Litigation Update: Ducey v. Treasury

Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

  

Mike Bailey:  Good afternoon, everyone. Welcome to the webinar for The Federalist Society Federalism & Separation of Powers Group. My name is Mike Bailey. I am the General Counsel at the Arizona Chamber of Commerce. And we are here today with the General Counsel from Governor Ducey's office here in Arizona, Anni Foster. Anni is an excellent attorney as the General Counsel at Governor Ducey's office. Prior to that she was the General Counsel for the Arizona Department of Public Safety and had been an Assistant Attorney General for a number of years, too, a graduate of Gonzaga Law School.

 

      I'm going to turn it over to Anni momentarily to introduce the lawsuit that we're talking about today. But first, I figured for those who might not be viewing from a local area or even from anywhere other than the East Coast, give you a little sense of the State of Arizona and its relations to COVID and protocols and all that kind of thing that we've heard so much about over the past two years.

     

      We'll say we started out like everybody else early on back in March, April of 2020 not knowing what was coming. We had a very brief period of what we call, what everybody called lockdown where nobody was going out and most things were closed and that kind of thing but that lasted only a week or so.

 

      Following up on that, we had our first real wave of COVID in late June and July of 2020. After that wave, as we got into the school year in the fall, everything pretty much in Arizona returned to normal. There were over the course of a few weeks, months, the masking seemed to end. And by the end of that fall and the end of that year in 2020, there was not much going on here different from what had been going on before, no masking, no limitations on who could be in restaurants and that kind of thing, numbers, except in a couple areas.

     

      We had a couple cities, local jurisdictions that wanted to retain their masking requirements, sometimes in violation of state law and also the schools. Of course the schools were always a problem, as they were everywhere, insisting on masking children if they were having in person school at all.

 

      And so in that context, the legislature [phone ringing] -- I apologize to you. I was supposed to run that off. The legislature got together and set some rules that would apply state-wide, including that schools may not require -- this is by now the spring of '21 -- the schools may not require children to wear masks in schools. A couple defiant schools stood up, and there was also an executive order to the same effect prior to the law where the governor said no masking in schools, and some districts just would not comply with that.

 

      So it was in that context that when the ARPA came through and we found out that billions of dollars would be coming to Arizona either through federal departments themselves directly to Arizona as the local communities or through the state from additional actions we're taking with relation to the way we would do grants for the state portion of the money. And Anni, I will let you take it from there.

 

Anni Foster:  Thank you, Mike, so much. I think you teed that up very well as to exactly what was going on here in Arizona and what the impetus of this was. I do just want to add a few more facts there in that the federal government has provided a lot of money for relief in relation to COVID. And what that means and what I mean by that is that some of that relief is to address COVID specific recovery, right. It's to go to hospitals and healthcare. Other relief is meant more towards the economic recovery because obviously COVID had a very extensive impact on our economy and people getting back to work, getting back to school.

     

      And so one of the first things applies here and that I would be remiss if I didn't talk about is that as part of that, the federal government issued funding to schools. And there's going to be a theme here, and that's why I bring this up, is when they issued that initial funding -- it's called Elementary and Secondary School Emergency Relief or ESSER funds -- those funds were scheduled to go to schools. The federal government issued some guidelines as to what the calculation was going to be as to how much money schools got.

 

      And the State of Arizona took that guidance. We told schools how much money they were going to be distributed. And around the time that we go ready to distribute them, the federal government changed the rules. And there were some schools that got more money than others, and this created issues for our state and our schools in our state obviously.

 

      So with that the governor announced the Education Plus-Up program. Using ARPA funding, we set up a program that basically made equal all of those schools that were not held equal under the ESSER program. So that's the first program that comes into play with this lawsuit.

 

      And then the second program that the governor initiated, it was meant to provide relief to families because we were, as Mike mentioned, as you mentioned, Mike, we were having issues with schools shutting down. And parents had already spent over a year educating, homeschooling their children for what they're paying their tax dollars for, and they were in need of getting back to work. They were in need of supporting themselves. And they needed to make sure that their kids had a place to go whether it be afterschool programs or transportation.

 

      We saw here in Arizona a lot of students and families changing schools. School choice became a major topic here in the State of Arizona because parents realized that they could move to different schools who offered what they were looking for and what worked for their family.

