Deference and Fiction: Reforming Chevron's Legal Fictions After King v. Burwell

• Publication year: 2021
• Citation: Vol. 95

95 Nebraska L. Rev. 702. Deference and Fiction: Reforming Chevron's Legal Fictions After King v. Burwell

Deference and Fiction: Reforming Chevron's Legal Fictions After King v. Burwell

Kurt Eggert(fn*)

TABLE OF CONTENTS

I. Introduction .......................................... 703

II. The Tumultuous Passage of the Affordable Care Act . . . 708

III. King v. Burwell and the Challenge to the ACA ........ 712

IV. Chevron and "Step Zero" .............................. 718
A. The Chevron Doctrine ............................. 718
B. Chevron Step Zero ................................. 721

V. The Application of Chevron in King v. Burwell ......... 728
A. Chevron and the Lead-Up to King v. Burwell ....... 728
B. King v. Burwell and Chevron Step Zero ............ 730
C. King v. Burwell and Skidmore Deference ........... 736

VI. How Chevron's Fictions Lead to Chevron's Confusion. . . 73
A. The Fictional Basis of Chevron .................... 7399
B. Chevron's Stare Decisis Muddle and the Need for "Sticky Deference" ................................. 745

VII. Legal Fictions: Their Forgotten History and Misunderstood Use .................................... 751
A. The History and Evolution of Legal Fiction ........ 751
B. The Evolving Definition of "Legal Fiction" .......... 761
C. The Utility and Dangers of Legal Fictions .......... 768

VIII. Reforming Chevron's Fictions .......................... 775
A. Lessons About Legal Fictions and Their Applicationto the Chevron Fiction ............................. 775
B. How Reforming Chevron's Legal Fiction Fixes the Mess of Chevron ................................... 780

IX. Conclusion ............................................ 785

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And to tell the truth, the quest for their 'genuine' legislative intent is probably a wild-goose chase anyway. In the vast majority of cases I expect that Congress neither (1) intended a single result, nor (2) meant to confer discretion upon the agency, but rather (3) didn'tthink about the matter at all. If I am correct in that, then any rule adopted in this field represents merely a fictional, presumed intent, and operates principally as a background rule of law against which Congress can legislate.(fn1)

The Kobold of the fiction often takes cruel vengeance upon those who pursue it.(fn2)

I. INTRODUCTION

In King v. Burwell,(fn3) the Supreme Court for the second time decided a fundamental challenge to the Patient Protection and Affordable Care Act (the ACA, also known as "Obamacare").(fn4) King v. Burwell involved whether a few words of the ACA referring to tax subsidies for those enrolled in an "Exchange established by the State" meant that a major component necessary for the function of Obamacare was available only in states that set up their own exchanges, exchanges being governmental agencies or nonprofits designed to provide one-stop shopping for health insurance.(fn5) If so, arguably those tax subsidies necessary for the functioning of Obamacare were unavailable in the vast majority of states that instead relied on federal exchanges.

An important element of the Court's decision was its determination whether to defer, in the interpretation of those crucial words, to a regulation promulgated by the Treasury Department and the IRS that stated that an exchange for the purposes of the ACA's tax subsidies included both those established and operated by the states as well as those created and run by the federal Department of Health and Human Services (HHS). The Court was forced to address whether it should defer to the agencies' interpretation of the provision of ACA in question pursuant to Chevron U.S.A. v. Natural Resources Defense

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Council, Inc.(fn6) The Court found that the key passage of the ACA was ambiguous, which normally, under Chevron, would trigger deference to the interpretation proffered by Treasury and the IRS. Instead, however, the Court held that, pursuant to what is known as Chevron Step Zero,(fn7) the deference normally mandated by Chevron was not appropriate, and the Court determined for itself the meaning of the disputed language of the ACA.(fn8)

This Article uses King v. Burwell as a lens to analyze the Chevron doctrine and the Step Zero exceptions to it, as well as the extensive legal fictions that form the basis for Chevron and Chevron Step Zero. This Article argues that even though the Court reached the same result in King v. Burwell that it would have employing deference to Treasury and the IRS's determination, the stare decisis and, hence, binding effect of the Court's decision was much greater without such deference. King v. Burwell displays the muddle and disarray exhibited by the Chevron and Step Zero fictions and the challenges courts have in applying them. Worse yet, King v. Burwell adds further confusion to the Step Zero exceptions to Chevron deference and makes them more readily available without clear rules for the application of Step Zero, rendering the Chevron doctrine an even more erratic, unpredictable, inchoate, and dubious system of determining court deference to agency interpretation.

