On his post about the Halbig case, my colleague Saul DeGraw says of the anti-ACA argument that the “logic behind their case is completely bonkers.” But what is striking to me is that neither he nor any of the subsequent commenters (including me) actually ever quote from the Halbig briefs. We are all, literally, arguing about some very vague impression of the argument, without addressing any part of it directly.
Kudos, however, to Will Truman, who linked to the Adler/Cannon argument, which was subsequently ignored by everyone. What I want to do here is quote at length from Adler/Cannon (because their argument is more succinct than the Halbig brief, making such quoting easier, and the logic is generally the same as in the brief, I think), and I challenge critics to explain why the logic is bonkers. Not why it is wrong, but why it is bonkers. Not why it is unlikely to persuade a majority on the Supreme Court, but why it is bonkers.
Understand, I’m not arguing for the Halbig side. I’m not saying it’s right, or that it’s likely to win. I’m only asking whether the logic has a reasonable basis in law–a basis discernible by those who understand constitutional jurisprudence–or whether it so lacks any meaningful legal basis that we can fairly call it bonkers. Put another way, I’m asking whether the claim that the logic is bonkers can be defended through an educated legal argument, or whether the claim was cheap-ass ideological rhetoric (and feel free to follow the lead of XKCD and move the hyphen one word to the right).
I begin on p.143, with footnotes omitted, a few ellipses to simplify the reading, and emphases in the original.
The starting point for statutory interpretation is the statute’s text. As noted above, the PPACA authorizes two methods for establishing an Exchange within a state. Section 1311 provides that ‘‘Each State shall…establish an American Health Benefit Exchange (referred to in this title as an ‘Exchange’)’’ and provides rules for state-run Exchanges. For purposes of Section 1311, the Act specifically requires that an Exchange must be ‘‘a governmental agency or nonprofit entity that is established by a State.’’ Section 1304(d) clarifies, ‘‘In this title, the term ‘State’ means each of the 50 States and the District of Columbia.’’
Two notes: First, Section 1304(d) specifically defines “State” in a way that excludes the federal government. This is an intentional definition, and under the standard interpretive assumption that Congress chooses its words with conscious intent and understanding of their meaning, the definition has substantial weight. Second, references to Section 1311 occur frequently, and it is 1311 that authorizes state exchanges.
Section 1321 requires the federal government to create an Exchange in states that elect not to create their own. Specifically…Section 1321 requires the HHS Secretary to ‘‘establish and operate such Exchange.’’ Section 1321 thus requires a federal ‘‘fallback’’ for states that do not create Exchanges of their own. State-run Exchanges created under Section 1311 and federal fallback exchanges created under Section 1321 are distinct.
That last line is important. The two types of exchanges are distinct, as they are created by different sections of the law. Consequently, subsequent sections of the law that refer to just one section, or one type of exchange, have an initial presumption (not an irrefutable one, just an initial one) that they do not refer to the other section, or the other type of exchange.
Section 1401…specifies that taxpayers may receive a tax credit only during a qualifying‘‘coverage month,’’ which occurs only when ‘‘the taxpayer is covered by a qualified health plan . . . that was enrolled in through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act.’’ By its express terms, this provision only applies to Exchanges ‘‘established by a state’’ and ‘‘established . . . under Section 1311.’’
Notice that Section 1401 (assuming Adler and Cannon aren’t lying or really badly mistaken) clearly references only Section 1311 state exchanges, not Section 1321 federal exchanges.
Section 1401 further emphasizes that tax credits are available only through Section 1311 Exchanges when it details the two methods for calculating the amount of the credit. The first method bases the amount on the premiums of a qualified health plan that the taxpayer ‘‘enrolled in through an Exchange established by the State under [Section] 1311 of the Patient Protection and Affordable Care Act.’’ The second method bases the amount on the premium of the ‘‘second lowest cost silver plan . . . which is offered through the same Exchange through which the qualified health plans taken into account under [the first method] were offered.’’ Both methods therefore require that taxpayers obtain coverage through a state-run Exchange. The second method also relies on the concept of an ‘‘adjusted monthly premium,’’ which only applies to ‘‘individual[s] covered under a qualified health plan taken into account under paragraph (2)(A)’’-i.e., ‘‘through an Exchange established by the State under [Section] 1311.’
