Supreme Court saves Obamacare again - Scalia pulls a punch

Fan(s)™ of my Platinum Coin series surely knew where I stood on the latest challenge to Obamacare, King v. Burwell, which challenged whether federal subsidies were available in states that refused to set up their own health-insurances exchanges. In short: the plaintiffs advanced a rather hyper-textualist reading of the law, and hyper-textualist arguments almost never win if there is any decent pragmatic argument to the contrary.

And that's the best reading, in my view, of Chief Justice Roberts's opinion for the Court today. Deep down he and Kennedy sensed it would be unjust to be hyper-technical in this case, and they were able to find enough rhetorical cover to justify a departure from the "plain meaning" of the statutory text. So they did.

Justice Scalia's dissent, however, is fairly powerful on its own terms—even if it is characteristically overcooked. He has a compelling response to each of Roberts's dodges. Based on the text of the statute alone, even when viewed in context, and even taking some account for the apparent "purpose" of the legislation, the argument for the plaintiffs in King is compelling on purely interpretive grounds.

But what struck me as I read his dissent was its complete lack of pragmatism. This is no accident: Scalia is not a pragmatist -- that's Justice Breyer's gig, and it is anathema to Scalia. But ultimately Scalia's defense of his interpretive method relies on a core principle of judicial restraint: that it is Congress's job to legislate, and the judicial power does not include the power to save badly drafted legislation. That's all well and good, but when the practical effect of such restraint would be to more or less undo landmark legislation, it makes the principle itself seem suspect, even monstrous. It's strange that judicial restraint would be the principle that undermines what many consider Congress's most momentous achievement of this century.

In any event, one thing to get off my chest: the usual suspects (whom I will not name) pegged this challenge as frivolous or cynical. This grates me to no end. I urge you to forever ignore any person who advanced that argument, as they are hacks and shills. As one example, many commentators advanced the argument that this challenge was frivolous because at the very least the statute had enough ambiguity to invoke Chevron deference, which is the doctrine that courts should defer to expert agency interpretations of ambiguous statutes.

Not a single justice bought that argument. Both the Roberts opinion and the Scalia dissent rejected it without reservation. No one concurred to say, "Hey, Chevron!" So this argument that commentators said rendered the King challenge frivolous lost nine to zip at the Supreme Court.

And finally, Justice Scalia ends his dissent with a pretty great little joke:

Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare. 

I absolutely guarantee that at some point in the drafting process the punchline of this joke was ROBERTScare.

The secret principle behind all statutory and constitutional interpretation

We haven't yet discussed the latest legal challenge to Obamacare, which is now in the news thanks to conflicting decisions issued by the DC Circuit and the 4th Circuit on the same day last week.

The issue is that the Obamacare statute says that certain tax credits are available to people who enroll for health insurance on exchanges "established by the State." The act defines "State" to mean a state or territory of the United States, so this raises the question of whether the tax credits are available to people who enrolled on an exchange established not by a state but by the federal government. This is a live issue because many states have not established exchanges, so the federal government has stepped in as a backstop, and the IRS has issued regulations permitting the tax credits for people who enrolled on those federal exchanges.

The court decisions have mostly fallen down along party lines, as has the underlying commentary. Republican judges have found the language of the statute to be unambiguous: the tax credits are authorized only for people who enrolled in exchanges "established by the State" and not by the federal government. Whether or not this was what was "intended" by Congress, there's no real ambiguity in the statute, so it must be applied as written. Besides, this kind of carrot-and-stick federalism is not unheard of—the federal government often puts conditions on its statutes to encourage states to act—so the result is not absurd.

Democratic judges have found plenty of ambiguity in the statute when viewed as a whole, and believe the result—denying affordable health insurance to millions based on a poorly drafted statute—is absurd and clearly contravenes the intent of Congress and the purpose of the Act.

This suspiciously partisan split over the meaning of words has led to some consternation and cynicism. For example, liberal blogger Matt Yglesias:

The deep nature of the division is illustrated by the suspicious way in which legal opinions and policy preferences are lining up on this issue. Essentially everyone who believes the Affordable Care Act was an important step toward securing social justice also agrees that it would be absurd to construe the statute in a manner that’s plainly inconsistent with congress’ goals. And essentially everyone who believes it’s crucially important to give the crucial sentence the most straightforward possible reading rather than defer to the IRS’ efforts to make sense of the law as a whole, also believes that the law is a scandalous boondoggle.

