what about the phrase seized upon by critics of the treasury department's rule found in the provision for calculating the amount of the tax credit from -- who purchased a policy on an exchange established by the state? well, you could pluck a forward phrase out of moby dick and say it was a story about a sunday whale watching cruise. that's not how you read a book and not how the supreme court tells us you read a statute, either. reading the law to provide tax credits nationwide on both state-run and federally facilitated exchanges allows the provisions of the aca to work harmoniously which is something the supreme court has told us clearly is something that should be a guidepost when we're reading statutes. in contrast, the reading asserted by the king challengers would deny effects to the regulatory scheme by subverting the act structure and design and basic purpose and rendering important provisions absurd. something the supreme court has told us we should avoid when reading statutes. i believe the interpretation of the law reflected in the

treasury rule making tax credits available nationwide to all americans who need them regardless of the state in which they live, accords with the plain text of the law and allows the law to work in the way that congress intended. interpreting section 36-b in this way allows the fundamental market reforms at the heart of the law to work in the way that they were intended and is the best interpretation of the law when you read the law according to the way that the supreme court tells us we should read statutes. i'd be delighted to answer any questions the court has and, i mean, the panel has. i'm used to being in front of judges. but thank you for your time and i'd be delighted to answer further questions. >> and i can promise you none of us will be wearing robes. mr. weiner? >> thank you, mr. chairman, ranking member -- ranking member coons, for inviting me to testify today. let me say first i think it is wrong or at least premature to be talking about a violation of the rule of law by the treasury

department when the supreme court may yet tell us, and i think will tell us shortly that they were right. second, i'd like to say the affordable care act, in fact, is working. 14.1 million americans more have insurance than they did before. the rate of uninsured americans has dropped from 20% to 13%. health care price inflation is at its lowest level in 50 years and the rate of increase in insurance premiums has declined. the third, the opponents of the aca in the king case would roll back this project, and they contend that the treasury department charged with implementing congress' intent should have found that what congress intended to do was to enact a self-destructive statute, one that coerced states

to set up their own exchanges by threatening if they did not to impose a federal backup system that didn't work. now, why would congress have done that when the whole point -- why would they have had a nonfunctional backup as a threat when the whole point of the backup was to ensure that the statute did work in those jurisdictions? and why would congress plant a time bomb in the statute, anyway? well, the argument is that the irs and the treasury department, those questions were off limits because the language was so clear that there was only one permissible interpretation. let me answer one more question, and that's why would the states have an incentive without the coercion to establish exchanges? and the states, themselves, asked -- answered that question in the very case that mr. carvin handled. when they amended the complaint

in the nfib case, the state governments alleged the exchanges were coercive. why were they coercive? not because they threatened subsidies of the citizens of those states, that they didn't set up an exchange. they were coercive, the lawsuit said, because the states would cede regulatory authority if the federal government established exchanges. that's not my position. that is the state's position and that is their incentive along with a lot of grants to establish exchanges. now, the opponents really have to take the position that the statute has one and only one permissible reading because there is a strong presumption that you read statutes to be effective, that you read statutes in furtherance of their evident purpose. justice scalia says that in his

book, "nonstatutory interpretation." and the argument here is that this self-emulating interpretation that the treasury department was so derelict in rejecting can prevail only if it is impossible to construe the statute any other way. it's crystal clear, they say, but no one at the time the statute was enacted was aware of it. in fact, it was so obscure that it wasn't discovered, and that's the word that has been used, discovered until months after the statute was enacted by a lawyer whose announced mission was to find a statutory glitch that would take down obamacare. nor is this a one and only

interpretation accepted now by an authoritative interpretive, probably for at least four members of the supreme court. the solicitor general, senate and house leaders and staffers who are involved in the drafting of the bill. health insurers. the american hospital association. american cancer society. 22 states. the former director of the cbo. all of these people interpret the statute the same way the irs does and to say that their interpretation is impermissible is to question either their literacy or their candor and neither is really endowed. let me just say with regard to the irs and their process, truth is a defense, and the irs engaged in a process that produced a reasonable result, one that did not gut the statute, as the interpretation offered by the aca opponents would do.

one that was consistent with the commonly -- with the commonly understood meaning of the statute by those who enacted it at the time. thank you. >> thank you very much. i'd like to thank each of the members of this learned panel. you know, i agree very much with the testimony of mr. carvin, that this is fundamentally about the rule of law. this is fundamentally about the question of whether the federal government can impose billions of dollars of taxes upon millions of americans directly contrary to the text of federal law. it is likewise about whether the federal government can spend billions of dollars explicitly prohibited by federal law. if the answer to both of those questions is yes, if the administration's interpretation is acceded to, it makes the

entire constitutional law making function superfluous. if the executive has the authority to tax and spend directly contrary to statute, the limits on the executives' authority are altogether abrogated. the legal question is not complicated. the statute provides that monthly premiums for qualified health plans enrolled through an exchange established by the state, the entire argument here, is whether the federal exchange established by hhs is an exchange established by the state. now several witnesses have testified that no one possibly envisioned that an exchange established by the state meant

an exchange established by the state. i would note, if we can have the second panel, please, i would note that at least one person understood that very well, someone who has been described as one of the leading architects of obamacare. professor jonathan gruber who, indeed, achieved worldwide fame when he candidly admitted that passage of obamacare depended upon, as he put it, the stupidity of the american people. and professor gruber quite candidly said, "what's important to remember politically about this is if you're a state and don't set up an exchange, that means your citizens don't get their tax credits." now, i would note we heard several times no one understood this. well, apparently professor gruber understood it very well but was relying upon a lack of transparency and as he put it the stupidity of the american people to keep it hidden. i want to focus on the decision-making process that occurred at treasury and the irs.

mr. weiner mentioned that no one is questioning the candor of treasury of the irs. well, it's difficult to make an assessment of that because they're unwilling to show up and defend their decision-making. so what i can tell you is they're not here. they are refusing to recognize the oversight responsibility of the senate. so i'd like to ask you, mr. cannon, you have examined this question closely. what do we know about the decision-making process at the irs and treasury in establishing the rule here? >> well, unfortunately, very little, senator, because as i mentioned before, a request by senator hatch for all the documents related to the development of this rule has been ignored by treasury and irs for 3 1/2 years. in. september of 2014 the chairman

of the house oversight committee after being frustrated by treasury and irs' unwillingness to release those documents to his committee issued a subpoena for those documents. treasury and irs have been ignoring that subpoena, for how long ago, september of last year. almost a year. >> let me stop you on that point because it was said a moment ago no one is doubting the candor of treasury or the irs. you're telling me the treasury and irs are denying a congressional subpoena, refusing to show up to this hearing? is that correct? >> that is -- well, the congressional subpoena has to do with a subpoena from a house committee for the document, not a subpoena to show up to the hearing. they're ignoring a subpoena to provide the documents which i think bears on the suggestion made by the ranking member that if they don't show up at this hearing, perhaps compulsory process could be pursued. compulsory process has already been pursued against treasury and irs -- >> the obama administration is defying that process. that seems at a minimum not an exercise in candor, living within the ordinary bounds of the english language. >> it's not an ideal transparency, no. >> now, my understanding is

staff was permitted to review some documents under highly restrictive circumstances. can you describe those circumstances as you understand them? >> well, after much persistence by the staff of the house oversight government reform committee, the treasury and irs did release some documents. 386, 387 pages, i believe. a fair amount of which was the final rule, itself. about half of it, a lot of it maybe i would think a fifth, 20% of it, was my work that they just released to the committee. only about 5% even commented on was there any substantive discussion by treasury and irs officials? and it was never -- here are the factors we're considering. it was just mentioning these things tangentially. those are the documents they released -- >> also allowed to review some documents but not take notes, not make copies. >> there are many documents

treasury and irs have not released and on two, three occasions staff were allowed to review those documents. they're allowed to go into a room sometimes with pen and paper, sometimes without pen and paper. not allowed to take documents out of the room or make copies. on one occasion, they were not allowed to make notes. >> no notes, no copies, no transparency to congress, no transparency to the american people, defying subpoenas, refusing to show up at this hearing. my understanding is the documents they're fighting tooth and nail to avoid sunshine coming upon show that initially career staff at treasury and the irs analyzed the phrase, an exchange established by the state, and concluded it means exactly what it says, an exchange established by one of the 50 states. is that correct? >> well, i'm not sure about that, senator. what we know is that -- this is from the in-camera review, they're allowed to go into the room with documents but couldn't take pen and paper with them. they had to scramble out of the

room and write down everything they remembered. in that in camera review, staff were allowed to look at different drafts of the proposed rule before the proposed rule was issued. from what we know of their review of those drafts is initially irs officials had included that statutory requirement that tax credit recipients be enrolled, quote, through an exchange established by the state. around the same time a treasury official raised this issue with the irs, that requirement, that statutory language was dropped from the proposed rule. >> so, mr. cannon, i want to make sure this committee understands that. our understanding, although to be clear, the obama administration is blocking release of the documents so it is all deliberately hidden in the lack of transparency that professor gruber bragged about. but our understanding is the initial version of the rule drafted by career staff at the irs and treasury attempting to follow the law followed the

plain text and concluded it had to be an exchange established by a state but then subsequently it appears that political appointees at the department of treasury overruled that decision and substituted instead a political decision contrary to the judgment of the career staff but consistent with the political outcome desired by president obama and the white house? >> what we know for a fact is that that provision, that statutory provision was dropped from the implementing regulations around the same time this political appointee at the treasury department intervened. we don't know anything of the substance of those discussions, what happened there. we do know that was a statutory provision that was on its way of being implemented as part of the proposed rule and then it was dropped and that's significant because that tells us a couple things. one, it tells us treasury and irs officials never believed that the phrase, the statutory requirement through an exchange established by the state was a term of art as the solicitor general now argues.

