and values of people in it. i think the regulators are setting expectations with respect to regulation, risks. with respect to conduct and setting expectations with respect to compensation. which is one of the most important incentives, important ways firms signalling what is valued, what is not, what is acce acceptable, what is not. i think, tim, that the problem as this juncture is that there is so many problems and for all the, for all that i think has changed, the way people agree oriented, you know, put yourself in the position of the american, european, japanese reading the

newspapers and see iing this wi respect to the u.s. firms, the mortgage problems, libor, forex issues. you can't just been telling yourself a few bad apples. there's something about the structure of incentives and expectations within firms that needs to be addressed and i think a lot of boards and management know it needs to be b addressed, but this is almost surely the classic case of needing to take some changes that in some instances, are not going to manifest themselves immediately. >> thank you so much for coming on a rainy saturday morning. >> thanks, tim. and president obama's in

china today and announce tad u.s. and china would begin granting visas to each other's citizens that would be value itd for up to ten years. p president arrived in beijing today and is also pursuing a trade pact. this is part of a week long foreign trip for the trip. he'll meet wednesday with the chinese president. on thursday and friday, he'll been b in myanmar and the trip will wrap up in australia for the g-20 leaders sum. he's expected to deliver a major policy address there. tonight on the communicatorcomm christopher yu and director of its center for technology and competition. >> people who oppose should take a look at the internet full header. the magic that makes the internet work.

there's something in there ca called the type of service flag. latency services, different forms of priorization, that was designed for the internet in the beginning. when we redesigned the internet for ipb 6 because we were running out of internet addresses, they not only kept that, b they put another field, a label field, to do another form of priori saix. prioritization was never allowed to be -- it's a design feature of the networks in the beginning and if you talk to the way they're using the network, they're using it to deliver voices. it's called voice over, all use prioritization.

>> tonight at 8:00 p.m. eastern on the communicators. here are a few of the comments we've recently received from viewers. >> i just watched your show this morning on domestic violence and was very disappointed with what i saw and heard, i thought the guests were both weak and ineffe ineffectual and it seemed that the bulk of callers were a bunch of whiny men. one woman is beaten once every 15 seconds in this country by a husband or partner. that is one woman every 15 seconds. this is alarmingly, it's swept under the rug in this country. most of the perpetrators, the only way this will ever change is if men are willing to look at their own bad behavior and address it head on.

>> i'm listening to your commentator and one from the bloomberg news and -- to be presented for -- each and every one of those bills have a repeal of what they call a o bamcare. or the affordable care act. whomever is the commentator needs to bring up that point and -- the lady who called in and said i'm watching the show recorded by the way. that would -- on the show, if you ever decide to that, i'm up for that. >> and continue to let us know what you think about the

programs you're watching. call, emil us or send us a tweet. join the cspan conversation, like us on facebook, follow us on twitter. reporters who covered the issue closely discussed the politics of the proposal and politics in canada. this is just under an hour. good afternoon. i'm david biette, also coordinator of polar initiative and it's my pleasure to welcome you to this program on politics and process of keystone xl.

i learned from politico this morning that attending today's program will keep the doctor away. so, just keep going to the xl programs. we have two stellar panels to look at how we got to this point. six years and counting. three years ago, almost to the day, we held a spirited debate on is the proposed keystone xl pipeline in the national interest. as the state department having looked at environmental questions was then looking at the national interest question. one of today's panelists moderated one of the 2011 sessions and seems to have devoted much of her journalism skills to the issue in the intervening years. let me introduce our first panel. next will begin at 2:00. el elana is oil and gas reporter. she will tell us how we got to this point and with we might be

now. joseph morton has been the correspondent for the omaha world herald since 2006. he will discuss the fight in nebraska and how the pipeline created strange bedfellows there. paul k ororin writes for the gl and mail where he covers international affairs and security issues. he will talk about how it fits into canadian policy. each guest will speak for about five to seventh minutes, then we'll turn to discussion. today's session is not about whether or not the pipeline should be built. we're trying to analyze its long and complicated history and what it means for politics. >>. >> thanks so much. >> so, to start off, i don't know if anybody else was

following keystone xl as far back of the spring of 2010 when i started covering it, but it helps to understand how we got here now, the biggest environmental story in washington was the cap and trade climate bill. now, if you remember back in 2009, house speaker nancy pelosi pushed through that bill by a very, very slim margin and over the course of late 2009, early 2010, in the senate was stalling. lindsey graham was the key republican involved in this. he was getting cold feet, citing lack of trust with the white house and immigration. all eyes were on cap and trade. now, when cap and trade kind of died its informal death politically in the middle of 2010, there was also the bp oil spill, which was a giant environmental story and a lot of people were paying a lot of attention to changing the drilling system in america. under the radar was keystone and there were a lot of environmental groups that cared

about it, but they care about all infrastructure projects to an extent. everybody has a policy analyst keeping an eye on something. it was a small time issue. you even had republicans in nebraska expressing a little bit of concern over the fact this pipeline would go through the auk wii fer. now, fast forward four years. every republican is on board urging the obama administration to cut short this review process. democrats like jon tester who back in 2010 was saying hey, i don't want to give trans canada a safety waiver, are saying i'm with the republicans on this. so, what happened? in the ensuing four years. the environmental movement kind of dusted itself off after cap and trade. and a lesser, but no less significant defeat on a bill which also failed in congress. and it said we're going to focus on infrastructure. you know, a lot of environmental

groups see the climate change problem increase as a matter of carbon budget that can be burned according to the iea and other analysts. by a certain you know, year, let's say 2050 is the usual one. if we exceed, we're locked in to climate change. so, that's kind of the frame that environmental groups adopted and said, b well, if we take an infrastructure focused approach, look at specific projects, among them, keystone, we have a better shot at winning the day. at, to their minds. fighting or slowing or halting climate change, the most insidious effects of it, that is. so, you know, when i look back and ask why did keystone become the be all and end all infrastructure project for this new kind of era in american environmentalism, it goes back

to a column jane hansen did, the game over column. that has been interpreted in very id rations by any number of americans and canadians ever since. he made the same assumption which is that keystone is the lynch pin, the key to essentially getting the lion share of the oil fans out of the ground. that is debatable, but he used kind of that assumption to say if keystone gets rejected, the oil goes to halt. the cost of extracting this he have fuel becomes potentially untenable for most in the industry and if it gets built, it's a free for all and quote unquote game over. now, as canadian officials pointed out a number of times, the oil fans when seen in the frame of broader global ghds, are a small portion. none the less, it's frame of

game over was really galvani galvanizing. it's really hard to organize against an epa. no one's going to march, section 611, clean air rule forever. but a pipeline, a big piece of steel that you can picture is something that gets people riled up. it's an easy organizing tool, easy to understand. and before you know it, this takes off in 20 suh, 11, we kic overdrive. in is summer of 2011 when there's a white house sit in, more than 1,000 people get arrested and there's just a shift that ends up pushing the policy and politics in a direction nobody could have predicted. again, when i started covering keystone xl for green wire, there was the thought, oh, this will be good for a couple of 400 word stories. nerdy terminology. and i think everyone including a

lot of people working on it, have been shocked at how fast the politics have taken off. the reason for that is i just think that it's, it's a combination of unique timing for the movement as i was explaining goes through this stylistic shift and a unique political moment where congress isn't doing much. so, the appeal of stopping something as opposed to getting something done comes from getting something done. because we're relying on getting something done. not a bill, couldn't fund the government last year, stopping something became a lot easier politically. so these two kind of forces, the stylistic organizing and political trend towards lack of progress and capitol hill formed attention and focus and before you know it, everybody was into keystone and here we are today. tied more than two years ago.

here we are again with president obama, after the election, for something i would get into, we've seen kind of a ground hog day type scenario going on politically. i don't know if everyone remembers that. it was the same day over and over again. environmentalists feel like the longer we wait for a decision, the better position we are in. there are some folks in the industry betting on the president making no decision. i'm not sure that's so true either, but it gives you a sense of emotionally where we are. a lot of people are exhausted by this issue. even those who work in major environmental groups who oppose it and for me, i'm just you know, wondering whether hillary clinton will weigh in on it. >> thanks. over to joe.

