Amicus Curiae Brief — King v. Burwell, 135 S. Ct. 475 (2014) (No. 14-114)

No. 14-114

Iu The

Supreme Court of the Anited States

°

DAVID KING, et ai.,

Petitioners,

Vv.

SYLVIA BURWELL, SECRETARY OF

HEALTH AND HUMAN SERVICES, et al.,

Respondents.

¢

On Writ Of Certiorari To The

United States Court Of Appeals

For The Fourth Circuit

¢

AMICUS CURIAE BRIEF OF

MOUNTAIN STATES LEGAL FOUNDATION

IN SUPPORT OF PETITIONERS

«

STEVEN J. LECHNER

Counsel of Record

JEFFREY W. McCoy

MOUNTAIN STATES LEGAL FOUNDATION

2596 South Lewis Way

Lakewood, Colorado 80227

(303) 292-2021

lechner@mountainstateslegal.com

jmccoy@mountainstateslegal.com

for Amicus Curiae

Mountain Stateg Legal Foundation

COCKLE LEGAL BRIEFS (800) 225-4064

WWW COCK BLEGALBRIEPS COM

QUESTION PRESENTED

Section 36B of the Internal Revenue Code, which

was enacted as part of the Patient Protection and

Affordable Care Act (“ACA”), authorizes federal tax-

credit subsidies for health insurance coverage that is

purchased through an “Exchange established by the

State under section 1311” of the ACA.

The question presented is whether the Internal

Revenue Service (“IRS”) may permissibly promulgate

regulations to extend tax-credit subsidies to coverage

purchased through Exchanges established by the

federal government under section 1321 of the ACA.

1}

TABLE OF CONTENTS

Page

QUESTION PRESENTED. ........000cccccccsccocscccsesceee i

TABLE OF AUTHORITIES. ............00......scccsccsseceeee ill

AMICUS CURIAE BRIEF OF MOUNTAIN

STATES LEGAL FOUNDATION IN SUP-

PRS GFE 6 EE MID ceenecisvssicssecennoneesensons

IDENTITY AND INTEREST OF AMICUS

Il. THE PLAIN LANGUAGE OF THE ACA

DOES NOT AUTHORIZE THE IRS TO

EXTEND TAX CREDITS TO INDIVIDU-

ALS WHO ARE ENROLLED THROUGH

THE FEDERAL EXCHANGE....................

II. EVEN IF THE STATUTORY TEXT

WERE AMBIGUOUS, CONGRESS DID

NOT INTEND TO DELEGATE TO THE

IRS THE ISSUE OF TAX CREDIT ELI-

IED TF cciiicimencenessnmnapbiinitinddaientiuidaasaiens

ll. THIS COURT SHOULD ENSURE THAT

THE EXECUTIVE BRANCH DOES

NOT EXCEED ITS CONSTITUTIONAL

EE nities sriccmtninilasiiionicnannmioncantion

TS nierincinideiavenanuinabiaeiaenianenesiieninannenin

11

ill

TABLE OF AUTHORITIES

Page

CASES

American Ship Building Co. v. NLRB, 380 U.S.

Le RAEI See Res ea a PCA RAIS nek ere Ee 14

Barnhart v. Sigmon Coal Co., 534 U.S. 438

RETA ey RE tia a gd NED, a AP a Rn tee ee ERATE 9,17

Barnhart v. Walton, 535 U.S. 212 (2002)....... 13, 15, 16

Bureau of Alcohol, Tobacco & Firearms v. Fed.

Labor Relations Auth., 464 U.S. 89 (1983) ............ 14

Chevron U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837 (1984).................. passim

Christensen v. Harris Cnty., 529 U.S. 576

ca eal 6

City of Arlington, Tex. v. F-C.C., 133 5. Ct. 1863

I ee eeeenains 12, 13, 21, 22

Coeur Alaska, Inc. v. Se. Alaska Conservation

CE Be Se Be COE orieccseccgiiansassieenissivaveenses 2

Food & Drug Admin. v. Brown & Williamson

Tobacco Corp., 529 U.S. 120 (2000)...... 11, 12, 14, 16

Griffin v. Oceanic Contractors, Inc., 458 U.S.

564 (1982)......... Tae oar a ang ote ne Cae ac ee UP Eee 9,10

Gulf Oil Corp. v. Copp Paving Co., 419 U.S.

RTI. sonst: onvhosonedestioghienaccienaneidinnsinistinimiacibatdapeaient 9

Halbig v. Burwell, 758 F.3d 390 (D.C. Cir.

IID niccscutuidincedseusinbennieneiinmndicaddntprniediantdaiandietiianeiieiees 17

iv

TABLE OF AUTHORITIES ~ Continued

Page

King v. Burwell, 759 F.3d 358 (4th Cir.

RBS AR reba ae? ot RANA By AE ALS Se 9,10, 12, 14

Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S.

