# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 25, 2014 Decided July 22, 2014

No. 14

- 5018

J ACQUELINE H ALBIG

, ET AL

., A PPELLANTS

v.

S YLVIA M ATHEWS B URWELL
, IN HER OFFICIAL CAPA CITY AS U.S. S ECRETARY OF H EALTH AND H UMAN S ERVICES

, ET AL

.,

A PPELLEES

Appeal from the United States District Court
for the District of Columbia (No. 1:13

- cv

- 00623)

Michael A. Carvin argued the cause for appellants. With
him on the briefs were Yaakov M. Roth and Jonathan Berry

.

Rebecca A. Beynon

, E. Scott Pruitt , Attorney General, Office of the Attorney General for the State of Oklahoma, Patrick R. Wyrick , Solicitor General, Luthe r Strange

, Attorney General, Office of the Attorney General for the State of Alabama, Sam Olens , Attorney General, Office of the Attorney General for the State of Georgia, Patrick Morrisey

, Attorney General, Office of the Attorney General for the State
of West Virginia, Jon Bruning , Attorney General, Office of the Attorney General for the State of Nebraska, and Alan
Wilson , Attorney General, Office of the Attorney General for2

the State of South Carolina were on the brief for amici curiae
Consumer ’ s Research , et al.

C. Boyden Gray

, Adam J. White , and Adam R.F. Gustafson were on the brief for amicus curiae The Galen Institute in support of appellants.

Charles J. Cooper

, David H. Thompson

, Howard C.
Nielson , and Michael E. Roman were on the brief for amici
curiae Senator John Cornyn, et al. in support of appellants.

John R. Woodrum was on the brief for amicus curiae National Federation of Independent Business Legal Center in support of appellants.

Bert W. Rein

, William S. Consovoy

, John M. Connolly

, and I lya Shapiro were on the brief for amici curiae Pacific Research Institute, et al. in support of appellants.

Derek Schmidt , Attorney General, Office of the Attorney General for the State of Kansas, Jeffrey A. Chanay , Deputy Attorney General, Stephen R. Mc Allister , Solicitor General, Bryan C. Clark , Assistant Solicitor General, Bill Schuette

, Attorney General, Office of the Attorney General for the State of Michigan, and Jon Bruning , Attorney General, Office of the Attorney General for the State of Nebraska , were on the
brief for amici curiae States of Kansas, et al. in support of appellants.

Andrew M. Grossman was on the brief for amici curiae Jonathan Adler, et al. in support of appellants.

Stuart F. Delery , Assistant Attorney General, U.S. Department of Justice, argued the cause for appellees. With
him on the brief were Ronald C. Machen

, Jr. , U.S. Attorney,3

Beth S. Brinkmann , Deputy Assistant Attorney General

, and
Mark B. Stern and Alisa B. Klein , Attorneys.

Martha Jane Perkins

, Kelly Bagby

, Iris Y. Gonz a lez , and
Michael Schuster were on the brief for amici curiae AARP and National Health Law Program in support of appellees.

Mary P. Rouvelas was on the brief for amici curiae The American Cancer Society, et al. in support of appellees.

H. Guy Collie r and Ankur J. Goel were on the brief for
amic i curiae Public Health Deans, Chairs, and Faculty in support of appellees.

Elizabeth B. Wydra and Simon Lazarus were on the brief
for amici curiae Members of Congress and State Legislatures in support of appellees.

Dominic F. Perella

, Sean Marotta , and Melinda Reid

Hatton were on the brief for amicus curiae The American Hospital Association in support of appellees.

Andrew J. Pincus and Brian D. Netter were on the brief
for amicus curiae America ’ s Health Insurance Plans in support of appellees.

Matthew S. Hellman and Matthew E. Price were on the
brief for amici curiae Economic Scholars in support of appellees.

Robert Weiner and Murad Hussain wer e on the brief for
amicus curiae Families USA in support of appellees.

Before: G RIFFITH
, Circuit Judge , and E DWARDS and
R ANDOLPH

, Senior Circuit Judges

.4

Opinion for the C ourt filed by Circuit Judge G RIFFITH

.

Concurring opinion filed by Senior Circuit Judge
R ANDOLPH

.

Dissenting opinion filed by Senior Circuit Judge
E DWARDS

.

G RIFFITH
, C ircuit Judge : Section 36B of the Internal
Reve n ue Code, enacted as part of the Patient Prote ction and Affordable Care Act ( ACA or the Act )

, makes tax credits
available as a form of subsidy to individuals who purchase health insurance through marketplaces

— known as “American Health Benefit Exchanges,” or “Exchanges” for short

— that
are “ established by the State under section 1311” of the A ct. 26 U.S.C. § 36B(c)(2)(A)(i)

. On its face , this provision
authorizes tax credits for insurance purchased on an Exchange established by one of the fifty states or the District of
Columbia. See 42 U.S.C. § 18024(d). But t he Internal Revenue Service has interpreted section 36B broadly to

au thorize the subsidy also for insurance purchased on an
Exchan ge established by the federal government under
section 1321 of the A ct. See 26 C.F.R. § 1.36B

- 2(a)(1) (hereinafter “IRS Rule”).

Appellants are a group of individuals and e mployers residing in states that did not establish Exchanges

. For reasons we explain more fully below , the IRS’s interpretation of
section 36B makes them su bject to certain penalties under the
ACA that they would rather not face . Believing that the IRS’s interpretation is inco nsistent with section 36B, a ppellants challenge the regulation under the Administrative Procedure Act (APA), alleging that it is not “in accordance with law.” 5 U.S.C. § 706(2)(A).5

On cross

- motions for summary judgment, the district court rejected that challenge, granting the government’s motion and denying appellants’. See Halbig v. Sebelius , No. 13 Civ. 623 (PLF), 2014 WL 129023 (D.D.C. Jan. 15, 2014). After resolving several threshold issues related to its jurisdiction, the district court held that th e ACA’s text, structure, purpose, and legislative history make “clear that Congress intended to make premium tax credits available on
both state

- run and federally

- facilitated Exchanges.” Id. at *18. Furthermore, the court held that even if the ACA were
amb iguous, the IRS ’s regulation would represent a permissible construction entitled to deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837 (1984).

Appellants timely appealed the district court’s orders, and we have jurisdiction under 28 U.S.C. § 1291. Our review of the orders is de novo, and “[o]n an independent review of the record, we will uphold an agency action unless we find it to be ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Holland v. Nat’l Mining Ass’n

, 309 F.3d 808, 814 (D.C. Cir. 2002) (quoting 5 U.S.C. § 706(2)(A)). Because we conclude that the ACA unambiguously restricts the section 36B subsi dy to insurance purchased on Exchanges “established by the State,” we reverse the district co urt and vacate the IRS’s regulation.

I

Congress enacted the Patient Protection and Affordable
Care Act in 2010 “to increase the number of Americans covered by h ealth insurance and decrease the cost of health
care.” Nat’l Fed ’ n of Indep. Bus. v. Sebelius ( NFIB ), 132 S. Ct. 2566, 2580 (2012). The ACA pursues these goals through6

a complex network of interconnected policies focused primarily on helping individuals who do not receive coverage through an employer or government program to purchase
affordable insurance directly. Central to this effort are the Exchanges. 42 U.S.C. § 18031(b)(1). Exchanges are “governmental agenc[ies] or nonprofit entit[ies]” that serve as both gatekeeper s and gateway s to healt h insurance coverage

. See id. § 18031(d)(1). Among their many functions as gatekeeper s , Exchanges determine which health plans satisfy
federal and state standards

, and they operate websites that
allow in dividuals and employers to enroll in those that do

. See
id. § 18031(b)(1), (d)(1 )

- (d)(4). Section 1311 of the ACA delegates primary responsibility for establishing Exchanges to
individual states. See id. § 18031(b)(1) (providing that “[e]ach State shall, n ot later than January 1, 2014, establish an American Health Benefit Exchange (referred to in this title as an ‘Exchange’ ) for the State”)

. However, because Con gress cannot require states to implement federal laws

, see Printz v.
United States

, 521 U.S. 898

, 904

- 05, 935 (1997), if a state
refuses or is unable to set up an Exchange

, s ection 1321 provides that the federal government , through the Secretary of
Health and Human Services (HHS)

, “shall . . . establish and operate such Exchange within the State.” 4 2 U.S.C. § 18041(c)(1). As of today

, only fourteen states and the
District of Columbia ha ve established Exchanges. T he federal government ha s established Exchanges in the remaining thirty

- six states, in some cases with state assistance but in

most cases not

. See R ichard Cauchi, State Actions To Address Health Insurance Exchanges

, N AT ’ L C ONFERENCE OF S TATE L EGISLATURES (May 9, 2014), http://www.ncsl.org/research/health/state

- actions

- to

implement

- the

- health

- benefit.aspx

.

Under s ection 36B

, Exchanges also serve as the gateway

to the refundable tax credits through which the ACA7

subsidizes health insurance. See 26 U.S.C. § 36B(a). Generally speaking, s ection 36B authorizes credits for “applicable taxpayer[s],” id. , defined as those with household
incomes between 100 and 400 percent of the federal poverty line, id. § 36B(c)(1)(A). But s ection 36B ’s formula for calculating the credit works further limits on who may receive the subsidy

. According to that formula, the credit is to equal the sum of the “premium assistance amounts” for each “coverage month.” Id. § 36B(b)(1). The “premium assistance
amount” is based on the cost of a “qualified health plan . . . enrolled in through an Exchange established by the State under [section] 1311 of the [ACA].” Id. § 36B(b)(2); see al so 42 U.S.C. §§ 18021(a)(1), 18031(c)(1) (establishing requirements for “qualified health plans”)

. Likewise, a “coverage month” is a month for which, “as of the first day of such month the taxpayer . . . is covere d by a qualified health plan .

. . that was enrolled in through an Exchange established by the State under section 1311 of the [ACA].” 26 U.S.C. § 36B(c)(2)(A)(i). In other words, the tax credit is available only to subsidi ze the purchase of insurance on an “Exchange established by the State under section 1311 of the [ACA].”

But, i n a regulation promulgated on May 23, 2012, the
IRS interpreted section 36B to allow credits for insurance purchased on either a state

- or federally

- established Exchange. S pecifically, the regulation provided that a taxpayer may receive a tax credit if he “is enrolled in one or more qualified health plans through an Exc hange, ” 26 C.F.R. § 1.36B

- 2(a)(1) , which the IRS defined as “ an Exchange serving the individual market for qualified individuals

. . . , regardless of whether the Exchange is established and operated by a State (including a regional Exchange or subsidiary Exchange) or by HHS

. ” 45 C.F.R. § 155.20 (emphasis added); see 26 C.F.R. § 1.36B

- 1(k) (incorporating
the de finition in 45 C.F.R. § 155.20 by reference) . In8

promulgating this broader rule, the IRS acknowledged that “[c]ommentators disagreed on whether the language in section 36B(b)(2)(A) limits the availability of the premium tax credit only to taxpayers who enr oll in qualified heal th plans on State Exchanges,” but asserted without elaboration
that “ [ t ] he statutory language of section 36B and other provisions of the [ACA],” as well as “the relevant legislative history,” supported its view

. Health Insurance Premiu m Tax Credit, 77 Fed. Reg. 30,377, 30,378 (May 23, 2012).

This broader interpretation has major ramifications

. B y making credits more widely available, the IRS Rule gives the
i ndividual and employer mandates

— key provisions of the
ACA

— broader effect than they would have if credits were limited to state

- established Exchanges. The individual
mandate requires individuals to maintain “minimum essential

coverage ” and, in general, enforces that requirement with a penalty. See 26 U.S.C. § 5000 A(a)

- (b)

. T he penalty does not apply , however, to individuals for whom the annual cost of the cheapest available coverage, less any tax credits , would exceed eight percent of t heir projected household income

. S ee id. § 5000A(e)(1)(A)

- (B). By some estimates , credits will determine on which side of the eight

- percent threshold
millions of individuals fall. See Br. of Economic Scholars in Support of Appellees 18. Thus, by making tax credits
available in the 36 states with federal Exchanges, the IRS Rule signifi cantly increases the number of people who must purchase health insurance or face a penalty

.

The IRS Rule affects the employer mandate in a similar

way . Like the individual mandate, t he employer mandate uses the threat of penalties to induce large employers

— defined as
those with at least 50 employees, see 26 U.S.C. § 4980H(c)(2)(A)

— to provide their full

- time employees with
health insurance. See generally id. § 4980H(a). Specifically,9

the ACA penalizes any large e mployer who fail s to offer its
full

- time employees suitable coverage if one or more of those employee s “enroll[s] . . . in a qualified health plan with respect to which an applicable tax credit . . . is allowed or paid with respect to the employee. ” Id. § 4980H(a)(2); see also id. § 4980H(b) (linking another penalty on employers to employees’ receipt of tax credits). Thus, even more than with the individual mandate, the employer mandate’s penalties hinge on the availability of credits. I f credits we re un available in states with federal Exchanges, employers there would face no penalties for failing to offer coverage. The IRS Rule has the opposite effect: by allowing credits in such states , it exposes employers there to penalties and thereby gives the employer mandate broader reach.

II

Before we can turn to the merits of the parties’ dispute,
we must first address the government ’ s argument that all appellants lack standing and that, even if they have standing, the APA does not provide them with a cause of action to challenge the IRS Rule. Because w e find that appellant David
Klemencic has standing and a cause of action under the APA,

we do not reach the issue of our jurisdiction over the remaining appellants’ claims. See Mountain States Legal
Found . v. Glickman , 92 F .3d 1228, 1232 (D.C. Cir. 1996) (explaining that as long as one plaintiff has standing for a claim, “we need not consider the standing of the other plaintiffs to raise that claim”)

.

A

The “ ‘ irreducible constitutional minimum ’ ” a plai ntiff must show to establish standing is (1) an injury in fact (2) fairly traceable to the alleged conduct of the defendant10

(3) that is likely to be redressed by the relief the plaintiff
seeks. Sprint Comm c’ns Co. v. APCC Servs., Inc. , 554 U.S. 269, 27 3

- 74 (2008) ( quoting Lujan v. Defenders of Wildlife

, 405 U.S. 555, 560

- 61 (1992)). The district court determined that at least one of the appellants, David Klemencic, has standing. Klemencic resides in West Virginia, a state that did
not establish its own Exchange, and expects to earn approximately $20,000 this year. 1 H e avers that he does not
wish to purchase health insurance and that, b ut for federal
credits , he would be exempt from the individual mandate
because the unsubsidized cost of coverage would exceed eight percent of his income. The availability of credits on West Virginia’s federal Exchange therefore confronts Klemencic with a choice he’d rather avoid: purchase health insurance at a subsidized cost of less than $21 per year or pay a some what greater tax penalty.

