Petition for a writ of certiorari, Ohio v. Yellen, No. 22-880 (U.S.) (March 10, 2023)
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Petition for a writ of certiorari in the Supreme Court of the United States by the State of Ohio, Petitioner, against Janet Yellen as Secretary of the Treasury, Richard K. Delmar as acting inspector general of the Department of the Treasury, and the U.S. Department of the Treasury, Respondents, seeking review of the Sixth Circuit. It states that Ohio accepted around $5.4 billion under the American Rescue Plan Act of 2021, which carries a Tax Mandate. Its two questions are whether courts have jurisdiction over the States' constitutional challenges to the Tax Mandate and whether the Tax Mandate is unconstitutional. The table of contents lists a conflict among the circuits. Dave Yost, Ohio Attorney General, and Benjamin M. Flowers, Counsel of Record, are listed for Petitioner.
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“Petition for a writ of certiorari, Ohio v. Yellen, No. 22-880 (U.S.) (March 10, 2023).”
Original at www.supremecourt.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/petition-for-a-writ-of-certiorari-ohio-v-yellen-no-22-880-u-s-march-10-8edeed48c0/
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No. 22-___
In the Supreme Court of the United States
______________________________
STATE OF OHIO,
Petitioner,
v.
JANET YELLEN, IN HER OFFICIAL CAPACITY AS
SECRETARY OF THE TREASURY, RICHARD K. DELMAR, IN
HIS OFFICIAL CAPACITY AS ACTING INSPECTOR GENERAL
OF THE DEPARTMENT OF THE TREASURY, AND THE U.S.
DEPARTMENT OF THE TREASURY,
Respondents.
______________________________
ON PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
______________________________
PETITION FOR WRIT OF CERTIORARI
______________________________
DAVE YOST
Ohio Attorney General
BENJAMIN M. FLOWERS*
*Counsel of Record
Ohio Solicitor General
ZACHERY P. KELLER
MAY MAILMAN
MATHURA J. SRIDHARAN
Deputy Solicitors General
30 E. Broad St., 17th Floor
Columbus, Ohio 43215
614-466-8980
bflowers@ohioago.gov
Counsel for Petitioner
QUESTIONS PRESENTED
The COVID-19 pandemic devastated the American
economy. In response, Congress passed the American
Rescue Plan Act of 2021, which offered $195 billion in
aid to the States. Pub. L. No. 117-2, 135 Stat. 4. The
States had no choice but to accept; refusing the money
would have given other States and their citizens a sig-
nificant competitive edge in emerging from the pan-
demic. Ohio accepted around $5.4 billion. But accept-
ing the money meant agreeing to the Rescue Plan’s
“Tax Mandate,” which bars States from using Rescue
Plan funds to “directly or indirectly offset a reduction
in … net tax revenue … resulting from a change in
law, regulation, or administrative interpretation.” 42
U.S.C. §802(c)(2)(A).
This case presents two questions, the first of which
has divided the circuits and the second of which is of
immense importance to the States and the Treasury.
1. Do courts have jurisdiction over the States’ con-
stitutional challenges to the Tax Mandate?
2. Is the Tax Mandate unconstitutional?
ii
LIST OF PARTIES
The Petitioner is the State of Ohio.
The Respondents are Janet L. Yellen, in her official
capacity as Secretary of the Treasury; Richard
Delmar, in his official capacity as acting inspector
general of the Department of the Treasury; and the
United States Department of the Treasury.
iii
LIST OF DIRECTLY RELATED PROCEEDINGS
1. Ohio v. Yellen, et al., No. 1:21-cv-181-DRC (S.D.
Ohio) (judgment entered July 1, 2021).
2. Ohio v. Yellen, et al., No. 21-3787 (6th Cir.)
(judgment entered November 18, 2021).
iv
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ........................................ i
LIST OF PARTIES .....................................................ii
LIST OF DIRECTLY RELATED
PROCEEDINGS .................................................. iii
TABLE OF CONTENTS ............................................ iv
TABLE OF AUTHORITIES ...................................... vi
INTRODUCTION ....................................................... 1
OPINIONS BELOW ................................................... 4
JURISDICTIONAL STATEMENT ............................ 5
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ................................... 5
STATEMENT .............................................................. 8
REASONS FOR GRANTING THE PETITION ....... 15
I. The circuits are in conflict regarding the
justiciability of challenges to conditions in
Spending Clause legislation. ....................... 16
A. Justiciability in the circuit courts. ........ 16
B. The circuits are split. ............................. 23
C. These conflicts typify broader
confusion over state standing. ............... 25
II. The Court should grant review of the
purely legal, immensely important merits
question........................................................ 31
III. The Court should grant certiorari in this
case even if it grants certiorari in
Kentucky or West Virginia. .......................... 35
v
CONCLUSION.......................................................... 36
APPENDIX:
Appendix A: Opinion, United States Court of
Appeals for the Sixth Circuit, November 18,
2022 ........................................................................... 1a
Appendix B: Opinion and Order, United States
District Court for the Southern District of Ohio,
July 1, 2021 ............................................................. 25a
Appendix C: Opinion and Order, United States
District Court for the Southern District of Ohio,
May 12, 2021 ........................................................... 79a
Appendix D: Declaration of Kimberly Mur-
nieks, United States District Court for the
Southern District of Ohio, June 7, 2021 .............. 117a
Appendix E: Declaration of Kimberly Mur-
nieks, United States District Court for the
Southern District of Ohio, May 19, 2021 ............. 120a
vi
TABLE OF AUTHORITIES
Cases Page(s)
Ariz. State Legis. v. Ariz. Indep.
Redistricting Comm’n,
576 U.S. 787 (2015) ....................................... 25, 34
Arizona v. Yellen,
34 F.4th 841 (9th Cir. 2022) ...................... 4, 16, 17
Buck v. Davis,
580 U.S. 100 (2017) ....................................... 34, 35
Cardinal Chem. Co. v. Morton Int’l, Inc.,
508 U.S. 83 (1993) ............................................... 24
Chafin v. Chafin,
568 U.S. 165 (2013) ............................................. 24
Colorado v. Toll,
268 U.S. 228 (1925) ............................................. 29
Cutter v. Wilkinson,
544 U.S. 709 (2005) ....................................... 33, 34
Exxon Shipping Co. v. Baker,
554 U.S. 471 (2008) ............................................. 34
FERC v. Mississippi,
456 U.S. 742 (1982) ............................................. 29
Fisher v. Univ. of Tex.,
579 U.S. 365 (2016) ....................................... 34, 35
Friends of the Earth, Inc. v. Laidlaw
Envtl. Serv.,
528 U.S. 167 (2000) ....................................... 24, 25
vii
Georgia v. Stanton,
73 U.S. 50 (1867) ................................................. 28
Gonzales v. Oregon,
546 U.S. 243 (2006) ............................................. 29
Gregory v. Ashcroft,
501 U.S. 452 (1991) ............................................. 27
Kentucky v. Yellen,
54 F.4th 325 (6th Cir. 2022) 3, 4, 15, 19, 20, 21, 30,
31, 32, 35
Massachusetts v. EPA,
549 U.S. 497 (2007) ............................................. 30
Massachusetts v. Mellon,
262 U.S. 447 (1923) ............................................. 28
Missouri v. Holland,
252 U.S. 416 (1920) ............................................. 29
Missouri v. Yellen,
39 F.4th 1063 (8th Cir. 2022) .................... 4, 18, 24
New York v. United States,
505 U.S. 144 (1992) ............................................. 29
NFIB v. Sebelius,
567 U.S. 519 (2012) ................................. 28, 29, 31
Ohio v. Yellen,
53 F.4th 983 (6th Cir. 2022) .................................. 5
Ohio v. Yellen,
539 F.Supp.3d 802 (S.D. Ohio 2021) ............... 4, 20
viii
Ohio v. Yellen,
547 F.Supp.3d 713 (S.D. Ohio 2021) ..................... 4
Oregon v. Mitchell,
400 U.S. 112 (1970) ............................................. 29
Puerto Rico v. Sánchez Valle,
579 U.S. 59 (2016) ............................................... 26
Revere v. Mass. Gen. Hosp.,
463 U.S. 239 (1983) ............................................. 34
South Carolina v. Katzenbach,
383 U.S. 301 (1966) ............................................. 29
South Carolina v. Regan,
465 U.S. 367 (1984) ............................................. 29
South Dakota v. Dole,
483 U.S. 203 (1987) ....................1, 9, 28, 29, 30, 31
Susan B. Anthony List v. Driehaus,
573 U.S. 149 (2014) ............................................. 13
Tex. Educ. Agency v. U.S. Dep’t of Educ.,
992 F.3d 350 (5th Cir. 2021) ..................... 3, 31, 32
Va. Dep’t of Educ. v. Riley,
106 F.3d 559 (4th Cir. 1997) (en
banc) ........................................................... 3, 31, 32
West Virginia v. EPA,
142 S. Ct. 2587 (2022) ......................................... 25
West Virginia v. Treasury,
59 F.4th 1124 (11th Cir. 2023) ..3, 4, 22, 23, 24, 31,
32, 35
ix
Yates v. Evatt,
500 U.S. 391 (1991) ....................................... 34, 35
Statutes, Rules, and Constitutional Provisions
U.S. Const. amend. X ................................................ 27
U.S. Const. art. I, §8 ............................................. 1, 28
U.S. Const. art. I, §10 ............................................... 26
U.S. Const. art. III, §2 .............................................. 26
28 U.S.C. §1254 ........................................................... 5
28 U.S.C. §1291 ........................................................... 5
28 U.S.C. §1331 ........................................................... 5
42 U.S.C. §802 ......................................... 1, 5, 9, 32, 34
31 C.F.R. §35.1 ...................................................... 2, 14
31 C.F.R. §35.4 .................................................... 14, 32
31 C.F.R. §35.5 ...................................................... 9, 34
31 C.F.R. §35.8 .................................................... 14, 32
86 Fed. Reg. 26786 (May 17, 2021) .................... 10, 11
87 Fed. Reg. 4338 (Jan. 27, 2022) .................. 2, 14, 21
Sup. Ct. R. 10 ............................................................ 33
x
Other Authorities
Grove, Foreword: Some Puzzles of State
Standing, 94 Notre Dame L. Rev.