Ree RR A RE ARTES SEA yA PRRSEPTE CG ete 19

Marbury v. Madison, 5 U.S. 137 (1803).................2.4. 21

MCI Telecommunications Corp. v. American

Telephone & Telegraph Co., 512 U.S. 218

Re A aR ke er rete bent RA aT cee eee 12

Mistretta v. United States, 488 U.S. 361 (1989)........ 15

Nachman Corp. v. Pension Benefit Guaranty

Corporation, 446 U.S. 359 (1980) ...................226. ae

NFIB v. Sebelius, 132 S. Ct. 2566 (2012)..................08 8

N. Star Steel Co. v. Thomas, 515 U.S. 29 (1995)....... 10

Oklahoma ex rel. Pruitt v. Burwell, No. CIV-11-

30-RAW, 2014 WL 4854543 (2014) .......0.. cece 18

Pension Benefit Guar. Corp. v. LTV Corp., 496

Be ee repccpscendinmsatdesnteamenmepassastinecscivoubencnetess 15

Printz v. United States, 521 U.S. 898 (1997)............. 10

Raleigh & Gaston R. Co. v. Reid, 13 Wall. 269,

A Be Oe CAPs BIG i Peiccncssesecnsersseesernserssoseencsesenans 6

Rapanos v. United States, 547 U.S. 715 (2006)........... 2

Russello v. United States, 464 U.S. 16 (1983).......... 7,9

Sec. Indus. Ass’n v. Bd. of Governors of Fed.

Reserve Sys., 468 U.S. 137 (1984)..........-...ce.e 9, 22

Stupak-Thrall v. Glickman, 988 F. Supp. 1055

Pe IE 1 ceenlipinee ea eGamnniannienneth 2

TABLE OF AUTHORITIES — Continued

Page

United States v. Nixon, 418 U.S. 683 (1974) ............. 21

United States v. Nordic Vill. Inc., 503 U.S. 30

SUI sciis-sabiinaeisacsdnnmGaaeietnansireriotaueeemmdenedioecheaaaaueeaee 6

United States v. Ron Pair Enterprises, Inc., 489

I UNI cok ceundeceueapaiaanactsasunonsmsasmuciasencene: emaatenl 5

United States v. Taylor, 487 U.S. 326 (1988)............. 20

Utility Air Regulatory Group v. EPA, 134 S. Ct.

OT CR cnciinke- cave, vaceaustasieeetenerasukaseens 2, 11, 14, 19

CONSTITUTIONAL PROVISIONS

PB Re eB SR at Ee RS a eT ES, 20

LEGISLATIVE HISTORY

H.R. 3962, 111th Cong., § 308(e) (2009)..........00..00.0..... 8

S. 1679, 111th Cong, § 3104(d) (2009)......0000 ee. 8

S. 1679, 111th Cong, § 3111(b) (2009).......................... 8

STATUTES

Pn ITH II. Sista shensacisicesielanigammaswaeubailinnoameaesidapsumasonemesen 21

ee hei ciad arincies dasinvarccdisealinddgeuienipetandbtanaiae 6

a i ee 3

Gs MAAN eterno ete ene Me 15

Le TER 5) Rel SERS SAGER AO pasa se ade aha ERSTE 16

ge Te Fs EN | | ce ene oe ere 2,5

Oe Eas ee ee i ivtscktttaniedersstindgidéniacbehiimbondadnnipiess 6

vi

TABLE OF AUTHORITIES — Continued

Page

og a RRR Re ee enema oe 5

— pt Me Rt eck 10

42 U.S.C. § 18032(dK3KDMiXTD)...........00...ccesseesneeee 3,7

Oe ie Oe MN ocrrseasnioate > sepcemnescaccisessaveabbekoeedamenee 7

Ae eae Oe SD ac ic ee 5

ee ee I a een 7

RULES

RS CIS BG 0G OM oe rcienicocicnccessdssacecicscocninsaccsiin 1

REGULATIONS

ee TE SS Saar Ee et Ete Ee Ses es seeh ke 3

ad I pa Silene Rtieet aa amen eae es uenar wee ile See 3

Oe OI ac itso pe usa capeteniabedetiesesedishetsoeassininial 3

OTHER AUTHORITIES

Caleb Nelson, Statutory Interpretation and

Decision Theory, 74 U. Chi. L. Rev. 329

i SE a SIE ES INP Beet AT EF eC Hemant 18

The Federalist No. 47 (J. Madison) (Buccaneer

NS SSRIS OEE SIRE ESMEIRR a D7 BHD RSS oe Es ere 19

The Federalist No. 78 (A. Hamilton) (Buccaneer

IEA CEO, GEOR MENT RE 19

V1

TABLE OF AUTHORITIES — Continued

Page

The Honorable Abner J. Mikva, How Should

the Courts Treat Administrative Agencies?,

FS | RE ee 16

Jonathan Gruber at Noblis, at 32:00 (Jan. 18,

2012), https://www.youtube.com/watch?v=

GtnEmPXEpro0&feature=youtu.be&t=31m25s........ 10

Jonathan T. Molot, Reexamining Marbury in

the Administrative State: A Structural and

institutional Defense of Judicial Power Over

Statutory Interpretation, 96 Nw. U. L. Rev.

tA SAS REY EASELS OB Se 21, 22

Nathan Alexander Sales & Jonathan H. Adler,

The Rest Is Silence: Chevron Deference,

Agency Jurisdiction, and Statutory Silences,

2009 U. Ili. L. Rev. 1497 (2009).................. 13, 16, 17

Philip Hamburger, Js Administrative Law

RNP co eco ckabisinalsbaleainuneurones 19

Sanford N. Caust-Ellenbogen, Blank Checks:

Restoring the Balance of Powers in the Post-

Chevron Era, 32 B.C. L. Rev. 757 (1991)................ 21

Stephen Breyer, Judicial Review of Questions

of Law and Policy, 38 Admin. L. Rev. 363

SIs scccdaceinccacccssachspdunssuicasestanicolacincansdesananicenscashens 12

1

AMICUS CURIAE BRIEF OF

MOUNTAIN STATES LEGAL FOUNDATION

IN SUPPORT OF PETITIONERS

Pursuant to Supreme Court Rule 37.3, Mountain

States Legal Foundation (“MSLF”) respectfully

submits this amicus curiae brief, on behalf of itself

and its members, in support of Petitioners.’

