Liberty University, Inc. v. Jacob Lew

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 10-2347

LIBERTY UNIVERSITY, INCORPORATED, a Virginia Nonprofit
Corporation; MICHELE G. WADDELL; JOANNE V. MERRILL,

Plaintiffs - Appellants,

and

MARTHA A. NEAL; DAVID STEIN, M.D.; PAUSANIAS ALEXANDER; MARY
T. BENDORF; DELEGATE KATHY BYRON; JEFF HELGESON,

Plaintiffs,

v.

JACOB LEW, 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; SETH HARRIS, Acting Secretary of
the United States Department of Labor, in his 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;
AMERICAN CIVIL RIGHTS UNION; FAMILY RESEARCH COUNCIL; BREAST
CANCER PREVENTION INSTITUTE; LIFE LEGAL DEFENSE FOUNDATION;
LANDMARK LEGAL FOUNDATION; PROJECT LIBERTY; DAVID BOYLE;
MEMBERS OF LEGATUS; CATHOLIC MEDICAL ASSOCIATION; FOUNDATION
FOR MORAL LAW; VIRGINIA FAMILY FOUNDATION; WEST VIRGINIA
FAMILY POLICY COUNCIL; MARYLAND FAMILY ALLIANCE; NORTH
CAROLINA FAMILY POLICY COUNCIL; PALMETTO FAMILY COUNCIL;
AMERICANS UNITED FOR LIFE; ALLIANCE DEFENDING FREEDOM,

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

2
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
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, Ph. D., 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

3
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; 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;
PHYSICIANS FOR REPRODUCTIVE HEALTH; AMERICAN COLLEGE OF
OBSTETRICIANS AND GYNECOLOGISTS; AMERICAN SOCIETY FOR
EMERGENCY CONTRACEPTION; ASSOCIATION OF REPRODUCTIVE HEALTH
PROFESSIONALS; AMERICAN SOCIETY FOR REPRODUCTIVE MEDICINE;
SOCIETY FOR ADOLESCENT HEALTH AND MEDICINE; AMERICAN MEDICAL
WOMEN’S ASSOCIATION; NATIONAL ASSOCIATION OF NURSE

4
PRACTITIONERS IN WOMEN’S HEALTH; SOCIETY OF FAMILY PLANNING;
JAMES TRUSSELL; SUSAN F. WOOD; DON DOWNING; KATHLEEN
BESINQUE; AMERICANS UNITED FOR SEPARATION OF CHURCH AND
STATE; THE ANTI-DEFAMATION LEAGUE; THE INTERFAITH ALLIANCE
FOUNDATION; THE NATIONAL COALITION OF AMERICAN NUNS; THE
NATIONAL COUNCIL OF JEWISH WOMEN; THE RELIGIOUS COALITION
FOR REPRODUCTIVE CHOICE; THE RELIGIOUS INSTITUTE; THE
UNITARIAN UNIVERSALIST ASSOCIATION; THE UNITARIAN
UNIVERSALIST WOMEN’S FEDERATION,

Amici Supporting Appellees.

On Remand from the Supreme Court of the United States.
(S. Ct. No. 11-438)

Argued: May 16, 2013 Decided: July 11, 2013

Before MOTZ, DAVIS, and WYNN, Circuit Judges.

Affirmed by published opinion. Judge Motz, Judge Davis, and
Judge Wynn wrote the opinion.

ARGUED: Mathew D. Staver, LIBERTY COUNSEL, Maitland, Florida,
for Appellants. Alisa Beth Klein, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Anita L.
Staver, LIBERTY COUNSEL, Maitland, Florida; Stephen M. Crampton,
Mary E. McAlister, LIBERTY COUNSEL, Lynchburg, Virginia, for
Appellants. Timothy J. Heaphy, United States Attorney, Roanoke,
Virginia; Neal Kumar Katyal, Acting Solicitor General, Tony
West, Assistant Attorney General, Beth S. Brinkmann, Deputy
Assistant Attorney General, Mark B. Stern, Samantha L. Chaifetz,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellees. Joel M. Spector, MOUNTAIN STATES LEGAL FOUNDATION,
Lakewood, Colorado, for Amicus Mountain States Legal Foundation.
Brian S. Koukoutchos, Mandeville, Louisiana; Charles J. Cooper,
David H. Thompson, COOPER & KIRK, PLLC, Washington, D.C., for
Amicus Revere America Foundation. Peter Ferrara, AMERICAN CIVIL
RIGHTS UNION, Falls Church, Virginia; Daniel M. Gray, LAW
OFFICES OF DANIEL M. GREY, LLC, Falls Church, Virginia; Richard
B. Rogers, RICHARD B. ROGERS,PLC, Alexandria, Virginia, for
Amicus American Civil Rights Union. Kenneth A. Klukowski,
FAMILY RESEARCH COUNCIL, Washington, D.C., for Amicus Family

5
Research Council. Scott J. Ward, Timothy R. Obitts, GAMMON &
GRANGE, P.C., McLean, Virginia; Catherine W. Short, LIFE LEGAL
DEFENSE FOUNDATION, Ojai, California, for Amici Breast Cancer
Prevention Institute and Life Legal Defense Foundation. Richard
P. Hutchison, LANDMARK LEGAL FOUNDATION, Kansas City, Missouri;
Mark R. Levin, Michael J. O'Neill, Matthew C. Forys, LANDMARK
LEGAL FOUNDATION, Leesburg, Virginia, for Amicus Landmark Legal
Foundation. Stephen B. Presser, Raoul Berger Professor of Legal
History, NORTHWESTERN UNIVERSITY SCHOOL OF LAW, Chicago,
Illinois; Kathleen Cassidy Goodman, LAW OFFICE OF KATHLEEN
CASSIDY GOODMAN, Helotes, Texas; Steven W. Fitschen, THE
NATIONAL LEGAL FOUNDATION, Virginia Beach, Virginia; Allen E.
Parker, R. Clayton Trotter, THE JUSTICE FOUNDATION, San Antonio,
Texas, for Amicus Project Liberty. David Boyle, Long Beach,
California, for Amicus David Boyle. Nikolas T. Nikas, Dorinda
C. Bordlee, BIOETHICS DEFENSE FUND, Scottsdale, Arizona, for
Amici 281 Members of Legatus and Catholic Medical Association.
John A. Eidsmoe, FOUNDATION FOR MORAL LAW, Montgomery, Alabama,
for Amicus Foundation for Moral Law. M. Casey Mattox, Michael
J. Norton, Steven H. Aden, ALLIANCE DEFENDING FREEDOM,
Washington, D.C.; Anna R. Franzonello, Mailee Smith, AMERICANS
UNITED FOR LIFE, Washington, D.C., for Amici The Virginia Family
Foundation, West Virginia Family Policy Council, Maryland Family
Alliance, North Carolina Family Policy Council, Palmetto Family
Council, Americans United for Life and Alliance Defending
Freedom. Rebecca Glenberg, AMERICAN CIVIL LIBERTIES UNION OF
VIRGINIA, Richmond, Virginia; Daniel Mach, AMERICAN CIVIL
LIBERTIES UNION FOUNDATION, Washington D.C.; Andrew D. Beck,
Brigitte Amiri, AMERICAN CIVIL LIBERTIES UNION FOUNDATION, New
York, New York, for Amici The American Civil Liberties Union,
The American Civil Liberties Union of Virginia, Americans United
for Separation of Church and State, The Anti-Defamation League,
The Interfaith Alliance Foundation, The National Coalition of
American Nuns, The National Council of Jewish Women, The
Religious Coalition for Reproductive Choice, The Religious
Institute, The Unitarian Universalist Association, and The
Unitarian Universalist Women’s Federation. Ian Millhiser,
CENTER FOR AMERICAN PROGRESS, Washington, D.C., for Amici
American Nurses Association, American Academy of Pediatrics,
American Medical Student Association, Center for American
Progress D/B/A Doctors for America, National Hispanic Medical
Association, and National Physicians Alliance. Professor Walter
Dellinger, Washington, D.C.; Professor H. Jefferson Powell,
GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, Washington, D.C., for
Amici Senate Majority Leader Harry Reid, House Democratic Leader
Nancy Pelosi, and Congressional Leaders and Leaders of
Committees of Relevant Jurisdiction. Gillian E. Metzger, Trevor

6
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 Amici Constitutional Law Professors.
Rochelle Bobroff, Simon Lazarus, NATIONAL SENIOR CITIZENS LAW
CENTER, Washington, D.C., for Amici The 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. Sheree R. Kanner, Catherine
E. Stetson, Dominic F. Perella, Michael D. Kass, Sara A. Kraner,
HOGAN LOVELLS US LLP, Washington, D.C.; 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, Washington, D.C., for Amici American
Hospital Association, Association of American Medical Colleges,
Catholic Health Association of the United States, Federation of
American Hospitals, National Association of Children’s
Hospitals, and National Association of Public Hospitals and
Health Systems. Kristin Houser, Adam Berger, Rebecca J. Roe,
William Rutzick, SCHROETER, GOLDMARK & BENDER, Seattle,
Washington, for Amicus The Governor of Washington. Richard L.
Rosen, ARNOLD & PORTER LLP, Washington, D.C., for Amici Economic
Scholars. Marcia D. Greenberger, Emily J. Martin, Judith G.
Waxman, Lisa Codispoti, NATIONAL WOMEN’S LAW CENTER, Washington,
D.C.; Melissa Hart, UNIVERSITY OF COLORADO LAW SCHOOL, Boulder,
Colorado, for Amici The 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,

7
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. B. Robert Piller, Jennifer Blasdell, PHYSICIANS FOR
REPRODUCTIVE HEALTH, New York, New York; Bruce H. Schneider,
Michele L. Pahmer, STROOCK & STROOCK & LAVAN LLP, New York, New
York, for Amici Physicians for Reproductive Health, American
College of Obstetricians and Gynecologists, American Society for
Emergency Contraception, Association of Reproductive Health
Professionals, American Society for Reproductive Medicine,
Society for Adolescent Health and Medicine, American Medical
Women’s Association, National Association of Nurse Practitioners
in Women’s Health, Society of Family Planning, James Trussell,
Susan F. Wood, Don Downing, and Kathleen Besinque.

