Author:Sohoni, Mila
Position:A - Symposium: Administrative Lawmaking in the Twenty-First Century

In King v. Burwell, the Supreme Court called the tax-credit provision of the Affordable Care Act ambiguous--but then invoked the major questions exception to Chevron deference and proceeded to resolve the provision's meaning for itself. Litigants and commentators quickly recognized that King had the potential to destabilize Chevron. If King exempts from Chevron deference anything that is "major," then Chevron's significance will necessarily be diminished, as agencies will only enjoy deference on their answers to questions of "minor" import; the major questions exception may swallow Chevron's rule.

This Essay, prepared for a symposium held by the Notre Dame Law Review, traces King's domain and shows how it leaves untouched much of Chevron's domain. King was correctly decided in the particular context in which it arose--the context in which an agency was interpreting an ambiguous statute to authorize broad-scale spending by the federal government. De novo review in this domain finds support in cases both old and new; it accords with constitutional values; and it need not spill over to other types of administrative law disputes. Courts can thus comfortably give King its due force within the domain it addressed. By the same token, however, courts should refrain from applying King beyond that domain, to block judicial deference to regulatory agency action that does not involve the generation of large amounts of federal spending. King and Chevron currently seem at war, but they can exist in detente. The federal courts should preserve this detente as Congress deliberates on the questions of fundamental regulatory reform currently pending before it.


The Supreme Court's decision in King v. Burwell (1) was "breathtakingly important." (2) The plaintiffs in that suit argued that the IRS incorrectly interpreted the Affordable Care Act to authorize the payment of refundable tax credits on a health insurance exchange established by the federal government, although the statute made those credits available only on an exchange "established by the State." (3) The Supreme Court rejected this challenge.

The practical consequence of the Court's decision for health care reform was obvious: King let the IRS pay tax credits on the federal health insurance exchange, and so sustained a central part of the ACA's insurance market reforms by allowing individuals to purchase federally subsidized health insurance plans. King thus preserved the substantive result achieved by the agency action at issue in that case. But the method the Court used to reach this result was unexpected. Instead of deferring to the agency, the Court--by invoking the "major questions" exception to Chevron deference (4)--proceeded to resolve the statute's meaning for itself.

King is a uniquely important major questions case. Earlier decisions applying the major questions exception held that Congress had resolved the major question in a way that foreclosed the agency's reading of the statute. (5) The other major questions cases are therefore "just" pure statutory interpretation cases in that they held that the statute did not authorize the result the agency sought. In King, however, the statute did not foreclose the agency's reading of the statute; indeed, the King Court ultimately concluded that the statute "compel[led]" the result the agency wanted to reach. (6) King limited Congress's power to delegate to the agency the authority to read the statute a particular way, while reserving to the Court the power to read the statute in exactly the same way. Because of this Step Zero holding, (7) King--and only King (8)--is a case that is not just about proper statutory interpretation, but also about nondelegation itself.

Kings use of the major questions exception has provoked a great deal of commentary, much of it negative. (9) A growing body of scholarship has criticized the major questions exception on a variety of scores--for its uncertain contours, (10) its susceptibility to judicial manipulation, (11) and its capacity to corrode the powers of agencies. (12) Because the major questions exception is flawed, and because King appeared to broaden and entrench the major questions exception, it seems to follow that King committed a dangerous blunder--or so contend many of King's critics.

To some extent, these worries have been ratified. Litigants have leveraged King's major questions holding in "a number of high-profile challenges to federal regulations." (13) And each case that relies upon King's major questions exception threatens to gradually chip away at Chevron's domain. (14) If King exempts from Chevron anything that is "major," then Chevron's significance will necessarily shrink, as agencies will only enjoy deference on their answers to questions of "minor" import. Chevron and King are locked in a (Step) zero-sum game.

