NOTICE: This opinion is subject to
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															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 20–1114

															_________________

															AMERICAN HOSPITAL ASSOCIATION, et al.,
PETITIONERS v. XAVIER BECERRA, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al.

															on writ of certiorari to the united states
court of appeals for the district of columbia circuit

															[June 15, 2022]

															Justice Kavanaugh delivered the opinion of the
Court.

															Under the Medicare statute, the Department of
Health and Human Services must reimburse hospitals for certain
outpatient prescription drugs that the hospitals provide to
Medicare patients. HHS’s total reimbursements to hospitals for
prescription drugs add up to tens of billions of dollars every
year.

															To set the reimbursement rates for the
prescription drugs, HHS has two options under the statute. First,
if HHS has conducted a survey of hospitals’ acquisition costs for
the drugs, HHS may set the reimbursement rates based on the
hospitals’ average acquisition costs—that is, the amount that
hospitals pay to acquire the prescription drugs—and may vary the
reimbursement rates for different groups of hospitals. Second and
alternatively, if HHS has not conducted such a survey, HHS must
instead set the reimbursement rates based on the average sales
price charged by manufacturers for the drugs (with certain
adjustments), and HHS may not vary the reimbursement rates
for different groups of hospitals.

															For 2018 and 2019, HHS did not conduct a survey
of hospitals’ acquisition costs for outpatient prescription drugs.
But HHS nonetheless substantially reduced the reimbursement rates
for one group of hospitals—Section 340B hospitals, which generally
serve low-income or rural communities. For those 340B hospitals,
this case has immense economic consequences, about $1.6 billion
annually.

															The question is whether the statute affords HHS
discretion to vary the reimbursement rates for that one group of
hospitals when, as here, HHS has not conducted the required survey
of hospitals’ acquisition costs. The answer is no. We therefore
reverse the judgment of the U. S. Court of Appeals for the
D. C. Circuit.

															I

															A

															In 2003, Congress passed and President George
W. Bush signed landmark legislation expanding Medicare to cover
prescription drugs. See Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, 117Stat. 2066, 42 U. S. C.
§1395. Under that 2003 law, HHS must annually set reimbursement
rates for certain outpatient prescription drugs provided by
hospitals. §1395 l (t)(14).

															The Medicare statute meticulously lays out the
formula that HHS must employ to set those reimbursement rates. As
relevant here, the agency’s reimbursement rate for each covered
outpatient prescription drug “shall be equal” to one of two
measures:

															“(I) to the average acquisition cost for the
drug for that year ( which, at the option of the Secretary, may
vary by hospital group (as defined by the Secretary based on
volume of covered OPD services or other relevant characteristics)),
as determined by the Secretary taking into account the hospital
acquisition cost survey data under subparagraph (D); or

															“(II) if hospital acquisition cost data are not
available, the average price for the drug in the year established
under section 1395u( o ) of this title, section 1395w–3a of
this title, or section 1395w–3b of this title, as the case may be,
as calculated and adjusted by the Secretary as necessary for
purposes of this paragraph.” §1395 l (t)(14)(A)(iii) (emphasis
added).

															To simplify a bit: Congress afforded HHS two
options to set the reimbursement rates for hospitals. Option 1
applies if the agency has conducted a survey of hospitals’
acquisition costs—that is, the amount that hospitals pay to acquire
the prescription drugs. If the agency has conducted a survey and
collected that data, HHS may set reimbursement rates based on the
hospitals’ “average acquisition cost” for each drug. See
§1395 l (t)(14)(A)(iii)(I); see also §1395 l (t)(14)(D)
(requirements for conducting surveys of hospitals’ drug acquisition
costs). Importantly for present purposes, if HHS has conducted a
survey of hospitals’ acquisition costs, option 1 authorizes HHS to
vary those reimbursement rates for different groups of
hospitals.

															Option 2 applies if HHS has not conducted a
survey of hospitals’ acquisition costs. In that circumstance, the
agency must set reimbursement rates based on “the average price”
charged by manufacturers for the drug, as “calculated and adjusted
by the Secretary as necessary for purposes of ” this statutory
provision. §1395 l (t)(14)(A)(iii)(II). The statute in turn
sets “the average price” as 106 percent of the drug’s average sales
price. See ibid . (citing §1395w–3a). Critically, option 2
does not authorize HHS to vary reimbursement rates for
different groups of hospitals.

