the health care exchanges with their established by the federal government or the state governments have proven costly operate typically the exchanges are funded primarily through user fees on participating issuers the district and the district of loan however has taken a different approach so just by way of illustration the federal government for example funds the federal exchange through a user fee on participating issuers that amounts to three point five percent of the premiums for the policies that are issued on the new exchanges in the district the rate is one percent and the way they've gotten that far lower rate is to impose the user fee or the assessment not just on the participating issuers but on clients on my clients who provide excepted benefits points that are expressly precluded from being offered on the exchanges now this is certainly a convenient arrangement for the participating in your shorts who get their user fee reduced by roughly seventy percent but we w inconsistent with the statute and with the constitution now before it turn to the various i decided let's say just a moment on the jurisdictional issue here to be very clear about this this is not just a situation where the district failed to time talking about that i think i'd rather start at least by telling you why i think it's rather straightforward that the district had it right the first time ok this is in fact a tax and i think we all agree that the the a political test here is the three things and i think all three factors here are either neutral or point strongly in favor of it being a regulatory fee i think the one that is maybe a bit neutral is whether or not this was imposed by the agency or  but why should i be of any consequence one way or the other i think the way it should be a sudden consequence is i think there is a sort of sense that maybe the legislatures broadly speaking are the ones that should be imposing taxes and not agencies so if it's a situation where the agency's done it maybe it's more like a regulatory fee than it is like a tax but i don't think that's a particularly dispositive factor especially when in a case like this it's kind of a walk three points in two directions i think the second third factors are more important the discouraged concedes that the second factor supports the classification of the assessment as a regulatory fee because this is not a broadly a political assessment it's an assessment just on participating issue and my clients and a few others that had accepted it except it benefits products so in that sense it's a very narrow universe and that's something that points in the direction of it being a a table makes crystal clear that this isn't something that goes into the general treasury for general purposes this is used exclusively for the authority to fund the exchanges that my clients are barred from participating in  strongly points in our favor and i think that in particular the provision in the statute that says that under no circumstances show this money be reverted to the general treasury is also it important aspect of th third factor and indeed if you go back to judge briars opinion of the san juan cellular telephone company case that's really what may not be dispositive in that case you had to feed that load as imposed by these sort of telecommunications arm puerto rico there are some facts that pointed in different directions but there was a specific provision in the law there that said that once the fees came to the communications agency of puerto rico they could be diverted to general revenues and you had the same thing it just like this case well and in fact that the courts aren't the people in there didn't decide this issue and we thought it was sufficiently close that it didn't decide the issue and went on to the merits which doesn't strike me as the exemplar of how to deal  company issues but in all of this that's what they did and that case it's not like that's a case where it was found that there was not jurisdiction and i think that what i would say here is is there is in this case though i think something of a higher breaker if you will if you think it's close and i don't think it's particularly close and that's the other provision in the d c law which is d c code forty seven twenty six zero eight eighty one which basically in the context of imposing a two percent tax on insurance carriers says the assessment not tax and i've been less you're going to read what they did as in by a repeal of the provision that i just referenced about no more taxes then i think you have multiple reasons to take the the on top of that you get into the possibility of retaliatory taxes by other jurisdictions on insurers and so that's a very important provision coming can you just tell us a little bit more about that get into the risk of  noticed that i didn't understand exactly how that works and how the risk arises and why that's a reason to construe this particular provision in any one way or another i think the issue here is you know you go back to your current fergusson you had a lot of state regulation of insurers but they typically regulate out of state insurers based on their operations in this state and so there's a real potential for one state to impose a tax on the city premiums written another state to impose tax on income when you get into all sorts of potential problems and nasty dormant commerce clause issues and i think the states have essential reach especially agreement where they impose limited taxes on previews in if you if state were to of state were to go above that and start imposing additional taxes i think it does create this risk that other states would retaliate and you would have been there to race to a bottom or not you have a real problem with retaliatory taxes and so that explains why the revenue but i think it's something they're good at that the states consciously want to avoid the kind of reached and accommodation on this and that's why you have the provision that basically says look this is a two percent tax on prevents it's in lieu of additional tax they karo real estate taxes they carve out certain other fees and charges i just think putting an additional tax on that is something that could be i put down i don't know personal ball i don't know that it would lead to retaliation but i think that's a real concern and i think of the provisions on the books but i don't know that anything turns on why it's on the books i think that the more salient point is that you know they did that to the district almost invites you to read the new d c code provision  your view i mean that has like this case circumstance of some of the folks who are responsible for and they were benefiting from the use to which the fund is being targeted having to pay it and didn't have a jurisdictional holding and so i guess what i would say is on the jurisdictional point i think this is a much stronger case for a variety of reasons not the least of which is this additional code provision that i mentioned on the merits i think the cases are quite distinguish e because you when you get into a situation where you are you know in a sense there's a line drawn question about this everybody benefits equally i think that those are the kind of questions where the courts typically defer to the legislature but i think if you go to the court's cases on this and i'm talking spring once cases and you start with village of norwood and then you go through mile salt and room improvement district and all the way up to when it's fabulous pharmacy and the spirit case i think the teaching of those cases is that we're willing to defer to the legislatures about the amount of the benefits and the life we're