*

IDENTITY AND INTEREST

OF AMICUS CURIAE

MSLF is a nonprofit, public-interest legal foun-

dation organized under the laws of the State of Colo-

rado. MSLF is dedicated to bringing before the courts

those issues vital to the defense and preservation of

individual liberties, the right to own and use proper-

ty, the free enterprise system, and limited and ethical

government. MSLF has members who reside and

work in every State. MSLF and its members strongly

believe that the Founders created a federal republic,

in which the federal government is one of limited,

enumerated powers, and that separation of powers is

at the heart of the U.S. Constitution.

' Pursuant to Supreme Court Rule 37.3, the undersigned

certifies that all parties consent to the filing of this brief. The

undersigned further affirms that no counsel for a party authored

this brief in whole or in part, and no person or entity, other than

MSLF, its members, or its counsel, made a monetary contribu-

tion specifically for the preparation or submission of this brief.

2

Since its creation in 1977, MSLF has sought to

preserve the separation of powers by ensuring that

executive agencies do not exceed the authority grant-

ed to them by Congress. Utility Air Regulatory Group

v. EPA, 134 S. Ct. 2427 (2014) (amicus curiae); Coeur

Alaska, Inc. v. Se. Alaska Conservation Council, 557

U.S. 261 (2009) (amicus curiae); Rapanos v. United

States, 547 U.S. 715 (2006) (amicus curiae); Stupak-

Thrall v. Glickman, 988 F. Supp. 1055 (W.D. Mich.

1997) (represented Plaintiffs). MSLF brings a unique

perspective to this case and believes that its amicus

curiae brief will assist this Court in deciding the issue

before the Court.

¢

SUMMARY OF ARGUMENT

This Court should reverse the decision of the

Fourth Circuit because the plain language of the ACA

provides that only individuals who are enrolled

through a State-established Exchange are eligible for

tax credits. The ACA authorizes tax credits to indi-

viduals whose household income is less than 400% of

the poverty line and who are enrolled through an

“Exchange established by the State under section

1311 of the Patient Protection and Affordable Care

Act. ” 26 U.S.C. § 36B(c)(2A\i). The Internal

Revenue Service (“IRS”), however, promulgated

regulations that authorize tax credits to individuals

who are enrolled through either a State-established

Exchange or the federal Exchange established by the

Department of Health and Human Services (“HHS”).

3

26 C.F.R. § 1.36B-1(k); 26 C.F.R. § 1.36B-2; 45 C.FR.

§ 155.20.

Applying traditional canons of statutory con-

struction, the intent of Congress is unambiguous. The

ACA only uses the term “established by the state”

when referring to State-established Exchanges. 26

U.S.C. § 36B. When the Act refers to both the federal

Exchange and State-established Exchanges, it uses

the term “Exchange established under this Act.” 42

U.S.C. § 18032(d)3)D)Q)U1). Furthermore, previous

versions of the bill provided for tax credits to be

extended to those enrolled through the federal Ex-

change, but Congress removed that language before

passing the ACA. Finally, the legislative history does

not indicate that the clear meaning of the text is at

odds with the purpose of the bill. In fact, it is likely

that Congress did not extend tax credits to individu-

als enrolled through the federal Exchange to provide

an incentive to States to establish Exchanges.

Even if the statutory text were ambiguous, there

is no indication that Congress intended to delegate,

explicitly or implicitly, to the IRS the authority to

decide who is eligible for tax credits. Congress tradi-

tionally delegates authority to agencies when a policy

decision requires special expertise. Congress does not,

however, traditionally delegate authority on major

policy decisions. In this case, the issue of tax credit

eligibility is a major policy decision that does not

require any particular agency expertise. Therefore, it

is unlikely that Congress intended to delegate the

determination to the IRS. Accordingly, no deference

4

should be accorded to the IRS's interpretation, and

instead this Court should give the statute its plain

meaning.

Finally, this Court must ensure that an executive

agency does not rewrite the legislation it is purport-

edly administering because doing so would threaten

the proper balance of power between the three

branches of government. The Constitution requires

that each branch of the government exercise a differ-

ent, specialized power. Therefore, an executive agency

cannot usurp either Congress’s legislative power or

this Court’s judicial power. If this Court defers to the

IRS’s interpretation of the ACA, it would allow the

agency to usurp both.

s

ARGUMENT

I. THE PLAIN LANGUAGE OF THE ACA

DOES NOT AUTHORIZE THE IRS TO E.--

TEND TAX CREDITS TO INDIVIDUALS

WHO ARE ENROLLED THROUGH THE

FEDERAL EXCHANGE.

This Court should reverse the decision of the

Fourth Circuit because the unambiguous language of

the ACA only authorizes the IRS to extend tax credits

to individuals enrolled through State-established

exchanges. When reviewing an agency construction of

a Statute a Court must determine whether “Congress

has directly spoken to the precise question at issue.”

Chevron, U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 842 (1984). If, after “employing

5

traditional tools of statutory construction,” a court

“ascertains that Congress had an intention on the

precise question at issue, that intention is the law

and must be given effect.” Jd. at 843 n.9.

