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

Supreme Court brief2014

Ask Donna

What actually matters in this document.

Text

No. 14-114

IN THE

Supreme Court of the Anited States

DAVID KING, et al.,

Petitioners,

SYLVIA MATHEWS BURWELL, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

AMICI CURIAE BRIEF OF THE

AMERICAN CIVIL RIGHTS UNION

AND THE HEARTLAND INSTITUTE

IN SUPPORT OF PETITIONERS

PETER J. FERRARA

Counsel of Record

20594 Woodmere Court

Sterling, VA 20165

(703) 582-8466

peterferrara@msn.com

Counsel for Amici Curiae

American Civil Rights Union

And the Heartland Institute

December 29, 2014

WiILSON-EPES PRINTING Co., INC. — (202) 789-0086 ~— WASHINGTON, D. C. 20002

TABLE OF CONTENTS

INTEREST OF THE AMICI CURIAE................

STATEMENT OF THE CASE ..................ccc0c000

SUMMARY OF ARGUMENT ...............ccccseeeeneees

I. THE CHALLENGED IRS REGULA-

TION IS INVALID BECAUSE IT

CONTRADICTS THE PLAIN LAN-

GUAGE OF THE ACA, ON WHICH IT IS

INET sciicscutvebicpobenicakantuienbinissannciaitnneiein

ll. THE ACA PROVIDES FOR TAX

CREDITS FOR HEALTH INSURANCE

PURCHASED ON STATE ESTAB-

LISHED EXCHANGES ONLY; THERE

IS NO VALID ALTERNATIVE

INTERPRETATION OF THE LAW.........

CSET svvtnecssencsinassndcessecnsneeciovetnecadesicaseees

(i)

Page

TABLE OF AUTHORITIES

CASES Page

Prinz v. United States, 521 U.S. 898 (1997).... 3

STATUTES

ACA, Section 1401, 26 U.S.C. Section 36B. ..... 4

26 U.S.C. Section 36(B)(b)2)............-.....ceeeeeees 3,4

ACA, Section 1311(a), 42 U.S.C. Section

SERIE TNE AREA AA, DOE te A 4

ACA Section 1304, 42 U.S.C. Section

SEES Ae DEA Oe Ae ee 4

ACA Section 1311, 42 U.S.C. Section 18031... 2

ACA Section 1311(bX(1), 42 U.S.C. Section

I a aes 2

ACA Section 1321, 42 U.S.C. Section 18041... 2

ACA Section 1321(c), 42 U.S.C. Section

RE a ATT IE See 3, 4

REGULATORY AUTHORITIES

a NE CI ricci saSbeisnsansinesensonsentons 4

Health Insurance Premium Tax Credit, 76

Fed. Reg. 50,931, 50,934 (Aug. 17, 2011) .... 5

OTHER AUTHORITIES

Adler and Cannon, Taxation Without

Representation: The Illegal IRS Rule to

Expand Tax Credits Under the PPACA,

Health Matrix: Journal of Law and

Medicine, Volume 23, Issue 1, Spring 2013 6

TABLE OF AUTHORITIES—Continued

Carrie Budoff Brown, Nelson: National

Exchange a Dealbreaker, POLITICO, Jan.

25, 2010 http//www.politico.com/livepulse/

0110/Nelson_National_exchange a dealbr

CUO DI occ ecvccsswcesscotsnnsnsteischdesteumaabandie

Jennifer Corbett Dooren, Two States Seek

Help With Health Exchanges, Wall St. J.,

May 22, 2003, http-//online.wsj.com/news/

articles/SB10001424127887323336104578

SEDGE OO veseviosstssccecssictecicndevmiciiaiis

Timothy S. Jost, Health Insurance

Exchanges: Legal Issues, O’Neill Institute,

Georgetown University Legal Ctr., no. 23 at

7, Apr. 27, 2009, http://scholarship.law.

