Liberty University, Inc., et al. v. Geithner, et al., No. 10-2347 (4th Cir. 2011)

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Plaintiffs brought this suit to enjoin, as unconstitutional, enforcement of two provisions of the recently-enacted Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119. The challenged provisions amended the Internal Revenue Code by adding: (1) a "penalty" payable to the Secretary of the Treasury by an individual taxpayer who failed to maintain adequate health insurance coverage and (2) an "assessable payment" payable to the Secretary of the Treasury by a "large employer" if at least on of its employees received a tax credit or government subsidy to offset payments for certain health-related expenses. The court held that because this suit constituted a pre-enforcement action seeking to restrain the assessment of a tax, the Anti-Injunction Act, 28 U.S.C. 2283, stripped the court of jurisdiction. Accordingly, the court vacated the judgment of the district court and remanded the case with instructions to dismiss for lack of jurisdiction.

The court issued a subsequent related opinion or order on September 15, 2011.
The court issued a subsequent related opinion or order on July 11, 2013.

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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-2347 LIBERTY UNIVERSITY, INCORPORATED, a Virginia Corporation; MICHELE G. WADDELL; JOANNE V. MERRILL, Nonprofit Plaintiffs Appellants, and MARTHA A. NEAL; DAVID STEIN, M.D.; PAUSANIAS ALEXANDER; MARY T. BENDORF; DELEGATE KATHY BYRON; JEFF HELGESON, Plaintiffs, v. TIMOTHY GEITHNER, Secretary of the Treasury of the United States, in his official capacity; KATHLEEN SEBELIUS, Secretary of the United States Department of Health and Human Services, in her official capacity; HILDA L. SOLIS, Secretary of the United States Department of Labor, in her official capacity; ERIC H. HOLDER, JR., Attorney General of the United States, in his official capacity, Defendants Appellees. ------MOUNTAIN STATES LEGAL FOUNDATION; REVERE AMERICA FOUNDATION, Amici Supporting Appellants, AMERICAN CIVIL LIBERTIES UNION; AMERICAN CIVIL LIBERTIES UNION OF VIRGINIA, INCORPORATED; AMERICAN NURSES ASSOCIATION; AMERICAN ACADEMY OF PEDIATRICS, INCORPORATED; AMERICAN MEDICAL STUDENT ASSOCIATION; CENTER FOR AMERICAN PROGRESS, d/b/a Doctors for America; NATIONAL HISPANIC MEDICAL ASSOCIATION; NATIONAL PHYSICIANS ALLIANCE; HARRY REID, Senate Majority Leader; NANCY PELOSI, House Democratic Leader; DICK DURBIN, Senator, Assistant Majority Leader; CHARLES SCHUMER, Senator, Conference Vice Chair; PATTY MURRAY, Conference Secretary; MAX BAUCUS, Senator, Committee on Finance Chair; TOM HARKIN, Senator, Committee on Health, Education, Labor and Pensions Chair; PATRICK LEAHY, Senator, Committee on the Judiciary Chair; BARBARA MIKULSKI, Senator, HELP Subcommittee on Retirement and Aging Chair; JOHN D. ROCKEFELLER, IV, Senator, Committee on Commerce Chair; STENY HOYER, Representative, House Democratic Whip; JAMES E. CLYBURN, Representative, Democratic Assistant Leader; JOHN B. LARSON, Representative, Chair of Democratic Caucus; XAVIER BECERRA, Representative, Vice Chair of Democratic Caucus; JOHN D. DINGELL, Representative, Sponsor of House Health Care Reform Legislation; HENRY A. WAXMAN, Representative, Ranking Member, Committee on Energy and Commerce; FRANK PALLONE, JR., Representative, Ranking Member, Commerce Subcommittee on Health; SANDER M. LEVIN, Representative, Ranking Member, Committee on Ways and Means; FORTNEY PETE STARK, Representative, Ranking Member, Ways and Means Subcommittee on Health; ROBERT E. ANDREWS, Representative, Ranking Member, Education and Workforce Subcommittee on Health; JERROLD NADLER, Representative, Ranking Member, Subcommittee on Constitution; GEORGE MILLER, Representative, Ranking Member, Education and the Workforce Committee; JOHN CONYERS, JR., Representative, Ranking Member, Committee on the Judiciary; JACK M. BALKIN, Knight Professor of Constitutional Law and the First Amendment, Yale Law School; GILLIAN E. METZGER, Professor of Law, Columbia Law School; TREVOR W. MORRISON, Professor of Law, Columbia Law School; AMERICAN ASSOCIATION OF PEOPLE WITH DISABILITIES; THE ARC OF THE UNITED STATES; BREAST CANCER ACTION; FAMILIES USA; FRIENDS OF CANCER RESEARCH; MARCH OF DIMES FOUNDATION; MENTAL HEALTH AMERICA; NATIONAL BREAST CANCER COALITION; NATIONAL ORGANIZATION FOR RARE DISORDERS; NATIONAL PARTNERSHIP FOR WOMEN AND FAMILIES; NATIONAL SENIOR CITIZENS LAW CENTER; NATIONAL WOMEN'S HEALTH NETWORK; THE OVARIAN CANCER NATIONAL ALLIANCE; AMERICAN HOSPITAL ASSOCIATION; ASSOCIATION OF AMERICAN MEDICAL COLLEGES; FEDERATION OF AMERICAN HOSPITALS; NATIONAL ASSOCIATION OF PUBLIC HOSPITALS AND HEALTH SYSTEMS; CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES; NATIONAL ASSOCIATION OF CHILDREN'S HOSPITALS; CHRISTINE O. GREGOIRE, Governor; DR. DAVID CUTLER, Deputy, Otto Eckstein Professor of Applied Economics, Harvard University; DR. HENRY AARON, Senior Fellow, Economic Studies Bruce and Virginia MacLaury Chair, The Brookings Institution; DR. GEORGE AKERLOF, Koshland Professor of Economics, University of California Berkeley, 2001 Nobel Laureate; DR. STUART ALTMAN, Sol C. Chaikin Professor of National Health Policy, Brandeis University; DR. KENNETH ARROW, Joan Kenney Professor of Economics and Professor of Operations Research, Stanford 2 University 1972 Nobel Laureate; DR. SUSAN ATHEY, Professor of Economics, Harvard University, 2007 Recipient of the John Bates Clark Medal for the most influential American economist under age 40; DR. LINDA J. BLUMBERG, Senior Fellow, The Urban Institute, Health Policy Center; DR. LEONARD E. BURMAN, Daniel Patrick Moynihan Professor of Public Affairs at the Maxwell School, Syracuse University; DR. AMITABH CHANDRA, Professor of Public Policy Kennedy School of Government, Harvard University; DR. MICHAEL CHERNEW, Professor, Department of Health Care Policy, Harvard Medical School; DR. PHILIP COOK, ITT/Sanford Professor of Public Policy, Professor of Economics, Duke University; DR. CLAUDIA GOLDIN, Henry Lee Professor of Economics, Harvard University; DR. TAL GROSS, Department of Health Policy and Management, Mailman School of Public Health, Columbia University; DR. JONATHAN GRUBER, Professor of Economics, MIT; DR. JACK HADLEY, Associate Dean for Finance and Planning, Professor and Senior Health Services Researcher, College of Health and Human Services, George Mason University; DR. VIVIAN HO, Baker Institute Chair in Health Economics and Professor of Economics, Rice University; DR. JOHN F. HOLAHAN, Director, Health Policy Research Center, The Urban Institute; DR. JILL HORWITZ, Professor of Law and Co Director of the Program in Law & Economics, University of Michigan School of Law; DR. LAWRENCE KATZ, Elisabeth Allen Professor of Economics, Harvard University; DR. FRANK LEVY, Rose Professor of Urban Economics, Department of Urban Studies and Planning, MIT; DR. PETER LINDERT, Distinguished Research Professor of Economics, University of California, Davis; DR. ERIC MASKIN, Albert O. Hirschman Professor of Social Science at the Institute for Advanced Study, Princeton University, 2007 Nobel Laureate; DR. ALAN C. MONHEIT, Professor of Health Economics, School of Public Health, University of Medicine & Dentistry of New Jersey; DR. MARILYN MOON, Vice President and Director Health Program, American Institutes for Research; DR. RICHARD J. MURNANE, Thompson Professor of Education and Society, Harvard University; DR. LEN M. NICHOLS, George Mason University; DR. HAROLD POLLACK, Helen Ross Professor of Social Service Administration, University of Chicago; DR. MATTHEW RABIN, Edward G. and Nancy S. Jordan Professor of Economics, University of California Berkeley, 2001 Recipient of the John Bates Clark Medal for the most influential American economist under age 40; DR. JAMES B. REBITZER, Professor of Economics, Management, and Public Policy, Boston University School of Management; DR. MICHAEL REICH, Professor of Economics, University of California at Berkeley; DR. THOMAS RICE, Professor, UCLA School of Public Health; DR. MEREDITH ROSENTHAL, Department of Health Policy and Management, Harvard University, Harvard School of Public Health; 3 DR. CHRISTOPHER RUHM, Professor of Public Policy and Economics, Department of Economics, University of Virginia; DR. JONATHAN SKINNER, Professor of Economics, Dartmouth College, and Professor of Community and Family Medicine, Dartmouth Medical School; DR. KATHERINE SWARTZ, Professor, Department of Health Policy and Management, Harvard School of Public Health; DR. KENNETH WARNER, Dean of the School of Public Health and Avedis Donabedian Distinguished University Professor of Public Health, University of Michigan; DR. PAUL N. VAN DE WATER, Senior Fellow, Center on Budget and Policy Priorities; DR. STEPHEN ZUCKERMAN, Senior Fellow, The Urban Institute; NATIONAL WOMEN'S LAW CENTER; AMERICAN ASSOCIATION OF UNIVERSITY WOMEN; AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES; AMERICAN MEDICAL WOMEN'S ASSOCIATION; ASIAN & PACIFIC ISLANDER AMERICAN HEALTH FORUM; BLACK WOMEN'S HEALTH IMPERATIVE; CHILDBIRTH CONNECTION; IBIS REPRODUCTIVE HEALTH; INSTITUTE OF SCIENCE AND HUMAN VALUES; MARYLAND WOMEN'S COALITION FOR HEALTH CARE REFORM; MENTAL HEALTH AMERICA; NATIONAL ASIAN PACIFIC AMERICAN WOMEN'S FORUM; NATIONAL ASSOCIATION OF SOCIAL WORKERS; NATIONAL COALITION FOR LGBT HEALTH; NATIONAL COUNCIL OF JEWISH WOMEN; NATIONAL COUNCIL OF WOMEN'S ORGANIZATIONS; NATIONAL EDUCATION ASSOCIATION; NATIONAL LATINA INSTITUTE FOR REPRODUCTIVE HEALTH; OLDER WOMEN'S LEAGUE; PHYSICIANS FOR REPRODUCTIVE CHOICE AND HEALTH; RAISING WOMEN'S VOICES; SARGENT SHRIVER NATIONAL CENTER ON POVERTY LAW; SOUTHWEST WOMEN'S LAW CENTER; WIDER OPPORTUNITIES FOR WOMEN; WOMEN'S LAW CENTER OF MARYLAND, INCORPORATED; WOMEN'S LAW PROJECT, Amici Supporting Appellees. Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Norman K. Moon, Senior District Judge. (6:10-cv-00015-nkm-mfu) Argued: May 10, 2011 Decided: September 8, 2011 Before MOTZ, DAVIS, and WYNN, Circuit Judges. Vacated and remanded by published opinion. Judge Motz wrote the opinion, in which Judge Wynn concurred. Judge Wynn wrote a concurring opinion. Judge Davis wrote a dissenting opinion. 4 ARGUED: Mathew D. Staver, LIBERTY COUNSEL, Orlando, Florida, for Appellants. Neal Kumar Katyal, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Anita L. Staver, LIBERTY COUNSEL, Orlando, Florida; Stephen M. Crampton, Mary E. McAlister, LIBERTY COUNSEL, Lynchburg, Virginia, for Appellants. Tony West, Assistant Attorney General, Beth S. Brinkmann, Deputy Assistant Attorney General, Mark B. Stern, Alisa B. Klein, Samantha L. Chaifetz, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Timothy J. Heaphy, United States Attorney, Roanoke, Virginia, for Appellees. Joel Spector, MOUNTAIN STATES LEGAL FOUNDATION, Lakewood, Colorado, for Mountain States Legal Foundation, Amicus Supporting Appellants. Brian S. Koukoutchos, Mandeville, Louisiana; Charles J. Cooper, David H. Thompson, COOPER & KIRK, PLLC, Washington, D.C., for Revere America Foundation, Amicus Supporting Appellants. Rebecca Glenberg, AMERICAN CIVIL LIBERTIES UNION OF VIRGINIA, Richmond, Virginia; Daniel Mach, Heather L. Weaver, AMERICAN CIVIL LIBERTIES UNION, Washington, D.C.; Andrew D. Beck, Brigitte Amiri, AMERICAN CIVIL LIBERTIES UNION, New York, New York, for American Civil Liberties Union and American Civil Liberties Union of Virginia, Incorporated, Amici Supporting Appellees. Ian Millhiser, CENTER FOR AMERICAN PROGRESS, Washington, D.C., for American Nurses Association, American Academy of Pediatrics, Incorporated, American Medical Student Association, Center for American Progress, d/b/a Doctors for America, National Hispanic Medical Association, and National Physicians Alliance, Amici Supporting Appellees. Professor Walter Dellinger, Washington, D.C.; Professor H. Jefferson Powell, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, Washington, D.C., for Senate Majority Leader Harry Reid, House Democratic Leader Nancy Pelosi, and Congressional Leaders and Leaders of Committees of Relevant Jurisdiction, Amici Supporting Appellees. Gillian E. Metzger, Trevor W. Morrison, New York, New York; Andrew J. Pincus, Charles A. Rothfeld, Paul W. Hughes, Michael B. Kimberly, MAYER BROWN LLP, Washington, D.C., for Constitutional Law Professors, Amici Supporting Appellees. Rochelle Bobroff, Simon Lazarus, NATIONAL SENIOR CITIZENS LAW CENTER, Washington, D.C., for American Association of People with Disabilities, The ARC of the United States, Breast Cancer Action, Families USA, Friends of Cancer Research, March of Dimes Foundation, Mental Health America, National Breast Cancer Coalition, National Organization for Rare Disorders, National Partnership for Women and Families, National Senior Citizens Law Center, National Women s Health Network, and The Ovarian Cancer National Alliance, Amici Supporting Appellees. Sheree R. Kanner, Catherine E. Stetson, Dominic F. Perella, Michael D. Kass, Sara A. Kraner, HOGAN LOVELLS US LLP, Washington, D.C.; 5 Melinda Reid Hatton, Maureen D. Mudron, AMERICAN HOSPITAL ASSOCIATION, Washington, D.C.; Ivy Baer, Karen Fisher, ASSOCIATION OF AMERICAN MEDICAL COLLEGES, Washington, D.C.; Jeffrey G. Micklos, FEDERATION OF AMERICAN HOSPITALS, Washington, D.C.; Larry S. Gage, President, NATIONAL ASSOCIATION OF PUBLIC HOSPITALS AND HEALTH SYSTEMS, Washington, D.C.; Lisa Gilden, Vice President, General Counsel/Compliance Officer, THE CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES, Washington, D.C.; Lawrence A. McAndrews, President and Chief Executive Officer, NATIONAL ASSOCIATION OF CHILDREN S HOSPITALS, Alexandria, Virginia, for American Hospital Association, Association of American Medical Colleges, Federation of American Hospitals, National Association of Public Hospitals and Health Systems, Catholic Health Association of the United States, and National Association of Children s Hospitals, Amici Supporting Appellees. Kristin Houser, Adam Berger, Rebecca J. Roe, William Rutzick, SCHROETER, GOLDMARK & BENDER, Seattle, Washington, for Christine O. Gregoire, Governor of Washington, Amicus Supporting Appellees. Richard L. Rosen, ARNOLD & PORTER LLP, Washington, D.C., for Economic Scholars, Amici Supporting Appellees. Marcia D. Greenberger, Emily J. Martin, Judith G. Waxman, Lisa Codispoti, NATIONAL WOMEN S LAW CENTER; Melissa Hart, UNIVERSITY OF COLORADO LAW SCHOOL, Boulder, Colorado, for National Women's Law Center, American Association of University Women, Amerian Federation of State, County and Municipal Employees, American Medical Women's Association, Asian & Pacific Islander American Health Forum; Black Women's Health Imperative, Childbirth Connection, Ibis Reproductive Health, Institute of Science and Human Values, Maryland Women's Coalition for Health Care Reform, Mental Health America, National Asian Pacific American Women's Forum, National Association of Social Workers, National Coalition for LGBT Health, National Council of Jewish Women, National Council of Women's Organizations, National Education Association, National Latina Institute for Reproductive Health, Older Women's League, Physicians for Reproductive Choice and Health, Raising Women's Voices, Sargent Shriver National Center on Poverty Law, Southwest Women's Law Center, Wider Opportunities for Women, Women's Law Center of Maryland, Incorporated, and Women's Law Project, Amici Supporting Appellees. 6 DIANA GRIBBON MOTZ, Circuit Judge: Liberty suit to University enjoin, provisions of Affordable Care as the and certain individuals unconstitutional, recently-enacted Act. The Internal Revenue Code by adding: enforcement this of two Protection Patient challenged brought and provisions amend the (1) a penalty payable to the Secretary of the Treasury by an individual taxpayer who fails to maintain adequate health insurance coverage and (2) an assessable payment payable to the Secretary of the Treasury by a large employer if at least one of its employees receives a tax credit or government subsidy to offset payments for certain health-related expenses. The district court upheld these provisions, ruling that both withstood constitutional challenge. Because this suit constitutes a pre-enforcement action seeking to restrain the assessment of a tax, the Anti-Injunction Act strips us judgment of of jurisdiction. the district Accordingly, court and we must remand the vacate the case with instructions to dismiss for lack of jurisdiction. I. A. On March 23, 2010, the President signed into law the Affordable Care Act, a comprehensive bill spanning 900 pages, which institutes numerous changes to the financing of health 7 care in the United States. See Pub. L. No. 111-148. Liberty and some individuals (collectively plaintiffs ) challenge only two provisions of the Act. 1. The first amends the Internal Revenue Code (sometimes the Code ) by adding § 5000A ( the individual mandate ). 1 § 1501(b). The individual to individual is individual ensure covered I.R.C. § 5000A(a). mandate that under requires beginning minimum an after essential See id., applicable 2013, the coverage. The individual mandate lists a number of health insurance programs that qualify for minimum essential coverage : government- and employer-sponsored plans, individual market plans, and other health plans recognized as adequate. § 5000A(f)(1). If an individual taxpayer fails to obtain the required coverage, the taxpayer is subject to a penalty. § 5000A(b)(1). The Affordable Care Act uses the Internal Revenue Code s existing tax collection system to implement the penalty. Only a taxpayer is subject to the penalty, id., and the Code defines a taxpayer tax. as any person Id. § 7701(a)(14). subject to any internal revenue A taxpayer must include the penalty 1 The Affordable Care Act itself refers to the provision as the Requirement to maintain minimum essential coverage. Pub. L. No. 111-148, § 1501. Because plaintiffs refer to it as the individual mandate throughout their complaint and briefs, we often do so as well. 8 payment with his § 5000A(b)(2). regularly-filed income tax return. The taxpayer owes the penalty only if he fails to maintain minimum coverage for a continuous period of three months or longer. also makes a § 5000A(e)(4)(A). taxpayer liable for a The individual mandate penalty dependent, as defined in § 152 of the Code. imposed on his § 5000A(b)(3)(A). Akin to the joint liability of spouses for income taxes, I.R.C. § 6013(d)(3), a taxpayer is also jointly liable for a spouse s penalty if filing a joint income tax return. § 5000A(b)(3)(B). A taxpayer subject to the penalty owes the greater of: a flat dollar amount equal to $95 for the taxable (1) year beginning 2014, $325 for 2015, $695 for 2016, and $695 indexed to inflation percentage for (1% in every year 2014, 2% thereafter; in 2015, or and (2) 2.5% a graduated every year thereafter) of the amount by which the taxpayer s household income, as defined by the Code, exceeds gross income specified in I.R.C. § 6012(a)(1) (the amount of income triggering the requirement to file a tax return). See § 5000A(c)(2), (3). But the penalty may not exceed the cost of the national average premium for coverage. qualified health plans of a certain level of Secretary of the § 5000A(c)(1). Section 5000A(g)(1) authorizes the Treasury ( the Secretary ) to assess and collect the penalty in the same manner as an assessable penalty under subchapter B of 9 chapter 68 of the Internal Revenue Code, which in turn contains penalties that the Secretary is to assess[] and collect[] in the same manner as taxes. Id. § 6671(a). Accordingly, the Affordable Care Act provides the Secretary with all the civil enforcement tools of the Internal Revenue Code subject to only one express limitation: the Secretary may not seek collection of the penalty by fil[ing] [a] notice of lien with respect to any property or levy[ing] on [a taxpayer s] property. § 5000A(g)(2)(B). 2. The other provision of the Act challenged by plaintiffs amends the Internal employer mandate ). provision imposes Revenue Pub. an Code L. by No. assessable adding 111-148, payment on § § 4980H 1513. any (the That applicable large employer if a health exchange notifies the employer that at least one full-time employee obtains an applicable premium tax credit or cost-sharing reduction. I.R.C. § 4980H(a), (b). An cost-sharing reduction to low-income applicable consists of premium either tax (1) a credit tax or credit assist a individual with financing premiums for qualified health plans or (2) a government subsidy to help finance an individual s share of out-of-pocket health Affordable Care Act. care costs, § 4980H(c)(3). 10 as provided by the Section 4980H calculates the assessable payment differently depending on whether the employer offers insurance coverage to its employees. offer adequate assessable coverage payment to is adequate health If the employer fails to its full-time calculated by employees, multiplying the $2,000 (increased yearly by the rate of inflation), by the number of total full-time employees, prorated over the number of months an employer is liable. § 4980H(a), (c)(1), (c)(5). the offer employer does adequate insurance If, however, coverage, the assessable payment is calculated by multiplying $3,000 by the number of employees receiving the applicable premium tax credit or cost-sharing reduction, subject to a cap. prorated on a monthly basis and § 4980H(b)(1), (2). A large employer must pay these assessments upon notice and demand by the Secretary. § 4980H(d)(1). The Secretary has the authority to assess and collect the exaction in the same manner as an assessable penalty provided by subchapter B of Chapter 68 of the Code. Id. B. On March 23, 2010, the day the President signed the Affordable Care Act into law, plaintiffs filed this action to enjoin the Secretary enforcing the Act. and other government officials from In their complaint, plaintiffs allege the following facts. 11 One of the individual plaintiffs, Michele G. Waddell, asserts that she has made a personal choice not to purchase health insurance coverage and does not want to do so in the future. Waddell maintains that she pays for needed health care services as she uses them. Another individual plaintiff, Joanne V. Merill, asserts that she too has elected not to purchase health insurance coverage and does not want to do so. Both Waddell and Merill contend that the individual mandate requires them to either pay for health insurance coverage Secretary from or face significant penalties. They seek to enjoin the assessing or collecting the exaction prescribed for failure to comply with the individual mandate. part of his oversight Waddell and Merill assert that, as of the Internal Revenue Service, the Secretary has the power to collect the penalties as part of an individual[ s] income tax return. They describe the individual mandate as imposing a penalty in the form of a tax . . . on any taxpayer who fails to maintain minimum essential coverage. They further allege that the Taxing and Spending Clause . . . only grants Congress the power to impose taxes upon certain purchases, not to impose taxes upon citizens who choose not to purchase something such as health insurance. Similarly, Waddell individual and Merrill repeatedly assert that the mandate assesses a direct tax that is not apportioned according 12 to Census data or other population-based violation of Congress s Taxing Power. be free from improper taxation individual mandate exceeds in Accordingly, they ask to [that] significant financial hardships. measurement, is likely to cause They also contend that the Congress s authority under the located in Commerce Clause of the Constitution. Liberty, a private Christian university Lynchburg, Virginia, challenges the employer mandate as a tax that will impose tax penalties on it because it has employees who will likely receive a tax credit or cost-sharing reduction. Liberty alleges that these significant penalties will cause it to suffer Liberty, substantial the employer financial mandate hardship. constitutes an According to unapportioned direct tax upon employers in violation of the Constitution, and [i]mposition of the tax infringes upon rights to be free from improper taxation. Liberty University s Liberty also asserts that the employer mandate exceeds Congress s authority under the Commerce Clause. For relief, plaintiffs ask for an injunction restraining all defendants, including the Secretary of the Treasury, from acting in any manner to implement, enforce, or otherwise act under the authority of the Affordable Care Act. They seek a declaration that the Act is unconstitutional and assert that 13 they have no adequate remedy at law to correct the continuing constitutional violation. Before the district court, the Secretary moved to dismiss the case, contending Injunction Act alia inter (AIA), I.R.C. § that the 7421(a), federal barred tax the Anti- district court from reaching the merits because the challenged penalty is to be assessed and collected in the same manner as a tax and other penalties to which the AIA clearly applies. The court rejected this argument, holding that Congress did not intend to convert the[se] penalties into taxes for purposes of the AntiInjunction Act. The court reasoned that (1) Congress did not specifically extend the term tax in the AIA to include the challenged exactions; and (2) the exactions did not qualify as a tax for purposes regulatory penalties. of the AIA because they function as After rejecting the AIA argument and the Secretary s other jurisdictional contentions, the district court concluded that the challenged exactions are valid exercise[s] of federal power under the Commerce Clause and dismissed the complaint for failure to state a claim upon which relief can be granted. Plaintiffs district court Affordable Care then erred Act. filed as a The this appeal, matter Secretary of asserting law argued that the in upholding the to the contrary, specifically declining to attack the district court s threshold 14 determination[] as to the applicability of the Anti-Injunction Act. The Secretary did, however, maintain that Congress s Taxing Power under Article I, § 8, cl. 1 of the Constitution authorized because the those Secretary s exactions mandates contention imposed by operate as to the as the challenged taxes. mandates Because constitutionality of the the mandates under the Taxing Power suggested that the AIA bar might apply to this suit, we ordered the parties to file supplemental briefs to address the applicability of the AIA. In these briefs, both the Secretary and plaintiffs contend that the AIA does not bar this action. We disagree. We initially explain why we believe that the plain language of the AIA bars our consideration of this challenge. address the parties contrary arguments: We then first those offered by the Secretary (and largely adopted by the dissent), then those advanced by plaintiffs. II. A. We note at the outset the inescapable fact that federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. Life Ins. Co. of Am., 511 U.S. 15 See Kokkonen v. Guardian 375, 377 (1994) (internal citations omitted). independent Accordingly, obligation to subject-matter jurisdiction. 