The foremost canon of statutory construction is

that the plain language of the statute controls the

Court’s interpretation. United States v. Ron Pair

Enterprises, Inc., 489 U.S. 235, 241 (1989) (A court’s

inquiry into the meaning of a statute begins and ends

with the language of the statute when “the statute’s

language is plain. . ”). Under this canon, it is clear

that the ACA does not authorize the IRS to extend tax

credits to individuals enrolled through the federal

Exchange. Section 1311 of the ACA provides, inter

alia, that “[eJach State shall, not later than January

1, 2014, establish an American Health Benefit Ex-

change (referred to in this title as an “Exchange”)

for the State. ” 42 U.S.C. § 18031(b). In the event

that a state does not establish an Exchange, Section

1321 of the ACA provides that the Secretary of HHS

“shall establish and operate such Exchange within

the State.” 42 U.S.C. § 18041(c). Although Congress

authorized HHS to establish a federal exchange, it

only extended tax credits to individuals enrolled in an

“Exchange established by the State under section 1311

of the Patient Protection and Affordable Care Act. ”

26 U.S.C. § 36B(cX2"AXi) (emphasis added). The

plain language of the statute only authorizes tax

credits to individuals enrolled through a State-

established Exchange.

6

Moreover, Congress expressly referenced section

211, which provides that States shall establish

Exchanges, and did not reference section 1321, that

provides for the federal Exchange. Under the canon

expressio unius est exclusio alterius, “‘[wjhen a stat-

ute limits a thing to be done in a particular mode, it

includes a negative of any other mode.’” Christensen

v. Harris Cnty., 529 U.S. 576, 583 (2000) (quoting

Raleigh & Gaston R. Co. v. Reid, 13 Wall. 269, 270, 20

L.Ed. 570 (U.S. 1872)). Therefore, because Congress

limited tax credits to individuals enrolled in an

exchange “established by the state under section

1311,” it denied tax credits to individuals enrolled in

the federal Exchange.

In addition, the ACA defines “State” as “each of

the 50 States and the District of Columbia.” 42 U.S.C.

§ 18024(d). It is a “settled rule that a statute must, if

possible, be construed in such fashion that every word

has some operative effect.” United States v. Nordic

Vill. Inc., 503 U.S. 30, 36 (1992). The IRS regulations,

however, eliminate the words “established by the

State under section 1311 of the Patient Protection

and Affordable Care Act” from the statute. Because

the challenged regulations violate the plain language

of the ACA, they must be held unlawful and set aside.

5 U.S.C. § 706(2); Chevron, 467 U.S. at 842-43 (When

the intent of Congress is clear, court “must give effect

to the unambiguously expressed intent of Congress.”).

Other canons of statutory construction further

demonstrate that Congress intended to only extend

tax credits to those enrolled through State-

established Exchanges. When interpreting a statute,

7

“differing language” in “two subsections” of a law

should not be given “the same meaning.” Russello v.

United States, 464 U.S. 16, 23 (1983). The ACA uses a

different term when it refers to State-established

Exchanges and the federal Exchange collectively. In

Section 1312 of the Act, Congress required its mem-

bers and their staff to enroll in a plan either created

by the Act or an “Exchange established under this

Act.” 42 U.S.C. § 18032(d)\3XD)G\IID. An “Exchange

established under this Act” refers to both an Ex-

change “established by the State under section 1311”

and the federal Exchange established under Section

1321. This language shows that there is a difference

between an “Exchange established under this Act,”

which includes the federal Exchange, and in Ex-

change “established by the State under section

1311. ” If Congress intended to extend tax credits

to individuals enrolled through the federal Exchange,

it would have used the language referring to the

Exchanges collectively, i.e., an “Exchange established

under this Act.”

Similarly, the ACA provides that a U.S. territory

that “elects . to establish an Exchange shall be

treated as a State.” 42 U.S.C. § 18043(a)(1). This

language arguably overrides the definition of “State”

because it allows a territory to be treated as a State

for the purpose of the Act. Congress, however, did not

include language authorizing the federal] Exchange to

be treated as a State when HHS established an

exchange. See 42 U.S.C. § 18041. This absence of

language is further evidence that Congress did not

extend tax credits to those enrolled in the federal

8

Exchange. NFIB v. Sebelius, 132 S. Ct. 2566, 2583

(2012) (“Where Congress uses certain language in

one part of a statute and different language in

another, it is generally presumed that Congress acts

intentionally.”).

That Congress did not intend for State-

established Exchanges and the federal Exchange to

be treated similarly for the purpose of tax credits is

confirmed by an earlier draft of the bill. In earlier

drafts of bills in both the House of Representatives

and the Senate, Congress used clear language that

would have extended tax credits to individuals en-

rolled through the federal Exchange. H.R. 3962, 111th

Cong., § 308(e) (2009) (Providing for one federal Ex-

change and, if states decided to create an Exchange

“references . to the Health Insurance Exchange. .

shall be deemed a reference to the State-based Health

Insurance Exchange.”); see also S. 1679, 111th Cong,

§§ 3104(d); 3111(b) (2009) (providing that the Secre-

tary shall establish a federal “gateway” if a state does

not establish a “gateway” and providing for tax cred-

its for all gateways.). That language, however, was

removed prior to passage of the ACA. When Congress

discards language from an earlier draft of a bill,

courts assume that the enacted law should not

be read to include the deleted language. /.N.S. v.

