the country growing up right here in south carolina. there are no excuses not to put in the effort. there are no excuses not hit the books. if you want a good education in this country, you can get a good education, even if you are in a bad school. and i'll be honest with you, we've got to do some work to make schools more equal. [applause] right here in south carolina there are still schools that were built back in the 1800s that haven't been repaired and don't have decent restrooms and don't have proper books. [applause] so we've still got to fight to make sure that every child, not just some, have equal opportunity. that's a worthy fight. but you can still learn even in that school. even in the most rundown school, if you're putting in the effort you can get a good education. so you can't make excuses. even as you advocate for

justice, you've got to make sure that you're also taking advantage of the opportunities that you currently have. but that brings me to one last piece of advice for young people, and that is, think about more than just yourself. [applause] think about how you can have an impact beyond yourself. the people who i know who are really happy and successful as they get older, it's because they have an impact on something other than just their own situation. they're not just thinking about how do i get mine. [applause] they're thinking about how does everybody get their fair share. and when they do that, that gives meaning to your life; that gives purpose to your life; that gives you influence and a sense of purpose. and you've got to have a sense of purpose beyond just the almighty dollar. i mean, look, we live in a free market society, and one of the things that sets america apart is business and entrepreneurship

and hustle, and folks are out there just -- they're trying to make a new product or create a new service, and the profit motive is strong. and that's good. that's important. but if that's all you're thinking about, and you're not thinking about how you can also have an impact through your church, or if you're not thinking about how you can treat your employees right when you do get a business, if you're not thinking once you do make it what am i giving back to make sure that i'm giving a helping hand to the folks coming up behind me -- if you're not thinking -- [applause] -- if you're not thinking that way you won't be able to get through the tough times. what gets you through tough times is that sense of purpose. and that purpose cannot just be about yourself, it's got to be about something larger. all right. oh, we got a young man right

here. he's standing tall. go ahead. yes, sir. audience member: my name is trace adams. the president: hey, trace. how old are you, man? audience member: 10. the president: so you're in fifth grade? audience member: fourth. the president: fourth grade? you're a tall guy. audience member: thank you. the president: so what's going on, trace? audience member: i was just wondering -- i'm 10, and i was just wondering when you were interested in being a president. the president: well, it wasn't when i was 10. are you thinking about it? [laughter] audience member: a little bit -- yes, sir.

[laughter and applause] the president: okay. all right. i mean, you're definitely ahead of me. now, just remember, you got to wait until you're 35 -- that's in the constitution. so you got at least 25 years to prepare. i did not think about -- when i was 10, i wasn't thinking about being president. i think when i was 10 i was interested in being an architect. i was interested in the idea of like building buildings, and i thought that was pretty cool. and then i went through a bunch of stuff, and for a while i thought i might be a basketball player -- and it turned out i was too slow and i couldn't jump. and so i stopped thinking that. and then i became interested in being a lawyer, and i did become a lawyer. but what are you interested in right now? what subjects are you interested in school? audience member: social studies, actually. the president: social studies? so you're interested in public policy. are you starting to read the newspapers and things? do you discuss -- is that your dad behind you? father: that's me. audience member: yes, sir. the president: and you discuss the issues with your dad and stuff?

audience member: oh, yes, sir -- definitely. the president: oh, yes, i can tell you do. okay. well, i think the most important thing is to just make sure that you work hard in school. i think it's really good if you get involved in like some service projects and help out people in your community whether it's through the scouts or your church, or at school, or some other program, so that you get used to trying to help other people. make sure you graduate from college. and then, who knows, you might end up being -- i might just be warming up the seat for you. [laughter] and if you become president, i want you to remind everybody how, when you talked to president obama, he said, go for it. all right? don't forget me. [laughter and applause] all right. that's trace -- trace, who's 10 years old and already thinking -- he's already thinking about public policy. i want all the folks in college to just notice he's reading the papers and talking public

policy. [laughter] so if all you're doing is watching the ballgame -- don't let 10-year-old trace embarrass you now. [laughter] all right, it's a young lady's turn. well, it's not going to help you just to be all like -- you got like five people all helping you out. i'll call on one of the young ladies there who's part of city year. they're wearing the city -- did you do paper, scissor, stone? is that what happened? [laughter] all right. you all did that fast, too. it's like you guys do that for everything. where are we going to lunch?

[laughter] audience member: well, good afternoon, mr. president. my name is tarissa young clayborn. i am also a native of illinois so it's good to see you here. i am also a proud city year-americorps member at hyde park elementary school here in columbia. the president: there you go. fantastic. so there's a hyde park school here? audience member: yes, sir. the president: because there's a hyde park in chicago back home. audience member: yes, there is a hyde park in chicago. so my question for you -- the president: look, he's like "hey-ay." [laughter] audience member: my question for you, mr. president: how can city year and other americorps programs support the goals of my brother's keeper? the president: well, first of all, city year, americorps -- for those young people who are thinking about public service or want to serve before they go on to graduate school, or in some cases, want to get involved

before they go to college, americorps programs are an outstanding way to help fund your college education. and city year is one of the great americorps programs that we have. in addition to them all getting these spiffy red jackets, they end up being placed in communities all across the country doing -- working in schools, working in communities in need, working on housing programs -- all kinds of different stuff. and we're very proud of them. my brother's keeper -- the idea the genesis of this came after the trayvon martin verdict and obviously there was great controversy about how the case was handled. and eric holder, by the way, has done an outstanding job getting our justice department to stay focused on -- [applause] -- the equal application of the law at local and state, as well as federal levels.

but what i realized is also part of the goal of making sure that young african-american men succeed, young latino men succeed, young white men who don't have opportunity succeed is to make sure that everybody has got a path that leads in a positive direction. and you can't wait until somebody is in trouble before you start intervening. you got to start when they're younger. because the statistics show that if a child, by the time they're in third grade, is reading at grade level, they are far more likely to be able to graduate and succeed. if a child doesn't get suspended or disciplined in school

they're far less likely to get involved in the criminal justice system. if they get through high school without being involved in the criminal justice system, they are far less likely than to ever get involved in the criminal justice system. so there are these points where we know that if you intervene in a timely way, it will make a difference. so what we've done is to get pledges from foundations and philanthropies -- we've businesses, we've gotten the nba involved, we've gotten every agency in our government involved. and we've got cities -- and your mayor is participating in this so columbia is participating in this -- in coming up with local plans for how are we going to give opportunities, pathways for mentorship, apprenticeship after-school programs, job search, college prep -- you name

it. and each community is coming up with its own programs and plans, and then we are partnering with them and helping match them up with folks in their area who are also interested in resourcing these initiatives. and americorps i think is a key part of this because where a city or a state or a local community has a good plan, there is an opportunity for city year or any other americorps program to be plugged in to that plan and become part of that plan. and my hope is, is that over the next several years and beyond my presidency, because i'll stay involved in this, that in every city around the country we start providing the kinds of help that is needed to make sure our young men are on the right track. [applause] now, i want to point out, by the way, i'm not neglecting young

women, because, as you might expect, michelle would not let me. [laughter] so she's initiative programs for mentorships. and we've got an entire office in the white house for women and girls that's focused on some of these same initiatives. but there is a particular challenge that we face for african-american and latino men, young men of color. and we've got to be honest about that. we're losing a large portion of our generation -- or a big chunk of this generation and the previous generation. i was talking to my -- we have something called the council of economic advisers. and even though there's been good job growth, really strong job growth, and unemployment has come down, we've gotten through the recession -- the labor participation rate, the number of people who are actively seeking work, still is low compared to what it was 10 years ago. and we're asking ourselves why. now, part of it is the

population is getting older, so more people are retiring and not working. but that's not the only reason. in the african-american community, a big reason is that you've got young people with criminal records who are finding themselves unemployable. [applause] now, that's not just bad for that individual, that's bad for their children, that's bad for the community. so this is part of the reason why it's so important for us to rethink how we approach nonviolent drug offenses, which is responsible for a lot of the churn of young men of color going through the criminal justice system. [applause] we got to reexamine how sentencing is working -- and make sure it's done equally, by the way, because we know statistically, it's been demonstrated that african-american men are more

likely to be arrested than their counterparts, more likely to be searched, more likely to be prosecuted, and more likely to get stiffer sentences despite the fact that they are no more likely to use drugs or deal drugs than the general population. [applause] and that's a problem. [applause] so we're going to have to look at reforms there. but for those who are already in the pipeline, we've also got to think about how do we help them get the kind of help that they need. and this is going to be something that i'm devoting a lot of energy to because this is not just a black or hispanic problem, this is an american problem. if you've got a big chunk of your workforce that is not working, and that's the youngest part of your workforce, and they're never contributing to the economy and not paying taxes and not supporting social security, then the whole economy grows slower.