>> my understanding is some of the documents have notations, initials, perhaps may reflect an individual who also worked in the white house as part of the policymaking apparatus. is that correct? although this is all murky and opaque by design of the administration, but is that your understanding as well? >> there was white house input into the development of this rule. there's white house input into the development of many rules. we don't know exactly who provided that input. >> the initials l.f. were written on at least one of these documents? >> i have not reviewed those documents but that is what house investigators report. >> all right. let me ask a final question. the administration is arguing pursuant to chevron deference that it is the courts owe deference to its efforts to implement this law. i want to ask mr. carvin, if the process that there appears to be a suggestion occurred here, although quite deliberately the administration is blocking any

effort for the american people to know if it occurred, but if it is the case that career professionals at treasury and the irs in their expert judgment read the statute to mean exactly what it means on its face, that an exchange established by the state means an exchange established by the state, and if it is the case that political operatives ordered those career professionals to disregard the law and reach a political conclusion instead, is it your understanding that that sort of partisan political decision to disregard the law is the kind of decision that is ordinarily given chevron deference? >> no, mr. chairman. as you know, one of the principle things that agencies can't do under chevron is behave in an arbitrary and capricious manner and obviously the paradigmatic definition is simply implementing political objectives. in terms of process, you're not deferring to the tax expertise of the irs, the task force which

i think is undisputed, drawing up these regs was not just irs people. it was hhs and white house operatives. so i don't even think they went through the pretense of pretending this was a neutral interpretation of the law. i hasten to add, of course, chevron's inapplicable here any way because the statute is completely unambiguous so there's no opportunity for deference and as justice kennedy pointed out during oral argument, there's a strong cannon of statutory construction because this body, congress controls the purse, moneys will come out of the federal treasury only if that's done unambiguously. >> thank you, mr. carvin. i would note if it is, indeed, the case that partisan political operatives in the obama administration instructed career professionals to disregard the law and reach a political outcome, it's not surprising that they were afraid to come here and testify and explain that that's what occurs and perhaps give some context to why the three witnesses on the first panel chose not to attend. senator coons?

>> thank you, mr. chairman. i'll note you've taken nearly ten minutes in your first question, i hope i'll have roughly the same period of time if possible. i believe the core issue we are seeking to have a conversation about here today is the availability of subsidies, the role in the aca, and the appropriateness of how the aca has been interpreted and applied. so let me first speak more broadly to that general context. the aca, as mr. weiner pointed out in his testimony, is working. thanks to the aca, 16 million people have gained access to affordable quality health insurance and since october 2013, the uninsured rate just to take one of many positive statistics for the non-elderly adults in america has fallen by nearly 35%. this success would not be possibile without the availability of the premium tax credit which provides nearly 8 million american individuals in the 37 states using healthcare.gov with an average subsidy of $3,200 to purchase health insurance. as we all know, this historic decrease in the number of

uninsured is only possible under the aca, is only possible that it becomes affordable because the 87% of individuals who signed up under healthcare.gov qualify for subsidies and this was central to the intent of the law in my view, eliminating subsidies which may well be the outcome of supreme court action if they, i think, rule on this in a way that is advocated by some today. would result in a massive disruption in the individual market with millions losing access to affordable insurance and average costs of remaining insured increasing significantly. it is my contention that that is not required by the structure, the text, the history of the law. in fact, the opposite. that the text and the history and the structure of the aca leads to only one possible conclusion. that tax credits are available to all poor, working class, and middle class americans, those who earn between 100% and 400%

of the poverty level. as we all know, there are many who have opposed the aca for principally ideological reasons. they fought it in congress and lost. they fought it before the treasury department and lost. they fought the individual mandate in the courts and have lost. now another group of opponents has raised another legal challenge. asking our courts to bless a contorted reading of the law in a way that would sabotage a core provision of the act and undue the way that the subsidies work to the fulfillment of the core goal of the affordable care act. now, neither the distinguished chairman of the subcommittee nor myself were present as the law was crafted, but there have been a number of quotes in the press recently from those who were actively engaged suggesting that this cramped reading that's being advanced runs directly contrary to the universally held understanding of those who were engaged in its drafting and implementation. from doug elmendorf, head of the cbo at the time, to members of the joint committee of taxation, charles clapton, former senator

enzi, senator snowe, herself, recently been quoted saying they did not see or recall any distinction between federal and state exchanges as this was being drafted. and the denial of subsidies based on that would have gone contrary to their understanding of the intent. so let's be clear, in my view, this hearing is just another part of a five-year effort to deny working class americans any help in affording health insurance, having failed at frontal assaults the aca's opponents are trying to contort the letter of the law, this important law, to defeat its spirit. so for some insight into that, let me begin with mr. weiner, if i might. in your view, is there any doubt at the time the aca was adopted it was understood to mean what treasury has subsequently said it meant? at the time that it was passed? and what, in your view, happened to create the dispute that we're discussing today? >> senator, there's no doubt at all of that proposition.

we see, for example, jonathan gruber's statement several years after the statute was adopted. he's an economist, an academic economist. well, i see your jonathan gruber and i raise it with four aces. senator orrin hatch who said back in january, 2010, that -- that establishing an exchange is not a condition of receiving federal funds. and that was stated by other people as well. in june -- well, i mentioned when the states amended their complaint. october 2011. the american legislative council -- exchange council, a.l.e.c., a

right-wing organization, said there's no penalty for a state in allowing the federal government to implement an exchange. november 2012, nebraska's governor explaining why states -- why the state wouldn't set up an exchange, said there's no real operational difference between a federal exchange and a state exchange. officials assessing exchanges in georgia, south carolina, west virginia, all these states advanced knowledge that subsidies were available. this is the way the statute was understood and since it was understood that way, it really doesn't prove much to say that the treasury department incorporated the language of the statute into an early draft of the regulation. >> if i might, miss wydra, the majority of witnesses have urged us to read four words in isolation and have argued that it leads to only one possible interpretation. the supreme court in its 2007

decision, national association of home builders versus defenders of wildlife wrote "the meaning or ambiguity of certain words or phrases may only become evidenced when placed in context how does the context of these four words, how does the text of the entire statute support the reading that exchanges established by the state includes exchanges established for the state by the secretary of hhs? you touched on this in your previous testimony. i'd appreciate your revisiting the point. >> thank you, senator. yes, the supreme court has made absolutely clear in numerous court rulings by justices of all ideological stripes that statutes are to be read in their entirety, in their context, and to effectuate rather than to defeat their central purpose. and i think it's important to note that there are basically three main features of the affordable care act that make its insurance market reforms work. you have the individual mandate

which ensures that either you sign up for health insurance or pay a tax penalty assuming you have the income to do so. the important market reforms such as preventing insurance companies from discriminating against individuals with pre-existing conditions. and then of course you have what we're talking about here today, which are the tax credits, which make it affordable for americans to enter the insurance market and to make the entire affordable care act's reforms work as they are intended to by the law. so in looking at the statute as a whole and in looking at the issue that is before the supreme court in kim v. burwell it's important to note the role of the tax credits in effectuating the key purpose of the affordable care act to make insurance available for all americans. so i think when we're looking at the exchanges it's important to

note that when you're talking about who is going to run the exchange, whether or not the state establishes its own exchange or the federal government does it according to section 1321 standing in the shoes of the state the idea is still to make ensure tax credits are nationwide available to all americans who need them. otherwise the act doesn't work and numerous provisions of the law are rendered absurd if you take the reading of the tax credit provision that critics of the treasury rule have put forth. you know, we talk about what congress intended. and when you look at what they intended, it was again because of the purpose of the act and the way that it is structured integral to achieving the purposes of the law that every american who needs these tax credits be able to have them. that is the way that it was scored by the congressional budget office, the statute. that's the way that the joint committee on taxation understood the law to work. that is the clear congressional intent behind the law. so when you look at the law and the way that the supreme court

tells us, looking at it in context, reading the text of the law, looking against the backdrop of cooperative federalism which justice kennedy raised in oral argument, noting that if you take the critics of the treasury department's rule you could basically put the states to an irrational choice, either set up an exchange or if you take the federal fallback which the statute allows you to do, we will take away millions, perhaps even billions of dollars from your constituents who need the tax credits desperately. that doesn't make sense and it's not in line with the way the supreme court tells us we should read statutes. >> thank you, miss wydra. that's very helpful. i appreciate the testimony of both witnesses. >> senator sessions. >> thank you, mr. chairman. well, the fact that you say it was a goal to make insurance available for all americans doesn't mean the statute can be written in any which you'd like to effectuate some theory of care.

congress will be faced with the legislative responsibility if the court rules to deal with the statute as it is left standing. it's going to be a difficult challenge but i think that's what we're paid to do. the president doesn't get to make up the law as he's done so often. it's really troubling to me the extent to which this has become the theory around here, that the executive office must do something. congress failed to act. but when congress fails to act, it acts. it makes a decision. it says no to some of these things. it didn't pass the law unless the state exchange language was in there. that's what the congress passed. so i think we're really in dangerous ground when we get this far away from plain statutory law. with regard to the health care cost, i see in cnn money a

recent report from cnn money, united health care cost in florida is up 18%. humana up 30% in texas. that's two of the biggest states and two of the biggest insurers in america. i don't know how well it's doing in the practical world. now, mr. grewal, let's take another area that i think is even simpler that you raised in your study that the affordable care act provides tax credits to u.s. citizens win comes between 100% and 400% of the federal poverty level. are you aware of anything else in the affordable care act that would alter that number, that range, 100 to 400? >> no, for aliens there's an exception. congress decided that for aliens they would come up with a special rule because aliens could not get medicaid. but for citizens there's no statutory exception and the irs

has affected that amendment by regulation. >> so by regulation irs altered that what would appear to be plain language to extend credits for citizens they would affect several million people below 100% of federal poverty level. is that right? >> right now the estimate by kaiser is about 4 million people aren't eligible for medicaid but don't get -- don't satisfy the 100% statutory floor. so we're talking several million people, yes. >> and mr. carvin, you've studied this. are you aware of any exception that could be used to justify adding several million people when they don't fall within the statutory range? >> it's precisely the rationale they use for the lawless irs rule here, which is it's a good thing to give poor people insurance.