>> thanks. and that was great recap. i'm going the talk about how nebraska kind of fit into that. again, if you go back to kind of the end of 2010, there were not many people other than you, who knew about keystone xl in nebraska or outside of it. when the republicans took over the house in 2011, congressman literary from omaha, he'll take a bit of credit for getting the ball rolling on this. he's described how the republicans on the energy and commerce committee got together and were kicking around, what should be the big ideas for this next congress. he said, oh, there's a pipeline and it's got the environmental community all bent out of shape in nebraska and if you could imagine all the other republicans on the energy committee, what is this keystone? never heard of this. soupds interesting, so get into it. draft some legislation and that you know, he became one of the loudest pro pipeline voices on capitol hill and he's kind of

spearheaded a lot of the efforts to try and force the president's hand. at this same time, other nebras nebraskans were concerned about the route and potential for spills in the aquifer. the sensitive area of the state that again, i don't think many people outside of nebraska had heard too much about before this. it was interesting to watch some of the politics develop as you had lee terry, big pipeline supporters, holding press conferences with labor groups who you know, he disagrees with on just about everything else under the sun. at the same time, senator mike johanns, republican from the state, who was out there expressing deep reservations about the route and his potential expectations on the sand hills and again, a senator who is more likely to be writing epa and overreach was saying

some of the same thipgs the sierra club was, so it was very interesting to watch those politics kind of play out. once the state legislature got together and the governor and publg got concerned about the route, trans canada opposed the route, not far enough out of the sand hills. now, it's very much republicans support the pipeline. it is still a red state. there is aowners and activists e upset about the pipeline. a lot of concerns the state are not on the national level, the concerns are much more about the

impact of potential spills, landowner rights, imminent domain and so, the landowners have been pushing those concerns in the fight, they want a legal victory when a district court throughout the route and the way the state legislature handled that process. that is now on appeal before the state supreme court. i think it's safe to say that decision will come after the midterm election. but it should be coming down in the next couple of months. it's also clear the fight goes on. congressman terry told me a few days ago he's not going let up on this until the pipeline is built. he's very committed to that. he's in a tough re-election race right now, so we'll see if he gets to come back next year and continue that fight. the bold nebraska, jane chleb, the antipipeline activists are trying to make sure he doesn't

come back. they are planning to go door to door on horse back in the near future trying to urge his constituents not to send him back. tlas little overview of things in nebraska. >> paul. >> hi. good afternoon. i'm just going to try and pull back a little bit from not so much the canadian standpoint, but this canadian perspective, i guess that would be the same thing. canada's sitting on this huge resource. it's going to decline in value. it might be second or third largest hydrocarbon reservoir in the world and you can make a strong argument that in 100 years or maybe 50 years, it will have no value. it's difficult and expensive to extract, perhaps three times crude in the middle east. it's a long way from world

markets and and a long way from world prices. particularly the -- or taurisanis and difference in terms. a major national priority and it's not about energy independence in canada. it's about extracting this massive resource before it declines in value or before mining it becomes politically impossible because of social or environmental considerations. this isn't the first time canada's taken an interesteded stand on issues. goths do that and some of those predecessors have been small economically -- others have been

boring, but important, like southwood lumber. this one's important in terms of energy and importance economically. there's another one for me that set the ketone stone apart, the first time that i can remember that a canadian government has made a specific project that it's going champion a national policy. this national policy really at its base level is let's get these resources to market and to world prices, but you don't hear the government saying we don't care which refineries it goes to, how it gets there. at least in terms of export to the united states, it's all about keystone.

it doesn't look like it's championing a policy. it looks like it's championing a project. times have really changed in the last few years. first started championing in a very loud voice. this was the landscape they were talking about. they were pointing out that americans were preoccupied with land wars in iraq and afghanistan. south of 49 so, did this undercurrent, which canadians really don't want to own, but governments have really played on it, which is wouldn't you rather buy your oil from nice, friendly people close to you instead of those unsavory people and run reliable people far

away. very clear that it's part of the -- when keystone was first proposed, but today, one of the biggest issues is whether they were going okay the export of domestic produced oil. the jobs were you had a very powerful lank. it may be there's not many jobs, you could argue it's a few dozen make those arguments, but the current reality is that the job doesn't -- lastly, four years ago, the keystone xl was billed at a $5.5 billion project.

there's people out there claiming it will be at 80. even $75 a barrel. i'm not going get into the crystal ball game, but if oil's at $75 a barrel, there's a lot of reservoir sitting in alberta that's never coming out. last two things. as we know, this isn't really about keystone. it wasn't about laying miles of pipe to get oil to refineries. every constituency with a steak in this sees it differently. for the environmentalists, it's a high profile, easy and useful icon to go after the administration on. in the greater scheme of things,

800,000 barrels imported to the united states a day is not that big a deal. much bigger deal in canada where 800,000 barrels a day export at significantly lower costs than the alternatives is a bigger economic impact and lastly, look ahead just a little bit. because this keystone project has according to money, really be devilled canada u.s. relations. some truly extraordinary comments on the supposed niceties of diplomatic relations. when the head of the country tells another country that the decision is a no brainer and when a foreign ministry, we don't care what the decision is.

i don't think there will be much impact. long-term. there have been spats before. presidents and prime ministers have disliked each other program. the mutual antipathy is pretty much obvious. lastly is a different view. keystone seems to matter to many canadians, not so much because they care about oil as exports. although some do. as much they care about being snubbed by americans. on the other hand, so did the 49. keystone and perhaps quite frankly, there's only incidentally about canada's national priorities and about whether it can sell its resources before they decline in

value. keystones issue on a u.s. domestic conversation and i don't think most americans care and i don't think they should whether kcanadians feel snubbed by it. thank you. >> well, thank you. now, i'm guessing that the informed public, which i think includes you, has heard about keystone pipeline, it has an opinion one way or the other. i'd like to give you folks a chance. we have microphones and we're being filmed today, so please wait for a microphone. wak there with the glasses could you introduce yourself, please? >> hi, scotty green, thanks so much. just trying help you out by kicking off the questions.

