King v. Burwell Amicus Briefs: Galen Institute and Big Questions

by Andy Grewal — Thursday, Jan. 22, 2015

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

The amici brief filed by the Galen Institute and a group of state legislators views King v. Burwell as an issue of state rights. That is, Section 36B can be understood through the lens of cooperative federalism: the Federal government offered tax credits as an incentive for States to establish exchanges. Without the tax credits, the establishment of exchanges would be unpalatable because severe penalties attach to businesses in a State when their employees enroll on an exchange. But, according to Galen, the IRS Rule destroys this elective framework by mandating tax credits and penalties even in States that rejected that regime. Aside from this federalism issue, Galen argues that, without a clear statement, the Court should not read Section 36B to grant the IRS the authority to decide whether billions of dollars of tax credits must be doled out.

I don’t want to dig too much further into the Galen brief, because it touches on themes I’ve discussed before and because it’s quite well-written (by co-blogger and counsel of record Adam White). Readers interested in the points above can download the brief and quickly grasp its main arguments. I would instead like to use the Galen brief as a springboard to express some points of frustration about this whole case.

First, I dislike how both sides seem to abandon their principles in deciding how to interpret Section 36B. To illustrate this point, consider, for example, a hypothetical statute that granted giant corporations a credit for “employing United States workers.” If Fortune 500 companies read ancillary statutes such that a tax credit were allowable for “employing foreign workers,” those companies would be lambasted by the same persons who advocate a broad interpretation of Section 36B. Those persons would argue that billions of dollars of tax credits should not be inferred, and they would call for the heads of CEOs who hired foreigners, even though the expansion of Section 36B to federal exchanges requires a somewhat countertextual reading.

Second, I’m genuinely confused about how to apply canons of construction when two complex statutory regimes intersect. On the one hand, this seems like a pure tax case, because we must interpret Section 36B of the tax code, and we should apply tax-specific canons, to the extent we consider them valid. Yet the construction of Section 36B demands examination of nontax statutes. By our very nature, tax nerds get squeamish whenever asked to definitively interpret a health law statute, or a bankruptcy statute, or an environmental statute, etc., and I’m no exception. Consequently, I’m frustrated because I just don’t know the “right” way to interpret statutes that are related to Section 36B but which aren’t actually in the tax code. But I find some comfort in knowing that no one else does, either.

Third — and I return to the Galen brief on this point– I would like to see better Court guidance on the Big Questions doctrine. It’s hardly obvious to me that the IRS Rule is foreclosed by that doctrine. Section 7805(a) plainly grants the IRS broad authority to interpret the tax laws and Section 36B itself evinces congressional intent to grant authority to the IRS. On top of that, the IRS Rule reflects the resolution of a fairly technical question of the sort that agencies are usually empowered to answer. But the challengers would say that they don’t doubt the IRS’s authority to generally issue regulations. Rather, they say that the Section 36B issue is thorny enough such that, all else being equal, we should not find an elephant (tax credits for federal exchanges) in a mousehole (language plainly limited to state exchanges). I see the appeal of that argument, but Section 36B still feels different to me than the statute at issue in FDA v. Brown & Williamson.

Having now gone through about half a dozen amicus briefs, I think I may have run out of steam, at least until the government files its response. I look forward to blogging about non-King v. Burwellissues in the interim. Please tweet me if you think I missed a notable brief that has not received sufficient attention elsewhere.

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