Plaintiffs' Motion for Summary Judgment — Commonwealth of Kentucky v. Yellen (E.D. Ky., Doc. 25)
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Plaintiffs' Motion for Summary Judgment, filed June 23, 2021 as Doc. 25 in Commonwealth of Kentucky and State of Tennessee v. Janet Yellen, et al., Civil Action No. 3:21-cv-0017, U.S. District Court, Eastern District of Kentucky. The Plaintiffs, through Attorney General Daniel Cameron and Attorney General and Reporter Herbert H. Slatery III, move for summary judgment under Federal Rule of Civil Procedure 56 as to all of their claims. The brief challenges a provision of the American Rescue Plan Act of 2021 that it calls the Tax Mandate, 42 U.S.C. § 802(c)(2)(A), arguing standing, the Spending Clause, the anticommandeering doctrine and a permanent injunction. The conclusion asks the Court to enter a judgment declaring the Tax Mandate unconstitutional and enjoining the Defendants from enforcing it against the Plaintiff States.
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“Plaintiffs' Motion for Summary Judgment — Commonwealth of Kentucky v. Yellen (E.D. Ky., Doc. 25).”
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION AT FRANKFORT
Electronically filed
COMMONWEALTH OF KENTUCKY
and
STATE OF TENNESSEE
Plaintiffs
v. Hon. Gregory F. Van Tatenhove
Civil Action No. 3:21-cv-0017
JANET YELLEN, in her official ca-
pacity as Secretary of the Treasury, et
al.,
Defendants
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT
Plaintiffs, the Commonwealth of Kentucky and the State of Tennessee, by and
through Attorney General Daniel Cameron and Attorney General and Reporter Her-
bert H. Slatery III, move for summary judgment under Federal Rule of Civil Proce-
dure 56 as to all of their claims. There is no genuine dispute as to any material fact,
and the Plaintiffs are entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................ ii
TABLE OF AUTHORITIES ..................................................................................... iii
INTRODUCTION ........................................................................................................ 1
BACKGROUND ........................................................................................................... 2
ARGUMENT ............................................................................................................... 10
I. The Plaintiff States Have Standing to Challenge the Tax
Mandate. ..................................................................................................... 10
A. The Tax Mandate intrudes on state taxing authority...................... 10
B. The Tax Mandate imposes administrative burdens. ........................ 16
II. The Tax Mandate Violates the Spending Clause. ............................. 19
A. The Tax Mandate is unconstitutionally ambiguous. ........................ 19
B. The Tax Mandate is not reasonably related to the federal
interest in passing the American Rescue Plan Act. ......................... 28
C. The Tax Mandate is unconstitutionally coercive. ............................ 31
III. The Tax Mandate violates the anticommandeering
doctrine. ..................................................................................................... 34
IV. The Court should permanently enjoin the Tax Mandate. ............... 38
CONCLUSION ........................................................................................................... 39
ii
TABLE OF AUTHORITIES
Cases
Abbott v. Perez,
138 S. Ct. 2305 (2018) .............................................................................................. 38
Alaska v. U.S. Dep’t of Transp.,
868 F.2d 441 (D.C. Cir. 1989) .................................................................................. 14
Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez,
458 U.S. 592 (1982) .................................................................................................. 13
Ariz. State Legislature v. Ariz. Indep. Redistricting Comm’n,
576 U.S. 787 (2015) ...................................................................................... 14, 15, 16
Arizona v. Yellen,
No. 2:21-cv-514 (D. Ariz.) ........................................................................................... 6
Ark Encounter, LLC v. Parkinson,
152 F. Supp. 3d 880 (E.D. Ky. 2016) ........................................................... 20, 21, 30
Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy,
548 U.S. 291 (2006) ...................................................................................... 19, 22, 23
Armstrong v. Exceptional Child Ctr., Inc.,
575 U.S. 320 (2015) .................................................................................................. 27
Assoc. of Private Sector Colls. & Univs. v. Duncan,
681 F.3d 427 (D.C. Cir. 2012) .................................................................................. 18
Barnes v. E-Sys., Inc. Grp. Hosp. Med. & Surgical Ins. Plan,
501 U.S. 1301 (1991) (Scalia, J., in chambers).................................................. 11, 16
Bennett v. Ky. Dep’t of Educ.,
470 U.S. 656 (1985) .................................................................................................. 28
Carpenters Indus. Council v. Zinke,
854 F.3d 1 (D.C. Cir. 2017) ...................................................................................... 17
City of Chicago v. Fulton,
141 S. Ct. 585 (2021) ................................................................................................ 21
Coal. to Defend Affirmative Action v. Granholm,
473 F.3d 237 (6th Cir. 2006) .................................................................................... 39
iii
Conn. Nat. Bank v. Germain,
503 U.S. 249 (1992) .................................................................................................. 20
Coyle v. Smith,
221 U.S. 559 (1911) ............................................................................................ 37, 38
Cutter v. Wilkinson,
423 F.3d 579 (6th Cir. 2005) .................................................................................... 28
Czyzewski v. Jevic Holding Corp.,
137 S. Ct. 973 (2017) ................................................................................................ 17
Danvers Motor Co. v. Ford Motor Co.,
432 F.3d 286 (3d Cir. 2005) ...................................................................................... 17
Dep’t of Com. v. New York,
139 S. Ct. 2551 (2019) .................................................................................. 10, 13, 17
Dep’t of Revenue v. ACF Indus., Inc.,
510 U.S. 332 (1994) .................................................................................................. 35
eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006) .................................................................................................. 38
Ex parte Young,
209 U.S. 123 (1908) .................................................................................................. 27
F.D.I.C. v. Meyer,
510 U.S. 471 (1994) .................................................................................................. 39
Forum for Acad. & Institutional Rights, Inc. v. Rumsfeld,
291 F. Supp. 2d 269 (D.N.J. 2003) ........................................................................... 15
Lane Cnty. v. Oregon,
74 U.S. (7 Wall.) 71 (1868) ..................................................................... 11, 26, 35, 38
Lujan v. Defs. of Wildlife,
504 U.S. 555 (1992) .................................................................................................. 10
M’Culloch v. Maryland,
17 U.S. (4 Wheat.) 316 (1819) .................................................................................. 35
iv
Maine v. Taylor,
477 U.S. 131 (1986) .................................................................................................. 13
Martin-Marietta Corp. v. Bendix Corp.,
690 F.2d 558 (6th Cir. 1982) .................................................................................... 39
Maryland v. King,
567 U.S. 1301 (2012) (Roberts, C.J., in chambers) ................................................. 38
Massachusetts v. E.P.A.,
549 U.S. 497 (2007) .................................................................................................. 10
Matter of Dunn,
988 F.2d 45 (7th Cir. 1993) ...................................................................................... 14
MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118 (2007) .................................................................................................. 16
Missouri v. Yellen,
No. 4:21-cv-376 (E.D. Mo.) ......................................................................................... 6
Murphy v. Nat’l Collegiate Athletic Ass’n,
138 S. Ct. 1461 (2018) ........................................................................................ 35, 36
N.Y. Civil Liberties Union v. Grandeau,
528 F.3d 122 (2d Cir. 2008)...................................................................................... 18
Nat’l Fed'n of Ind. Bus. v. Sebelius,
567 U.S. 519 (2012) .......................................................................................... passim
New Jersey v. E.P.A.,
989 F.3d 1038 (D.C. Cir. 2021) ................................................................................ 18
New York v. United States,
505 U.S. 144 (1992) ............................................................................................ 29, 35
Ohio v. Yellen,
--- F. Supp. 3d ---, 2021 WL 1903908 (S.D. Ohio May 12, 2021) ............................ 26
Ohio v. Yellen,
No. 1:21-cv-181 (S.D. Ohio) .................................................................................. 6, 23
Ohio ex rel. Celebrezze v. U.S. Dep’t of Transp.,
766 F.2d 228 (6th Cir. 1985) .................................................................................... 13
v
Pennhurst State Sch. & Hosp. v. Halderman,
451 U.S. 1 (1981) ................................................................................................ 19, 24
Printz v. United States,
521 U.S. 898 (1997) .................................................................................................. 35
Rumsfeld v. Forum for Acad. & Institutional Rights, Inc.,
547 U.S. 47 (2006) .............................................................................................. 10, 16
Sabri v. United States,
541 U.S. 600 (2004) .................................................................................................. 34
Saenz v. Roe,
526 U.S. 489 (1999) .................................................................................................... 1
Sch. Dist. of Pontiac v. Sec’y of U.S. Dep’t of Educ.,
584 F.3d 253 (6th Cir. 2009) (en banc) ............................................................ passim
South Dakota v. Dole,
483 U.S. 203 (1987) ............................................................................................ 28, 31
Susan B. Anthony List v. Driehaus,
573 U.S. 149 (2014) ............................................................................................ 10, 13
Tabernacle Baptist Church, Inc. of Nicholasville v. Beshear,
459 F. Supp. 3d 847 (E.D. Ky. 2020) ......................................................................... 1
Tex. Off. of Pub. Util. Couns. v. F.C.C.,
183 F.3d 393 (5th Cir. 1999) .................................................................................... 14
Texas v. United States,
787 F.3d 733 (5th Cir. 2015) .............................................................................. 13, 16
Texas v. United States,
809 F.3d 134 (5th Cir. 2015) ........................................................................ 13, 15, 17
Va. Dep’t of Educ. v. Riley,
106 F.3d 559 (4th Cir. 1997) (en banc) .............................................................. 27, 28
Wallace v. ConAgra Foods, Inc.,
747 F.3d 1025 (8th Cir. 2014) .................................................................................. 17
West Virginia v. U.S. Dep’t of Treasury,
No. 7:21-cv-465 (N.D. Ala.) ............................................................................ 6, 21, 23
vi
Wyoming ex rel. Crank v. United States,
539 F.3d 1236 (10th Cir. 2008) ................................................................................ 13
Yates v. United States,
574 U.S. 528 (2015) .................................................................................................. 22
Statutes and Constitutional Provisions
2021 Ky. Acts ch. 171..................................................................................................... 8
2021 Ky. Acts ch. 194..................................................................................................... 8
2021 Ky. Acts ch. 195..................................................................................................... 8
2021 Ky. Acts ch. 196............................................................................................... 8, 32
2021 Ky. Acts ch. 203................................................................................................. 8, 9
42 U.S.C. § 802(b)(3) ...................................................................................................... 3
42 U.S.C. § 802(c)(1) ...................................................................................... 4, 8, 29, 30
42 U.S.C. § 802(c)(1)(C) ......................................................................................... 23, 24
42 U.S.C. § 802(c)(2)(A) ....................................................................................... passim
42 U.S.C. § 802(c)(2)(B) ................................................................................................. 4
42 U.S.C. § 802(d)(1) ...................................................................................................... 8
American Rescue Plan Act of 2021, Pub. L. No. 117-2 ................................. 2, 3, 30, 36
Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, 131 Stat. 2054 ......................... 37
U.S. Const. art. I, § 8, cl. 1........................................................................................... 27
Other Authorities
The Federalist No. 45 (J. Madison) ......................................................................... 1, 36
Regulations
31 C.F.R. § 35.3 ........................................................................................................ 7, 24
vii
31 C.F.R. § 35.8 .............................................................................................................. 6
31 C.F.R. § 35.8(b).................................................................................................... 7, 24
31 C.F.R. § 35.8(b)(4) ..................................................................................................... 7
31 C.F.R. § 35.10 ............................................................................................................ 6
31 C.F.R. Part 35 ........................................................................................................... 6
86 Fed. Reg. 26,786 (May 17, 2021) ........................................................................ 6, 37
viii
INTRODUCTION
“If the federal government is to have collectors of revenue, the State
governments will have theirs also.”
