Reply of petitioner Missouri, Missouri v. Yellen, No. 22-352 (U.S.) (January 4, 2023)
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A reply brief for petitioner State of Missouri in Missouri v. Yellen, No. 22-352, on petition for writ of certiorari to the United States Court of Appeals for the Eighth Circuit, dated January 4, 2023. The respondents are Janet L. Yellen, Richard Delmar and the United States Department of the Treasury. The table of contents lists arguments that Treasury's standing analysis repeats the Eighth Circuit's errors, that the circuit courts are split on how to evaluate a State's standing to challenge the Tax Mandate, and that the Court should review the meaning and constitutionality of the Tax Mandate. The conclusion states that the petition for writ of certiorari should be granted.
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“Reply of petitioner Missouri, Missouri v. Yellen, No. 22-352 (U.S.) (January 4, 2023).”
Original at www.supremecourt.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/reply-of-petitioner-missouri-missouri-v-yellen-no-22-352-u-s-january-4-a332181be5/
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No. 22-352
In the
Supreme Court of the United States
THE STATE OF MISSOURI,
Petitioner,
v.
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; UNITED STATES
DEPARTMENT OF THE TREASURY,
Respondents.
On Petition for Writ of Certiorari to the
United States Court of Appeals for the Eighth Circuit
REPLY BRIEF FOR PETITIONER
ANDREW BAILEY
Missouri Attorney General
D. JOHN SAUER
Deputy Attorney General
MICHAEL E. TALENT
Deputy Solicitor General
Counsel of Record
OFFICE OF THE MISSOURI
ATTORNEY GENERAL
Supreme Court Building
P.O. Box 899
Jefferson City, MO 65102
(314) 340-4869
Michael.Talent@ago.mo.gov
Counsel for Petitioner
i
TABLE OF CONTENTS
TABLE OF CONTENTS ............................................. i
TABLE OF AUTHORITIES....................................... ii
REPLY BRIEF.............................................................1
I. Treasury’s standing analysis repeats the
Eighth Circuit’s errors. .....................................2
II. The circuit courts are split on how to
evaluate a State’s standing to challenge
the Tax Mandate and spending conditions
more generally...................................................5
III. The Court should review the meaning and
constitutionality of the Tax Mandate. ............ 10
CONCLUSION .......................................................... 12
ii
TABLE OF AUTHORITIES
Cases Page(s)
Arizona v. Yellen,
34 F.4th 841 (9th Cir. 2022) ........................ 1, 2, 5–9
Armstrong v. Exceptional Child Care Ctr., Inc.,
575 U.S. 320 (2015) ..................................................4
Bell v. Hood,
327 U.S. 678 (1946) ..................................................4
City and County of San Francisco v. Trump,
897 F.3d 1225 (9th Cir. 2018) ..................................4
FEC v. Cruz,
142 S. Ct. 1638 (2022) ..............................................4
Franklin v. Massachusetts,
505 U.S. 788 (1992) ..................................................4
Kentucky v. Yellen,
54 F.4th 325 (6th Cir. 2022) ...................... 1, 4–9, 11
Ohio v. Yellen,
53 F.4th 983 (6th Cir. 2022) ........................ 1, 6, 7, 9
Susan B. Anthony List v. Driehaus,
(SBA List), 573 U.S. 149 (2014) ...............................4
Texas v. Yellen,
597 F. Supp. 3d 1005 (N.D. Tex. 2022) ................. 11
Virginia v. Am. Booksellers Ass’n, Inc.,
484 U.S. 383 (1988) ..................................................4
West Virginia v. U.S. Dep’t of Treasury,
571 F. Supp. 3d 1229 (N.D. Ala. 2021) .................. 11
Zivotofsky v. Clinton,
566 U.S. 189 (2012) ................................................ 10
Regulations
31 C.F.R. § 35.8(b).................................................... 3, 9
iii
Coronavirus State and Local Fiscal Recovery Funds,
86 Fed. Reg. 26,786 (May 17, 2021) ........................3
Coronavirus State and Local Fiscal Recovery Funds,
87 Fed. Reg. 4,338 (Jan. 27, 2022)...........................3
1
REPLY BRIEF
Treasury’s opposition highlights why this case is
worthy of certiorari review.