1883 (2019) .......................................................... 25
Hamburger, Purchasing Submission:
Conditions, Power, and Freedom
(2021) ............................................................. 29, 31
Hessick, Quasi-Sovereign Standing, 94
Notre Dame L. Rev. 1927 (2019) ............. 26, 27, 28
Narechania, Certiorari in Important
Cases, 122 Colum. L. Rev. 923 (2022) ................. 35
Rappeport, A Last-Minute Add to
Stimulus Bill Could Restrict State
Tax Cuts, N.Y. Times (Mar. 13, 2021) .................. 1
Roesler, State Standing to Challenge
Federal Authority in the Modern
Administrative State, 91 Wash. L.
Rev. 637 (2016) ........................................ 25, 28, 29
Shapiro, et al., Supreme Court Practice
§4.12 (10th ed. 2013) ........................................... 35
Sub. S.B. 18, 134th Gen. Assemb. §§1, 5,
6 (Ohio, enrolled Mar.29, 2021) .......................... 13
U.S. Dep’t of Treasury, Compliance &
Reporting Guidance: State and
Local Fiscal Recovery Funds (Sept.
20, 2022) ......................................................... 14, 21
xi
Vladeck, States’ Rights and State
Standing, 46 U. Rich. L. Rev. 845
(2012) ................................................................... 30
Woolhandler & Collins, State Standing,
81 Va. L. Rev. 387 (1995) .................................... 28
Young, State Standing and Cooperative
Federalism, 94 Notre Dame L. Rev.
1893 (2019) .......................................................... 30
INTRODUCTION
Congress enacted the American Rescue Plan Act of
2021 to spur the States’ recovery from the COVID-19
pandemic. The Rescue Plan, among other things, of-
fers the States money—a lot of it. Ohio, for its part,
was offered more than $5 billion, which is a sizeable
portion of the State’s yearly budget. But the money
comes with strings attached. One such string, the
“Tax Mandate,” prohibits States from using Rescue
Plan funds to “directly or indirectly offset” any “reduc-
tion in [their] net tax revenue” caused by a tax cut. 42
U.S.C. §802(c)(2)(A). Congress enacted the Mandate
in hopes of pressuring States not to cut taxes. The
Mandate thus codifies the view, held by at least one
legislative proponent, that it is irresponsible to “cut
your revenue during a pandemic [when you] still need
dollars.” Rappeport, A Last-Minute Add to Stimulus
Bill Could Restrict State Tax Cuts, N.Y. Times (Mar.
13, 2021), https://archive.is/oKQxG.
This case presents the question whether Congress
lawfully enacted the Tax Mandate. The answer is
“no.”
The Constitution’s Spending Clause puts Congress
in control of the federal purse. U.S. Const. art. I, §8,
cl.1. Congress can use that power to offer States fed-
eral money with conditions attached. South Dakota v.
Dole, 483 U.S. 203, 206 (1987). But those conditions
must be clear, and the offers must be non-coercive. Id.
at 207–08, 211.
The Tax Mandate is unconstitutional both because
it is hopelessly ambiguous and because Congress co-
erced the States into accepting its terms.
Start with the ambiguity. The Mandate forbids
States from using Rescue Plan funds to “indirectly
2
offset” losses in “net tax revenue” attributable to tax
cuts. But money is fungible. Thus every dollar gained
can be fairly described as indirectly offsetting every
dollar lost. As a result, there is no principled way to
tell whether money a State receives through the Act
indirectly offsets any tax reduction the State might
choose to pursue. To make matters worse, the Tax
Mandate provides no guidance on how to identify re-
ductions in “net tax revenue.” In particular, it sets no
baseline by which to test for reductions; it does not say
whether a tax cut’s effect on revenue should be deter-
mined relative to what revenue would have been with-
out the tax reduction, what it was the year before,
what it was pre-pandemic, or something else.
Moreover, Congress coerced the States into accept-
ing the Mandate. Had Ohio turned down the billions
of dollars Congress offered, it would have hampered
the State’s economic recovery and put Ohioans at a
competitive disadvantage relative to citizens of sister
States that accepted the money. Ohio, like every other
State, had no realistic choice but to take the money
and the strings attached to it.
The District Court deemed the Tax Mandate un-
constitutionally ambiguous. And it enjoined the
United States from enforcing the Mandate against
Ohio. The Sixth Circuit reversed, but not on the mer-
its. In fact, the Sixth Circuit held the Mandate uncon-
stitutional in a companion case brought by Kentucky
and Tennessee. But the court held that Ohio’s case
was mooted by a regulation Treasury promulgated
months after Ohio filed suit. See Coronavirus State
and Local Fiscal Recovery Funds, 87 Fed. Reg. 4338-
01 (Jan. 27, 2022); 31 C.F.R. §35.1 et seq. This regu-
lation purported to cure the unconstitutional ambigu-
ity, in part by announcing a complex framework for
3
identifying indirect offsets. And the Sixth Circuit held
that this framework, by providing guidance regarding
the manner in which Treasury might enforce the Man-
date, eliminated any likelihood of a future enforce-
ment action. That, the court believed, fully redressed
Ohio’s injuries.
The Sixth Circuit erred. Even with Treasury’s
guidance, the States “continue to experience” a “sov-
ereign injury.” West Virginia v. Treasury, 59 F.4th
1124, 1136 (11th Cir. 2023). In particular, the Man-
date “continues to limit how the States may use fed-
eral funds.” Id. at 1139. So, if the States are right
that Congress illegally enacted the Mandate—and
thus illegally imposed on the States the Mandate’s tax
restrictions—the States are suffering an ongoing con-
stitutional injury from which they are entitled to seek
relief. Id.
What is more, Treasury’s regulation does not actu-
ally cure the Tax Mandate’s ambiguity. For one thing,
administrative agencies cannot provide the clarity the
Spending Clause requires—only Congress can. Id. at
1147; Tex. Educ. Agency v. U.S. Dep’t of Educ., 992
F.3d 350, 361–62 (5th Cir. 2021); Va. Dep’t of Educ. v.
Riley, 106 F.3d 559, 560–61, 567 (4th Cir. 1997) (en
banc); id. at 572 (Niemeyer, J., concurring in part); id.
(Hamilton, J., concurring in the judgment); Kentucky
v. Yellen, 54 F.4th 325, 363 (6th Cir. 2022) (Nal-
bandian, J., concurring in part and dissenting in part).
Regardless, the regulation fails to cure the Mandate’s
“lack of explanation on how to (1) calculate a ‘reduc-
tion’ in net tax revenue, (2) determine whether such a
reduction resulted from a tax cut, and (3) tell what
particular conduct constitutes an ‘indirect’ offset.”
Kentucky, 54 F.4th at 363 (Nalbandian, J., concurring
in part and dissenting in part). As a result, state
4
legislators “still face an unlawfully-imposed quan-
dary” when exercising state taxing power—a quan-
dary that may cause legislators to “delay, second
guess, or abandon parts of tax policies.” Id. (quotation
marks omitted).
