ou can see his remarks any time in the seas and video library or go to c-span.org. as the senate gavels and at this hour, they begin their legislative week. the hill looks at the senate republicans agenda in dealing with their democrat colleague spirit with the department of home and security standoff in the rearview mirror, senate republicans are going on office with of that divide democrats, such as iran oversight bill and trade legislation. senate republicans are desperate to show they can delve -- they can govern after they largely wasted february haggling the dhs funding bill without winning any of the concessions they hope for an immigration. after battling for weeks republicans now want to put democrats on the defensive by pushing issues that split democratic centrists and liberals. we are definitely moving to offense be it we hope democrats want to work with some of us on those issues but as usual, we're not holding our breath. that is from the third ranking number of the gop leadership. for more on what we can expect this week, we spoke with a capitol hill reporter.

>> preview on this week's's action in the senate. we turn to neil, a frequent guest at the washington journal joining us . good morning to you. john: i want to talk about the iran deal that is going on and the bill that was expected to be on the floor this week in the senate and then got pulled. what is going on there? niels: what has happened with the floor schedule was we had anticipated that on tuesday, the senate would attempt to hold a vote on picking up a measure sponsored by the foreign relations chairman bob corker of tennessee that would require the administration to send any sort of agreement that may be reached with the iranians over their

nuclear program to capitol hill for a sixty-day period to allow congress to weigh in on any sort of agreement. what happened was, a number of democratic senators who had supported the legislation indicated to the majority leader in the senate that they would not vote for their own bill until after a march 24 deadline for some sort of resolution in these talks with iran. what we are left with is the prospect that the bill was not going to be preceded. our corker -- bob corker told me he knew he did not have 60 votes for his own bill. that plan was put on hold until

after the 24th. john: if a bill like this does not get past by this congress how much say will this congress have in any sort of nuclear negotiations that are happening? niels: it is not clear the way this is being structured that there is anything the congress will have specifically approving any sort of agreement with iran. if there is some sort of agreement reached, you would have a situation where members of congress might be waiting in through -- weighing in through something like the appropriations process. in order to implement the agreement. without this legislation -- at this juncture, the white house

had indicated it would be vetoed . there is no real way for congress to necessarily have to weigh in, absent something like that. john: with that legislation off the table, attention turning to the debate over the president's war powers request. talk us through what is happening in the senate this week. niels: while they are working on the floor with a much less controversial matter, they are going to take up anti-human trafficking legislation that should have broad support. you will see at various committees that there will be all sort of foreign policy related hearings, the highlight of which is the secretary of

state john kerry, the new defense secretary, ash carter and the chairman of the joints these -- joint chiefs of staff are scheduled to be testifying midweek about the president's request for an authorization of the use of force against the group called isis or isil or the islamic state. what we will see, i think, is that that is going to lay bare how big the gap is between the group of lawmakers who think that the request was too broad those that think the request was too narrow. i think that will be the most interesting thing of the week. it may be that we find out there is no way this congress can move forward with that request at all if the gap is as wide as we think it is.

john: touch on some of those other hearings we are expected to see on capitol hill this week on some of those foreign-policy matters. niels: there is -- a weekly a current, -- weekly occurrence, a closed briefing at the armed services committee. we will see another hearing about the status in ukraine. today, this morning, it might be of interest to washington journal viewers, senator chris murphy, a democrat from connecticut is hosting senator mccain, the chairman of the armed services committee. in connecticut. they are meeting with the

ukrainian american community up there about the situation on the ground in ukraine. that will be another talking point for the week. the other thing we might see as this goes forward, how they will respond to see if anything will be done about russia in regards to ukraine. john: niels lesniewski, appreciate your time. quasi-reminder you can see the senate here at c-span2. c-span we will be back live at the national league of cities conference at 3:34 remarks on homeland security, secretary jeh johnson. interior secretary sally jewell.

there were also be a panel discussion with secretary anthony foxx, and energy secretary, and the epa administrator genia -- gina mccarthy. the future of president obama's's health care law arrests once again with the supreme court to her justices heard oral argument last week in a challenge to other tax subsidies can be given to people who buy health -- insurance and all exchanges. the challenge rests on six words in the over 1000 page law, situating health subsidies are available through an exchange established by the state. only 16 states run their own exchange as per the federal government runs exchanges for the remaining 34 states that opted out of setting up their own. the court is expected to roll on this case before the end of the term in june.

>> we'll hear argument this morning in case 14114, king v. burwell. mr. carvin. >> mr. chief justice, and may it please the court, this is a straightforward case of statutory construction where the plain language of the statute dictates the result. >> 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. 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. 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?

>> 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 -- >> 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? >> that was my first answer. >> 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.

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?