To start, the agency’s standing analysis
underscores that the Eighth Circuit’s decision is
wrong. Like the Eighth Circuit, Treasury starts by
misstating Missouri’s argument. The State’s position
is not that the agency is interpreting the Tax Mandate
to bar all tax cuts; it is that the agency is interpreting
the law too broadly. Strawman in hand, Treasury
concludes Missouri lacks standing because the Tax
Mandate supports Treasury’s interpretation. Such
conflation of standing and the merits shows that this
case should be resolved on the latter, not the former.
Treasury’s attempt to reconcile the Eighth
Circuit’s decision and the Ninth Circuit’s analysis in
Arizona v. Yellen, 34 F.4th 841 (2022), is equally
flawed. The agency’s cursory analysis underscores
that the two courts—when faced with cases involving
similar facts and similar theories—reached
contradictory conclusions.
Furthermore, the Sixth Circuit’s decisions in
Ohio v. Yellen, 53 F.4th 983 (2022), and Kentucky v.
Yellen, 54 F.4th 325 (2022), have deepened the split.
In analyzing standing, the Sixth Circuit adopted
reasoning that tracks with what the Ninth Circuit
said in Arizona. But in concluding that Treasury’s
regulations mooted challenges premised on the
plaintiff States’ pre-enforcement theories of standing,
the court adopted reasoning that is similar to the
Eighth Circuit’s decision here.
While the Sixth Circuit’s analysis does not cast
doubt on Missouri’s Article III standing, it
2
underscores the need for certiorari review. Three
circuits have now addressed the jurisdictional issues
this case raises in four opinions. And two of those
decisions drew partial dissents. That well-developed
split highlights the need and appropriateness of
review here.
Finally, Treasury fails to show why the Court
should not review the important question of the Tax
Mandate’s meaning and constitutionality. The
agency’s only objection is that this case does not
provide the Court with a proper vehicle for doing so.
That ignores that the Eighth Circuit’s—and
Treasury’s—conflation of standing and the merits
means both issues are fairly presented. It also ignores
that Missouri is the only State to provide an
interpretation of the Tax Mandate that is consistent
with the law’s text and that is constitutional; every
other case challenges the Tax Mandate’s
constitutionality outright. Further percolation will
therefore not bring Missouri’s statutory analysis to
the Court, and so review is appropriate. Indeed, the
fact that Missouri alone, among all pending
challenges, offers a saving construction of the Tax
Mandate that preserves state sovereignty while
avoiding constitutional problems makes this case a
uniquely appropriate vehicle for review.
I. Treasury’s standing analysis repeats
the Eighth Circuit’s errors.
Treasury treats Missouri’s challenge as the Eighth
Circuit did—as one to “ ‘a specific potential
interpretation’ ” of the Tax Mandate. Opp. 8 (quoting
App. 9a); see also Opp. 10 (similar). That permits
Treasury—again, like the Eighth Circuit, see App. 9a–
10a—to say “that there is no threatened application of
3
[that] interpretation” because the Tax Mandate’s
“plain terms foreclose such an interpretation” and the
“regulations implement” those terms. Opp. 9–10
(quotations and alterations omitted); see also, e.g.
Opp. 11 (saying “tax cuts simpliciter do not violate
the” Tax Mandate).
Treasury attacks a strawman. Missouri’s claim is
that the Tax Mandate prohibits “only the deliberate
use of ARPA funds to pay for a tax cut.” Pet. 11. That
is, Missouri does not challenge a specific, potential
interpretation. It challenges “an interpretation that
is broader than Missouri’s and that implicates tax
cuts the State was considering at the time it filed suit
and tax cuts it has subsequently enacted.” Pet. 19; see
also Pet. 19 n.6 (providing record cites). Moreover,
Treasury admits, as it must, that its reading of the
law diverges from Missouri’s. See Pet. 18–19 (noting
that fact).
For example, Treasury’s regulations create a
presumption that a drop in net tax revenue violates
the Tax Mandate. See Coronavirus State and Local
Fiscal Recovery Funds, 86 Fed. Reg. 26,786, 26,807
(May 17, 2021) (the IFR) (noting that such reductions
“will be considered to have been offset by” ARPA funds
unless a safe harbors applies); see also 31 C.F.R.
§ 35.8(b). To avoid recoupment, States must “identify
any sources of funds that have been used to
permissibly offset” that reduction. Coronavirus State
and Local Fiscal Recovery Funds, 87 Fed. Reg. 4,338,
4,423 (Jan. 27, 2022) (final rule). Those regulations
are consistent with how Secretary Yellen has
interpreted the law. See Pet. 6–7 (detailing that
history). So Treasury does not key a violation of the
Tax Mandate to whether a State deliberately uses
4
ARPA funds to pay for a tax cut (as Missouri says it
should)—it keys the violation to a drop in tax revenue.