would love to get the panel's view on sort of the three big canadian proposals that would take crude out of the market. the one that goes to the west coast, the one that goes west to east and keystone. which do you think will go first, if any, and if not, what do you think about oil on rail? >> can i throw something into that, going north through northwest territories. >> yeah. let me start -- i don't have a clue to be honest. i do think, and i'm based here in canada. i think opponents of pipelines in canada are watching closely. as to what's haning in the

united states. it's the movement which has ranged across a whole spectrum of groups, delay part of winning, so far, the antipipeline effort has been extremely successful and the idea that there will be a quick approval in canada on any of the projects seems farfetched to me. we have the ship now north of the territories. full disclosure, literally, late '70s, the first, i was work ng the yukon covering inquiries and people were saying the same things then. if these pipelines aren't built, that north slope is never going to come out and it will cripple the oil fields up there. it's 40 years later.

it's pretty cheap compare today a project that hasn't started and may never start. saw a number last week, expectations, 800,000 barrels and oil would move by rail in 2016. that's the same volume that keystone would move. railways in some ways, are better suited for the kind of heavy oils that. >> i don't really have the industry expertise, but the role this plays and the political debate you hear from proponents

of keystone all the time, that of course, if we don't build it, they're going find other ways, other pipelines. i also recently saw where some were sort of floating the argument that farmers were having trouble moving their products by rail because so much is tied up in transporting oil and if we just built the pipeline, that would open up and farmers could get their product to market much easier. which in my part of the country, get at some of the rural voters concerned about the impact on the land from this. >> two things worth noting. one, just this morning, the european union announced that it would not label oil crude as uniquely polluting and coincidentally, two weeks ago, sun core shipped a 700,000

barrel cargo to europe. so i think oil by rail less tanker is something very viable. whether it would quote unquote take the place of a keystone is hard the to say. also, when the state department did its final statement on the pipeline, it pointed to around $75 a barrel as the point at which rail is no longer assumed to be likely to take the place of keystone, so the top line conclusion got a lot of attention, which was no significant impact, but it left the door open a crack. we just maybe don't know and are we getting close to this $75 point. again, i don't cover oil markets, but some people think we might be. >> first, the pipeline's way more ek pensive than it used to be and secondly, the president and president of trans canada, has been saying they're happy to look at oil by rail to bridge the gap across the boundary.

that will create an interesting political dynamic that if there's a no decision or on going decision to delay and the canadian company perceived as backed by the canadian government says we found a loophole and we're just going to off load this stuff and ship it across by rail and put it back in the pipeline, that, to me, would be pretty volatile for us. >> the ceo told me and a couple of other reporters, even if it's approve, trans canada will get involved in rail in the next couple of years. >> some other spills and tracks going through cities and the cars not being able to say weaker standards than one would like on some oil cars, where's this going, how does this play out politically? or does it?

>> i would just quickly say with respect to the u.s., the adopt of transportation is in the middle of crafting a very, very closely watched oil by rail safety rule. and the initial version assumed more than 20,000 old cars that would no longer be allowed to carry crude could get easily repurposed to carry oil sands. >> less volatile. >> exactly. however, that's a costly process, now, we're talking about not the die luted format, but what they call rail bit or raw bit, much stickier, much harder to ship without really ek pensive heating equipment, so the industry thinks that's somewhat silly, but it will happen. a lot of companies will invest in using those older cars because they're just sitting there. >> the, you know -- shouldn't have happened for lots of republicans. but it wasn't really in many ways, this is not an oil

industry. even a railroad industry. no properly regulated railroad should be on the -- that was nuts. sitting at the top of the hill with nobody watching it overnight. unbelievable. >> i'll be watching to see if it shifts more to rail. a lot of the landowners who have problems with this have problems with it because of the imminent domain concerns because of the potential for spills you know, would they be more comfortable with rail, i guess we'll have to see. >> i've worked on this for some time, but i think all politics is local, but it should be a state department decision. it's a national decision, a cross border pipeline.

10,000 miles of pipe have been laid in this country since keystone's been approved and when you look and your talking abo you're talking about the european union, other markets getting to the head of epa, even saying it's going to be developed and get out, another thing to consider is the most efficient way. of it getting to our refineries or anywhere else because what you're looking at with the other proposals that scotty mentioned in canada, just another way to get it to, get offshore. that doesn't mean it's not going to the same exact place. that keystone would be flowing to, so from the political aspect of this discussion, do you think the holistic view or factors are being played or it's just about the chips and boils down to yes, i'm frustrated with the project, too, at the point. but like the sub tans that we're talking about, where is it come into play? the conversation may pivot a bit

towards rail, but that could come into play with fracking here or anything else. so, i mean, looking at the holistic equation in whether it should be approved, do you think those factors are really being considered either? >> well, i'll go back to my suggestion. i don't think it's about keystone, this pipeline. well, no, the debate focuses on the project because it's an easy way to focus the debate. but that doesn't make the broader debate illegitimate. there are lots of people who are opposed to keystone who want to hold the president's feet to the fire and see if he was blowing smoke. when he said i'm going to do something that preserves the planet for future generations. now, you can make all kinds of arguments that you can't draw a straight line from one to the other, but that's what the political debate is.

just like you can, you see all kinds of, you see all kinds of issues where the debate gets folked on a particular thing. should the pentagon be giving you know, high-tech weaponry and assault rifles to local police departments. that's what the debate is focused on, but much broader issue is about you know, policing the american cities and i mean, i don't want to deminnish the importance. >> and with respect to going beyond keystone, i would -- everybody in this audience and those watching on television, go back and look at executive order 1337 signed in 2004 by president george w. bush, that sets up the system we're working under. for presidential approval of cross border pipelines. i think you'll be surprised at

how broad it is. there's tho definition of what the national interest means. it's essentially one sheet of paper in the federal register. that gives a lot of latitude to people on both sides to try to influence this and you might argue from both sides that it has de-emphasized because we don't even really know what we're talking about, so we could be talking about everything and consider this also applies to other structure. the alberta clipper and both sides, again, should ask themselves do i want the system to continue with such a broad parameter or does this not make a lot of sense. >> i don't think there's any question that keystone is a proxy for this bigger debate, bigger battle and clearly, both sides seem pretty comfortable that p both sides picked this hill as the one they want to figtd on. we'll see how whoa made the mistake on picking this as where they want to hold the big fight.