Cardoza-Fonseca, 480 U.S. 421, 442-43 (1987) (“‘Few

principles of statutory construction are more compel-

ling than the proposition that Congress does not

intend sub silentio to enact statutory language that it

has earlier discarded in favor of other language.”

(quoting Nachman Corp. v. Pension Benefit Guaranty

9

Corporation, 446 U.S. 359, 392-93 (1980) (Stewart, J.,

dissenting))); cf. Gulf Oil Corp. v. Copp Paving Co.,

419 U.S. 186, 200 (1974); Russello, 464 U.S. at 23. If

Congress intended to provide tax credits to those

enrolled through the federal Exchange, then it would

have included the language from an earlier draft of

the bill. Therefore, that Congress removed language

extending tax credits to individuals enrolled through

the federal Exchange further demonstrates that the

ACA is not ambiguous regarding tax credit eligibility.

See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461-

62 (2002) (“We have stated time and again that courts

must presume that a legislature says in a statute

what it means and means in a statute what it says

there.” (internal quotation omitted)).

Finally, contrary to the suggestion made in Judge

Davis’s concurring opinion below, the Petitioners do

not need to support their position with legislative

history. King v. Burwell, 759 F.3d 358, 378 (4th Cir.

2014) (Davis, J., concurring). Legislative history has a

limited value when construing the meaning of a

statute, and can only overcome the plain language of

the statute in the “rare cases [in which] the literal

application of a statute will produce a result demon-

strably at odds with the intentions of its drafters.”

Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571

(1982); Sec. Indus. Ass'n v. Bd. of Governors of Fed.

Reserve Sys., 468 U.S. 137, 149 (1984) (“[TJhe legislative

purpose is expressed by the ordinary meaning of the

words used.”). This is not the case here, as no legisla-

tive history demonstrates that Congress intended to

extend tax credits to individuals enrolled through the

10

federal Exchange. See Brief of Petitioners, Part

I.D.1.c.; King, 759 F.3d at 371 (stating that the

legislative history is “somewhat lacking”).

In fact, the challenged regulations likely frustrate

the “intentions of [the] drafters.” Griffin, 458 U.S. at

571. The plain language of the ACA demonstrates

that Congress intended for states to set up Exchang-

es. 42 U.S.C. § 18031(bX1) (providing that “[eJach

State shall, not later than January 1, 2014, establish

an American Health Benefit Exchange (referred to in

this title as an ‘Exchange’) for the State”). It is axio-

matic, however, that Congress cannot require states

to implement federal laws. Printz v. United States,

521 U.S. 898, 904-05, 935 (1997). Therefore, Congress

likely included the tax credits to encourage states to

establish Exchanges. See N. Star Steel Co. v. Thomas,

515 U.S. 29, 34 (1995) (Congress legislates with this

Court’s decisions as a backdrop). This is reflected in

the statements of one of the ACA’s key architects,

Prof. Jonathan Gruber:

[I]f you’re a state and you don’t set up an

Exchange, that means your citizens don’t get

their tax credits. I hope that that’s a

blatant enough political reality that states

will get their act together and realize that

there are billions of dollars at stake here in

setting up these Exchanges, and that they'll

do it.

Jonathan Gruber at Noblis, at 32:00 (Jan. 18, 2012),

https://www. youtube.com/watch?v=GtnEmPXEpr0&

feature=youtu.be&t=31m25s.

11

As the foregoing demonstrates, Congress’s intent

is clear: tax credits may not be provided to individu-

als enrolled through the federal Exchange. “[T]hat is

the end of the matter; for [a] court, as well as the

agency, must give effect to the unambiguously ex-

pressed intent of Congress.” Chevron, 467 U.S. at

842-43; see Utility Air Regulatory Group v. EPA, 134

S. Ct. 2427, 2446 (2014) (“[A]n agency may not rewrite

clear statutory terms to suit its own sense of how the

statute should operate.”). Accordingly, this Court

should reverse the decision of the Fourth Circuit and

hold unlawful and set aside the IRS regulations.

Il. EVEN IF THE STATUTORY TEXT WERE

AMBIGUOUS, CONGRESS DID NOT IN-

TEND TO DELEGATE TO THE IRS THE

ISSUE OF TAX CREDIT ELIGIBILITY.

As demonstrated above, the text of the ACA

clearly prevents the IRS from extending tax credits to

those enrolled through the federal Exchange. Even if

the statutory language were ambiguous, however, the

IRS may only resolve that ambiguity if Congress

intended to delegate that authority to the agency.

Food & Drug Admin. v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 159 (2000) (holding that ambiguous

statutory language did not constitute a Congressional

delegation of authority). “In extraordinary cases,” like

when the legal question before the Court is an im-

portant one, “there may be reason to hesitate before

concluding that Congress has intended such an

implicit delegation” of authority to an agency as a

12

result of statutory ambiguity. /d. (citing Stephen

Breyer, Judicial Review of Questions of Law and

Policy, 38 Admin. L. Rev. 363, 370 (1986), for the

proposition that “Congress is more likely to have

focused upon, and answered, major questions, while

leaving interstitial matters to answer thems: ves in

the course of the statute’s daily administration ‘)).* Jd.

A court should not necessarily presume the Congress

intended to delegate authority to an agency and

“must be guided to a degree by common sense as to

the manner in which Congress is likely to delegate a

policy decision of such economic and political magni-

tude to an administrative agency.” Jd. at 133 (citing

MCI Telecommunications Corp. v. American Tele-

phone & Telegraph Co., 512 U.S. 218, 231 (1994)).