everybody is worse off. so this is not an issue just for one group. this is an issue for everybody. all right. [applause] all right. it's a young woman's turn. it's a young woman's turn. i'll be happy to sign your book. i know, you've been waving a lot, but it's not going to help. [laughter] it's a young woman's turn. so let's see -- this young lady way back in the back, right up there. yes. i'm going to give -- make the mic person get some exercise. audience member: thank you, mr. president. good afternoon, and welcome to south carolina. my name is simone martin. i'm an attorney in this area with the rutherford law firm. in fact, my boss, representative and house minority leader todd

rutherford is sitting right over there -- probably wondering why i'm not at the office. [laughter] but nevertheless -- the president: are you advertising for him? was this like a whole -- [laughter] audience member: no, i'm just trying to keep my job. the president: are you going to give like the number? audience member: q no, i'm just trying to keep my job. the president: "if you need representation" -- [laughter] -- "call rutherford and associates." [laughter.] all right, go ahead. audience member: i have two questions for you. i hope that you'll indulge me by addressing both. they're quick -- or the second one is quick. the first one is, what can criminal defense attorneys, like myself and mr. rutherford, do to increase the number of federal pardons that are granted? the second question is, to whom do i need to speak to improve my chances of being selected as a white house fellow? can you help me out? the president: oh, okay.

well, let me address the non-self-interested question first. [laughter] i just had a discussion about the criminal justice system. one of the extraordinary powers that a president has is the power to commute sentences or to pardon somebody who's already been sentenced. and when i came into office, for the first couple of years i noticed that i wasn't really getting a lot of recommendations for pardons that -- at least not as many as i would expect. and many of them were from older folks. a lot of them were people just looking for a pardon so they could restore their gun rights. but sort of the more typical cases that i would have expected weren't coming up. so i asked attorney general

holder to work with me to set up a new office, or at least a new approach, inside the justice department. because historically, what happened was the president would get a big stack of recommendations and then he could sign off on them -- because obviously, i don't have time to go through each request. and so what we've done now is open it up so that people are more aware of the process. and what you can do is contact the justice department. but essentially, we're now working with the naacp, we're working with various public defenders offices and community organizations just to make people aware that this is a process that you can go through. now, typically we have a pretty strict set of criteria for whether we would even consider you for a pardon or commutation. eric, i assume that that's available somewhere on the

justice department website, is that correct? attorney general holder: yes. the president: okay. so my first suggestion would be to go to the justice department website. if the person doesn't qualify because they may have served time but there were problems when they served time, or if it was a particularly violent crime, or they may just not fit the criteria where we would consider it -- a lot of what we're focused on is non-violent drug offenses where somebody might have gotten 25 years, and she was the girlfriend of somebody and somehow got caught up, and since then has led an exemplary life, but now really wants to be able to start a new career or something like that. that's the kind of person typically, that would get through the process. now, in terms of the white house fellows program, there's a whole white house fellows committee

and it's complicated, and i don't have any pull on it. [laughter] i do not put my thumb on the scale, because if i did i'd get into trouble. because then people would say, he just put his friends on there. so you have got to go through the process. but you seem very well-qualified so good luck. audience member: thank you. the president: you're welcome. all right. how many more questions do i got? i like to -- it looks like i'm okay. all right, you know what -- i'm going to just call on this gentleman. he's been like waving and i have got to make sure he's not waving -- because out of my periphery i just saw him the whole time. all right. go ahead. audience member: first, i have two questions. firstly, would you sign my book? the president: yes, i will sign your book. audience member: all right. and i'm a student currently studying at the university of south carolina.

go, gamecocks! audience member: i see president pastides is in the house, so it's good to see you, mr. president. the president: you're sucking up to the president, huh? audience member: my question, well, i guess it relates to the michael brown case. and i've just recently seen the report that suggested that there's been grave injustices going on in ferguson. and i'm trying to figure out why the attorney general, eric holder, refused to press charges against the police officer. why didn't he face the federal charges? the president: well, i will answer that question. now, that was two questions right now. audience member: and i'm -- the president: no, that's it. [laughter] you don't get a third question. sit down. i called on you. come on, sit down. see, this is how folks will get you.

my reporter friends here they're famous for doing that. they'll be like, mr. president, i've got a four-part question. [laughter] so you only get two. i will sign your book. with respect to ferguson, keep in mind that there are two separate issues involved. the first is the specific case of officer wilson and michael brown. and that is typically a charge that would be brought and dealt with at the state level and the local level. the federal government has a role only if it can show that there was a significant miscarriage of the justice system and had clear evidence --

now, i'm being overly technical but basically the federal jurisdiction here is to make sure that this wasn't just a completely wrong decision. they don't retry the whole thing all over again. they look to see whether or not, at the state level, due process and the investigation was conducted. and the standard for overturning that or essentially coming in on top of the state decision is very high. the finding that was made was that it was not unreasonable to determine that there was not sufficient evidence to charge officer wilson. that was an objective, thorough,

independent, federal investigation. we may never know exactly what happened, but officer wilson like anybody else who is charged with a crime, benefits from due process and a reasonable doubt standard. and if there is uncertainty about what happened, then you can't just charge him anyway just because what happened was tragic. that was the decision that was made. and i have complete confidence and stand fully behind the decision that was made by the justice department on that issue. there is a second aspect to this, which is how does the ferguson police department and the government of ferguson, the

municipality, treat its african-american citizens when it comes to law enforcement. and there, the finding was very clear, and it's available for everybody to read. what we saw was that the ferguson police department, in conjunction with the municipality, saw traffic stops, arrests, tickets as a revenue generator as opposed to serving the community, and that it systematically was biased against african-americans in that city who were stopped harassed, mistreated, abused called names, fined. and then it was structured so

that they would get caught up in paying more and more fines that they couldn't afford to pay or were made difficult for them to pay, which raised the amount of additional money that they had to pay. and it was an oppressive and abusive situation. and that is also the conclusion that the justice department arrived at. the steps that now are to be taken is that the justice department has presented this evidence to the city of ferguson, and the city of ferguson has a choice to make. they're basically going to have to decide, do they dispute the findings of the justice department -- and i shouldn't comment on that aspect of it although i will say what's striking about the report is a lot of this was just using

emails from the officials themselves. so it wasn't like folks were just making it up. but the city of ferguson will now have to make a decision -- are they going to enter into some sort of agreement with the justice department to fix what is clearly a broken and racially biased system? or if they don't, then the justice department has the capacity to sue the city for violations for the rights of the people of ferguson. [applause] and -- here's the thing, the lesson that i would draw from this. i don't think that what happens in ferguson is typical. i think the overwhelming

majority of law enforcement officers here in south carolina and anyplace else -- young man sit down, i'm in the middle of talking. all right, thank you. the overwhelming number of law enforcement officers have a really hard, dangerous job, and they do it well and they do it fairly, and they do it heroically. [applause] and i strongly believe that. and the overwhelming majority of police departments across the country are really thinking hard about how do we make sure that we are protecting and serving everybody equally. and we need to honor those folks, and we need to respect them, and not just assume that

they've got ill will or they're doing a bad job. but as is true in any part of our lives, as is true among politicians, as is true among business leaders, as is true among anybody, there are circumstances in which folks don't do a good job -- or worse, are doing things that are really unlawful or unjust or unfair. and what happened in ferguson is not a complete aberration. it's not just a one-time thing. it's something that happens. and one of the things that i think frustrated the people of ferguson, in addition to the specific case of michael brown was this sense of, you know what, we've been putting up for this for years, and now when we start talking about it everybody is pretending like

it's just our imaginations, like we're just paranoid, we're just making this stuff up. and it turns out they weren't just making it up. this was happening. and so it's important for all of us then to figure out how do we move together to fix it. how do people of goodwill, in law enforcement and community, everybody worked to fix it and find concrete solutions and to have accountability and oversight and transparency in terms of how law enforcement works? and one of the great things that we did out of a tragic situation was we were able to form a task force made up of law enforcement, police chiefs, and community activists, including two who got the ferguson marches and protests started, and they came up with a consented document that was presented to me last week that was very

specific in terms of how we can solve some of these problems. how we can make sure that police departments provide data about who they are stopping in traffic and data about how many people are killed in confrontations with the police, and how are those cases handled, and how are we training our law enforcement to respect the communities that they are serving, and how do we make sure we have a diverse police force, and how do we use technologies like body cameras and how do we make sure when something happens that may be an unjustified shootings that people have confidence in that prosecutors are independent. there is a legitimacy to the process that they can trust.

that is good not just for the community, good for the police department, so that they feel like they can get out from under a cloud if in fact the officer did the right thing, and if the officer did the wrong thing, the department should want to get rid of that officer because they are going to undermine trust for the good cops that are out there doing a good job. so the point is that now our task is to work together to solve the problem and not get caught up in either the cynicism that says this is never going to change does everybody is racist. that is not a good solution, not what the folks in selma did. they had confidence that they could change things and change people's hearts and minds. you have to have the ability to assume the best in people, including law enforcement and work with them, and the flip side is the larger community has to be able to say, you know what -- when a community says systematically that it is having some problems with its law enforcement, you got to listen

and pay attention and engage constructively to build trust and accountability so that it gets better. so often we get caught up in this and it becomes a political football instead of us trying to solve the problem. and our goal should be to stop circumstances such as ferguson or what happened in new york from happening again. or what happened in new york at should be our number one goal, and it is achievable, and we got to be constructive in going forward. [applause] all right. i got one more question. now it is a woman's turn. men, put down your hands. i am looking around. it is not going to be a guy. ok, we will call on this young lady right here. oh -- i'm sorry. go ahead.