The Federalist No. 45 (J. Madison).
America is an admittedly unique Nation. Not content to divide power between
the branches of a single government, the compromise of America divided power be-
tween governments themselves—“one state and one federal, each protected from in-
cursion by the other.” Saenz v. Roe, 526 U.S. 489, 504 n.17 (1999) (citation omitted).
That compromise left the federal government with supreme but limited authority.
And it reserved for the States “numerous and indefinite” powers that “extend to all
the objects which, in the ordinary course of affairs, concern the lives, liberties, and
properties of the people.” The Federalist No. 45 (J. Madison). Preserving the bound-
aries between these two governments makes this Nation what it is.
In a single sentence, the American Rescue Plan Act of 2021 threatens to undo
this balance. Covid-19 has “[swept] the world, ravage[d] our economy and
threaten[ed] our health.” Tabernacle Baptist Church, Inc. of Nicholasville v. Beshear,
459 F. Supp. 3d 847, 850 (E.D. Ky. 2020). It is a crisis like no other, and one that
Congress has spent nearly $6 trillion of taxpayer money to fight. Yet Congress’s latest
attempt at providing Covid-19 relief goes well beyond just spending money. The Res-
cue Plan, which took effect in early March of this year, offers the States nearly $200
billion in financial aid that they need. But—no doubt aware of that need—Congress
also attached an unprecedented set of strings to the money. It conditioned each
1
State’s ability to receive that money on an agreement that it will not provide its citi-
zens with tax relief for the next several years. Although disguised as a “condition” on
how a State “uses” its federal funds, the Tax Mandate is no such thing. It is a federal
attempt to dictate state tax policies, regardless of how the State ultimately spends its
Rescue Plan funds.
The Tax Mandate is unconstitutional. It violates the limits on Congress’s
power to spend under Article I, and it violates the Constitution’s prohibition against
commandeering. The Court should declare it void and enjoin the Defendants from
enforcing it.
BACKGROUND
The American Rescue Plan Act
President Biden signed the American Rescue Plan Act of 2021, Pub. L. No. 117-
2 into law on March 11, 2021.1 The ostensible purpose of the Rescue Plan is in its
name—to rescue those harmed by the Covid-19 pandemic. This was Congress’s sixth
major relief effort since the pandemic began in early 2020. All told, the federal outlay
for Covid-19 is nearing $6 trillion. And the Rescue Plan accounts for almost $2 trillion
of that total. [See R. 23-1, ¶ 23].
The Rescue Plan works in several ways. Part of the financial assistance went
directly to individuals through direct payments (up to $1,400 per person). See id.
§ 9601. The Rescue Plan also provides financial relief through tax credits and reduc-
tions that lower the federal tax burden an individual or taxpayer might ordinarily
1 The Rescue Plan is available at https://www.congress.gov/bill/117th-congress/house-
bill/1319/text (last visited June 23, 2021).
2
owe. The Rescue Plan, for example, temporarily increases the child tax credit and
makes it fully refundable for 2021. See id. § 9611. The Rescue Plan also significantly
increases the maximum tax credit for dependent care. See id. § 9631. In this way, the
Rescue Plan acknowledges what is obvious: tax decreases and direct subsidies are
two sides of the same coin for providing relief to struggling taxpayers.
In addition to the assistance provided directly to taxpayers, the Rescue Plan
appropriates $195.3 billion in aid for the States (and the District of Columbia). 42
U.S.C. § 802(b)(3). From that $195.3 billion, the Secretary of the Treasury must dis-
tribute $25.5 billion “equally among each of the 50 States and the District of Colum-
bia” and a lesser additional amount specifically “to the District of Columbia.” Id.
“[T]he remainder of the amount” is then distributed “to each of the 50 States and the
District of Columbia” according to a formula that averages each State’s unemploy-
ment rate during the last quarter of 2020. Id.
The Rescue Plan places four general conditions on how the funds must be
spent. The States must use the funds:
(A) to respond to the public health emergency with respect to [Covid-19]
or its negative economic impacts, including assistance to households,
small businesses, and nonprofits, or aid to impacted industries such as
tourism, travel, and hospitality;
(B) to respond to workers performing essential work during the [Covid-
19] public health emergency by providing premium pay to eligible work-
ers of the State . . . that are performing such essential work, or by
providing grants to eligible employers that have eligible workers who
perform essential work;
(C) for the provision of government services to the extent of the reduction
in revenue of such State . . . due to the [Covid-19] public health emer-
gency relative to revenues collected in the most recent full fiscal year of
the State . . . ; or
3
(D) to make necessary investments in water, sewer, or broadband infra-
structure.
Id. § 802(c)(1). On top of that, the Rescue Plan prohibits the States from using funds
“for deposit into any pension fund.” Id. § 802(c)(2)(B).
The Tax Mandate
Though Congress has passed multiple Covid-19 relief packages over the past
year, the Rescue Plan is unlike any that preceded it. That’s because Congress at-
tached a unique restriction that purports to limit the States’ ability to lower taxes on
their own residents.
Under the Tax Mandate, States accepting relief funds are prohibited from us-
ing the funds to “directly or indirectly offset a reduction in [their] net tax revenue” if
that tax reduction resulted from “a change in law, regulation, or administrative in-
terpretation.” 42 U.S.C. § 802(c)(2)(A). The full provision reads as follows:
A State or territory shall not use the funds provided under this section
or transferred pursuant to section 803(c)(4) to either directly or indi-
rectly offset a reduction in the net tax revenue of such State or territory
resulting from a change in law, regulation, or administrative interpre-
tation during the covered period that reduces any tax (by providing for
a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or
delays the imposition of any tax or tax increase.
Id.
So what does it mean to “use the funds” to “directly or indirectly offset a reduc-
tion in the net tax revenue of” a State? The law provides little clarification. It does
not explain how broadly the word “indirectly” must be read. Nor does it provide any
clarification as to how the States must measure “a reduction in net tax revenue.”
4
Although potentially sweeping in scope, the Tax Mandate provides few clues to what
it actually means.
That’s why several States sought clarification from Treasury Secretary Yellen
soon after President Biden signed the Rescue Plan into law. In a letter sent on March
16, 2021, a coalition of 21 States, including Kentucky, asked Secretary Yellen to “con-
firm that the American Rescue Plan Act does not prohibit States from generally
providing tax relief” for matters not directly related to the use of Covid-19 relief funds.
[R. 23-1 at 6]. Secretary Yellen, however, demurred. Although she stated that “the
Act does not ‘deny States the ability to cut taxes in any manner whatsoever,’” she
failed to provide any clarity about the meaning of the Tax Mandate’s prohibition on
using Covid-19 relief funds to “indirectly” offset a reduction in net tax revenue. [R.
