Brief, State of West Virginia et al. v. U.S. Department of the Treasury, No. 7:21-cv-00465 (N.D. Ala.), Doc. 42 (April 30, 2021)

Summary

An amici curiae brief of seventy-eight (78) members of the U.S. Senate and U.S. House of Representatives and the American Center for Law and Justice, in support of Plaintiffs' motion for preliminary injunction, in State of West Virginia et al. v. U.S. Department of the Treasury, Case No. 7:21-cv-465-LSC, in the U.S. District Court for the Northern District of Alabama. It bears a file stamp of April 30, 2021. The summary of argument states that the Tax Mandate in the American Rescue Plan Act of 2021 exceeds Congress's power under the Spending Clause and is unconstitutional whether it is unambiguous or ambiguous. The certificate of service is signed /s/ Michael L. Jackson.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

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“Brief, State of West Virginia et al. v. U.S. Department of the Treasury, No. 7:21-cv-00465 (N.D. Ala.), Doc. 42 (April 30, 2021).” Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/brief-state-of-west-virginia-et-al-v-u-s-department-of-the-treasury-no-5b80350ef4/, SHA-256 54da80caf700ba80930875771ee497ab42a55698a5a0bf873bef6e232cf10170.

Full text

FILED
2021 Apr-30 PM 12:46
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
STATE OF WEST VIRGINIA, by and through )
Patrick Morrisey, Attorney General of the State of )
West Virginia; STATE OF ALABAMA, by and )
through Steve Marshall, Attorney General of the )
State of Alabama; STATE OF ARKANSAS, by )
and through Leslie Rutledge, Attorney General of )
the State of Arkansas; STATE OF ALASKA, by )
and through Treg R. Taylor, Attorney General of )
the State of Alaska; STATE OF FLORIDA, by )
and through Ashley Moody, Attorney General for )
the State of Florida; STATE OF IOWA; STATE )
OF KANSAS, by and through Derek Schmidt, )
Attorney General for the State of Kansas; STATE )
OF MONTANA, by and through Austin Knudsen, )
Attorney General of the State of Montana; STATE )
OF NEW HAMPSHIRE; STATE OF )
OKLAHOMA, by and through Mike Hunter, )
Attorney General of the State of Oklahoma; )
STATE OF SOUTH CAROLINA, by and )
through Alan Wilson, Attorney General of the )
State of South Carolina; STATE OF SOUTH )
DAKOTA, by and through Jason R. Ravnsborg, )
Attorney General of the State of South Dakota; )
and STATE OF UTAH, by and through Sean )
Reyes, Attorney General of the State of Utah, )
)
Plaintiffs, )
)
vs. ) Case No. 7:21-cv-465-LSC
)
U.S. DEPARTMENT OF THE TREASURY; )
JANET YELLEN, in her official capacity as )
Secretary of the United States Department of the )
Treasury; and RICHARD K. DELMAR, in his )
official capacity as acting inspector general of )
the Department of Treasury, )
)
Defendants. )
AMICI CURIAE BRIEF OF SEVENTY-EIGHT (78) MEMBERS OF THE
U.S. SENATE AND U.S. HOUSE OF REPRESENTATIVES AND THE
AMERICAN CENTER FOR LAW AND JUSTICE IN SUPPORT OF
PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
MICHAEL L. JACKSON* JAY ALAN SEKULOW**
Wallace, Jordan, Ratliff & Brandt, LLC Counsel of Record
P.O. Box 530910 STUART J. ROTH**
Birmingham, AL 35253 ANDREW J. EKONOMOU**
Telephone: (205) 870-0555 JORDAN SEKULOW**
Facsimile: (205) 874-0315 BENJAMIN P. SISNEY**
Email: mjackson@wallacejordan.com AMERICAN CENTER FOR LAW & JUSTICE
Local Counsel for Amici Curiae 201 Maryland Avenue, NE
Washington, DC 20002
Tel.: 202-546-8890
Email: sekulow@aclj.org
bsisney@aclj.org
Counsel for Amici Curiae

April 30, 2021

*Admitted to practice before this Court
** Not admitted to practice before this Court
CORPORATE DISCLOSURE STATEMENT

The American Center for Law and Justice (ACLJ) is a non-profit legal

corporation dedicated to the defense of constitutional liberties secured by law. The

ACLJ has no parent corporation and issues no stock.

i
TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT.…………………………................i

