Obamacare

Another Good Reason Why the I.R.S. Deserves No Deference from the Federal Courts

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In its 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, the U.S. Supreme Court held that when the judiciary is tasked with determining the meaning of an "ambiguous" statute, the default approach is to defer to the statutory interpretation advanced by the government agency charged with enforcing that statute. Lawyers call this approach "Chevron deference."

As I noted last week, Chevron deference is playing a central role in the unfolding legal battle over the propriety of an I.R.S. rule which provides tax credits to individuals who purchased health insurance from federally run health exchanges under the Patient Protection and Affordable Care Act. Although the text of the ACA limits such tax credits only to those who purchased health insurance on an exchange "established by the State," the U.S. Court of Appeals for the 4th Circuit held that exchanges established by the federal government should also qualify. Why? Because "the relevant statutory sections appear to conflict with one another," the 4th Circuit held in King v. Burwell. Therefore "we must defer to the IRS Rule." That decision is now up for possible review by the Supreme Court.

Writing at the Library of Law & Liberty, Columbia University law professor Philip Hamburger says the time has come for Chevron to go extinct. Not only does Chevron deference grant far too much leeway to unelected bureaucrats, Hamburger argues, it violates the Constitution in two different ways. He writes:

Under the Constitution, the judges have an office or duty to exercise their own independent judgment about what the law is, and it therefore must be asked how the judges can defer to the interpretation or judgment of executive and other agencies. In respecting or otherwise deferring to the judgment of agencies, the judges are abandoning their duty–indeed, their very office–of independent judgment.

The second question about the judges concerns systematic bias. Under the Fifth Amendment, Americans have a right to the due process of law, and it therefore must be asked whether judicial deference is systematic bias for one party and against others. The judges defer to agencies' interpretations of statutes, and they thereby typically are favoring the interpretation or legal position of one of the parties in their cases. They thus are engaging in systematic bias in favor of the government and against other parties in violation of the due process of law.

These constitutional questions about the role of the judges should worry all Americans but especially the judges. No amount of statutory authority can put these constitutional questions to rest. A mere statute may allow an agency to interpret for its purposes, but it cannot excuse the judges from their constitutional duty to exercise their own independent judgment about the law. Nor can it brush aside the constitutional right of parties not to be subjected to systematic bias.

These are very powerful objections to the Supreme Court's deferential Chevron regime. Expect to hear much more about them if (when?) the high court agrees to take up the latest Obamacare challenge.

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  1. …the default approach is to defer to the statutory interpretation advanced by the government agency charged with enforcing that statute.

    I didn’t realize Congress’ shift of its responsibility to bureaucrats was codified in law.

  2. Okay, so if the Chevron rule is eliminated, what rule should replace it? How should a judge interpret an ambiguous statute?

    1. It should be construed just like a horribly one-sided agreement drafted by a megacorp signed by a consumer. . .against the drafter whenever there’s the slightest ambiguity. For the exact same reason.

      1. That’s something I could agree to, but your example, as well as the rule of leniency which came to mind, strike me as undercutting the Columbia law profs argument about due process (unless he thinks these set up biases that violate due process as well).

        1. Putting extra burdens on the government does not burden due process rights. See, also, “proof beyond a reasonable doubt.”

          1. Fair enough, but what about the contract law provision Pro notes?

            1. To the extent that canon is applied to statutory interpretation when an agency’s reading is at issue, then it amounts to an extra burden on the government that does not burden due process rights.

              Seriously, I had to spell that out for you, Bo?

              1. What I was getting at was the complaint of the Columbia prof that the problem with deference was that the problem is a systematic bias in favor of one of the parties, but that’s not unheard of in our legal system, as Pro L’s example notes.

                1. Additionally, in many Chevron cases (including Chevron itself) the case is about somebody suing to get an agencies less restrictive interpretation overturned. In that case an environmental agency under Reagan gave a less harsh interpretation to an act and an environmental agency sued to get the less harsh interpretation replaced with the old one, Chevron intervened because they would have been hurt if deference was NOT applied. So whose DP rights are violated by deference there?

