Environmental attorneys are grappling with whether today’s Supreme Court ruling upholding the Obama administration’s health care reform could set a precedent in expected legal challenges to U.S. EPA’s Clean Power Plan.
In a 6-3 vote, the justices upheld the Affordable Care Act’s tax subsidies for people who get insurance on both federal and state-created exchanges.
Challengers claimed that a strict reading of the law mandated that the IRS provide the subsidies only for individuals who purchased insurance on an "exchange established by the state" and, therefore, not on the exchanges in roughly three dozen states that were set up by the federal government.
Chief Justice John Roberts, in his opinion for the court, wrote that the context of the law indicated that Congress intended both types of exchanges to qualify for the subsidies. Otherwise, he wrote, the underpinnings of the health care law would crumble.
"Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts," Roberts wrote, "and to avoid the type of calamitous result that Congress plainly meant to avoid."
Environmental lawyers, however, have homed in on the chief justice’s brief discussion of the 1984 precedent Chevron v. Natural Resources Defense Council. In that ruling, the court set up a two-step structure for adjudicating agency actions. Step 1 is whether the law directing the agency’s work is ambiguous. If it is, under Step 2 the court must defer to the agency’s interpretation if it was reasonable.
At first glance, the health care reform case, King v. Burwell, looked as if it could be decided on Chevron grounds. But Roberts quickly sidestepped the precedent.
Chevron didn’t apply because the health care case is "extraordinary" and centers on a question of "deep ‘economic and political significance,’" Roberts wrote, quoting precedent. The Chevron two-step process, he said, need not be initiated if it appears the ambiguity at issue was not one that Congress intended for the acting agency to resolve.
"Had Congress wished to assign that question to an agency, it surely would have done so explicitly," Roberts wrote.
Lisa Heinzerling, a Georgetown Law professor and former climate official at EPA, said she was "struck" by the passage.
It’s an "affirmation of the idea that because an issue is really important, an agency doesn’t get deference," she said.
She noted that the "economic and political significance" argument has been raised in the early challenges to EPA’s proposed greenhouse gas standard for existing power plants, the key component of the administration’s effort to address climate change that is due to be finalized later this year.
In fact, Harvard Law professor Laurence Tribe, a former mentor to President Obama, made that argument earlier this year, Heinzerling said.
A potentially analogous issue involves the conflicting Clean Air Act amendments under which EPA is issuing the greenhouse gas rules. Due to a legislative glitch, two versions of Section 111(d) were signed into law — one from the House and one from the Senate. Critics of the proposal read the House version to prohibit EPA from issuing regulations for sources of pollution already regulated under the law.
Because EPA has already issued power plant standards for other pollutants, that theory would foreclose the new rule.
EPA and environmentalists counter that the Senate version only prohibits redundant regulation of specific pollutants, which would allow the greenhouse gas standards to stand.
The two amendments are not easily reconciled, and Thomas Lorenzen, a former Justice Department environmental attorney, said today’s ruling reinforces the idea that the fate of the Clean Power Plan will ultimately be resolved by judges.
And Roberts’ opinion, he said, may have provided a way for them to sidestep the traditional two-step Chevron analysis.
With the two amendments, "you have a congressional goof," said Lorenzen, who now represents industry clients at the law firm Crowell & Moring. There is "no clear intent to delegate authority to the agency."
Jeff Holmstead, a former EPA air chief now representing industry at Bracewell & Giuliani, echoed that point.
"The decision in King v. Burwell makes it pretty clear that the court will not just defer to EPA but will make its own decision about the legal implications of the competing House and Senate versions of 111(d)," Holmstead said. "The court clarified its holding in Chevron by saying that the courts should only defer to an agency on the types of issues that Congress intended to leave to that agency’s discretion. It will be hard for EPA to argue that Congress intended to give EPA discretion over the scope of its own power."
‘You need to look at the context’
Heinzerling, as well as environmentalists, however, cautioned against reading too much into today’s decision. They noted that several factors differentiate the case from the inevitable challenges to the Clean Power Plan.
Roberts said Chevron didn’t apply because the ambiguity in the state versus federal exchange issue was left to the IRS.
"It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort," Roberts wrote.
That would not be the case in a challenge to the Clean Power Plan, said Howard Learner, the president of the Chicago-based Environmental Law & Policy Center.
"There is a congruence between the statute, the Clean Air Act and the agency, EPA, being called upon to execute it," he said. "I would be very, very surprised if the court went to some sort of Chevron step 0 analysis with regard to EPA’s interpretation of the Clean Air Act."
Heinzerling added that there was an alternate way to read the health care decision that would bolster EPA’s case.
After rejecting a Chevron analysis, Roberts chose to look at the broader context of the law in order to uphold the administration’s reading of it.
In the context of the Clean Power Plan, EPA and environmentalists contend that the 1990 amendments to the law were clearly intended to strengthen EPA’s authority under Section 111(d), not weaken it — and critics’ reading would.
Roberts, Heinzerling said, seemed to say "you need to look at the context in which that language appears."
"That’s very helpful in most environmental cases," Heinzerling said.
More broadly, some law professors still found reasons to be concerned about Roberts’ reasoning, even though the case turned out to be a major win for the administration.
Justin Pidot, a former DOJ environmental attorney now a professor at the Sturm College of Law at the University of Denver, said the ruling reinforces the court’s willingness to wade into high-profile agency actions.
There is, he said, "this newly minted rule that the court is going to intercede when costs get high."
"I think it’s alarming," he said. "That’s a pretty dangerous principle for EPA."