TABLE OF CONTENTS…………………………………………………..............ii

TABLE OF AUTHORITIES………………………………………………...........iii

INTEREST OF AMICI………………………………………………….....……….1

SUMMARY OF THE ARGUMENT…………………………………………........4

ARGUMENT..……………………………………………………………………..4

I. Congress Possesses Conditioning Authority Under the Spending Clause,
but It is Limited.…………………………………………………………….7
II. Congress’s Tax Mandate Crosses the Line from Lawful Condition to
Unconstitutional Compulsion ………………………………………………9
III. The Tax Mandate Is Unconstitutional Either as an Invalidly Ambiguous
Condition or as an Unambiguous Compulsory Encroachment upon the
States’ Sovereignty ………………………………………..........................11

CONCLUSION.…………………………………………………………..............17

CERTIFICATE OF SERVICE …………………………………………………..19

ii
TABLE OF AUTHORITIES

Cases: Page(s)

Alden v. Maine, 527 U.S. 706 (1999)............................................................ 10

Ark Encounter, LLC v. Parkinson, 152 F. Supp. 3d 880 (E.D. Ky. 2016)...... 5

Barnes v. Gorman, 536 U.S. 181 (2002) ........................................................ 9

Benning v. Georgia, 391 F.3d 1299 (11th Cir. 2004) ......................... 7, 12, 13

Bond v. United States, 564 U.S. 211 (2011) ................................................. 10

Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,
527 U.S. 666 (1999) ............................................................................... 8–9

Edelman v. Jordan, 415 U.S. 651 (1974)...................................................... 12

Emps. of the Dep’t of Pub. Health & Welfare v.
Dep’t of Pub. Health & Welfare, 411 U.S. 279 (1973)............................ 12

FERC v. Mississippi, 456 U.S. 742 (1982) ..................................................... 8

Hawk v. Comm’r, 924 F.3d 821 (6th Cir. 2019) ............................................. 5

Hodel v. Va. Surface Mining & Reclamation Assn.,
452 U.S. 264 (1981) ................................................................................... 8

Holder v. Humanitarian L. Project, 561 U.S. 1 (2010) .............................. 4–5

In re ACF Basin Water Litig., 467 F. Supp. 3d 1323 (N.D. Ga. 2020) ........ 15

Lindley v. FDIC, 733 F.3d 1043 (11th Cir. 2013) ........................................ 15

Lowe v. Bowers (In re Nicole Gas Prod.), 916 F.3d 566 (6th Cir. 2019) ..... 15

Mayweathers v. Newland, 314 F.3d 1062 (9th Cir. 2002) .............................. 7

iii
Medical Transp. Mgmt. Corp. v. Comm’r,
506 F.3d 1364 (11th Cir. 2007)................................................................ 15

Nat’l Fed’n of Indep. Bus. v. Sebelius,
567 U.S. 519 (2012) ............................................................. 8, 9, 10, 12, 14

New York v. United States, 505 U.S. 144 (1992) .................................. 8, 9, 10

Ohio Cas. Ins. Co. v. Holcim (US), Inc.,
744 F. Supp. 2d 1251 (S.D. Ala. 2010) .................................................... 16

Pennhurst State Sch. & Hosp. v. Halderman,
451 U.S. 1 (1981) ..................................................................... 9, 11, 12, 16

Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) ................................... 5

South Dakota v. Dole, 483 U.S. 203 (1987) ........................................... 11, 12

Steward Machine Co. v. Davis, 301 U.S. 548 (1937) ............................. 10, 14

Tennessee v. United States Dep’t of State,
329 F. Supp. 3d 597 (6th Cir. 2018) .......................................................... 7

United States v. Near, 708 Fed. Appx. 590 (11th Cir. 2017) .......................... 5

Unpublished Opinions:

United States v. Langston, 2007 U.S. Dist. LEXIS 111279
(N.D. Ala. Aug. 21, 2007) (unpublished) .................................................. 5

Other Authorities:

U.S. Const. art. I, §8, cl. 1 ........................................................................... 4, 8

American Rescue Plan Act of 2021,
Pub. L. No. 117-2, § 9901 (2021) .......................................................... 4, 5

Black’s Law Dictionary (11th ed. 2019) ....................................................... 14

iv
Joey Garrison, Stimulus Tax Cut Language Rankles Republicans As Ohio
AG Files Suit Against Biden Administration, USA TODAY (Mar. 17, 2021),
https://www.usatoday.com/story/news/politics/2021/03/18/ohio-attorney-
general-sues-biden-administration-over-covid-19-stimulus/4746166001/
.................................................................................................................... 6

v
INTERESTS OF AMICI1

Amici are seventy-eight (78) elected Members of the U.S. Senate and U.S.

