In 2010, Congress passed the Affordable Care Act (ACA) to expand health care insurance and decrease the cost of healthcare. As a part of the ACA, “exchanges” were created at the state level, or at the federal level if the state declined to create one, so that people could purchase health care coverage. Additionally, people were required to obtain a minimum level of coverage or pay a tax penalty unless they qualified for an unaffordability exemption. To decrease the number of people that qualified for this exemption, the ACA provided tax credits. However, the language of the ACA only referred to the exchanges established by the states. In response, the Internal Revenue Service (IRS) made the tax credits available to people enrolled in federal exchanges as well.
The state of Virginia declined to establish a state-run exchange. Consequently, a group of residents who, without the tax credits, would have qualified for an exemption, sued the IRS and argued that its creation of federal exchange tax credits exceeded the agency’s authority.
The Supreme Court ruled 6-3 in favor of the IRS, claiming that while Congress did not delegate the authority to determine if tax credits are available at both the state and federal level to the Internal Revenue Service, the language of the Act clearly indicated that Congress intended the tax credits to be available through both exchanges.
When creating the Clean Power Plan, the EPA used the decision in King v. Burwell to justify their regulation of carbon dioxide emissions from existing power plants. In the 1990 Amendments to the Clean Air Act, there are House and Senate versions of an amendment to Section 111(d). In the House version, the EPA is not allowed to cite the section to cover carbon dioxide emissions from existing plants. Meanwhile, in the Senate version, it is. Given the authority the IRS was granted in King v. Burwell, the EPA inferred that they had judicial deference in interpreting the amendments and used the Senate version to develop the CPP. Under the major questions doctrine, this inferred deference did not hold up.