The Court should grant review to address two im-
portant questions.
The first is the subject of an acknowledged circuit
split: In light of the Final Rule, do federal courts still
have jurisdiction to adjudicate the States’ challenges
to the Tax Mandate? Compare Pet. App.1a, and Mis-
souri v. Yellen, 39 F.4th 1063, 1069–70 (8th Cir. 2022),
with West Virginia, 59 F.4th at 1135; cf. Arizona v.
Yellen, 34 F.4th 841, 853 (9th Cir. 2022). In answer-
ing this question, the Court can answer subsidiary
questions that have also divided the circuits. For ex-
ample, can challenges to ambiguous Spending Clause
conditions be mooted by clarifying regulations?
The second question presented asks whether the
Tax Mandate is unconstitutional. Two circuits have
already held that it is. West Virginia, 59 F.4th at
1140–48; Kentucky, 54 F.4th at 346–57. Every State,
and the Treasury too, would benefit from a speedy res-
olution of this immensely important question.
OPINIONS BELOW
The District Court’s opinion denying a preliminary
injunction is published at Ohio v. Yellen, 539
F.Supp.3d 802 (S.D. Ohio 2021), and reproduced at
Pet.App.79a. The District Court’s opinion granting a
permanent injunction is published at Ohio v. Yellen,
547 F.Supp.3d 713 (S.D. Ohio 2021), and reproduced
at Pet.App.25a. The Sixth Circuit’s decision is
5
published at Ohio v. Yellen, 53 F.4th 983 (6th Cir.
2022), and is reproduced at Pet.App.1a.
JURISDICTIONAL STATEMENT
This case concerns the constitutionality of a fed-
eral statute. The District Court had jurisdiction over
this dispute under 28 U.S.C. §1331. After the District
Court entered judgment for the State of Ohio, the de-
fendants timely appealed to the Sixth Circuit, which
had jurisdiction under 28 U.S.C. §1291. The Sixth
Circuit issued its judgment on November 18, 2022. On
January 20, 2023, Justice Kavanaugh granted the
State’s application for an extension of time in which to
file a petition for a writ of certiorari. His order gave
Ohio until April 17, 2023 to file its petition. See Order,
Ohio v. Yellen, No. 22A652 (U.S. Jan. 20, 2023). This
petition timely invokes the Court’s jurisdiction under
28 U.S.C. §1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
Article I, Section 8, clause 1 of the Constitution
provides:
The Congress shall have Power To lay and
collect Taxes, Duties, Imposts and Excises,
to pay the Debts and provide for the com-
mon Defence and general Welfare of the
United States; but all Duties, Imposts and
Excises shall be uniform throughout the
United States;
42 U.S.C. §802(c) provides, in relevant part:
(c) Requirements
(1) Use of funds
6
Subject to paragraph (2), and except as
provided in paragraph (3), a State, ter-
ritory, or Tribal government shall only
use the funds provided under a payment
made under this section, or transferred
pursuant to section 803(c)(4) of this ti-
tle, to cover costs incurred by the State,
territory, or Tribal government, by De-
cember 31, 2024--
(A) to respond to the public health emer-
gency with respect to the Coronavirus
Disease 2019 (COVID-19) or its nega-
tive economic impacts, including as-
sistance to households, small busi-
nesses, and nonprofits, or aid to im-
pacted industries such as tourism,
travel, and hospitality;
(B) to respond to workers performing es-
sential work during the COVID-19
public health emergency by providing
premium pay to eligible workers of
the State, territory, or Tribal govern-
ment that are performing such essen-
tial work, or by providing grants to el-
igible employers that have eligible
workers who perform essential work;
(C) for the provision of government ser-
vices to the extent of the reduction in
revenue of such State, territory, or
Tribal government due to the
COVID-19 public health emergency
relative to revenues collected in the
most recent full fiscal year of the
7
State, territory, or Tribal government
prior to the emergency; or
(D) to make necessary investments in
water, sewer, or broadband infra-
structure.
(2) Further restriction on use of funds
(A) In general
A State or territory shall not use the
funds provided under this section or
transferred pursuant to section
803(c)(4) of this title to either directly
or indirectly offset a reduction in the
net tax revenue of such State or terri-
tory resulting from a change in law,
regulation, or administrative inter-
pretation during the covered period
that reduces any tax (by providing for
a reduction in a rate, a rebate, a de-
duction, a credit, or otherwise) or de-
lays the imposition of any tax or tax
increase.
(B) Pension funds
No State or territory may use funds
made available under this section for
deposit into any pension fund.
8
STATEMENT
1. The COVID-19 pandemic devastated the Amer-
ican economy. With consumers staying home—either
by choice or by edict—demand for goods and services
plummeted. In response, some businesses closed.
Others scaled back operations. Employees lost jobs,
wages, and hours. This plunge in economic activity
dramatically reduced the States’ tax hauls. Consider,
for example, Ohio. In the 2020 fiscal year, its tax rev-
enues came in $1.1 billion below estimates. Pet.App.
118a. As revenues plummeted, the need for state ser-
vices “ballooned.” Pet.App.82a.
Congress responded by passing the American Res-
cue Plan Act of 2021. The Rescue Plan offered $195
billion in aid to the States and the District of Colum-
bia. Pet.App.2a. Congress made $5.4 billion available
for Ohio. Pet.App.30a. That was (and is) a lot of
money. It equals about 7.2 percent of Ohio’s last pre-
pandemic budget. Pet.App.118a–119a.
To obtain the money, Ohio and other States had to
accept conditions. This case concerns one such condi-
tion, the “Tax Mandate.” It says:
A State or territory shall not use the funds
provided under this section or transferred
pursuant to section 803(c)(4) of this title to
either directly or indirectly offset a reduc-
tion in the net tax revenue of such State or
territory resulting from a change in law,
regulation, or administrative interpreta-
tion during the covered period that re-
duces 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.
9
42 U.S.C. §802(c)(2)(A). In simpler terms, if a State
cuts taxes, causing “net tax revenue” to fall, it cannot
use Rescue Plan funds to “directly or indirectly offset”
the loss. Treasury can initiate recoupment proceed-
ings against States that violate the Mandate, recover-
ing funds equal in size to the reduction in net tax rev-
enue. §802(e).
Given the billions of dollars at stake, every State
accepted Rescue Plan funding. Having accepted the
offer, they must now comply with the Tax Mandate
until they spend or return the funds, which will re-
main available until 2025. §802(a)(1), (g)(1)(B); 31
C.F.R. §35.5. Further, States must prove their com-
pliance with the Tax Mandate. In particular, the Res-
cue Plan requires States that accept the offer to peri-
odically submit a “detailed accounting” to the federal
government regarding their use of Rescue Plan funds.
§802(d)(2). That accounting must include “all modifi-
cations” to “tax revenue sources.” §802(d)(2)(A).
2. Six days after President Biden signed the Res-
cue Plan into law, Ohio filed suit against the Secretary
of the Treasury, Treasury’s Inspector General, and the
Department of the Treasury. (Collectively, “the Sec-
retary.”) Ohio also moved for a preliminary injunc-
tion.
The State made two constitutional arguments rel-
evant here. First, it argued that the Tax Mandate vi-
olated the constitutional prohibition on ambiguous
conditions in Spending Clause legislation. See South
Dakota v. Dole, 483 U.S. 203, 207 (1987). Second, Ohio
argued that Congress unconstitutionally coerced the
State into accepting the Mandate’s terms. See id. at
211.
10
The District Court determined that the Mandate
was ambiguous and that Ohio would likely prevail on
the merits. See Pet.App.116a. It nonetheless denied
a preliminary injunction because it determined that
preliminary relief would do Ohio no good. Ohio, the
court concluded, needed a permanent injunction to re-
dress its constitutional injuries. Pet.App.115a–116a.
3. Two important developments occurred while
the parties briefed the permanent-injunction issue.
First, Ohio accepted the Rescue Plan funds. Pet.
App.118a.
Second, the Treasury Department published an in-
terim rule purporting to implement portions of the
Rescue Plan. Coronavirus State and Local Fiscal Re-
covery Funds, 86 Fed. Reg. 26786-01, 26807–10 (May
17, 2021).
This “Interim Rule” announced Treasury’s ap-
proach to enforcing the Tax Mandate. The rule con-
firmed that, because “money is fungible,” and because
the Mandate prohibits using Rescue Plan funds to “in-
directly” offset revenue lost through tax cuts, States
may violate the Mandate even without “explicitly or
directly” using Rescue Plan funds to “cover the costs
of [tax-law] changes that reduce net tax revenue.” Id.
at 26807. But the rule denied that all expenditures or
uses of Rescue Plan funds indirectly offset all losses of
tax revenue. It announced a complex, atextual frame-
work for identifying impermissible, indirect offsets.