 

      And so with that, again, ARPA funds were used, and Arizona instituted the Educational Recovery Benefit Program. And this program was put into place, and so both of these programs operated. And there was a state law that prohibited masking, but we had schools that said they weren't going to follow that. And they were going to do whatever they wanted. So there was a situation as part of these grant programs that they had to comply with state law. And we went forward.

     

      Well, a few months into the school year in October, we received a letter from the Treasury Department stating that our programs did not comply with their guidance which has been issued in May, and our programs has been set up after the issuances of those regulations, and we're in total compliance. And they said they had concerns and that they did not comply because of the masking prohibitions.

 

      And I want to be clear here. It was a masking prohibition on the school. So parents, students, they could make the determination that at school it was safe for their family. They wanted to wear a mask in school, that was totally allowed. This was just making sure that students weren't being prevented from going to school because they had an issue with wearing a mask. And I'm not going to go into a lot of details there, but there are a lot of issues with children wearing masks and how it affects learning as well as the behavioral issues that can come from that. What happens when kids refuse to wear masks? Are they going to get kicked out of school for that? There's a lot of issues surrounding that as well.

     

      So Treasury sent us this letter and asked for a response within 30 days. The governor and his team did respond to that letter within 30 days and laid out the case at to why our programs were in compliance. And we didn't hear anything further until the beginning of January, one week after the final rule was issued by Treasury, which specifically stated that states could not use these funds or as a stipulation if they were using the funds, they had to make sure that they weren't used in a way that took away from the mitigation efforts that CDC was requiring to combat COVID-19. Which, by the way, they also didn't really ever give any legal justification as to their position. It was sort of like an edict like we don't believe it complies and therefore you need to remediate this or there will be consequences.

 

      So fast forward to January, we get a letter a week after the final rule is implemented, and they tell us that if we don't remediate these programs, in other words, if we don't take out the masking prohibition, if we don't change them, which again, they didn't provide much detail for, that not only were there administrative remedies that they could take, but they would not be providing the state with the second round of ARPA funds.

 

      So under the federal statute that started the ARPA program, there are two -- the Treasury is able to provide installment payments, basically, for ARPA funds. And so we had gotten the first one already, but we have still not gotten the second as with most states. And I think we're not expecting that until closer to May. But basically, they threatened that not only were we subject to them taking back the money that we had already received, which by the way all of that money is what they were threatening not just the money spent on these programs, they were also threatening to take away or to not provide us with the statutorily appropriated money that we were due.

 

      So with that, the governor said enough is enough, and he said he needed to protect the State of Arizona and the State of Arizona's interest in these funds and just stand up to the overreach that was occurring. Again, it wasn't like we just filed this out of nowhere. There had been some back and forth, and we had tried to comply. And so as the chief executive of Arizona, he's very attuned to separation of powers and staying in his lane and felt that the action of the Treasury was clearly out of bounds. And so we went to court.

 

      And in going to court, we filed this complain on the 21st of January, and we alleged several things. We alleged a violation of the Admin Procedures Act, basically that the final rule exceeded their statutory authority. We alleged a violation of the APA in that their action was arbitrary and capricious and an abuse of discretion. We argued that it's a violation of the spending clause what they're trying to do and a violation of the nondelegation doctrine.

 

      And all of these sum up into a real quick argument in that the statute is very clear. It says that these funds can be used for COVID recovery efforts. The scope of the statute says it's for fiscal recovery, not any kind of medical or health recovery, and that the funds can be used for economic recovery. And so much so, that in the interim rule and the final rule, Treasury has also said that education funding and use for education purposes is within the economic recovery piece because schools and students were disproportionately affected by COVID and students have fallen behind, which I think we all know. There's plenty of studies that have gone on and shown that kids have really fallen behind during COVID.

     

      So those are the basis of our lawsuits, and I think that it's pretty cut and dry, quite frankly, but happen to answer your questions, Mike. I know you have some questions for me.

 

Mike Bailey:  It's interesting. I think probably all of us, but these issues have become so political when it really doesn't make any sense in any principled direction one way or the other. Maybe with some mandates there's some philosophical underpinnings to it. But people just get out of control.

 

      The matter was called to the attention of Treasury, of our program in the first place, by one of our congressman writing a letter that I'll share momentarily. But to do a little Seinfeld thing here, it was kind of like Kramer going to the dentist. He let the epithets fly. But it was just an attack on the governor that frankly was kind of unhinged. So let's take a look at some of what was said here when we got to the governor.

