Reply to Response to Motion, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 91 (December 23, 2022)
Summary
Defendants' reply in support of their motion to dismiss in State of Arizona v. Janet Yellen, Secretary of the Treasury, et al., Case No. 2:21-cv-00514-ROS, U.S. District Court for the District of Arizona, Doc. 91, dated December 23, 2022. The reply argues that the offset provision of the American Rescue Plan Act (ARPA) is not unconstitutionally ambiguous, that ARPA is not coercive or commandeering, and that the offset provision relates to ARPA's purposes. It states that Congress need only make the existence of the condition explicitly obvious, citing Mayweathers v. Newland. The conclusion asks the Court to dismiss the case or enter judgment for Defendants.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Reply to Response to Motion, State of Arizona v. Yellen, No. 2:21-cv-00514 (D. Ariz.), Doc. 91 (December 23, 2022).”
Original at storage.courtlistener.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/reply-to-response-to-motion-state-of-arizona-v-yellen-no-2-21-cv-00514-aa8ffd5375/
, SHA-256 8e20930d17a3c0907965c30e8777ce15dfd9b4b20a4d4ebae87b8442599c1859.Full text
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 1 of 17
1 BRIAN M. BOYNTON
Principal Deputy Assistant Attorney General
2 ALEXANDER K. HAAS
3 Director, Federal Programs Branch
BRIGHAM J. BOWEN
4
Assistant Director, Federal Programs Branch
5 MICHAEL P. CLENDENEN
6 STEPHEN EHRLICH
Trial Attorneys
7
U.S. Department of Justice
8 Civil Division, Federal Programs Branch
9
100 L Street, NW
Washington, DC 20005
10 Tel.: (202) 305-9803
11 Email: stephen.ehrlich@usdoj.gov
12 Counsel for Defendants
13
14 UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
15
16 Case No. 2:21-cv-00514-ROS
State of Arizona,
17
18 Plaintiff, DEFENDANTS’ REPLY IN
19
SUPPORT OF THEIR MOTION TO
v. DISMISS
20
21 Janet Yellen, in her official capacity as
Secretary of the Treasury, et al.,
22
23 Defendants.
24
25
26
27
28
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 2 of 17
1
TABLE OF CONTENTS
2
3
INTRODUCTION........................................................................................... 1
4
ARGUMENT ................................................................................................... 2
5
6 I. The offset provision is not unconstitutionally ambiguous. .......... 2
7 II. ARPA is not coercive or commandeering. ..................................... 8
8
III. The offset provision relates to ARPA’s purposes. ....................... 10
9
10
CONCLUSION ............................................................................................. 11
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Defs.’ Reply to Mot. to Dismiss|i
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 3 of 17
1 TABLE OF AUTHORITES
2 Cases
3 Air Line Pilots Ass’n v. Alaska Airlines, Inc.,
4 898 F.2d 1393 (9th Cir. 1990) ................................................................................. 11
5
Arizona v. Yellen,
6 34 F.4th 841 (9th Cir. 2022) .................................................................................. 4, 8
7
Arizona v. Yellen,
8
550 F. Supp. 3d 791 (D. Ariz. 2021).................................................................passim
9
Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy,
10
548 U.S. 291 (2006) ................................................................................................... 3
11
12 Ass’n of Priv. Sector Colls. & Univs. v. Duncan,
681 F.3d 427 (D.C. Cir. 2012) ................................................................................... 5
13
14 Benning v. Georgia,
391 F.3d 1299 (11th Cir. 2004) ............................................................................... 10
15
16 Biden v. Missouri,
17 142 S. Ct. 647 (2022) ................................................................................................. 4
18
Charles v. Verhagen,
19 348 F.3d 601 (7th Cir. 2003) ................................................................................. 3, 6
20
City of Los Angeles v. Barr,
21 929 F.3d 1163 (9th Cir. 2019) ..............................................................................7, 10
22
Ducey v. Yellen,
23
--- F. Supp. 3d ---, 2022 WL 2817710 (D. Ariz. July 19, 2022) .................... 1, 4, 6, 7
24
Janus Cap. Grp., Inc. v. First Derivative Traders,
25
564 U.S. 135 (2011) ................................................................................................... 5
26
27 Kentucky v. Yellen,