This Essay reconciles Chevron and King by tracing the boundaries of what we might think of as " King's domain." (15) King arose in a specific and rather unusual context: it was a case in which an agency interpreted ambiguous statutory authority to create federal spending without clear congressional authorization. The King Court's choice not to invoke Chevron in that context is consistent with caselaw concerning appropriations and spending. (16) Kings eschewal of Chevron deference at Step Zero should be understood to be confined to this domain rather than as undercutting deference to major regulatory activity that does not trigger spending by the federal government. Put another way, Chevron and King are in detente, rather than in conflict. And, for reasons more fully discussed below, courts should maintain that detente as Congress decides on the proposals for fundamental regulatory reform currently pending before it.


    To understand King, it is necessary to review briefly the context in which it arose: in litigation concerning the Affordable Care Act (ACA). The ACA was intended to expand access to affordable health insurance to millions of Americans. To secure that aim, the ACA created a complex and interlocking scheme of subsidies and mandates. "The subsidies took various forms and flowed to different recipients. For insurers, there were cost-sharing reduction payments, risk-adjustment payments, reinsurance payments, and risk-corridor payments. For individuals, there were premium tax credits." (17) By creating these subsidies, Congress "enabled insurers to offer plans at affordable prices," and "enabled consumers to purchase those affordably priced plans." (18)

    The difficulty was that the rushed and unusual circumstances of the ACA's passage left several problems in the statutory text. (19) The challengers in King focused on one of these problems: the provisions that dealt with refundable tax credits. The ACA authorized the provision of such tax credits for purchases of plans on "an Exchange established by [a] State." (20) The IRS, however, regarded the provision as authorizing it to make tax credits available to purchasers on the federal (21) If the Agency's determination were rejected and the challengers were to prevail, the consequences would be lethal for the ACA: the insurance markets in over thirty states would collapse because federal money could no longer flow to purchasers of plans in those states. (22)

    Ultimately, the government won King, with a six-Justice majority holding that the ACA authorized the provision of tax credits on both the federal and state exchanges. (23) For health care reform, the consequences were clear: the ACA's insurance market reforms would survive to fight another day. But for administrative law, the consequences of the Court's opinion were more difficult to parse. The King Court rejected the argument that the IRS was entitled to Chevron deference, "brushing the case aside like a slightly annoying but unthreatening bug." (24) This startled many observers, particularly because King did not hold that the ACA was clear or unambiguous, which is the usual reason courts decline to apply Chevron. (25) To the contrary, the Court stated that the statutory provision concerning tax credits was ambiguous, (26) yet nonetheless declined to defer under Chevron. "This is not a case for the IRS," the Court reasoned; "[i]t is instead our task to determine the correct reading of Section 36B." (27)

    On the question of why the IRS was not entitled to resolve this statutory ambiguity, King offered a single, dense paragraph. First, the Court noted, the tax credits are among the ACA's "key reforms." (28) Second, the Court pointed out that the tax credits "involv[e] billions of dollars in spending each year and affect[ ] the price of health insurance for millions of people," making the availability of those tax credits "a question of deep 'economic and political significance.' " (29) Third, the Court stressed that the agency claiming the delegated authority to decide the question was "the IRS," an agency that "has no expertise in crafting health insurance policy of this sort." (30) King, in short, offered a "grab bag of reasons" (31) for its refusal to defer.

    Clearly, the most important element of the "grab bag" was the Court's invocation of Brown & Williamson's language on questions of "deep 'economic and political significance.' " (32) The Brown & Williamson case is now the canonical cite for the "major questions exception" to Chevron--the idea that Congress does not delegate authority to answer questions of major economic and political significance implicitly, but instead does so explicitly. As the Court elsewhere phrased it, Congress does not "hide elephants in mouseholes." (33)

    This "elephants in mouseholes" element of King has caused some consternation. Several perceive in this opinion the spreading symptoms of an incipient across-the-board pushback against the very foundation of Chevron deference (34)--perhaps an effort by Chief Justice Roberts to establish as...

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