Chevron deference provides that if a law is not clear, the court will defer to the Executive Branch interpretation.
Recently, I presented
an argument, limited to only the text of the Affordable Care Act and the most basic and universally accepted canons of statutory interpretation (I did not rely on legislative purpose or history or any other rules of construction such as constitutional avoidance). This argument was for a plain and unambiguous reading of ACA as providing for tax credit subsidies to participants in federal health insurance exchanges operating in 36 states (14 states created state-operated exchanges).
Obviously I'm persuaded by this argument. But suppose five members of the Supreme Court refuse to accept this argument. What happens then? Well, if five members of the SCOTUS instead accept the challengers' arguments that the plain and unambiguous interpretation of ACA prohibits tax credit subsidies on federal exchanges, then the inquiry ends—the challengers win, millions lose their health insurance, state insurance markets are thrown into chaos and the SCOTUS imposes great hardship on the nation.
But what if the SCOTUS finds ACA ambiguous on the question? This is what the Fourth Circuit found (one concurring opinion found ACA to unambiguously provide for tax credit subsidies on the federal exchanges) in the case currently being heard by the SCOTUS, King v. Burwell. In such a case, a rule known as Chevron deference, which provides that when a law is ambiguous, the court shall defer to a permissible interpretation of the Executive Branch, will apply.
On the flip I will examine Chevron deference, by reviewing the Fourth Circuit's application of the rule in the very case now before the SCOTUS.
In King v. Burwell, the Fourth Circuit rejected a challenge to the Affordable Care Act that argued that the law does not permit subsidies and tax credits on the federal exchanges. It did so by invoking what is known as Chevron deference, after the 1984 Supreme Court case of the same name. Here is what the Fourth Circuit opined on that point:
Because this case concerns a challenge to an agency's construction of a statute, we apply the familiar two-step analytic framework set forth in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). At Chevron's first step, a court looks to the “plain meaning” of the statute to determine if the regulation responds to it. Chevron, 467 U.S. at 842–43. If it does, that is the end of the inquiry and the regulation stands. Id. However, if the statute is susceptible to multiple interpretations, the court then moves to Chevron's second step and defers to the agency's interpretation so long as it is based on a permissible construction of the statute. Id. at 843.
In layman's terms, this means unless the challenger of an agency ruling can demonstrate that its interpretation of the provision in question is the clear and plain one, then the Court will defer to the agency interpretation so long as it is a permissible one. Thus, the deck is stacked against a party arguing against a government agency's interpretation. If the challenger does not convince a court that its interpretation is clearly and unambiguously correct, in the normal course, it has almost no chance of winning.
The government of course tries to convince a court that the agency interpretation is the clear and unambiguously correct one, but unlike the challenger, the government does not have to win on this point, as, if the law is found to be unclear, then the government need only show that its interpretation is permissible.
In King, the Fourth Circuit found that "the [government] ha[s] the stronger position, although only slightly." Thus, the challengers did not come close to meeting their burden of showing that their interpretation of the ACA was clearly the correct one, much less that it was the correct reading of the plain and unambiguous meaning of the law. Here is how the King court put it:
Having examined the plain language and context of the most relevant statutory sections, the context and structure of related provisions, and the legislative history of the Act, we are unable to say definitively that Congress limited the premium tax credits to individuals living in states with state-run Exchanges. We note again that, on the whole, the defendants have the better of the statutory construction arguments, but that they fail to carry the day. Simply put, the statute is ambiguous and subject to at least two different interpretations. As a result, we are unable to resolve the case in either party's favor at the first step of the Chevron analysis. [my emphasis]
The Fourth Circuit proceeded to the second step of
Chevron deference:
Finding that Congress has not “directly spoken to the precise question at issue,” we move to Chevron's second step. 467 U.S. at 842. At step two, we ask whether the “agency's [action] is based on a permissible construction of the statute.” Id. at 843. We “will not usurp an agency's interpretive authority by supplanting its construction with our own, so long as the interpretation is not ‘arbitrary, capricious, or manifestly contrary to the statute.’ A construction meets this standard if it ‘represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute.’ “ Philip Morris, 736 F.3d at 290 (quoting Chevron, 467 U.S. at 844, 845). We have been clear that “[r]eview under this standard is highly deferential, with a presumption in favor of finding the agency action valid.” Ohio Vall. Envt'l Coalition v. Aracoma Coal Co., 556 F.3d 177, 192 (4th Cir.2009).
As this language makes clear, once you reach step 2 of
Chevron, the government wins. The challengers understood that reaching Step 2 was a guaranteed loss for them, and thus they tried to escape
Chevron deference. The
King Court denied these attempts:
Rejecting all of the plaintiffs' arguments as to why Chevron deference is inappropriate in this case, for the reasons explained above we are satisfied that the IRS Rule is a permissible construction of the statutory language. We must therefore apply Chevron deference and uphold the IRS Rule. [my emphasis]
Thus, in order to find in favor of the challengers, the SCOTUS will have to find that the ACA plainly and unambiguously PROHIBITS the provision of tax credit subsidies on federal exchanges, then, applying
Chevron deference, the SCOTUS must uphold the IRS's rule permitting tax credit subsidies on the federal exchanges.
The challengers' burden in this case is very high. Because of this, it is my view the applicable law makes the King case not a close one, even if you think the statutory interpretation question is close. Because of Chevron deference, even if the statutory interpretation question is close, the LEGAL case is very much in favor of the government.
But, as we know, the law often has little to do with decisions of the Roberts Court. The SCOTUS may well indeed find for the challengers, but not based on law and precedent, but rather on raw judicial power.
Tuesday I will examine the last of the major legal issues in this case, the doctrine of constitutional avoidance. On Wednesday I will present a preview of the oral argument. After the argument, Adam Bonin will provide a recap.