Nelson on Vested Rights, Franchises, and Separation of Powers

Caleb Nelson, University of Virginia School of Law, has posted Vested Rights, "Franchises," and the Separation of Powers:

Modern courts and commentators have had trouble distinguishing the kinds of decisions that require “judicial” power from the adjudicative tasks that Congress can authorize administrative agencies to perform in the course of “executing” federal law. In a prior article ("Adjudication in the Political Branches," 107 Colum. L. Rev. 559 (2007)), I sought to explain traditional doctrines on that topic. For much of American history, Congress could authorize executive-branch agencies to administer and dispose of “public rights” belonging to the federal government or the people collectively, and Congress also could give agencies conclusive authority with respect to the administration of “privileges” that federal law gave private individuals or entities. But the political branches did not have similar sway over vested private “rights.” Only true courts could conclusively determine either that a private person had forfeited such rights or that the claimed rights had never vested in the person to begin with.

In my earlier article, I referred to the category of “franchises”—special powers or perquisites that the government gave private people who, in turn, did something of value for the public. Because no one had a vested right to be granted a franchise in the first place, I lumped franchises together with privileges. That taxonomy may have influenced the Supreme Court’s analysis of patents in Oil States Energy Services v. Greene’s Energy Group (2018). But the story is actually more complex. In the nineteenth century, once the government granted a franchise, private rights normally were thought to vest in the franchisee. That idea affected constitutional doctrine with respect to a wide array of legal interests, including not only patents but also corporate charters, the power to operate ferries and toll-roads, and more.

This Article explores the concept of franchises and their interaction with American-style separation of powers. In the process, it illuminates historical understandings of the public/private distinction, unearths new evidence about the constitutional status of patents, and sheds light on the traditional roles of each branch of government.

--Dan Ernst