House of Representatives.

Amici Members of the U.S. Senate submitting this Brief are Senators Mike

Crapo, Tim Scott, John Barrasso, Marsha Blackburn, John Boozman, Mike Braun,

Shelley Moore Capito, John Cornyn, Kevin Cramer, Ted Cruz, Steve Daines, Bill

Hagerty, James Inhofe, James Lankford, Roger Marshall, Rob Portman, James E.

Risch, Ben Sasse, Rick Scott, and Todd Young.

Amici Members of the U.S. House of Representatives submitting this Brief

are Representatives Jim Banks, Kevin Brady, Robert Aderholt, Rick W. Allen, Andy

Biggs, Gus M. Bilirakis, Dan Bishop, Lauren Boebert, Mo Brooks, Vern Buchanan,

Ted Budd, Earl L. “Buddy” Carter, Ben Cline, James Comer, Warren Davidson, Jeff

Duncan, Ron Estes, A. Drew Ferguson, IV, Scott Fitzgerald, Mike Garcia, Louie

Gohmert, Bob Good, Lance Gooden, Paul A. Gosar, D.D.S., Glenn Grothman,

Michael Guest, Diana Harshbarger, Vicky Hartzler, Kevin Hern, Yvette Herrell,

Ashley Hinson, Ronny L. Jackson, Mike Kelly, Darin LaHood, Kevin McCarthy,

Tom McClintock, Carol D. Miller, Barry Moore, Devin Nunes, Scott Perry, Tom

1
Consistent with Federal Rule of Appellate Procedure 29(a)(4)(E), amici affirm that no counsel for
a party authored this brief in whole or in part and that no person other than the amici, their
members, or their counsel has made any monetary contributions intended to fund the preparation
or submission of this brief.

1
Reed, Guy Reschenthaler, Tom Rice, Mike Rogers, David Rouzer, David

Schweikert, Pete Sessions, Adrian Smith, Jason Smith, Lloyd Smucker, Michelle

Steel, W. Gregory Steube, Claudia Tenney, Ann Wagner, Jackie Walorski, Michael

Waltz, Randy Weber, and Brad Wenstrup.

Amici are involved in a wide variety of matters relating to the crisis imposed

by the COVID-19 pandemic, including but not limited to communication with and

assistance to constituents, the prioritization and utilization of funds, and securing the

public welfare. The COVID-19 pandemic and the government’s response thereto are

major considerations in the lives of amici and their constituents. As such, amici have

an interest in the issues raised in this case. The Court’s disposition of the issues will

affect the ability of amici’s constituents to access critical services, but also the ability

of various States’ executive offices to respond as effectively and efficiently as

possible to the pandemic. Amici Seventy-Eight (78) Members of the U.S. Senate and

U.S. House of Representatives are aware of the implications of Congress’s usage of

terms and have a perspective to offer this Court which is inherently different than

that of the parties.

Amicus curiae, the American Center for Law and Justice (ACLJ), is an

organization dedicated to the defense of constitutional liberties secured by law and

to the importance of federalism. ACLJ attorneys have argued before the Supreme

Court of the United States and other federal and State courts in numerous cases

2
involving constitutional issues. E.g., Pleasant Grove City v. Summum, 555 U.S. 460

(2009); Lamb’s Chapel v. Ctr. Moriches Union Free Sch. Dist., 508 U.S. 384 (1993).

The ACLJ has also participated as amicus curiae in numerous cases involving

constitutional issues before the Supreme Court and lower federal courts. E.g., Whole

Woman’s Health v. Hellerstedt, 136 S. Ct. 2292 (2016); FEC v. Wis. Right to Life,

Inc., 551 U.S. 449 (2007); Van Orden v. Perry, 545 U.S. 677 (2005).

The ACLJ is devoted to the rule of law and defending individual rights and

liberties, including those enumerated by the Founders in the Declaration of

Independence and the United States Constitution – and those protected by the

federalism established by the Founders.

Amici curiae Seventy-Eight (78) Members of the U.S. Senate and U.S. House

of Representatives and amicus curiae the ACLJ on behalf of its members, submit

this Brief in support of the Plaintiffs and their Motion for a Preliminary Injunction

[Doc. # 21].

This brief is filed pursuant to and consistent with the Court’s Order [Doc. #

30] entered April 23, 2021, that amicus briefs in support of Plaintiffs may be filed,

and must be filed by April 30, 2021. Further, the parties consented to the filing of

amicus briefs. [Doc. # 28]. Amici understand this Order and the parties’ consent to

mean that a motion for leave is unnecessary.