500, 514 (2006). overlook or a federal investigate the court has an limits of its See Arbaugh v. Y&H Corp., 546 U.S. This is so even when the parties either elect not to press the issue, Henderson v. Shinseki, 131 S. Ct. 1197, 1202 (2011), or attempt to consent to a court s jurisdiction, see Sosna v. Iowa, 419 U.S. 393, 398 (1975). Our obligation to examine our subject-matter jurisdiction is triggered whenever that jurisdiction is fairly in doubt. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1945 (2009). As part of the Internal Revenue Code, the AIA provides that no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person. that, I.R.C. § 7421(a). 2 when applicable, the subject-matter jurisdiction. so held. The parties concede, as they must, AIA divests federal courts of The Supreme Court has explicitly See Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 5 (1962). 2 The Declaratory Judgment Act authorizes a federal court to issue a declaratory judgment except with respect to Federal taxes. 28 U.S.C. § 2201(a). In Bob Jones Univ. v. Simon, 416 U.S. 725, 732 n.7 (1974), the Court held that the federal tax exception to the Declaratory Judgment Act is at least as broad as the Anti-Injunction Act. Accordingly, our holding as to the Anti-Injunction Act applies equally to plaintiffs request for declaratory relief. 16 By its terms the AIA bars suits seeking to restrain the assessment or collection of a tax. pre-enforcement actions brought Thus, the AIA forbids only before the Secretary of the Treasury or his delegee, the Internal Revenue Service (IRS), has assessed or collected an exaction. A taxpayer can always pay an assessment, seek a refund directly from the IRS, and then bring a refund action in federal court. See United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4-5 (2008). The parties recognize that plaintiffs here have brought a pre-enforcement action. Moreover, although Congress has provided numerous express exceptions to the AIA bar, see I.R.C. § 7421(a), the parties do not claim that any of these exceptions applies here. Resolution of the case at hand therefore turns on whether plaintiffs suit seeks to restrain the assessment or collection of any tax. B. A tax, in the general understanding of the term, simply an exaction for the support of the government. States v. Butler, 297 U.S. 1, 61 (1936). is United An exaction qualifies as a tax even when the exaction raises obviously negligible revenue and furthers a revenue primary goal of regulation. purpose secondary to the United States v. Sanchez, 340 U.S. 42, 44 (1950); see also Bob Jones, 416 U.S. at 741 n.12. the term tax can describe a wide variety of exactions. 17 Thus, See Trailer Marine Transp. Corp. v. Rivera Vazquez, 977 F.2d 1, 5 (1st Cir. 1992) (surveying cases that have regularly applied the label tax to a range of exactions, even those that might not be commonly described as taxes ). The Supreme Court has concluded that the AIA uses the term tax in its broadest possible sense. This is so because the AIA aims to ensure prompt collection of . . . lawful revenue by preventing taxpayers from inundating tax collectors with preenforcement lawsuits over disputed sums. 370 U.S. at 7-8. Williams Packing, Thus, an exaction constitutes a tax for purposes of the AIA so long as the method prescribed for its assessment conforms to the process of tax enforcement. See Snyder v. Marks, 109 U.S. 189, 192 (1883) (defining a tax in the AIA as any exaction in a condition [of being] collected as a tax ). Specifically, the AIA prohibits a pre-enforcement challenge to any exaction [that] is made under color of their offices by revenue officers charged with the general authority Phillips v. CIR, 283 U.S. to assess and collect the revenue. 589, 596 (1931) (citing Snyder, 109 U.S. at 192); see also Bob Jones, 416 U.S. at 740 (applying the AIA bar when IRS action is authorized by requirements of the [Internal Revenue Code] ). The Supreme Court has steadfastly adhered to this broad construction, enforcement notably challenges in holding to exactions 18 that that the do AIA bars pre- not constitute taxes under the Constitution. Compare Bailey v. George, 259 U.S. 16 (1922) with Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922). In Bailey v. Drexel Furniture, a refund action, the Court held unconstitutional as beyond Congress s Taxing Power a so-called tax, finding it was in truth a mere penalty, with the characteristics of regulation and punishment. 38. 259 U.S. at Yet the Court held the very same provision a tax for purposes of the AIA and so dismissed a pre-enforcement challenge to the exaction. See Bailey v. George, 259 U.S. at 20. In recent years, the Court has expressly affirmed these holdings, reiterating that the term tax in the AIA encompasses penalties that function as mere regulatory measure[s] beyond the taxing power of Congress and Article I of the Constitution. Bob Jones, 416 U.S. at 740. The Court s broad interpretation of the AIA to bar interference with the assessment of any exaction imposed by the Code entirely accords with, and indeed seems to be mandated by, other provisions of the Internal Revenue Code. use the term tax in a vacuum; rather, The AIA does not it protects judicial interference the assessment . . . of any tax. § 7421(a) (emphasis added). from I.R.C. The Secretary s authority to make such an assessment . . . of any tax derives directly from another provision in the Code, which charges the Secretary with making assessments of all taxes (including interest, additional 19 amounts, additions to the tax, and assessable penalties) imposed by this title. § 6201(a) (emphases added); see also § 6202 ( assessment of any internal revenue tax includes assessment of penalties ). Thus, authority the that penalties (as for AIA well as purposes of protects, the very Congress interest, made additional additions to the tax ) count as taxes. assessment clear amounts, that [and] Congress must have intended the term tax in the AIA to refer to this same broad See Erlenbaugh v. United States, 409 U.S. range of exactions. 239, 243 (1972) ( [A] legislative body generally uses a particular word with a consistent meaning in a given context. ). In sum, the AIA forbids actions that seek to restrain the Secretary from exercising his statutory authority exactions imposed by the Internal Revenue Code. to assess See, e.g., Bob Jones, 416 U.S. at 740 (holding AIA barred suit challenging IRS regulatory action when action was authorized by requirements of the [Internal United States, Revenue 353 Code] ); F.3d 1357, Mobile 1362 & Republican n.5 (11th Assembly Cir. v. 2003) (holding AIA barred suits challenging penalties imposed for violating disclosure conditions of tax-exempt status); In re Leckie Smokeless Coal Co., 99 F.3d 573, 583 & n.12 (4th Cir. 1996) (holding AIA applied to premiums assessed and collected by the Secretary under color of the Internal Revenue Code); cf. Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 558 n.9 20 (1976) (holding AIA did not bar challenge to fees because fees not assessed under the Internal Revenue Code). imposed for constitutes provisions. failure a to tax[] See comply as I.R.C. with defined §§ the in 6201(a), the 6202, The exaction individual Code s mandate assessment 5000A(g)(1). For these reasons, the AIA bars this action. 3 III. The Secretary s contrary contention primarily relies on the fact that the individual mandate labels the imposed exaction a penalty, not a tax. § 5000A(b). For the Secretary, the Sixth Circuit, see Thomas More Law Center v. Obama, -- F.3d -(6th Cir. 2011) [No. 10-2388], and now our friend in dissent, this penalty label renders the AIA inapplicable. A. Indisputably, the AIA bars pre-enforcement challenges even when Congress has exhibit[ed] its intent that a challenged 3 Although both parties generally contend that the AIA does not bar this suit, neither offers any reason why the challenge to the employer mandate escapes the AIA bar. There is good reason for that. Because Congress placed the employer mandate in the Internal Revenue Code, triggering the Secretary s authority to assess and collect payment, all of the reasons set forth in the text as to why the AIA bars a pre-enforcement challenge to the individual mandate also apply to the employer mandate. We additionally note that Congress waived none of the Secretary s collection tools in imposing the employer mandate and labeled the exaction a tax in certain subsections. See § 4980H(b)(2), (c)(7), (d)(1). Accordingly, the AIA clearly bars Liberty s challenge to the employer mandate. 21 exaction function as a penalty. Compare Bailey v. Drexel, 259 U.S. at 38, with Bailey v. George, 259 U.S. at 20. The term penalty therefore describes a category of exaction to which the Supreme Court has already applied the AIA. 4 Given this history, it seems inconceivable that Congress would intend to exclude an exaction from the AIA merely by describing it as a penalty. To be sure, Congress called the penalty at issue in the Bailey cases Secretary if a tax. there That is fact, something however, talismanic only aids about the the label penalty that removes a challenged exaction from the scope of the AIA. The Secretary has supporting such a proposition. repeatedly bearing on instructed whether that an cited no case even remotely In fact, the Supreme Court has congressional exaction 4 labels qualifies as have a little tax for This is not to elide the general distinction between taxes and penalties. We agree with the Sixth Circuit s general observation that there are contexts in which the law treats taxes and penalties as mutually exclusive. Thomas More, -- F.3d at ___ (slip op. at 11) (citing one bankruptcy and two constitutional cases). The question here is whether the AIA is one of these contexts. Neither the Secretary nor the Sixth Circuit cites a single case suggesting that it is. The dissent relies on some bankruptcy cases in an attempt to import the distinction between a revenue-raising tax and a regulatory penalty from that context. To accept the dissent s view would place us at odds with the Supreme Court s explicit holding, in the context of the AIA, that the distinction between regulatory and revenue-raising exactions has been abandoned. Bob Jones, 416 U.S. at 741 & n.12. 22 statutory purposes. See, e.g., Helwig v. United States, 188 U.S. 605, 613 (1903) (holding use of words does not change the nature and character of the enactment in the context of the revenue laws); 5 see also United States v. Reorganized CF & I Fabricators of Utah, Inc., 518 U.S. 213, 220 (1996) (requiring a court to look behind the label placed on the exaction and rest[] its answer directly on the operation of the provision ); United States v. Sotelo, 436 U.S. 268, 275 (1978) (holding exaction s penalty label not dispositive, but its essential character controls, in determining whether exaction is a tax for bankruptcy purposes); United States v. New York, 315 U.S. 510, 515-16 (1942) (stressing that the term tax includes any pecuniary burden laid upon individuals . . . for the purpose of 5 Helwig does not, as the dissent contends, support its view that an exaction s label controls. The Court in Helwig acknowledged that Congress may expressly classify an exaction as a penalty or in the nature of one, with reference to the further action of the officers of the government, or with reference to the distribution of the moneys thus paid, or with reference to its effect upon the individual, and that it is the duty of the court to be governed by such statutory direction. 188 U.S. at 613 (emphasis added). The Court then identified statute after statute illustrating the various ways in which Congress has historically directed a duty, additional duty, or penalty to be treated with reference to a specified governmental action. Id. at 614-19. Congress has provided no such direction with reference to the AIA, and Helwig makes clear that a mere label describing an exaction does not constitute such direction. See id. at 613 (explaining that describing an exaction as a further sum or an additional duty will not work a statutory alteration of the nature of the imposition ). 23 supporting the government, by whatever name it may be called (internal quotation omitted and emphasis added)). Indeed, the Court has specifically found an exaction s See Lipke, label immaterial to the applicability of the AIA. 259 U.S. 557 (1922). In Lipke, the Supreme Court held that the mere use of [a] word to describe a challenged exaction was not enough to show whether a tax was laid. Id. at 561. The Court concluded that one of the challenged exactions, although labeled a tax, functioned in reality to suppress crime and so fell outside the AIA bar. Id. Moreover, notwithstanding the penalty and special penalty labels of the other challenged exactions, neither the majority nor Justice Brandeis in dissent gave these labels any import in determining the applicability of the AIA. Compare id. at 561-62 with id. at 563-65 (Brandeis, J., dissenting). In light of this history, it is not surprising that no federal More, appellate has ever court, held that except the the label Sixth Circuit affixed to an in Thomas exaction controls, or is even relevant to, the applicability of the AIA. 6 6 We certainly respect the views of the courts, trumpeted by the dissent, that have held the AIA inapplicable to suits like the one at hand. We note, however, that even unanimity among the lower courts is not necessarily predictive of the views of the Supreme Court. See CBOCS West, Inc. v. Humphries, 553 U.S. 442, 472 (2008) (Thomas, J., dissenting) (collecting cases where the Supreme Court has reject[ed] a view uniformly held by the courts of appeals ). 24 Nonetheless, the Secretary and the dissent insist that the label of an exaction applies. We does first control address in determining the if the AIA bar Secretary s argument on this that passing on the point and then the dissent s. The Secretary acknowledges when constitutionality of a tax law, a court places no weight on the precise form of descriptive words attached to the challenged exaction. Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363 (1941) (internal quotation citing the Bailey twin omitted) cases as (emphasis authority, added). the But Secretary contends that the opposite rule must apply for purposes of the AIA, i.e. that for purposes of the AIA, the precise form of descriptive words given an exaction becomes dispositive. The Secretary s mystifying. reliance on the twin Bailey cases is In fact, they provide no support for his position. In Bailey v. Drexel Furniture, 259 U.S. at 38, a refund action, the Court constitutional held that taxing an exaction authority, while exceeded on the Congress s same day, in Bailey v. George, 259 U.S. at 16, it dismissed a pre-enforcement challenge to the same exaction, characterizing it as a taxing statute for purposes of the AIA. When dismissing the pre- enforcement action, the Court did not state or suggest that it classified the challenged statute as a taxing statute because Congress labeled it as such. Nor does it seem plausible that 25 the Court implicitly relied on that label, given that it had never before and has never since controlling for statutory purposes. found an exaction s label See, e.g., Reorganized CF & I, 518 U.S. at 220; Sotelo, 436 U.S. at 275; Lipke, 259 U.S. at 561; Helwig, 188 U.S. at 613. Rather, only one explanation of the twin Bailey cases coheres with the Court s precedents: the term the tax in the AIA reaches any exaction assessed by Secretary pursuant to his authority under the Internal Revenue Code -- even one that constitutes a penalty for constitutional purposes. The dissent s contention that the Supreme Court s reliance on the statutory label in Bailey v. George is so obvious that it required no explanation by the Court strikes us as unsound. It seems doubtful that the Court departed from its normal practice of ignoring statutory labels without explaining why it was doing so. Instead, the more likely -- and just as straightforward -- explanation is that the Court described the exaction as a taxing statute because Congress had charged the tax collector with assessing Snyder, 109 U.S. at 192. 7 the challenged exaction. See Contrary to the dissent s belief, this 7 The dissent argues that the statement in Snyder, 109 U.S. at 192-93, that the term tax in the AIA refers to those exactions claimed by the proper public officers to be a tax, makes relevant the Secretary s present litigation position that the AIA does not bar this lawsuit. The most fundamental problem with this argument is that the Secretary still does claim that 26 holding did not require the Court to perform any elaborate functional analysis, but rather to recognize simply that the challenged exaction formed part of the general revenue laws. The dissent s related contention -- that our interpretation of Bailey v. George brings that case into conflict with Lipke, in which the Supreme Court held that the AIA did not bar a certain pre-enforcement challenge -- also misses the mark. In Lipke, the Court faced a challenge to the Secretary s assessment of an exaction imposed pursuant to the National Prohibition Act, a statute primarily designed to define and suppress crime. 259 U.S. at 561 (emphasis added). Congress had enacted the statute to prohibit intoxicating beverages and authorized the tax collector violation sold to of this liquor. 41 enforce a criminal statute Stat. tax 318. The against illegally National persons who in manufactured or Prohibition Act, however, did not authorize the collector to make an assessment under his general revenue authority; rather, it converted him the challenged exaction is a tax, albeit one authorized by the Constitution s Taxing Clause. See Appellee s Br. at 58. We cannot hold that the AIA does not apply to this tax merely because the Secretary has changed his stance on the AIA and now contends that the exaction is a tax only for constitutional purposes. To give the Secretary s lawyers such a veto over the AIA bar would abdicate our independent obligation to assure ourselves of our own jurisdiction. Arbaugh, 546 U.S. at 514. Moreover, Congress called the exaction in the employer mandate a tax. See 26 U.S.C. § 4980H(b)(2), (c)(7), (d)(1). The argument is for this reason, too, fatally flawed. 27 into a federal prosecutor. Specifically, it (1) conferred upon the collector an array of prosecutorial powers, subject to the control of the Attorney General, and (2) predicated the enforcement of the challenged tax on proof of criminal guilt. 41 Stat. 305, 317-18. bar a The Lipke Court held that the AIA did not pre-enforcement challenge to this exaction because guarantees of due process required pre-enforcement review of penalties for crime. 262 U.S. at 562. Lipke thus casts no doubt on our conclusion that the term tax in the AIA reaches any exaction imposed by the Code and assessed by the tax collector pursuant to his general revenue authority. Lipke held only that when Congress converts the tax assessment process into a vehicle for criminal prosecution, the Due Process Clause prohibits courts from applying the AIA. See United States v. One Ford Coupe Auto., 272 U.S. 321, 329 (1926) (characterizing Lipke as merely a due process case); see also Bob Jones, 416 U.S. at 743 (describing Lipke as permitting pre-enforcement review of tax statutes that function as adjuncts to the criminal law ); Lynn v. West, 134 F.3d 582, 594-95 (4th Cir. 1998) (citing Lipke for proposition that courts possess jurisdiction criminal penalty ). to enjoin a tax that is in reality a Of course, the individual mandate imposes no such criminal penalty, and thus presents no constitutional impediment to applying the AIA. 28 In sum, the Supreme Court has itself emphasized that Lipke creates only a narrow constitutional limitation, not applicable here, on the holding of the twin Bailey cases that the AIA reaches a broader range of exactions than does the term tax in the Constitution. See Bob Jones, 416 U.S. at 741 n.12 (citing Lipke and noting, in the context of the AIA, that the Court has since abandoned any distinction taxes and regulatory penalties). the Secretary and the dissent between revenue-raising Yet the theory propounded by -- that a label transforms a constitutional tax into a penalty for AIA purposes - would yield an AIA Constitution. that As reaches former fewer exactions Commissioners of the than IRS does noted the in criticizing this argument, this is the opposite of what the Supreme Court held in the twin Bailey cases. Mortimer Caplin & Sheldon Cohen as Amici See Brief for Curiae Supporting Appellees at 24, Seven-Sky v. Holder, No. 11-5047 (D.C. Cir. July 1, 2011). The Secretary all but acknowledges this fact, admitting that the Bailey cases show only the converse of the position that he now propounds. We cannot upend the Supreme Court s settled framework for determining if an exaction is a tax for statutory purposes on the basis of a theory for which the Secretary musters only cases that hold the converse. B. 29 Perhaps in recognition of the dearth of case law supporting their argument, the Secretary and the dissent rely heavily on an inference they draw from the structure of the Internal Revenue Code to support their position. Section 6665(a)(2) provides the starting point for this inference; it states that any reference in this title to tax imposed by this title shall be deemed also to refer to the . . . penalties provided by § 6665(a)(2)(emphasis this added); chapter, see i.e. § also Chapter 6671(a) 68. See (redundantly stating the same for penalties and liabilities provided by subchapter B of Chapter 68). dissent, § 6665(a)(2) According to the Secretary and the necessarily implies that any penalty outside of Chapter 68 does not qualify as a tax for purposes of the Code. in Chapter Taxes ) Because Congress codified the individual mandate 48 rather of the than Code (entitled Chapter 68 Miscellaneous (entitled Excise Assessable Penalties ), the Secretary and the dissent urge us to infer that Congress did not intend the individual mandate to constitute a tax for purposes of the AIA. The fundamental difficulty with this argument is that § 6665(a)(2) merely clarifies that the term tax encompasses the penalties contained in Chapter 68; it does not limit the term tax to only these penalties. Nor can we imply such an limitation, for courts must not read the enumeration of one 30 case to exclude another unless it is fair to suppose that Congress considered the unnamed possibility and meant to say no to it. Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003). There is no evidence that in enacting the clarifying language of § 6665(a)(2), Congress intended to exclude a penalty codified outside of Chapter 68 from also qualifying as a tax. See United States v. Sischo, 262 U.S. 165, 169 (1923) (holding no inference can be made to imply an exclusion when Congress enacts an extension, rather than restriction, of a term). Furthermore, the suggestion that we infer from § 6665(a)(2) a categorical exclusion from the term tax of all non-Chapter 68 penalties § 7806(b) of violates the Congress s Code, Congress express has instructions. forbidden courts In from deriving any inference or implication from the location or grouping of any particular section or provision or portion of this title. I.R.C. § 7806(b). The argument of the Secretary and the dissent demands that we draw precisely such a forbidden inference, for under their theory, the character of a penalty turns entirely on the Chapter in which it is locat[ed]. 