Biden v. Nebraska
Oral argument transcript · No. 22-506 · October Term 2022 · argued February 28, 2023 · the petitioner won
Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court
Advocates
- Elizabeth B. Prelogar, Solicitor General of the United States, for the petitioner
- James A. Campbell, State Solicitor General, for the respondent
Transcript
From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.
Chief Justice Roberts: We'll hear argument first this morning in Case 22-506, Biden versus Nebraska. General Prelogar. ORAL ARGUMENT OF GEN. ELIZABETH B. PRELOGAR ON BEHALF OF THE PETITIONERS
Elizabeth B. Prelogar: Mr. Chief Justice, and may it please the Court: COVID-19 is the most devastating pandemic in our nation's history and it has caused enormous disruption and economic distress. Over the past three years, millions of Americans have struggled to pay rent, utilities, food, and many have been unable to pay their debts. To head off immediate harm for student-loan borrowers, two Secretaries across two administrations invoked the HEROES Act to suspend interest and payment obligations for all Americans with federally held loans. But, if that forbearance ends without further relief, it's undisputed that defaults and delinquencies will surge above pre-pandemic levels. Official 1 So Secretary Cardona again invoked the HEROES Act to provide a measure of loan forgiveness to ensure that this unprecedented pandemic does not leave borrowers worse off in relation to their student loans. The states ask this Court to deny that vital relief to millions of Americans, but they lack standing to seek that result. They principally assert harm to a separate legal person, MOHELA, that could sue in its own name but has chosen not to do so, and the states' asserted harms to their tax revenues are self-inflicted and indirect. The states' bare disagreement with this policy is not the sort of concrete injury that Article III demands. On the merits, the states say the Act doesn't authorize the Secretary to ever forgive loan principal. But the Secretary's interpretation of this text is not just a plausible reading; it's the best reading. Congress expressly authorized the Secretary to waive or modify any Title IV provision in emergencies to provide financial relief to borrowers. Loan forgiveness is a paradigmatic form of debt relief, and the Secretary acted Official 1 within the heartland of his authority and in line with the central purpose of the HEROES Act in providing that relief here. To apply the major questions doctrine to override that clear text would deny borrowers critical relief that Congress authorized and the Secretary deemed essential. I welcome the Court's questions.
Justice Thomas: General, is this a waiver, or is it a modification?
Elizabeth B. Prelogar: It's both a waiver and a modification, Justice Thomas. This appears at JA 261. That was the decision document that the Secretary signed where he said, I hereby issue waivers and modifications of multiple provisions under Title IV of the student loan program. And then that language was repeated in the Federal Register notice that actually implemented that program and constitutes the final agency action that the states are challenging here.
Justice Thomas: Well, could you explain then -- in -- in -- in other provisions, there is express language as to cancellation, and, of course, there isn't here. Official 1 So would you take a minute to explain how a waiver or modification amounts to a waiver -- to a cancellation?
Elizabeth B. Prelogar: Of course. So the Secretary identified various provisions in Title IV that govern the terms and conditions of student loans and also govern discharge and cancellation in other circumstances, as your question suggested. And I think the straightforward way to think about how the verbs map onto the Secretary's action is that he waived elements of those provisions that contain eligibility requirements for discharge and cancellation that are inapplicable under this program and then modified the provisions to contain the limitations that he had announced as part and parcel of announcing this loan forgiveness. Now you had suggested that there's no express statement in the HEROES Act to discharge loan principal, an -- and that's true, but the relevant and operative language here is the provision that says the Secretary is empowered to waive or modify any Title IV provision, and so the HEROES Act isn't enumerating any of the Official 1 various forms of relief that have long been authorized and implemented under this statute. I don't think anything can be read into the fact that there's no express reference to particular forms of relief because Congress was trying to broadly cover the field and ensure that the Secretary had the tools to respond to the national emergency with whatever relief might be necessitated.
Chief Justice Roberts: But, in -- in an opinion we had a few years ago by Justice Scalia, he talked about what the word "modify" means, and it's -- he said modified in our view connotes moderate change. He said it might be good English to say that the French Revolution modified the status of the French nobility, but only because there's a figure of speech called understatement and a literary device known as sarcasm. We're talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of "modifying"?
Elizabeth B. Prelogar: So, of course, I recognize that in MCI, Justice Scalia's opinion Official 1 adopted a narrower understanding of that term, but I don't read that opinion to set forth a universal meaning of "modify," no matter the statutory context. And, here, of course, we have a broader phrase, "waive or modify." It's undisputed and the states aren't contesting that the ordinary meaning of "waive" means to eliminate an obligation in its entirety. And I think, if you look at that phrase in the context of the statute, that means that "modify" has to mean making a change up to the point of wholesale elimination. It would be really strange for Congress to say you can eliminate obligations altogether or tweak them just the littlest bit, but you can't do anything in between.
Chief Justice Roberts: Well, but it's "waive" particular regulatory or statutory provisions.
Elizabeth B. Prelogar: That's right.
Chief Justice Roberts: That to me suggests a much more focused use of the word.
Elizabeth B. Prelogar: Well, it's "waive or modify" paired with the authority to do that Official 1 with respect to any Title IV provision. So I think that that is the --
Chief Justice Roberts: It doesn't say waive -- modify or waive loan balances.
Elizabeth B. Prelogar: That's true, but it's very clear that under the Title IV provisions that are expressly referenced in the statute, things like repayment obligations, cancellation, discharge, are core features of the program and obvious candidates for waiver in a statute, the central purpose of which is to provide debt relief to borrowers. You know, Congress itself has provided for loan discharge in other circumstances in response to borrower hardship. It's included provisions in the Higher Education Act for bankruptcy, for example, or for total disability or school closure, other kinds of hardships. And so it couldn't have surprised Congress one bit that in response to hardship posed by a national emergency, the Secretary might consider similarly providing discharge if that's what it takes to make sure borrowers don't default.
Chief Justice Roberts: You think Official 1 because there's a provision to allow waiver when your school closes, that because of that, Congress shouldn't have been surprised when half a trillion dollars is wiped off the books?
Elizabeth B. Prelogar: Well, I think it demonstrates that in a statute that's centrally focused on providing financial relief, that that terminology should be given its plain meaning, and Congress could have anticipated that in a particular situation, you might expect that the way that you need to ameliorate the borrower harm is through loan forgiveness. And, Mr. Chief Justice, maybe I can just use an example drawn from the initial context of promulgation of this statutory relief. It was initially a bill that was limited just to helping service members who were fighting in wars. And think about an example of a service member who goes off to war and you can provide HEROES Act relief to ensure that the service member doesn't have to pay down the loan while the term of service, but if something were to happen that left that service member worse off because of his service, say a -- a disability that doesn't qualify for total Official 1 discharge, it makes perfect sense to think that Congress would have expected that the Secretary would have authority under this Act to make the service member whole and to ensure, just as the plain language suggests, that that service member isn't going to be left worse off because of the circumstance that prompted his service in the first place. And so there's that first-order question of whether you can ever do any debt discharge. And I think, in that context, it's perfectly sensible to read this language to authorize that.
Justice Sotomayor: General, the amount at issue, the Chief mentioned the quarter trillion dollars or the half a trillion dollars. How do you deal with that? Because that seems to favor the argument that this is a major question.
Elizabeth B. Prelogar: Yes, Justice Sotomayor. So, of course, we acknowledge that this is an economically significant action, but I think that that can't possibly be the sole measure for triggering application of the major questions doctrine. Official 1 In prior cases, the Court has pointed to economic and political significance, but it's also reviewed a litany of additional factors that have demonstrated that based on common-sense understandings of how Congress is likely to legislate, the agency is claiming extravagant regulatory authority that it doesn't actually have. And I think, if the Court were to just look at costs alone, it would take the major questions doctrine outside of that extraordinary case because national policies these days frequently do involve more substantial costs or trigger political controversy. Here, we think that there are any number of additional factors that demonstrate that this does not fit the major questions paradigm. And the first thing I would point to is that this is not an assertion of regulatory authority at all. This is the administration of a benefits program. And the Court in prior cases had -- has recognized that you -- using common sense interpretations of understanding how Congress would legislate, Congress might pause Official 1 before empowering the executive to engage in extravagant regulation with the corresponding cost to individual liberty interests. But, in the context of a benefits program, there's not that same reason to hesitate about what Congress might have intended because it's perfectly logical for Congress to broadly empower the executive to provide benefits, especially in a crisis situation or an emergency like we've seen with COVID-19.
Justice Alito: And General, let's say that nobody in Congress was aware that there is such a thing in our case law called the major questions doctrine. So put that out of their minds. And you simply polled every member of Congress and asked that person whether, in the ordinary sense of the term, they would regard what the government had -- proposes to do with student loans as a major question or something other than a major question.
Elizabeth B. Prelogar: Well, I certainly acknowledge that in a colloquial sense you could characterize this as a major policy. We're not disputing that point. Official 1 But, again, I think that that applies to any number of actions that the government might take, and especially in the context of benefits programs, where just based on the size of those programs and the number of individuals affected, the costs can frequently run into the billions of dollars. So I don't --
Justice Alito: Is there any conceptual reason why the major questions doctrine should apply to most regulatory matters but not to the -- not to benefits programs?
Elizabeth B. Prelogar: The reason we think it shouldn't apply in the same way to benefits programs is because it doesn't involve that corresponding trade-off on individual liberty interests. The Court in some of the prior cases in this area has expressed concern that if the government is claiming an extraordinary power to regulate, that means it can encroach on the lives of individuals, the affairs of businesses, and quite directly impose onerous burdens on them.
Justice Alito: It may have an effect Official 1 on important individual rights, but do you think that the doctrine also or perhaps primarily has a separation of powers component?
Elizabeth B. Prelogar: Yes, of course, I recognize the Court has grounded it in the separation of powers, but I think that that cuts in favor of the distinction that we're trying to make because, if the Court were to apply major questions in this benefits context, even in a circumstance where you might think Congress could quite reasonably want to legislate broadly, then it would have the effect of potentially overriding Congress's intent, contrary to the same kind of separation of powers principles the Court has focused on in prior cases.
Justice Alito: Well, I don't understand why it would under -- undermine Congress's intent to a greater extent in that context. But drawing a distinction between benefits programs and other programs seems to presume that when it comes to the administration of benefits programs, a trillion dollars here, a trillion dollars there, it doesn't really make that much difference to Congress. That doesn't Official 1 seem very sensible.
Elizabeth B. Prelogar: Of course, I acknowledge that there can be substantial costs associated with benefits programs, but I guess the reason I'm pressing on this distinction is because I'm trying to think through, you know, what is Congress supposed to do when it wants to empower the executive to --
Justice Alito: But, I mean, isn't the question, looking at this program and looking at this question, is this the sort of thing that Congress is likely to address expressly or through a contestable interpretation of some statutory language?
Elizabeth B. Prelogar: Well, of course, we think Congress did address this expressly here, and Congress directed that in the context of a national emergency, that is the -- the limitation of the HEROES Act, so the Secretary can't invoke this whenever he wants. There has to be that predicate war or military operation or national emergency. In that context, in line with Congress's limitations on who can count as an affected individual by that -- an emergency, in Official 1 line with the purposes that relief has to serve, Congress said you can waive or modify any Title IV provision in order to get relief to borrowers. And, Justice Alito, I would point to the forbearance policy that's been in place for the prior three years, put into place right at the beginning of the pandemic by then Secretary DeVos. That has been an economically significant program. It's currently costing the federal government more per year than this loan forgiveness plan would cost the government annually. But I would argue that that is right in the heartland of what the HEROES Act aimed to do. It was critical relief that was rushed out at the beginning of this devastating pandemic to ensure that we didn't see spikes in delinquency and default across the nation.
Justice Alito: May I ask you a question about standing? So it's the case, isn't it, that if any party in either of these two cases has standing, then it would be permissible for us to reach the merits of the issue? Official
Elizabeth B. Prelogar: Yes. In -- in the states' case, if you conclude that any party has standing, then the Court could go on to the merits. In the case that the Court is going to hear next, we think that there are objections to the procedural claim with respect to the borrowers' objections there.
Justice Alito: Okay. Then let me ask you a question about MOHELA or maybe a question or two. If MOHELA itself had brought this suit, would you contest Article III standing?
Elizabeth B. Prelogar: No, we would not. So we think that if MOHELA made allegations that the plan was going to have financial effects on it, it could sue in its own name and we would not contest Article III standing.
Justice Alito: All right. So then we would consider the Article III standing of the State of Missouri, right?
Elizabeth B. Prelogar: That's right.
Justice Alito: And the -- the -- the most -- the -- the part of the Article III test that's most disputed is injury in fact, is that correct?
Elizabeth B. Prelogar: That's right. Official 1 We're also contesting causation --
Justice Alito: Right.
Elizabeth B. Prelogar: -- and redressability here, but I think injury in fact is one of the critical points in dispute with respect to MOHELA and the state's attempt to assert MOHELA's injury.
Justice Alito: Okay. Injury in fact is a factual question. So I understand a big thrust of your argument to be that Missouri lacks standing because MOHELA is -- is separately incorporated. But why should that formal distinction govern the determination of injury in fact?