Therefore, if this Court finds the language of the ACA

ambiguous, it must analyze whether Congress in-

tended the IRS to resolve the tax credit eligibility

issue. Id.; see also City of Arlington, Tex. v. F-C.C., 133

S.Ct. 1863, 1875 (2013) (Breyer, J., concurring)

(“I say that the existence of statutory ambiguity is

sometimes not enough to warrant the conclusion that

Congress has left a deference-warranting gap for the

* Although the Fourth Circuit recognized “that not every

ambiguity in a statute gives rise to Chevron deference,” it failed

to analyze whether the purported ambiguity in this case reflect-

ed a Congressional intent to delegate to the IRS the authority to

determine tax credit eligibility. King, 759 F.3d at 373 n.4. To

make matters worse, the Fourth Circuit simply presumed that

Congress delegated the authority to the IRS to make this major

policy decision. Jd. Yet, as demonstrated below, that the issue is

a major policy decision demonstrates that Congress did not

intend to deiegate policy-making authority to the IRS.

13

agency to fill because our cases make clear that other,

sometimes context-specific, factors will on occasion

prove relevant.”); id. at 1877 (Roberts, C.J., dissent-

ing) (“A court should not defer to an agency until the

court decides, on its own, that the agency is entitled

to deference.”); Nathan Alexander Sales & Jonathan

H. Adler, The Rest Is Silence: Chevron Deference,

Agency Jurisdiction, and Statutory Silences, 2009 U.

Ill. L. Rev. 1497, 1538 (2009) (“(T]o shift interpretive

authority to an agency is to presume, as a matter of

law, that a delegation occurred and to relieve the

courts of determining whether, in fact, such a delega-

tion occurred.”). The nature of the tax credit provision

demonstrates that Congress did not implicitly dele-

gate to the IRS the authority to determine tax credit

eligibility.”

There are several factors that indicate that

Congress intended to delegate policy-making authori-

ty to an agency: the interstitial nature of the legal

question, the related expertise of the Agency, the

importance of the question to administration of the

statute, the complexity of that administration, and

the careful consideration the Agency has given the

question over a long period of time. See Barnhart v.

Walton, 535 U.S. 212, 222 (2002) (Stating that those

factors “indicate that Chevron provides the appropriate

* As demonstrated by Petitioners, Congress did not even

expressly delegate to the IRS the authority to administer the

ACA provisions at issue. Brief of Petitioners, Part IJ.C. As a

result, it is unlikely that Congress implicitly delegated any

authority.

14

legal lens through which to view the legality of the

Agency interpretation here at issue.”). In this case,

these factors indicate that Congress did not intend to

delegate the issue of subsidy eligibility to the IRS.

First, Congress does not often delegate major

policy issues to agencies, as it does with interstitial

matters. Brown & Williamson Tobacco Corp., 529

U.S. at 147. At a minimum, “Congress {must} speak

clearly if it wishes to assign to an agency decisions of

vast ‘economic and political significance.’” Util. Air

Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2444 (2014)

(quoting Brown & Williamson Tobacco Corp., 529 U.S.

at 160); cf. Bureau of Alcohol, Tobacco & Firearms v.

Fed. Labor Relations Auth., 464 U.S. 89, 97 (1983)

(“(Djeference owed to an expert tribunal cannot be

allowed to slip into a judicial inertia which results in

the unauthorized assumption by an agency of major

policy decisions properly made by Congress.” (citing

American Ship Building Co. v. NLRB, 380 U.S. 300,

318 (1965)). In this case, t'»2 issue of tax credit eligi-

bility has vast economic and political significance

because it affects billions of dollars of potential tax

credits. Brief of Petitioners, Part II.A. Furthermore,

the issue is not an interstitial matter because tax

credit eligibility is a major aspect of the ACA. King,

759 F.3d at 373 n.4 (stating the importance of tax

credits to the overall statutory scheme of the ACA).

Therefore, Congress did not delegate policy-making

authority on the issue to the IRS. Brown & William-

son Tobacco Corp., 529 U.S. at 147.

15

Secondly, the nature of the policy question of tax

credit eligibility is not a question related to the

expertise of the IRS. See Walton, 535 U.S. at 222

(Stating that “related expertise of the Agency” is a

factor in deciding whether to defer to agency’s inter-

pretation). Congress often delegates policy-making

authority to an agency when a policy decision re-

quires expert knowledge. Mistretita v. United States,

488 U.S. 361, 372-73 (1989) (“[Ojur jurisprudence has

been driven by a practical understanding that in our

increasingly complex society, replete with ever chang-

ing and more technical problems, Congress simply

cannot do its job absent an ability to delegate power

under broad general directives.”); Pension Benefit

Guar. Corp. v. LTV Corp., 496 U.S. 633, 651-52 (1990)

(“(P]ractical agency expertise is one of the principal

justifications behind Chevron deference.”). The policy

question at issue is not how eligible individuals may

receive the tax credit or how the amount of the tax

credit is calculated, issues that are arguably within

the IRS's expertise. Instead, the issue in this case is

the class of individuals who are eligible for the tax

credit.‘ 26 U.S.C. § 36B(a) (providing for tax credits to

‘ The distinction between the hypothetical issues and the

actual issue in this case also demonstrates that the issue before

the Court is not “importa(lnt] .. to administration of the

statute” nor will the Court's resolution of the issue affect the

“complexity of that administration.” Walton, 535 U.S. at 222.