The government primarily questions whether Klemencic has suffered an injury in fact. A n injury in fact is “a concrete and particularized invasion of a legally protected interest.” Sprint Comm c’ns Co. , 554 U.S. at 273 (internal q uotation marks omitted). The government characterizes Klemencic’ s injury as purely ideological and hence neither concrete nor particularized

. But

, although Klemencic admits to being at

1 Although West Virginia actually passed legislation authorizing the establishment of an Exchange, see W

. V A

. C ODE § 33

- 16G

- 1 et seq. , it subsequently decided to allow the federal government to establish the Exchange, in partnership with the state, due to cost concerns, see Nat’l Conference of State Legislatures: Health Insurance Exchanges or Marketplaces: State Action

— May 2014, http:/

/www.ncsl.org/Portals/1/Documents/Health/Health_ Insurance_Exchanges_State_Profiles.pdf#page=49 (last visited June 12, 2014).11

least partly motivated by opposition to “government handouts,” he has e stablished that, by making subsidies available in West Virginia, the IRS Rule will have quantifiable economic consequences particular to him. See Clapper v. Amnesty Int’l USA , 133 S. Ct. 1138, 1147 (2013) (explaining that a “threatened injury” that is “cer tainly impending” may “constitute injury in fact” ( emphasis and
in ternal quotation marks omitted)). Those consequences may be small, but even an “‘ identifiable trifle ’” of harm may
est ablish standing. Chevron Natural Gas v. FERC , 199 F. App’x 2, 4 (D.C. Cir. 2006) (quoting United States v. Students Challenging Regulatory Agency Procedures , 412 U.S. 669, 689 n.14 (1973 )) ; see Bob Jones Univ. v. United States , 461 U.S. 574, 581

- 82 (1983) (noting that Bob Jones University
sued for a tax refund of $21.00). Klemencic thus satisfies the requirement of establishing an injury in fact, and because that injury is traceable to the IRS Rule and redressable through a judicial decision invalidating the rule

, we find that he has standing to challenge the rule . We therefore proceed to consider whether Klemencic may mount his challenge under
the APA.

B

The APA provides a cause of action to challenge final agency action “for which there is no other adequate remedy in

a court. ” 5 U.S.C. § 704. The government argues that even if Klemencic has standing to challenge the IRS Rule, he cannot
do so under the APA because he has an adequate alternative remedy in the form of a tax

- refund suit : Klemencic c ould violate the individual mandate, pay the penal ty, and then sue
for a refund , raising the same arguments he makes here

. See 28 U.S.C. § 1346(a)(1) ; see also 26 U.S.C. § 7422(a) . Such a remedy is adequate, the government contends, because if12

Klemencic were successful, the suit would make him financially whole.

The APA “embodies the basic presumption of judicial
revie w ” of agency action. Abbott Labs. v. Gardner , 387 U.S. 136, 140 (1967) . Therefore , i n determining whether an alternative remedy is adequate, we must give the APA’s “generous review provisions ” a “hospitable interpretation

, ” such that “only upon a showing of clear and convincing evidence of a contrary legislative intent should the courts restrict access to judicial review.” Id. at 141 (internal quotation marks omitted); see Garcia v. Vilsack , 563 F.3d 519, 523 (D.C. Cir. 2009). Under this standard, “[a]n
alternat ive remedy will not be adequate

. . . if the remedy offers only ‘doubtful and limited relief.’” Garcia , 563 F.3d at 522 (quoting Bowen v. Massachusetts , 4 8 7 U.S. 879, 901 (198 8)). A lthough “the alternative remedy need not provide
relief id entical to relief under the APA,” it must “ offer [] relief of the ‘same genre.’” Id. at 522 (quoting El Rio Santa Cruz Neighborhood Health Ctr. v. U.S. Dep’t of Health & Human
Servs. , 396 F.3d 1265, 1272 (D.C. Cir. 2005)).

In arguing that a tax refund suit provides an adequate alternative remedy, the government emphasizes Klemencic’s ability to recover any assessed overpayment

, plus interest. But
that backward

- looking relief differs in kind f rom the prospective relief Klemencic could obtain under the APA. See
Bowen , 487 U.S. at 904

- 05 (rejecting as “unprecedented” the government’s argument that a suit for monetary damages is an adequate alternative to prospective relief under the APA). Specif ically, requiring Klemencic to proceed via refund suit would deprive him of the opportunity to obtain a “certificate of exemption.” See 45 C.F.R. § 155.605(g)( 2). Such certificates are a form of safe harbor, allowing an individual to obtain an exemption from the mandate’s penalty on the13

basis of projected income, “notwithstanding any [subsequent] change in an individual’s circumstances.” Id. § 155.605(g)(2)(vi). Unlike the “prospective[]” assurance such certificates offer, id.

, a refund suit would require Klemencic to violate the law as it now stands, pay a penalty, and only then challenge the assessment of the penalty for that previous year based on his actual i ncome . And even if Klemencic were to prevail, his relief

— financial restitution

— would be backwards looking, meaning that Klemencic would have to repe at the cycle the following year. T he government offers no suggestion that he could obtain a certificate of

e xemption through a refund action.

F urthermore, it is not clear that Klemencic could obtain any prospective relief through a refund action, let alone that
which he seeks under his APA claim

— namely, a declaration that the IRS Rule is invalid and an injunc tion barring its implementation. As we explained in Cohen v. United States

, the provision authorizing refund suits “does not, at least explicitl y, allow for prospective relief. ” 650 F.3d 717, 732 (D.C. Cir. 2011) (en banc); see 26 U.S.C. § 7422(a) (setting forth requirements applicable to any “suit or proceeding . . .
for the recovery . . . of any penalty claimed to have been collected without authority” (emphasis added)). And the government here does not suggest that it implicitly allows such relief, maint aining instead the studied silence as to the availability of non

- monetary relief that, in Cohen , we interpreted as a concession of the limited nature of the
remedies a refund suit under section 7422 offers. See C ohen

, 650 F. 3d at 732

. (noting that, by being “agnostic concerni ng the availability of broad equitable remedies as part of a refund suit,” the IRS “unknowingly concedes” that an action under section 7422 does not offer prospective relief). We must therefore conclude that a tax refund suit is inadequate as an
alternativ e remedy: it is “doubtful” that it offers prospective14

relief at all, and the monetary relief it does offer is clearly not “of the same genre” as the relief available to appellants under
the APA. See Garcia , 563 F.3d at 522 (internal quotation
marks omitte d)

. Because a tax refund suit thus offers Klemencic only “doubtful and limited relief,” Bowen , 487 U.S. at 901, w e hold that the APA provides him with a cause
of a ction to challenge the IRS Rule and turn to the merits of
his claim.

III

On the merits, t his case requires us to determine whether
the ACA permits the IRS to provide tax credits for insurance purchased through federal Exchanges. To make this determination, we begin by asking “whether Congress has directly spoken to the precise question at issu e,” for if it has, we must give effect to its unambiguously expressed intent. Chevron U.S.A., Inc. v. Natural Res. Def. Council , 467 U.S. 837, 84 2

- 4 3 (1984 ). The text of section 36B is only the starting point of this analysis . That provision is but one pie ce of a vast, complex statutory scheme, and we must consider it
both on its own and in relation to the ACA’s interconnected provisions and overall structure so as to interpret the A ct , if possible, “as a symmetrical and coherent scheme.” See FDA
v. Brown & Williamson Tobacco Corp. , 52 9 U.S. 120, 133 (2000) (internal quotation marks omitted) ; Wolf Run Min ing Co. v. Fed. Mine Safety & Health Review Comm’n , 659 F.3d 1197, 1200 (D.C. Cir. 2011).

Although b oth appellants and the government argue that the ACA, read in its totality, evinces clear congressional
intent

, they dispute what that intent actually is. Appellants argue that if taxpayers can receive credits only for plans enrolled in “through an Exchange established by the State under section 1311 of the [ ACA],” then the IRS clearly15

cannot give credits to taxpayers who purchased insurance on an Exchange established by the federal government. After all, the federal government is not a “State,” see 42 U.S.C. § 18024(d) (defining “State” to “mean[] each of the 50 States and the District of Columbia”), and its authority to establish Exchanges appears in section 1321 rather than section 1311,
see id. § 18041(c)(1). The government counters that appellants take a blinkered view of the ACA and that sections
1311 and 1321 of the Act establish complete equivalence between state and federal Exchanges, such that when the federal government establishes an Exchange, it does so standing in the state’s shoes. Furthermore, the government

argues , whereas appel lants’ construction of section 36B
render s other provisions of the ACA absurd, its own view brings coher ence to the statute and better promotes the

purpose of the Act

.

W e conclude that appellants have the better of the argument: a federal Exchange is not an “Exchange established by the State,” an d section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges

. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. We then
consider the government’ s arguments that this construction generates absurd results but find that it does not render other provisions of the ACA unworkable, let alone so unreasonable as to justify disregarding section 36B’s plain meaning. Finally, t urn ing to the ACA’s purpose and legislative history

, we find that the government again comes up short in its efforts to overcome the statutory text. Its appeals to the ACA’s broad aims do not demonstrate that Congress16

manifestly meant something other than what section 36B

says

.

A

The crux of this case is whether an Exchange established by the federal government is an “Exchange established by the
State under sec tion 1311 of the [ ACA]. ” W e therefore begin with the provisions authorizing states and the federal government to establish Exchanges. Section 1311 provides that states “shall” establish Exchanges. 42 U.S.C. § 18031(b)(1). But, as the parties agree, despite its seemingly mandatory language

, section 1311 more cajoles than commands. A state is not literally required to establish an Exchange; the ACA merely encourages it to do so . And if a
state elects not to (or is unable to) , such that it “will not have any required Exchange operational by January 1, 2014,” section 1321 directs the federal government, through the Secretary of Hea lth and Human Services, to “establish and
operate such Exchange within the State.” Id. § 18041(c)(1) (emphasis added).

The phrase “such Exchange” has twofold significance. First, the word “such”

— meaning “aforementioned,” see B LACK ’ S L AW D ICTIONARY 1473 (8th ed. 2004); W EBSTER ’ S T HIRD I NT ’ L D ICTIONARY 2283 (1981)

— signifies that the Exchange the Secretary must establish is the “required Exchange” that the state failed to establish. In other words, “such” conveys what a federal Exchange is : the equivalent o f the Exchange a state would have established had it elected to
do so. The meaning of “Exchange” in the ACA reinforces and
builds on this sense . The ACA defines an “Exchange” as “an American Health Benefit Exchange established under [section
1311 of the AC A].” 42 U.S.C. § 300gg

- 91(d)(21). If we import that definition into the text of section 1321, the17

provision directs the Secretary to “establish . . . such American Health Benefit Exchange established under [section 1311 of the ACA] within the State .” This suggests not only that the Secretary is to establish the type of exchange described in section 1311, but also that when s he does so, s he acts under section 1311, even though her authority appears in section 1321. Thus, section 1321 creates equivalence betw een state and federal Exchanges in two respects: in terms of what they are and the statutory authority under which they are
established.

The problem confronting the IRS Rule is that subsidies
also turn on a third attribute of Exchanges: who established

t hem. Under section 36B , subsidies are available only for plans “enrolled in through an Exchange established by the
State under section 1311 of the [ACA].” 26 U.S.C. § 36B(c)(2)(A) (i) (emphasis added); see also id. § 36B(b)(2)(A). Of the three elements of that provision

— (1) an Exchange (2) established by the State (3) under section
1311

— federal Exchanges satisfy only two: they are Exchanges established under section 1311. Nothing in s ection
1321 deem s federally

- established Exchanges to be “Exch ange [ s ] established by the State.” This omission is particularly significant since Congress knew how to provide
that a non

- state entity should be treated as if it were a state when it sets up an Exchange

. In a nearby section , the ACA provides that a U.S. t erritory that “elects . . . to establish an Exchange . . . shall be treated as a State.” 2 42 U.S.C. § 18043(a)(1). The absence of similar language in section

2 Specifically, the ACA permits territories to be treated as states for the limited purposes of sections 1311, 1312, and 1313. Se e 42 U.S.C. § 18043(a).18

1321 suggests that even though the federal government may establish an Exchange “within the State, ” it does not in fact stand in the state’s shoes when doing so. See NFIB , 132 S. Ct. at 2583 (“Where Congress uses certain language in one part of a statute and different language in another, it is generally presumed that Congress acts intentionally.” (cit ing Russello v.
United States , 464 U.S. 16, 23 (1983) ) ).

The dissent atte mpts to supply this missing equivalency by pointing to section 1311( d)(1) , which provides: “A n Exchange shall be a governmental agency or nonprofit entity that is established by a S tate.” 42 U.S.C. § 18031(d)(1). According to the dissent

, (d)(1) mean s that an Exchange established under section 1311 is, by def inition, established by a state. Therefore, the dissent argues, because federal Exchange s are established under section 1311, they too , by definition, are established by a state.

The premise that (d)(1) is definitional, however, does not survive examination of (d)(1)’s context and the ACA’s

structure

. T he other provisions of section 1311(d) are operational requirements, setting forth what Exchanges must (or, in some cases, may) do. 3 See generally 42 U.S.C. § 18031(d)(2)

- (7) (listing “[r]equirements”). Read in keeping

3 Although we attach little weight to section titles, the title of section 1321(c)

— “Failure to establish Exchange or implement requirements”

—

reinforces this interpretation. See Gorman v. Nat’l Transp. Safety Bd. , 558 F.3d 580, 588 n.5 (D.C. Cir. 2009) (recognizing that “headings ‘are of use . . . when they shed light on some ambiguous word or phrase’” (ellipsis in original) (quoting Bhd. of R.R. Trainmen v. Balt. & O

. R. Co. , 331 U.S. 519, 5 29 (1947) )).19

with that theme, (d)(1) would simply require that an Exchange operate as either a governmental agency or nonprofit entity

. But the dissent would have us construe (d)(1) differently. In its view, (d)(1) plays a definitional role unique among section 1311(d)’s otherwise operational provisions, creating a legal fiction that any Exchange is , by definition, established by a
state , even when, as a matter of fact, it is not

. That reading, however, would render (d)(1) the odd man out twice over:
both within section 1311(d) and among the ACA’s other definitional provisions, which, unlike (d)(1), employ the (unmistakably definitional) formula of “The term ‘X’ means

. . . .” See, e.g. , 42 U.S.C. §§ 300gg

- 91, 18024 ; see also 26 U.S.C. § 4980H(c)

.