Thus, at every step, there has been a dispute
between Missouri and Treasury about what the Tax
Mandate requires of the State; that is, of the
lawfulness of what Treasury is requiring the State to
do to avoid recoupment. That is the stuff of Article III
cases and controversies. See, e.g., Susan B. Anthony
List v. Driehaus (SBA List), 573 U.S. 149, 163 (2014);
Virginia v. Am. Booksellers Ass’n, Inc., 484 U.S. 383,
392–93 (1988); City and County of San Francisco v.
Trump, 897 F.3d 1225, 1236 (9th Cir. 2018); see also
Armstrong v. Exceptional Child Care Ctr., Inc., 575
U.S. 320, 327 (2015) (noting federal courts’ power “to
enjoin unconstitutional actions by . . . federal
officers”); Franklin v. Massachusetts, 505 U.S. 788,
828 (1992) (Scalia, J., concurring in part and
concurring in the judgment) (“Review of the legality of
Presidential action can ordinarily be obtained in a suit
seeking to enjoin the officers who attempt to enforce
the President’s directive.”).
Indeed, Treasury’s opposition underscores that
fact. The agency’s standing analysis assumes that the
Tax Mandate supports the agency’s interpretation of
the law, see Opp. 9–10, and so necessarily assumes
that Missouri’s statutory claim is not meritorious.
But “[f]or standing purposes, [courts] accept as valid
the merits of [the plaintiff ’s] legal claims.” FEC v.
Cruz, 142 S. Ct. 1638, 1647 (2022). Treasury’s focus
on what the Tax Mandate means underscores that
this case “calls for a judgment on the merits and not
for a dismissal for want of jurisdiction.” Bell v. Hood,
327 U.S. 678, 682 (1946); see also Kentucky v. Yellen,
5
54 F.4th 325, 349 n.16 (6th Cir. 2022) (making this
point).
II. The circuit courts are split on how to
evaluate a State’s standing to challenge
the Tax Mandate and spending
conditions more generally.
1. Treasury’s assertion that there is no conflict
between the Eighth Circuit’s decision in this case and
the Ninth Circuit’s decision in Arizona v. Yellen, 34
F.4th 841 (2022), see Opp. 11–12, relies on the Eighth
Circuit’s claim that “Arizona did not challenge a
hypothetical ‘broad interpretation’ of the [Tax
Mandate] but instead argued that, as written, the
[Tax Mandate] is unconstitutionally ambiguous and
unduly coercive,” and that Missouri “developed no
argument as to how it has suffered a concrete injury”
under similar theories. Opp. 11–12 (quoting App. 9a
n.5 (alterations omitted)).
The first point again relies on a misstatement of
Missouri’s position. Missouri seeks to enjoin
enforcement of Treasury’s unlawfully broad reading of
the Tax Mandate, not one specific, hypothetical
interpretation. As to the second point, the
constitutional challenges and theories of injury that
animate the Ninth Circuit’s reasoning in Arizona
undergird Missouri’s statutory analysis and are the
basis of the State’s alternative constitutional claim.
See Pet. 20–21.
There is thus no principled distinction between
this case and Arizona. Factually and analytically, the
cases are similar. See Pet. 17–21. The different
results are therefore irreconcilable and certiorari is
6
warranted to address this clear, concrete split of
authority.
2. Deepening the split are the Sixth Circuit’s
decisions in Ohio v. Yellen, 53 F.4th 983 (2022), and
Kentucky v. Yellen, 54 F.4th 325 (2022). The
decisions, taken together, have two jurisdictional
rulings—a standing ruling and a mootness ruling.
First, the Sixth Circuit held that Kentucky and
Tennessee had pre-enforcement standing to challenge
the constitutionality of the Tax Mandate because both
States alleged they “desire to enact (or have enacted)
tax cuts,” Kentucky, 54 F.4th at 335, 1 but the Tax
Mandate “constrain[s] their sovereign authority to tax
and exposed them to an imminent recoupment action
should they wish to pursue their preferred policies,”
id. at 336. That tracks the Ninth Circuit’s analysis,
see Arizona, 34 F.4th at 851 (“There is a realistic
danger that Arizona, after accepting federal funds
under ARPA and passing a billion dollar tax cut, will
be forced to repay federal funds for directly or
indirectly using those funds to offset its tax cut, in
violation of the Offset Provision.”), and so splits with
the Eighth Circuit’s decision in this case, see App. 11a,
and Judge Nelson’s partial dissent in Arizona, see
34 F.4th at 856 (“A tax cut, on its own, does not fall
within the Offset Provision’s ambit.”).
