Amicus Curiae Brief — King v. Burwell, 135 S. Ct. 475 (2014) (No. 14-114)

[Supreme Coun, US”

FILED

No. 14-114 SEP 3- 20%

— T OFFICE TF THE CLERK

In the

Supreme Court of the Anited States

DAVID KING, ET AL.,

Petitioners,

Vv.

SYLVIA BURWELL, SECRETARY OF

HEALTH AND HUMAN SERVICES, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Fourth Circuit

BRIEF OF AMICI CURIAE SENATORS

JOHN CORNYN, TED CRUZ, ORRIN HATCH,

ROB PORTMAN AND MARCO RUBIO;

AND REPRESENTATIVES DAVE CAMP AND

DARRELL ISSA IN SUPPORT OF PETITIONERS

MICHAEL E. ROSMAN CHARLES J. COOPER

CENTER FOR INDIVIDUAL Counsel of Record

RIGHTS DAVID H. THOMPSON

1233 20th Street, N.W. HOWARD C. NIELSON, JR.

Suite 300 PETER A. PATTERSON

Washington, D.C. 20036 COOPER & KIRK, PLLC

1523 New Hampshire

CARRIE SEVERINO Avenue, N.W.

THE JUDICIAL EDUCATION Washington, D.C. 20036

PROJECT (202) 220-9600

722 12th Street, N.W. ccooper@cooperkirk.com

Fourth Floor

Washington, D.C. 20005

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

ty 0 gy | > ll

INTEREST OF AMICI CURIAE. .......0000000000.000.... 1

SUMMARY OF ARGUMENT..........................00 2

atte ciisiahassininibiniipntssteberessesvesssorstseneveve 4

I. Congress Has Not Granted the IRS Any

Authority To Extend Premium Subsidies

to Health Plans Offered Through an Ex-

change Established by the Federal Gov-

NE t tdi intemamsinidehindsidtneseisoncereccseusssenvesce 4

II. This Court Should Grant Certiorari To En-

sure that the Executive Branch’s Imple-

mentation of the ACA Accords with Con-

gress’s Clear Instructions. .................-.000+0+. 8

i Deas dauiciveananesuevenonessecesonecsasssesnes 19

il

TABLE OF AUTHORITIES

Page

CASES

Artuz v. Bennett,

en aaeepenieneanied 17

Barnhart v. Sigmon Coal Co.,

534 U.S. 438 (2002) .............. ssabiinsadneaicanteiasian ade ambaneE 17

Bartlett ex rel. Neuman v. Bowen,

Be We RO GG. Ga, Bi ivccncccccvnvcecccesvscennscavee 9

Bond v. United States,

4} ke ®t” Bee oe 9

Bowsher v. Synar,

Ee SE URANO aan 10

Chevron, U.S.A., Inc. v.

National Res. Def. Council, Inc.,

fF og Ut ee 4

Clinton v. City of New York,

Bate BEG I erikntocnisstevecvesunsavevbaseasessouens 10, 11

FDA v. Brown & Williamson Tobacco Corp.,

ot BD RS ene 14, 18

Halbig v. Burwell,

-- F.3d --, 2014 WL 3579745

(D.C. Cir. July 22, 2014)........... ere ecereans 3, 5, 7,8

Hollingsworth v. Perry,

es i ek, SE I connec aus ccoseunegeasdansouseteuml 6

NLRB v. Noel Canning,

I i I CIO siccareitecatenmscnasateccsepnnesccnenssonans 10

Office of Pers. Mgmt. v. Richmond,

Oe ey ee RIE ececdeentncceasdtprocainnsanicosadvniedenntam 12

TABLE OF AUTHORITIES — Continued

Page

Printz v. United States,

I a 6

United States v. Locke,

i 16

United States v. Standard Oil Co. ot Cal.,

I 11

Utility Air Regulatory Grp. v. EPA,

Oe en I 11

Youngstown Sheet & Tube Co. v. Sawyer.