8 8 Contrary to the dissent s contention, this conclusion does not reject the legal force of § 6665(a)(2). When Congress expressly directs that the location of a provision matters, as it has in § 6665(a)(2), then a court need not infer anything and Congress s direction controls. But to adopt the position of the Secretary and the dissent, a court would have to infer that an exaction is not to be treated as a tax from the exaction s place 31 Moreover, the Secretary s newly-minted position that Congress has implicitly excluded any penalty codified outside of Chapter previous 68 from qualifying interpretation of the as a tax AIA. In contradicts Mobile his Republican Assembly, 353 F.3d 1357, the Secretary defended against a preenforcement challenge to an exaction imposed by I.R.C. § 527(j), for failure to comply with the conditions attached to tax-exempt status. The district precisely the reasons because Congress had court that held the labeled the AIA Secretary the inapplicable now exaction espouses, a for i.e. penalty and See National Federation of codified it outside of Chapter 68. Republican Assemblies v. United States, 148 F. Supp. 2d 1273, 1280 (S.D. Ala. 2001). But the Secretary appealed, insisting that the AIA did apply because the challenged penalty was to be assessed and collected in the same manner as taxes. Br. of Appellant at 32, Mobile Republican Assembly, 353 F.3d 1357 (Feb. 18, 2003) (No. 02-16283), 2003 WL 23469121. The Eleventh Circuit agreed and dismissed the suit because the exaction was based squarely Revenue and the explicit form[ed] part of language the of overall the Internal tax subsidy in the Code (here Chapter 48 rather than Chapter 68). this inference that the Code forbids. It is scheme. Code upon 353 F.3d at 1362 n.5. 32 The Secretary fails to explain his change in position or even refer to the Eleventh Circuit s holding that applies to penalties codified outside of Chapter 68. the AIA Instead, the Secretary s argument boils down to his intuition, accepted by the Sixth Circuit and the dissent, that Congress said one thing in sections 6665(a)(2) and 6671(a), and something else in section 5000A [the individual mandate], and we should respect the difference. Thomas More, --- F.3d at ___ [No. 10-2388, slip op. at 12]. But we can easily respect the difference in congressional wording without holding plaintiffs challenge exempt from the AIA bar. that The legislative history of § 6665(a)(2) makes clear Congress inserted that provision in the course of reorganizing and codifying the revenue laws in 1954, and did so merely to declare explicitly what had been implicit -- that the term tax for purposes of the Code also refers to penalties imposed by the Code. See H.R. Rep. No. 83-1337, at A420 (1954) (noting that predecessor to § 6665(a)(2) conforms to the rules under existing law and contain[s] no material changes to existing law ); S. Rep. No. 83-1622, at 595-96 (1954) (same). 9 9 Congress originally inserted the text of § 6665 as § 6659 of the 1954 Code, see Internal Revenue Code of 1954, Pub. L. No. 83-289, § 6659(a)(2), 68A Stat. 1, 827 (1954), but relocated it to § 6665 in 1989 without making any changes to it, see Omnibus Reconciliation Act of 1989, Pub. L. No. 101-239, tit. VII, 33 Given this history, we cannot interpret § 6665(a)(2) as working any substantive change to the Code; rather, it simply mak[es] explicit what was already implied by the Code. U.S. at 169; see Walters also v. Nat l Survivors, 473 U.S. 305, 317-18 (1985). Sischo, 262 Ass n of Radiation That Congress did not repeat this clarifying language when it enacted the individual mandate, which is not part of any reorganization or recodification of the Code, demonstrates nothing. 10 Rather, Congress well knew that the Code had for decades expressly provided that for purposes of the Secretary s assessment power, the term tax includ[es] . . . penalties. I.R.C. § 6201(a). AIA encompass unnecessary. Congress federal the individual mandate penalty was therefore Cf. Bob Jones, 416 U.S. at 741-42 (noting that intended tax Specific direction that the term tax in the AIA system ). to adapt Put to another evolving way, § complexity 6201 of specifically provides the Secretary with authority to make assessments of § 7721(a), (c)(2), I.R.C. § 6665(a)). 103 Stat. 2106, 10 2399 (1989) (codified at This does not mean that § 6665(a)(2), which includes Chapter 68 penalties within the term tax throughout the Code, serves no purpose. For example, § 6665(a)(2) may well be necessary to authorize a taxpayer to pursue a civil suit for the illegal collection of Federal tax against a collector who intentionally misinterprets the Code in collecting a Chapter 68 penalty. See I.R.C. § 7433(a); cf. Sylvester v. United States, 978 F. Supp. 1186, 1189 (E.D. Wis. 1997); Le Premier Processors, Inc. v. United States, 775 F. Supp. 897, 902 n.6 (E.D. La. 1990). 34 all taxes (including . . . penalties), and the AIA specifically bars judicial interference with the Secretary s power to make assessment . . . of any tax. Given that Congress has not provided to the contrary, these two provisions taken together mandate the conclusion that the AIA bars this suit seeking to restrain an assessment of the exaction challenged here, regardless of the exaction s label. The Secretary s contrary label argument not only fails to persuade, Code. it also requires a strained interpretation of the The Secretary urges us to take the view that Congress intended the individual mandate to constitute the only exaction imposed by the lengthy qualify as a tax. 11 Internal Revenue that does not The consequences of this counterintuitive argument extend well beyond the AIA. Secretary s Code contention that the For example, accepting the label penalty exempts the individual mandate from provisions applicable to taxes would inexplicably eliminate a host of procedural safeguards against abusive tax collection. See, 11 e.g., §§ 7217(a) (prohibiting The Secretary yet again employs faulty reasoning to reach this remarkable conclusion. He contends that three other exactions labeled as penalties and codified outside Chapter 68 - I.R.C. §§ 5114(c)(3), 5684(b), 5761(e) -- constitute taxes for purposes of the AIA because they shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6665(a). But the only meaningful difference between these provisions and the individual mandate is the addition of the phrase, as provided in section 6665(a), which refers only to the previous clause and does not incorporate the separate, unreferenced parts of § 6665(a). 35 executive branch officials from requesting IRS officials to conduct or terminate an audit . . . with respect to the tax liability of any particular taxpayer), 7433(a) (providing civil damages for (providing unauthorized civil collection damages for of Federal unauthorized tax ), enticement disclosure concerning the collection of any tax ). 7435 of We will not presume that Congress intended such an anomalous result, and we certainly cannot infer this intent on the basis of a mere label. C. The Secretary s remaining contentions, some of which are adopted by the dissent, are brief and unsupported by any statute or case law. All Secretary s view of individual mandate, are what policy the arguments, 2010 assertedly relying Congress, would regard the enacting in on the as mak[ing] sense, or would not have wanted, or as the dissent would have it, what the Secretary and 2010 the Congress dissent, intended. these policy According concerns to the demonstrate that the 2010 Congress could not have wanted the AIA to bar preenforcement challenges to the individual mandate. The most fundamental difficulty with this contention is its focus on the intent individual mandate. of the 2010 Congress in enacting the Our task is not to divine the intent of the 2010 Congress but simply to determine whether the term tax in the AIA encompasses the exaction challenged here. 36 To resolve this question, we must look to the text of the AIA and the intent of the Congresses that enacted and re-enacted that statute, just as the Supreme Court has done in its AIA cases. See, e.g., South Carolina v. Regan, 465 U.S. 367, 375 (1984); Bob Jones, 416 U.S. at 741-42; Snyder, 109 U.S. at 191. Once we conclude that the term tax in the AIA encompass a challenged exaction, we can go no further. terms of statutory the AIA declare exceptions, not that courts, applicable save here, may for does For the specific entertain no suit for the purpose of restraining the assessment or collection of any tax. U.S.C. § language expansive 26 leaves 7421(a) no room (emphasis for a added). court to This carve out exceptions based on the policy ramifications of a particular pre-enforcement challenge. Bob Jones, departure repudiating from the The Supreme Court said as much in its old literal exceptional circumstances. cases reading that of had the 416 U.S. at 743. embraced Act based a on In doing so, the Court instructed that courts must give the AIA literal force, without regard challenge. Of the . . . nature of the pre-enforcement Id. at 742. course, individual to the mandate 2010 from Congress the AIA. could But to have date exempted it has the not provided for such an exemption, and surely we cannot hold it has implicitly done so. To infer an intent on the part of the 2010 37 Congress to exempt this pre-enforcement challenge from the otherwise-applicable AIA bar would be tantamount to finding an implicit repeal of that bar; such an approach would violate the cardinal rule that repeals by implication are not favored. TVA v. Hill, 437 U.S. 153, 189 (1978) (applying the implicit repeal doctrine to the TVA s argument that the Act cannot reasonably be interpreted as applying to [the challenged] federal project ); see also United States v. United Continental Tuna Corp., 425 U.S. 170, 169 (1976) (holding that courts must be hesitant to infer that Congress, in enacting a later statute, intended to authorize evasion of a [prior] statute ). Given that the terms of the AIA encompass the exaction imposed by § 5000A(b), exempting that irreconcilable the only exaction with is the permissible if the AIA. justification individual Hill, 437 for mandate U.S. at is 189. Obviously, it is not. Accordingly, it is simply irrelevant what the 2010 Congress would have thought about the AIA; all that matters is whether the 2010 Congress imposed a tax. If it did, then the AIA bars pre-enforcement challenges to that tax. After all, were we to embrace the argument pressed by the Secretary and the dissent that the exhibited render the AIA an applies intent AIA only for little it more when to subsequent apply, than 38 a a we would non-binding Congress has impermissibly suggestion to future Congresses, devoid of independent legal force. Corp., 425 explicit U.S. at 169 expression (holding by that Congress courts that it See Tuna must require intends the compromise or abandonment of previously articulated policies ). The Supreme Court has rejected this very view, holding that the AIA establishes a nearly irrebuttable presumption that no tax may be challenged in any pre-enforcement action. See Bob Jones, 416 U.S. at 743-46. Even taken on their policy arguments fail. own terms, however, the proffered Neither the Secretary nor the dissent has identified any persuasive evidence that the 2010 Congress in fact intended individual to permit mandate. 12 pre-enforcement The best evidence challenges of what to the Congress 12 The Secretary offers only congressional floor statements as evidence of this supposed congressional intent. In those statements, two Senators contemplated a potential onslaught of challenges to the individual mandate but, as the Secretary puts it, never suggested that the only way for an individual to obtain review would be . . . [through] a refund action. The Supreme Court has long held that such statements are of little assistance in ascertaining congressional intent. See, e.g., Grove City College v. Bell, 465 U.S 555, 567 (1984). Moreover, the floor statements relied on here are irrelevant, because at most they signal an acknowledgment of potential lawsuits, not an endorsement of challenges seeking pre-enforcement injunctive relief. The dissent goes even a step further than the Secretary, inferring an AIA exception because drafts of what became the Affordable Care Act had previously called the challenged exaction a tax. The Supreme Court has warned against such an approach, cautioning courts not to read much into Congress s unexplained decision to change wording in a final bill. See 39 intended, of course, is the legislation it actually enacted. See Carcieri v. Salazar, 129 S. Ct. 1058, 1066-67 (2009). Congress could have enacted an exemption from the AIA bar; it did so in other instances. See, e.g., I.R.C. §§ 4961(c)(1) (second-tier tax exempt from AIA), 6703(c)(1) (penalty exempt from AIA upon satisfying statutory conditions), 7421(a) (listing several exactions and procedures exempt from AIA). has provided so such exemption here. But Congress Alternatively, Congress could have crafted a specific route to pre-enforcement judicial review. See Sigmon Coal Co. v. Apfel, 226 F.3d 291, 301 (4th Cir. 2000); see also Clinton v. City of New York, 524 U.S. 417, 428-29 (1998). Again, it did not do so here. Thus, Congress knows how to exempt a specific exaction from the AIA bar, and that it did not do so here strongly undermines the contention that Congress intended such an exemption. Trailmobile Co. v. Whirls, 331 U.S. 40, 61 (1947) (noting that the interpretation of statutes cannot safely be made to rest upon mute intermediate legislative maneuvers ). Moreover, the dissent errs in suggesting that our holding ignores this wording change; rather, we simply hold that change irrelevant to the AIA bar. Congress s decision to call the challenged exaction a penalty may affect its treatment under sections of the Code that expressly distinguish taxes from penalties, e.g. those pertaining to the timing of interest accrual. See Latterman v. United States, 872 F.2d 564, 569-70 (3d Cir. 1989). Or Congress s wording change may have simply carried political benefits. See Florida v. HHS, 716 F. Supp. 2d 1120, 1142-43 (N.D. Fla. 2010). No evidence, however, indicates that the change was intended to exempt the individual mandate from the AIA. 40 Nor do the Secretary s policy arguments, which the dissent embraces, demonstrate that the AIA should not apply here. Secretary contends that it makes sense that Congress The would regard it as unnecessary to apply the AIA bar to the individual mandate because, in the mandate, Congress prohibited the Secretary from using his principal tools to collect unpaid taxes. fact Maybe so. that the assessment (emphasis But the Secretary s argument ignores the AIA or bars challenges collection added). of seeking any Congress s tax. intent to restrain I.R.C. to waive the § 7421(a) some of the Secretary s collection tools does not in any way evidence that it would want to invite pre-enforcement challenges to the Secretary s remaining collection powers or all of his assessment authority. And the Supreme Court has left no doubt that restraining even one method of collection triggers the AIA s prohibition on injunctive suits. United States v. Am. Friends Serv. Comm., 419 U.S. 7, 10 (1974). Alternatively, the Secretary argues that because the individual mandate is integral to the [Affordable Care Act s] guaranteed-issue and community-rating provisions and has a delayed . . . effective date, Congress would have wanted early resolution of challenges to it and did not intend the AIA to prohibit pre-enforcement challenges. that any holding that the AIA 41 bar This argument ignores does not apply to the individual mandate might have serious long-term consequences for the Secretary s revenue collection. The Congressional Budget Office projects that 34 million people will remain uninsured in 2014 and thus potentially subject to the challenged penalty. Letter from Douglas W. Elmendorf, CBO Director, to Hon. Harry Reid, Senate Majority Leader, at table 4 (Dec. 19, 2009). To exempt the individual mandate from the AIA would invite millions of taxpayers -- each and every year -- to refuse to pay the § 5000A(b) exaction and instead preemptively challenge the IRS s assessment. Moreover, some of those taxpayers will undoubtedly possess a host of non-constitutional, individual grounds upon which to challenge the assessment of the § 5000A(b) exaction. As former IRS Commissioners warned in a recent brief, allowing these suits would severely hamper IRS collection efforts. Mortimer Caplin & Sheldon Cohen as Amici See Brief for Curiae Supporting Appellees at 12-15, Seven-Sky v. Holder, No. 11-5047 (D.C. Cir. July 1, 2011). This would threaten to interrupt the IRS s collection of $4 billion annually from the challenged exaction. See Letter from Elmendorf to Reid at table 4. Moreover, those challenges could impede the collection of other income taxes by preemptively resolving -- in litigation over the exaction imposed by § 5000A(b) -- issues basic to all tax collection, 42 such as a taxpayer s adjusted gross income. 13 See I.R.C. § 5000A(c)(2)(B); C.I.R. v. Sunnen, 333 U.S. 591, 597-98 (1948) (issue preclusion applicable in the federal income tax field ). Thus, while the Secretary and the dissent may be correct that we could resolve this one lawsuit with few adverse revenue consequences, the holding necessary to reach the merits here could, in the long-run, wreak havoc on the Secretary s ability to collect revenue. If Congress is persuaded by the Secretary s present position, exception mandate. litigation for constitutional it can craft challenges to a specific the AIA individual See I.R.C. § 7428(a) (inserting, after Bob Jones, an exemption for the exact sort of pre-enforcement challenge the Bob Jones Court had held barred by the AIA). Until it does so, however, we are bound by its directive that we entertain no suit restraining the assessment of any tax. § 7421(a). IV. Having dispensed with the Secretary s arguments, we turn finally to the arguments pressed by plaintiffs. A. 13 Other issues raised by the individual mandate that are common to many taxes include certain deductions from income taxes (§ 5000A(c)(4)(C)(i)), child dependency determinations (§ 5000A(b)(3)(A)), joint liability for spouses (§ 5000A(b)(3)(B)), the income level triggering a taxpayer s duty to file a return (§ 5000A(c)(2)(B)), and family size for deduction purposes (§ 5000A(c)(4)(A)). 43 Plaintiffs apply because initially this contend case that does the seek not assessment or collection of a tax. AIA to bar does not restrain the The plaintiff university in Bob Jones tendered precisely the same initial argument. Its first contention was that the AIA did not apply because its suit was not brought for the purpose assessment or collection of any tax. Supreme Court [this] notion. held that Id. the of 416 U.S. at 738. university s So it is here. restraining complaint the The belie[d] For, in their complaint, plaintiffs characterize the individual mandate as a tax and ask for a judicial invalidation of this tax[] upon citizens who choose They not to assert purchase that the something individual such as mandate health insurance. provision, although labeled a penalty, is a tax not apportioned as required by Article I of the Constitution, and a tax beyond the scope of congressional Constitution. power Thus, under as in the Bob Sixteenth Jones, Amendment plaintiffs of the complaint belies their initial contention. 14 14 Moreover, Bob Jones forecloses an argument that the AIA allows a challenge to the requirement that an individual maintain insurance, i.e. § 5000A(a), separate from a challenge to the penalty for noncompliance with this requirement, i.e. § 5000A(b). Some district courts have accepted this argument. See, e.g., Goudy-Bachman v. U.S. Dep t of Health & Human Servs., 764 F. Supp. 2d 684, 695 (M.D. Pa. 2011); Thomas More Law Center v. Obama, 720 F. Supp. 2d 882, 891 (E.D. Mich. 2010). But invalidation of the individual mandate would necessarily preclude the Secretary from exercising his statutory authority 44 Plaintiffs remaining contention as to why the AIA does not bar their challenge to the individual mandate is that it imposes an unconstitutional regulatory penalty not designed to raise revenue, Taxing which and assertedly Spending constitutional rights. a claim that violates an Clause, the and Commerce Clause, unspecified the other The problem with this argument is that exaction is an unconstitutional regulatory penalty does not insulate a challenge to it from the AIA bar. Again, in Bob Jones, the Court confronted and rejected precisely this argument. Like plaintiffs here, the university in Bob Jones asserted that the IRS s threatened constitutional] rights. action would violate [its Id. at 736 (asserting various First and Fourteenth Amendment rights). In fact, in its brief to the Supreme Court, the university made an argument identical to that here. The university maintained that what the government would have the University do . . . involves not revenue but rather unconstitutional compulsion, Brief for Petitioner at 28, Bob Jones Univ. v. Simon, 416 U.S. 725 (1973) (No. 72-1470), 1973 WL 172321. This mirrors the plaintiffs contention here that the to assess the accompanying penalty. Moreover, in Bob Jones, the Court held that the AIA barred a challenge to the IRS s interpretation of I.R.C. § 501(c)(3), even though that provision itself did not impose any tax; only when coupled with § 501(a) (making a 501(c)(3) organization exempt from income taxes) did tax consequences result. 416 U.S. at 738. 45 mandate is not designed to raise revenue but unconstitutionally compel[] specific behavior. instead to Just as the Bob Jones Court held the university s argument foreclosed by the twin Bailey cases, see 416 U.S. at 740-41, we must hold plaintiffs identical argument foreclosed by those cases. For in Bob Jones, the Supreme Court not only reaffirmed the twin Bailey cases as setting forth the proper course by which a taxpayer could challenge an exaction but also explained that it had abandoned . . . revenue-raising taxes. distinctions between Id. at 741 n.12. regulatory and The Court held that the AIA bar applied even to an exaction implementing a social policy unless a plaintiff could demonstrate that the IRS has no legal basis in the Code for assessing the exaction or seeks an objective unrelated to the protection of the revenues. 740. Id. at Plaintiffs cannot and do not make any contention that the IRS has no legal basis in the Code for assessing the penalty in § 5000A or that this exaction is unrelated to the protection of the revenues. In sum, we find plaintiffs argument that the AIA does not apply here wholly unpersuasive. B. Perhaps recognizing the weakness of their argument as to the inapplicability of the AIA, plaintiffs principally contend that a narrow judicially-created exception to the AIA permits 46 pursuit of their action seeking a pre-enforcement injunction against enforcement of the individual mandate. That exception allows a plaintiff to escape the AIA bar if he demonstrates that (1) equity jurisdiction otherwise exists, i.e. irreparable injury results if no injunction issues, and that (2) it is clear that under no circumstances could the [Secretary] ultimately prevail. 7. 15 Williams Packing, 370 U.S. at When making the latter determination, a court must take the most liberal view of the law and the facts in favor of the Secretary. Id. It is difficult to see how any irreparable injury justifies the injunctive relief requested here. But even assuming equity jurisdiction does exist here, plaintiffs cannot meet the stringent standard of proving with certainty that the Secretary has no chance of success on the merits. Bob Jones, 416 U.S. at 745. In rejecting the university s contention that it would prevail on the merits, the Bob Jones Court explained that the sole case in which a plaintiff had met this exacting standard was Miller v. Standard Nut Margarine Co., 284 U.S. 498 (1932). That case is a far cry from the case at hand. 15 In Standard Nut, The Court has carved out one other exception to the AIA for aggrieved parties for whom [Congress] has not provided an alternative remedy. See Regan, 465 U.S. at 378. That exception clearly does not assist plaintiffs because, as the Secretary concedes, they may challenge the individual mandate in a refund action. See Bob Jones, 416 U.S. at 746. 47 a tax collector attempted to assess a tax that federal courts had already held in a proper post-enforcement action did not apply to the plaintiff s product. date, no court has even Id. at 510. considered the By contrast, to validity of the individual mandate in a post-enforcement action, let alone held it invalid in such a proceeding. actions, the courts of Moreover, in pre-enforcement appeals have divided constitutionality of the individual mandate. as to the Compare Florida v. HHS, --- F.3d --- (11th Cir. 2011) (invalidating mandate) with Thomas More, --- F.3d --- (upholding mandate). Given this history and the presumption of constitutionality a federal court must afford every congressional enactment, see United States v. Morrison, 529 U.S. 598, 607 (2000), we can hardly hold that the Secretary has no chance of success on the merits. Bob Jones, 416 U.S. at 745. V. In closing, potentially we harsh recognize regime on that Congress some taxpayers. has imposed Id. at a 749. However, as in Bob Jones, the question of whether these concerns merit consideration is a matter for Congress to weigh. 750. Id. at Unless and until Congress tells us otherwise, we must respect the AIA s bar to the intrusion of the injunctive power 48 of the courts into the administration of the revenue. Regan, 465 U.S. at 388 (O Connor, J., concurring). For all these reasons, we vacate the judgment of the district court and remand the case to that court to dismiss for lack of subject-matter jurisdiction. VACATED AND REMANDED 49 WYNN, Circuit Judge, concurring: I. I concur in Judge Motz s fine opinion Anti-Injunction Act applies to this case. holding that the I therefore agree that it should be remanded to the district court for dismissal. I note that my distinguished colleague, after vigorously dissenting from the majority s holding that the AIA applies, chose to exercise his prerogative to address the merits. 