>> 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. >> 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 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 they 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'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. [laughter] 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 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 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 with respect to 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 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 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 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 -- >> why wouldn't we accept a representation by him? 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 it's really the only way to make sense of section 36b and the rest of the act. textually, their reading produces an incoherent statute that doesn't work. and second, our reading is compelled by the act's structure and design. their reading forces hhs to establish rump exchanges that are doomed to fail. it makes a mockery of the statute's express status -- express textual promise of state flexibility. it precipitates the insurance market death spirals that the statutory findings specifically say the statute was designed to avoid, and of course it revokes the promise of affordable care for millions of americans. that cannot be the statute that congress intended. >> of course it could be.

i mean it may not be the statute they intended. the question is whether it's the statute that they wrote. i mean, you know, there are no provisions in the statute that turn out to be ill considered and ill conceived? >> so it's not the statute that they wrote, and the reason it's not the statute that they wrote, i think -- i want to actually start, if i could, picking up i think on a variation of the hypothetical that justice kagan asked. in petitioners' brief they throw down the gauntlet with respect to a hypothetical about airports, and that a statute requires a state to construct an airport, it says the federal government shall construct such airport if the state doesn't, and no one would think that the federal government's airport was an airport constructed by the state. well, what i would say to that is that if those statutory provisions were conjoined with a provision that said airplanes may only land at airports constructed by the state, then you would conclude immediately that what that federally constructed airport qualifies as an airport constructed by the state, and the because otherwise the statute would make no sense.

and the same exact thing is true here. >> there are no statutes that make no sense. >> this one makes sense. >> if that is the case, every statute must make sense and we will -- we will twist the words as necessary to make it make -- that can't be the rule. >> that isn't the rule. what the rule -- is that you read -- that you don't read statutory provisions in isolation. you read them in context. the rule is that you read them in order to ensure that the statute operates as a harmonious whole. you read them so that you don't render the statutory provisions ineffective. you read them to promote -- >> i mean, you acknowledge that all of what you're saying only applies where there are alternative readings that are reasonable. you pick the one that will do all the things that you say. >> and there is -- >> but if it can only reasonably mean one thing, it will continue to mean that one thing even if it has untoward consequences for the rest of the statute. no?

>> with respect to this statute, first, let me -- i want to make two points. first -- >> answer me in principle. i mean, is it not the case that if the only reasonable interpretation of a particular provision produces disastrous consequences in the rest of the statute, it nonetheless means what it says. is that true or not? >> i think there are a couple of limitations on that principle. the first is if what you have is a situation in which the that -- that creates conflict within a statutory scheme, then the court's got to do its best to try to harmonize and reconcile the provisions. >> well, i disagree with that. you have a single case in which we have said the provision is not ambiguous, it means this thing, but, lord, that would make a terrible statute, so we will interpret it to mean something else. do you have one case where we've ever said that? >> i think i think brown & williamson is a good example of that. in brown & williamson, the court said, look, the definition of drug and drug delivery device

would actually seem unambiguously to cover tobacco but when you read that provision in context, and considering the full scope of the regulatory regime, it can't possibly mean that. but let me -- let me actually work through the text here because i do think i can show you that there's a quite reasonable reading of this statutory text that allows you to affirm and requires you to affirm the government's position. >> but, general verrilli, before we get too immersed in a number of provisions of this, could you respond to a question that was asked during mr. carvin's argument? if we adopt petitioners' interpretation of this act, is it unconstitutionally coercive? >> so 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 -- 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 22 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 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, 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 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 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 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 elegantly drafted statute.

it was it was pushed through on expedited procedures and didn't have the kind of consideration by a conference committee, for example, that statutes usually do. what would be so surprising if among its other imperfections, there is the imperfection that what the states have to do is not obvious enough? it doesn't strike me as inconceivable. >> so, justice scalia, i'm going to answer that question by talking about the legislative process, because i think it is quite relevant and i think it ought to be quite relevant even to you with respect to the question you just asked. the language here in 36b was not the product of some last-minute deal, it wasn't the product of scrambling at the end. the language that emerged here the statutory structure with the language of 36b about tax credits, the language that's in 1311, the language that's in 1321 was the product of the senate finance committee markup, which went on for weeks and

weeks. it was a public -- it was a public hearing. it -- frankly, it was covered by c-span. you can go watch it on the c-span archives if you want to and you will see coming out of that the that the understanding, the clear understanding was with this statutory setup would result in subsidies being available in every state. >> there were senators, were there not, who were opposed to having the federal government run the whole thing, because they thought that would lead to a single-payer system, which some people wanted? and the explanation for this provision is it prevents it prevents the the federalization of the entire thing. >> no. justice scalia, i -- >> that's certainly a plausible explanation -- >> no. >> as to why the provision is there. >> mr. carvin has floated that as an explanation and he suggests that it was senator ben nelson who required it. we there is absolutely no contemporaneous evidence, none whatsoever, that anybody thought that way, that the solution to