The dissent’s reading would also require us to overlook
the fact that section 1311(d ) would be a strange place for Congress to h ave buried such a legal fiction

. Section 1311, after all, concerns Exchanges that are established by states in fact ; the legal fiction the dissent urges would matter only to Exchanges established by the federal government

. T o accept the dissent’s construct ion would therefore transform (d)(1) into the proverbial elephant in the mousehole

— the “ancillary provision[]” that “alter[s] the fundamental details of a regulatory scheme.” Whitman v. Am. Trucking Ass’n s , 531 U.S. 457, 468 (2001). The Supreme Court has r epeatedly held that Congress does not legislate in this manner, see id. ; accord Gonzales v. Oregon , 546 U.S. 243, 267 (2006), and we see no
evidence that it did so here. 4 Indeed, we are particularly loath

4 The government makes its own elephants

- in

- mouseholes argument, asserting that the formula for calculating tax credits (located in section 36B(b)) is an odd place to insert a condition that
the states must establish their own Exchanges if they wish to secure
tax credits for their c itizens. The more natural location, the20

to accept the dissent’s construction given that the re are far more natural locations to place this fiction, such as section
1321 or the provision defining the term “Exchange,” 42 U.S.C. § 300gg

- 91(d)(21).

The dissent’s construction of (d)(1) also ignores the structural relationship between sections 1311 and 1321. J ust as section 1311(b)(1) assumes that states will establish Exchanges in general

, s ee 42 U.S.C. § 18031(b)(1), section

government suggests, would have been section 36 B (a), which authorizes the credit in the first place. See 26 U.S.C. § 36B(a). But even under the government’s reading of section 36B (b) , the statutory formula houses an elephant: namely, the rule that subsidies are only available for plans purchased through Exchanges. Given that this other crucial limitation on the availability of subsidies is found only in section 36B’s formula

, the government’s contention that the formula is a mere mousehole is unpersuasive. Equally unpersuasive is the dissent’s suggestion that section 36B cannot mean what it plainly says because Congress did not use an “if/then” formula to signify that credits are available onl y on
state

- established Exchanges. The dissent cites no authority for requiring such magic words, and we perceive none. Section 36B(b) also does not employ an “if/then” construction for the requirement
that credit

- eligible coverage be purchased through an E xchange, yet neither the government nor dissent disputes that requirement. It is simply not the case that Congress expresses conditions only through such language . Indeed, in 26 U.S.C. § 35, which
establishes a tax credit to offset the cost of health insur ance for certain workers displaced by foreign competition, Congress made the availability of the credit turn, in part, on state cooperation without employing “if/then” language, simply through its definition of the phrase “eligible coverage month.” See 26 U.S.C. § 35(e)(2)(A).21

1311(d) assumes that states will carry out the specific requiremen ts Exchanges must meet

. But if those assumption s
prove wrong, section 1321 assigns the federal government responsibility both to establish the Exchange and to ensur e that it satisfies the particulars of section 1311(d). See id. § 18041(c) (directing the Se cretary to “establish and operate such Exchange” and to “take such actions as are necessary to implement such other requirements” pertaining to Exchanges). In other words, section 1321 creates a limited scheme of substitution: the requirements assigned to states by 1311(d) are transferred to the federal government if a state fails to establish an Exchange

. The specific requirement that ( d)(1) assumes each state will fulfill is to establish an Exchange in the form of “ a governmental agency or nonprofit entity. ” So i f a state elects not to participate in the creation of an Exchange, section 1321 directs the federal government t hat
it must create “ a governme ntal agency or nonprofit entity” to serve as the Exchange. Crucially, this construction does not

ent ail ignoring the plain meaning of “established by a State” in section 1311(d)(1); here, section 1321 tells us to substitute the federal government for the state under a certain scenario. But there is nothing comparable with respect to section 36B:
no analo gue to section 1321 says that section 36B should be read to encompass federally

- established Exchanges. Accordingly , we reject the dissent’s argument that

, because federal Exchanges are established under section 1311, they are by definition “established by a State.”

Instead, sections 1311 and 1321 lead us to interpret section 36B essentially as appellants do. Those provisions, to be sure, establish some degree of equivalence betw een state and federal Exchanges

— enough , indeed, that if section 36B
had autho rized credits for insurance purchased on an “Exchange established under section 1311,” the IRS Rule would stand. But section 36B actually autho rizes credits only22

for coverage purchased on an “Exchange established by the
State under section 1311,” 26 U.S.C. § 36B(c)(2)(A)(i), and the government offers no textual basis

— in sections 1311 and
1321 or elsewhere

— for concluding that a federally

established Exchange is, in fact or legal fiction, established by

a state. Moreover, as we have noted, that absence is especially glaring given that the ACA elsewhere provides that a federal territory that establishes an Exchange “shall be treated as a State,” 42 U.S.C. § 18043(a) , clearly demonstrat ing that Congress knew how to deem a non

- state entity to be a “State.”
Thu s, at least in light of sections 1311 and 1321, the meaning of section 36B appears plain: a federal Exchange is not an “Exchange established by the State.”

B

The government argues that we should not adopt the plain meaning of section 36B , however, becaus e doing so would render several other provisions of the ACA absurd. Our obligation to avoid adopting statutory constructions with
absurd results is well

- established. See Pub. Citizen v. U.S. Dep’t of Justice , 491 U.S. 440, 454

- 55 (1989). Under this princip le, we will not give effect to a statute’s literal meaning when doing so would “render [ the] statute nonsensical or superfluous or . . . create[] an outcome so contrary to perceived social values that Congress could not have intended it.” United States v. Cook , 594 F.3d 883, 891 (D.C. Cir. 2010) (internal quotation marks omitted) . But we do not disregard statutory text lightly . The Constitution assigns the legislative power to Congress, and Congress alone, see U.S. C ONST . a rt. I, § 1, and legislating often entails compromises that courts must respect. See Barnhart v. Sigmon Coal Co. , 534 U.S. 438, 461 (2002). See generally John F. Manning, The Absurdity
Doctrine , 116 H ARV

. L. R EV . 2387, 2434

- 2435 (2003) ( warning that an overbroad application of the absurdity23

doctrine “ contradicts the rule

- of

- law objectives implicit in the Constitution’s strict separation of lawmaking from judging”).
W e therefore give the absurdity principle a narrow domain, insisting that a given construction cross a “high threshold” of
unreasonableness before we conclude that a statute does not mean what it says. Cook , 594 F.3d at 891. A provision thus “may seem odd ” without being “absurd,” and in such instances “it is up to Congress rathe r than the courts to fix it,” even if it “may have been an unintentional drafting gap.” Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 565 (2005) (in ternal quotation marks omitted) ; see also Sierra
Club v. EPA , 294 F.3d 155, 161 (D.C. Cir. 200 2) (“Because

our role is not to ‘correct’ the text so that it better serves the statute’s purposes, we will not ratify an interpretation that abrogates the enacted statutory text absent an extraordinarily convincing justification.” (internal quotation mark s and citation omitted)).

i

The government first argues that we must uphold the IRS
Rule to avoid re ndering language in 26 U.S.C. § 36B(f) superfluous. Titled “Reconciliation of credit and advance credit,” section 36B( f) requires the IRS to reduce a taxpayer’s
end

- of

- year credit by the amount of any advance payments
made by the government to the taxpayer’s insurer to offset the cost of monthly premiums. Id. § 36B(f)(1); see 42 U.S.C. § 18082(c)(2)(A) (authorizing such a dvance payments ) . As relevant here, section 36B(f) also requires “each Exchange”

— i.e. , both state and federal Exchanges

— to report certai n information to the government. With respect to any health plan it provides, an Exchange must report:

(A) The level of cov erage . . . and the period such coverage was in effect.24

(B) The total premium for the coverage without regard to
the credit under this section or cost

- sharing reductions under section 1402 of [the ACA]. (C) The aggregate amount of any advance payment of
such c redit or reductions . . .

. (D) The name, address, and [taxpayer identification number (TIN)] of the primary insured and the name
and TIN of each other individual obtaining coverage under the policy. (E) Any information provided to the Exchange, including any chan ge of circumstances, necessary to determine eligibility for, and the amount of, such credit. (F) Information necessary to determine whether a taxpayer has received excess advance payments.

26 U.S.C. § 36B(f)(3) . The government contends that these reporting re quirements assume that credits are available on federal Exchanges, and it argues that the requirements would be superfluous, even nonsensical, as applied to federal Exchanges if we we re to reject that assumption.

Not so. Even if credits are unavailable o n federal Exchanges, reporting by those Exchanges still serves the

purpose of enforcing the individual mandate

— a point the IRS, in fact, acknowledged i n promulgating a recent regulation, 26 C.F.R. § 1.6055

- 1(d)(1). That regulation exempts insurers from 26 U.S.C. § 6055, which otherwise would require that, for each policy they issue, insurers report to the IRS such information as “the name, address, and TIN of the primary insured ,” the dates of coverage, and the “amount (if any) or any advance payment .

. . or of any premium tax credit under section 36B with respect to such coverage.” 26
U.S.C. § 6055(b)(1) (B). The IRS justified the exemption for
insurers on the ground that “Exchanges must report on this coverage under section 36B(f)(3).” Information Reportin g of25

Minimum Essential Coverage, 79 Fed. Reg. 13,220, 13,221 (Mar. 10, 2014); see 26 C.F.R. § 1.6055

- 1(d)(1). 5 The government’s claim that section 36B(f)(3) ’s reporting requirement serves no purpose other than reconciling credits is therefore simply not tr ue. 6

Furthermore, holding that credits are unavailable on federal Exchanges would not convert the specific reporting requirements concerning credits into an “‘empty gesture.’” Gov’t Br. 28 (quoting Fund for Animals, Inc. v. Kempthorne

, 472 F.3d 872, 878 ( D.C. Cir. 2006)). Those requirements would still allow the reconciling of credits on state Exchanges; as applied to federal Exchanges, they would simply be over

- inclusive. Over

- inclusiveness, however, remains a problem even if we were to agree that sectio n 36B allows credits on federal Exchanges. Section 36B(f)(3), after all, mandates reporting “with respect to any health plan provided through the Exchange,” 26 U.S.C. § 36B(f)(3) (emphasis added) , even though only plans purchased by taxpayers with incomes between 100 and 400 percent of the federal poverty line may be subsidized, see id. § 36B(a),

5 Appellants also suggest that the information collected from federal Exchanges could be useful for the “Study on Affordable Coverage” mandated by the ACA in that same section. See ACA § 1401(c), 124 Stat. at 220.

6 The dissent takes a slightly different tack, emphasizing that the “ principal purpose” of the reporting requirement is to reconcile
advance and end

- of

- year payments. Dissenting Op. at 22. We agree but fail to see how this helps the government. Reporting by state

established Exchanges still would serve this purpose, while reporting by federally

- established Exchanges would serve the secondary purpose implicitly recognized by 26 C.F.R. § 1.6055

- 1(d)(1).26

(c)(1)(A). A weakness common to both views of the availability of credits hardly serves as a basis for choosing
between them.

ii

The government next points to the supposedly absurd consequences appellants’ interpretation of section 36B would have for section 1312 of the ACA, which defines the rights of “qualified individuals.” See 42 U.S.C. § 18032. The term “‘qualified individual’ means, with respect to an Exchange, an
individual who

— (i) is seeking to enroll in a qualified health plan in the individual market offered through the Exchange; and (ii) resides in the State that established the Exchange.” Id. § 18032(f)(1)(A). If this provision is given it s plain meaning

, then the 3 6 states with federal Exchanges (that, obviously, the

states did not establish) have no qualified individuals. That
outcome is absurd , the government argues, because in its view section 1312 restricts access to Exchanges to quali fied
individuals alone

. S ee 45 C.F.R. § 155.20. The absence of qualified individuals would mean that federal Exchanges have no customers and therefore no purpose. The government urges us to avoid this outcome by construing section 1321 to
authorize the fed eral government to establish Exchanges “ on behalf of ” states that decline to do so

. Gov’t Br. 21 (internal quotation marks omitted).

The government, however, tilts at windmills. It assumes that when section 1312(a) states that “[a] qualified individual may enroll in any qualified health plan available to such individual and for which such individual is eligible,” 42 U.S.C. § 18032(a) (1) , it means that only a qualified individual may enroll in such a plan. The obvious flaw in this interpretation is that t he word “only” does not appear in the provision. We have repeatedly emphasized that it is “not our27

role” to “engage in a statutory rewrite” by “ insert [ing] the word ‘only’ here and there .” Adirondack Med. Ctr. v.
Sebelius , 740 F.3d 692, 699

- 700 (D.C. Cir. 2014); see Lamie
v. U.S. Tr. , 540 U.S. 526, 538 (2004) (rejecting an interpretation that “would have [the Court] read an absent word into the statute” because such an interpretation “would result ‘not [in] a construction of [the] statute, but, in effect, a n enlargement of it by the court’” (second and third alterations in original) (quoting Iselin v. United States , 270 U.S. 245, 251 (1926))); P ub. Citizen , 533 F.3d at 817 (“Congress knows well how to say that disclosures may be made only under specified pro visions or circumstances, but it did not do so here.” (footnote omitted) ). Section 1312(a)’s actual language simply establishes the right of a qualified individual to enroll in any qualified health plan , at any level of coverage. 7 On this reading, giving the phrase “established by the State” its plain meaning creates no difficulty, let alone absurdity. Federal Exchanges might not have qualified individuals, but they
would still have customers

— namely, individuals who are not “qualif ied individuals.” 8

7 Under the ACA, qualified health plans may offer four
di fferent levels of coverage: bronze, silver, gold, and platinum. The level of coverage reflects the percentage of the insured’s medical costs that the plan’s benefits are designed to cover. See 42 U.S.C. § 18022(d)(1). Lower levels of coverage have higher d eductibles and thus higher out

- of

- pocket costs and, as a general matter, lower premiums. See id. ; see also id. § 18032(a)(2) (providing that qualified employers may “select[] any level of coverage under section 18022(d) . . . to be made available to employ ees through an Exchange”).