23-2 at 1–2]. And in fact, while Secretary Yellen disclaimed the position that the Tax
Mandate “den[ies] States the ability to cut taxes in any manner whatsoever,” she also
stated that the Tax Mandate does require the States to “replac[e] the lost revenue
through other means”—suggesting that the Rescue Plan does in fact prohibit the
States from implementing any tax relief that has the overall effect of reducing a
State’s net revenue. [Id.]. In short, Secretary Yellen’s response only increased the
confusion about the scope of the Tax Mandate, putting the States in an impossible
position. Cf. Nat’l Fed’n of Ind. Bus. v. Sebelius, 567 U.S. 519, 581 (2012) (op. of Rob-
erts, C.J.) (“NFIB”).
5
Litigation and the Interim Rule
After Secretary Yellen failed to provide any clarity about the scope of the Tax
Mandate (or perhaps worse, vaguely suggested that the law stretches as broadly as
feared), several States filed suit. See, e.g., Ohio v. Yellen, No. 1:21-cv-181 (S.D. Ohio
filed Mar. 17, 2021); Arizona v. Yellen, No. 2:21-cv-514 (D. Ariz. filed Mar. 25, 2021);
Missouri v. Yellen, No. 4:21-cv-376 (E.D. Mo. filed Mar. 29, 2021); West Virginia v.
U.S. Dep’t of Treasury, No. 7:21-cv-465 (N.D. Ala. filed Mar. 31, 2021). The Treasury
defendants responded—at least initially—by pushing back against the broadest pos-
sible reading of the Tax Mandate. They insisted that it does not prevent the States
from enacting tax reforms that lower the tax burdens on their citizens, but instead
emphasized that the law prohibits the States from using the federal funds in a par-
ticular way. See, e.g., Ohio v. Yellen, No. 1:21-cv-181, Dkt. 29 at 28 (S.D. Ohio) (argu-
ing that the Tax Mandate only prevents States from “employing federal funds to fi-
nance state tax cuts”); West Virginia v. U.S. Dep’t of Treasury, No. 7:21-cv-465, Dkt.
54 at 26 (N.D. Ala) (same). What exactly that looks like, however, remains unclear.
Soon after the briefing started in those cases, Treasury published its Interim
Final Rule detailing how it interprets and intends to apply the Tax Mandate. See
Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 (May 17,
2021) (codified at 31 C.F.R. Part 35). The gist of the Interim Rule is as follows: If a
State accepts Rescue Plan funds, it must annually calculate the value of any changes
in State law that might reduce the State’s tax revenue. 31 C.F.R. §§ 35.8, 35.10. If
the net loss in revenue is greater than one percent of the State’s revenue during the
6
last fiscal year before the pandemic (adjusted for inflation), the State must identify if
and how the State has offset its revenue in other ways—either through changes in
State law that increase revenue or through spending cuts elsewhere in the budget.
Id. §§ 35.3, 35.8(b). That itself involves a complicated process, including requiring the
States to decipher whether a spending cut occurred in the same “Departments, agen-
cies, or authorities in which the State” is (or is not) using funds. Id. § 35.8(b)(4)(ii).
The long and short of the Interim Rule is that, subject to a few confusing limits,
Treasury is now interpreting the Tax Mandate precisely as feared: as a broad ban on
the States lowering their taxes at all.
Of course, the Interim Rule is not the law itself. And this suit is about the
statute that Congress enacted, not the executive branch’s attempt to clean it up.
Moreover, federal agencies are able to change their interpretations of federal stat-
utes, so the States have no way of knowing whether the Treasury Department will
change its view of what the Tax Mandate requires in future years.
Thus, even after the Interim Rule, the States are still stuck between a rock and
a hard place. The Tax Mandate imposes an ambiguous and potentially sweeping con-
dition on much-needed relief funds. Accepting the funds and the accompanying con-
ditions will limit the range of permissible tax policies the States may enact in the
coming years, likely prohibiting them from enacting tax relief that would benefit their
citizens. But declining the funds to avoid that outcome would have an immediate
harmful effect on the States’ fiscal outlooks and the people within their borders.
7
Given that reality, declining the funds is not a realistic option. Kentucky has
already submitted its certification to receive Rescue Plan funds. [Exhibit A, Kentucky
Submission Confirmation]. And Tennessee intends to submit the required certifica-
tion to receive its funds in the coming weeks, see 42 U.S.C. § 802(d)(1), without con-
ceding that the Tax Mandate is a valid funding condition and expressly reserving its
right to challenge that condition. [Exhibit B, Niknejad Decl., ¶ 5].
Kentucky and Tennessee
Kentucky’s allotment under the Rescue Plan is about $2.1 billion. Before re-
ceiving the funds, Kentucky’s General Assembly earmarked more than $1 billion of
that total to address its unemployment crisis, to invest in infrastructure improve-
ments, and to mitigate against other effects of Covid-19. See 2021 Ky. Acts ch. 171,
§ 3; 2021 Ky. Acts ch. 194, §§ 11, 15, 16, 17; 2021 Ky. Acts ch. 195, § 1; 2021 Ky. Acts
ch. 196, §§ 4, 6. Each of these uses falls squarely within the text and purpose of the
Rescue Plan. See 42 U.S.C. § 802(c)(1).
Yet because Kentucky has also made efforts to provide tax relief for reasons
unrelated to Covid-19, it faces the looming possibility that the Treasury Department
could seek recoupment of the funds that Kentucky spends. Kentucky, for example,
recently enacted a law aimed at revitalizing a predominantly minority area of Louis-
ville hurt by decades of divestment. See 2021 Ky. Acts ch. 203. The law creates a tax
increment financing district that provides incentives for new development and gives
current homeowners a state tax credit to offset any increase in property taxes for the
next two decades. Id. §§ 5, 8. These policy decisions by the State to invest in and
8
revitalize a predominantly minority community in Kentucky’s largest city have noth-
ing to do with Covid-19 relief and are a core part of its sovereignty. But these policy
decisions could also cause a net reduction in tax revenue, subjecting Kentucky to the
Tax Mandate.
Tennessee faces similar difficulties. The State has a long history of cutting
taxes and spending to spur economic growth. [Exhibit B, Niknejad Decl., ¶ 6]. In the
last decade, Tennessee has enacted dozens of tax cuts, the fiscal impact of which likely
exceeds $800 million in budgeted revenue reductions. [Id.]. Those tax-relief efforts
include reducing the sales tax rate on groceries, repealing the inheritance tax, and
removing 15 different categories of licensed professions from burdensome profes-
sional privilege taxes. [Id., ¶¶ 7–8]. Tennessee has also considered other kinds of tax
relief—such as a complete phase out of the professional privilege tax—but the Covid-
19 pandemic delayed action on those proposals. [Id. ¶ 9].
The Tax Mandate threatens to stall Tennessee’s efforts even longer. Tennessee
is eligible to receive about $3.725 billion in Rescue Plan funds. [Id., ¶ 5]. But because
of the ambiguous and potentially sweeping reach of the Tax Mandate, the risk of an
enforcement action after spending Rescue Plan funds means the State must neces-
sarily defer, slow, or reconsider some of its taxing decisions for several years. [Id.,
¶ 14]. Put simply, the Tax Mandate will limit the State’s ability to enact desirable tax
cuts that are necessary to ensure long-term economic growth, [id., ¶ 15], even when
those tax cuts have nothing to do with Covid-19 or how Tennessee otherwise spent
its Rescue Plan funds.
9
ARGUMENT
I. The Plaintiff States Have Standing to Challenge the Tax Mandate.
To establish Article III standing, a plaintiff must have an injury in fact that is
traceable to the challenged action of the defendants and redressable by a favorable
decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). Only one plaintiff
must have standing for a court to reach the merits. Rumsfeld v. Forum for Acad. &
Institutional Rights, Inc., 547 U.S. 47, 52 n.2 (2006). Future injuries are sufficient for
Article III standing “if the threatened injury is certainly impending, or there is a
substantial risk that the harm will occur.” Dep’t of Com. v. New York, 139 S. Ct. 2551,
2565 (2019) (quoting Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014)).
And because Kentucky and Tennessee are not “private individual[s]” but rather “sov-
ereign State[s]” asserting their sovereign interests, they are “entitled to special solic-
itude in [the Court’s] standing analysis.” Massachusetts v. E.P.A., 549 U.S. 497, 518–
20 (2007).
Kentucky and Tennessee have standing to challenge the Tax Mandate under
at least two theories. First, the Tax Mandate intrudes on their sovereign authority to
set tax policy. Second, the States must spend resources to comply with the Tax Man-
date. Both injuries are traceable to the Defendants’ enforcement of the Tax Mandate
and can be redressed by declaring the Tax Mandate unconstitutional and enjoining
its enforcement.
A. The Tax Mandate intrudes on state taxing authority.
The sovereign authority to set tax policy “is indispensable” to a State’s very
“existence.” Lane Cnty. v. Oregon, 74 U.S. (7 Wall.) 71, 76 (1868). “It is an essential
10
function of government,” and “[t]here is nothing in the Constitution which contem-
plates or authorizes any direct abridgment of this power by national legislation.” Id.
at 76–77. Unsurprisingly, any “unlawful interference with state tax collection” irrep-
arably harms a State, not merely by creating the risk of non-collection, but also by
interfering “with the State’s orderly management of its fiscal affairs.” Barnes v. E-
Sys., Inc. Grp. Hosp. Med. & Surgical Ins. Plan, 501 U.S. 1301, 1304 (1991) (Scalia,
J., in chambers). In short, States are entitled to make taxing decisions based on their
own views of sound public policy and without being forced to consider whether their
policy choices align with the views of federal policymakers.