Elizabeth B. Prelogar: So we think that the injury in fact analysis here has both a factual and a legal component. In the first place, of course, we're making arguments that even if there's a financial injury to MOHELA, the state hasn't carried its -- its burden to show that that will have downstream effects on the state or that those would be cognizable. And MOHELA hasn't paid money into the relevant state fund for the past 15 years. It said that further payments Official 1 were not deemed probable even before this plan was announced. But even putting the -- the factual discrepancies to the side, there's a fundamental problem as a matter of law with the claim of injury, and I think it arises directly from two sets of blackletter law principles. The first is that the whole point of incorporation is that you're creating a separate legal person with its own rights and interests. And Missouri has derived substantial benefits from structuring MOHELA that way. And the second is the basic Article III principle that a party has to come to court and assert her own rights and interests.
Justice Alito: Right. We -- I -- I, you know -- I --
Elizabeth B. Prelogar: She can't invoke the interests of a third party.
Justice Alito: All of that is certainly true. You think that our -- that the lack -- the fact that MOHELA is incorporated is the end of the day? That's enough to destroy -- to defeat standing?
Elizabeth B. Prelogar: We think, as a Official 1 matter of first principles, yes, that this Court has several times emphasized that when you have a separately incorporated instrumentality like that, the corporate separateness should be respected and that that --
Justice Alito: Well, what about --
Elizabeth B. Prelogar: -- serves important --
Justice Alito: -- Lebron and Amtrak?
Elizabeth B. Prelogar: So those are doctrines not focused on Article III standing, of course, but instead are testing for other things. In Lebron, that was a state action case, and the Court's reasoning was that you shouldn't be able to parcel out governmental functions to an instrumentality and thereby evade the strictures of the Constitution.
Justice Alito: Well, have we ever decided a case that presents what you see is the issue here or what the parties see as the issue, as one of the issues, which is whether, for Article III standing purposes, a -- an entity is part of a state?
Elizabeth B. Prelogar: No. So the Court Official 1 hasn't addressed this issue in the context of Article III. There aren't cases that are directly on point on either side, but I think that we definitely have the better argument of the first principles here based on the propositions I mentioned earlier, including those that generally make clear that the Court won't countenance third-party claims seeking to invoke rights and interests of individuals or entities that aren't before the Court. And I think it would be particularly anomalous to recognize some kind of exception to those principles here for two reasons.
Justice Alito: No, but the question would be whether MOHELA is part of the State of Missouri for present purposes. And where we're considering injury in fact, why should the test turn solely or why should the lack of corporate status be a necessary element? Why shouldn't the test be something more like whether the relationship between this entity and the State of Missouri is such that an injury to MOHELA will necessarily or presumptively be an injury to the state? And if that's the case, doesn't that Official 1 all point to the reasons for setting up MOHELA as a very relevant factor and the degree of state control, the degree of the governor's control over MOHELA as a very important factor?
Elizabeth B. Prelogar: I don't think that those factors should count as important in the analysis, and to the extent the Court is inclined to broaden out the analysis beyond the principles I've articulated about corporate separateness, I think the most critical fact would be whether there's financial entanglement and whether Missouri has itself decided to blur those lines for purposes of making it responsible for MOHELA's own liabilities.
Justice Jackson: And, in fact, isn't that really, as you say, the most important thing if economic injury is the point?
Elizabeth B. Prelogar: Yes.
Justice Jackson: I mean, I had understood that the injury that was being asserted here was an economic injury, but if we look at MOHELA and we see that its financial interests are totally disentangled from the state, it stands alone, it's incorporated separately, the state is not liable for anything Official 1 that happens to MOHELA, I don't know how that could possibly be a -- a -- a reason to say that an injury to MOHELA should count as an injury to the state.
Elizabeth B. Prelogar: Yes, we agree exactly with that analysis. And it's important to think about the benefits that Missouri has obtained from structuring MOHELA that way. This is not the first lawsuit that MOHELA's been involved in. Actually, MOHELA is not involved in this particular suit, but in prior suits, when MOHELA's been sued, the state's been entirely absent because state law makes clear that Missouri cannot be on the hook for MOHELA's liabilities. It creates a wall of separation financially between the two entities, and Missouri gets a lot of benefit from that.
Justice Jackson: And so --
Justice Sotomayor: General --
Justice Jackson: -- if MOHELA is being injured as a result of the plan or at least if that's the allegation, MOHELA has the ability to defend itself and its interests, correct?
Elizabeth B. Prelogar: Exactly. It's a Official 1 separate legal person. It has the right to sue or be sued in its own name. There is nothing that stands in the way of MOHELA asserting these interests if it's experiencing financial harm, and there's no --
Justice Jackson: But wouldn't --
Elizabeth B. Prelogar: -- principle that would support allowing Missouri now to interfere with the separation it itself has created --
Justice Jackson: And so we would -- would we be breaking --
Elizabeth B. Prelogar: -- just because it doesn't like the policy.
Justice Jackson: -- would we be breaking new ground then if, on this basis, we found standing?
Elizabeth B. Prelogar: Yes. I'm not aware of any case that would support standing on this basis.
Justice Alito: Well, would we be breaking new ground if we found that there was standing since we've never been presented, as you admitted earlier, with a case that presents precisely the issue that's here?
Elizabeth B. Prelogar: It's true that it's Official 1 a new fact pattern, but I think that the Court would be breaking new ground with respect to the general principles that it's asserted in third-party standing contexts. There, for example, one of the critical facts the Court has highlighted is whether there's some impediment that would prevent the party whose rights and interests are implicated from pursuing its own claim. There is nothing like that here, and the Court has never recognized a doctrine of third-party standing on facts like these.
Justice Kagan: Do you have any understanding about why MOHELA isn't here?
Elizabeth B. Prelogar: No. The only evidence in the record about MOHELA is that its involvement in this suit has been responding to sunshine law requests. I think it's possible that loan servicers have --
Justice Kagan: Sunshine law requests brought by?
Elizabeth B. Prelogar: Brought by the state. So Missouri served sunshine law requests on MOHELA to get information about its financial interests.
Justice Kagan: Because MOHELA was not Official 1 giving over information voluntarily?
Elizabeth B. Prelogar: That's correct. I think it just reinforces the sense that there was separation here between the state and this instrumentality. If I had to speculate, I think that loan servicers, during the course of the forbearance policy, have seen some of their servicing fees be reduced in light of that policy, and it's possible that they are waiting for forbearance to lift so that they can start collecting those fees again, and that might be a possible reason why they made the judgment that they don't want to stand in the way of this forgiveness policy, because it's a critical component of allowing payments to resume.
Justice Alito: Do you think there might be a dependent relationship between agencies like MOHELA and the federal government since we're speculating about why they're not here?
Elizabeth B. Prelogar: Certainly, there are contractual relationships, yes.
Justice Sotomayor: General --
Justice Jackson: Can I ask you, you -- oh, I'm sorry. Official
Justice Sotomayor: General, there was a Missouri case in 1979, Menorah Medical Center, with an agency much like MOHELA, and, there, the -- the Missouri Supreme Court said that that entity was not the state. States are free to organize themselves and structure themselves in any way they want, correct?
Elizabeth B. Prelogar: Correct, yes.
Justice Sotomayor: And it would be odd for us to have a state say we're creating a -- an -- a corporation, we're not going to be responsible for its debts, we're not going to be responsible for any of its contracts, we're not going to be responsible for anything it does financially, and the state itself says this is not the state, it's an independent corporation, and we're going to say instead that it is the state, correct?
Elizabeth B. Prelogar: Yes. I think that it would be really anomalous to override the separation that Missouri itself created between it and MOHELA in the context of this case, this case --
Justice Sotomayor: Or to override its own state supreme court's decision that it is Official 1 not the state?
Elizabeth B. Prelogar: Yes, that's correct.
Justice Barrett: General, I'm thinking of, in Arkansas versus Texas, it was significant in that case that Arkansas owned the land of the university. So it does seem that Missouri has created this separateness with respect to the liabilities of MOHELA. What if -- and I'll ask this to the other side. It's not really clear to me what happens to MOHELA's assets. I mean, what if MOHELA itself dissolves? There are no shareholders. I mean, does your answer change if, even though Missouri is not responsible for the liabilities, it does have an ownership stake in the assets of MOHELA?
Elizabeth B. Prelogar: I think it's clear under state law, Justice Barrett, that Missouri doesn't have that kind of ownership interest in the assets of MOHELA. And I would point in particular to Missouri Revised Statute 173.410. This is the provision that makes clear that Missouri cannot take the assets of MOHELA and appropriate them. They don't go into the Official 1 general treasury. It makes clear instead that those assets are under MOHELA's exclusive control. So I think, as a matter of state law here, we don't have anything like the Arkansas case that you just referenced. And as well, the flip side of that is the provision of state law that likewise says Missouri is not going to be liable for any agreements or obligations or liability of MOHELA so that if MOHELA goes out there in the world and harms someone, the state's not on the hook for the damage. And that's another distinction from the Arkansas case, where, under state law there, it was clear that a suit against the instrumentality was a suit against the state itself.
Justice Barrett: Would you have the same position with respect to federal corporations? Like what about the FDIC or, you know, organizations like that, what if the agency didn't want to sue? Could the United States sue to protect the federal government's interests if the corporate identity was separate like here? Official
Elizabeth B. Prelogar: No. I think that our principles would apply with respect to our own instrumentalities. We could, of course, sue to protect interests -- distinct rights and interests of the United States. And so Respondents have cited some cases, for example, where a -- an instrumentality entered into a contract on behalf of the United States in the name of the United States as its agent, and we had a contract right that we could enforce in our own name, or there was another case that involved a statutory right in the tax context to offset, and the United States was permitted to sue on that basis because it had its own rights and interests. But we've never done what the states are doing here and, in the absence of any underlying contract right or statutory right or trust right, just asserted this all-purpose ability to blur the distinction between the sovereign and instrumentalities when they're separately incorporated in this way.
Justice Barrett: Thank you.
Chief Justice Roberts: Thank you -- thank you, General. I just have a question on Official 1 the -- on the major questions doctrine, and I wanted just a little bit background for why -- I want to get your views on how it applies. You're -- you're arguing here that no notice-and-comment proceeding was required before the action taken on the half trillion dollars of loans and that because of your view that the President can act unilaterally, that there was no role for Congress to play in this either, and at least in this case, given your view of standing, there's no role for us to play in this -- in this either. Now we take very seriously the idea of separation of powers and that power should be divided to prevent its abuse, and there are many procedural niceties that have to be followed for the same purpose. The case reminds me of the one we had a few years ago under a different administration where the administration tried acting on its own to cancel the Dreamers program, and we blocked that effort. And I just wonder, given the posture of the case and given our historic concern about the separation of powers, you would recognize at Official 1 least that this is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that, significant enough that the major questions doctrine ought to be considered implicated?
Elizabeth B. Prelogar: Well, Mr. Chief Justice, let me try to respond to the concerns about both the role for the judiciary and the role for Congress here. We are not suggesting that there's no role for the judiciary to play. It's that these plaintiffs are not proper plaintiffs in this case. Of course, the Court is bound by Article III, and as I acknowledged to Justice Alito, we think that loan servicers, for example, would have standing to challenge this plan. But the fact that the -- the loan servicers haven't yet challenged to date doesn't provide a basis to overlook those fundamental Article III requirements and distort the meaning of how this Court has previously articulated standing principles in a circumstance where the states can't otherwise demonstrate their standing to sue. Official 1 With respect to the role for Congress, I think what's clear is, of course, we're recognizing that Congress could take additional action if it disapproves this plan. In fact, there were bills introduced to alter the text of the HEROES Act to specifically provide that the Secretary can't authorize loan discharge. Those bills didn't pass, but that's one role Congress can play. I think, though, that if the Court is focused on trying to ensure that Congress's role in this process is respected, that just argues in favor of reading this text in line with what the plain language suggests. You know, these are not words of limitation in the actual assertion of authority here, waive or modify any Title IV provision. The states want this Court to say Congress really only meant waive or modify some of the provisions, not all of them, not the central provisions that govern repayment and cancellation, when those would have been obvious candidates for waiver or modification in a loan discharge program. And if the Court overrides that clear Official 1 HEROES Act language here, I think that it could only thwart Congress's intent in this particular posture of ensuring that you have the tools, the Secretary has the tools he needs to take care of Americans in a -- a national emergency situation.
Chief Justice Roberts: But whether Congress acted or not was a factor that we considered in the major questions doctrine, and the way we considered it is whether or not the issue that was before the Court is something that had been seriously considered and debated and was a matter of political controversy before Congress. That certainly is the case here, right?
Elizabeth B. Prelogar: That's right. We're not disputing that this is a politically significant action. But, if you're focused --
Chief Justice Roberts: Well, not just a politically significant action but one that has the attention of Congress. The fact that it hasn't acted under the major questions doctrine but has considered the matter we cited as support for the notion that maybe it should be Official 1 one for Congress. If you're talking about this in the abstract, I think most casual observers would say, if you're going to give up that much amount of money, if you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on. And if they haven't acted on it, then maybe that's a good lesson to say for the President or -- or the administrative bureaucracy that maybe that's not something they should undertake on their own.