1 While I think that his position on the Commerce Clause is persuasive, were I to reach the merits, I would uphold the constitutionality of the Affordable Care Act on the basis that Congress had the authority to enact the individual and employer mandates under its plenary taxing power. 2 However, my conclusion that the 1 The majority opinion vacates the district court s decision and remands plaintiffs lawsuit for dismissal. Judge Davis dissents from the majority s dismissal of plaintiffs suit on AIA grounds; nonetheless, on the merits, he, too, would dismiss plaintiffs lawsuit. 2 Justices and judges have previously spoken on the merits after stating that the court lacked jurisdiction; my approach today is therefore nothing new. See Stolt-Nielsen S.A. v. AnimalFeeds Int l Corp., 130 S. Ct. 1758, 1777 (2010) (Ginsburg, J., dissenting) ( The Court errs in addressing an issue not ripe for judicial review . . . . I would dismiss the petition as improvidently granted. Were I to reach the merits, I would adhere to the strict limitations the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., places on judicial review of arbitral awards. § 10. Accordingly, I would affirm the judgment of the Second Circuit, which rejected petitioners plea for vacation of the arbitrators decision. ); Pennzoil Co. v. 50 mandates are (constitutional) taxes inevitably leads back to the AIA s bar to this case. II. A. Plaintiffs contend that [t]he Taxing and Spending or General Welfare Clause does not vest Congress with the authority to enact the mandates. University, Liberty Michele Univ. v. G. Opening Brief of Appellants Liberty Waddell Geithner, individual and employer authorized by Congress s No. mandate and Joanne J. 10-2347. I provisions constitutional Merrill at disagree. are power 40, The independently to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States . . . . U.S. Const. art. I, § 8, cl. 1. Texaco, Inc., 481 U.S. 1, 23 (1987) (Marshall, J., concurring in the judgment) ( Were I to reach the merits I would reverse for the reasons stated in the concurring opinions of Justices Brennan and Stevens, in which I join. But I can find no basis for the District Court s unwarranted assumption of jurisdiction over the subject matter of this lawsuit, and upon that ground alone I would reverse the decision below. ); Veterans for Common Sense v. Shinseki, 644 F.3d 845, 900 (9th Cir. 2011) (Kozinski, J., dissenting) (determining that court lacked jurisdiction but also analyzing claims on their merits); Patel v. Holder, 563 F.3d 565, 569 (7th Cir. 2009) (majority opinion doing same); cf. Helvering v. Davis, 301 U.S. 619, 639-40 (1937) (noting the belief of Justices Cardozo, Brandeis, Stone, and Roberts that the case should be dismissed but nevertheless reaching the merits in an opinion authored by Justice Cardozo). 51 A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the government. (1936). United States v. Butler, 297 U.S. 1, 61 Stated differently, a tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the United States v. New York, 315 U.S. 510, 515-16 government. (1942) (quoting New Jersey v. Anderson, 203 U.S. 483, 492 (1906)). Before analyzing whether the exactions in question were authorized under Congress s taxing power, it is useful first to clarify that neither an exaction s label nor its regulatory intent or effect is germane to the constitutional inquiry. To determine whether an exaction constitutes a tax, the Supreme Court has instructed us to look not at what an exaction is called but instead at what it does. Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363 (1941) (stating that when passing on the constitutionality of a tax law, a court is concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it ) (quoting Lawrence v. State Tax Comm n, 286 U.S. 276, 280 (1932)); see also United States v. New York, 315 U.S. at 515-16 (stating that an exaction meeting the definition of a tax will be construed as such regardless of whatever name it may be called ). This makes four sense, given that the Constitution 52 itself uses different terms to refer to imposts, duties, and excises. Accordingly, the the concept of taxation: taxes, U.S. Const. art. I, § 8, cl. 1. 3 Supreme Court has characterized legislative acts as taxes without regard to the labels used by Congress. See, e.g., United States v. Sotelo, 436 U.S. 268, 275 (1978) (deeming an exaction labeled a penalty in the Internal Revenue Code a tax for bankruptcy purposes); License Tax Cases, 72 U.S. taxing (5 Wall.) power a 462, federal 470-71 statute (1866) (sustaining requiring the under purchase the of a license before engaging in certain businesses and stating that the granting of a license . . . must be regarded as nothing more than a mere form of imposing a tax ); see also In re Leckie Smokeless Coal Co., 99 F.3d 573, 583 (4th Cir. 1996) (holding that, for purposes of the AIA, premiums constituted taxes). Further, a tax regardless of its label does not cease to be valid merely definitely Sanchez, deters 340 U.S. because it regulates, the activities 42, 44 (1950). discourages, taxed. As United long as a or even States v. statute is productive of some revenue, Congress may exercise its taxing power without collateral inquiry as to the measure regulatory effect [of the statute in question]. 3 of the Sonzinsky v. Congress also does not have to invoke the source of authority for its enactments. The question of the constitutionality of action taken by Congress does not depend on recitals of the power which it undertakes to exercise. Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144 (1948). 53 United States, 300 U.S. 506, 514 (1937). And if the legislation enacted has some reasonable relation to the exercise of the taxing authority conferred by the Constitution, it cannot be invalidated because of the supposed motives which induced it. United States v. Doremus, 249 U.S. 86, 93 (1919). I recognize that some cases from the 1920s and 1930s suggest that taxes are either regulatory or revenue-raising and that the former are unconstitutional. See, e.g., Bailey v. Drexel Furniture Co., 259 U.S. 20, 37-44 (1922) (holding that a tax on goods penalty). made by child labor was an unconstitutional However, both older and newer opinions indicate that the revenue-versus-regulatory distinction was short-lived and is now defunct. 28 (1953) See, e.g., United States v. Kahriger, 345 U.S. 22, (upholding tax on bookmakers and stating, It is conceded that a federal excise tax does not cease to be valid merely because it discourages or deters the activities taxed. ), overruled in part on other grounds, Marchetti v. United States, 390 U.S. 39 upholding a (1968); tax on Sonzinsky, firearm 300 U.S. dealers at 514 despite (1937 case registration provision and alleged regulatory effects); Doremus, 249 U.S. at 95 (1919 case upholding the Narcotic Drugs Act, which taxed and regulated sales of narcotics); McCray v. United States, 195 U.S. 27, 59 (1904) (upholding tax on colored margarine and stating, Since . . . the taxing power conferred by the Constitution 54 knows no limits except those expressly stated in that instrument, it must follow, if a tax be within the lawful power, the exertion of that power may not be judicially restrained because of the results to arise from its exercise. ). It is not surprising that this distinction did not endure, given that taxes can, and do, both regulate and generate revenue at the same time. Indeed, as the Supreme Court recognized in Sonzinsky, [e]very tax is in some measure regulatory. extent it interposes an economic impediment taxed as compared with others not taxed. to the To some activity But a tax is not any the less a tax because it has a regulatory effect . . . . U.S. at 513. 300 And [i]n like manner every rebate from a tax when conditioned upon conduct is in some measure a temptation. But to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties. Chas. C. Steward Mach. Co. v. Davis, 301 U.S. 548, 589-90 (1937). in Bob Jones University v. Simon, Supreme Court recognized that, 416 while U.S. in some 725 Accordingly, (1974), early cases the it drew what it saw at the time as distinctions between regulatory and revenue-raising such distinctions. taxes, the Court subsequently abandoned Id. at 741 n.12, overruled in part on other grounds by South Carolina v. Ragan, 465 U.S. 367, 379 (1984). Courts, therefore, do intent, or regulatory effect. not look to labels, regulatory Instead, we must consider whether 55 something that operates as a tax is authorized under Congress s taxing power, which has been described as very extensive, License Tax Cases, 72 U.S. at 471, and indeed virtually without limitation. (1983). United States v. 462 Ptasynski, U.S. 74, 79 As Justice Cardozo recognized in Helvering, The discretion [to tax and spend for the general welfare] belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, [or] not an exercise of judgment. This is now familiar law. When such a contention comes here we naturally require a showing that by no reasonable possibility can the challenged legislation fall within the wide range of discretion permitted to the Congress. 301 U.S. at 640-41 (quoting Butler, 297 U.S. at 67). There are essentially three exhibit to be constitutional. features that a tax must First, to pass constitutional muster, a tax must bear some reasonable relation to raising Doremus, 249 U.S. at 93. revenue. is irrelevant: The amount of revenue raised A tax does not cease to be one even though the revenue obtained is obviously negligible, or the revenue purpose of the tax (citations productive may be omitted). of some secondary. Instead, revenue. Sanchez, the 340 measure Sonzinsky, U.S. must 300 at 44 simply be U.S. at 514 (upholding tax that raised $5,400 in revenue in 1934). Second, to be constitutional, a tax must be imposed for the general welfare. is in the Congress enjoys wide discretion regarding what general welfare. The 56 discretion . . . is not confided to the courts. unless the choice is The discretion belongs to Congress, clearly wrong, a power, not an exercise of judgment. 640. Therefore, enactment furthers in determining the general display of arbitrary Helvering, 301 U.S. at whether welfare, a congressional courts substantially to the judgment of Congress. should defer South Dakota v. Dole, 483 U.S. 203, 207 (1987). Finally, raising even revenue if an and exaction furthers the is rationally general related welfare, to to be constitutional, it must not infringe upon another constitutional right. right For example, a tax may not infringe on an individual s to be free criminal conduct. from double jeopardy by further punishing See Dep t of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 780-83 (1994) (concluding that a drug tax was actually a criminal penalty based on its high rate, its deterrent activity purpose, and and holding a that criminal prohibition the consequently tax on the taxed violated the Double Jeopardy Clause of the Fifth Amendment). B. Turning now to the case at hand, the provisions at issue are the mandates. exaction provisions in the individual and employer I would conclude, after examining their practical operation, that these provisions impose taxes. 57 The individual mandate exaction in 26 U.S.C. § 5000A(b) amends the Internal Revenue Code to provide that a non-exempted individual who fails to maintain a minimum level of insurance must pay a penalty. Notably, while the individual mandate in some places uses the term penalty, some form of the word tax appears in the statute over forty times. 26 U.S.C. § 5000A. For example, it references taxpayers and their returns, includes amounts due under the provision in the taxpayer s tax return liability, income calculates for tax the purposes, penalty and by allows reference the to household Secretary of the Treasury to enforce the provision like other taxes (with several procedural exceptions). Id. Yet, as explained above, the label applied to an exaction is irrelevant; instead, in assessing an exaction s constitutionality, we look to its practical operation. The practical operation of the individual mandate provision is as a tax. tax returns § 5000A(e)(2). Individuals who are not required to file income are not The required amount of to any pay the penalty penalty. owed is Id. generally calculated by reference to household income and reported on an individual s federal income tax return. 4 Id. § 5000A(b)-(c). 4 The statute prescribes monthly penalties in an amount calculated by identifying a specified percentage of the excess of the taxpayer s household income for the taxable year over the amount of gross income specified in section 6012(a)(1) unless 58 Taxpayers filing jointly are jointly liable for the penalty. Id. § 5000A(b)(3)(B). empowered to And enforce the the provision several procedural exceptions. 5 mandate exaction, Secretary codified of like a the tax, Id. § 5000A(g). in the Treasury albeit is with The individual Internal Revenue Code, therefore functions as a tax. Looking next at the employer mandate exaction in 26 U.S.C. § 4980H, it amends the Internal Revenue Code to impose an assessable payment on large employers if a health exchange notifies the employer that at least one full-time employee obtains a premium tax credit or cost-sharing reduction. 4980H(a) (b). calculated adequate The differently health amount based insurance of the on whether coverage to assessable the its Id. § payment employer employees. is offers Id. § that calculation produces an amount that is less than certain statutorily defined thresholds. 26 U.S.C. § 5000A(c)(2). Ultimately, the penalty owed by a taxpayer is equal to the lesser of either the sum of the monthly penalties owed by the taxpayer or the cost of the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends. Id. § 5000A(c)(1). 5 The fact that Congress considered it necessary to exempt the individual mandate exaction from some traditional tax collection procedures like criminal liability and liens evidences that the exaction is a tax. 26 U.S.C. § 5000A(g)(2). Otherwise, there would be no need to except the exaction from some of the standard tax collection procedures, which otherwise apply. 59 4980H(a) (c). And instead of the term penalty, the employer mandate uses the terms assessable payment and tax. 4980H(b). Id. § Like the individual mandate exaction, the practical operation of this provision is as a tax that is assessed and collected in the same manner penalties treated as taxes. 6 as other Internal Revenue Code Id. § 4980H(d). Having concluded that the individual and employer mandates operate as taxes, 7 to determine whether they are constitutional, I must consider whether they: 1) are reasonably related to raising revenue; 2) serve the general welfare; and 3) do not infringe upon any other right. The individual and employer exactions are surely related to raising revenue. The Congressional Budget Office estimated that the individual mandate exaction will generate approximately $4 billion annually, and the employer mandate exaction, $11 billion annually, by 2019. Letter from Douglas W. Elmendorf, Dir., Cong. Budget Office, to Hon. Nancy Pelosi, Speaker, U.S. House of Representatives, tbl. 4 (Mar. 20, 2010), available at http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf; 6 No exceptions to the standard collection procedures exist in the case of the employer mandate. 26 U.S.C. § 4980H(d). 7 Since the Supreme Court long ago established that Congress did not have to invoke the word tax to act within its taxing power, Congress s use of other verbiage in portions of the individual and employer mandates, and most notably in the penalty provision of the individual mandate, sheds little light on Congressional intent. See Nelson, 312 U.S. at 363. 60 see also Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1563(a), 124 Stat. 119, 270 (stating that Affordable Care Act will reduce the Federal deficit ). the Not only will the exactions raise significant amounts of revenue, but the revenue raised can cover the [h]igher government costs attributable to the uninsured . . . implicitly paid for by the insured . . . through increased taxes or reductions in other government services as money is spent on the uninsured. Amici Curiae of Economic Scholars in Support of Brief Defendants- Appellees at 13, Liberty Univ. v. Geithner, No. 10-2347. In other words, as Judge Davis notes in his opinion, [b]ecause the uninsured effectively force the rest of the nation to insure them with respect to basic, stabilizing care, this penalty is something like a premium paid into the federal government, which bears a large share of the shifted costs as the largest insurer in the nation. Post at 125. Clearly, then, the exactions bear some reasonable relation to raising revenue. U.S. at 93. Doremus, 249 See also Sonzinsky, 300 U.S. at 514 (upholding tax that raised $5,400 in revenue). Further, the individual serve the general welfare. and employer mandate exactions The Affordable Care Act is aimed at, among other things, reducing the number of the uninsured as well as the cost of those who remain uninsured imposed on those who are insured. Congress found 61 that, nationwide, hospitals provided $43 billion in uncompensated care to the uninsured in 2009 and that these costs were shifted onto insured individuals, increas[ing] family premiums by on average over $1,000 a year. 42 U.S.C. § significantly 18091(a)(2)(F). reducing [individual mandate], th[e] will Act, encouraging the It number together lower health individuals to also with found of the the other insurance purchase that [b]y uninsured, provisions premiums. health the of Id. By insurance and employers to provide it, the individual and employer mandates alleviate the costs associated with providing uncompensated care to the uninsured and lower health insurance premiums. Such cost reductions and expansions in access to health insurance surely constitute contributions to the general welfare. Finally, neither the exaction in the individual mandate nor that in the employer mandate infringes on other rights. The exactions do not, for example, operate to impose duplicative criminal penalties double jeopardy. in violation of the prohibition against See Kurth Ranch, 511 U.S. at 780-83 ( Taxes imposed upon illegal activities are fundamentally different from taxes with a despite their pure revenue-raising adverse effect on the purpose taxed that are imposed activity. ). The provisions lack the punitive character of other measures the Supreme Court has held to be penalties. Bailey, 259 U.S. at 36. Id.; see also, e.g., And the provisions do not appear to 62 violate any other rights: No one has a right to be free from taxation. 8 C. It bears mention that the individual and employer mandate exactions do not run afoul of the constitutional requirement that [n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken. clause has its slavery debates. U.S. Const. art. I, § 9, cl. 4. origins in the Constitutional This Convention s The Northern states consented to count a slave as three-fifths of a person for allocating representatives in Congress in exchange for a corresponding increase in the tax liability of Southern states. the Affordable Compromise, 120 Care Yale Act, L.J. Brian Galle, The Taxing Power, and the Online Limits 407, 414 of Constitutional (Apr. http://yalelawjournal.org/2011/4/5/galle.html. time, the definition of direct tax was unclear. Even 5, at 2011), that Id.; Springer v. United States, 102 U.S. 586, 596 (1880) ( It does not appear 8 Additionally, any contention that the individual mandate violates either the First, Fifth, or Tenth Amendment is, in my opinion, meritless. See post at 134-40; Florida ex rel. Atty. Gen. v. U.S. Dep t of Health & Human Servs., --- F.3d ---, 2011 WL 3519178, at *113-17 (11th Cir. Aug. 12, 2011) (Marcus, J., dissenting). 63 that an attempt was made by any one to define the exact meaning of the language employed. ). It is therefore understandable that the Supreme Court has demonstrated reluctance to strike direct/indirect distinction. a tax based solely on the See Knowlton v. Moore, 178 U.S. 41, 83 (1900) ( [I]t is no part of the duty of this court to lessen, impede, or obstruct the exercise of the taxing power by merely abstruse and subtle distinctions as to the particular nature of a specified tax, where such distinction rests more upon the differing theories of political economists than upon the practical nature of the tax itself. (quoting Nicol v. Ames, 173 U.S. 509, 515 (1899)). Indeed, the Supreme Court restricted the meaning of direct taxes to capitation, or head taxes, and taxes on the ownership of real property. Springer, 102 U.S. at 602; Veazie Bank v. Fenno, 75 U.S. (8 Wall.) 533, 544 (1869). Taxes on personal property have also been held to be direct. Pollock v. Farmers Loan & Trust Co., 158 U.S. 601, 637 (1895), superseded on other grounds by constitutional amendment, U.S. Const. amend. XVI, as recognized in Brushaber, 240 U.S. 1. The Supreme Court has never struck down a federal tax as an unapportioned capitation tax. And the Supreme Court has repeatedly upheld a variety of federal taxes as indirect and therefore outside the apportionment requirement. See Knowlton, 178 U.S. at 83 (upholding a federal estate tax); Bromley v. 64 McCaughn, 280 U.S. 124, 138 (1929) (upholding a federal gift tax); United States v. Mfrs. Nat l Bank of Detroit, 363 U.S. 194, 199 (1960) (upholding a federal estate tax collected on an insurance policy). As the Supreme Court has explained, [a] tax laid upon the happening of an event, as distinguished from its tangible fruits, is an indirect tax which Congress . . . Tyler v. United States, 281 U.S. 497, undoubtedly may impose. 502 (1930). The individual capitation taxes; apportioned. and nor Far employer are from they being mandate direct exactions taxes imposed are not must be regard to that without circumstance, they will be imposed only upon taxpayers who can afford, but fail to maintain, health insurance, or upon employers who fail to provide adequate and affordable insurance. See 26 U.S.C. happening of an §§ 4980H, event, 5000A. the As individual exactions are clearly indirect. taxes and laid upon employer the mandate See Tyler, 281 U.S. at 502. Nor are they property taxes, since they will not be assessed based on the ownership of property. Indeed, the Supreme Court has so limited the application of the Direct Tax Clause that the Sixth Circuit concluded that it relates solely to taxation generally for the purpose of revenue only, and not impositions made incidentally under the commerce clause exerted either directly or by delegation, as a means of 65 constraining Congress as and regulating pernicious or what harmful may to be considered commerce. United States, 138 F.2d 992, 995 (6th Cir. 1943). by Rodgers the v. Since the individual and employer mandate exactions are neither capitation nor property taxes, the Direct Tax Clause is inapplicable, and the individual and employer mandate taxes stand. III. In sum, I concur in Judge Motz s fine opinion holding that the AIA applies here. dissents from our Our distinguished colleague vigorously holding and presents a credible basis for upholding the constitutionality of the Affordable Care Act under the Commerce Clause. However, were I to rule on the merits, for the in reasons given this opinion, I would uphold the constitutionality of the Affordable Care Act on the basis that Congress had the authority to enact the individual and employer mandates, which operate as taxes, under its taxing power. Accordingly, I must agree with Judge Motz that the AIA bars this suit. 66 DAVIS, Circuit Judge, dissenting: Today we are asked to rule on the constitutionality of core provisions of the Patient Protection and Affordable Care Act. Appellants advance several arguments against the Act, chief among them their claim that Congress exceeded its power when it sought to require all individuals (with narrow exceptions) to obtain a certain minimum of health insurance coverage starting in 2014. 