>> david in the back. >> jones, retired state department officer. i wondered whether you could give us some detail on the sense of the -- how it's going on, what the court looks like. do you have or does anyone have regardless of how difficult it is to bet on what a court is going to do, what they will do, but more than that, just give us a sense for the process and how this is going forward? thank you. >> sure and as the washington correspondent, i'm not the one covering the actual arguments before the court, but i followed this closely. just like the supreme court, i think you get into trouble if you try and predict what they're going to do. i think just from listening to the chatter out there both sides feel like they have some support on the court. and some big question marks.

oral arguments. believe they have something like 55 questions and the bulk of those were to the majority were to the state. who was appealing the lower court's ruling throughout the route. ting big questions were what happens if they uphold the lower court's ruling and thus far, i haven't seen a lot of indication from trans canada if that just starts all over again. just waiting to see what the court does. and we'll just have to see where it comes down. >> that was a really good summary. i will just jump in and say it is my, i would bet i guess you could say is my judgment that trans canada would if the

decision is apply with the body called the nebraska public service commission. no doubt jane chleb and other folks joe deals with in nebraska will start aggressively start trying to influence that process. >> this of course was the central underpinning of the big part of it, the idea that in giving the authority to allow trans canada to allow the public service commission, they violated the state constitution. i think that opponents of the pipeline feel like they have a good chance at shutting this down. going to the public service commission t. governor by the time they rearrange this and had it going to him was supportive of the pipeline as long as in his mind, they got the route right so, that's why they went to him. i think the opponents feel pretty confident they could bring some pressure there on the

public service commission to do this if they wind up having to go this them. >> again, going back to the calendar, if the opponents prevail and the district court ruling stands, best case scenario, a five to eight month window. and keep in mind, the obama administration does not plan to weigh in until the nebraska process is done, so then you start to envision this going to the next president. potentially. >> if i could just add the administration -- said it won't decide at least until or while. there's no promise from the administration on the decision. you mentioned for lee terry, it was an issue.

is it elsewhere in other districts and what does it mean for the president and what does it mean for stephen harper? >> i don't know. i really don't. i'm not in canada. the pipeline to -- i assume no, canadian politicians will do what canadian politicians do when they feel snubbed by the united states, which is to sort of jump up and down and all sorts of nasty things and go on with the relationship. absolutely. i think the, i think the it looks to me, i mean, the last two federal cab b innocent members, five years, every federal cabinet minister that came to washington made it a point of talking about keystone. the last two that have come have

not said anything about keystone until they were asked about it. normally, this is too subtle to be b a change in strategy. froms or whether ottawa's finally got the message as senator kerry -- nebraska, you alluded to this, some sense we write about it all the time. every story i write as well, it will be a little longer, longer. but it is plain that it has come up in debates -- on the statewide race, the candidates are very much opposed to the pipeline, the republicans are very much in favor. in congressman terry's --

opposed -- cutting the process short. we'll see, but it's defini definitely -- >> do you see this as an issue further political editions around the country. >> there's no shortage of keystone focused as this cycle. lot of them centered on the billionaire donor, a super pac that spends quite a lot of money talking about keystone and other issues. that said, you look at the polls and majority of the public is shown to support this project when asked about it straight up. however, i think it's arguable that using keystone in ads doesn't move the needle. you saw a lot in 2012 and the report was mixed, but you'll see a what it will signify in nebraska is lit m. >> i was struck by one story

about one story to governor's candidates, the democrats, proposing is pipeline might cost me a little bit of labor support, but probably not. republicans said supporting the pipeline might cost me a few landowne landowners, but they'll probably vote for me any ways. >> one of the things that occurs to me is that in fact if republicans win control of the senate next month it will be b interesting to see legislation come up from congress, either changing the process or approving the pipeline and see what the president does with it. so far, harry reid's protected the president from that and they can't get legislation specifically through congress. a fully republican congress is going to have lots of things to throw at the white house, but this may be one of them. >> i will also just interject one thing. i mentioned at the end of my

opening remarks, but if this goes on until the 2016 primary season starts in earnest, environmentalists are already pressuring hillary clinton to take a position on this and to understand why think back to october 2010 when she told a public audience here in d.c. that her state department, it was hers at the time, would be quote inclined to approve it. using some of the same logic paul was talking about. just yesterday, she deflected yet another keystone question. and especially if she gets challenged from the left by perhaps somebody like the vice president, i think you should prepare to see this getting a loft democratic votes, but that's a big if. >> i would agree. in the democrat primaries, this could be an even bigger issue. could take on a whole new dimension, which would be bizarre for a canadian backed project to move a few hundred thousand barrels of oil. >> on the point of the senate switching hands, i've talked to

some republicans who feel good they'll be able to bring it up in passing. they still have to get to 60. got close before. in order to get control, they're going to have to defeat a bunch of the democrats they had before. so that's not necessarily picking up hope. >> in america it's 67 votes in the senate to override a vito, which the republicans have no chance of getting. >> and i was-i'm wondering, i know it's way down the line, but the name keystone, you already mentioned is like the lynch pin for environmentalists. tipping the scales for the environment. and is it already such an independent issue that they can't play baseball with keystone if you do it

superenvironmentally, you can give us something back. pull it through. thanks. >> because that's how they tried to sell it. >> it's funny you mention that because the house has also passed a bill that it has a wonky name that i won't bore you with. there's a key to a dprak member of congress joked with me about that. i mean it's just a joke, but with respect to your other question about horse training, there's definitely some well respected voices in the environmental movement that have

talked about something like that. at this point, i think the sort of younger, more insurgent energy in the movement that has helped make the issue would not stand for that, because that's the same dale maeal making that trapped the cap and trade bill. >> if they said well, we got this epa rule, but we're going to let the pipeline go forward, even at the national level environmental folks thought that's a good idea, i think it would be quite a blow for the grass roots. >> does it matter that there's been a lot of pipeline constructed elsewhere since this? i mean it's sort of like we have this one thing that's sort of like the golden bullet and all this buildup all around us. you said even if we kill oil sands, it doesn't really matter,

why doesn't the bigger questions and other things happening have any standing with -- it's like keystone is it. what if we get it, what if you do kill us, what happens around you. >> i think again, that's what a symbolic totemic thing is, as we all have kind of agreed, it's less about what itself means, just to be clear, mid oil against keystone, the epa will.

>> i think there will be the next systemic issue as people work through what is an incredibly difficult political debate on it. and, you know, sometimes these things come because of accidents. people take a look at the bigger underlying issue, sometimes they kind of get manipulated into -- in the case of keystone, it probably got manipulated perhaps by both sides into having an importance that nobody originally intended or expected. but the debate, this is a fundamental debate for the 21st century.

a and. >> it's an interesting question, what will they fight over if this ever does get decided one way or another. but the next pipeline? you can envision sort of scorched earth and craters everywhere. so now what, what do we fight over next? >> infrastructure to them, let's say magically the priceal falls and oil, we can't get it at a reasonable price. and solar and wind power, but we still need infrastructure to get it to market. does that pose a problem for people? transmission lines aren't necessarily pretty either. nimbi is not going away, nobody wants the pipeline or the nuclear reactor or anything else in their backyard unless you pay them enough and then they're okay with it.

>> i'm not saying they all agree with this, but they all go, even if we lose, we win. >> i think they have more difficulty, i think it's going to be really hard to find a successor issue that is quite so easy to brand, if there's a decision to -- i think it will be a shot in the arm, because they think they didn't enough. i think it will reenergize the movement.

