Which Avoidance Holding in King v. Burwell?

In Wednesday’s oral arguments, Justice Kennedy seemed highly tempted by a constitutional avoidance argument in King v. Burwell. Although Kennedy’s questions provide some optimism for the government, they have also caused some confusion and consternation. The confusion arises because three different amicus briefs presented constitutionally-motivated arguments (including one that I wrote), and it wasn’t totally clear which argument Justice Kennedy was pursuing. The consternation arises, particularly among liberal commentators, because they worry about a holding that centers on constitutional problems. The biggest concern seems to be that an avoidance holding in King would set dangerous precedent for federalism’s future.

Here, I’ll address the confusion. (In a second, I’ll address the consternation.) On the confusion: I’m entirely sure that Justice Kennedy’s questions arose from the JALSA brief rather than the other two. Here’s why.

These are the three constitutionally-motivated amici briefs filed in King: one by 22 states, one by five law professors, and one by JALSA. I authored the JALSA brief (under Andy Fischer’s supervision and with lots of help).

The states’ brief argues, based on the Pennhurst doctrine, that the federal government may not attach conditions to federal funds unless the conditions are unmistakably clear. The states argue that Obamacare, if the petitioners’ interpretation is right, gave them insufficient notice that their citizens’ subsidies were contingent on the states’ exchange establishment choices. They urge the Court to adopt the government’s interpretation in order to avoid the constitutional difficulty that would arise from insufficient notice.

The law professors’ brief argues, based on Gregory and Bond, that statutes should not be interpreted to alter fundamentally the federal-state balance; they should be interpreted consistently with prevailing notions of federalism. The professors argue further that, traditionally, the feds use one of two strategies to encourage state implementation of federal policies: conditional spending or conditional preemption. The plaintiffs’ interpretation of Obamacare, however, combines these two strategies, creating a chimera of cooperative federalism that is fundamentally different from the traditional federal-state relationship.

The JALSA brief argues, based on NFIB and Shelby County, that the plaintiffs’ interpretation would be unconstitutional under the anti-coercion doctrine and under the fundamental principle of equal sovereignty. Most relevantly, given Justice Kennedy’s questions, the brief argues that the plaintiffs’ interpretation gives rise to a novel kind of regulatory threat—something very different from the standard fiscal threat of taking money away from non-compliant states. Under the petitioners’ interpretation, Obamacare says to the states: “Establish an exchange, or the federal government will enforce within your borders a subset of regulations that’s purposefully designed to destroy health insurance markets in your state.” That regulatory threat—as distinct from the fiscal threat of taking away subsidies—is plausibly unconstitutional under NFIB. And under the canon of constitutional avoidance, the Court typically disfavors statutory interpretations that might render Congress’s work unconstitutional.

Of those three arguments, the third is the one that ignited Kennedy. It was clear from the questions he asked that Kennedy was focused on coercion, not clear notice or traditional federalism; he consistently referred to “coercion” or “anti-coercion” in his questions. Even more tellingly, when Justices Sotomayor, Kennedy, and Ginsburg were first pushing plaintiffs’ attorney Michael Carvin on the constitutionality of his interpretation, Carvin’s initial response was that, if plaintiffs’ interpretation is unconstitutional, then all of the many fiscal threats in existing cooperative federalism schemes are also unconstitutional. But Justice Ginsburg jumped in immediately, saying, “But this is quite different,” and Justice Kennedy followed up right after that with a hypothetical lifted straight from pages 27-28 of the JALSA brief: “In South [Dakota] v. Dole, where the matter of funding for the highway, suppose Congress said, and if you don’t build the highways, you would have to go 35 miles an hour all over the State.” That’s the hypothetical case that I used to sharpen the distinction between fiscal and regulatory threats and to pose the difficulties that would arise in assessing the constitutionality of such regulatory threats. Justice Kennedy continued, “We wouldn’t allow that.”

From that exchange, it’s pretty clear that Kennedy was focused on the potential unconstitutionality of regulatory threats, not the potential unconstitutionality of ambiguous notice or chimeric cooperative federalism. (Note that the liberal justices asked lots of Pennhurst and Bond questions, too. Only Kennedy focused exclusively on coercion.) From what I could tell, Kennedy seemed sufficiently worried about that constitutional problem to vote for the government, which (as I will explain in another post) is good news for the government.

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