the problem that your honor's identified is what congress did by having states have the option to set up their own exchanges with state-by-state federal fallbacks rather than a national system. senator nelson has made clear, he has stated that he had no intention of the kind. there's no contemporaneous evidence at all that anyone did. and what mr. carvin has suggested is that this was the product of some deal to try to get votes so the act could get passed. what i would suggest to your honor is that there is objective proof that is not true. the provisions in the act that were negotiated at the end to secure the necessary votes are in title x of the act. and if you look in the in the act, pages 833 to 924, that's title x. you can see all of the amendments. not a single one has anything to do with the statutory language before the court now. >> well, the puzzle that's created by your interpretation is this -- if congress did not want the

phrase "established by the state" to mean what that would normally be taken to mean, why did they use that language? why didn't they use other formulations that appear elsewhere in the act? why didn't they say "established under the act"? why didn't they say "established within the state"? why didn't they include a provision saying that an exchange established by hhs is a state exchange when they have a provision in there that does exactly that for the district of columbia and for the territories? it says that they are deemed to be states for purposes of this act. >> so -- >> so why would they do that? >> so, of course, the provision says -- doesn't say "established by the state" with a period after state. it says "established by the state under section 1311." and our position textually is and we think this is clearly the better reading of the text that by cross-referencing section 1311, effectively what congress is doing is saying that

exchanges established through whatever mechanism, exchanges set up by the states themselves, exchanges set up by -- >> so you're saying that by cross-reference to 1311, they really mean 1311 and 1321? >> yes. well, let me and i do think that, and let me walk through why i think that's true. >> all right. that seems to me to go in the wrong direction -- >> no, i think -- >> for your case -- >> i think -- >> not the right direction. >> no, i think it goes in the right direction, if you'll just ride with me for a little bit, justice kennedy, on this. >> well, before you before you get on to that, that your answer doesn't explain why "by the state" is in there. then why didn't they say "established under 1311"? >> well, so the second point is that wherever this provision appears in the act, "established by the state under section 1311," it's doing work. and the work it's doing is saying, what we're talking about is the specific exchange established in the specific state as opposed to general rules for exchanges. if you look at the medicaid maintenance of effort provision it works the same way. >> well, why didn't they say "in the state"? that's the phrase you just used "in the state." why didn't they say "in the state"?

>> because i suppose they could have, but it worked perfectly well this way. if you look at the qualified individual provision, it's clearly how they're using it with respect to the qualified individual provision. and with respect to that provision, it says a qualified individual is a person who is located, who resides in the state that established the exchange. clearly, what they're talking about is a geographical reference to the particular state. that's what's going on there and what's going on every time the statute uses that phrase. so it's doing that work, and that's why it's in there. but now if i could go back to your point, justice kennedy, it says, "established by the state under section 1311." section 1311(b)(1) says, "each state shall establish an american health benefits exchange for the state." it's not, as mr. carvin said, an urging that states do it. it says, "each state shall establish." now, we know that when congress used that language, "each state shall establish," it must have meant something more inclusive than each state government shall

itself set up the exchange. we know that because congress is legislating against the backdrop of the tenth amendment, and so it couldn't impose that requirement. and we know that because of section 1321, because section 1321 provides the means by which the 1311(b)(1) requirement is satisfied. it will be 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 or tries but comes up short by hhs stepping in and establishing the exchange. >> so when the statute says, "each state shall establish," it really means the federal government shall establish if a state doesn't establish. >> i think the right way -- >> and if that were the correct interpretation, you wouldn't need 1321 at all. >> so, no. i think the right way to think about this, justice alito, is that what's going on here is -- the right place to focus

let me put it that way. the right place to focus here 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. and the reason they qualify is because they fulfill the requirement in section 1311(b)(1) that each state shall establish an exchange. and 1321 tells you that because it says to the hhs that when a when a state hasn't elected to meet the federal requirements, hhs steps in, and what the hhs does is set up the required exchange. it says such exchange, which is referring to the immediately prior to the required exchange where the only exchange required in the act is an exchange under section 1311(b)(1). so it has to be that's that what hhs is doing under the plain text of the statute is fulfilling the requirement of the section 1311(b)(1) that each state establish an exchange, and for that reason we say it qualifies as an exchange established by the state. that's reinforced, as justice breyer suggested earlier, by the definition which says that an exchange is an exchange

established under section 1311. 1311, again, has 1311(b)(1) which says each state shall establish an exchange. and it has to be that way because petitioners have conceded, and it's at page 22 of their brief, that an exchange that hhs sets up is supposed to be the same exchange that petitioners say function just like an exchange that the state sets up for itself. >> well, you're putting a lot of weight on the on the one word, "such," "such exchange." such it seems to me the most unrealistic interpretation of "such" to mean the federal government shall establish a state exchange. rather, it seems to me "such" means an exchange for the state rather than an exchange of the state. how can the government federal government establish a state exchange? that is gobbledygook. you know, "such" must mean something different. >> it isn't gobbledygook justice scalia. and i think about it and i go back to something that justice alito asked earlier.

