Courthouse Steps Oral Argument: Dept. of Ed. v. Brown & Biden v. Nebraska

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February 28, 2023, the U.S. Supreme Court will hear oral argument in two cases challenging the Biden Administration's Student Loans forgiveness program: Board of Education v. Brown and Biden v. Nebraska

In August 2022, the Biden Administration's Department of Education announced plans to forgive up to $20,000 in federal student loans for borrowers who qualified. In order to do this, the DOE relied on the HEROES Act, which allows the government to modify student loans, among other things, during a national emergency.

Both cases challenge this action. Biden v. Nebraska involves a challenge to the Executive action from six states who contend they will suffer direct harm based on a loss of tax revenue. In Department of Education v. Brown, two individual borrowers, one of whom has loans that are fully intelligible for forgiveness under the program, and one of whose loans only qualify for part of the maximum relief possible, also challenge the legitimacy of the program. 

The Court will be faced with two questions in both cases: first, do the challengers, whether they be the states or the individual borrowers, have standing to sue? The Biden administration contends neither of the respondents possess standing. Second, assuming the Court decides there is standing to sue, the Court will face the question “Does the plan exceed the statutory authority available to the Secretary of Education, and adopted in a procedurally proper manner?”

We will break down and analyze how oral argument went in both cases in this Courthouse steps program.

Featuring:

  • Mark Chenoweth, President and General Counsel, New Civil Liberties Alliance

 

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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript

[Music]

 

Chayila Kleist:  Hello, and welcome to The Federalist Society's webinar call. Today, March 1, 2023, we host a Post-Oral Argument Courthouse Steps on two cases: the United States Department of Education v. Brown and Biden v. Nebraska, which was argued just yesterday before the Court. My name is Chayila Kleist, and I'm an Assistant Director of Practice Groups here at The Federalist Society. As always, please note that all expressions of opinion are those of the expert on today's call, as The Federalist Society takes no position on particular legal or public policy issues.

 

In the interest of time, we'll keep the introduction of our speaker brief, but if you'd like to know more about him, you can have his impressive full bio at fedsoc.org. Today, we are fortunate to have with us Mark Chenoweth, who is the President and Senior Counsel at the New Civil Liberties Alliance.

 

Throughout his career, Mr. Chenoweth observed the administrative state from positions across the federal government and in the private sector. Regarding his time in government, Mr. Chenoweth served as the first chief of staff to Congressman Mike Pompeo; as legal counsel to Commissioner Anne Northup at the U.S. Consumer Product Safety Commission; as an attorney advisor at the Office of Legal Policy at the U.S. Department of Justice; and as a law clerk to the Honorable Danny Boggs at the U.S. Court of Appeals for the Sixth Circuit.

 

In the private sector, Mr. Chenoweth has worked in several different roles as well. He began his legal career in D.C. as a regulatory associate Wilmer, Cutler & and Pickering. He then returned to his home state of Kansas to serve as in-house counsel for Koch Industries, and most recently, prior to coming to work at the NCLA, he spent over four years in general counsel to the Washington Legal Foundation. And I'll leave it there.

 

One last note: Throughout the panel, if you have any questions, please submit them via the Question and Answer feature, which you can find generally at the bottom of your Zoom screen, so that we'll access them when we get to that portion of today's webinar. With that, thank you all for being with us today. Mr. Chenoweth, the floor is yours.

 

Mark Chenoweth:  Well, thank you very much, Chayila. And I just wanted to say that I'm going to start with the Biden v. Nebraska argument, and this was a fairly high-quality argument with many interesting angles explored. So we're not going to be able to cover everything in the hour that we have here, especially if we want to leave time for Q&A, which I do, but I do encourage you to read the transcript if you didn't already listen to the oral argument.

 

Solicitor General Prelogar tries to lay out a simple case in defense of the administration's loan forgiveness program. She said that Secretaries of Education from the Trump and Biden administrations had already invoked the HEROES Act to suspend payment of principal and interest during the pandemic, so this is just a further extension of what she termed that unchallenged authority. She says student loan borrowers will be worse off without this relief because ending forbearance without it will cause defaults and delinquencies greater than what occurred pre-pandemic, and so Secretary Cardona crafted debt relief to ensure borrowers would not be worse off.

 

So two quick things about that: First, the idea that this is unchallenged authority isn't true, even in the context of this case. The New Civil Liberties Alliance, in our amicus brief to the Court, actually challenged the forbearance authority and said that it was unlawful as well, so it's not true that that's unchallenged. And then, the idea that she said that they're essentially going to forgive this debt to avoid defaults, that seems a little like a funny concept to me. That's essentially saying, "Well, the cure to shoplifting is giving everything on the shelves away." It's a very odd way to think about how to stop default.

 

In any event, the second point that she makes is that the states lack standing to challenge the relief. There's an entity in the state of Missouri called MOHELA that is set up as a separate corporate entity in charge of the loan disbursement in Missouri. She said it's a separate legal person and the state's claims about tax revenues or revenues coming from MOHELA are self-inflicted and indirect and don't give the state standing in this case.

 

Her third point is that the best reading of the plain text expressly authorizes the Secretary under the HEROES Act to "waive or modify" "any" Title IV provision in an emergency situation, and no one in this oral argument, at least, took issue with whether or not the emergency trigger had been pulled here.

 

Justice Gorsuch did ask what authorities did the president invoke and did he ever invoke the HEROES Act as part of that? Prelogar's answer to that was, "Well, this works in the opposite direction that, once an emergency exists, then the HEROES Act says that you can invoke the HEROES Act." Don't know that that's going to surface again, but that might have been an Easter egg that Justice Gorsuch was dropping. I don't think so, but we'll find out.

 

What Prelogar said is that loan forgiveness is a usual form of debt relief, and so the Secretary was acting in the heartland of his statutory authority and consistent with the HEROES Act's purpose in forgiving the debt. And lastly, she said that applying the major questions doctrine to override the clear text here would put the judiciary in the position of overriding the will of Congress in order to deny student borrowers' critical relief.