563 F. Supp. 3d 647 (E.D. Ky. 2021) ........................................................................ 9
28
Defs.’ Reply to Mot. to Dismiss |ii
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 4 of 17
1
Massachusetts v. Mellon,
2 262 U.S. 447 (1923) ................................................................................................... 7
3
Mayweathers v. Newland,
4
314 F.3d 1062 (9th Cir. 2002) .................................................................... 3, 4, 10, 11
5
6 Missouri v. Yellen,
39 F.4th 1063 (8th Cir. 2022) ................................................................................ 4, 8
7
8 NFIB v. Sebelius,
567 U.S. 519 (2012) ............................................................................................... 2, 9
9
10 New York v. United States,
11 505 U.S. 144 (1992) ............................................................................................ 10, 11
12 Ohio v. Yellen,
13 53 F.4th 983 (6th Cir. 2022) .................................................................................. 5, 9
14
Oklahoma v. U.S. Civ. Serv. Comm’n,
15 330 U.S. 127 (1947) ................................................................................................. 10
16
Rust v. Sullivan,
17 500 U.S. 173 (1991) ................................................................................................. 10
18
Sabri v. United States,
19
541 U.S. 600 (2004) ................................................................................................. 10
20
21 School Dist. of City of Pontiac v. Sec’y of U.S. Dep’t of Educ.,
584 F.3d 253 (6th Cir. 2009) ..................................................................................... 8
22
23 South Dakota v. Dole,
483 U.S. 203 (1987) ................................................................................................. 10
24
25 Texas v. Yellen,
26 --- F. Supp. 3d. ---, 2022 WL 1063088 (N.D. Tex Apr. 8, 2022)............................ 10
27 West Virginia v. U.S Dep’t of Treasury,
28 571 F. Supp. 3d 1229 (N.D. Ala. 2021) .................................................................... 7
Defs.’ Reply to Mot. to Dismiss |iii
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 5 of 17
1
2 Statutes
3 42 U.S.C. § 802.................................................................................................... passim
4
Regulations
5
6 17 C.F.R. § 240.10b-5................................................................................................... 5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Defs.’ Reply to Mot. to Dismiss |iv
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 6 of 17
1 INTRODUCTION
2 In attempting to invalidate the offset provision of the American Rescue
3 Plan Act (ARPA)—a duly enacted statute providing billions in emergency aid—
4 Arizona essentially musters no more than a two-wrongs-make-a-right argument.
5 Other courts have found ARPA unconstitutionally ambiguous because it does
6 not specify the minute details of the offset provision, Arizona exclaims, so this
7 Court should too. Never mind that Judge Humetewa in this case rejected the ex-
8 act arguments that the State raises here. Arizona v. Yellen, 550 F. Supp. 3d 791,
9 797 (D. Ariz. 2021) (Congress allowably “made the existence of the condition
10 upon which Arizona could accept funds explicitly obvious.”). Never mind that
11 Judge Logan correctly did the same in upholding an even broader ARPA provi-
12 sion. Ducey v. Yellen, --- F. Supp. 3d ---, 2022 WL 2817710, at *8 (D. Ariz. July 19,
13 2022) (“Even though the ARPA’s language is broad and undoubtedly does not
14 specify every use that would violate the condition, Congress is not required to
15 provide such specificity.”). Never mind that those judges properly applied bind-
16 ing Supreme Court and Ninth Circuit precedent to do so. And never mind that
17 all those Supreme Court, Ninth Circuit, and District of Arizona decisions were
18 crystal clear in rejecting Arizona’s desired outcome: uncertainty about “every
19 factual instance of possible noncompliance does not amount to a violation of
20 Congress’ duty.” Arizona, 550 F. Supp. 3d at 797; Ducey, 2022 WL 2817710, at *8.
21 This Court should likewise reject the State’s arguments and reiterate Judge Hu-
22 metewa’s correct reasoning: “nobody questions the [offset provision] exists as a
23 condition to Arizona accepting the funds” and “[i]n that regard, Congress ful-
24 filled its duty[.]” Arizona, 550 F. Supp. 3d at 796.