8 The government warns that interpreting section 1312(a) as a

non

- discrimination provision would allow undocumented aliens to shop on Exchanges. Gov’t Br. at 31. But section 1312 specifically28

Several other provisions in section 1312 imply that not only “qualified individuals” may participate in an Exchange.

T ake, for example, the provision concerning incarcerated
convicts . Section 1312(f)(1)(B) states that “[a]n individual

s hall not be treated as a qualified individual if, at the time of
enrollment , the individual is incarcerated, other than incarceration pending the disposition of charges.” 42 U.S.C. § 18032(f)(1)(B) (emphasis added)

. By implying that an
incarcerated convict may enroll in coverage through an Exchange despite not being a “qualified individual,” t his provision suggests that participation in an Exchange does not depend on “qualified individual” status

. T h at proposition gains further strength from section 1312(d) (3) , which states

, first, that “[n]othing in this title shall be construed to restrict the choice of a qualified individual to enroll or not to enroll in a qualified health plan or to participate in an E xchange,” 42
U.S.C. § 18032(d)(3)(A), and , second, th at “[n]othing in this title shall be construed to compel an individual to enroll in a qualified health plan or to participate in an Exchange,” id. § 18032(d)(3)(B ). The second provision

, which speaks of

“ individual [ s ]” generally, would be wholly unnecessary if only “qualified individuals” were eligible to participate in the Exchanges. 9

addresses that concern, providing th at aliens not “lawfully present in the United States . . . may not be covered under a qualified health plan in the individual market that is offered through an Exchange.” 42 U.S.C. § 18032(f)(3).

9 We note that section 1312’s heading, “Consumer Choice,” and subsection 1312(a)’s heading, “Choice,” also suggest that the purpose of section 1312(a) is primarily to protect choice among levels of coverage, not restrict access to Exchanges.29

ii i

The government also claims that a plain meaning reading of section 36B would have pec uliar effects under 42 U.S.C. § 1396a(gg)(1). That prov ision states that, as a condition of receiving Medicaid funds, a State may not tighten its Medicaid eligibility standards for adults until “the date on which the Secretary determines that an Exchange established by the State under [ section 1311 ] is fully o perational.” 42 U.S.C. § 1396a(gg)(1). If a federally

- established Exchange is not one “established by the State,” the government argues, states with federal Exchanges “would never be relieved of
th [ is ]

. . . requirement,” transforming an “interim measure” into a “perpetual obligation.” Gov’t Br. at 33. B ut appellants propose a logical explanation for why the ACA might establish this rule: to preserve Medicaid benefits for the impoverished residents of states where, as a result of having federally

- establishe d Exchanges, subsidies are unavailable. Cf. Pub. Citizen , 533 F.3d at 817 (adopting a reasonable explanation of a provision’s purpose despite not being able to

“ know for certain what purpose Congress had in mind ”). In this light, the results produced by gi ving section 36B its plain meaning seem sensible, not absurd. 10

10 In a footnote, the government identifies another set of provisions t hat supposedly embodies the assumption that federal Exchanges are Exchanges “established by the State”: 42 U.S.C. § 1397ee(d)(3)(B)

- (C). Those provisions instruct states to enroll children in coverage “ offered through an Exchange established by
the State u nder section [1311]” in the event of a funding shortfall in a state’s Children’s Health Insurance Program. See id. § 1397ee(d)(3)(B). Although we recognize the oddity of requiring some states and not others to take this step, we do not see how it
makes the statute nonsensical or otherwise meets the high threshold30

i v

T he government urges us, in effect, to strike from section 36B the phrase “established by the State,” on the ground that giving force to its plain meaning renders other provisions of
the Act absurd. But we find that the government has failed to make the extraordinary showing required for such judicial rewriting of an act of Congress. N othing about the imperative to read section 36B in harmony with the rest of the ACA requires interpreting “established by the State” to mean anything other than what it plainly says.

C

This conclusion places us at a fork in our precedent. One line of cases instructs us to cease our inquiry and give effect to the statute’s unambiguous language. See Coal

. for Responsible Regulation, Inc. v. EPA , 684 F.3d 102, 137 (D.C. Cir. 2012) (per curiam) (noting, in the Chevron context, that “‘[w]hen the words of a statute are unambiguous . . . judicial inquiry is complete ’ ” ( ellipsis in original) (quoting Conn. Nat’l Bank v. Germain , 503 U.S. 249, 254 (1992))

, aff’d in relevant part sub nom. Util. Air Regulatory Grp. v. EPA ( UARG )

, 1 34 S. Ct. 2427 , 2448 ( 2014) ; accord Dep’t of Housing & Urban Dev. v. Rucker , 535 U.S. 125, 132

- 33 (2002); Hughes A ircraft Co. v. Jacobson , 525 U.S. 432, 438 (1999) (“As in any case of statutory construction, our analysis

of absurdity. The statute remains workable, and nothing suggests that in states with federal Exchanges, the federal government could not step in and perform the same service for uninsured children. The government’s bare citation to the provisions thus hardly demonstrates absurdity.31

begins with the language of the statute. And where the statutory language provides a clear answer, it ends there as well.” (emphasis added) (internal quotation marks and citation omitted)); see also Am. Fed’n of Gov’t Emps. v. Shinseki , 709 F.3d 29, 33 (D.C. Cir. 2013). Another tells us to wade into the legislative history in the hope of glimpsing “new light on congressional intent.” Sierra Club v. EPA , 551 F.3d 1019, 1027 (D.C. Cir. 2008). But, though we recognize that our decision about which path to travel implicates substantial theoretical questions of statutory interpretation, its practical consequences are less momentous here because both paths
le ad to the same destination. Therefore, assuming arguendo that it is proper to consult legislative history when the

s tatutory text is clear, we consider what light the ACA’s history offers.

We begin by clarifying the role the ACA’s legislative history might play in our analysis. Legislative history is a
means to an end , to be consulted for evidence of congressional intent

. See, e.g.

, Sierra Club , 551 F.3d at 1027. But legislative history is not the sole, or even the primary,
source of such evidence. Rat her, “[t]he most reliable guide to congressional intent is the legislation the Congress enacted.”
Sierra Club , 294 F.3d at 161; see also Cal. Indep. Sys. Operator Corp. v. FERC , 372 F.3d 395, 400 (D.C. Cir. 2004) (“[W]e assume ‘that the legislative purpose is expressed by the ordinary meaning of the words used.’” (quoting Sec. Indus. Ass’n v. Bd. of Governors of Fed. Reserve Sys. , 468 U.S. 137, 149 (1984))); Engine Mf r s. Ass’n , 88 F.3d at 1088 (noting that the “most traditional tool” for “determin[ing] Cong ressional intent” is “to read the text”). Where used,
l egislative history plays a distinctly secondary role. Its purpose is not to confirm already clear text; c lear text speaks for itself and requires no “amen” in the historical record. See,

e.g. , Harrison v. PPG Indus., Inc. , 446 U.S. 578, 5 92 (1980)32

(“[I]t would be a strange canon of statutory construction that would require Congress to state in committee reports or
elsewhere in its deliberations that which is obv i ous on the face of a statute.”)

. Instead, only when “apparently plain language compels an ‘odd result’” might we look to legislative history to ensure that the “‘literal application of a statute will [not] produce a result demonstrably at odds with the intentions of its drafters.’” Engine Mf r s. A ss’n , 88 F.3d at 1088 (quoting Public Citizen

, 491 U.S. at 454

, and United States v. Ron Pair Enters., Inc. , 489 U.S. 235, 242 (1989)). Thus, accepting for the sake of argument the government’s
contention that the results of appellants’ construction of section 36B are odd, our inquiry into the ACA’s legislative history is quite narrow. In the face of the statute’s plain meaning

— a federal Exchange is not an “Exchange established by the State”

— we ask only wh ether the legislative history provides evidence that this literal meaning is

“ demonstrably at odds with the intentions” of the ACA’s drafters. Unless evidence in the legislative record establishes that it is, we must hew to the statute’s plain meaning, eve n if it compels an odd result. See id. (“[T]here must be evidence that Congress meant something other than what it literally said before a court can depart from plain meaning.”); accord
Garcia v. United States , 469 U.S. 70, 75 (1984) (noting that “only the most extraordinary s howing of contrary intentions

. . . would justify a limitation on the ‘plain meaning’ of the statutory language”); Bldg. & Constr. Trades Dep’t, AFL

- CIO v. U.S. Dep’t of Labor Wage Appeals Bd. , 932 F.2d 985, 990 (D.C. Cir. 1991).

Her e, the scant legislative history sheds little light on the precise question of the availability of subsidies on federal Exchanges. The government points, for example, to a Congressional Budget Office report from November 2009, before the ACA’s adoption, th at calculated the cost of33

subsidies based on the assumption that they would be available in all states. But that assumption is as consistent with an expectation that all states would cooperate ( i.e.

, establish their own Exchanges) as with an understanding that subsidies would be available on federal Exchanges as well. Cf. Robert Pear, U.S. Officials Brace for Huge Task of Operating Health Exchanges , N.Y. T IMES

, at A17 (Aug. 5

, 2012) (“ When Congress passed legislation to expand coverage two years ago, Mr. Ob ama and lawmakers assumed that every state would set up its own exchange . . . .”). Equally unilluminating are floor statements by S enate sponsors of the
ACA touting the availability and benefits of premium tax credits in general

, but not addressing the pr ecise issue of
whether they would be available on federal Exchanges.

The government and its amici are thus left to urge the court to infer meaning from silence, arguing that “during the debates over the ACA, no one suggested, let alone explicitly stated, that a State’s citizens would lose access to the tax credits if the State failed to establish its own Exchange.” Br. of Amici Members of Congress and State Legislatures 8. The historical record, however, belies this claim. The Senate Committee on Health, Education, Labor, and Pensions (HELP) proposed a bill that specifically contemplated penalizing states that refused to participate in establishing “American Health Benefit Gateways,” the equivalent of Exchanges, by denying credits to such states’ residents for four years. See Affordable Health Choices Act, S. 1679, 111th Cong. § 3104(a), (d)(2) (2009). This is not to say that section 36B necessarily incorporated this thinking; we agree that inferences from unenacted legislation are too uncertain to be a
hel pful guide to the intent behind a specific provision

. See Village of Barrington v. Surface Transp. Bd. , 636 F.3d 650, 666 (D.C. Cir. 2011) . But the HELP Committee’s bill certainly demonstrate s that members of Congress at least34

considered the notion of usin g subsidies as an incentive to gain states’ cooperation.

I n any case, even if the historical record were silent, that
silence is unhelpful to the government

. For the court to depart from the ACA’s plain meaning, which favors appellants,
“there must be ev idence that Congress meant something other than what it literally said,” from which the court can conclude
that applying the statute literally would be “‘ demonstrably at odds with the intentions of [the ACA’s] drafters.’” Engine Mfrs. Ass’n , 88 F.3d at 108 8 (quoting Ron Pair Enters. , 489 U.S. at 242) (emphas e s added)

. As Chief Justice Marshall wrote, “it is incumbent on those who oppose” a statute’s plain meaning “to shew an intent varying from that which the words import.” United States v. Fisher , 6 U.S. ( 2 Cranch) 358, 386 (1805). Nothing the government or its amici cite
demonstrates what that precise intent was

. And “ [i] n the absence of such evidence, the court cannot ignore the text by assuming that if the statute seems odd to us, i.e., the statute is

no t as we would have predicted beforehand that Congress would write it, it could be the product only of oversight, imprecision, or drafting error.” Engine Mfrs. Ass’n , 88 F.3d at 1088

- 89; see also id. at 1091 (“With such a meager record of what happened in conference, the court is unable to reconstruct the legislative compromises that were made. Even if the final product might strike us as unexpected . . . the court could not make the leap from such an im pression to the certainty that such a result was unintentional.”).

T he government , together with the dissent, also lean s heavily on a more abstract form of legislative history

— Congress’s broad purpose in passing the ACA

—urging the
court to view section 3 6B through the lens of the ACA’s economic theory and ultimate aims. They emphasize that to achieve the goals of “near universal coverage” and35

“ lower[ing] health insurance premiums

, ” 42 U.S.C. § 18091(2)(D), ( F ), the ACA relies on three interrelated policie s: insurance market reforms prohibiting insurers from denying coverage or charging higher premiums based on an individual’s health status, see, e.g. , id. § 300gg (community rating requirement); id. § 300gg

- 1 (guaranteed issue requirement); the individual m andate, see 26 U.S.C. § 5000A; and subsidies to individuals purchasing insurance in the individual market, see id. § 36B. These policies, the government and dissent explain, are like the legs of a three

legged stool; remove any one, and the ACA will collap se. The insurance market reforms are necessary to expand the availability of insurance. The individual mandate is necessary to avoid the adverse selection that would result if people could exploit the insurance market reforms to wait to purchase insurance until they were sick. And subsidies are necessary both to make the mandated insurance affordable and, in so doing, to expand the reach of the individual mandate by reducing the cost of insurance below the
threshold

— eight percent of household income

— at whic h taxpayers are exempt from the mandate’s penalty. See 26 U.S.C. § 5000A(e)(1)(A)

- (B). Given this structure, the government and dissent argue that it is “inconceivable” to think Congress would have risked the ACA’s stability by making subsidies conditional on states establishing Exchanges. 11 Dissenting Op. at 2

.

