrepresentation’s materiality established a presumption that the naturalized citizen procured citizenship based on the misrepresentation, but that the presumption could be rebutted “by showing, through a preponderance of the evidence, that the statutory requirement as to which the misrepresentation had a natural tendency to produce a favorable decision was in fact met.”²⁰

ArtI.S8.C4.1.6.1 Expatriation (Termination of Citizenship) Generally

Besides revoking citizenship fraudulently or unlawfully obtained through denaturalization, Congress may have the power to terminate citizenship as a result of an individual’s voluntary actions abroad that evince an intent to relinquish citizenship.¹ Unlike its power over denaturalization, Congress’s power over expatriation does not derive from any specific enumerated power in the Constitution.² But informed by the notion that an individual has the inherent right of expatriation, Congress has established a statutory framework that provides for the expatriation of U.S. citizens in certain specified circumstances.³

ArtI.S8.C4.1.6.2 Development of Expatriation Doctrine

Under British common law, the “doctrine of perpetual allegiance” prescribed that an individual retained allegiance to his country of nationality, and could not lose that “bond of allegiance” through his own actions or the acts of a foreign nation.¹ But during the early years of the United States, there was some disagreement over whether a U.S. citizen had the right to renounce citizenship.² Some argued that the doctrine of perpetual allegiance restricted an individual’s ability to relinquish citizenship, while others contended that there was an inherent right of expatriation.³ In one early case, Talbot v. Jansen, the Supreme Court in 1795 determined that a U.S. citizen’s temporary absence from the United States could not be construed as an expatriation.⁴ The U.S. citizen had captured a Dutch vessel in violation of piracy laws, and, when arrested upon returning to the United States, he claimed that he had expatriated himself by swearing allegiance to France.⁵ While concluding that the individual “was, and still is, a citizen of the United States,” the Court noted that “[a] statute of the United States, relative to expatriation is much wanted.”⁶

Eventually Congress in 1868 passed a law declaring that “the right of expatriation is a natural and inherent right of all people, indispensable to the enjoyment of the rights of life, liberty, and the pursuit of happiness.”⁷ The law prohibited government action that denied or restricted the right of expatriation, and provided protections to foreign nationals who had relinquished their native citizenship to become U.S. citizens, and who were detained by their former governments.⁸ While the 1868 Act recognized an “inherent right” of expatriation, the law did not specify the circumstances in which an individual would be considered to have expatriated himself, or address the government’s authority to remove citizenship on the grounds of expatriation.⁹

After the 1868 expatriation act, the United States entered into treaties with other countries that sought to resolve certain disagreements about citizenship.¹⁰ While these treaties generally clarified that persons naturalized in a country would be considered citizens of that country, they also contemplated circumstances in which citizenship could be lost based on the commission of certain acts.¹¹ Based on these treaties, the State Department began issuing ad hoc rulings that determined, in individual cases, whether U.S. citizens had lost their citizenship following the commission of certain acts abroad.¹² These administrative rulings laid the groundwork for legislation that would authorize the government to strip citizenship from U.S. citizens who were considered to have expatriated themselves abroad.¹³

ArtI.S8.C4.1.6.3 Expatriation Legislation

In 1907, Congress passed a law on the expatriation of U.S. citizens.¹ The legislation provided that a U.S. citizen was “deemed to have expatriated himself when he has been naturalized in any foreign state in conformity with its laws, or when he has taken an oath of allegiance to any foreign state.”² The law also provided that, if a naturalized U.S citizen resided for two years in his or her native country, or for five years in any other foreign country, there was a rebuttable presumption that the U.S. citizen “ceased to be an American citizen.”³ Further, the law provided that “any American woman who marries a foreigner shall take the nationality of her husband,” but allowed the woman to resume her U.S. citizenship upon the termination of the marriage if certain requirements were met.⁴

In 1940, Congress passed a more comprehensive nationality law that enumerated various circumstances in which a U.S. citizen (whether by birth or naturalization) would lose citizenship.⁵ These circumstances (subject to certain exceptions) included obtaining citizenship in a foreign country; taking an oath of allegiance to a foreign country; serving in the armed forces of a foreign country; accepting certain foreign employment; voting in a political election in a foreign country; making a formal renunciation of nationality in a foreign country; conviction by military court martial of desertion during a time of war; and committing an act of treason against (or seeking to overthrow) the United States.⁶ The statute also clarified when a naturalized U.S. citizen would lose citizenship by residing in his or her native country or another foreign country.⁷