For example, the rule said States will not be deemed
to have sustained a reduction in “net tax revenue”—
even if their tax revenue drops relative to the prior
year—as long as they bring in more tax revenue than
they did in 2019, adjusting for inflation. Id. at 26807–
09. The Interim Rule also attempted to explain the
11
meaning of “indirectly offset.” On the one hand, the
Interim Rule assured States that they will not be
deemed to have used Rescue Plan funds to indirectly
offset the revenue lost from a tax-rate reduction if
changes to other laws, “organic growth,” or spending
cuts fully counterbalance the losses. Id. at 26807,
26809–10, 26823. But the rule included a catch-all
that empowered the Secretary to initiate recoupment
proceedings if, at any point during the Rescue Plan’s
coverage, she concludes in her sole discretion that a
State used Rescue Plan funds to “indirectly offset a re-
duction in net tax revenue.” Id. at 26810. The rule
thus tautologically defined “indirectly offsetting” to
mean “indirectly offsetting.”
The Interim Rule also established a detailed “step-
by-step framework” by which States must prove their
compliance with (among other things) the Tax Man-
date. Id. at 26809; see id. at 26807–10.
4. The District Court permanently enjoined the
Tax Mandate in its application to Ohio. Pet.App.28a–
29a. It first confirmed its jurisdiction to decide the
case. The court determined that Ohio sustained a sov-
ereign injury when Congress denied the State the un-
ambiguous offer to which it was constitutionally enti-
tled. Pet.App.38a–41a. An order enjoining enforce-
ment of the unconstitutionally ambiguous term would
redress that injury. Id. Further, the dispute re-
mained live even after Ohio accepted the funds: an
injunction would benefit Ohio by freeing its legislators
from having to enact tax policy under the “pall” cast
by an ambiguous limit on the State’s taxing power.
Pet.App.41a–46a.
The court then deemed the Mandate unconstitu-
tionally ambiguous. The Mandate, the court
12
explained, provides “no mechanism for determining
whether a State’s net tax revenues are ‘reduced’” be-
cause of a tax cut. Pet.App.58a. Moreover, because
every tax cut that reduces revenue relative to what
revenue would otherwise have been could be described
as reducing net tax revenue, the lack of statutory
guidance caused a great deal of ambiguity. Pet.App.
58a–59a. The phrase “indirectly offset” made the am-
biguity even worse. Given money’s fungibility, any
Rescue Plan funds received could be described as “in-
directly offset[ting]” any loss of revenue from tax cuts.
Pet.App.59a–61a. Yet the statute gives no principled
basis for identifying impermissible “indirect” offsets.
Taken together, the Tax Mandate gave the States no
guidance regarding which tax policies were forbidden.
The Interim Rule did not alter the court’s analysis.
The court doubted whether “an administrative regu-
lation” could ever “provide the clarity needed for a con-
ditional grant to comply with Spending Clause stric-
tures.” Pet.App.63a, 67a. Regardless, nothing in the
Rescue Plan empowered Treasury to provide the
needed clarity. In reaching this conclusion, the court
explained that, when “Congress intends for an agency
to answer major questions relating to a statute—i.e.,
a question of deep economic and political significance
that is central to the statutory scheme—then Con-
gress must clearly say so.” Pet.App.71a (quotation
marks and citations omitted). Given the billions of
dollars at stake and the potential effect on tax policy,
the meaning of the Tax Mandate qualified as a ques-
tion of “deep economic and political significance.” Pet.
App.72a. Because nothing in the Rescue Plan clearly
delegated to Treasury the power to resolve this major
question, the law was best interpreted to give Treas-
ury no such power.
13
5. The Secretary appealed. On appeal, she argued
that Ohio lacked standing to sue. Ohio responded by
advancing three theories of standing relevant here.
First, Ohio asserted an “imminent-recoupment” in-
jury. Again, the Tax Mandate could be read to pro-
hibit any expenditure of funds by a State that reduced
taxes, as Ohio had. See, e.g., See Sub. S.B. 18, 134th
Gen. Assemb. §§1, 5, 6 (Ohio, enrolled Mar.29, 2021),
https://perma.cc/4Q5F-ZWYT. Ohio thus invoked the
rule that plaintiffs sustain an injury in fact—and have
standing to bring a pre-enforcement challenge—when
a statute “arguably proscribe[s]” their actual or
planned conduct. Susan B. Anthony List v. Driehaus,
573 U.S. 149, 161–64 (2014).
Second, Ohio asserted “sovereign-authority” inju-
ries: the Mandate interfered with Ohio’s sovereign
prerogatives both pre-acceptance and post-ac-
ceptance. Pre-acceptance, the Mandate denied Ohio
the unambiguous and noncoercive terms to which it
was entitled, thus hindering the State’s ability to
meaningfully decide whether to accept Congress’s con-
ditions. Post-acceptance, the Mandate continues to
injure the State in two respects. Ohio continues to be
injured by having to comply with a condition it was
unconstitutionally coerced into accepting. Further,
the Mandate’s vague requirements cast a pall over
Ohio’s sovereign prerogatives by forcing the state leg-
islature to exercise its taxing and spending powers un-
der the cloud of ambiguous restrictions.
Third, Ohio asserted a “compliance-cost” injury.
Under this theory, the State is injured by having to
devote resources to proving its compliance with the
Tax Mandate. An order enjoining the Mandate would
redress that injury.
14
6. Shortly before oral argument, Treasury final-
ized the Interim Rule. Coronavirus State and Local
Fiscal Recovery Funds, 87 Fed. Reg. 4338 (Jan. 27,
2022); 31 C.F.R. §35.1 et seq. This “Final Rule” is iden-
tical to the Interim Rule in all material respects. For
example, it preserves the Secretary’s virtually limit-
less authority to enforce the Mandate by taking what-
ever actions she deems “necessary to prevent eva-
sions” of the Mandate. See 31 C.F.R. §35.4(a). It also
requires States to provide a “detailed accounting of
the uses of funds,” and gives the Secretary broad dis-
cretion to request “other additional information as
may be necessary or appropriate … to prevent eva-
sions.” §35.4(c); §35.8(b). Among other things, States
must make specific “reports” to Treasury geared to-
ward the Tax Mandate’s requirements. See
§35.8(b)(3).
The Final Rule promised “additional guidance” re-
garding the reporting requirements linked to the Tax
Mandate. 87 Fed. Reg. at 4428–29. True to its word,
Treasury issued guidance requiring States to “report
certain items related to the” Tax Mandate each year.
U.S. Dep’t of Treasury, Compliance & Reporting Guid-
ance: State and Local Fiscal Recovery Funds at 23
(Sept. 20, 2022). States are advised to “maintain rec-
ords to support their compliance.” Id. at 23.
7. Following argument, the Sixth Circuit reversed
the District Court’s permanent injunction. It set aside
the question whether Ohio had standing to sue at the
case’s outset. Pet.App.14a. Instead, the court re-
solved the case on mootness grounds—grounds the
Secretary had not even raised on appeal. The circuit
stressed that the Secretary, in her briefing and in the
Final Rule, had “disavowed” a broad reading of the
Mandate. Pet.App11a; 17a; 20a. The court believed
15
this disavowal negated the imminent-recoupment in-
jury, as it suggested Treasury would not “initiate re-
coupment against any policy that Ohio has shown …
it intends to pursue.” Pet.App.19a. The circuit next
concluded the Secretary’s disavowal cured any sover-
eign injury that might result from the Mandate’s am-
biguity, as it freed the State to tax and spend without
worrying about a realistic threat of enforcement. Pet.
App.20a. The court failed to distinguish between the
ambiguity and the coercion injuries. Pet.App.19a. In-
stead, it viewed both as a single injury that it thought
the Final Rule extinguished. Pet.App. 19a–20a. Fi-
nally, the court determined the compliance-cost injury
failed to save the case from mootness, both because it
was too vague and because Ohio would need to spend
money complying with the rest of the Rescue Plan
even if the Mandate were enjoined. Pet.App.21a–24a.
The same day, in another case, the Sixth Circuit
held that the Mandate fails to provide the clear notice
the Spending Clause requires, and that Treasury had
not cured the ambiguity with its Final Rule. See Ken-
tucky v. Yellen, 54 F.4th 325, 346–54 (2022). This
means that Ohio is barred from challenging an uncon-
stitutional law that directly regulates Ohio because of
assurances in a regulation that failed to cure the con-
stitutional error Ohio sued to prevent.