congress cut it off below 100%. we don't like that. so we're going to take billions of dollars from the federal treasury and help poor people. we don't need no statutory language, we'll just do what's right. and so no, it's precisely the same analysis you've seen here, which is this is supposed to be available for all americans and therefore we can do whatever we want. >> mr. grewal, another one it seems to me is dramatically clear and has been violated as you know section 36-b of the aca grants credits to some non-citizens with low incomes only if they themselves are lawfully present in the united states and cannot obtain medicaid coverage. irs regulations issued pursuant to that statute, however, contradict the statute and allow subsidies if "the taxpayer or a member of the taxpayer's family

is lawfully present in the united states" and "the lawfully present taxpayer or family member is not eligible for the medicaid program." do you find any statutory basis for the administration to find such an exception to what appears to be plain language? >> absolutely not. and the odd thing about that particular change as opposed to the other two, at least for the other two they had the courtesy to announce what they were doing in the preamble to the regulation. for this one there's no explanation at all. just the text of the regulation goes beyond the statute without any hint they're expanding the credit to persons not lawfully residing here. >> i think your analysis is important to us. we've had a number of studies

that talk about lawless approach to governmental legislation. and the american people have an expectation that when a law is passed the chief executive will follow that law and this is just plain. mr. carvin, you've studied the aca. is mr. grewal correct? is there any authority that you can find that would allow the administration to provide health care coverage to individuals if they're a member of their family is lawfully present in the united states? >> it's yet another revision in a series of stark revisions to the aca that the obama administration has done, all pursuant to roughly the same analogy, which is we want to make this better, we want to make it work in the way that we want and do all the kinds of legislative compromises that go into actually crafting statutes will be disregarded if the people in the administration view it as inconvenient.

>> our goal is to make available health care for all americans. that wasn't what the law said, however. thank you, mr. chairman. >> thank you, senator sessions. senator blumenthal. >> thank you, mr. chairman. mr. carvin, you argued in the supreme court, did you not? >> i did. >> you argued for the plaintiffs? >> correct. >> are they here today? >> no. >> you know, this hearing has been conducted with a lot of hype and hyperbole, not uncharacteristic of the debates surrounding the affordable care act. a lot of overheated, overreaching rhetoric. but there are some facts. and as ronald reagan said, facts are stubborn things. the fact is the affordable care act is working. it has provided insurance coverage to millions of americans, more than 10 million americans.

and not only did congress intend certain results but what congress intended is actually happening. we're dealing here with reality on the ground. in connecticut, which has a health exchange, like 13 states do, the uninsured rate has been cut by one half from 12.3% to 6%. 7.7% of connecticut consumers have qualified for the tax credit. millions of people across the country are now protected against discrimination. for example, based on pre-existing conditions. for years and years as the attorney general of the state of connecticut i did advocacy on behalf of people who were discriminated against because of supposed pre-existing conditions.

there's mental health care that has been expanded along with substance use disorder benefits and federal parity protection. 62 million americans have benefited, and more than 600,000 in connecticut. so the aca is working. and the public health and prevention fund has provided connecticut alone with $31 million for tobacco cessation, obesity prevention, health coverage, enrollment assistance. those facts in effect i think support the argument that congress not only intended certain consequences and the interpretation suggested by ms. wydra and mr. wiener fits within the statutory whole and the context of the statute but also

the results of the statute. i'd like to ask mr. wiener whether that interpretation in effect of the statutes, the reality on the ground, comports with what congress intended. >> yes, it very much comports with what congress intended. congress did say in the statute that the goal was to extend health care, affordable health care to all americans. it said it six times. that was in language that was enacted by congress, not some purpose intuited by a judge. it was what congress said it was trying to achieve in the statute. >> ms. wydra, do you agree? >> yes, absolutely. senator sessions joked that the statute should have been written to say health care should be

able for all americans. well, point of fact, title 1 of the act is titled "quality affordable health care for all americans." so that is the stated purpose of the law. and it wouldn't make any sense for congress to have written the tax credit eligibility to defeat that purpose. >> and mr. carvin, i assume you disagree. >> the model that was followed in the aca for the subsidy was precisely the model for medicaid. we all agree that medicaid was conditioned on the states doing certain things. my friends on the left here would say it would be insane to end medicaid payments for the neediest americans. and yet the aca conditioned the medicaid on the states doing certain things. and that's because this body thought we can get the best of both worlds, we can get the states to do something and we can get universal coverage. precisely the same logic obtains here. you give the states a real

incentive to do things, and then the premiums will flow if the state does it. so there's two purposes to the aca. one is stated in 1311, states shall run exchanges. the second is we want subsidies to be available. the only way to accomplish both purposes is to condition the subsidies on states running the exchanges, just like congress conditioned medicaid funds on the states altering their medicaid eligibility standards. there's nothing inconsistent with the purpose. there's nothing illogical. unless this body is going to say it was utterly illogical to do what it did with medicaid. so no, it's perfectly logical, perfectly reasonable public policy. >> well, let me just say that your friends who from your perspective are on your left actually are on our right. >> i was giving a geographic description, not an ideological one. >> which i think in a sense reflects the different perspectives that we may bring

to these issues, and i respect yours. but i would just suggest, again, that congress establish a system that fits together as a whole. it's working as a whole. we can argue hypothetically. we can use rhetoric. but the fact of the matter is congress actually did something good here. i can say that because i wasn't a part of congress at the time. and i approached this area with a lot of humility. very simply, in my view a ruling for the plaintiffs in king v. burwell would be contrary -- would have catastrophic for millions of families who owe their health insurance to the statutory structure that congress approved. not a perfect structure. not absolutely perfect in all of its wording and statutory language but a ruling for the plaintiffs in my view would be a human tragedy.

as well as a legal travesty. and so i'm hopeful that the reasoning that you advanced to the court will not succeed but i thank you for being here today and i thank all of the members of the panel. thank you. >> thank you very much. i would note on the discussions of the expansion of health care that studies have also shown that virtually all of the expansion has been on medicaid and that roughly 900,000 people have received private insurance, that nearly as many people have had their insurance canceled as have signed up on the exchanges for private insurance and the data are compelling that forcing people onto medicaid ends up predictably producing worse health care outcomes. with that senator hatch. >> i might also add that more people are now going to the emergency rooms because they can't get care. too long a wait to get care they need. i also want to bring out that there were about 30 million

people that didn't have health care when we started this issue and this bill. guess how many there are today. between 30 and 35 million still don't have health care. now, maybe you can make some explanations about that. you quoted my letter, mr. wiener. i'll just put the letter into the record if i can. >> without objection. >> also mr. carvin. let me just say another thing to mr. wiener. with respect to mr. wiener, the quote that you made from my law review article where you said supports the president's position was a reference to a supreme court's holding in south dakota versus dole. i do address that issue in my ucla law review article. and let me just put that into the record as well. just the page where i address it. okay? >> without objection.

>> mr. carvin, you've been carrying a load on your shoulders here. proponents of the president's position have argued that congress could not have intended to deny subsidies to federally established exchanges. but isn't it a fact that a very good reason the congress would have wanted to limit subsidies to state established exchanges was namely to incentivize states to create these exchanges. and congress couldn't order the states to create exchanges directly. so it needed a way to incentivize the states to create exchanges. i think isn't that a perfectly reasonable argument as to what was going on here? >> you're entirely right about the constitutional provision. this body has in countless statutes incentivized states precisely the same way.

it's noteworthy the help committee at the same time was considering it conditioned subsidies on certain insurance reform provisions. the clinton administration health care proposals also conditioned subsidies on state cooperation. so far from departing from the norm, this is the norm that this body has continually used not only in the health care area, not only with respect to medicaid and the aca, but with respect to virtually every provision, which is since we can't force the states to do it but we wanted them to take an operational role the best traditional way of doing it is conditioning federal funds on having the states become our cooperative partners. >> all right. well, let me just say -- ask this question to you and mr. cannon as well. i want to thank you both for your important work on this issue. i'd like to read for you a passage from my recent ucla law review article and then ask you to comment. "advocates of the president's position that obamacare authorizes subsidies for

federally enrolled plans would have us believe that statutes are infinitely malleable, up can mean down, right can mean left, established by a state can mean established by the federal government. what matters to them is advancing some alleged statutory purpose regardless of what the statute actually says. that furthers the president's agenda." now, those of us on the other side, however, insist that text does matter, words matter. they always have. and what the statute says is what matters because at the end of the day the words in our statutes and in our constitution are what bind our leaders and what prevent them from doing whatever they want to. now, fidelity of text is a foundation of the rule of law." do you agree with that passage? >> i do. and i want to make it clear we're not talking about ripping text out of context. i fully agree with my friends you that need to read this in context. i've said that approximately 400,000 times.