															For more than a decade after those provisions
took effect in 2006, HHS did not conduct a survey of hospitals’
acquisition costs. Indeed, HHS has only once attempted to conduct
such a survey—in 2020, after this litigation commenced. At oral
argument in this Court, the Government explained that HHS had not
previously attempted to conduct such surveys because the surveys
are “very burdensome on the study takers,” are “very burdensome on
the hospitals,” and do not “produce results that are all that
accurate.” Tr. of Oral Arg. 41–42.

															As a result, until 2018, HHS consistently relied
on option 2 and set reimbursement rates for each drug based on the
average-sales-price data provided by manufacturers. Every year, HHS
set the reimbursement rates at about 106 percent of each covered
drug’s average sales price, and HHS used the same reimbursement
rates for all hospitals. In other words, until 2018, HHS never
varied the reimbursement rates by hospital group. See Medicare
Program: Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs, 82
Fed. Reg. 52490, 52494–52495 (2017).

															During its rulemaking for 2018, HHS proposed a
change to reduce the reimbursement rates only for 340B hospitals.
Importantly, HHS did not conduct a survey of hospital acquisition
costs. As a policy matter, HHS said that its existing reimbursement
rates resulted in what the agency viewed as overpayments to
hospitals that serve low-income or rural populations through the
federal 340B program. Federal law requires drug manufacturers to
sell prescription drugs to those 340B hospitals at prices below
those paid by other hospitals. See 42 U. S. C.
§256b(a)(1) (setting a “ceiling price” that manufacturers can
charge to 340B hospitals). Consistent with the Medicare statute,
however, HHS historically had reimbursed 340B hospitals for covered
outpatient prescription drugs at the same reimbursement rates that
were set for all other hospitals. For 2018, HHS said that the
uniform reimbursement rates combined with the discounted prices
paid by 340B hospitals for prescription drugs meant that 340B
hospitals were able to “generate significant profits” when they
provided the prescription drugs to Medicare patients. 82 Fed. Reg.
52494.

															In response to HHS’s proposed change, the 340B
hospitals countered that, under the Medicare statute, HHS could not
single out 340B hospitals without conducting a survey of hospitals’
acquisition costs. With respect to HHS’s policy arguments, the 340B
hospitals explained that the reimbursement payments for
prescription drugs helped those hospitals offset the considerable
costs of providing healthcare to the uninsured and underinsured in
low- income and rural communities. The 340B hospitals pointed out,
moreover, that Congress had long been aware of the situation.
Indeed, the hospitals claimed that Members of Congress not only
were aware, but actually intended for the 340B program’s drug
reimbursements to subsidize other services provided by 340B
hospitals. The hospitals noted that Congress had never singled out
340B hospitals for lower Medicare reimbursements for outpatient
prescription drugs. Nor, until 2018, had HHS ever done so.
Furthermore, the 340B hospitals asserted that reducing their
reimbursement rates for prescription drugs would force those
hospitals to eliminate or dramatically curtail other crucial
programs that provide a wide range of medical services in
low-income and rural communities—such as treatments for cancer,
mental health issues, opioid addiction, and diabetes.

															In the final rule for 2018, HHS decided to
establish two separate reimbursement rates: one rate for non-340B
hospitals and another rate for 340B hospitals. The reimbursement
rate for non-340B hospitals remained at the historical rate of
approximately 106 percent of the average sales price for each drug.
But HHS established a substantially reduced rate for 340B
hospitals—a rate equal to 77.5 percent of the average sales price
for each drug. In setting that rate, HHS relied on an estimate from
the Medicare Payment Advisory Commission that 340B hospitals
obtained prescription drugs at an average discount of at least 22.5
percent below the average sales price charged by manufacturers. Id ., at 52496, 52499. HHS estimated that the reduction in
the reimbursement rates for 340B hospitals would save Medicare (and
deprive 340B hospitals of ) about $1.6 billion annually, which
by law would be re-allocated for other Medicare services. Id., at 52509–52510. For 2019, HHS set reimbursement rates
for 340B hospitals in the same way.