georgetown.edu/cgi?article=1022&context=

Kaiser Family Foundation, State Health

Facts, State Decisions for Creating Health

Insurance Exchanges, (May 28, 2013),

http://kff.org/health-reform/stateindicator/

health-insurance-exchanges/

3,4

£3

ia hea

ays

ase oh

ni rate -

he dhe ae lt

ee ee

INTEREST OF THE AMICI CURIAE '

The American Civil Rights Union is a non-partisan,

non-profit, 501(cX3), legal/educational policy

organization dedicated to defending all of our

constitutional rights, not just those that might be

politically correct or fit a particular ideology. It was

founded in 1998 by long time policy advisor to

President Reagan, and the architect of modern welfare

reform, Robert B. Carleson. Carleson served as

President Reagan’s chief domestic policy advisor on

federalism, and originated the concept of ending the

federal entitlement to welfare by giving the

responsibility for those programs to the states through

finite block grants. Since its founding, the ACRU has

filed amicus curiae briefs on constitutional law issues

in cases nationwide.

Those setting the organization’s policy as members

of the Policy Board are former U.S. Attorney General,

Edwin Meese III; former Assistant Attorney General

for Civil Rights, William Bradford Reynolds; former

Assistant Attorney General for the Office of Legal

Counsel, Charles J. Cooper; John M. Olin

Distinguished Professor of Economics at George

Mason University, Walter E. Williams; former

Ambassador Curtin Winsor, Jr.; former Assistant

Attorney General for Justice Programs, Richard

’ Peter J. Ferrara authored this brief for the American Civil

Rights Union (ACRU). No counsel for either party authored the

brief in whole or in part and no one apart from the ACRU made

a monetary contribution to the preparation or submission of this

brief. All parties were timely notified and have consented to the

filing of this brief.

Bender Abell and former Ohio Secretary of State J.

Kenneth Blackwell.

The Heartland Institute is a non-partisan, non-

profit, 501(c3) educational policy institute devoted to

promoting understanding of how the free market

operates, and how it can be used to better address the

nation’s social and economic problems.

This case is of interest to the ACRU and the

Heartland Institute because both are concerned that

America be governed under the rule of law.

STATEMENT OF THE CASE

The Affordable Care Act (“ACA”) provides for two,

separate, distinct types of health insurance Exchanges

that can be established for each state, in two entirely

separate sections of the law. One is a health insurance

Exchange established by a state government. ACA

Section 1311, 42 U.S.C. Section 18031. That Section

provides, “Each State shall, not later than January 1,

2014, establish an American Health Benefit

Exchange...for the state that facilitates the purchase

of qualified health plans.” ACA Section 1311(b\(1), 42

U.S.C. Section 18031(b)(1).

The other type is a federal health insurance

Exchange established by the Secretary of the U.S.

Department of Health and Human Services. ACA

Section 1321, 42 U.S.C. Section 18041. That Section

provides, “If a State does not establish an

Exchange...the Secretary shall (directly or through an

agreement with a not-for-profit entity) establish and

operate such Exchange within the State[.!” ACA

Section 1321(c), 42 U.S.C. Section 18041(c).

The legislative history shows that the final ACA

legislation as passed intended for the states to

establish and operate the Exchanges in each state.

E.g. Carrie Budoff Brown, Nelson: National Exchange

a@ Dealbreaker, POLITICO, Jan. 25, 2010

http://www.politico.com/livepulse/0110/Nelson_Natio

nal_ exchange a dealbreaker.html. But as is well

recognized, under the Constitution, the states are each

sovereign entities, and the federal government has no

authority to order the states to carry out and

implement federal policies and programs. Prinz v.

United States, 521 U.S. 898, 925 (1997); Timothy S.

Jost, Health Insurance Exchanges: Legal Issues,

O'Neill Institute, Georgetown University Legal Ctr.,

no. 23 at 7, Apr. 27, 2009, http://scholarship.

law.georgetown.edu/cgi?article=1022&context=ois_pa

pers. The ACA state Exchanges could only be

established by the independent decision of each state.