Elizabeth B. Prelogar: Well, let me react to that in a couple of different ways, Mr. Chief Justice. First is to emphasize that the unenacted legislation that the states are pointing to here did not mirror the particulars of this plan, so I don't think it would be right to say that Congress has specifically focused on this plan and disapproved it. And if the Court were to go down that road, I'd point again to the fact that there's -- there's legislative inaction on the Official 1 other side of not amending the HEROES Act. But I would think that the Court, as it usually does, would place more focus on enacted legislation. And, here, during the pandemic, Congress enacted a provision of the American Rescue Plan that specifically anticipated and sought to facilitate a program of loan discharge by providing that it wouldn't be subject to federal taxation from 2021 to 2025. So I think that that congressional action actually carries more weight in the analysis.
Chief Justice Roberts: Thank you. Justice Thomas, anything further?
Justice Thomas: Just briefly. There's some discussion in the briefs that going past with this provision or that modification or waiver, that this is, in effect, a cancellation of a debt -- that's really what we're talking about -- and that as a cancellation of $400 billion in debt, in effect, this is a grant of $400 billion, and it runs head long into Congress's appropriations authority, and I'd like to give you some time to Official 1 respond to that.
Elizabeth B. Prelogar: Sure. And -- and so, first, I want to take on the argument that some amici have made in this case about implicating appropriations authority. Of course, implementing this program doesn't require that any money be drawn from the Treasury, and so I don't think that it strictly raises an appropriations issue, which is why I think the states aren't raising that argument here. And to the extent that the concern is about the Secretary taking action in a way that Congress didn't authorize, it seems to me that it just collapses back into the central interpretive question in this case, which is: Does the HEROES Act authorize the Secretary's action or not? With respect to the concern you raised that the -- the effect of loan forgiveness here will result in cancellation of a measure of debt for the affected borrowers, of course, that's true, but I don't think that that is materially different from the kind of effects you can see from other types of authority that's long been Official 1 exercised under the HEROES Act. You know, take the forbearance policy that I have mentioned. This has been powerful relief for debtors -- I'm sorry, for student-loan borrowers while it's been in place with respect to their debt. And it's had, you know, kind of permanent financial effects on the government, over $150 billion over the course of that forbearance program by the end of it, but it's been absolutely critical relief. And it's provided that kind of help to the student-loan borrowers as well who haven't had to make those interest payments or any payments on their loans while it's been in place. And that too can have the kind of consequence of resulting in cancellation of principal. During the period of forbearance, the -- the years that borrowers spent in forbearance count towards loan forgiveness programs, for example. So, at the end of the day, those borrowers in income-driven repayment or public service loan forgiveness are going to pay less on their loan overall. It will be forgiven three years Official 1 earlier or without those three years of payments that they weren't obligated to make. But I don't think that in any sense calls into question the legitimacy and authorization behind the forbearance policy.
Justice Thomas: Well, I -- I think that forbearance fits more comfortably in modify -- waive or modify language. It's you simply forbearing on collecting an underlying debt, but you don't cancel the debt. And that's what we're talking about here. And, certainly, there's a cost to that, I understand, but I -- I still think that you haven't fully explained why, if you looked at this, you could not -- you would not argue that the Secretary could actually grant four billion -- $400 billion.
Elizabeth B. Prelogar: Well, he --
Justice Thomas: Do we agree on that?
Elizabeth B. Prelogar: I'm sorry --
Justice Thomas: He could not give grants of --
Elizabeth B. Prelogar: -- outside the context of the HEROES Act?
Justice Thomas: Yes. Official
Elizabeth B. Prelogar: That's right. We, of course, are premising the relief here --
Justice Thomas: So you would --
Elizabeth B. Prelogar: -- specifically on the HEROES Act.
Justice Thomas: -- you would rely on appropriations from Congress for that, right?
Elizabeth B. Prelogar: Yes.
Justice Thomas: And the argument is that you are, in effect, doing that without appropriations from Congress?
Elizabeth B. Prelogar: Well, Justice Thomas, I don't see how you could distinguish that from any of the other forms of relief under the HEROES Act. All of those forms of relief cost the federal government money and often in significant sums. You know, one of the quintessential forms of relief that the government has offered before in periods of extended deferment for soldiers fighting abroad is to pay the interest on their loans for them. And I think you could probably make the same argument of -- of questioning, well, does that cost the government money? Is there Official 1 an appropriations overlay there? Does that transform the nature of the program because it takes a loan with interest and makes it an -- effectively an interest-free loan? But that's exactly what Congress attend -- intended under this authority. It's to make those changes to the program in direct response to and in direct proportion to the situation the Secretary confronts that will otherwise leave that borrower worse off.
Chief Justice Roberts: Justice Alito? Justice Sotomayor?
Justice Sotomayor: Returning to the standing question, the states basically say we're going to lose money in taxation one way or another. In the Texas case, you argued that we should be looking at the cost benefit, and some of the amici here say that there will be a tremendous benefit to the states from this cancellation because that extra money will result in increased consumer spending and decreased housing insecurity, less defaults on other loans that those borrowers may have, et cetera. Official 1 Do you agree with those amici that the economic benefits outweigh any alleged financial harm in this case?
Elizabeth B. Prelogar: As a factual matter, we do not disagree. As a legal matter, we haven't asked the Court to rely on that as a basis for standing because we think that the invocation of these harms to tax revenues are so easily answered under this Court's precedent. And I would point the Court to the Pennsylvania versus New Jersey case. It is on all fours with this one, precisely identical. And so we just think you don't need to go down the road of thinking about some of the broader arguments about tax injury in this case because it's so clear that this Court has already rejected the very injury the states are asserting under the Pennsylvania case.
Justice Sotomayor: In Pennsylvania, it was a tax credit that was going to be removed, so it's almost identical to this, correct?
Elizabeth B. Prelogar: Exactly. Pennsylvania had issued its tax credit before the New Jersey law that they were opposed to and Official 1 had extended it to residents when they pay taxes in other states. And then New Jersey came along and changed its tax code to impose newly a -- a commuter tax that would ultimately deplete Pennsylvania's tax revenues, and the Court said that's self-inflicted because nothing required Pennsylvania to extend that tax credit, nothing prohibits Pennsylvania from withdrawing it now. And that analysis applies equally here because, of course, there is nothing that requires the states to tie their definition of gross income to the federal tax code. Two of the states here, Arkansas and Missouri, don't do that. And there's nothing that prevents them from changing that if they don't want to honor the -- the forgiveness from taxation that the federal government is now under.
Justice Sotomayor: Thank you.
Chief Justice Roberts: Justice Kagan?
Justice Kagan: General Prelogar, I want to change the subject a bit. The -- your friends on the states' side and also the borrowers in the other case have a number of statutory arguments. They frame them as Official 1 statutory arguments, saying this wasn't necessary under the terms of the statute, saying that it leaves borrowers better off, not worse off, again, pointing to statutory language saying that, you know, it -- the borrowers it targets aren't worse off because of the pandemic. Now I'm not sure that I understand really those arguments as statutory arguments as much as I understand them as arbitrary and capricious arguments, that, essentially, they are saying that the Secretary just did not say the right things, did not make the right findings, did not properly justify what he did here, that there's no sense in which we read this memorandum and we come away thinking, oh, yes, these harms were caused by the pandemic and -- and there's a basis for this action and -- and a -- and a sufficient basis for this action. So I wanted to give you a chance to talk about that. It's -- it's essentially the tie to the pandemic of the sort of harms that the Secretary said made relief appropriate.
Elizabeth B. Prelogar: So let me say at the outset that I agree that those kinds of Official 1 arguments, I think, find a much more natural home in arbitrary and capricious analysis, and the reason for that is because it's clear that Congress tolerated overbreadth in this statute. It told the Secretary, for example, that he can act on a "class-wide basis." He doesn't need to go case by case with respect to each individual borrower who stands to benefit under HEROES Act relief. It said he should take action to ensure, that is, make certain, that borrowers aren't left worse off as may be necessary, not as strictly necessary. So, once we're in the world where it's clear under the statute that the Secretary isn't violating the HEROES Act by providing relief that's class-wide and may have the effect of offering critical benefits to borrowers who, as it turns out, wouldn't have needed them in the absence of the relief, then I think the question boils down to has the Secretary justified his line-drawing and the scope of relief, and that really should function under arbitrary and capricious review. And, here, I think, with respect to all of the states' arguments, they lack merit Official 1 when you look at the Secretary's explanation for why this relief, in his judgment, was necessary. He documented the substantial economic impacts of the COVID pandemic across the entire country that's already necessitated unprecedented levels of aid that we've never seen before, $5 trillion in other pandemic relief efforts, this forbearance policy under the HEROES Act that the Department had never put into place before. So he documented those financial effects the pandemic has had on borrowers, and then he explained, using data that he examined, that huge swaths, substantial percentages of borrowers were going to be at serious risk of default and delinquency or inability to pay their loans once forbearance ends. And that ultimately justified his decision about how to craft the limits within the program and the scope of relief to offer. And I think that all of the states' arguments about how that wasn't strictly necessary or that maybe it doesn't have enough of a connection to the pandemic are answered in full by the Secretary's analysis here.
Justice Kagan: Thank you. Official
Chief Justice Roberts: Justice Gorsuch?
Justice Gorsuch: I -- I'd like to follow up on Justice Kagan's question, General. Under State Farm, one of the things that the government must normally do is, in its memoranda, explain not just the -- the benefits of its proposed course of action but also grapple with the costs or negative effects of -- of a program that it proposes. And your friends on the other side argue that that's another deficiency in the Secretary's memorandum, and I'd like to give you the chance to respond to that.
Elizabeth B. Prelogar: Yes, of -- of course. So I want to say at the outset that my friends are mistaken to suggest that the Secretary didn't even consider costs here. The Department extensively modeled the costs associated with this program and submitted those --
Justice Gorsuch: Oh, I -- I -- I --
Elizabeth B. Prelogar: -- cost estimates to OMB.
Justice Gorsuch: -- I'm -- I don't Official 1 just mean the numbers --
Elizabeth B. Prelogar: Yeah.
Justice Gorsuch: -- but, generally, the -- the negative effects to the economy, to other persons, to people who don't have this opportunity for debt relief. There are a variety of factors that, under State Farm, normally the government would have to consider, and -- and your friends on the other -- other side argue those are not present in this memorandum.
Elizabeth B. Prelogar: Well, I think that those were -- were certainly part and parcel of the Secretary's determination about how to tailor this relief. The Secretary recognized that the central purpose of the HEROES Act was implicated here because there were going to be millions and millions of student-loan borrowers who were at serious risk of default and who were in a worse position because of the pandemic. But then he decided to tailor the plan to look at that -- those particular risks and decide on the scope of relief to offer those borrowers. And, of course, the costs associated with that are the flip side of providing HEROES Official 1 Act relief in any circumstance. There are always going to be the -- the costs to the government of offering that benefit to borrowers, and it's in line --
Justice Gorsuch: Again, not -- not just the costs to the government. I'm sorry to interrupt. But --
Elizabeth B. Prelogar: Yeah.
Justice Gorsuch: -- what I think they argue that is missing is costs to other persons in terms of fairness, for example, people who have paid their loans, people who don't -- have -- have -- have -- have planned their lives around not seeking loans and people who are not eligible for loans in the first place and that a half a trillion dollars is being diverted to one group of favored persons over others. I think that's the nature of their argument, in addition to, as you point out, the cost to the fisc.
Elizabeth B. Prelogar: The --
Justice Gorsuch: And I didn't see anything in the memorandum that dealt with those kinds of questions, and if there is something, I'd be appreciative if you could point me to it. Official
Elizabeth B. Prelogar: No, there's not, but that's because I think that those kinds of arguments are inconsistent with the statutory scheme that Congress set up here. Congress already made the judgment that in the context of a national emergency, you should be able to provide borrowers with this kind of relief to serve this purpose. And so I think, for -- for the states to suggest that it's incumbent on the Secretary to say, actually, I'm not going to do that, even though Congress wanted to -- me to ensure that borrowers won't be left worse off, is -- is just at war with the whole statutory purpose.
Justice Gorsuch: I appreciate that. Congress has given the executive branch a lot of emergency authority, and I -- I think your argument rests on that. But it also requires generally the President to specify the provisions of law under which he proposes that he or others will act. That's 50 U.S.C. 1631, I think, my notes are right. And I'm just wondering, did that happen here?
Elizabeth B. Prelogar: Yes, it did. So Official 1 the COVID-19 emergency, the specific provisions that he invoked were part of the Social Security Act and HHS's authority to target the spread of disease. I can't give you the exact citation here, but that determination was made.
Justice Gorsuch: Did -- did he indicate anything under the HEROES Act or the Department of Education that's acting in this case?
Elizabeth B. Prelogar: No, but I think that it's clear that the HEROES Act is linked to the declaration of the national emergency, not the other way around.