 

Well, let's hold off on the issue of standing for just a minute. We could spend a whole hour talking about that—It came up a lot in both cases—but let's jump instead right into the Court's skepticism of the government's argument on the merits of Prelogar's other three points. So first, as I say, Solicitor General Prelogar got less pushback than she should have on what I think is a misleading claim that Secretaries of Education of both parties have invoked the HEROES Act to suspend principal and interest payments.

 

It fell to Solicitor General Campbell of Nebraska to point out that, in fact, Congress had authorized six months of suspended interest and principal payment in the CARES Act. And it's true that Secretary DeVos had, for a few days before the CARES Act was passed, talked about suspension, but before there was ever any even opportunity to challenge that, Congress stepped in and essentially made the decision for the Secretary but did put a six-month cap on that. At the end of that six-month period, Secretary DeVos did extend that once into December, and then another time in December, and I believe it wasn't until December of 2020 that the HEROES Act was invoked.

 

So the idea that the HEROES Act has been in play from the beginning isn't really true. It was the CARES Act that was initially responsible for the suspension of principal and interest payments, and that was a statute of Congress. This case, thus, bears a striking similarity to the Alabama Realtors case, which also dealt with something Congress did for several months—in that case, an eviction moratorium on federally subsidized housing—that the administration then tried to extend for many months and expand beyond subsidized housing. And we saw what happened there when it reached the Supreme Court. The Court eventually got fed up with that, and I strongly suspect it won't put up with Secretary of Education's extension and expansion of the CARES Act in this dimension, either, but we'll find out.

 

In any event, Prelogar also claimed that no one -- Well, as I say, she said no one has challenged the use of the HEROES Act, and that may be true that no lawsuits have been filed on that, but the issue was joined in the amicus briefs here. And what Solicitor General Campbell pointed out is that the HEROES Act has never before been used to forgive a single loan, and Justice Thomas noted that loan cancellation or forgiveness is different than mere suspension of payment.

 

And that brings us to Prelogar's arguments about the text. Justice Thomas asked and pointed out that Congress uses express language regarding cancellation elsewhere, but not in the HEROES Act, and so he seems to be suggesting that a waiver or modification of provisions might not extend to a complete cancellation of debt. But Prelogar says, quite unabashedly, that what the Secretary did was to waive any provisions that didn't apply and modify others by adding provisions that he wanted.

 

So she calls it "mapping the verbs." And, of course, what she's talking about is wholesale rewriting of the statute. It would be like taking the sentence, "Neil Armstrong was the first man to walk on the moon," waiving everything but the moon, and then modifying the sentence to add green cheese, and then producing the sentence, "The moon is made of green cheese" and saying that that's merely a modified version of the original sentence about Neil Armstrong being the first man to walk on the moon. The resulting sentence is unrecognizable from the first. It seems to be far beyond a waiver or a modification.

 

But Prelogar is very insistent that the text of the statute is quite broad, that the Secretary can waive or modify any provision so that the lack of mention of cancellation isn't meaningful to her, especially where no other forms of relief are mentioned, either. So it's not as though four or five forms are mentioned and cancellation isn't mentioned. No forms of relief are mentioned. So she would have Congress handing the Secretary of Education the keys to the kingdom in terms of forms of relief that would be allowed.

 

Chief Justice Roberts, interestingly, picks up on this problem and brings in Justice Scalia's notion from the MCI case that modification has to be modest, not a wholesale rewriting. And he notes, "We're talking about a half a trillion dollars here and something that impacts 43 million Americans." Prelogar's short answer to that is that waive or modify is broader than just modify, and her limiting principle appears to be that the subject matter of loans is generally within the Secretary of Education's domain so that he's apparently entitled to rewrite the law however he pleases, so long as there is an emergency and so long as he's still dealing with student loans.

 

I don't know that the Court's appetite for such statutory adventurism will be as robust. The Chief notes that the law speaks of waiving provisions, not waiving loan balances, and when it came to be Solicitor General Campbell's turn to get up to speak, he made the point—which I think is interesting—that, really, they weren't even waiving these provisions because the provisions still apply. If you want to continue to operate under the provisions that existed before, you can still do that. So the provisions haven't been waived.

 

Essentially, what happened is certain provisions were added and other provisions were excluded, and a whole new program was set up, almost like picking words out of a book, and I think "red penciling" was the term that Justice Amy Coney Barrett used to describe what the Secretary did here. And it has a lot of a line item veto feel to it, and that's why the point Solicitor General Campbell made is, "Look, this has a Clinton v. New York problem." That was the line item veto case. If the Secretary is allowed to do this, then the Secretary is essentially line item vetoing parts of the HEROES Act, and that's not allowed.

 

Even if Congress tried to give the Secretary that power, we know from the line item veto case that that doesn't matter, that it's still unconstitutional. So I don't know that that much of a rewrite is something that Court is going to accept, and I'm not sure how they would handle the Clinton v. New York precedent if they decided that this rewrite was okay.

 

Prelogar boldly claims that Congress could not have been surprised one bit that a future Secretary of Education would take the HEROES Act and forgive half a trillion dollars in debt. She says, "Discharge is what it takes to make sure borrowers don't default." Again, it's the "stop shoplifting by giving away the store" sort of logic here. And, look, that might work in an individual case like Jean Valjean and the silver candlesticks from Les Misérables, but the idea that Congress authorized wholesale canceling of debt to avoid default is a bit rich, and the point of avoiding default is to maximize repayment of debt to the government. Canceling debt does not maximize repayment when you're wiping it out in the process. Nothing is ever repaid then. So the government is guaranteed a complete loss versus at least a chance of repayment, and I just don't think the Court is going to buy the logic that says Solicitor General Prelogar is selling there.