 

      It's "Dear Secretary Yellen," and this is from August of 2021 before any response from the Department of Treasury but after the final rule was issued. And so it starts out, "The Governor Ducey intends to use these funds these funds to carry out a science denying mission and put Arizona children in greater danger punitively denying resources to schools." And then they go on to say, "These funds aren't intended to undercut scientific research for purely partisan ideological priorities." So this is the environment into which you're walking. And it feels like there's almost no hope.

 

      I remember -- if I can indulge in a short story -- my freshman year of college, I had what I -- something unfair happened to me. It's meaningless now, of course, but I've never been able to get it out of my head because it seemed unfair. And we had a small class, maybe five students, with an adjunct professor, some kind of business thing. I don't even remember what the name of the class was. But we had to submit a paper, and we'd taken some subject matter prior to submitting the paper, and I did something in my paper that he didn't like. And for the sake of argument, let's say it used too much alliteration or whatever. That wasn't what it was, but after reading the paper, he took his standard I'm going to grade this on substance, on writing and on a third thing. And instead of using the normal three categories for grading, he created a fourth category which was is there too much use of alliteration. So rather than docking me just for the few points that might have been expected, maybe, even though we'd never talked about it, a whole new category was created, and it just wasn't fair. And it's stuck with me to this day that for some reason. I wish it didn't.

     

      But this feels exactly like that where we issue some interim guidance, an interim rule, and you're complying with it perfectly well. And then at the end, they say, oh no, we're going to come back and not only are we going to change the rule just on the basis of what we saw that you did that we didn't like within the [inaudible 00:18:04] rule, but we're also going claim we can get the money back from you. So it's out of that that all of the claims arise.

 

      Look, let me ask you a little more specific question about the nature of the claim. So in my case with the paper that was due, if the teacher has warned us before don't use alliteration or told you you're going to be grade on how much, that kind of thing would seem fair then, even if the substantive stuff was still off. But it was the process of deciding afterwards that I'm going to add that as a category, same thing in this case.

 

      Do you have any claims that you're bringing that are purely process related as opposed to substance? In other words, regardless of maybe what the substance of the rule is, the fact that the department skipped notice and comment, that they went straight to an interim final rule, and then made this change on the basis of one state program, are there any purely procedural claims you're bringing under the APA?

 

Anni Foster:  So at this point, no. It's really about what they included in the rule and what they -- their authority to do so. So they did, I will say, they did go through a comment period, and they had those opportunities to talk about -- people had the opportunity to understand what was going on even though it was an expedited process. And so at this point, no. I think if we come up and find something in the meantime that they did do something incorrectly, there'd potentially be a place to amend the complaint. But at this point, we're solely just looking at the law, right.

 

      And as FedSoc members, we talk about textualism all the time. But this is a clear case of looking at what the text of the statute says. And them just saying, okay, well, we're just going to do what we want to do. So, and just in talking about the arbitrary and capriciousness of what they're threatening the State of Arizona with, I would just point out that in their January letter where they cite the interim final rule and say that we're in violation of that rule, they also make a mention -- they fail to mention, actually, that that rule doesn't even go into place until April 1st of 2022. So they are taking a rule that's not even in effect yet, and retroactively applying it which again, is an abuse of discretion.

 

      So most of it boils down to the language of the statute and what they're trying to accomplish by exceeding the authority that has been delegated to them from Congress.

 

Mike Bailey:  Let's take a look at the statue. So this is a -- ARPA as a whole is nearly 250 pages long and, of course, is dealing with, in best estimate, nearly $2 trillion that are being added to various uses here. And then there is this small section, this small little slice of it. So we have this $2 trillion overall package. A lot of it goes to various federal departments which in term through the federal department goes to state and local interests. There's a small slice of it of about 4.2 billion for Arizona, 4.2 billion, but it was -- what was the total number on that state and local fiscal relief package?

 

Anni Foster:  Yeah. I know that what we got was -- I think it was a total of like some trillion. I forget how much that was, and I don't have it in front of me right now. But it was substantial because Arizona's portion of it was $4 billion. And every state got a certain amount. So.