1
The States also alleged past harm “from the receipt of an
ambiguous or coercive offer.” Kentucky, 54 F.4th at 338–39
(quotations omitted). Because the Sixth Circuit was considering
the validity of an injunction, it did not discuss that injury in
much depth. See id. at 339 (concluding that “an injunction
cannot be used to redress a purely past injury.”).
7
The Sixth Circuit—over a dissent on this point—
then held that Treasury’s regulations mooted the
States’ pre-enforcement and sovereign theories of
standing. See Kentucky, 54 F.4th at 341; Ohio, 53
F.4th at 990–92. The regulations, the court said,
meant “there is no reasonable possibility” of
recoupment because even if “Treasury could read the
[Tax Mandate] in a broad way—as barring any tax
cut”—the agency “disavowed” that interpretation.
Ohio, 53 F.4th at 991–92 (quotations omitted); see
Kentucky, 54 F.4th at 341. That splits with the Ninth
Circuit, which concluded that Treasury’s regulations
evidenced Arizona’s standing, see Arizona, 34 F.4th at
850 (“[T]he recoupment process outlined in the IFR
show[s] the federal government’s intent to enforce the
Offset Provision.”), and never mentioned them in
analyzing the harms to Arizona’s sovereign interests,
see 34 F.4th at 851–53.
Instead, the Sixth Circuit said, the States needed
to show “they intend to specifically violate the Rule.”
Kentucky, 54 F.4th at 341. That is, they needed to
show that a tax cut “would (1) result in a reduction
in . . . net tax revenue, and (2) that [the State] would
then offset such a reduction with ARPA funds, or (3)
fail to identify a permissible source of offsetting
funds,” Ohio, 53 F.4th at 992. 2 That is what the
2
Alternatively, the Sixth Circuit held that the costs of
compliance Tennessee faced meant the case was not moot as to
it. Kentucky, 54 F.4th at 342. That reasoning applies here, too.
See Pet. 22 (noting the costs Missouri will face to comply with
Treasury’s unlawfully broad reading).
8
Eighth Circuit said Missouri needed to show to
establish standing. See App. 11a. 3
Judge Nalbandian disagreed. He noted the
regulations “still limit States from enacting tax
policies if they do not offset a net reduction with
permissible revenue sources.” Kentucky, 54 F.4th at
364 (Nalbandian, J., concurring in part and dissenting
in part). Thus, he said, the Tax Mandate “still
restrict[s] States from enacting tax cuts in their
sovereign capacities and Treasury-recoupment
actions remain a credible threat.” Id. That reasoning
tracks the Ninth Circuit’s analysis. See Arizona, 34
F.4th at 853 (“Here, Arizona has demonstrated that if
the Offset Provision is as ambiguous and coercive as
it alleges, it will face serious consequences in losing
control over its taxing policies and being held to a
funding offer that it does not understand.”).
3. Thus, the Sixth Circuit’s analysis deepens the
split between the Eighth and Ninth Circuits. And on
the merits, the Sixth Circuit’s analysis does nothing
to undermine Missouri’s standing.
Because the Sixth Circuit’s standing analysis
supports Missouri, see Kentucky, 54 F.4th at 335–36
(discussing the States’ “original theories” that
established standing), the question is whether the
court’s mootness analysis applies. It does not. To
start, the Sixth Circuit’s mootness holding is wrong
for the same reason the Eighth Circuit’s standing
3
Even here, there is a conflict. But see Opp. 12 n.2. By holding
that Treasury’s regulations mooted the Plaintiff States’
challenges, the Sixth Circuit placed the burden of “defeat[ing]
jurisdiction” on Treasury rather than on the States to show
standing. Kentucky, 54 F.4th at 340 n.10.
9
analysis is wrong. The Sixth Circuit said, to avoid
mootness, the States needed “to provide evidence that
they intend to specifically violate the Rule.” Id. at 341.
But that “approximates requiring [the States] to
admit to violating a law in order to have standing to
challenge it,” and so embraces a theory of jurisdiction
this Court “has repeatedly rejected.” Arizona, 34
F.4th at 849 (gathering examples); see also Pet. 22–
23.