3
SUMMARY OF THE ARGUMENT

The “Tax Mandate” in the American Rescue Plan Act of 2021, Pub. L. No.

117-2, § 9901 (adding § 602(c)(2)(A) to the Social Security Act (42 U.S.C. § 801 et

seq.)) (ARPA), exceeds Congress’s power under the Spending Clause, U.S. Const.

art. I, §8, cl. 1. The conditions, i.e., the “Tax Mandate,” purportedly set by Congress

controlling State recipients of the ARPA funds and prohibiting such States from

lowering their taxes, exceed the conditioning power recognized by the Supreme

Court. If the Tax Mandate is unambiguous, it amounts to an impermissible assault

on the States’ sovereignty. If it is ambiguous, it fails to pass one of the Supreme

Court’s clear limitations on Congress’s conditioning authority. As a result, the ultra

vires Tax Mandate is unconstitutional. For this reason, as well as those set forth in

the States’ Motion for a Preliminary Injunction [Doc. # 21], any enforcement of the

Tax Mandate must be enjoined.

ARGUMENT

Acceptance of ARPA funds is conditioned on a prohibition that bars recipient

States from “directly or indirectly” offsetting revenue loss from tax reductions. This

means that if the Plaintiff States accept the funds, they are prohibited by Congress

from reducing their respective State taxes. The reason is clear: money is fungible.

See Holder v. Humanitarian L. Project, 561 U.S. 1, 37 (2010) (“Money is fungible,

and when foreign terrorist organizations that have a dual structure raise funds, they

4
highlight the civilian and humanitarian ends to which such moneys could be put.”

(internal citation, quotations and alterations omitted)); Ransom v. FIA Card Servs.,

N.A., 562 U.S. 61, 79 (2011) (explaining that money is fungible where funds used to

purchase a vehicle were funds not used to pay down credit card debt); United States

v. Near, 708 Fed. Appx. 590, 603 (11th Cir. 2017) (“Money is fungible.”); United

States v. Langston, 2007 U.S. Dist. LEXIS 111279, *10 (N.D. Ala. Aug. 21, 2007)

(unpublished) (“Money is fungible.”); see Hawk v. Comm’r, 924 F.3d 821, 826 (6th

Cir. 2019) (“Money is fungible. So is air.”); Ark Encounter, LLC v. Parkinson, 152

F. Supp. 3d 880, 904 (E.D. Ky. 2016) (“Because money is fungible, such benefits

will to some extent have the incidental effect of allowing the institution’s other funds

to be used to advance their religious purposes if they wish. Indeed, any

reimbursement, aid, or tax exemption necessarily frees up other funds for other

purposes.”).

Any funds received by the States via ARPA will necessarily offset, either

directly or indirectly, every tax reduction that a State pursues. This condition comes

with teeth: “Treasury can recoup funds that it interprets were used in violation of the

Federal Tax Mandate.” [Plaintiffs’ Motion, Doc. # 21, p. 15 (citing ARPA § 9901

(enacting 42 U.S.C. § 602(g)(1)))]. This condition is not a choice. It is coercion.

5
As amici ACLJ and Members of Congress know full well, such an attempt at

coercion violates the Spending Clause of the United States Constitution and the well-

established limitations on Congress’s conditioning authority.

The Biden Administration has indicated that, at bottom, and in a manner that

matters for purposes of this case, it views the Tax Mandate just as the States do:

Treasury spokeswoman Alexandra LaManna . . . defended the
provision, saying it does not prevent states from making tax cuts but
simply says pandemic relief funds can’t pay for those cuts. ‘It is well
established that Congress may establish reasonable conditions on how
states should use federal funding that the states are provided,’ she said.
‘Those sorts of reasonable funding conditions are used all the time –
and they are constitutional.’”2

Indeed, the “Biden [Administration] has promised ‘fastidious’ oversight over the use

of funds in the relief package.”3 And,

White House press secretary Jen Psaki on Monday said the original
purpose of the state and local funding provision was ‘to keep cops,
firefighters, other essential employees at work and employed, and it
wasn’t intended to cut taxes. So I think he certainly hopes that that’s
how the funding is used,’ she said of the president.4

There is a tension here: on one hand, the Treasury Department told the press

that the Tax Mandate does not prevent States from cutting taxes; on the other, it also

told the press that ARPA funds cannot be used to pay for those cuts. Defendants

2
Joey Garrison, Stimulus Tax Cut Language Rankles Republicans As Ohio AG Files Suit Against
Biden Administration, USA TODAY (Mar. 17, 2021),
https://www.usatoday.com/story/news/politics/2021/03/18/ohio-attorney-general-sues-biden-
administration-over-covid-19-stimulus/4746166001/ (emphasis added).
3
Id.
4
Id.