Justice Gorsuch: Okay. And then, finally, on standing, in -- in the New York census case, the majority of this Court held that the failure to count an individual, potential failure to count an individual, undercount the census, would have potential effects to the State of New York in the terms -- in terms of the benefits it might later receive. That kind of knock-on effect was sufficient to constitute standing in that case. And I'd just like to get your thoughts on how you'd have us distinguish that. Official
Elizabeth B. Prelogar: Sure. So, in that case, of course, the Court was looking at a census count that was going to plug in directly to the amount of federal funding that the state would receive. And I think that, you know, in the kind of terminology that we've been using and thinking about this issue with, that was a direct effect, that, effectively, the action would, by virtue of determining federal funding for the state in that way, operate directly on the state or -- or at least determine its rights and interests. And, here, there's not the same kind of direct effect. Of course, as I've already mentioned to Justice Sotomayor, we think that this is a self-inflicted injury to begin with, so the Court doesn't need to get into those issues. But, even if it does, here, the kind of downstream effects on tax revenues bring this case within Florida versus Mellon as the closest analogue and not Department of Commerce.
Justice Gorsuch: Thank you.
Chief Justice Roberts: Justice Kavanaugh?
Justice Kavanaugh: I'd like to pick Official 1 up on the Chief Justice's and Justice Thomas's questions on statutory text and then our precedent. I think you said earlier what was Congress in 2003 supposed to do in terms of advance authorization. But, of course, they could have in 2003 referred to loan cancellation and loan forgiveness, and those are not in the statutory text. So then that leaves us with a situation that I think we've seen before, an old statute with a general language, Congress specifically considering the present issue repeatedly but not, as you acknowledge, passing legislation that would authorize the specific act -- and then, in the wake of Congress not authorizing the action, the executive, nonetheless, doing a massive new program. And that seems problematic under -- going back to the Benzene case, the Brown & Williamson, UARG. You know the line of cases. So why does this case not fit into that formula that we've seen before in prior cases?
Elizabeth B. Prelogar: So there was a lot Official 1 packed in there, and I want to be careful and try to respond to each of the considerations you raise because I think, actually, down the line, this case is a far cry from those prior situations the Court has confronted. You mentioned the idea of taking an old statute with, you know, general language or cryptic language and pressing it into service. I don't think that that is a fair characterization of this use of the HEROES Act. The whole point of this statute, its central mission and function, is to ensure that in the face of a national emergency that is causing financial harm to borrowers, the Secretary can do something. He can alter the student loan program to ensure that they're not worse off. So there's not the same mismatch here of taking an old statute and dusting it off and deploying it in a context where Congress could never have imagined it would be used before. Instead, this is a perfect fit with the problem that the Secretary confronted. You also suggested that there would have been a clearer way for Congress to formulate this language, that there's no express Official 1 reference here. But I think that that doesn't carry a lot of significance in this context because, of course, Congress didn't enumerate any of the possible forms of relief under the HEROES Act. It says that the Secretary can consider waiving or modifying all Title IV provisions. And, certainly, if there was an enumerated list, you might be able to draw inferences from that, but, here, I think the opposite inference applies, that Congress wanted to cover the waterfront and ensure in advance that the Secretary had the tools depending on whatever situation he confronted to make sure that student-loan borrowers weren't going to be left worse off. You mentioned the congressional inaction. And I think that it -- it's true that I acknowledge that that demonstrates that this is a politically significant issue. We have -- we have never contested that point. But there again, as I mentioned to the Chief Justice, we have inaction on both sides. Congress has not amended the HEROES Act and instead enacted the provision of the Official 1 American Rescue Plan that anticipated this -- this program in particular and facilitated it by ensuring that those discharges would not be subject to federal taxation. And then the other thing I would add, you did -- you did not put this in, but if you'll indulge me --
Justice Kavanaugh: Yeah.
Elizabeth B. Prelogar: -- this is not a situation where the Secretary is acting outside the heartland of his authority. In some of the cases that you've mentioned, you have, you know, concerns that the -- the agency is acting outside the core of its domain, the CDC inserting itself in the landlord/tenant relationship, for example. But that's not what we have here. This is the student loan program. That falls within the wheelhouse of the Secretary of Education. He exercises comprehensive authority over that program. These are federal loans between the federal government and student-loan borrowers. So this is a situation where the Secretary is really acting within the core of his expertise and his authority. Official
Justice Kavanaugh: Something else you said earlier was that we shouldn't necessarily apply that line of precedent in this situation because this is not a regulatory program but a -- but a benefits program. But I want to push back a little bit on that and get your response, which is, in something like this, there are going to be winners and losers, and that raises similar concerns about individual rights, individual liberty that are present arguably in regulatory programs as well. And why, therefore, wouldn't the same line of precedents that we've applied in the regulatory context apply also in the benefits context to consider whether we need specific express congressional authorization?
Elizabeth B. Prelogar: Well, I think that at the very least, to the extent that there are those considerations that you referenced, they're not direct in the same way that expansive regulatory authority is. You know, when you've got a government program that is -- as -- as the Court has said before, constitutes extravagant regulatory Official 1 authority, that I -- takes an identifiable group of individuals or entities and directly imposes burdens or costs on them. And I think there is a distinction with the benefit context when it comes to how Congress is likely to legislate and its general comfort level with broadly empowering the executive to provide benefits to Americans, especially in the context of an emergency situation. But even if you didn't think that that benefits and regulation distinction should carry the day and be a bright-line rule, at the very least, I think it should factor into the analysis when applying interpretive principles here and in looking at what Congress is -- is doing. And as I mentioned before and -- and would love to finish here, you know, think about what Congress is supposed to do. There you are, Congress in 2003, thinking we can't predict the future, we don't know exactly what national emergencies will happen, but we -- what we want to ensure is that we are empowering the federal government to take care of student-loan Official 1 borrowers and not leave them at substantial risk of being worse off with their ability to repay their loans. And the language that Congress enacted here is a perfect fit to accomplish that goal. And it's hard to see what Congress could have done differently.
Justice Kavanaugh: Last question. Broadening it out and thinking about, you mentioned emergencies, the history of this Court with respect to executive assertions of emergencies. Some of the biggest mistakes in the Court's history were deferring to assertions of executive emergency power. Some of the finest moments in the Court's history were pushing back against presidential assertions of emergency power. And that's continued not just in the Korean War but post-9/11 in some of the cases there. So, given that history, there's a concern, I suppose, that I feel at least about how to handle an emergency assertion. You know, some of the amicus briefs, one of them from a professor says this is a case study in abuse of Official 1 executive emergency powers. I'm not saying I agree with that. I'm just saying that's the assertion. And I want to get your assessment -- this is a big-picture question, so I'll give you a little time -- of how we should think about our role in assertion of presidential emergency power given the Court's history.
Elizabeth B. Prelogar: Well, I think, in -- in light of that history in all of the contexts that you identified, it's aware the distinction between regulation and benefits really makes a difference. And it actually tracks some of the concerns that have been raised about standing and the Chief Justice's questions about who could actually sue on this plan and what role there is for the judiciary. To the extent that there is a limited category of people who have the actual kind of cognizable Article III harm that would permit standing in a case like this one, I think that just shows that that's because, when the government is administering a benefits program, there are fewer reasons to be concerned that it is going to have the kind of profound burdens Official 1 or -- or regulatory effects that might prompt a note of caution in other contexts involving exercises of emergency powers. Instead, I think that the considerations all line up on the other side when you think about an emergency situation. It is logical for Congress, in -- in confronting that possibility, to think we want to make sure that without delay the executive branch can take care of Americans and can get them essential benefits. It did so here with language that has many other limitations, so we are not claiming just limitless authority for the federal government to do what it wants in an emergency. The HEROES Act limits the circumstances that can trigger the authority. It says who you can help. It says how you can help them. And it enumerates the purposes that the aid has to serve. So, in all of those ways, Congress can find that authority. But, in a circumstance like this one, where the Secretary has made the findings that without this critical relief for debtors we are going to have a wave of default Official 1 across the country with all of the negative consequences that has for borrowers, I think it is precisely the type of context where the executive should be able to implement those emergency powers.
Justice Kavanaugh: Thank you very much.
Chief Justice Roberts: Justice Barrett?
Justice Barrett: General, my first question is clarifying because I think I may have misunderstood. You said at the start of your argument that the Secretary both waived and modified. I had understood that the Secretary only relied on the modification in the Federal Register at the relevant cites at 87 Federal Register 61512 and 61514. Is it in those same -- did I just miss in there, did he also specifically say waive?
Elizabeth B. Prelogar: So I -- I understand where your confusion comes from --
Justice Barrett: Yes.
Elizabeth B. Prelogar: -- because, at times in the Federal Register, he spoke of Official 1 modifications and then, if you read down in the next paragraph, he said these waivers will. So I think he was treating these as both waivers and modifications. And the relevant decision memo specifically says, I hereby issue waivers and modifications of the relevant provisions of Title IV. That's at the cite I gave earlier at JA 261. So I would look at that as well to understand what the Secretary was doing.
Justice Barrett: Okay. And to be clear, and I think maybe some of the confusion is waivers. I guess, when I saw that in the language, I thought he was talking -- using waiver as a synonym for cancellation there with respect to the underlying debt, the waiver of the obligation to pay back the principal. And just to be clear, waiver in the statute refers to waiving the statutory and regulatory provisions, not waiving the obligation to repay?
Elizabeth B. Prelogar: That's correct. So the -- if you kind of trace through the specific provisions that he invoked, they are statutory and regulatory provisions and they establish the Official 1 terms of the student loan program and then also deal with discharge and cancellation authority. And he said that he was issuing waivers and modifications of -- of all of those provisions, and I think the right way to conceptualize this is that he was waiving the elements of the discharge and cancellation provisions that are inapplicable in this program that would limit eligibility to other contexts and then modifying the provisions to bring it in line with this program and the -- and the student-loan borrowers who are eligible for relief.
Justice Barrett: So kind of like, if you think of it as red penciling, both deleting and then adding back in, waiving and then putting his own requirements in?
Elizabeth B. Prelogar: That's right. And the states have suggested there was something improper about adding the requirements in, but the HEROES Act directs him to do this. That subsection (b)(2) specifically says he has to publish the terms and conditions for the loan program that are going to apply in lieu of the waived and modified provision. Official 1 So there's nothing improper about the Secretary delineating how those waivers and modifications were going to operate.
Justice Barrett: Okay. Next question is also a clarification because I want to be sure I understand your position on Lebron and the overlap potentially between when we're thinking about are you acting as an arm of the government for purposes of say, like in the Amtrak sense, are you bound by the First Amendment, and are -- is MOHELA part of the government of Missouri for purposes of standing. So could MOHELA, say, deny loans to people on the basis of their race or their religion? Would the First Amendment bind MOHELA?
Elizabeth B. Prelogar: I think that MOHELA likely would qualify as a state actor under the Lebron test, but I don't think that the Lebron test should in any way be controlling for Article III standing purposes.
Justice Barrett: Well, why would that be? How can they be part of the government for purposes of the state action doctrine but then not for purposes of standing? Either they are Official 1 or they are not part of the government of Missouri, right?
Elizabeth B. Prelogar: So we're certainly not disputing that they could be, that they're a public instrumentality, that they have governmental functions, and that's the kind of inquiry the Court would engage in to determine whether they're brought within the state action doctrine. But one way to think about this is that the Court, in trying to kind of analyze who's a state actor, has made clear that it would be inappropriate for a state to be able to separately incorporate an instrumentality, for example, and that way evade the strictures of the Constitution. There's kind of a good equitable reason to ensure that states can't thereby unbind themselves from the Bill of Rights with respect to fundamental rights of citizens. Here, I think all of the equitable considerations line up in precisely the opposite direction. We have a situation here where Missouri has benefited from the corporate separateness. It's ensured that it's not going Official 1 to be responsible for MOHELA's debts. And to now allow it to come in and blur that line and say, actually, you should just treat it and this separate corporation as one and the same would actually produce the kind of inequity that the state action doctrine is guarding against.
Justice Barrett: So two different buckets, three if you throw in sovereign immunity too? You would say one test is for purposes of state action, another test for purposes of sovereign immunity, and another test for purposes of standing?
Elizabeth B. Prelogar: That's right. And for sovereign immunity, I just want to be clear that we don't think MOHELA actually qualifies as an arm of the state for sovereign immunity purposes because, there, one of the critical factors is whether a lawsuit against the instrumentality can get at the state treasury. And, here, the financial separation makes clear that there is a strict wall and that Missouri's not going to be responsible for MOHELA's debts. Lower courts have gone both directions on this, but we think that under this Court's precedent, MOHELA wouldn't qualify as an arm of Official 1 the state. Even if it did, though, yes, we think that there is a different inquiry under Article III.
Justice Barrett: Right. Okay. And now I just want to return to Justice Kagan's questions about whether we think about these as statutory arguments or arbitrary and capricious arguments, some of these arguments about are you leaving them worse off or better off. Specifically, I want to focus on the causation. It seems to me that the government's position must be that the HEROES Act permits but-for causation and it doesn't require proximate cause because the Secretary's memo also refers to things like Russia's invasion of Ukraine and, you know, inflation and other things that would -- well, I mean, the invasion of Ukraine has nothing to do with COVID, but the other things that would have a more attenuated relationship to COVID. So is that your position, it would be a but-for?