															When setting the 2018 and 2019 reimbursement
rates, HHS acknowledged that it had not conducted a survey of
hospitals’ acquisition costs—the statutory prerequisite for varying
the reimbursement rates by hospital group. Id., at 52496.
Nonetheless, HHS pointed to its statutory authority under option 2
to “adjust” the average price “  ‘as necessary for purposes
of ’ ” this statutory provision. Id., at 52499.
HHS claimed that its authority to “adjust” the average price for
each drug also implicitly encompassed the authority to vary the
reimbursement rates by hospital group. Ibid .

															B

															The American Hospital Association, along with
two other hospital industry groups and several hospitals, sued in
U. S. District Court to challenge HHS’s 2018 and 2019
reimbursement rates for 340B hospitals. Among other things, the
Hospitals asserted that HHS did not conduct a survey of hospitals’
acquisition costs and therefore could not impose different
reimbursement rates on different groups of hospitals.

															In response, HHS first contended that various
statutory provisions precluded judicial review of the 2018 and 2019
reimbursement rates. As relevant here, HHS further argued that it
could vary the reimbursement rates by hospital group under its
authority to “adjust” the price-based reimbursement rates, even
though HHS had not conducted a survey of hospitals’ acquisition
costs.

															The District Court ruled for the Hospitals. The
court rejected HHS’s argument that the statute precluded judicial
review. On the merits, the court concluded that HHS had acted
outside its statutory authority, and the court remanded to HHS for
the agency to consider an appropriate remedy. See American
Hospital Assn. v. Azar , 385 F. Supp. 3d 1 (DC 2019)
(remedy); American Hospital Assn. v. Azar , 348
F. Supp. 3d 62 (DC 2018) (merits).

															A divided panel of the U. S. Court of
Appeals for the D. C. Circuit reversed. On the question of
judicial review, the court unanimously ruled that the statute did
not preclude judicial review. See American Hospital Assn. v. Azar , 967 F.3d 818, 824 (2020). On the merits, however, the
court upheld HHS’s reduced reimbursement rates for 340B hospitals. Id., at 828.

															In dissent, Judge Pillard contended that HHS’s
reduced reimbursement rates for 340B hospitals contravened the text
and structure of the statute. Id ., at 835. In her view, “HHS
may institute its large reductions, tailored for a distinct
hospital group,” only if the agency has conducted the required
survey of hospitals’ acquisition costs. Ibid. This Court granted certiorari. 594 U. S.
___ (2021).

															II

															HHS first argues that the Medicare statute
precludes judicial review of the 2018 and 2019 reimbursement rates.
See 42 U. S. C. §1395 l (t)(12). The Court of
Appeals rejected HHS’s preclusion argument, as did the District
Court. We likewise conclude that the statute does not preclude
judicial review of HHS’s reimbursement rates.

															This Court has long recognized a “strong
presumption” in favor of judicial review of final agency action. Weyerhaeuser Co. v. United States Fish and Wildlife
Serv ., 586 U. S. ___, ___ (2018) (slip op., at 11)
(quoting Mach Mining, LLC v. EEOC , 575 U.S. 480, 489
(2015)). Judicial review of final agency action in an otherwise
justiciable case is traditionally available unless “a statute’s
language or structure” precludes judicial review. Mach
Mining , 575 U. S., at 486.

															No provision in the Medicare statute precludes
judicial review of the 2018 and 2019 reimbursement rates.
More-over, the detailed statutory formula for the reimbursement
rates undermines HHS’s suggestion that Congress implicitly granted
the agency judicially unreviewable discretion to set the
reimbursement rates. Cf. Weyerhaeuser Co., 586 U. S.,
at ___−___ (slip op., at 13−14).

															HHS cites two
provisions—§§1395 l (t)(12)(A) and (C)—that preclude judicial
review of HHS’s “development of the classification system under
paragraph (2)” and “periodic adjustments made under paragraph
[(9)].” But both of those provisions refer to the general payment
methodology that HHS employs to set rates for other Medicare
outpatient services. By contrast, when HHS sets rates for
outpatient prescription drugs, it uses a different payment
methodology—namely, the methodology specified by paragraph (14) of
§1395 l (t). And nothing in the statute precludes judicial
review of reimbursement rates set under paragraph (14).