REASONS FOR GRANTING THE PETITION
This case presents two questions. First, in light of
the Final Rule, do courts have jurisdiction to resolve
challenges to the Tax Mandate? This question gives
rise to subsidiary questions, including whether execu-
tive agencies can, by issuing clarifying regulations,
deprive the States of their ability to challenge uncon-
stitutionally ambiguous and coercive Spending Clause
16
offers. Second, is the Tax Mandate unconstitutional?
The Court should grant certiorari to decide both ques-
tions.
I. The circuits are in conflict regarding the
justiciability of challenges to conditions
in Spending Clause legislation.
The Tax Mandate has inflicted on all States the
very same injuries that Ohio discussed already: im-
minent-recoupment, sovereign-authority, and compli-
ance-cost injuries. So far, four circuits—in five cases
involving eighteen States—have issued decisions ad-
dressing the justiciability of suits asserting these in-
juries. Their decisions, and in particular the decisions
of the Sixth and Eleventh Circuits, are inconsistent.
The lower courts need guidance regarding when, if
ever, States may challenge unlawful conditions im-
posed on States through Spending Clause legislation.
This case affords the Court a chance to provide that
clarity.
A. Justiciability in the circuit courts.
1. Arizona, just like Ohio, challenged the Tax
Mandate. Arizona, just like Ohio, asserted imminent-
recoupment, sovereign-authority, and compliance-
cost injuries. Arizona found a receptive audience in
its home circuit: the Ninth Circuit held that Arizona
had standing to sue. See Arizona v. Yellen, 34 F.4th
841, 853 (9th Cir. 2022).
The Ninth Circuit accepted two of Arizona’s three
theories of standing. Because Arizona recently en-
acted a $1.9 billion tax cut, the court held there was a
“realistic danger” that Treasury would seek recoup-
ment of the funds. Id. at 848–50. The Ninth Circuit
also concluded that the Tax Mandate injured Arizona
17
by interfering with its sovereign authority. Id. at 851–
53. For one thing, the Tax Mandate’s allegedly “un-
constitutionally ambiguous and coercive” conditions
injured Arizona “at the outset” of the case. Id. at 852.
Further, those conditions would continue to affect
every tax decision that the State might make going
forward. Id. at 852–53. Having held Arizona’s chal-
lenge justiciable, the Ninth Circuit remanded the case
for further proceedings.
The Ninth Circuit never addressed the significance
of the Final Rule, which was promulgated after argu-
ment. It instead left for the district court the question
of how the Final Rule affected the case. Id. at 853 n.2.
And the Ninth Circuit did not consider whether the
Interim Rule mooted the case, either. That said, the
court’s conclusion that the Mandate injured Arizona
by limiting the State’s sovereign taxing authority
would have defeated any mootness argument resting
on the Interim Rule or the Final Rule, as those rules
necessarily inflict the same sovereign injury.
Though it found that Arizona had standing on
other grounds, the court rejected the compliance-cost
theory of injury. Id. at 848. Because Arizona sued
before Treasury promulgated the Interim Rule, the
court reasoned that any additional costs imposed by
the rule came into play only after the case began. Id.
Because those costs were incurred only post-filing, the
Ninth Circuit held, they could not qualify as injuries
for standing purposes, since standing must be estab-
lished at the case’s outset. Id.
2. Missouri also challenged the Tax Mandate.
Missouri, just like Ohio and Arizona, asserted immi-
nent-recoupment, sovereign-authority, and compli-
ance-cost injuries. But Missouri, unlike Arizona,
18
failed to persuade its home circuit that it had standing
to sue. Missouri v. Yellen, 39 F.4th 1063, 1066 (2022).
The Eighth Circuit did not address the compliance-
cost injury raised by Missouri. But it did consider, and
reject, Missouri’s argument that the other injuries
were sufficient to confer standing. With respect to the
imminent-recoupment injury, the Eighth Circuit held
that the Final Rule made “clear” that the Tax Man-
date would be enforced only if the State “cannot ac-
count for net revenue losses through non-[Rescue
Plan] sources.” Id. at 1169. Because Missouri could
not establish that it had engaged (or would engage) in
conduct that would violate Treasury’s regulation, the
court concluded that Missouri’s alleged injuries stem-
ming from the statute were “conjectural or hypothet-
ical,” rather than “actual or imminent.” Id. at 1070 &
n.7 (quotation marks omitted).
The Eighth Circuit likewise rejected Missouri’s
sovereign-authority arguments. It held that, even if
the funding offer was unconstitutionally ambiguous or
coercive when Congress extended it to the States, that
injury did not “still exist” after Missouri accepted the
funds. Missouri, 39 F.4th at 1069 n.5. The court
never considered Missouri’s post-acceptance injury.
That is, the court never considered whether, after Mis-
souri took the money, the ambiguity injured Missouri
by hindering its ability to make tax policy without the
specter of a later recoupment action.
3. The Sixth Circuit considered twin cases—
Ohio’s, and another case brought by Kentucky and
Tennessee—challenging the Tax Mandate. The Sixth
Circuit decided both cases on the same day, reaching
different (and inconsistent) results.
19
Kentucky v. Yellen. Kentucky and Tennessee
raised the same imminent-recoupment and sovereign-
authority injuries that Ohio, Arizona, and Missouri
raised. Kentucky v. Yellen, 54 F.4th 325, 332–33 (6th
Cir. 2022). The court held that both injuries “sufficed
for standing” at the time the complaint was filed. Id.
at 336. The Court reasoned that there was a suffi-
ciently credible and imminent threat that Treasury
would pursue a recoupment action against those
States, both of which enacted or planned to enact tax
cuts. Id. And, because the States had to enact tax
policy in the shadow of a potential enforcement action,
the Tax Mandate intruded on their “powerful sover-
eign prerogative” to set their own tax policies. Id.
But the court held that the Final Rule mooted the
controversy with respect to those two injuries. Id. at
340–41. According to the court, the rule offered a
“narrowing construction” of the Tax Mandate. Id. at
338. That narrowing construction, the court reasoned,
eliminated any threat of recoupment, allowing Ken-
tucky and Tennessee to make tax policy free from the
shadow of the ambiguity. The Sixth Circuit thus held
that States challenging the Tax Mandate must, to
avoid having their imminent-recoupment and sover-
eign-authority injuries mooted, show that they have
“pursued or intend to pursue a course of conduct that
would arguably violate the Rule” rather than the Man-
date. Id. at 340. Neither Kentucky nor Tennessee
made that showing.
This portion of the analysis drew a dissent. Id. at
358–64 (Nalbandian, J., concurring in part and dis-
senting in part). Judge Nalbandian agreed with the
court’s standing analysis, but disagreed that the Final
Rule eliminated the relied-upon injuries. He ex-
pressed doubt that an agency’s regulation could ever
20
cure an ambiguous condition in Spending Clause leg-
islation. Id. at 363. Even if a regulation could provide
the constitutionally required clarity, the Final Rule
did not do so. Id. at 363–64. According to Judge Nal-
bandian, the rule did not eliminate the pall cast over
the States’ policymaking: “legislators considering tax
changes may delay, second guess, or abandon parts of
tax policies” because of the rule’s inherent vagueness.
Id. at 363. And the States would have to do “some-
thing—either raise other taxes or lower expenditures
elsewhere in the budget to offset a revenue reduc-
tion”—to comply with the Mandate. The need to do
“something” constitutes an ongoing injury. Id.
All three judges, however, agreed that Tennessee’s
challenge was not moot under a third theory of injury.
Id. at 342–43. Tennessee, but not Kentucky, had al-
leged a compliance-cost injury. In particular, Tennes-
see alleged that complying with the Final Rule’s re-
quirements for reporting compliance with the Man-
date would impose costs on the State. Because Ten-
nessee submitted “uncontroverted evidence” support-
ing that allegation, the Sixth Circuit held that Ten-
nessee’s challenge (but not Kentucky’s) remained jus-
ticiable. Id.
The Sixth Circuit proceeded to the merits. It held
that the Tax Mandate was unconstitutionally ambig-
uous and affirmed the district court’s injunction only
as to Tennessee. Id. at 346–57. The courts’ merits
analysis largely tracked the analysis of the District
Court in Ohio’s case.
Ohio v. Yellen. The Sixth Circuit held that the
Final Rule mooted Ohio’s case. Whereas the Sixth
Circuit in Kentucky concluded that Tennessee’s com-
pliance-cost theory saved the challenge from
21
mootness, the Sixth Circuit here concluded that Ohio’s
compliance-cost injury was too vague even to establish
standing.