Elizabeth B. Prelogar: Yes, that is our position. We think that it should be but-for causation. And the states were challenging that Official 1 below. They haven't actually revived those arguments here, and I don't understand them to be -- to be urging a different standard, or at least they haven't made that a central aspect of their arguments in the Court.
Justice Barrett: But would that bear on the question of whether this is a statutory interpretation question or not, whether this is within the Secretary's authority? I mean, below the government took the position too that even in 10 years from now it could forgive loans based on COVID if effects were lingering, right?
Elizabeth B. Prelogar: No. The district court completely misunderstood that colloquy at oral argument. What government counsel said in that oral argument is, if the national emergency is ongoing, if we are still in 10 years in the midst of a raging COVID pandemic and it's producing all of those same harms, he said it would be hard to fathom. And, of course, we know that we are actually as a nation now working to recover from the pandemic. But, in the counterfactual world, as he understood the hypothetical, he said the HEROES Act authority would continue to apply. Official 1 We are not suggesting that you could have that kind of temporal attenuation from a national emergency and say that, you know, ending today and going forward 10 years from now, you could point back to COVID and in this time period as a basis for HEROES Act relief. But, of course, we don't have anything like that. The Secretary acted now in the midst of the pandemic and in -- in recognition that it's time for the forbearance policy to end, but that is going to leave huge numbers of borrowers unable to pay their loans.
Justice Barrett: That's very helpful. Thank you.
Chief Justice Roberts: Justice Jackson?
Justice Jackson: Yes. I have two questions, one concrete and one big picture. The concrete question comes from a -- a statement that you make in your reply brief about MOHELA standing to earn offsetting fees. Can you spell out what those off -- by -- and by that, I mean offsetting fees from the discharges so that we aren't even really sure, you know, what the net loss would be. Official 1 Can you spell out a little bit more about those?
Elizabeth B. Prelogar: Yes. So, under the Department's contracts with MOHELA, MOHELA receives fees for discharging accounts. And we were making the point that, here, Missouri hasn't come forward with any allegations that MOHELA will actually, sum total, suffer financial injury under this plan. And this is all just in service of making the -- the broader point that any financial effects downstream on the state here are attenuated and speculative.
Justice Jackson: So we don't know really what the ultimate loss would be to MOHELA, even if we believed that MOHELA is part of the state?
Elizabeth B. Prelogar: That's right. The states haven't offered any evidence in that regard to substantiate their assertion of standing.
Justice Jackson: All right. And -- and I also have a big picture question about standing. You've been arguing that standing here would be a reach if we were to, for Official 1 example, find that, you know, MOHELA somehow -- losses to it count for the purposes of the state based on established standing principles. And what I've been mulling and wondering is whether the same concerns about the political significance of this case that the Chief pointed to could be a reason for us to hold the line in terms of thinking about our standing doctrine and whether or not we should expand it in this area. I understood that the standing bar really, you know, as applied in a case like this, would allow the political branches to hash this out without interference, you know, from a torrent of lawsuits brought by states and entities and individuals who don't have a real personal stake in the outcome. And, in some ways, it's not unlike a case we heard last week where people were very concerned about, you know, lawsuits against tech companies and how they might hobble these companies if we allowed them to go forward. And I guess I have that same worry about the operation of the federal government and -- and its ability to govern. If we look at Official 1 our standing doctrine in cases like this and we find that, you know, even the most minor state interest, a dormant fund that hasn't been, you know, funded or used by the state in 15 years, if that can be the basis for standing, I -- I guess I'm concerned that we're going to have a problem in terms of -- of -- of the federal government's ability to operate. So my question is: Is this a legitimate concern and should we think -- be thinking in cases like this about that type of concern as we ponder whether to expand our standing doctrines?
Elizabeth B. Prelogar: I think it is a legitimate concern. The Court has never suggested before that it should alter ordinary Article III principles and allow plaintiffs to sue based on concerns about the significance of the action. And, in fact, the Court has said again and again that the fact that no one might have standing to sue about an action doesn't mean that you should alter Article III and allow a suit to proceed, because the judiciary doesn't sit as a roving commission to rule on the Official 1 legality of either Congress's enactments or the executive's implementation of those enactments. But I think it would be particularly anomalous in this case to accept any of the states' attenuated theories of standing because there isn't even a situation where there's no other identifiable plaintiff or possibility to have the -- the courts weigh in on these issues. The problem here is that the states aren't the proper plaintiff to bring this suit.
Justice Jackson: Thank you.
Chief Justice Roberts: Thank you, General. General Campbell. ORAL ARGUMENT OF JAMES A. CAMPBELL ON BEHALF OF THE RESPONDENTS
James A. Campbell: Mr. Chief Justice, and may it please the Court: The Secretary is attempting to bypass Congress on one of today's most debated policy questions, student loan forgiveness. After many failed legislative efforts, the Secretary seeks to write off nearly a half trillion dollars in loans for over 40 million borrowers. No statute authorizes this sweeping action. Official 1 On standing, Missouri has the right to vindicate the harms to MOHELA. MOHELA is a state-created and state-controlled public instrumentality that performs the essential public function of providing financial aid to Missouri students. The Secretary's program threatens to cut MOHELA's operating revenue by 40 percent. That will directly undermine MOHELA's ability to further its critical public purposes, and the state has standing to assert those harms. On the merits, this is a major questions case. A nearly half trillion dollar debt cancellation program is undoubtedly a matter of vast economic and political significance. It is also unprecedented. Never before has the HEROES Act been used to forgive a single loan. In addition, the Secretary here asserts a breathtaking power, to do anything that he thinks might reduce the risk of borrowers defaulting, even years after a national emergency arises. He needs clear congressional authorization for such power, but he doesn't have it here because the HEROES Act Official 1 does not authorize this program. The Act permits the Secretary to waive or modify existing provisions because of a national emergency. It does not permit him to rewrite existing provisions to create a new program that covers 95 percent of borrowers and applies to them regardless of how the pandemic affected them. This Court should declare this program unlawful, and I welcome the Court's questions.
Justice Thomas: General, I think, at the beginning, you should comment some on the relationship between MOHELA and the State of Missouri, primarily, the -- as you've heard, the effect of this forgiveness program on MOHELA and, by extension, on the State of Missouri for the -- at least to establish standing.
James A. Campbell: Sure, Justice Thomas. To start with the effect on MOHELA, so MOHELA approximately -- as of last fiscal year, 77 percent of its operating revenue came from servicing direct loans. The Secretary tells us that nearly half of all loans -- all borrowers' loans will be discharged under this program. So it stands Official 1 to reason that about half of MOHELA's operating revenue from direct loans will be cut, and, overall, that amounts to about 40 percent of its operating revenue. Now Justice Jackson asked the question about whether there are offsetting fees. It -- it -- it's very hard to believe, and the government doesn't offer any details in its reply brief, that a one-time payment of fees for discharging loans will offset the ongoing fee that MOHELA earns from servicing those loans. So --
Justice Jackson: But isn't that your burden? I mean, I -- I understood the government to say that you are bringing this lawsuit and you have to establish standing. And so, to the extent we're trying to assess whether or not MOHELA is actually going to be injured, I -- I don't think you can answer but the government hasn't said something about the fees.
James A. Campbell: Well, the -- my point in bringing that up, Justice Jackson, is that the government hasn't -- hasn't said anything about the fees in responding to what we've Official 1 already substantiated through the documents we've put in. We have put in documents indicating that this will amount to approximately a 40 percent loss of operating revenue for MOHELA. And, in response, the government referenced potential offsetting costs, which they don't quantify, and they don't show that that would significantly reduce the injury that we're anticipating. Now --
Justice Kagan: MOHELA isn't here, General Crawford, is that correct?
James A. Campbell: MOHELA is not here, but --
Justice Kagan: It has the ability --
James A. Campbell: -- its interests are here.
Justice Kagan: -- to sue and be sued. It's been set set up as an independent corporate entity with the ability to bring suits on its own. Usually, we don't allow one person to step into another's shoes and say I think that that person suffered a harm, even if the harm is very great. We -- we -- we -- we leave it to the person, him or her or itself, to make that Official 1 judgment. Now, here, the state has derived very substantial benefits from setting up MOHELA as an independent body with financial distance from the state and sue and be sued authority. So why isn't MOHELA responsible for deciding whether to bring this suit?
James A. Campbell: We don't deny that MOHELA has -- could file a suit like that, but the state's interest is directly implicated here, so it is allowed to assert the interests it has in MOHELA directly.
Justice Kagan: Well, I guess -- I mean, there are third parties all the time who have an interest in, gosh, I -- I wish that party over there would bring a suit because I have some relationship with that third party and I would like it very much if that third party represented its own interests better in my view. But we don't do that. We -- we -- we -- we don't allow that kind of interference with the decision of the entity involved to decide whether the harm is of the kind that -- that they want to sue for.
James A. Campbell: Well, the government is Official 1 different. This Court has recognized that in cases like Cherry Cotton Mills and Erickson, where it's allowed the federal government to assert the interests of federally created corporations.
Justice Kagan: I -- I -- I believe that in those cases the federal government had an independent interest. So the federal government was not saying, oh, we just have an entitlement to stand in the shoes of the -- the federal corporation.
James A. Campbell: Two -- two responses. The first response is I don't think that's the best reading, certainly, of Cherry Cotton Mills. Cherry Cotton Mills, the Court discussed a number of facts and then at the end said the reason why the government can assert the federal corporation's interest is because it is performing purely governmental purposes. That's exactly what's happening here. The State of Missouri has declared that everything MOHELA does is the performance of an essential public function. So that's the first response. The second response is, even if the Official 1 state does need an interest, the state has an interest here. I'd identify at least three. The first interest is that the state created MOHELA to provide financial aid for Missouri students and that's what it does. The second interest is in the Lewis and Clark Discovery Fund. And the third interest is in the regular contributions that MOHELA makes to the state's scholarship programs. Now there was some discussion early -- earlier about the Lewis and Clark Fund and some suggestion that it's a dormant fund that no longer exists. I -- I think it's clear -- I -- I think we need to clarify what exactly is the status. So, yes, it's true that there hasn't been a contribution in the last 15 years, but that's because the state has negotiated with MOHELA for MOHELA, in lieu of making the Lewis and Clark contributions, to contribute over $65 million directly to the state's scholarship program. And in exchange for those agreements, the -- the state has allowed the Lewis and Clark deadline to be extended. So, at this point, the question is: Official 1 What's going to happen at the next deadline? The next deadline is coming up next year. And if -- the question before this Court is whether cutting MOHELA's operating revenue by 40 percent will increase the risk that it either won't make the next contribution to the Lewis and Clark Fund or it won't make the next payment to the scholarship fund in lieu of the Lewis and Clark Fund.
Justice Barrett: That's --
Justice Sotomayor: That seems --
Justice Barrett: -- what's most important to you now is the Lewis and Clark Fund?
James A. Campbell: No, it's not, Your Honor. What's most important to us is that the state can speak directly for MOHELA, but I was responding to the question about the interest that --
Justice Barrett: I guess I understood the interests to be, if MOHELA was really Missouri, the loss of the servicing fees. Am I misunderstanding that?
James A. Campbell: No, you're not --
Justice Barrett: You have two Official 1 different arguments, right?
James A. Campbell: That's correct.
Justice Barrett: You have that argument and then you have this argument about the Lewis and Clark Fund.
James A. Campbell: That -- that's correct. My first response to Justice Kagan, I was trying to focus on the first theory, and then the second response, where I got into the Lewis and Clark Fund, I was responding under the second theory.
Justice Barrett: All right. So let's --
Justice Sotomayor: On the first theory, it's hard to imagine how the State of Missouri can claim an injury, putting the Lewis and Clark and the scholarship issues aside, when it's not responsible for the debts of MOHELA, it's not responsible for the contracts it enters into, it doesn't own the assets of that corporation. There is on paper no financial obligation by the state or loss to the state by anything MOHELA does or anything it gets. I'm -- I'm putting aside Lewis and Clark. It's Official 1 hard -- it's just very hard for me to say that there is an interest sufficient for the state to speak on behalf of an entity who has the right to sue or be sued.
James A. Campbell: When this Court in Lebron and when the Missouri Supreme Court in Casualty Reciprocal Exchange consider whether an entity is a part of the government, it looks at a far more --
Justice Sotomayor: But those are --
James A. Campbell: -- broad analysis.
Justice Sotomayor: -- different -- those are different issues. Standing has to do with injury. It doesn't have to do with are you evading the Constitution, are you trying to delegate public functions. Those are all -- are you immune because you are acting in a way that only a state can. Those are very, very different questions. This is the question of standing, which relies on injury in fact. How can you have -- I'm putting Lewis and Clark aside -- how can you have injury in fact if you have immunize -- you, the state, have immunized yourself from any liability or any injury that Official 1 MOHELA can experience?
James A. Campbell: Because the state speaks for MOHELA. The state represents MOHELA's interests.
Justice Sotomayor: Well, it -- it decided to give this entity the right to sue and be sued. So it -- it chose to say I'm not injured in fact. Speaking is not the same as injury.
