Professional Documents
Culture Documents
8th Cir Motion For Inj Pending Appeal
8th Cir Motion For Inj Pending Appeal
22-3179
Appellate Case: 22-3179 Page: 1 Date Filed: 10/21/2022 Entry ID: 5210216
TABLE OF CONTENTS
INTRODUCTION ...................................................................................... 1
STATEMENT ............................................................................................ 2
ARGUMENT ............................................................................................. 7
i
Appellate Case: 22-3179 Page: 2 Date Filed: 10/21/2022 Entry ID: 5210216
III. An injunction would not injure the Department, and the
public interest favors an injunction. .............................................. 26
CONCLUSION ........................................................................................ 27
CERTIFICATE OF SERVICE................................................................. 31
ii
Appellate Case: 22-3179 Page: 3 Date Filed: 10/21/2022 Entry ID: 5210216
INTRODUCTION
understood to have granted.” West Virginia v. EPA, 142 S. Ct. 2587, 2609
(2022). Yet the Biden Administration is doing exactly that through its
Mass Debt Cancellation, which will erase over $400 billion of the $1.6
States have standing, are facing irreparable harm, and are likely to
accruals are paused, and the Department can continue that forbearance
1
Appellate Case: 22-3179 Page: 4 Date Filed: 10/21/2022 Entry ID: 5210216
STATEMENT
U.S.C. §§1071 et seq. (FFEL), 1087a et seq. (Direct). Direct Loans are
held by the Department and serviced by entities that contract with the
396. MOHELA services accounts for borrowers in all 50 States. See id.
at 92–93.
secure bonds, and they earn income from the payments on those loans.
See R. Doc. 5-1, at 60, 66; R. Doc. 5-4, at 2, ¶6. MOHELA not only holds
2
Appellate Case: 22-3179 Page: 5 Date Filed: 10/21/2022 Entry ID: 5210216
FFEL loans but also services those loans, which provides it with “ongoing
revenue streams” from the interest payments and servicing fees. R. Doc.
ities (SLABS) secured by FFEL loans. See R. Doc. 5-2, at 1–2, ¶¶4–5.
State of Nebraska, including the pension fund, see Neb. Rev. Stat. §72-
2, ¶¶4–7.
and it is in place until December 31, 2022. See 87 Fed. Reg. 61512, 61514
(Oct. 12, 2022). Last month, the President declared “[t]he pandemic …
2s35maau.
3
Appellate Case: 22-3179 Page: 6 Date Filed: 10/21/2022 Entry ID: 5210216
II. Mass Debt Cancellation
dent debt relief” “[d]uring the [2020 presidential] campaign” and was now
dum, the Department revoked its prior view that cannot cancel student
first time that it has such power, see 87 Fed. Reg. 52943 (Aug. 30, 2022).
will eliminate $430 billion of the $1.6 trillion in federal student debt.
analyses project that the costs will reach up to $519 billion. R. Doc. 5-3,
at 23. Of the 43 million borrowers who still owe, see CBO Sept. 26, 2022
nearly 20 million “will have their debt completely canceled.” R. Doc. 5-3,
4
Appellate Case: 22-3179 Page: 7 Date Filed: 10/21/2022 Entry ID: 5210216
To be eligible, borrowers must owe on Direct Loans, FFEL loans, or
also must have had “an Adjusted Gross Income (AGI) below $125,000 for
in either the 2020 or 2021 Federal tax year.” Id. (emphasis added). The
a Pell grant and $10,000 for those who did not. Id.
federal student loans,” including FFEL loans, that they can receive the
Cancellation “by consolidating these loans into the Direct Loan program.”
federally held FFEL loans into Direct Loans. See Carmen Arroyo, Biden’s
That Memo did not consider any alternative to the widespread elimina-
tion of debt. Nor did it address why the Cancellation includes households
5
Appellate Case: 22-3179 Page: 8 Date Filed: 10/21/2022 Entry ID: 5210216
income cutoff in 2020 or 2021 (rather than in both years). The Secretary
did not carefully consider the Memo but rather signed off on it at 9:25 am
The States filed this suit on September 29. R. Doc. 1. That same
FFEL loans can no longer become eligible “by consolidating those loans
into Direct Loans,” but that borrowers “who have applied to consolidate
made this change to try to avoid lawsuits like this one because entities
holding and investing in FFEL loans were “widely seen, both inside and
Student Debt Relief for Millions Amid Legal Concerns, Politico (Sept. 29,
2022), https://tinyurl.com/2hexr9cf.
tion. R. Doc. 3. In response, the Department told the district court that
6
Appellate Case: 22-3179 Page: 9 Date Filed: 10/21/2022 Entry ID: 5210216
it might start discharging debt as soon as October 23. R. Doc. 27-1, at 4,
¶5. On October 20, the district court denied the States’ motion for a pre-
liminary injunction and dismissed their case for lack of standing. R. Doc.