ne MEAS 10

CONSTITUTIONAL AND LEGISLATIVE MATERIALS,

STATUTES, AND RULES

Ry Gime et NE LEN POS A tee ee 11

SG Bo 0 RS AUS ee el oe eR Oa als q

Be eae bctlccsaittucctactenisenedisdedceecthadenneniets passim

EAE Ta al REIS a 4,5

ee ee ED Sineadsecndenacsvisedccnteristiiesnince 7,8

re 6 a oc 5, 7, 8

ale IED isveitieseduascnsdnctsecetceniinpistivessts 6,7

Ne ee se re I wiki licnishesguieacmacovonneecemiemeaidens 12

USO COND eo 7,8

en RB BEET 8 At aS oe 10

Br is I I hiss eh cvionsnnemmsodstenpucbcarnabsncseentconcatabio 10

1V

TABLE OF AUTHORITIES — Continued

Page

Bs rs a NIE c:cecesonictici-coitiaisianbennsiascnaababasichosennetobeetlciail 9

A eS a | eee tp Bot EE SES AAR Bt Ie 9

Be ke” EEA UAE pee EA Re ad l

Sy ee tilis iiaticacirttndanndacinieisacinenntebidenmanndsnnseleiabtenstan 1

OTHER

2 JOSEPH STORY, COMMENTARIES ON THE CONSTI.

TUTION OF THE UNITED STATES

I eel 11, 12

7 THE WORKS OF ALEXANDER HAMILTON

Cees C). TID GG, DEED ccksicvtcccascsssecnscssncsseens 11

Adam J. White, No Need for a Halbig Rehearing,

WALL STREE: JOURNAL (Aug. 4, 2014, 7:45 PM),

I aii ind dicnsnnnsvcinnandeveniitnisiiaeininncn g

AMY BURKE ET AL., PREMIUM AFFORDABILITY,

COMPETITION, AND CHOICE IN THE HEALTH IN.

SURANCE MARKETPLACE, 2014 (ASPE Research

Brief) (June 18, 2014), http://goo.gl/e9zgzh .......... 12

ASPE, HEALTH INSURANCE MARKETPLACE: SUM-

MARY ENROLLMENT REPORT FOR THE INITIAL AN.

NUAL OPEN ENROLLMENT PERIOD (May 1, 2014),

Re ING OO vsssiccnncessenccecenssccsccenss RS RESS 14

Carrie Budoff Brown, Nelson: National Ex-

change a Dealbreaker, POLITICO (Jan. 25,

2010, 7:59 PM), http://goo.gl/BloeHy .................... 17

Vv

TABLE OF AUTHORITIES — Continued

Page

CBO, THE LONG-TERM BUDGET OUTLOOK

(July 2014), http://goo.gl/VaiPNw ...................0000. 14

CBO, UPDATED ESTIMATES OF THE EFFECTS OF

THE INSURANCE COVERAGE PROVISIONS OF THE

AFFORDABLE CARE ACT, APRIL 2014,

I a saedeaeeainnins 13

Douglas H. Ginsburg, The Behavior of Federal

Judges: A View from the D.C. Circuit,

A I ee Cie iecsccccctnconicécvecsconninexssscnnses 9

Interview with United States Senator Ben Nel-

son by LifeSiteNews.com (Jan. 26, 2010),

IPE UF oniscnnccusiniarsceciasadnscenvassdgunindanccave 17

John F. Manning, The Absurdity Doctrine,

116 HARV. L. REV. 2387 (2003).......................- 17, 18

Joint Staff Report of the House Committee on

Oversight and Government Reform and the

House Committee on Ways and Means, Admin-

istration Conducted Inadequate Review of Key

Issues Prior to Expanding Health Law’s Taxes

and Subsidies (Feb. 5, 2014),

ie ies ckesscnseadiccscoticciavicvemsapvaensbtcsnianss 2

United States Senator Ted Cruz, The Legal

Limit: The Obama Administration's Attempts

To Expand Federal Power ~ Report No. 2, The

Administration’s Lawless Acts on Obamacare

and Continued Court Challenges to Obamacare

(Dec. 9, 2013), http://goo.gl/BX5oer.................... 3, 11

1

INTEREST OF AMICI CURIAE!

Senator John Cornyn is the Senate Minority

Whip. Senator Ted Cruz is the Ranking Member of the

Senate Judiciary Subcommittee on the Constitution,

Civil Rights and Human Rights. Senator Orrin Hatch

is the Ranking Member of the Senate Finance Com-

mittee. Senator Rob Portman is the Ranking Member

of the Senate Finance Subcommittee on Fiscal Re-

sponsibility and Economic Growth. Senator Marco

Rubio is the Ranking Member of the Senate Foreign

Relations Subcommittee on East Asian and Pacific Af-

fairs. Representative Dave Camp is the Chairman of

the House Ways and Means Committee. Representa-

tive Darrell Issa is the Chairman of the House Over-

sight and Government Reform Committee.

As elected representatives, amici have a power-

ful interest in protecting the liberty of their millions

of constituents. Amici have taken a strong interest in

the implementing regulations of the Patient Protec-

tion and Affordable Care Act (“ACA”) in general and

the regulation at issue in this case in particular. Two

amici were members of the Senate Republican caucus

that originally united against the passage of the ACA

and remain outspoken critics of the Administration's

usurpation of congressional authority, including with

respect to the ACA. Another amicus, the Ranking

Member of the Senate Judiciary Subcommittee on the

1 Pursuant to SuP. CT. R. 37.2(a), amici certify that coun-

sel of record received timely notice of the intent to file this brief

and granted consent. Pursuant to SuP. CT. R. 37.6, amici certify

that no counsel for any party authored this brief in whole or in

part, no party or party’s counsel made a monetary contribution

to fund its preparation or submission, and no person other than

amici or its counsel made such a monetary contribution.