But even on the Sixth Circuit’s terms, jurisdiction
exists. Missouri faces compliance costs and sovereign
harms from Treasury’s inappropriately broad reading
of the Tax Mandate. See Pet. 22 (compliance costs);
Pet. 24–26 (sovereign harms). That means there is a
live controversy, and so jurisdiction. See Kentucky, 54
F.4th at 342 (finding that compliance costs prevents
mootness).
Even Missouri’s pre-enforcement standing
remains. The Sixth Circuit’s mootness analysis rests
on the view that Kentucky’s and Tennessee’s injuries
stem from their fear that the Tax Mandate bars “any
tax cut . . . .” Ohio, 53 F.4th at 991; see Kentucky,
54 F.4th at 341. But Missouri’s claim is that the Tax
Mandate prohibits only the deliberate use of ARPA
funds to pay for a tax cut. See, e.g., supra § I. And the
source of the State’s injuries is Treasury’s
implementation of a broader interpretation of the law.
See, e.g., 31 C.F.R. § 35.8(b) (codifying the broader
reading). As a result, Treasury has not “repeatedly
disavowed” an interpretation of the Tax Mandate that
injures Missouri, Ohio, 53 F.4th at 991, it has
embraced it.
10
***
There is thus a circuit split on when States have
standing to challenge the Tax Mandate—and, by
extension, when States have standing to challenge a
spending condition, see Pet. 31–33. That split spans
three circuits, four cases, and has resulted in six
opinions. It is therefore a well-defined split that
makes certiorari review appropriate.
III. The Court should review the meaning
and constitutionality of the Tax
Mandate.
Finally, Treasury argues that the Court should not
address the meaning and constitutionality of the Tax
Mandate. See Opp. 13–15. That is not because the
Tax Mandate’s meaning and constitutionality are
unimportant; they plainly are. See Sup. Ct. R. 10(c);
Pet. 33. The agency’s main argument is that the
Eighth and Ninth Circuits “resolved the case on
threshold grounds.” Opp. 13–14 (citing Zivotofsky v.
Clinton, 566 U.S. 189, 201 (2012)).
That ignores that the Eighth Circuit’s standing
analysis (like Treasury’s opposition, see Opp. 9–10)
conflates the merits with standing. See, e.g., App. 11a;
see also Pet. 27–28, 34. Both issues are therefore
fairly before the Court. Furthermore, the Court now
has the benefit of the Sixth Circuit’s constitutional
analysis of the Tax Mandate. See Kentucky, 54 F.4th
at 346–57. Thus, unlike in Zivotofsky, there are
“lower court opinions to guide [the] analysis of the
merits.” Zivotofsky, 566 U.S. at 201. 4
4
Given that, this case’s procedural posture is irrelevant.
Contra Opp. 14.
11
Nor does Missouri’s statutory argument render
review inappropriate. But see Opp. 14. To the
contrary, Missouri’s statutory claim shows that
review is appropriate. Only Missouri has provided a
constitutional interpretation of the Tax Mandate.
Every other case challenging the law—including the
two Treasury mentions, see Opp. 15—has held that
the law is constitutionally deficient. See, e.g.,
Kentucky, 54 F.4th at 347 (concluding that, because
the Tax Mandate is vague, Tennessee cannot be forced
to comply with Treasury’s regulations); Texas v.
Yellen, 597 F. Supp. 3d 1005, 1012–15 (N.D. Tex.
2022), appeal docketed No. 22-10560 (5th Cir.); West
Virginia v. U.S. Dep’t of Treasury, 571 F. Supp. 3d
1229, 1248–55 (N.D. Ala. 2021), appeal docketed No.
22-10168 (11th Cir.). That means further percolation
is unnecessary, contra Opp. 14–15, because no other
case will bring Missouri’s statutory argument to the
Court.
12
CONCLUSION
The petition for writ of certiorari should be
granted.
Respectfully submitted,
ANDREW BAILEY
Missouri Attorney General
D. JOHN SAUER
Deputy Attorney General
MICHAEL E. TALENT
Deputy Solicitor General
Counsel of Record
OFFICE OF THE MISSOURI
ATTORNEY GENERAL
Supreme Court Building
207 West High Street
Jefferson City, MO 65102
(314) 340-4869
Michael.Talent@ago.mo.gov
January 4, 2023
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