Libertarianish economist Scott Sumner agrees, and goes further:

It’s an embarrassment that the two sides of the debate line up so predictably on a narrow technical issue. It says that intellectuals cannot be trusted to argue in good faith.

That's a bold statement. Can the principles of the Enlightenment be saved from this pit of cynicism and contempt?

I think so. Here's the secret principle behind all good faith legal decision making, including all statutory and constitutional interpretation—a principle that is deeply held by all public intellectuals and by all honest legal scholars, judges and justices of left, right, and center:

Do justice.

Well, okay, you say, but that's a pointless abstraction. Not so. It is the saving grace girding our legal system. Once you realize that people of good faith have profoundly held but deeply opposed conceptions of how to do justice, most of the world's seeming hypocrisy melts away.

Let's take Matt Yglesias, for example. In his post on the new Obamacare challenges, he starts out by stating how frivolous he thinks this legal challenge is:

I'm no lawyer, but from the first time I heard it the theory advanced by the plaintiffs in the Halbig case has struck me as laughably far-fetched and as best I can tell most objective legal observers agree that they are unlikely to prevail.

Reader(s)™ may remember, however, that Yglesias was one of the major proponents of the Trillion Dollar Platinum Coin. In that case, he applied a hyper-textualist reading to the coinage statute to find that it allowed minting of platinum coins of any denomination whatsoever. Now, however, he finds the same analysis (hypertextualism) to be laughably far-fetched. How can these positions possibly be reconciled? Isn't Yglesias just a hypocrite?

Not at all. The cases can easily be reconciled as long as you treat hyper-textualism as a tool to do justice rather than something to be achieved for its own case. In the Platinum Coin case, Yglesias was seduced by hyper-textualism because it provided an opportunity to do what he thought was just: to fund the federal government over what he thought was an insane and probably unconstitutional obstructionism by Republicans. In the new Obamacare case, however, hyper-textualism does a terrible injustice by undoing Obamacare.

There's a common principle here, that everyone can agree with: it is right, proper, and moral to use every tool at one's disposal to do justice. And this makes perfect sense of the partisan judicial split. Republicans are happy to apply a hyper-textualist interpretation of the Obamacare act because they don't think it's a just law—or at least, they don't think undoing it would lead to any profound injustice. Indeed, they probably see it as poetic justice that the law would be undone on a technicality, given the unusual and rushed procedures used to get it passed. Democrats, on the other hand, see the hyper-textualist interpretation as leading to so much injustice as to be practically absurd.

Descriptively speaking, I think there's really an underlying ur-canon of statutory interpretation: apply the plain text unless it seems really unfair or unjust. That's what both the Republican and Democratic judges are actually doing in this Obamacare case, and that's what most judges do most of the time. I don't have a problem with that, and you shouldn't either.

Greenhouse Gases and the Platinum Coin

The Supreme Court issued another statutory interpretation opinion today in UARG v. EPA. Justice Scalia took the opportunity to torpedo the ridiculous argument that the U.S. Treasury has authority to mint a one-trillion dollar platinum coin. Well, not in so many words, but for all practical purposes he did.

The background is pretty interesting. In 2007, the Court ratified the EPA's power under the Clean Air Act to regulate greenhouse gases as an "air pollutant" in the context of motor vehicles. But this created a bit of problem in another section of the Clean Air Act, which requires the EPA to regulate, by issuing permits, for major "stationary" emitters of "any air pollutant." The statute defines major permitters as those emitting more than 250 tons of an air pollutant in a year.

The problem is that tens of thousands of buildings, schools, malls, etc, emit that much in greenhouse gases, and thus would need to be permitted if that section applied. Everyone agreed that was not intended. To avoid that absurd result, the EPA issued a regulation setting a different, much higher, threshold for the emission of greenhouse gases (between 50,000 and 100,000 tons, depending on the circumstances).

Today, the Court struck down those regulations, finding that "air pollutant" in the context of the stationary emitters means something different than what it meant in the context of the Act-wide definition applicable in the motor vehicle case. Based on context, and prior regulations, the Court held that "air pollutant" means something much narrower in the relevant section of the act, since the broader definition would render it ridiculous. Justice Scalia had no problem finding the same term to mean different things in different parts of the same statute: "the presumption of consistent usage readily yields to context, and a statutory term—even one defined in the statute—may take on distinct characters from association with distinct statutory objects calling for different implementation strategies."