 

The Chief seemed to think, for one, that Congress could be easily surprised by the idea that borrower relief would lead to total loan forgiveness. Prelogar tries to take the case of forgiving a single soldier's debt and uses that to say -- and sort of spins out this hypothetical where a lot of bad things happened to a soldier on active duty and the Secretary decides to forgive that soldier's debt, and then says, "Well, if that's possible under the statute, then it's possible for 43 million people" in this sort of wholesale way.

 

Justice Sotomayor then picked up on the Chief's mentioned of a half-trillion dollars and asked if this is a major question for these sort of economic impact reasons, and Prelogar said, "It can't just be economic." And she offered some additional factors why she thinks that this case is not in major questions doctrine territory. Primarily, she said, "This is an administration of benefits, not a regulatory action that impinges on individual liberty."

 

And several of the justices came back at her later in the argument on that point and tried to suss out whether there was something., but the first one came from Justice Alito, and he wanted to know if there's really a doctrinal difference or if there's really something that would justify treating benefits differently from regulatory actions here, given that what we're really concerned about is the separation of powers and that matters as much in the benefits context as it does in the regulatory action context.

 

Prelogar claimed that that actually cuts in the government's favor because, when you think about separation of powers, the Court is the one that would be overriding Congress's intent here. And kudos to her, I suppose, for sticking to her guns, but I think she's missing the thrust of Alito's argument. He pressed on whether Congress would need to be explicit before authorizing trillions of spending, and Prelogar claims to the notion that the statute is clear, even though it's breathtaking in scope, and she also returns to her point about forbearance policy and no one complaining about a forbearance policy.

 

At that point, there's a long sidetrack on standing. We'll come back to that. And then Chief Justice Roberts is the one that brings the argument back to the major questions doctrine. So this is obviously the lens through which he is looking at this case, having already mentioned it twice at this point, and he said that the separation of powers reminds him of the DREAMers case where the Trump administration tried to unilaterally cancel that immigration program.

 

And Prelogar doubled down, then, on the idea that the Court would be thwarting the plain language and the will of Congress, but the Chief persisted and noted that a factor for the major questions doctrine is that if Congress would be expected to act on this. If this is something that has Congress's attention and it isn't acting, then that's meaningful. In other words, if Congress can't get something done and the bureaucracy then comes in and tries to do it without going through bicameralism and presentment, then that's a problem.

 

And what Prelogar said is that there's legislative inaction on both sides of this question. So there were also legislative actions to try to reduce the scope of the HEROES Act, that those also failed, and that in the American Rescue Plan Act, there was a provision that would not treat any sort of loan forgiveness as taxable. And so, she said that was Congress essentially blessing programs like this.

 

Justice Thomas then asked her about the appropriations clause, and Prelogar said that it's not implicated here because no funds are drawn from the Treasury, and that alone puts it outside of appropriations clause analysis. Now, she did not explain how keeping money from coming into the Treasury is not just the flipside of sending money out from the Treasury because, if you're forgiving debt, you're keeping the money from coming into the Treasury that otherwise would be coming into the Treasury under the laws that Congress had passed.

 

But Prelogar, once again, invoked the forbearance, noted $150 billion cost of forbearance, the ongoing $5 billion-a-month cost of the program and said that if that's okay, then what the administration is doing with forgiving loans is okay, too. Thomas offered that perhaps forbearance fits more comfortably into waive or modify language because the debt isn't going away; it's just being postponed. But Prelogar said it's all of a piece because they're both costing the government money, so even though forgiveness costs half a trillion instead of 150 billion, that that's not that far off.

 

Justice Kagan then raised a few statutory arguments about whether the relief was necessary or whether it made borrowers better off, but she suggested that these aren't really statutory interpretation arguments about how to look at the HEROES Act, but rather, these are questions having to do with whether or not the Secretary of Education made the right findings or justifications of before acting here. In other words, she said these go more toward the question of whether the Secretary's line drawing was arbitrary and capricious.

 

And Prelogar readily agreed that these are arbitrary and capricious considerations. She says, "We're in a world where the statute tolerates overbreadth and allows class-wide relief." Just put a pin in that. Whether that's true or not, I think, is debatable, but she said that, in that world, the question is justification of the line drawing it took place, and all of the Secretary's noting of the financial impacts of the pandemic are enough to justify the lines he drew for arbitrary and capricious purposes.

 

Now, interestingly, in the second case, in the Brown case, she comes back to this arbitrary and capricious point and essentially tells the Court, "Look, if we're going to lose, we want to lose on these arbitrary and capricious grounds." And that makes sense because, of course, from their perspective, if they lose on arbitrary and capricious grounds, then in theory, at least, the Secretary of Education could come back, make additional findings, better findings, maybe tailor the program a little more, draw the lines in a different place, and then try to do the program again under the HEROES Act.

 

Whereas, if they lose under maybe more of a major questions doctrine approach that says there isn't statutory authority to do this under HEROES Act, then they wouldn't be able to go again under the HEROES Act. They'd have to do it under other statutory authority, if such statutory authority exists, or they'd have to go back to Congress. Perish the thought that they would get Congress involved here on doing something that costs half a trillion dollars, but that would be where they would be.

 

Justice Gorsuch, at this point, followed up with a question about the applicability of State Farm as to whether the Secretary adequately considered costs to third parties of the program—for example, the unfairness to people who paid their loans—and he suggested that if Congress were doing this, Congress would take a look at that. But Prelogar admits that none of those considerations are in there, but she says the Congress already made the judgment about who would get student loan benefits when it passed the HEROES Act, and so that the Secretary doesn't need to gainsay that in doing his line drawing.

 

Justice Kavanaugh jumps in at this point. He seems to agree with the Chief Justice and Justice Thomas that Congress could have said cancellation here but didn't. And he asks, "Aren't we just dealing with another old statute here with general language and a massive new program being created years after the fact?" And so, this smacks of Brown & Williamson and UARG and the whole line of major questions doctrine cases.