Through enactment of the INA in 1952, Congress expanded the range of conduct that would trigger a loss of U.S. citizenship.⁸ The INA added, as grounds for expatriation, the acts of making a formal renunciation of nationality in the United States during a time of war, and leaving or remaining outside the United States during a time of war or national emergency to avoid military service.⁹ The INA also provided that a naturalized U.S. citizen would lose nationality by “having a continuous residence for three years in the territory of a foreign state of which he was formerly a national or in which the place of his birth is situated,” or by “having a continuous residence for five years in any other foreign state or states.”¹⁰ The INA did not contain a similar foreign residence restriction for native-born U.S. citizens.

ArtI.S8.C4.1.6.4 Judicial Recognition of Congress’s Expatriation Power

In a number of cases, the Supreme Court considered Congress’s authority to remove citizenship based on the performance of specified acts. Initially, the Court determined that Congress had broad authority to remove citizenship that was rooted in its power to regulate foreign affairs. But the Court later imposed limitations on Congress’s authority, concluding that Congress can only remove citizenship from those who voluntarily commit specified acts with the intention of relinquishing their citizenship.

For example, in Mackenzie v. Hare, the Court in 1915 considered a challenge to the 1907 Act’s provision that terminated citizenship of U.S. citizen women who married foreign nationals.¹ The Court rejected the plaintiff ’s contention that expatriation can be shown only by an act demonstrating a voluntary renunciation of citizenship.² Instead, the Court upheld the statute as a lawful exercise of Congress’s authority to regulate foreign affairs and determine the conditions of nationality.³

Several decades later, in Perez v. Brownell, the Court in 1958 addressed a constitutional challenge to the INA provision that removed citizenship from a U.S. citizen who voted in a foreign political election.⁴ The Court declared that “[a]lthough there is in the Constitution no specific grant to Congress of power to enact legislation for the effective regulation of foreign affairs, there can be no doubt of the existence of this power in the law-making organ of the Nation.”⁵ The Court determined that Congress’s power to regulate foreign affairs authorized it to make voting in foreign elections an act of expatriation.⁶ Additionally, while the Court recognized that “Congress can attach loss of citizenship only as a consequence of conduct engaged in voluntarily,” the Court rejected the notion that an individual must intend to relinquish citizenship.⁷

ArtI.S8.C4.1.6.5 Judicial Limits on Congress’s Expatriation Power

In a series of cases decided in the 1950s and 1960s, the Supreme Court established some constraints upon Congress’s expatriation power.¹ As for the standard of proof to establish expatriation, the Supreme Court in the 1958 case of Nishikawa v. Dulles held that the standard adopted in Schneiderman v. United States for denaturalization applied to expatriation cases.² Under this standard, the government has the burden of proving by “clear, convincing and unequivocal evidence” that a U.S. citizen voluntarily performed one of the statutorily enumerated acts that results in loss of citizenship.³ Applying this standard, the Court held that the government failed to prove that a dual U.S.-Japanese citizen, Nishikawa, lost his U.S. citizenship by serving in the Japanese military during World War II because, according to his testimony, he had been drafted into the Japanese military under the country’s penal conscription law while visiting Japan.⁴

Apart from setting the standard of proof for expatriation, the Supreme Court has struck down certain expatriation provisions as unconstitutional. In Trop v. Dulles, decided the same day as Nishikawa, the Court held that the statutory provision revoking citizenship of U.S. citizens convicted by general court martial of desertion was unconstitutional because it exceeded Congress’s war power.⁵ The Court reasoned that “[d]esertion in wartime, though it may merit the ultimate penalty, does not necessarily signify allegiance to a foreign state.”⁶ The Court declared that “[c]itizenship is not a license that expires upon misbehavior,” and concluded that “[a]s long as a person does not voluntarily renounce or abandon his citizenship, . . . his fundamental right of citizenship is secure.”⁷

