Boris Badenov and Natasha Fatale struggle to think of a bad deed to perform, but then get an idea: An essay contest called "I Like being evil because..." (in 25 words or less). Bullwinkle, mistaking the word "evil" for "wevil", enters the contest and writes that he has the distribution rights in Moosylvania. Bullwinkle ends up winning and Boris presents him with a set of the "Encyclopedia Badanov", set to explode when Bullwinkle reads the entry on Moosylvania, which he does, but when it doesn't explode, Bullwinkle admits that he can't read and was reciting what he had memorized. Boris then takes the book and turns the page to Moosylvania, exploding on him.
Rocky and Bullwinkle then go to Washington, D.C. in an attempt to get Moosylvania qualified for statehood. Boris and Natasha, who think they'll lose their chances of distribution rights to evil if Moosylvania becomes a state, decide to disguise Butte, Montana as Washington, D.C.