2

Constitution, Civil Rights and Human Rights, re-

leased a report that outlines the current Presidential

Administration’s repeated attempts to ignore the

ACA'’s statutory text, including by adopting the inter-

pretation at issue in this case. See United States Sen-

ator Ted Cruz, The Legal Limit: The Obama Admin-

istration’s Attempts To Expand Federal Power — Re-

port No. 2, The Administration’s Lawless Acts on

Obamacare and Continued Court Challenges to

Obamacare (Dec. 9, 2013), http://goo.gl/BX5o0er. Two

amici are the Chairmen of the House Ways and Means

and the House Oversight and Government Reform

Committees, which recently released a joint report

documenting the results of a year-long investigation

that revealed that the IRS failed to seriously grapple

with the plain meaning of section 36B before issuing

its regulation. See Joint Staff Report of the House

Committee on Oversight and Government Reform and

the House Committee on Ways and Means, Admin-

istration Conducted Inadequate Review of Key Issues

Prior to Expanding Health Law’s Taxes and Subsidies

(Feb. 5, 2014), http://goo.gl/5thZ4J.

SUMMARY OF ARGUMENT

The plain text of the ACA reflects a specific

choice by Congress to make health insurance pre-

mium subsidies available only through “an Exchange

established by the State.” 26 U.S.C. § 36B(c)(2)(A)(i).

The IRS has discarded this unambiguous statutory

limitation and made subsidies available on exchanges

established not only by the States, but by the federal

government. The Fourth Circuit upheld this executive

overreach by reading the ACA as providing that the

federal government acts on behalf of a State when es-

tablishing an exchange for that State’s citizens. See

3

Pet.App.18a. But nothing in the statute supports this

interpretation. As the D.C. Circuit has held in reach-

ing a contrary conclusion, “the ACA unambiguously

restricts the section 36B subsidy to insurance pur-

chased on Exchanges ‘established by the State sg

Halbig v. Burwell, -- F.3d --, 2014 WL 3579745, at *1

(D.C. Cir. July 22, 2014).

There are compelling reasons to grant certio-

rari and authoritatively resolve the issue presented by

this case, several of which are of particular im-

portance to amici as members of Congress. First, the

executive branch’s extension of premium subsidies be-

yond State exchanges rewrites the ACA and improp-

erly encroaches upon Congress’s lawmaking function.

Indeed, the IRS’s regulation is just one example of the

Administration’s repeated treatment of the ACA’s di-

rectives as optional rather than binding law. Second,

the executive incursion at issue here has immediate,

immense, and ongoing implications for the public

purse. If the IRS’s regulation is permitted to stand,

projections indicate that it will result in tens of bil-

lions of dollars in unlawful spending over the next

year, and hundreds of billions over the next decade.

Finally, the departure from the statutory text at issue

here is especially improper given the nature of the

compromises that were required in order to pass the

ACA. The executive should not be able to accomplish

through grasping agency rulemaking, and friendly ju-

dicial review, what it could not accomplish in legisla-

tive negotiations.

4

ARGUMENT

I. Congress Has Not Granted the IRS Any

Authority To Extend Premium Subsidies

to Health Plans Offered Through an Ex-

change Established by the Federal Gov-

ernment.

Because our Constitution grants the legislative

power to Congress, the executive and judicial

branches are bound to “give effect to the unambigu-

ously expressed intent of Congress.” Chevron, U.S.A.,

Inc. v. National Res. Def. Council, Inc., 467 U.S. 837,

843 (1984). Thus, when a controversy arises regarding

an executive agency’s construction and implementa-

tion of a statute, the analysis must always begin with

the determination “whether Congress has directly

spoken to the precise question at issue.” Jd. at 842.

And that is also where the analysis must end if Con-

gress has directly spoken to the question, for both the

courts and the agency must yield to Congress’s clear

directives.

The precise question at issue here is whether

individuals who purchase health insurance on an ex-

change established by the federal government may be

eligible for tax credits to offset the cost of their premi-

ums. Congress has directly spoken to this question in

the ACA, and the plain text of the statute unambigu-

ously demonstrates that the answer is no.