The ACA grants federal tax credits providing

substantial assistance for the purchase of health

insurance in one of these two types of health insurance

Exchanges but not the other. 26 U.S.C. Section

36(BXb)(2) provides for a defined federal tax credit for

health insurance that a taxpayer or a spouse or a

dependent of the taxpayer was “enrolled in through an

Exchange established by the State under 1311 of the

Patient Protection and Affordable Care Act.” But that

Section does not mention any tax credit at all for

health insurance that the taxpayer or a spouse or a

dependent of the taxpayer enrolled in through

“Exchanges established by the Secretary under

Section 1321.”

Moreover, the ACA defines the term “State” as

“each of the 50 states, plus the District of Columbia.”

ACA Section 1304, 42 U.S.C. Section 18024(d); 45

C.F.R. Section 155.20. So when 26 U.S.C. Section

36(B\(b)2) states that the federal health insurance tax

credits under the ACA are available for health

insurance that a taxpayer or a spouse or a dependent

of the taxpayer was “enrolled in through an Exchange

established by the State under 1311 of the Patient

Protection and Affordable Care Act,” it means

established by one of the 50 states or the District of

Columbia, not by the Secretary of the US.

Department of Health and Human Services.

Restricting federal tax credits for health insurance

to residents of the states where the state established a

state Exchange was the main way the ACA sought to

encourage states to establish such Exchanges. ACA,

Section 1401, 26 USC, Section 36B; Jost, supra, n. 23

at 7. Congress further encouraged states to establish

Exchanges by offering the states federal funding to do

so, ACA, Section 1311(a), 42 U.S.C. Section 1803(a),

and by providing for the federal government to

establish the Exchange in a state if the state does not

do it, ACA, Section 1321(c), 42 U.S.C. Section 18041(c).

But a total of 34 states did not accept these

inducements to set up a state Exchange under the

ACA. Kaiser Family Foundation, State Health Facts,

State Decisions for Creating Health Insurance

Exchanges, (May 28, 2013), http://kff.org/health-

reform/stateindicator/health-insurance-exchanges/.

Two other states decided to establish state Exchanges

under the ACA, but failed to get them up and running

in time. Jennifer Corbett Dooren, Two States Seek

Help With Health Exchanges, Wall St. J., May 22,

2003, http://online.wsj.com/news/articles/SB10001424

127887323336 104578499444065609364. That means

36 states do not have state Exchanges under the ACA

for 2014. Only 14 do.

Perhaps because of these disappointing results,

with two thirds of the states failing to participate in

the ACA, Defendant Internal Revenue Service (IRS)

proposed a regulation on August 17, 2011 defining

eligibility for the federal health insurance tax credits

under the ACA as follows:

“a taxpayer is eligible for the credit for a

taxable year if...the taxpayer or a member of

the taxpayer’s family (1) is enrolled in one or

more qualified health plans through an

Exchange established under Section 1311 or

1321 of the Affordable Care Act....”

Health Insurance Premium Tax Credit, 76 Fed. Reg.

50,931, 50,934 (Aug. 17, 2011 emphasis added).

In response to this proposed regulation, swarms of

commenters, legal scholars, and dozens of members of

Congress filed comments objecting that the proposed

regulation departed from the text of the ACA in

granting eligibility to taxpayers who had enrolled in

health insurance plans on state Exchanges

established under Section 1311, or health insurance

plans on federal Exchanges established under Section

1321. The ACA, as discussed above, provides for

eligibility only for health insurance plans on state

Exchanges established under Section 1311. The

proposed regulation, by adding the six letters or 1321,

had vastly expanded the availability of the federal tax

credits from the 14 states with state Exchanges, as

provided in the legislation as enacted by Congress and

the President, to all 50 states and the District of

Columbia. Adler and Cannon, Taxation Without

Representation: The Illegal IRS Rule to Expand Tax

Credits Under the PPACA, Health Matrix: Journal of

Law and Medicine, Volume 23, Issue 1, Spring 2013.

Nevertheless, on May 23, 2012, the IRS finalized

the regulation as proposed, without change,

explaining only,

“The statutory language of Section 36B and

other provisions of the Affordable Care Act

support the interpretation that credits are

available to taxpayers who obtain coverage

through a State Exchange, regional

Exchange, subsidiary Exchange, and the

federally facilitated Exchange. Moreover, the

relevant legislative history does not

demonstrate that Congress intended to limit

the premium tax credit to State Exchanges.

