Today the Supreme Court heard arguments from Biden v. Nebraska And Department of Education v. Brown, two cases challenging the legality of the Biden administration’s plan to cancel more than $400 billion in student debt, relying on the HEROES Act of 2003 and the national Covid-19 emergency. The big questions in both cases are whether the administration has the authority to grant loan forgiveness on such a large scale, and whether the plaintiffs in both cases (six state governments in one, two private parties who actually want the program to be broader in the other) have standing to challenge the program. I have already gone over the substantive issues here And hereand standing here, hereAnd here.
While the outcome won’t be known for weeks, possibly not until June, today’s oral arguments strongly suggest that the six Tory justices think the loan forgiveness scheme is illegal, while the three Liberals are of opposite opinion. Things are less clear on the permanent question. Judge Amy Coney Barrett may join the Liberal Three in finding that none of the plaintiffs have standing. But the other conservatives seem likely to decide that at least one (likely the state of Missouri) has it.
Various conservative justices have repeatedly signaled that they doubt the HEROES Act authorizes the Biden plan, both because the power to “waive or vary” the terms of student loans does not include large-scale cancellation of the debt principal, and because many of the plan’s 40 million potential beneficiaries are not actually “in a worse financial position relative to” their student loan obligations as a result of the Covid-19 pandemic, as the law requires it for the power to “waive or modify” to be authorized by the Covid National Emergency Declaration. In My opinionthe latter is the plan’s greatest legal weakness.
Chief Justice John Roberts cited evidence indicating that more than half of potential recipients do not believe they will have difficulty repaying their student loans. Of the rest, many have issues unrelated to the impact of the pandemic. Although Solicitor General Elizabeth Prelogar rightly pointed out that the law does not require a “case-by-case” assessment of each individual, such a massive overrun – covering tens of millions of people and hundreds of billions of dollars – obviously seems beyond what the law allows.
Conservative justices – and at least one liberal – have also indicated that they believe in the “major issues doctrine” – which demands Congress to “speak clearly when authorizing a [executive branch] agency to exercise powers of great economic and political significance” – applies here. Judge Sotomayor (who was sympathetic to the government on almost every other point), rightly pointed out that “the amount involved, the chief [Justice] mentioned the quarter [of] a trillion dollars or half a trillion dollars…seems to favor the argument that this is a major issue.”
None of the justices seemed to favor Prelogar’s argument that the major issues doctrine applies only to regulations, but not to federal benefits. Chief Justice Roberts noted that this ignores the fact that the purpose of the doctrine is to protect the separation of powers at all levels. Justice Alito commented that “to draw a distinction between benefit programs and other programs seems to presume that when it comes to the administration of benefit programs, a trillion dollars here, a trillion dollars there, it doesn’t really make a big difference to Congress.”
The Court does not need to resort to the major issues doctrine to rule against the administration. He could just make that decision based on the text of the HEROES Act. But the doctrine increases the burden of proof that the administration must assume. If the loan forgiveness policy is seen as solving a “major issue” (and the immense size of the expenditure suggests it is!), the government must not only show that the law authorizes the policy, but that it does” clearly”. If the Court concludes that the law is ambiguous, the federal government will lose.
From early, I thought the best chance for the Biden administration to save this policy was to gain quality. Today’s arguments confirm this.
Plaintiffs in both cases advance various theories of standing. But by far the strongest is that of the State of Missouri, based on the fact that Missouri has a state agency called the Higher Education Loan Authority of the State of Missouri (MOHELA), which handles many student loans backed by the federal government and risk losing money. if some of these loans are cancelled.
Interestingly, Prelogar conceded today that MOHELA would have standing if she brought the case herself! But she argues that the state of Missouri lacks standing to sue on behalf of MOHELA because MOHELA has independent company status and has the legal right to sue and be sued. In My opinion, this ignores the fact that MOHELA is a state agency performing public functions, that it is owned by the state, and therefore any financial losses incurred by MOHELA are also incurred by Missouri. The fact that there is some administrative separation between MOHELA and other state agencies is irrelevant.