25 The same is true for Arizona’s other claims. In arguing that the amount of
26 ARPA funding was so large as to be coercive, the State refuses to engage with
27 the Supreme Court’s decision in NFIB, where all Justices agreed that new federal
28 funding, however substantial, may properly be subject to conditions. NFIB v.
Defs.’ Reply to Mot. to Dismiss| 1
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 7 of 17
1 Sebelius, 567 U.S. 519, 687–88 (2012) (joint dissent); id. at 576, 585 (plurality)
2 (same); id. at 624–46 (Ginsburg, J., concurring in part) (finding no coercion).
3 That’s exactly what ARPA does: States who misuse ARPA funds—for example,
4 by using them as an improper offset—stand to lose only the amount of ARPA
5 funds they misused. 42 U.S.C. § 802(e). In contrast, the key in NFIB was that
6 States who declined the condition at issue stood to lose preexisting federal funding.
7 NFIB, 567 U.S. at 585. That is not true here. As Judge Humetewa rightly ex-
8 plained, ARPA is not coercive because it “will not revoke any federal funding
9 Arizona enjoyed prior to accepting,” so the “downside to declining the ARPA
10 funds is just that—Arizona would not have received ARPA funds.” Arizona, 550
11 F. Supp. 3d at 799. And because the offset provision is a condition on how states
12 use funds, it is necessarily related to the purpose of the funding. The Court
13 should dismiss Arizona’s claims or enter judgment in favor of Defendants.
14 ARGUMENT
15 I. THE OFFSET PROVISION IS NOT UNCONSTITUTIONALLY AMBIGUOUS.
16 Arizona fails to articulate any standard by which this Court should adjudi-
17 cate a Spending Clause ambiguity challenge. See Combined Reply in Supp. of
18 Renewed Mot. for Prelim. Inj. & Permanent Inj. & Resp. in Opp’n to Mot. to Dis-
19 miss (Pl.’s Opp’n) at 4–10, ECF No. 87. Does the statutory condition need to be
20 “unambiguously clear” only “as to [its] fundamental mandate”? Renewed Mot.
21 for Prelim. Inj. & Permanent Inj (Pl.’s Mot.) at 11 n.7, ECF No. 78. Or does the
22 statutory condition need to set forth every minute detail? See Pl.’s Opp’n at 6−7
23 (wanting details about, among other things, the “baseline against which to meas-
24 ure revenue reductions” and whether the offset provision “prohibits a reduction
25 in expected tax revenues” or “actual tax revenues”). Or something else? Arizona
26 doesn’t specify. It simply wants whatever analysis allows it to spend almost $5
27 billion in federal money without abiding by the minimal federal restrictions. See
28 42 U.S.C. § 802(c)(2). But as Defendants have explained, the real standard is
Defs.’ Reply to Mot. to Dismiss| 2
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 8 of 17
1 clear, easy to apply, and mandated by precedent: Congress need only “make the
2 existence of the condition itself—in exchange for the receipt of federal funds—
3 explicitly obvious.” Mayweathers v. Newland, 314 F.3d 1062, 1067 (9th Cir. 2002).
4 Agencies, like Treasury here, may then fill in the details subject to the Adminis-
5 trative Procedure Act and the other typical constraints.
6 In arguing otherwise, Arizona has no answer to Defendants’ legion of cited
7 cases, all of which express the same idea: “the exact nature of the conditions may
8 be ‘largely indeterminate,’ provided that the existence of the conditions is clear.”