Accordingly, the final regulations maintain

the rule in the proposed regulations because

it is consistent with the language, purpose,

and structure of section 36B and the

Affordable Care Act as a whole.”

Health Insurance Premium Tax Credit, 77 Fed. Reg.

30,377, 30,378 (May 23, 2012).

The availability of the tax credits in a state triggers

the employer mandate for most employers, and the

individual mandate for most workers withovt

employer provided insurance. Workers and employers

are consequently forced to bear some costs as a result.

The District Court below recognized that granted

the Plaintiffs standing to challenge the IRS rule,

which made them subject to the individual mandate in

Virginia, one of the states that did not establish a state

health Exchange. Pet.App.53a-60a. Paying for the

required health insurance even with the tax credit left

them subject to substantial net costs. Pet. App. 52a-

53a; See also JA29-38.

But the District Court ruled for the government on

the merits on February 18, 2014. The Court agreed

that Petitioners’ “plain meaning interpretation of

Section 36B has a certain common sense appeal.” Pet.

App. 71a. But the Court nevertheless concluded that

somehow Congress unambiguously intended just the

opposite of that “plain meaning.” Pet. App. 64a-7 1a.

The Fourth Circuit confirmed the District Court on

July 22,2014. That Court too recognized “the common

sense appeal of plaintiffs argument.” Pet. App. 18a.

But the Court concluded that the ACA was somehow

ambiguous as to whether an Exchange established by

the federal Dept. of HHS was “established by the

State.” Pet. App. 18a.

On the very same day as that Fourth Circuit ruling,

the D.C. Circuit held just the opposite, finding that the

IRS rule was directly contrary to the plain text of the

ACA. Halbig v. Burwell, '758 F.3d 390 (D.C. Cir. 2014).

The D.C. Circuit subsequently granted the

government’s request for rehearing en banc. 2014 U.S.

App. LEXIS 17099 (D.C. Cir. Sept. 4, 2014).

On Sept. 30, 2014, the Federal District Court for

the Eastern District of Oklahoma ruled on the same

issue, agreeing with the D.C. Circuit in Halbig, and

criticizing the Fourth Circuit’s ruling in the present

case. Oklahoma v. Burwell, No. 11-cv-30, 2014 U.S.

Dist. LEXIS 139501 (E.D. Okla. Sept. 30, 2014). The

Court in that case declared Halbig to be “more

persuasive,” and criticized the Government’s defense

of the IRS Rule as “lead[ing] us down a path toward

Alice’s Wonderland, where up is down and down is up,

and words mean anything.” Jd. at *14, 16.

With this growing split between the circuits, this

Court granted certiorari in the present case, and

ordered Halbig to be held in abeyance.

SUMMARY OF ARGUMENT

This is a critical case coming at a critical time for

our nation and its history. The President has

famously announced that he has a phone and a pen,

by which he means to say that he can govern the

nation perfectly well without Congress. We

understand that to imply that the President thinks he

is ready and able to assume Congress’s Article 1

legislative powers.

Which to our minds may make the real question

before this Court today: “Is this America, or is this

Venezuela?”

We respectfully submit that the role of the Court

today is to stand for and enforce the law and the

Constitution so that question never comes before this

Court. Consider that what President Obama does

today will become the foundation for others to take the

currently budding Constitutional abuse even further,

transforming America into the very authoritarian

despotism our Nation’s Founding Fathers intended

the fundamental structure of the Constitution to

prevent.

This Court should issue a landmark ruling in this

case to prevent that national nightmare from ever

approaching reality. That landmark ruling would

unambiguously reaffirm that the President does not

have the Article 1 legislative powers of Congress, and

he must follow the law as enacted, even when he is

sure he has a better idea, which this President has put

at issue again and again.