>> not to get into all that stuff, but i'm very interested in finding out the amount of infwluns this frustrated tarzan's exportation agenda especially for harper's government had on the recent sketchy, you know, adaptation of the fipa agreement with china, as possibly another way to expedite getting tarzan's problem out. thank you. >> i don't know the answer to that. >> we should be asking you about whether the chances for northern gateway. but i think it is clear, but it is clear that the canadian government has been saying for years now, if we can't deliver

this oil to the americans, and making it sound like the americans need it, it won't be further exploited. we'll send it elsewhere. >> we'll go and be cozy with other markets. 7 0% of oil exports go to the united states. it's a bit of a mute point. isn't it 97? it's huge anyway. join me in thanking our next pajt.

and my staff will change the name cards and you can go sit down and hopefully join us for the second part. >> cspan veterans day coverage begins tuesday morning at 8:30 eastern during washington journal with an interview with american legion director verna jones. and we're live at 11:00 at the articletop national cemetery, just after noon, a discussion on veteran's mental health issues and later the medal of honor white house ceremonies. >> the 2015 student cam video contest is under way. create a five to seven minute

documentary on the three branches and you, showing how a policy, law or action by the legislative or judicial branch of the federal government has affected you or your community. there's 200 cash prizes for students and teachers totaling $100,000. for a list of the rules and how to get started, go to cspan zorg. a look at recent court challenges that deal with tax subsidies through the health care law. and later, a discussion on efforts to prevent money laundering. the kato institute recently hosted a discussion on whether the obama administration overreached in extending tax credits and subsidies for -- the circuit courts are currently split with the d.c. security ruling that federal subsidies are only available in health

care exchanges established by the state. meanwhile the fourth circuit court of appeals -- were permissible at the discretion of the irs. this is two hours. >> i am david bose, i'm the executive vice president of the cato institute, i know there are more people who are going to be coming in, but we're going to go ahead and get started and try and stay on time today. the subject for our conference today is this, in a democracy, under the rule of law, does the executive branch of government have the power to implement laws the way the president would prefer they had been written, or is the executive bound by the law the same way you and i are. the four lawsuits we're talking about today involve the patient protection and affordable care act or obama care. but they are not lawsuits about obama care. they are lawsuits about the rule of law.

back in 2011, the supreme court quietly re -- it announced it would implement the health care laws health insurance subsidies and the penalties on employers and individuals who failed to purchase coverage even in states that did not establish a so-called health insurance exchange. michael cannon, one of our scholars here at cato were the first to blow the whistle on this problem. the aca, they pointed out, only authorizes those taxes and those subsidies in a state if the state establishes an exchange. the irs persisted, it's been spending billions of dollars in subjecting tens of millions of employers and individuals to penalties that are not permit bid the aca, not authorized by an act of congress.

as you might imagine, the people subjected to those illegal taxes don't like that and that's why they have filed four lawsuits. rather than challenging the aca, the plaintiffs are claiming that the executive branch of the government is not implementing the law faithfully, they are asking the courts to force the irs to do so. despite the fact that the president has come under bipartisan criticism for unilaterally rewriting the health care law. someone unearthed this video of jonathan gruber who is widely held as one of the key architects of the aca.

sorry, i talked a little too fast here. jonathan gruber as many of you know was a key architect of governor prromney's health care plan. and jonathan gruber was discovered halfway through the discussion of all of these things, making this point about the aca.

>> that means your citizens don't get the tax credits. >> so there is a guy who knows more about this law than anybody else does, and he says if you're a state and you don't set up an exchange, that means your citizens don't get their tax credits. tomorrow the supreme court will meet to decide whether to take up one of these lawsuits. two of these lawsuits were filed by state attorneys general and we are delighted to have both of them here with us today, in just a moment, we'll be hearing from

indiana attorney general greg zeller, who was the first to challenge the irs in court. in between we will have one panel of scholars debating the legal merits of this case. >> on october 8, 2013, greg zeller became the fourth person and the second attorney general to file aç legal challenge to that irs regulation in indiana, the irs. he was joined as a plaintiff by 39 indiana school systems, those public school systems say they have had to reduce the hours of

nonsupport staff, like bus staf staff -- regular zeller has been indiana's 42nd attorney general since 2008, prior to state government, he spent ten years as an assistant to senator and vice president dan quail, first in the senate office and then in the office of the vice president, he was also in private practice for ten years after getting his law degree from the indiana school of law. welcome greg zeller. >> thank you, david, and thank you to the cato institute for

hosting this. i'm glad the lead in kind of took away some of the things that i was going to point out. and hopefully we'll condense this and try to take some questions. i'm almost sorry that you mentioned my ten years in the federal government with senator and vice president quayle. in indiana, i deny it and i have learned the federal government is not a well loved institution and congress even worst, so it was a clintonesque deny, deny, deny. i guess that was my brother skippy that was actually in the white house and not your attorney general. but i think i have resolved my checkered past by suing the federal government several times. that's very popular in the state

of indiana. let me explain when i come to washington, i have to explain a little bit about states. what you have read ins books is not exactly true. first of all, it's true that al states are not alike, since we're sovereign, we have our ability to create our own sovereign government in the way we choose. indiana is one of six states which has chosen i think a little bit more of a conservative past in our history, and we have created the office of attorney general as a statutory office. the other states are all constitutional office holders, but i serve as indiana's attorney general under statutory authority. and the distinction is one that i think merits some attention,

because if you're a constitutional officer, you have some of the areas of -- which would allow you to do things based on the need of the population that you serve. if you're a staff statutory office, you represent the state government. we don't have the same expansive role to be able to represent the people as individuals, so i thits it's a distinction that plays out in this area. a little history that proves out that point. in the leadup to the passage of the i fordable carable, our senator richard luger recognized that in the stature of the attorney general, my office was able to do research for the

senators. so this dates back to kind of the quaint days when senators represented state legislators before the 17th amendment. so senator luger, seeing the coming of the affordable care act, asked my office to do a report. we did a 675-page report that told the senator that there was some substantial constitutional issues being raised by the way they have structured the affordable care act. and i knew in kind of in conclusion that should it pass in its current form which at the time it was unlikely, everybody assumed that it would be changed when it went through the house and back to the senate. i said that if it passed in its current state, i would feel compelled to when it did pass,

there were a number, i think 13 attorneys general that filed maybe minutes after the president's signature. indiana was not one of those, the original lawsuit focused on original mandate, and again since i don't represent individuals in that same capacity, my office i felt may lack standing to bring a claim based on the individual rights of our citizens as opposed to the authority of the state. so what we did is, we worked with some of my colleagues later in the first amended complaint that was filed, we added the complaint dealing with the expansion of medicaid under what we felt was a coercive mandate from the federal government to coerce a sovereign state. so we joined in the whole

lawsuit, but our real focus was on that relationship between the federal government and the state, being coerced to expand our medicate program or loses all of the moneys that we currently were giving from the previous deal with the federal government. so i think that, as you look through the court's decisions, chief justice roberts, again, i'll throw out a shoutout to our hoosier born supreme court justice, but the three points that were made clear in his decisi decision -- i second they did

strike down the mandatory expansion of medicaid, again, i think it was his words that a gun to the head is the type of coercion that is not allowed under the constitution. finally in saving the constitutionity of the case in the affordable care act, he found that there was a taxing authority being implemented by the federal government in which they had that authority to have a tax penalty. so when you look through the history since the passage, and the supreme court's decision, all of the states have now made their choice.

that was a sovereign, based on our authority as a state sovereign, it was not manage dated by a federal solve republican, it was something that the state chose. it's not the way that the affordable care act was written, because if you look through the first few paragraphs of the act, it says this is an exercise -- that's what we defted girps, that's what we challenged, we were i'll admit a little bit surprised about a saving under a tax penalty. that's not the subject of my remarks today. the real issue, when you think about it from the perspective of six states that are statutory creatures, it's really a question of whether the federal government now has authority to regulate state sovereigns under the taxing authority.