															HHS further argues that allowing judicial review
of the 2018 and 2019 reimbursement rates would be impractical
because the agency is required to operate the program on a
budget-neutral basis. Due to that budget-neutrality requirement,
HHS says that a judicial ruling invalidating the 2018 and 2019
reimbursement rates for certain hospitals would require offsets
elsewhere in the program. The Hospitals respond that various
potential remedies could make 340B hospitals whole for the past
shortfalls without running afoul of the budget-neutrality
provision. At this stage, we need not address potential remedies.
Regardless, HHS’s arguments against judicial review cannot override
the text of the statute and the traditional presumption in favor of
judicial review of administrative action.

															In sum, HHS’s preclusion argument lacks any
textual basis. We agree with the District Court and the Court of
Appeals that the Medicare statute does not preclude judicial review
of the 2018 and 2019 reimbursement rates.

															III

															We turn next to the merits. The question is
this: If HHS has not conducted a survey of hospitals’ acquisition
costs, may HHS still vary the reimbursement rates for outpatient
prescription drugs by hospital group? The answer is no. The 2003
Medicare Act authorizes HHS to set reimbursement rates for covered
outpatient prescription drugs provided by hospitals. The Act also
specifies how HHS must set those reimbursement rates. 42
U. S. C. §1395 l (t)(14)(A). The statute therefore
reflects a careful congressional focus not only on the goal of
proper reimbursement rates, but also on the appropriate means to
that end.

															To reiterate, the statute affords HHS two
options for setting reimbursement rates for outpatient drugs.
Option 1 applies if HHS collects “hospital acquisition cost survey
data” from hospitals. §1395 l (t)(14)(A)(iii)(I). If the
agency has conducted a survey and collected that data, then HHS may
use the data to set reimbursement rates equal to “the average
acquisition cost for the drug.” Ibid. Importantly, in that
circumstance, HHS may “vary” reimbursement rates “by hospital
group.” Ibid .

															By contrast, if HHS does not conduct a survey of
hospitals’ acquisition costs and if acquisition cost data are
therefore “not available,” HHS must instead proceed under option 2
and obtain price data from drug manufacturers.
§1395 l (t)(14)(A)(iii)(II). And in that circumstance, HHS
must set reimbursement rates based on “the average price for the
drug” as “calculated and adjusted by the Secretary as necessary for
purposes of ” this statutory provision. Ibid .
Critically, that second option does not authorize HHS to
vary reimbursement rates by hospital group. Instead, HHS must set
uniform reimbursement rates for all hospitals for each covered
drug, and the rates must be equal to the average price for that
drug for that year.

															HHS’s authority to proceed under option 1 and to
vary reimbursement rates by hospital group thus depends on whether
HHS has obtained acquisition cost survey data from hospitals. The
statute expressly authorizes HHS to vary rates by hospital group if
HHS has conducted such a survey. But the statute does not authorize
such a variance in rates if HHS has not conducted a survey. Cf. Babb v. Wilkie , 589 U. S. ___, ____ (2020) (slip
op., at 12); Sandoz Inc. v. Amgen Inc. , 582
U. S. ___, ___ (2017) (slip op., at 16); Russello v. United States , 464 U.S.
16 , 23 (1983).

															The statute thus protects all hospitals by
imposing an important procedural prerequisite—namely, a survey of
hospitals’ acquisition costs for prescription drugs—before HHS may
target particular groups of hospitals for lower reimbursement
rates. The survey allows the agency to determine whether there is
in fact meaningful, statistically significant variation among
hospitals’ acquisition costs. The data regarding variation in
hospitals’ acquisition costs in turn help HHS determine whether and
how much it should vary the reimbursement rate among hospital
groups. See §§1395 l (t)(14)(D)(iii)–(iv). But absent that
survey data, as Congress determined, HHS may not make
“billion-dollar decisions differentiating among particular hospital
groups.” 967 F. 3d, at 837 (Pillard, J., dissenting).

															In this case, all agree that HHS did not conduct
a survey of hospitals’ acquisition costs. See, e.g., 82 Fed.
Reg. 52501. HHS nonetheless varied the rates by hospital group,
fixing a substantially lower reimbursement rate for 340B hospitals
than for non-340B hospitals.