As widely reported, the Speaker of the House is in

the process of trying to sue the President to enforce

this rule in regard to another transgression. But this

Court can and should settle these matters by a firmly

stated rule in this case. That would be firmly restating

the obvious, but this President is repeatedly

challenging the obvious, which is that he may have a

phone and a pen, but he is the President, not the

Congress, and he needs to reread the Constitution to

see the difference.

This is all the more urgent because of a political

philosophy that has been gathering force among a

substantial segment of this nation for over a century,

which holds that the rules that apply to everyone else

do not apply to them, because they are well

intentioned to establish “social justice” as they see it,

and there is no need or warrant for checks and

balances on that. That is precisely a psychological

precursor to despotism that has no place in our

Constitutional Republic.

The plain words of the ACA statute provide

explicitly and unambiguously for tax credits for health

insurance purchased on health exchanges established

by states under Section 1311. An entirely different

Section 1321 provides for the Federal Dept. of HHS to

establish health exchanges in states that do not

establish their own State Exchanges. The ACA

nowhere provides for tax credits for health insurance

purchased on federally established health Exchanges

under Section 1321.

Yet the IRS Rule challenged in this case, which

supposedly interprets and implements the statute,

provides that the tax credits are available for health

insurance purchased on State Exchanges established

under Section 1311, and on Federal Exchanges

established under Section 1321. There is no

conceivable way within the realms of Aristotelian logic

and the English language that the words “established

by the State under [Section] 1311” can be read to

include “established by the [Federal government]

under [Section 1321].”

The rule of this Court that governs this case is, if

the statute is clear and unambiguous that is the end

of the matter, for the court, as well as the agency, must

give effect to the unambiguously expressed intent of

Congress. That governing principle, therefore,

resolves this case, and the decision of the court below

consequently must be reversed.

ARGUMENT

I. THE CHALLENGED IRS REGULATION

IS INVALID BECAUSE IT CONTRA-

DICTS THE PLAIN LANGUAGE OF THE

ACA, ON WHICH IT IS BASED.

As discussed above, the ACA provides for a defined

federal tax credit for health insurance that a taxpayer

or a spouse or a dependent of the taxpayer was

“enrolled in through an Exchange established by the

State under 1311 of the Patient Protection and

Affordable Care Act.” ACA, Section 1401, 26 USC,

Section 36B. Yet, the challenged regulation interprets

this statutory language to provide that,

“a taxpayer is eligible for the credit for a

taxable year if...the taxpayer or a member of

the taxpayer's family (1) is enrolled in one or

more qualified health plans through an

Exchange established under Section 1311 or

1321 of the Affordable Care Act....”

Health Insurance Premium Tax Credit, 76 Fed. Reg.

50,931, 50,934 (Aug. 17, 2011) (emphasis added). The

addition of the 6 characters “or 1321” as compared to

the statutory language has the practical effect of

expanding the federal tax credits beyond the ACA

statutory language from 14 states to all 50 states, plus

the District of Columbia. Adler and Cannon, supra,

at 7.

There is no canon of construction allowing the

addition of new language to a statute that so broadens

its meaning as enacted by the legislature, at least

since the Magna Carta. The U.S. Supreme Court has

long upheld the “plain meaning rule,” which holds that

if the language of a statute is clear and unambiguous,

it must be applied according to its plain terms. As the

Court said in Conn. Natl Bank v. Germain, 503 U:S.

249, 254 (1992),

“In interpreting a statute a court should

always turn first to one cardinal canon before

all others. We have stated time and again

that courts must presume that a legislature

says in a statute what it means and means in

a statute what it says there....When the

words of a statute are unambiguous, then,

this first canon is also the last: judicial

inquiry is complete.”

Similarly, this Court added in Bd. of Governors of the

Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S.

361, 368 (1986 quoting Chevron v. USA Inc. v. NRDC,

Inc., 467 U.S. 837, 842-43 (1984)),

“If the statute is clear and unambiguous ‘that

is the end of the matter, for the court, as well

as the agency, must give effect to the

unambiguously expressed intent of

Congress.”