6
cannot have it both ways. Again, since money is fungible, these are conflicting

admissions by the Treasury Department. The States have identified a congressional

conditioning action that the Biden Administration intends to enforce and that the

condition plainly can be used to prevent recipient states from reducing their taxes.

Certainly Congress enjoys the ability to condition funding to States. This

authority is clear and settled. Just as clear and settled, though, is the fact that the

conditioning authority is limited.

I. Congress Possesses Conditioning Authority Under the Spending Clause,
but It is Limited.

The United States Court of Appeals for the Eleventh Circuit has embraced and

followed the Supreme Court’s requirement that, while “Congress may condition the

expenditures of federal funds on the furtherance of federal objectives,” “when the

recipient of those funds is a state the conditions imposed by Congress must be

unambiguous.” Benning v. Georgia, 391 F.3d 1299, 1305 (11th Cir. 2004)

(concluding RLUIPA conditions were unambiguous); see id. at 1307 (“Congress

must, however, make the existence of the condition itself–in exchange for the receipt

of federal funds–explicitly obvious.” (quoting Mayweathers v. Newland, 314 F.3d

1062, 1067 (9th Cir. 2002))); Tennessee v. United States Dep’t of State, 329 F. Supp.

3d 597, 622–23 (6th Cir. 2018) (“[C]onditions on the receipt of federal funds must

be unambiguous.”).

7
And as for the anticommandeering doctrine, even while vested with the

authority to spend funds on the general welfare, “Congress may not simply

‘commandeer the legislative processes of the States by directly compelling them to

enact and enforce a federal regulatory program.’” New York v. United States, 505

U.S. 144, 161 (1992) (quoting Hodel v. Va. Surface Mining & Reclamation Assn.,

452 U.S. 264, 288 (1981)). The Supreme Court “observed that ‘this Court never has

sanctioned explicitly a federal command to the States to promulgate and enforce

laws and regulations.’” Id. (quoting FERC v. Mississippi, 456 U.S. 742, 761–62

(1982)). As a result, Congress does not possess direct authority to “require the States

to govern according to Congress’[s]” preferred tax regime. New York, 505 U.S. at

162. And while the Spending Clause of the U.S. Constitution empowers Congress

to “provide for . . . the general Welfare,” Congress may not use conditions imposed

under the Spending Clause to coerce the States to adopt Congress’s tax policy

preferences. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 576–78 (2012)

[hereinafter NFIB] (op. of Roberts, C.J.).

“The Spending Clause grants Congress the power ‘to pay the Debts and

provide for the . . . general Welfare of the United States.’” Id. at 576 (quoting U.S.

Const., Art. I, § 8, cl. 1). As Chief Justice Roberts explained, the Court “ha[s] long

recognized that Congress may use this power to grant federal funds to the States, and

may condition such a grant upon the States’ ‘taking certain actions that Congress

8
could not require them to take.’” Id. (quoting Coll. Sav. Bank v. Fla. Prepaid

Postsecondary Educ. Expense Bd., 527 U.S. 666, 686 (1999)).

As the Supreme Court has recognized, “[s]uch measures ‘encourage a State to

regulate in a particular way, [and] influenc[e] a State’s policy choices.’” Id. (quoting

New York, 505 U.S. at 166) (second and third alterations original). Logically, “[t]he

conditions imposed by Congress ensure that the funds are used by the States to

‘provide for the . . . general Welfare’ in the manner Congress intended.” Id. Neither

amici nor the States take issue with Congress’s conditioning authority. Instead, amici

support the States in calling to this Court’s attention that the conditioning authority

has limits – the condition must be unambiguous and may not commandeer the States’

sovereign prerogatives – and that those limits have been breached here.

II. Congress’s Tax Mandate Crosses the Line from Lawful Condition to
Unconstitutional Compulsion.

As the Chief Justice put it, “[a]t the same time, our cases have recognized

limits on Congress’s power under the Spending Clause to secure state compliance

with federal objectives.” Id.

