Below is a portion of a longer Client Advisory from Alston & Bird. It makes a couple of fascinating points about the Supreme Court's decision in
King. Namely:
- The way it was decided precludes a future administration from undoing it in the regulatory process with a new interpretation of whether "State" means "State" or if it means "State or federal." And,
- In the long run, it can lead to a decrease in the power of federal bureaucracies as the Court refused to grant significant deference to a bureaucracy on a matter that was as pivotal and weighty as the subsidy question.
From
Alston & Bird:
For administrative law, there are notable implications of the decision because the majority opinion does not follow the ordinary Chevron rules for interpreting ambiguous provisions in a statute. Ordinarily, when a court construes an ambiguous statutory provision under Chevron, the court would defer to the interpretation adopted by the federal agency that administers the statute (here the IRS) as long as that interpretation is reasonable—even if the court does not believe the agency’s interpretation to be the best interpretation of the statute. As noted in the Court’s opinion, the basis for deference is the theory that by enacting an ambiguous provision, Congress delegated responsibility to the pertinent agency to fill in the gaps in the statute. A corollary to that delegation (and deference) is that the agency could change its regulatory interpretation of the statute as long as the agency’s new interpretation is a reasonable or plausible interpretation of the statute.
Here, the Supreme Court construes ambiguous statutory language directly, in lieu of deferring to the IRS’s interpretation. The Court acknowledges that this is a departure from the ordinary rules of interpretation but is necessary, given that King is an “extraordinary case.” The Court reasons that the availability of tax credit subsidies (to make health insurance affordable) is so central to the statutory scheme that Congress would not have intended to delegate responsibility to the IRS to decide the question. Although the Court’s approach is unusual, it ends up with the same result as if the Court had applied Chevron deference: upholding the IRS Rule implementing the tax credit subsidies. While the Court’s interpretive approach does not lead to a different outcome than would likely have obtained under a Chevron step 2 analysis of the IRS Rule, both its approach and its conclusion that Congress would not have delegated authority to the IRS to fill the gaps in the statutory provision by rulemaking could have implications on a future administration’s ability to change the IRS Rule: If the Congress did not delegate authority to the IRS to interpret IRC § 36B, a future administration cannot amend the IRS Rule to limit premium subsidies to insurance policies purchased through state-established Exchanges.
The Court’s message is clear: Courts need not always defer to the pertinent agency when construing ambiguous statutes. Although this is a victory for the current Administration, the majority’s decision in King v. Burwell could be seen as reducing the power of the Executive Branch in interpreting and implementing statutory schemes—and increasing that of the Judicial Branch in the situations where a court chooses not to apply Chevron deference but to independently interpret an ambiguous statutory provision for itself.
The added emphasis is mine.