 

Mike Bailey:  So with respect to the package on the state and local fiscal relief, which we got the four here in Arizona. Out of the 242 page total ARPA bill, these few lines are the sections we're fighting over basically for general provisions on the use of funds and two restrictions. And the restrictions are what, Anni, in the statute?

     

Anni Foster:  So the restriction -- and I'll just really speak to the one that we're looking at. It's under subsection (a) there that you've highlighted. It says "to respond to the public health emergency with respect to coronavirus disease 2019 or its negative economic impacts". And then it lists out several things. There are other things like essential workers and government services and other investments in infrastructure.

      So from that perspective, it's extremely broad. And I would actually also point out that at the very beginning of this statute, I believe it is, it specifically talks about the scope of ARPA and the scope of ARPA is to address COVID fiscal recovery. So it's not like they said somewhere else in the statute that these funds should be used for public health purposes. It was very clear.

 

      When you talk about Representative Stanton's letter, okay, he can speak about the governor and throw out all of these political things, but bottom line, he did vote on this bill. And it's assumed that he knew what the language in the bill was and what exactly it allowed for. And even if his intent was not what it is -- again, we're all FedSoc members, very familiar with textualism and originalism -- all of the language in the statute makes it perfectly clear what the purpose was. And there are 534 other members of congress who probably all had different intents on what they thought this might have said.

 

      But again, the words are what matters. And the fact that even if the federal government wants to argue that it's recovery from COVID-19, in subsection (a), there is an or there that talks about economic recovery. And you have the federal government in and of itself saying that economic recovery includes education purposes.

 

      So from that perspective, I think it's just been interesting to see how people read statutes. And I would also just add how important it is. We've talked on a lot of these webinars that FedSoc supports and puts on, we talk about textualism. We talk about the judiciary and following textualism and originalism, but it's just as important for those counsels that are working within agencies in the executive branch to understand that concept and how important it is. And it's doubly important for those people that are working in these fields to make sure that you're following the law. Separate of powers isn't just a concept. It's a thing that is necessary to ensure that our government works the way that it does.

 

Mike Bailey:  So as you know, clearly it's talking about fiscal relief. It does in the subsection (c)(1)(a) talk about the ability to directly address health issues related to coronavirus and remediate actual effects of the virus and that kind of thing. But it's certainly non-exclusive, and it certainly gives you other purely fiscal approaches that you can take to recover from the fiscal damage that was incidental to everything that happened.

 

      And so let's take a look at that very first letter they sent out of Treasury to you folks in October suggesting that you have not complied with the statute or the interim rule for the state and local fiscal recovery package. And it's notable, I think, that they cite two portions of the interim final rule as their authority, and this is essentially the closest thing to an actual authority that they can cite in the letter. And they're talking about 86 Federal Register 26786 and page 26790. You address this in your complaint, but what is the problem? They do in those sections talk about health issues. Why does that not hurt you?

 

Anni Foster:  Well, I think it doesn't hurt us because again, the rule has to be based in their statutory authority. They can't just make something up. And this is also gets into the spending clause claim, right, because Congress appropriates money, and they do so unambiguously. And basically Treasury has taken Congress's language and said we're not going give you the money without you complying with all of these other things.

     

      And the other thing I would point to, that citation that they use is not even part of a rule. It's part of their findings and background that they use. So if they're trying to make us comply with a rule, you actually have to put it in a rule not in the findings and background. So from that perspective, you can cite all you want to other things as to your reasoning, but it has to be based in statute. It has to be based in the law. And what they're citing is -- all it is is background that they're trying to cite to prove their case and support their case. But if you actually look at  those provisions, it doesn't really cite what they claim it does, or it doesn't support what they claim it does. And I'm not going to dispute that the CDC has put out that guidance. But what I will say is that that guidance -- the ARPA funding is not contingent on that guidance.

 

Mike Bailey:  Right. And the specific sections they cited very clearly on their face related to that section under subsection (c)(1)(a) -- I think, it was (c)(2)(a)  -- where they talked about addressing the healthcare consequences, and they are giving example of appropriate uses on how we can address the healthcare consequences. But that was not to the exclusion of all other things.

 

      So what about the argument -- so you have the nondelegation argument because we have that very broad statute and even the Treasury Department in the rules interim and the final note that it is broad and it can be used in a variety of ways. And even in their examples, they give a variety of ways.