In the alternative, the Court held that revoking citizenship as punishment for a crime violates the Eighth Amendment’s prohibition against “cruel and unusual” punishment because it causes “the total destruction of the individual’s status in organized society.”⁸ For instance, the Court explained, the individual would become stateless, “a condition deplored in the international community of democracies,” and subject only to the limited and potentially temporary protections available in the country where he happens to reside.⁹ Furthermore, although the crime of desertion was punishable by death under criminal statutes, “the existence of the death penalty is not a license to the Government to devise any punishment short of death within the limit of its imagination.”¹⁰

In the 1963 case of Kennedy v. Mendoza-Martinez, the Supreme Court struck down the statutory provision that divested citizenship for leaving or remaining outside the United States at a time of war or national emergency to evade military service.¹¹ As in Trop, the Court construed the Immigration and Nationality Act (INA) provision as punitive because it strictly imposed penalties on those who engaged in specified conduct.¹² The Court held that the provision violated the Fifth and Sixth Amendments because it exacted a punishment (loss of citizenship) without providing any procedural safeguards, such as notice, the right to trial, the right to counsel, and the right to present witnesses.¹³

The term after it decided Mendoza-Martinez, the Supreme Court in Schneider v. Rusk considered the constitutionality of the INA’s expatriation provision for naturalized U.S. citizens who maintained a continuous residence in their native country for three years.¹⁴ The case involved a German national, Angelika Schneider, who had derived U.S. citizenship through her mother when she was a child, but later resided in Germany following her marriage to a German national.¹⁵ Eventually, the State Department denied Schneider a passport on the ground that she lost her citizenship by maintaining a continuous residence in Germany, her native country, for at least three years.¹⁶

Because “the rights of citizenship of the native born and of the naturalized person are of the same dignity and are coextensive,” the Supreme Court held that the INA’s expatriation provision violated due process by unjustifiably discriminating between naturalized U.S. citizens and native-born U.S. citizens, who were not subject to the INA’s foreign residence restriction.¹⁷ The Court reasoned that, although Congress has the power to set forth the various requirements for naturalization, “[t]he constitution does not authorize Congress to enlarge or abridge those rights” that are equally conferred upon both naturalized and native-born U.S. citizens.¹⁸

During this period, the Supreme Court also considered the constitutionality of removing citizenship from those who voted in a foreign political election. In its 1958 decision in Perez v. Brownell, the Supreme Court had initially ruled that Congress’s inherent authority to regulate foreign affairs enabled it to make voting in foreign elections an act of expatriation resulting in loss of U.S. citizenship.¹⁹ A few years later in Afroyim v. Rusk, however, the Supreme Court in 1967 reexamined this issue and reached a different conclusion.²⁰ Afroyim involved a naturalized U.S. citizen, Beys Afroyim, who voted in an Israeli election and was denied the opportunity to renew his U.S. passport on the ground that he had lost his U.S. citizenship.²¹ Afroyim argued that the government’s termination of his citizenship without his voluntary renunciation of it violated his right to due process under the Fifth Amendment, as well as the Fourteenth Amendment’s command that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.”²²

In striking down the relevant statute, the Court turned away from the view expressed in Perez that Congress “has any general power, express or implied, to take away an American citizen’s citizenship without his assent.”²³ The Court rejected the theory that Congress derived the power to forcefully remove citizenship from its power to regulate foreign affairs, or “as an implied attribute of sovereignty possessed by all nations.”²⁴ Further, the Court observed that the Fourteenth Amendment declares that all persons born or naturalized in the United States are U.S. citizens, and that “[t]here is no indication in these words of a fleeting citizenship, good at the moment it is acquired but subject to destruction by the Government at any time.”²⁵ Instead, the Court held, a U.S. citizen has a constitutional right under the Fourteenth Amendment to remain a citizen unless he voluntarily relinquishes his citizenship, and the Federal Government has no power to terminate citizenship without the individual’s consent.²⁶ This conclusion, the Court determined, “comports more nearly than Perez with the principles of liberty and equal justice to all that the entire Fourteenth Amendment was adopted to guarantee.”²⁷