we know that the federal government can regulate states as employers -- where the states actually won under a 5-4 saying we were not subject to federal regulation under commerce clause, then garcia overturned that, again, 5-4, saying that the federal government can require states as employers, to be subject to those fair labor

standardables and terms and conditions of ememployment. now i'm still not happy about garcia, and frankly i would like another shot. now the question, under of the rule of law is whether the federal government has the ability through the irs to regular laid my sovereign state under a taxing authority. you know, and again, what has been taught in law schools all around the country over the years, is that states as

sovereigns are not subject to federal taxation. we don't have a tax form that we fill out. so i point that all out to demonstrate that under our challenge, it's not so much just scott pruett and explained from a congressional officer's position, the focus on challenging the act, but i think ours really lends itself to this question of federalism, whether the precedent will now be set that the irs can regulate our states under a taxing authority that's hitherto unknown. this tax penalty is not the same as a regular tax, so if you read the, what i would consider a somewhat draconian tax penalty, the math is that you count up how many employees you have, the

state has 28,000 employees and you multiply 2,000 times your workforce and that is your tax penalty. even if you were just to misa few employees being covered so again, this is that same type of threatening coercion that doesn't really fit in the relationship between sovereigns, the 39 school corporations who have joined, i was talking to a few people in the hall, they're usually not standing next to me during my election process. but they were very concerned about the way we educate our children and our school corporations as part of our sovereign government has been structured, we have a school board, they elect the people who run the school and they use

part-time workers so it's bus drivers, the teacher's aid, the people that work in the cafeteria, under indiana's law, 37 and a half hours, anything less than that is part-time. a lot of our schools are run by part-time employees under our statute. now they're busy trying to comply with 30 hours as full toil. so they therefore had to crete a whole process of moving people down to 30,000 or les. i would be willing to defend if they were sued under a tax penalty, as i am willing to defend my state.

as i thought about it, it was enough not to wait to be penalized. to comply with a federal dictate, in keeping with the nature of federalism and the sovereignty of my client, i thought it was better to challenge in advance, and again it's not a challenge over all of obama care, which as it's been kind of labeled, but it really reflects the fact that whether the federal government can require an employer under their taxing authority to be subject to the same dictates as trp under the commerce clause as originally written. so the $56 million threat of the

state is a tax penalty that i didn't want to wait to have to defend, i thought i would bring in advance. state is really the intergovernmental tax immunity that we have lived with as part of our federal society and the sovereignty of each. i have joked among our legislators, and some of them didn't think it was a joke, but i have talked about if there was a tax penalty, we could have a 100% reciprocal tax. if you think about it, if we're going to break the deal between the sovereigns of

intergovernmental tax immunity, that the federal government has the tax penalty authority, does that mean the state as sovereigns themselves might have some taxable right over our federal players. so again, i said it as a joke, i'm not sure whether it might show up as a bill later in indiana's legislature when they come back in january. but treats states not as sovereign but as taxable entities that people raise for consideration, i know there's a number of people from the academy, if you congress tend that states are taxable entities, and can be taxed as employers, it's not about health

care, it's not about health care, it's a question of federalism and what is left of federalism if the federal government has the so with that question, i think i'll conclude by saying, this is the obligation of state we often sip federal funds and have sold part of our sovereignty and we explain about the springs, but we have entered into a deal with the so republicans and are subject to rules and regulations, i do think it's time for states to do more in the goal of checks and balances that our constitutional.

but i do think that without a senate that will check the federal government on behalf of states, it's going to be left to attorneys general in our state government to do more in terms of being the sovereign and challenging the acts of our federal sovereign friends when they get out of line. is so with that i'll conclude and can we take questions? >> i think we might have time for one or two questions. are there people with questions? right there and please wait for a microphone to get to you so everyone can hear. >> i'm sam castle, in regards to the groovr video, the groover video was discovered a few days

how big and i don't know if richard winestein is here in the audience, i think he ought to be thanked for actually finding it and posting it on the web. but my question is, if you look at the oklahoma ruling, that has a very interesting discussion of the groover video, and i was won'tering what extent if any that played a role in any of the -- >> well, it was an unusual oral argument in front of the district court. judge lawrence asked for it. because he did have some questions that he thought would help in a frame work of oral arguments. so we're still at the district court level and it was not-we're not briefing and arguing in front of the court of appeals. so it was very limited in terms of his questions, and i think it

really didn't explore anything like what i saw come out of the oklahoma case that went up to the court of appeals. >> any other questions? in that case, we're really on time. so let me simply ask the panelist or the first panel to come up here.

my name is bob barnes. my job will be to give them subtle signs that they have gone on too long, i'll do something like that. and to move things los angeles to sort of help with your questions, when you have some. and also if i find that our panelists are agreeing too much, i'll try to be devil's advocate a little bit and see what we can do about that. so thanks to cato for doing this and let me introduce the panel to you. jonathan adler is the -- i'm not going to pronounce it right. the memorial professor of law, director of the center of distance law and education.

he teaches courses in environmental, administrative and constitutional law. his work has appeared in publications ranging from the harvard and environmental law review and the supreme court economic review to "the wall street journal" to the usa today. testified before congress a dozen times. he is contributing editor to the national review online and a regular contributor to washingtonpost.com. he along with michael cannon is the co-author of taxation without representation, the illegal irs rule to expand tax credits under the ptaca which appeared in the journal health matrix, he's credited with being responsible for the current solidify indication. >> he teaches legal writing,

statutory interpretation, the place of writing and brief writing. he earned a ba in matt aches and a ba in economics from brown and his jd from columbia law school. he was a kent scholar, executive mack managing editor of the columbia law review. after law school he clerked for girard limplg, the united states district court for the southern zriktd of new york, i'm sorry, and -- before entering academia, she practiced civil litigation in seattle, white collar

criminal defense and civil litigation in new york. breeann garard. i hope i said it right, is constitutional accountability center's and pell rat counsel. richard counsel in the firm's supreme court and appellate practice. prior to joining melvin myers, he was an attorney advisor in the office of legal counsel at the justice department. he also served as a law clerk for justice steven briar. for academic -- the duke law journal, northwestern university law review, the washington law review, the american university law review and the yale law and policy review, he's one of the drafters of the am meek cuss brief on behalf of members of congress and states legislature, she received her degree from

emery university. and university professor of constitutional law and health law at vangder built university so with an ma and mb from yale. he's a selected member of the institute of medicine at the national academy of sciences, he served as a member. anded a minute of the advisory panel in the use of medical technology, office of technology assessment. in addition, he served as former seat governor, counsel on reforms. and that's tennessee's medicaid programs. he also has lit gate constitutional years in state and federal court, i was

particularly grateful for that lawsuit because it allowed me to write about high school football and covered the supreme court at the same time. most recently he's written and spoken about the state's constitutional challenge. the successful friend of the court brief on the issue in the supreme court. and has testified before congress about the issue. whether subsidies under the aca has accrued to income qualified person to purchase insurance under federally run exchanges. as you have heard, one of these cases, the appeal from the fourth circuit, is currently at the supreme court. it at least was, i didn't check this morning, but we expect it to be on the private conference list that the court takes up tomorrow. we don't find out right away what the court will do about this.