The IRS’s administration of the tax credit provision of the ACA

is not going to be significantly diferent if this court holds that

only those enrolled through State-established Exchanges are

eligible for tax credits. The IRS’s method of calculating tax

(Continued on following page)

16

“applicable taxpayer[s]”); 26 U.S.C. § 36B(c) (defining

“applicable taxpayer”); see also Question Presented,

supra. As demonstrated above, the plain language of

the ACA proves that Congress made that major policy

decision itself. Thus, contrary to the decision of the

Fourth Circuit, there was no delegation of authority

to the IRS. As a result, no deference should be

accorded to the IRS’s interpretation. Brown & Wil-

liamson Tobacco Corp., 529 U.S. at 159; Walton, 535

U.S. at 222.

In fact, this Court is in a better position than the

IRS to determine Congressional intent. Statutory in-

terpretation is an area where the judiciary has more

experience and expertise than any administrative

agency:

(Cjourts have a large fund of experience with

statutes and such experience makes them

uniquely qualified for this important task.

If there is one thing that judges are good

at, and have a lot of practice in, it is con-

struing statutes. Judges are routinely pre-

sented with cases whose outcomes turn

on bread-and-butter questions of statutory

interpretation.

The Honorable Abner J. Mikva, How Should the

Courts Treat Administrative Agencies?, 36 Am. U. L.

Rev. 1, 8 (1986); see also Sales & Adler, supra, 2009

credits under the ACA will remain the same. All that will be

different is who is eligible to receive those tax credits.

17

U. Til. L. Rev. at 1536 (“However imperfect judicial

decisions may be, they are more likely to reflect the

faithful application of precedent, applicable legal

norms, and canons of construction than equivalent

decisions made by agencies headed by executive

officials.”).

Drafting legislation requires many compromises,

and the text of the statute reflects those compromis-

es. Sigmon Coal Co., 534 U.S. at 461 (A statute’s

“delicate crafting reflected a compromise amidst

highly interested parties attempting to pull the

provisions in different directions.”); see also Halbig v.

Burwell, 758 F.3d 390, 402 (D.C. Cir. 2014), reh’g en

banc granted, judgment vacated, No. 14-5018, 2014

WL 4627181 (D.C. Cir. Sept. 4, 2014)° (“The Constitu-

tion assigns the legislative power to Congress, and

Congress alone and legislating often entails

compromises that courts must respect.”). While an

agency may have some knowledge of the Congres-

sional deal making, the “ultimate deal struck is

unlikely to match the legislative proposal advanced

by the agency, nor is an agency’s interpretation likely

to be immune from the agency’s perceived self- inter-

est.” Sales & Adler, supra, 2009 U. Il. L. Rev. at 1536-

37. Therefore, if the Act is ambiguous, this Court

should determine who Congress intended to extend

* Halbig also involved a challenge to the IRS regulations

extending tax credits to individuals enrolled through the

Federal Exchange. 758 F.3d 390.

18

tax credits to, without deferring to the IRS.° Doing so

will result in a decision that reflects the policy

decision made by Congress. As demonstrated above,

Congress intended to only extend tax credits to

individuals enrolled through State-established Ex-

changes. Accordingly, this Court should reverse the

decision of the Fourth Circuit.

lil. THIS COURT SHOULD ENSURE THAT THE

EXECUTIVE BRANCH DOES NOT EXCEED

ITS CONSTITUTIONAL AUTHORITY.

The text of the ACA clearly provides that

Congress intended to only extend tax credits to indi-

viduals enrolled through State-established exchanges.

Oklahoma ex rel. Pruitt v. Burwell, No. CIV-11-30-

RAW, 2014 WL 4854543, at *6 (2014). If this Court

allows the IRS to rewrite the ACA and ignore Con-

gressional intent, it will threaten the proper balance

* There is no concern that this Court will substitute its

policy judgment for that of Congress in this case. See Chevron,

467 U.S at 865-66 (noting concern with judges making decisions

based on personal policy preferences). As demonstrated above,

when a court properly applies canons of statutory interpretation

it can ensure that the decision reflects the intent of Congress.

See Caleb Nelson, Statutory Interpretation and Decision Theory,

74 U. Chi. L. Rev. 329, 359-60 (2007) “(I]t is possible for norma-

tive canons to be policy-based without resting entirely on policy

judgments made by courts. Some normative canons, although

developed and articulated by judges, are designed to guide the

resolution of ambiguities toward outcomes that reflect values

gleaned from the federal Constitution or from our legal system

as a whole.”).

19

of power between the three branches of government.

An executive agency cannot usurp either Congress’s

legislative power or this Court’s judicial power. Util.

Air Regulatory Grp., 134 S. Ct. at 2446 (2014) (“The

power of executing the laws does not include a

power to revise clear statutory terms.. ”). If this

Court defers to the IRS’s interpretation of the ACA, it

will allow the agency to usurp both.

The Framers of the Constitution created sepa-

rate, co-equal branches of government because the

“accumulation of all powers, legislative, executive,

and judiciary, in the same hands may justly be

pronounced the very definition of tyranny.” The

Federalist No. 47, at 244 (J. Madison) (Buccaneer

Books 1992). Therefore, to protect individual liberty,

the framers created a system that placed specialized

powers in each of the three branches of government.