26 U.S.C. § 5000A. In particular, appellants urge that the Commerce Clause, which authorizes Congress To regulate Commerce . . . among the several States, U.S. Const. art. I, § 8, cl. 3, allows only regulation of economic activity. Thus, they contend, Congress cannot regulate appellants decision not to purchase health insurance and to otherwise privately manage [their] own healthcare, which they characterize as inactivity in commerce, Appellants Br. 1. They also contend that upholding the Act under the Commerce Clause would create an unconstitutional national police power that would threaten all aspects of American life, id. at 11, suggesting in particular that Congress could require that people buy and consume broccoli at regular intervals or that everyone above a certain income threshold buy a General Motors automobile, Appellants Reply Br. 9 (quoting Florida ex rel. Bondi v. Dep t of Health and Human Servs., --- F. Supp. 2d ----, ----, 2011 WL 285683, at *24 (N.D. Fla. Jan. 31, 2011), aff d in part and rev d in part 67 sub nom. Florida v. U.S. Dept. of Health & Human Servs., --F.3d ----, Appellants 2011 employer WL bring a 3519178 (11th similar mandate, and Cir. facial they Aug. 12, challenge to assert Free also 2011)). the Act s Exercise, Establishment Clause, and Equal Protection claims against the Act. My good Injunction colleagues Act strips in us the of majority hold jurisdiction that the Anti- in this case. For reasons I explain at length below, I disagree. As I reject the reasoning and analysis, I am the result entitled of to the reach majority s the merits jurisdictional of appellants claims. Reaching the merits, I would hold that the challenged provisions of the Act are a proper exercise of Congress s authority under the Commerce Clause to regulate the interstate markets for health services and health insurance. I do not believe that constitutional review of the Act requires courts to decide whether the Commerce Clause discriminates between activity and inactivity. But even if I were to assume appellants were inactive, I could not accept appellants contention that a distinction between activity and inactivity is vital to Commerce Clause analysis. I would therefore affirm the district court s dismissal of appellants suit. Appellants raise two major concerns about upholding the Act: first, they believe that individual liberty is infringed 68 when the federal government is permitted to regulate involuntary market participants; second, they fear that our liberty will be further eroded in the future, as a ruling sustaining the Act would permit Congress to establish arbitrary purchase mandates. Because I take these concerns very seriously, I explain at some length why the Act is a far more limited exercise of federal power than appellants fear. I. Anti-Injunction Act A. My View The majority concludes that the Anti-Injunction Act (AIA) applies to the challenged provisions of the Affordable Care Act, depriving us of subject-matter jurisdiction. Although the parties argue that we have jurisdiction, federal courts have an independent obligation to . . . raise and decide jurisdictional questions that the parties either overlook or elect not to press. Henderson ex rel. Henderson v. Shinseki, --- U.S. ---, --, 131 S. Ct. 1197, 1202 (2011). Before today, nine federal judges had expressly considered the application of the Anti-Injunction Act, and all nine held it inapplicable to the Affordable Care Act s mandates. See Thomas More Law Center v. Obama, --- F.3d ----, ----, 2011 WL 2556039, at *6-*8 (6th Cir. June 29, 2011); Goudy-Bachman v. United States Dept. of Health & Human Servs., 764 F. Supp. 2d 684, 69597 (M.D. Pa. 2011); Liberty University, Inc. v. Geithner, 753 F. 69 Supp. 2d 611, 627-29 (W.D. Va. 2010); United States Citizens Ass n v. Sebelius, 754 F. Supp. 2d 903, 909 (N.D. Ohio 2010); Florida ex rel. McCollum v. United States Dept. of Health & Human Servs., 716 F. Supp. 2d 1120, 1130-44 (N.D. Fla. 2010); Thomas More Law Center v. Obama, 720 F. Supp. 2d 882, 890-91 (E.D. Mich. 2010); Virginia ex rel. Cuccinelli v. Sebellius, 702 F. Supp. 2d 598, 603-605 (E.D. Va. 2010). Although the two circuit courts that have considered challenges to the mandates have split, all six members of those panels agreed that the courts should reach the merits; only the Sixth Circuit panel thought it necessary to discuss the AIA. Florida v. U.S. Dept. of Health & Human Servs., --- F.3d ----, 2011 WL 3519178 (11th Cir. Aug. 12, 2011) (reaching the merits without raising the applicability of the AIA); Thomas More Law Center, --- F.3d at ---, 2011 WL at *6-*8 (expressly holding the AIA does not apply). For the following reasons, I agree with these judges and would hold that the AIA does not strip us of jurisdiction in this case. The directs Anti-Injunction that no suit Act, for the originally purpose enacted of in restraining 1867, the assessment or collection of any tax shall be maintained in any court by any person, certain enumerated exceptions aside. 26 70 U.S.C. § 7421(a). 1 Thus, we have jurisdiction only if the penalty provisions attached to the challenged mandates do not constitute tax[es] for purposes of the AIA. 2 The Sixth Circuit recently held that the individual mandate s penalty provision was not a tax within the meaning of the AIA. Thomas More Law Center, --- F.3d at ----, 2011 WL at *6-*8. Its reasoning is straightforward: Congress spoke only of tax[es] in the Anti-Injunction Act, while it deemed the amount owed by those in violation of the individual mandate a penalty. See id. at *7; compare 26 U.S.C. § 7421(a) with id. § 5000A(b), (c), (e), (g). And Congress did not simply use the term penalty in passing: Congress refers to the exaction no fewer than seventeen times in the relevant provision, and each time Congress calls it a penalty. 1 Although appellants also requested declaratory relief, the Declaratory Judgment Act enlarged the range of remedies available in the federal courts but did not extend their jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950); In re Leckie Smokeless Coal Co., 99 F.3d 573, 582 (4th Cir. 1996). In any case, the Declaratory Judgment Act expressly excludes claims with respect to Federal taxes. 28 U.S.C. § 2201(a). The Supreme Court has held this exclusion to be at least as broad as the Anti-Injunction Act. Bob Jones Univ. v. Simon, 416 U.S. 725, 732 n.7 (1974). 2 This question of statutory interpretation is wholly distinct from the constitutional question concerning Congress s power under the Taxing and Spending Clause, U.S. Const. art. I, § 8, cl. 1, to enact these mandates. Because I would hold the Act constitutional under the Commerce Clause, I need not and do not reach the latter issue. 71 In fact, Congress considered earlier versions of the individual mandate that clearly characterized the exaction as a tax and referred to it as such more than a dozen times. See H.R. 3962, § 501, 111th Cong. (2009) ( impos[ing] a tax in section entitled Tax on individuals without acceptable health care coverage, and repeatedly referring to this exaction as a tax ); H.R. 3200, § 401, 111th Cong. (2009) (same); S. 1796, § 1301, 111th Cong. (2009) ( impos[ing] a tax in section entitled Excise tax on individuals without essential health benefits coverage, and repeatedly referring to exaction as a tax ). Congress deliberately deleted all of these references to a tax in the final exaction a version of the Act and penalty. As the Supreme instead Court designated noted in the INS v. Cardoza-Fonseca, [f]ew principles of statutory construction are more compelling intend sub than silentio the to proposition enact that statutory Congress language does that not it has earlier discarded in favor of other language. 480 U.S. 421, 442-43 (1987). Thus, it seems odd for the majority to ignore Congress s deliberate drafting decision to call the exaction a penalty rather than a tax. When Congress has wished penalties to be treated as taxes, it has said so expressly. In Subchapter A of Chapter 68 of the Internal Revenue Code, Congress directed that any reference in this title [Title 26 of the United States Code (the 72 Internal Revenue Code)] to tax imposed by this title shall be deemed also to refer to the additions to the tax, additional amounts, and penalties provided by this chapter. Id. § 6665(a)(1). Likewise, in Subchapter B of that chapter, Congress instructed that any reference in this title to tax imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter. Id. § 6671(a). Yet, Congress chose to place the individual mandate and its penalty provisions not in Chapter 68 but in Chapter 48, which contains no such instructions. Though Congress did provide that this penalty be assessed and collected in the same manner as an assessable Chapter penalty 68 under penalties subchapter are treated B of as chapter taxes, 68, and the term assessment and collection like a tax does not imply that the penalty should purposes. Id. be § treated as 5000A(g)(1). a tax for any As the Sixth and all Circuit other recently observed, Congress said one thing in sections 665(a)(2) and 6671(a), and something else in section 5000A, and we should respect the difference. Thomas More, 2011 WL at *7. Where, as here, resolution of federal law turns on a statute and the intention of Congress, we look first to the statutory language and then to the legislative history if the statutory language is unclear. Blum v. Stenson, 465 U.S. 886, 896 (1984). Courts look to legislative 73 history first to see whether it indicates that Congress intended a particular result and then, if not, to find evidence of the purposes of the statute. Cf. Dolan v. United States Postal Service, 546 U.S. 481, 486 (2006) ( Interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute . . . . ). Even if the statutory text were unclear here, legislative history indicates that the AIA should not apply. Legislative history of the Affordable Care Act reveals that Congress never considered application of the Anti-Injunction Act. Nowhere in the Act s voluminous legislative history can I find a single reference to the AIA. And when members of Congress discussed the inevitable judicial review of the Affordable Care Act, no one appears to have contemplated that the AIA might bar such review for the five years, post-enactment, that would have to elapse before a tax refund suit could be brought. Looking, then, to legislative purpose, it appears that immediate judicial review of the individual mandate would do little to frustrate the aims of the AIA. The Anti-Injunction Act was intended to protect[] the expeditious collection of revenue. South Carolina v. Regan, 465 U.S. 367, 376 (1984). Revenue from the individual mandate s penalty provision will not be assessed and collected until the year after the mandate becomes operative 2015. Judicial review of the mandate in 2011 74 most assuredly will not frustrate the expeditious collection of revenue four years later. I also note that Congress forbid the Internal Revenue Service from employing its primary enforcement mechanisms to collect this penalty: the IRS may not seek the institution of criminal prosecutions by the Justice Department or impose a lien or levy on an individual s property for failure to pay the penalty. 26 U.S.C. § 5000A(g)(2). This indicates that Congress had scant concern for the expeditious collection of revenue from the penalty provision. A failure to provide immediate judicial review in reliance on a rather strained construction of the AIA, on the other hand, might undermine the core purpose of the Affordable Care Act. In the absence of a conclusive ruling from the federal courts, some individuals may well decide for themselves that the Act is unconstitutional and thus can be ignored. In the case of an ordinary tax this would simply result in some lost revenue and the costs of tax prosecutions; here, it would push the nation farther from Congress s goal of attaining near-universal health insurance coverage. And, as leaving the constitutionality of the Act unsettled would seem likely to create uncertainty in the health insurance and health care industries, which might depress these major sectors of the economy, it seems that application of the AIA would be at cross-purposes with the Act s reforms. Thus, I believe that there is ample reason for me to conclude that 75 Congress had no design that the Anti-Injunction Act might apply to the individual mandate s penalty provisions. The question of our jurisdiction over appellants challenge to the analogous presents a penalty closer attached question. to That the employer exaction is mandate termed an assessable payment in the provision that imposes it, but it is then twice referred provisions. Compare to Id. as § a tax 4980H(a) in with later, id. § qualifying 4980H(b)(2), (c)(7). The . . . 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, 341 (1997). Given these mixed references, and mindful of the Supreme Court s warning in United States v. Am. Trucking Ass ns, 310 U.S. 534, 542 (1940), that [t]o take a few words from their context and with them thus isolated to attempt to determine their meaning, certainly would not contribute greatly to the discovery of the purpose of the draftsmen of a statute, I find the text of the employer mandate provision ambiguous on the history and application of the Anti-Injunction Act. Thus, I would again look to legislative Congressional purpose. Cf. SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344, 350-51 (1943) (Jackson, J.) (explaining that our canons of statutory construction long have been subordinated to 76 the doctrine that courts will construe the details of an act in conformity with its dominating general purpose, will read text in the light of context and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy ). For the reasons stated above, I would hold that Congress did not intend the Anti-Injunction Act to block timely judicial review of the employer mandate provisions. Accordingly, I would hold that we have jurisdiction to consider all of appellants claims. B. The Majority s View The majority s contrary conclusion relies on two arguments, neither of which I find convincing. First, the majority contends that the Supreme Court has repeatedly instructed that congressional labels have little bearing on whether an exaction qualified as a tax for statutory purposes and that the Court has specifically found an exaction s label immaterial to the applicability of the AIA, displacing the ordinary methods of statutory interpretation with a functional analysis of the challenged exactions. Ante pp. 22-24. Thus, in the majority s view, it is simply irrelevant what the 2010 Congress would have thought about the AIA; all that matters is whether the 2010 Congress imposed a tax. Ante p. 38. Second, the majority asserts that [t]he Supreme Court has concluded that the AIA uses the term tax in its broadest possible sense and thus 77 that this functional analysis sweeps quite broadly: the majority holds that the AIA prohibits a pre-enforcement challenge to any exaction that is made under color of their offices by revenue officers charged with the general authority to assess and collect the revenue. Ante p. 18 (internal quotation marks and braces omitted). 1. The majority s functional approach hinges on its interpretation of two Supreme Court cases from 1922: Bailey v. George, 259 U.S. 16 (1922), and Lipke v. Lederer, 259 U.S. 557 (1922). I read these cases differently from the manner in which the majority reads them. Because the majority s view of George and Lipke brings these cases into conflict, I believe my approach, which harmonizes them, is preferable. The majority specifically found asserts an that in exaction s Lipke the Court label immaterial . . to . the applicability of the AIA. Ante p. 24. The Lipke Court held that [t]he mere use of the word tax in an act primarily designed to define and suppress crime is not enough to show that within the true intendment of the term a tax was laid. 259 U.S. at 561 (emphases added). That is, [t]he mere use of the word tax in a criminal statute particularly where, as in the statute at issue in Lipke, the word tax is immediately followed by the word penalty is not dispositive of Congress s true inten[t] 78 regarding application of the AIA. Id. This is an ordinary exercise in statutory interpretation, not an instruction from the Court to disregard Congressional designations as immaterial to the applicability of the AIA. Ante p. 24. The Court did go on to examine the function of the exaction, noting that [w]hen by its very nature the imposition is a penalty, it must be so regarded, but it did not do so in the course of an ordinary application of the AIA. Lipke, 259 U.S. at 561. Rather, it is clear that the Court considered the function of the exaction because that function (as a criminal penalty) was relevant to the Court s due process concerns. It was to resolve this constitutional problem, not simply to construe the word taxes in the AIA, that the Court looked to the exaction s function. Thus, the Court reasoned, Before collection of taxes levied by statutes enacted in plain pursuance of the taxing power can be enforced, the taxpayer must be given fair opportunity for hearing; this is essential to due process of law. And certainly we cannot conclude, in the absence of language admitting of no other construction, that Congress intended that penalties for crime should be enforced through the secret findings and summary action of executive officers. The guaranties of due process of law and trial by jury are not to be forgotten or disregarded. Id. at 562 (emphasis added). This passage strongly indicates that the Court was applying the canon of constitutional avoidance, construing the exaction at issue together with the 79 AIA so as not to run afoul of due process. Cf. South Carolina v. Regan, 465 U.S. 367, 398-400 (1984) (O Connor, J., concurring in the judgment) (relying on doctrine of constitutional avoidance to interpret the AIA not to apply to original jurisdiction of the Supreme Court). The functional analysis was required by the Court s when constitutional the penalty is concerns, as due process criminal, whatever its is triggered designation by Congress. As the AIA was simply being interpreted to accord with the constitutional mandate of due process which binds Congress and thus of course requires that we look beyond Congressional labels to the nature and function of the exaction Lipke did not establish a new methodology for construing taxes under the AIA. Instead, it recognized that the term taxes in the AIA is flexible, like nearly all statutory language, and may admit to alternative constructions. And it affirmed that a court s goal when applying the AIA, like any other statute, is to do so in accord with the true intendment of Congress. Id. at 561. This reading of Lipke harmonizes it with the two Bailey cases. As the majority explains, the Supreme Court considered a tax refund suit in Bailey v. Drexel Furniture Co. and held the Child Labor Tax Law unconstitutional as a penalty rather than a tax. 259 U.S. 20, 38-39 (1922). The same day, in Bailey v. George, the Court dismissed, pursuant to the AIA (§ 3224, precursor to the modern AIA), a pre-collection suit alleging the 80 Child Labor Tax Law was unconstitutional. 259 U.S. 16 (1922). The George Court s reasoning is extremely brief (in a one-page opinion): The averment that a taxing statute is unconstitutional does not take this case out of [the AIA]. Id. at 20. The question, of course, is why the statute, though an unconstitutional exercise of the taxing power per Drexel Furniture, is still a taxing statute for purposes of the AIA. My answer is the more straightforward one: it constitutes a taxing statute for purposes of the AIA because it purported to be a taxing statute and appeared to be one on its face that is, because it was designated as a taxing statute by Congress. See Drexel Furniture, 259 U.S. at 34 (noting exaction was called Tax on Employment of Child Labor, part of An act to provide revenue . . . ). Thus, the Court provided no explanation because it relied on the most obvious reason for deeming the statute at issue a taxing statute. The majority disagrees, arguing that the Court never mentioned the statutory label in George and that it [does not] seem plausible that the Court implicitly relied on that label, given that it had never before and has never since found an exaction s label controlling for statutory purposes. Ante pp. 25-26. Under the majority s approach, the George Court must have conducted a functional analysis of the exaction and determined that it qualified as a tax. 81 Yet this supposed functional analysis appears nowhere in the opinion. It is difficult to believe that the Court would not bother to specify any criteria for determining when an exaction is functionally a tax, given that the Court had just held the statute not to qualify as a tax for constitutional purposes in Drexel Furniture. If the George Court were relying on anything beyond the face of the statute, surely the Court would have provided some explanation of why the enactment qualified as a tax under the AIA but not under the Taxing and Spending Clause. More brings it troubling into still, conflict the with majority s Lipke. reading Under the of George majority s approach, the Court in George must have simply recognized that the AIA . . . [reaches] any exaction that is made under color of their offices by revenue officers charged with the general authority to assess and collect the revenue. Ante 18 (internal quotation marks and braces omitted). But these criteria fail to distinguish the penalty in Lipke, which was held to be outside the AIA. The criteria: the penalty National in Lipke Prohibition also Act met simply the majority s doubled taxes already assessed and collected by the Commissioner, 41 Stat. 305, 317-18 (1919), which were laid down in the Revenue Act of 1918 on all distilled spirits, and were to be paid by the distiller or importer when withdrawn, and collected under the provisions of existing law, 40 Stat. 1057, 1105, Title VI Tax 82 on Beverages, § 600(a). That the Court found the exaction tantamount to a criminal penalty does not change this. 3 Thus, by the majority s understanding of the AIA, there should have been no room for constitutional avoidance, and the Court in Lipke should have held the AIA applicable and refused jurisdiction. 4 The majority seems to recognize that Lipke may appear problematic, but it contends that it is not. It argues that Lipke held only that when Congress converts the tax assessment process into a vehicle for criminal prosecution, the Due Process Clause prohibits courts from applying the AIA. Ante p. 28. That 3 The majority attempts to sidestep this conflict, nicely arguing that the Act did not authorize the collector to make an assessment under his general revenue authority because it converted him into a federal prosecutor. Ante p. 27. But the constitutional failings of the Act does not change the fact that the Commissioner would be collecting the challenged tax under his general revenue authority. The Act did not provide any separate mechanism for the assessment and collection of this tax, or even expressly assign those duties to the Commissioner; it simply stated that a tax shall be assessed . . . and collected . . . in double the amount now provided by law from those illegally manufacturing or selling alcohol. Thus, the Commissioner could only perform such assessments and collections under the general revenue authority granted by the Internal Revenue Code. 41 Stat. at 318. That such assessments violated due process does not change the fact that the revenue officers doing the assessment would be acting under color of their offices. Ante p. 18 (internal quotation marks omitted). 4 This was the view of the dissenting opinion in Lipke, which relied on George. See Lipke, 259 U.S. at 563 (Brandeis, J., dissenting) ( The relief should therefore be denied, whatever the construction of section 35, tit. 2, of the Volstead Act, and even if it be deemed unconstitutional. Compare Bailey v. George, 259 U. S. 16, 42 Sup. Ct. 419, 66 L. Ed. 816, decided May 15, 1922. ). 83 was the core holding of Lipke, yes, but the question is whether the Court s construction of the AIA in reaching that holding accords with the majority s rigid interpretative regime constructed ninety years later. 5 Under the majority s proposed construction, the term tax in the AIA reaches all exactions which the Commissioner is empowered to collect. Ante pp. 19-20. Yet, the Lipke Court held that the AIA did not reach such an exaction. Though the majority would prefer that Lipke create[d] only a narrow constitutional limitation to the AIA, ante p. 28, the Court s exception holding to the constru[ed] the is AIA. simply not Rather, term tax the in framed Court the as creating explained AIA (in an that accord it with Congress[ s] inten[t] ) and held that it was not so broad. 229 U.S. at 561-62. The majority s view of the AIA, and its corresponding interpretation of these cases, inescapably places George and Lipke in conflict. My reading of these cases, which is fully consistent with my approach to the AIA, harmonizes them. Under my view of Lipke, the AIA s taxes is recognized to be, like any statutory language, a flexible term that must be interpreted in accord with Congressional intent and, 5 when applicable, bounding Indeed, the rigidity of the majority s approach prompts a reminder that we confront here the court s statutory jurisdiction, not its Article III jurisdiction. Congress grants, and Congress restricts, as it chooses, the statutory jurisdiction of the lower federal courts. 