and i always supplemented it with the point that context reinforces for the reasons i've already articulated at every turn that 36-b should be interpreted to mean what it says. so we're not talking about some green eye shade, pulling words out of context. that's not statutory interpretation. read in context, this serves a very valuable, sensible purpose, and there is no reason to depart from the plain language. >> mr. cannon -- yeah. mr. cannon, in your written testimony you discuss an investigation that two house committees conducted into the irs's drafting of the obamacare subsidy rule. what are your takeaways from that investigation? if you could add this too, in your view what are the most troubling things that the house investigators found? >> well, as i mentioned in my testimony, i think the most troubling things are those that show -- or that indicate that the treasury department and the irs recognize that this statutory language posed an

obstacle to how they wanted to implement the statute, so they jettisoned what the statute said and implemented the law as they saw fit. or they just exercised power as they saw fit. and this is not a victimless sort of scenario here. there are 57 million individuals and employers in this country who are being subjected to illegal taxes because the irs decided that it would ignore the clear language of federal law. one of those people is kevin pace, who i mentioned in my testimony. he took a hit to his income of $8,000. he's a jazz musician. if you think $8,000 is a lot of money to you, it's a lot more money to a jazz musician. others who are affected by this rule are seeing their incomes hit by $1,000. others are paying penalties to the irs that employers and individuals, from which they're statutorily exempt, that is -- and the irs it appears from what little we know that the irs knew that this language prevented them from doing that but they tried to find a workaround, they

tried to disregard it. the other problem -- or the other thing that this investigation shows is how the arguments that the government has made before the supreme court are not the -- were not the reasoning the irs used when it developed this rule. the fact they jettisoned the statutory phrase through an exchange established by the state from their implementing regulations tells us that they knew it was not the term of art of solicitor general claims. if it were a term of art that incorporated an exchange established by the federal government, there would be no reason to take it out of the proposing -- or out of the draft proposed regulations. you could keep it in there if it's a term of art. but they knew it was not. they knew it was an obstacle to implementing these taxes and spending that money. and so they threw it out. >> mr. carvin, let me just ask you this. under the well-known chevron doctrine if a statute is ambiguous, an agency interpretation can be sustained

if it is a product of "reasoned decision-making." from the evidence we have, do you believe that the irs subsidy rule is the product of reasoned decision-making and if not why not? product of right hand decision making and if not, why not? and what does that tell us about the lawfulness of the rule? >> as i -- >> and you can also answer if you care to the arguments of our two who are arguing for the administration's position. >> well, with respect to your specific question senator hatch, no. as i've indicated to senator cruz fulfilling the administration's ideological agenda is the opposite of right hand decision-making because they're simply substituting their poll seats for that of the enacted law. and i would -- in addition point out that it strikes me as incredible, and i believe the solicitor general more or less admitted this during oral argument that from anybody's perspective the notion that this body was dell kbating to the irs

the seminal decision on whether or not to have these subsidies, which my friends to the left agree is very important to the act, strikes me as kbiet counter intuitive. this was not filling in the gaps in a statute, this is the basic policy decision. so no congress spoke precisely to the question, the issue as the chevron phrase has it congress made a decision so there was no room for the irs, much less white house operatives to change the basic policy decision embodied in the statute statute. >> thank you. now, less me ask professor -- is it gray wall? >> gray wall, yes. >> i want to pronounce it right. i hope i'm pronounce hadding yours right is it weiner? >> where he. >> you identified in your written testimony several other irs regulations that grant obamacare stat -- to several -- outside this statutory income

range. individuals automatically enrolled in employer healthcare plans, and even some categories of unlawful aliens. now, what does the fact that the irs ignored limits on its authority to began subsidies in other instances tell you about its general attitude toward obeying limits on statutory authority? >> regarding the king v. burr we will issue if that regulation is valid it's impossible to believe that it's because they closely paid attention to the statute and their statutory authority. it could be by accident that the reg laegss valid, but i think what so many instances it's obvious to me that they are implementing the law that they wanted to see enacted rather than what actually was enacted. >> all right. well, i think i've taken -- i appreciate the extra time that the mare man and ranking member have granted to me. i appreciate you both >> thank you, senator hatch. i'd like to thank each of the witnesses here. we have heard, i believe incredibly important testimony.

testimony that i think has particular salience to the millions of residents in the states that have not established state exchanges. to the millions of young people young people fresh out of college, millennials for the obama administration is trying to exact billions of dollars in illegal taxes from each of you, to a legal immigrant like my father 58 years ago, if you live in a establish that has not established an exchange the testimony we've heard today at this hearing is that the obama administration is trying to impose on you personally thousands of dollars in penalties that are flatly contrary to law. and i would note that these penalties coming from the individual mandate disproportionately hurt the most vulnerable among us. the people being hurt by these

illegal taxes are not the warn buff gets and bill gates of the world, they're young people, single moms, hispanics, african-americans that are suddenly finding a big tax bill that is due from an administration that is ignoring and violating federal law to he can tract illegal taxes. and i would note the testimony this panel has given that the career professionals at the irs and the treasury department recognize they were bound by law not to collect those taxes. for millions of people who didn't owe them until political operatives, the testimony suggests overruled them, instructed them to disregard the law and collect taxes from people who did motto them and could not afford them. that testimony is quite stunning and it is testimony that every american ought to consider. i want to thank each of the

witnesses from the subcommittee. and the committee will keep the hearing record open for an additional five business face which means the record will be closed as of the close of business next thursday, june 11th 2015. i note senator coons wishes to make a closing remark so i will allow senator coons. >> thank you mr. chairman. we came to this hearing today with differing views of the history, structure purpose and impact of the aca and i thank the witnesses for their testimony, but i think we leave with sharply differing views of the pat forward and of what the purpose was of this hearing today. in my view this is just another part of a five-year long effort to deny working class americans any help in affording health insurance, having failed at repeated frontal assaults the aca's opponents are trying to advance a contorted view of the letter of this important law in order to defeat its very spirit and i, too, will raise the

specter of a tack increase, these opponents of the affordable care act apparently find the idea that every american should have access to affordable health insurance so offensive that they areling to advance a cause if successful would immediately raise taxes for 7.7 million americans by an average of $3200 a year in order to dee table lies this law and ultimately in an effort to bring it down. i hope they are not successful and i hope instead the affordable care act continues to be improved and to strengthen access to quality healthcare if had this country. thank you for holding this hearing and i appreciate the fairness with which you've conducted it. >> i thank the members of the panel and the hearing is now adjourned.

had this weekend the c-span city tour has partnered with comcast to learn about the history and literary life of key west, florida. earnest hemingway wrote several of his noefls at this home in key west. >> they found this house for sale, they bought it for $8,000 in 1831 and pauline converted this hay lot of into his first formal writing tud joe. here he fell in love with fishing, he fell in love the with the clarity of his writing, how fast he was producing the work, in fact, he knocked out the first rough draft of a fair well to arms in two weeks when arriving in key west. he once had had a line that said if you really want to write start with one true sentence. >> for a true writer each book should be a new beginning where he tries again for something that is beyond attainment. he should always try for something that has never been done or that others have tried

and failed. >> key west is also where president harry true man sought refuge from washington. >> president true man regarded the big whitehouse as the great while jail he felt he was constantly under everyone's eye. by coming to key west he could come with his closest staff, let down his hair sometimes some of the staff would let their beards grow for a couple days. they certainly at times used off-colored stories and they certainly could have a glass of bourbon and, you know, visit back and forth without any scrutiny from the press. a sportswear company sent a case of hawaiian shirts to the president with the thought that if the president is wearing our shirt we're going to sell a lot of shirts and so president true man wore those free shirts that first year and then organized what they called the loud shirt contest and that was the

official uniform of key west. >> watch all of our events from key west saturday at 5:00 p.m. eastern on c-span 2's book tv. and sunday afternoon at 2:00 on american history tv on c-span 3. ton on c-span 3, the supreme court hears oral argument in a case challenging the conviction of a man accused of selling synthetic drugs. when agriculture secretary tom vil sack on child nutrition assistance program and a.m. that power testifies at a house hearing about promoting u.s. foreign policy in the united nations. nations. today the supreme court unanimously ruled that prosecutors must show that defendants accused of selling synthetic drugs knew the doctor ugs in this question were illegal. the case centers on the conviction of steven mcfadden

for selling bath salts designed to mimic the effects of chemically similar narcotics. the case heard oral argument mcfadden versus united states in april. this is an hour. we will hear argument this this morning in case 14378 mcfadden versus united states. mr. russell. >> mr. chief justice, may it please the court. the briefing in this court has narrowed considerable the disagreement among the parties. we now all agree that the fourth circuit ms. con struns the men's real for a criminal offense upped the controlled substances analogue act. we further agree that the jury instructions begin in this case were ear these. instead, we government now agree that to prove an offense the government must show that the government knowingly distributed an a log. which showing noeg that the substance in question had the characteristics of making it an analog under the statue tut. over the government's alternative theory that it can

show that the defendant knew that the substance was illegal or regulated. if all the government means by that is illegal or regulated under the statute of con vic the controlled substances analogue act itself we would agree that the government would simply lose because as its acknowledged the evidence tended to show that my client did not believe that his conduct violated the csa itself. >> just to be sure i understand all you're agreeing on rjs you do agree that if the defendant knew that the substance was illegal under the controlled sub is stands act or the analog act even though the can defendant didn't know the chemical structure or the particular effects, say that the dealer had handed him a box and said it this is our new analog which is illegal under the analog act, you agree that that is sufficient for a conviction? >> we do agree with that. i think that that is simply a special application of the general rule that the defendant has to know the facts that make his conduct unlawful because he knows in that circumstance the

only fact he needs to know in order to know that what he's doing is illegal. >> in and that sounds sensible to me. what about the expert testimony from chemists, is that still put on in the trial if does the government still have to show -- put on an expert to say, well this is chemically modified but it's sub shael similar and the i didn't remember sits there knowing that it doesn't have to listen to this? >> they to have to show that. the government still has to prove that it is in fact an a log. >> but does the jury have to understand the chemical testimony? >> they've got to make the determination that it is in fact chemically substantially similar. i acknowledge that that's a lot to ask of a jury or a lot to ask of a defendant to understand that. >> it is the government's burden to show both composition in relation to the controlled substance and the -- the affect of the drug. those the government must prove but what we have out of the way

is that the defendant now doesn't have to know -- you agree, the defendant doesn't have to understand the chemical structure? >> he doesn't have to understand the chemical structure if the government can prove that the defendant knew that the substance was illegal under the controlled substances act itself. >> the government has given up a lot getting to this point and i think you've just given up a lot. i would have thought -- your position that you have to know that's regulated under the chemical substances -- controlled substances act, it seems to me is contrary to the proposition that ignorance of the law is no excuse. if you didn't know -- i didn't know this was regulated you would say he's innocent because he didn't know the law. i thought your position was that you do have to know as in all the other cases in the men's ray area the facts that make your conduct illegal. you don't have to know that's illegal. >> that is certainly our principle position. we are willing to say however, whether you consider it a special exception to that rule or a special application to that