there's been a pattern if the court decides to take a case, if you wait a week later to announce it, supposedly to see if there are any flaws that they didn't see the first time, or the court of courts koumtd decide not to take the appeal or simply hold on to it for a while. so while there is some action plans for tomorrow, it's unlukely that we will find out riling away exactly what the court decided. with that, i'm going to turn things over to professor burn stein who's going to start us off. >> thank you very much. from vanderbilt law school, delighted to be here, i want to give a shoutout to michael

cannes and the stars of the issue that we're going to be talking about and whose work has really been crystallized and per sued this with vigor and not this intellectual and academic background, but with a real seven sus mission. tom miller who will be on the second panel at adi who's also been extremely important in working on this issue. this case, the issue was poo-pooed in the beginning, the king case out of virginia is now pending before the supreme court and the court will decide or at least potentially could despite if tomorrow whether to take up the case or just when the case will be reviewed, if at all.

it reminds me of a story i would like to tell about the danger of jumping to conclusions and being too sure of what's going on and taking measures that are not prudent and it's a story of a man who calls home. a woman answers the phone and he doesn't recognize her and she says who is this? and she said i'm with the new cleaning service. and he said would you please put my wife on the phone and she said she's unavailable. why is she unavailable? because she's with a man upstairs in the bedroom. he said how would you like to earn a lot of money. how much money? $10,000. i want you to take the gun that's in the table, in the vestibule, i want you to go upstairs and shoot my wife and the man she's with. 10,000, you have a deal. he hears the drawer opening, he

hears her walk up the steps, he hears her open the door, the shots ring out, she comes back down and says i've shot your wife and the manage she's with, where do you want me to dispose of the body. he said i want u you to drag them across the steps, and across the patio. >> she said patio. she said there's no patio here. i think a lot of the opponents in this case have just in that story have jumped to conclusion with potentially serious consequences. the issue here is whether the affordable care act allows the irs to provide tax credits so resz departments of states that have not set up health insurance exchanges. the federal government runs exchanges in about two-thirds of the states.

the subsidy affects the large employer mandates because the mandate that is triggered by the law is trigger when one employee receives a federal subsidy, so if there's no subsidy that's available, then the employer mandate does not kick in. the affordable care act and there's been a lot of kind of sophisticated discussion and really acts is -- but the basic point is this. the affordable care act makes provisions for two types of exchanges, where persons can purchase medical care and medical insurance. section 1311 of the statute says the state shall establish an

exchange. the federal government cannot force states to establish a change. when this was drafted, somebody who had basic constitution 101 looked over this and decided that this is not a workable solution. but typical of this very large law, folks did not go back and change the language to 1311. so you have language that clearly connotates the states should be the source of the exchanges but realizes constitutionally it cannot be done that way. because of the anti-common deering principle. then you have section 1321. there's nothing in 1311 that takes butt the -- clearly the idea was for states to do this.

this is an oops provision, because 12321 provided that the federal government shall schedule up an exchange if the federal government opts not to set up such an exchange. this is by any stretch sloppy drafting, because one would think that if you have a provision that allows for the election of states not to set up an exchange, the language shall in 1311 would have been changed, but that's not the case. so the shall language of 1311, as a constitutional matter cannot be enforced and 1321 does the right thing, it says if states do not set up an excha e exchange. now note the 100 to 400% of

poverty means if you have under 100% of poverty income, you do not qualify for a subsidy. many states have not expangded medicate as a result of the nfib decision, tennessee being one of them. and as a result there are folks who have income under 100% of poverty who do not qualify for medicaid, they don't get a subsidy, they don't qualify for a subsidy. so what are the requirements for subsidy? under section 1401, there are bafblg two. that the exchange must be established by a state, and secondly, it must be established by a state under its authority under section 1311. both elements, by a state, not on behalf of a state, but by a state under section 1311 are

expressly enumerated and limiting terms in section 14101. there is no comparable subsidy for those enrotted in an exchange established by the government under section 1321. so at the eptd of the day, that's all i should really need to say, i should sit down and that's really the end of the discussion. but that's not the end of the case. the irs as was stated earlier, adopted a lul that the subsidies apply to both federally run and state run exchanges, even though there's no express statutory authorizizations for that, in fact it's the opposite. so what the plaintiff's claim in these cases? the court claims, the subsidies are provided for state run exchanges under section 1311 and not for federally run exchanges under section 1321.

and there's several rationales. the limitation of the subsidies was in fact purposeful. when the federal government realized that it could not main date the states accomplish -- to have the states run the exchanges, since coercion was not possible, therefore the subsidies were designed to encourage the states to set up the exchanges, the states are the gate keepers and that the letting tiff history supported this, that this was an induszment on the part of the federal government to enkurjs the state to set up an exchange. can't force them, but you can bribe them or incentivize them too. here would be a good place for the gruber clip. michael cannon has been promoting it. the you run the grouper clip for

me? the federal government has been sort of slow in putting up the backdrop, in part because they want to squeeze the states to do it. what's important to remember politically and you're not the -- blatant enough political reality that states will get their act together and realize that there are billions of dollars at stake here. but once again the politics can get ugly around that. >> and so, gruber was one of the architects of the structure of the plan, hiss economic model was influential driving this. but we don't need john and grouber to read the statute, any person that can read the statute, the idea was section 1311 states should run the exchanges, the federal government cannot force the state to do it. and so the incentive structure was put in place to encourage

and strongly incentive vise the state. this is my view in this is as the court fourth circuit says the language says what it says, or it is what it is. this is an important philosophical principle. the affordable care act provides subsidy to one kind of exchange that says nothing got a subsidy for one kind of exchange. what the congress did is the key. not what we intended, we don't psycho analyze the congress, there's a case called railroad requirement board against fritz, we look at the statute and we determine what the statute did. we don't go background and look at the purpose in broader terms and in ethereal terms, we look at what it actually did. and in this case, what congress did is not what it's intended is the critical part.

and judge griffith in the dc circuit picked up on this and said if there's a gap in the statute, it's really for congress, it's a separation of powers issue, it's for congress. so wimpb of the courts, the fourth circuit and the descent into the -- this is the rationale that developed with one of the colleagues i think in the constitutional accountability center, my old friend si laz rest, it allows for the federal government to stand in the shoes of the state governments and if they stand in the shoes, meaning that under section 1321, the federal government can set up such an exchange as contemplated by section 1311.