The ACA provides that an exchange operating

in any particular State may be established either by

the State itself or by the federal government. As an

initial matter, section 1311 of the ACA provides that

“leJach State shall, not later than January 1, 2014, es-

tablish an Exchange for the State ” 42

5)

U.S.C. § 18031(b). Because Congress does not have

the authority to compel a State to establish an ex-

change, this provision is precatory, not mandatory.

And in the event a State does not accept Congress’s

invitation to establish an exchange, section 1321 of

the ACA directs the Secretary of Health and Human

Services (“HHS”) to “establish and operate such Ex-

change within the State.” Jd. § 18041(c)(1).

In addition to addressing how exchanges are es-

tablished, the ACA also addresses the circumstances

under which individuals purchasing insurance cover-

age from exchanges are eligible for premium subsi-

dies. As relevant here, eligibility for such subsidies is

expressly limited to individuals “covered by a quali-

fied health plan that was enrolled in through an

Exchange established by the State under section 1311

” 26 U.S.C. § 36B(c)(2)(A)G) (emphasis added).

The plain text of the ACA thus demonstrates (a)

that an exchange may be established either by a State

or by the federal government, and (b) that premium

subsidies are available only for plans enrolled in

through an exchange established by a State. Because

“the ACA unambiguously restricts the section 36B

subsidy to insurance purchased on Exchanges ‘estab-

lished by the State,’” Halbig, 2014 WL 3579745, at *1,

the IRS’s attempt to extend this subsidy to insurance

purchased on an exchange established by the federal!

government is ultra vires and must be vacated.

While the Fourth Circuit agreed that “a literal

reading of the statute undoubtedly accords more

closely with [petitioners’] position” than with the gov-

ernment’s, Pet.App.18a, it nevertheless strained to

find an ambiguity in the statute’s plain text in order

6

to uphold the challenged IRS regulation. According to

the Fourth Circuit, section 1321 may be read as di-

recting the federal government to establish an ex-

change “on behalf of the state” when the State elects

not to establish an exchange itself. Id. (emphasis

added).

Contrary to the Fourth Circuit’s assertion, it

“makes [no] sense to read § 1321(c)’s directive that

HHS establish ‘such Exchange’ to mean that the fed-

eral government acts on behalf of the state when it

establishes its own Exchange.” Jd. Indeed, the notion

that a State’s refusal to establish an exchange demon-

strates that the State intended to appoint the federal

government to act as its agent to establish an ex-

change on the State’s behalf is difficult to take seri-

ously. Cf. Hollingsworth v. Perry, 133 S. Ct. 2652,

2666-67 (2013). To the contrary, a State that declines

to establish an exchange is perforce electing not to

play any part in the implementation and operation of

an exchange, either directly or through the agency of

the federal government. The federal government, of

course, remains free to establish its own exchange to

serve such a State’s citizens. But surely the federal

government cannot appoint itself to serve as an un-

willing State’s agent to establish an exchange on be-

half of the State. See Printz v. United States, 521 U.S.

898, 935 (1997).

Furthermore, nothing in the ACA supports the

notion that Congress meant to create the legal fiction

that the federal government acts on behalf of a State

when it establishes an exchange. Indeed, Congress

elsewhere expressly provided that a United States

territory that establishes an exchange “shall be

treated as a State” for certain purposes. 42 U.S.C.

7

§ 18043(a)(1). Congress could have used similar lan-

guage if it intended an exchange established by the

federal government to be treated as an exchange es-

tablished by a State, but it did not.

Nor do the statutory provisions cited by the

Fourth Circuit provide support for the notion that

Congress deemed the federal government to be acting

on the State’s behalf when establishing an exchange.

The ACA, to be sure, defines the term “Exchange” to

mean “an American Health Benefit Exchange estab-

lished under section [1311],” 42 U.S.C. § 300gg-

91(d)(21)—1.e., the section inviting States to establish

their own exchanges. And section 1321 directs the fed-

eral government to “establish and operate such Ex-

change within the State” if the State does not. Jd.

§ 18041(c)(1) (emphasis added). But these provisions

at most provide that federal exchanges should be

deemed “Exchanges established under section 1311,”

Halbig, 2014 WL 3579745, at *8; they in no way sug-

gest that federal exchanges are to be deemed to have

been established under section 1311 on behalf of the

State.

The Fourth Circuit also erred in interpreting

section 1311(d)(1)’s directive that “[a]n Exchange

shall be a governmental agency or nonprofit entity

that is established by a State,” 42 U.S.C.

§ 18031(d)(1), as definitional, i.e., as “apparently nar-

rowing the definition of ‘Exchange’ to encompass only

state-created Exchanges.” Pet.App.17a. Section

1311(d)(1) is operational, not definitional. It and “[t}he

other provisions of section 1311(d) are operational re-

quirements, setting forth what Exchanges must (or, in

some cases, may) do. Read in keeping with that theme,

(d)(1) would simply require that an Exchange operate

8

as either a governmental agency or nonprofit entity.”