8
MOTZ, DAVIS, and WYNN, Circuit Judges:

Liberty University and certain individuals (collectively,

“Plaintiffs”) brought this action challenging two provisions of

the Patient Protection and Affordable Care Act: the “individual

mandate,” which requires individuals to purchase a minimum level

of health insurance coverage, and the “employer mandate,” which

requires certain employers to offer such coverage to their

employees and their dependents. The district court dismissed

the lawsuit, upholding the constitutionality of both mandates.

On appeal we held that the Anti-Injunction Act barred us from

considering Plaintiffs’ claims and remanded the case to the

district court with instructions to dismiss for lack of

jurisdiction. See Liberty Univ., Inc. v. Geithner, 671 F.3d 391

(4th Cir. 2011). The Supreme Court granted Plaintiffs’ petition

for certiorari, vacated our judgment, and remanded for further

consideration in light of National Federation of Independent

Business v. Sebelius, 132 S. Ct. 2566 (2012) (“NFIB”). See

Liberty Univ. v. Geithner, 133 S. Ct. 679 (2012). After careful

consideration of that case, we affirm the judgment of the

district court.

I.

On March 23, 2010, President Obama signed the Patient

Protection and Affordable Care Act (“Affordable Care Act” or

9
“the Act”) into law. See Pub. L. No. 111-148, 124 Stat. 119

(2010). Liberty and two unaffiliated individuals challenge the

individual mandate, which will become effective in 2014, and the

employer mandate, which will become effective in 2015. Before

resolving the legal questions, we summarize the requirements of

the mandates and the relevant facts and procedural history of

this case.

A.

1.

With limited exceptions, the individual mandate imposes a

“penalty” on any taxpayer who is an “applicable individual” and

fails to obtain “minimum essential coverage.” 26 U.S.C.

§ 5000A(a)-(b). “Minimum essential coverage” includes coverage

under various government-sponsored programs, an employer-

sponsored plan, or a health plan offered in the individual

market within a state, as well as certain other coverage. Id.

§ 5000A(f).

Any individual who does not qualify for a listed exemption

is an “applicable individual.” Id. § 5000A(d)(1). The Act

provides two religion-based exemptions. The “[r]eligious

conscience exemption” applies to an individual who is “a member

of a recognized religious sect or division thereof,” id.

§ 5000A(d)(2)(A), and “an adherent of established tenets or

teachings of such sect or division by reason of which he is

10
conscientiously opposed to acceptance of the benefits of any

[life, disability, old-age, retirement, or medical] insurance,”

id. § 1402(g)(1). The sect must have been in existence at all

times since December 31, 1950, and must “make provision for

[its] dependent members.” Id. The “[h]ealth care sharing

ministry” exemption applies to a member of a 501(c)(3)

organization that “has been in existence at all times since

December 31, 1999,” the “members of which share a common set of

ethical or religious beliefs[,] . . . share medical expenses

among members in accordance with those beliefs,” and “retain

membership even after they develop a medical condition.” Id.

§ 5000A(d)(2)(B).

The penalty for failing to obtain minimum essential

coverage is tied to the individual’s income but cannot exceed

the cost of “the national average premium for qualified health

plans” meeting a certain level of coverage. See id. § 5000A(c).

The Secretary of the Treasury has the authority to “assess[] and

collect[] [the penalty] in the same manner” as a tax. Id.

§§ 5000A(g)(1), 6671(a).

2.

If an “applicable large employer” fails to provide

affordable health care coverage to its full-time employees and

their dependents, the employer mandate may require an

“assessable payment” by the employer. Id. § 4980H(a)-(b). The

11
Act defines an “applicable large employer” as an employer who

employed an average of at least fifty full-time employees during

the preceding year. Id. § 4980H(c)(2).

Such an employer must make an assessable payment if at

least one of its full-time employees qualifies for “an

applicable premium tax credit or cost-sharing reduction” to help

pay for health care coverage. Id. § 4980H(a)-(b). An employee

is eligible for an “applicable premium tax credit” or “cost-

sharing reduction” if the employer fails to offer the employee

“affordable” coverage providing “minimum value” and the

employee’s income falls between 100% and 400% of the poverty

line. Id. §§ 4980H(c)(3), 36B(a)-(c); Affordable Care Act

§ 1402(a), (b), (f)(2) (codified at 42 U.S.C. § 18071(a), (b),

(f)(2)). 1

The amount of the assessable payment that an employer

required to make such a payment must pay depends on whether the

employer offers “minimum essential coverage” to its full-time

employees and their dependents. 26 U.S.C. § 4980H(a)-(b). If

the employer fails to offer such coverage, the assessable

1
Coverage is “affordable” if the employee’s required
contribution to the plan does not exceed an indexed percentage
of his household income. 26 U.S.C. § 36B(c)(2)(C)(i). A plan
fails to provide “minimum value” if the plan’s share of the
employee’s health costs is less than 60% of total costs. Id.
§ 36B(c)(2)(C)(ii).

12
payment is calculated by multiplying $2000 by the number of

full-time employees (less thirty), prorated over the number of

months the employer is liable. Id. § 4980H(a), (c)(1),

(c)(2)(D)(i). If the employer does offer such coverage, the

assessable payment is calculated by multiplying $3000 by the

number of employees receiving an applicable premium tax credit

or cost-sharing reduction, prorated on a monthly basis. Id.

§ 4980H(b)(1). The amount of the payment under § 4980H(b)

cannot exceed the amount the employer would owe if liable under

§ 4980H(a). Id. § 4980H(b)(2). As with the individual mandate,

the Secretary of the Treasury has the authority to assess and

collect the exaction in the same manner as a tax. Id.

§§ 4980H(d)(1), 6671(a).

“Minimum essential coverage” includes coverage under an

“eligible employer-sponsored plan,” other than coverage of only

certain excepted benefits (like limited scope dental or vision

benefits), which does not qualify. Id. §§ 4980H(a)(1),

5000A(f)(2)-(3); Public Health Service Act § 2791(c) (codified

at 42 U.S.C. § 300gg-91(c)). An “eligible employer-sponsored

plan” includes a “group health plan,” which is a plan

established or maintained by an employer for the purpose of

providing medical care to employees and their dependents. 26

U.S.C. § 5000A(f)(2); 42 U.S.C. § 300gg-91(a); 29 U.S.C.

§ 1002(1). Thus, employer-provided health care coverage would

13
seem to qualify as minimum essential coverage unless that

coverage applies only to excepted benefits. In effect, then,

§ 4980H(a) imposes an assessable payment on an applicable

employer who fails to offer coverage to its full-time employees

and their dependents, while § 4980H(b) imposes an assessable

payment on an applicable employer who provides coverage that

does not satisfy the mandate’s affordability criteria.

B.

On March 23, 2010, the day the President signed the

Affordable Care Act into law, Plaintiffs filed this action

against the Secretary of the Treasury and other officials

(collectively, “the Secretary”). Plaintiffs sought a

declaration that the individual and employer mandates are

invalid and an order enjoining their enforcement.

1.

In their second amended complaint, the individual

plaintiffs, Michele G. Waddell and Joanne V. Merrill, assert

that they have “made a personal choice not to purchase health

insurance coverage and [do] not want to” do so. 2 Further,

Waddell and Merrill allege that the Act will force them to “pay

2
The district court found that three of the individual
plaintiffs, David Stein, Kathy Byron, and Jeff Helgeson, lacked
standing. Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611,
621-22 (W.D. Va. 2010). Plaintiffs do not challenge that
determination on appeal.

14
for health insurance coverage that is not necessary or desirable

or face significant penalties.” They also assert that they are

Christians “who have sincerely held religious beliefs that

abortions, except where necessary to save the life of the

pregnant mother, are murder and morally repugnant” and that

“they should play no part in such abortions, including no part

in facilitating, subsidizing, easing, funding, or supporting

such abortions since to do so is evil and morally repugnant

complicity.”

Liberty alleges that it employs approximately 3900 full-

time faculty and staff, and that it is self-insured and offers

“health savings accounts, private insurance policies and other

health care reimbursement options to qualified employees.”

Liberty asserts that “depending upon how the federal government

defines ‘minimum essential coverage’ and the affordability

index,” the University could be found to offer coverage

insufficient “to satisfy the federal definition of minimum

essential coverage or coverage that is deemed unaffordable . . .

and therefore could be subjected to significant penalties” and

“substantial financial hardship.” Liberty also alleges that the

employer mandate will “increase the cost of care . . . [and]

will directly and negatively affect [the University] by

increasing the cost of providing health insurance coverage and

15
thus directly affect the ability of the University to carry on

its mission.”

Finally, Liberty asserts that it “is a Christian

educational institution whose employees are Christians who have

sincerely held religious beliefs that abortions, except where

necessary to save the life of the pregnant mother, are murder

and morally repugnant.” It further explains that its religious

beliefs bar it from “play[ing] [any] part in abortions,

including [any] part in facilitating, subsidizing, easing,

funding, or supporting abortions since to do so is evil and

morally repugnant complicity.”

2.

Before the district court, Plaintiffs asserted that the

individual and employer mandates exceeded Congress’s Article I

powers and violated the Tenth Amendment, the Establishment and

Free Exercise Clauses of the First Amendment, the Religious

Freedom Restoration Act, the Fifth Amendment, the right to free

speech and free association under the First Amendment, the

Article I, Section 9 prohibition against unapportioned

capitation or direct taxes, and the Guarantee Clause. The

Secretary moved to dismiss the second amended complaint for lack

of jurisdiction, arguing that Plaintiffs lacked standing and

that the Anti-Injunction Act barred the suit. Alternatively,

the Secretary moved to dismiss all counts for failure to state a

16
claim upon which relief could be granted. The district court

concluded that it possessed jurisdiction but granted the

Secretary’s motion to dismiss for failure to state a claim. See

Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611 (W.D. Va.

2010). Plaintiffs appealed only as to the Article I,

Establishment Clause, Free Exercise Clause, Religious Freedom

Restoration Act, and Fifth Amendment claims.