44 & 46. Later that day, the States filed a notice of appeal, R. Doc. 47,
pending appeal, R. Doc. 48. Thereafter, the States filed this emergency
motion without waiting for the district court’s ruling because further
ARGUMENT
show (1) the likelihood of success on the merits; (2) the likelihood of
granted; and (4) the absence of any harm to the public interest if an
763, 764 (8th Cir. 1998). Those factors support an injunction here.
7
Appellate Case: 22-3179 Page: 10 Date Filed: 10/21/2022 Entry ID: 5210216
I. The States have a strong likelihood of success on appeal.
U.S. 47, 52 n.2 (2006). To establish standing, plaintiffs must show injury,
causation, and redressability. Kuehl v. Sellner, 887 F.3d 845, 850 (8th
analysis.” Massachusetts v. EPA, 549 U.S. 497, 520 (2007). The States
governor with the consent of the Missouri Senate. Id. It is part of the
§173.445.
8
Appellate Case: 22-3179 Page: 11 Date Filed: 10/21/2022 Entry ID: 5210216
student loans” and providing financial support to Missouri’s public
originated over $4 million in loans for Missouri students during the last
earned $88.9 million for “servicing 5.2 million” Direct Loan accounts and
services—the more it services, the more it earns, see R. Doc. 5-1, at 197–
98, 209–10, 258–69—and the Cancellation will result in nearly half of all
Doc. 5-3, at 31. Because many borrowers have more than one account,
see R. Doc. 5-1, at 403–07, MOHELA stands to lose at least half of the
9
Appellate Case: 22-3179 Page: 12 Date Filed: 10/21/2022 Entry ID: 5210216
Direct Loan accounts it services, which equates to millions of dollars of
revenue per year. Stripping MOHELA of that money will leave fewer
the State. See Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 983
‘injury.’”).
Doc. 44, at 13. But MOHELA is a state entity within Missouri’s Depart-
public purposes. Missouri has standing “to protect” these “rights and
of the State.” See Doc. 44, at 9 (citing that framework). But sovereign
10
Appellate Case: 22-3179 Page: 13 Date Filed: 10/21/2022 Entry ID: 5210216
immunity and standing are “distinct jurisdictional requirements.” Duit
Constr. Co. v. Bennett, 796 F.3d 938, 940 (8th Cir. 2015); accord
Calderon v. Ashmus, 523 U.S. 740, 745 n.2 (1998) (the two are not “coex-
tensive”).
are not available to pay MOHELA’s debts. See R. Doc. 44, at 10–11. Yet
that does not change the fact that MOHELA is (1) a state entity (2) that
will be financially harmed by the Cancellation (3) and that uses its finan-
loans and supporting the State’s higher education system. Mo. Rev. Stat.
baseline. See Neb. Rev. Stat. §77-2714.01(1); Iowa Code §422.7; Kan.
11
Appellate Case: 22-3179 Page: 14 Date Filed: 10/21/2022 Entry ID: 5210216
But under the American Rescue Plan Act of 2021, discharges occurring
before January 1, 2026, are not included in federal adjusted gross income.
Under existing law, the States are set to tax a substantial amount
of student loan debt discharge after 2025. Because the Cancellation will
result in less for the States to tax. Contrary to what the district court
said, see R. Doc. 44, at 18, that injury is “actual” and “imminent,”
Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013). The tax laws are
clear, and so their results here are certainly impending. Even if the total
Article III injury. See Czyzewski, 137 S. Ct. at 983. The Cancellation will
deprive the States of tax revenue, and they have standing to prevent such
losses.
The district court reasoned that State “legislatures are free to pro-
pose and pass tax revenue plans as they see fit.” R. Doc. 44, at 18. But
the States cannot “avoid injury altogether” because forcing them to exer-
cise their “power to create and enforce a legal code” is itself an injury, and
12
Appellate Case: 22-3179 Page: 15 Date Filed: 10/21/2022 Entry ID: 5210216
[another] does not negate standing.” Texas v. United States, 809 F.3d
ends ongoing interest payments from those loans; and it stops the fees
earned from servicing those loans. See R. Doc. 5-1, at 66–67, 87.
