Biden v. Nebraska

CONSIDERING STANDING THROUGH THE HIGHER EDUCATION LOAN AUTHORITY OF THE STATE OF MISSOURI

Biden argues that Missouri has failed to establish standing through MOHELA because any reduction in loan collections would not necessarily result in a reduction of revenue for Missouri. Brief for Petitioners, Biden et al. at 27. In other words, Biden argues that Missouri stated no legal authority for the proposition that, “if A causes financial harm to B, and B owes money to C, C has standing to sue A.” Id. In this case, “A” is the loan forgiveness plan, “B” is MOHELA, and “C” is Missouri. Id.

Biden also refutes Missouri’s treatment of harms against MOHELA as equivalent to harms against Missouri. Id. Biden notes that equating MOHELA’s harms with Missouri ignores the principle that “separately incorporated organizations are separate legal units with distinct rights.” Id. at 28; Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, Inc. Biden then points to the rule that an entity cannot premise its legal argument for relief based on the rights of third parties even if Missouri could have established MOHELA’s injury. Id. at 27–28.

Missouri disagrees and argues that it has demonstrated a future “sufficient likelihood of economic injury” due to Missouri’s inevitable monetary losses. Brief for Respondents, State of Nebraska et al. at 20. Missouri highlights that MOHELA’s financial obligations to the state include both substantial educational funds and scholarship grants. Id. at 21. Such obligations, notes Missouri, constitute over half of MOHELA’s operating expenses. Id. Thus, Missouri argues that financial harm to Missouri is inevitable when MOHELA’s revenue from student loans stops. Id. at 22.

Missouri also argues that it has standing based on MOHELA’s harms. Id. at 15. Missouri contends that MOHELA’s harms are the state’s harms because the Missouri legislature created MOHELA, retains the right to abolish MOHELA, and requires yearly reports from MOHELA. Id. at 16. Thus, Missouri argues that MOHELA counts as a state-controlled entity for the purposes of establishing standing. Id. at 18.

EXAMINING STANDING UNDER STATE TAX LAW

Biden argues that the student debt relief plan does not illicitly diminish the tax revenues of Iowa, South Carolina, Nebraska, and Kansas. Brief for Petitioners at 22. Biden argues that the states are not bound to define “gross income” according to the federal definition. Id. at 23. As such, Biden contends that any harm from the structuring of the tax law is due to those states’ own choice and not the plan. Id.

Biden further denies Arkansas, Missouri, and Nebraska’s argument that the plan will cause borrowers to consolidate their loans into Direct Loans rather than maintaining them under Family Education loans. Brief for Petitioners at 25. Biden refutes this contention by noting that the Department of Education declared that borrowers may not consolidate loans to obtain loan forgiveness. Id.

Iowa, South Carolina, Nebraska, and Kansas argue that the student debt relief plan will cause tax revenue deficits. Brief for Respondents at 23. These states also argue that the American Rescue Plan Act of 2021 (“ARPA”) will erase billions of dollars of debt that the states could have taxed upon discharge. Id. Further, these states argue that not taxing student loan discharges creates a direct harm. Id. at 24. Iowa, South Carolina, Nebraska, and Kansas contend that the effects of the ARPA establish a sufficient likelihood of economic injury, thus justifying the injunction. Id. at 25. These states also conclude that the harm is not self-inflicted because the taxation scheme existed prior to ARPA. Id.

The states of Nebraska, Arkansas, and Missouri contend that the program illicitly required the consolidation of “non-federally held FFEL Loans into Direct Loans.” Id. at 26. These states note that ARPA explicitly advised borrowers to consolidate their privately held FFEL loans with the Direct Loan program. Id. at 27. As a result, these states contend that consolidation caused a significant reduction in their loans. Id.

CONSIDERING WHETHER THE HEROES ACT AUTHORIZES STUDENT LOAN RELIEF

Biden argues that its student debt relief plan accords with the HEROES Act because the Act directly targets people who were harmed because of the pandemic. Brief for Petitioners at 33, 35. Biden contends that the plan establishes causation between the harm from the pandemic and the actions of the Secretary because the effects of the pandemic especially harmed low-income people. Id at 35. Biden then asserts that such harm caused low-income people to experience higher risk levels for delinquency and defaulting on their loans. Id.