11 Appellants do not challenge the government’s account of the economic theory behind the ACA, but they contend that the theory must be understood through the lens of pol itical reality. In their telling, section 36B is the product of legislative compromise to secure the support of Nebraska Senator Ben Nelson, the crucial sixtieth vote needed to avoid a filibuster. Nelson opposed House plans for a national, federally

- run ex change, fearing that it would36

set the United States down a path to a single

- payer system

. S ee Carrie Budoff Brown, Nelson: National Exchange a Dealbreaker

, P OLITICO (Jan. 25, 2010), http://www.politico.com/livepulse/0110/ Nelson_National_exchange_a_dealbreaker.html . To gain Nelson’s support, proponents of the ACA scrapped the national exchange in favor of establishing exchanges on a state

- by

- state basis. This change, in turn, required Congress to devise means of inducing

st ates to take on the politically and technologically challenging task of establishing exchanges. Congress’s solution, appellants maintain, was a package of “carrots” and “sticks” for states. The carrots included federal grants to states for “activities (inc luding planning activities) related to establishing an [Exchange].” 42 U.S.C. § 18031(a)(3). The sticks included the prohibition against tightening Medicaid eligibility requirements imposed on states that do not create their own Exchanges. See id. § 1396a( gg). The most important incentive of all, appellants argue, was the provision at issue here: making premium tax credits available only for individual coverage purchased through state

- established Exchanges. According to appellants, the ACA’s supporters beli eved no state would refuse so good an offer

— and, appellants add, perhaps no state would have had the IRS not eliminated this incentive by proposing and promulgating the IRS Rule, making subsidies available regardless of which entity established an Exchange

, before states had to elect whether to establish Exchanges. See Health Insurance Premium Tax Credit, 77 Fed. Reg. 30,377, 30,378 (May 23, 2012); Health Insurance Premium Tax Credit, 76 Fed. Reg. 50,931, 50,934 (Aug. 17, 2011). Like the government, however , appellants fail to marshal persuasive evidence (apart from the statutory text, that is) in support of their theory. Senator Nelson may have opposed a single, national exchange, but it does not necessarily follow that he opposed making subsidies available on federal fallback Exchanges in uncooperative states. Similarly, the fact that the ACA contained some incentives to states does not necessarily mean that section 36B is one of them. Nor does the fact that Congress has conditioned
federal benefits on stat e cooperation in other contexts shed light on37

Yet the supposedly unthinkable scenario the government
and dissent describe

— one in which insurers in states with federal Exchanges remain subject to the community rating and guaranteed issue require ments but lack a broad base of healthy customers to stabilize prices and avoid adverse
selection

— is exactly what the ACA enacts in such federal territories as the Northern Mariana Islands, where the Act imposes guaranteed issue and community rating require ments without an individual mandate. See 26 U.S.C. § 5000A(f)(4) (exempting residents of such federal territories as Puerto Rico
and the Northern Mariana Islands from the individual mandate by providing that they are automatically treated as having “minimu m essential coverage”); 42 U.S.C. § 201(f) (providing that the Public Health Service Act, where the guaranteed issue and community rating requirements appear, applies to residents of such territories). This combination, predictably, has thrown individual insurance markets in the
territories into turmoil. See Sarah Kliff, Think Your State Has Obamacare Problems? They’re Nothing Compared to Guam

, W ASH

. P OST (Dec. 19, 2013), http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12
/19/think

- your

- state

- has

- obamacare

- problems

- theyre

- nothing

compared

- to

- guam/ . But HHS has nevertheless refused to exempt the territories from the guaranteed issue and

the precise question of whether Congress did so in section 36B. Thus, the most that can be said of appellants’ theory is that it is plausible. But we need not endorse appellants’ historical account to agree wit h their construction of section 36B. “Wh ere the statutory language is clear and unambiguous, we need neither accept nor reject a particular ‘plausible’ explanation for why Congres s would have written a statute [as it did].” Barnhart , 534 U.S. at 460.38

community rating requirements, rec ognizing that, “[h]owever meritorious” the reasons for doing so might be, “HHS is not authorized to choose which provisions of the [ACA] might apply to the territories.” Letter from Gary Cohen, Director,
Center for Consumer Information and Insurance Oversi ght, HHS, to Sixto K. Igisomar, Secretary of Commerce, Commonwealth of the Northern Mariana Islands (July 12, 2013), available at http://www.doi.gov/oia/igia/upload/12

- 3

- HHS

- CMS

- CNMI

- Letter

- igisomar7

- 12

- 13.pdf

.

Moreover, the territories are not the only instance where the ACA did the unimaginable. A separate title of the ACA, known as the Community Living Assistance Services and Supports (CLASS) Act, see ACA, Pub. L. No. 111

- 148, §§ 8001

- 8002, 124 Stat. 119, 828

- 47 (2010), required the Secretary of HHS to establish a long

- term care insurance program subject to guaranteed issue and community rating requirements but unaided by an individual mandate or premium subsidies, see 124 Stat. at 834. This recipe for adverse selection risk never materialized only beca use Congress, in response to actuarial analyses predicting that the CLASS Act would be fiscally unsustainable, repealed the provision in 2013. 12 See American Taxpayer Relief Act of

12 Th e dissent attempts to distinguish the market targeted by the CLASS Act from the individual insurance market by pointing out
that the CLASS Act contains no individual mandate. In the dissent’s view, the omission “of a tool [Congress] knew to be important to preventing adverse selection merely indicates that Congress had a substantially higher tolerance for the risk of adverse selection” in peripheral markets than in the core market. Dissenting Op. at 19. This argument, however, assumes the very conclusion at issue, taking for granted that the mandate in the individual market
indeed is as broad as it must be to eliminate all adverse selection risk. But the plain language of section 36B suggests that it is not. If39

2012, Pub. L. No. 112

- 240, § 642, 126 Stat. 2313, 2358 (2013); Sarah Kliff, The Fiscal Cliff Cuts $1.9 Bi llion from Obamacare. Here’s How

, W ASH

. P OST (Jan. 2, 2013), http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01
/02/the

- fiscal

- cliff

- cuts

- 1

- 9

- billion

- from

- obamacare

- heres

how/

.

The CLASS Act and the provisions applicable to the territories attest that Congress twice did exactly what the government and the dissent insist it never would: introduce significant adverse selection risk to insurance markets. This is not to say that as Congress did in the CLASS Act and
territories

, so too must it have done in section 36B; perhaps Congress was willing to tolerate risks in those corners of the
insurance market that it never would tolerate at its core . But perhaps not. The point is that we don’t know, and in asking us to ignore the be st evidence of Congress’s intent

— the text of
section 36B

— in favor of assumptions about the risks that Congress would or would not tolerate

— assumptions

section 36B limits the availability of subsidie s and thus curtails the reach of the individual mandate, this is evidence that Congress was tolerant of adverse selection risk in the core markets, although Congress might not have expected the risk to materialize. We recognize that, from an economic stan dpoint, such adverse
selection risk bodes ill for individual insurance markets. But it made no more sense economically in the CLASS Act. Congress may simply have miscalculated the consequences of omitting a mandate, as its decision to repeal the CLASS Act suggests. In any event, whether by error or design, the CLASS Act in clear terms created a significant adverse selection risk, which, as Congress and the government recognized, could be undone only by subsequent legislation, not administrative fiat. Cf. UA RG

, 1 34 S. Ct. at 2445 (“An agency has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous statutory terms. ”).40

doubtlessly influenced by hindsight

— the government and
dissent in effect urge us to substitute our judgme nt for Congress’s. We refuse. As the Supreme C ourt explained just this term, “an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.” UARG

, 1 34 S. Ct. at 2446

. And n either may we. “ T he role of th[e] [c ] ourt is to apply the statute as it is written

— even if we th ink some other approach might ‘accor[d] with good policy.’” Burrage v. United States , 134 S. Ct. 881, 892 (2014) (quoting Comm’r v. Lundy , 516 U.S. 235, 252 (1996)) ( third alteration in original); see also Lewis v. City of Chicago , 560 U.S. 205, 217 (2010) (“[I]t is not our task to assess the consequences of each approach [to interpreting a statute] and adopt the one that produces the least mischief. Our charge is to give e ffect to the law Congress enacted.”); United States v. Locke , 471 U.S. 84, 95 (1985) (“[T] he fact that Congress might have acted with greater clarity or foresight does not give courts a carte blanche
to redraft statutes in an effort to achieve that which C ongress is perceived to have failed to do. ”).

More generally , the ACA’s ultimate aims shed little light on the “precise question at issue,” Chevron , 467 U.S. at 842

— namely, whether subsidies are available on federal Exchanges because such Exchanges are “establish ed by the State.” As the Supreme Court has repeatedly warned, “it frustrates rather than effectuates legislative intent simplistically to assume that
whatever furthers the statute’s primary objective must be the law” because “no legislation pursues its pur poses at all costs.” Rodriguez v. United States , 480 U.S. 5 22, 525

- 26 (1987) (per curiam); see also Pension Benefit Guar. Corp. v. LTV Corp.

, 496 U.S. 633, 646

- 47 (1990); MetroPCS Cal., LLC v. FCC

, 644 F. 3d 410, 414 (D.C. Cir. 2011) (“ ‘ The Act must do

ever ything necess ary to achieve its broad purpose ’ is the slogan of the enthusiast, not the analytical tool of the arbiter.”). Thus, if legislative intent is to be our lodestar, we41

cannot assume, as the government does, that section 36B single

- mindedl y pursues the ACA’s lofty goals.

The fact is that the legislative record provides little indication one way or the other of c ongressional intent, b ut the statutory text does. Section 36B plainly makes subsidies available only on Exchanges established by states. An d in the absence of any contrary indications, that text is conclusive evidence of Congress’s intent. C f. Ethyl Corp. v. EPA , 51 F.3d 1053, 1063 (D.C. Cir. 1995) (“At best, the legislative history is cryptic, and this surely is not enough to overcome the pl ain meaning of the statute.”)

. To hold otherwise would be to say that enacted legislation, on its own, does not command our respect

— an utterly untenable proposition. Accordingly, applying the statute’s plain meaning, we find
that section 36B unambiguously forecloses the interpretation embodied in the IRS Rule and instead limits the availability of premium tax credits to state

- established Exchanges.

IV

We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up Exchanges, our ruling
will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges
and for health insurance markets more broadly. But, high as

t hose stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to

ascerta in the meaning of the words of the statute duly enacted through the formal legislative process. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life

- tenure d judges.42

Thus, although our decision has major consequences, our role is quite limited : deciding whether the IRS Rule is a permissible reading of the ACA. H aving concluded it is not

, we reverse the district court and remand with instructions to grant s ummary judgment to appellants and vacate the IRS
Rule.R ANDOLPH

, Senior Circuit Judge , concurring: A Supreme Court tax decision, and a tax decisi on of this court, flatly reject the position the government takes in this case.

As Judge Griffith’s majority opinion—which I fully join—demonstrates, an Exchange established by the federal government cannot possibly be “an Exchange established by the
State.” To hold otherwise would be to engage in distortion, not interpretation. Only further legislation could accomplish the expansion the government seeks.

In the meantime, Justice Brandeis’ opinion for the Supreme
Court in Iselin v. United States is controlling: “What the government asks is not a construction of a statute, but, in effect, an enlargement of it by the cour t, so that what was omitted, presumably by inadvertence, may be included within its scope. To supply omissions transcends the judicial function.” 270 U.S. 245, 251 (1926). We held the same in National Railroad Passenger Corp. v. United States , 431 F.3d 374, 378 (D.C. Cir. 2005), citing not only Iselin but also Lamie v. United States
Trustee , 540 U.S. 526, 538 (2004), which reaffirmed Iselin ’s “longstanding” interpretative principle.E DWARDS

, Senior Circuit Judge , dissenting: This case is about Appellants’ not

- so

- veiled attempt to gut t he Patient Protection and Affordable Care Act (“ACA”). The ACA requires every S tate to establish a health insurance “Exchange,” which “shall be a government al agency or nonprofit entity that is established by a State.” 42 U.S.C. § 18031(b)(1), (d)(1). The Department of Health and Human Services (“HHS”) is required to esta blish “such Exchange”
when the S tate elects not to create one. Id. § 18041(c)(1 ). Taxpayers who purchase insurance from an Exchange and
whose income is between 100 % and 400 % of the poverty line

are eligible for premium subsidies. 26 U.S.C. § 36B(a), (c)(1)(A). Appellants challenge regulations issued by the Internal Revenue Service (“ IRS”) and HHS making these
subsidies available in all S tates, including S tates in which HHS has established an Exchange on behalf of the S tate. In support of their challenge, Appellants rely on a specious argument that there is no “Exchange established by the State”
in S tates with HHS

- created Exchanges and, therefore, that taxpayers who purchase insurance in these S tates cannot receive subsidies.

As explained below, there are three critical components to the ACA: nondiscrimination requirements applying to insurers; the “individual mandate” requiring individuals who are not covered by an employer to purchase minimum insurance coverage or to pay a tax penalty; and premium
subsidies which ensure that the individual mandate will have a broad enough sweep to at tract enough healthy individuals into the individual insurance markets to create stability. These components work in tandem

. At the time of the ACA’s enactment, it was well understood that without the subsidies,
the individ ual mandate wa s not viable as a mechanism for creating a stable insurance market.

Appellants’ proffered construct ion of the statute would permit S tates to exempt many people from the individual2

mandate and thereby thwart a central element of the ACA. A s Appellants’ amici candidly acknow ledge, if subsidies are unavailable to taxpayers in S tates with HHS

- created Exchanges, “the structure of the ACA will crumble.” Scott Pruitt, ObamaCare’s Next Legal Challenge

, W ALL S T

. J

., Dec. 1, 2013. It is inconceivable that Congress intended to give S t ates the power to cause the ACA to “crumble.”

Appellants contend that the phrase “Exchange established by the State” in § 36B unambiguously bars subsidies to individuals who purchase insurance in S tates in which HHS created the Exchange on the S tate’s beh alf. T h is argument
fails because “the words of a statute must be read in their context and with a view to their place in the overall statutory
scheme.” Nat’l Ass’n of Home Builders v. Defenders of Wildlife , 551 U.S. 644, 666 (2007) (internal quotation mark s omitted)

. When the language of § 36B is viewed in context

– i.e. , in conjunction with other provisions of the ACA

– it is quite clear that the statute does not reveal the plain meaning that Appellants would like to find.

Because IRS and HHS have been delegated authority to jointly administer the ACA, this case is governed by the
familiar framework of Chevron U.S.A. Inc. v. Natural Resources Def ense Council, Inc. , 467 U.S. 837 (1984). Under
Chevron , if “the statute is silen t or ambiguous with respect to the specific issue,” we defer to the agency’s construction of the statute, so long as it is “permissible.” Id. at 843. The Government’s permissible interpretation of the statute easily
survives review under Chevron . The Act c ontemplates that an Exchange created by the federal government on a State’s
behalf will have equivalent legal standing with State

- created Exchanges. 42 U.S.C. § 18041. And the ACA would be self

defeating if taxpayers who purch ase insurance from an HHS

crea ted Exchange are deemed ineligible to receive subsidies.3

Appellants’ argument cannot be squared with the clear legislative scheme established by the statute as a whole.

