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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2014

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0338%3A51. Public record. Not legal advice.