The Tax Mandate narrows the range of permissible tax policies States may
enact, which is an injury to their sovereignty on its own. It intrudes on Kentucky’s
and Tennessee’s constitutional taxing powers by imposing a new federal constraint
on their taxing decisions. No longer may the States set taxes based solely on their
own views of sound policy. Instead, they must now consider whether their desired
polices run afoul of an unconstitutionally ambiguous, irrelevant, coercive, and com-
mandeering federal funding condition.
Moreover, the Tax Mandate will likely prevent Tennessee from pursuing some
of its preferred tax policies in the coming years, and it will in all events introduce
needless complexity, delay, and confusion into the State’s legislative process. Tennes-
see has a long history of pursuing pro-growth tax cuts and corresponding decreases
in spending. Since 2011, the State has enacted dozens of tax cuts that account for an
estimated $800 million or more in budgeted revenue reductions. [Exhibit B, Niknejad
11
Decl., ¶¶ 6–8]. Just last year, Tennessee’s Governor proposed additional tax cuts, in-
cluding a complete phase out of the State’s professional privilege tax. [Id., ¶ 9]. Con-
sideration of that proposal was deferred because of the pandemic, but there remains
interest in pursuing it in the coming years. [Id.]. And Tennessee enacted numerous
tax cuts in its most recent legislative session, including a sales tax holiday for the
food and restaurant industry that is estimated to reduce state tax revenues by about
$50 million. [Id., ¶¶ 10–11].
The State has every reason to expect that additional tax cuts will be needed in
the next few years. Indeed, Tennessee has determined that, “[t]o maintain its positive
economic trajectory coming out of the pandemic, Tennessee will have to continue its
longstanding track record of reducing taxes and spending while also using [Rescue
Plan] Funds to offset one-time expenses.” [Id., ¶ 13].
But now, because of the Tax Mandate, Tennessee “must necessarily defer, slow,
or reconsider some of its taxing decisions” in the coming years. [Id., ¶ 14]. Although
the State cannot predict with certainty the precise nature of the tax cuts its leaders
will likely pursue, one thing is certain: Instead of making those decisions based on its
leaders’ views of sound policy, Tennessee must now consider whether its desired pol-
icies will run afoul of the federal Tax Mandate. [Id., ¶¶ 14–17]. As the Governor’s
Policy Director explains, the State’s “deliberative process” regarding tax cut and
spending decisions “will now need to be shaped around an analysis of the permissi-
bility or impermissibility of any proposed change in tax policy under the Tax Man-
date,” rather than simply deciding what is best for Tennessee. [Id., ¶ 15]. Moreover,
12
Tennessee’s desire to continue its history of pro-growth tax cuts, [id., ¶¶ 6–13], com-
bined with the Tax Mandate’s ambiguous and potentially sweeping scope, see pp. 19–
28, infra, together create at least “a substantial risk” that the State will be forced to
forego or delay certain tax policies it would otherwise pursue immediately. Dep’t of
Com., 139 S. Ct. at 2565 (quoting Susan B. Anthony List, 573 U.S. at 158).
This kind of intrusion on a State’s lawmaking authority is an Article III injury.
Texas v. United States, 787 F.3d 733 (5th Cir. 2015) (“[B]eing pressured to change
state law constitutes an injury.”); see also Texas v. United States, 809 F.3d 134, 153–
54 (5th Cir. 2015), aff’d, 136 S. Ct. 2271 (2016). Indeed, both the Supreme Court and
the Sixth Circuit have long recognized that interference with a State’s sovereign
“power to create and enforce a legal code, both civil and criminal,” is sufficient for
State standing. Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592,
601 (1982); see also Maine v. Taylor, 477 U.S. 131, 137 (1986) (“[A] State clearly has
a legitimate interest in the continued enforceability of its own statutes.”); Ohio ex rel.
Celebrezze v. U.S. Dep’t of Transp., 766 F.2d 228, 232–33 (6th Cir. 1985) (Ohio had
standing to challenge federal policy statement that state law was preempted). Other
circuits have recognized the same principle. See, e.g., Wyoming ex rel. Crank v. United
States, 539 F.3d 1236, 1241–42 (10th Cir. 2008) (federal preemption of state law was
an Article III injury); Matter of Dunn, 988 F.2d 45, 46–47 (7th Cir. 1993) (same);
Alaska v. U.S. Dep’t of Transp., 868 F.2d 441, 443–44 (D.C. Cir. 1989) (same).
The most recent Supreme Court decision clearly applying this principle is Ari-
zona State Legislature v. Arizona Independent Redistricting Commission, 576 U.S.
13
787 (2015). The Court held that the Arizona Legislature had standing to challenge a
law that intruded on its claimed constitutional authority over redistricting. Id. at
800–01. That was true regardless of whether the Arizona Legislature in fact pos-
sessed the constitutional authority it claimed (a merits question, not a standing one)
and regardless of whether it could identify “some specific legislative act that would
have taken effect but for” the challenged law. Id. (quotation marks omitted). Invasion
of the state legislature’s asserted “constitutionally guarded role” over redistricting
was an Article III injury by itself. Id. at 800; see also id. at 793 (loss of “authority to
draw congressional districts” was an injury); Tex. Off. of Pub. Util. Couns. v. F.C.C.,
183 F.3d 393, 449 (5th Cir. 1999) (States had standing to challenge federal agency’s
assertion of authority over an aspect of telecommunications regulation that the
States believed they controlled).
A similar analysis applies here. To receive their Rescue Plan funds, Kentucky
and Tennessee must surrender at least some of their preexisting authority to set state
tax policy free from federal constraints. Regardless of whether this Court agrees
about the scope of their claimed authority over tax policy (a merits question), losing
their “prerogative” to cut taxes as much as they wish injures the States. See Arizona
State Legislature, 576 U.S. at 800. And that remains true even if the States do not
identify “some specific” tax cut they would have enacted “but for” the Tax Mandate.
See id. (quotation marks omitted). Under Arizona State Legislature, States “asserting
14
institutional injury to their lawmaking authority” have standing. Texas, 809 F.3d at
154.2
That this federal intrusion on State taxing authority takes the form of a fund-
ing condition does not change the analysis. In analogous funding contexts, recipients
of government funds have standing to challenge allegedly unconstitutional conditions
on the receipt of those funds regardless of whether the government has actually with-
held or revoked the funds. See, e.g., Forum for Acad. & Institutional Rights, Inc. v.
Rumsfeld, 291 F. Supp. 2d 269, 286 (D.N.J. 2003) (“The relevant injury for standing
purposes is the government-induced abandonment of the schools’ non-discrimination
policies and not, as the Government urges, an actual loss of funding.”), rev’d and re-
manded, 390 F.3d 219, 228 n.7 (3d Cir. 2004) (agreeing that the plaintiff had standing
“for the reasons [the district court] provided”), rev’d and remanded, 547 U.S. 47, 52
n.2 (2006) (agreeing with lower courts that the plaintiff had standing). The same rea-
soning applies in this Spending Clause context: forcing the States to choose between
abandoning their constitutional taxing powers or risking the loss of federal funds “is
a dilemma that it was the very purpose of the Declaratory Judgment Act to amelio-
rate.” Sch. Dist. of Pontiac v. Sec’y of U.S. Dep’t of Educ., 584 F.3d 253, 278 (6th Cir.
2009) (en banc) (Sutton, J., concurring) (quoting MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118, 129 (2007)). Put differently, a State’s “forced choice” between financial
hardship and foregoing its preferred policies “is itself an injury.” Texas, 787 F.3d at
2 Moreover, Tennessee has shown that the Tax Mandate creates at least a substantial
risk that the State will in fact forego or delay enacting certain tax policies that it
would otherwise pursue immediately. See pp. 11–13, supra.
15
749; cf. Forum for Acad. & Institutional Rights, 547 U.S. at 52–53 & n.2 (plaintiff had
standing to challenge allegedly unconstitutional condition that forced it to choose be-
tween exercising its constitutional rights and losing federal funding).
In sum, the Tax Mandate injures Kentucky and Tennessee by requiring them
to surrender a portion of their lawmaking authority over state taxation to receive
needed relief funds. By requiring the States to attempt compliance with a hopelessly
ambiguous funding condition, the Tax Mandate will disrupt the States’ budgetary
and legislative processes. [Exhibit B, Niknejad Decl., ¶¶ 14, 17 (explaining that the
Tax Mandate will “present an immediate disruption to the State’s normal budget pro-
cess” and “introduce complexity, delay, and confusion into the State’s legislative pro-
cess”)]. Those injuries to the States’ sovereign interests are traceable to the Defend-
ants’ enforcement of the Tax Mandate, and they can be redressed by a judgment de-
claring the Tax Mandate unconstitutional and enjoining the Defendants from enforc-
ing it. Cf. Arizona State Legislature, 576 U.S. at 800. If this Court enters such a judg-
ment, Kentucky and Tennessee will again be free to set taxes based on their own
views of sound policy rather than those of federal policymakers, without disruption
to the “orderly management of [their] fiscal affairs.” Barnes, 501 U.S. at 1304 (Scalia,
J., in chambers). And they will again be free to consider and adopt the full range of
tax policies they are constitutionally entitled to enact.