rule, if the government can show that the defendant knows that the substance is illegal under the statute of conviction that serves searches the basic purpose of the knowledge of fact requirement. >> and if he doesn't know he's innocent? >> if he -- >> if he's ignorant of that law he's not guilty. >> he's not guilty unless the government can show that he knows the substance has the characteristics of an a log which n. which case his ignorance is not an excuse. he can prove the facts, factual knowledge and the way this court described in staples and in other cases involving prohibited items. we're willing to acknowledge if they can, instead of that, show that he knew that this is illegal under the statue that's good tough enough -- >> i take it that's the same as under the controlled substances act itself, is that right? that's the analogy. that you can either show the person knew it was heroin or you can show well, the person didn't know it was heroin but the person did know that it was

some drug that was on schedule 1 of the -- of -- in controlled substance. >> that's right. where we disagree with the government is that it construes some of the lower court cases that say that as saying the broader thing, which is -- >> i'm sorry. you keep saying knowing that it's illegal under the act. he doesn't have to know the act, he just has to know it's illegal. that some law regulates it, otherwise he's not going to know what the number of the law is or the controlled substance act. >> let me be clear -- >> i mean criminals don't care, this he just know that it is -- they may think it's something, they just know it's a controlled substance. >> no. i would disagree with that and i think that's the principal of this agreement we have with the government here is that it's not enough to show that the defendant thinks that it's illegal generally or that it's unlawful under an import statute or state law. >> the government would say if he's selling it without paying the sales tax he knows that that's illegal.

that's enough to convict him under the controlled substances act. >> potentially i think that that may be the argument. so we give the example if in our brief of somebody who knows he's selling cuban supports in violation of an import ban. he knows in that case that it's an illegal or clold substance but that knowledge doesn't equate -- you wouldn't say that somebody in that case knows he's selling a controlled substance simply because it turns out that the cigars have marijuana in them. that's the not the way that you would use the english language. you wouldn't say he knowingly sold marijuana or a controlled substance. >> let's take a case involving a drug that isn't an log, a drug that's actually listed. let's say the facts are the distributor gives it to the person who is who is being to make the distribution and says this is an illegal drug go distribute it and the person then goes and distributes it and tries to evade law enforcement and so forth, is caught. now, is it is it it -- is that sufficient -- is that evidence sufficient to take the case to

the jury so the jury can find -- the jury can decide whether there's circumstantial evidence that the person who distributed the drugs knew that it was a controlled substance under federal law as opposed to one of the few things that is illegal under state law but not under federal law. >> yes, i think that's sufficient evidence to go to the jury. the jury then, though has to decide whether to make that inference. in a case like this where the defendant puts on evidence that he in fact didn't believe it violated federal law, or if the defendant is able to explain, yeah, i thought it was illegal because i thought it was in violation of an import statute, then it's up to the jury to decide whether to believe that. if it does it ought to conclude pens ray wasn't established until they can show that that he knew the characteristics of the substance that made it the analog. >> what if the employer tells the dealer this substance produces exactly the same effect as cocaine? would that be enough to satisfy

the men's ray requirement? >> it wouldn't be enough to satisfy it. it might be evidence from which the jury could draw an inference that the defendant knew that it was a controlled substance under federal law. i don't think that they should. i think it's only partial evidence. >> you say he has to know the chemical makeup that causes it could be an log, right in. >> he either has to know that or know that it violates -- >> let's assume that he doesn't know that it violates the law. he also doesn't know that -- what the chemical makeup is but he knows what it is. it is mvd-3. that's all he knows. now, under the controlled substances act that would be enough. he wouldn't have to know the makeup of it. he would just have to know it's one of the named controlled substances. if indeed md-3 is an a log, why isn't that enough? that he just knows what it was and what it was is an a log.

>> i think that's pair a log to somebody knowing that he has an ar-15 rifle which is a machine gun. in staples this court said that isn't enough, you have to know the facts about the gun which makes it an a log -- or a machine gun. >> this isn't a rifle this is n fact, an analogue of a controlled substance. it's not a proper comparison. he knows the identity of it and that chemical has in fact the characteristics that make it an analogue. >> he knows -- knowing simply the name of it doesn't tell you whether it's an analogue or not. >> that's true and knowing that it's cocaine doesn't prove that you know it's and a controlled substance. >> it does, though because the only fact that you need to know about cocaine for it to be a controlled substance is that it is can't because that's the fact that makes it illegal. it's listed on the controlled

substance act and the controlled substance schedules. so if it's cocaine you know everything you need to know based on the presumption that you know the law to know that what you're doing is illegal. >> suppose the distributor gives it to the person who is going to distribute it and says, here distribute this and there's the actual chemical formula on the container and it's the chemical formula for pcp, whatever that is, c something h something -- so that's all a person knows. he knows exactly what it is the chemical formula. has he not committed a crime, then? >> under the word controlled substances act? >> yes. >> i don't know. it depends on how it's listed in the schedule. i think the schedule might in fact list the chemical name. >> it does list the chemical name. >> then i think you do know the fact that makes the conduct unlawful. >> the person has just arrived from mars and has no idea what -- you know, whether it's

legal or not. >> i think the basic assumption is that people know what the law is. they know what's in the schedules. and if you know what's in the schedule and if you know the fact, that's enough i think to convict. >> the actual facts of this case, that is the defendant gave names to what he was peddling he called it speed, new up a replacement for the listed -- now listed approximate mpd. these were supposed to be bath salts but there's no bath salts in the world that cost what those packets cost. so what -- what do we make of what he was advertising this to be? speed up, and selling it at a price that fits a controlled substance. >> i think what it reflects

what a jury could find it to reflect is that the petitioner thought he found a loophole to the federal drug laws. as long as something was not listed on the schedules, even if it had druglike effects he could sell it and sell it at whatever price the market would bear. certainly the government can point to that kind of evidence to suggest that he knew that his conduct violated the controlled substances act. >> i thought you said that that kind of evidence was enough to get you to a jury. >> yes. >> that the defendant acted fewer tifl or that he sold these for incredibly inflated prices, that all of that it's not the thing itself, but it's evidence of the thing that the government is trying to prove. >> that's right. and i think it gets to the jury but it doesn't prove what the government has to prove here which is harmless error beyond a reasonable doubt. >> if i can just understand i meaning, i think -- tell me if i'm wrong -- that the only thing that's possibly separating you and the government we'll see if it's separating you and the government is this question of what happens if the defendant knew it was illegal under

something other than the csa or the analogue act right? and that's the only point of potential difference between you and the government. >> i think that's true with respect to our legal interpretation. i will say we also think that you ought not to reach that because of this entire regulated status theory was raised the first time in the government's brief on the merits in this court. >> wait a minute. you do differ with the government on that. >> yes. >> but assuming that the government cannot prove any belief in illegal at the government would not say it therefore must prove of that you knew the chemical composition of what you were selling. and you say you have to know the chemical composition. >> right. i think we're all on the same page. just to be clear about our position, i think that the only disagreement about the meaning of the law between the government and us now is this question of whether it's sufficient as a matter of law for the government to show that the defendant believed that the substance was unlawful under some law other than the csa.

they think that's sufficient, we think it's not sufficient. >> okay. >> beyond that -- >> assuming it's not sufficient what else does the government have to prove? i think you differ on that. >> i don't think so. i think the government fwraes that one way to prove the men's ray in this case is to show that the defendant knew the characteristics of the substance that made it an analogue. >> which means the chemical competition s. igs. >> yes. yes. >> and who would that reach other than the chemist, the underground chemist would be in a position to know that but an ordinary person would not. >> i acknowledge that giving this had statute what i think is a straightforward and traditional reading does make it substantially harder for the government to prove that men's ray for an ordinary layperson. >> my understanding -- well, the government will tell you but my understanding of the government

is it would be enough if the defendant knew the name -- the name of the drug that it's blue fly or whatever else and if indeed that drug has the chemical composition. >> i'm pretty confident that that's not their position. >> okay. >> that they've said the opposite. >> so shows the court instructs the jury that it suffices if the defendant knows that this is an illegal drug because of its had a louis jen nick effect? >> i don't think -- again the critical question is illegal drug. if by that you mean illegal drug -- >> know that it's an illegal drug because of its had a louis jen nick effect. it seems to me that should suffice for men's ray i can't. >> just to be clear -- >> excuse me. and then it's shown that this is chemically similar.

>> i think that the court would have to tell the jury that you can take into account the defendant's knowledge of its had a louis jen nick effect in deciding whether he nude it was illegal under the controlled substances act itself. so what i'm quibbling with is just the unadorned word illegal. i don't think it would be sufficient if a jury was convinced that the defendant it's an hallucinogenic effect and illegal under state law. i don't think that a jury could if it if you believe that find the men's ray i can't established unless they went under this factual knowledge prong that's the ordinary way in which knowledge unlawful procession of a prohibited item is proven. >> the instructions on page 14 of your brief in footnote 9, can you save that by adding just a sentence or two to the first paragraph paragraph. >> no, because -- >> or is it beyond hope or -- >> no i think -- you will recall that this is setting

forth the elements. so i think the element is that the defendant has to know that he's distributed an analogue and then there's questions about ways in which to prove that. i think the jury -- the court could give an instruction of the sort that we proposed which said that the defendant has to know. that this is an analogue within the -- has the characteristics to make it an analogue within the meaning of the statute. it could have also begin instructions or the government can show that the defendant knew the conduct was unlawful generally. and you can make that -- or unlawful under the csa itself. you can reach that conclusion based on circumstantial evidence including evidence concerning the defendant's knowledge about the drug's effect. but there's a world of difference between saying that this is relevant circumstantial evidence about whether the defendant knew that he was violating the statute of conviction and what the government's position is, which is once you prove that the defendant knows that it's illegal at all, you're done and the jury is compelled to conclude that men's ray i can't

is established and i think that that's simply wrong. >> i'm sorry to put you through this again but it's important i think for me anyway to get it right. i understand your understanding that the sg -- there's a big difference, the sg says you have to know it's illegal under any law, you say no under the csa. what was the other way in which you disagree with the government? >> i think that's the only way in which i disagree about the meaning of the statute. >> i thought you were disagreeing about names and characteristics. >> well, i was disagreeing with justice scalia. i don't think we're disagreeing with the government because i think they've said under the knowledge of identity approach they have to show that the defendant knows the chemical structure and effects of the analogue because it's not enough to simply know its name. so i don't think that we disagree with each other on that point. >> can i ask can mr. russell about your difference as to whether it's under this statute or under any statute? if you look at some of the instructions that are given just under the csa, not analogues,

that some of the instructions just say that you need to find that the defendant knew that he was distributing some kind of prohibited drug. they don't say a drug prohibited under the csa. so if we use that as the analogy here, that would suggest that the jury wouldn't need to find the analogue prohibited under the csa and the analogue act but just that they know it was prohibited by something. >> right. i think that there is an m big out in those instructions whether referring to unlawfulness generally or under the csa. i think courts what they really mean is under the csa n in the cases where the defendant has come forward and said actually i thought it was illegal and there is some other statute in hassan and hussein and the case of morale less, three of the seven cases the government cites for this proposition the court has said, no that's not good enough.