“We have repeatedly characterized . . . Spending Clause legislation as
‘much in the nature of a contract.’[”] Barnes v. Gorman, 536 U.S. 181,
186 (2002) (quoting Pennhurst State School and Hospital v.
Halderman, 451 U.S. 1, 17 (1981)). The legitimacy of Congress’s
exercise of the spending power “thus rests on whether the State
voluntarily and knowingly accepts the terms of the ‘contract.’[”] Id. at
17. Respecting this limitation is critical to ensuring that Spending
Clause legislation does not undermine the status of the States as
independent sovereigns in our federal system. That system “rests on

9
what might at first seem a counterintuitive insight, that ‘freedom is
enhanced by the creation of two governments, not one.’[”] Bond [v.
United States], 564 U.S. [211,] 220-221 [(2011)] (quoting Alden v.
Maine, 527 U.S. 706, 758 (1999)). For this reason, “the Constitution
has never been understood to confer upon Congress the ability to
require the States to govern according to Congress’ instructions.” New
York, supra, at 162. Otherwise the two-government system established
by the Framers would give way to a system that vests power in one
central government, and individual liberty would suffer.

Id. at 576–77.

The Supreme Court has certainly policed Congress in its attempts to coerce

States to do its will. Among those cases, and critical to this Court’s consideration of

the States’ lawsuit, the Supreme Court has “scrutinize[d] Spending Clause

legislation to ensure that Congress is not using financial inducements to exert a

‘power akin to undue influence.’” Id. at 577 (quoting Steward Mach. Co. v. Davis,

301 U.S. 548, 590 (1937)). “Congress may use its spending power to create

incentives for States to act in accordance with federal policies. But when ‘pressure

turns into compulsion,’ the legislation runs contrary to our system of federalism.”

Id. at 577–78 (internal citation omitted) (quoting Steward Mach., 301 U.S. at 590).

It is certainly true that “[t]he Constitution simply does not give Congress the

authority to require the States to regulate.” Id. at 578 (quoting New York, 505 U.S.

at 178). But as the Chief Justice made clear, this is just as “true whether Congress

directly commands a State to regulate or indirectly coerces a State to adopt a federal

regulatory system as its own.” Id. (emphasis added).

10
The case before this Court is not like South Dakota v. Dole, where the

Supreme Court held that Congress’s conditioning of funds on a certain minimum

drinking age, incentivized by a mere 5% reduction if South Dakota were to choose

a lower drinking age, was not so coercive so as to cross the line from pressure into

compulsion. 483 U.S. 203, 205–06, 211 (1987). According to the Court,

[w]hen we consider, for a moment, that all South Dakota would lose if
she adheres to her chosen course as to a suitable minimum drinking age
is 5% of the funds otherwise obtainable under specified highway grant
programs, the argument as to coercion is shown to be more rhetoric than
fact.

Id. at 211. No, the States’ case here is one where a State could face the loss of all

ARPA COVID-19 relief funds – up to the total the Defendants determine (with no

clear or meaningful standards of review) “indirectly” offset State tax cuts – if a State

does not bend its knee to Congress’s tax policy demands. That is hardly the “mild

encouragement,” allowed in South Dakota v. Dole. Id. No, Dole teaches that

congressional encouragement to States is permissible. Sovereignty-melting

compulsion is not.

III. The Tax Mandate Is Unconstitutional Either as an Invalidly Ambiguous
Condition or as an Unambiguous, Compulsory Encroachment Upon the
States’ Sovereignty.

The Supreme Court “ha[s] required that if Congress desires to condition the

States’ receipt of federal funds, it ‘must do so unambiguously . . . , enabl[ing] the

States to exercise their choice knowingly, cognizant of the consequences of their

11
participation.’” South Dakota v. Dole, 483 U.S. at 207 (quoting Pennhurst State Sch.

& Hosp. v. Halderman, 451 U.S. 1, 17 (1981)).

There can, of course, be no knowing acceptance if a State is unaware
of the conditions or is unable to ascertain what is expected of it.
Accordingly, if Congress intends to impose a condition on the grant of
federal moneys, it must do so unambiguously.

Pennhurst, 451 U.S. at 17 (emphasis added); see Benning, 391 F.3d at 1305–1307.

When Congress places conditions upon States receiving federal funds, the States’

duty, the thing it gives up in exchange for the money, must be clear. See Edelman v.