The Supreme Court most recently addressed expatriation in the 1980 case of Vance v. Terrazas.²⁸ In that case, a native-born U.S. citizen of Mexican descent, Laurence Terrazas, applied for and obtained a certificate of Mexican nationality while he was in Mexico, and renounced his allegiance to the United States in his application.²⁹ The Department of State determined that, based on these actions, Terrazas voluntarily relinquished his U.S. citizenship.³⁰ The Supreme Court disagreed, holding that, under Afroyim, evidence must show that “the citizen not only voluntarily committed the expatriating act prescribed in the statute, but also intended to relinquish his citizenship.”³¹ Because the evidence failed to show that Terrazas specifically intended to relinquish his U.S. citizenship when he applied for Mexican nationality, the Court held that he did not expatriate himself.³²

The Supreme Court’s post-Perez jurisprudence signals that the government may not remove an individual’s citizenship unless that person voluntarily commits a specified act with intent to renounce citizenship.³³ In response, Congress amended the INA to clarify that the government has the burden of proving by “a preponderance of the evidence” that an individual committed an expatriating act “with the intention of relinquishing nationality.”³⁴ The amendments clarified that, when an individual commits one of the enumerated acts, there is a presumption that the individual acted voluntarily, but this presumption may be rebutted by a preponderance of evidence that the act was involuntary.³⁵ Congress also repealed INA provisions that removed citizenship based on voting abroad, military desertion, departure from the United States during a time of war, and maintaining a foreign residence—provisions ruled unconstitutional by the Supreme Court.³⁶

ArtI.S8.C4.2.1 Overview of Bankruptcy Clause

The Bankruptcy Clause grants Congress power to enact uniform, national laws governing bankruptcies in the United States.¹ In the colonial period, domestic bankruptcy and insolvency matters were governed by each colony’s individual laws. After ratification of the Constitution, state law continued to govern bankruptcy and insolvency matters until Congress passed the first federal bankruptcy law in 1800.² States retained the ability to enforce their own bankruptcy laws in subsequent periods when there was no national law.³

While early English bankruptcy law at the time of American independence existed merely as a collective remedy for creditors and applied to a narrow category of debtors, neither Congress nor the Supreme Court has ever accepted the view that, under the Bankruptcy Clause, Congress may only enact laws of the type that governed England in the eighteenth century. Over the years, Congress has expanded the coverage of bankruptcy laws, increasingly enlarging the scope of relief afforded debtors and the rights of creditors and other parties.⁴ However, in exercising its bankruptcy power, Congress is subject to certain constitutional limitations, including the requirement that it enact “uniform” bankruptcy laws.⁵

When no national bankruptcy law exists, the states may enact and enforce their own bankruptcy and insolvency laws. During the country’s first eighty-nine years under the Constitution, a national bankruptcy law existed for only sixteen years in total.⁶ Congress’s enactment of a national bankruptcy law does not invalidate conflicting state laws, but only suspends them.⁷ Upon repeal of a national bankruptcy statute, conflicting state bankruptcy laws again come into operation without the need for re-enactment.⁸

The following essays examine the history and meaning of the Bankruptcy Clause. They first review the historical background of the Clause. They then consider how the Supreme Court has interpreted the scope of the Clause and constitutional limitations on Congress’s exercise of its bankruptcy power. Finally, they review general restrictions on state bankruptcy power.

ArtI.S8.C4.2.2 Historical Background on Bankruptcy Clause

Colonial American bankruptcy and insolvency laws were inspired by the English bankruptcy experience.¹ Under English law, creditors were authorized to institute involuntary bankruptcy proceedings against debtors who committed certain unauthorized “acts of bankruptcy.”² The debtor’s property was liquidated and the proceeds from liquidation were distributed to his or her creditors.³ Only a trader or merchant qualified as a debtor for purposes of bankruptcy.⁴ Debtors could not institute voluntary bankruptcy proceedings—instead, the early English bankruptcy system was by design a collective remedy for creditors.⁵ Debtors could be punished by, among other measures, imprisonment and, by 1705, death.⁶ English law did not allow for the discharge of a debtor’s debts until 1705; however, by 1706, a discharge was only available upon the consent of one’s creditors.⁷