and that if the language of 36b were exactly the same as it is now, and the statute said in 1321 that an exchange set up set up by hhs shall qualify as an exchange established by the state for purposes of section 1311, you wouldn't change the language of 36b one iota, and that wouldn't be any doubt in anyone's mind that the that subsidies were available on federal exchanges. and what we're saying is that effectively reading 1311 and 1321 together, that is what the statute does. and that is certainly that is a reasonable reading of the statute. it is really the only reading of the statute that allows you to be faithful to the text of 1311(b)(1), the word "shall," and to the tenth amendment. in order for their -- >> the word "such" means not just the exchange that the state was supposed to set up, but it means the state exchange. >> it means an exchange that

qualifies as satisfy as an exchange established by the state because it satisfies the requirement of 1311(b)(1). >> no. you have to say it means the state exchange. you have -- your case hinges on the fact that a federal exchange is a state exchange for purposes -- >> 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 reading of the particular textual provisions, and once you've concluded that it's a reasonable reading of the particular textual provisions, then you have to read it the way that we say it needs -- it is to be read because it is the only way to make sense of the statute as a whole. it is the only way to bring it into harmony with the act's qualified individual and qualified health plan provisions which do lead to what they admit is an absurdity under their reading under the law. >> would you agree that there that there are provisions of the act where the exact same phrase, "established by the state," has to be read to mean established

by the state and not by hhs? >> i don't -- >> there are some provisions like that. >> they've pointed out some, but i think they're wrong about each one, and i don't know what your honor has in mind. >> all right. well, let's take one let's take one. i'd be interested in your answer to it. 42 u.s.c. section 1396w3( h)(1)(d) which says that each state shall establish procedures to ensure that an exchange established by the state utilizes a secure electronic interface. and they say that if that is read to if "exchange established by the state" there is read to mean an hhs exchange, that means that the state in which that exchange is established is responsible for making sure that the federal exchange has a secure electronic interface. >> yes. they're just wrong about that. it's just completely wrong. the statute says that the state shall -- first of all, the statutory obligation is addressed to the state medicaid and chip agencies. what it says is they shall establish procedures to ensure the coordination. hhs has issued regulations setting forth what that statutory provision requires of

states in those circumstance. every state where there is a federally facilitated exchange has met the requirements and fulfilled them, and it worked perfectly fine. there's no anomaly there at all. >> and the state -- >> it met the requirements of the regulations you say, but do the regulations track the statute? >> yes, they do. >> do they give the state authority to say whether or not these conditions have been met? >> they the requirements are imposed on the state medicaid and chip end of the relationship. that's what the statute does, and the regulation to implement that statutory requirement, and it's satisfied in every state. and, of course, as your honor reading it to me said, it does say -- and i think that proves our point -- the statute says each state shall. it doesn't say states that have set up exchanges for themselves shall. it says each state shall. it presupposes that there is going to be something that qualifies as an exchange established by the state in every state. so there's no anomaly there, and if your honor wants to ask me about any of the other ones, you

can, but there are no anomalies frankly. >> as i understand your answer to be that there are federal regulations telling the states what they have to do here, and they've all done it. but the fact remains that the state has some obligation under the regulations to make sure that there is a proper interface with the federal exchange. >> on the state's side of the interface, yes. but that's the chip and medicaid agencies. those are state government agencies, and it's their side of the interface that the statute governs. and, you know, as i said, i don't think there are anomalies of our reading, but if they are, they pale in comparison to the anomalies on the other side. i mean, i really do want to focus on this point about the qualified health plan and the qualified individual, because the statute is quite clear in section 1311 that an exchange, not an exchange established by the state, but an exchange can only sell a qualified health plan. it is forbidden from selling a health plan that is not a qualified health plan. and that's not an exchange established by the state. it is an exchange. now, the statute also says that

to certify a health plan as qualified, the exchange has to decide that it is in the interest of qualified individuals. now, qualified individuals are persons who reside in the state that established the exchange. so if you read the statute, the language, the way mr. carvin reads it instead of the way we read it, you come to the conclusion and in a state in a federally facilitated exchange there are no qualified individuals. therefore, the exchange cannot certify a qualified health plan as being in the interest of qualified individuals because there aren't any, so there aren't any qualified health plans that can lawfully be sold on the exchange. >> what is the provision that says that only a only a qualified individual can be can -- can enroll in a plan under an exchange? >> so let the i will address that, but i just want to make clear the provision i'm talking about with respect to the prohibition on selling a qualified health plan to anybody on anything other than a