															Under the text and structure of the statute,
this case is therefore straightforward: Because HHS did not conduct
a survey of hospitals’ acquisition costs, HHS acted unlawfully by
reducing the reimbursement rates for 340B hospitals.

															HHS maintains that there is more to the case
than that straightforward analysis would suggest. HHS emphasizes
that even when it does not conduct a survey of acquisition costs
and thus is required to employ option 2 (based on price), the
agency still may “adjus[t]” the average price “as necessary for
purposes of ” this statutory provision.
§1395 l (t)(14)(A)(iii)(II).

															It is true that the statutory text of option 2
affords HHS discretion to adjust the average price. The parties
here vigorously debate how much HHS may adjust the price. To
resolve this case, however, we need not determine the scope of
HHS’s authority to adjust the price up or down.

															Regardless of the scope of HHS’s authority to
“adjust” the average price up or down under the statute, the
statute does not grant HHS authority to vary the reimbursement
rates by hospital group unless HHS has conducted the required
survey of hospitals’ acquisition costs. Under the statute, varying
a rate by hospital group is not a lesser- included power of
adjusting price. Otherwise stated, HHS’s power to increase or
decrease the price is distinct from its power to set different
rates for different groups of hospitals.

															The text of option 2 confirms the point. It
requires reimbursement in an “amount” that is equal to “the average
price for the drug in the year.” Ibid . The text thus
requires the reimbursement rate to be set drug by drug, not
hospital by hospital or hospital group by hospital group. The only
item that the agency is allowed to adjust is the “average price for
the drug in the year.” Ibid . Such an adjustment can consist
of moving the average-price number up or down, but it cannot
consist of giving a single drug two different average prices for
two different groups of hospitals. (Tellingly, before 2018, the
agency never used its adjustment authority to vary reimbursement
rates by hospital group.)

															Moreover, HHS’s contrary interpretation of the
statute—and its broad understanding of its adjustment
authority—would make little sense given the statute’s overall
structure. To proceed under option 1 (based on cost) and vary the
rate by hospital group, HHS must conduct a survey. In HHS’s view,
the agency can decline to conduct a survey and can proceed under
option 2, and then can still do everything under option 2 that it
could do under option 1—including varying the reimbursement rates
by hospital group. So under HHS’s interpretation, the agency would
never need to conduct a survey of hospitals’ acquisition costs. But
why, then, would Congress have constructed this elaborate statute
premised on HHS’s surveys of hospitals’ acquisition costs,
including specifying when HHS could vary reimbursement rates by
hospital group? HHS has no good answer to that question.

															HHS’s interpretation not only would render
irrelevant the survey prerequisite for varying reimbursement rates
by hospital group, but also would render largely irrelevant the
provision of the statute that precisely details the requirements
for surveys of hospitals’ acquisition costs. See
§1395 l (t)(14)(D). We must hesitate to adopt an
interpretation that would eviscerate such significant aspects of
the statutory text. See, e.g., Chicago v. Fulton , 592 U. S. ___, ___ (2021) (slip op., at 5); Maine Community Health Options v. United States , 590
U. S. ___, ___ (2020) (slip op., at 16); Whitman v. American Trucking Assns., Inc. , 531
U.S. 457 , 484−485 (2001).

															In short, the statute allows HHS to set
reimbursement rates based on average price and affords the agency
discretion to “adjust” the price up or down. But unless HHS
conducts a survey of hospitals’ acquisition costs, HHS may not vary
the reimbursement rates by hospital group.

															As a final argument, HHS insists that Congress
could not have intended for the agency to “overpay” 340B hospitals
for prescription drugs. But when enacting this statute in 2003,
Congress was well aware that 340B hospitals paid less for covered
prescription drugs. After all, that had been the law for the
duration of the 340B program, which began in 1992. In 2003,
Congress nonetheless did not see fit to differentiate 340B
hospitals from other hospitals when requiring that the
reimbursement rates be uniform under option 2. And for more than a
decade after this statute took effect, HHS employed option 2 but
did not differentiate 340B hospitals from other hospitals—an agency
practice that was known in the wider hospital industry and in
Congress.