9 Charles v. Verhagen, 348 F.3d 601, 607–08 (7th Cir. 2003) (quoting Mayweathers, 314
10 F.3d at 1067); Defs.’ Mot. to Dismiss & Opp’n to Pl.’s Inj. Mot., (Defs.’ Mot.) at 5–
11 8, ECF No. 86 (collecting cases). Instead, Arizona argues that the Supreme
12 Court’s decision in Arlington Central demands more clarity. Pl.’s Opp’n at 5–6.
13 But as Judge Humetewa explained, the issue in Arlington Central “was whether
14 the Individuals with Disabilities Education Act ‘furnishes clear notice regarding’
15 the existence of a condition whereby the States were required to pay for expert
16 testimony fees incurred through bringing claims under the Act.” Arizona, 550 F.
17 Supp. 3d at 796 (quoting Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S.
18 291, 296 (2006)). Nothing in Arlington Central was inconsistent with the binding
19 precedent of Mayweathers, which says that Congress need only “make the exist-
20 ence of the condition itself . . . explicitly obvious.” Mayweathers, 314 F.3d at 1067.
21 And Arizona conspicuously avoids any mention of post-Arlington Central
22 cases, which would make no sense if the Spending Clause required the particu-
23 larized clarity Arizona demands. Pl.’s Opp’n at 5–6. For example, Arizona says
24 nothing about Biden v. Missouri, where the Supreme Court recently cited and ap-
25 plied “a broad and indefinite grant of authority” for an agency “to impose [ ]
26 conditions” without questioning the provision’s constitutionality. Defs.’ Mot.
27 at 7 (citing Ducey, 2022 WL 2817710, at *8 and Biden v. Missouri, 142 S. Ct. 647, 652
28
Defs.’ Reply to Mot. to Dismiss| 3
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 9 of 17
1 (2022) (per curiam)). If Arizona were correct, that provision would be unconsti-
2 tutional. The same would be true of a similar ARPA provision, which Judge Lo-
3 gan recently upheld using the same standard articulated by the Ninth Circuit in
4 Mayweathers and Judge Humetewa in this case. 1 Defs.’ Mot. at 6.
5 “Here, nobody questions the [offset provision] exists as a condition to Ari-
6 zona accepting the funds.” Arizona, 550 F. Supp. 3d at 796. “In that regard,”
7 Judge Humetewa correctly held, “Congress fulfilled its duty under Pennhurst
8 and Arlington Central” and Mayweathers.2 Id. at 796–97 (citing Mayweathers, 314
9 F.3d at 1067). That should end the analysis.
10 But ARPA does plenty more than just note the existence of a condition, it
11 explains both the nature and scope of the offset provision as well. Defs.’ Mot. at
12 9–10. Fighting this simple conclusion, Arizona attempts to manufacture ambi-
13 guity by arguing that the statute’s use of the phrase “directly or indirectly” ren-
14 ders the offset provision incomprehensible because “money is fungible,” so any
15 tax cut is “indirectly” offset by ARPA funds. See Pl.’s Opp’n at 5–6. But the
16 fungibility of money is not some talisman that renders the offset provision unin-
17 telligible. The key is Congress’s use of the word “offset,” which merely prohibits
18 States from “us[ing] ARPA funds as part of [their budget] balancing process[.]”
19 Missouri v. Yellen, 39 F.4th 1063, 1070 n.6 (8th Cir. 2022). As Defendants ex-
20 plained, Congress’s use of the phrase “directly or indirectly” was simply meant
21
22
23 1 After appealing that decision, the Governor later moved to dismiss the
appeal. See Ducey v. Yellen, 22-16101, ECF No. 26 (9th Cir. Dec. 23, 2022).
24 2 Arizona bizarrely suggests that the Ninth Circuit’s reversal of Judge Hu-
25 metewa’s standing ruling casts doubt on her underlying reasoning. See Pl.’s
Opp’n at 3. But the Ninth Circuit made abundantly clear that its reversal “should
26 not be construed as commenting in any way on the merits of Arizona’s case.”
Arizona v. Yellen, 34 F.4th 841 (9th Cir. 2022). And it only reversed because it
27 viewed Judge Humetewa’s standing ruling as a premature ruling on the merits.