James A. Campbell: Your -- Your Honor, the -- the federally created corporations in Cherry Cotton Mills and Erickson also had the right to sue and be sued, but that didn't stop the federal government from asserting their interests. In addition, if we're focusing just on the right to sue or be sued, the Secretary has the right to sue or be sued. That doesn't disable the Department of Justice for -- from speaking for their interests.
Justice Sotomayor: Now let's go back to Lewis and Clark a moment. The arrangement that MOHELA and the state engaged in predated the pandemic, correct? It started in 2009, 2010? Official
James A. Campbell: The -- the Lewis and Clark Fund started --
Justice Sotomayor: Yes. The --
James A. Campbell: -- in --
Justice Sotomayor: -- suspension of MOHELA's contributions to it, correct?
James A. Campbell: Started in 2008.
Justice Sotomayor: Isn't it a series of speculations that in 2004, absent this program, that the state won't continue that arrangement it currently has and continue to defer obligations? MOHELA said that it -- MOHELA has already said publicly that it doesn't think that contributions to the Lewis and Clark Fund are within its wheelbarrow obligations. That was one of the reasons this arrangement has been made, correct?
James A. Campbell: Well, MOHELA recognizes that it still owes $105 million to the Lewis and Clark Fund.
Justice Sotomayor: Well, it's -- in fact, I understand it's not writing it off as an obligation anymore.
James A. Campbell: But it still -- Official
Justice Sotomayor: It doesn't carry it on its books anymore.
James A. Campbell: Your Honor, if you look at page 20 through 21 of the financial statement we cite in our brief, MOHELA acknowledges that it still owes $105 million to that fund. And the point that I was making earlier is that the fund -- contributions to the fund and contributions to the scholarship program are different sides of the same coin. The state has been constantly -- throughout the entire time from 2007 until now, has been constantly receiving payments from MOHELA, and those payments have taken the form sometime of Lewis and Clark, but more -- more often recently, it has taken the form of a scholarship contribution.
Justice Jackson: Have you expressed any plans to actually use the fund to pursue projects in the foreseeable future, and, if so, what projects?
James A. Campbell: At this point, the projects have been put on pause.
Justice Jackson: I see. So we're talking about a fund that hasn't been Official 1 contributed into because the state has waived the obligation to do so for at least a temporary period of time, and then, even if the funds were to go into this particular fund, you don't have a set of plans that you are planning to pursue with them?
James A. Campbell: But all that requires is the legislature and the governor to move forward once the money -- once the fund has been funded.
Justice Jackson: Yes. No, I understand, but we're trying to figure out the degree to which the state is injured by the money not being there. And so, on the one hand, you know, I hear Justice Sotomayor exploring with you the fact that the state has allowed the money not to be there in the recent past by saying don't worry, you don't have to put it in there, MOHELA. So that seems to be a sort of strike against the state now saying we're so injured because the money isn't there. And then we have on top of that your representation here that the state isn't even actively seeking or interested in the money insofar as it's decided that it's going to Official 1 engage in some sort of project that we need the money for. So I'm just wondering about the speculative, attenuated nature of the harm that you're alleging on the basis of there not being -- or -- or -- of the risk that we won't have extra money put into this fund.
James A. Campbell: Your Honor, I -- I disagree with -- with what you said, that the state has waived the obligation under the fund. What the state has done is it's engaged in a quid pro quo discussion with MOHELA, and it has said that in exchange for $65 million in payments to the scholarship fund, it has allowed the -- the timeline to be extended. That's not a waiver.
Justice Jackson: Yes, I apologize. I'm just saying the state has not pressed MOHELA to put money into the fund, right?
James A. Campbell: Because it -- correct, but because it has been receiving money in another fund all along.
Justice Jackson: I -- I appreciate that, but I guess I'm just still trying to understand how you can look at that fund as the Official 1 basis for the injury that you're claiming with respect to this particular plan.
James A. Campbell: Your Honor, because the next due date for the fund is the -- a year from now.
Justice Jackson: And you can't extend it?
James A. Campbell: It can be extended, but that would be in exchange for them giving another contribution to a scholarship fund, which is further showing that there are further financial contributions coming.
Justice Jackson: And there -- the -- the plan is not totally ridding them of any opportunity to make money, so they do have some other income, yes?
James A. Campbell: MOHELA?
Justice Jackson: Yes.
James A. Campbell: Whether MOHELA has other --
Justice Jackson: Yes.
James A. Campbell: Yes, MOHELA has other --
Justice Jackson: All right. So we could believe that the income that MOHELA gets Official 1 from its other sources of revenue could be used to pay off in a year the -- the -- the amount that the state says it requires in order to put off the obligation yet again, right?
James A. Campbell: I -- I don't -- I don't think -- well, here -- here's the key point in response: What MOHELA says in the letter that the government filed as supplemental authority with the Eighth Circuit is that they take all available funds beyond their expenses and reasonable reserves and they devote them to student financial aid in Missouri. So, if their operating revenues are cut by 40 percent, we know what they do with the money at the top, the excess money. They give it to students attending school in Missouri. So, if their operating revenues go down, that's the first thing that's going to go.
Justice Barrett: General, I'd like to put aside the Lewis and Clark Fund for a minute, and I want to return to the direct injury argument, the MOHELA is an arm of the state argument. Justice Sotomayor was pointing out statutorily MOHELA has the right to sue and be Official 1 sued, the state doesn't have responsibility for its liabilities, and the state has disclaimed any -- any claim to the assets. Is that correct?
James A. Campbell: I would disagree with the last point. I don't think --
Justice Barrett: Okay.
James A. Campbell: -- the state has disclaimed any interest in the assets.
Justice Barrett: So explain to me why --
James A. Campbell: I --
Justice Barrett: -- because, on the one hand, you have -- you know, in -- in Missouri Statute 173.420, you have -- the last sentence says that nothing in these sections "shall be construed to deprive the state and its governmental subdivisions of their respective powers over assets of the authority." But then, in the next section, 425, it says, "[n]o asset of the authority shall be considered to be part of the revenue of the state." So which is it? I mean, because it would be hard to see how a win for the state would benefit MOHELA or a win for MOHELA would Official 1 benefit the state if the assets are completely separate. You don't get any money out of it, putting aside Lewis and Clark because I'm not really interested in that.
James A. Campbell: So, Your Honor, to -- to go to the second provision you read, 425, it says, "[n]o asset of the authority shall be considered to be part of the revenue of the state" within the meaning of a specific state constitutional provision. So I would then say --
Justice Barrett: Okay.
James A. Campbell: -- that's only for a limited purpose. The prior provision that you read, where the state has preserved its authority over MOHELA's assets, shows that any residual interest in MOHELA's assets belongs to the state. So we cited the Reciprocal Casualty Exchange case in our brief that shows that the legislature could abolish an entity like MOHELA, and if it did, the money would come back to the state. So the state does have the ultimate interest in the property of MOHELA.
Justice Barrett: If the state wanted Official 1 money from MOHELA right now, if the state just wanted to pull assets out, say, because the state was going to make a decision to fund the Lewis and Clark Fund, does the state have the authority to do that?
James A. Campbell: Acting through the legislature, it does.
Justice Barrett: Okay.
James A. Campbell: Act -- acting -- and -- and I think the Lewis and Clark Fund is actually a great example of that. So the Lewis and Clark Fund wasn't created until 26 years after MOHELA began its operations, and at that point, the legislature came in and said, MOHELA, you have to start giving this source of funding to the state. So the legislature can come in at any time and -- and request money.
Justice Barrett: Do you want to address why MOHELA's not here?
James A. Campbell: MOHELA is not here because the state's asserting its interests. MOHELA doesn't need to be here because the state has the authority to speak for them. And that brings me to --
Justice Barrett: Why didn't the state Official 1 just make MOHELA come then? If -- if MOHELA is really an arm of the state and all of this would be a lot easier -- I mean, the Solicitor General conceded that if MOHELA was here, MOHELA would have standing. If MOHELA is an arm of the state, why didn't you just strong-arm MOHELA and say you've got to pursue this suit?
James A. Campbell: Your Honor, that's a question of state politics, but we believe as a matter of law that the state has the authority to assert its interests. Under the factors in Lebron, under the factors that the state -- Missouri State Supreme Court recognized in Casualty Reciprocal Exchange, if it's a state-created and state-controlled entity that performs government functions, the state can speak for it regardless --
Justice Kagan: Just -- just along the same lines, I mean, it's true that you couldn't even get documents from MOHELA without file -- filing the state equivalent of a FOIA request.
James A. Campbell: Your -- Your Honor, that was the -- the mechanism by which we went about acquiring the documents, but that just further -- Official
Justice Kagan: Well, that was the mechanism. I think that if MOHELA was willing to hand you over the documents, you wouldn't have filed a state FOIA request.
James A. Campbell: Your Honor, I think that further shows that MOHELA is a state entity. They're subject to public records laws. They're subject to open meeting laws. They are a entity of the State of Missouri.
Justice Jackson: And when you say acting through the legislature in response to Justice Barrett, do you mean that sort of the -- the structure of MOHELA would have to be revisited through the legislature? In other words, you've now set it up -- we have a law in Missouri that structures this corporation in a certain way, and it is separate. So, when you say acting through the legislature, do you mean that there would have to be some kind of amendment to the way in which MOHELA is and operates in order to allow for you to reach its assets?
James A. Campbell: I -- I think it would have to be an act of the legislature. Whether it took the form of amending the existing Official 1 statutes or whether it was a new statute, it would have to be an act of the legislature.
Justice Gorsuch: Counsel, on -- on the merits, if I could direct you to the Solicitor General's argument suggesting the major questions doctrine does not apply because this is a benefits program, despite our -- our holding in King versus Burwell, and -- and arguing that it doesn't implicate the Appropriations Clause authority of Congress. Can you address that argument, please?
James A. Campbell: Yes, Your Honor. The whole point of the major questions doctrine is to preserve the separation of powers, and it rests on the presumption that Congress intends to address major questions for itself.
Justice Gorsuch: I understand that. But this is a more specific question with respect to benefits programs --
James A. Campbell: Right.
Justice Gorsuch: -- and the relationship between it and the Appropriations Clause and King versus Burwell.
James A. Campbell: Your Honor, the reason why I referenced the underlying doctrine and why Official 1 it exists is that those same reasons apply in this benefits context no less than they do in a different regulatory context. The separation of powers is implicated here because we're dealing with a congressionally created program. In addition, if anything, I would say that there are more reasons to apply the major questions doctrine here, because what the agency is effectively doing is exercising the power of the purse by going into the federal balance sheet and crossing off nearly a half trillion dollars in loans payable to the government. That is a quintessentially legislative function. So that's even more reason why the major questions doctrine should apply.
Justice Kavanaugh: Isn't the -- well, do --
Justice Sotomayor: I was just going to ask, that's the whole purpose of the HEROES Act. The whole purpose of the HEROES Act is to say in -- either for veterans or -- not for veterans, for people who are in military service or in a national emergency, we give you the authority to impose debt on us. The forbearance of payment is -- is it Official 100 5 billion a month or something like that? It's an outrageous sum. And yet that isn't -- no one is disputing that the Secretary -- that the Secretary has that power. It's not the amount of money. The question is: What's Congress's intent? And we know from the HEA Act that Congress recognized that there would be cancellation of debt for schools that close at least. Why would you think that Congress didn't intend under the HEROES Act to permit cancellations of debt if a national emergency required it?
James A. Campbell: Because what Congress said in the HEROES Act is that the Secretary has the power to "waive or modify" existing provisions. It did not give the Secretary the power to rewrite --
Justice Sotomayor: But all of those -- a waiver --
Justice Kagan: Well, yes, it did. Sorry. May I?
Justice Sotomayor: Go ahead. Yes.
Justice Kagan: General Campbell, I mean, it -- it says, "waive or modify any Official 101 statutory or regulatory provision applicable to the student financial assistance programs, and then it says the Secretary can add terms and conditions to be applied in lieu of such statutory and regulatory provisions." So it's really quite clear here, it's like you can waive or modify the old ones, and then you can add new ones in lieu of the old ones. So, you know, Congress could not have made this much more clear. I mean, Congress didn't say exactly the circumstances in which it wanted the Secretary to use this authority. Of course not. This is -- this is a -- a bill about, like, what happens when you have an emergency. So what Congress said is what happens when you have an emergency is the Secretary has the power to take care of emergencies, and it has that power by way of waiving or modifying any provision and adding others in lieu of them.
James A. Campbell: A couple responses. The adding "in lieu of" language, that has to be understood to mean adding along the lines of a modification. It can't be adding just anything the Secretary wants. It has to be Official 102 read in context with the terms --
Justice Kagan: Or a waiver.
James A. Campbell: -- waive or modify.
Justice Kagan: Or a -- and, you know, it's not just modify, it's waived. So it's modify even if we take a kind of MCI-type reading of modify, all -- you know, through more major changes, all the way up to waive, and then you can say what terms and conditions should be applied in lieu of those provisions. Congress doesn't get much clearer than that. We -- we deal with congressional statutes every day that are really confusing. This one is not.
