King v Burwell: Initial Observations

0 Flares 0 Flares ×

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

Avatar photo About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.


  1. But does it raise the level of scrutiny for medical care, that is, because I must have coverage, must I receive medical care? By the way, it looks like the Court raised the level of scrutiny for housing in the Texas case, issued today, which also involves taxation. It affirmed all the facts of housing stated in the proposed Affirmatively Advancing Fair Housing regulation which will now be promulgated. The Texas Court affirmed the Administrations overriding of Lindsey v. Normet.

  2. Great post, Leslie. I posted some quick reactions about the case over at the Yale Journal on Regulation blog earlier today in case you’re curious:

  3. Dissent didn’t even mention Chevron. Did use the term “jiggery-pokery”, which I need to start working into my writing.

  4. Carl Smith says

    It is ironic that the paragraphs in the King opinion restricting allowing deference to agencies (at least for certain issues) were written by the CJ, who also authored the 2011 Mayo Foundation opinion adopting the Chevron standards for review of general authority tax regulations. Since I have never been a fan of Chevron (especially in the tax area), I applaud any effort to restrict it and reassert the primacy of the courts as interpreters of the law.

  5. It is not clear to me what is different about the statutory interpretation analysis Chief Justice Roberts engaged in than what it would have been if he had concluded Chevron was applicable. It reads like a standard Chevron step one analysis. There is nothing novel about saying that statutory interpretation under Chevron step one does not stop with reading the statutory provision that is at issue in isolation from the rest of the statute.

    • Chris Walker’s excellent post on Notice and Comments (linked in the post) discusses why he thinks the CJ did not rest on a Step One analysis. Chris frames the decision in the context of the court asserting its institutional role:

      “But if that were the Court’s sole intention, it could have just ruled that the statute is unambiguous at Chevron Step One, after applying the traditional tools of statutory interpretation. Instead, the Chief went the extra step of reasserting the judiciary’s primary role of interpreting statutes that raise questions of “deep economic and political significance.” This is a major blow to a bright-line rule-based approach to Chevron deference…”

      • Thanks, Les. Yes, I can see that but what I can’t see is how the analysis would have been different. If the analysis is no different, what is the point of making such a big deal about the fact that you are not applying Chevron if you come out in the same place whether you are nominally applying Chevron or not. That is what I don’t see.

        • I think it turns on the Court saying in certain exceptional areas of “deep economic and political significance” it, rather than the agency, is going to have the role of determining the proper interpretation. Might not matter in this case if you resolve at Step One, but it could make a difference in other cases. Moreover, it avoids the issue as to whether this is a Step One or Step Two analysis. If Step Two, future agency interpretations could lead to a different also reasonable interpretation.

          • Eric Rasmusen says

            I wonder if this opinion needs to be read “esoterically”. The message I see is that at least 5 of the justices thought that though the law unambiguously said that subsidies required state exchanges, it would be too disruptive to issue such a ruling. Justice Roberts, who may or may not have been one of those 5, wanted to preserve the dignity of the court and to limit the damage. His long complicated opinion blew smoke in the eyes of the general public. Using Chevron step one would have put the Court in an even worse light. He would have had to say that it was not only plausible but unambiguous that the statute says that when a state refuses to act, the federal government can establish the “exchange established by the state” instead. This way, he signals those adept in the law that the Court is willing to amend a bad law by rewriting clear provisions but not to let executive agencies do the same.

  6. Carl Smith says

    A friend just wrote to me:

    “I just noticed that Congress in §36B(g) expressly delegated regulatory authority regarding §36B to the Treasury Department, which makes the regulation at issue a ‘legislative regulation’ in pre-Mayo parlance and makes the majority’s analysis of the Chevron issue all the more remarkable.”

    I wonder why the Chief Justice, in saying that Congress did not want to let the IRS decide such important questions, did not bother to note and distinguish 36B(g)?

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind