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Greetings, Court Fans!

We’re back with our final Update of OT22, covering a trio of decisions involving standing and challenges federal agencies’ authority:

• Biden v. Nebraska (No. 22-506) and Department of Education v. Brown (No. 22-535), where the Court held that some plaintiffs had standing to challenge the Biden Administration’s student-loan forgiveness plan (while others did not) and that the plan exceeded the Secretary of Education’s statutory authority;

• And United States v. Texas (No. 22-58), where an 8-1 Court held that Texas and Louisiana lacked standing to challenge the Secretary of Homeland Security’s immigration-enforcement guidelines prioritizing the removal of certain categories of non-citizens.

We’ll start with Biden v. Nebraska (No. 22-506) and Department of Education v. Brown (No. 22-535), two challenges to the Biden Administration’s student-loan forgiveness plan. In 2022, Secretary of Education Miguel Cardona announced that the Biden Administration would cancel up to $10,000 in eligible student debt for any borrower whose adjusted gross income was below $125,000 in 2020 or 2021, and another $10,000 for borrowers who previously received Pell Grants as undergraduates with exceptional financial need. Student debt eligible for forgiveness included loans offered directly by the federal government; other government-subsidized, low-interest loans made by schools to students with significant financial need; and loans made by private lenders and guaranteed by the government, known as Federal Family Education Loans (FFELs). Approximately 43 million borrowers were eligible for forgiveness under the plan, putting its estimated cost at $430 billion.

Secretary Cardona claimed authority for his plan under the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act. In the wake of the September 11 terrorist attacks, Congress had passed a predecessor statute, the HEROES Act of 2001, to help borrowers (particularly military personnel) by granting the Secretary of Education “specific waiver authority to respond to conditions in the national emergency.” The 2003 HEROES Act granted the Secretary permanent authority when responding to a war or national emergency to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs.” Congress granted the Secretary these powers to ensure that “recipients of student financial assistance … are not placed in a worse position financially in relation to that financial assistance because” they “suffered direct economic hardship as a direct result of” a national emergency.

In March 2020, President Trump declared the COVID-19 pandemic a national emergency. Then-Secretary of Education Betsy DeVos promptly suspended loan repayments and interest accrual for all federally held student loans, but the Department’s Office of General Counsel advised her that she did not have authority to cancel or forgive student loans across the board. After the change in administrations, the loan forbearance remained in place. But the Office of General Counsel rescinded its prior advice and greenlighted “targeted loan cancellation directed at addressing the financial harms of the COVID–19 pandemic.” In August 2022, Secretary Cardona issued his proposal to cancel student debt under the HEROES Act and published the required notice of his “waivers and modifications” in the Federal Register.

Six Republican-led states—Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina—promptly sued, seeking a preliminary injunction against the plan. The District Court found that the states lacked standing to challenge the plan and dismissed their suit. But the Eighth Circuit reversed, concluding (preliminarily) that Missouri likely had standing to sue and that it was entitled to a nationwide preliminary injunction pending resolution of the appeal. In another suit, two individual borrowers—Myra Brown and Alexander Taylor—also sued the administration. In Brown’s case, she alleged that her student-loan debt was “commercially held” rather than “held by the Department,” rendering her ineligible for loan forgiveness under the plan. The other borrower, Taylor, was eligible for $10,000 in loan forgiveness but not the $20,000 offered to Pell Grant recipients, notwithstanding that some of those recipients now had higher incomes than Taylor. These individual borrowers alleged that the Department should have followed a formal rulemaking process that would have allowed them (and others) to express their concerns about the plan before its adoption. They also contended (as did Missouri and its peers in the first suit) that the Secretary lacked authority to promulgate the plan under the HEROES Act. In the individual borrowers’ case, the District Court determined that the plan exceeded the Secretary’s authority and vacated it, and the Fifth Circuit denied the Department of Education’s motion for a stay pending appeal. The Supreme Court granted certiorari before judgment in both cases.