and that makes complete sense. now, it could be in a lot of cases the government is going to present evidence that the defendant thinks it's a controlled substance generally and we can agree that the jury can infer absent other evidence that he thought it was illegal under the csa itself but you have to leave open the possibility that a jury can in a case like this say actually, no, the evidence doesn't show that he believed it was unlawful and you the csa because he looked at the scheduled and believed if they weren't on the schedules they weren't illegal. the only legal if they are illegal and not on the schedule is the analogue act. i think a lot of people didn't. in the community where my client was selling these things, these things were being sold openly in dellees and gas stations, they were being advertised in local newspapers and magazines. that's consistent with the fact that lots of people entertain the incorrect notion that if something is not on the schedules and it's legal to sell. >> and you don't defend that,

right? i mean ignorance of the law is no excuse. >> it's no -- >> even though you're totally ignorant that it's on the analogue act, if you know the chemical composition and it happens to be on the analogue -- covered by the analogue act they've got you right? >> let me try to make clear my position. we agree that if the government can prove that you have the factual knowledge that the chemical has the characteristics that make it an analogue ignorance of the law is no excuse. >> wait. what does that mean? >> so -- >> i know all of the chemical characteristics, okay? i have to in addition no he that those characteristics make it an analogue? >> no. >> okay. >> so there are three options, the one is that you proposed, they know the name of the -- >> right. you reject that. >> we don't think that's enough. >> right. >> they know that the substance a is sem clee subs that will to

a substance. they have to know that's substantially is similar and represented actual fact. >> i mean i'm not a chemist, i don't know that it's substantially similar but i do know what the chemical composition is. i have to in addition know that that chemical composition is substantially similar in. >> yes. >> i don't think so. i think if i know the chemical composition and in fact that is substantially similar, we've got you. >> i think we disagree about that. it if you take that view we still win this case. there's no evidence the petitioner knew anything about the chemical structure he was selling here. >> i assume your argument is simply it's a kind of coincidence. you have to know that this substance is an analogue, and there are two ways you could know that. one way you know it is you could know what the chemical composition of this is and what the chemical composition of say, cocaine is. that want one way. very few people other than chemists know that. then there is a second way you

could know. the second way you could know is that you know that it is forbidden by a law which has the title forbidding analogues. and if you happen to know that it falls within that, of course you know it's an analogue because you know it falls within it. and those are the two ways. >> yes. >> no one has been able to think of a third. ignorance of the law is no excuse, has nothing to do with this case. this is just a coincidence that those are the two ways you could know it was an analogue. >> i certainly agree that those are the two ways you could know it is an analogue. i don't think that the government did can even argue that it satisfied that burden in this case much less that the jury would have been compelled to find that -- >> but you say that the government has to prove knowledge of two chemical compositions, the chemical composition of what is being sold but also the chemical composition of one of the items

on the list of controlled substances. >> yes. yes. that is our position. >> but only if that's the government's theory. only if the government goes that route rather than the route of just saying you knew it was an analogue. >> that's correct. i will acknowledge that going the knowledge of identity route in an analogue case is going to be difficult for nonchemists but i think it's difficult for reasons that should not give the court pause which is simply that it's difficult for somebody to know, even if they know what the law is whether what they're doing is illegal or not. so, you know our theory has the benefit of avoiding entirely the vagueness problems that we think are inherent in this statute. >> but there was enough evidence in in this case to go to the jury under the instruction that you want? >> yes. i will agree that there was. so the only question here is whether there should be a new trial under which we can have another discussion with the district court about what the proper instructions are, i don't think we will have a lot of

disagreement about that, or whether the court should instead hold that they are harmless and it would be unfair to do that in the ground grow under that petitioner didn't present sufficient evidence to rebut an argument the government wasn't making in trial. this court could, i think, quite he is easily resolve this case by saying as justice briar did here is the legal rule there are the two ways in which this can be proven but the government in this case to the extent it has some special new theory about illegal under some other law has waived that argument by failing to reserve it. if i can reserve the remainder of my time. >> ms. harrington. >> i find mr. russell is almost correct about the extent of the disagreement that's left in this case. our position is not that we can prevail if we can prove that a defendant believed that his conduct was illegal under some law other than the csa or the analogue act our position is that we can prevail if we can prove that a defendant knowingly distributed a drug and that he

believed that his conduct that his distribution of the drug was illegal generally. as justice -- >> my question that i posed to him is really for you. >> would you mind repeating it? >> well i'll try. suppose you have to show -- and i think you do -- that the defendant did know it is an analogue, say, to cocaine. there are two ways you could do that, the first way is you could show that this defendant being a graduate in chemistry knows what the chemical competition of cocaine is, knows what the chemical composition of this other substance is and knows they are the same. you're not going to be able to do that very often. >> right. >> another possibility is you could show that he knows that this particular substance is banned by a law that is called the analogue act, because obviously it if he knows that it

is banned by the act that bans analogues it must be an analogue. those are two ways you could prove knowledge. so prove that it is banned by the anti-turkey shoot act proves nothing about his knowledge that this is an analogue and, therefore, once you say, as you are trying to say i think that some other illegal at is enough to convict, i no longer understand the argument. >> well, the argument as justice associate meyer pointed out, they to tend to know whether what they're doing is illegal or not. our view is that the intentional standard in section 841 a describes a culpable state of mind. one way to prove that culpable state of mind is prove that the defendant knowingly or intentionally engaged in the act -- >> then you are saying that the defendant does not have to know it is an analogue and that i think you don't want to say.

>> well -- >> because you could think it was banned by some other act and that would make you know that it is that thing that the other act bans. it doesn't tend to show it's an analogue. >> what i'm saying is defendants tend obl that what they're doing is illegal not under any particular provision but generally they believe it's illegal. >> that's not what the statute says. the statute doesn't say knowingly be a bad guy. it says knowingly manufacture, distribute or dispense a controlled substance. >> yes. >> that's what the knowingly applies to. so you have to know that it violates that law, not just know that you're a bad guy. that -- that's not what it says. >> in almost every context the easiest way to prove knowledge of this kind of statute is to profit that the defendant knew the facts that made his conduct illegal. >> right, under the statute. >> just to prove the facts, he doesn't have to have any awareness of the statute, but if he knows the facts, which would include the chemical structure

that's usually in other context the easiest way to prove knowledge under this kind of statute. in this context that's not the easiest way. we think there is another way. the knowing or intentional standard described the culpable mental state, this court has said that to prove knowledge you don't have to prove -- >> the cuban cigar that turns out to be filled with marijuana -- >> well, i guess our primary submission is that it's sufficient if the government proffers that a defendant distributed a drug and that he believed that to go so was illegal under some drug law, that he knew it was some kind of illegal drug. >> it has to be under some drug law. you didn't say that before and i don't think your drug said it. it has to be illegal under some other drug law. >> let me point out the reason there's not as much explanation in the brevis there's a fundamental disagreement that we disagree with the petitioner what the courts have done in the csa context.

we think it's sufficient that if a defendant believes what he's doing is illegal under a drug law. we think it would be consistent with broader principles if the court held nor broadly that he believed his conduct was illegal generally. you don't need to go that far in this case. >> but the problem -- i mean, that highlights what i think is the practical difference here. you've got a defendant who is obviously knows something is out there, he's trying not to do something, whether it's not to violate the csa or whether it's not to violate anything and you just want to be able to show to the jury look, something is bothering him, he knows that something is afoot and that's all you want to have to prove as opposed to he knows he's violating either the csa or a drug law. >> well -- >> and i don't know how that works. i understand how that works in this case because you just say to the jury look, he's checking the schedule every day, he's doing this he's doing that, but i'm a little concerned about extending that as a general matter where it doesn't have to be the law -- one because i think usually it's not a

question whether you know anything about the law at all it's whether you know a question about the facts and whether that happens to bring it under the law but then i don't know how broad the principle is that you just have to know what you're doing is -- would raise a doubt in the jury's mind about whether you knew it was legal or not. >> i have two types of responses which i will point out. the first is a dock trinl point and the is second a real world example. the dock trinl point is that this court has ruled there are other ways to prove knowledge other than a defendant knew a critical fact. the government can prove willful blindness, the reason you allow willful blindness to substitute for knowledge is not because being willfully blind to a fact is the same as knowing the fact, it's because they have the same date of mind as the person who knows the fact. a person who engages in an act intentionally and believes doing that is illegal is at least as culpableable as the person who

