Tuesday, July 29, 2014

The Problematic Halbig Decision: Why “Intent” is Too Narrow an Inquiry

I was about to write a comment in response to Eric Rasmusen’s post below, but then I thought I’d make use of my privilege as a blog editor to reply through a post of my own. 

I think framing the issue in Halbig as a question of intent is to view the dispute far too narrowly.  As I noted in my prior post on these cases, I accepted a position at the Treasury Department after the passage of the Obamacare legislation, and I worked on the Regulations interpreting the tax provisions of Obamacare as a primary focus of my position. 

Importantly, I did not hear anyone even mention the possibility that the Obamacare legislation could be read to deny tax credits through the federal Exchanges until months after I arrived at Treasury.  I surrendered my Treasury computer and e-mails when my position ended, so I cannot look up the exact date.  But I remember vividly when I first heard this argument.  A senior political appointee I worked with had heard Michael Cannon present his argument on a radio show and asked me and others working on these issues what we thought of the argument.

Prior to that time, I had been reading the detailed language of the Obamacare statute on a daily basis while working on the early draft of Regulations for the premium tax credits (IRC Sec. 36B), the individual mandate (IRC Sec. 5000A), the employer mandate (IRC Sec. 4980H), and other related provisions.  I had been discussing these provisions with literally hundreds of other lawyers and government officials, many of whom were also poring over the statutory text of these provisions of Obamacare.  After first hearing Cannon’s argument , I asked the other lawyers and officials I had been working with whether they had heard anything like this argument before.  None had.  Everyone I spoke with was completely surprised upon first hearing Cannon’s argument.

How is this possible?  If you read the language of Sec. 36B out of context, Cannon’s argument seems obvious.  Many commentators agree with Cannon that his reading of the text is plainly correct.  And yet this reading never occurred to me or to numerous other lawyers or government officials before Cannon began arguing for his reading on radio and (later) in print.

I’ve explained elsewhere how the plain language of Sec. 1311 defines “Exchanges established by a State” as a defined term-of-art.  I thus consider Cannon’s argument to be based on a sloppy reading of the statutory language, because he ignores that the statute defines the terms he wants to read in a manner inconsistent with the statutory definitions.

But let’s imagine that I’m wrong.  What if I’m misreading the statutory text?  Numerous commentators have noted that we lack decisive contemporary legislative history.  Should we thus despair of determining the “intent” of Congress?

Perhaps so.  However, whatever the intent of Congress, no one claims that the States who chose to go with the federal Exchange infrastructure thought that they would be denying their citizens the premium tax credits by doing so.  This argument simply did not factor into the state-level debates about whether to establish Exchanges on their own or to instead rely on the federal government Exchanges.

We thus return to the fact that Cannon’s argument (which formed the basis of the challenges in Halbig and related cases) was developed after the fact.  Not only was this argument developed after the passage of the Obamacare legislation.  But, more problematically, this argument was developed after important real-world actors made major decisions with far-reaching implications based on reading the language of the statute in a manner contrary to Cannon’s arguments.  When the first states were deciding whether to establish their own Exchanges or instead to rely on the federal government, no one was arguing that this decision might have implications for whether the states’ citizens would be eligible for premium tax credits.

This “course of performance” evidence should easily trump any half-hearted attempts to directly divine legislative intent.

http://lawprofessors.typepad.com/law_econ/2014/07/the-problematic-halbig-decision-why-intent-is-too-narrow-an-inquiry.html

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