Id. at 852–53; Defs.’ Mot. at 3. Nowhere did the Ninth Circuit say that the district
28 court got the merits wrong. So this Court is free to—and should—reiterate Judge
Humetewa’s prior reasoning that the offset provision is not unconstitutionally
ambiguous.
Defs.’ Reply to Mot. to Dismiss| 4
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 10 of 17
1 to prevent States from using accounting tricks to circumvent the statutory re-
2 striction against using ARPA funds to “offset” tax-cut-related revenue losses.
3 Defs.’ Mot. at 9–10. This could happen when, for example, a State uses ARPA
4 funds to replace $2 billion in planned state expenditures on COVID-19 testing
5 and then uses the $2 billion it had originally budgeted for that purpose to offset
6 a $2 billion reduction in state income tax. Id.
7 Contrary to Arizona’s odd contention that the “‘directly or indirectly offset’
8 language is completely unprecedented,” Pl.’s Opp’n at 10, such text is nothing
9 new. As Defendants explained, “directly or indirectly” is commonly used to em-
10 phasize that a dictate cannot be circumvented by formalities. Defs.’ Mot. at 10
11 (citing Ass’n of Priv. Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 444 (D.C. Cir.
12 2012)); see also Janus Cap. Grp., Inc. v. First Derivative Traders, 564 U.S. 135, 141
13 (2011) (quoting 17 C.F.R. § 240.10b-5(b)) (Under the SEC’s Rule 10b-5, “it is un-
14 lawful for ‘any person, directly or indirectly, . . . [t]o make any untrue statement
15 of a material fact’ in connection with the purchase or sale of securities.”).
16 Arizona’s remaining arguments amount to improper nitpicking of the off-
17 set provision. Compare Pl.’s Opp’n at 6–7 with Defs.’ Mot. at 8 (collecting cases
18 for the proposition that Congress need not detail “‘every factual instance’ of pos-
19 sible noncompliance”). To do this, Arizona largely relies on out-of-circuit ARPA
20 cases that are overturned, currently on appeal, or currently pending potential
21 further review.3 See Pl.’s Opp’n at 6–7. Those decisions were incorrect for the
22 reasons Defendants explain here. And as Judge Humetewa recognized, this
23
24
25
26
27 3 Ohio was overturned by the Sixth Circuit as moot. Ohio v. Yellen, 53 F.4th
28 983, 994 (6th Cir. 2022). West Virginia is currently pending on appeal in the Elev-
enth Circuit. And Defendants disagree with the Sixth Circuit’s ruling on the mer-
its in Kentucky and are currently considering their options for further review.
Defs.’ Reply to Mot. to Dismiss| 5
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 11 of 17
1 Court “is benefitted and bound by [the Ninth Circuit’s decision in] Mayweathers,”
2 which is “directly on point.” Arizona, 550 F. Supp. 3d at 797 n.2. 4
3 Those decisions were also incorrect on their own terms. Issues like the
4 “baseline against which to measure revenue reductions” and “actual” versus
5 “expected” reductions in tax revenue, Pl.’s Opp’n at 6–7, are textbook examples
6 of details that can be filled in by the agency rather than painstakingly specified
7 by Congress. See Charles, 348 F.3d at 608 (“[I]t is simply impossible” for Congress
8 “to have envisioned all aspects of compliance and noncompliance” with a fund-
9 ing condition.). Indeed, Congress explicitly gave Treasury “the authority to issue
10 such regulations as may be necessary or appropriate to carry out this section” of
11 ARPA. 42 U.S.C. § 802(f). That is not uncommon. Agencies routinely flesh out
12 the details of Spending Clause statutes and courts routinely defer to those details.