The court’s reasoning is hard to understand, but it
seems to run as follows: because Ohio must report
compliance with other Rescue Plan conditions in ad-
dition to the Tax Mandate, its fiscal injury cannot be
redressed by enjoining the Tax Mandate alone. There-
fore, the argument goes, the Tax Mandate does not im-
pose any additional burden on Ohio, and so does not
injure it. Pet.App.21a–23a.
This argument makes little sense. While Ohio
must report compliance with other conditions, enjoin-
ing the Tax Mandate would free the State from having
to report compliance with the Tax Mandate, saving
Ohio the resources needed to track and report compli-
ance with that provision. In any event, the very same
argument could have been made as to Tennessee. Yet
the same court on the same day determined that Ten-
nessee’s compliance costs saved the case from moot-
ness. It is thus far from clear when compliance costs
are sufficient to establish an Article III injury within
the Sixth Circuit.
To the extent the Sixth Circuit distinguished be-
tween Tennessee and Ohio based on the evidence, the
distinction is immaterial. It is true that Tennessee
submitted a declaration explaining the compliance
costs the Tax Mandate would impose. Kentucky, 54
F.4th at 342. But the States’ reporting obligations—
and their link to the Tax Mandate—are judicially no-
ticeable matters of public record. See 87 Fed. Reg.
4338, 4428–29 (Jan. 27, 2022); U.S. Dep’t of Treasury,
Compliance & Reporting Guidance: State and Local
Fiscal Recovery Funds at 23 (Sept. 20, 2022).
22
4. In the Eleventh Circuit, a thirteen-state coali-
tion raised the same constitutional challenge and ad-
vanced the same standing theories as Ohio. West Vir-
ginia v. Treasury, 59 F.4th 1124 (11th Cir. 2023).
They fared much better.
First, the Eleventh Circuit concluded that the im-
minent-recoupment and sovereign-authority injuries
sufficed to establish standing at the case’s outset. Id.
at 1135–38. With respect to the first theory, the
States showed that the Tax Mandate “arguably pro-
scribes” tax cuts the States enacted or planned to en-
act. Id. at 1137–38. The States also sustained a sov-
ereign-authority injury when “they were coerced into
accepting an offer with an unascertainable condition.”
Id. at 1136. They will “continue to experience” that
injury as long as the “unascertainable condition”—the
Mandate—remains “in force and effect,” since their
sovereign authority will continue to be unlawfully lim-
ited. Id.
After confirming the States’ standing to challenge
the Mandate, the Eleventh Circuit turned to moot-
ness. It found that the States’ challenge remained live
notwithstanding the Final Rule. While the Final Rule
“reduces” the Mandate’s “effect on state sovereignty,”
id. at 1139, the Mandate’s mere existence is still a
“present and continuous infringement on state sover-
eignty,” id. at 1136. That injury could not be cured by
agency rulemaking. Id. at 1140 (citing Whitman v.
Am. Trucking Ass’ns, 531 U.S. 457, 472 (2001)).
The Eleventh Circuit expressly “disagree[d]” with
the Sixth Circuit’s mootness analysis. Id. at 1139. A
case becomes moot, the Eleventh Circuit explained,
only when it is no longer possible for a court to grant
the plaintiff meaningful relief. Id. But injunctive
23
relief would be meaningful to the States, the Final
Rule notwithstanding. The Secretary had not com-
pletely “disclaimed an intent to enforce” the Mandate,
meaning its terms still limited the States’ taxing au-
thority. Id. Thus, an order enjoining the Mandate’s
enforcement would redress an ongoing sovereign in-
jury. Said another way, the Secretary could not moot
the States’ challenges by providing “a lesser remedy (a
narrower construction) to address … the States’ re-
quest for a more substantial remedy (facial invalida-
tion).” Id.
Turning to the merits, the Eleventh Circuit
deemed the Tax Mandate unconstitutionally ambigu-
ous.
B. The circuits are split.
As the preceding discussion shows, the circuits are
split. First and foremost, they are split regarding
whether federal courts, after the Final Rule’s promul-
gation, have Article III jurisdiction to adjudicate con-
stitutional challenges to the Tax Mandate. Courts in
the Eleventh Circuit (and perhaps the Ninth) have ju-
risdiction to hear these cases. Courts in the Eighth
Circuit do not. Courts in the Sixth Circuit do some-
times, though it is unclear precisely when. The Elev-
enth Circuit acknowledged that its decision created a
split with the Sixth Circuit, see West Virginia, 59
F.4th at 1139, and the Court should grant review to
resolve that split.
The circuits are also divided on two subsidiary
questions.
First, when can post hoc agency rulemaking moot
States’ challenges to ambiguous conditions in Spend-
ing Clause legislation? In the Sixth Circuit, the
24
sovereign injury that States sustain by being sub-
jected to an unconstitutionally ambiguous condition is
fully redressed whenever an agency’s post hoc rule
provides clarity sufficient to give the States guidance
and reduce the chances of enforcement proceedings.
Pet.App.17–18a. The Eleventh Circuit “disagree[d]”
with this analysis, concluding that post hoc rules will
not moot already-underway challenges as long as the
unlawfully imposed condition can still be enforced.
West Virginia, 59 F.4th at 1139. Provided the uncon-
stitutional condition continues to limit the States’ sov-
ereign authority, the States “continue to experience” a
“sovereign injury” sufficient to satisfy justiciability re-
quirements. Id. at 1136.
Second, assuming that clarifying regulations can
be relevant, should they be considered through a
standing or a mootness rubric? The Sixth Circuit (cor-
rectly) thought about the issue in terms of mootness.
See Pet.App.15a–21a. But the Eighth Circuit viewed
the issue through a standing lens. See Missouri, 39
F.4th at 1069–70 & n.5. The label comes with signifi-
cant consequences because “initial standing to bring
suit” and “post-commencement mootness” are differ-
ent inquiries that should not be “conflated.” Friends
of the Earth, Inc. v. Laidlaw Envtl. Serv., 528 U.S.
167, 174 (2000). On the one hand, the plaintiff has the
burden to establish standing at the outset of litigation.
Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83,
98 (1993). But once a case has commenced, there is a
strong presumption that it will continue. Thus, de-
fendants bear a heavy burden in establishing moot-
ness—they must show that it is “impossible” for the
Court to grant meaningful relief. Chafin v. Chafin,
568 U.S. 165, 172 (2013) (quotation marks omitted).
25
The Sixth Circuit, unlike the Eighth Circuit, pur-
ported to assess the Final Rule’s relevance through a
mootness lens. But the Sixth Circuit still “conflated”
mootness and standing, Friends of the Earth, 528 U.S.
at 174, in that it did not hold the Secretary to her
mootness burden. Ohio had no burden to show immi-
nent enforcement. Contra Pet.App.16a–17a (citing
standing cases). Rather, it was the Secretary’s burden
to make “absolutely clear” that Ohio faced no risk of
recoupment. West Virginia v. EPA, 142 S. Ct. 2587,
2607 (2022) (quotation marks omitted).
In sum, this case presents a square circuit split,
the resolution of which will shed light on important
subsidiary questions relating to standing and moot-
ness. The Court should seize the opportunity to pro-
vide clarity.
C. These conflicts typify broader
confusion over state standing.
The discord among the circuits here exemplifies
the general confusion about the States’ standing to
sue the federal government. This Court’s state-stand-
ing jurisprudence is “hard to reconcile.” See Ariz.
State Legis. v. Ariz. Indep. Redistricting Comm’n, 576
U.S. 787, 802 n.10 (2015) (quotation marks omitted).
It presents “as many questions as answers.” Grove,
Foreword: Some Puzzles of State Standing, 94 Notre
Dame L. Rev. 1883, 1883 (2019). In blunter words,
“federal standing doctrine” is “under-theorized” and
“notoriously unclear about the extent to which” the
States may “litigate questions of governmental au-
thority in federal courts.” Roesler, State Standing to
Challenge Federal Authority in the Modern Adminis-
trative State, 91 Wash. L. Rev. 637, 639 (2016). This
26
Court should accept this case to provide clarity on a
subject that badly needs clarification.
A return to the founding era provides some helpful
context. Historically, sovereigns resolved their dis-
putes by “diplomacy or war,” not by suing each other
in court. Hessick, Quasi-Sovereign Standing, 94
Notre Dame L. Rev. 1927, 1943 (2019). And, before
“forming the Union, the States possessed separate
and independent” sovereign authority. Puerto Rico v.