Nevertheless, the three liberal justices seemed to buy this argument. Curator Amy Coney Barrett might also agree with that. She repeatedly insisted on this issue today. At one point she asked Nebraska Solicitor General Jim Campbell “[i]f MOHELA is an offshoot of the state, why didn’t you just pressure MOHELA and say you need to pursue this lawsuit?” That’s a reasonable question, and Campbell didn’t handle it well, in saying it’s “a matter of state policy.
A better answer is that while the state attorney general may not have the authority to order MOHELA to sue, it doesn’t change the fact that MOHELA belongs to Missouri, and therefore that the financial losses for MOHELA are also losses for the State. . The state government can limit the power of one state agency (the AG’s office) to control another (MOHELA). But that doesn’t change the fact that ultimately the state owns and controls both. While the AG may not have the authority to issue orders to MOHELA, it does have the authority to sue on behalf of the state as a whole, to advance the interests of the state, including those involving the assets of administratively independent state agencies.
It’s not entirely clear what direction Justice Barrett will take on this issue. While asking Campbell extensive permanent questions, she also at one point suggested that Missouri could become permanent simply on the basis that he owns MOHELA.
The other five conservative justices said little about Missouri’s position. If they were inclined to rule against the plaintiffs on this basis, I would expect them to push the issue much further.
Some of the conservatives also seem open to other quality arguments put forward by complaining states, such as more indirect financial losses they might suffer. Judge Neil Gorsuch noted that a majority of the Court granted statehood in Department of Commerce vs. New Yorkthe 2019 case challenging the legality of the Trump administration’s plans for the 2020 census, on the grounds that “undercounting the state’s population” would have potential effects on New York State eventually – in terms of any benefits he might receive later, that sort of ripple effect was sufficient to constitute standing in this case.” had standing to act, they probably would not have left in place the lower court injunctions blocking the implementation of the loan cancellation plan.
For all these reasons, I believe that at least five conservative judges will eventually conclude that at least one plaintiff in Biden v. Nebraska (probably Missouri) has standing. If so, they are likely to speak out against the program on its merits. But I admit that there is much more uncertainty on this question than on the substance.
Like I have underlined before, the Biden administration and its supporters have, in this case, pushed ultra-narrow stance theories traditionally associated with the political right. These theories were wrong when advanced by conservatives, and they are still wrong today.
Although there may be a majority to grant standing Biden v. Nebraskathe argument suggests that there is probably none in Ministry of Education c. Brown, THE slightly bent box brought by the conservative Job Creators Network on behalf of two plaintiffs who complain that the Biden program is not generous enough, excluding one of them altogether and forgiving the other less debt than he otherwise would have been the case. They argue that they have standing because the administration adopted the plan without going through the “notice and comment” procedure presumably required by the Administrative Procedure Act, which would have given them the opportunity to argue that the program should have been more generous to them.
During the argument, the Brown The plaintiffs’ attorney argued that, if the court rules the current loan forgiveness plan is illegal, the Biden administration could go back to the drawing board and draft a new — hopefully more generous — plan! – under the Higher Education Act 1965. In the process, there would be a notice and comment procedure, where its clients would have their say. Ironically, the Higher Education Act has been cited as a possible alternative justification for the current Biden plan by some of the administration’s supporters in the litigation (I have criticized this theory here).
Both liberal and conservative justices have criticized this status theory as too uncertain and convoluted. Among other things, it is far from clear that defeat in this case will actually lead the administration to try again, using the Higher Education Act. They might just decide to accept defeat and go home.
I myself think that the Brown applicants TO DO deserve to stand. But that’s largely because I think the current permanent doctrine is far too restrictive and should be largely abolished. At the very least, taxpayers should have a general right to challenge potentially illegal government spending. But it’s highly unlikely that the Supreme Court will endorse such radical (albeit correct!) notions anytime soon. Under current Supreme Court case law, the Brown the plaintiffs face a very uphill battle, despite prevailing in the lower court.
But even if the Brown plaintiffs lose standing, it won’t make much of a difference to the fate of the loan forgiveness program, as long as the plaintiffs in the other case win on this issue – and prevail on the merits as well. That still seems like the most likely outcome to me.