ation, ASLA held $100 million in FFEL loans. R. Doc. 5-4, at 2, ¶6. Since
the program was announced, about $6 million of those loans have been
13
Appellate Case: 22-3179 Page: 16 Date Filed: 10/21/2022 Entry ID: 5210216
consolidated. Id. at 2, ¶7. Because ASLA’s administrative fee is based
on the amount of its FFEL loans, the Cancellation has reduced ASLA’s
revenue. Id. at 2, ¶8. That, in turn, lowers ASLA’s funding to pursue its
FFEL SLABS, which returns the principal early and ends the interest
of FFEL loans increase because they “are consolidated under the Direct
in this way inflicts an “actual financial injury.” See Franchise Tax Bd.,
14
Appellate Case: 22-3179 Page: 17 Date Filed: 10/21/2022 Entry ID: 5210216
ignores that “voluntary cessation of a challenged practice” generally
Comer, 137 S. Ct. 2012, 2019 n.1 (2017). This rule is particularly salient
relief to borrowers with federal student loans not held by [the Depart-
direct borrowers who recently consolidated FFEL loans to pay part of the
The States also have standing to vindicate the sovereign and quasi-
v. Puerto Rico, ex rel., Barez, 458 U.S. 592, 607 (1982). And States may
15
Appellate Case: 22-3179 Page: 18 Date Filed: 10/21/2022 Entry ID: 5210216
States and its agents.” Kentucky v. Biden, 23 F.4th 585, 596–99 (6th Cir.
2022).
public function[s]” of providing student aid and funding the State’s public
Under the APA, a reviewing court shall “hold unlawful and set
Act. That Act provides, in relevant part, that the Secretary may “waive
16
Appellate Case: 22-3179 Page: 19 Date Filed: 10/21/2022 Entry ID: 5210216
of student financial assistance … who are affected individuals are not
The Supreme Court just reaffirmed that a federal agency may regu-
between $430 billion and $519 billion, see CBO Sept. 26, 2022 Letter at
3; R. Doc. 5-3, at 23, the economic significance is plain. See Ala. Ass’n of
Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485, 2489 (2021)
17
Appellate Case: 22-3179 Page: 20 Date Filed: 10/21/2022 Entry ID: 5210216
West Virginia, 142 S. Ct. at 2610, rejecting many sweeping student loan
relief. E.g., H.R. 2034, 117th Cong. (2021); H.R. 6800, 116th Cong.
ginia, 142 S. Ct. at 2610. Until now, the Department has “generally
was affording relief to those serving in the “military” for “our nation’s
18
Appellate Case: 22-3179 Page: 21 Date Filed: 10/21/2022 Entry ID: 5210216
Fourth, “the sheer scope of the [Department’s] claimed authority”
tors, 141 S. Ct. at 2489. The Department claims that the class of “affected
individuals” for whom it may grant relief includes every “borrower who
33–34. And it suggests that it could discharge all borrowers’ “entire loan
rates will rise.” R. Doc. 27-1, at 14. Courts greet such “assertions of
Virginia, 142 S. Ct. at 2614 (quotation marks omitted). None exists here.
First, the HEROES Act requires that the Secretary’s relief is “nece-
ssary to ensure” the assisted borrowers will not fall into “a worse position
But the Cancellation does not simply prevent borrowers from slipping
19
Appellate Case: 22-3179 Page: 22 Date Filed: 10/21/2022 Entry ID: 5210216
reducing the principal they owe. Additionally, the Secretary has not
same must be true of the relief afforded. See Jarecki v. G.D. Searle &
Co., 367 U.S. 303, 307 (1961) (“a word is known by the company it keeps”).
come cutoff)—are not remotely at risk of falling into a worse position. See
2020 or 2021).
20
Appellate Case: 22-3179 Page: 23 Date Filed: 10/21/2022 Entry ID: 5210216
Fourth, the Act limits relief to “affected individuals.” 20 U.S.C.
Fifth, the Act applies only when borrowers are facing “a worse
cult. R. Doc. 27-1, at 10–13. But these concerns stretch beyond COVID-
21
Appellate Case: 22-3179 Page: 24 Date Filed: 10/21/2022 Entry ID: 5210216
C. The States are likely to prevail on their APA arbitrary-
and-capricious claim.
Courts applying the APA must “hold unlawful and set aside agency
rescinds a prior policy its reasoned analysis must consider the alterna-
tives that are within the ambit of the existing policy.” Dep’t of Homeland
Sec. v. Regents of the Univ. of California, 140 S. Ct. 1891, 1913 (2020)
ance) are plainly within the ambit of the Department’s existing policy,
22
Appellate Case: 22-3179 Page: 25 Date Filed: 10/21/2022 Entry ID: 5210216
1908. The agency did not first identify the Cancellation as “necessary” to
cellation has long been the President’s goal, and his Administration is
mise.” See R. Doc. 5-3, at 29. Confirming this, the Secretary signed the
Rationale Memo, see R. Doc. 27-1, at 25, showing that the supposed
2575.