When we considered the case on appeal, we did not reach the

merits of those claims because we concluded that the Anti-

Injunction Act deprived us of jurisdiction. See Liberty Univ.,

671 F.3d 391. After initially denying certiorari, Liberty Univ.

v. Geithner, 133 S. Ct. 60 (2012), on reconsideration the

Supreme Court granted certiorari, vacated our judgment, and

directed us to give further consideration to the case in light

of NFIB, see Liberty Univ., 133 S. Ct. 679. In NFIB, the Court

held that the Anti-Injunction Act did not bar a challenge to the

individual mandate and upheld that mandate as a lawful exercise

of Congress’s taxing power. 132 S. Ct. at 2584, 2600. Five

members of the Court, however, concluded that the individual

mandate exceeds Congress’s power under the Commerce Clause. Id.

at 2593 (Roberts, C.J.); id. at 2644-50 (Scalia, Kennedy,

Thomas, and Alito, JJ., dissenting) (“joint dissent”).

On remand, we must decide whether the Anti-Injunction Act

bars this pre-enforcement challenge to the employer mandate, and

17
whether Plaintiffs have standing to challenge the mandates. If

neither jurisdictional hurdle prevents our consideration of the

merits of the case, we must determine whether Congress acted

within the scope of its constitutionally delegated powers when

it enacted the employer mandate. Finally, if we find that the

mandates are a valid exercise of Congress’s Article I powers, we

must address Plaintiffs’ religion-based arguments. 3 Our review

is de novo. E.I. du Pont de Nemours & Co. v. Kolon Indus.,

Inc., 637 F.3d 435, 440 (4th Cir. 2011) (reviewing de novo

district court’s grant of motion to dismiss for failure to state

a claim under Fed. R. Civ. P. 12(b)(6)); Estate of Michael ex

rel. Michael v. Lullo, 173 F.3d 503, 506 (4th Cir. 1999)

(reviewing de novo district court’s decision whether to dismiss

for lack of jurisdiction).

II.

The Anti-Injunction Act (“AIA”) provides that “no suit for

the purpose of restraining the assessment or collection of any

3
The plaintiffs raise on appeal new arguments that the
Affordable Care Act violates the Origination Clause and
impermissibly conflicts with various state laws. Plaintiffs had
the opportunity to raise these arguments in the district court
and in the original briefing in this case but did not do so;
thus the arguments are waived. See Wash. Metro. Area Transit
Auth. v. Precision Small Engines, 227 F.3d 224, 227-28 (4th Cir.
2000).

18
tax shall be maintained in any court by any person.” 26 U.S.C.

§ 7421(a). Where it applies, the AIA thus deprives courts of

jurisdiction to entertain pre-enforcement suits seeking to

enjoin the collection of federal taxes. See Enochs v. Williams

Packing & Navigation Co., 370 U.S. 1, 5 (1962). 4

Liberty’s challenge to the employer mandate is a pre-

enforcement suit to enjoin the collection of an exaction that is

codified in the Internal Revenue Code, and which the Secretary

of the Treasury is empowered to collect in the same manner as a

tax. In NFIB, however, the Supreme Court made clear that the

AIA does not apply to every exaction that functions as a tax or

even to every exaction that passes muster as a tax for

constitutional purposes. Rather, the AIA applies only where

Congress intends it to. See NFIB, 132 S. Ct. at 2583 (noting

that, although “Congress cannot change whether an exaction is a

tax . . . for constitutional purposes,” the AIA and the

Affordable Care Act “are creatures of Congress’s own creation”

and “[h]ow they relate to each other is up to Congress”).

4
We note that Plaintiffs request declaratory as well as
injunctive relief. The Declaratory Judgment Act authorizes
federal courts to issue declaratory judgments, except “with
respect to Federal taxes.” 28 U.S.C. § 2201(a). Because the
Declaratory Judgment Act’s tax exception is coextensive with the
AIA, the following analysis also applies to Plaintiffs’ request
for declaratory relief. See Sigmon Coal Co. v. Apfel, 226 F.3d
291, 299 (4th Cir. 2000).

19
 When concluding that Congress did not intend to bar pre-

enforcement challenges to the individual mandate, the Court in

NFIB found it most significant that Congress chose to describe

the shared responsibility payment as a “penalty” rather than a

“tax.” See id. (noting that “[t]here is no immediate reason to

think that a statute applying to ‘any tax’ would apply to a

‘penalty’”). Thus, we begin our AIA inquiry with particular

attention to how Congress characterized the exaction set forth

in the employer mandate.

In maintaining that the AIA bars this challenge to the

employer mandate, the Secretary relies heavily on the fact that

the Act twice refers to the employer mandate exaction as a

“tax.” See 26 U.S.C. § 4980H(b)(2), (c)(7). In doing so, the

Secretary virtually ignores the fact that the Act does not

consistently characterize the exaction as a tax. Rather, the

Act initially identifies the employer mandate exaction as an

“assessable payment.” See id. § 4980H(a). The Act then

proceeds to characterize the exaction as an “assessable payment”

six more times. See id. § 4980H(b)(1), (c)(2)(D)(i)(I), (d)(1),

(d)(2), (d)(3). Additionally, the Act once refers to the

exaction as an “assessable penalt[y].” See id.

§ 4980H(c)(2)(D).

Further, on one of the two occasions in which the Act

refers to the employer mandate exaction as a “tax,” it does so

20
in a tax-specific context, where the use of another word would

create confusion. Section 4980H(c)(7) provides: “For denial of

deduction for the tax imposed by this section, see section

275(a)(6).” Section 275(a) states that “[n]o deduction shall be

allowed for the following taxes” and then lists various taxes,

including “[t]axes imposed by chapter[] . . . 43.” The employer

mandate is codified in chapter 43 of the Code. Thus, the Act

presumably refers to the employer mandate exaction as a “tax”

when cross-referencing § 275(a)(6) to make clear that, for

purposes of determining deductibility, the exaction is a tax

imposed by chapter 43.

There may be no equally obvious explanation for the other

instance in which the Act characterizes the employer mandate

exaction as a “tax.” See 26 U.S.C. § 4980H(b)(2) (providing

that the “aggregate amount of tax” assessed for offering

coverage that is unaffordable cannot exceed the amount the

employer would owe under section 4980H(a) for failing to offer

minimum essential coverage). But we simply cannot place much

significance on a single unexplained use of that term. Because

Congress initially and primarily refers to the exaction as an

“assessable payment” and not a “tax,” the statutory text

suggests that Congress did not intend the exaction to be treated

as a tax for purposes of the AIA.

21
 Furthermore, Congress did not otherwise indicate that the

employer mandate exaction qualifies as a tax for AIA purposes,

though of course it could have done so. As the Supreme Court

pointed out in NFIB, 26 U.S.C. § 6671(a) provides that the

“penalties and liabilities” found in subchapter 68B of the

Internal Revenue Code are “treated as taxes” for purposes of the

AIA. See NFIB, 132 S. Ct. at 2583. The employer mandate, like

the individual mandate, is not included in subchapter 68B, and

no other provision indicates that we are to treat its

“assessable payment” as a tax. See id. (making the same point

with regard to the individual mandate).

Finally, we note that to adopt the Secretary’s position

would lead to an anomalous result. The Supreme Court has

expressly held that a person subject to the individual mandate

can bring a pre-enforcement suit challenging that provision.

But, under the Secretary’s theory, an employer subject to the

employer mandate could bring only a post-enforcement suit

challenging that provision. It seems highly unlikely that

Congress meant to signal -- with two isolated references to the

term “tax” –- that the mandates should be treated differently

for purposes of the AIA’s applicability. Tellingly, the

Government has pointed to no rationale supporting such

differential treatment.

22
 For these reasons, we hold that the employer mandate

exaction, like the individual mandate exaction, does not

constitute a tax for purposes of the AIA. Therefore, the AIA

does not bar this suit.

III.

The Secretary argues that another jurisdictional hurdle –-

standing -- prevents our consideration of the merits of this

case. To establish standing at the motion to dismiss stage, a

plaintiff must plausibly allege that: “(1) it has suffered an

injury in fact that is (a) concrete and particularized and (b)

actual or imminent, not conjectural or hypothetical; (2) the

injury is fairly traceable to the challenged action of the

defendant; and (3) it is likely, as opposed to merely

speculative, that the injury will be redressed by a favorable

decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.

(TOC), Inc., 528 U.S. 167, 180–81 (2000) (internal quotation

marks omitted); see Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007) (at motion to dismiss stage, plaintiff must allege

sufficient facts to render claim plausible). The Secretary

contends that all plaintiffs lack standing because they allege

no actual or imminent injury. We address first Liberty’s

standing and then that of the individual plaintiffs.

23
 A.

Liberty has more than fifty full-time employees, and the

Secretary does not contest that it is an “applicable large

employer” subject to the employer mandate. Nevertheless, the

Secretary argues that Liberty has failed to establish standing

because it is speculative whether Liberty will be subject to an

assessable payment under 26 U.S.C. § 4980H. Specifically, the

Secretary contends that the health care coverage Liberty

acknowledges it already provides to its employees qualifies as

minimum essential coverage that may also satisfy the employer

mandate’s affordability criteria.

The Secretary’s argument may well be correct -– as far as

it goes. 5 But Liberty need not show that it will be subject to

an assessable payment to establish standing if it otherwise

5
Liberty alleges that it “could be determined to not offer
coverage sufficient to satisfy the federal definition of minimum
essential coverage or coverage that is deemed unaffordable . . .
and therefore could be subjected to significant penalties.” But
“minimum essential coverage” seems to include coverage under any
employer-sponsored plan, unless that plan covers only excepted
benefits. See 26 U.S.C. §§ 4980H(a), 5000A(f)(2)-(3). Liberty
does not suggest its current plan covers only excepted benefits.
Thus, by definition that plan appears to meet the “minimum
essential coverage” requirement. Further, while it is possible
that Liberty’s current plan fails to provide affordable
coverage, subjecting Liberty to an assessable payment under
§ 4980H(b), Liberty alleges only that its coverage “could” be
deemed unaffordable. The Supreme Court has held that
“threatened injury must be certainly impending to constitute
injury in fact” and “[a]llegations of possible future injury are
not sufficient.” Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138,
1147 (2013) (internal quotation marks omitted).

