Prof. Zimmerman is guest blogging on Prawfsblawg, where this post originally appeared.
I agree with Chris that the way the Court reached today's outcome could have broader consequences for administrative law. I offer some very, tentative off-the-cuff thoughts about the opinion below the fold.post, there were a few different ways that the Court could have sided with the government. First, the Court could have found that the statute favored the government's position by using a somewhat novel application of the "unconstitutional avoidance" doctrine. The Court could have used that doctrine to reason that Obamacare could not be read to punish the citizens of states that failed to set up health exchanges without raising serious federalism questions under the Constitution. The Court sometimes uses avoidance canons like this before it decides to defer to an agency (at, what administrative law people call "Chevron Step 1," discussed below). See, e.g., Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 574-75 (1988); Solid Waste Agency v. U.S. Army Corps of Eng'rs, 531 U.S. 159 (2001).
Second, the court could have found that the statute favored the government under cases like Pennhurst, Gregory, and Gonzales, which require Congress to speak unambiguously before imposing new onerous conditions on the states. The Court could have reasoned that Congress could not have done so in such an awkward way, buried in an obscure subsection of the tax code. Some commentators, like Mila Sohoni and Nick Bagley, observed that this doctrine would not raise the same kinds of constitutional doubts about the how Congress can interact with states in the future as the avoidance doctrine described above. The Court would simply be saying that Congress didn't write the law with sufficient clarity.
Third, the Court could have found that the provision favored the government because, even though the text was somewhat awkward and unclear, when read as a whole, the structure and purpose of the law unambiguously favored the government. This was the government's primary argument.
Fourth, the Court could have found that the statute was ambiguous, but then deferred to the government's interpretation of the statute under Chevron. One thoughtful commenter argued that this approach would respect the government's position without raising any new questions, under any doctrine, about how Congress interacts with state government.
All of those tacks would have been consistent with the way the court is supposed to apply Chevron--determining (1) whether Congress has spoken to the issue using traditional canons of construction, and if not, (2) deferring to the agency's permissible reading of a statute. But Court didn't do any of those things. The Court instead said the ACA was ambiguous. But rather than defer to the government's interpretation of an ambiguous statute under Chevron, it held that courts, not agencies, have the primary role in interpreting statutes that raise questions of “deep economic and political significance.”
When analyzing an agency’s interpretation of a statute, we often apply the two-step framework announced in Chevron. Under that framework, we ask whether the statute is ambiguous and, if so, whether the agency’s interpretation is reasonable. Id., at 842–843. This approach “is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps.”FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120, 159 (2000). “In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”Ibid.This "major questions doctrine"—the presumption that Congress “does not . . . hide elephants in mouseholes”—has been around for a while. See Whitman v. American Trucking (2001), FDA v. Brown & Williamson (2000). But it does seem unusual for the Court to use it here for two reasons.
This is one of those cases.
First, the Court relied on this proposition by citing FDA v. Brown & Williamson. But that case didn't acknowledge or claim that it was side-stepping Chevron. Rather, Brown & Williamson said that whether or not the statute gave the FDA authority to regulate tobacco had to be considered against Congress' long history of regulating tobacco in other ways. And when it was considered in that light, Congress clearly could not have given the FDA that power under Chevron's first step. Brown & Williamson ("[W]e find that Congress has directly spoken to the issue here and precluded the FDA’s jurisdiction to regulate tobacco products.")
Second, I wonder how the Court's latest use of the "major questions" doctrine is supposed to interact with two other court cases: Mead and City of Arlington. Under Mead, the Supreme Court said it is supposed to consider two things before determining whether or not to apply Chevron: (1) whether Congress delegated power to an agency to interpret a statute and (2) whether the agency exercised its authority to do so. But, as the Solicitor General observed at oral argument, Section 36B(g) of the ACA expressly gives the IRS the specific authority to make any decisions necessary to implement Section 36B (the provision at issue). And the IRS did so through a formal, deliberative process. The Court never grapples with Mead, but perhaps the court is suggesting that when Congress delegated the IRS interpretive power, it didn't mean to delegate authority to resolve this kind of question.
That seems to square with Justice Kennedy's concerns at oral argument: that the IRS could not have authority to make this interpretation because the decision involved "billions of dollars" of subsidies. But I'm not sure how that fits with City of Arlington. Under, City of Arlington, Chevron is supposed to apply to all decisions--jurisdictional and non-jurisdictional, big and small. The purported reason for this was because it's so difficult and subjective for judges to determine what counts as a big and small question before deciding to defer to an agency. After all, agencies like the EPA, the FCC, and the FTC often are delegated with power to make billion dollar decisions. How specific does Congress have to be when it gives agencies authority to regulate?
If anything, the Court's discussion of Chevron, mirrors the kind of rigorous judicial review that appears in Justice Robert's dissent in City of Arlington-- searching provision-by-provision to determine “whether [that] delegation covers the ‘specific provision’ and ‘particular question’ before the court":
By the same logic, even when Congress provides interpretive authority to a single agency, a court must decide if the ambiguity the agency has purported to interpret with the force of law is one to which the congressional delegation extends. A general delegation to the agency to administer the statute will often suffice to satisfy the court that Congress has delegated interpretive authority over the ambiguity at issue. But if Congress has exempted particular provisions from that authority, that exemption must be respected, and the determination whether Congress has done so is for the courts alone.(emphasis added).
More broadly, I wonder whether this case reflects growing unease by the Chief Justice--and possibly other members of the court--with opinions that defer to agency's interpretations of statutes and rules. Or perhaps, this decision just reflects a lack of unanimity on the court about what Chevron really means. (If it's the latter, that's equally surprising given that no member of the court in King v. Burwell questioned the decision to bypass Chevron.)