In the American colonies, domestic bankruptcy and insolvency matters were governed by each colony’s laws.⁸ Early statutes typically were modeled on English laws, but later colonial laws began to differ from English practice in various ways.⁹ As opposed to English law, colonial American laws “broadly centered on the plight of imprisoned debtors, with somewhat lesser emphasis on the issue of insolvent traders (to the exclusion of other debtors).”¹⁰ Colonial legislatures often passed private bills that discharged individual debtors.¹¹ While English bankruptcy law did not directly govern creditor-debtor relations in the American colonies, colonial bankruptcy laws were subject to invalidation by the Privy Council.¹²

Following independence, bankruptcy and insolvency laws remained within the purview of the newly independent states. The Articles of Confederation did not empower Congress to establish federal bankruptcy laws.¹³

During the Constitutional Convention in Philadelphia, the Framers did not appear to spend a considerable amount of time debating what would become the Bankruptcy Clause.¹⁴ Charles Pinckney of South Carolina proposed that the Convention add to what would become the Full Faith and Credit Clause¹⁵ a provision granting Congress authority “[t]o establish uniform laws upon the subject of bankruptcies, and respecting the damages arising on the protest of foreign bills of exchange.”¹⁶ The Committee of Detail proposed adding slightly modified language—“to establish uniform laws on the subject of Bankruptcies”—to what would become the clause housing Congress’s naturalization power.¹⁷ The Convention ultimately approved the bankruptcy provision on September 3, 1787, with only Connecticut voting against the measure.¹⁸ Roger Sherman of Connecticut objected to granting Congress authority to establish bankruptcy laws, remarking that in England, “[b]ankrutptcies were in some cases punishable with death.”¹⁹ In response, Gouverneur Morris of New York acknowledged that it “was an extensive & delicate subject,” but agreed with the bankruptcy proposal because he did not see any “danger of abuse of the power by the Legislature of the U.S.”²⁰

Once the Constitution was submitted to the states for ratification, scant attention was paid to the Bankruptcy Clause in the ensuing public debate. In the Federalist Papers, James Madison remarked that the bankruptcy power “is so intimately connected with the regulation of commerce, and will prevent so many frauds where the parties or their property may lie or be removed into different States, that the expediency of it seems not likely to be drawn into question.”²¹ However, some expressed opposition to the Bankruptcy Clause. For example, the Anti-Federalist “Federal Farmer” wrote in one letter that the bankruptcy power “will immediately and extensively interfere with the internal police of the separate states” and aggrandize the new federal judiciary.²² Ultimately, however, the Clause was not a focal point for extensive debate during this period.

ArtI.S8.C4.2.3 Scope of Federal Bankruptcy Clause

In an 1817 opinion issued while riding circuit, Justice Henry Livingston suggested that because the English statutes on the subject of bankruptcy from the time of Henry VIII down had applied only to traders, it might “well be doubted, whether an act of Congress subjecting to such a law every description of persons within the United States, would comport with the spirit of the powers vested in them in relation to this subject.”¹ Neither Congress nor the Supreme Court has ever accepted this limited view. The first bankruptcy law, passed in 1800, departed from the English practice by including bankers, brokers, factors, and underwriters as well as traders.² Justice Joseph Story argued that the narrow scope of the English bankruptcy statutes merely reflected Parliament’s policy judgment about how far bankruptcy relief should extend, but that this policy judgment was not an immutable part of the nature of bankruptcy laws.³ Justice Story defined bankruptcy legislation, in a constitutional sense, as lawmaking provisions for persons who failed to pay their debts.⁴

This interpretation has been ratified by the Supreme Court. In Hanover National Bank v. Moyses,⁵ the Court upheld the Bankruptcy Act of 1898,⁶ which provided that persons other than traders might become bankrupts and that this might be done on voluntary petition.⁷ Over the years, the Court has given tacit approval to extending bankruptcy laws to cover a variety of classes of persons and corporations,⁸ including municipal corporations⁹ and wage-earning individuals.¹⁰ In its 1935 decision in Continental Illinois National Bank & Trust Co. v. Chicago, Rock Island & Pacific Ry.,¹¹ the Court wrote that “as far reaching” as the federal bankruptcy laws up to that point had been, they “have not gone beyond the limit of Congressional power; but rather have constituted extensions into a field whose boundaries may not yet be fully revealed.”¹²

Congress repealed and replaced the 1898 act with the Bankruptcy Reform Act of 1978.¹³ The 1978 act, as amended, is the current national bankruptcy law. It is commonly referred to as the Bankruptcy Code.

