In advance of the King v. Burwell oral argument, Jonathan Adler has an interesting post today on the fight over textualism in the case. Both sides claim the mantle of textualism; Prof. Adler argues that the challengers are the good guys in that fight. I disagree, but that’s not really the point of this post. Instead of arguing about who is better at textualism, I think the more relevant disagreement between the parties is the framing of the case: What is the question that textualism (or statutory interpretation more generally) is meant to answer in this case?
The challengers, Prof. Adler included, want to focus on the meaning of the phrase “established by the State.” It’s not hard to see why. Arguing “State means State!” has an obvious rhetorical appeal. And who could claim that “State” doesn’t mean state?
The challengers’ focus on section 1401’s use of the word “State” leads to arguments like this one by Prof. Adler, discussing the amicus brief submitted by a group of law professors who teach and write on matters of statutory interpretation:
Most significantly, the brief makes no mention whatsoever of the PPACA’s definition of “State.” Section 1304 provides that “the term ‘State’ means each of the 50 States and the District of Columbia.” Congress could have defined “State” to include the federal government, but it did not. Nor did it adopt equivalence language of the sort contained in the House bill or which was adopted concerning federal territories.
Given that the key question is what, if anything, Congress meant by an exchange “established by the State,” one might think the definition of “State” would be relevant. After all, we’re supposed to look at the whole text. Yet it is never mentioned in the brief. In a footnote the amici write: “Petitioners are not free to ignore Congress’s definition just because it’s not the definition that they would give to the same term.” It seems they should have heeded their own advice.
But contrary to Prof. Adler’s assertion, the brief’s lack of discussion on the definition of “State” does not reflect “bad textualism”; rather, it reflects a different (and in my view, more relevant) interpretive focus.
Instead of asking “Does State mean State?” the government and its allies ask a different question: Given the statute’s provision for backup federal exchanges in section 1321, does the language in section 1401 prohibit federal exchanges from standing in the shoes of state exchanges when calculating an individual’s credit?
To see why this framing is preferable, consider the following (unfortunately counter-factual) state of the world: Section 1401 is written exactly as it currently stands. However, section 1321 is more explicit in its “stands in the shoes” language. Instead of the now-familiar phrasing, which employs the word “such,” imagine that section 1321 expressly provides that wherever practicable, a federal exchange in a state will have all the same characteristics, obligations, and benefits of a state-established exchange. In that alternative reality, asking whether “State means State” is wholly irrelevant. Of course “State” means “State.” But it doesn’t then follow that federal exchanges are excluded from section 1401. To the contrary: Individuals on federal exchanges would certainly be eligible for credits. This conclusion flows not from any word or phrase in section 1401, but from the operation of section 1321 and its relationship to the rest of the PPACA as a whole.
Of course, one could imagine an entirely different state of the world, one in which the availability of subsidies within a state were expressly conditioned on the state’s establishing an exchange—perhaps something clear like the Medicaid example at #4 here, or a provision not susceptible to this argument from the “federalism professors” amicus brief:
If Congress had intended petitioners’ interpretation, a subsection of Section 18041 entitled “Failure to establish Exchange or implement requirements” would surely have been the logical place to put it. 42 U.S.C. §18041(c). Instead, Congress kept all of Section 18041 scrupulously free of any mention of this crucial consequence, while emphasizing in that provision the States’ flexibility to decide, one way or the other, whether to set up Exchanges.
That’s the state of the world the challengers’ are advancing, based primarily (exclusively?) on the words of section 1401 and some tenuous legislative history.
But this is where the challengers’ isolationism gets them into trouble. As stated in the amicus brief that drew Prof. Adler’s ire:
But the whole-text canon doesn’t authorize courts to interpret seven words in isolation and then ask whether that interpretation renders other statutory provisions absurd. Rather, courts must interpret a provision in the first instance in light its context and place in the statutory scheme. Statutory construction, after all, is a “holistic endeavor.” So the question here isn’t just whether Petitioners’ reading of Section 36B renders absurd the various provisions discussed above. Rather, the question is this: What does the ACA, read as a whole, say about tax credits when you take into account all its provisions?
Or as I put it: Statutory interpretation is like The Avengers.
In a state of the world where federal exchanges stand in the shoes of state exchanges, the definition of “State” or “established by the State” isn’t relevant. But in a state of the world where the statute punishes states that fail to establish exchanges, the distinction between “State” and federal exchanges is critical.
The argument, therefore, isn’t what “State” means, but what state of the world we’re in. Which system is embodied in the PPACA? Textualism can answer that question, but only if that’s the question you’re willing to ask.