Although the result is a bit less interesting, we’ll discuss Department of Education v. Brown first. Writing for a unanimous Court, Justice Alito concluded that the individual plaintiffs lacked standing to challenge the plan. Before the Supreme Court, Brown and Taylor argued they had standing on the theory that if the Department had offered them an opportunity to voice their objections to its plan (including its legality) through rulemaking, the Department might have promulgated a different loan-forgiveness plan, one that relied on the Higher Education Act of 1965 (HEA) instead of the HEROES Act. Alito made short work of that with standing doctrine’s “traceability” requirement: that is, the requirement that the plaintiff’s injury be “fairly traceable” to the defendant’s alleged wrongful conduct. Brown and Taylor’s alleged injuries—not receiving the loan relief they hoped for—was not fairly traceable to the Department’s adoption of this loan forgiveness plan, because the Department could promulgate the program Brown and Taylor envisioned at any time: “[T]he Department’s decision to give other people relief under a different statutory scheme did not cause respondents not to obtain the benefits they want.” While Brown and Taylor could petition the Department for the issuance of a new rule or repeal of its existing rule, they lacked standing in federal court to challenge the loan forgiveness plan on the “theory that it crowds out the[ir] desired one.” True, the Department had occasionally referred to the plan as a “one-time” student-loan relief package, but it still had discretion to issue an alternative loan forgiveness plan consonant with Brown and Taylor’s wishes. The Court therefore directed dismissal of their suit for lack of standing.

That leads to Biden v. Nebraska, where a 6-3 Court found that Missouri, at least, had standing to sue and that the plan exceeded the Secretary’s authority under the HEROES Act. Chief Justice Roberts’s majority decision began with standing. Missouri alleged it had the requisite injury for standing purposes by virtue of the Missouri Higher Education Loan Authority (MOHELA), a public corporation that holds and services about five million federal loan accounts, comprising nearly $150 billion in federal loans and over $1 billion in FFELs. For servicing these accounts, MOHELA receives approximately $89 million annually in administrative fees—about $44 million of which it would lose if half of the accounts were closed after the discharge of those borrowers’ debt under the plan. That undisputed financial injury to MOHELA, Roberts concluded, gave Missouri standing, because MOHELA was a “public instrumentality” of the state, subject to its supervision and control, and it was established to perform the “essential public function” of providing student loans for Missourians attending college. Thus, although MOHELA was technically its own corporate entity, it remained a state instrumentality for purposes of Missouri’s standing to sue.

Here, we’ll jump ahead to Justice Kagan’s dissent, joined by Justices Sotomayor and Jackson. She viewed Missouri as improperly piggybacking on MOHELA’s injury. As she saw it, MOHELA was “a legally and financially independent public corporation” whose revenue did not pass through to Missouri. While it presumably could have sued in its own name based on its loss of administrative fees, it chose not to. Because Missouri and MOHELA are “separate entities,” and MOHELA could independently represent its own interests, Kagan concluded that Missouri could not rely on MOHELA’s injury for its standing. Moreover, she observed that Missouri and its fellow state plaintiffs didn’t really care about the loss of loan servicing fees to instrumentalities like MOHELA. Instead, they wanted to air generalized grievances with the policy choice of the Administration’s plan. But because that was not a recognized basis for standing, she would have dismissed the states’ suit along with the individual plaintiffs’ one.

Turning to the merits, the majority found that the Secretary’s authority under the HEROES Act to “waive or modify” financial assistance provisions in federal education law did not confer on him the authority to rewrite that law “from the ground up.” First, in common usage “modify” describes incremental change, not fundamental overhaul. Yet the Secretary’s plan would have repurposed his statutory authority to discharge a borrower’s liability under extraordinary circumstances (such as the death, disability, or bankruptcy of the borrower) and in defined ways (with “particular sums to be forgiven and income-based eligibility requirements”) into the power to discharge substantial debt held by 98.5% of all borrowers under entirely new guidelines. As the Chief Justice quipped, invoking a memorable phrase from the late Justice Scalia, this plan “‘modified’ the cited provisions only in the same sense that the French Revolution ‘modified’ the status of the French nobility—it has abolished them and supplanted them with a new regime entirely.” The Secretary’s authority under the HEROES Act to “waive” provisions was similarly insufficient to permit the Secretary to adopt a freestanding loan forgiveness program, “waiving provisions root and branch and then filling the empty space with radically new text.” Third, because neither waiver nor modification authorized the plan, the Secretary could not get there by adding “waive” and “modify” together. Nor could he bootstrap a procedural provision directing that the notice in the Federal Register include “the terms and conditions to be applied in lieu of [the waived] statutory and regulatory provisions” to craft his own regulations from whole cloth.

Finally, responding to the argument that emergency powers should be construed broadly, the majority invoked the major questions doctrine as applied last Term in West Virginia v. EPA. As Chief Justice Roberts put it, “[t]he question here is not whether something should be done; it is who has the authority to do it.” Because the Secretary had never previously claimed the power to discharge the debt of millions of borrowers under the HEROES Act and the statute did not purport to grant him that authority of staggering “economic and political significance,” the Court concluded that Congress, rather than the Secretary himself, should decide whether such novel emergency powers were warranted. The Court therefore upheld the Eighth Circuit’s injunction, stalling the loan forgiveness program at the starting gate.

The dissent disagreed, to put it mildly, on the merits too. First, Justice Kagan understood the Secretary’s “waiver” power to encompass the elimination of certain requirements altogether—not in a manner limited by the incremental connotation of the adjoining verb “modify.” Second, she read the reporting requirement for “terms and conditions in lieu of” those waived or modified to confirmCongress’s intention that, after eliminating or adjusting statutory requirements, the Secretary could add new provisions in their place. Taken together, the statutory toolbox of waiver, modification, and new terms and conditions meant that “when an emergency strikes, the Secretary can alter, so as to cover more people, pre-existing provisions enabling loan discharges,” which “is exactly what the Secretary did in establishing his loan forgiveness plan.” By waiving some requirements, modifying others, and then filling gaps with new terms and conditions, the Secretary was permitted to “counteract an emergency’s effects on borrowers.”

With respect to congressional intent, Justice Kagan argued that Congress “would be appalled” if the Secretary failed to use his emergency powers to “scratch the pre-existing conditions for discharge and specify different conditions met by the affected borrowers.” Instead, by summoning the major questions doctrine to its rescue, she charged, the majority had “put[] its own heavyweight thumb on the scales” and arrogated to itself the power to decide an important national policy question, even though student loans were squarely “in the Secretary’s wheelhouse.” Reprising her dissent in West Virginia, Kagan argued that the major questions doctrine was in fact a “judicially manufactured” device of recent vintage designed to “trump” rather than “better understand … the scope of a legislative delegation.”

In a lengthy concurrence, Justice Barrett defended the major questions doctrine as a context-dependent inquiry consistent with textualism that was neither “made-up” nor “new.” In her view, the doctrine simply reflected a common-sense approach to “the manner in which Congress is likely to delegate a policy decision of [] economic and political magnitude to an administrative agency” by assuming that Congress would make that delegation clear in the statutory text. After all, the Constitution vests Congress with “all legislative Powers,” so “a reasonable interpreter would expect it to make the big-time policy calls itself, rather than pawning them off to another branch.”

The dissent’s accusations that the Court was not “acting like a court” by deciding “a case [that was] not a case” and overriding “the combined judgment of the Legislative and Executive Branches” drew a response in the majority’s closing section. The Chief Justice noted the “disturbing feature of some recent opinions to criticize the decisions with which they disagree as going beyond the proper role of the judiciary.” He cautioned that this “plainly heartfelt disagreement” should not be mistaken by the public as “disparagement,” as “such misperception would be harmful to this institution and our country.” Kagan agreed that no disparagement was intended, but felt it was her duty to “raise[] the alarm when the Court has overreached.”

Our last case for the day (and the term) is United States v. Texas (22-58), where the Court addressed whether Texas and Louisiana had standing to challenge immigration enforcement guidelines promulgated in 2021 by the Secretary of Homeland Security that prioritize the arrest and removal from the United States of certain noncitizens, such as suspected terrorists, over others. The States argued that the guidelines were inconsistent with federal law requiring the detention of certain noncitizens upon their release from prison or a final order of removal, because the guidelines resulted in only a subset of those statutory categories being detained and removed. And the States claimed that they had standing to challenge the guidelines because the Executive Branch’s failure to comply with the statutory requirements (and so to arrest and remove larger numbers of noncitizens) caused the States to incur costs for continued incarceration of these individuals or for providing them with social services (such as school or healthcare). The District Court agreed that those economic losses amounted to an injury for standing purpose. And on the merits, the District Court concluded that the Guidelines were unlawful, issuing an order vacating them. The Fifth Circuit declined to stay the District Court’s mandate, and the Court granted cert before judgment to review the issue.

