Brown & Williamson vs. Congressional Intent

by Andy Grewal — Tuesday, June 30, 2015

As has been discussed on this blog and elsewhere, Chief Justice Roberts’ majority opinion in King v. Burwell rejected the application of Chevron deference for the IRS’s construction of Section 36B. The meaning of the phrase “established by the State” was not something for the IRS to determine, because “had Congress wished to assign that question to an agency, it surely would have done so expressly.” Slip Op. at 8. The Court thus followed the approach of FDA v. Brown & Williamson, under which agency deference does not attach for “extraordinary” cases.

Over at the Bloomberg BNA Federal Tax Blog, Syd Gernstein raises an underappreciated objection to the Court’s reasoning. As he discusses, Section 36B(g) actually delegates specific authority to the IRS, saying that the IRS “shall prescribe such regulations as may be necessary to carry out the provisions of this section [36B].” This provision stands in addition to the IRS’s general grant of authority under Section 7805(a), under which the IRS is empowered to “prescribe all needful rules and regulations for the enforcement” of the tax code. Between Section 36B(g) and 7805(a), the IRS seems to have received a clear congressional grant of authority to resolve ambiguities regarding the premium tax credit.

Yet King v. Burwell makes absolutely no mention of Section 36B(g). It’s hard to see how that provision could be dismissed as irrelevant, especially since the Solicitor General relied on it in arguing for deference. If Section 36B(g) did not warrant deference for the IRS, it would have been nice for the Court to explain why.

The Court tells us that Brown & Williamson displaces Chevron, but Brown & Williamson, at least nominally, is about respecting Congressional intent. That is, the decision warns that “there may be reason to hesitate before concluding that Congress has intended such an implicit delegation” for big questions. 529 U. S. 120, 159 (2000). But Section 36B(g) provides a strong reason to overcome that hesitation — the legislature has specifically said that the IRS should issue regulations under Section 36B.

I suppose one could imagine an even clearer grant of authority, and maybe that’s what the Court was looking for. The statute might have said something along the lines of: “To the extent provided under regulations prescribed by the Secretary, premium tax credits shall be available to applicable taxpayers who purchase coverage on a federally established Exchange.” This statute would unequivocally leave it for the IRS to determine the Question Presented in King v. Burwell.

Nonetheless, I think existing Sections 36B(g) and 7805 come pretty close to granting the authority conferred under the hypothetical statute. I’m thus not satisfied that Brown & Williamson really is only about respecting Congressional intent.

Instead, the decision, in a backdoor kind of way, may reflect a twist on the nondelegation doctrine. The Court in King v. Burwell paid lip service to legislative intent, but its failure to grapple with Section 36B(g) makes it hard to believe that the will of the legislature governed its approach to deference. Instead, King v. Burwell may embody the principle that there are simply some decisions that are too big to be left to the discretion of an agency, regardless of what Congress says.

Usually, when we think about the nearly-dead nondelegation doctrine, we think of circumstances where a statute is invalid because it unconstitutionally confers the legislative power onto an agency. That’s obviously not what happened in King v. Burwell (there’s no indication that Section 36B suffers from constitutional problems). Instead, the decision appears to embody the principle that Congress can leave major questions unresolved in a statute, so long as an Article III court enjoys principal responsibility for resolving it. There’s at least a flavor of the nondelegation principle in this characterization.

Of course, when arguing doctrine in a court of law, it would be risky to use King v. Burwell in connection with a nondelegation doctrine argument. The opinion actually references congressional intent, and it’s the language of the decisions, not the undisclosed motives of the Justices, that remains the law. But if one adopts the approach of a legal realist or if one is studying trends in judicial attitudes, King v. Burwell might be an important decision in thinking about what limitations might attach to legislative enactments that leave broad questions unresolved.

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