84 constitutional mandates. In many cases, Congress s decision to designate something a tax will prove dispositive indeed, the designation did so in Bailey v. George. Lipke simply reflects the recognition that Congress s use of the word tax in an otherwise non-tax provision (followed closely by the word penalty ) does not invariably mandate that the AIA be applied constitutional concerns can override congressional designations. This is fully in accord with my view of the AIA and its relation to subsequent enactments, particularly an expansive programmatic enactment such as the ACA that would alter the fabric of many layers of American life. 6 The majority cites several other cases for the proposition that we are to ignore Congressional designations when applying the AIA, instead asking only whether an exaction is intrinsically a tax according to its nature and character. Ante p. 23 (quoting Helwig v. United States, 188 U.S. 605, 613 (1903)). I will briefly discuss two of them. Helwig v. interaction of United a States, statute that 6 for instance, imposed a concerned further sum the when In this regard, Justice O Connor nicely captured the essential purpose of the AIA when she declared: The AIA depriv[es] courts of jurisdiction to resolve abstract tax controversies . . . . South Carolina v. Regan, 465 U.S. 367, 386 (1984) (O Connor, J., concurring in the judgment); and see id. at 392 ( the Act generally precludes judicial resolution of all abstract tax controversies . . . ). The essential issues presented in this case are about as far from abstract tax controversies as one can get. 85 importers declared a value more than 10% lower than customs subsequent appraisal and a statute that gave federal district courts exclusive jurisdiction over penalties and forfeitures. The passage the majority excerpted from is quite instructive: Although the statute . . . terms the money demanded as a further sum, and does not describe it as a penalty, still the use of those words does not change the nature and character of the enactment. Congress may enact that such a provision shall not be considered as a penalty or in the nature of one, with reference to the further action of the officers of the government, or with reference to the distribution of the moneys thus paid, or with reference to its effect upon the individual, and it is the duty of the court to be governed by such statutory direction, but the intrinsic nature of the provision remains, and, in the absence of any declaration by Congress affecting the manner in which the provision shall be treated, courts must decide the matter in accordance with their views of the nature of the act. 188 U.S. 605, 612-13 (emphases added). Thus, the Court emphasized that it looked to the nature and character of the enactment only in the absence of any declaration by Congress giving direction majority s claim instructed that to whether an purposes, direct the exaction a the that court. congressional exaction Helwig court supporting Court has labels qualifies indicates may further from Supreme [t]he Far of sum as that course did a little tax be the Court on statutory labels dispositive. help repeatedly bearing for Congressional not 86 have the that Terming an determine whether expressly deleting or not that considering the dozens sum was calling of a an penalty ; exaction references to a a but Congress s tax tax and and then instead designating it a penalty (as Congress did in the course of its enactment of the ACA) does help courts determine whether Congress wished us to view the exaction as a tax for purposes of the AIA. 7 Though Congress did not expressly reference the AIA here and, judging from the legislative history, may well not have considered application of the AIA specifically it did consider whether to attach all the trappings of a tax to the exaction (including, among many others provisions, the AIA), and decided instead to specify the ones it wanted. The AIA is not among them. 7 The majority focuses on Helwig s use of the phrase with reference to, suggesting that Helwig would have us consider Congressional direction here only if it is expressly labeled as being made with reference to the AIA. Ante 23 n.5. But that very sentence in Helwig goes on to describe such direction as any declaration by Congress affecting the manner in which the provision shall be treated. 188 U.S. at 613 (emphasis added). The following citations to statute after statute which the majority references are part of the Court s analysis, the Court tells us, because it must determine whether the words [employed by Congress] are not regarded by Congress as imposing a penalty and [thus] should not be so treated by the court, for [i]f it clearly appear that it is the will of Congress that the provision shall not be regarded as in the nature of a penalty, the court must be governed by that will. Id. I do not mean to suggest that Helwig teaches that an exaction s label controls, ante p. 23 n.5, only that any Congressional direction that indicates the will of Congress on the application of the AIA should be considered. 87 The majority s second citation for that proposition, United States v. Reorganized CF & I Fabricators of Utah, Inc., 518 U.S. 213, (1996), is much like Helwig. There the Court determined whether a constituted tax an imposed excise on tax for certain Chapter funding 11 deficiencies purposes (as an excise tax was accorded higher priority than ordinary claims). It prefaced its discussion by recognizing that Congress could have included a provision in the Bankruptcy Code calling [the relevant] exaction an excise tax . . . ; the only question is whether the exaction ought to be treated as a tax (and, if so, an excise) without some such dispositive direction. Id. at 219. Its ultimate conclusion considered legislative history of the exaction at issue and conclude[d] that the 1978 Act reveals no congressional intent to reject generally the interpretive principle that characterizations in the Internal Revenue Code are not dispositive in the bankruptcy context . . . . Id. at 224. Here, where Congress provided one of the most direct signals it can of its intentions it expressly considered calling the exaction a tax and ultimately decided not to do so Helwig and Reorganized CF & I would direct us to follow Congress s direction and treat an exaction denominated a penalty as a penalty and not as a tax for purposes of the AIA. 2. 88 Second, the majority s approach relies upon its assertion that [t]he Supreme Court has concluded that the AIA uses the term tax in its broadest possible sense and thus that the AIA prohibits a pre-enforcement challenge to any exaction that is made under color of their offices by revenue officers charged with the general authority to assess and collect the revenue. Ante p. 18 (internal quotation marks and braces omitted). This definition is far from self-evident. As the majority concedes, taxes and penalties are distinguished in some federal statutory contexts. Ante p. 22 n.4. In the very case discussed above, Reorganized CF & I Fabricators, which dates from 1996, the Court adopted these definitions for its functional inquiry of the exaction at issue: A tax is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act. 518 U.S. at 224. The majority reasons that [n]either the Secretary nor the Sixth Circuit cites a single case suggesting that [this distinction applies to the AIA]. Ante p. 22 n.4. Of course, Lipke, on which the majority relies, is one major AIA case that distinguishes between taxes and penalties. And, as the Court in Reorganized CF & I Fabricators borrowed its definitions of tax and penalty from a somewhat different context, it appears that these definitions are not particularly context- specific. 518 U.S. at 224. Thus, if a court is to perform a 89 functional examination of its own, why would it not use these well-settled definitions, under which the Affordable Care Act s exaction would clearly be a penalty (for noncompliance with the individual mandate)? By my count, the majority puts forward three affirmative arguments favoring the broadest possible definition for the word taxes in the AIA: (1) Snyder v. Marks, 109 U.S. 189 (1883), established a broad definition of tax under the AIA; (2) the twin Bailey cases show that the AIA is broader than the taxing clause; and (3) the fact that the IRS grants the Secretary the authority to make assessments of all taxes (including interest, additional amounts, additions to the tax, and assessable penalties) imposed by this title implies that the AIA, which generally protects the Government s interest in effecting unfettered tax assessments, must apply to all exactions. 26 U.S.C. § 6201(a) (emphasis added). I find these arguments unpersuasive. First, Snyder does not establish the broad definition the majority cites it for. The Court explains that tax meant that which is in condition to be collected as a tax, and is claimed by the proper public officers to be a tax. 109 U.S. at 192 (emphasis added). Commissioner s Thus, designation Snyder of clearly an makes exaction relevant and, the reasonably viewed, requires that the Commissioner claim[] an exaction to 90 be a tax. Here, of course, the Secretary of the Treasury is a party before us and supports Congress s designation of the mandate as a penalty rather than a tax. 8 Second, the Bailey cases have already been dealt with at length above. I agree that they show that the AIA is broader than the taxing clause when applied to exactions that are designated by Congress as taxes in the limited sense that they include some exactions that purport to be taxes yet are unconstitutional but they do no more than that. As for the majority s final argument, it seems to require a logical leap. I reproduce the relevant paragraph for ease of reference: The Court s broad interpretation of the AIA to bar interference with the assessment of any exaction imposed by the Code entirely accords with, and indeed seems to be mandated by, other provisions of the Internal Revenue Code. The AIA does not use the term tax in a vacuum; rather, it protects from judicial interference the assessment . . . of any tax. I.R.C. § 7421(a) (emphasis added). The Secretary s authority to make such an assessment . . . of any tax derives directly from another provision in the Code, which charges the Secretary with making interest, assessments of all taxes (including additional amounts, additions to the tax, and assessable penalties) imposed by this title. § 6201(a) (emphases added); see also § 6202 ( assessment 8 The majority believes the fundamental problem with this argument is that the Secretary still does claim that the challenged exaction is a tax, albeit one authorized by the Constitution s Taxing Clause. Ante p. 26-27 n.7. As Snyder is discussing the use of the word tax in the precursor to the modern AIA, I read Snyder to refer to the Commissioner s designation with respect to the statute. 91 of any internal revenue tax includes assessment of penalties ). Thus, for purposes of the very assessment authority that the AIA protects, Congress made clear that penalties (as well as interest, additional amounts, [and] additions to the tax ) count as taxes. Congress must have intended the term tax in the AIA to refer to this same broad range of exactions. See Erlenbaugh v. United States, 409 U.S. 239, 243 (1972) ( [A] legislative body generally uses a particular word with a consistent meaning in a given context. ). Ante p. 19-20 (large emphasis mine). I agree, of course, that for purposes of the [Secretary s] assessment authority, Congress made clear that the penalties . . . count as taxes. Indeed, where Congress has wished penalty to be treated as a tax, it has said so. See, e.g., 26 U.S.C. §§ 6665(a)(2), 6671(a) (directing that tax be deemed also to refer to . . . penalties in Chapter 68 of the Internal Congress Revenue has Code). employed It is this not at shorthand all surprising when that defining the Secretary s authorities. The problematic leap is this: simply because the AIA generally protects the Secretary s assessment authority does not mean that the AIA must apply to all exactions. The many exemptions included in the AIA as currently codified show that Congress has often wished to exempt certain exactions from the AIA. As a matter of statutory interpretation, it seems improper for a court to insist that taxes means any exaction (despite the fact that Congress does not say so) and thereby to undercut 92 Congress s deliberate decision to reject designating an exaction as a tax and instead to call it a penalty. Given that we have been cited no cases that would require such a large redrafting of the AIA other penalties to which the AIA have been applied were placed in Chapter 68, which expressly directs that all references to tax in the IRC are to refer also to the Chapter s penalties I believe that this broadest possible interpretation of the AIA is unwarranted and unwise. The majority appears to reject the legal force of sections 6665(a)(2) and 6671(a), arguing that section 7806(b) forbid[s] courts from deriving any inference or implication from the location or grouping of any particular section or provision or portion of this title. Ante p. 31. This puzzles me, as it is absolutely clear that sections 6665(a)(2) and 6671 have the force of law. Section 6665(a)(2) directs that any reference in this title to tax imposed by this title shall be deemed also to refer to . . . penalties provided by this chapter. This instructs courts that Congress wished to make the word penalty inclusive of the word tax in this particular chapter (Chapter 68). Congress remains free to do otherwise in other chapters; indeed, it chose not to do so in Chapter 48, in which the individual mandate is found. Giving force to section 6665(a)(2) in no way contradicts section 7806(b) by drawing a prohibited implication from the location or grouping of Internal Revenue 93 Code (IRC) provisions. Section 7806(b) prohibits inferences drawn from the location or group itself; instructions can still flow from section 6665(a)(2) that are to apply only to a specified chapter. This seems to me to be beyond serious doubt. Likewise, section 7806(b) does not prohibit courts interpreting one provision of the IRC from looking to other provisions of the IRC and noting that, where Congress has desired a particular result, it has stated so. To suggest that a court cannot draw the traditional penalty failure as to do inference inclusive so here from of Congress s tax seems in other wholly decision to chapters unwarranted define and by its section 7806(b). 9 In the final analysis, the majority s approach essentially imposes a clear-statement rule on Congress, making the AIA applicable to all exactions, regardless of statutory language and in disregard of apparent Congressional intent, unless Congress had the foresight to expressly exempt an exaction from the AIA. The majority concedes, as it must, that the 111th Congress could have exempted the individual mandate from the AIA, but it suggests that the only way Congress could avoid the 9 I do not suggest that we [should] infer from § 6665(a)(2) a categorical exclusion from the term tax of all non-Chapter 68 penalties. Ante p. 31 (emphasis added). Rather, the fact that Congress has directed us to treat some penalties as taxes simply makes it less likely that Congress desired this result where it enacted no such direction (and in fact expressly rejected the term tax for the term penalty ). 94 AIA s bar on immediate judicial review of the ACA is by amending the AIA itself to include an express exemption for the ACA or (in what amounts to the same thing) by referencing the AIA by name in the ACA. That is, the majority seems to believe that a clear-statement rule is operative here, and that absent a clear statement regarding the inapplicability of the AIA, it must apply to any and all exactions. Given that the Supreme Court has never recognized such a clear-statement rule, it seems to me that this turns the ordinary principles of statutory interpretation on their head. As Justice Kennedy recently recognized for a plurality of the Court, applications clear-statement of otherwise rules are designed unambiguous statutes to avoid that would intrude on sensitive domains in a way that Congress is unlikely to have intended had it considered the matter. Spector v. Norwegian Cruise Line Ltd., 545 U.S. 119, 139 (2005) (plurality op.). Justice Kennedy even warned in his plurality opinion against convert[ing] the clear statement rule from a principle of interpretive caution into a trap for an unwary Congress. Id. That seems to be precisely what the majority does today. Presumably because the majority believes such a clear- statement rule applies, it asserts that [t]o infer an intent on the part of the 2010 Congress to implicitly exempt this preenforcement challenge from the AIA bar would be tantamount to 95 inferring an implicit repeal of that bar. Ante p. 37. But our case is nothing like implicit repeal cases like TVA v. Hill, 437 U.S. 153 (1978), which the majority cites in that paragraph. In the Hill, Court appropriations being for challenged implicit repeal considered a dam under of after the the Act whether notice Endangered with continued that construction Species respect to federal Act the worked dam. In was an an implicit repeal case, the Court is forced to consider whether Congressional action definitively to the contrary of an earlier enactment works an implied repeal. In our case, on the other hand, we are simply asking whether Congress created with the ACA the sort of exaction to which the earlier act (the AIA) applies. This requires us to construe both the word taxes under the AIA and the word penalty in the ACA, applying our ordinary tools of statutory interpretation. We look first to the text itself, and, after finding that it is at best ambiguous, we look to legislative history and Congressional purpose. Because the application of the AIA to the ACA is in doubt this is precisely the question we are deciding sua sponte our case is nothing like implicit repeal cases. Of course, my approach fully recognizes that the AIA has legal force. But, as the AIA can undoubtedly be sidestepped by any Congress as it creates a new exaction (at the very least, in the majority s view, by a clear statement that the AIA is not to 96 apply), the AIA is non-binding on future Congresses. When courts determine the application of the AIA to the ACA, they are only considering the application of one Congressional enactment to a later one. Because one Congress cannot bind a later one, the 111th Congress was fully within its prerogative to indicate, even if only implicitly, that the AIA should not apply. See United States (plurality concept v. op.) that one Winstar (quoting Corp., 518 Blackstone legislature may U.S. for not 839, the bind the 872 (1996) centuries-old legislative authority of its successors ). The independent legal force of the AIA does not spring from the fact that it can trap future, unwary Congresses, but rather from the fact that we must seek to harmonize its terms with that of future legislation. That is, the AIA is not binding on Congress, it is binding on us, the judiciary. Finally, as for the majority s suggestion that policy arguments favor its position because a contrary holding might have serious long-term consequences for the Secretary s revenue collection, ante p. 41, I would simply note again that the Secretary of the Treasury is a party before us and argues that the AIA does not apply. Indeed, I cannot find a Supreme Court case where the AIA has been applied over the objection of the Secretary. 3. 97 The majority suggests that the issue presented here is one of context, and I agree. The majority accepts the Sixth Circuit s general observation that there are contexts in which the law treats taxes and penalties as mutually exclusive and explains that [t]he question here is whether the AIA is one of these contexts. Ante p. 22 n.4 (internal quotation marks omitted). To my mind, the proper question is not whether taxes and penalties are always mutually exclusive under the AIA, but whether Congress, in creating a later-enacted exaction, intended to create a tax for purposes of the AIA. But the more important question of context is this: whether, in light of the context provided by Congress s deliberate decision to designate the individual mandate s exaction a penalty rather than a tax and the evidence of Congress s desire to erect no jurisdictional bar to immediate judicial review of the ACA, we should nonetheless interpret the ACA as creating a tax within the meaning of the AIA. My effort here, to marshal the historical, jurisprudential, interpretive, and, yes, commonsense factors necessary to answer this question, persuades me that we should not. Given this larger context, I do not believe that one interpretation of near century-old AIA cases cases that fail to devote enough space to the AIA analysis to even spell out their reasoning should carry the day. 98 If the Supreme Court s vacillations concerning the proper interpretation of the AIA teach us anything, they teach us that context matters. 10 * * * * Because I do not believe that Lipke and George instruct courts to eschew interpretation and our I do ordinary not agree methods that the of AIA statutory reaches all exactions though by its terms it is limited to taxes, I cannot join the majority. Where Congress expressly rejected the term tax in favor of penalty, and where it appears that application of the AIA would do little to further the purposes of the AIA, but would do much to frustrate the Affordable Care Act s reforms desired by the Congress that approved the Act, I would hold that the AIA does not strip us of jurisdiction. Thus, I would reach (and I do indeed reach) the merits of appellants challenges. II. The Act 10 Justice Powell follows, in part: summarized the history of the AIA as [T]he Court's unanimous opinion in Williams Packing indicates that the case was meant to be the capstone to judicial construction of the Act. It spells an end to a cyclical pattern of allegiance to the plain meaning of the Act, followed by periods of uncertainty caused by a judicial departure from that meaning, and followed in turn by the Court's rediscovery of the Act's purpose. Bob Jones Univ., 416 U.S. at 742. Rediscoveries of congressional intent abound in the law and should not surprise us. 99 After a months-long national debate, the Patient Protection and Affordable Care Act was signed into law on March 23, 2010. Pub. L. No. 111-148, 124 Stat. 119, amended by The Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010). The Affordable Care Act is comprised of a half-dozen initiatives designed to reduce the costs of health care and the number of Americans who remain uninsured. First, the Act creates health benefit exchanges in each state, which are regulated to increase transparency concerning premium increases and claim denials and which offer market-based incentives tied to increases in efficiency and better health outcomes. 42 U.S.C. § 18031(e), (g). Second, the Act prevents insurers from rejecting applicants with preexisting conditions (the guaranteed issue requirement) and bars insurers from charging higher premiums to those with serious medical conditions or a history of past illness (the community rating requirement). Id. §§ 300gg 300gg-3. Third, the Act makes more Americans eligible for Medicaid, and to many of those who earn too much to receive Medicaid it grants tax credits to subsidize the cost of insurance premiums and pledges federal dollars to reduce out-of-pocket expenses. Id. §§ 1396a(10)(A)(i)(VIII), 18071; 26 U.S.C. § 36B. Fourth, the Act requires that individuals keep up minimum essential [health insurance] coverage. 100 Id. § 5000A. In particular, it directs that [a]n applicable individual shall for each month beginning after 2013 ensure that the individual, and any [applicable] dependent . . ., is covered under minimum essential coverage for such month. Id. Appellants term this the individual mandate, and it is the chief target of their suit. Appellants Br. 3. Congress found that hospitals provided $43 billion in uncompensated care to the uninsured in 2009, and that these costs were shifted onto insured individuals, increas[ing] family premiums by on average over $1,000 a year. 42 U.S.C. § 18091(a)(2)(F). It also found that, [b]y significantly lowering the number of the insured, the [minimum coverage] requirement, together with the other provisions of th[e] Act, will lower health insurance premiums. Id. Congress created two religious exemptions to the individual mandate: a religious conscience exemption and a health-care sharing ministry exemption. 26 U.S.C. § 5000A(d)(2). I discuss the particulars of these exemptions in Part VIII, where I consider appellants First Amendment claims. Fifth, the Act created tax incentives making it more affordable for small businesses to offer health insurance to their employees. Id. § 45R. Finally, the Act required applicable large employers . . . to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an 101 eligible employer-sponsored plan if at least one full-time employee is receiving federal subsidies for health insurance. Id. § 4980H(a). Appellants call this the employer mandate. Appellants Br. 3. Appellants Michele Waddell, Joanne Merrill, and Liberty University assert an array of constitutional challenges to the Act s individual and employer mandates and request declaratory and injunctive relief. They allege that the mandates are outside Congress s Article I powers and that the individual mandate s religious exemptions effect violations of the First Amendment s Free Exercise and Establishment Clauses as well as the equal protection Clause. component Appellants of chief the Fifth contention Amendment s is that Due the Process individual mandate was not validly enacted pursuant to Congress s commerce power because it regulates what they call inactivity. Id. at 1. The district court carefully parsed appellants arguments and dismissed their suit pursuant to Federal Rule of Civil Procedure 12(b)(6), concluding that appellants had failed to state a legally sufficient claim. Liberty University, Inc. v. Geithner, 753 F. Supp. 2d 611 (W.D. Va. 2010). For the following reasons, I would affirm. III. Constitutionality, Inactivity Aside Putting aside appellants inactivity argument, to which I return in Parts IV and V, I first consider whether the Act is 102 otherwise authorized activities that under Congress s substantially affect power to regulate interstate commerce. Gonzalez v. Raich, 545 U.S. 1, 16-17 (2005). In particular, I ask whether the Act runs afoul of the teachings of United States v. Lopez and United States v. Morrison, two cases in which the Supreme Court enforced limits on the Commerce Clause so as not to convert congressional authority under the Commerce Clause to a general police power. Lopez, 514 U.S. 549, 567 (1995); see Morrison, 529 U.S. 598, 617-19 (2000). A. Lopez and Morrison In Lopez and Morrison the Supreme Court struck down two congressional enactments because the objects of regulation the possession of guns in school zones in Lopez, violence against women in commerce Morrison were authority noneconomic. includes the Affirming power to that Congress regulate those activities having substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce, Lopez held that gun possession in schools did not substantially affect interstate commerce. 