 

And he asked Prelogar why this doesn't fit that line, and Prelogar offered that the new program here is consistent with the purpose of the HEROES Act. She said Congress said provisions can be waived or modified and the Secretary was acting within his subject matter lane. He's dealing with student loans, the core of his expertise. Kavanaugh said, "But there's still winners and losers in the benefits context." And so, he wondered why express authorization from Congress shouldn't be needed, and Prelogar claims it's hard to see what Congress could have done differently back in 2003.

 

Kavanaugh ended with a big-picture question about the Court's finest hours being when they pushed back on executive assertions of emergency authority. I think he had the steel seizures case in mind, for example, but he also mentioned some of the post-9/11 cases, which is interesting since he was in the White House during those years. But Prelogar said that there is less reason to be worried in the benefits context. And Justice Kagan also said that we worry about the separation of powers if the executive is acting without authority that Congress has given it, but as long as Congress has given the authority over then, we don't worry about executive power.

 

Well, that's not the Constitution that I read, so I've found that perplexing that Justice Kagan put that out there. I thought the point of separation of powers was that you can't have legislative power in the executive branch because those powers aren't supposed to mix. They're not supposed to be under the control of one branch of Congress, and when they are under control of one branch of Congress, bad things happen to liberty, as we have seen in this case.

 

In any event, Justice Amy Coney Barrett then asked Prelogar about the red penciling done by the Secretary. We talked about this a little bit earlier. And Prelogar said that the statute specifically directs the Secretary to publish the terms and conditions that are going to apply in lieu of the waived and modified provisions. And so, essentially, he wasn't doing anything wrong by spelling these things out.

 

A query whether there's a non-delegation problem here wasn't really talked about at all at the oral argument. The Clinton v. New York question did come up, so maybe that will feature in. Solicitor Campbell's argument to the Court was quite direct when it came to be his turn. He said the Secretary of Education is bypassing Congress, which tried and failed to pass relief for student loan debt several times; that no statute authorizes the half-trillion-dollar write-off that Missouri has standing; and that this is a major questions doctrine case, given the amount at stake; and that this statute has never been used this way before, even to forgive one soldier's debt. So the statute allows waiving and modifying, not wholesale rewriting of the statute.

 

The questions for the first chunk of the argument to Solicitor General Campbell focused heavily on standing questions. And Justice Thomas started things off saying, "Hey, you really ought to talk about MOHELA here. You really ought to talk about the standing questions." And he really faced a barrage of questions, I think it's fair to say, about standing, about MOHELA.

 

And the interesting quirk here is that we're talking about the Solicitor General of Nebraska, of course, who's having to speak to a Missouri entity, and I assume that there are behind-the-scenes reasons for who had been on the case the longest and was the most up to speed on the various arguments and so forth. And I think Solicitor General Campbell did a fine job, but I would just note that peculiarity. Ordinarily, you wouldn't have another state Solicitor General defending a different state's program, so it was interesting to hear that.

 

I think that the most direct version of standing that the Solicitor General said is, "Look, 77 percent of MOHELA's revenue comes from servicing direct loans. About half of all loans will be discharged under the Secretary of Education's program. That will cut MOHELA's operating revenue from direct loans in half. MOHELA gives $63 million—or has given something like $63 million—to a state scholarship fund. If MOHELA's revenue is cut in half, it's not going to keep be able to keep giving money at the same rate it's given before, sort of QED."

 

Justice Jackson asked if there are offsetting fees and whether he needed to show that the offsetting fees weren't enough to make up for that. Campbell said it's hard to think that there'd be enough to make up for the loss of half of MOHELA's a revenue. Justice Kagan said that MOHELA can sue and be sued. Isn't here. SCOTUS usually doesn't allow standing in the shoes of another by third parties. But Campbell said the government is different, and he pointed to two federal cases, Cherry Cotton Mills and Erickson, where the federal government has been allowed to assert interests of federally created corporations, and he tried to say that the states are just asking for the same sort of latitude here that the federal government enjoyed in those cases.

 

Campbell also said that Missouri has an interest in MOHELA. It created it in order to provide financial aid. And so, if those payments aren't made, then the students in Missouri will be harmed by that. When pressed by Justice Barrett, he was also quick to say, "Look, there's just a plain old argument that the state can speak directly for MOHELA," that this is an instrumentality of sorts, and that that's enough.

 

I'll pause here to say that NCLA's amicus brief did focus on the standing question as well up front, but what we said is that we think that the states have standing under the MOHELA theory that they're asserting. But we also think that the states employ people who benefit from the Public Service Loan Forgiveness program. That program is severely undercut by the Secretary of Education's waiver and modifications that went into creating this new program.

 

This is the theory of standing that we are using on behalf of the Cato Institute in a separate case against the Biden administration's loan forgiveness program that we filed in the district of Kansas, but we think it applies to the states as well because the states also have employees who are eligible for and benefit from the Public Service Loan Forgiveness Program. That didn't come up at oral argument, but if for any reason the justices don't buy the MOHELA argument that Solicitor General Campbell spelled out for them, I just want to reiterate that there is an additional theory of standing in front of the Court from NCLA's amicus brief.

 

Now, coming back away now from the standing arguments, Justice Gorsuch, I think, was the first to get away from standing and ask Campbell to address whether the major questions doctrine applies and whether the Congress's appropriations clause authority is implicated. Campbell said there's even more reason for the major questions doctrine to apply because the Secretary of Education is invading a quintessential legislative function by writing off debt, and so the separation of powers is deeply implicated in that action.

 

Justice Sotomayor said no one's disputing that the Secretary has forbearance power. I would invite Justice Sotomayor to read NCLA's amicus brief; we are disputing that. But she said that the amount of money can't be the issue because forbearance is $5 billion a month already, and so the question is Congress's intent. Campbell replied that the HEROES Act doesn't give rewrite powers. Kagan jumped in to say, "Yes, it did," says the Secretary can add terms and conditions to be applied. She says the statute is very clear.