but this is somewhat problematic, because there's an express provision for subsidies and no such comparable provision in any explicit way for federal exchanges under 1321. with the concept of established on behalf of the state, those are not the same things, from a textur tex point of view, state governments are insent vised and the state government is now standing in the shoes, but it's very different. it means that the federal government has the authority to it set up an exchange. i find this to be an awful lot of analytical weight on a very small analytical term. then the courts have looked at the broader intend, which is what i call the earlier psycho analysis. this is problematic also. it is true that there's language in the affordable care act, that

there's a goal of establishing or moving towards universal covera coverage, but intent, in the abstract motion is not really very satisfactioning. it proves too much. and here's the example. clearly congress wanted to cover, to expand ed indicate and actually tried to coerce states to expangd medicaid by threatening the loss of all medicaid if they didn't expangd medicaid. the supreme court 7-2 found that that was coercive and unenforceable. now we have situations where nearly half of the states are not expanding medicate. all these folks with the income in the 100% to 400% of poverty range qualify for subsidy. you have folks who are too poor for subsidies. if you're in the 100% to 400% of

poverty range, but on medicate you fall under 100% of poverty, there's no subsidy for you. can't the irs make a rule if you're not on medicaid you income under 100% of poverty, you qualify for subsidy on the exchange. if you look at the broad intent, that's what congress would have wanted because they thought everyone wanted to fall under medicaid. that's not the case. states are the gate keepers of expansion of medicaid. can irs come in and say congress wanted to cover as many people as possible. yes the language and law says 100 to 400% of poverty. it never contemplated states would refuse to expand medicaid. never contemplated the nifb case and therefore we as an administrative agency as a regulatory body can, in fact, expand those subsidies. no one thought that could be possible. yet under the principle of

looking at the overall intent, that's where you go. why would that not be valid under the circumstances even though the language of the statute limits the statue from 100 to 400% of poverty. so this is problematic. further there's no provision in the statute that suggests the irs has a specific gap filling role here. in order for there to be a gap filling role, it's not enough to look at the overall statute, you have to look at the particular issue the supreme court said or the particular context. in the particular context or issue, there's nothing that suggests that congress contemplated a gap filling role for the irs under the circumstances. so then the question is what if in fact, they are not right, that this was not an intentional strategy, but in fact was an oops provision? and was something that congress had sloppy drafting about? i would argue even under those

circumstances, which is the best case scenario for government, that it's not the role of the government to fill in the gap of this type with this sloppy drafting. sloppy drafting should be cured by congress not by the agency and not by the executive branch. this is what legislators do. if they have -- certainly the supreme court said this a number of times that if the statute doesn't play out exactly the way some proponents would have liked it to play out, the right way to do this is to go back to congress and get a change or a fix. what are the effects -- let me conclude by saying about the effects. if the plaintiffs prevail, there will be a battle in the state. the number of 5 million has been suggested. there will be a battle and in the states and lot of pressure on states like tennessee and others that have not established an exchange to establish the exchange. that's not a static situation. there's tremendous pressure to do that.

the issue will be business clie gnat on the one hand versus subsidies for more folks. then in terms of broad issues, i've mentioned the separation of power. that's what this is really about, who gets to decide? what about the fact the republicans now control the house. after next week, we'll have a stronger position in the senate and may even control the senate. this is a stronger reason for courts not to allow the agency to intervene. the politics have not held on the affordable care act. the democrats, advocates have 60 votes in senate, wide majority in the house. 60% in the senate. the people voted and there are much narrower margins in the senate. dems have lost control of the house. the new deal was institutionalized. people don't remember this. there were successful challenges brought in president roosevelt's first term.

he had a landslide in 1936 and implemented a second term. that's where a lot of new deals were ultimately institutionalized. the political process moved in a different direction. the courts should in this case strictly construe the law and enter dialogue and basically require the advocates of the affordable care act to negotiate with the republicans and require the republicans to negotiate with the democrats. because if the plaintiffs win, it will be a politically unsustainable position. on the sir question which will be decided tomorrow, i think there's no purpose in waiting. i think there will be -- i'll talk about if we have questions. i'll concludes about that. i think that issue is for tomorrow. thank you. >> professor, you'll let others talk about why you may be wrong. you tell us why you're right. >> i think i have some. slides. here we go. great. pleasure to be back here. i wanted to start off by saying how i got involved in this issue.

in early 2011 i was asked to present a paper at a conference on health care policy at the university of kansas looking at federal state interactions under the affordable care act. i've done quite a bit looking at how the governments interact and other programs in the context where federal government tries to use various tools whether conditional funding, either conditional preexemption or tax treatment to induce state cooperation in the achievement of goals. so in preparation for this conference, i did what one would have thought you should do in a statute like this. i read these. one of the reasons i mention that, as some of you may recall in 2009-2010 there were quite a few folks that said when it came to complex legislation and this specific law that people, including members of congress, shouldn't read the statue. kline at the time ran a blog at the washington post that

actually had an item entitled don't read the bill. the fact that we are here is perhaps a consequence of the fact that sometimes people didn't read the bill. i read the bill and noted in the paper i presented in early 2011, the way the statute is plainly written, tax credits which must be authorized by congress because the irs only has the authority to recognize tax credits in so far as congress has authorized it to do so are authorized for the purchase of health insurance in exchanges established by a state under statute 1311. they are not otherwise authorized. in a room full of health care officials, federal health folks, no one thought this was controversial in february, 2011. the irs had yet to promulgate a rule authorizing tax credits and federal exchanges. more over, no one really thought states were going to refuse to

set up exchanges. the assumption was states would fall in line much like the assumption states fall in line with medicaid. no one contemplated something like this could be litigated. it was only after the irs made the rule after folks challenged the irs authority to issue the rule and prospect of litigation became real that people tried to come up with arguments about why the plain text of the statute couldn't work. it offered no meaningful justification of the rule. no citation of legislative authority or legislative history. it gave a general paragraph which is in future years will probably be exhibit a of what in most cases, courts like d.c. insufficient statement or explanation of statutory interpretation and a rule -- an

interpretation and explanation that would have been rejected in any other case but one of this significance. jim has already talked about the language. we have section 1311 talking about states shall establish exchanges. 1321 saying if states fail to establish or take steps to implement the law that hhs shall establish and operate. why is that important? because congress saw the difference between establishing the act of creating, authorizing of initiating and creating this entity and running it. throughout the statue, the word established is used to identify who the entity is that is creating something or under who's authority it is created. in section 1401 authorizing tax credits and exchanges subsidies established by the state under 1311. language that was used repeatly in 1401. language that was added to section 1401 at different times

during the drafting process. as jim said, we should be able to stop with the language. here are expressed references by the state in 1401. i think seven, cross references. one is in the definition of premium assistance amount. the other is coverage month. i put both there. i highlighted the establish by the state in the coverage provision because that's added very late in the drafting process. the reference to establish by the state in the premium assistance amount is language after it comes out of the senate finance committee, but later on in the process, the senate leadership including staff of senator majority leader harry reed are making fine-tuning adjustments to the statute, going through it line by line. they add establish by the state again in section 1401. if merely referencing exchange is the same as saying exchange established by the state, there would have been no reason to do this. if section 1311 and 1321 are the

same, there would be no reason to do this. if reference to a section 1311 exchange is by definition an exchange established by the state, there would be no reason to do this. yet they did it. the government and defenders of the irs rule have failed to come up with an explanation of why this would happen, of why this language would be there. the best explanation is it was convenient short hand for exchange. convenient shorthand that's longer and required members of congress to add additional language at multiple times in the drafting process. that's just not credible. it's not taking language seriously. it's not taking the fact that every place in the statute were established by the state is used to modify exchange it provides provision the statue is serving to induce state cooperation or coordinate state and federal