In short, section 1401 references Section 1311 (state exchanges) to the exclusion of Section 1321 (federal exchanges) in two different ways.
These clauses carefully restrict tax credits to state-created Exchanges. They either employ or refer to not one but two limiting phrases: ‘‘by the State’’ and ‘‘under Section 1311.’’ Either phrase by itself would have been sufficient to limit availability of tax credits to state-run
Exchanges… The repeated use of both phrases makes the meaning and effect of the language abundantly clear.
…every reference to Exchanges in Section 1401’s tax-credit eligibility rules is to an Exchange ‘‘established by the State under section 1311.’’ The Act contains no parallel language authorizing tax credits in Exchanges established by the federal government under Section 1321. Nor does it contain language authorizing the IRS to issue tax credits through the ‘‘functional equivalent’’ of a Section 1311 Exchange.
One of the arguments I saw on Saul’s post was that we can’t read the ACA text in a way that excludes the “clear intent” of the law. But that begs the question of how we know the clear intent. And as a matter of legal interpretation, the clear intent is often determined by the plain language of the law. It’s not dispositive (nothing is ever dispositive in constitutional interpretation, I think), but it normally is not wholly without force against a reading whose logic is “the plain text meaning is not the real meaning,” even if the logic of that latter reading is that the plain text reading limits the effectiveness of the law. Adler & Cannon’s next paragraph addresses this point.
Courts are to ‘‘give effect, if possible, to every clause and word of a statute, avoiding, if it may be, any construction which implies that the legislature was ignorant of the meaning of the language it employed.”
That quote they use, by the way, is to a Supreme Court case. It’s not just an interpretive approach they’re trying to persuade us is best; it’s one that the Supreme Court has explicitly asserted. Now, given the nature of the Court, in about the time it takes to microwave a burrito a smart person with access to Lexis-Nexis could probably find a dozen cases where the Supreme Court has ignored its own stated interpretive standard. But, again, I’m not arguing about whether this argument is the best, or whether the Supremes will buy it–I’m asking whether an argument based on an interpretive standard explicitly promulgated by the Supreme Court can fairly be labeled “bonkers,” and if so, for a clear explanation why. Continuing that same paragraph…
To treat federal fallback Exchanges as equivalent to state Exchanges established under Section 1311 is to ignore the PPACA’s repeated reference to Exchanges ‘‘established by the State’’ and render this latter language into mere surplusage. Further, as Professor James Blumstein notes, under the familiar canon of expressio unius est exclusio alterius, ‘‘the ACA’s granting of subsidies for income-qualified enrollees under state exchanges established under Section 1311 is to be construed not to grant comparable subsidies for income-qualified enrollees under federal exchanges established under Section 1321.
The fancy-pants Latin that lawyers use to separate themselves from the masses means “the express mention of one thing excludes all others.” Now, we don’t have to like that idea, but I think all of our legal scholars here will nod their head in recognition of its accepted place in the canons of interpretation.
Next, Adler & Cannon cite the Congressional Research Service.
As the Congressional Research Service has written, a strictly textual analysis of the plain meaning of the provision would likely lead to the conclusion that the IRS’s authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange. Therefore, an IRS interpretation that extended tax credits to those enrolled
in federally facilitated exchanges would be contrary to clear congressional intent, receive no Chevron deference, and likely be deemed invalid.
Chevron deference (referencing Chevron v. NRDC) is an interpretive standard used when a federal agency is implementing rules for a law whose text is “silent or ambiguous.” In such cases the Court will defer to the agency’s interpretation of the statute unless it unreasonable. But if the statutory language is clear, no such deference is required–“the agency must follow, and the court must enforce, the clear and unambiguous commands that Congress provides through statute” (See CRS report on Chevron deference here). And in this case the CRS–Congress’s own non-partisan research service–has stated that the language is clear enough that a court could conclude that no such deference is required.
Now Adler & Cannon note in a footnote that the CRS subsequently qualifies that conclusion in the same memorandum. So let’s now leave them to look more closely at that memorandum, which is found here (the link provided by Adler & Cannon is dead). In beginning their analysis, the authors–both attorneys–write,
In general, the starting point for courts in interpreting the meaning of a statute is the language of the statute itself. The Supreme Court often recites the “plain meaning rule,” that if the language of the statute is clear and unambiguous, it must be applied according to its terms. As the United States Supreme Court stated in Connecticut National Bank v. Germain:
[I]n interpreting a statute a court should always turn first to one cardinal canon before all others. 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 …. When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.