Halbig, 2014 WL 3579745, at *8 (footnote and citation

omitted). Furthermore, Congress elsewhere expressly

defined the term “Exchange,” see 42 U.S.C. § 300gg-

91(d)(21), making even less plausible the Fourth Cir-

cuit’s interpretation of section 1311(d) as definitional.

See Halbig, 2014 WL 3579745, at *8. Finally, section

1311(d)(1) is directed at the States, and it naturally

requires a State-established exchange to “be a govern-

mental agency or nonprofit entity that is established

by a State.” 42 U.S.C. § 18031(d)(1). Section 1321, by

contrast, is directed at the federal government, and it

requires the federal government to establish and op-

erate an exchange “directly or through agreement

with a not-for-profit entity,” id. § 18041(c)(1); it says

nothing to suggest these activities are to be deemed to

be the actions of a State. In sum, as the D.C. Circuit

concluded, “[t}he premise that (d)(1) is definitional .

does not survive examination of (d)(1)’s context and

the ACA’s structure.” Halbig, 2014 WL 3579745, at

*8. The Fourth Circuit erred by concluding otherwise.

Il. This Court Should Grant Certiorari To

Ensure that the Executive Branch’s Imple-

mentation of the ACA Accords with Con-

gress’s Clear Instructions.

The foregoing demonstrates that the Fourth

Circuit erred in holding that the ACA authorizes the

IRS to extend premium subsidies to health plans of-

fered on an exchange established by the federal gov-

ernment. This Court should grant certiorari to correct

this error.

9

As an initial matter, certiorari should be

granted because the Fourth Circuit “has entered a de-

cision in conflict with the decision of [the D.C. Circuit]

on the same important matter.” SuP. CT. R. 10(a). The

government, to be sure, has filed a petition for en banc

rehearing in Halbig.? But certiorari should be granted

in this case regardless of how the D.C. Circuit rules on

the government's rehearing petition, for the Fourth

Circuit “has decided an important question of federal

law that has not been, but should be, settled by this

Court.” Sup. CT. R. 10(c). And there are compelling

reasons why this Court should settle that question

now, rather than waiting for any further develop-

ments in the courts of appeal. Several of these reasons

are of particular importance to amici as members of

Congress.

1. The Constitution vests Congress with the au-

thority to make laws, and it imposes upon the Presi-

dent the duty to “take Care that the Laws be faithfully

executed.” U.S. ConsT. art. II, § 3. This division of au-

thority is not “merely an end unto itself.” Bond v.

United States, 134 S. Ct. 2077, 2091 (2014). Rather,

2 If past practice is any guide, it is likely that the D.C.

Circuit will deny the government's rehearing request and that

the circuit solit therefore will persist. See Adam J. White, No

Need for a Halbig Rehearing, WALL STREET JOURNAL (Aug. 4,

2014, 7:45 PM), http://goo.gl/RkwMjh (“[I]f the D.C. Circuit re-

hears the case en banc, it would be a sharp break from history”

because “[t]he D.C. Circuit rehears virtually none of its cases.”);

Douglas H. Ginsburg, The Behavior of Federal Judges: A View

from the D.C. Circuit, 97 JUDICATURE 109, 111 (2013) (“The num-

ber of rehearings en banc averaged six per year in the 1980s,

three in the 1990s, and less than one in the first decade since.”

(footnotes omitted)); Bartlett ex rel. Neuman v. Bowen, 824 F.2d

1240, 1242 (D.C. Cir. 1987) (Edwards, J., concurring in the deni-

als of rehearing en banc).

10

“the constitutional structure of our Government is de-

signed first and foremost not to look after the interests

of the respective branches, but to protect individual

liberty.” NLRB v. Noel Canning, 134 S. Ct. 2550, 2593

(2014) (Scalia, J., concurring in the judgment) (brack-

ets and internal quotation marks omitted). In fact,

“[s]o convinced were the Framers that liberty of the

person inheres in structure that at first they did not

consider a Bill of Rights necessary.” Clinton v. City of

New York, 524 U.S. 417, 450 (1998) (Kennedy, J., con-

curring). As relevant here, “the Constitution diffuses

power the better to secure liberty ”" Youngstown

Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635 (1952)

(Jackson, J., concurring). This diffusion of power re-

flects the founding generation’s belief “that checks

and balances were the foundation of a structure of

government that would protect liberty.” Bowsher v.

Synar, 478 U.S. 714, 722 (1986).

The IRS’s decision to extend premium subsidies

to health plans available on exchanges established by

the federal government rewrites the law and en-

croaches on Congress’s constitutional authority.