ArtI.S8.C4.2.4 Expansion of the Scope of Bankruptcy Power

Through the years, Congress has expanded the coverage of the bankruptcy laws. As a result, the scope of statutory relief afforded debtors and the rights of creditors have been correspondingly adjusted. The act of 1800,¹ like its English antecedents, was designed primarily to benefit creditors.² Beginning with the act of 1841,³ which first permitted voluntary petitions, debtor rehabilitation has become an object of increasing importance in American bankruptcy law.⁴ Under the act of 1867,⁵ as amended in 1874,⁶ the debtor was permitted, either before or after adjudication of his or her bankruptcy, to propose terms of composition that would become binding if accepted by a designated majority of his or her creditors and confirmed by a bankruptcy court.⁷ In a decision by the United States District Court for the Southern District of New York that the Supreme Court would later cite with approval, future-Justice Samuel Blatchford held that this measure was constitutional.⁸ The Supreme Court has upheld the constitutionality of laws that provided for the reorganization of corporations that were insolvent or unable to meet their debts as they matured,⁹ limitation of landlords’ claims for indemnification for rent,¹⁰ and composition and extension of debts in proceedings for the relief of individual farmer debtors.¹¹ The Court also has concluded that a bankruptcy court is permitted under the Constitution to authorize sales of property free from encumbrance by state tax liens,¹² and that, because Congress “possesses supreme power in respect of bankruptcies,” a state that desires to recover assets in a bankruptcy must comply with bankruptcy court requirements regarding filing claims by a designated date.¹³

Congress’s bankruptcy power is not limited to adjusting creditor rights. The Supreme Court has ruled that Congress’s bankruptcy power extends to a purchaser’s rights at a judicial sale of a debtor’s property, and Congress may modify such rights by reasonably extending the period for redemption from such sale.¹⁴ The Court has also held that a federal law permitting reorganization courts to stay pending bankruptcy court proceedings “was within the power of Congress,”¹⁵ and that a statute enacted under Congress’s bankruptcy power deprived a state court of power to proceed with pending foreclosure proceedings after a farmer-debtor filed a petition in federal bankruptcy court for a composition or extension of time to pay his debts.¹⁶ All of these developments demonstrate the Supreme Court’s broad view of “the subject of Bankruptcies.”¹⁷ In Wright v. Union Central Life Insurance Co.,¹⁸ the Court explained that, while “incapable of final definition,” “[t]he subject of bankruptcies is nothing less than the subject of the relations between an insolvent or nonpaying or fraudulent debtor and his creditors, extending to his and their relief.”¹⁹

The Court considered the relationship between the Bankruptcy Clause and the Eleventh Amendment²⁰ in Central Virginia Community College v. Katz.²¹ In Katz, the Court determined that the Eleventh Amendment poses no obstacle to proceedings by bankruptcy trustees to avoid preferential transfers of property to state agencies and to recover such property. The Court held that, when they ratified the Bankruptcy Clause, states relinquished their ability to assert sovereign immunity as a defense in proceedings that implicate a bankruptcy court’s authority over the debtor’s property and the bankruptcy estate.²² The Court determined that given this relinquishment, Congress’s effort to abrogate sovereign immunity in Section 106 of the Bankruptcy Code²³ was unnecessary.²⁴

ArtI.S8.C4.2.5 Constitutional Limits on Bankruptcy Power

In exercising its bankruptcy powers, Congress is subject to certain constitutional limitations.¹ Congress may not circumscribe the creditor’s right in property to such an unreasonable extent as to deny him due process of law or effect an unconstitutional taking.² Congress may impair the obligation of a contract or extend a federal bankruptcy law to contracts already entered into at the time Congress passed the law.³ In 1935, the Court held that, under the Tenth Amendment,⁴ Congress was unable to subject the fiscal affairs of a political subdivision of a state to a federal bankruptcy court’s control.⁵ A year later, however, the Court held that Congress may empower federal bankruptcy courts to entertain petitions by taxing agencies or instrumentalities for a composition of their indebtedness when the state has consented to the proceeding and the federal court is not authorized to interfere with the fiscal or governmental affairs of such petitioners.⁶