															If HHS believes that this Medicare reimbursement
program overpays 340B hospitals, it may conduct a survey of
hospitals’ acquisition costs to determine whether and how much the
data justify varying the reimbursement rates by hospital group—for
example, reducing reimbursement rates paid to 340B hospitals as
compared to other hospitals. Or if the statute’s requirement of an
acquisition cost survey is bad policy or is working in unintended
ways, HHS can ask Congress to change the law.

															Of course, if HHS went to Congress, the agency
would presumably have to confront the other side of the policy
story here: 340B hospitals perform valuable services for low-income
and rural communities but have to rely on limited federal funding
for support. As amici before this Court, many 340B hospitals
contend that the Medicare reimbursement payments at issue here
“help offset the considerable costs” that 340B providers “incur by
providing health care to the uninsured, underinsured, and those who
live far from hospitals and clinics.” Brief for 37 State and
Regional Hospital Associations as Amici Curiae 7. As the
340B hospitals see it, the “net effect” of HHS’s 2018 and 2019
rules is “to redistribute funds from financially strapped, public
and nonprofit safety-net hospitals serving vulnerable
populations—including patients without any insurance at all—to
facilities and individuals who are relatively better off.” 967
F. 3d, at 840 (Pillard, J., dissenting). In other words, in
the view of those hospitals, HHS’s new rates eliminate the federal
subsidy that has helped keep 340B hospitals afloat. All of which is
to say that the 340B story may be more complicated than HHS
portrays it. In all events, this Court is not the forum to resolve
that policy debate.

															In sum, after employing the traditional tools of
statutory interpretation, we do not agree with HHS’s interpretation
of the statute. We conclude that, absent a survey of hospitals’
acquisition costs, HHS may not vary the reimbursement rates for
340B hospitals. HHS’s 2018 and 2019 reimbursement rates for 340B
hospitals were therefore contrary to the statute and unlawful.

															*  *  *

															We reverse the judgment of the U. S.
Court of Appeals for the D. C. Circuit and remand the case for
further proceedings consistent with this opinion.

															It is so ordered.

Summary: The Department of Health and Human Services (HHS) must reimburse hospitals for providing outpatient prescription drugs to Medicare patients, with rates based on either a survey of hospitals' acquisition costs or the average sales price charged by manufacturers. In 2018 and 2019, HHS reduced reimbursement rates for Section 340B hospitals serving low-income or rural communities without conducting the required survey. The Supreme Court ruled that HHS may not vary reimbursement rates for these hospitals without the survey and reversed the lower court's judgment, finding HHS's actions unlawful.


U.S. Supreme Court Schenck v. United States, 249 U.S.
47 (1919) Schenck v. United
States Nos. 437, 438 Argued January 9, 10,
1919 Decided March 3, 1919 249 U.S.
47 ERROR TO THE DISTRICT COURT OF THE
UNITED STATES FOR THE EASTERN DISTRICT OF
PENNSYLVANIA Syllabus Evidence held sufficient to connect the defendants with
the mailing of printed circulars in pursuance of a conspiracy to
obstruct the recruiting and enlistment service, contrary to the
Espionage Act of June 15, 1917. P 249 U. S. 49 . Page 249 U. S. 48 Incriminating document seized under a search warrant directed
against a Socialist headquarters, held admissible in
evidence, consistently with the Fourth and Fifth Amendment, in a
criminal prosecution against the general secretary of a Socialist
party, who had charge of the office. P. 249 U. S.
50 .

															Words which, ordinarily and in many places, would be within the
freedom of speech protected by the First Amendment may become
subject to prohibition when of such a nature and used in such
circumstances a to create a clear and present danger that they will
bring about the substantive evils which Congress has a right to
prevent. The character of every act depends upon the circumstances
in which it is done. P. 249 U. S.
51 .

															A conspiracy to circulate among men called and accepted for
military service under the Selective Service Act of May 18, 1917, a
circular tending to influence them to obstruct the draft, with the
intent to effect that result, and followed by the sending of such
circulars, is within the power of Congress to punish, and is
punishable under the Espionage Act, § 4, although unsuccessful. P. 249 U. S.
52 .