B. The Tax Mandate imposes administrative burdens.
In addition to the sovereignty injury, the Tax Mandate also inflicts a classic
pocketbook injury on Kentucky and Tennessee. Economic harm is a “paradigmatic”
injury in fact. Danvers Motor Co. v. Ford Motor Co., 432 F.3d 286, 291 (3d Cir. 2005)
16
(Alito, J.). Indeed, a loss of mere pennies is a concrete injury. See, e.g., Czyzewski v.
Jevic Holding Corp., 137 S. Ct. 973, 983 (2017) (“For standing purposes, a loss of even
a small amount of money is ordinarily an injury.” (quotation marks omitted)); Car-
penters Indus. Council v. Zinke, 854 F.3d 1, 5 (D.C. Cir. 2017) (Kavanaugh, J.) (“A
dollar of economic harm is still an injury-in-fact for standing purposes.”); Wallace v.
ConAgra Foods, Inc., 747 F.3d 1025, 1029 (8th Cir. 2014) (holding that a loss of “only
a few pennies” was a “concrete, non-speculative injury”).
States, no less than private parties, may rely on economic injuries to satisfy
the injury-in-fact requirement. For example, in Department of Commerce v. New
York, the Supreme Court held that States had standing to challenge the federal gov-
ernment’s inclusion of a citizenship question on the Census because they had shown
that including the question would cause them to “lose out on federal funds.” 139 S.
Ct. at 2565. And the Fifth Circuit held that Texas had standing to challenge the De-
ferred Action for Parents of Americans program because it would “enable beneficiar-
ies to apply for driver’s licenses,” which would cost the State money. Texas, 809 F.3d
at 152–53.
The Tax Mandate will cause the Plaintiff States concrete financial injury. To
comply with the funding conditions and reporting requirements imposed by the Tax
Mandate, Tennessee must develop and implement additional processes to identify all
tax policy changes that “reduce[] any tax . . . or delay[] the imposition of any tax or
tax increase,” 42 U.S.C. § 802(c)(2)(A), and to attempt to ensure that Rescue Plan
17
funds are not directly or indirectly used to offset a net reduction in tax revenue, [Ex-
hibit C, Eley Decl., ¶¶ 5–6, 8–9]. The State will also have to spend resources compiling
and reporting information about all modifications to the State’s revenue sources dur-
ing the covered period to aid the Treasury Department in its enforcement of the un-
constitutional Tax Mandate. [Id. ¶ 7]. These tasks will necessitate either the reallo-
cation of existing state personnel, to the detriment of other important state functions,
or the hiring of additional staff. [Id. ¶¶ 6, 8].
It is well settled that increased administrative burdens and compliance costs
of this nature constitute an injury in fact sufficient to confer standing. See Sch. Dist.
of Pontiac, 584 F.3d at 261–262 (plurality op.) (school districts had standing because
they had to spend “state and local funds” to comply with challenged federal law); New
Jersey v. E.P.A., 989 F.3d 1038, 1046–47 (D.C. Cir. 2021) (holding that “exacerbated
administrative costs and burdens” were sufficient “to establish standing”); Assoc. of
Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 458 (D.C. Cir. 2012) (plaintiffs
had standing because they would face “greater compliance costs” under challenged
regulations (quotation marks omitted)); N.Y. Civil Liberties Union v. Grandeau, 528
F.3d 122, 131 (2d Cir. 2008) (plaintiff had standing to challenge reporting require-
ments that “greatly increased its administrative burden”). These costs are directly
traceable to the Tax Mandate and will be redressed by a judgment declaring the Tax
Mandate unconstitutional and enjoining its enforcement. The Plaintiff States there-
fore have standing to challenge the Tax Mandate.
18
II. The Tax Mandate Violates the Spending Clause.
A. The Tax Mandate is unconstitutionally ambiguous.
When Congress attaches conditions on spending, it must state those conditions
“unambiguously.” Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291,
296 (2006) (citations omitted). The basic theory is this: “‘Legislation enacted pursuant
to the spending power is much in the nature of a contract,’ and therefore, to be bound
by ‘federally imposed conditions,’ recipients of federal funds must accept them ‘vol-
untarily and knowingly.’” Id. (quoting Pennhurst State Sch. & Hosp. v. Halderman,
451 U.S. 1, 17 (1981) (alterations adopted)). That means Congress must make it clear
that conditions apply, see Pennhurst, 451 U.S. at 17, and it must state those condi-
tions with language that allows the States “to ascertain” what they are, see Arlington,
548 U.S. at 296 (citations omitted).
What makes a condition “unambiguous”? To answer that question, the Court
must consider whether the language would be clear “from the perspective of a state
official who is engaged in the process of deciding whether the State should accept
[the] funds and the obligations that accompany those funds.” Sch. Dist. of Pontiac,
584 F.3d at 271 (plurality op.) (citing Arlington, 548 U.S. at 295). Ordinary principles
of interpretation apply to that inquiry. The Court must “begin with the text” and
“presume that a legislature says in a statute what it means and means in a statute
what it says there.” Arlington, 548 U.S. at 296 (quoting Conn. Nat. Bank v. Germain,
503 U.S. 249, 253–54 (1992)). But if the text allows for more than one plausible inter-
pretation, the spending condition is unconstitutionally ambiguous. See Sch. Dist. of
Pontiac, 584 F.3d at 284–85 (Sutton, J., concurring) (“A State . . . must identify a
19
plausible alternative interpretation of the law consistent with its theory of ambigu-
ity.”).
1. The Tax Mandate suffers from two fatal ambiguities. It is unclear from the
text and structure of the law, first, what it means to “indirectly offset” a loss in tax
revenue, and second, how States should measure a “net reduction in tax revenue” in
the first place. Resolving these questions is critical to know how the Tax Mandate
operates. Yet on both counts, the Tax Mandate leaves the States guessing.
The indirect offset. The Tax Mandate prohibits States from using Rescue Plan
funds to “directly or indirectly offset” a reduction in their net tax revenue. 42 U.S.C.
§ 802(c)(2)(A). The first part of that restriction is straightforward. A State would
likely offset a tax cut directly if it lowered its taxes, made no changes to its budget,
and then deposited its Rescue Plan funds into the state treasury to make up for the
shortfall. But what does it mean for a State to “use” federal funds to “indirectly offset”
a tax cut? The sweeping potential of that language leaves open too many possibilities
to settle on a clear answer.
Start with the broadest reading of “indirectly.” It is plausible to read the Tax
Mandate as prohibiting States from enacting tax relief during the covered period no
matter what the States spend the money on. That’s “[b]ecause money is fungible.” See
Ark Encounter, LLC v. Parkinson, 152 F. Supp. 3d 880, 904 (E.D. Ky. 2016). A dollar
spent here is always a dollar that cannot be spent somewhere else. And so an influx
of additional cash into the State’s treasury will “necessarily free[] up other funds for
other purposes,” providing “[i]ndirect benefits” to virtually every part of a State’s
20
budget. See id. The result of that reasoning here? By prohibiting States from indi-
rectly offsetting net tax reductions, the Tax Mandate may just be an outright ban on
States lowering their taxes regardless of how the States actually spend their federal
funds.
Yet it is far from clear that the Tax Mandate should be read so broadly. One
potential problem with that interpretation is that it may well render the word “use”
superfluous. The Tax Mandate provides that a State “shall not use the funds . . . to
either directly or indirectly offset a reduction in the net tax revenue of such State.”
42 U.S.C. § 802(c)(2)(A) (emphasis added). That language suggests it matters how a
State spends its Rescue Plan funds, not just whether the State cuts taxes. In fact,
that is precisely how Treasury initially interpreted the statute in other litigation. See,
e.g., West Virginia v. U.S. Dep’t of Treasury, No. 7:21-cv-465, Dkt. 54 at 26 (N.D. Ala.)
(“The term ‘use’ connotes ‘volitional’ ‘active employment’ of federal funds.”). But, as
explained above, a broad interpretation that takes into account the fungibility of
money makes a State’s particular “use” of Rescue Plan funds irrelevant. All that mat-
ters is whether a State spends the money, not how it uses it. And so adopting that
broad reading would turn the phrase “shall not use” into surplusage. See City of Chi-
cago v. Fulton, 141 S. Ct. 585, 591 (2021) (“The canon against surplusage is strongest
when an interpretation would render superfluous another part of the same statutory
scheme.”) (quoting Yates v. United States, 574 U.S. 528, 543 (2015) (plurality op.)).
21
Nor can the States find much comfort in a narrower interpretation. What does
it mean to indirectly offset a decrease in revenue if the phrase does not broadly pro-
hibit tax cuts of any kind? Are States limited to reducing revenue that would have
been earmarked for particular services? Are revenue reductions related to a State’s
restricted funds permissible, but revenue reductions from the general fund pro-
scribed? The word “indirectly” gives no hint to the States that may help them decide
whether or how to spend their Rescue Plan funds.
The result? Either the Tax Mandate applies so broadly that—contrary to the
language suggesting otherwise—it does not matter how States use the Rescue Plan
funds because all uses are prohibited if the State cuts taxes. Or the Tax Mandate is
limited in some way that only Treasury can decide as it enforces the law against the
States. Neither construction is clear or unambiguous; neither passes constitutional
muster. And “from the perspective of a state official who is engaged in the process of
deciding whether the State should accept [the] funds,” both leave too many questions
to know with certainty what the Tax Mandate means. See Arlington, 548 U.S. at 296.