qualified health plan on an exchange 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, 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 logical inference from a number of provisions that only a qualified individual may purchase the policy, but i gather there is no provision that you can point to that says that directly. >> well, that's what qualified means, justice alito. it means that, you know, if you're not qualified, you're unqualified. and so, i mean, that's what it means. and so you're just reading the word "qualified" out of the statute if you read it that way. >> "qualified" is used in the lay sense of the term, it's not a technical term here? >> well, i think -- well, given the way it's defined, it's defined as a person who resides in the state. it excludes people out of state. it does that because the statute was quite clear that you weren't

going to be allowed to shop for insurance policies across state lines because that would infringe on traditional state prerogatives regulating insurance. and with respect to prisoners, it doesn't make any sense to say that prisoners should be able to get insurance. mr. carvin says, yes, it does because they get out of prison. well, there's a specific statutory provision that says when you face a changed-life circumstance, such as getting out of prison, you can sign up for insurance at that point. he makes the point about unlawfully present persons being both unqualified and not being able to be covered, but that's not that's not surplus, that's there for a very important reason, which is that someone can be in lawful status and, therefore, be eligible for health care, but then lose lawful status and at that point, they can no longer be covered. so, just none of that works for them. none of that works for them. and -- but to really, to get to the fundamental point here that both at the level of text, you have clear irresolvable conflicts so that the statute can't work if you read it mr. carvin's way. you have, at the level of

text -- >> is that a synonym for ambiguity? >> i think so, exactly right justice scalia. i mean, excuse me, justice kennedy, that you have ambiguity there precisely because you have to -- you know, this is a statute that's going to operate one way or the other. and the question is how it's going to operate. and when you read it their way you -- >> well, if it's if it's ambiguous, then we think about chevron. but it seems to me a drastic step for us to say that the department of internal revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here? hundreds of millions? >> yes, there are billions of dollars of subsidies involved here. but two points about that --

>> and it seems to me our cases say that if the internal revenue service is going to allow deductions using these, that it has to be very, very clear. >> so -- >> and it seems to me a little odd that the director of internal revenue didn't identify this problem if it's ambiguous and advise congress it was. >> so a few points about that with respect to chevron deference. first, we do think chevron deference clearly supports the government here and i'll explain why. but before you get to that, you can resolve and should resolve this statute and the statute's meaning in our favor even without resort to chevron deference. that's what the canon of reading a statute as a whole to make it work harmoniously directs you to do. it's what the very important principles of federalism that we've been describing here direct you to do. if you think there's a constitutional problem with the statute, it's what the doctrine of constitutional avoidance directs you to do. now, with respect to chevron section 36b(g) of the statute expressly delegates to the irs

the specific authority to make any decisions necessary to implement section 36b. so you don't have any ambiguity. congress said the irs should do this. it is a big question, but as the court said in city of arlington two terms ago, chevron applies to big questions as well as small. your honor raised this point about the need for clarity in a tax deduction and irs in the statutory reading of tax deductions, there is a learned treatise that describes that as a false notion. and it is certainly not consistent with this court's unanimous decision in mayo two terms ago that chevron applies to the tax code like anything else. and so -- >> if you're right about chevron, that would indicate that a subsequent administration could change that interpretation? >> i think a subsequent administration would need a very strong case under step two of the chevron analysis that was a reasonable judgment in view of the disruptive consequences. so as i said, i think you can

resolve and should resolve this case because the statute really has to be read when taken as a whole to adopt the government's position. but i do take -- >> general -- >> if there are any if there are any tax attorneys in the in the courtroom today, i think probably they wrote down what you just said. when we get future tax cases the united states is going to argue that we should not read them to -- you know, there should be no presumption that a tax credit is provided by that statute. >> you should you should read it according to its terms. and when you read this provision according to its terms and you read it in context and you read it against the background principles of federalism, you have to affirm the government's interpretation. thank you. >> thank you, general. four minutes, mr. carvin. >> thank you, mr. chief justice. very quickly, on standing. mr. hurst would be subject to a penalty absent relief by this court for 2014. as i've discussed, both he and mrs. leevy, of course, would face the same principle for 2015. if the government is suggesting that their case has become moot because of changed circumstances, under cardinal