See also United States v. Husted, 545 F.3d 1240, 1247

(10th Cir. 2008)“It is a longstanding principle that

absent ambiguity we cannot rely on legislative history

to interpret a statute.”).

It is inconceivable that the plain meaning of the

statutory language “Section 1311” can mean “Section

1311 or 1321.” As the Supreme Court teaches in

Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc. 467 U.S. 837 (1984), courts “must give

effect to the unambiguously expressed intent of

Congress.” Id. at 842-843. But there can be no

ambiguity in the term “Section 1311” that can be read

as “Section 1311 or 1321.”

Acceding to that would require not deference, but

abdication. But the IRS is not even entitled to

deference under Chevron, in regard to the regulation

at issue here. That in part is because the regulation

interprets sections of the ACA involving the

Exchanges (such as Sections 1411 and 1321) that are

within the domain of HHS to interpret and administer,

not the IRS. Tsosie v. Califano, 651 F.2d 719, 722

(10th Cir. 1981)(Agency’s “construction is not entitled

to special deference to the extent it rests on the

interpretation of another agency’s statutes and

regulations.”); Dep’t of Treasury v. Fed. Labor

Relations Auth., 837 F.2d 1163, 1167 (D.C. Cir. 1988)

(“[W]hen an agency interprets a statute other than

that which it has been entrusted to administer, its

interpretation is not entitled to deference.”); Cheney

R.R. Co. v. R.R. Ret. Bd., 50 F.3d 1071, 1073-74 (D.C.

Cir. 1995) (no deference where issue “turn[ed] on the

interpretation” of laws that were “not the Board’s

governing statutes.”).

This plain meaning of the statute is reinforced all

the more because later in the very same Section 36B

providing for the tax credits the statute uses different

language very clearly to refer to both state and federal

Exchanges in elucidating reporting requirements

applying to both. There it refers to the “responsibili-

ties of an Exchange under Section 1311(f(3) or

1321(c).” 26 U.S.C. Section 36B(fX3). This shows that

when Congress wanted to refer to both state and HHS

Exchanges, it “knew how to do so.” Custis v. United

States, 511 U.S. 485, 492 (1994). Yet, in defining where

the tax credits apply, the statute refers only to state

Exchanges.

The challenged IRS regulation was also adopted in

violation of the Administrative Procedure Act (APA).

Responding to the accurate criticisms of commenters

on its proposed regulation, the conclusory, cursory,

and even transparently false statements issued by the

IRS regarding the textual support for the availability

of the federal ACA tax credits for health insurance on

federal Exchanges, the legislative history of the ACA,

and the language, purpose and structure of the ACA,

Health Insurance Premium Tax Credit, 77 Fed. Reg.

30,377, 30,378 (May 23, 2012), did not meet the

standards of Citizens to Preserve Overton Park v.

Volpe, 401 U.S. 402, 416 (1971). The IRS response and

consideration failed to consider all important aspects

of the issues raised by the proposed regulation, offered

an explanation that was inconsistent with the

administrative record before it for its decision to

proceed without change in the proposed regulation

despite mumerous, accurate criticisms in the

comments, and failed to make a plausible decision that

was the product of agency expertise, all in violation of

Citizens to Preserve Overton Park.

The IRS even certified that the challenged

regulation was “not a significant regulatory action,” 77

Fed. Reg. at 30,385, yet expanding the availability of

the credit from 14 states following the statutory

language to all 50 as provided in the regulation’s

language will cost the federal government hundreds of

billions at least over the next 10 years alone.

Executive Order 12866, referenced by the IRS, defines

“significant regulatory action” as having an expected

cost of $100 million or more. Exec. Order 12,866, 58

Fed. Reg. 51,735 (Sept. 30, 1993). See also 5 U.S.C.

Section 804(2) (defining a major rule as having

an expected annual cost of $100 million or more).

This further indicates inadequate consideration of

the effects of the regulation, in violation of APA

requirements.

ll. THE ACA PROVIDES FOR TAX

CREDITS FOR HEALTH INSURANCE

PURCHASED ON STATE ESTABLISHED

EXCHANGES ONLY; THERE IS NO

VALID ALTERNATIVE INTERPRETA-

TION OF THE LAW.