>> i am also a native of chicago. president obama: i did not mean to call on three chicagoans. go ahead. >> i'm a senior majoring in psychology. one of my questions is, chicago has struggled with gun violence. what organizations and programs are you guys designing to keep the youth off the streets and into better conditions? and how can we as a community help you guys execute these programs and designs? president obama: i already mentioned my brothers' keepers. each community is going to have its -- this is an example where you got to work with the police department effectively and build trust. we know that things like community policing really were where you are partnering with law enforcement, they get to know young people when there is still in school, before they are in trouble, people have

confidence that that law enforcement is there for them, not just for -- in taking down stuff, but in lifting people up. my brothers' keepers and other initiatives are going to make a difference. you mentioned gun violence, and that is probably the hardest issue to deal with. we have a long tradition of gun rights and gun ownership in this country. the second amendment has been interpreted by the supreme court to mean the people have a right to bear arms. there are a lot of law-abiding responsible gun owners who use it for protection or sport, they handle their weapons properly, there are traditions of families passing down from father to son or daughter, hunting, and that is important, part of our

culture, part of who we are. but what we also have to recognize is, is that our homicide rates are so much higher than other industrialized countries, by like a mile. and most of that is attributable to the easy, ready availability of firearms, particularly handguns. now, the courts and state legislatures -- and i am sure this is true in south carolina -- have restricted the ability to put in place common-sense -- some common-sense gun safety laws, like background checks.

i personally believe that it is not violating anybody's rights that if you want to purchase a gun, it should be your responsibility to get a background check so we know you are not a violent felon or that you don't currently have a restraining order on you because you committed domestic abuse -- right now we do not know a lot are not a violent felon or that about that. it is not available. and that does not make sense to me. i will be honest with you. i thought after what happened at sandy hook that that would make us think about it. the hardest day in my presidency -- i have had some hard days -- but nothing compares to being with the parents of 20

6-year-old kids, beautiful kids, and heroic teachers and administrators in that school, two, three days after they had just been gunned down in their classroom, and you would've thought at that point, that has got to be enough of a motivator for us to want to do something about this. and we cannot get it done. i mean, at least at the congressional level. so what we have done is we have tried as much as we can administratively to implement background checks and to make sure that we are working with those states and cities and jurisdictions that are interested and willing to partner with us to crack down on the illegal use of firearms, particularly handguns. but i will be honest with you,

in the absence of more -- what i would consider heroic and courageous stances from our legislators, both at the state level and the federal level -- it is hard to reduce the easy availability of guns. and as long as you can go on in some neighborhoods and it is easier for you to buy a firearm that it is for you to buy a book, there are neighborhoods where it is easier free to buy handgun and clips than it is for you to buy a fresh vegetable, as long as that is the case, we are going to continue to see unnecessary violence. but i will end by saying this -- despite those frustrations despite the failure of congress

to act, and in some places it goes the opposite direction -- people say we should have firearms in kindergarten and we should have seen guns in bars -- you think i am exaggerating? you look at some of these laws. despite those frustrations, i would say it is still within our control to reduce the incidence of handgun violence by making sure that our young people understand that that is not a sign of strength, that violence is not the answer for whatever frustrations they may have or conflicts they may have, and to work diligently with our young people and in our communities to try to put them

on a positive path. and the people who are going to lead that process are the young people who are here today. you are going to have more impact on the young people coming up behind you than anybody else, and the kind of example you set and the willingness of all of you to get involved and engaged in a concrete way, to remake our world, together, that is what is going to determine the future of america. and looking out of all of you, you are what makes me optimistic. thank you, benedict college. [applause] and looking out of all of you, [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> employers added 295,000 jobs

in february. it is welcome news more americans found jobs last month middle-class families continued to be left behind by the president's policies. the president put his political agenda ahead of the workers who would've had a shot at a good paying job. it is time for the hesitant to put down the veto pen and get commonsense measures signed in july. >> the c-span cities tour take tv and american history on the road. we go to galveston texas. >> the rising tide certainly drew them. they watched in amazement as it battered the structures.

at the time we had wooden bat h houses. we even had a huge civilian. as the storm increased in intensity, the structures literally were turned into matchstick. the 1900 storm struck galveston saturday september 8, 1900. the storm began before noon and increased in dramatic intensity and finally tapered off that evening. it is the deadliest recorded natural off amount in the history of the united states. >> watch it on c-span book tv and american history tv.

>> next, the supreme court oral arguments in king versus burwell on the constitutionality of the health care law. after that, a discussion of the operation of the affordable care act and the possible impact of the court's decision. then another chance to see president obama at a town hall meeting in south carolina. >> the future of the federal health care law breast with the supreme court. the justices heard oral argument wednesday, challenging whether tax subsidies could begin to people who buy insurance from admiral exchanges were only once established by state. the challenge rest on six words in the more the 1000 page law comes stipulating the hell subsidies are available through an exchange established i the state. only 16 states run their own exchanges. the federal government runs

exchanges for the remaining 34 states that opted out in setting up their own. the court is expected to rule on the case before the end of the term in june. this is an hour and 20 minutes. >> we'll hear arguments this morning in case 14114, king v. burwell. mr. carvin. , and may it please the court, th burwell. >> mr. carvin, will you please back up, because before we get to a question of statutory construction, as you know, each plaintiff, or at least one plaintiff, has to have a concrete stake in these questions. they can't put them as ideological questions. and we have as four plaintiffs.

as to two of them, there is a declaration stating "i am not eligible for health insurance from the government," but there's a question of whether they are veterans eligible for coverage as veterans. >> yes. one of those is mr. hurst who would have to, if i would refer you to joint appendix at page 42, where this is the government's recitation of facts where they make it clear that mr. hurst would have to spend $750 of his own money as a because of the irs rule. mr. hurst was a veteran for 10 months in 1970. he is not eligible for any veterans service because if you've served such a short health services. if you serve such a short -- >> i'll ask the government if they agree that -- >> and i should point out that the government has never disputed this, and i'd also like -- >> but the court has an obligation to look into it on its own. >> that's true, but of course there has been fact-finding by lower courts in an adversarial

system. i don't believe the court does its own -- >> i don't think it was ever brought up in the lower court that these two people were veterans. >> if i could just make one further point on this, justice ginsburg. even if he were technically eligible, which he is not, there is an irs rule 26 c.f.r. 1.36b2(c)(ii), which says -- >> ah, yes. >> with the usual clarity of the irs code, making clear that you are only disabled from receiving subsidies if you have actually enrolled in a veteran's health services and it's undisputed that -- >> that's the government that's -- >> mr. hurst did not. >> that's deposition to. and then there were the two women, i think one of them was going to turn 65 in june, which would make her medicaid eligible. >> she will turn 65 in late june. she's obviously subject to the individual mandate well in advance of that. by virtue of the irs rule, she would have to spend $1800 per year for health insurance by virtue of the irs -- >> per year? >> excuse me? >> but you said she will turn 65

in june. >> late june, yes. >> so that takes care of 2015. >> no. right now she is obliged, under the individual mandate, to have insurance. you have to have insurance for 9 months of the year and so as of april 1 -- >> then -- >> she will be subject to the penalty which will be alleviated only by -- >> again, i'll ask the government if they agree with you on that. and then i think for the fourth plaintiff, there's a question whether she would qualify for a hardship exemption from the individual mandate even if she received the tax credit, in which case the tax credits would be irrelevant. >> that's true. again, i'll refer you to the joint appendix at 41. that was the government's argument below. we didn't want to get into a factual dispute about it because we had such clear standing with respect -- >> yeah, but you have to -- >> but you would have to establish the standing, prove the standing. >> well, as -- >> if this gets beyond the opening door. >> fair enough, your honor, but it's black-letter law that only

one plaintiff needs standing and for the reasons i've already articulated, both plaintiff hurst and plaintiff levy have. >> ok. i don't want to detain you on this any more but i will ask the government what their position is on standing. >> thank you. returning to the merits, the only provision in the act which either authorizes or limits subsidies says, in plain english, that the subsidies are only available through an exchange established by the state under section 1311. >> if you're going to elaborate on that, i would appreciate your in your elaboration, i've read that, and this statute is like the tax code more than it's like the constitution. there are defined terms, and the words you just used concern a defined term. as i read the definition there's a section, definitions and it says, quote, the term

"exchange" means, quote, an exchange established under 1311. and 1311 says, an exchange shall be a government agency, et cetera, that is established by a state. those are the definitions. so then you look to 1321. and 1321 says, if a state does not set up that exchange, then the federal, quote, secretary shall establish and operate such exchange. so it says, "the secretary is to establish and operate such exchange," the only kind of exchange to which the act refers, which is an quote, "an exchange established by a state under 1311." that's the definition. so the statute tells the

secretary, set up such exchange, namely, a 1311 state exchange. >> correct. >> and there's nothing else in this statute. >> correct. >> so that's throughout what they're talking about. so what's the problem? >> as your honor just said, it tells the secretary to establish such exchange. >> yes. >> and what 36b turns on is whether the state or the secretary has established the exchange. >> no, it uses the same terminology that it's used in 15 times in this statute, namely, the terminology in the definition is "an exchange established by a state." >> under -- >> that's the phrase. >> well, under 1311, that is the phrase. and if 1311 created some the definitional section created some ambiguity as to whether hhs was establishing a 1311 or 1321 exchange, that is immaterial because 36b does not say all

1311 exchanges get subsidies, it says exchanges established by the state under section 1311 -- >> mr. carvin. >> not established by hhs under section 1311 -- >> mr. carvin. >> so it eliminates any potential ambiguity created by the definitional section. >> can i offer you a sort of simple daily life kind of example which i think is linguistically equivalent to what the sections here say that justice breyer was talking about? so i have three clerks, mr. carvin. their names are will and elizabeth and amanda. ok? so my first clerk, i say, will i'd like you to write me a memo. and i say, elizabeth, i want you to edit will's memo once he's done. and then i say, amanda, listen if will is too busy to write the memo, i want you to write such memo. now, my question is, if will is too busy to write the memo and amanda has to write such memo, should elizabeth edit the memo?