 

So again, this is just a statutory issue being joined on how far does waive or modify go. Does it allow you to go all the way to rewriting the statute in a way that essentially creates new programs with us picking and choosing various words to assemble a new program out of, or maybe not words, but partial provisions?

 

And then, as I said before, Campbell made the interesting point that the Secretary is not waiting provisions at all because they're still in effect for folks who want to use them, and he said that the "in lieu of" language has to be read in a sense of modification, not authorizing a wholesale rewrite.

 

Kagan, at this point, puts forward sort of an earthquake hypothetical and asked whether the Secretary could modify the program to include not just the borrower's loss of income, which the statute might cover, but, say, extend that to the primary earner in the borrower's household. And Campbell said that sounds like a new program. Kagan resists that. She says the statute is very broad, but Campbell said that Congress reserved for itself the ability to discharge loans. Kagan asked where that is in the statute.

 

Campbell said the CARES Act shows that Congress has a voice in an emergency. Presumably, he was pointing to the temporary suspension of payments that Congress clearly authorized in the CARES Ac, and that's when Kagan said that we only worry about executive power when Congress hasn't authorized it. And Campbell then raises the Clinton v. City of New York problem.

 

Once again, Chief Justice Roberts comes back to the major questions doctrine case, which I think tells you this is on his mind. This is now the third time Chief Justice Roberts has come back to ask about major questions doctrine cases and ask whether those others statutes similarly had broad language in them that might literally cover the authority that was exercised by the government officials there, and Campbell agreed. He said, "Look, this fits very well within those cases."

 

I talked earlier about Alabama Realtors and that both of them are CARES Act extensions kinds of cases. Sotomayor said Alabama Realtors was different because an eviction moratorium had never occurred before, but neither has this kind of massive loan forgiveness, so I'm not exactly sure what she was getting at there. She claims this couldn't come as a surprise because the Higher Education Act allows for loan forgiveness, but again, this wasn't done under the HEA. This was done under the HEROES Act. She claims the Campbell just wants to say that this rewrite is bigger than he would like, but she said it's all semantics, that all of this is rewriting the statute, and the question is just whether Congress allowed it or not, and she says that Congress did.

 

Campbell sticks to his guns that waive or modify is just not broad enough to permit rewriting. He also points to grant overpayments as one named instance in the statute where the Secretary of Education could excuse returning funds to the government. And by naming one, Campbell says Congress implicitly excludes a wider scope for that particular form of relief.

 

Justice Gorsuch then asked about the OLC opinion and its limits, saying that the program could only put people back in no worse position, not in a better position, and this program puts some borrowers in a much better position than the status quo ante. Of course, Campbell agreed with that. Actually, he said he disagreed with almost everything in the OLC opinion, but he agreed with that, which I thought was a funny line.

 

Justice Kavanaugh said the argument on modify is good but that waive is a very broad term, but Campbell reiterated that nothing's really being waived here, the programs still exist, and that what they're really doing is creating new programs, and that this isn't in the Secretary of Education's wheelhouse because only Congress can create brand-new loan discharge programs, so that this idea that this is out of the major questions doctrine territory because we're dealing with student loans and the Secretary of Education is dealing with student loans.

 

Campbell said "No, no, no, no. This is loan discharge, and that's Congress's job, and so it is out of the lane of the Secretary of Education." I thought he made a good point there, and that using the HEROES Act to forgive loans is unprecedented, which is another reason to think that the statutory text doesn't cover that since no one's done it for the last 20 years.

 

Justice Barrett then asks Campbell whether the loan repayment pause is okay. That goes to the scope of waive or modify, she says, and Campbell said that, at some point, an extension goes beyond a modification, and the connection to the national emergency becomes too tenuous. Also, he noted that a pause maintains the status quo with regard to debt, but the cancellation puts people in a better position. He also said a pause keeps indebtedness from rising versus erasing that indebtedness, and finally that, when lockdowns were still going on, there was a pretty strong connection between the emergency and the forbearance on the loans.

 

But however you look at it, this kind of wholesale rewriting of the law in the executive branch cannot possibly be okay, I would think even under the current lax standards for divesting legislative power under the non-delegation doctrine. But the Court didn't talk about this in terms of non-delegation. It's gotten some, I'd say, sidetracked into its newest creation, the major questions doctrine, which, while useful in some sense, is getting us even further away from the text of the Constitution than the non-delegation doctrine did.

 

So ideally, the Court would return to first principles here and recognize that Congress cannot delegate wholesale rewriting of statutes to the Secretary of Education, even in an emergency. One might even protest that there's no such thing in American law as executive suspending of the law. That kind of royal prerogative is anathema to the Constitution. So to the extent the HEROES Act purports to delegate that power to the executive, we have a constitutional problem there as well, but those arguments weren't joined in the oral argument.

 

And so, I think if I were to hazard a guess about what's going to happen, I would say that the Court is likely to find standing for the states. The Court creates fewer problems by finding standing for the states, given the state’s instrumentalities connection, then something that would allow any citizen to object, it's not a big leap at all from current law to say that Missouri has an interest in seeing that the $63 million in contributions for MOHELA to the state scholarship fund do not dry up anytime soon.

 

I think it's also likely that the major questions doctrine rides again here, especially with the Chief Justice bringing it up as many times as he did. The amount of money at issue here is ginormous. The Chief is obviously bothered by the Secretary of Education acting when Congress couldn't.

 

So this is Heartland MQD territory for the Chief, and I don't think there will be much explicating of the doctrine because this is so much like the previous cases. The major difference is that this statute is the Secretary of Education's to administer, but I don't think that's going to make a difference, and I don't think that the doctrine will be said not to apply in the benefits context. I also don't think that the Solicitor General will get her wish to lose, if she must, based on an arbitrary and capricious analysis, but the Court may say something about borrowers not being in the same position as before, but in an appreciably better position.