Much of this confusion stems from the misuse in the Chevron doctrine of its multiple legal fictions, a misuse that stems in part from the modern lack of understanding of the purpose and utility of legal fictions, their dangers and how they should be used properly to avoid those hazards. While legal fictions were, through the 1930s, the topic of much scholarly interest and debate, study of them dropped dramatically following the 1930s. Only recently has scholarly interest in the use and misuse of legal fictions resurfaced. This Article revisits the scholarship from the past, as updated and renewed by modern study of legal fictions, to determine the lessons such scholarship teaches about how legal fictions should be used. Applying those lessons to the Chevron doctrine indicates where the Chevron fictions have gone awry and how they can be fixed and reformulated to achieve a more functional, effective, and understandable deference doctrine.

Part II of this Article describes the chaotic passage of the ACA and how that chaos contributed to legislation that melded together disparate versions that left conflicting language and unanswered questions. It describes how the ACA was built on interlocking provisions, including the granting of tax subsidies to those who would have substantial

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difficulty otherwise affording health insurance, which is the subject of King v. Burwell. Even though the model for the ACA had originally been proposed by a conservative think tank, the ACA was largely rejected by Republicans during and after its passage, and many states with Republican-controlled governorships, legislatures, or both refused to set up the state exchanges envisioned by the drafters of the ACA. Instead, their states used the exchanges created by HHS, federal exchanges that were envisioned as a back-ups should states not set up their own exchanges.

Part III of this Article discusses King v. Burwell and the challenge to the ACA. The plaintiffs were Virginia residents who did not want to purchase health insurance but argued that they were being forced to do so in violation of the express terms of the ACA because of the IRS's misinterpretation of the provision that tax subsidies would be available in exchanges "established by the State." Because Virginia used a federal exchange, plaintiffs argued, tax subsidies should not have been made available to them, and because the cost of their health insurance would exceed 8% of their income, they should have been exempted by the ACA from the individual mandate that they buy insurance.

In Part IV, this Article discusses Chevron's delegation fiction and the exceptions to that delegation fiction collectively known as Chevron Step Zero.(fn9) The Chevron delegation fiction asserts in essence that where Congress leaves a gap or ambiguity in a statute that is administered by a federal agency, that gap or ambiguity constitutes an implicit delegation to that agency to use its interpretative powers to fill the gap or resolve the ambiguity. Chevron has two steps, with Step One being whether the statue in question resolves clearly or is ambiguous regarding the exact question that the agency interpretation seeks to resolve. Only upon a finding of ambiguity does a court reach Step Two, determining whether the agency's interpretation is a permissible one and hence should be followed by the court. Chevron Step Zero is a collection of exceptions to the Chevron delegation doctrine, based on the idea that in some cases courts should determine even before Step One that the Chevron delegation fiction should not be applied in those cases. Some aspects of Chevron Step Zero are also built on fictional determinations about whether Congress would have wanted the Chevron delegation doctrine to apply.

Part V discusses the application of Chevron in King v. Burwell, first in the lower courts and then by the Supreme Court. Although the Chevron doctrine seemed to loom large in the determination of plaintiffs' challenge to the ACA, the Supreme Court made quick and terse work of the Chevron issue, holding with little discussion or explana-

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tion that, because Congress would not have wanted the IRS to make this kind of decision, this case was not one for the IRS.(fn10) The Court based that conclusion on the importance of the question, in terms of how central it was to the functioning of the ACA, the billions of dollars involved, and the millions of people that could be affected.(fn11)

The Court based its analysis on two cases that do not seem to support its argument. The Court's argument seems contradicted by the express delegation language contained in the ACA and by other court decisions interpreting similar delegation language. Perhaps more surprisingly, the Court did not...