                  1. I don’t think it’s an incredible stretch under our system of government to place the burden of clarity and legality on the government. It’s the entity with the power, not only in the absolute sense but also in writing, enforcing, and interpreting laws.

                    In other words, no presumptions in its favor.

                2. a systematic bias in favor of one of the parties,

                  Like “proof beyond a reasonable doubt”. Or like the “strict scrutiny”.

                  somebody suing to get an agencies less restrictive interpretation overturned.

                  So? If Congress established Standard X, then the agency should have no more discretion to exhibit regulatory capture by adopting Standard X-Minus than it does to exhibit regulatory zeal by adopting Standard X-Plus.

    2. How should a judge interpret an ambiguous statute?

      That is a conversation for another time. There is nothing even remotely ambiguous about the IRS rule in question.

      1. The ambiguity is said to arise from other sections of the statute iirc.

        1. None of which give rise to ambiguity about the meaning of “Exchange established by a State under Section 1311.”

          The court goes through a shell game with the statute, through which they try to claim that exchanges established by the federal government are exchanges established by a state.

          To be fair, this is a stronger argument than the claim that the “penalties” for not having insurance are really “taxes”, so they are probably on safe ground when they get to our ESL Supreme Court.

          1. “hrough which they try to claim that exchanges established by the federal government are exchanges established by a state.”

            It’s another part, Section 1321, which seems to say that a state may “elect” to establish an exchange or not, and if not, then the federal government “shall . . . establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements” that raises the ambiguity.

            1. Explain to me, Bo, how

              (a) language which permits tax credits only for insurance purchased “through an Exchange established by a State” becomes ambiguous when read in conjunction with

              (b) language which allows a state the option to establish an exchange, and

              (c) language which allows the feds to establish an exchange when a state does not?

    3. How should a judge interpret an ambiguous statute?

      De novo. Just like they interpret such statutes when an agency isn’t a party to the case.

      See? That wasn’t so hard.

    4. In the way that seems to correctly reflect the intended meaning, if it’s possible to do so beyond a reasonable doubt? If it is not possible, then it should be terminated as unconstitutionally vague.

    5. God forbid they interpret according to some sort of philosophical principle or something.

  3. “Not only does Chevron deference grant far too much leeway to unelected bureaucrats,”

    How in the world are federal judges not unelected bureaucrats as well? And one’s with life tenure to boot.

  4. First let’s define ambiguity. I don’t know the Chevron case, but the “ambiguity” here is actually the difference between 1) what Democrats and the IRS wanted and hoped the law would mean, and 2) what the law actually says. That’s not “ambiguity.”

    Let’s say some Democrats in Congress want to give $1000 to every citizen. They know they can’t get that passed, so they write a law that says every veteran gets $1000. That passes. Then, the IRS decides that every citizen counts as a “veteran” of the War on Terror. That’s not “resolving an ambiguity.”

    1. Actually, it’s between the compromise that Democrats made in order to pass the law and what they would prefer to have passed, especially now that their plan to strongarm the states has failed.

  5. Under the Constitution, the judges have an office or duty to exercise their own independent judgment about what the law is..,

    I didn’t know that, Phil. They call you Phil, right? Your pals at the University call you Phil or Phillip?

  6. That does not make a whole lot of sense to me dude.

    http://www.AnonGalaxy.tk

  7. The judges defer to agencies’ interpretations of statutes, and they thereby typically are favoring the interpretation or legal position of one of the parties in their cases. They thus are engaging in systematic bias in favor of the government and against other parties in violation of the due process of law.

    Yes, and in this case, they would be systematically favoring the executive branch over the legislative branch. I’ve heard the doctrine that the Court should defer to the legislature, but to have the court systematically deferring to whatever spin the executive puts on the law seems like a very dangerous precedent.

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