Since the statutory language regarding health

insurance tax credits is not ambiguous, the legislative

history of the ACA is not relevant to this case. Davis

v. Mich. Dep’t. of Treasury, 489 U.S. 803, 808 n.3

(1989)(“Legislative history is irrelevant to the

interpretation of an unambiguous sstatute....”);

Husted, supra. But that legislative history only

supports the same conclusion as the clear statutory

language — the ACA tax credits for the purchase of

health insurance are only available for health

insurance purchased on Exchanges established by the

states, not on federal Exchanges established by the

U.S. Dept. of HHS.

The policy of the ACA as passed by Congress and

enacted into law is that the Exchanges should be

established by each of the states. The statute, in fact,

purports to command the states to establish such

Exchanges. 42 U.S.C. Section 18031 (b\1).

But, of course, the Congress does not have the

power under the Constitution to order the states to

take this or any other action, as discussed above. So

Congress adopted the policy of providing for hundreds

of billions in tax credits for the purchase of the

mandated health insurance only for insurance

purchased on Exchanges established by the states, not

on those established by the Federal Dept. of HHS, in

order to give states a politically compelling incentive

to establish their own State Exchanges under the ACA

(so their citizens could get the tax credits). 26 USC,

Section 36B; Jost, supra, n. 23 at 7.

The House version of the bill only allowed states to

establish Exchanges, but did not provide any

incentives for them to do so. H.R. 3962, Section 308,

111th Cong. (2009). But that was not going to satisfy

more moderate Senate Democrats, who were more

insistent on state rather than federal Exchanges.

Halbig v. Sebelius, No. 13-623, 2014 U.S. Dist. LEXIS

4853 (D.D.C. Jan. 15, 2014), at *61. Carrie Budoff

Brown, Nelson: National Exchange a Dealbreaker,

POLITICO, Jan. 25, 2010.

High level ACA architects and advisors Timothy

Jost and Jonathon Gruber proposed limiting the tax

credits only to health insurance purchased on state

Exchanges that met federal requirements, as a

politically compelling way to induce states to establish

such Exchanges. Timothy S. Jost, Health Insurance

Exchanges: Legal Issues, O’Neill Inst., Georgetown

Univ. Legal Ctr., no. 23 at 7, Apr. 27, 2009; Jonathon

Gruber at Noblis, January 18, 2012 (YouTube Video);

Michael D. Shear, Care Act Supporter Ignites Fury

with a Word: ‘Stupid’, N.Y. Times, Nov. 14, 2014, at

Al12.

The Senate Finance Committee included that

insight in its version of the bill. That became the

definitive resolution of the issue after ACA supporters

lost their filibuster proof majority with the election of

Scott Brown in a Massachusetts special election to fill

the seat of former Sen. Ted Kennedy, who died in

office. That left the House with no choice other than

to pass the Senate version of the bill without change,

to avoid any further Senate vote that could be

filibustered. John Cannan, A Legislative History of the

Affordable Care Act: How Legislative Procedure

Shapes Legislative History, 105 Law Library J. 131,

159 (2013); Pet. App. 23a.

Moreover, there is exactly zero legislative history

to the contrary indicating any Congressional intent in

support of the reading of the statute the government

is urging upon this Court today, that the tax credits

may be available for health insurance purchased on

federal HHS Exchanges as well. This only further

confirms how completely lawless the government's

position is in the present case.

The ACA’s supporters may bitterly regret that the

great majority of states nevertheless have refused or

failed to establish state Exchanges, which eliminates

the Act’s mandates as well as tax credits in all of those

states. But as this Court ruled just last term, neither

courts nor agencies may “revise clear statutory terms

that turn out not to work in practice.” Utility Air

Regulatory Grp. V. EPA, 134 S. Ct. 2427, 2446 (2014).

ACCORD: United States v. Locke, 471 U.S. 84, 95

(1985\“[T}hat Congress might have acted with greater

clarity or foresight does not give courts a carte blanche

to redraft statutes in an effort to achieve that which

Congress is perceived to have failed to do.”); Nixon v.