I quote this to re-emphasize the importance of taking seriously the plain meaning of the text rule, which we cannot both dismiss easily and pretend we’re doing serious legal analysis.
But the rule only applies if the plain language of the text is in fact clear. Adler & Cannon make a decent argument that it is. I would argue that all those who suggested that the text can’t really mean what it looks like it means have also admitted, implicitly, that the plain language is clear. But let’s see what the CRS says.
Applying the plain meaning rule to §36B, it is possible that a court could read the phrase “an exchange established by the State under 1311 of ACA,” as being clear to not include an exchange established by the federal government. Indeed, this language seems to be straightforward on its face, which has perhaps led some commentators to suggest that the lack of reference to a federally created exchange could have been a drafting error. However, courts often assume that the language Congress employs, including additions and omissions to a particular statute, is intentional.Therefore, a court may be inclined to find that §36B presents a clear statement regarding the types of exchanges in which taxpayers may receive a premium tax credit, and may not look to any additional factors in its analysis.
Let’s pause here and think about the “bonkers” claim. Two lawyers working for the bipartisan Congressional Research Service, whose task is to provide “policy and legal analysis” (cite, emphasis added) are arguing that a court could reasonably accept this argument.
Now for the qualification that follows in this memorandum.
On the other hand, it is possible that a court could find that it is unable to rely on a plain meaning interpretation of §36B, perhaps finding the language to be ambiguous. In examining whether §36B is ambiguous, a court may look, for example, to the definition of “exchange” in ACA. ACA defines the term “exchange” as the following:
EXCHANGE.—The term ‘Exchange’ means an American Health Benefit Exchange established under section 1311 of the Patient Protection and Affordable Care Act.
Section 1311 of ACA, as referenced in this definition, seems to only address the creation of state-established exchanges. The section does not explicitly speak to federally created exchanges — those are addressed in §1321 of ACA. However, section 1321 of AC A also uses the term “exchange”: it states that the Secretary of HHS must establish an “exchange” if a state should fail to take certain specified actions [list of actions omitted: JH]
Plugging in ACA’s general definition of “exchange” into §1321 above arguably links a federally created exchange to one established by a state pursuant to the requirements of §1311. Thus, it may be questioned whether, based on the definition of “exchange,” a federally created exchange should in some way be synonymous with one created by a state under §1311 and how this could affect the interpretation of §36B.
So this interpretation–the interpretation favored by Saul and others commenting on his post–is “arguable.” It “may be questioned” whether it is in fact the correct one. That is, it could be the way the courts will interpret the statute, and that would be a legitimate approach. Or they might not interpret the statute that way, and that would also be a legitimate approach.
The CRS report (highly recommended reading) continues on to provide reasons why the Court might not take Adler & Cannon’s preferred route, including reference to another canon of interpretation stating
that parts or sections of statutes or Acts should be evaluated in connection with other parts and sections as one “harmonious whole” – requiring examination of not just one particular provision, but the broader legislative scheme in which the provision is included.
It’s fairly evident that this canon of interpretation can conflict with the plain meaning canon. And that’s why, as the CRS memorandum states, courts could also choose to follow the line of logic urged by Saul and others in his post and subsequent discussion. Or not. The memorandum tells us two things: 1) Adler & Cannon are not drop-dead unequivocally right, and 2) Adler & Cannon are not drop-dead unequivocally wrong.
This post is already more than long enough, so I’ll conclude it here. I hope I’ve made clear that I’m not arguing that Adler & Cannon & Halbig are right (woot! woot!), but just that I think their argument cannot seriously be dismissed as being wholly meritless, as so lacking in legal logic as to be “bonkers.”
The ball is now in others’ court. Rebut me. Defend Saul’s claim. Please don’t tell me why Adler & Cannon are wrong, because I’m not arguing they’re right, and I’ll mock you mercilessly for attacking a straw man and ducking the hard question. Instead, tell me why, as a matter of legal logic, there is no merit to their case.
[Photo Credit: Wikimedia Commons.]
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