King v Burwell: Understanding Chevron Deference

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 exchange. 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]

In short, the challengers did not come close to winning. In fact, it was actually the government who came closer to garnering the clean win on the meaning of the law. But the government had a strong fallback position - 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, the King case is 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 case is still a slam dunk for the government, and the challenge absurd. Don't let anyone fool you on this.

Especially not the SCOTUS and its extreme conservative, judicially activist and results oriented ways. Because they may well indeed find for the challengers, but not based on law and precedent, but rather on raw judicial power.

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  • Display: Sort:
    so, what, in your opinion, will (none / 0) (#1)
    by NYShooter on Sat Feb 14, 2015 at 02:04:03 PM EST
    the challenger's next step be that will give the Supremes an opportunity to exercise their "raw judicial power?"


    do you believe the Court is hoping for such an opportunity?

    The Supreme Court (none / 0) (#2)
    by Big Tent Democrat on Sat Feb 14, 2015 at 02:18:41 PM EST
    hears oral argument on March 4.

    The challengers will argue, AS THEY MUST, that the statute is clear and unambiguous in its denial of tax credits and subsidies on federal exchanges.

    If the Court feels like ruling in their favor (see Roberts and maybe, Kennedy), they will agree.

    Alternatively, if they want to not strike down the tax credits and subsidies on the federal exchange but rule in the challengers favor, they can agree but then find that the restriction violates the "equal sovereignty" of the states and federalism and strike it down as unconstitutional, thus agreeing with the challengers AND allowing the tax credits and subsisides to continue on the federal exchange.


    Can you explain last paragraph (none / 0) (#3)
    by Coral on Sat Feb 14, 2015 at 04:38:26 PM EST
    of your response?

    I explain it (none / 0) (#4)
    by Big Tent Democrat on Sat Feb 14, 2015 at 08:11:36 PM EST