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King v Burwell: Initial Observations

Posted on June 25, 2015

Most readers by now already know that the Supreme Court today decided King v Burwell. We have previously discussed the case and some of the many potential tax procedure issues that the decision might have considered. The most interesting tax procedural aspect of the case from my quick read is its approach to interpretation, that is its reliance on broader legislative purpose and its lack of referring to Chevron deference in its decision. Part of the Court’s rationale is that the decision implicated health care, a subject not in the IRS’s wheelhouse of expertise.

The language from the opinion that pushes away from Chevron is below, with my emphasis in bold:

This approach[Chevron] “is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Con- gress to the agency to fill in the statutory gaps.” FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120, 159 (2000). “In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.” Ibid.

This is one of those cases. The tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insur- ance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so ex- pressly. Utility Air Regulatory Group v. EPA, 573 U. S. ___, ___ (2014) (slip op., at 19) (quoting Brown & William- son, 529 U. S., at 160). It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort. See Gonzales v. Oregon, 546 U. S. 243, 266–267 (2006). This is not a case for the IRS.

Professor Rick Hasen at U Cal Irvine in the Election Law Blog has a brief post called King v Burwell: The Return of Purpose in Statutory Interpretation. He highlights the importance of the decision in light of the Court’s approach to resolving the issue:

This means of interpretation is important for a number of reasons. First, it means that a new administration with a new IRS Commissioner cannot reinterpret the law to take away subsidies. Second, it puts more power into the hands of Congress over administrative agencies (and therefore the executive), at least on issues at the core of congressional legislation. Third, and most important as a general principle, it rehabilitates a focus on the law’s purpose as a touchstone to interpretation, over a rigid and formalistic textualism that ignores real-world consequences. If followed through consistently, this principle would greatly improve our statutory interpretation.

In the near future, I suspect there will be a lot of discussion revolving around the Court’s approach in the case and perhaps whether it signifies a move away from Chevron when Congress tasks IRS with its typical  grab bag of non-revenue raising policies.  In the meantime, it looks like ACA is here to stay, leaving us and PT with many other procedural and administrative issues we are sure to discuss in the days ahead.

UPDATE: Chris Walker, former PT guest blogger and administrative law scholar, has a nice discussion of some of the administrative law context and implications over at Notice & Comment

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