24
alleges facts that establish standing. In this case, in

addition to alleging that it “could” be subject to an assessable

payment, Liberty alleges that the employer mandate and its

“attendant burdensome regulations will . . . increase the cost

of care” and “directly and negatively affect [it] by increasing

the cost of providing health insurance coverage.”

“[G]eneral factual allegations of injury resulting from the

defendant’s conduct may suffice, for on a motion to dismiss we

presum[e] that general allegations embrace those specific facts

that are necessary to support the claim.” Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992) (internal quotation marks

omitted); see Bennett v. Spear, 520 U.S. 154, 167-68 (1997).

Thus, to establish standing, Liberty need not prove that the

employer mandate will increase its costs of providing health

coverage; it need only plausibly allege that it will.

Liberty’s allegation to this effect is plausible. Even if

the coverage Liberty currently provides ultimately proves

sufficient, it may well incur additional costs because of the

administrative burden of assuring compliance with the employer

mandate, or due to an increase in the cost of care. See

generally Ass’n of Private Sector Colls. & Univs. v. Duncan, 681

F.3d 427, 457-58 (D.C. Cir. 2012) (increased compliance costs

constitute injury in fact sufficient to confer standing); N.Y.

Civil Liberties Union v. Grandeau, 528 F.3d 122, 131 (2d Cir.

25
2008) (administrative burden constitutes injury in fact for

standing purposes); Frank v. United States, 78 F.3d 815, 823-24

(2d Cir. 1996) (same), vacated on other grounds, 521 U.S. 1114

(1997).

Moreover, Liberty’s injury is imminent even though the

employer mandate will not go into effect until January 1, 2015,

as Liberty must take measures to ensure compliance in advance of

that date. See Virginia v. Am. Booksellers Ass’n, 484 U.S. 383,

392-93 (1988) (holding booksellers had standing though

challenged law had not yet been enforced because they “w[ould]

have to take significant and costly compliance measures”

beforehand “if their interpretation of the statute [wa]s

correct”). Thus, Liberty has standing to challenge the employer

mandate.

B.

The individual plaintiffs, after alleging that they do not

have or want to purchase health insurance coverage, assert that

the individual mandate “will create a financial hardship in that

[they] will have to either pay for health insurance coverage

. . . or face significant penalties.”

The Secretary maintains that the individual plaintiffs lack

standing because they may be exempt from the individual mandate

penalty, either because their income is below the mandate’s

threshold level or because they qualify for a proposed hardship

26
exemption. See 26 U.S.C. § 5000A(e)(2) (exempting individuals

with income below filing threshold); 78 Fed. Reg. 7348, 7354-55

(Feb. 1, 2013) (describing proposed hardship exemptions). But,

again, at this early stage, plaintiffs need only provide

“general factual allegations of injury.” Lujan, 504 U.S. at

561. And, we must “accept[] all well-pleaded allegations in the

plaintiff’s complaint as true.” De’Lonta v. Angelone, 330 F.3d

630, 633 (4th Cir. 2003).

The individual plaintiffs allege the individual mandate

will obligate them to buy insurance or pay a penalty, and their

alleged lack of insurance provides sufficient support for that

allegation at this stage of the proceedings. Further, the

individual plaintiffs’ injury is imminent because they must make

preparations to obtain insurance before the mandate goes into

effect. See Am. Booksellers Ass’n, 484 U.S. at 392-93.

Thus, we conclude that the individual plaintiffs have

standing to challenge the individual mandate. We therefore

proceed to the merits.

IV.

A.

Liberty argues that the employer mandate exceeds Congress’s

commerce power because Congress does not have “the power to

order employers to provide government-defined health insurance

27
to their employees.” Post-Remand Opening Br. 18. This is so,

Liberty contends, because the employer mandate “compel[s]

employers to engage in particular conduct or purchase an

unwanted product,” contrary to the dictates of NFIB. Post-

Remand Reply Br. 16. In Liberty’s view, “[a]llowing Congress to

mandate that employers provide health insurance . . . goes far

beyond regulations of wages and hours upheld under the Commerce

Clause.” Post-Remand Opening Br. 19.

The Secretary counters that the employer mandate is a valid

exercise of Congress’s authority under the Commerce Clause

because “[h]ealth coverage benefits form part of an employee’s

compensation package, and ‘it is well-established in Supreme

Court precedent that Congress has the power to regulate the

terms and conditions of employment.’” Post-Remand Resp. Br. 25.

(quoting Liberty Univ., 753 F. Supp. 2d at 635). More

specifically, the Secretary argues that

[i]f employees put their insurance at risk when they
change jobs, they may be “reluctant to switch jobs in
the first place (a phenomenon known as ‘job lock’).”
[Congressional Budget Office, Key Issues in Analyzing
Major Health Insurance Proposals 8 (Dec. 2008)
[hereinafter “CBO, Key Issues”]]. As Congress
understood, the prospect of losing employee insurance
benefits may obstruct interstate mobility, which the
Constitution generally, and the commerce power
specifically, were designed to prevent.

Original Resp. Br. 46–47. The Secretary further contends that

Congress found that “employers who do not offer health
insurance to their workers gain an unfair economic

28
 advantage relative to those employers who do provide
coverage, and millions of hard-working Americans and
their families are left without health insurance.”
H.R. Rep. No. 111-443(II), at 985 (2010). Congress
noted that this state of affairs results in “a vicious
cycle because these 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
provide coverage. Id. at 985–86.

Id. at 53. Thus, the Secretary concludes, “[t]he provision of

health coverage substantially affects commerce just as other

forms of compensation and terms of employment do, and the

businesses run by large employers likewise substantially affect

commerce.” Post-Remand Resp. Br. 27–28. We think the Secretary

has the better argument.

B.

“[T]he determinative test of the exercise of power by the

Congress under the Commerce Clause is simply whether the

activity sought to be regulated is commerce which concerns more

States than one and has a real and substantial relation to the

national interest.” Heart of Atlanta Motel, Inc. v. United

States, 379 U.S. 241, 255 (1964) (internal quotation marks

omitted). “The power of Congress in this field is broad and

sweeping . . . .” Katzenbach v. McClung, 379 U.S. 294, 305

(1964); see also NFIB, 132 S. Ct. at 2585 (Roberts, C.J.) (“[I]t

is now well established that Congress has broad authority under

the [Commerce] Clause.”). “[T]he power to regulate commerce is

29
the power to enact all appropriate legislation for its

protection or advancement; to adopt measures to promote its

growth and insure its safety; to foster, protect, control, and

restrain.” NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1,

36–37 (1937) (internal citations and quotation marks omitted).

Among Congress’s expansive Commerce Clause powers is the

authority to regulate “those activities that substantially

affect interstate commerce.” United States v. Morrison, 529

U.S. 598, 609 (2000). So broad is this power that Congress may

regulate activity without showing that it has “any specific

effect upon interstate commerce,” so long as, “in the

aggregate,” the activity “would represent ‘a general practice

. . . subject to federal control.’” Citizens Bank v. Alafabco,

Inc., 539 U.S. 52, 56-57 (2003) (ellipsis in original) (quoting

Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S.

219, 236 (1948)). Moreover, Congress need not show that the

activity “taken in the aggregate, substantially affect[s]

interstate commerce in fact,” but only that “a ‘rational basis’

exists for so concluding.” Gonzales v. Raich, 545 U.S. 1, 22

(2005) (emphasis added) (quoting United States v. Lopez, 514

U.S. 549, 557 (1995)).

To be sure, Congress’s authority under the Commerce Clause

is not without limits. In NFIB, five justices of the Supreme

Court found that the individual mandate exceeded Congress’s

30
commerce power. 132 S. Ct. at 2585–93 (Roberts, C.J.); id. at

2644–50 (joint dissent). Although “[t]here has been

considerable debate about whether the statements [in NFIB] about

the Commerce Clause are dicta or binding precedent,” 6 these five

justices agreed that the Commerce Clause does not grant Congress

the authority to “compel” or “mandate” an individual to enter

commerce by purchasing a good or service. See NFIB, 132 S. Ct.

at 2587 (Roberts, C.J.) (finding the individual mandate beyond

Congress’s commerce power because it “compels individuals to

become active in commerce by purchasing a product”) (emphasis in

original); id. at 2646–47 (joint dissent) (noting that

“mandating of economic activity” is beyond the scope of the

Commerce Clause). Rather, these justices concluded that the

Commerce Clause permits Congress to regulate only existing

activity.

Chief Justice Roberts’s -- and, to a large degree, the

joint dissenters’ -- analysis focused on the text of the

Commerce Clause, the Court’s cases interpreting that clause, and

6
United States v. Henry, 688 F.3d 637, 641 n.5 (9th Cir.
2012) (citing David Post, Commerce Clause “Holding v. Dictum
Mess” Not So Simple, The Volokh Conspiracy (July 3, 2012, 8:17
AM), http://www.volokh.com/2012/07/03/commerce-clause-holding-v-
dictum-mess-not-so-simple/), cert. denied, 133 S. Ct. 996
(2013); see also United States v. Roszkowski, 700 F.3d 50, 58
n.3 (1st Cir. 2012) (declining to “express [an] opinion as to
whether the . . . Commerce Clause discussion was indeed a
holding of the Court”).

31
the practical effect and operation of the individual mandate.

As to the text, Chief Justice Roberts noted that the Commerce

Clause “grants Congress the power to ‘regulate Commerce.’” Id.

at 2586 (emphasis in original) (citing U.S. Const. art. I, § 8,

cl. 3). In the Chief Justice’s view, “[t]he power to regulate

commerce presupposes the existence of commercial activity to be

regulated.” Id. (emphasis in original). In the same vein, the

joint dissenters cited definitions of “regulate” common at the

time of the Constitution’s drafting, and concluded that under

these definitions “regulate” “can mean to direct the manner of

something but not to direct that something come into being.”

Id. at 2644.

As to the Court’s prior cases, the Chief Justice noted that

“all have one thing in common: They uniformly describe the

power as reaching ‘activity.’” Id. at 2587; see also id.