Jordan, 415 U.S. 651, 673–74 (1974); Emps. of the Dep’t of Pub. Health & Welfare

v. Dep’t of Pub. Health & Welfare, 411 U.S. 279 (1973). There is a reason that the

Chief Justice immediately followed his analysis by likening conditions on funds to

contracts, where both parties must know and ascertain that to which they agree, with

this:

Respecting this limitation is critical to ensuring that Spending Clause
legislation does not undermine the status of the States as independent
sovereigns in our federal system. That system “rests on what might at
first seem a counterintuitive insight, that ‘freedom is enhanced by the
creation of two governments, not one.’[”] For this reason, “the
Constitution has never been understood to confer upon Congress the
ability to require the States to govern according to Congress’[s]
instructions. Otherwise the two-government system established by the
Framers would give way to a system that vests power in one central
government, and individual liberty would suffer.

NFIB, 567 U.S. at 577 (internal citations and quotations omitted). States must be

recognized as the sovereign governments that they are. Congress’s use of an

12
amorphous term like “indirectly” – and the Defendants’ apparent desire to exploit

States reeling from the pandemic and to micromanage their tax policies – disrespects

States’ sovereignty, mocks federalism, and injures each Plaintiff State.

As explained below, since “the conditions imposed by Congress must be

unambiguous,” Benning, 391 F.3d at 1305, the Tax Mandate is unconstitutional, for

if the Defendants contend it is unambiguous, then it concedes the provision

commandeers the States’ sovereignty.

To surmount the obstacle of unambiguity, Defendants must contend and show

that the Tax Mandate is unambiguous – that is, that what the States are agreeing to

give up in exchange for the ARPA funds is clear. If Defendants argue that it is, in

fact, clear, then they concede that Congress purported to grant the National

Government the authority to prevent a recipient State, like Oklahoma, for example,

from lowering its State taxes. This would include an admission that the “directly, or

indirectly” clause does, in fact, clearly incorporate the “money is fungible” principle,

and as such, a recipient State’s action to lower its State taxes would be viewed as

being indirectly offset by ARPA funds, and hence, prohibited by the Tax Mandate.

The addition of “indirectly” to the Tax Mandate prohibition certainly does, as

the States contend, appear broad in scope – broad enough to sweep in seemingly any

13
connection that is not direct.5 In this scenario, receiving the ARPA funds would

impose upon a State the National Government’s tax policy preferences for that State

– which is apparently that taxes should not be lowered. If a State reduced its State

taxes in a manner that reduced that State’s revenue in an amount up to the sum of

ARPA funds received by that State, the National Government’s position could be

that the State offset those reductions with the ARPA funds, and would view that as

a violation of the Tax Mandate. It could even move to seize those ARPA funds back

from the State. The ARPA’s Tax Mandate is certainly ambiguous enough to allow

that action by Defendants. If Defendants do not forswear this interpretation, then

Defendants concede the very injurious usurpation of State sovereignty of which the

States complains If Defendants claim the Tax Mandate is unambiguous, and gives

Defendants the power to prohibit recipient states from lowering their own taxes, this

is not just “a ‘power akin to undue influence.’” NFIB, 567 U.S. at 578 (quoting

Steward Mach. Co., 301 U.S. at 590), this would be actual undue influence.

On the other hand, if Defendants argue that ARPA’s Tax Mandate does not

prohibit recipient States, like Oklahoma, from lowering taxes, then Defendants must

identify language in the Tax Mandate that forecloses this possibility. Otherwise, this

Court is left with the ambiguity created by two inconsistent interpretations of

5
Black’s Law Dictionary defines “indirect” like this: “A term almost always used in law in
opposition to ‘direct.’” Indirect, Black’s Law Dictionary (11th ed. 2019). Thus, if a thing is
indirect, it is anything that is not direct.

14
“indirectly,” one that accords with common usage (“indirectly” means anything that

is not direct and encompasses fungibility) and one that proposes an arbitrary limit

on meaning (“indirectly” does not encompass fungibility). Two such conflicting

views of the inherently ambiguous term “indirectly,” and indeed, the very existence

of this lawsuit, and the other lawsuits brought elsewhere by Ohio, Kentucky and

Tennessee, Missouri, and Arizona, bear witness to the ambiguity of the Tax

Mandate.

Even assuming the Department of Treasury’s interpretation is reasonable

(which is questionable), this would not help. As the Eleventh Circuit has recognized,

“Statutory language is ambiguous if it is susceptible to more than one reasonable

interpretation.” Lindley v. FDIC, 733 F.3d 1043, 1055 (11th Cir. 2013) (quoting

Medical Transp. Mgmt. Corp. v. Comm’r, 506 F.3d 1364, 1368 (11th Cir. 2007); see

Lowe v. Bowers (In re Nicole Gas Prod.), 916 F.3d 566, 574 (6th Cir. 2019); In re

ACF Basin Water Litig., 467 F. Supp. 3d 1323, 1331 (N.D. Ga. 2020) (finding statute

“is ambiguous, as it is susceptible to more than one reasonable interpretation”).