knows the facts that make his conduct illegal. >> what if its violating a sales tax law, you're going to send him up the river for 15 years? >> we don't think the court needs to hold that in this case. we think it's sufficient if the government can revolver that the defendant knowingly distributed a drug believing it to be illegal to do so whether or not he knew what provision of law -- >> it's illegal because am fact, it's bad for animals and the law involved -- prevents veterinarians are from using this kind of drug for animal treatment. that's all he knows. that's all he thinks. now, he's guilty of this statute? that doesn't tend to show at all that knowledge that he knows it's an analogue but in your view because he feels guilty, as perhaps he should, he's guilty of violating this law. >> well we do believe that that would establish the necessary culpable state of mind. >> can you give me any authority for that? i mean your example of willful blindness is an example of

where, in fact in respect to this law he knows there is a risk he is violating doing the conduct that it forbids, he knows there is a serious risk and he pays no attention to that at all. >> well, we do think -- that's not a very strong analogy, i don't think. >> well, but i think what it shows is that you don't have to prove actual knowledge of a fact to satisfy a knowledge standard in the statute. we think it would be perfectly sufficient for the court to hold that when the government proves a defendant is distributing an illicit drug for human consumption and believes what he's doing is illegal and he's correct about that then that is enough to satisfy the csa or the analogue act. >> it might be except that there's some evidence in this case different than what you're saying. he checked according to his brother, the controlled substances act, didn't see this listed. and also he was told something was illegal, he flushed it down

the toilet. so why don't we leave this to the court below to figure out whether the error was harmless or not given the evidence in the case. >> i acknowledge that is that is the court's usual practice and we won't have any problem with the court doing that here. we do think the evidence you point to tends to show that he may not have believed he was violating the csa specifically, but there's plenty of evidence to show that he knew and correctly believed that what he was doing was illegal. he sold his products in baggies and vials -- >> i'm sorry, he has it to know that it is a controlled substance. >> he has no know that it's a controlled substance analogue, where we differ -- >> not even an analogue because plenty of people sell things thinking it's maybe cocaine but in fact it's crack, or they sell something else thinking that it's a different drug. had they just know it's a drug. >> we are 100% on the same page.

i think -- >> you keep saying has to know it's an analogue, i think that's wrong. he just has to know it's a controlled substance. >> but by controlled substance what we don't mean that he has to know that it's illegal under the controlled substances act. that's -- that's not our position. >> is this a real world problem? this sounds to me like most artificial distinction that i've heard in a long time. does virginia have an analogue act, this is from virginia right? >> yes. >> virginia are have an analogue act that's different from the federal analogue act? >> i do not know the answer to that question. >> do the states typically have analogue acts period or do they have analogue acts that are different from the state analogue acts? all of these cases unless this case involves a chemist your proof that the person knew the thing was an analogue is going to be that this person engaged in all kinds of officer testify conduct to try to hide it from law enforcement. so it's going to be for the jury

to determine based on circumstantial evidence whether the person knew that this thing was illegal under some law and if it's not the federal controlled substances act i don't know what act it's going to be. the defense is going to be well, you know i knew that it was illegal, but i thought it was illegal under the state analogue act it wasn't illegal under the federal controlled substances act. that what we're worrying about here in. >> i think that gets to the point. the way you sort of characterized with a might be the right instruction, that you have to prove that the defendant through it was relieved it was ilg legal under some drug law we're fine with that. petitioner would like the instruction to be that the defendant knew it was illegal under the rays or under the analogue act. >> the question i'm asking practical question we've got the federal controlled substances act the analogue provision. what is this other body of law that might come into play ear? >> i think our point is that most defendants aren't aware of

any body of law. they just know what they're doing is illegal. so we shouldn't have to prove that he had a specific -- the specific statute of conviction in his mind. >> ms. harrington i take your point that this is going to have a very small practical effect in terms of what either the prosecutor or the defense attorney is putting on at trial but it actually seems to me to be a real thee kret cal difference which has implications far beyond this case. what mr. russell has suggested is two ways of showing that a defendant knew a fact that the fact that he was distributing an analogue and you might know it because you know the chemical structure and all its property or you might know it because you know, you know, somebody has given you a box and said this is an analogue prohibited under the analogue act and so you know that it's an analogue. so those are two ways of knowing a fact but you are saying that in addition to knowing a fact the men's rae is satisfied if

you can just show that the defendant knew he was acting cull much blee in violation of some law and that it seems to me is a theory that could be put on to any law, that in addition to knowing all the facts that a statute says you have to know, the government has an alternative way of proving its case which is just to say, oh look you were acting cull.blee. you knew you were doing something wrong. >> yes, and, again you know, we would embrace a narrower articulation in this case of what your knowledge of illegal at has to be if you know you're violating a u.s. drug law -- >> suppose he thought that there was a labeling law and he was vie laying the labeling law. he's wrong. there is no labeling law. but it violates the analogue act. guilty? >> under our view that would be sufficient. we don't think the court needs to reach that in this case because there's no suggestion that he -- that his belief in illegal at was that he was doing anything other than distributing an elicit drug that he was violating some u.s. law.

>> so just to clarify, you are saying it's not just any legality it has to be a drug law that's a qualification. >> we're saying at least for the purposes of this case that is sufficient. >> what do you mean by purposes of it this case? what is the law generally? must it be a drug law or could it be any law? >> you should give it up ms. harrington. >> let me try one more time. we think it would be consistent with the way this court has treated other men's rae issues such as, you know willful standard. >> i don't think the problem is with your articulation. i think the problem is we're sitting here thinking of examples like, you know there's an anti-bird hunting statute and says you cannot hunt green-i had turkeys and the guy has never heard of that and you say, okay, i don't know if this is a green-i had turkey and gone yon if it violates the green-i had turkey statute but maybe it violates something.

that sounds like an odd principle even if you limit it to all laws concerning birds. do you see the problem? am i suddenly worried the government is going to start skull king around in the bushes. >> i think that has not turned out to be a real world problem. i certainly understand the court's concern i do think in the willful context that that has the court -- brian said that's sufficient if the defendant correctly believes what he is doing is illegal he doesn't have to have any sense of what law he's violating. willfulness is generally thought to be a much higher pens ray i can't standard than knowing or intentional. although this court has never address this had precise session, the penal code and brown commission report have em based the idea when you satisfy a higher men's rae statute you have satisfied the lower. we are embracing a narrower articulation -- >> you say you're embracing the narrower articulation, but it seems to me that's just a case-specific one, justice alito

is right it's hard to see how that could make a difference here, but i think it would make a world of difference when you expand it to the other cases involving men's rae. when you get to that point it is an ignorance of the law situation. in all the cases involving men's rae we do not ask whether you have any idea whether it violates the law or not. >> well -- >> and your position makes it much ease why err to convict people because you don't have to show that they even knew the facts that made their conduct illegal. all you have to do is say that -- illegal under the law that they're being charged. all you have to do ask say they did something that makes it look like they knew that -- they did something that makes it look that they were suspicious and if we can find any law in the united states code that makes what they did illegal we can prosecute them for what we want to prosecute them for, even though they didn't know that the facts fell under that provision. >> well, you have to prosecute

them for the actions they actually took that broke the law. >> yes, and part of that prosecution is you must show that they had the second sit men's rae. what you're saying is we can show that simply by showing the jury that they were acting suspiciously. >> i don't think that's quite correct. we have to convince the jury that the defendant in any case believed what he was doing the relevant conduct which in this case would be distributing the drug violated the law was illegal. you have to prove that beyond a reasonable doubt. just merely suggesting to the jury that a defendant was acting suspiciously is not going to get the job done am in most cases. i do think in most context it it is easier to prove that a defendant knows the facts that make his conduct illegal than it is to prove that he was doing was illegal. >> what's the best case you can give us to help? in more asset the defendant didn't know that the surplus shell casings belonged to the government and he was exonerated because he had to have an intent. suppose that he didn't know they

belonged to the government, but he thought that was it an illegal casing because it was dangerous, and he was wrong about that, could he be prosecuted then. >> we think he could be. all of the cases in that mine, the more asset and staipless all of those cases involved people who genuinely believed what they were doing was innocent. we had to construe the statute so it didn't sweep in people that were innocent. >> is there a case you have -- >> so the easier cases where the defendant really truly believes what he is doing is illegal and those cases it tend not to come to the court. there are some statements in brian, brian was about willful standard but also discussion of knowledge standard. in brian the court said the government doesn't necessarily have to prove that a defendant knew what he was doing was illegal. i think the use of necessarily there suggests at least leaves open the possibility that if the government did prove that then it would be sufficient. the court also said -- >> that's the best you have? >> the court also said in brian

that the defendant -- that the government merely needs to prove knowledge of the facts that make his conduct illegal suggesting that that's an easier standard for the government to meet. >> just to follow up quickly on justice kennedy's hypothetical, what if he knew he was trespass trespassing but he went on to the government property and took the casings, you have to show he knew what he was doing was illegal. he was trespassing the sign said government property. so we can convict him for taking the shell casings. >> we would tie it more correctly to the conduct that actually violates the law. if he needs to know that the taking of the shell casings is illegal, not that some ancillary conduct that brought him to the shell casings was illegal. so here we would say the defendant needs to know that the distribution of the drug is what's illegal. we think if you look at the -- i think we're on the same page with petitioner in suggesting that the same standard should conference csa and analogue cases, we just disagree about --