The Federalist No. 78, at 394 (A. Hamilton) (Bucca-

neer Books 1992) (“‘there is no liberty, if the power of

judging be not separated from the legislative and

executive powers.” (quoting Montesquieu, Spirit of

Laws, Vol. 1)); Philip Hamburger, Js Administrative

Law Unlawful? 325 (2014) (Arguing that the “separa-

tion of powers” in the Constitution was “a matter of

distinguishing the three specialized powers of gov-

ernment and vesting each in its own specialized part

of government.”).

While this Court has held that Congress can

delegate some legislative authority to an agency, it

has always ensured that it is Congress making the

decision to delegate. Louisiana Pub. Serv. Comm'n v.

20

FCC, 476 U.S. 355, 374 (1986) (“[AJn agency literally

has no power to act unless and until Congress

confers power upon it.”). In this case, Congress decid-

ed who was eligible for tax credits and used clear

statutory language to reflect that major policy deci-

sion. If deference is accorded to the IRS in this case,

then it is difficult to imagine a situation in which

Congress could ever effectively limit an agency’s

ability to rewrite a statute to suit its own self-serving

purposes. Accordingly, this Court must ensure that

the legislative power remains solely with Congress by

holding unlawful the IRS’s attempt to arrogate this

power to itself. United States v. Taylor, 487 U.S. 326,

336 (1988) (“[Judicial}] review must serve to ensure

that the purposes of [an] Act and the legislative

compromise it reflects are given effect.”).

Like the legislative power, the Constitution vests

the judicial power “in one supreme Court, and in such

inferior Courts as the Congress may from time to

time ordain and establish.” U.S. Const. art. III, § 1.

This power:

[CJan no more be shared with the Executive

Branch than the Chief Executive, for exam-

ple, can share with the Judiciary the veto

power, or the Congress share with the Judi-

ciary the power to override a Presidential ve-

to. Any other conclusion would be contrary to

the basic concept of separation of powers and

the checks and balances that flow from the

scheme of a tripartite government.

21

United States v. Nixon, 418 U.S. 683, 704 (1974);

Marbury v. Madison, 5 U.S. 137, 177 (1803) (“It is

emphatically the province and duty of the judicial

department to say what the law is.”). Therefore, the

Constitution requires that the judiciary be the ulti-

mate authority on issues of statutory construction.

Chevron, 467 U.S. at 843 n.9 (“The judiciary is the

final authority on issues of statutory construction and

must reject administrative constructions which are

contrary to clear congressional intent”); 5 U.S.C.

§ 706 (Administrative Procedure Act providing that

“the reviewing court shall decide all relevant ques-

tions of law. . ); Jonathan T. Molot, Reexamining

Marbury in the Administrative State: A Structural

and Institutional Defense of Judicial Power Over

Statutory Interpretation, 96 Nw. U. L. Rev. 1239, 1285

(2002). (“[Ajllowing administrators to interpret

statutes and to define their powers free from judicial

review is precisely the sort of arrangement that the

constitutional separation of powers was designed to

prevent.”); Sanford N. Caust-Ellenbogen, Blank

Checks: Restoring the Balance of Powers in the Post-

Chevron Era, 32 B.C. L. Rev. 757, 803 (1991) (“In

order to maintain the checks and balances inherent

in our constitutional framework, judicial review of

article I adjudications must exist and independent

review of questions of law must be permitted.”).

The Fourth Circuit, however, relinquished its

judicial power to the IRS by failing to interpret the

plain language of the statute itself. See City of Arling-

ton, 133 S. Ct. at 1873 (It is a court’s responsibility to

22

“tak(e] seriously, and apply[ | rigorously, in all cases,

statutory limits on agencies’ authority.”); Molot,

supra, 96 Nw. U. L. Rev. at 1278 (2002) (If judges

were to relinquish “final authority on issues of statu-

tory construction” to administrators this would

upset the Constitution’s careful allocation of political

power.”).

The concerns of agency overreach are not un-

founded. The growing power of the administrative

state has resulted in the concentration of legislative,

executive, and judicial powers in unelected adminis-

trative agencies. City of Arlington, 133 S. Ct. at 1877-

78 (Roberts, C.J., dissenting) (“Although modern

administrative agencies fit most comfortably within

the Executive Branch, as a practical matter they

exercise legislative power. . executive power

and judicial power. . The accumulation of these

powers in the same hands is not an occasional or

isolated exception to the constitutional plan; it is a

central feature of modern American government.”). In

order to ensure that the constitutional plan is not

eroded, this Court must take its judicial role seriously

and ensure that “deference is not to be a device that

emasculates the significance of judicial review.” Sec.

Indus. Ass’n v. Bd. of Governors of Fed. Reserve Sys..,

468 U.S. 137, 142-43 (1984). No deference should be

accorded to the IRS’s interpretation, and this Court

should hold that the ACA does not allow the agency to

extend tax credits to individuals who are enrolled

through the federal Exchange. Therefore, to ensure

that an agency does not invade the purview of the

23

judiciary by interpreting a statute contrary to the

plain meaning of its language, this Court should

reverse the decision of the Fourth Circuit.

CONCLUSION

For the foregoing reasons, the decision of the

Fourth Circuit should be reversed.

Dated this 29th day of December 2014.

Respectfully submitted,

STEVEN J. LECHNER

Counsel of Record

JEFFREY W. McCoy

MOUNTAIN STATES LEGAL FOUNDATION

2596 South Lewis Way

Lakewood, Colorado 80227

(303) 292-2021

lechner@mountainstateslegal.com

jmccoy@mountainstateslegal.com

Attorneys for Amicus Curiae

Mountain States Legal Foundation