Mo. Mun. League, 541 U.S. 125, 141 (2004) (Scalia

concurring in the judgment) (“I do not think...that the

avoidance of unhappy consequences is adequate basis

for interpreting a text.”).

Congress still sits and is open for business. So if

the President and other ACA supporters are unhappy

with the results of their law, they are free to ask

Congress to change it. Of course, exactly half of the

Senators that originally voted for the ACA have been

replaced by the voters. That is their prerogative and

right. The President and other ACA supporters do not

have the prerogative and right to evade this judgment

of the voters, and rewrite their statute as they prefer.

This Court should not indulge them in this anti-

Constitutional and anti-democratic abuse, but enforce

the will of the people as the Constitution provides.

The reading of the statute that the government

urges upon this Court is further foreclosed by the long-

standing, venerable canon of construction providing

that tax credits, deductions and exemptions “must be

expressed in clear and unambiguous terms.” Yazoo &

Miss. Valley R.R. Co. v. Thomas, 132 U.S. 174, 183

(1889). A tax agency cannot recognize a tax credit that

the agency determines was “implied” by a statute,

United States v. Wells Fargo Bank, 485 U.S. 351, 354

(1988), nor can it be interpreted based on a doubt or

ambiguity in a statute. United States v. Stewart, 311

U.S. 60, 71 (1940).

This rule applies all the more to refundable tax

credits, which the IRS proclaims in the present case to

apply to health insurance purchased on federal

Exchanges, as well as on state Exchanges, and which

are indistinguishable from direct spending. In regard

to such refundable tax credits, the canon serves the

Constitution’s requirement that Congress exclusively

control all “Money...drawn from the Treasury,” which

means that the Executive “cannot touch moneys in the

Treasury of the United States, except [as] expressly

authorized.” Office of Personnel Mgmt. v. Richmond,

496 U.S. 414, 424, 426 (1990) (quoting U.S. Const.,

Art. I, Sect. 9, Cl. 7); Knote v. United States, 95 U.S.

149, 154 (1877).

In Knote, this Court said, “Any other course would

give to the fiscal officers a most dangerous discretion.”

Id., at 425 (quoting from Reeside v. Walker, 52 U.S.

272, 291 (1851). See also Util. Air, 134 S. Ct. at 244

(This Court reiterated just last term, “We expect

Congress to speak clearly if it wishes to assign to an

agency decisions of vast ‘economic and political

significance.”) (quoting FDA v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 160 (2000).

Does a statute providing for a federal tax credit for

health insurance “enrolled in through an Exchange

established by the State under [Section] 1311 of the

Patient Protection and Affordable Care Act,” express

“in clear and unambiguous terms” that Congress has

provided in the statute for federal tax credits for

health insurance “enrolled in...through an Exchange

established under Section 1311 or 1321 of the

Affordable Care Act....,” as the IRS has provided in the

interpretive Rule challenged in the present case?

Given the precedents just reviewed above, that is

what the Internal Revenue Service, through its

representative before the Court in this case, the

United States Department of Justice, must be

arguing, given the precedents above, for its proposed

Rule to be valid.

Are the Internal Revenue Service and the United

States Department of Justice not aware of the

precedents discussed above? Given that these are the

official U.S. government agencies responsible for

implementing federal tax law, and for representing

federai tax law before this Court, must we not presume

and hold them responsible for knowing those

precedents?

We respectfully request that this Court take

judicial notice that this case is not being heard in

Wonderland, and that the Internal Revenue Service

and the United States Justice Department are not

Alice. Therefore, Aristotelian logic and the English

language still apply to this case. On these grounds, we

respectfully submit the question, do not the Internal

Revenue Service and the United States Department of

Justice warrant sanctions for the Through the Looking

Glass illogic of the arguments they have presented to

this Court in the present case?

CONCLUSION

For all of the foregoing reasons, Amici Curiae

American Civil Rights Union and the Heartland

Institute respectfully submit that the decision below

should be reversed.

Respectfully submitted,