(citing Lopez, 514 U.S. at 560; Perez v. United States, 402 U.S.

146, 154 (1971); Wickard v. Filburn, 317 U.S. 111, 125 (1942);

NLRB, 301 U.S. at 37). The joint dissenters similarly

distinguished the Commerce Clause cases on which the government

relied as “involv[ing] commercial activity,” id. at 2648

(emphasis in original), and “not represent[ing] the expansion of

the federal power to direct into a broad new field,” id. at

2646.

32
 Finally, both Chief Justice Roberts and the joint

dissenters expressed substantial concern about the practical and

operational effects of the individual mandate. Chief Justice

Roberts suggested that construing the commerce power to allow

Congress to mandate the purchase of health insurance would

“permit Congress to regulate individuals precisely because they

are doing nothing,” and “would bring countless decisions an

individual could potentially make within the scope of federal

regulation . . . .” Id. at 2587 (emphasis in original). The

joint dissenters expressed a similar concern, stating that

[i]f Congress can reach out and command even those
furthest removed from an interstate market to
participate in the market, then the Commerce Clause
becomes a font of unlimited power, or in Hamilton’s
words, “the hideous monster whose devouring jaws . . .
spare neither sex nor age, nor high nor low, nor
sacred nor profane.”

Id. at 2646 (ellipsis in original) (citing The Federalist No.

33, at 202 (Clinton Rossiter ed., 1961)).

C.

For the reasons set forth within, we find that the employer

mandate is no monster; rather, it is simply another example of

Congress’s longstanding authority to regulate employee

compensation offered and paid for by employers in interstate

commerce. To begin, we note that unlike the individual mandate

(as construed by five justices in NFIB), the employer mandate

does not seek to create commerce in order to regulate it. In

33
contrast to individuals, all employers are, by their very

nature, engaged in economic activity. All employers are in the

market for labor. And to the extent that the employer mandate

compels employers in interstate commerce to do something, it

does not compel them to “become active in commerce,” NFIB, 132

S. Ct. at 2587 (Roberts, C.J.) (emphasis in original); it merely

“regulate[s] existing commercial activity,” id., i.e., the

compensation of employees, see Congressional Budget Office, CBO,

Key Issues 5 (observing that “[e]mployers’ contributions [to

health insurance coverage] are simply a form of [employee]

compensation”). Liberty fails to recognize the distinction

between individuals not otherwise engaged in commerce and

employers necessarily so engaged.

Further, contrary to Liberty’s assertion, the employer

mandate does not require employers to “purchase an unwanted

product.” Post-Remand Reply Br. 16. Although some employers

may have to increase employee compensation (by offering new or

modified health insurance coverage), employers are free to self-

insure, and many do. See 78 Fed. Reg. 7314, 7318 (Feb. 1, 2013)

(confirming that a self-insured group health plan is an eligible

employer-sponsored plan satisfying the Act’s “minimum essential

coverage” requirement); Paul Fronstin, “Self-Insured Health

Plans: State Variation and Recent Trends by Firm Size,” Notes

(Employee Benefit Research Inst.), Nov. 2012, at 2 (“In 2011,

34
68.5 percent of workers in firms with 50 or more employees were

in self-insured plans . . . .”). 7

Having found that the provision regulates existing economic

activity (employee compensation), and therefore stands on quite

a different footing from the individual mandate, we further

conclude that the employer mandate is a valid exercise of

Congress’s authority under the Commerce Clause. It has long

been settled that Congress may impose conditions on terms of

employment that substantially affect interstate commerce, see

United States v. Darby, 312 U.S. 100 (1941) (upholding minimum

wage and overtime provisions of the Fair Labor Standards Act);

NLRB, 301 U.S. 1 (upholding National Labor Relations Act of

1935, which prohibited unfair labor practices), and regulate

activities that have a substantial impact on interstate

mobility, see Heart of Atlanta Motel, Inc., 379 U.S. 241

(prohibiting discrimination by hotel operators); Katzenbach, 379

U.S. 294 (prohibiting discrimination by restaurant owners).

Here, Congress did both.

First, the employer mandate regulates a term of employment

(compensation) that substantially affects interstate commerce.

7
We express no opinion as to whether the limitation on the
commerce power announced by five justices in NFIB constitutes a
holding of the Court. Rather, we assume without deciding that
it does, and conclude that the employer mandate is not
restricted by that limitation.

35
Health insurance provided as part of employees’ compensation “is

the primary source of coverage for the nonelderly,” CBO, Key

Issues 4, and “[h]ealth insurance and health care services are a

significant part of the national economy,” 42 U.S.C.

§ 18091(2)(B).

National health spending is projected to increase from
[$2.5 trillion], or 17.6 percent of the economy, in
2009 to [$4.7 trillion] in 2019. Private health
insurance spending is projected to be [$854 billion]
in 2009, and pays for medical supplies, drugs, and
equipment that are shipped in interstate commerce.

Id. “[E]mployers who do not offer health insurance to their

workers gain an unfair economic advantage relative to those

employers who do provide coverage,” and perpetuate a “vicious

cycle,” H.R. Rep. No. 111-443(II), at 985 (2010): “uninsured

workers turn to emergency rooms for health care” they cannot

afford, id.; “health care providers pass on the cost [of the

uncompensated care] to private insurers,” 42 U.S.C.

§ 18091(2)(F); and insurers “pass on the cost to families”

through premium increases, id., making it more expensive -- and

thus, more difficult -- for employers to insure their employees.

“The cost of providing uncompensated care to the uninsured was

[$43 billion] in 2008,” id., and “[t]he economy loses up to

[$207 billion] a year because of the poorer health and shorter

lifespan of the uninsured,” id. § 18091(2)(E). Accordingly,

36
health insurance provided as part of employee compensation has a

substantial impact on interstate commerce.

Second, the employer mandate regulates an activity

(employee compensation) that substantially affects workers’

interstate mobility. The availability and breadth of employer-

sponsored health coverage varies, see, e.g., CBO, Key Issues 44

(observing that “large employers are more likely than small

employers to offer health insurance”), and “[t]he availability

of health insurance options can affect people’s incentives to

enter the labor force, work fewer or more hours, retire, change

jobs, or even prefer certain types of firms or jobs,” id. at

162. “[E]mployees and their dependents typically have to change

plans when changing jobs and could become uninsured if their new

employer does not offer coverage,” id. at 8; “[e]mployment-based

insurance offers a number of advantages,” including “lower

administrative costs” and “favorable tax treatment” that “may be

difficult or impossible for workers to obtain by purchasing

insurance individually,” id. at 164. And “[p]eople who have

medical problems (or have family members with medical problems)

can have an incentive to stay in a job that provides health

insurance benefits in order to cover those preexisting

conditions, even if more productive opportunities exist

elsewhere.” Id. at 164–65. Thus, health insurance provided as

37
part of employee compensation substantially affects interstate

mobility, and thereby interstate commerce.

Our recognition of Congress’s authority to enact the

employer mandate does not “open a new and potentially vast

domain to congressional authority,” NFIB, 132 S. Ct. at 2587

(Roberts, C.J.), or “enable the Federal Government to regulate

all private conduct,” id. at 2643 (joint dissent). Requiring

employers to offer their employees a certain level of

compensation through health insurance coverage is akin to

requiring employers to pay their workers a minimum wage, Darby,

312 U.S. at 115, or “time and a half for overtime,” Overnight

Motor Transp. Co. v. Missel, 316 U.S. 572, 577 (1942). Thus,

our conclusion fits squarely within the existing core of the

Supreme Court’s jurisprudence, including the admonition of five

justices in NFIB that Congress may not, through its commerce

power, seek to create commerce in order to regulate it.

D.

For all these reasons, we conclude that Congress had a

rational basis for finding that employers’ provision of health

insurance coverage substantially affects interstate commerce,

see Raich, 545 U.S. at 22, and Congress’s regulation of this

activity does not run afoul of NFIB’s teachings. Accordingly,

we hold that the employer mandate is a valid exercise of

Congress’s authority under the Commerce Clause.

38
 V.

A.

Plaintiffs contend that “[t]he Taxing and Spending or

General Welfare Clause does not vest Congress with the authority

to enact the [individual and employer] mandates.” Original

Opening Br. 40. But in NFIB, the Supreme Court held that the

individual mandate exaction constituted a tax and that Congress

acted well within the scope of its constitutionally granted

authority in imposing it. 132 S. Ct. at 2594-2600. Clearly,

then, Plaintiffs’ contention fails with regard to the individual

mandate. And although NFIB did not present the Supreme Court

with an opportunity to address the constitutionality of the

employer mandate, we are convinced that the NFIB taxing power

analysis inevitably leads to the conclusion that the employer

mandate exaction, too, is a constitutional tax.

B.

The Constitution unambiguously grants Congress the power to

“lay and collect Taxes . . . .” U.S. Const. art. I, § 8, cl. 1.

The Supreme Court has defined a tax as a “pecuniary burden laid

upon individuals or property for the purpose of supporting the

government,” United States v. New York, 315 U.S. 510, 515

(1942), and described Congress’s taxing power as “very

extensive,” License Tax Cases, 72 U.S. 462, 471 (1866).

39
 In NFIB, the Supreme Court gleaned from precedent a

“functional approach” for determining whether an exaction,

whatever Congress calls it, constitutes a tax. 132 S. Ct. at

2595. Under that approach, the “essential feature” of any tax

is that “it produces at least some revenue for the Government.”

Id. at 2594. Additional characteristics indicative of a tax

include: the absence of a scienter requirement, collection by

the Internal Revenue Service through the normal means of

taxation, and the absence of negative legal consequences beyond

requiring payment to the IRS. Id. at 2595-97. The Supreme

Court illustrated its functional approach with a hypothetical:

Suppose Congress enacted a statute providing that
every taxpayer who owns a house without energy
efficient windows must pay $50 to the IRS. The amount
due is adjusted based on factors such as taxable
income and joint filing status, and is paid along with
the taxpayer’s income tax return. Those whose income
is below the filing threshold need not pay. The
required payment is not called a “tax,” a “penalty,”
or anything else. No one would doubt that this law
imposed a tax, and was within Congress’s power to tax.
. . . Interpreting such a law to be a tax would
hardly “[i]mpos[e] a tax through judicial
legislation.” Rather, it would give practical effect
to the Legislature’s enactment.