Likewise, as this Court has recognized, “[a] contractual provision is ambiguous if it

is reasonably susceptible of more than one meaning.” Madison Cty. v. Evanston Ins.

Co., 340 F. Supp. 3d 1232, 1271 (N.D. Ala. 2018) (internal citation and quotations

omitted). Further, it is axiomatic that ambiguous terms in contracts – which is the

relevant context against which to assess congressional conditioning of funds – are

15
typically construed against the drafter. See Ohio Cas. Ins. Co. v. Holcim (US), Inc.,

744 F. Supp. 2d 1251, 1260 (S.D. Ala. 2010) (Under Alabama law, where a contract

is the not the product of arms-length negotiations between parties represented by

counsel, “any ambiguity must be construed against the drafter of the contract.”).

Moreover, adopting an interpretive rule that “indirectly” does not include

fungibility itself opens up further ambiguity: what precisely marks the boundaries of

“fungibility”? If a State allots a portion of ARPA funds to a program that previously

derived most of its funding from tax revenues, and those gross revenues have

dropped because of state tax cuts, is the tax cut still protected, or is this a forbidden

use of ARPA funds for tax cuts? And if allotting ARPA funds to areas where

shortfalls in part derive from tax cuts is permissible, then does the Tax Mandate do

anything other than forbid distribution of ARPA funds as tax refunds?

From the States’ and amici’s viewpoint, what does the addition of “indirectly”

encompass if not fungibility, an economics and accounting principle as old as money

itself. But, if the Defendants contend that “indirectly” does not include fungibility,

then what does “indirectly” mean? The ambiguity would be undeniable. Truly, a

State “is unaware of the conditions or is unable to ascertain what is expected of it.”

Pennhurst, 451 U.S. at 17. An ambiguous condition violates the conditioning

doctrine, as the Supreme Court and the Eleventh Circuit have recognized.

16
In either event, regardless of which path Defendants choose to take, the Tax

Mandate is invalid as either (1) coercion and compulsion destroying the States’

sovereign right to decide their own tax policy in violation of the anticommandeering

doctrine, or (2) an impermissibly ambiguous rule in violation of the conditioning

doctrine. In either event, the Tax Mandate is unconstitutional.

CONCLUSION

To be sure, Congress enjoys a wide lane to spend and effectuate policy for the

National Government – and even to set certain limited conditions on the States’

acceptance of funds. But here, Congress went too far. For these reasons, and others

outlined by the States in their Motion [Doc. # 21] and Complaint [Doc. # 1], amici

ACLJ and Seventy-Eight (78) Members of Congress urge this Court to grant the

States’ motion and enjoin enforcement of ARPA’s Tax Mandate.

April 30, 2021. Respectfully submitted,

s/ Michael L. Jackson
MICHAEL L. JACKSON* JAY ALAN SEKULOW**
Wallace, Jordan, Ratliff & Brandt, LLC Counsel of Record
P.O. Box 530910 STUART J. ROTH**
Birmingham, AL 35253 ANDREW J. EKONOMOU**
Telephone: (205) 870-0555 JORDAN SEKULOW**
Facsimile: (205) 871-7534 BENJAMIN P. SISNEY**
Email: mjackson@wallacejordan.com AMERICAN CENTER FOR LAW & JUSTICE
Local Counsel for Amici Curiae 201 Maryland Avenue, NE
Washington, DC 20002
Tel.: 202-546-8890
Email: sekulow@aclj.org
bsisney@aclj.org
Counsel for Amici Curiae

17
*Admitted to practice before this Court
** Not admitted to practice before this Court

18
CERTIFICATE OF SERVICE

I hereby certify that on this 30th day of April, 2021, the foregoing document

was electronically transmitted to the Clerk of Court using the ECF System for filing

and was transmitted to those individuals receiving Notice of Electronic Filings in

this matter.

/s/ Michael L. Jackson
MICHAEL L. JACKSON
Wallace, Jordan, Ratliff & Brandt, LLC
P.O. Box 530910
Birmingham, AL 35253
Telephone: (205) 870-0555
Facsimile: (205) 871-7534
Email: mjackson@wallacejordan.com
Local Counsel for Amici Curiae

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