															The word "recruiting," as used in the Espionage Act, § 3, means
the gaining of fresh supplies of men for the military forces, as
well by draft a otherwise. P. 249 U. S. 52 The amendment of the Espionage Act by the Act of May 16, 1918,
c. 75, 40 Stat. 553, did not affect the prosecution of offenses
under the former. P. 249 U. S. 53 . Affirmed. The case is stated in the opinion.

															MR. JUSTICE HOLMES delivered the opinion of the court.

															This is an indictment in three counts. The first charges a
conspiracy to violate the Espionage Act of June 15, 1917, c. 30, §
3, 40 Stat. 217, 219, by causing and attempting Page 249 U. S. 49 to cause insubordination, &c., in the military and naval
forces of the United States, and to obstruct the recruiting and
enlistment service of the United States, when the United States was
at war with the German Empire, to-wit, that the defendants
willfully conspired to have printed and circulated to men who had
been called and accepted for military service under the Act of May
18, 1917, a document set forth and alleged to be calculated to
cause such insubordination and obstruction. The count alleges overt
acts in pursuance of the conspiracy, ending in the distribution of
the document set forth. The second count alleges a conspiracy to
commit an offence against the United States, to-wit, to use the
mails for the transmission of matter declared to be nonmailable by
Title XII, § 2 of the Act of June 15, 1917, to-wit, the above
mentioned document, with an averment of the same overt acts. The
third count charges an unlawful use of the mails for the
transmission of the same matter and otherwise as above. The
defendants were found guilty on all the counts. They set up the
First Amendment to the Constitution forbidding Congress to make any
law abridging the freedom of speech, or of the press, and bringing
the case here on that ground have argued some other points also of
which we must dispose.

															It is argued that the evidence, if admissible, was not
sufficient to prove that the defendant Schenck was concerned in
sending the documents. According to the testimony, Schenck said he
was general secretary of the Socialist party, and had charge of the
Socialist headquarters from which the documents were sent. He
identified a book found there as the minutes of the Executive
Committee of the party. The book showed a resolution of August 13,
1917, that 15,000 leaflets should be printed on the other side of
one of them in use, to be mailed to men who had passed exemption
boards, and for distribution. Schenck personally attended to the
printing. On Page 249 U. S. 50 August 20, the general secretary's report said "Obtained new
leaflets from printer and started work addressing envelopes"
&c., and there was a resolve that Comrade Schenck be allowed
$125 for sending leaflets through the mail. He said that he had
about fifteen or sixteen thousand printed. There were files of the
circular in question in the inner office which he said were printed
on the other side of the one sided circular, and were there for
distribution. Other copies were proved to have been sent through
the mails to drafted men. Without going into confirmatory details
that were proved, no reasonable man could doubt that the defendant
Schenck was largely instrumental in sending the circulars about. As
to the defendant Baer, there was evidence that she was a member of
the Executive Board, and that the minutes of its transactions were
hers. The argument as to the sufficiency of the evidence that the
defendants conspired to send the documents only impairs the
seriousness of the real defence.

															It is objected that the documentary evidence was not admissible
because obtained upon a search warrant, valid so far as appears.
The contrary is established. Adams v. New York, 192 U. S. 585 ; Weeks v. United States, 232 U. S. 383 , 232 U. S. 395 , 232 U. S. 396 .
The search warrant did not issue against the defendant, but against
the Socialist headquarters at 1326 Arch Street, and it would seem
that the documents technically were not even in the defendants'
possession. See Johnson v. United States, 228 U.
S. 457 . Notwithstanding some protest in argument, the
notion that evidence even directly proceeding from the defendant in
a criminal proceeding is excluded in all cases by the Fifth
Amendment is plainly unsound. Holt v. United States, 218 U. S. 245 , 218 U. S. 252 , 218 U. S.
253 .

															The document in question, upon its first printed side, recited
the first section of the Thirteenth Amendment, said that the idea
embodied in it was violated by the Conscription Act, and that a
conscript is little better than a Page 249 U. S. 51 convict. In impassioned language, it intimated that conscription
was despotism in its worst form, and a monstrous wrong against
humanity in the interest of Wall Street's chosen few. It said "Do
not submit to intimidation," but in form, at least, confined itself
to peaceful measures such as a petition for the repeal of the act.
The other and later printed side of the sheet was headed "Assert
Your Rights." It stated reasons for alleging that anyone violated
the Constitution when he refused to recognize "your right to assert
your opposition to the draft," and went on

															"If you do not assert and support your rights, you are helping
to deny or disparage rights which it is the solemn duty of all
citizens and residents of the United States to retain."