Id. at 2597-98 (citation omitted).

By contrast, the Supreme Court dismissed as largely

irrelevant the “regulatory motive or effect of revenue-raising

measures.” Id. at 2599. The Court recognized that some of its

older cases suggested a dichotomy between regulatory and

40
revenue-raising taxes: “A few of our cases policed the[] limits

[of Congress’s ability to use its taxing power to influence

conduct] aggressively . . . .” Id. (citing United States v.

Butler, 297 U.S. 1 (1936); Bailey v. Drexel Furniture Co., 259

U.S. 20 (1922)). But the Court rejected the revenue-versus-

regulatory distinction as defunct. Id. Accordingly, that

Congress “plainly designed” the Affordable Care Act “to expand

health insurance coverage” did not impact the Court’s taxing

power analysis in NFIB. Id. at 2596. The Court did, however,

attempt to distinguish taxes from penalties, explaining that “if

the concept of penalty means anything, it means punishment for

an unlawful act or omission.” Id. (quotation marks omitted).

C.

First, we examine the factors the Supreme Court considered

in upholding the individual mandate exaction as a constitutional

tax. In applying its “functional approach” to that exaction,

the Supreme Court concluded that it “looks like a tax in many

respects.” Id. at 2594. First and foremost, it will produce

“at least some revenue for the Government” -- namely “about $4

billion per year by 2017.” Id. Further attributes that

convinced the Supreme Court that the individual mandate exaction

constitutes a tax include: its “pa[yment] into the Treasury by

taxpayers when they file their tax returns”; the fact that “its

amount is determined by such familiar factors as taxable income,

41
number of dependents, and joint filing status”; and its

inclusion “in the Internal Revenue Code and enforce[ment] by the

IRS, which . . . must assess and collect it in the same manner

as taxes.” Id. (citations, quotation marks, and alterations

omitted). The Supreme Court also distinguished the individual

mandate tax from an exaction the Court invalidated as an

impermissible penalty in Bailey v. Drexel Furniture Co. The

Court noted that the individual mandate, unlike the provision at

issue in Drexel, contains no scienter requirement and does not

constitute “prohibitory financial punishment.” Id. at 2596

(internal quotation marks omitted).

Underscoring that the exaction was no penalty, the Supreme

Court stated that “[n]either the [Affordable Care] Act nor any

other law attaches negative legal consequences to not buying

health insurance, beyond requiring a payment to the IRS . . . .

[I]f someone chooses to pay rather than obtain health insurance,

they have fully complied with the law.” Id. at 2597. The Court

noted that an exaction may become so punitive that the taxing

power no longer authorizes it. Id. at 2599-2600. But because

the individual mandate exaction easily passed taxing power

muster, the Court refrained from delving deeper into that issue.

Id. at 2600 (“[T]he shared responsibility payment’s practical

characteristics pass muster as a tax under our narrowest

interpretations of the taxing power. Because the tax at hand is

42
within even those strict limits, we need not here decide the

precise point at which an exaction becomes so punitive that the

taxing power does not authorize it.” (internal citation

omitted)).

Finally, the Supreme Court swiftly dispelled any notion

that the individual mandate constituted a direct tax subject to

the constitutional apportionment requirement. See id. at 2598-

99; see also U.S. Const. art. I, § 9, cl. 4 (“No Capitation, or

other direct, Tax shall be laid, unless in Proportion to the

Census . . . .”). Having recognized only two types of direct

taxes -- those on individuals as individuals and those on

property -- the Supreme Court held that the individual mandate

payment fits into neither category. NFIB, 132 S. Ct. at 2598-

99.

At the end of the day, the Supreme Court concluded that

when an exaction “need not be read to do more than impose a

tax[,]” “[t]hat is sufficient to sustain it.” Id. at 2598. The

Court held that because the Affordable Care Act’s individual

mandate could be read simply as imposing a tax, Congress had the

power to enact it. The Supreme Court thus squarely rejected

Plaintiffs’ contention that the individual mandate exaction is

not a constitutional tax.

43
 D.

Turning now to the employer mandate, it is clear from the

provision’s face that it possesses the “essential feature” of

any tax: “it produces at least some revenue for the

Government.” NFIB, 132 S. Ct. at 2594; see 26 U.S.C. § 4980H.

Indeed, the Congressional Budget Office estimated that the

employer mandate exaction will generate $11 billion annually by

2019. See Liberty Univ., 671 F.3d at 419 (Wynn, J., concurring)

(citing 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).

Looking beyond the “essential feature” to other

“functional” characteristics, the exaction the Affordable Care

Act imposes on large employers “looks like a tax in many

respects.” Cf. NFIB, 132 S. Ct. at 2594. The exaction is paid

into the Treasury, “found in the Internal Revenue Code[,] and

enforced by the IRS,” which “must assess and collect it in the

same manner as” a tax. Id.; see also 26 U.S.C. §§ 4980H(d)(1),

6671(a). Further, the employer mandate lacks a scienter

requirement, does not punish unlawful conduct, and leaves large

employers with a choice for complying with the law -- provide

adequate, affordable health coverage to employees or pay a tax.

26 U.S.C. § 4980H(a)-(b). And finally, because the exaction

44
taxes neither individuals as such nor property, it is not a

direct tax subject to the apportionment requirement. Cf. NFIB,

132 S. Ct. at 2598-99.

Relying exclusively on Drexel, Liberty contends that the

employer mandate exaction nevertheless “cross[es] the line” from

a reasonable payment to a “potentially destructive”

unconstitutional penalty. Post-Remand Opening Br. 24-25.

Fatally for Liberty’s argument, Drexel is easily distinguishable

from the case at hand.

In Drexel, the Supreme Court invalidated a “so-called tax

on employing child laborers” as an impermissible penalty. See

NFIB, 132 S. Ct. at 2595 (citing Drexel, 259 U.S. 20). The

Supreme Court did so ostensibly because the penalty: (1)

carried a scienter requirement “typical of punitive statutes,

because Congress often wishes to punish only those who

intentionally break the law”; (2) imposed an “exceedingly heavy”

financial burden -- 10 percent of an offender’s net income --

even if the offender employed only one child laborer for only

one day of the year; and (3) was enforced at least in part by

the Department of Labor, an agency responsible not for

collecting revenue but rather for punishing labor law

violations. NFIB, 132 S. Ct. at 2595 (citing Drexel, 259 U.S.

at 36-37). In stark contrast to the penalty the Court struck

down in Drexel, the employer mandate exaction is devoid of any

45
scienter requirement and does not punish unlawful behavior.

Further, the exaction is collected by the Secretary of the

Treasury in the same manner as a tax. 26 U.S.C. §§ 4980H(d)(1),

6671(a).

Moreover, the amount of the employer mandate exaction is

proportionate rather than punitive. If Liberty offers adequate

health coverage, but that coverage fails to satisfy the employer

mandate’s affordability and minimum value requirements, Liberty

will be taxed $3000 times the number of employees who receive

government assistance, prorated on a monthly basis and subject

to a cap. Id. § 4980H(b)(1)-(2); see supra at 13. And if

Liberty fails to offer adequate health coverage to its full-time

employees, it will be taxed $2000 times thirty less than its

number of full-time employees -- presumably all of whom are

being deprived of coverage -- prorated over the number of months

for which Liberty is liable. 26 U.S.C. § 4980H(a), (c)(1),

(c)(2)(D)(i); see supra at 12-13.

We therefore reject Liberty’s argument that the employer

mandate imposes a penalty rather than a tax.

E.

In conclusion, the Supreme Court has already upheld the

individual mandate exaction as a constitutional tax. NFIB, 132

S. Ct. at 2594-2600. Similarly, the employer mandate exaction

“need not be read to do more than impose a tax.” Id. at 2598.

46
Accordingly, Congress had the power to enact it, and we must

uphold it. For these reasons, as well as those provided supra

in Part IV, we reject Plaintiffs’ contention that Congress

lacked authority under Article I of the Constitution to enact

the employer mandate.

VI.

Finally, Plaintiffs challenge the Act on various religion-

based grounds. In their second amended complaint, Plaintiffs

allege that the Act violates their rights under the First and

Fifth Amendments and the Religious Freedom Restoration Act

(“RFRA”), 42 U.S.C. § 2000bb-1. For the first time on this

appeal, they also seek to challenge on religious grounds certain

regulations implementing the Act. We initially consider the

claims alleged in the second amended complaint and then those

raised for the first time on this appeal.

A.

1.

Plaintiffs maintain that both the employer mandate and the

individual mandate violate their free exercise rights under the

First Amendment and RFRA. Specifically, they allege that the

mandates unlawfully force them to violate their religious belief

47
that “they should play . . . no part in facilitating,

subsidizing, easing, funding, or supporting . . . abortions.” 8

The Free Exercise Clause provides that “Congress shall make

no law . . . prohibiting the free exercise” of religion. U.S.

Const. amend. I. However, the Clause does not compel Congress

to exempt religious practices from a “valid and neutral law of

general applicability.” Emp’t Div., Dep’t of Human Res. v.

Smith, 494 U.S. 872, 879 (1990) (internal quotation marks

omitted). This is so even if such a law “has the incidental

effect of burdening a particular religious practice.” Church of

the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520,

531 (1993).

A neutral law of general applicability thus does not

violate the Free Exercise Clause. The Act is just such a law.

It has no object that “infringe[s] upon or restrict[s] practices

because of their religious motivation,” id. at 533 (emphasis

added), and imposes no “burden[] only on conduct motivated by

religious belief,” id. at 543 (emphasis added). Relying on

8
Plaintiffs have also attempted to characterize their
complaint as raising other religious liberty claims, for
example, that “[t]hey are Christians who believe in living out
their sincerely held religious beliefs in everyday life,
including in the lifestyle choices they make, of which managing
their health care privately is but one example.” See, e.g.,
Original Opening Br. 10. But, as the district court recognized,
“[a] fair reading of the complaint does not support this novel
characterization, and the parties have not briefed these
issues.” Liberty Univ., 753 F. Supp. 2d at 641 n.17.