Apparently recognizing the weakness of a claim that rests solely on § 36B, divorced fr om the rest of the ACA, Appellants attempt to fortify their position with the extraordinary argument that Congress tied the availability of
subsidies to the existence of S tate

- established Exchanges to

encourage S tates to establish their own Exchanges. This claim is nonsense, made up out of whole cloth. There is no credible evidence in the record that Congress intended to condition
subsidies on whether a S tate, as opposed to HHS, established the Exchange . Nor is th ere credible evidence that any S tate even considered the possibility that its taxpayers wo uld be
denied subsidies if the S tate opted to allow HHS to establish an Exchange on its behalf.

The majority opinion ignores the obvious ambiguity in the

statute and claims to rest on plain meaning where there is none
to be found. I n so doing, the majority misapplies the applicable standard of review, refuses to give deference to the IRS’s and HHS’s permissible constructions of the ACA, and issues a judgment that port ends disastrous consequences

. I
therefore dissent.

I. S TANDARD OF R EVIEW

The first question a reviewing court must ask in a case of this sort is whether the disputed provisions of the statute are clear beyond dispute. “If a court, employing traditional t ools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.” Chevron , 467 U.S. at 843 n.9

. In determining whether a statutory provision is ambiguous,4

however, a court must evaluate it within the co ntext of the
statute as a whole:

[A] reviewing court should not confine itself to examining a particular statutory provision in isolation. Rather, the meaning

– or ambiguity

– of certain words or phrases may only become evident when placed in context. . . . It is a fundamental canon of statutory construction
that the words of a statute must be read in their context and with a view to their place in the overall statutory
scheme.

Nat ’ l Ass ’ n of Home Builders

, 551 U.S. at 666 (citations, alteration, and internal quotation marks omitted) ; see also

F

D

A v. Brown & Williamson Tobacco Corp ., 529 U.S. 120,
132

- 33 (2000); Davis v. Mich

. Dep ’ t of Treasury, 489 U.S. 803, 809 (1989).

In other words, “[t]he plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the
broader context of the statute as a whole.” Robinson v. Shell
Oil Co. , 519 U.S. 337, 34 1 (1997). The Supreme Court just recently reiterated this principle, making it clear that e ven when a statute is not “a chef d’oeuvre of legislative draftsmanship”

– as the ACA is not

– courts must bear “in mind the fundamental canon of statutory construction that the
words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Util. Air Regulatory Grp. v. EPA , No. 12

- 1146, 2014 WL 2807314, at *9 (June 23, 2014) (internal quotation marks omitted).

When a “court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute.” Chevron

,5

467 U.S. at 843. Rather, “the question for the court is whether the agency ’ s answer is based on a permissible construction of the statute,” id., that is, whether the agency ’ s interpretation is “manifestly contrary to the statute,” id . at 844. See, e.g

., Mayo
Found

. for Med

. Educ. & Research v. U nited S tates , 131 S. Ct. 704, 711 (2011) ( de ferring to the agency ’ s interpretati on because the statute did not speak with “ the precision necessary” to definitively answer the question, and the

agency ’ s interpretation was not “manifestly contrary to the statute”)

.

Appellants argue that Chevron d eference is unwarranted
because some of the provisions at issue “are codified in a chapter of Title 42 . . . the domain of HHS

, not the IRS,” and the “IRS has no power to enforce or administer those provisions.” Br. for Appellants at 46

. Appellants ’ positi on is
mistaken. Chevron applies because IRS and HHS are tasked with administering the provisions of the ACA in coordination

. S ee 42 U.S.C. § 18082(a); Nat ’ l Ass ’ n of Home Builders , 551
U.S. at 665 (applying Chevron deference to a regulation promulgated by the National Marine Fisheries Service and the
Fish and Wild life Service “acting jointly”). Here

, t here is no issue of one agency interpreting the statute in a way that
conflicts with the other agency ’ s interpretati on. The IRS ’s rule
defines “E xchange” by reference to the HHS ’s definition, which provides that subsidies are available to low

- income taxpay ers purchasing insurance on an E xchange “ regardless of whether the Exchange is established and operated by a State

. . . or by HHS.” 45 C.F.R. § 155.20; 26 C.F.R. § 1.36B

- 1(k).

Appellants also argue that Chevron deference is precluded by the canon that “tax credits ‘ must be expressed in clear and unambiguous terms. ’ ” Br. for Appellants at 51 (quoting Yazoo
& M iss. Valley R .R. Co. v. Thomas

, 132 U.S. 174, 183 (1889)). Again, Appellants ’ position is mistaken. The Supreme Court6

has made clear that “[t] he principles underlying [the] decision
in Chevron apply with full force in the tax context.” Mayo
Found

. , 131 S. Ct. a t 713

.

Chevron plainly applies to this case. And this court is obliged to defer to the IRS ’ s and HH S ’ s “permissible” interpretations of the ACA. Chevron , 467 U.S. at 843

.

II. A NALYSIS

Appellants ’ argument focuses almost entirely on 26 U.S.C. § 36B

, c onsidered in isolation from the other provisions of the ACA

. Repeating the phrase “Exchange established by the State” as a mantra throughout their brief

, Appellants contend that this language unambiguously indicates that § 36B(b) conditions refundable tax credits on a State

– and not HHS

– establishing an Exchange

.

Appellants ’ argument unravel s , however, when the phrase “established by the State” is subject to close scrutiny in view
of the surrounding provisions in the ACA

. See Brown &
Williamson , 529 U.S. at 132 (“The . . . ambiguity . . . of certain

. . . phrases may only become evident when placed in

context .”). In particular, § 36B has no plain meaning when read in conjunction with § 1803 1 (d)(1) and § 18041(c). And,

m ore fundamentally , the purported plain m eaning of § 36B(b)
would subvert the careful policy scheme crafted by Congress

, which understood when it enacted the ACA that subsidies
were critical ly necessary to ensure that the goals of the ACA
could be achieved. Simply put, § 36B(b) interpreted as Appellants urge would function as a poison pill to the
insurance markets in the States that did not elect to create their own Exchanges. This surely is not what Congress intended.7

Perhaps b ecause they appreciate that no legitimate method

o f statutory interpretation ascribe s to Congress the aim of tearing down the very thing it attempted to construct, Appellants in this litigation have invented a narrative to explain why Congress would want health insurance m arkets to
fail in States that did not elect to create their own Exchanges

. Congress, they assert, made the subsidies conditional in order

to incentivize the States to create their own exchanges . Th is argument is disingenuous, and it is wrong

. Not only is there no evidence that anyone in Congress thought § 36B operated as a
condition

, there is also no evidence that any State thought of it
as such. And no wonder: T he statutory provision presumes the
existence of subsidies and was drafted to establish a formula for the payment of tax credits , not to impose a significant and
substantial condition on the States

.

It makes little sense to think that Congress would have impose d so substantial a condition in such an oblique and
circuitous manner

. See Whitman v. Am. Trucking Ass ’n s , 531 U.S. 457, 468 (2001) (“Congress . . . does not alter the fundamental details of a regulatory scheme in vague

terms

. . . .”). The simple truth is that Appellants ’ incentive story is a fiction, a post hoc narrative concocted to provide a
colorable explanation for the otherwise risible notion that Congress would have want ed insurance markets to collapse in
States that elected not to create their own E xchanges.

In the end, t he question for this court is whether § 36B unambiguously operate s as a condi tion limiting the tax subsidies that Congress understood were a necessary part of a functioning insurance market to only those S tates that created their own exchange. T he phrase “Exchange established by the
State ,” standing alone, suggests the affirmative. But there is powerful evidence to the contrary

– both in § 36B and the8

provisions it references , and in the Act as a whole

– t hat shows Appellants’ argument to be fatally flawed.

It is not the prerogative of this court to interpret the ambiguities uncovered in the ACA. Congress has delegated this authority to the IRS and HHS. And t he interpretation given by these agencies is not only permissible but also the
better construction of the statute because § 36B is not clearly
dr afted as a condition, because the Act empowers HHS to establish exchanges on behalf of the State s , because parallel provisions indicate that Congress thought that federal subsidies would be provided on HHS

- created exchanges, and, most importantly, because Congress established a careful legislative scheme by which individual subsidies were essential to the basic viability of individual insurance markets

.

A. Appellants’ “ Plain Meaning” Argument Viewed in
Con text

In arguing that the ACA clearly and unambiguously bars subsidies to individuals who purchase insurance in States in which HHS created the Exchange on the State’s behalf

, Appellants rest on a narrow, out

- of

- context interpretation of § 36B(b) and § 36B(c)(2)(A)(i). Br. for Appellants at 16. Appellants argue that b ecause there is no “Exchange established by the State” in States with HHS

- created Exchanges, taxpayers who purchase insurance in these States cannot receive subsidies. This plain meaning a rgument , which
views § 36B in isolation , is simplistic and wrong

.

W e cannot read § 36B in isolation; we must also consider the specific context of the provision and the “broader context
of the statute as a whole.” Robinson , 519 U.S. at 341. And viewing t he matter through this wider lens, as we must, the provision which initially might appear plain is far from9

unambiguous. To begin with, as the Government points out, § 36B refers to premiums for health plans enrolled in through “an Exchange established by the State under 1331 [ i.e. , 42 U.S.C. § 18031] .” 26 U.S.C. § 36B(b) (emphasis added). The

cross

- referenced provision

– 42 U.S.C. § 18031

– contains
l anguage indicating that all States are required to establish an exchange under the section. See 42 U.S.C. § 18031(b)(1) (“Each State shall

. . . establish an American Health Benefit Exchange .

. . .”); see also id. § 18031(d)(1) (“An Exchange
shall be a governmental agency or nonprofit entity that is established by a State .” (emphasis added))

. In other words, i f our statutory universe consisted only of these two provisions, it would be clear that § 36B intended that residents in all
States would receive subsidies because all States were required to create such exchanges by the section of the Act referenced in § 36B.

Of course, the ACA is broader than just § 36B and § 18031, and in 42 U.S.C. § 18041 it permits a State to elect to allow HHS to establish the Exchange on behalf of the State. In such circumstances, however, the Act requires HHS to establish and oper ate “ such Exchange.” Id. § 18041(c) (emphasis added). The use of “such” can reasonably be interpreted to deem the HHS

- created Exchange to be the equivalent of an Exchange created in the first instance by the State. That is, when HHS creates an exchange und er § 18041(c), it does so on behalf of the State, essentially standing in its stead. Put differently, under the ACA, an Exchange within a State is a given. The only question is whether the State opts to create the Exchange on its own or
have HHS do it on its behalf. On this view, “established by the State” is term of art that includes any Exchange within a State.

Indeed, the Act says as much when it defines the term

“ Exchange” as “a governmental agency or nonprofit entity10

that is established by a State.” 42 U.S.C. § 18031(d)(1 )

. It is
clear t hat § 18031 is the source of the definition of the term “Exchange ” under the Act. See 42 U.S.C. § 300gg

- 91(d)(21) (defining “Exchange” for purpose of Public Health Service Act to mean what it does in § 18031); id . § 18111 (incorporating the definitions in § 300gg

- 91 for purpose of Title I of the ACA). It is also clear that § 18031 defines every “Exchange” under the Act as “a governmental agency or nonprofit entity that is established by a State .” Id. § 18031(d)(1) (emphasis added). Because § 18041(c)
author izes the federal government to establish “Exchanges,” the phrase “established by the State” in § 18031 must be broad enough to accommodate Exchanges created by the HHS on a State’s behalf. Section 36B expressly incorporates this broad
definition of “Exchan ge” when it uses the phrase an “Exchange established by the State under [§ 18031]

. ” 26 U.S.C. § 36B(b) (emphasis added). Therefore, the phrase “established by the State” in § 36B is reasonably understood to take its meaning from the cognate language in the incorporated definition in § 18031, which embraces Exchanges created by
HHS on the State’s behalf. See, e.g.

, Gustafson v. Alloyd Co.,

Inc. , 513 U.S. 561, 570 (1995) (noting “the normal rule of statutory construction that identical words used in different parts of the same act are intended to have the same meaning” (internal quotation marks omitted) ). These provisions belie the “plain meaning” that Appellants attempt to attribute to § 36B.

What is more, Appellants’ interpretation of the operative language in § 36B sits awkwardly with the section’s structure. Subsection (a) provides tax credits to any “applicable taxpayer,” defined in reference to the poverty line and without regard to what the taxpayer’s State has or has not done. 26 U.S.C. § 36B(a), (c)(1 )(A). Subsection (b) then establishes a numerical formula for calculating the amount of the subsidy.
Id. § 36B(b). It is only in the context of this numerical formula11

and its definition of “coverage month” that the purported
condition is found

. Id. § 36B(b )(1), (c)(2)(A)(i). If Congress intended to create a significant condition on taxpayer eligibility for subsidies of the sort advocated by Appellants, one would expect that it would say so plainly and clearly. See Am. Trucking Ass’ns , 531 U.S. at 468. There is no “if/then” or other such conditional language in § 36B. Instead, if Appellants are to be believed, Congress thought it appropriate to incentivize significant State action (creating Exchanges) through an oblique and indirect co ndition. This is an implausible reading of the statute.

The simple truth is that the phrase “established by the State” in § 36B does not have the plain meaning that Appellants would like . T he inquiry does not end with a narrow look at § 36B. That provisio n must be read in conjunction with § 18031(d)(1) and § 18041 (c); and these provisions

, read together

, defy any claim of plain meaning.

