Michael Greve on Halbig and Its Aftermath

The King and Halbig plaintiffs’ argument is that the statutory language must mean what it plainly says: Obamacare’s machinery of subsidies and mandates requires exchanges to be established by a state. The government and its defenders say that this can’t be right: since only some 14 states have established an exchange, plaintiffs’ position would render Obamacare inoperable for most of the country—and Congress cannot have intended that. “By a state,” they insist, must mean something like “by a state, or the federal government stepping into its shoes.”

Needless to say, the plaintiffs and defendants have spun out and buttressed the basic arguments in multiple ways; and one can have, and the bloggers have had, a learned discussion about “textualism” or “contextualism” or “purposivism” as the proper mode of statutory interpretation. Step back, though: would we actually be having this overwrought discussion over a perfectly straightforward Administrative Law and statutory interpretation question—and a perfectly conventional judicial resolution—if Halbig were about something other than Obamacare? Hardly.

in the IRS code state can mean many things. they will rule that state includes DC and therefore the federal exchanges are considered a state in IRS code end of story.
(5) State
(A) In general
The term “State” means—
(i) any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands,
(ii) for purposes of subsections (a)(2), (b)(4), (d)(1), (h)(4), and (p), any municipality—
(I) with a population in excess of 250,000 (as determined under the most recent decennial United States census data available),
(II) which imposes a tax on income or wages, and
(III) with which the Secretary (in his sole discretion) has entered into an agreement regarding disclosure, and
(iii) for purposes of subsections (a)(2), (b)(4), (d)(1), (h)(4), and (p), any governmental entity—
(I) which is formed and operated by a qualified group of municipalities, and
(II) with which the Secretary (in his sole discretion) has entered into an agreement regarding disclosure.
(B) Regional income tax agencies
For purposes of subparagraph (A)(iii)—
(i) Qualified group of municipalities The term “qualified group of municipalities” means, with respect to any governmental entity, 2 or more municipalities—
(I) each of which imposes a tax on income or wages,
(II) each of which, under the authority of a State statute, administers the laws relating to the imposition of such taxes through such entity, and
(III) which collectively have a population in excess of 250,000 (as determined under the most recent decennial United States census data available).
(ii) References to State law, etc. For purposes of applying subparagraph (A)(iii) to the subsections referred to in such subparagraph, any reference in such subsections to State law, proceedings, or tax returns shall be treated as references to the law, proceedings, or tax returns, as the case may be, of the municipalities which form and operate the governmental entity referred to in such subparagraph.
(iii) Disclosure to contractors and other agents Notwithstanding any other provision of this section, no return or return information shall be disclosed to any contractor or other agent of a governmental entity referred to in subparagraph (A)(iii) unless such entity, to the satisfaction of the Secretary—
(I) has requirements in effect which require each such contractor or other agent which would have access to returns or return information to provide safeguards (within the meaning of subsection (p)(4)) to protect the confidentiality of such returns or return information,
(II) agrees to conduct an on-site review every 3 years (or a mid-point review in the case of contracts or agreements of less than 3 years in duration) of each contractor or other agent to determine compliance with such requirements,
(III) submits the findings of the most recent review conducted under subclause (II) to the Secretary as part of the report required by subsection (p)(4)(E), and
(IV) certifies to the Secretary for the most recent annual period that such contractor or other agent is in compliance with all such requirements.
The certification required by subclause (IV) shall include the name and address of each contractor and other agent, a description of the contract or agreement with such contractor or other agent, and the duration of such contract or agreement. The requirements of this clause shall not apply to disclosures pursuant to subsection (n) for purposes of Federal tax administration and a rule similar to the rule of subsection (p)(8)(B) shall apply for purposes of this clause.

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