514 U.S. at 559-60 (internal citations omitted). The Court worried that to identify the effect of guns in schools on interstate commerce it would have to pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the 103 States. Id. at 567. If gun possession in schools were held to be substantially related to interstate commerce simply because such incidents harmed our national productivity, then Congress could regulate any activity that it found was related to the economic productivity of individual citizens and it would be difficult to perceive any limitation on federal power, even in areas such as criminal law enforcement where States historically have been sovereign. or education Id. at 564. Morrison further clarified the holding of Lopez. The Court explained that a fair reading of Lopez shows that the noneconomic, criminal nature of the conduct at issue was central to our decision in that case. 529 U.S. at 610. Without express congressional findings regarding the effects upon interstate commerce of gun possession in a school zone, the Court refused to find a substantial effect upon interstate commerce, as it believed the link between gun possession and . . . interstate commerce was attenuated. Id. at 612. The Court noted that it has upheld Commerce Clause regulation of intrastate activity only where that activity is economic in nature. Id. at 613. Because the Morrison Court found that [g]ender-motivated crimes of violence are not, in any sense of the phrase, economic activity and that their effects on interstate commerce (many of which were expressly enumerated by Congress) are attenuated, it struck down the challenged congressional regulation of these 104 crimes. Id. at 613, 615. As it did in Lopez, the Court emphasized that the regulation . . . of intrastate violence . . . has always been the province of the States and affirmed that [t]he Constitution requires a distinction between what is truly national and what is truly local. Id. 617-18. Without doubt, appellants are correct to insist that Lopez and Morrison remind us that any formulation of the Commerce Clause must admit to limiting principles that distinguish the truly national from the truly local. But the concern directly animating Lopez and Morrison the noneconomic character of the regulated activities is not present in this case, where the failure to obtain health insurance is manifestly an economic fact with direct effects on the interstate markets for both health insurance and health services. Cf. Thomas More, --- F.3d at ----, 2011 WL at *11-12 (Martin, J.); Florida, --- F.3d, at ---, 2011 WL at *94, *106 (Marcus, J., dissenting). Nor can it be said that health insurance or health services have always been the province of the states in the way that education, family law, and criminal law have been. Raich, 529 U.S. at 618. Since the Social Security Act of 1965, Pub. L. No. 89-97, 79 Stat. 286, established Medicare and Medicaid benefits, the federal government has been the single largest provider in the interstate health insurance market and the largest purchaser in the health services market. Federal dollars have accounted 105 for more than one-quarter of all health spending each year since 1974; in 2008, Americans spent $2.3 billion on health services, of which the federal government paid more than $815 million nearly 35%. Ctrs. for Medicare & Medicaid Servs., National Health Expenditure Amounts by Type of Expenditure and Source of Funds: Calendar Years 1965-2019. The year 1974 also saw the passage of the Employee Retirement Income Act (ERISA), which has a broadly worded and clearly expansive preemption provision. 29 U.S.C. § 1144(a); Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 146 (2001). Through ERISA, as well as later enactments like the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, has government No. come to 110 occupy Stat. much 1936, of the the field federal of the regulation of health benefits, and many state and local attempts to regulate health insurance have been held preempted. See, e.g., Retail Industry Leaders Ass n v. Fielder, 475 F.3d 180 (4th Cir. 2007) (holding Maryland s Fair Share Health Care Fund Act, which regulated employer health care spending, preempted by ERISA, as ERISA establishes comprehensive federal regulation of employers provisions of benefits to their employees ); but see Metropolitan (holding preemption Life that as Ins. state a law Co. v. Mass., mandated-benefit that regulates 471 law U.S. 724 (1985) survives ERISA insurance, banking, or securities within the meaning of ERISA s savings clause). Given 106 nearly half a century of extensive federal involvement in the national health insurance and health services sectors, it seems clear that Lopez and Morrison s interest in protecting areas of traditional state sovereignty is not directly implicated. That said, Lopez and Morrison do remind us that the scope of the Commerce Clause is finite and that its jurisprudence must admit to bounding principles. Thus courts must assure themselves that upholding the Act under the Commerce Clause would not effectively create a federal police power. B. Substantial Effects Appellants argue that if we were to hold that failure to obtain insurance substantially affects interstate commerce, we would be marketed forced product to find that the substantially failure affects to purchase interstate any commerce. Thus, they quote Florida ex rel. Bondi, where the district court for the Northern District of Florida found the Act unconstitutional in part because it believed that a Commerce Clause broad enough to authorize the Act must also support purchase mandates for broccoli or GM cars. Appellants Reply Br. 9 (quoting Bondi, --- F. Supp. 2d at ----, ----, 2011 WL 285683, at *24). The Eleventh Circuit, upholding the district court on that point, expressed similar fears cognizable, judicially administrable that there limiting are principles. Florida, --- F. 3d at ----, 2011 WL at *54. This is not so. 107 no I begin by noting that whether failure to purchase insurance substantially affects interstate commerce relies on a great number of factual determinations. These are to be made not by the courts but by Congress, an institution with far greater ability to gather information. As and the critically Supreme Court evaluate noted the in relevant Raich, [i]n assessing the scope of Congress authority under the Commerce Clause, . . . [our] task . . . is a modest one. We need not determine whether respondents activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a rational basis exists for so concluding. 545 U.S. at 22. The Act s effects on interstate commerce depend in large part on an unusual feature of the health care market. By federal law, a hospital participating in Medicare must stabilize any patient who arrives at its emergency room, regardless of the patient s ability to pay for treatment, Emergency Medical Treatment and Active Labor Act, 42 U.S.C. § 1395dd(b)(1), and many states impose similar requirements, see, e.g., H.R. Rep. No. 99-241(III), at 5 (1985), reprinted in 1986 U.S.C.C.A.N. 726, 726-27 statutes or (noting that at issued least regulations 22 states requiring the have enacted provision of limited medical services whenever an emergency situation exists and that many state court rulings impose a common law duty on 108 doctors and hospitals to provide necessary emergency care ). As a result, the uninsured often receive care that they are unable to pay for: in 2008, hospitals provided $43 billion in uncompensated care to the uninsured. 42 U.S.C. § 18091(a)(2)(F). To cope with these costs, hospitals increase the price of health care services, which in turn leads to rising health insurance premiums; Congress found that [t]his cost-shifting increases family premiums by on average over $1,000 a year. Id. Recognizing these direct effects on the health insurance and health services markets does not require us to pile inference upon inference in the way linking noneconomic acts like the possession of guns in schools or gender-motivated violence to interstate commerce might have done in Lopez and Morrison. Lopez, 514 U.S. at 567; see Morrison, 529 U.S. at 615. In Lopez, the Court rejected the Government s argument that gun possession in schools substantially affected interstate commerce due to the general costs of crime or because the presence of guns in schools process, which citizenry. Congress s but-for crime 514 in . . a at in chain to substantial turn, U.S. findings causal . poses will 564. result every the in Likewise, Morrison from threat because initial attenuated to a the they the less productive Court rejected follow[ed] occurrence effect education upon of the violent interstate commerce, chiefly deterring potential victims from interstate 109 travel, employment, general commercial transactions, diminishing national productivity, increasing medical and other costs, and decreasing the supply of and demand for interstate products. 529 U.S. at 615 (quoting H.R. Rep. No. 103-711, at 385 (1990), reprinted in 1994 U.S.C.C.A.N. 1803, 1853). Where the proffered substantial effects in Lopez and Morrison were attenuated, here the effects are direct: considered as a class (per Wickard and Raich s aggregation principle, see Wickard v. Filburn, 317 U.S. 111, 127-28 (1942); Raich, 545 U.S. at 22; post pp. 46-48), those who fail to purchase health insurance will seek and receive medical care they cannot afford; the cost of that care ($43 billion in 2008) is borne by the hospitals, which are forced to increase the price of health care services. And recognizing that the uninsured s passing on $43 billion in health care costs to the insured constitutes a substantial effect on interstate commerce in no way authorizes a purchase mandate for broccoli or any other vegetable. The health care market is unique in that its product (medical care) must be provided even to those who cannot pay, which allows some (the uninsured) to consume care on another s (the insured s) dime. Here the substantial effect on commerce comes not from simply manipulating demand in a market, as it would in the case of a broccoli or GM car mandate, but from correcting a massive market failure caused by tremendous negative externalities. Thus, we 110 need not decide today whether the reasoning of Wickard and Raich, which were both concerned in part about limiting supply in interstate artificially markets inflating for fungible demand via goods, a purchase extends to mandate. See Wickard, 317 U.S. at 128 (recognizing that even wheat grown for home consumption overhangs the market and if induced by rising prices tends to flow into the market and check price increases ); Raich, 545 U.S. at 19 (noting that high demand in the interstate market and consequent higher prices is likely to draw [home consumed] marijuana into that market ). For these reasons, I would hold that the failure to obtain health insurance substantially affects the interstate markets for health insurance and health care services. Accord Thomas More, --- F.3d at ----, 2011 WL at *12 (Martin, J.); id. at *2425 (Sutton, J.); Florida, --- F.3d at ----, 2011 WL at *106 (Marcus, J., dissenting). IV. Universal Participation in the Health Care Market Nor need discriminates I decide between today activity whether and the Commerce inactivity. Clause Appellants concede that virtually all persons will voluntarily enter into the interstate health services market in their lifetimes, and they concede further, as they must, that this constitutes activity in commerce. Yet appellants insist that the Commerce Clause requires Congress to adopt 111 an extremely narrow time- horizon: it may regulate persons seeking health care, but only once they have sought it. Appellants Br. 34. A faithful application of Wickard s and Raich s teachings requires us to reject this contention. Wickard introduced the aggregation principle into Commerce Clause jurisprudence: That appellee s own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial. 317 U.S. at 127-28. Raich reaffirmed analysis looks this to the approach, regulated noting that activities, Commerce taken Clause in the aggregate. 545 U.S. at 22. Further, Raich emphasized that Congress [need not] legislate with scientific exactitude. When Congress decides that the total incidence of a practice poses a threat to a national market, it may regulate the entire class. See United States v. Perez, 402 U.S. at 154-55 ( [W]hen it is necessary in order to prevent an evil to make the law embrace more than the precise thing to be prevented it may do so. ). In this vein, we have reiterated that when a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence. Id. at 17 (some internal quotation marks and citations omitted). Under Wickard and Raich, we are to take the view of the legislators, not those who are regulated. Courts look at the 112 aggregated impact of an activity, not the impact of individuals; the Commerce Clause authorizes the regulation of an entire class, regardless of the de minimis character of individual instances. Id. We are to put aside the mechanical application of legal formulas and look instead to the actual effects of the activity in question upon interstate commerce. Wickard, 317 U.S. at 120, 124. Indeed, it bears repeating, our task in deciding Commerce Clause challenges is a modest one in which we ask only whether a rational basis exists for Congress to find a substantial effect on interstate commerce. Id. at 22. Considering that hospitals are required to provide certain care to the uninsured, that illness and accidents are nothing if not unpredictable, and that the costs of medical care are often catastrophic, I have no hesitation in concluding the Congress rationally determined that addressing the $43 billion annual cost-shifting from the uninsured to the insured could only be done via regulation before the uninsured are in need of emergency medical treatment. Wickard and Raich teach that we are to take imagine the longer that view Commerce of legislators; Clause it analysis is difficult would to aggregate individuals and allow regulation of entire classes but then, when legislators confront a problem requiring a remedy before emergencies permit them (and to their adopt ever-growing the costs) time-horizon 113 occur, necessary refuse to enact to a solution. Accord Florida, --- F.3d at ----, 2011 WL at *93 (Marcus, J., dissenting). Thus, as participation course Congress found the interstate health residents of in rationally lifetimes, the virtually Act care does universal market not over the present an issue of congressional regulation of inactivity. Accord Thomas More, --- F.3d at ----, 2011 WL at *15 (Martin, J.); id. at *2730 (Sutton, J.); Florida, --- F.3d at ----, 2011 WL at *93-*94 (Marcus, J., dissenting). Rather, courts are asked to pass on regulation of voluntary participation in the interstate health care market that, to be effective, must be preemptive. As it is clear that the regulated behavior substantially affects interstate commerce and appellants bring no other challenge to Congress s authority under the Commerce Clause, I would hold the Act to be a proper exercise of congressional power. V. Regulating Inactivity But even if I were to assume that the uninsured are, in appellants phrase, inactive in commerce, I would be bound to uphold Commerce the Act. Clause Despite is not appellants offended several by the arguments, the regulation of inactivity or, in proper circumstances, by a purchase mandate. Appellants urge that the Act is an unprecedented attempt to force private citizens who have decided not to participate in commerce to engage in commerce by mandating that they purchase . 114 . . health insurance . . . . Appellants Br. 3. This argument presents two distinct authority under the citizen s questions: Commerce inactivity in (1) Clause commerce ; [w]hether to Congress regulate and (2) a has private whether such regulation can include forc[ing] [a] citizen to participate in commerce by mandating that she purchase a [commodity] . . . or pay a penalty for noncompliance. Id. at 1. I consider these questions in turn. A. Regulating Inactivity in Commerce Appellants decision not privately characterize to purchase manage her Mss. health own Waddell s insurance healthcare and and as to Merrill s otherwise inactivity in commerce, which they claim is beyond the reach of the Commerce Clause. Id. at 1. As the following brief review of the case law will show, reaches this broader non-market Commerce Clause participants challenge whether (those inactiv[e] it in commerce ) has already been litigated. The Supreme Court s case law firmly establishes that Congress may regulate those who have opted not provisioning, to participate considered in in the a market when aggregate, their self- substantially affect[s] an interstate market. Raich, 545 U.S. at 17. After explaining why appellants broader challenge is foreclosed, I consider the far narrower challenge to the Act that survives. 1. Regulating Non-Market Participants 115 Nearly seventy years ago, in the famous case of Wickard v. Filburn, the Supreme Court upheld Congress s power under the Commerce Clause to regulate Mr. Filburn s private, noncommercial production of wheat. The Court squarely confronted the question: it began its discussion by noting that [t]he question would merit little consideration . . . except for the fact that this Act extends federal regulation to production not intended in any part for commerce but wholly for consumption on the farm. 317 U.S. at 118. Just six years ago, the Court reaffirmed Wickard s vitality in Raich, explaining, Our case law firmly establishes Congress power to regulate purely local activities that are part of an economic class of activities that have a substantial effect on interstate commerce. As we stated in Wickard, even if appellee s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce. Raich, 545 U.S. at 17 (quoting Wickard, 317 U.S. at 125) (emphasis added). The Raich Court made clear that Congress can regulate purely commercial, in intrastate that it activity is not that produced is for not itself sale, if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity. Id. at 18. Applying this principle, the Court upheld the regulation home of individuals consumption that is, who it 116 grew allowed marijuana Congress solely to for regulate individuals who deliberately chose not to participate in commerce. Id. Thus, appellants true quarrel with the Act is more limited than their language sometimes suggests. With subheadings like Wickard does not support the district court s conclusion that private economic decisions can be regulated under the Commerce Clause, appellants briefs muddy their real point. Appellants Br. 20. As just described, it is well settled that Congress may regulate the private, noncommercial economic activities of nonmarket participants when their self-provisioning (growing wheat or marijuana for themselves) substantially affects an interstate market. Commerce Appellants Clause contend law, that Raich, 545 this U.S. firmly at 17, establishe[d] is inapplicable because Wickard and Raich involved voluntary activity, whereas the Act regulates voluntary inactivity. Appellants Br. 19. To the extent that voluntary inactivity again suggests deliberate non-participation in the market, this fails to distinguish Raich; yet appellants also seem to be raising a different point. [I]t was the fact that Mr. Filburn actively grew wheat beyond the quota, even if for personal use, that was significant in Wickard, as it was that activity that constituted economic activity. By contrast, [appellants] have exerted no effort and used no resources. Id. at 21. It is this distinction between activity and inactivity, id. at 117 19 absolute inactivity, not just inactivity (non-participation) in commerce that carries the true thrust of appellants argument. 2. Regulating the Inactive Before I can consider this narrower argument, I must be sure I understand exactly what appellants mean by it. Appellants say that Mr. Filburn actively grew wheat beyond the quota, even if for personal use while Ms. Waddell and Mrs. Merrill have exerted no effort and used no resources. Appellants Br. 21. But appellants Merrill have expressly state voluntarily and that Miss deliberately Waddell decided and Mrs. not to purchase health insurance, but to instead save for and privately manage health care. Id. at 10 (emphasis added). It is not clear why sav[ing] species of for what and privately economists call manag[ing] health self-insurance, 11 care, a requires neither effort nor resources in fact, one would imagine that sav[ing] requires resources 11 (namely, money) and that Cf. 42 U.S.C. § 18091(a)(2)(A) ("In the absence of the [individual mandate], some individuals would make an economic and financial decision to forego health insurance coverage and attempt to self-insure . . . ."). Because individuals who selfinsure are unable to shift risk in the way that market insurance does, self-insurance is far more common among collectives or businesses, where it may be efficient. See generally M. Moshe Porat, Uri Spiegel, Uzi Yaari, Uri Ben Zion, Market Insurance Versus Self Insurance: The Tax-Differential Treatment and Its Social Cost, 58 J. Risk & Ins. 657 (1991); Patrick L. Brockett, Samuel H. Cox, Jr., and Robert C. Witt, Insurance Versus SelfInsurance: A Risk Management Perspective, 53 J. Risk & Ins. 242 (1986); Isaac Ehrlich, Gary S. Becker, Market Insurance, SelfInsurance, and Self-Protection, 80 J. Pol. Econ. 623 (1972). 118 manag[ing] requires some effort. Id. at 10, 21. Though, unlike wheat and marijuana, insurance is intangible, appellants do not suggest that interstate markets in intangible goods or services are less subject to regulation under the Commerce Clause than markets in tangible goods; thus, it is difficult to see why the legal import of the appellants sav[ing] and manag[ing] should differ from that of Mr. Filburn s sowing and harvesting. But even if appellants had said nothing about saving and managing and I accepted that Ms. Waddell and Mrs. Merrill had truly exerted no effort and used no resources with respect to health insurance that is, that they had taken no steps to selfinsure it is difficult to make out the legal relevance of this point. Mr. Filburn and Ms. Raich deliberately chose to meet their own needs rather than enter commerce and purchase goods on the market and thus they, too, exerted no effort and used no resources in connection to the relevant markets; why are they more susceptible to Commerce Clause regulation than appellants simply because they privately exerted effort and expended resources for a noncommercial end? Appellants have provided no express answer, but one is implicit in their arguments: in choosing to act, even privately, with notice of regulation, one can be said to consent or at least submit to that regulation. Under this view, Wickard and 119 Raich are domains distinguishable which commencement because individuals of some they concerned voluntarily activity. Thus, regulated entered upon appellants the complaint that appellants in Raich could avoid Congress reach by not manufacturing or possessing marijuana, but here the Appellants cannot avoid Congress reach anything. Appellants Br. throughout their about brief even 19. if they Appellants allowing are not express Congress to doing concern regulate [people] because they are legal citizens who merely exist, id. at 20; 12 likewise, the Eleventh Circuit majority worries that [i]ndividuals subjected to this economic mandate have not made a voluntary choice to enter the stream of commerce . . . . Florida, --- F.3d at ---, 2011 WL at *48. So I will consider the Commerce Clause ramifications of regulating everyone. 3. Federalism & Regulations Affecting Everyone I am aware of no substantial effect case, in more than a century of Commerce Clause jurisprudence, that looks beyond the class of activities regulated to the class of persons affected. And this is unsurprising, as the dispositive question is whether the object of regulation substantially affects interstate commerce; what the affected persons have done to consent (or not) to the regulation is obviously irrelevant to that inquiry. 12 It is no coincidence that voluntary or voluntarily appears twenty-eight times in appellants briefs. 120 Appellants claim that their liberty concern springs from the principles Clause of law. federalism Though these rather than principles black-letter serve to Commerce protect state sovereignty and the resulting division of power helps to secure our liberty, federalism is not an independent font of individual rights. As Justice Kennedy explained in his concurrence in Lopez, it was the insight of the Framers that freedom was enhanced by the creation of two governments, not one, as power could be split between state and federal governments even before each government s executive, [s]tate powers and were judicial sovereignty is further separated among departments. 514 U.S. not end in just an legislative, at 576. itself: Thus, Rather, federalism secures to citizens the liberties that derive from the diffusion of sovereign power. New York v. United States, 505 U.S. 144, 181 (1992) (quoting Coleman v. Thompson, 501 U.S. 722, 759 (1991) (Blackmun, J., dissenting)). Federalism enhance[s] our liberty by disaggregating power; it helps to secure all our individual rights, but it does not create new ones. The Supreme Court s recent decision in Bond v. United States, which granted an individual criminal defendant standing to challenge a federal statute on the grounds that it usurped powers reserved to the states and which discussed at length the ways in which federalism protects individual liberty, is not to 121 the contrary. 