Again, the ACA restricts premium subsidies to indi-

viduals “covered by a qualified health plan that

was enrolled in through an Exchange established by

the State " 26 U.S.C. 36B(c)(2)(A)Q). The IRS's

regulation, by contrast, makes subsidies available “re-

gardless of whether the Exchange is estab'ished and

operated bya State or by HHS.” 26C.F.R. § 1.36B-

1(k); 45 C.F.R. § 155.20. The executive branch, in

other words, effectively has struck the words “estab-

lished by the State” from section 36B, thus amending

it to read that subsidies are available to individuals

1]

“covered by a qualified health plan that was en-

rolled in through an Exchange estebhshed—by—the

State... ” As this Court emphasized in Clinton v. City

of New York: “There is no provision in the Constitution

that authorizes the President to amend stat-

utes.” 524 U.S. at 438; see also Utility Air Regulatory

Grp. v. EPA, 134 S. Ct. 2427, 2446 (2014) (“The power

of executing the laws does not include a power to

revise clear statutory terms that turn out not to work

in practice.”). And the IRS regulation at issue here is

just one example of the Administration's selective ap-

proach to following the directives of Congress con-

tained in the ACA. See Senator Cruz, The Legal Limit,

http://goo.gl/BX5oer.

2. The Constitution assigns Congress to be “the

custodian of the national purse.” United States v.

Standard Oil Co. of Cal., 332 U.S. 301, 314 (1947).

The Constitution thus establishes that “no money can

be expended, but for an object, to an extent, and out of

a fund, which the laws have prescribed.” 7 THE WORKS

OF ALEXANDER HAMILTON 532 (John C. Hamilton ed.,

1851) (emphases omitted). See U.S. CONST. art. 1, § 9,

cl. 7. Like the separation of powers generally, this

structural provision of the Constitution is intended to

secure liberty.

(I]t is highly proper, that Congress should

possess the power to decide how and when

any money should be applied for [the en-

gagements of the government]. If it were

otherwise, the executive would possess an

unbounded power over the public purse of

the nation; and might apply all its moneyed

resources at his pleasure.

12

2 JOSEPH STORY, COMMENTARIES ON THE CONSTITU.

TION OF THE UNITED STATES § 1348 (3d ed. 1858). The

Constitution thus seeks “to assure that public funds

will be spent according to the letter of the difficult

judgments reached by Congress as to the common

good. ” Office of Pers. Mgmt. v. Richmond, 496 U.S.

414, 428 (1990) (emphases added).

In June of this year, the Office of the Assistant

Secretary for Planning and Evaluation (“ASPE”) of

HHS released a report that provides some insight into

the magnitude of unlawful spending that is occurring

as a result of the IRS regulation at issue here. See AMY

BURKE ET AL., PREMIUM AFFORDABILITY, COMPETITION,

AND CHOICE IN THE HEALTH INSURANCE MARKETPLACE,

2014 (ASPE Research Brief) (June 18, 2014),

http://goo.gl/e9zgzh. HHS reported that more than 5.4

million people enrolled in health plans through ex-

changes established by the federal government during

the initial open enrollment period. Jd. at 3. Of the in-

dividuals who enrolled through a federal exchange,

87% selected a plan with premium tax credits, with an

average tax credit of $264 per month. Jd. at 5. These

figures indicate that the government is spending over

$1.2 billion unlawfully each and every month on pre-

mium subsidies. (5.4 million enrollees < .87 with cred-

its X $264 average credit per month = $1,240,272,000

per month.)

The HHS report, however, understates the fis-

cal effects of the IRS’s regulation, both because the

number of individuals enrolling in plans through ex-

changes is expected to increase and because the report

does not include cost-sharing subsidies available to a

subset of individuals receiving premium subsidies.

See 42 U.S.C. § 18071(f)(2). A recent Congressional

13

Budget Office report helps to fill out the picture. See

CBO, UPDATED ESTIMATES OF THE EFFECTS OF THE IN.

SURANCE COVERAGE PROVISIONS OF THE AFFORDABLE

CARE ACT, APRIL 2014, http://goo.gl/iEeX0b. The CBO

anticipate[s] that coverage through the

exchanges will increase substantially

over time as more people respond to sub-

sidies and to penalties for failure to ob-

tain coverage. Coverage through the ex-

changes is projected to increase to an av-

erage of 13 million people in 2015, 24

million in 2016, and 25 million in each

year between 2017 and 2024. Roughly

three-quarters of those enrollees are ex-

pected to receive exchange subsidies.

Id. at 6.