Sánchez Valle, 579 U.S. 59, 69 (2016) (quotation
marks omitted). The States did, at times, try to re-
solve disputes in state courts. Hessick, Quasi-Sover-
eign Standing, 94 Notre Dame L. Rev. at 1943. But
their efforts yielded limited success, as States often
refused to abide by the decisions from other States’
courts. Id. Thus, the States frequently resorted to
non-judicial means, such as diplomacy or “bloodshed,”
to resolve interstate conflicts. Id. To decrease these
“hostilities” between the States, the Articles of Con-
federation “contained a provision for the establish-
ment of ad hoc tribunals to resolve interstate dis-
putes.” Id. at 1944 (citing Articles of Confederation of
1781, art. IX). That provision, however, was “rarely
used.” Id.
Against this backdrop, the Constitution took sev-
eral steps to redirect disputes over sovereignty into
federal court. For one thing, it forbade the States from
warring against each other. U.S. Const. art. I, §10,
cl.3. For another, it created federal courts in which
States could litigate their disputes. U.S. Const. art.
III, §2, cl.1. Specifically, under Article III, the “judi-
cial Power” of federal courts extends to both “Contro-
versies between two or more States” and “Controver-
sies to which the United States shall be a Party.” Id.
27
“As every schoolchild learns,” the Constitution es-
tablished a “system of dual sovereignty” that confers
only “limited powers” to the federal government.
Gregory v. Ashcroft, 501 U.S. 452, 457 (1991). All
“powers not delegated to” the federal government “are
reserved to the States.” U.S. Const. amend. X. To
maintain this division of power, States must be able
to seek judicial recourse against the federal govern-
ment. In this dual system, an unjustified claim of
power by the federal government amounts to an inva-
sion of state power. Recognizing as much, the framers
anticipated that there would also be disputes between
States and the federal government about the extent of
their respective powers. See, e.g., The Federalist No.
28, at 179 (Hamilton) (Cooke ed., 1961). Early law-
makers similarly recognized that, unless they ensured
a judicial forum for resolving disputes against the fed-
eral government, States might resort to armed re-
sistance to resolve such disputes. Hessick, Quasi-Sov-
ereign Standing, 94 Notre Dame L. Rev. at 1944 (dis-
cussing debates over the Judiciary Act of 1802).
Considering this history and our federalist consti-
tutional framework, it follows that States should have
broad access to federal courts to challenge federal
overreach. Because States relinquished only limited
sovereign power to the federal government when they
entered the Union, they did so with the understanding
that federal courts would provide a forum in which
sovereignty disputes might be decided without blood-
shed. Thus, when the federal government exercises
power in an unconstitutional manner, and thus in-
trudes on the States’ reserved powers, federal courts
are the agreed-upon forum for resolving disputes. See
Id. at 1945. “Limiting state standing to sue the
28
federal government interferes with this arrange-
ment.” Id. at 1953.
No doubt, this Court has not been clear regarding
when the States have standing to sue the federal gov-
ernment over sovereign injuries. Some early cases—
mostly original actions in this Court—use jurisdic-
tional language to express the Court’s reluctance to
resolve sovereignty conflicts between the States and
the federal government. E.g., Georgia v. Stanton, 73
U.S. 50, 77 (1867); Massachusetts v. Mellon, 262 U.S.
447, 484–85 (1923). But, during the country’s early
years, “federal law was less pervasive and less de-
pendent on the collaboration of state and local actors
for its implementation and enforcement.” Roesler,
State Standing to Challenge Federal Authority, 91
Wash. L. Rev. at 641. The Court’s early cases thus
offer little guidance as to how state standing should
operate today. See id. at 644–53; cf. Woolhandler &
Collins, State Standing, 81 Va. L. Rev. 387, 455–56,
492–93 (1995).
Today, the federal and state governments often
work together—and cohabit the same area—through
cooperative-federalism statutes. “By offering federal
funds in exchange for state cooperation,” Congress
“enlists state assistance in administrative govern-
ment.” Roesler, State Standing to Challenge Federal
Authority, 91 Wash. L. Rev. at 677. The Constitution’s
Spending Clause empowers Congress “to … provide
for the … general Welfare of the United States.” U.S.
Const. art. I., §8 cl.1. This provision empowers Con-
gress to spend money. And Congress may “attach con-
ditions on the receipt of federal funds.” South Dakota
v. Dole, 483 U.S. 203, 206 (1987). Through offers of
conditional funding, Congress may entice States to
make particular “policy choices.” NFIB v. Sebelius,
29
567 U.S. 519, 576 (2012) (op. of Roberts, C.J.) (quota-
tion marks omitted).
Taken too far, this spending power “undermine[s]
the status of the States as independent sovereigns in
our federal system.” Id. at 577; accord Hamburger,
Purchasing Submission: Conditions, Power, and Free-
dom 124–50 (2021). Thus, Congress’s Spending
Clause power is “subject to several general re-
strictions.” Dole, 483 U.S. at 207. Importantly, “if
Congress desires to condition the States’ receipt of fed-
eral funds, it ‘must do so unambiguously …, enabling
the States to exercise their choice knowingly, cogni-
zant of the consequences of their participation’” in the
federal spending program. Id. (brackets omitted)
(quoting Pennhurst State Sch. & Hosp. v. Halderman,
451 U.S. 1, 17 (1981)). And any such offer must be
non-coercive. NFIB, 567 U.S. at 577–578 (op. of
Roberts, C.J.).
With “the development of the administrative
state,” the rate of state-federal conflicts has also dras-
tically increased. See Roesler, State Standing to Chal-
lenge Federal Authority, 91 Wash. L. Rev. at 672. To
resolve these conflicts, this Court has become increas-
ingly open to the States’ litigating sovereign injuries
caused by unlawful federal action. See, e.g., Gonzales
v. Oregon, 546 U.S. 243 (2006); New York v. United
States, 505 U.S. 144 (1992); South Carolina v. Regan,
465 U.S. 367 (1984); FERC v. Mississippi, 456 U.S.
742 (1982); Oregon v. Mitchell, 400 U.S. 112 (1970);
South Carolina v. Katzenbach, 383 U.S. 301 (1966);
Colorado v. Toll, 268 U.S. 228 (1925); Missouri v. Hol-
land, 252 U.S. 416 (1920). As both Dole and NFIB re-
flect, the States may protect themselves against ille-
gal funding offers by bringing lawsuits in federal
court. None of the various opinions in those cases
30
questioned the States’ standing to raise such chal-
lenges.
Even though the Court accepts that a “recipient of
the federal funds” has standing to challenge the legal-
ity of a funding condition, Vladeck, States’ Rights and
State Standing, 46 U. Rich. L. Rev. 845, 862–63 (2012)
(discussing Dole), it has never expressly said as much,
see Kentucky, 54 F.4th at 362 n.4 (Nalbandian, J., con-
curring in part and dissenting in part). The first ques-
tion presented offers a chance to do so. The Court can
expressly confirm what both history and precedent al-
ready indicate: that the States have standing to sue
over direct injuries to their sovereignty, such as when
Congress coercively offers federal funds with ambigu-
ous conditions attached.
Indeed, the Court has held that States are “enti-
tled to special solicitude” as part of “standing analy-
sis,” at least when they “assert” their own “rights un-
der federal law.” Massachusetts v. EPA, 549 U.S. 497,
520 & n.17 (2007). The United States, for its part, has
not accepted that. In recent years, the United States
has pressed several “novel” standing arguments
against States “that have few precedents” or ana-
logues “in the standing jurisprudence governing suits
by private individuals.” Young, State Standing and
Cooperative Federalism, 94 Notre Dame L. Rev. 1893,
1894 (2019). The federal government has argued, for
example, that state injuries stemming from federal ac-
tion are “self-inflicted” or “offset by other benefits of
federal policies.” Id. (quotation marks omitted).
As the Tax Mandate challenges show, the United
States has developed yet another “novel” way to de-
prive the States of their standing to sue over federal
power grabs: post hoc agency rulemaking. This case
31
allows this Court to make clear that federal agencies
cannot, through such rulemaking, deprive the States
of their ability to challenge Congress’s illegal funding
offers. Every circuit to have addressed the issue—in-
cluding the Sixth Circuit—has held agencies cannot,
by regulation, provide the constitutionally required
degree of clarity. Only Congress can provide that clar-
ity. West Virginia, 59 F.4th at 1147; Tex. Educ.