Biden also argues that the plan was appropriately limited to “affected individuals.” Id. According to Biden, “affected individuals” are those who “[reside] or [are] employed in an area that is declared a disaster area . . . in connection with a national emergency.” Id.; 20 U.S. Code § 1098ee(c-d). Biden notes that all of the United States constituted a COVID-19 disaster area. Brief for Petitioners at 35. Biden also says that “affected individuals” include those who have “suffered direct economic hardship as a direct result of a . . . national emergency.” Id. 20 U.S. Code § 1098ee(c-d). Biden argues that the pandemic constitutes an appropriate national emergency, and that even eligible borrowers living abroad are still relevantly “affected” by the pandemic due to its global impact. Brief for Petitioners at 44­–45.

The six states disagree and contend that the Secretary has illicitly used his power to put borrowers in a better position than they were prior to the pandemic. Brief for Respondents at 39­–40. The six states argue that such financial assistance exceeds the power that Congress granted to the Secretary through the HEROES act. Id.

Further, the six states do not agree that the program is necessary to ameliorate a national emergency like the COVID-19 pandemic. Brief for Respondents at 47. The six states contend that the economic harm that borrowers experience is not sufficiently attributable to the pandemic. Id. Rather, the six states contend that the economic harm stems from a variety of other sources like Federal Reserve tactics, changing global economic policies, and international supply-chain issues. Id. Additionally, the six states argue that the Secretary did not limit the relief to “affected individuals,” because the program gave relief to financially well-off borrowers and to overseas borrowers. Id. at 49. The six states note that the Secretary’s own studies show that most borrowers who earn some income do not expect to have any difficulty paying back their loans. Id. at 49–50.

ANALYZING THE POWER OF THE SECRETARY AND THE MAJOR QUESTION DOCTRINE

Biden argues that the Major Questions Doctrine (the “Doctrine) has no bearing on this situation. Brief for Petitioners at 34. The Doctrine applies when the attempted use of power stands to have such great political and economic effects that it raises a question about whether Congress actually intended to confer that authority. Brief for Respondents at 30. Biden notes that many statutes affect economic and political concerns, but such effects do not authorize the courts to question every piece of legislation under the Doctrine. Brief for Petitioners at 48. Rather, Biden argues that the Doctrine is reserved for extraordinary cases that invoke regulatory authority—which Biden argues is not the case here. Id.

Biden argues that the Secretary did not exceed his scope of authority. Id. at 57. Rather, Biden notes that the Secretary’s attempted use of power is proportionate and reasonable because the plan is a one-time discharge necessary due to the dire financial circumstances caused by the COVID-19 pandemic. Id.

The six states disagree and argue that the Doctrine should apply because the attempted use of power has a great political and economic impact. Brief for Respondents at 30. The six states note that there is an economic impact because it will erase 430 billion dollars of government debt revenue and cost taxpayers more than 500 billion dollars over the next ten years. Id. at 31. Further, the six states contend that there is also political impact as the question of student loans is a hotly debated issue that is continually before the White House. Id.

The six states further note that the HEROES Act has never been used for the purpose of canceling student debt. Id. at 33. Rather, the six states note that forgiving student debt is an entirely novel application of the statute. Id. at 33–34.

EXAMINING WHETHER THE PROGRAM IS ABRITRARY AND CAPRICIOUS

Biden asserts that the plan is not arbitrary and capricious primarily because an agency need not explore every conceivable alternative in enacting a plan, the Secretary did not ignore reliance interests, and the plan was reasonably explained. Brief for Petitioners at 57, 60.

The six states disagree and argue that the program is arbitrary and capricious because the Secretary failed to consider alternative ways of ameliorating the situation, inadequately weighed reliance interests, and failed to explain the distinctions within the consolidation policy. Brief for Respondents at 50, 53.