chemical 508 u.s. 83, it's their burden to raise it, not ours to supplement the record. in terms of the anomaly, in terms of all the states losing -- 34 states losing their medicaid funds, the solicitor general greatly distorted the statute. it's printed at 64a of their exhibit. it says, "a state shall establish procedures," so the notion that hhs established them is obviously contrary to that. it says, "the state will identify people to enroll on their exchanges." well, they can't enroll anybody on their exchanges if there are no such exchanges in the state. therefore, by the plain language, if you adopt the notion that "exchange established by the state" means established by hhs, all of them need to lose their medicaid funding. >> could i follow up on something the general ended with, which -- and justice kennedy referred to, which is the need to read subsidies limited. but so is in a limited way. but so is the need to ensure

that exemptions from tax liability are read in a limited way. and under your reading, we're giving more exemptions to employers not to provide insurance, more exemptions to states and others or to individuals, how does that work? i mean, you've got two competing -- >> no, no. you do get more exemptions for employers under our reading, but the same principle applies. is it unambiguous? it's undisputed that one is unambiguous. >> well -- >> the dispute here is whether or not if they win under ambiguity, and they don't because the canon requires unambiguous statutes not to afford the tax credit. in terms of the employer mandate, i think that's very helpful in terms of justice kennedy's concern about federalism. under their view of the statute, the federal government gets to unilaterally impose on states -- there's an amicus from

indiana describing this a requirement that states insure their own individuals. it implies the employer mandate to states. so under their theory, the states are absolutely helpless to stop this federal intervention into their most basic personnel practices, whereas under our theory, they are able to say no. so actually, the more intrusive view of the statute is theirs. in terms of the funding condition, head on, your honor i think my short answer is as follows -- there's no way to view this statute as more coercive or harmful than the medicaid version of medicaid that was approved by this court in nfib and, indeed, the nfib dissenting opinion pointed to this provision as something that was an acceptable noncoercive alternative. but in all events, even if there's a constitutional doubt under a novel constitutional question, as justice scalia pointed out, there's no alternative reading of the statute that avoids that because either way, you're intruding on state sovereignty. in terms of the anomaly, in terms of qualified individuals as predicted, solicitor general

did not come up here and tell you, yes, if we prevail here under this theory, they're going to have to empty out the hhs exchanges. nor did he even respond to my argument that with respect to an exchange under the definitional section only applies to state exchanges. so i think we can view this as a complete tendentious litigation position and not a serious statutory interpretation. in terms of the qualified health plan that he discussed with you, justice alito, the complete answer to that is that is in 1311. 1311 only is talking about state established exchanges. it has no application to hhs exchanges, therefore, it can't possibly create an anomaly with respect to those hhs exchanges. >> thank you, counsel. the case is submitted. >> that argument happened last wednesday. the court will rule on the case before june. earlier today president obama

was here talking about a new training initiative for high-tech jobs. this afternoon remarks from secretary jeh johnson. there will also be a panel discussion with other secretaries. this is live coverage on c-span. >> it is a little bit silly. if you know it, you should sing it. ♪ ♪ just watching her blonde hair and whitecaps rolling over she looks back and she throws me a kiss it is 130 between her and me.

it is sunshine [indiscernible] whatever happens happens a reggae band in the corner she gets him going be happy sunshine

[indiscernible] sunshine [indiscernible]

♪ ♪ you all are nice. ok i am going to play you one more song. it is going to be an experiment. i have never played this song before. it might be terrible. i just wrote this a couple days ago. this is a song that i wrote with a couple of friends of mine. i really like this one. it is called "still beautiful." ♪ ♪ sun going to come up tomorrow

the way it has a million other times going to reach across that pillow my hands are going to find something never changed even this, not the same [indiscernible] walking out the door it is still beautiful trying so hard not to cry even with goodbye in your eyes still beautiful even saying it is over it is still beautiful i will probably

see you out on a friday and i will be jealous you are going to be the life of the party and it could be anything [indiscernible] you do not love me anymore my heart is in pieces on the floor you are walking out the door still beautiful trying hard not to cry it is still beautiful getting closer to -- looking over your shoulder even saying it is over it is still beautiful some things never change

they are not the same different picture in the frame you do not love me anymore my life is in pieces on the floor. you are walking out the door it is still beautiful trying so hard not to cry [indiscernible] it is still beautiful getting closer even saying it is over it is still beautiful ♪ ♪ thank you guys. all right. i think they are going to do more stuff now. so thank you for hanging out with me. my name is jimmy. we have a booth and you should

come visit. that is the end. [captions copyright national cable satellite corp. 2015] >> good afternoon again, and welcome, everyone. we welcome you to this afternoon's general session. thank you to jimmy for entertaining the crowd, and the city for nashville for bringing him to washington. thank you so much. let's give him a round of applause. this morning we were honored to be part of a historic event for the national league of cities and its members. i believe the session will be memorable in its own right and informative as well. we will hear from several representatives from the administration as well as-provoking panel disruption -- this discussion.