The Court reversed, issuing several opinions that make the result a bit more complex than the 8-1 vote tally suggests. Justice Kavanaugh penned the majority opinion, joined by the Chief and Justices Sotomayor, Kagan, and Jackson. In their view, the States lacked standing because they had not alleged the right kind of injury. Standing requires a plaintiff to plead and prove an “injury in fact,” but not every injury suffices; instead, a plaintiff must suffer a “legally and judicially cognizable” one. Historically, Kavanaugh explained, courts had concluded that there is no cognizable injury arising from the Government’s failure to prosecute another. Further, recognizing standing in such suits would interfere with the Executive’s Article II authority to determine how to prioritize its limited resources. Courts lack meaningful standards to evaluate the Executive’s enforcement choices, underscoring that this is not a suitable arena for judicial enforcement. The majority took pains, however, to limit its ruling, explaining that it was not holding that a failure to prosecute claim may never be cognizable. For example, standing might exist for selective prosecution claims under the Equal Protection Clause And the analysis might differ if Congress elevated de facto injuries into legally cognizable injuries or if the Executive wholly abandoned its statutory responsibility to make arrests or adopted a policy of not just declining to arrest but of providing benefits.

Justice Gorsuch, joined by Justices Thomas and Barrett, concurred in the judgment only. In their view, the Court correctly concluded that the States lacked standing, but for the wrong reason. To have standing, a plaintiff must have (1) a concrete and particularized injury; (2) that is traceable to the defendant’s conduct; and (3) can be redressed by a court order. Gorsuch concluded that the States had alleged an injury in fact (financial detriment has long been recognized to be sufficient), and that this injury was traceable to defendant’s conduct (failure to arrest immigrants as required by law directly led to the increased costs). Indeed, in Massachusetts v. EPA (2007), the Court already held that States have standing to challenge the federal government’s failure to regulate (in that case, the EPA’s failure to regulate greenhouse gas emissions). But even though the States could establish an injury in fact traceable to the defendant’s conduct, that injury was not redressable by a court order, because federal law provides that “no court (other than the Supreme Court) shall have jurisdiction or authority to enjoin or restrain the operation of” certain immigration laws, including the laws the States sought to have enforced in this case. That provision had been interpreted to bar “lower courts from … order[ing] federal officials to take or to refrain from taking actions to enforce, implement, or otherwise carry out the specified statutory provisions.” The District Court attempted to skirt that prohibition by vacating the guidelines rather than entering a mandatory injunction requiring the Executive Branch to enforce the statutes as written. But that did not solve the problem because the elimination of the guidelines would not necessarily result in the Executive Branch enforcing the laws as the State would like. This lack of redressability meant the States lacked standing. Gorsuch also doubted that the District Court’s remedy—vacatur of the guidelines—was even authorized by the APA, forecasting that this issue raised “serious” questions that “this Court will have to address sooner or later.”

Justice Barrett joined Justice Gorsuch’s concurrence but penned a short separate concurrence to emphasize her disagreements with the majority’s opinion and in particular, their reliance on prior precedent to conclude that the States lacked an injury-in-fact here.

Justice Alito alone dissented, explaining that while it may be the case that the Executive often has discretion not to prosecute, that presumption was overcome here. The immigration laws at issue in the case were enacted in direct response to the Executive Branch’s failure to address illegal immigration and to limit the Executive Branch’s discretion by requiring the arrest of certain noncitizens. The statute even provided for a phase-in period, in recognition that the Executive Branch might not have enough resources to immediately adhere to the laws’ strict requirements. This would have been totally unnecessary if the Executive were free to disregard the legislative mandate. Alito criticized the majority for adopting a vision of sweeping Executive power that is not only inconsistent with the separation of powers between the three branches of government but is inconsistent with the Constitution’s command that the Executive “take care that the Laws be faithfully executed.” In Alito’s view, the States clearly suffered an injury in fact from the Executive’s failure to enforce the law. And that injury was redressable: The Supreme Court itself could issue an injunction requiring enforcement. And even if the Court could not, vacating the Guidelines itself was likely to redress the injury, given the presumption that the Executive Branch would adhere to the Court’s authoritative interpretation of the law.

And with that, the Court’s 2022 Term comes to an end. We want to take this opportunity to thank our colleagues who’ve helped us summarize this term’s 58 decisions: Aaron Bayer, Anjali Dalal, Ariela Anhalt, Emmett Gilles, Evan Bianchi, Jeff Babbin, Jonathan Freiman, Kim Rinehart, Michael Rondon, Nate Guevremont, and Sean Vallancourt. And we couldn’t have brought these Updates to you without the assistance and support of our marketing and IT colleagues. We’ll be back this fall to preview some of OT23’s most anticipated cases. Until then, enjoy your summer.