 

I don't think the Court will reach the appropriations clause question; it doesn't have to in order to decide this case, and it's already granted cert on the CFPB case where the same question is lurking. So I think, if I had to predict, I'd say it probably takes a pass on that. I think it'll just say that waive or modify is not broad enough to cover what happened here, given the major questions doctrine dimensions in the case. And I suspect the Chief Justice might write the opinion and assign it to himself, but that's just sheer speculation.

 

Let me just say a few words about the Department of Education v. Brown case. Once again, the Court there spent an inordinate amount of time on the standing question and trying to figure out whether these plaintiffs have standing and why these plaintiffs are trying to knock down the Secretary of Education's program in order to hopefully benefit from some other program—they called it a bank shot—and wondered whether or not that is the kind of action that plaintiffs can ask for.

 

And I think the Court is a little suspicious as well. At least Justice Sotomayor seemed to think that maybe these plaintiffs weren't really interested in having the HEROES Act program shut down in order for another program to blossom. Maybe they would just be happy to have the HEROES Act program shutdown, full stop. And so, do we really have plaintiffs here that are complaining about something in a way that they can get the kind of relief that they want? Is it very speculative to say, if the HEROES Act is shut down, that the administration would go forward with a new program?

 

Now, one aspect of this I haven't talked about yet is the complaint that the Brown plaintiffs are making is, look, this was done under the HEROES Act. It shouldn't have been done under the HEROES Act, but the reason it was done under the HEROES Act was because they didn't have to go through notice and comment rulemaking, and maybe they wanted to do it more quickly or what have you, and that by holding up the stop sign here, the Court would force the Secretary of Education to go back, maybe do it under the ATA or some other statutory authority where he would have to go through notice and comment rulemaking, and then these plaintiffs would be able to participate in the notice and comment rulemaking process.

 

So they're essentially saying that their procedural rights have been violated because the Secretary went through door number one when he was only allowed to go through door number two. It'll be interesting to see what the Court makes of that standing argument. I believe this was the first argument at the Supreme Court for my friend Michael Connolly and, I thought, did a good a very nice job for a first presentation at the Supreme Court.

 

And the reason the Court, I think, granted cert here was because the plaintiffs won below and the Solicitor General in the United States wanted to defend the program in front of the Supreme Court. So I really think that most of the argument, most of the things that are going to be adjoined here by the Supreme Court, the various issues that they're going to certainly chew on, are going to be ones that came up in the argument in the Biden v. Nebraska first argument.

 

I don't know that there's going to be as much for the Court to chew on in the second argument. I think that's mostly going to be a question of standing, and if they decide that the plaintiffs don't have standing, that may be the only ruling that they make. They may not talk about any of the other substance because they'll already have the opportunity to do that in the context of the Biden v. Nebraska case.

 

Now, if they do find that these plaintiffs have standing and if they were to find that the state plaintiffs don't have standing in Biden v. Nebraska and that the Brown plaintiffs do have standing in the second case, then the reverse would be true. Then I think a lot of those same issues would come up.

 

But one of the things that has happened in the current post-pandemic version of the Supreme Court is that, after the normal time is allotted, the Chief Justice goes down and asks each justice if they have any more questions. One of the funny things that happened in argument here was that the Chief started to cut off the attorney for Brown before he had done that piece of it, and then he stopped himself, and then went down the line and asked if anybody had any further questions. And no one did, and the Chief was like, "See?"

 

So I think that lack of questions, really, is what's leading me to say that there's not as much for the Court to chew on there as there is in the Biden v. Nebraska case. And with that, I think maybe, Chayila, we can go ahead and open it up to questions. If people do have more to say about the Brown case, I'm happy to speak more about that, too, but I think we've certainly touched on the various highlights here.

 

Chayila Kleist:  Thank you. Thank you. I know two cases in an hour or less is a ton to cover and really appreciate that laying out of the facts and how oral argument went and the major themes that were going on. Eventually, I'd love to get to some broad-level questions, but a detailed question based on something submitted via the Q&A feature that pairs with the question I had: Are the arguments in either case affected by the promise of the Biden administration to end the national public health state of emergency in May of this year? We had a comment saying, "Hey, there's conversations about the fact that the emergency seems to be ending." And so, how does that affect either of these cases? Does it affect either of these cases, and what might the ramifications be for the arguments that were put forward?

 

Mark Chenoweth:  Well, one place that that came up was in the Brown case when the idea was raised that, well, look, if this program is shot down, then maybe the Secretary of Education can't create another program because, if the pandemic is over, then maybe he won't have the authority at that point to create another program.

 

There was an alarm raised—I want to say it was Justice Barrett, but I don't remember for certain—about an argument that had taken place in front of the District Court that she thought maybe the government was claiming, well, now that this pandemic has happened, at any point, even 10 years in the future, the administration can look back at the economic effects from the pandemic and say, "Oh, look, we still haven't done enough, and here's a brand-new program that is still based on this pandemic authority."

 

The Solicitor General disclaimed that authority, and I don't know whether that is consistent with how the government was arguing below or not, but she said that there had been a misunderstanding by the court below. And so, she represented to Justice Barrett that that's not the government's position. They don't think that they can do the program at any point down the road. So that's one place where that comes up.

 

Do I think that there's a problem, given that the president said on 60 Minutes several months ago that the pandemic is over and that was right around the time that this program was set up? I don't think it's a helpful fact for the government, but I think if they were otherwise on strong statutory ground and constitutional ground, I don't know that it would be an issue. But they're not; they're on terribly weak ground, and so, I think that's really their bigger problem.