Perhaps this is why Secretary Yellen called this “a hard question to answer.” 3
She’s not wrong. And that might explain why Treasury’s litigation position in other
cases seems to contradict its interpretation of the statute in the Interim Rule.4 If
Treasury itself cannot settle on the meaning of this phrase, how is the law clear
3 See Crapo: States Need Maximum Flexibility for COVID Relief Funds, at 2:54–3:29
(Mar. 24, 2021), available at https://www.youtube.com/watch?v=2O2tLSoeP94 (last
visited June 23, 2021).
4 See, e.g., Ohio v. Yellen, 1:21-cv-181, Dkt. 29 at 28 (S.D. Ohio); West Virginia v. U.S.
Dep’t of Treasury, 7:21-cv-465, Dkt. 54 at 26 (N.D. Ala).
22
enough for the States to “decid[e] whether” to “accept [the] funds and the obligations”
that accompany them? See Arlington, 548 U.S. at 296; see also Sch. Dist. of Pontiac,
584 F.3d at 277 (plurality op.) (finding evidence of ambiguity in the fact that the
agency had changed positions on the meaning of the statute). The short answer is
that it’s not.
The reduction in net tax revenue. Even if the phrase “indirectly offset” had a
clear meaning, the phrase “reduction in the net tax revenue” does not. The problem
has several layers but boils down to this: A State can only reduce its tax revenue
relative to a baseline, but the Tax Mandate never says what that starting point is.
And while there are multiple possibilities, picking one would require the States (or
this Court) to simply guess.
One could imagine, for example, that the Tax Mandate prohibits the States
from cutting taxes in any given year relative to the year prior. Presumably, most
States craft budget and revenue bills from the vantage point of their most recent
effort. But there’s some reason to doubt that is what Congress intended. Elsewhere
in the law, the States are permitted to use Rescue Plan funds to make up for losses
in revenue caused by the pandemic. See 42 U.S.C. § 802(c)(1)(C). That provision spec-
ifies that States are to judge their losses in revenue “relative to revenues collected in
the most recent full fiscal year.” Id. No similar provision exists in the Tax Mandate,
suggesting that Congress might have had something different in mind. See
Pennhurst, 451 U.S. at 17–18 (“[I]n those instances where Congress has intended the
23
States to fund certain entitlements as a condition of receiving federal funds, it has
proved capable of saying so explicitly.”).
Treasury’s Interim Rule gives another possible answer. Under the Interim
Rule, States must evaluate revenue losses relative to the last fiscal year that ended
before the pandemic. 31 C.F.R. §§ 35.3, 35.8(b). That arguably makes some sense from
a policy perspective—that was the last year the States collected revenue before the
pandemic might have caused a reduction, and so it avoids a messy debate over
whether relative revenue losses were caused by a change in law or Covid-19. But what
in the statute makes this interpretation unambiguously clear? The question under
the Spending Clause is not whether an agency can come up with a reasonable inter-
pretation of an ambiguous condition. The question is whether that interpretation is
the clear, unambiguous meaning of the law Congress passed. See Sch. Dist. of Pon-
tiac, 584 F.3d at 277 (plurality op.).
Nor is establishing the baseline the only issue. Suppose, for example, that in
Year 1 after accepting Rescue Plan funds, the State increases its tax revenue by $10
million relative to its last pre-pandemic fiscal year, but then in Year 2 decreases its
tax revenue by $5 million relative to that same year. The net effect is an increase in
$5 million, spread out over two years instead of one. Can Treasury nevertheless re-
coup $5 million from the State for having collected too little in Year 2? Because the
Tax Mandate provides no clarity as to how States should understand what amounts
to a “reduction” in tax revenue, it’s plausible that Treasury might answer this ques-
tion just about any way it chooses. And that, ultimately, is the problem. The issue is
24
not whether it makes sense to adopt Treasury’s Interim Rule—it’s whether the stat-
ute unambiguously compels that interpretation. It does not.
Making matters worse, the Tax Mandate says nothing about when the reduc-
tion in net tax revenue must occur for the State to “indirectly offset” it with Rescue
Plan funds. The Tax Mandate covers any reduction in revenue caused by the State
changing its law “during the covered period.” 42 U.S.C. § 802(c)(2)(A). But it does not
limit the effect of those changes—that is, the actual reduction in revenue—to the same
period. So suppose that a State spends all of its Rescue Plan funds during the covered
period and, in the last month, eliminates its income tax for the next fiscal year. Could
an enterprising Treasury Secretary in the spring of 2025 view the State’s decision as
some kind of gamesmanship and initiate a recoupment action against the State for
the revenue loss after the covered period ends? After all, Congress limited the period
in which the Tax Mandate applies to changes in state law, but it did not similarly
limit the period in which to measure revenue reductions, leaving open the possibility
of never-ending oversight for any tax policies enacted during the covered period.
One final point: What should the States make of the fact that tax policies are
often predictive, and those predictions might take time to play out? If a State enacts
tax reform with the goal of keeping revenue neutral, will it be punished for making a
bad prediction? Or what if the State’s prediction is correct, but it takes several years
to materialize? Can Treasury recoup funds from the State because one fiscal year saw
a dip in revenue even though the next three years saw an increase?
25
The ambiguity inherent in the Tax Mandate amplifies what is already a coer-
cive intrusion into State sovereignty. By prohibiting the States from enacting tax pol-
icies that cause an ill-defined effect, Congress is freezing out the States from legislat-
ing in an area that is central to their historical and guaranteed sovereignty. See Lane
Cnty., 74 U.S. at 76–77. The federal government perhaps hopes that the States will
simply idle along for the next four years (or perhaps longer) on tax reform for fear of
losing billions of dollars in federal funding. That fear is itself the constitutional prob-
lem. The States should not be made to guess about the meaning of a law that places
conditions on their receipt of billions of dollars in taxpayer money.
***
Perhaps all this is why a district court in Ohio considering a similar challenge
to the Tax Mandate recently called the ambiguity question “not . . . particularly
close.” Ohio v. Yellen, --- F. Supp. 3d ---, 2021 WL 1903908, at *1 (S.D. Ohio May 12,
2021). Like the Ohio district court, the Plaintiff States here, “[d]espite poring over
this statutory language, . . . cannot fathom what it would mean to ‘indirectly offset a
reduction in the net tax revenue’ of a State, by a ‘change in law . . . that reduces any
tax.” See id. at *12 (second alteration in original). And for that simple reason, the Tax
Mandate is unconstitutional.
2. Nor can Treasury wave away the ambiguities in the Tax Mandate with its
Interim Rule—or any rule for that matter. When Congress imposes conditions on fed-
eral funds, the Spending Clause requires that “Congress spell[] them out clearly in
the text of the law.” Sch. Dist. of Pontiac, 584 F.3d at 284 (Sutton, J., concurring). It
26
is, after all, Congress—not the President—that wields the power of the purse. See
U.S. Const. art. I, § 8, cl. 1. No amount of executive-branch cleanup can avoid this
constitutional requirement. See Va. Dep’t of Educ. v. Riley, 106 F.3d 559, 567 (4th
Cir. 1997) (en banc) (per curiam) (“The Department of Justice argues . . . that in the
event of ambiguity in the IDEA provision at issue, we defer to a reasonable interpre-
tation by the agency, as if we were interpreting a statute which has no implications
for the balance of power between the Federal Government and the States. We do not.”
(footnote omitted)).5
That conclusion follows from the nature of a Spending Clause challenge. In this
context, ambiguity is not a question about whether an agency’s interpretation is per-
missible, or even what the best reading of the statute might be. If a statutory condi-
tion on spending is ambiguous, it is unconstitutional. And an unconstitutional statute
is unenforceable. See Ex parte Young, 209 U.S. 123, 155–56 (1908). So to say that an
agency can cure an ambiguous spending condition is to say that an agency can enforce
an unconstitutional statute. But obviously the executive branch can do no such thing.
See, e.g., Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 326–27 (2015). The
Interim Rule cannot resuscitate the fatally ambiguous Tax Mandate. See Riley, 106
F.3d at 567. Any other approach would make the constitutional limits on the Spend-
ing Clause a dead letter, as the executive branch could write around virtually any
ambiguous statute.
5 In Riley, a majority of the en banc court adopted Judge Luttig’s dissent at the panel
stage, see 106 F.3d at 560–61, and then reproduced that dissent at the end of the en
banc court’s per curiam opinion, id. at 561.
27
B. The Tax Mandate is not reasonably related to the federal inter-
est in passing the American Rescue Plan Act.
Even if the Tax Mandate is not unconstitutionally ambiguous, it violates the
requirement that spending conditions be reasonably “related to a federal interest.”
Cutter v. Wilkinson, 423 F.3d 579, 586 (6th Cir. 2005) (citing South Dakota v. Dole,
483 U.S. 203, 207–08 (1987)). That’s because a ban on using Rescue Plan funds to
“indirectly offset” tax cuts (broadly construed) bears no relation to the purpose of the
law. Instead, the Tax Mandate uses State governments to enact federal policy, re-
gardless of whether the States use their funds to provide Covid-19 relief to their citi-
zens.