not willing to defer to you and approve legislative approaches that are effective and indifferent to whether somebody is benefiting in a material way i mean that task that emerges is whether there are the charges a loose approximation for the benefits and i think we under that task but i think if you want to look at it from even like thirty thousand feet i mean you know driest property in the district in the parish and the court says no that's problematic in the in the real district improvement case they impose a higher assessment on the railroad for a highway that's likely to divert business all way from the railroad and no they're not because the end you know that the reality is the participating members are what you would think of as your classic health insurers and the members are what you would think of as your classic life insurance companies but they also provide things like more term disability like you know sort of motor peer insurance and i think with what congress recognized in the n c a a this frankly those things are more like life insurance and other things which is why they were exempted from the not very telling myself and it's not the case that the proportion that your clients would have to pay has over time as more people are participating in the exchange no actually and that's actually thing that gets to the heart of what's been particularly unfair about this arrangement so i mean it with the district faced by their own sort of decision about how they were going to structure their exchange is really a two year gap because they are both exchange up and running before they close the market for small businesses so they actually did force as many customers on to the exchanges in the first two years and then created funding and but the solution that they came up with imposing this user fee on my clients is a permanent solution and it actually is indifferent to have the precisely because they impose it on people who are never going to participate on the exchange how can that be given a provision that read about not about the district being prohibited to collect more than is needed if if the premium base of participating benefits and you know i'm here to tell you that if they did this as just a two year stopgap that we wouldn't be here but i think part and parcel of the unfairness and i think the unconstitutionality of this is that it's a permanent solution we're st paying one percent as he does fact a user fee for something that we can't use in perpetuity and again that's why you know it's interesting because in the first couple of years when they had stock you have a problem the charge they would have to make on the participating users was higher than the federal rate and that is both parties would get the numbers once they get everybody on the stage would be about the same but now the participating insurer issuers are locked into a one percent rate and so are we even though we don't get the benefits of now distinct from that is each one which allows the authority through rule making ability to assess things like user fees on let's say i pay income tax parsons and my entire income tax go to funding schools that because i have a child in that school system does not sit and has suddenly converted that tax into a user fee it is still a tax near fact i am particularly benefiting from some aspect of that tax what others just figuring out policies for exchange participants but for enabling all individuals to find affordable health insurance to reduce the number of uninsured throughout the district to educate consumers about health insurance and so the public at large are being served by this and so in that way brief confront a situation where the district allowed to litigation to go forward in the soon division of the superior or as the corner decided it wasn't going to decide whether there was a sound for that or with her for that and so the district court certainly don't view this as being obviously jurisdictional and i would expect that all that's going on here is these provisions made d c the same as any state which means there are certain limits on when you're not challenging specifically a refund or the the legislature itself said by calling in assessment and not pass it reinforces the relationship with it with the other provisions in the code that says it would be no other taxes in lieu of this two percent tax on the premiums so i think all of those factors reinforce the idea that this is not a tax this is a feed but if i can then just walk through very briefly the three factors first of all i think and certainly agree with you ju with the districts council about how the amount of the taxes alternately going to be said visa v the user fee in your words completely undermines their argument on point one the authorities the one that's going to be determining the amount of this time based on what they do with the user fees which is entirely in their bewicke on the second factor that doesn't really i mean you can make that argument and that was true before she ever rates that in terms of what's the return on their investments in terms of how many tax started with the authority in the legislature gave the authority that's actually the right to impose the tax not just came back to me and said oh wait the administration essentially buy a legislator and i think this is just consistent with my idea real tax here the real power over this tax is being wielded by the who are not by the legislature because on the one hand they can pump up the amount of the user fee and in judge tails words if they want if you could reduce the amount of this is testament to  but it doesn't stop there the second factor and spiritual is when you have this is not a situation where one set over here is being taxed to pay for this thing way over here instead of the people who are the principal beneficiaries of this new facility that's being funded by the district are being subject to something that even the district calls the user fee when it's imposed on the users and then it's also being imposed on some other people that the district thought were close enough to call and help carriers impose the user fee on them i think that when the second factor plainly in our favor and then another third factor again here is where i think it should be that the test is simply whether or not the money is used to promote something that promotes the general welfare because not only signaling that everything for these purposes that everything the district does promotes the general welfare and benefits the citizens of the district the point is are you using it to work a specific designated purpose or are you using it more broadly and this judge prior said through the first circuit a hugely important indicator is whether the money gets funneled into the general treasury in which place it could be funneled out to anywhere in might by happenstance come back to a particular  a dedicated file this used for a very specific thing which is the funding of these changes and there's no doubt when the principal beneficiaries of those exchanges property taxes are dedicated a portion of the proper things i think is dedicated to the school system or it may be put into green tax just sort of a provision but all the money goes into the general treasury it in then it goes out and is allocated as part of the appropriations process and that doesn't happen here and it can't happen here and that's exactly the same as in the same one cellular telephone case where the money went into a communications agency and it couldn't come out to the general treasure and i mean you know it's not a position to be in when the other side doesn't want to say anything affirmative