So the Court found that nothing in the statute compelled the EPA to treat greenhouse gases as "air pollutants" in this context. Next, it considered whether the EPA's interpretation that it was even allowed to regulate the stationary emitters because of their greenhouse gas emissions. Justice Scalia said no, for a variety of reasons. Most interesting me, though, was this:

EPA's interpretation is also unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization. When an agency claims to discover in a long-extant statute an unheralded power to regulate "a significant portion of the American economy," we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance."... [I]t would be patently unreasonable—not to say outrageous—for EPA to insist on seizing expansive power that it admits the statute is not designed to to grant.

Now, maybe it's just me, but I think Justice Scalia actually might have been thinking of the ridiculous argument for the trillion-dollar platinum coin here. Substitute "Treasury" for "EPA" and that is exactly what you'd see in any opinion considering the minting of a trillion-dollar platinum coin. There is no credible argument that Congress intended for the platinum coin statute to grant Treasury the last say on the nation's fiscal and monetary policies. It would be absolutely outrageous if Treasury pretended that it had such power.

Overall, this is another lesson in the vagaries of statutory interpretation.  Just like "air pollutant" doesn't always means "air pollutant," the phrase "such denominations as the Secretary may prescribe" doesn't actually include a denomination with 12 zeros before the decimal point.

(By the way, this decision is not the end of the world. The Court held that the EPA had discretion to regulation the greenhouse gas emissions of those stationary emitters who were otherwise under the EPA's thumb based on their emissions of the narrower kind of "air pollutants." This gave the EPA pretty much every thing it wanted—despite the tweets of certain hacks to the contrary.)

This is Part 9 in The Gillette-Torvik Blog's 94-Part Series on the Trillion Dollar Platinum Coin idea

Chemical Weapons and the Platinum Coin

Reader(s)™ have lodged many complaints against the blog over the years, but the most recent complaints have been:

• Mr. Torvik seems to have gone AWOL; and
• Specifically, Mr. Torvik appears to have abandoned his promised 94-part series on the Trillion Dollar Platinum Coin.

All I can say, dear Reader(s)™, is that I hear you, and I am doing my best. To wit, today I give you Part 8 in the platinum coin series.

The impetus for today's post is the Supreme Court's decision in Bond v. United States. The facts are simple: British secret agent James Bond went rogue and stole a large cache of chemical weapons from Saddam Hussein in 2002 (yes, that's where they went). Over the next several years, he sold the chemicals to terrorists on the black market, eventually amassing enough money to purchase nearly 60% of all platinum known to exist. Then he attempted to use that platinum to create a one-trillion-dollar coin, which he intended to gift to the United States treasury, thus solving all our fiscal problems. It was kind of a Robin Hood thing. Yesterday, the Supreme Court put the kibosh on the whole scheme.

The Importance of Interpretation

This is part three in my planned 94-part series on the $1 Trillion Platinum Coin, which clever people continue to peddle feverishly and foolishly.

The basic argument in favor of the legality of the Platinum Coin is, "Hey, the statute says what it says. Sure, it's a stupid loophole, but we take the law as we find it." In other words, it's hyper-technical literalism—strict constructionism—a way of interpreting texts that even Justice Scalia denounces.

But it's also self-defeating because if you give a hyper-literal reading to the relevant statute (31 U.S.C. 5112) you'll see that it is self-contradictory. That is, it contains irreconcilable provisions.

Section 5112(a) says: "The Secretary of the Treasury may mint and issue only the following coins" and then goes on to specify just twelve specific coins of specific denomination. By its terms, § 5112(a) prohibits the minting of any other coins. Since the trillion dollar platinum coin is not among the enumerated coins, the Secretary of the Treasury may not mint or issue it. "Hey, just read the statute, idiot!"

But wait! Section 5112(k) says "The Secretary may mint and issue platinum bullion coins and proof platinum coins." So, under subsection (k), the Secretary can mint a coin that subsection (a) clearly prohibits. DOES NOT COMPUTE!

Even worse, there is the embarrassment of § 5112(e), which authorizes the minting of silver dollars. That provision, however, is reconcilable with subsection (a) because it explicitly begins with a magical phrase: "Notwithstanding any other provision of law, the Secretary shall mint and issue . . . [silver dollars]." Subsection (k), the platinum-coin section, lacks the magic words. It just contradicts without excuse.

The provisions are irreconcilable—what Congress literally gives with subsection (k), it literally takes away with subsection (a). What can we do???