When Congress provides funds to the States through its Spending Clause
Power, any conditions on those funds must have a “nexus” to the federal government’s
interest. Id. at 587. In most cases, that requirement is easily met. For example, Con-
gress can condition new funding for education on an agreement that the States will
not reduce the level of education-related funding they already spend. Bennett v. Ky.
Dep’t of Educ., 470 U.S. 656, 659 (1985). Likewise, Congress can condition funding
for the States’ prison systems on a commitment to “allow inmates greater freedom of
religion” because doing so “promote[s] [inmate] rehabilitation.” Cutter, 423 F.3d at
586–87. The key is that the conditions are “related to” the federal government’s over-
all interest that gives rise to the legislation in the first place. See New York v. United
States, 505 U.S. 144, 172 (1992) (explaining that “both the conditions and the pay-
ments embody Congress’ efforts to address the pressing problem of radioactive waste
28
disposal” (emphasis added)). And while this might be a relatively low bar, it is one
that the federal government must meet.
The purpose of the Rescue Plan is to provide relief to the States (and their
citizens) from hardships caused by Covid-19. Yet the Tax Mandate does nothing to
further that interest. It does not require the States to spend their money on Covid-19
relief—that requirement already exists in other parts of the law. See 42 U.S.C.
§ 802(c)(1). Nor does it prohibit the States from spending their money in a way that
runs counter to this federal interest. Instead, the Tax Mandate (broadly interpreted)
proscribes certain State tax policies regardless of how the States spend their money.
Do not be fooled: The Tax Mandate is not a restriction on how States use the
federal funds. Those restrictions are provided elsewhere in the law. Congress spelled
out four areas in which the States can spend their Rescue Plan funds, and each of
those categories contains its own restrictions. See id. The Tax Mandate, on the other
hand, has nothing to do with how States use the federal money or whether they spend
it on Covid-19 relief at all. Rather, all the Tax Mandate does is prevent the States
from lowering their tax revenue without regard to how States disburse the Rescue
Plan funds. For example, under the Tax Mandate a State could take its existing rev-
enue and increase the salaries of its highest-ranking officials, but it cannot provide
tax credits to frontline workers who have put their lives on the line over the past year.
How does that relate to the purpose of the Rescue Plan or the federal interest at
stake? It does not. And that’s because the Tax Mandate is not about how States use
their federal funds, and it is not about ensuring that States provide Covid-19 relief to
29
their citizens. It is about prohibiting States from providing tax relief to their citizens,
even when that relief mirrors what the Rescue Plan itself offers.
That last point is worth highlighting. The Rescue Plan increases several fed-
eral tax credits and makes others fully refundable. See American Rescue Plan Act
§§ 9611, 9631. And yet, the Tax Mandate prevents States from doing the same. What-
ever the minimum nexus between a federal interest and a spending condition might
be, it cannot be that Congress can reasonably forbid the States from doing precisely
what Congress has done in the same law.
Consider the problem this way: What if Congress attached the Tax Mandate—
without changing a single word—to every spending bill going forward? The Tax Man-
date itself does not tell the States how to spend their Rescue Plan funds (that’s taken
care of in other provisions). See 42 U.S.C. § 802(c)(1). So Congress could easily include
a verbatim copy of the Tax Mandate in virtually any future spending bill no matter
its subject. A law providing funding for education could also prohibit the States from
using those funds to “indirectly offset” a reduction in net tax revenue. The same for
funding new highways or investments in opportunity zones. “Because money is fun-
gible,” the effect of the Tax Mandate does not depend on the subject matter of the law.
See Ark Encounter, 152 F. Supp. 3d at 904. All funds could be said to “indirectly offset”
a reduction in state tax revenue, so Congress could use any spending bill to achieve
the same effect of prohibiting the States from lowering their taxes. Such an indis-
criminate prohibition is not reasonably related to the purpose of the Rescue Plan.
30
C. The Tax Mandate is unconstitutionally coercive.
The Tax Mandate also violates the Spending Clause because it is unconstitu-
tionally coercive.
Congress cannot use an offer of federal funds to coerce the States into adopting
the federal government’s preferred policies. Dole, 483 U.S. at 211. Conditions at-
tached to spending grants must encourage, rather than compel, the States to comply.
Id. at 211–12. And while the Supreme Court has not “fix[ed] a line” as to when “fi-
nancial inducement offered by Congress” is “so coercive as to pass the point at which
‘pressure turns into compulsion,’” it has given a few guideposts. NFIB, 567 U.S. at
580, 585 (op. of Roberts, C.J.) (quoting Dole, 483 U.S. at 211).
For example, the threat of withholding a small percentage of highway funding
was not enough to coerce the States into adopting the federal government’s preferred
legal drinking age. Dole, 483 U.S. at 211–12. But a threat to withdraw Medicaid fund-
ing equal to 10 percent of a State’s total budget easily crossed the line. NFIB, 567
U.S. at 582, 585 (op. of Roberts, C.J.) (“It is enough for today that wherever that line
may be, this statute is surely beyond it.”). As the Chief Justice explained, an offer
that significant is “much more than ‘relatively mild encouragement’—it is a gun to
the head.” Id. at 581. No State could reasonably turn down funding when doing so
meant the State must give up such a large portion of its budget. Id. at 582.
The Tax Mandate is similarly coercive for two reasons. First, the “sheer size”
of the Rescue Plan is inherently coercive. Id. at 683 (dissenting op.). For both Ken-
tucky and Tennessee, the aid amounts to roughly one fifth of each State’s General
31
Fund revenue from the previous fiscal year.6 And those funds are needed to repair
the damage caused by Covid-19. Kentucky, for example, has earmarked some of its
Rescue Plan funds to repay the debt it accumulated for extended unemployment ser-
vices during the pandemic. See 2021 Ky. Acts ch. 196, § 6. The Rescue Plan offers
extraordinary sums of money in a time of need, and the federal government knows
that “refusing to accede to the conditions set out in the [law] is not a realistic option”
for the States. See NFIB, 567 U.S. at 681 (dissenting op.). And that point leads to the
second. No one can look past the context here. Congress has offered the States billions
of dollars in relief to rescue Americans from a once-in-a-century pandemic. Even if
the dollar amount alone were not enough to make this offer coercive, the dire circum-
stances “surely” do. See id. at 585 (op. of Roberts, C.J.). “Congress may not simply
‘conscript state [agencies] into the national bureaucratic army,’ and that is what it is
attempting to do with the [Tax Mandate].” Id. (citation omitted) (first alteration in
original).
In considering the coercive nature of this offer, it is important that the Court
not mistake this issue as one in which Congress has attached conditions on how the
States use a particular bucket of funding. For all the reasons explained above, that’s
not what the Tax Mandate is. See pp. 29–30, supra. If the Tax Mandate is broadly
construed, it does not tell States how to use their Rescue Plan funds. Rather, the Tax
6 Compare [Exhibit B, Niknejad Decl., ¶ 5] (about $3.725 billion in Rescue Plan
funds), with Governor Bill Lee, State of Tennessee, The Budget: Fiscal Year 2021-
2022 A-62 (2021), available at https://www.tn.gov/content/dam/tn/finance/budget/doc-
uments/2022BudgetDocumentVol1.pdf (last visited June 23, 2021) (about $18.1 bil-
lion in estimated total state revenues for Fiscal Year 2020-2021).
32
Mandate is an independent obligation of the States to adopt the federal government’s
preferred tax policies, regardless of how the States end up using the Rescue Plan
funds. This point matters when the Court considers how coercive the offer is. Con-
gress has more freedom to impose strict conditions on how States use federal funds
than when telling States that they must adopt independent policies if they accept the
spending grant. See NFIB, 567 U.S. at 580 (op. of Roberts, C.J.). When spending “con-
ditions are properly viewed as a means of pressuring the States to accept policy
changes,” the Court must scrutinize whether Congress is improperly leveraging its
offer against the States. Id.
This point was at the heart of the Spending Clause problem in NFIB. There,
Congress created an expanded Medicaid program that the States could choose to opt
out of. Id. at 581. But if they did, the federal government could withhold all of the
States’ Medicaid funding, not just the new funding offered as part of the expansion.
Id. The government argued that because Medicaid is a single federal program, all
Congress did was tell the States how to use their Medicaid dollars—a much less co-
ercive act than leveraging spending to force the States to adopt new policies. Id. at
582–83. But the Supreme Court did not bite. Even though “Congress styled” the con-
dition as simply a restriction on how Medicaid dollars must be spent, the reality was
that Congress was leveraging a significant part of the States’ budget to force the
States into adopting new policies by expanding Medicaid. See id. (“The Medicaid ex-
pansion, however, accomplishes a shift in kind, not merely degree.”). That Congress
33
styled the conditions as a mere restriction on how funds are used was “irrelevant” to
the analysis. Id. at 582.
The same point applies here. Even though Congress “styled” the Tax Mandate
as a restriction on how the States use their Rescue Plan funds, it is nothing of the
sort. Instead, Congress is wielding an offer of billions of dollars in necessary relief
funds to coerce the States into adopting the preferred tax policies of the federal gov-
ernment. It is unconstitutional for the same reason that the spending conditions were
unconstitutional in NFIB.
Put simply, it is hard to see the Tax Mandate as anything more than “a means
for bringing federal economic might to bear on a State’s own choices of public policy.”