Third, the Department has not even tried to justify the Cancella-
ation—for the $250,000 household income cutoff. Nor has the agency
and thus “not writing on a blank slate, it was required to assess whether
23
Appellate Case: 22-3179 Page: 26 Date Filed: 10/21/2022 Entry ID: 5210216
there were reliance interests, determine whether they were significant,
Regents, 140 S. Ct. at 1915. But nothing in the agency materials suggests
that the Department did this. The failure to “consider[]” any “reliance
those who did not. R. Doc. 31-1, at 9. The agency never attempts to
for it.
action” by the federal government. Free Enter. Fund v. Pub. Co. Acct.
Oversight Bd., 561 U.S. 477, 491 n.2 (2010). That includes suits against
federal officials for “actions [that] are ultra vires [their] authority” or in
24
Appellate Case: 22-3179 Page: 27 Date Filed: 10/21/2022 Entry ID: 5210216
337 U.S. 682, 689–90 (1949). Thus, “judicial review is available” for the
of action” under the APA “is lacking.” Trudeau v. Fed. Trade Comm’n,
456 F.3d 178, 190 (D.C. Cir. 2006). The States are likely to succeed on
able harm. All four categories of injuries identified in the standing analy-
appear, which will cost MOHELA revenue. That revenue is not recover-
able and thus “qualif[ies] as irreparable harm.” Iowa Utils. Bd. v. FCC,
109 F.3d 418, 426 (8th Cir. 1996); see also Baker Elec. Co-op., Inc. v.
Chaske, 28 F.3d 1466, 1473 (8th Cir. 1994) (finding irreparable harm
25
Appellate Case: 22-3179 Page: 28 Date Filed: 10/21/2022 Entry ID: 5210216
potential tax revenue will be lost for good. Tellingly, the Supreme Court
Third, the harms to the States from FFEL loan consolidations also
irreparable. Med. Shoppe Int’l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801,
26
Appellate Case: 22-3179 Page: 29 Date Filed: 10/21/2022 Entry ID: 5210216
government action].” N.Y. Progress & Prot. PAC v. Walsh, 733 F.3d 483,
488 (2d Cir. 2013). Nor will an injunction harm borrowers because their
loan payments have been deferred and interest is not accruing, and the
true interest lies in the correct application of the law.” Kentucky, 23 F.4th
United States v. Newby, 838 F.3d 1, 12 (D.C. Cir. 2016). “[O]ur system
ends.” Alabama Ass’n of Realtors, 141 S. Ct. at 2490. Since the Cancell-
CONCLUSION
27
Appellate Case: 22-3179 Page: 30 Date Filed: 10/21/2022 Entry ID: 5210216
Dated: October 21, 2022 Respectfully submitted,
28
Appellate Case: 22-3179 Page: 31 Date Filed: 10/21/2022 Entry ID: 5210216
DEREK SCHMIDT ALAN WILSON
Attorney General of Kansas Attorney General of South Carolina
SHANNON GRAMMEL J. EMORY SMITH, JR.
Deputy Solicitor General of Deputy Solicitor General of
Kansas South Carolina
OFFICE OF THE KANSAS ATTORNEY OFFICE OF THE ATTORNEY GENERAL
GENERAL OF SOUTH CAROLINA
120 SW 10th Avenue, 2nd Floor P.O. Box 11549
Topeka, KS 66612 Columbia, SC 29211
(785) 296-2215 803-734-3680
[email protected] [email protected]
29
Appellate Case: 22-3179 Page: 32 Date Filed: 10/21/2022 Entry ID: 5210216
CERTIFICATE OF COMPLIANCE
32(a)(6) because it has been prepared using Microsoft Word 2016 in 14-
Local Rule 28A(h)(2) because it was scanned for viruses using Windows
30
Appellate Case: 22-3179 Page: 33 Date Filed: 10/21/2022 Entry ID: 5210216
CERTIFICATE OF SERVICE
motion with the Clerk of the Court by using the CM/ECF system, and
that the CM/ECF system will accomplish service on all parties repre-
sented by counsel who are registered CM/ECF users. I also certify that
Thomas Pulham
[email protected]
Courtney L. Dixon
[email protected]
Simon C. Brewer
[email protected]
Michael S. Raab
[email protected]
Sarah W. Carroll
[email protected]
31
Appellate Case: 22-3179 Page: 34 Date Filed: 10/21/2022 Entry ID: 5210216