King v. Burwell Amicus Brief: Academics and the Appropriations Clause

by Andy Grewal — Saturday, Jan. 10, 2015

This is the third in a series of my posts discussing some of the amicus briefs filed in King v. Burwell:

A group of academics have filed a provocative brief in King v. Burwell, viewing the dispute through the lens of the Constitution’s appropriations clause. The academics argue that the health care law is an appropriations bill, because the “PPACA appropriates money” and because Section 36B “in explicit terms” allows a credit against a consumer’s tax liability. According to the academics, the IRS has stepped on Congress’s authority because in extending Section 36B to purchases of policies on federally established exchanges, “the IRS draws money from the Treasury,” thereby expanding “the pool of taxpayers revises how taxes are collected under PPACA.” This action, according to the academics, is illegal, because the IRS has acted by regulation and not “by Law.” The IRS has no power to “determine from whom taxes will be collected, or determine how they will be calculated.”

I’m plenty skeptical of this approach. Unless an IRS regulation perfectly parrots a statute’s language, any regulation will, at the end of the day, affect how many dollars the Treasury receives or pays out. And the delegation to the IRS under Section 7805(a) would be entirely meaningless if the IRS could handle only administrative tasks and could not offer meaningful interpretations of the tax laws. Carried further, the academics’ argument becomes very troublesome; even courts would lack the power to interpret tax provisions because their adoption of one position or another would ultimately “determine from whom taxes will be collected, or determine how they will be calculated.”

I think the academics are right to emphasize the large number of dollars at stake, and maybe there is room for an FDA v. Brown & Williamson-style argument here (that is, Congress doesn’t hide elephants in mouseholes). But I have a fundamental problem with viewing an IRS regulation through a constitutional lens. Instead, when examining a regulation, we should ask whether it comports with the governing statute. If it goes outside the statute, then the regulation is a “mere nullity,” Manhattan General Equipment Co. v. Commissioner of Internal Revenue. 297 U.S. 129, 134 (1936), and we don’t have to concern ourselves with constitutional questions. If the regulation fits within the statute but leads to something bad, then the statute itself may be unconstitutional. (For an outstanding analysis of evaluating constitutional claims, see Nicholas Rosenkranz’s article on the Subjects of the constitution.)

Although I disagree with the academics’ analysis, I appreciate that it offers a new angle to the dispute and does not simply repeat the petitioner’s brief. Also, although I have focused on the appropriations clause issue, the academics’ brief covers issues regarding the absurdity and Chevron doctrines, and readers should download the brief if they are interested in those topics.

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