48
Lukumi, Plaintiffs contend that the Act somehow effects a

“religious gerrymander[].” Original Opening Br. 45; see Lukumi,

508 U.S. at 534-35 (internal quotation marks omitted). But it

does no such thing. Unlike the ordinances struck down in

Lukumi, the Act does not set apart any particular religious

group. See 508 U.S. at 535-38. The Act therefore does not

violate the Free Exercise Clause.

Plaintiffs’ RFRA claim fares no better. RFRA provides

that, “even if the burden results from a rule of general

applicability,” the “Government may substantially burden a

person’s exercise of religion only if it demonstrates that

application of the burden to the person -- (1) is in furtherance

of a compelling governmental interest; and (2) is the least

restrictive means of furthering that compelling governmental

interest.” 42 U.S.C. § 2000bb-1(a)-(b).

Thus, by its own terms, RFRA directs application of strict

scrutiny only if the Government “substantially burden[s]”

religious practice. Id.; see also Goodall by Goodall v.

Stafford Cnty. Sch. Bd., 60 F.3d 168, 171 (4th Cir. 1995) (“[I]f

the [plaintiffs] cannot show that their exercise of religion is

substantially burdened by the [government’s] policy, the

[government] is not required to come forth with proof of its

interest.”). A substantial burden, in turn, requires

“substantial pressure on an adherent to modify his behavior and

49
to violate his beliefs.” Thomas v. Review Bd. of Ind. Emp’t

Sec. Div., 450 U.S. 707, 718 (1981).

Plaintiffs present no plausible claim that the Act

substantially burdens their free exercise of religion, by

forcing them to facilitate or support abortion or otherwise.

The Act specifically provides individuals the option to purchase

a plan that covers no abortion services except those for cases

of rape or incest, or where the life of the mother would be

endangered. See 42 U.S.C. § 18054(a)(6) (requiring that at

least one plan on each exchange exclude non-excepted abortions

from coverage). The Act also does nothing to prevent employers

from providing such a plan. Furthermore, the Act allows an

individual to obtain, and an employer to offer, a plan that

covers no abortion services at all, not even excepted services.

See 42 U.S.C. § 18023(b)(1)(A)(i). 9

Given that the mandates themselves impose no substantial

burden, the option of paying a tax to avoid the mandates’

requirements certainly imposes no substantial burden. On the

9
Plaintiffs also argue that a requirement “that individuals
and employers pay at least one dollar per person per month
directly into an account to cover elective abortions” unlawfully
burdens their religious exercise. Post-Remand Opening Br. 37
(citing 42 U.S.C. § 18023(b)(2)). But this provision applies
only if individuals choose to enroll in a plan through a health
insurance exchange that elects to cover abortions, for which
federal funding may not be used. Post-Remand Resp. Br. 34-35
n.13; see 42 U.S.C. § 18023(b)(1)(B)(i), (b)(2)(A)-(B).

50
contrary, this option underscores the “lawful choice” Plaintiffs

have to avoid any coverage they might consider objectionable.

See NFIB, 132 S. Ct. at 2600; see also Goodall, 60 F.3d at 171

(“It is well established that there is no substantial burden

placed on an individual’s free exercise of religion where a law

or policy merely operates so as to make the practice of the

individual’s religious beliefs more expensive.” (internal

quotation marks omitted)).

To the extent Plaintiffs contend that the tax payment

itself is a substantial burden, as the district court explained,

the Act “contains strict safeguards at multiple levels to

prevent federal funds from being used to pay for [non-excepted]

abortion services.” Liberty Univ., 753 F. Supp. 2d at 642-43;

see 42 U.S.C. § 18023(b)(2)(A) (prohibiting use of the Act’s

cost-sharing reduction or tax credits for abortion coverage);

id. § 18023(b)(2)(B)-(C) (requiring separate premiums for

coverage of abortion services); Exec. Order No. 13,535, 75 Fed.

Reg. 15,599 (Mar. 29, 2010) (implementing abortion

restrictions). We note also that “[t]axpayers generally are not

permitted to avoid payment of a tax when their objections

concern the manner in which government revenues are expended.”

Olsen v. Comm’r, 709 F.2d 278, 282 (4th Cir. 1983) (collecting

cases); see also Doremus v. Bd. of Educ., 342 U.S. 429, 433

(1952) (“[T]he interests of a taxpayer in the moneys of the

51
federal treasury are too indeterminable, remote, uncertain and

indirect to furnish a basis for an appeal to the preventive

powers of the Court over their manner of expenditure.”).

Accordingly, Plaintiffs’ free exercise claims –- both under

the Constitution and under RFRA -- fail.

2.

Plaintiffs also allege that the two religious exemptions in

the Act violate the Establishment Clause and their Fifth

Amendment equal protection rights. Of course, the mere

existence of religious exemptions in a statute poses no

constitutional problem. Rather, the Constitution freely permits

exemptions that will allow “religious exercise to exist without

sponsorship and without interference.” Walz v. Tax Comm’n, 397

U.S. 664, 669 (1970). Permissible benevolence morphs into

impermissible sponsorship only when the “proposed accommodation

singles out a particular religious sect for special treatment.”

Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 512 U.S.

687, 706-07 (1994). Thus, a court applies strict scrutiny only

to statutes that “make[] explicit and deliberate distinctions

between different religious organizations.” Larson v. Valente,

456 U.S. 228, 246-47 & n.23 (1982).

A statute without such distinctions, even one that has a

disparate impact on different denominations, need only satisfy

the less rigorous test set forth in Lemon v. Kurtzman, 403 U.S.

52
602 (1971). See Hernandez v. Comm’r, 490 U.S. 680, 695 (1989);

Koenick v. Felton, 190 F.3d 259, 264-65 (4th Cir. 1999)

(“[U]ntil the Supreme Court overrules Lemon and provides an

alternative analytical framework, this Court must rely on Lemon

in evaluating the constitutionality of legislation under the

Establishment Clause.” (internal quotation marks omitted)); cf.

Cutter v. Wilkinson, 544 U.S. 709, 717 n.6, 720 (2005)

(rejecting an Establishment Clause challenge to a statute making

no explicit religious distinction, without reaching Lemon,

“because it alleviates exceptional government-created burdens on

private religious exercise”). The Lemon test requires “a

secular legislative purpose,” a “principal or primary effect

. . . that neither advances nor inhibits religion,” and no

“excessive government entanglement with religion.” 403 U.S. at

612-13 (internal quotation marks omitted).

The first exemption Plaintiffs challenge is the individual

mandate’s religious conscience exemption. See 26 U.S.C.

§ 5000A(d)(2)(A). Plaintiffs maintain that this exemption

discriminates against their religious practice by applying only

to sects that conscientiously oppose all insurance benefits,

provide for their own members, and were established before

December 31, 1950. The religious conscience exemption adopts an

exemption of the Social Security Amendments of 1965 under 26

U.S.C. § 1402(g), which courts have consistently found

53
constitutional under the Establishment Clause and the Fifth

Amendment. See, e.g., Droz v. Comm’r, 48 F.3d 1120, 1124-25

(9th Cir. 1995); Hatcher v. Comm’r, 688 F.2d 82, 84 (10th Cir.

1979) (per curiam); Jaggard v. Comm’r, 582 F.2d 1189, 1189-90

(8th Cir. 1978) (per curiam); Henson v. Comm’r, 66 T.C. 835,

838-40 (1976); Palmer v. Comm’r, 52 T.C. 310, 314-15 (1969). As

the Supreme Court explained with respect to the § 1402(g)

exemption, “Congress granted an exemption . . . [to] a narrow

category which was readily identifiable,” i.e., “persons in a

religious community having its own ‘welfare’ system.” United

States v. Lee, 455 U.S. 252, 260-61 (1982).

Moreover, this exemption makes no “explicit and deliberate

distinctions” between sects, Larson, 456 U.S. at 246 n.23, and

so is subject only to the Lemon test, see Droz, 48 F.3d at 1124.

The exemption passes the Lemon test because it has a secular

purpose: “to ensure that all persons are provided for, either

by the [Act’s insurance] system or by their church.” Id.; see

also Corp. of Presiding Bishop of the Church of Jesus Christ of

Latter-Day Saints v. Amos, 483 U.S. 327, 335 (1987) (“[I]t is a

permissible legislative purpose to alleviate significant

governmental interference with the ability of religious

organizations to define and carry out their religious

missions.”). The exemption’s principal effects also neither

advance nor inhibit religion, but only assure that all

54
individuals are covered, one way or the other. And there is no

excessive entanglement with religion. Cf. Zelman v. Simmons-

Harris, 536 U.S. 639, 668 (2002) (O’Connor, J., concurring)

(noting that the Court has previously “folded the entanglement

inquiry into the primary effect inquiry,” which “ma[kes] sense

because both inquiries rely on the same evidence”); Madison v.

Riter, 355 F.3d 310, 319 (4th Cir. 2003) (same).

The second individual mandate exemption challenged by

Plaintiffs is the health care sharing ministry exemption. See

26 U.S.C. § 5000A(d)(2)(B). Plaintiffs maintain that it

unconstitutionally selects an arbitrary formation date of

December 31, 1999 as the eligibility cutoff. But even if the

exemption’s cutoff date is arbitrary, it is not

unconstitutional. For neither the cutoff’s text nor its history

suggests any deliberate attempt to distinguish between

particular religious groups. Accordingly, the cutoff need only

satisfy the Lemon test. See Hernandez, 490 U.S. at 695-96; cf.

Larson, 456 U.S. at 254 (applying strict scrutiny only when the

legislative history demonstrated “the provision was drafted with

the explicit intention of including particular religious

denominations and excluding others”).

Applying Lemon, the date serves at least two “secular

legislative purpose[s].” 403 U.S. at 612. First, the cutoff

ensures that the ministries provide care that possesses the

55
reliability that comes with historical practice. Second, it

accommodates religious health care without opening the

floodgates for any group to establish a new ministry to

circumvent the Act. The “primary effect” of the cutoff

accordingly “neither advances nor inhibits religion.” Id.