James A. Campbell: Your Honor, I -- I disagree that what we're dealing with here is a waiver or modification. Three points on waiver. In terms of when -- when we look at the -- the publication in the -- in the Federal Register, it says the Secretary modifies the following provisions. So the Secretary didn't even purport to waive the loan discharge provisions that were cited. Second point, that makes sense because the Secretary wasn't actually excusing Official 103 compliance with any of the existing requirements. The Secretary was ignoring all of those requirements and creating brand-new ones to -- to put in place a brand-new program. And the third point is, again, we know that there was no waiver here because affected individuals can continue to access all those existing loan discharge programs. If somebody qualifies for the public loan service program, they're able to access it right now. So there was no waiver here. All we have is an attempt to modify, but this goes far beyond a modification because it -- it is the creation of a brand-new program that goes far beyond what Congress intended. In fact, if Congress --
Justice Kagan: Do you think that there is an ability to modify provisions respecting discharge? So, you know, is there any ability? Because there are these -- these particular discharge provisions, right, and it has to do with death and with when your school closes and so forth. So suppose the Secretary says, that's not enough, I want to do some more. Official
James A. Campbell: Your -- Your Honor, I think there's a good example where the Secretary's done it in the past that was acceptable. So, in 2003, the Secretary used the power under the HEROES Act to modify the -- an existing requirement to access student loan and it was under one of those profession-based programs where, if you work for a teacher for a certain amount of years, you can get into the program.
Justice Kagan: So let me give you an example. Suppose, like, there's an earthquake. We'll use an earthquake instead of a pandemic. And the Secretary says this isn't enough, people are -- are really being hurt by this. So we have a provision about the borrower dying. The Secretary says, I'm also going to allow dischargers where the primary earner in the borrower's household dies. Could the Secretary do that?
James A. Campbell: Your Honor, I don't believe so because it doesn't sound like a modification of an existing program. It sounds like the creation of a brand-new program.
Justice Kagan: Really, just from the Official 105 borrower dying, the Secretary is allowed to do that, but -- but the Secretary in -- in -- in -- in the face of this massive earthquake is not allowed to say, you know, or not just the borrower but the -- the -- the primary earner in the borrower's family?
James A. Campbell: Your Honor, the question would come down to whether that is a modification. It sounds to me like it might go too far because it's creating a new program. But even if that was --
Justice Kagan: I mean, this is very broad language, go -- go modify or waive any statutory or regulatory provision and come up with new ones, and you're not even going to allow me that?
James A. Campbell: Your Honor, I was going to say, even if that would be sufficient here, it's nothing like this program. This is a program that includes 95 percent of borrowers regardless of how they were affected by the pandemic. So we --
Justice Kagan: Could the Secretary say, well, there was this terrible earthquake and lots of people's houses were destroyed, and Official 106 so I'm going to discharge the loans of people whose houses were destroyed in this terrible earthquake?
James A. Campbell: Your Honor, it sounds to me like creating a new program. I don't think that that would be okay under the HEROES Act. Now what I would say --
Justice Kagan: See, I -- I -- I -- I guess, you know, this is an emergency provision. There's an emergency. It's an earthquake. You don't think Congress wanted to give -- and -- and not just wanted. It's not what Congress thought. It's what Congress said, to give the Secretary power to say, oh, my gosh, people have had their homes wiped out, we're going to discharge their student loans.
James A. Campbell: Your -- Your Honor, when it comes to taking that ultimate step to discharging loans, Congress wanted to preserve that for itself. And I think we note -- we -- Congress acts in pandemics --
Justice Kagan: Where do you see that in this statute? I mean, the -- the provision of the statute says any statutory or regulatory provision applicable to the student loan program Official 107 you can waive, you can add another, to deal with an emergency. This isn't a massive delegation to the Secretary of Education. It's -- it's designed to deal with emergency conditions. You have a lot of power in emergencies. When those people's homes are destroyed, you have the power to -- to discharge their loans.
James A. Campbell: But Congress still has a voice in emergencies, and we see that through the CARES Act here.
Justice Kagan: Congress used its voice. Congress used its voice in enacting this piece of legislation. All this business about executive power, I mean, we worry about executive power when Congress hasn't authorized the use of executive power. Here, Congress has authorized the use of executive power in an emergency situation. We're in that sphere, you know, in those -- all -- all those zones, we're in that sphere where the executive is acting with congressional authorization.
James A. Campbell: Your Honor, I disagree that this is congressional authorization because Official 108 it's not a modification. It goes way beyond that. It creates a brand-new program, and that's not what the HEROES Act allowed. If the HEROES Act did allow the wholesale rewriting of statutes whenever an emergency arose, then that would create an issue -- constitutional issue under Clinton versus City of New York, and it essentially would be allowing the executive branch to go in and rewrite statutes after the fact, and the executive branch doesn't have that power.
Chief Justice Roberts: Thank you, counsel. Just pick up on the discussion that we've been having, the breadth of the statute at issue here. How does it compare to the breadth of the statutes that were at issue in our major questions doctrine, where we indicated enough even though the breadth of some of those provisions would by their terms literally cover the authority that the agency exercised, that given the nature of the authority and its consequences, that was not clear enough?
James A. Campbell: Your Honor, I think Official 109 it -- it fits within those cases. And I would point the Court specifically to Alabama Association of Realtors. In that case, the statute authorized the relevant federal official to engage in actions that he thought in his judgment were necessary or in his judgment may be necessary. Yet this Court looked at that language and said that it was not broad enough to -- to authorize the -- the action at issue there, the CDC eviction moratorium, and it did so because of the major questions doctrine.
Chief Justice Roberts: Justice Thomas? Justice Alito? Justice Sotomayor?
Justice Sotomayor: This is substantially different because the Secretary is authorized to cancel loans under HEA. So this is not an action as a moratorium on eviction which had never occurred previously or wasn't within the wheelhouse of the agency. At least that's what the Court said. I had -- I had a difference of opinion. Putting that aside, this is not an Official 110 action that could come as a surprise because it is expressly permitted under the HEA Act, and nothing in the HEROES Act says that the Secretary can't do something that's in the normal course of his business in circumstances that justify it, like a school closing or like a school engaged in fraud. Those are exceptions that clearly are permitted under the HEA to cancel a debt. So why would I have a view that Congress didn't understand that, in a proper emergency, debt cancellation would be right?
James A. Campbell: I would go back to my prior -- prior answer, which is there is a difference between modifying an existing loan forgiveness program in light of the national emergency, which is appropriate -- and an example of that is to take the existing loan discharge program for teachers, and there has to be consecutive service, and to say if the reason why that teacher would fall out of the consecutive service requirement is because of the national emergency, it's okay to waive that requirement or to modify that requirement.
Justice Sotomayor: That's changing Official 111 the program. I -- I mean, it -- it's semantics. Clearly, a waiver is an extinguishment. Whether you're -- whether you're rewriting it to say a national emergency will pause your service years, statute says you have to serve consecutively, and the Secretary is saying you don't have to, you're rewriting the statute. You just want to say this is a bigger rewrite than I like. But it's not rewriting the statute. It's just saying this obligation is terminated.
James A. Campbell: Your Honor --
Justice Sotomayor: This obligation to serve continuously is terminated for this period of time.
James A. Campbell: It's a bigger rewrite than the words "waive or modify" allow.
Justice Sotomayor: That -- that really has us, as the third branch of government, changing Congress's words because we don't think we like what's happening.
James A. Campbell: Your Honor, I would --
Justice Sotomayor: There's 50 million students who are -- will benefit from this who today will struggle. Many of them don't have Official 112 assets sufficient to bail them out after the pandemic. They don't have friends or families or others who can help them make these payments. The evidence is clear that many of them will have to default. Their financial situation will be even worse because, once you default, the hardship on you is exponentially greater. You can't get credit. You're going to pay higher prices for things. They are going to continue to suffer from this pandemic in a way that the general population doesn't. And what you're saying is now we're going to give judges the right to decide how much aid to give them. Instead of the person with the expertise and the experience, the Secretary of Education, who's been dealing with educational issues and the problems surrounding student loans, we're going to take it upon ourselves, instead of leaving that decision in the hands of the person who has experience with these questions.
James A. Campbell: Your Honor, there are additional statutory clues showing that Congress didn't intend the creation of new loan discharge programs. I'd point the Court to subsection Official 113 (a)(2)(D). That -- there, Congress specifically identified one limited instance where the Secretary could excuse the return of funds owed to the government. That was grant overpayments.
Justice Sotomayor: Counsel --
James A. Campbell: By identifying --
Justice Sotomayor: -- that was an emergency, or that was a situation that was sui generis. That's what emergencies are.
James A. Campbell: Your -- Your Honor, I think --
Justice Sotomayor: Sui generis situations that the Secretary can address in a particular situation.
James A. Campbell: Your Honor, I think, by identifying that specific example, Congress was sending a message that it did not want the other provisions to be used to create new loan discharge programs.
Chief Justice Roberts: Justice Kagan? Justice Gorsuch?
Justice Gorsuch: I had understood the Office of Legal Counsel's memorandum to suggest that the Secretary, under the statute, had authority to put student borrowers in -- in the Official 114 same condition that they were in prior to the emergency and that the nature of your argument is that that -- that test is not met. Do you agree with the OLC's position and understanding of the statute? And -- and -- and do -- and how do you -- how do you argue that it's exceeded that authority?
James A. Campbell: Your Honor, I disagree with most everything in the OLC opinion, but I agree with that part of the OLC opinion. I think it's right that that's what the phrase "no worse position" means. It means Congress was telling the -- the Secretary he had the authority to keep borrowers near the status quo. But what we have here is a program that, for 20 million borrowers, is going to leave them without a single outstanding loan. That goes well beyond putting them back in the status quo ante. And for the other approximately 20 million borrowers that stand to benefit from this, their average debt is going to go from $29,000 to $13,000, again, far beyond returning to the status quo ante.
Justice Gorsuch: And I understand the Official 115 Secretary has considerable expertise when it comes to educational affairs, but with -- in terms of macroeconomic policy, do we normally assume that every -- every Secretary, cabinet member, as learned as they are, has that kind of knowledge?
James A. Campbell: No, we don't. When we're dealing with a nearly half trillion dollar loan cancellation program, this is squarely in the ken of Congress. Congress has the power and expertise to weigh the balancing, competing fiscal implications, particularly at that scale. So this is something that's outside the Secretary's expertise.
Chief Justice Roberts: Justice Kavanaugh?
Justice Kavanaugh: I think, when we're talking about emergency powers, that certainly focuses the inquiry, but that doesn't mean that the executive can't take action. And it all then turns on the -- I think, the language of the statute at issue and the kind of action taken. And I think you have a good argument on "modify," but what do you do with the word Official 116 "waive"? That is an extremely broad word. In 2003, Congress was very aware of potential emergency actions in the wake of September 11th and war, possible terrorist attacks, and yet it puts that extremely broad word, "waive," into the statute. Why not just read that as written?
James A. Campbell: Your Honor, I -- I believe we are reading it as written. "Waive" means to excuse compliance with an existing obligation. And what the Secretary is purporting to do here is to change existing loan discharge program. The Secretary is not waiving anything in those provisions. And so we think, as I explained earlier, that the word "waiver" simply doesn't apply here. Now, to the extent the Court looks at the term "waiver" and finds that that's cause to read the phrase "waive or modify" a little more broadly, it still doesn't reach this program, because the Secretary is not dealing with any of these existing provisions that he purports to cite. He's not changing anything within them. He's frankly ignoring what's there and creating a brand-new program, and that's not within the Official 117 language of this statute.
Justice Kavanaugh: You don't think that fits within "waiver"?
James A. Campbell: I -- I don't believe it does, no. A waiver is to take something away, and the Secretary is not taking anything away from the cited loan discharge provisions.
Justice Kavanaugh: And then, on the body of precedent we've developed within the pandemic on emergency powers and -- and major executive actions, we have the eviction moratorium case, we have the national OSHA mandate case, but, on the other hand, we have the healthcare mandate case, and I think the distinction -- one of the distinctions drawn there was that was more in the -- in the wheelhouse of the agency in question. And I think the Solicitor General has argued, and I'll just get your response, on this is right in the wheelhouse -- and Justice Sotomayor was just saying this -- right in the wheelhouse of what the Secretary of Education would normally be expected to do, unlike CDC doing an eviction moratorium. I know you've addressed this a little Official 118 bit, but just to get your response on that.
James A. Campbell: Your Honor, I don't think it's in the wheelhouse because it's creating a brand-new program. The only entity that has created new loan discharge programs is Congress. There's a number of them in the Higher Education Act. But the Secretary has never before created a brand-new loan cancellation program, particularly under the HEROES Act. As I mentioned at the outset, the HEROES Act has never even been used to forgive a single loan in the past. That's telling because one of the things the Court looks at in its major questions jurisprudence is if it's unprecedented. And we certainly have an unprecedented use of the statute here.
Justice Kavanaugh: Thank you.
Chief Justice Roberts: Justice Barrett?
Justice Barrett: Two questions, one on merits, one on standing. First, on the merits, do you agree that this Administration and the prior administration had authorization under the HEROES Act to pause loan -- loan Official 119 repayment obligations?