The Bankruptcy Clause provides that Congress may enact “uniform” bankruptcy laws.⁷ However, the Court has explained that the uniformity required is geographic, not personal.⁸ Thus, Congress may recognize state laws relating to dower, exemptions, the validity of mortgages, priorities of payment, and similar matters, even though such recognition leads to different results from state to state.⁹ And the Court has declared that the uniformity requirement “does not deny Congress power to take into account differences that exist between different parts of the country, and to fashion legislation to resolve geographically isolated problems.”¹⁰ Thus, in the Regional Rail Reorganization Act Cases, the Court denied a uniformity challenge to a railroad reorganization law that applied to railroads in one particular geographic region, because no other railroads were under reorganization at the time.¹¹ However, in Railway Labor Executives’ Association v. Gibbons,¹² the Court held that a railroad reorganization law that applied to only one railroad was unconstitutional where there were other railroads engaged in reorganizations that were not subject to the law.¹³

Article III of the U.S. Constitution contains relevant limits on Congress’s exercise of the bankruptcy power.¹⁴ The Supreme Court has considered Congress’s power to vest the adjudication of claims in non-Article III bankruptcy courts in several decisions.¹⁵ In Northern Pipeline Construction Co. v. Marathon Pipe Line Co.,¹⁶ the Court invalidated portions of the Bankruptcy Reform Act of 1978 that impermissibly empowered non-Article III bankruptcy courts with “jurisdiction over all ‘civil proceedings arising under [the Bankruptcy Code] or arising in or related to cases under [the Bankruptcy Code],’” such as state law breach of contract claims and other claims unrelated to “the restructuring of debtor-creditor relations.”¹⁷ Later, in Stern v. Marshall,¹⁸ the Court held a provision of the Bankruptcy Amendments and Federal Judgeship Act of 1984¹⁹ unconstitutional for authorizing bankruptcy courts to enter final judgments on certain actions whose existence are not attributable to bankruptcy proceedings—such as tortious interference counterclaims against creditors—but which are merely intended to “augment the bankruptcy estate.”²⁰ The Court subsequently held that a bankruptcy court may issue proposed findings and conclusions of law, subject to de novo review by the district court, on claims statutorily denominated as within the bounds of bankruptcy courts’ “core” powers but which may only be constitutionally committed to an Article III adjudicator.²¹ And in 2015, the Court held that a bankruptcy court may resolve such claims if a party consents to the bankruptcy court’s jurisdiction.²²

ArtI.S8.C4.2.6 Restrictions on State Bankruptcy Power

Prior to 1898, Congress exercised its authority “[t]o establish . . . uniform Laws on the subject of Bankruptcies” only intermittently.¹ It did not enact the first national bankruptcy law until 1800, twelve years after the Constitution’s ratification. This first national bankruptcy law was soon after repealed in 1803.² Congress then passed the second national bankruptcy law in 1841, only to repeal it two years later.³ And Congress enacted the third federal bankruptcy law in 1867, which it subsequently rescinded in 1878.⁴ Thus, during the country’s first eighty-nine years under the Constitution, a national bankruptcy law was in existence for only sixteen years altogether.⁵ Consequently, a key issue of interpretation that arose during that period concerned the effect of the Bankruptcy Clause on state bankruptcy and insolvency laws.

The Supreme Court ruled at an early date that, in the absence of congressional action, states may enact bankruptcy and insolvency laws because it is not the mere existence of the federal bankruptcy power, but rather the power’s actual exercise by Congress that is incompatible with states exercising bankruptcy power.⁶ Thus, the Court has held that a state statute regulating the distribution of an insolvent’s property was suspended by the then-governing national bankruptcy law.⁷ Further, the Court held that a state law governing fraudulent transfers was compatible with federal law.⁸ But while a state insolvency or bankruptcy law is inoperative to the extent it conflicts with a national bankruptcy law in effect,⁹ the Court has held that Congress’s enactment of a national bankruptcy law does not invalidate conflicting state laws; it merely suspends them. Upon repeal of the national statute, the conflicting state laws again come into operation without the need for re-enactment.¹⁰