 

      Now although the subsections, those brief subsections we looked at relating to the SLFRF provisions didn't specifically go at public health and certainly not at the notion of doing something that is not in the interest of public health, which they in their contention is the taking the mask off the children. But throughout many of the other 240 pages of the bill that relate to how the federal government, the department, health, education and how they are directly spending their money, there are a number of health provisions in those sections. Does the overall theme of the act as a whole and the 240 pages that we are -- have a goal of mitigating COVID not just financially but actually mitigating COVID itself? Does that hurt you or help you in anyway with respect to your argument that the 4.2 billion to Arizona in SLFRF funds also might have that intent behind them?

 

Anni Foster:  So I'm not sure whether it helps or hurts us. I would argue it helps us, actually. I do expect that's what the federal government will argue is that the overall bill is meant to address these things. But I think it begins with the facts that -- and we call it SLFRF funds, although it doesn't hit all the letters necessarily. But it's State and Local Fiscal Recovery Fund. That is the title of the statute. That is the name of the program. And so -- and nowhere does it talk about public health. It talks about fiscal recovery. And that's why I went back to the scope. If they had said that in light of COVID we need to make sure that as we're pursuing fiscal recovery we put stipulations on this that you not only use these funds for fiscal recovery, but you do so with consideration of the public health consequences, we'd probably be in a different scenario.

 

      But when you talk about the nondelegation doctrine you have to have an intelligible principle. Well, the only intelligible principle is that these monies have been appropriated to the states for these reasons. And those reasons are so broad that I think it's going to be really hard for Treasury to argue that the overall bill in other areas addressed public health issues. Because Congress -- it's believed that Congress knew what it was doing, and if it intended them have public health consequences tied to their appropriation, they would have said that in that section of statute because they did say it in other sections of statute.

 

      So to answer your question, I think it helps. That would be my impression. But I do think that probably will be the argument that the federal government tries to make is that it is COVID and this is what the Congress would never have intended to issue these funds with the thought that it could be used for something adverse to COVID.

 

      But the other fallacy in that argument is going to be the CDC previously has identified industries that were supposedly a threat to public health during the peak of COVID, correct, right? They said that gyms should be shut down. They said that you shouldn't eat at buffets, and bars should be shut down, all of these things. Well, if that's the case, these monies are meant for fiscal recovery and include -- one of the inclusive categories is hospitality. So if you're including those portions but yet several months ago CDC said it wasn't safe, well, then how can you use those funds for fiscal recovery in those industries now.

     

      So I don't think that that argument will hold water, but as we all know, you never know what a judge is going to do.

 

Mike Bailey:  Sure. So let's talk a little bit more about the process issue, I think. And we've generally talked about changing the rule at the end and then coming back and saying you didn't comply. We've talked about the fact that the rule really was without authority and the delegation from Congress by the act. But there's some more to the process that strikes me as a little odd that feels mostly procedural to me, but it could be the creation of simply a claim for arbitrary enforcement of rule-making, I guess.

 

      So remember, it was the end of August when the congressman first raised the issue. And it was October 5th when the department wrote the first letter to the governor indicating that this is a problem. And yet, after October 5th but before the final rule was released, the department sent out, first of all, a guidance that said look you and presumably we, the department, are bound -- just to be clear -- you are bound by this interim final rule in your use of these funds. And again, the interim final rule did not address the issue that is now being raised at all.

 

      Treasury's interim final rules details your compliance responsibilities and provides additional information on eligible and restricted uses. This is after they've raised it, but at this point, correctly me if I'm wrong, there have still been no, other than in a letter saying we don't really think that applies, no formal restrictions that say you can't have anything related to masking, have there?

 

Anni Foster:  No. No. Well, the interim final rule is out there. It doesn't go into effect until April 1 --

 

Mike Bailey:  - The final rule you mean?

 

Anni Foster:  Yes. Yes.

 

Mike Bailey:  But this is after the interim final rule -

 

Anni Foster:  - Which said nothing about masking.

