King v. Burwell and EPA's Climate Rules

The Supreme Court's decision in King v. Burwell is, of course, most important for its central holding that the Affordable Care Act's federal subsidies are available even on federally established health exchanges. The decision preserves health insurance subsidies for millions of people who have begun to benefit from them and avoids the ridiculous spectacle of taking the subsidies away based on four words ("established by the State") in a lengthy and complicated statute.

But for those who, like me, are not health care experts but teach and write in environmental law, the majority opinion by Chief Justice Roberts is principally worth studying for its approach to statutory interpretation. Especially for those following EPA's impending regulation of greenhouse gases from power plants under section 111 of the Clean Air Act, which has already drawn attacks based on a purported lack of statutory authority, the Court's opinion in King v. Burwell strikes some familiar (and possibly unpleasing) chords.

First, the Court in King v. Burwell declined to apply the two-step Chevron framework.

The Court did not say the Affordable Care Act is clear, and therefore Chevron deference doesn't apply. It did not say the Affordable Care Act is not clear, and therefore Chevron deference applies if the agency's interpretation is reasonable. These would have been the two standard moves for the Court to make. Instead, the Court simply held Chevron inapplicable. Granted, the Court did not – as the Reporter's headnote did – come out and baldly say "Chevron does not provide the appropriate framework here" (slip op. at 2). And granted, the Court pitched its language on Chevron in terms of "reason to hesitate" rather than outright rejection.

But after explaining why this was an "extraordinary case" in which the Court has "reason to hesitate," the Court moved into its very own interpretation of the statutory provision at issue. The Court read the statute straight up, as it were, with no deference, or even subsequent reference, to the agency's thoughts on the matter.

In proposing to regulate greenhouse gas emissions from power plants under section 111 of the Clean Air Act, EPA has thoroughly wrapped itself in Chevron's flag. It is at least arresting, therefore, and maybe even startling, that in a brand-new case of huge importance, with six Justices on board, the Supreme Court was willing to dump the Chevron framework and go it alone, without the relevant agency.

Second, the Court explained its reasons for avoiding the Chevron framework in terms familiar to anyone who has followed the section 111 proceedings on greenhouse gases. The Court explained that this was an "extraordinary case," outside Chevron's domain, because the availability of federal tax credits for health insurance was "a question of deep 'economic and political significance' that is central to this statutory scheme." The Court also asserted that it is "especially unlikely" Congress would have given this interpretive question to the IRS – "which has no expertise in crafting health insurance policy of this sort."

The lawyers who prematurely challenged EPA's proposed rule to regulate greenhouse gases from power plants under section 111(d) have already argued that the "economic and political significance" of regulating greenhouse gases counsels against deferring to EPA's interpretation of the Clean Air Act. Now, with King v. Burwell, they have another case – again, a brand-new, important, six-Justice case – to cite for the idea that the sheer economic and political magnitude of regulating greenhouse gases from power plants means EPA shouldn't be trying to do this through the statute we already have. Note well, too, that "economic and political significance" does not tend to run in the direction of stronger regulation; most notably deployed as an argument against the FDA's effort to regulate tobacco as a drug, "economic and political significance" has almost uniformly referred to the economic consequences for business of being regulated and not to the multifarious consequences for citizens of living with less governmental protection. Don't expect, therefore, the "economic and political significance" of climate change itself to emerge as a justification for EPA's regulation of greenhouse gas emissions.

The Court's rejection of the IRS as the likely intended locus of interpretive authority also repeats themes from the attacks on EPA's section 111 rules, in particular the agency's proposal to regulate sources "outside the fenceline" of the power plants at the core of the rule. The idea is that other agencies, most prominently the Federal Energy Regulatory Commission, regulate the electric grid and have the relevant expertise to do so – and, the argument goes, EPA does not.

Neither of these arguments for rejecting Chevron deference comes anywhere close to sealing the legal case against EPA's impending climate rule. A pervasive theme of the Clean Air Act is the preservation of EPA authority to act on new pollution threats. EPA's action on climate is consistent with, not detrimental to, this overall goal – unlike a ruling against federal subsidies would have been in King v. Burwell. And EPA is fully competent to choose best pollution control technologies; that is a major part of its job description.

Third, in King v. Burwell the Court resurrected Justice Scalia's "elephants in mouseholes" principle, just without the vivid metaphor. Congress does not, the Court said, quoting Justice Scalia's opinion for the Court in Whitman v. American Trucking Associations, "alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions" – and would not likely make "the viability of the entire Affordable Care Act turn on … a sub-sub-sub section of the Tax Code." Here, too, the Court's reasoning echoes arguments that have been made against EPA's use of section 111 to regulate greenhouse gases from power plants: Congress would not, the argument runs, have buried a giant new regulatory program in the supposedly unassuming section 111. But there is nothing unassuming about section 111.

Last, in all of this minute parsing of a few lines in a case addressing a wholly different statute, one must remember: the government did win in King v. Burwell.

This blog is cross-posted from the American Constitution Society's blog.