564 U.S. ---, ---, 131 S. Ct. 2355, 2364 (2011). Appellants provide no support for their suggestion that some novel, heretofore unknown, individual right can spring from the principles of federalism. Federalism was properly invoked in Lopez and Morrison, where, to police the division of authority between state and federal governments, the Court struck down federal regulation of noneconomic enforcement activity or within education areas where such States as criminal historically have law been sovereign. Lopez, 514 U.S. at 564; see Morrison, 529 U.S. at 599. Lopez and Morrison s authority within implicates the areas and Appellants individual suggest that thus allowing about traditionally division governments concern of goes power to the liberty the Act the reserved between very touch to state of the and state states federal core of federalism. do not. Appellants all U.S. residents, concerns to loss whether or not they have voluntarily entered a regulated domain, threatens . . . the bedrock concept[] of . . . individual freedom. Appellants Br. 11-12. Federalism does not speak to this issue. Nor rhetoric does any sometimes recognized suggests a individual right. generalized right Appellants to be left alone; but outside of a limited right to privacy concerning the most intimate and personal choices 122 a person may make in a lifetime, choices including those contraception, central to personal dignity to marriage, relating family relationships, child and autonomy, procreation, rearing, and education, Planned Parenthood of Se. Penn. v. Casey, 505 U.S. 833, 851 (1992), no such right exists. And any such right springing from substantive due process would bind the states under the Fourteenth Amendment as well as the federal government under the Fifth, placing universal regulation outside the reach of any government. Moreover, an extensive body of federal laws, many passed pursuant to the Commerce Clause, targets all U.S. residents: federal criminal law. Indeed, Raich itself concerned the Controlled Substances Act and the noncommercial production and consumption of marijuana; nowhere in Raich did the Court intimate concern that the federal government was regulating the drug use of everyone . . . just for being alive and residing in the United States. Bondi, --- F. Supp. 2d. at ---, 2011 WL 285683, at *20. Though penalties do not attach until someone has violated the statute, the same is true of the Act s regulation. Of course, appellants suggest that compelling action is less legitimate under the Commerce Clause than prohibiting action. I take up that question next. VI. Compelling Action 123 Having established that the regulation of inactivity in commerce does whether federal citizen to purchase not offend commerce participate a [commodity] the Commerce regulation in . can commerce . . Clause, I properly by force [a] that she penalty for mandating or pay consider a noncompliance. Appellants Br. 1. As I explained at length above, the Supreme Court has taught that an enactment is authorized by the Commerce Clause where Congress regulation inquiry rationally substantially looks regulation could and only at conclude affects the interstate that interstate relation the object commerce. between commerce; the of This the object of content of the regulation what it compels or prohibits is irrelevant. Indeed, it has long been recognized that [t]he power of Congress over interstate commerce is plenary and complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. Wickard, 317 U.S. at 124 (quoting United States v. Wrightwood Dairy Co., 315 U.S. 110, 119 (1942)); cf. Raich, 545 U.S. at 29 ( [S]tate action cannot circumscribe Congress plenary commerce power. ). The Necessary and Proper Clause makes clear that we are to defer to Congress with respect to the means it employs to effectuate legitimate ends. U.S. Const. art. I, § 8, cl. 18. In combination with the Commerce Clause, it empowers Congress to take all 124 measures necessary or appropriate to the effective regulation of the interstate market. Raich, 545 U.S. at 38 (Scalia, J., concurring) (quoting Shreveport Rate Cases, 234 U.S. 342, 353 (1914)). But even if it were appropriate to review the method of regulation Congress has chosen to employ, I would find that the individual mandate fits well within the range of acceptable commercial regulations. A. The Act Does Not Compel Citizens to Enter Commerce I first note that the Act does not force any citizen to enter commerce. Appellants Br. 1. Instead, residents are given a choice between obtaining health insurance (by market purchase or otherwise) and paying a non-punitive tax penalty that, by law, is capped at the national average premium for qualified health plans which have a bronze level of coverage. 26 U.S.C. § 5000A(c)(1)(B); see id. at § 5000A(b)(1). As the average cost of providing the most basic insurance, this amount should roughly approximate the expected costs to the regulatory scheme (in the form of higher premiums) occasioned by an individual s failure to procure insurance. Because the uninsured effectively force the rest of the nation to insure them with respect to basic, stabilizing care, this penalty is something like a premium paid into the federal government, which bears a large share of the shifted costs as the largest insurer in the nation. 125 B. History of Compelled Purchases Even if the individual mandate were properly characterized as compelling residents to enter the market, this has long been an acceptable form of regulation under the Commerce Clause. For instance, the Federal Motor Carrier Safety Administration, acting pursuant to the Motor Carrier Act of 1980, requires that motor carriers purchase either liability insurance or a surety bond in order to ensure that they are able to pay for damage they may cause. See 49 C.F.R. § 387. And the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) requires that the owner of property contaminated by a hazardous substance provide removal or remedial action likely requiring resort to the market on pain of liability for punitive damages, even responsibility where for the the owner bears contamination no[] and culpability indeed is or entirely passiv[e]. 42 U.S.C. § 9607(c)(3); Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 846-47 (4th Cir. 1992). CERCLA has survived all Commerce Clause challenges, and it was expressly held a proper exercise of Congress s Commerce Clause power by the Second Circuit Court of Appeals. See Freier v. Westinghouse Elec. Corp., 303 F.3d 176, 203 (2d Cir. 2002), cert. denied, 538 U.S. 998 (2003); cf. United States v. Olin Corp., 107 F.3d 1506, 1511 (11th 126 Cir. 1997) (holding CERCLA constitutional Commerce Clause legislation as applied to appellants). Wickard itself suggests that compelled purchases are permissible. The Court explained: It is said, however, that this Act, forcing some farmers into the market to buy what they could provide for themselves, is an unfair promotion of the markets and prices of specializing wheat growers. It is of the essence of regulating that it lays a restraining hand on the selfinterest of the regulated and that advantages from the regulation commonly fall to others. . . . And with the wisdom, workability, or fairness, of the plan of regulation we have nothing to do. 317 U.S. at noncommercial 129 (emphasis wheat added). production When decreased describing demand for how market wheat, the Court explained that it forestall[ed] resort to the market and supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Id. at 127, 128. Though Wickard did not involve an express purchase mandate, the Court understood that Mr. Filburn was effectively being forc[ed] . . . into the market to buy wheat when it rejected his Commerce Clause challenge. Id. at 129. C. Compelled Purchases as Government s Core Function Finally, I pause to consider why purchase mandates whether they be for health insurance or broccoli occasion such fear of federal aggrandizement. Cf. Thomas More, --- F.3d at ----, 2011 WL at *32 (conveying author s lingering 127 intuition shared by most Americans, I suspect that Congress should not be able to compel citizens to buy productions they do not want ) (Sutton, J). Compelled purchases are the most fundamental function of government of any sort, and the fact that the government here allowed its residents additional freedom of choice over these purchases should diminish, not exacerbate, anxieties about federal tyranny. Governments exist, most fundamentally, to solve collective action problems. Core governmental functions, like the provision of domestic peace, enforceable property rights, national defense, and infrastructure, are assigned to government because the market fails to produce optimal levels of such public goods. 13 Since public goods are enjoyed by all, most individuals refuse to purchase them themselves, hoping instead that they can free-ride when someone else does. By forcibly collecting tax revenue and using it to purchase public goods, governments are able to solve this collective action problem. Thus, at root, 13 See generally R.H. Coase, The Lighthouse in Economics, 17 J.L. & Econ. 357, 357-360 (1974); Paul A. Samuelson, The Pure Theory of Public Expenditure, 36 Rev. Econ. & Statistics 387 (1954). Public goods are goods that are "non-rival" and "nonexcludable." "Non-rival" means that enjoyment of the good by one citizen does not reduce the enjoyment by another; "nonexcludable" means that all citizens will enjoy the good once it is produced none can be excluded. See, e.g., John P. Conley & Christopher S. Yoo, Nonrivalry and Price Discrimination in Copyright Economics, 157 U. Pa. L. Rev. 1801, 1805-11 (2009). 128 governments are formed precisely to compel purchases of public goods. Because hospitals are required to stabilize the uninsured, the uninsured are able to pass along much of the cost of their health care to the insured. 14 Solving this problem, as the Act attempts to do, creates a public good: lower prices for health services for all citizens. Thus, the Act compels the purchase of a public good, just as the federal government does when it collects taxes and uses it to fund national defense. Indeed, it is undisputed that Congress would have had the power under the Taxing and Spending Clause to raise taxes and use increased revenues to purchase and distribute health insurance for all. It seems quite odd that Congress s attempt to enhance individual freedom by allowing citizens to make their own purchase decisions would give rise to such bloated concerns about a federal power grab. Cf. Thomas More, --- F.3d at ----, 2011 WL at *31 (Sutton, J.) ( Few doubt that Congress could pass an equally coercive law under its taxing power . . . . ). As for the broccoli mandate appellants fear, I have explained at several points why nothing I have written would authorize it. But I note that mandating the purchase (but not the consumption, which would 14 raise serious constitutional In the language of economics, the failure to obtain insurance has "negative externalities" negative effects on those not responsible for the decision. 129 issues) of broccoli in order to bolster the broccoli market would, in practical effect, be nothing new. Since the time of the Founding Fathers, when Alexander Hamilton called for federal subsidies for domestic manufacturers, the federal government has used tax revenues to subsidize various industries. See Algonquin SNG, Inc. v. Federal Energy Administration, 518 F.2d 1051, 1061 (D.C. Cir. 1975) ( From earliest days, the tariff authority given Congress by the Constitution has been understood to apply to the protective tariff sponsored by Alexander Hamilton, a measure focused . . . on the non-revenue purpose of protecting domestic industry against foreign competition. ), rev d by Federal Energy Administration v. Algonquin SNG, Inc., 426 U.S. 548 (1976). Though centralized subsidies are far more efficient than purchase mandates which is why a broccoli mandate is purely fantastical they are, in effect, the same. Since they, too, are clearly within Congress s power under the Taxing and Spending Clause, allowing broccoli purchase mandates would not increase federal power. For these reasons, I find appellants fears to be unfounded. I would reject their novel and unsupported suggestion that Commerce Clause jurisprudence ought to discriminate among regulated persons according to the amount of effort or resources they have years of regulated expended in well-settled (whether a given law, economic it characterized 130 is as arena. enough Under seventy the behavior that activity or inactivity) substantially affects interstate commerce. Appellants can cite neither case nor constitutional text for their proposed activity/inactivity distinction. They can explain neither why it ought to be relevant to my Commerce Clause analysis nor why it ought to impel courts to ignore seventy-year-old law that takes a wholly different approach. And they cannot even provide a sufficiently concrete definition of activity and inactivity to allow courts to reliably apply their distinction. Because I find the individual mandate to be within the bounds of Congress s commerce power defined by Wickard, Lopez, Morrison, and Raich, I would reject appellants Commerce Clause challenge. VII. Employer Mandate Appellants also challenge the Affordable Care Act s employer mandate, arguing that it is not a proper exercise of Congress s power under the Commerce Clause. I disagree. It is employment well settled under the that Congress may regulate Clause. See United Commerce terms of States v. Darby, 312 U.S. 100 (1941) (upholding minimum wage and overtime provisions of the Fair Labor Standards Act); NLRB v. Jones & Laughlin Labor Steel Relations Corp., Act 301 U.S. of 1935, 1 (1937) which (upholding forbid National unfair labor practices); cf. Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (regulating employer retirement plans and preempting state regulations under the Commerce Clause); id. 131 at § 1082 employer et seq. retirement (setting plans). minimum This is funding true, standards of course, for of employers engaged [solely] in intrastate commerce, so long as Congress could reasonably find that their intrastate activities (considered in the aggregate) substantially affect interstate commerce. Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 537 (1985); accord Darby, 312 U.S. at 118-119; Jones & Laughlin, 301 U.S. at 36-38. Appellants do not challenge Congress s finding that employers who do not offer health insurance to their workers gain an unfair economic advantage relative to those employers who do provide coverage and contribute to a negative feedback loop in which uninsured workers turn to emergency rooms for health care which in turn increases costs for employers and families with health insurance, making it more difficult for employers to insure their employees. H.R. Rep. No. 111-443(II), at 985-86 (2010). Nor do appellants dispute the fact that this amounts to a substantial effect on interstate commerce. Instead, they attempt to distinguish the employer mandate from the wage and overtime provisions in Darby and the fair labor practices in Jones & Laughlin and argue that the mandate compels private employers [to] enter into a contract with other private parties for a particular product. Appellants Br. 25. 132 These arguments fail. Appellants cannot convincingly distinguish Darby or Jones & Laughlin. They repeatedly suggest that regulated commerce; employers but, as must explained be above, involved it is in well interstate settled that employers who conduct only intrastate business may be regulated under the Commerce Clause so long as their economic activities, considered in the aggregate, substantially affect interstate commerce. Appellants emphasize the Court s observation in Jones & Laughlin that the National Labor Relations Act does not compel agreements between employers and employees. Id. at 27 (quoting Jones & Laughlin, 301 U.S. at 31). Neither does the employer mandate: like the minimum wage and overtime provisions upheld in Darby, it merely requires that employment agreements contain certain terms (or that the employer pay a penalty). Appellants attempt to distinguish Darby by arguing that the wage and hour provisions in Darby . . . did not prescribe what must be contained within the employment contract, other than setting a floor for wages and a ceiling for hours. Appellants Br. 28. But the employer mandate, too, only set[s] a floor : it requires employers to offer employees the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, but employers are free to select any plan (or create their own) and provide any level of 133 coverage above the minimum essential level, the mandate s floor. 26 U.S.C. § 4980H(a)(1). Appellants only other objection to the employer mandate is that it allegedly forces employers to contract with third parties. This is untrue: employers are free to self-insure, and many do. Employee See Differences: Benefit Fully-Insured vs. Research Inst., Self-Insured Health (2009) Plan (reporting that 55% of employees with health insurance were enrolled in self-insured plans in 2008); Christina H. Park, Div. of Health Care Statistics at the Nat l Ctr. for Health Statistics, Ctrs. for Disease Control and Prevention, Prevalence of Employer SelfInsured Health Benefits: National and State Variation, 57 Med. Care Res. & Rev. 340, 352 (2000) (finding that 21% of all private-sector employers who offered health benefits offered a self-insured health plan in 1993; 49% of employees were enrolled in self-insured enter the plans). market to Even if purchase employers health were compelled insurance, to appellants objection would fail for the very reasons I would reject their similar challenge to the individual mandate. VIII. Religious Exemptions Appellants Clause, the also allege Religious violations Freedom of the Free Restoration Act of Exercise 1993, the Establishment Clause, and equal protection. The Act makes two religious exemptions: a religious 134 conscience exemption and a health-care sharing ministry exemption. 26 U.S.C. § 5000A(d)(2). The former exempts members of a recognized religious sect in existence since December 31, 1950 who are conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care. Id. § 1402(g)(1). The latter exempts members of a health care sharing ministry a non-profit organization in existence since December 31, 1999 with members who share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the State in which a member resides or is employed. Id. § 5000A(d)(2)(B)(ii). Appellants claim that these exemptions are religious gerrymanders demonstrating that the Act itself is hostile to certain religions, exemptions Appellants themselves are Br. 45, and further unconstitutional that under the the Establishment and Equal Protection Clauses. For the following reasons, I reject these arguments. A. Free Exercise Clause Appellants their sincerely subsidizing, allege held easing, that the Act religious funding, compels beliefs or 135 them against supporting to violate facilitating, abortions and prohibits the University from providing health care choices for employees that do not conflict with the mission of the University and the core Christian values under which it and its employees order their day to day lives. Second Am. Compl. ¶ 142; Pls. Opp n 36. This argument is unavailing. [T]he right of free exercise does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes). Dept. of Human Res. of Or. v. Smith, 494 U.S. 872, 879 (1990). Appellants claim that the Act is not neutral because its religious exemptions are the type of religious gerrymanders that the Supreme Court warned against in Lukumi. Appellants Br. 45 (quoting Church of Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 534 (1993)). They are not. In Lukumi, the Supreme Court struck down city ordinances after finding that [t]he record in this case compels the conclusion that the suppression of the central element of the Santeria worship service was the object of the ordinances. 508 U.S. at 534. Here appellants never allege that the object of [the Act] [wa]s to infringe upon or restrict practices because of their religious motivation. Id. The Act is a neutral law of general applicability and so does not violate the Free Exercise Clause. B. Religious Freedom Restoration Act 136 I also reject the claim that application of the individual mandate to appellants would run afoul of the Religious Freedom Restoration Act of 1993 (RFRA). The RFRA directs that the Government shall not substantially burden a person s exercise of religion even if the burden results from a rule of general applicability, unless the Government demonstrates that application of the burden to the person (1) is in furtherance of a compelling restrictive governmental means of interest; furthering and that (2) is compelling the least governmental interest. 42 U.S.C. § 2000bb-1. If appellants had plead sufficient facts to demonstrate a substantial burden to their exercise of religion, I would be forced to consider the relevance of the RFRA to a subsequent act of Congress. Cf. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418 (2006) (applying RFRA to enforcement of pre-RFRA provisions of the Controlled Substances Act). But appellants have not. To survive appellants the complaint Government s must 12(b)(6) provide the motion grounds to of dismiss, [their] entitlement to relief, which requires more than labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted). [C]onclusory allegations are not entitled to be assumed true. Ashcroft v. Iqbal, --- U.S. ---, ---, 129 S. Ct. 1937, 1951 (2009). Unless 137 appellants allegations nudge[] their claims across the line from conceivable to plausible, their complaint must be dismissed. Twombly, 550 U.S. at 570. Here appellants merely alleged that the individual mandate will force them to violate their sincerely held religious beliefs against facilitating, subsidizing, easing, funding, or supporting abortions. Second Am. Compl. ¶ 142. Nowhere does the complaint explain how the Act would do this. The Act contains provisions to ensure that federal funds are not used for abortions (except in cases of rape or incest, or when the life of the woman would be endangered), see Affordable Care Act § 1303; see also Exec. Order No. 13,535 of Mar. 24, 2010, 75 Fed. Reg. 15,599 (implementing Section 1303 s abortion restrictions), and that each state s health benefit exchange will include at least one plan that does not cover (non-excepted) abortions, see Affordable Care Act § 1334(a)(6). Without additional or more particularized allegations, I cannot say that appellants complaint makes it plausible that the Act substantially burdens [their] exercise of religion. 42 U.S.C. § 2000bb-1(b). C. Establishment Clause and Equal Protection Appellants also challenge the Act s religious exemptions themselves, claiming that they violate the Establishment Clause and equal protection because they grant preferred status only to certain religious adherents. Appellants Br. 45. I disagree. 138 Like the permissible legislative accommodation of religion upheld by the Supreme Court in Cutter v. Wilkinson, the Act s exemptions alleviate religious government-created exercise, do[] not burdens override on other private significant interests, and neither confer[] . . . privileged status on any particular religious sect, [nor] single[] out [any] bona fide faith for disadvantageous treatment. 544 U.S. 709, 719-23 (2005). The religious conscience exemption simply incorporates the exemption created by section 1402(g)(1), which has survived every Establishment Clause challenge to it over the last forty years. See, e.g., Droz v. Comm r, 48 F.3d 1120, 1124 (9th Cir. 1995); Hatcher v. Comm r, 688 F.2d 82, 83-84 (10th Cir. 1979); Jaggard v. Comm r, 582 F.2d 1189, 1190 (8th Cir. 1978); Palmer v. Comm r, 52 T.C. 310, 314-15 (1969). For the reasons set out by our sister courts in these cases, I would reject appellants Establishment Clause challenge to the Act s exemptions. The exemptions easily survive appellants equal protection challenge as well. Legislation comports with equal protection requirements so long as it employs a rational means to serve a legitimate end. City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 442 (1985). And where individuals in the group affected by a law have distinguishing characteristics relevant to interests the [legislature] has the authority to implement, 139 the courts have been very reluctant . . . to closely scrutinize legislative choices as to whether, how, and to what extent those interests should be pursued. Id. at 441-42. Here Congress could have reasonably believed that members of groups that provide health care to their members are less likely to require public medical care, and thus less likely to produce the externalities the Act was designed to diminish. And Congress could have reasonably believed that if it did not limit these exemptions to groups formed prior to a pre-enactment date, individuals who simply wished to avoid the individual mandate would form groups that insincerely claimed the required religious beliefs. Thus the distinctions Congress drew in the Act s religious exemptions accord all equal protection under the law. IX. Conclusion For the foregoing reasons, I would hold that the AIA does not deprive federal courts of jurisdiction to adjudicate the constitutionality of the Affordable Care Act. I would further hold that each of appellants challenges to the Act lacks merit and that, mandates specifically, pass muster as both the legitimate individual exercises and of employer Congress s commerce power. Regrettably, my fine colleagues in the majority perceive a jurisdictional bar in this case Accordingly, I respectfully dissent. 140 that simply is not there.

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