 

Mike Bailey:  - which said nothing about -- so they wrote you a letter, and then they still later issued guidance that says that's the rule that the rule that says nothing about masking is the one that applies. And then after that, they issue a second -- and I -- oh, there it  is -- an explainer, what they call an explainer which says until Treasury adopts the final rule -- this was sometime maybe September-ish, I think -- but actually this came before. Until Treasury adopts the final rule, and it becomes effective, meaning April of 2022, the interim final rule is binding and effective. And so this is part of your argument, and in criminal law we would call it ex post facto. But how do you exactly frame it in this case where they're trying to hold you to a standard that does not yet exist?

 

Anni Foster:  Well, there's some case law on it -- and I'm sorry, but it's escaping me right now -- that we found that talks about this, that you can't retroactively go back and apply rules after the fact. And that's what they're trying to do. And Congress can only apply things retroactively if it's specific in the statute. There's clearly no language in the statute that says that -- first of all we've already established that the statute doesn't support what they've done in the first place in this final rule. But above and beyond that, there's no place in the statute that says that Treasury can apply their rules retroactively.

 

      And so to that point though, one of the biggest concerns, again, which sparked the reason why we filed this lawsuit, is because not only are they trying to apply the rules retroactively, but in order to get that second round of funding, the state is going to have to sign off saying that just exactly what you showed, saying that we will comply with the final rule, which again, we don't believe there is statutory authority for.

 

      So we need to proactively get a court ruling saying that what they have done is an abuse of discretion and arbitrary and capricious because if we don't get that, then we're going to have to contractually sign an agreement that has problems with it and that we will potentially be bound by. So the state is really put in a no win situation with the treasury right now as to what it does about these funds going forward because on one hand -- and that's a whole other issue that we haven't had a chance to talk about yet. But they're threatening to not distribute funds and recoup all of the funds that they've paid us. But under the statute, the only amount of money that they're able to recoup is the money that is determined to have been spent contrary to the authority.

 

      So right now, that amount is nowhere near the amount that they're alleging that we would have to pay back because although we appropriated or we set aside $173 million for these two programs, that amount has not gone out. I can't remember off the top of my head how much has actually gone out. I know I have that here somewhere. I think at this point only $322,000 has gone out on the educational recovery benefit program. And then the whole $163 million has been set aside for the Education Plus-Up. So at the most, that's all that they could recoup at this point. But yet, they're saying not only do we have to give it all back, but we can't get the funding in the future. So I think there's a lot of issues there.

 

Mike Bailey:  Well, that is, as you point out, it's a lot of money anyway you slice it. But it's not something that's going to break the federal government or break the state. Now, the NFIB case that we recently had come down from the Court relating to other mandates, in that case the vaccine mandate on employers and workers, the Court used the major questions doctrine to address the delegation in that case. And the Court noted that this doctrine applies where there's a question of vast economic and political significance.

 

      In our case where even in education our school directly have already gotten 2.5 billion from the ESSER programs and out of our 4.2 billion we're talking about $163 million in addition to the ERE program. But it's a contextual drop in the bucket. It's a point or two, a percent or two of the total money we're talking about, if that, so hard to push that into a major question. How does the non-delegation doctrine on which you base your claim differ, and what do you think you'll successfully be able to show?

 

Anni Foster:  Well, I think one thing that I just point out is we're talking about an intelligible principle here, right. What Congress laid out, it was a very broad statute. And if there is some kind of delegation to an agency, that delegation has to be based on an intelligible principle, and we don't have that here as to what Treasury is trying to do.

 

      I will tell you, because we've looked at this, are there things that -- treasury for instance has the ability to monitor fraud and those types of things -- when you look at their enabling statutes under the Department of Treasury, of course. But even with that, it doesn't give them blanket authority to just say well we don't like the way that you are spending the money that Congress appropriates you and so we get to come in and change that.

 

      In terms of the major questions, I would just say I think it's a broader issue. It is a substantial issue. When you have an executive agency that's coming in and taking what Congress dictated and prescribed, and they are putting additional stipulations on how that money can be received, I think that's a problem. And there've been a couple of cases throughout the country. I know General Brnovich here in Arizona filed a case. I know that Kentucky, Tennessee, and one other state came together and filed a lawsuit against treasury on the tax principle that's in this that prevents states from giving tax cuts. That's a little bit of a different issue there because -- and some people have questioned me like how is that not the same case as what you're arguing.