>> let me try this out. start with a drug that is on the list. all right? the defendant knows the chemical composition of a drug that's on the list. the defendant has no idea that this is on the list. knows nothing about the federal drug laws the person distributes it intentionally, knowingly. that person has violated the law. the person's ignorance of the fact that this is a controlled substance is irrelevant. am i right so far? >> yes, because he knows the identity of the drug. >> he knows what it is. >> yes. >> he knows the chemical composition, he knows the name. all right. now, let's assume we have a list of analogues. it's the samg thing. if the defendant those that the thing is on the list, knows the chemical composition of it and it turns out that this is an analogue, that is sufficient. that's not going to be the proof in most cases. i think maybe the confusion is that a defendant's knowledge of the illegality of what he or she

is doing is not something that has to be proven circumstantial evidence that the person knows that the thing that is being distributed is something that is on the list. >> again there's no list in the analogue context. >> i understand that, but it makes it easier to understand if we imagine that there is. >> yes. so, no we agree. our position is that if we can prove that it a defendant knew what he was doing was illegal, that's a way of proving that he through he was distributing a controlled substance analogue or a controlled substance -- >> but it's not something that you have to prove. you don't have to prove that he knew that it was illegal under federal law or under state law or under any other law. you have to prove that he knew that it was a is substance that constitutes -- that, in fact constitutes an log, but the fact that he knows that it's illegal under federal law is circumstantial evidence that he knew that it was something that fell within that definition. >> yes, and it might help if it i could give you a real world example of how this has worked

in the courts of appeals under the can csa. there's a number of cases in the courts of appeals dealing with a substance called khat, khat is a plant that's born grown in the who were of africa, it gives a stimulant effect. fresh leaves of khat contain a substance called cafinone which is a schedule 1 substance illegal under the csa, produces amphetamine effects. khat is legal in many places in the world, it's illegal to distribute it in this country because when treasury picked it contains a schedule 1 substance. the number of cases where the government has prosecuted people for distributing cafin ichlt chlt ne defendants have said i didn't know it had cafinine i was distributing khat. the courts of appeals have uphold those convictions based on there was proof that the defendant knew distributing the

khat was illegal did -- >> the light is drawing slightly. don't say i'm stating your argument correctly if i'm not. >> okay. >> you're saying first he doesn't know the chemistry. so he doesn't -- he has no know it's an analogue but he doesn't know the chemistry. you're saying of course if he knows that it is illegal under the analogue act, that's good enough because he knows it's an analogue. >> yes. >> now you're saying if he knows it's illegal generally under the drug laws, that should be evidence of the fact that he knows it's an analogue because, let's ask him, why do you think it's illegal under the analogue -- i mean, why do you think it's illegal under the drug laws? i'm going to tell you it's not a listed substance, why could it be? and he'd sort of be stuck there because he doesn't way to say because it's a lot like cocaine. >> right. >> because once he says because it's a lot like cocaine he knows it's an analogue. and using my far out examples

it's not because he thinks it's a veterinarian law. is this right, if i follow your argument, you'd say the fact that he knows it's illegal under the drug laws it's an analog, but he's free to come up, if he wants, with some kind of basis for saying that even though he thought it was illegal under the drug law, he thought it was illegal under some other law that had to do with postage stamps or something, the jury believes he should get off, is that right? >> that's a correct interpretation of our narrow argument. if we can prove that the defendant believed what he was doing violated some drug law, that's enough to prove that he knowingly distributed an analog. >> what was some drug law be other than the csa and the analog act? >> in the federal context, there wouldn't be, but our point is really that the defendant generally does not have a specific law in mind. he just knows what he's doing is breaking the law. when the petitioner says we have to prove he knew he was

violating the statute of conviction, that's much too high of a burden. the only time you do that is when you have a willful standard in a tax aversion context. just general knowledge of illegality -- >> illegality must relate to drugs? >> pardon me? >> the illegality must relate to drugs? >> that's certainly sufficient when the government proves that the illegality relates to drugs. >> and sufficient is not just evidence that he knew it was an analog. it's inclusive evidence. >> we think that's correct. petitioner suggests -- >> even if he comes back and says, yes, i thought what i was doing was wrong, but it wasn't because i thought this was an analog. it was for some other reason. >> we think if he came back, for example, and said i thought it violated virginia controlled

substances act, because some states control more drugs than the federal schedules include, but i didn't know it violated a federal drug law, we think that would not be a defense. some knowledge that you're violating a drug law is sufficient. we think in this case, there is actually -- >> you say sufficient. how about necessary? is it necessary -- is the drug -- is the law that he thinks he's violating, the drug law, is that necessary? >> again, we think that a broader view would be correct, but we're perfectly happy with the willingness in this case that it would be sufficient. we don't think there's a basis for limiting the knowledge of illegality to drug laws. as long as you tie the conduct to belief in illegality we think it's enough. with you think it's definitely sufficient for this case to hold that when the government proves a belief that he's violating drug laws, that's enough. >> the conduct is related to the genus of illegality? >> right. >> i think there are areas where criminal defendants try to tailor their conduct to fall within, if they're captured and caught, particular laws but not

others. i recall cases where that's true. hypothetically, let's say they know this much marijuana or cocaine is a misdemeanor, if they get up to this much, it's 15 years mandatory minimum, so they structure their activities to fall in the lower level. you would be able to prosecute them, according to your theory for the big 15 year mandatory whatever, if they happen to go beyond the misdemeanor amount. >> certainly, yes. if the defendant believed he was distributing one pound of cocaine and it turned -- i don't know what the right numbers are, but say he believed he was distributing one pound and turned out to be distributing five pounds of cocaine and there's a different sentence that applies for five pounds, if we can prove he distributed five pounds of cocaine, that would be sufficient. >> what does that do to the theory? what they have to know is it's illegal under the drug laws. what was illegal, what they knew was, the misdemeanor amount, and you say, well, it doesn't matter that they -- doesn't matter that

they didn't know they were distributing the larger amount. >> i took your hypothetical to know he knew what he was doing was illegal. >> he knew it was a misdemeanor because of the amount. he didn't know it was going to be a felony because he didn't know he had that much of the drug. >> in the argument, if he knew what he was doing violated a drug law, that's sufficient. if he thought what he was distributing was oregano and it turned out to be marijuana, we think that wouldn't be sufficient, because he would believe a what he was doing was innocent and wouldn't have known the facts that made his conduct illegal. in this case, there are plenty of facts to show that the petitioner really believed what he was doing was illegal and it turned out he was correct. he sold his product in little baggies and vials instead of having more traditional commercial packaging. he charged $450 an ounce for these products which sort of undercuts his belief he thought they were aromatherapy products or things you would pour into a bathtub. >> you can only charge what the market will bear.

if it has the same effect, if it has the same effect as cocaine, even if it's perfectly legal, you should charge $400, don't you believe in the free market? >> not in the illegal -- the free market works in the illegal context the same way it works anywhere else. but i think there's evidence he knew what he was selling was a drug, and an illicit drug. >> all he knows is that it would give you a high, and he was charging what people were willing to pay. >> he also acted furtively. he hid the product on his website. he wouldn't answer direct questions from his customers about the high for the controls substances. we think there's sufficient evidence to show the petitioner in this case -- >> the petitioner's counsel agrees there's sufficient evidence to convict. >> i think he has a different view of what a proper instruction is. i understand the court

remeadowlands for general application and harmless error. i think that would be appropriate in this case because the government didn't act for this instruction, and then it was defending a harsher instruction it was given in the case. >> how do we -- when the jury is told that human ingestion is enough, he has to intend that these bath salts are not put in the bathtub but to ingest, that's all that -- that was the only mention that was charged. that was the men's ray --. instruction that the government requested because that's what they said was enough, but the instruction that was given to the jury to find he knowingly distributed a substance that had the same farm collagical effects of a controlled substance. >> let me start with the instruction. justice ginsburg, under the government's interpretation of jury instructions as requiring the jury to find that the

defendant knew about the similarity, the government acknowledges it didn't require any knowledge about the similarity in structure. the government has acknowledged that this instruction here was inadequate, even under the government's new view of the law. and so the question here is simply, whether or not they're entitled to take advantage of that and make a harmless error argument based on a theory that they only developed in this court. with respect to the general legal questions, let me start with addressing their broad any law will do position. as i understand them, it is premised on their thought all it requires is culpable state of mind. that's not what the statute says. it doesn't say distribute an analog culpably. it says knowingly. this court has repeatedly said knowing requires knowledge of the facts. and there may be an exception we have discussed that you can meet by showing there's knowledge that the law of conviction itself, but there is no precedent from this court that

gives prosecution the option that nets the facts made it unlawful or that he acted culpably, or knew that the conduct was unlawful under some law. with respect to their fallback position that it has to be illegal under a drug law, we're getting closer. we would agree if they were to say, as some courts have said, including a case that they featured prominently in the brief, it has to be a federal anti-drug abuse law. now, the truth of the matter is there's only one of those, but the value in that articulation is that it makes clear that the defendant doesn't have to know the name of the statute. but if the government's position is that it's enough that it's under state drug abuse laws. there are lots of state analog acts, and there's lots of states that have been ahead of the government in putting on their schedules things that are analog, including some of the substances in this case, that's clearly not what this court has ever had in mind in interpreting

the word "knowingly" and it's up to congress to decide what is culpable enough. when it uses the word knowingly, it's going to get the same interpretation it has in the past. the government points to cases like bryant where the court has said in in addition to knowing the fact, you must also know something about the law, and it says that, you know, willfulness is enough to establish knowing distribution. but of course, in those cases, it's not something they have general knowledge of, they also know the facts. >> if the defendant knowingly distributes heroin, doesn't have any idea it's illegal, nevertheless has violated the law, i don't see why the rules should be different with respect to an analog. >> i don't say that it is. i think that -- >> the defendant doesn't have to know the legal status of the drug. >> again, we're talking about the government's alternative. the government always has the option. >> state law calls it an analog, and he know he's violating state

law, he knows this is an analog. >> well, if he knew he was violating a state analog act that had the same definition under federal law, you could then ask the jury to infer that he knew that he was violating the federal law, but most of the time, as my colleague said, the government's evidence is simply going to be that the defendant knew the conduct was unlawful somehow. >> i'm not sure that you answered justice scalia's question fully. >> i'm sorry. >> go ahead. >> so justice alito, the government never has to prove the defendant's knowledge about the law if it proves he knows the facts that makes it unlawful. what we're objecting to is the government's alternative route to showing men's raya. we agree to the point it's enough to show the defendant knew it was violating from the state law or perhaps some provision of the fda, which regulates substances independent of the controlled substances act. as a practical matter in most cases, what the government --