The cost of these subsidies is expected to be

steep. In fiscal year 2015 alone (beginning October 1,

2014), the CBO projects outlays of $23 billion for pre-

mium subsidies and $7 billion for cost-sharing subsi-

dies, along with a $5 billion reduction in tax revenue

as a result of premium subsidies, for a total budgetary

effect of $35 billion. Jd. at 10 tbl.3. This number in-

creases to $74 billion in 2016, $93 billion in 2017, and

$101 billion in 2018. Jd. All told, outlays and reduc-

tions in revenue from premium tax credits and cost-

sharing subsidies are projected to amount to over

$1 trillion over the next 10 years. Id. These costs are

expected to be a major driver of the federal deficit.

Over the next 10 years, the CBO forecasts that “defi-

cits would become notably larger under current law.

The pressures stemming from an aging population,

rising health care costs, and an expansion of federal

14

subsidies for health insurance would cause spending

for some of the largest federal programs to increase

relative to GDP ” CBO, THE LONG-TERM BUDGET OUT-

LOOK at 1 (July 2014), http://goo.gl/VaiPNw.

The totals described in the previous paragraph

are for all exchanges, not just exchanges established

by the federal government. But if circumstances re-

main as they are today it can be expected that a ma-

jority of these costs will be incurred for plans enrolled

in through federal exchanges. Again, the federal gov-

ernment has established exchanges for 36 of the

States. And HHS’s figures indicate that over two-

thirds of individuals enrolling in health plans through

exchanges have done so through exchanges estab-

lished by the federal government. See ASPE, HEALTH

INSURANCE MARKETPLACE: SUMMARY ENROLLMENT

REPORT FOR THE INITIAL ANNUAL OPEN ENROLLMENT

PERIOD at 4 tbl.1 (May 1, 2014), http://goo.gl/qmr9Ph

(noting approximately 5.4 million federal exchange

enrollees out of approximately 8 million total ex-

change enrollees).

In sum, the IRS’s decision to extend subsidies

to federal] exchanges has serious implications for this

Nation’s finances. It is doubtful that “Congress

[would] have intended to delegate a decision of such

economic and political significance to an agency in so

cryptic a fashion.” FDA v. Brown & Williamson To-

bacco Corp., 529 U.S. 120, 160 (2000). As the text of

the ACA demonstrates, “Congress is more likely to

have focused upon, and answered, major questions”

such as the one at issue here, “while leaving intersti-

tial matters to answer themselves in the course of the

statute’s daily administration.” Jd. at 159 (quoting

15

Stephen Breyer, Judicial Review of Questions of Law

and Policy, 38 ADMIN. L. REV. 363, 370 (1986)).

3. Of course, it is not necessarily the case that

Jong-term federal spending will decrease if the IRS’s

regulation is vacated. States facing the loss of billions

of dollars for their citizens may reconsider their deci-

sions not to establish their own exchanges. But even

if every State were to establish its own exchange, va-

catur of the IRS’s regulation would put to a halt the

massive amount of illegal spending that is occurring

now. And it would also mean that the States, rather

than the federal government, would be in the lead in

establishing exchanges. This plainly is in keeping

with the ACA’s structure, which exhorts States to es-

tablish their own exchanges and directs the federal

government to step in only if States fail to do so. In-

deed, it is doubtful that the ACA could have passed if

Congress expected the vast majority of the States to

take a pass on setting up an exchange. See infra. And

absent practical consequences for States failing to es-

tablish exchanges, it should have been easy to antici-

pate that many States would take a pass.

4. These considerations highlight that a bill as

massive and controversial as the ACA is bound to re-

flect many competing policy considerations and legis-

lative compromises. It is particularly important to

hew closely to the statutory text of such a law rather

than trying to force it to fit any single overarching pol-

icy goal. But here, the Fourth Circuit scoured the Act

in search of an ambiguity on which to justify uphold-

ing the IRS’s regulation because it deemed the regu-

lation as “advanc[ing] the broad policy goals of the

Act.” Pet.App.27a. The concurring opinion went so far

as to suggest that “Congress has mandated in the Act

16

that the IRS provide tax credits to all consumers re-

gardless of whether the Exchange on which they pur-

chased their health insurance coverage is a creature

of the state or the federal bureaucracy,” id. 34a (em-

phasis added), relying on sources such as the New

York Times and the President’s remarks upon signing

the ACA to interpret the law in a manne: purportedly

consistent with “Congress’ central purpose in enacting

the Act,” id. 39a.

The words of a statute, of course, are the best

guide to Congress’s purposes in enacting the statute.