James A. Campbell: Your Honor, it's a -- we're not challenging it in this case.
Justice Barrett: I know, but --
James A. Campbell: I think it's a --
Justice Barrett: -- the question is, do you think it's within it? This kind of goes to the --
James A. Campbell: Sure.
Justice Barrett: -- scope of "waive or modify," right?
James A. Campbell: Yes. I -- I think that the -- so if I can go through the timeline to explain, so the first seven days, on March 20th, 2020, Secretary DeVos waived but didn't indicate what legal authority she was using. I have no way to assess that because I just don't know what -- what authority she was using. Then Congress came in seven days later and enacted the CARES Act. The CARES Act put a payment pause in place for six months. At the end of that six-month period, Secretary DeVos extended it for three months. I think, arguably, that was a legitimate use of the HEROES Act because taking Official 120 a congressionally created six-month program and extending it for three months seems like it might be a modification. But now that we're two years down the road, we're beyond a modification. And not only that, the connection to the national emergency has become even more tenuous.
Justice Barrett: So your argument is that even assuming that Secretary DeVos initially had the authority to -- and you're -- and you're kind of just whiffing on the question about before the CARES Act was passed, right? But you're talking about after the CARES Act was passed, she arguably had authority under the HEROES Act to extend the pause but that at some point as that time dragged on post the CARES Act, when the new administration came in, then it exceeded the authority to waive or modify?
James A. Campbell: Your Honor, it could have been the -- Secretary DeVos had two extensions. It could have been her second extension. I don't think it hinges on who the administration was. At some point, I think it goes beyond Official 121 a modification and the connection to the national emergency became too tenuous to maintain it.
Justice Barrett: So it's not that a pause is different in your mind than canceling the obligation to repay the principle. It's that -- or -- or I guess it's a combination of the distinction between a pause and a cancellation and then the temporal --
James A. Campbell: Correct.
Justice Barrett: -- reach?
James A. Campbell: Correct, because I do think there are significant distinctions between a pause and cancellation. I'll give you a few. The first is a pause maintains the status quo. Cancellation puts people in a -- in a far better -- this cancellation puts people in a far better position. A pause keeps indebtedness from rising, versus cancellation erases indebtedness. In addition, as I mentioned before, the connection to the national emergency, when you put a pause in place, when the nation is still dealing with lockdown conditions, that is a -- a -- a there's a pretty close connection between Official 122 that and a national emergency. When two-and-a-half years down the road the Secretary, having much time to contemplate this -- this -- the situation, comes in and creates a debt forgiveness program for 95 percent of borrowers, the connection to the -- to the national emergency is too tenuous.
Justice Barrett: Okay. I -- I understand. Second question is on standing. Could Missouri file suit to vindicate the interests of the City of St. Louis?
James A. Campbell: No, Your Honor, because, when we look at the factors that we've cited for why MOHELA is a state-created and state-controlled entity, the leadership of the City of Missouri is not selected by the governor or by the state. They're selected at the local level.
Justice Barrett: Thank you.
Chief Justice Roberts: Justice Jackson?
Justice Jackson: So can I just understand your view on waiver or modification with respect to sort of the initial applications Official 123 of this authority? You know, we're sort of in a certain species of it now, but I had understood from the SG and from the briefs that originally we're talking about wartime, and -- and so I'm just trying to understand, are you saying that those were not legitimate waivers or modifications under this kind of power?
James A. Campbell: Your Honor, we don't question any of the uses of the HEROES Act prior to 2020. So --
Justice Jackson: Right. But I -- I --
James A. Campbell: -- I don't know if I'm understanding the question.
Justice Jackson: -- what -- what is -- what is your view -- again, I'm just trying to clarify your exchange with -- with Justice Kavanaugh on what "waiver" means. So are you saying that the Secretary would have had to change something about the regulations but not about their application with respect to the obligations that they require of people?
James A. Campbell: Your -- Your Honor, if I can try to illustrate it with an example, I Official 124 think this might get to it. There is an existing loan discharge program for permanent disability that requires an individual to expect to be permanently disabled for at least 60 months. If the Secretary came in and said, because of the national emergency, if someone was affected because of that, they can reduce that 60-month requirement down to, say, 36 months, that to me is a modification of an existing program. That would be an example. In terms of waiver, waiver is when the Secretary goes in and would take out an entire -- one of the existing requirements. And that's not what the Secretary is doing here. That --
Justice Jackson: I understand. But -- but -- but you're -- I guess my question is, do you dispute that under the prior circumstances people owed a certain amount, and what the Secretary did was modified the amount that they would owe as a result of this loan?
James A. Campbell: Your -- Your Honor, I think that's exactly what he was trying to do. And I think that highlights why there's a Official 125 problem here. Let me point --
Justice Jackson: Okay.
James A. Campbell: -- the Court specifically to the statute that we cite on pages 46 through 47 of our brief. Congress knows how to authorize the Secretary to waive or modify an amount owed. We cite provisions in the Higher Education Act that specifically say the Secretary shall waive the amount owed. Here, the Secretary wasn't given that language. If the Secretary instead was given the power to waive or modify provisions, and so that's why the analysis here have --
Justice Jackson: But why doesn't it all -- why doesn't it all reduce to the same thing? And this is where I go back to the sort of original application. I mean, so, fine, we have wartime people who are away and you say you have no problem with the Secretary modifying the regulations insofar as it would help them, but doesn't it reduce to just them not having to pay as much? I don't understand why there's really a distinction --
James A. Campbell: Well -- Official
Justice Jackson: -- between waiving the -- the regulations in the way that you're reading this and waiving the amount a person owes under a regulation that relates to a loan.
James A. Campbell: Your Honor, there's never been a past use of the HEROES Act that would eliminate the amount that someone owes. So I don't think there's a prior comparator to look to.
Justice Jackson: Okay. Let me just ask you one final question on my big-picture concern. So I was listening carefully to your opening statement, and you started by indicating that this is one of today's most debated policy questions, and you ended by saying that we, the courts, should essentially answer it by invalidating this program. And what concerns me is that to the extent you're talking about separation of powers and major questions, the judiciary is part of the same constitutional separation of powers dynamic that compels us to think about questions like the major questions doctrine. And I feel like we really do have to Official 127 be concerned about jumping into the political fray, unless we are prompted to do so by a lawsuit that is brought by someone who has an actual interest. So this is why I'm sort of pressing really hard on the standing point. And so do -- do you dispute that the ordinary standing rule would be that a plaintiff cannot establish standing by asserting the interests of an independent actor or by saying that an independent actor not before the Court will respond to the defendant's actions in a certain way? I mean, isn't the ordinary rule one that really doesn't cover you and what you're asking for in a way is an extension of our standing principles to allow for the state to proceed with this action?
James A. Campbell: Your Honor, I don't believe so. I think what we're asking for is the same treatment that the federal government got in Cherry Cotton Mills and Erickson. We're asking for the ability to assert the interests of the public corporation that the State of Missouri created, that it controls and that it charged with performing nothing but Official 128 essential government functions.
Justice Jackson: All right. So we'll go back and look at that case, and if we find that the federal government had some sort of a separate interest that it was asserting, do you lose? I mean, is that your only case that is going to make it be the case that we can find standing for you?
James A. Campbell: No, Your Honor. I think that those cases are certainly helpful. I would direct the Court, if the Court wants to look under either federal law to see what it takes to be a part of the government, I would direct the Court to Lebron and Department of Transportation that we cite. If the Court wants to look --
Justice Jackson: So you reject the distinction that the -- that the SG pointed to with respect to what those cases were about? Those were not standing cases. We have different doctrines that apply when we're looking at different issues. And the issue of whether or not you are injured by, you know, an injury to another entity, an independent corporation, seems to me Official 129 to be a separate thing. So do you have a case that would help us to understand whether an entity like MOHELA that has totally been isolated through state law from liability, that can sue for itself, et cetera, do you have a case where we've said that same kind of entity you can sue as a state in -- because you're injured for standing purposes?
James A. Campbell: Your Honor, I think the closest cases we have are the ones I referenced before, Cherry Cotton Mills and Erickson. But I will say that part of the inquiry has to look to state law to see if Missouri is charged with speaking -- has the ability to speak on behalf of MOHELA. And on that front, I would point the Court to two things. One is Missouri Statute 27.06 -- .060, which gives the attorney general the right to determine whether to litigate in the name of the state to protect any interest of the state. And because MOHELA is a --
Justice Jackson: But, of course, that's the question here, right?
James A. Campbell: -- but because MOHELA -- Official
Justice Jackson: Yeah.
James A. Campbell: -- is a part of the state --
Justice Jackson: I see.
James A. Campbell: -- and the second point that I would direct the Court to is the Casualty Reciprocal Exchange case. That's the case that specifically identified what it means to be a public corporation under Missouri state law. And it identifies the same factors that Lebron looked to. It's whether it was created by the government, controlled by the government, and whether it's performing essential public purposes.
Justice Jackson: Thank you.
James A. Campbell: Thank you.
Chief Justice Roberts: Thank you, counsel. Rebuttal, General? REBUTTAL ARGUMENT OF GEN. ELIZABETH B. PRELOGAR ON BEHALF OF THE PETITIONERS
Elizabeth B. Prelogar: Thank you, Mr. Chief Justice. I'll pick up with standing and focus on the MOHELA-related arguments. Official 131 Justice Barrett, you asked about the provision of state law 173.420. This is a provision that refers generally to Missouri reserving rights over the assets of MOHELA. I think, if you look at that in context, it clearly functions as a savings clause. It's making clear that notwithstanding all of the other provisions we've pointed to, like 173.425, .4210 -- 410, these are the provisions that create the strict financial separation, that Missouri is reserving its rights under other sources of law, like eminent domain or search and seizure, and it's not actually limiting its ability to obtain assets in that way. I understand my friend to have conceded that actually Missouri would have to change its law and change the structure of MOHELA if it wanted to have any direct access to MOHELA's assets. And that makes sense because these other provisions that I just pointed you to are very clear that there is absolute financial separation between the state and MOHELA. You asked as well about control over Official 132 MOHELA, which my friend has emphasized several times. That's actually one of the relevant questions under the arm-of-the-state doctrine, whether you could direct the authority in any way. I'd point to Justice Kavanaugh's decision in the D.C. Circuit in the Puerto Rico Ports Authority case. There, it was significant that you could direct the -- the authority to sue. And, here, that's obviously lacking, and the state hasn't attempted to do that. My friend several times brought up the Cherry Cotton Mill and Erickson cases. In Cherry Cotton Mill, there was an express statutory right of the United States to tax offsets, and the Court was interpreting that statutory language and determined that the United States had its own interest in the statutory right and further emphasized that with respect to that particular public corporation -- and I'm reading from the language of the Court's opinion -- that for the public corporation, "its profits, if any, go to the Government; its losses the Government must bear." There wasn't the financial separation in that case that exists here, and there was a Official 133 distinct statutory right on behalf of the United States. Erickson is even further afield. It wasn't a case about standing at all. And there, the United States had a contract right that the instrumentality had entered into as an agent of the federal government. The instrumentality was itself a plaintiff in that case, and there was no Article III issue in the case. Finally, I'll focus on the contributions to the Lewis and Clark Discovery Fund. This is the secondary argument as it relates to MOHELA. There are huge factual deficiencies in trying to premise standing on that basis. As we've explained, they haven't been able to bring forward allegations that would substantiate the asserted financial impacts on MOHELA and certainly haven't established that that will be the likely cause of any default to a fund that hasn't been paid for the last 15 years. But there's also a more fundamental legal problem with their theory. It has no logical stopping point. There's nothing, for example, that would prevent anyone who's owed a Official 134 debt to say that suddenly they can have standing to challenge a regulation that doesn't affect them in any way because it might affect the debtor, who then will be unable to make good on that -- on that liability. And there is no precedent in this Court's Article III doctrine to support that kind of broad expansion of Article III standing here. Turning to the merits, I want to pick up on the colloquies that my friend was having about the meaning of the term "waive or modify." And if I understand the gloss that he's putting on that language, I don't think that there would be any room to grant any kind of HEROES Act relief whatsoever. He says that there was no waiver or modification here, but there was. The Secretary took the provisions that deal with discharge and cancellation and he waived the existing eligibility requirements and modified those provisions to add an additional basis for relief. This is how Secretaries across administrations have implemented the HEROES Act. For example, with deferment, the Secretary, in Official 135 prior uses of the HEROES Act, took the provisions that exist for deferment and waived the existing eligibility requirements and then granted additional deferment in line with the national emergency. That fits with the plain language of the statute, and to suggest that that automatically creates a brand-new program would leave very little room for the HEROES Act to operate at all. My friend is getting it exactly backwards. The fact that there are already statutory provisions for things like deferment and forbearance and discharge demonstrates that Congress could foresee that all of those are ways that you grant financial relief to student-loan borrowers. And in the context of a statute like this one that is centrally focused on ensuring that the Secretary can act in unforeseen circumstances outside the existing scope of those provisions, Congress directed that the Secretary has the authority to "waive or modify" in order to expand eligibility for those forms of relief. Official 136 So we'd ask the Court to reject the states' arguments here.
Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 12:15 p.m., the case was submitted.)