Well, we interpret the statute as a whole, of course. Turns out, there's a basic canon of interpretation that governs when two parts of statute are irreconcilable: the general/specific canon. This is the interpretive rule that, if two provisions are irreconcilable, the specific provision wins out over the more general provision. So if the question is whether the Secretary of Treasury may mint a platinum coin, you have two applicable provisions: (1) the general provision that the Secretary may mint only 12 kinds of coins, none of which are platinum; and (2) the specific provision that says the Secretary may indeed mint a platinum coin. The rule is that the specific provision wins. THE PLATINUM COIN LIVES!

Now, this may seem like common sense. And it is. But remember: people are talking about the minting of a trillion dollar coin. So I am going back to first principles. Today's lesson: to give a statute its fair meaning, you have to read all of it, and you almost always have to interpret it. If you read just ten or twenty words and apply no judgment, you'll almost never actually know what the law is.

Keeping those basic concepts in mind, ask yourself a question: given that the specified denominations in § 5112 range from one cent to $50, does a fair reading of subsection (k) give the Secretary of Treasury "discretion" to mint and issue $1 trillion coins? Or would that be an abuse of the discretion delegated by Congress?

New year, new taxes, and an exercise in statutory interpretation

The Senate has passed a bill to avert / delay the so-called Fiscal Cliff. The bill's main feature is to make "permanent" most of President Bush's 2001 tax cuts, except that it creates a new 39.6% tax bracket starting at $400,000 for individuals and $450,000 for married couples filing jointly.

This morning I read a report that the bill included a radical provision that would impose a uniform (rather than marginal) tax rate of 35% on all the income of high-earners:

Finally, rather than (or in addition to) simply slapping the old Clinton 39.6% top tax rate on incomes above $450,000 for joint filers, the economist David Malpass of Encima Global reports that "For incomes above $450,000, the bill also appears to take away the lower tax brackets, applying a 35% rate to all income up through $450,000." New Yorkers know this as a "benefits recapture" provision, and if Mr. Malpass is correct that it's there, it's not pretty.

There was no link to Mr. Malpass's report or how he came to this conclusion, so I went to the text of the bill itself, which I've embedded here for your reading pleasure:

Mat 12564

The relevant provisions start at the bottom of page 6 of the document (line 22, specifically) where the 35% bracket is defined. It says:

(i) the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer's taxable income in the highest rate bracket shall be 35 percent to the extent such income does not exceed an amount equal to the excess of—(I) the applicable threshold, over (II) the dollar amount at which such bracket begins, and

(ii) the 39.6 percent rate of tax under such subsections shall apply only to the taxpayer's taxable income in such bracket in excess of the amount to which clause (i) applies.

Let's break this down. First, clause (i) applies to the rate of tax in the "highest rate bracket" under "subsections (a), (b), (c), and (d)." To what does this refer? It's not super clear, but in fact this is a reference to subsections (a)-(d) of 26 U.S.C. §1. These subsections define, respectively, the different tax brackets for: (a) married individuals filing joint returns; (b) head of household filers; (c) unmarried individual filers; and (d) married individuals filing separately.

To cut to the chase, the bill says that for each of these classes of filers, the tax rate shall be 35% for the income between the dollar amount at which "the highest rate bracket" begins and the dollar amount defined as "the applicable threshold." To understand this, let's look at  at 26 U.S.C. § 1(a) as currently drafted:

If taxable income is:	The tax is:
Not over $36,900	15% of taxable income.
Over $36,900 but not over $89,150	$5,535, plus 28% of the excess over $36,900.
Over $89,150 but not over $140,000	$20,165, plus 31% of the excess over $89,150.
Over $140,000 but not over $250,000	$35,928.50, plus 36% of the excess over $140,000.
Over $250,000	$75,528.50, plus 39.6% of the excess over $250,000.

For married couples filing jointly, the "applicable threshold" is $450,000 (see page 8, lines 1-2 in text above). Under 26 U.S.C. §1(a), the "highest rate bracket" begins at $250,000. Thus, the 35% rate bracket applies to income above $250,000 (that is "income in the highest rate bracket") as long as it does not exceed "the applicable threshold" ($450,000) minus "the dollar amount at which [the highest rate bracket] begins" ($250,000). In other words, a 35% tax applies to the $200,000 in income earned between $250,000 and $450,000. Then the 39.6% bracket applies to income above $450,000 under clause (ii).

Simple!

In conclusion, the economist Mr. Malpass seems to be mistaken.