“(Djeference to the supremacy of the Legislature, as

well as recognition that Congressmen typically vote

on the language of a bill, generally requires [the as-

sumption] that the legislative purpose is expressed by

the ordinary meaning of the words used.” United

States v. Locke, 471 U.S. 84, 95 (1985) Gnternal quo-

tation marks omitted). And given the manner in

which the ACA was enacted, it is particularly im-

portant to interpret the words “an Exchange estab-

lished by the State” to mean what they say. The ACA

was the product of contentious political compromise

that any administrative or judicial amendment would

be certain to upset. The relative roles that would be

played under the Act by the States and the federal

government were highly controversial and hotly con-

tested. The ACA’s supporters did not have the votes to

establish a single-payer system or even to take what

many feared to be a significant first step towards such

a system: the establishment of a national exchange

providing federal subsidies to low-income partici-

pants. For example, supporters of healthcare legisla-

tion needed 60 votes in the Senate to overcome a fili-

buster, and because there was not a single vote to

17

spare, compromise within the Democratic caucus was

necessary to ensure passage of any bill. Senator Ben

Nelson, essential to the 60-vote majority, made clear

his objection to a federal exchange, describing it as a

“dealbreaker” because it would “start us down the

road of. .a single-payer plan.” Carrie Budoff Brown,

Nelson: National Exchange a Dealbreaker, POLITICO

(Jan. 25, 2010, 7:59 PM), http://goo.gl//BloeHy. Senator

Nelson was ultimately able to leverage his opposition

to “scrub[ ] dozens of things out of it that federal-

ized the bill.” Interview with United States Senator

Ben Nelson by LifeSiteNews.com (Jan. 26, 2010), see

http://goo.g/2fDY 1J. Like much of the ACA’s drafting,

those changes were made behind closed doors, and it

is not known which amendments were inserted for

what reason. What is known is that the statutory lan-

guage that emerged was the product of lengthy nego-

tiations.

Evidence of such political compromise makes

faithful adherence to the plain meaning of the statu-

tory text especially important, lest the Court undo the

agreement that made the Act’s enactment possible.

“Dissatisfaction. 1s often the cost of legislative com-

promise,” and to ignore a provision’s “delicate craft-

ing’ could undo a negotiated political compromise that

was critical to passage. Barnhart v. Sigmon Coal Co.,

534 U.S. 438, 461 (2002); see also Artuz v. Bennett, 531

U.S. 4, 10 (2000) (“We hold as we do because respond-

ent’s view seems to us the only permissible interpre-

tation of the text—which may, for all we know, have

slighted policy concerns on one or the other side of the

issue as part of the legislative compromise that ena-

bled the law to be enacted.”); John F. Manning, The

Absurdity Doctrine, 116 HARV. L. REV. 2387, 2417

18

(2003) (“The reality is that a statutory turn of phrase,

however awkward its results, may well reflect an un-

recorded compromise or the need to craft language

broadly or narrowly to clear the varied veto gates en-

countered along the way to enactment.”). In an era

when Congress is often criticized for its inability to

forge consensus and enact major legislation, the judi-

ciary should-take special care not to upset the legisla-

tive compromises that enabled passage of laws that

come before it.

More fundamentally, the Administration’s at-

tempt to upset the legislative compromise embodied

in the unambiguous text of the ACA would effectively

strike a new and different compromise, one the Con-

gress demonstrably could not and did not pass itself.

To cast aside the compromise that resulted in the un-

ambiguous language of section 36B in the name of ad-

vancing the Act’s supposed general purpose would ef-

fectively amend the Act by handing its most enthusi-

astic supporters a victory t>at they were unable to

achieve through the political process. Any “anxiety to

effectuate the congressional purpose” behind enacting

a statute “must take care not to extend th scope of

the statute beyond the point where Congress indi-

cated it would stop.” Brown & Williamson Tobacco

Corp., 529 U.S. at 161. Here, Congress plainly indi-

cated that the availability of premium subsidies

would stop at State exchanges and not extend to fed-

eral exchanges. The executive branch, and the courts,

are required to honor that choice.

19

CONCLUSION

For the foregoing reasons, the Court should

grant the petition for certiorari and reverse the deci-

sion below.

Respectfully submitted,

MICHAEL E. ROSMAN CHARLES J. COOPER

CENTER FOR Counsel of Record

INDIVIDUAL RIGHTS DAVID H. THOMPSON

1233 20th Street, N.W. HOWARD C. NIELSON, JR.

Suite 300 PETER A. PATTERSON

Washington, D.C. 20036 COOPER & KIRK, PLLC

1523 New Hampshire

CARRIE SEVERINO Avenue, N.W.

THE JUDICIAL Washington, D.C. 20036

EDUCATION PROJECT (202) 220-9600

722 12th Street, N.W. ccooper@cooperkirk.com

Fourth Floor

Washington, D.C. 20005

Counsel for Amici Curiae

September 3, 2014