Further, given that it applies only secular criteria, the cutoff

does not “foster an excessive government entanglement with

religion.” Id. at 613 (internal quotation marks omitted).

Plaintiffs additionally contend that both the religious

conscience exemption and the health care sharing ministry

exemption violate their Fifth Amendment equal protection rights.

In furtherance of this argument they maintain that both

exemptions are subject to the heightened scrutiny that applies

“if the plaintiff can show the basis for the distinction was

religious . . . in nature.” Olsen, 709 F.2d at 283; Post-Remand

Opening Br. 56. Of course, “[i]f the justification for the

distinction is secular, it need only be rational.” Olsen, 709

F.2d at 283; see also City of Cleburne v. Cleburne Living Ctr.,

473 U.S. 432, 441-42 (1985). Here, the distinction made between

sects that oppose insurance and provide for themselves in their

own welfare system and those that do not, and the distinction

made between ministries formed before 1999 and those formed

after, are secular and thus subject only to rational basis

review. See Olsen, 709 F.2d at 283. Both distinctions are

56
rationally related to the Government’s legitimate interest in

accommodating religious practice while limiting interference in

the Act’s overriding purposes. Cf. Corp. of the Presiding

Bishop, 483 U.S. at 335.

We therefore conclude that Plaintiffs have failed to state

any plausible claim that the Establishment Clause or the Fifth

Amendment provide a basis for relief.

B.

In their recent post-remand briefs, Plaintiffs argue at

length that certain regulations implementing neither the

individual nor the employer mandate but another portion of the

Act -- § 1001, codified in part at 42 U.S.C. § 300gg-13 --

violate their religious rights. 10 See, e.g., Post-Remand Opening

Br. 2-5, 43-44. These new regulations require group health

plans to cover all FDA-approved contraceptive methods. See 45

C.F.R. § 147.130(a)(1)(iv) (2011); HRSA, Women’s Preventive

Services: Required Health Plan Coverage Guidelines, available

at http://www.hrsa.gov/womensguidelines.

Plaintiffs’ second amended complaint mentions neither

§ 1001 of the Affordable Care Act nor 42 U.S.C. § 300gg-13.

10
Section 1001 of the Affordable Care Act, inter alia,
amended the Public Health Service Act to require “[a] group
health plan and a health insurance issuer offering group or
individual health insurance” to provide, “with respect to
women,” free “preventative care and screenings.”

57
Further, the complaint does not mention contraception. To be

sure, the complaint specifies that Plaintiffs have “sincerely

held religious beliefs that abortions . . . are murder and . . .

they should play . . . no part in facilitating, subsidizing,

easing, funding, or supporting . . . abortions.” But the

complaint gives no notice that Plaintiffs challenge methods of

contraception or include within their challenge to “abortion”

all the forms of contraception they now label “abortifacients.” 11

Moreover, Plaintiffs did not challenge these regulations,

or make any argument related to contraception or abortifacients,

in the district court, in their first appeal before us, or in

their Supreme Court briefs. The Supreme Court in turn ordered a

limited remand simply “for further consideration in light of

National Federation of Independent Business v. Sebelius,” which

did not discuss this issue. See Liberty Univ., 133 S. Ct. 679.

11
In their new briefs, Plaintiffs seek to challenge as
abortifacients forms of FDA-approved contraception that may act
after fertilization, including emergency contraceptive pills and
intra-uterine devices. See Post-Remand Opening Br. 3-5. But
the Government does not define such contraceptives as
abortifacients or abortion. Well-established federal law
defines “pregnancy” to “encompass[] the period of time from
implantation until delivery.” 45 C.F.R. 46.202(f) (2001). The
forms of contraception that Plaintiffs now challenge, as they
themselves recognize, do not act after implantation, so they do
not terminate a “pregnancy” as defined in this regulation. See
FDA, Birth Control: Medicines To Help You, available at
http://www.fda.gov/ForConsumers/ByAudience/ForWomen/FreePublicat
ions/ucm313215.htm.

58
 Nevertheless, for the first time in their post-remand

briefs, Plaintiffs seek to challenge these regulations.

Generally, “a federal appellate court does not consider an issue

not passed upon below.” Singleton v. Wulff, 428 U.S. 106, 120

(1976); accord Muth v. United States, 1 F.3d 246, 250 (4th Cir.

1993). This rule applies with equal force when a party attempts

to raise an issue for the first time after remand. See Rowland

v. Am. Gen. Fin., Inc., 340 F.3d 187, 191 n.1 (4th Cir. 2003).

Of course, in our discretion, we can make “[e]xceptions to

this general rule” but we do so “only in very limited

circumstances.” Muth, 1 F.3d at 250. The Supreme Court has

explained that we are “justified” in making such an exception

when the “proper resolution is beyond any doubt” or “injustice

might otherwise result.” Singleton, 428 U.S. at 121 (internal

quotation marks omitted). We have also recognized that certain

other “limited circumstances” may justify such action, e.g.,

when refusal to do so would constitute plain error or result in

a fundamental miscarriage of justice, Muth, 1 F.3d at 250, or

where there is an intervening change in the case law, Holland v.

Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999).

Plaintiffs do not contend that any of these “limited

circumstances” apply here. There is good reason for this; none

does. We recognize that the Government initially promulgated

the regulations in question while this case was pending (i.e.,

59
approximately a month before the issuance of our earlier

opinion). See Liberty Univ., 671 F.3d 391; 76 Fed. Reg. 46,621

(Aug. 3, 2011). But a new implementing regulation cannot

“become a vehicle for converting plaintiffs’ lawsuit into a

challenge to the new regulation” when a “challenge to th[at]

regulation would raise substantially different legal issues from

the . . . arguments [already] propounded in th[e] lawsuit.”

Phillips v. McLaughlin, 854 F.2d 673, 676-77 (4th Cir. 1988);

see also Kinney v. Dist. of Columbia, 994 F.2d 6, 10 (D.C. Cir.

1993) (“[T]he term ‘intervening change in the law,’ [does] not

refer[] to a prospective [regulatory] change that could not

affect rights already accrued . . . .”).

Furthermore, several compelling reasons counsel against

taking up Plaintiffs’ challenge to the new regulations here. To

do so would require us not only to resolve a claim not

considered below, but also to do this in a second appeal three

years after the initiation of this lawsuit. To do so would also

require us to interpret new regulations, implementing a

provision of the Act never challenged in the second amended

complaint. 12 And to do so would require us to consider at this

12
Contrary to the Plaintiffs’ assertion, the second amended
complaint’s reference to § 1302 of the Affordable Care Act did
not preserve for our review a challenge to 42 U.S.C. § 300gg-13.
See Post-Remand Reply Br. 17–20 & n.7 (arguing that the
definition of “‘minimum essential coverage’ requires a
(Continued)
60
premature stage an argument that other appellate courts have

before them in cases in which plaintiffs have properly pled the

issue and a district court has addressed it.

Indeed, several of our sister circuits are considering such

cases, timely filed after the regulations at issue were

promulgated. See, e.g., Hobby Lobby Stores, Inc. v. Sebelius,

No. 12-6294, 2013 WL 3216103 (10th Cir. June 27, 2013) (en

banc); Gilardi v. U.S. Dep’t of HHS, No. 13-5069 (D.C. Cir.

docketed Mar. 5, 2013); Conestoga Wood Specialties Corp. v.

Sec’y of HHS, No. 13-1144, 2013 WL 1277419 (3d Cir. Feb. 8,

circuitous trip through various sections of the Act,” including
§ 1302, which defines “essential health benefits” to “include at
least preventive and wellness services partially defined in 42
U.S.C. § 300gg-13” and “has been part of Plaintiffs’ challenges
from the outset”). Section 1302, codified at 42 U.S.C. § 18022,
gives the Secretary authority to define what must be included in
an “essential health benefits package,” a “wholly different
term” from “minimum essential coverage.” Florida ex rel. Att’y
Gen. v. U.S. Dep’t of HHS, 648 F.3d 1235, 1251 (11th Cir. 2011),
rev’d in part on other grounds, NFIB, 132 S. Ct. 2566.

The term “essential health benefits package” refers to
the comprehensive benefits package that must be
provided by plans in the individual and small group
markets by 2014. The Act does not impose the
essential health benefits package on plans offered by
large group employers to their employees . . . .
“Minimum essential coverage” is the type of plan
needed to satisfy the individual mandate . . . . Many
. . . plan types will satisfy the mandate even if they
do not have the “essential health benefits package”
and regardless of the level of benefits or coverage.

Id. at 1250–51 (internal citations omitted).

61
2013); Grote v. Sebelius, 708 F.3d 850 (7th Cir. 2013); Annex

Med., Inc. v. Sebelius, No. 13-1118 (8th Cir. docketed Jan. 14,

2013); Korte v. Sebelius, No. 12-3841, 2012 WL 6757353 (7th Cir.

Dec. 28, 2012); Autocam Corp. v. Sebelius, No. 12-2673 (6th Cir.

docketed Dec. 26, 2012); Wheaton Coll. v. Sebelius, 703 F.3d 551

(D.C. Cir. 2012); O’Brien v. U.S. Dep’t of HHS, No. 12-3357 (8th

Cir. docketed Oct. 4, 2012).

Finding no circumstance justifying a premature resolution

of Plaintiffs’ new arguments and compelling reasons for refusing

to do so in this case, we decline to reach Plaintiffs’ challenge

to the new regulations. 13

VII.

In sum, in light of the Supreme Court’s teachings in NFIB,

we hold that we have jurisdiction to decide this case. On the

merits, we affirm the judgment of the district court dismissing

the complaint in its entirety for failure to state a claim upon

which relief can be granted.

AFFIRMED

13
For similar reasons, we decline to address Plaintiffs’
post-remand arguments that the regulations exempting religious
employers from required contraception coverage and accommodating
eligible non-profit employers unconstitutionally discriminate
against their religious views. See 45 C.F.R. 147.130; 78 Fed.
Reg. 39,869 (July 2, 2013).

62