Bryan Garner and Justice Scalia are getting the band back together

Continuing their interesting collaboration, legal writing guru Bryan Garner and United States Supreme Court justice Antonin Scalia have a new book coming out. It is entitled, "Reading Law: The Interpretation of Legal Texts," and it appears to be addressed to judicial readers. Their previous collaboration, "Making Your Case," was aimed at litigators.

Tony Mauro of the National Law Journal has the scoop, including this tidbit:

Scalia himself has been accused of saying he is bound by the text of a statute or constitutional provision – and then ruling according to his personal preferences anyway. "That is a false charge," Garner said Thursday, adding that Scalia is probably "the most consistent and principled" justice in terms of following the text wherever it leads him. 

In the preface, Scalia and Garner address that point. "If pure textualism were actually a technique for achieving ideological ends, your authors would be counted extraordinarily inept at it." Describing himself as a "confessed law-and-order social conservative," Scalia said textualism has led him to seemingly liberal positions on criminal sentencing, confronting witnesses, punitive damages and the constitutionality of bans on burning the American flag. For his part, Garner said he is pro-choice and supports same-sex marriage, but "finds nothing in the text of the Constitution that mandates these policies."

Justice Thomas stands up for the little guy

Recently, the Supreme Court decided the case of Pacific v. Valladolid.  It is a decidedly unsexy case, and its ruling did not provoke any headlines in the New York Times. The unsexy issue: whether the Longshore and Harbor Worker's Compensation Act extends to an employee who died on land rather than at sea, if the death had a "substantial nexus" to his work at sea. According to the Supreme Court, it does.

Why is this bloggable?

First, the opinion was unanimous.  There was no ideological split, though Alito and Scalia did file a separate opinion concurring in part and concurring in the judgment.

Second, the case came up from the Ninth Circuit, which the Supreme Court famously likes to smack down.  And the Ninth Circuit's opinion was in conflict with two other circuits which had decided the issue, so it may have seemed ripe for a smackin'.

Third, the losing party in this case was Big Oil, which (along with all other big businesses) the Supreme Court supposedly kowtows to.

Fourth, the majority opinion, written by Justice Thomas, uses textual analysis to reach a result that favors the little guy—in this case a manual laborer whose job was known in the trade as a "roustabout."  This would seem to refute the argument that textualism is just a smokescreen that judges use to get the results that they subjectively prefer.  (For another example, see this prior post.)

In other words, this case should make you question your cynicism.

The Pitfalls of Style

Occasionally, statutes or codes go through a process of "stylistic revision." The intent is a noble one. Laws are often confusingly or archaically drafted, or both, leaving them sometimes incomprehensible even to trained lawyers. Since the lay public is presumed to know what the law is, laws should be drafted in a way that even the average person can understand them. Stylistic revisions further that goal.

But sometimes laws are hard to understand because they are just complicated, and stylistic revisions can, in an effort to simplify the prose, unintentionally change their meaning—and thus the law!

Scalia stands up for the little guy

Today the Supreme Court decided a statutory interpretation case involving bankruptcy law that turns more or less on the meaning of the word "applicable."  Sexy, sexy stuff.  At the risk of boring our reader(s), let me briefly explain the issue: whether an individual in bankruptcy can deduct from his disposable income—that is, the amount he's presumed to have available to pay creditors -- an amount for the ownership costs of his car, even if he owns his car outright and has no car payments.

In Justice Kagen's first published opinion, the pro-business Roberts Court predictably sided with the creditor—a big, bad credit card company—by interpreting the Bankruptcy Code to more or less incorporate an IRS regulation that makes clear that taxpayers may not take a deduction for ownership costs unless they have car payments to make. 

Only one Justice had the courage to stand up and dissent on behalf of the poor debtor:  Justice Scalia.  He interpreted "applicable" so that simply owning a car would qualify the debtor to deduct the specified amount from his or her disposable income.  To the charge that his interpretation rendered the word "applicable" superfluous, Scalia responded, "The canon against superfluity is not a canon against verbosity."  Just another example of a judge using the canons of statutory interpretation to get his preferred result.

Of course I'm being facetious.  I don't think this is evidence that Scalia cares about the little guy, particularly, or that either he or Kagen were perverting the canons to get their "preferred result. " But just remember this case the next time you read a story about how the Supreme Court always decides "business cases" in favor of businesses.  I posit that most of them are just like this one—statutory interpretation cases that come down to judicial idiosyncrasy—not judicial ideology.