it is my pleasure to introduce my first speaker this afternoon, secretary of homeland security jeh johnson. [applause] i know from my experience you will really enjoy him, and we will learn a lot. he was sworn in on december 23, 2013, as the fourth secretary of homeland security. prior to joining dhs, secretary johnson served as general counsel for the department of defense, where he was part of the senior management team and lead more than 10,000 military and civilian lawyers across the department. as general counsel of the defense department, secretary johnson oversaw the development of the aspects of many of our nation's counterterrorism policies. he spearheaded reforms to the military system at one time obey in 2009 and co-authored the 250-page report that paved the

repeal of don't ask don't tell in 2010. senator johnson's career has included service in national security, law enforcement, and as an attorney in private corporate law practice. from its role in facilitating legal immigration and enforcing immigration laws, it is his responsibility for coordinated fonts abilities national disasters and other large emergencies. cities recognize the importance of strong leadership in the area of homeland security. please join me in reckonin welcoming the secretary jeh johnson. [applause] secretary johnson: thank you mayor. it is good free here. good afternoon, everybody. welcome to washington and 60-degree weather. we are really happy about that. as i was in the back, waiting

to come up. -- up here, i had a moment of trepidation listening to the musical segment. someone said to me, you know you have to sing. [laughter] oh, well, i cannot sing. your secretary of homeland security does not know how to carry a tune. i do know a few things about the national league of cities. i am here to pay tribute to this organization and to thank you for two very, very major and important positions that you have taken over the last several months and i have an ask which i will tell you. first, i have to tell a story. thank you for the wonderful welcome you gave our president this morning. [applause]

i recall -- this is a lively group, a good group. i will enjoy talking to you. i recall eight years ago january 2008, des moines, iowa, introducing senator barack obama for the first time to my 12-year-old daughter, then 12 now a college freshman. he walked into the room, there were many cameras, and a lot of excitement and my daughter was standing right behind me, and i said to her, follow me, i am going to finally introduce you to our next president of the united states, senator barack obama. and we pushed forward through the crowd and i turned around introduce my 12-year-old daughter to senator obama, and she is gone.

and the reason she is gone is because scarlett johansson has walked into the room. so i found my daughter, i scolded her and she said, i am really sorry dad, into my 12-year-old's credit come on her own, she pressed forward through the cameras, through the fans, and introduced herself to senator obama with the words " mr. obama, i am really sorry. my dad wanted to meet you, but i had to meet an important person first." [laughter] i'm sure you would agree that our president is an important person. all of you are important people for reasons that i am going to discuss today. i was in selma, alabama, yesterday, and as i sat through

the almost for our church service -- four-hour church service, i'm a graduate of morehouse college, gas 1979. my mind turned to our most famous alumnus from the class of 1948, martin luther king jr. one of my favorite quotations from martin luther king is the following -- "the ultimate measure of a man is not where he stands in moments of convenience and comfort, but where he stands in times of challenge and controversy." today we would have to modify that is a man or woman. today i would like to say to you, the national league of cities, the ultimate measure of an organization is not where it stands in moments of convenience

and comfort, but where it stands at times of challenge and controversy. so i want to thank the national league of cities first for your stand with the men and women of the department of homeland security as we fought for a full -year appropriation last week. [applause] i want to thank you for standing with the 225,000 people in our organization who are members of the coast guard and secret service, fema, immigration enforcement, citizenship and immigration services, and i could go on and on, for your courageous and unyielding stand in support of the homeland security of this nation, in support of a full-year appropriation for our department and in support of our people. many people have said to me,

congratulations, you must be happy, and i have to respond we walked back from a cliff literally. i would have had to furlough 30,000 men and women of our department who depend on a paycheck. you mayors out there, imagine having to tell your own work force you must come to work, but i cannot pay you during the period of time that you must come to work. so we avoided the shutdown, and we now have a full-year appropriation for fy 2015. it is a good bill, a good appropriation. we're now able to fund our vital homeland security missions which includes important grants to states, towns, and cities like those represented in this room for purposes of homeland security. it is especially important that

in these times we work together on our joint homeland security mission. the reality is that we have a fault to a new phase in the global terrorist threat, which requires that we even evolve to a new phase in our counterterrorism efforts. the global terrorist threat today is more decentralized more complex. includes the phenomenon of foreign fighters, those going to places like syria and then returning to their home communities. it involves effective use of the internet to reach into communities, perhaps your own in an attempt to recruit and inspire someone to commit an act of violence. we are concerned about the independent actor, the so-called lone wolf who could strike at a