 

Chayila Kleist:  Got it. Thank you. Question from the audience concerning standing: Could you clarify when standing is non-issue in Alabama Association of Realtors, whereas in these two cases, a lack of standing could hurt the challenger's chances of succeeding? In the case of the Court, what are the issues beyond this case with granting standing to challengers?

 

Mark Chenoweth:  So the Alabama Realtors case was the eviction moratorium case that made it to the Supreme Court. I don't remember standing being an issue in that case. I guess the person's asking why wasn't it an issue in that case. You know, we didn't represent the Alabama Association of Realtors, so I don't have a real strong understanding of whether there are landlords that belong to that group, but that's my guess.

 

So we represented National Apartment Association and so forth, which included landlords. And so, I'm guessing that the Realtors Association was an association that included landlords that were being represented there. And so, they would obviously have an interest in not having their ability to evict people contravened by the government. So I felt like standing wasn't an issue in those cases.

 

As for why it is an issue here, well, I don't think it's an issue for the states; I think the states do have standing. And I think if the Court were to say to the states, "You don't have standing," the states could come right around with two or three other arguments, including the one NCLA provided, and say, "Well, here's another reason we have standing and here's another reason we have standing."

 

And so, it's a little bit -- I think it would be a little bit pointless for the Court to say that the states don't have standing here because I feel very strongly that the states could make the necessary showings, if they haven't already, to assert that they have standing. I don't think the Court is going to kick it on that basis, but we'll see.

 

Chayila Kleist:  Got it. Another question on standing coming from an audience member: Would the House have standing to challenge this executive action as usurping Congress's authority to decide whether to incur the costs of a blanket loan forgiveness?

 

Mark Chenoweth:  Yes. Give you an easy answer there. I think the House would. I think it's somewhat surprising -- If the House hasn't already filed suit somewhere, one House of Congress does have the authority to file. I think Speaker McCarthy should probably get busy on that.

 

Chayila Kleist:  Efficient answer. To the opposite side of the standing question, what are the possible consequences for future challenges to executive action if either of the states or probably more the individual challengers are granted standing in this case? Might that be a departure from precedent, and what other challenges in the future could that open the door to?

 

Mark Chenoweth:  I think if the Brown plaintiffs here are granted standing, that would definitely open the door to wider sorts of challenges in the future. I haven't given a lot of thought to exactly how wide open that would make the door, but I think that, typically, when you're dealing with benefits program, you can't complain about getting left out of the benefit program. That doesn't usually give you standing to sue about someone else getting the benefits.

 

And so, what they've done here, essentially, is find a procedural way of still complaining about being left out of a benefits program. If that is allowed to happen, then I could imagine lots of other people similarly finding creative ways -- And hats off to the attorneys for this creative approach, but I suspect that the Court will be afraid that it's opening a big can of worms if it does this. Whereas saying that a state can represent the interests of an entity that was set up by the state, I think that does not open the door very wide at all. And we've seen the special solicitude that the court has had for state plaintiffs in the past. I'll be awfully surprised if they don't find standing here for the states.

 

Chayila Kleist:  Got it. Thank you. Audience question: Is there a distinction between the authority of the president and the authority of the Secretary, or is it treated as one and the same for these cases?

 

Mark Chenoweth:  So they're slightly different. So the president has the authority to declare the emergency; the Secretary of Education couldn't unilaterally declare an emergency. So Justice Gorsuch did get into that. That was the Easter egg that I mentioned at the beginning. Is it possible that the Court would look at this and say, "Look, when the emergency was first announced by President Trump, what was talked about was some of these quarantine kind of authorities and things under HHS. No one mentioned the HEROES Act"?  So maybe there's a misalignment here in terms of declaring that authority.

 

But anyway, the Solicitor General's point was that, once the emergency is declared, however it's declared, then that triggers the Secretary's power under the HEROES Act, and he can proceed. That may be true, but I think then the question remains, what can he do? Can he completely rewrite the statute and come up with a new loan discharge program? I think the Court's going to say no, he can't do that.

 

Can he—or she, in Secretary DeVos's case—do forbearance of principal and interest payments? Well, maybe for a short period of time, maybe not, but certainly not indefinitely. And so, I think that's another weakness of Prelogar's argument is she's essentially saying, "Well, if you can do forbearance, then you can do this loan forgiveness." But no one's saying you can do forbearance forever and indefinitely, and that's essentially what she's asking for by allowing this loan discharge program to be authorized or approved by the Court.

 

Chayila Kleist:  Okay. Moving to sort of a hypothetical, assuming that standing is granted, one of the implications of this case, if the Court finds in favor of either the states or the individual challengers -- And you've talked about this a little bit, but does it matter whether the states or the individuals win?  Are there practical ramifications depending on which one is granted standing, and then has the Court cited them?

 

Mark Chenoweth:  So we already talked about what the impact might be on standing, so I'll leave that aside. But is there a difference on the merits? No, I don't think so. I think that the Court can reach -- In fact, Justice Alito asked the government, "If we find standing for either one of these plaintiffs in either one of these cases, we can reach the merits, right?" And the government agreed, "Yep, that's right. You can reach the merits."

 

So I think the bigger question will be, do they reach the merits and decide this on major questions doctrine grounds? Do they reach the merits and say," Look, waive or modify doesn't go this far"? Do they reach the merits and say, "This is arbitrary and capricious, bad line drawing"? There are different ways of reaching the merits that I think would have bigger or lesser impacts.

 

I think that what we're likely is to see, given the Chief's repeated invocation of the major questions doctrine and the apparent willingness of Justice Kavanaugh and Gorsuch to go along with that, I think we're going to see another MQD decision.

 

Chayila Kleist:  Got it. Well, granting that, I'll still ask the opposite question.

 

Mark Chenoweth:  Sure.

 

Chayila Kleist:  What are the effects of these cases if the Court grants standing and then rules in favor of the Biden administration? Is there a world where we could see options being open to what can be done when we're in a state of emergency, and are there dangers and benefits to the precedent that creates?