Furthermore, i n order to address the question before us, this court is obliged to consider § 36B in “ the broader contex t of the statute as a whole.” Robinson , 519 U.S. at 341; see also Zuni Pub. Sch. Dist. No. 89 v. Dep’t of Educ. , 550 U.S. 81, 98 (2007) (looking to “basic purpose and history” of statute). The Supreme Court’s recent decision in Michigan v. Bay Mills
Indian Community

, 13 4 S. Ct. 2024 (2014), which Appellants cite, is not to the contrary. See also Util. Air Regulatory Grp., 2014 WL 2807314, at *9 (reaffirming that courts must bear “in mind the fundamental canon of statutory construction that the
words of a statute must be read in their context and with a view to their place in the overall statutory scheme” (internal quotation marks omitted)). Nothing in Bay Mills or Utility Air Regulatory Group purport to undermine the commonsense principle

– repeatedly endo rsed by the Court

– that the operative text must be understood in its statutory context, nor12

the subsidiary principle, which follows from the first, that evidence of meaning drawn from the broader statutory context can render the operative text ambiguous o n a particular question of law. Appellants’ argument in this case is illogical
when cast in the context of the statute as a whole.

B

. The Statute Read a s a Whole

1. The “Three

- Legged Stool” and t he Indispensable
Role of the Tax Subsidies

Appellants ’ interpretation is implausible because it would destroy the fundamental policy structure and goals of the ACA that are apparent when the statute is read as a whole. A key component to achieving the Act ’ s goal of “near

- universal coverage” for all Americans is a series of measures to reform
the individual insurance market

. 42 U.S.C. § 18091(2)(D).
These measures

– nondiscrimination requirements applying to
insurers

, the individual mandate, and premium subsidies

– work in tandem , each one a necessary component to ensure the basic viability of each State’s i nsurance market

. Because premium subsidies are so critical to an insurance market’s sustainability , Appellants’ interpretation of § 36B would, in the words of Appellants’ amici , cause “th e structure of the ACA [to] crumble.” Scott Pruitt, ObamaCare’s Next Legal Challenge

, W ALL S T

. J. , Dec. 1, 2013.

This point is essential and worth explaining in detail. The
ACA has been described as a “three

- legged stool ” in view of
its three interrelated and interdependent reforms. Br. for
Economic Scholars at 7

. The first “leg” of the ACA is the “guaranteed issue” and “community rating” provisions, which prohibit insurers from denying coverage based on health status or history, 42 U.S.C. § 300gg

- 1, and r equire insurers to offer coverage to all individuals at community

- wide rates, id

.13

§ 300gg(a). But such non discrimination provisions cannot
function alone because of the problem of “adverse selection

. ”
W hen insurers cannot deny coverage or charge sick or high

risk individuals higher premiums , healthy people delay purchasing insurance ( knowing they will not be denied

coverage if and when they become sick ) , and insurers ’ risk

po ols thus become skewed toward high

- risk individuals ( as they are the only ones wi lling to pay the premiums)

. The result
is that insurers wind up paying more per average on each policy, which leads them to increase the community

- wide rate, which, in turn, serves only to exacerbate the “adverse
selection” process (as now only those who a re really sick will find insurance worthwhile)

. This is the so

- called “death

spiral

, ” which Congress understood would doom each State’s
individual insurance market in the a bsence of a multifaceted reform program

. Nat ’ l Fed ’ n of Indep. Bus. v. Sebelius , 132 S. Ct. 2566, 2626 (2012) (Ginsburg, J., concurring in part and dissenting in part ).

This is where the individual mandate, the second “leg” of the ACA, comes in. Congress recognized:

[I]f there were no requirement, many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the [individual coverage] requirement, together with the other provisions of this Act, will minimize this adverse
selection and broaden the health insurance ri sk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverag e of pre

- existing
conditions can be sold.14

42 U.S.C. § 18091(2)(I). Accordingly, the Act requires each individual who is not covered by an employer to purchase minimum coverage or to pay a tax penalty. 26 U.S.C. § 5000A(a)

- (b). But recognizing that individ uals cannot be
made to purchase what they cannot afford, Congress provided that the mandate would not apply if the cost of insurance
exceeds eight per cent of the taxpayer ’ s income after subsidies.
Id. § 5000A(e)(1).

The third “l eg” of the ACA is the subsidies . The subsidies
ensure that the individual mandate will have a broad enough

s weep to attract enough healthy individuals into the individual insurance markets to create stability

, i.e.

, to prevent an adverse

- selection death spiral

. Without the subs idies, the
individual mandate is simply not viable as a mechanism for creating a stable insurance market : the lowest level of coverage for typical subsidy

- eligible participant s will cost 23% of income, meaning that these individuals will be exempt
from the mandate

. Id. ; Br. f or Economic Scholars at 17

- 18

. Cong ress was informed of the importance of the subsidies to
the overall legislative scheme. See R oundtable Discussion on Expanding Health Care Coverage: Hearing Before the Senate
Comm. On Finance , 111th Co ng. 50 4 (2009) (statement of Sandy Praeger, Comm’r of Insurance for the State of Kansas) (“State regulators can support these reforms to the extent they are coupled with an effective and enforceable individual purchase mandate and appropriate income

- sensit ive subsidies to make coverage affordable. ” (emphasis added) ) ; s ee also
C ONGRESSIONAL B UDGET O FFICE

, A N A NALYSIS OF H EALTH I NSURANCE P REMIUMS U NDER THE P ATIENT P ROTECTION AND A FFORDABLE C ARE A CT 24 (Nov. 30, 2009), (estimating that approximately 78% of people purchasing their own coverage would receive subsidies). It is thus no surprise that Congress provided generous subsidies in the ACA and, importantly, expressly linked the operation of the individual mandate to the15

cost of insurance after taki ng account of the subsidies. 26 U.S.C. § 5000A(e)(1)(B) (ii).

If nothing else, it is clear that premium subsidies are an essential component of the regulatory framework established by the ACA

. If, as Appellants contend, a S tate could block subsidies by el ecting not to establish an Exchange, this would exempt a large number of taxpayers from the individual mandate, cause the risk pool to skew toward higher risk people, and effectively cut the heart out of the ACA. This is one of the points that was made in the joint opinion by Justice Scalia, Justice Kennedy, Justice Thomas, and Justice Alito in
Nat ional Federation of Independent Business v. Sebelius :

Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyers and even fewer sellers, the exchanges would no t operate as Congress
inten ded and may not operate at all.

132 S. Ct. at 2674 (Scalia, Kennedy, Thomas, and Alito, JJ., dissenting) (emphasis added) ; s ee also Br. for the Appellee s at 38 (“Insurers in States with federally

- run Exchanges would still be req uired to comply with guaranteed

- issue and community rating rules, but, without premium tax subsidies to encourage broad participation, insurers would be deprived of the broad policy

- holder base required to make those reforms viable.”). This “adverse select ion” is precisely what Congress sought to avoid when it enacted the individual mandate. 42 U.S.C. § 18091(2)(I). It is unfathomable that Congress
intended to allow S tates to effectively nullify the individual mandate, which it recognized was necessary to t he viability of an individual insurance market subject to the “guaranteed
issue” and “community rating” requirements

.16

Section 36B cannot be interpreted divorced from the ACA’s unmistakable regulatory scheme in which premium
subsidies a re an indispensable component of creating viable
and stable individual insurance markets. Due regard for the carefully crafted legislative scheme casts § 36B in a clearer light

. “Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or an cillary provisions

— it does not, one might say, hide elephants in mouseholes.” Am. Trucking Ass’ ns , 531 U.S. at 468. If Congress meant to deny subsidies to taxpayers in S tates with HHS

- created Exchanges

– thereby initiating an adverse

- selection death

- spiral that would effectively gut the statute in those States

– one would expect to find this limit set forth in terms as clear as day. But
the subsection defining which taxpayers are eligible for
subsidies make no mention of S tate

- established Exchanges.
Subsidi es are available to an “applicable taxpayer,” 26 U.S.C. § 36B(a), and “applicable taxpayer” is defined as any
individual whose household income for the taxable year is
between 100 % and 400% of the poverty line, id

. § 36B(c)(1)(A).

A comparison with the ACA’s Medicaid expansion
condition offers a striking case in point. T h is condition
demonstrates that Congress knew how to speak clea rly and provide notice to S tates when it intended to condition funding

on S tate behavior. The Medicaid provision lays out an express conditional statement in the form of “ if, then ”: “ If the Secretary, after reasonable notice and opportunity for hearing,” determines that the State is not in compliance with
the Medicaid

- expansion requirements, the Secretary “shall notify such Sta te agency that further payments will not be
made to the State. ” 42 U.S.C. § 1396c (emphasis added). This provision stands in stark contrast to § 36B. The formula for calculating subsidies does not say, for example , “ If a S tate17

does not create an Exchange, its taxpayers shall be ineligible for premium credit subsidies,” or “ If coverage is purchased on an Exchange established by HHS, premium credit subsidies will not be available.” Furthermore, § 1396c ensures that
S tates receive notice before Medicaid fundin g is withheld. In contrast, there is no similar notice to S tates that their taxpayers

w ill be denied subsidies if the S tate elects to have HHS create an Exchange on its behalf.

The majority thinks it unremarkable that Congress would condemn insurance markets in States with federally

- created Exchanges to an adverse

- selection death spiral. It reaches this
conclusion by observing that , in peripheral statutory provisions, Congress has twice created insurance markets that
suffered from th e defect of having guaranteed issue requirements without the other measures ( such as a mandate or
subsidies ) necessary to ensure the soundness of the market. Congress did this, the majority notes

, in the provisions covering the Northern Mariana Islands and other federal
territories

, see 26 U.S.C. § 5000A(f)(4); 42 U.S.C. § 201(f)

, and in the Community Living Assistance Services and Supports (CLASS) Act

, Pub. L. No. 111

- 148, §§ 8001

- 8002, 124 Stat. 119, 828

- 47 (2010)

.

This argument entirely misses the point . These peripheral statutory provisions say nothing about the core provisions of the ACA at issue here, as both the majority and the Appellants recognize. In both provisions, Congress purposely decided not to impose an individual mandate. That is a crucial difference.
The Government and supporting amici ’s position in this case relies on Congress ’ express recognition that the individual mandate, “ together with the other provisions of this Act, will
minimize

. . . adverse selection

, ” and that , as such, the
mandate “is essential to creating eff ective health insurance
markets” with guaranteed

- issue requirements. 42 U.S.C.18

§ 18091(2)(I) (emphasis added)

. This recognition , together with Congress’ linking the mandate to the subsidies available to taxpayers

, 26 U.S.C. § 5000A(e)(1)(B)(ii), demonstrates
that Congress appreciated that subsidies would be an integral part of ensuring that the individual mandate reached broadly enough to secure the viability of the insurance market

. By not imposing individual manda tes in the peripheral markets identified by the majority ( i.e. , in the territories and the
CLASS Act ), Congress displayed a willingness to tolerate the
risk that these market s would succumb to adverse selection

. Congress displayed no such willingness here ; i n the markets covered by the core provisions of the ACA, Congress imposed

an individual mandate linked to subsidies as an “essential” tool

to ensur e market viability. 42 U.S.C. § 18091(2)(I).

Appellants suggest that because Congress enacted peripheral statutory provisions covering territories and in the
CLASS Act without including measure s to ensure a broad base of healthy customers to stabilize prices and avoid adverse selection, it is reasonable to assume that Congress did the same thing with respect to the core provisions of the ACA. But this argument gets it backwards

. The CLASS Act and the provisions covering the federal territories importantly demonstrate that when Congress determined to expose an insurance market to significant adverse selection risk, it specifically declined to enact an individual mandate. In other words, Congress acted intentionally when it passed the CLASS Act and the provisions covering the federal territories
without an individual mandate

. The core provisions of the
ACA inclu de an individual mandate , which of course indicates that Congress meant to treat the core provisions of the ACA differently.

Appellants’ arguments to the contrary are perplexing, to say the least. Congress ’ omissions of an individual mandate

–19

which it r ecognized as an “essential” tool to prevent adverse selection, 42 U.S.C. § 18091(2)(I)

– from the peripheral statutory provisions cited by the majority are not evidence that Congress had some monolithic statute

- wide tolerance of the
risk that insurance mar kets might succumb to adverse
selec tion. To the contrary, Congress’ intentional omission s in these peripheral insurance markets of a tool it knew to be important to preven ting adverse selection merely indicates that Congress had a substantially higher tole rance for the risk of
adverse selection in such markets vis

- à

- vis the core markets where it did impose the individual mandate. The CLASS Act and the provisions covering the territories t hus do not rebut the
Government’ s structural argument. Indeed, i f anything, the subsequent history concerning the territories and the C LASS
Act serve only to highlight that Congress was correct in its judgment that an individual mandate

– accompanied by subsidies to ensure its scope was sufficiently large

– wa s

necessa ry to stave off adverse selection in insurance markets. As Appellants note, without an individual mandate

, the
CLASS Act was “ unworkable, ” which led Congress to repeal it. Reply Br. for Appellants at 15.

The Government and supporting amici ’s structural

ar gument in this case cannot be dismissed as idle meanderings
in to legislative history

. It is apparent from the statutory text of
the ACA that Congress understood (1) the importance of a broadly applicable individual mandate that works “ together with the other provisions” to ensure the viability of an insurance market against the threat of adverse selection, 42 U.S.C. § 18091(2)(I)

, and (2) the necessity of taxpayer subsidies to broaden the scope of the individual mandate, see 26 U.S.C. § 5000A(e)(1)(B)(ii)

. In giving short shrift to the clear statutory scheme adopted by Congress when it enacted
the core provisions of the ACA, the majority has ignored congressional intent and improperly rejected the reasonable20

interpretations of HHS and IR S. In sum, the majority has drawn the wrong lesson from the CLASS Act and the provisions covering federal territories, which demonstrate just the opposite of the conclusion reached by the majority.