moment's notice. for my department and for the u.s. government in general, it makes working with state and local communities, governors, mayors police chiefs commissioners, sheriff's all the this through the issuance of joint intelligence bulletins and through our grant-making activity. the reality is that given how the global terrorist threat has evolved in this country and in other countries, in europe and elsewhere, that a cop on the beat may be the first one to learn about the terrorist attack. in 2015, therefore, homeland security must also mean hometown security. [applause] on our end we are engaged

militarily against isil in iraq and syria, along with an international coalition. we are engaged in our law enforcement efforts to interdict to prosecute those who provide material support to terrorism. the fbi does a terrific job. i have directed the enhancement of our federal protective service at federal buildings in major cities around the country. we have enhanced aviation security in this country and at last points of departure airports into the united states. this, by the way, must include working with cities municipalities on airport security as well. we are moving forward with our preclearance capability to establish more security on the front end at airports overseas. every opportunity i have to defend the homeland from the 50

yard line as opposed to the one-yard line we should take. where are violating whether more security is necessary for our visa waiver program for those who would travel to the united states from countries for which we do not require a visa. we are working with our counterterrorism partners and allies overseas more and more to deal with the global terrorist threat as it has evolved. we are enhancing the effectiveness of fusion centers. those are things that many of you in this room are familiar with that exist in every state. we have revamped our say something campaign. if you see something, say something must be more than a slogan. it requires, it calls for public participation in our efforts, in our homeland security efforts. we are engaged in what we call

countering violent extremism interactions. i have personally been to places like columbus, ohio, chicago los angeles, boston, minneapolis to talk to community leaders in communities where there is a potential for young people to turn to violence. in my view, given how the world situation has evolved, it is all the more important that we do that here in the homeland. so when i go to these engagements very often, i am with the police commissioner the mayor, the city council member, the sheriff, and so forth. the other thing i want to thank this organization for is your support of our efforts to reform the immigration system. we would have preferred congressional action, but the president and i identified nine

actions we could take within our existing legal authorities to reform our system. we have issued reforms to facilitate the employment of high-skilled workers, something the president talked about this morning, to facilitate the issuance of green cards for high-skilled workers. we have strengthened border security. we have embarked on a southern border campaign strategy. i am pleased to report that this january and february the numbers of total apprehensions on our southern border are -- the numbers month-to-month are now the lowest they have been in several years because of seasonal factors and frankly because of our efforts and those of our partners south of the border. last year, as many of you know we saw the heartbreaking spectacle of a number of

children unaccompanied by any parent attending to cross the southern border. i personally met with hundreds of children. i'm happy to report that this year, this month, last month there was a 42% decrease in the numbers of unaccompanied children from where we were last year. we are through our executive actions encouraging citizenship through greater public awareness and permitting people to pay for citizenship applications by reddit card. where i'm -- -- credit card. and we are revamping what we call prosecutorial discretion. we are focusing the use of our resources to deport and remove people on felons, not families. we want to stop tearing families apart. [applause]

we are emphasizing national security, public safety, and border security over tearing families apart. we have created a new deferred action program for parents for those who have been in this country for years who have in effect become integrated members of society. there are by most estimates something like 11 million undocumented immigrants living in this country. the reality is that given our resources, they are not going to be deported by any administration, republican or democrat. the most striking thing about the number of people is at least half, perhaps more than half have been here in excess of 10 years. so the president and i in november directed the creation of a new deferred action program

for those who have been here five years, who have children, who are citizens or lawful permanent residents, and who have committed no serious crime. the reality is we have to deal with these people. we have to account for these people. and we should encourage them to come out of the shadows. as all of you know, our actions have been challenged in the courts, and i thank this organization for the your support of our position in that lawsuit in texas. the national league of cities filed an amicus brief that i think said it best -- doca and dopa will fuel economic growth in cities across the country, increase public safety and public engagement, and facilitate the full integration of immigrant presidents by

limiting family separation. that is from the national league of cities. [applause] thank you. from my homeland security point of view, from my homeland security law enforcement point of view, we need to encourage people who have been here for years to come out of the shadows, to be held accountable. the litigation and the decision in the injunction puts us in an untenable position. the judge does not quarrel with the notion that we have the ability to engage in prosecutorial discretion, prioritize felons over families, prioritize criminals over those who have been here and not committed any serious crimes. i want to take the additional step and encourage them to come out of the shadows so that we know who they are. the injunction basically prevents us from doing that.

we're supposed to somehow leave these people in the shadows. we want to take steps to ring them forward, have them pay taxes, apply for deferred action, and apply for work permits. so the only thing i will say about the case is this is what appeals courts are for. so what we say, what we must say to people in your communities who i have personally met with now: don't lose hope. as martin luther king said, "the mark of the universe is long but it always ends towards