Agency v. U.S. Dep’t of Educ., 992 F.3d 350, 361–62
(5th Cir. 2021); Va. Dep’t of Educ. v. Riley, 106 F.3d
559, 560–61, 567 (4th Cir. 1997) (en banc); id. at 572
(Niemeyer, J., concurring in part); id. (Hamilton, J.,
concurring in the judgment); Kentucky, 54 F.4th at
353–54; accord Hamburger, Purchasing Submission,
130–31. It would be strange if the same regulations
that are incapable of curing the constitutional defect
in ambiguous Spending Clause legislation were none-
theless capable of mooting challenges to such condi-
tions. After all, allowing agencies to “moot” constitu-
tional challenges in this way effectively gives them the
power to cure ambiguity in Spending Clause legisla-
tion—the very power that courts have consistently
held agencies lack.
II. The Court should grant review of the
purely legal, immensely important merits
question.
This Court should also grant certiorari to decide
whether the Tax Mandate is unconstitutional.
A. Congress’s Spending Clause power is “subject
to several general restrictions.” Dole, 483 U.S. at 207.
Relevant here, Congress cannot attach ambiguous
conditions to funding offers, id., or impose conditions
through coercive offers, id. at 211; NFIB, 567 U.S. at
577–578 (op. of Roberts, C.J.). The Tax Mandate
32
violates both principles. It is ambiguous because it
leaves entirely unclear what it means for a State to
“indirectly offset a reduction in” its “net tax revenue.”
42 U.S.C. §802(c)(2)(A); see also West Virginia, 59
F.4th at 1143–46. And it is unduly coercive because
no State, in the wake of a devastating pandemic, could
have declined the billions of dollars to which the Tax
Mandate was attached. Every State was forced to sur-
render a part of its sovereign taxing authority under
the Tax Mandate in exchange for the much-needed
funds.
The Final Rule does not cure these problems. The
rule does not even arguably bear on the coerciveness
of Congress’s offer to the States. And for three rea-
sons, the rule also has no effect on the question
whether the Tax Mandate is unconstitutionally am-
biguous. First, agency rulemaking cannot cure an am-
biguous spending offer. See West Virginia, 59 F.4th at
1147; Tex. Educ. Agency, 992 F.3d at 361–62; Riley,
106 F.3d at 560–61, 567; id. at 572 (Niemeyer, J., con-
curring in part); id. (Hamilton, J., concurring in the
judgment). Second, Congress did not delegate to
Treasury the power to say what the Tax Mandate
means. See Pet.App. 63a–75a; West Virginia, 59 F.4th
at 1146–47. Third, the Final Rule does not clarify the
Mandate’s requirements. Though the Final Rule an-
nounces an atextual formula that the Secretary will
use in assessing Tax Mandate compliance, 31 C.F.R.
§35.8(b), it also gives Secretary broad authority to act
on any “evasions” of the Tax Mandate she perceives in
hindsight, 31 C.F.R. §35.4(a); see Kentucky, 54 F.4th
at 363–64 (Nalbandian, J., concurring in part and dis-
senting in part). The States are thus forced to make
tax policy without being able to discern which
33
exercises of taxing authority will trigger an enforce-
ment action.
The Tax Mandate’s constitutionality presents an
“important question of federal law” that should be
“settled by this Court.” Sup. Ct. R. 10(c). Every State
accepted Rescue Plan funds. So every State without
an injunction is bound by the Tax Mandate’s terms.
And any perceived violation of the Mandate will sub-
ject an offending State to a double penalty: the State
will lose money through recoupment equal to the
amount of money the State already lost by cutting
taxes.
Any federal law that intrudes on the States’ au-
thority to set tax policy implicates an issue of great
importance. “States’ sovereign authority to tax” is one
of the most vital powers the States retain. See Pet.
App. 27a. It is “‘indispensable’ to the States’ very ‘ex-
istence.’” Id. (quoting Gibbons v. Ogden, 9 Wheat. 1,
199 (1824)). The founders recognized that the States
“possess an independent and uncontrollable authority
to raise their own revenues for the supply of their own
wants,” and that “an attempt on the part of the na-
tional Government to abridge them in the exercise of
it would be a violent assumption of power unwar-
ranted by any article or clause of its Constitution.”
The Federalist No. 32, p.199 (Hamilton) (Cooke, ed.,
1961) (emphasis added). The question whether the
Tax Mandate unconstitutionally interferes with this
power thus presents a question of exceptional im-
portance.
B. The Court can and should address the Man-
date’s constitutionality even though the Sixth Circuit
never reached the issue. To be sure, this Court is a
court “of review, not of first view.” Cutter v.
34
Wilkinson, 544 U.S. 709, 718 n.7 (2005). But the
Court can, and does, make exceptions to that rule
when it is prudent to do so. See, e.g., Buck v. Davis,
580 U.S. 100, 118 (2017); Fisher v. Univ. of Tex., 579
U.S. 365, 378–79 (2016); Exxon Shipping Co. v. Baker,
554 U.S. 471, 487 (2008); Yates v. Evatt, 500 U.S. 391,
407 (1991). Considering what “would serve judicial
economy best,” Yates, 500 U.S. at 407, this case is a
proper vehicle for reaching the merits. And the Court
should do so now.
For one thing, States must spend all of their Res-
cue Plan funds by 2025. See §802(a)(1); see also 31
C.F.R. §35.5. Thus, putting off a decision on the Man-
date’s constitutionality would deprive States of
needed clarity regarding their duty to comply with the
Mandate’s terms.
Further, the constitutionality of the Tax Mandate
is a legal question that substantially overlaps with
justiciability. Standing and the merits are distinct in-
quiries. See Ariz. State Legis., 576 U.S. at 800. But in
some cases, such as this one, they “are inextricably in-
tertwined.” Revere v. Mass. Gen. Hosp., 463 U.S. 239,
243 n.5 (1983) (quotation marks omitted). Here, jus-
ticiability and the merits both turn on the Tax Man-
date’s meaning. The same ambiguity that makes the
Mandate unconstitutional inflicts the imminent-re-
coupment and sovereign-authority injuries on Ohio.
And Treasury’s effort to extinguish that ambiguity
through rulemaking only deepened the injury by im-
posing additional compliance costs on the State.
In any event, the Court is not being asked to take
a “first view” of the merits. See Cutter, 544 U.S. at 718
n.7. Two circuits have already reached the merits
question and held the Mandate unconstitutional. See
35
Kentucky, 54 F.4th at 346–58; West Virginia, 59 F.4th
at 1140–48. And the parties to this case have “briefed
and argued the underlying merits at length.” Buck,
580 U.S. at 118. Especially given the high likelihood
that the Secretary will seek and obtain a writ of certi-
orari in either Kentucky or West Virginia—more on
that in the next section—the Court can reach the mer-
its confident that the legal questions presented have
been fully developed.
All told, putting off merits review would “do noth-
ing more than prolong [the] suit” and waste judicial
resources. Fisher, 579 U.S. at 379. The Court should
take the more efficient approach and answer this im-
portant question now. Accord id.; Yates, 500 U.S. at
407.
III. The Court should grant certiorari in this
case even if it grants certiorari in
Kentucky or West Virginia.
The Court is likely to decide the questions pre-
sented in this case sooner rather than later. For one
thing, the Secretary herself will almost certainly seek
review in either Kentucky, 54 F.4th 325, or West Vir-
ginia, 59 F.4th 1124, both of which held that the Tax
Mandate is unconstitutionally ambiguous. This Court
will likely grant the Secretary’s petition for a writ of
certiorari, since the Court considers decisions holding
federal laws unconstitutional to be especially worthy
of review. See Narechania, Certiorari in Important
Cases, 122 Colum. L. Rev. 923, 928–29 (2022);
Shapiro, et al., Supreme Court Practice §4.12 at 264
(10th ed. 2013).
Even if the Court grants review in Kentucky or
West Virginia, it should grant review in this case as
well. Doing so would allow the Court to address the
36
novel mootness arguments the Sixth Circuit advanced
below. And by granting review in this case—in addi-
tion to West Virginia or Kentucky—the Court can en-
sure that no hitherto unnoticed jurisdictional flaw in
one case blocks the Court’s consideration of the im-
portant issues presented.
At minimum, the Court should hold this case pend-
ing the disposition of Kentucky or West Virginia.
CONCLUSION
The Court should grant the petition for certiorari
and reverse.
Respectfully submitted,
DAVE YOST
Ohio Attorney General
BENJAMIN M. FLOWERS*
Solicitor General
*Counsel of Record
ZACHERY P. KELLER
MAY MAILMAN
MATHURA J. SRIDHARAN
Deputy Solicitors General
30 East Broad St., 17th Floor
Columbus, Ohio 43215
614-466-8980
bflowers@ohioago.gov
Counsel for Petitioner
MARCH 2023
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