[laughter] >> if you're going to create moneys to will for writing the memo and amanda writes the memo and you say, the money will go if will writes the memo, then under plain english and common sense, no, when amanda writes the memo -- >> gosh -- >> but now -- >> you run a different shop than i do if that's the way -- [laughter] because in my chambers, if elizabeth did not edit the memo, elizabeth would not be performing her function. in other words, there's a substitute, and i've set up a substitute. and then i've given i've given instructions -- elizabeth, you write you edit will's memo, but of course if amanda writes the memo, the instructions carry over. elizabeth knows what she's supposed to do. she's supposed to edit amanda's memo, too. >> and in your chambers, you're

agnostic as to whether will, elizabeth or amanda writes it. but the key point is here under section 1311, congress was not agnostic as to whether states or hhs established the exchange. it's -- >> well, mr. carvin, if i had those clerks, i had the same clerks -- and amanda wrote the memo, and i received it and i said, this is a great memo, who wrote it? would the answer be it was written by will, because amanda stepped into will's shoes? [laughter] >> that was my first answer. [laughter] >> he's good, justice alito. >> justice kagan didn't accept it, so i'm going to the second answer, which is you are agnostic as between will and amanda, but this -- >> ah, but that's -- >> but congress was not agnostic as between state and federal exchanges. >> yes. that's a very important point, i think, because what you're saying is that the answer to the question really does depend on context, and it depends on an understanding of the law as a whole and whether they were agnostic.

i agree with that. so it's not the simple four or five words because the four or five words in my example, it's obvious that elizabeth should edit the memo. it's the whole structure and context of the provision that suggests whether those instructions carry over to the substitute, isn't it? >> we implore you to examine these words in the context of the act as a whole because our argument becomes stronger for five reasons. to respond to justice breyer's point, he says such exchange connotes that it's the same person doing it. but look at the provision on territorial exchanges. it says, territories can establish such exchanges and then it says, "and shall be treated as a state." so -- >> yes, it does. but you say connote. no, it's not a question of connotation. it is a question of denotation. now what does that mean? it means that the federal government, the secretary, is establishing a thing for the

state. and what is the thing? the thing that it is establishing for the state is defined as an exchange established by the state. >> to -- >> now, that person from mars, who's literal, which i usually am not, but a literalist, i think would have to read it that way. but if you're not a literalist, well, at least you could read it that way. now you want to go into the context if you want to go into the context, at that point it seems to me your argument really is weaker. >> well, two points. >> the exchanges fall apart, nobody can buy anything on them. you know the arguments. you've read the briefs. nobody can there are no customers. employers don't have to pay penalties as long as they use just people from virginia, but one maryland person comes you know all those arguments. so how does the context support you? >> well, again, under the literalist or nonliteralist interpretation, saying that hhs

will establish such exchange doesn't suggest that the state has established such exchange if there was -- >> but the state, if made the -- >> if there was ambiguity in that regard just if i could finish my answer to justice breyer you look at a parallel provision where they use precisely the same language, and they said, "and shall be treated as a state," that language which is notably omitted from 1321 -- >> correct. >> and it's a basic principle of statutory construction that you interpret the same phrases the same way. and it shows that congress knew how to create equivalence between non-state exchanges and exchanges if and when it wanted to. sorry, justice sotomayor. >> take a breath. [laughter] i'm a little concerned with how you envision this provision working. you're saying that the hhs exchange can't be for the state so that it's established by the

choice of the state. the choice the state had was establish your own exchange or let the federal government establish it for you. that was the choice. if we read it the way you're saying, then we're going to read a statute as intruding on the federal-state relationship because then the states are going to be coerced into establishing their own exchanges. and you say, oh, no, they can't be coerced, but let's go back to what justice breyer was talking about. in those states that don't their citizens don't receive subsidies, we're going to have the death spiral that this system was created to avoid. states are obligated, insurers are obligated to make sure that in their states, whether they're

part of this program or not, that they have guaranteed coverage, that children are covered till they're 26, and that they base their costs on community ratings. so if they have to do that, then costs are going to rise on every insurance plan offered in the country in those 34 states, 3 or 6 of or 9 of your states will have tightened their medicaid eligibility requirements in contravention of the act, so they're taking money by breaking their compacts. they would have to lose all of their medicaid money. tell me how that is not coercive in an unconstitutional way?

and if it is coercive in an unconstitutional way, in bond just i think it was last term, we said that is a primary statutory command, that we read a statute in a way where we don't impinge on the basic federal-state relationship. >> this court has never suggested outside the very unusual coercion context of the nfib medicaid that a funding condition somehow invades a state police power. obviously -- >> oh, we did it we said it last year. >> in an nf no, no. in bond, there the federal government was taking away a police power. here, all the federal government is doing is saying you want billions of free federal dollars. that's hardly invading state sovereignty and it's the kind of routine the funding condition that this court has upheld countless times. >> let me say that from the standpoint of the dynamics of federalism, it does seem to me that there is something very

powerful to the point that if your argument is accepted, the states are being told either create your own exchange, or we'll send your insurance market into a death spiral. we'll have people pay mandated taxes which will not get any credit on the subsidies. the cost of insurance will be sky high, but this is not coercion. it seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there's a serious constitutional problem if we adopt your argument. >> two points, justice kennedy. one is the government's never made that argument. number two, i'd like to think -- >> sometimes we think of things the government doesn't. [laughter] >> well, i certainly hope you do in this case, but not on this question. what i'm trying to, quite seriously, justice kennedy convey is if this was unconstitutional, then the medicaid statute that this court approved in nfib would be unconstitutional. >> mr. carvin, what would the

consequence of unconstitutionality be? very often you have an ambiguous provision, could be interpreted one way or another way. if interpreting it one way is unconstitutional, you interpret it the other way. >> correct. >> but do we have any case which says that when there is a clear provision, if it is unconstitutional, we can rewrite it? >> and that and that -- >> is there any case we have that says that? >> no, your honor. and that was really my point justice kennedy. think about the consequences when of the medicaid deal as being coercive. 22 states have said no to the medicaid deal. that has created a bizarre anomaly in the law. that if people making less than the poverty line are not available to any federal funds to help them with health insurance. >> i fully understand that, but i think the court and the counsel for both sides should confront the proposition that your argument raises a serious constitutional question. now, i'm not sure that the

government would agree with that, but it is in the background of how we interpret this statute. >> your honor -- >> it may well be that you're correct as to these words, and there's nothing we can do. i understand that. >> there are many -- >> a, there's no savings construction to echo justice scalia's point, but, b, the point i want to make on the straight-up constitutionality is, if this is unconstitutional, then all of the provisions in the u.s. code that say to states if you do something for no child left behind, we will >> but this is this is quite different. >> in south carolina v. dole where the matter of funding for the highway, suppose congress said, and if you don't build the highways, you have to go 35 miles an hour all over the state. we wouldn't allow that. >> no. well, there, of course, you would be interfering with a basic state prerogative as to establish their limit, and they are the condition is not related to that. here the condition is perfectly related to it. >> mr. carvin -- >> we want to create something

new -- >> mr. carvin, here's a -- you refer to the medicaid example. that's a familiar -- a grant in aid says to the state, here's the federal money and here's the conditions, take it or leave it. that's one pattern. but this pattern that we have says flexible state. you can you can have your program if you want it, and if you don't, there's a fallback. there's the federal program. i mean, that's a typical pattern. it's the pattern of the clean air act. you can have a state implementation plan, but state if you don't get up your plan there's a federal implementation plan. i have never seen anything like this where it's if you take what the statute says you can have in 1321, then you get these disastrous consequences. >> that's why this is much less risky a deal for congress. and what distinguishes it from medicaid as the dissenting opinion in nfib pointed out.