 

       Well, in that case it was all about the language of the actual statute and what the statute was saying. There were some guidance and rules that we were waiting for before those lawsuits got filed from Treasury, but that statute had a little bit different -- the arguments there were a little bit different than here where it is based on statutory language, but what we're talking about is them so super exceeding something. And oh by the way, there is an actual harm. Because I know in there have been questions about standing in rightness, that have held them up a little bit.

 

Mike Bailey:  We're getting toward the end of our time, so let me ask you just one or two more questions, and then we'll see if there are any questions from those who may still be watching at this point.

 

      I'll ask you one question going back to the statutory language. I'm just curious because I haven't been of course privy to all of the conversations back and forth between the Arizona governor's office and the Department of Treasury. But if does seem the statutory -- one of the specific mentions they make in this broad statute is in (c)(1)(b). We were talking about (a) before, but (b) talks about responding to workers performing essential work during the emergency and providing money either directly to them or to their employers that have eligible workers who perform essential work.

 

      It seems to me there's an argument to say look the masking requirement, we're never going to agree on whatever somebody's science says on whether masks work or not. It's pretty much set in some people's mind at this point. But clearly if you are a school that has -- and it's clear -- I think we can also agree -- it's better for the children to not have to wear masks. If there's any danger for anyone in there it's not more than negligible, it's the teachers and so this is why the teacher's union operation has been so involved in this with the school board business, department of justice, et cetera.

 

      But if we have a school where for the benefit of the children, these teachers and this school, this district, in some cases have not required masking, that these essential workers, these teachers in those districts have exposed themselves to some kind of danger over the course of this. And that's why we're especially concentrating on them rather than to control them in anyway. Is that a discussion that's come up at all?

 

Anni Foster:  We have not had that discussion. I think it's an interesting concept. But we have not had that discussion. I know that there's -- and when we talk about funding, there's lots more funding that has gone to schools that is not part of this discussion. There's funding that goes directly through the Department of Ed to schools. And so we haven't had that discussion, but it's an interesting concept.

 

Mike Bailey:  That's right. And I think we've noted it, but it can't hurt to reiterate it, that again 2.5 billion when out through the Department of -- same thing ARPA -- but through the Department of Education directly to the schools instead of passing through the state executive on the way through. And Governor Ducey's program with this fiscal relief money was directed at schools that really were underpaid, received less than 1800 per student in the ESSER distribution. So these are all schools that were on the low end of whatever else. And in the case of the funding for parents to give them some options, that, of course, was limited to low income families that really without that funding wouldn't have a choice to find what they think is best for their kids. And for any state, as Arizona is, that prides itself on the just great amount of school choice we have here, that makes perfect sense.

 

      Well, do you have anything else to add before we --

 

Anni Foster:  - I would just add on that point, the one thing that is shocking here is that on one hand the federal government is claiming that under ESSER, Title 1 schools should get more money. That's kind of what happened here. And those are the schools that have a disproportionate number of low income children. But the kids that have the most to gain by school choice are those same kids, but yet they're basically saying no, you need to send them to the Title 1 schools which sometimes are not performing schools. And they're taking away that choice. And I think that shouldn’t be lost here.

 

Mike Bailey:  Well, thank you. We'll see if anybody does have any questions, now would be the time to put on in the question and answer box there. But if not, thank you all for your time. And Evelyn has come back on, so what do you think? Do we wrap it up, or do we take a minute?

 

Evelyn Hildebrand:  I think that if the two of you are ready to wrap it up, then we can wrap it up for this afternoon. It was a great presentation.

 

Anni Foster:  Oh, we got a question. Oh, no.

 

Evelyn Hildebrand:  I think you answered everyone's questions preemptively.

 

Anni Foster:  Yeah. I would just say thank you, Mike, like you were -- your questions were really great, so I appreciate it.

 

Mike Bailey:  Well, thanks for taking the time, Anni, and we'll certainly be watching the case closely from here on out.

 

Anni Foster:  For sure.

 

Mike Bailey:  Thanks.

 

Anni Foster:  Thank you.

 

Evelyn Hildebrand:  Thank you both. And on behalf of The Federalist Society, thank you to our speaker and our moderator for their time this afternoon. Thank you to our audience for tuning in and participating. And if the attendees have any questions or comments, please send those to [email protected], and we welcome questions and comments. Please keep an eye on the website and your emails for announcements about upcoming virtual events. And with that, we are adjourned. Thank you.

 

Anni Foster:  Thank you.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.