 

Mark Chenoweth:  I think there's massive danger. In fact, I'll go so far as to say I don't think that the Court would get five votes if that's where they're going to come out on the merits. Now, standing and merits are supposed to be separate inquiries, but I would be shocked if they would find standing and then uphold the program. I think they'd be much more inclined to say there isn't standing and then wait for someone else to challenge the program who has standing.  I don't think that they're going to uphold this program.

 

If this is allowed, if the Secretary of Education can spend half a trillion dollars -- It wasn't so long ago that the whole budget was only a trillion dollars. If he can spend half a trillion on his own, then we've completely lost the power of the purse from Congress, and if Congress no longer has the power of the purse, then the whole enterprise is down the tube. Not to be sort of a millennialist about it, but I think that's all she wrote. I don't think you can have a functioning constitutional government in which the executive branch sell funds.

 

Chayila Kleist:  Okay. You've mentioned, a couple pieces of argument for standing that either weren't raised in oral argument or were submitted by amicus briefs and just weren't addressed as they were talked about. Are their arguments as to the validity of the loan forgiveness program that exist and you were surprised not to see come up in oral argument or just could have been brought in these cases?

 

Mark Chenoweth:  Did you say arguments in favor or arguments against?

 

Chayila Kleist:  I'll take both.

 

Mark Chenoweth:  Well, to be completely candid, I haven't spent a lot of time educating myself about additional arguments in favor. I can say that, in the Kansas case, we have the government's defense of the statute has been pretty much in line with what they said at the Supreme Court, so I don't know that there's a lot of new ground to break there.

 

I think the issue that did come up at oral argument here but that has been much more thoroughly explored elsewhere is the appropriations clause question. I do think that the appropriations clause does not allow this and that you could decide this solely on an appropriations clause analysis.

 

I don't think that this case is set up to do that partly because of how often the major questions doctrine came up, but you could imagine a case coming along, much like I think is going to happen with the CFPB case, where they just said "Look, you can't take this much appropriations power away from Congress. Article I gives that appropriations power. And when you say that money drawn from the Treasury, you shouldn't be reading that so literally, that debt forgiveness, keeping money coming into the Treasury, doesn't count."

 

And you could look at this as a historical matter. My boss, Philip Hamburger, has looked at some of these questions. There are certain kinds of debt that an executive can forgive. So for example, if you're trying to negotiate a loan forgiveness situation with somebody and they say, "Well, I can't pay back the $10,000 I owe, but if you can put me on this different plan and I can pay back $6,000 or $7,000 over this period of time, instead of $10,000 over this period of time," there's good authority that the executive has the power to reach that sort of individualized loan forgiveness. But doing something like this where it's so widespread is different.

 

I think the other thing that didn't really come up is, Congress never appropriated funds under the HEROES Act, so the idea that the HEROES Act did this -- There was no CBO score for how much the HEROES Act would cost when the HEROES Act passed, so the idea that this is an appropriation statute, I think, is flawed. And there's more to explore there. Some of the amici did explore that.

 

Chayila Kleist:  Got it. Well, I will pose two last questions, as are running up on time. The first is, these are two cases challenging the same program and offering, it seems, many of the same questions: Do you have standing, and was this constitutional? Why have two cases? What were some of the differences, either in oral argument or as to the issues and points raised, that make it arguably worth hearing both?

 

Mark Chenoweth:  Well, there's a circuit split, right? So one of the cases essentially prevailed below and one of the cases essentially didn't prevail below, although the Eighth Circuit had put a stay in place but had lost at the Eastern District of Missouri. So I think that you had different outcomes. I think you also had the government asking for cert to be granted in the in the second case. So I think that's a big part of why both cases were granted. When the government asks for cert because a federal program or statute has been shut down, cert is usually granted.

 

Chayila Kleist:  Got it. Question from the audience, if we can sneak it in: Was there any discussion in the briefs or oral argument as to what other hypothetical relief under the SG's view would have been okay?

 

Mark Chenoweth:  There was discussion about what hypothetical relief would have been okay, but the SG's view is that everything is hunky dory the way it happened. And essentially, her view is that waive includes everything and modify includes everything under waive; therefore, everything is okay in terms of relief.

 

Chayila Kleist:  Got it. And then, last question. You mentioned that you think the Court will grant standing in the state's case; may grant standing, it's still a question in Brown; and that there will likely be a ruling against the Biden administration. Do you have a perspective on what the issues will be that break out the various members of the Court to say, "We're going to disagree on this, we agree on this," and this is sort of the argumentative stumbling blocks or dividers that will break out the Court?

 

Mark Chenoweth:  Great question. I don't have time to address it. So I guess what I would say is I think that there will be a core of justices who are willing to buy into the major questions doctrine argument and that the Chief Justice seems to want to propound that here. And I don't think they have to break much new ground in order to do that, and I don't think the Chief likes to break much new ground, particularly when they're doing something as potentially controversial as striking down this instance of government overreach just because it's popular for the people who are beneficiaries of it.

 

So I suspect that he will try to cobble together at least five votes for a major questions doctrine analysis and result here. Maybe I'll be wrong. Maybe something else will come up. There certainly are statutory arguments. If they thought they could get Justice Kagan to go along with something, maybe they'd be tempted to do something that would lead to a 7-2 argument, but I don't think you're going to get -- I don't think it's going to be an arbitrary and capricious type decision. I will be surprised if they decide on that ground.

 

Chayila Kleist:  Got it. Well, thank you so much. On behalf of myself and The Federalist Society, thank you so much, Mr. Chenoweth, for the benefit of your valuable time and expertise today. We really appreciate you joining us. And thank you to our audience for joining and participating. We welcome listener feedback at info@fed-soc.org. And as always, keep an eye on our website and your emails for announcements about other upcoming virtual events. With that, thank you all for being with us today. We're adjourned.

 

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