in medicaid, congress is playing all in, take it or leave it. if they turn down the deal, then medicaid is completely thwarted. here, if they turn down the subsidy deal, they still get the valuable benefits of an exchange and there's not a scintilla of -- >> what are those benefits? what are the customers that can buy on it? what are the insurers that will sell on it? >> well, three points. one is we know textually that they thought exchanges without subsidies work, because again, they have territorial exchanges, but the government concedes no subsidies. >> that's not -- >> we have legislative history which -- >> mr. carvin, that's not what you said previously when you were here last time in this never-ending saga. [laughter] you said without the subsidies driving demand within the exchanges, insurance companies would have absolutely no reason to offer their products through exchanges. and then you said the insurance exchanges cannot operate as intended by congress absent the

subsidies. >> that is entirely true. they wouldn't have operated as intended because congress intended all 50 states to take this deal. so eliminating -- >> so why create 1326 at all? obviously, they thought that some states wouldn't. >> well, they thought it was possible and -- >> very possible. >> and then -- >> because they set up a mechanism for that to happen. >> and then what happens? you still get the exchange. it's not like medicaid where the entire federal program is thwarted. you get the benefits that were lauded. >> but nobody's going to visit the program if there are no subsidies because not enough people will buy the programs to stay in the exchanges. >> that is demonstrably untrue and not reflected anywhere in the legislative history. the legislative history quite clearly contradicts that. many senators got up and said there are very valuable benefits to the exchange, one-stop shopping, amazon, as president

obama has said. the government came in the last case and told you these two things operate quite independently. we don't need exchange without subsidies. in contrast, there's not a scintilla of legislative history suggesting that without subsidies, there will be a death spiral. not a word. >> wait a minute. that was the whole purpose that drove this bill because states had experimented with this, and those that didn't have subsidies or other provisions of the act didn't survive. >> they didn't have -- >> you said it yourself in the prior case. >> no. the prior case was about the individual mandate. the government came in and said the individual mandate is necessary to affect death spirals. no one, in the findings in congress or anywhere else, suggested that subsidies were available. will subsidies reduce the number of people available on the individual -- >> my problem my problem is that the reverse. you're talking about congress, hiding, borrowing the phrase of one of my colleagues, a huge

thing in a mousetrap. ok? because do you really believe that states fully understood that they were not going to get their citizens were not going to get subsidies if they let the federal government? what senator said that during the hearings? >> the same amount of senators who said that subsidies were available on hhs exchanges which is none. they didn't deal with it in the legislative history just as they didn't deal with medicaid because the statute was quite clear. let's talk about it in context again, justice sotomayor. the context is the only provisions in the act establishing any limit on the subsidies is found in 36b. so it's not a mouse hole. it's the place you'd expect to find it. it's the only place in the act that limits subsidies to purchases made on exchange. >> but it's a -- >> i don't know think that's quite right, mr. carvin. >> justice ginsburg. >> it's a tax code provision that's an implementation provision. it tells you how you compute the individual amount. >> it -- >> it it's not in the body of

the legislation where you would expect to find this. >> no. your honor, if that's true -- >> and if it -- >> sorry. please. >> what justice kagan just read to you, you had the idea that the subsidies were essential -- >> no. >> to have the thing work. that's what you told us last time. >> what i told you was it wouldn't work as expected, and that's because they thought this deal would work just like the medicaid deal where all 50 states would say yes, so you would have both of congressional purposes. >> then why in the world would they set up this whole extra thing if they didn't think anybody was going to take it? >> well, that was my response to justice sotomayor. that is completely unsupported empirical observation made post hoc by amicus. there's no reflection of that in the legislative history. indeed, the legislative history refutes it. >> mr. carvin, we've heard talk about this other case. did you win that other case? [laughter] so maybe it makes sense that you have a different story today? >> i'm really glad your honor said that.

>> and if i could return to context because i think -- >> i mean i'm sorry, mr. carvin. please. >> just very briefly, justice kagan. very much appreciate it. to respond, we've already talked about context. section 1311 is a key part of this context. it says in the strongest possible terms we want states to run these exchanges. if you give unconditional subsidies, then, of course there is absolutely no incentive for states to do it, and you have fundamentally undermined that distinct statutory purpose. whereas if you condition subsidies, congress accomplishes both of its goals. widespread subsidies, plus state-run exchanges. in terms of terms of art, again, there is language in the statute which says "exchanges," "exchanges under the act." those phrases naturally encompass both hhs exchanges and state-established exchanges. and, yet, the solicitor general is coming here to tell you that a rational, english-speaking person intending to convey subsidies available on hhs exchanges use the phrase

"exchanges established by the state." he cannot provide to you any rational reason why somebody trying to convey the former would use the latter formulation. >> mr. carvin, why don't you take an extra ten minutes and maybe we'll give you a little bit more of a chance to talk. >> ok. fine. >> well, then, i'll ask a question. [laughter] >> well, if you're going to ruin my 10 minutes. >> no. i mean, let's go back to this question of where congress put this thing because putting aside constitutional issues, i mean, there's at least a presumption as we interpret statutes, that congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly. and here and this goes back to what justice ginsburg was saying there's really nothing clear about this. i mean, this took a year and a

half for anybody to even notice this language. and as justice ginsburg said it's put in not in the place that you would expect it to be put in, which is where it says to the states, here is the choice you have. it's not even put in where the statute defines who a qualified individual is or who is entitled to get the subsidies. rather, it comes in this technical formula that's directed to the department of the treasury saying how much the amount of the subsidy should be. and that seems to be it both makes no sense from congress's point of view, and in terms of our own point of view, in terms of interpreting statutes, that's not the clarity with which we require the government to speak when it's upsetting federal-state relations like this. >> i must respectfully disagree for three reasons, justice kagan. in the first place, of course, you where else would you expect a tax credit except in the tax code? that's where this was. you wouldn't put it in 42 u.s.c., which has nothing to do with taxes.

it's the only place where exchange is limitations placed. you have three audiences here, not just states. you have to tell taxpayers what they're entitled to. you have to tell insurance companies when these subsidies are available. and you have states. so you have to put it in 36b. so the argument, i guess, the government is making is what you should have done is put half of it in 36b and half it in 1321 which, of course, would have confused everybody. 36b would say, exchanges period. then you'd go to 1321 and say when we said exchanges in 36b, we meant established by the state. >> mr. carvin, if i were a state official and i was trying to decide whether my state should establish an exchange, and i wanted to know whether individuals who enrolled in a plan on my possible state-established exchange would get a credit, where would i look? >> exactly.

the basic thesis here is these exchanges don't work without subsidies. you've read 1311. you've read 1321. now you're going to go find out where the subsidies are. that's 36b. they're hypothesizing state -- >> i think not, mr. carvin. i mean, i think the place i would look to find out about my choices is in the provision of the statute that talks about my choices. i think the last place i would look is a provision of the statute that talks about what is it coverage months for purposes of this subsection, which, by the way, isn't even the right subsection, but whatever. [laughter] that's where i would look, is in where it talks about what a coverage month is? >> but, your honor, i've already described the difficulties of putting it part of it in 1321, right? because then you would create this bizarre tax credit provision which is only half true, and you wouldn't tell taxpayers and insurance companies. so i believe that's the complete

answer. but the other practical point i'd like to make is they had three years to implement this. and no one thought the states were going to have to make a decision overnight. if the irs had done its job, every state would have been fully informed of the consequences because presumably they've read 36b, and then they would make an intelligent decision well in advance of the 2013 deadline. so there's a bizarre notion that states were somehow unable to read a statute or to or to read a regulation is simply -- >> i really want i really want to hear what you're going to say in your five to ten minutes. and if you want, only if you want, i would be interested in your responses to the government's brief, that if you read the words "established by the state" without reference to the technical definition as you wish, this isn't just about the taxes. it means employers in virginia

don't have to make policy, don't have to don't have to give policies, but if they have one maryland worker they do. it means that they never can tighten up their medicaid regulations, never, in 34 states but, of course, in the others they can. it means that there's no qualified person ever to buy anything on an exchange established by the secretary for the state, and they have two or three other anomalies that have nothing to do with taxes, all of which supports their argument that you have to read this phrase technically according to the definition. now, that's their basic point. i've tried to summarize it. do it as you wish. i just want you to have 5 or 10 minutes to answer it. >> thank you. and the first point is there are no anomalies. >> i'm going to clock that, see if see if you get 5 minutes. [laughter] >> there are no the first point i'd like to make is there are no anomalies stemming from our interpretation of 36b.