															It described the arguments on the other side as coming from
cunning politicians and a mercenary capitalist press, and even
silent consent to the conscription law as helping to support an
infamous conspiracy. It denied the power to send our citizens away
to foreign shores to shoot up the people of other lands, and added
that words could not express the condemnation such cold-blooded
ruthlessness deserves, &c., &c., winding up, "You must do
your share to maintain, support and uphold the rights of the people
of this country." Of course, the document would not have been sent
unless it had been intended to have some effect, and we do not see
what effect it could be expected to have upon persons subject to
the draft except to influence them to obstruct the carrying of it
out. The defendants do not deny that the jury might find against
them on this point.

															But it is said, suppose that that was the tendency of this
circular, it is protected by the First Amendment to the
Constitution. Two of the strongest expressions are said to be
quoted respectively from well known public men. It well may be that
the prohibition of laws abridging the freedom of speech is not
confined to previous restraints, although to prevent them may have
been the Page 249 U. S. 52 main purpose, as intimated in Patterson v. Colorado, 205 U. S. 454 , 205 U. S. 462 .
We admit that, in many places and in ordinary times, the
defendants, in saying all that was said in the circular, would have
been within their constitutional rights. But the character of every
act depends upon the circumstances in which it is done. Aikens
v. Wisconsin, 195 U. S. 194 , 195 U. S. 205 , 195 U. S. 206 .
The most stringent protection of free speech would not protect a
man in falsely shouting fire in a theatre and causing a panic. It
does not even protect a man from an injunction against uttering
words that may have all the effect of force. Gompers v. Bucks
Stove & Range Co., 221 U. S. 418 , 221 U. S. 439 .
The question in every case is whether the words used are used in
such circumstances and are of such a nature as to create a clear
and present danger that they will bring about the substantive evils
that Congress has a right to prevent. It is a question of proximity
and degree. When a nation is at war, many things that might be said
in time of peace are such a hindrance to its effort that their
utterance will not be endured so long as men fight, and that no
Court could regard them as protected by any constitutional right.
It seems to be admitted that, if an actual obstruction of the
recruiting service were proved, liability for words that produced
that effect might be enforced. The statute of 1917, in § 4,
punishes conspiracies to obstruct, as well as actual obstruction.
If the act (speaking, or circulating a paper), its tendency, and
the intent with which it is done are the same, we perceive no
ground for saying that success alone warrants making the act a
crime. Goldman v. United States, 245 U.
S. 474 , 245 U. S. 477 .
Indeed, that case might be said to dispose of the present
contention if the precedent covers all media concludendi. But, as the right to free speech was not referred to specially, we
have thought fit to add a few words.

															It was not argued that a conspiracy to obstruct the draft was
not within the words of the Act of 1917. The Page 249 U. S. 53 words are "obstruct the recruiting or enlistment service," and
it might be suggested that they refer only to making it hard to get
volunteers. Recruiting heretofore usually having been accomplished
by getting volunteers, the word is apt to call up that method only
in our minds. But recruiting is gaining fresh supplies for the
forces, as well by draft as otherwise. It is put as an alternative
to enlistment or voluntary enrollment in this act. The fact that
the Act of 1917 was enlarged by the amending Act of May 16, 1918,
c. 75, 40 Stat. 553, of course, does not affect the present
indictment, and would not even if the former act had been repealed.
Rev.Stats., § 13. Judgments affirmed.

Summary: In the case of Schenck v. United States (1919), the US Supreme Court upheld the conviction of Schenck, who had been charged with conspiring to distribute anti-war leaflets and obstruct the military draft during World War I. The Court, in an opinion by Justice Holmes, established the "clear and present danger" test, stating that the First Amendment's protection of free speech does not extend to speech that poses a clear and present danger of causing harm or substantive evil. In this case, the Court found that Schenck's actions, in the context of a nation at war, created a danger of obstructing the draft and hindering the war effort, and thus fell outside the protections of the First Amendment.