2. The Advance Payment Reporting Requirements of § 36B(f )(3)

One of the subsections in § 36B

– which is the section upon which Appellants stake their case

– makes it clear that Congress intended that taxpayers on HHS

- created Exchanges
would be eligible for subsidies. S ubsection (f) , entitled
“Reconciliation of credit and advance credit,” tasks the IRS with reducing the amount of a taxpayer’s end

- of

- year premium tax credit under § 36B by the sum of any advance payments of the credit. 26 U.S.C. § 36B(f). Crucially, subsection (f) establishes reporting requirement s that expressly apply to
HHS

- created Exchanges

. Id. § 36B(f)(3) ( citing 42 U.S.C. § 18041(c)). These reporting requirement s mandate that Exchanges provide certain information to the IRS, including
the “ aggregate amount of any advance payment of such
credi t”; information needed to determine the taxpayer’s “eligibility for, and the amount of, such credit”; and “[i]nformation necessary to determine whether a taxpayer has received excess advance payments.” Id. § 36B(f)(3)(C), (E), (F). The self

- evident primary purpose of these requirements

– reconciling end

- of

- year premium tax credits with advance payments of such credits

– could not be met with respect to Exchanges created by HHS on behalf of a State if these Exchanges were not authorized to deliver tax credit s. Indeed,
HHS

- created Exchanges would have nothing to report regarding subsidies were they barred from giving any. It is thus plain from subsection (f) that Congress intended credits under § 36B to be available to taxpayers in States with HHS

created Exch anges.21

Appellants ’ attempt s to minimize the importance of the reporting requirements are specious . They first argue that, even if credits are unavailable on federally

- created Exchanges, the reporting provision would nevertheless serve a purpose: to enforce the individual mandate to buy insurance. This amounts

to a sleight of hand. The argument ignores the clear purpose

– apparent from the statutory text

– of subsection (f) and its reporting requirements. The purpose is front and center in the
subsection’s title

– “Reconciliation of credit and advance credit,” id. § 36B(f)

– and is reinforced by the wording and structure of the provision. Consistent with its title, subsection (f) charges the IRS with reconciling the ultimate tax credit to be paid with any advanced payments of the credit, id. § 36B(f)(1), including a dvance payments that “exceed the credit allowed” for the tax year, id. § 36B(f)(2). The IRS, of course, can accomplish these tasks only if it has adequate information, and the next paragraph, § 36B(f)(3), establishes the reporting requirements that ensure that the IRS has the
information it needs to satisfy the terms of the statute

. See id. § 36B(f)(3)(C), (E), (F) (requiring disclosure of information concerning advanced payments of tax credits). Ob viously

,

some of the information covered by subsection (f)( 3) will also assist in enforcing the individual mandate. But much of the information required to be disclosed by subsection (f)(3) is irrelevant to the purpose hypothesized by Appellants ( i.e. , to enforcing the mandate). See id. § 36B(f)(3)(F) (mandating t he reporting of “[i]nformation necessary to determine whether a taxpayer has received excess advance payments”); id. § 5000A(e)(1)(A)

- (B) (in determining whether an individual is exempted from the mandate, the statute takes account of the
“amount of the cr edit allowable,” but not the amou nt of excess advance payments).22

In a letter submitted t o the court before oral argument

, Appellants cited an IRS regulation, 26 C.F.R. § 1.6055

- 1(d)(1), that addresses information reporting requirements. “ In
order to reduce the compliance burden on” insurers, the IRS decided not to require insurers “to report under section 6055 for coverage under individual market qualified health plans purchased through an Exchange because Exchanges must report on this coverage under section 36B(f)(3).” Information Reporting of Minimum Essential Coverage, 79 Fed. Reg. 13,220, 13,221 (Mar. 10, 2014). Appellants seem to think that this regulation somehow vindicates their view of § 36B(f)(3), but their argument makes no sense. That the IR S determined that additional reporting by insurers in specified circumstances was unnecessary does not imply that Congress drafted § 36B(f)(3) solely to enforce the individual mandate , as Appellants would have it

. What is clear here is that § 36B(f)(3) est ablishes reporting requirements for the principal purpose of requiring disclosure of information concerning advanced payments of tax credits , a purpose which cannot be squared with Appellants’ interpretation under which no credits
are available on federall y

- created Exchanges.

Appellants also argue that the reporting provisions in
subsection § 36B(f) are already over

- inclusive because they apply to plans serving taxpayers who, by reason of their income, are ineligible for subsidies. The implication suggest ed by Appellants

– and accepted too easily by the majority

– is that the reporting requirements in § 36B(f)(3) already suffer
from over

- inclusiveness (since such taxpayers will have neither credits nor advance payments) and that there is thus
little reason to be concerned about the additional over

inclusiveness generated by Appellants’ interpretation of § 36B. Framing the issue in this manner obscures a fundamental difference. Interpreting § 36B to foreclose credits on federally

- created Exchanges would not merely increase the23

“over

- inclusiveness” of § 36B(f)(3)’s reporting requirements; it would render certain of the reporting requirements pointless

as to every single taxpayer on an HHS

- created Exchange. This
is a nonsensical interpretation because Congress enacted the § 36B(f)(3) reporting requirements to apply to HHS

- created Exchanges. Id. § 36B(f)(3) (citing 42 U.S.C. § 18041(c)). T he provision is powerful evidence that Congress intended that tax credits be available on federally

- created Exchanges.

3. Ot her Provisions

There are two other provision s of the ACA that strongly support the Government ’ s claim that the statute, read as a whole, permits taxpayers who purchase insurance i n non

electing S tates to receive subsidies. F irst

, the statute defines a “qu a lified individual” as a person who “ resides in the State that established the Exchange.” 42 U.S.C. § 18032(f)(1)(A)(ii). There is no separate definition of “qualified individual” for S tates with HHS

- created Exchanges.
If an HHS

- creat ed Exchange does n ot count as established by
the S tate it is in, there would be no individuals “qualified” to purchase coverage in the 34 S tates with HHS

- created Exchanges. This would make little sense.

Second, i n a subparagraph entitled “ Assurance of exchange coverage for t argeted low

- income children unable to be provided child health assistance as a result of funding shortfalls,” the ACA requires S tates to “ensure” that low

income children who are not covered under the S tate ’ s child health plan are enrolled in a health plan that is offered through “an Exchange established by the State under [§ 18031].”
42 U.S.C. § 1397ee(d)(3)(B). Here again, the statute simply presumes that the existence of such State

- established exchanges. The statute ’ s objective of “ assur[ing] exchange

co verage for targeted low

- income children ” would be largely24

lost if S tates with HHS

- created Exchanges are excluded. There is nothing in the statute to indicate that Congress meant to
exclude benefits for low

- income children in the 34 S tates in
which HHS has established an Exchange on behalf of the
S tate.

* * *

In view of the foregoing, Appellants’ reliance on Bay
Mills is entirely misplaced. In citing that case, Appellants simply cherry pick language which appears favorable to their
side but which does not reflect the Court’s reasoning . It is true, of course, that courts have no “ roving license ” to disregard a

statute ’ s unambiguous meaning. 134 S. Ct. at 2034

. This was an important point in Bay Mills because it was undisputed in
that case that the plaintiff’ s position could not be squared with

t he plain meaning of the statute. A nd the plaintiff in Bay Mills
failed “ to identify any specific textual or structural features of the statute to support its proposed result. ” Id. at 2033 ( emphasis added). Bay Mills is plainly inapposite. Here, by contrast, there is considerable evidence

– textual and structural

– to render the ACA ambiguous on the question whether § 36B operates to bar tax subsidies in States in which HHS has established an Exchange on behalf of the State. And, as shown above, when the ACA is read as a whole

– including its

“ textual [and] structural features,” “purpose,” “history and design,” id . at 2033

- 34

– it is clear that the Government’s interpretation of the ACA is permis sible and reasonable, and

, th erefore, entitled to deference under Chevron

.25

C

. Appellants ’ Extraordinary Subsidies

- As

- Incentive Argument

The foregoing examination o f the statute shows that when
the terms of § 36B are read “with a view to their place in the overall statutory scheme,” Nat ’ l Ass ’ n of Home Builders , 551 U.S. at 666, Appellants ’ plain meaning argument fails. Appellants obviously recognize that their argument resting on § 36B in isolation, apart from the rest of the ACA, is
ridiculous

. This is clear because, i n an effort to bolster their claim, Appellants proffer the extraordinary argument that Congress limited subsidies to S tate

- run Exchanges as an incentive to encourage S tates to set up their own Ex changes. Br. for Appellants at 28. As noted above, this argument is

nons ense

. Appellants have no credible evidence whatsoever to support their subsidies

- as

- incentive theory.

T he record indicates that , when the ACA was enacted, no
S tate even considered the possibility that its taxpayers wo uld
be denied subsidies if the S tate opted to allow HHS to establish an Exchange on its behalf. N ot one . Indeed no S tate even suggested that a lack of subsidies factored into its
deci sion whether to create its own E xchange

. Br. of Members of Congress and State Legislat ures at 24

- 25 & n.30 (citing authorities). “States were motivated by a mix of policy considerations, such as flexibility and control, and ‘ strategic ’ calculations by ACA opponents, not the availability of tax
credits.” Id . at 24

- 25 n.30 (citing authorities). The fact that all
S tates recognized and protested the Medicaid expansion condition, while no S tate raised any concern over the purported subsidy

- condition shows that Appellants ’ argument is at best fanciful. See Br. for the Appellee s at 42 (“[T]he twenty

- six plaintiff states in [ Nat ’ l Fe d ’n of Indep

. Bus

. , 132
S. Ct. 2566

, ] repeatedly contrasted the Medicaid eligibility expansion with the ‘ real choice that the ACA offers States t o26

create exchanges or have the federal government do so. ’ ” (quoting Br

. for State Pet ’ r s on Medicaid, Florida v. HHS , No.
11

- 400, 2012 WL 105551, at *51 (2012))).

T he legislative history also indicates that Congress
assumed subsidies would be available on HHS

- created Exchanges. First, earlier proposals for the legislation and an earlier version of the House Bill provided that the federal government would establish and operate Exchanges. Halbig v.
Sebelius , 2014 WL 129023, at *17 (D.D.C. Jan. 15, 2014) (citing Reconciliation Act of 2010, H.R. 4872 §§ 141(a), 201(a) (2010) (version reported in the House on March 17, 2010); H. R EP

. N O . 111

– 443, at 18, 26 (2013)). When the legislation was modified so that S tates could operate their own Exchanges, the Senate Finance Committee expressly acknowledged that the federal government could “establish state exchanges.” Id . (citing S. R EP

. N O . 111

– 89, at 19 ( 2009) (“If these [state] interim exchanges are not operational within a reasonable period after enactment, the S ecretary [of HHS] would be required to contract with a nongovernmental entity

to establish state exchanges during this interim period.”) (emphasis added) ).

In addition, the three House C ommittees with jurisdiction over the ACA legislation issued a fact s heet explaining that
S tates would have a choice whether to create their own Exchanges or have one run by the federal government, and “the Exchanges” would make health insurance more affordable. The fact sheet recognized income level as the only
criteria fo r subsidy

- eligibility. Br. for Members of Congress and State Legislatures at 11

- 12. The Joint Committee on Taxation also reported that the subsidies would be available to those who purchase insurance through “an exchange.” Id . at 12. And Congressional Budg et Office estimates assumed that
subs idies would be available nation wide. Letter from Douglas27

W. Elmendorf, Director, CBO, to Rep. Darrell E. Issa, Chairman, House Committee on Oversight and G overnment Reform (Dec. 6, 2012) (“To the best of our recollectio n, the possibility that those subsidies would only be available in states that created their own exchanges did not arise during the
discussions CBO staff had with a wide range of Congressional staff when the legislation was being
considered.” (emphasis add ed) ).

The truth is that there is nothing in the record indicating
that , aside from wanting to afford States flexibility

, Congress preferred S tate

- run to HHS

- run Exchanges. Appellants have not explained why Congress would want to encourage S tates to operate Exchanges rather than the federal government doing so, nor is there any indication that Congress had this goal. “[T]he purpose of the tax credits was not to encourage States to set up their own Exchanges. Indeed, making the tax credits

con ditional on state establishment of the Exchanges would have empowered hostile state officials to undermine the core purpose of the ACA, a result that [the] architects of the ACA wanted to avoid, not encourage.” Br. for Members of Congress and State Legisla tures at 22.

F urth ermore , Appellants assume without any basis that denying taxpayers premium subsidies would put political

pressure on S tates to create Exchanges. This assumption runs counter to Appellants’ own theory of harm : After all, Appellants object to the subsidies because they impose additional financial obligations on individuals and employers by trigger ing the individual mandate and assessable payments for employers. These obligations would not attach if the
subsidies were not available in the S t ate. Because the subsidies trigger additional costs for individuals and employers, it is not obvious that they would be popular among taxpayers or cause taxpayers to pressure their S tates to create Exchanges.28

The single piece of evidence that Appellants c ite to support their claim that Congress intended to restrict subsidies

to S tate

- run Exchanges is an article by a law professor. Br. for Appellants at 40 (citing Timothy S. Jost, Health Insurance Exchanges: Legal Issues

, O ’ Neill Inst

. , Georgetown Univ.
L egal Ctr., n o. 23 (Apr

. 7, 2009 ) ). There is no evidence, however, that anyone in Congress read, cited, or relied on this
article.

III. C ONCLUSION

The Supreme Court has made it clear that “[t]he plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a
whole.” Robinson , 519 U.S. at 34 1

. We cannot review a

“ particular statutory provision in isolation

. . . . It is a
fundame ntal canon of statutory construction that the words of
a statute must be read in their context and with a view to their place in the overall statutory scheme. ” Nat ’ l Ass ’ n of Home
Builders , 551 U.S. at 666 . Following these precepts and reading the AC A as a whole, it is clear that the statute does not unambiguously provide that individuals who purch ase insurance from an Exchange created by HHS on behalf of a
S tate are inel igible to receive a tax credit. T he majority opinion evinces a painstaking effort

– cov ering many pages

– attempting to show that there is no ambiguity in the ACA. The result, I think, is to prove just the opposite. I mplausible results would follow if “established by the State” is construed to exclude Exchanges established by HHS on behalf o f a S tate.
T his is why the majority opinion strains fruitlessly to show plain meaning when there is none to be found.29

The IRS ’s and HHS ’s constructions of the statute are perfectly consistent with the statute ’ s text, structure, and purpose, while Appellants ’ interpretation would “crumble” the
Act ’ s structure. Therefore, we certainly cannot hold that that the agencies ’ regulations are “manifestly contrary to the
statute.” This court owe s deference to the agencies’
i nterpretation s of the ACA. Unfortu nately, by imposing the Appellant s ’ myopic construction on the administering agencies without any regard for the overall statutory scheme, the majority opinion effectively ignores the basic tenets of statutory construction, as well as the principles of Che vron deference . Because the proposed judgment of the majority defies the will of Congress and the permissible interpretations of the agencies to whom Congress has delegated the authority to interpret and enfor ce the terms of the ACA, I dissent.