the government agrees with that. their biggest anomaly is this qualified individuals point about how there would be nobody on hhs exchanges. the solicitor general is not going to stand up here and tell you that if we prevail in our interpretation of 36b, they would be obliged by the logic of that opinion to empty out hhs exchanges. so we all agree that there's no connection between 36b and the qualified individual. that's point one. point two is, if you want anomalies, their interpretation of the statute requires 34 states today to lose all medicaid coverage. why is that? because of the provisions on 64a through 66a of the government's brief, there are various requirements that the state, on pain of losing all of its medicaid funds, must coordinate between the state-established exchange, the state agency for chip, and the state agency for medicaid in terms of secure interface and enrollment. now that makes perfect sense if "exchange established by the state" means what it says, but they think it encompasses hhs exchanges. well, the state cannot ensure coordination between hhs exchanges and the state

agencies, and none of the 34 are doing it today. so under their atextual reading of the statute, 34 states will suffer the penalty that this court found in nfib as unconstitutionally coercive. as to this medicaid maintenance anomaly, the government agrees that the purpose of this provision was to freeze medicaid payments until you had an exchange with subsidies, which makes sense, right? you want to coordinate the two. and that's exactly what this provision means under our interpretation. until you have an exchange with subsidies, the states will be frozen. the government says, that thing ended on january 1, 2014. that's a figment of their imagination. it's nowhere in the statute. plus which it makes no sense. before 2014, the states were powerless to have an exchange with subsidies, right? they couldn't do it. so there was a 3-year freeze on medicaid that they were powerless to get out of. after 2014, if they don't want

to have their medicaid frozen, all they have to do is establish an exchange. so it's a less harsh restriction on states, plus which it gives them another incentive in addition to the subsidies to create the state exchange, which is the purpose enunciated in 1311. i don't know oh, as to, yeah maybe somebody would from another if you had an employee that let lived in other state, maybe he would be subject to the employer mandate. why is that an anomaly? congress likes the employer mandate. of course they wanted to expand it. they also never thought it would really happen because, again what they thought was going to happen was there wouldn't be neighboring states without it because nobody was going to turn down this extraordinarily generous deal. i don't know if my 5 minutes are up, but that's my response to these anomalies. >> as i understand it -- >> i think if i could -- >> wow. you've been talking a long time. [laughter] >> yes.

yes. sorry. >> you have two more sentences. >> even if there were anomalies in these other sections, you don't transport them to 36b which is concededly neither absurd and furthers the purposes of the act, just like in utility air, because the word pollutants didn't work with one section, you don't spread it like a virus throughout the rest of the act. you cure it in that provision -- >> those were two long sentences -- >> if and when there's any litigation. >> i think i think -- >> oh, it was a long sentence. >> yes. i think i'm right that justice breyer's question about anomalies, which are replete in the act, under your interpretation, did not talk about what i think is one of the most glaring ones, which is this qualified individualist thing, that you're essentially setting up a system in which these federal exchanges, that there will be no customers and, in fact, there will be no products, because section 1311 says that the exchange shall make health plans available to qualified individuals, and then the next section says that qualified individual means an individual who resides in the state that established the exchange.

so under your theory, if federal exchanges don't qualify as exchanges established by the state, that means federal exchanges have no customers. >> which, of course, is not the reading that the government's giving to it because they're not going to tell you -- >> well, that's because they don't share your theory. >> no, no. >> under your theory -- >> no. >> that's the result. >> well, no. let me be as clear as i can. if we prevail in this case, they are not going to empty out the hhs exchanges because they understand that there are numerous defenses even if you interpret "established by the state" literally in the qualified individuals provision. number one defense that they will use is, it says you have to be a qualified individual with respect to an exchange. as justice breyer pointed out, the statutory definition of exchange is a 1311 exchange. so they're only talking about state exchanges, not these hhs exchanges, and it is in section 1312, which immediately follows 1311, before 1321.

number two, "qualified individual" doesn't mean that means you're guaranteed access. it doesn't mean if you're not qualified, you're absolutely denied access. we know that from the illegal alien provision, which says illegal aliens are neither qualified individuals nor eligible for subsidies. >> ah, but look at the look at the prisoner provision, which says prisoners shouldn't be treated as qualified individuals. so under your theory, this statute effectively said that prisoners should be able to enroll on federal exchanges? that makes no sense. >> it makes perfect sense to say the states get a choice. think about somebody who's in prison in february, they're getting out in april, they've got to buy insurance under the individual mandate. so if you said nobody who's incarcerated can buy insurance that means they wouldn't be able to buy insurance during the relevant enrollment period. it makes perfect sense to give states the flexibility to say, as to those incarcerated principles, you can make them available for exchanges, but under illegal aliens we don't

want to, which is why we are saying they are neither qualified nor eligible. even if justice even if you don't find that the most pristine logic to be applied to a statute, remember, we are interpreting these statutes to avoid an absurd result. and it's a basic principle of statutory construction that you will give a plausible, if not the most persuasive, reading to a statute to avoid the result. >> but we are interpreting a statute generally to make it make sense as a whole, right? we look at the whole text. we don't look at four words. we look at the whole text, the particular context, the more general context, try to make everything harmonious with everything else. i think you said, even at the very beginning of this argument as we were going back and forth about my hypothetical, that, of course, context matters and context might make all the difference with respect to what those five words mean. and i think what we're suggesting is that, if you look at the entire text, it's pretty clear that you oughtn't to treat

those five words in the way you are. >> i've given you the contextual points before. i think the key one that i'd like to convey to you, justice kagan, is section 1311. you say the statute must work harmoniously. if you provide subsidies to hhs exchanges, you have essentially gutted section 1311's strong preference for state exchanges. what will happen is precisely what did happen under the irs rule, 2/3 of the states are saying no, we're not going to undertake this thankless task of running these exchanges with no incentives to do so. so yes, it what i have here in terms of what the statute means is 36b quite clearly saying exchanges are available only on states. i have 1311 explaining why they limited subsidies to that. and there is no contrary legislative history at all. what do they have, an atextual reading of 36b, which they can't

explain why anybody would have used those words if they wanted to convey exchanges, a rule that completely undermines the purposes of 1311 and no supporting legislative history. so under all the legal materials that this court normally used to discern what statute means, we clearly prevail. >> thank you, counsel. general verrilli, you'll have an extra 10 minutes as well. >> thank you, mr. chief justice, and may it please the court, standing has been raised, so let me start by telling you where we stand on standing and then i'd appreciate the opportunity after that to summarize what i think are the two key points in this case. now, with respect to standing, the question the case or controversy question turns on whether any of the four petitioners is liable for the tax penalty for 2014. now, this case was litigated in the district court in 2013 based on projections on the part of each of the four petitioners that they would earn a certain

income in 2014. they filed declarations saying that. with respect to 2 of the 4, the projections were of their income were such that they would qualify for the unaffordability exception and they wouldn't have standing. with respect to the other two, their projections were such that they wouldn't qualify for the unaffordability exception and they would have standing. but those were projections in 2013 about their income in 2014. 2014 has now come and gone, and we don't know, but petitioners know whether any of the 4 have in fact are, in fact, liable for the tax penalty and that will depend on whether their actual income in 2014 matched their projections. now, mr. carvin said there was fact-finding about this. i'm afraid that's not correct. the petitioners did file a

motion for summary judgment, but the case was decided on the basis of the government's motion to dismiss before discovery and without any fact-finding. i'm assuming because mr. carvin has not said anything about the absence of a tax penalty, that at least, 1 of the 4 has and is, in fact, liable for a tax penalty, but that's the key standing question. now, with respect to the veterans point, your honor, if it is the case, as mr. carvin tells us, that mr. hurst was a veteran for only 10 months, then i think he's correct, he would not qualify for va health care because you generally have to serve two years. so that's where we are on standing. now, if i could turn to the merits. >> so are you saying one person does have standing? >> no, no. it will depend on whether as a factual matter 1 of the 4 has and is, in fact, liable for the tax penalty for 2014. and that's information that is not in the government's possession. it is in the possession of petitioners' counsel. and i should make one more point, with respect to 2015, there were no projections, there's nothing in the record about the possible income of any of the petitioners for 2015, so there's really nothing that would establish a case of controversy for 2014. >> well, you're surely not raising a standing question with

us here for the first time at oral argument, are you? >> well, mr. chief justice, as i said, that based on the projections, it was our understanding that at least 1 of the 4 would be liable for a tax penalty. the question of standing has been raised and i've tried to identify for the court what i think is the relevant question which is whether any one of the 4 has, in fact is, in fact liable for a tax penalty because -- >> this is this is on a motion to dismiss, right? >> well, that's correct, your honor, but it does also go to this court's jurisdiction. because if none of the four is liable for a tax penalty for 2014, there just isn't the case or controversy. none of them is liable, there's no there's no injury. and so i do think that's ultimately the relevant question here and with respect to liable for a tax penalty for standing. i don't think there's a question about veteran status, but i do think that's the relevant question. >> isn't the question before us as to standing whether the district court correctly held in the motion to dismiss context that there was standing? that may not be the end of the

matter, but don't we have to isn't that what's before us? >> well, that may be yes. but then you and you might alternatively think about this as a question of mootness, i guess, in that, you know, based on the projection, there was a case or controversy, but if the projection didn't come to pass and none of the plaintiffs is liable for a tax penalty, then the case or controversy no longer exists. >> well, what are you suggesting? should we have a should we have a trial here? >> no, i'm not suggesting anything of the kind. >> on this issue and find -- what the facts are? >> justice alito, i did not raise standing affirmatively the court raised it. and i'm just doing my best to let the court know what our position is on standing. >> well, you would you send it back then to the district court? >> well, i guess no. i guess what i've said is that mr. carvin hasn't suggested that there's no plaintiff liable for a tax penalty.

