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
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.
Comments are closed on this story.