See Sabri v. United States, 541 U.S. 600, 608 (2004). At some point the sovereignty of
the States just cannot be for sale. Yet the States can no more refuse the Rescue Plan
funds than a man dying of thirst could refuse a glass of water. And that’s why States
like Kentucky and Tennessee have either already requested their funds without wait-
ing for the result of this suit or intend to do so in short order. Even with the uncon-
stitutional invasion of the States’ sovereignty attached to the funds, the States are
compelled to accept the offer—and that’s what makes the Tax Mandate an unconsti-
tutional exercise of congressional power.
III. The Tax Mandate violates the anticommandeering doctrine.
The anticommandeering doctrine is “the expression of a fundamental struc-
tural decision incorporated into the Constitution, i.e., the decision to withhold from
Congress the power to issue orders directly to the States.” Murphy v. Nat’l Collegiate
Athletic Ass’n, 138 S. Ct. 1461, 1475 (2018). The Tenth Amendment confirms this
34
principle by expressly providing that “[t]he powers not delegated to the United States
by the Constitution, nor prohibited by it to the States, are reserved to the States re-
spectively, or to the people.”
In its basic form, the anticommandeering doctrine prohibits Congress from “re-
quir[ing] the States to govern according to Congress’ instructions.” New York, 505
U.S. at 162. The doctrine safeguards individual liberty and promotes political ac-
countability by preventing Congress from using the States to implement its preferred
(and possibly unpopular) policies. Printz v. United States, 521 U.S. 898, 920–25, 929–
30 (1997); see also Murphy, 138 S. Ct. at 1477 (“[I]f a State imposes regulations only
because it has been commanded to do so by Congress, responsibility is blurred.”).
Few powers of government are as central to sovereignty as the power to tax—
or just as importantly, the power not to tax. Lane Cnty., 74 U.S. at 76; see also Dep’t
of Revenue v. ACF Indus., Inc., 510 U.S. 332, 345 (1994). The ability to control the
taxing policy of a State is nothing short of the “power to destroy.” M’Culloch v. Mar-
yland, 17 U.S. (4 Wheat.) 316, 431 (1819). That’s why, for example, when James Mad-
ison sought to persuade the States that the Constitution would not make the federal
government too powerful, he used tax collectors as an example to contrast the relative
strength of each government. See The Federalist No. 45 (J. Madison) (“Should it hap-
pen, however, that separate collectors of internal revenue should be appointed under
the federal government, the influence of the whole number would not bear a compar-
ison with that of the multitude of State officers in the opposite scale.”). While Madi-
son’s prediction about the size of the federal government might have proved wrong,
35
his emphasis on revenue collection was right: power over taxation is core to main-
taining a sovereign government.
There is no doubt that Congress is using the Tax Mandate to “blur[]” the lines
of political accountability on an issue of supreme importance. See Murphy, 138 S. Ct.
at 1477. Taxes touch on every part of political life. By prohibiting the States from
offering tax relief to their citizens, Congress is handcuffing local governments and
leaving them unable to respond to electoral pressures that drive a healthy democracy.
Yet when a State’s taxes are too high, it is the State—not Congress—that will face
the voters. And that is a central problem that the anticommandeering doctrine exists
to prevent. See id.
But the Tax Mandate compounds the problem even more. Congress has not
only coerced the States into adopting higher tax policies than they might otherwise
do, it has done so while lowering the federal tax burden it levies. See, e.g., American
Rescue Plan Act § 9611 (temporarily increasing the child tax credit and making it
fully refundable); id. § 9631 (increasing the maximum tax credit for dependent care).
So with one hand, Congress has extended favorable federal tax relief to its constitu-
ents (for which Congress can then take political credit). And with the other hand,
Congress has prohibited the States from providing similar relief (for which Congress
can deflect the blame). This unprecedented commandeering of State power is thus
doubly problematic: it blurs political accountability for unpopular policy choices and
36
leaves the federal government with the political spoils that the States might other-
wise earn. No theory of federalism and State sovereignty could allow for such a re-
sult.7
One final point: It must be the case that there are some features of State sov-
ereignty that the federal government cannot intrude on, regardless of whether Con-
gress does so with its Spending Clause power or not. The federal government, for
example, cannot order a State to relocate its capitol, even if it has attempted to do so
as part of a bargain to admit that State into the union. Coyle v. Smith, 221 U.S. 559,
565–67 (1911). As the Court explained, “[t]he power to locate its own seat of govern-
ment, and to determine when and how it shall be changed from one place to another,
and to appropriate its own public funds for that purpose, are essentially and peculi-
arly state powers.” Id. at 565. Surely the power to tax one’s citizens—or to not tax
them—is of similar importance to state sovereignty. See Lane Cnty., 74 U.S. at 76.
Thus, whether Congress has couched the Tax Mandate as a spending condition or
not, it amounts to an unlawful commandeering in violation of the Tenth Amendment.
7 The federal regulations implementing the Tax Mandate further compound this prob-
lem. “Treasury has determined” that State income tax changes “that simply conform
with recent changes in Federal law” (such as changes in federal taxation under the
Paycheck Protection Program) “are permissible under” the Tax Mandate. Corona-
virus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786, 26,808 (May 17,
2021) (emphasis added). This determination implies that Treasury will permit States
to conform to recent tax policy changes enacted by the current administration but not
“non-recent” tax policy changes enacted by prior administrations that States may now
wish to belatedly conform to, such as changes in the Tax Cuts and Jobs Act of 2017,
Pub. L. No. 115-97, 131 Stat. 2054. This disparate treatment of state decisions to
conform to federal tax law is further evidence that the federal government is com-
mandeering state tax policy through the Tax Mandate in an effort to achieve its de-
sired policy goals.
37
IV. The Court should permanently enjoin the Tax Mandate.
A plaintiff is entitled to a permanent injunction if: (1) the plaintiff has suffered
“an irreparable injury”; (2) “the remedies available at law . . . are inadequate to com-
pensate for that injury;” (3) “a remedy in equity is warranted” in light of “the balance
of hardships between the plaintiff and defendant”; and (4) “the public interest would
not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, L.L.C., 547
U.S. 388, 391 (2006). All four factors are present here.
First, the Tax Mandate causes irreparable injury because it intrudes on the
States’ lawmaking authority. See pp. 10–16, supra; Abbott v. Perez, 138 S. Ct. 2305,
2324 n.17 (2018) (explaining that “the inability to enforce its duly enacted plans
clearly inflicts irreparable harm on the State”). That kind of constitutional injury al-
ways amounts to irreparable harm. Cf. Maryland v. King, 567 U.S. 1301, 1303 (2012)
(Roberts, C.J., in chambers). Second, the “remedies available at law” are “inadequate”
precisely because of the nature of the injury. See eBay, 547 U.S. at 391. Kentucky and
Tennessee cannot restore their sovereign right to control their own taxing policies or
be free from unconstitutional Spending Clause conditions through a damages award.
See Abbott, 138 S. Ct. at 2324 & n.17. And that’s particularly true given the Plaintiff
States cannot sue the federal government for money damages, anyway. See F.D.I.C.
v. Meyer, 510 U.S. 471, 475 (1994). Third, the balance of hardships favors the Plaintiff
States because the Tax Mandate unconstitutionally intrudes on their sovereignty and
the federal government has no legitimate interest in enforcing an unconstitutional
law. See Martin-Marietta Corp. v. Bendix Corp., 690 F.2d 558, 568 (6th Cir. 1982).
And fourth, the public interest favors an injunction here because “the public interest
38
lies in a correct application of the federal constitutional . . . provisions upon which the
[Plaintiff States] have brought this claim.” See Coal. to Defend Affirmative Action v.
Granholm, 473 F.3d 237, 252 (6th Cir. 2006) (quotation marks omitted).
CONCLUSION
The Court should grant summary judgment to the Plaintiff States and enter a
judgment declaring the Tax Mandate unconstitutional and enjoining the Defendants
from taking any steps to enforce the Tax Mandate against the Plaintiff States.
Respectfully submitted by,
DANIEL CAMERON HERBERT H. SLATERY III
Attorney General of Kentucky Attorney General of Tennessee
/s/ Brett R. Nolan /s/ Andrée S. Blumstein (w/ permission)
Barry L. Dunn Andrée S. Blumstein*
Victor B. Maddox Sarah K. Campbell*
Matthew F. Kuhn Brandon J. Smith*
Brett R. Nolan Office of the Tennessee Attorney Gen-
Office of Kentucky Attorney General eral and Reporter
700 Capital Avenue, Suite 118 PO Box 20207
Frankfort, Kentucky 40601 Nashville, TN 37202-0207
Phone: (502) 696-5300 Phone: (615) 741-3491
Barry.Dunn@ky.gov Andree.Blumstein@ag.tn.gov
Victor.Maddox@ky.gov Sarah.Campbell@ag.tn.gov
Matt.Kuhn@ky.gov Brandon.Smith@ag.tn.gov
Brett.Nolan@ky.gov *admitted pro hac vice
Counsel for the Commonwealth Counsel for the State of Tennessee
of Kentucky
39
CERTIFICATE OF SERVICE
I certify that I filed the above document using the Court’s CM/ECF system on
June 23, 2021, which electronically served a copy to all counsel of record.
/s/ Brett R. Nolan
40
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