based on that, i'm inferring that at least one of the petitioners -- >> representation by him? >> and i'm not -- >> would you -- has standing. why wouldn't we accept a there's no reason not to if he if he makes a representation that at least one of the four is has was liable in 2014 and is liable in 2000 or will be liable in 2015 -- >> so i guess what i'm saying -- >> i mean, we know at least one of them won't because that's -- >> what i'm saying about that is i'm actually going to step further than that, justice sotomayor, given that there hasn't been i'm willing to accept the absence of a representation as an indication that there is a case or controversy here, and so that's why, mr. chief justice, we haven't raised standing and that's what it but i do think that the key question is whether one of the four is liable for a tax penalty. you have to have that to have a case or controversy in the case. if i could now, let me please turn to the merits that summarize what i think are the two key points. first, our reading follows directly from the text of the act's applicable provisions and >> namely, a 1311 state exchange.

there is nothing out. what is the problem? as your honor justthere is nothing out. said, he tells the secretary to establish exchanges. and what 36 b turns on is whether the state or secretary uses it. >> it is used in the same to desktop mythology. mainly, the terminology is, and exchange established a state. that is the phrase. under 1311, that is the phrase. the definition that created ambiguity. it does not say all 13 exchanges get subsidies. it says exchanges established by the state under the state. it eliminates any potential ambiguity created.

>> can i give you some simple, daily life example which is linguistically equivalents. i have three clerks. their names are will, lisbeth, and amanda. my first clerk i say, will, i would like you to write me a memo. i say, elizabeth i want you to edit wills memo once he is done. then i say, amanda, if will is too busy to write the memo, i want you to write such menu -- memo. should elizabeth edit the memo? if you are going to create money see right the memo and amanda writes the memo. and you say the money will go,

then under plane english, no. you run a different shop. in my chambers, if elizabeth did not run the memo. she would not be running, i've given instruction it is not the case that the only reasonable of an interpretation produces disastrous consequences, it no less means what it says. is that true or not? >> i think there are a couple of limitations.

the courts have to do their best we will interpret it to mean something else. >> williamson is a good example. the court said, they will see money ambiguously. the full scope of the regulatory regime can't possibly mean that. i think i can show you there is a quite reasonable reading of the statutory text that allows you to affirm the government's position. . if we adopt petitioners'

interpretation of this act, is it unconstitutionally coercive? >> so the here's what i would say about that, justice alito. i think that it would be certainly be a novel constitutional question, and i think that i'm not prepared to say to the court today that it is unconstitutional. it would be my duty to defend the statute and on the authority of new york v. united states, i think we would do so. but i don't think there's any doubt that it's a novel question, and if the court believes it's a serious question -- >> is it a i was going to say does novel mean difficult? [laughter] because it does seem to me that if petitioners' argument is correct, this is just not a rational choice for the states to make and that they're being coerced. >> so what i -- >> and that you then have to invoke the standard of constitutional avoidance. >> well, what i was going to say, justice kennedy, is to the extent the court believes that this is a serious constitutional

question and this does rise to the level of something approaching coercion, then i do think the doctrine of constitutional avoidance becomes another very powerful reason to read the statutory text our way. because i do think and i do think with respect to the point that your honor's making remember, it's not just it's not just a situation in which there is onerous conditions, onerous consequences for state residents. it's also a profound problem of notice here, that, you know, if you read petitioners' if you take petitioners' reading of the statute, then the idea that states were given added -- you can't possibly justify this as adequate notice to the states. >> well, mr. general verrilli, let me ask you this about notice. we get lots and lots of amicus briefs from states. and we got two amicus briefs from states here. 34 states, i think, is -- that's the number of states that declined to or failed to establish a state exchange? >> correct.

>> now, if they were all caught off guard and they were upset about this, you would expect them to file an amicus brief telling us that. but actually, of the 34, only 6 of them signed the brief that was submitted by a number of states making that argument. 23 states, 23 jurisdictions submitted that brief. 17 of them are states that established state exchanges. only 6 of the states that didn't establish state exchanges signed that brief, how do you account for that? >> so, i guess i'd make two points about that, justice alito. first, you've got states there, states in both camps, all of whom told you that they didn't understand the statute that way. now, with respect to the other 8 states that filed the amicus brief on the other side, i actually think there's quite an important point that goes to their understanding of what this act did. remember, this is an irs rule that we're talking about here, and the irs put out a notice of

proposed rulemaking saying this is what we intend to do, and several of these states oklahoma, indiana, nebraska they filed rulemaking comments in that in that proceeding. and if you look at those rulemaking comments you will see that they address a number of issues, and they say nothing nothing about the issue that's before the court now. so if they really understood the statute as denying subsidies in states that did not set up their own exchanges, that would have front and center in their rulemaking comments, but they said nothing about it and i think that tells you a good deal about where -- what everybody understood that this statute was -- >> well, there's another point on notice on this pennhurst argument that seems curious to me. usually when this argument comes up, a state has signed up for a federal program and then they say, oh, my gosh, we didn't realize what we had gotten ourselves into. but here, it's not too late for a state to establish an exchange if we were to adopt petitioners' interpretation of the statute. so going forward, there would be no harm. >> well, let me address that

directly, and then i'd like to make a broader point about statutory context in response. now directly, of course, i don't i don't think it's possible to say there would be no harm. the tax credits will be cut off immediately and you will have very significant, very adverse effects immediately for millions of people in many states in their insurance markets -- >> well, i said i've said going forward. >> and then -- >> after the current tax year. >> and then going -- >> would it not be possible if we were to adopt petitioners' interpretation of the statute to stay the mandate until the end of this tax year as we have done in other cases where we have adopted an interpretation of the constitutional or a statute that would have very disruptive consequences such as the northern pipeline case. >> sure. northern pipeline is an example of doing that, and it will be up to the court to decide whether it has the authority to do that. i will say, this does seem different than northern pipeline to me, because this is about money going out of the federal treasury, which is a different scenario. but if the court obviously, if that's where the court is going

and that's what the court thinks the proper disposition is, that would reduce the disruption. but what i think is another important point to make here just as a practical matter, the idea that a number of states all of these states or a significant number are going to be able to in the 6 months between when a decision in the this case would come out and when the new the new year for insurance purposes will begin we'll be able to set up exchanges, get them up, up and running and get all the approvals done i think is completely unrealistic. >> how long has it taken -- >> well, for just to give you an example of the current time line, justice ginsburg, the in order to be in order to have an exchange approved and insurance policies on the exchange ready for the 2016 year, those approvals have to occur by may of 2015. ok. so that gives you a sense of the of the time line that hhs is operating under. >> what about what about congress? you really think congress is just going to sit there while all of these disastrous consequences ensue. i mean, how often have we come out with a decision such as the

you know, the bankruptcy court decision? congress adjusts, enacts a statute that 16 that takes care of the problem. it happens all the time. why is that not going to happen here? >> well, this congress, your honor, i -- [laughter] you know, i mean, of course, theoretically of course, theoretically they could. >> i don't care what congress you're talking about. if the consequences are as disastrous as you say, so many million people without insurance and whatnot, yes, i think this congress would act. >> and but the relevant question and then i'm going to try to get back to the point i was trying to make in response to justice alito's question. the relevant question here is, what did the congress that enacted this statute in 2010 do? did they really set up a system in which the states are subject to the kind of onerous situation that the petitioner claims?

and i think there are three textual indications objective, textual indications that cannot possibly have been the statutory scheme that congress tried to set up. first is the existence of the federal exchanges. it would make no sense, no sense for congress to have provided for federal exchanges if, as mr. carvin suggests, the statutory design was supposed to result in every state establishing its exchange. second -- >> well, wouldn't it have been again, talking about federalism a mechanism for states to show that they had concerns about the wisdom and the workability of the act in the form that it was passed? >> so, justice kennedy, i think the federalism values are promoted by our interpretation because if that is, indeed, what a state thought, if a state really would have preferred that not to have the state government participate in the implementation of this act, for reasons that your honor identified, the structure of the act that congress put in place and that we're advocating for today fully vindicates that

concern. they can decide not to participate without having any adverse consequences visited upon the citizens of the state. and that's why our reading is the pro-federalism reading. it's their reading that seems to me that is the anti-federalism reading, and that's a powerful reason to reject it. and if i could go to the second statutory point, which is related to what we're talking about, justice kennedy, which is section 1321, says that this statute is designed to afford state flexibility. state flexibility. it would be an orwellian sense of the word "flexibility" to use it in the manner that petitioners say the statute uses it, because it's the polar opposite of flexibility. and the third point, seems to me, is the notice point, that if, indeed, the plan was, as mr. carvin said, that every state was going to establish an exchange for itself and that would cure all of the massive statutory anomalies and textual anomalies and absurdities and impossibilities that his reading provides for, if that was really

the plan, then the consequence for the states would be in neon lights in this statute. you would want to make absolutely sure that every state got the message. but instead what you have is a subclause in section 36b, which is a provision that addresses the eligibility of individual taxpayers for taxing purposes. >> this is not the most elegant thing drafted. it was pushed through on expedited procedures. it didn't have the kind of consideration by a conference committee, for example. that statute usually do. what would be so surprising if among its other imperfections there is the imperfection of what the state have to do is not obvious? that doesn't strike me as inconceivable. >> just as scalia -- justice

scalia, i will talk about the legislative process. i think will be quite relevant, even to you in the question that you asked. the language here in 36b was not the product of some last-minute deal, or scrambling at the end the language -- the statutory structure about tax credits the language that isn't 1321, the product of the senate finance committee markup, which went on for weeks and weeks, it was a public hearing, and frankly it was covered by c-span, you can go watch it on the archives. you will see coming out of that at the understanding was that this statutory set up with result substance -- subsidies available in every state. >> were senators opposed to having the federal government on the whole thing because that will lead to a single-payer system. which some people wanted.

the explanation for this division is it -- for this provision is it about -- it prevents the federalization of the entire thing. >> certainly a possible exclusion. >> mr. cardin has floated that is a possible vaccination. there is absolutely no contemporaneous evidence, none whatsoever that anybody that way, but the solution to the problem you what and if i is what congress did my having to set up their own exchanges by state-by-state federal fallbacks, rather than in national system. he has stated yet know intention -- that he had no intention. what mr. carter has suggested that this is -- mr. cardin suggested that this is a deal to get pvotes so that the act passed. there is objective proof that is not true any provisions in the

act that were negotiated at the end are entitled 10 of the act. if you look in the act pages 833-924, that his title 10, you can see all of the amendments not a single one had anything to do with the statutory language before the court -- >> some was created by your interpretation. if congress did not want the phrase "established by the state" to mean what it would normally taken to me, why did they use that language? why didn't they just other formulations that appear elsewhere in the act? why didn't they say "established under the act?" why did they say established within the state"/" why didn't they say it is a state exchange when i have a provision that does exactly that the district of columbia and for the territories. it says that they are deemed to

be states for purposes of the act. why would they do that? >> the provision>> says "est that most by the state under -- established by the city under section 11." we think this is a better reading of the text, that by cross referencing section 1311, effectively what congress is saying that exchanges established through whatever mechanism, exchanges set up by states themselves -- >> you are saying cross-referencing 13,1111. >> let me walk that through. >> that seems to be going in the wrong direction rather than the right direction. >> i think it goes in the right direction if you stay with me. >> before you get onto that, your answer doesn't ask why the state is in their. why wouldn't they say "established under 1311?"

>> the second point is that any provision this appears in the act it is doing work. the work is doing is talking about the specific exchange established in the specific state as opposed to general rules for exchanges. if you look at the medicaid means of effort provision, it works the same way -- >> why didn't you use the phrase "in the state/" >> i suppose they could have but it worked perfectly well this way. is clearly how they are using it with respect to individual provisions. with respect to that provision, it's as a qualified individual is a person who was -- a person who reside in the state of the exchange. clearly what they are talking about is a geographical reference to the state. it goes on every time the statute uses that phrase. it is doing that works, and that is why it is in their. i can go back to your point, justice kennedy.

established under section 1311 b-1 says "each state shall establish an american health benefits exchange for the state." it is not urging that the states do it, it says "each state shall establish." it means it must have meant something more inclusive than "each state government shall its own set of the exchange." we know that because carter's is legislating against the backdrop of the 10th amendment. we know that of section 1321. because that section provides the means by which the 1311 b-1 requirement is satisfied. it is satisfied by a state electing to meet the federal requirements for exchanges, or it can be satisfied in the event that a state doesn't work tries because of -- or comes up short. >> when the statute says "each

state stealth established" it means the federal government shall establish if it doesn't. >> know i think the right way to think about this justice alito is that what is going on here is that -- the right place to focus, let me put it that way -- the right place to focus is not on the who, but on the what. on the thing that gets set up and whether it qualifies as an exchange established by the state. and these exchanges do qualify. the reason that they qualify is because they fulfill the requirements in section 1311 b-1 that each state shall astonish an exchange. 1311 tells you that. because when a state has elected to meet the federal requirements hhs sets up and required exchange. such exchange referring to the

prior exchanges. the only exchange required under the act is required under section 1311 b-2. -- b-1. is the filling the requirement over 1311 b-1 that each state establish an exchange. it says that an exchange established under section 1311 which says that he state -- each state shall establish exchange. it has to be that way. it is an page 22 of the petitioner's brief that an exchange that hhs setup is supposed to be the same exchange and functions like an exchange at the state sets up -- >> you're putting a lot of weight on the word "such e xchange."

it seems the most unrealistic interpretation of "such" that the federal government shall the stuff was a state exchange. rather it seems to be an exchange for the state rather than an exchange of the state. how can the federal government established a state exchange? that is gobbledygook. >> this is gobbledygook, justice scalia. will go back to some think justice alito asked earlier. the link which of 36-b were the same it was now. in the statute set in 1321 that an exchange set up by hhs cell qualify as an exchange -- shall qualify as an exchange under section 1311, you wouldn't change the length which of 36 b one iota and there would be any doubt in anyone's mind that the subsidies were on federal changes.

we are saying that reading these together is what the statute does. certainly that is a reasonable reading of the statute. is the only reading of the statute allows you to be faithful to the text of 1311 b-1, the word "shall" and the 10th of -- >> the word "such" means not just. the exchange that the state was supposed to set up, in the state exchange. >> it means an exchange that qualifies as a state -- ethnic change stuff for this state because it qu >> your case hinges on the fact that a federal exchange is a state exchange. >> it hinges on it qualifying as the state exchange or being equivalent to the state exchange for the purpose of the operation of the statute. that is a reasonable meaning of the textual provisions. once you concluded that is a reasonable meaning you have to read it the way that we say it

is to be read. the only way to make sense of the statute is the only way to bring it into harmony with the act qualified individual, the qualified health print provisions, which delete what they admit in conservative under the reading of the law -- in their absurdity of the reading of the law. >> to admit there are provisions in the act where the exact same phrase "establish by the state" has to me be renting estoppels by the state and not hhs? >> i think they are wrong about each one. >> i would be interested in your answer to it. >> they say if that is ready to an exchange established by the state there is read to me and hhs, it means that the state in

which that exchange is established is responsible for making sure has an electronic interface. >> the statute says -- first of all, the statute -- what it says they shall establish procedures to ensure the coronation. hhs has issued regulations setting forth what that statutory vision requires in the circumstances. every state was a federally facilitated strange that met the permit and works properly fine. there is no anomaly there at all. >> to the regulations attract the statutes? >> yes they do. >> do they get state authority to say whether or not these conditions have been met? >> the requirements are imposed on the state medicaid and the relationship. that is with the statute does.

it doesn't say and i think it proves our point -- it says each state shall stop it doesn't -- it doesn't say each state shall. it presupposes that there is going to be something that qualifies as an exchange in every state. there is no anomaly there. if you want to ask me about any of the older ones, you can. there are no anomalies frankly. >> i understand or stand your answer that there are no federal relations and they have all done it. the state has some obligation under the regulations to make sure there is a proper interface with the federal exchange. >> those are state government agencies. that is their side of the interface that the statute governs.

i want to focus on this point about the qualified individual. it is quite fair in section 1311 that an exchange, not exceed established by the state, but in exchange can only sell a qualified health plan will stop it is for been in from selling a helpline qualified health plan. it is an exchange. it says the certify health plan the exchange has to decide that it is in the interest of qualified individuals. qualified individuals are those who reside in the state that establish the exchange stop you read the statute the way mr. cardin region instead of the weight we read it, if you come to the conclusion -- there are no qualified individuals therefore certified. there aren't any.

there aren't any qualified health plans that can lawfully be sold on the exchange. >> what is the provision is only a qualified individual can be in on the plan under an exchange? >> i will address that, but it want to make clear on the provision i'm talking about with respect to the prohibition on selling a qualified health plan. is 1311(d)(2)(b), which is at page 8a of the appendix to our brief. it's absolutely unambiguous. an exchange, not an exchange established by the state, an exchange may not make available any health plan that is not a qualified health plan. so -- >> qualified health plan. but what's the provision you were referring to when you said that an exchange may enroll only a qualified individual?

>> well, i what they 20 what the statute says throughout is that qualified individuals are eligible to purchase on exchanges, and it's the necessary meaning of that phrase that if you are not a qualified individual, then you are not eligible to purchase health care on an exchange because otherwise, the word qualified would not have any meaning. the whole the meaning of the word qualified is to distinguish between people who are eligible and people who are ineligible. and as a policy matter, it wouldn't make any sense because think of the people who are not qualified individuals. the people who don't live in the state, the people in prison, and they're unlawfully documented. >> this is part of section 1312. a person qualified to purchase on an exchange must, quote reside in the state that established the exchange. >> right. and there are no such people in 34 states under mr. carvin's theory of the statute. so it just doesn't it just you just run into a textual brick wall. >> i understand your argument is that it's a it's a logical inference from a number of provisions that only a qualified individual may purchase the policy, but i gather there is no