13 See Defs.’ Mot. at 10–11 (collecting cases).
14 Plaintiffs protest that such deference is inapplicable here because Defend-
15 ants said that “agency regulations have no bearing on the Spending Clause anal-
16 ysis.” Pl.’s Opp’n at 9. But this completely misses the point. Defendants are not
17 asking for deference to Treasury’s regulations because Arizona has not chal-
18 lenged them. The point is that, in all those Chevron deference cases, the details
19
20
21
22
23
4Arizona tries in vain to distinguish Mayweathers, saying only that the off-
24 set provision is “impossible to understand” and not just “unpredictable.” Pl.’s
Opp’n at 8–9.
25 to understand” But the State fails to explain how the offset provision is “impossible
or why that distinction matters under the Ninth Circuit’s man-
26 dated standard for Spending Clause ambiguity. Regardless, as discussed, the off-
set provision is straightforward. And, as Judge Logan correctly explained,
27 because “ARPA gives the Secretary authority to determine how the statute should
apply to more specific facts rather than leaving it to the courts, as in Mayweathers,”
28 the statute is actually “better aligned with the judiciary’s role and provides
greater predictability for regulated parties in advance of litigation.” Ducey, 2022
WL 2817710, at *8.
Defs.’ Reply to Mot. to Dismiss| 6
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 12 of 17
1 of the statutory spending condition must have been ambiguous because other-
2 wise there would be nothing for the agency to interpret or courts to defer to. 5
3 Defs.’ Mot. at 11. But none of those cases declared the spending conditions un-
4 constitutional, as Arizona demands, simply because there was some ambiguity.
5 Nowhere is this clearer than in City of Los Angeles, where the Ninth Circuit
6 applied Chevron deference while simultaneously finding no Spending Clause vi-
7 olation. City of Los Angeles v. Barr, 929 F.3d 1163 (9th Cir. 2019). Perhaps recog-
8 nizing that its position is irreconcilable with City of Los Angeles, Arizona attempts
9 to escape that decision by asserting that “Congress has not made any delegation
10 here.” Pl.’s Opp’n at 10. But Congress explicitly authorizing Treasury “to issue
11 such regulations as may be necessary or appropriate to carry out this section” of
12 ARPA. 42 U.S.C. § 802(f). And Treasury’s final rule (and interim final rule) are
13 valid exercises of that authority. See generally Ducey, 2022 WL 2817710. Like
14 many other Spending Clause regimes, ARPA clearly states that a condition exists
15 and the details of the condition may be provided by regulation.
16 This proves Defendants’ point. Far from “immuniz[ing]” the offset provi-
17 sion “from constitutional scrutiny simply because Congress has never done
18 something so audacious and dubious before,” Pl.’s Opp’n at 10, Congress has
19 conditionally offered money to States for more than a century. See, e.g., Massa-
20 chusetts v. Mellon, 262 U.S. 447, 479 (1923). Yet until Arizona’s cited out-of-circuit
21 ARPA cases, no court had ever held that a statutory funding condition was un-
22
23
24 ulationsInhave
several places, Arizona quotes Defendants’ statement that “agency reg-
5
no bearing on the Spending Clause analysis.” Pl.’s Opp’n at 15. But
25 of other cases) areout
the State leaves the first part of that statement: “when Pennhurst (and the legion
properly applied.” Defs.’ Mot. at 7 (emphasis added). In other
26 words, the regulations are irrelevant to the Spending Clause inquiry because that
inquiry asks about the existence of a condition. If the Court nevertheless con-
27 cludes, contrary to binding precedent, that the Spending Clause requires some-
thing more, like minute details about the condition, then the regulations may be
28 relevant to the Court’s analysis, especially if the Court accepts Arizona’s sugges-
tion that the analysis can look beyond the statute itself. Pl.’s Opp’n at 9 (quoting
West Virginia v. U.S Dep’t of Treasury, 571 F. Supp. 3d 1229, 1253 (N.D. Ala. 2021)).
Defs.’ Reply to Mot. to Dismiss| 7
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 13 of 17
1 constitutionally ambiguous. That is not an accident. Even though the unambi-
2 guity requirement “has constitutional roots, it remains a rule of statutory inter-
3 pretation” to be used in concrete disputes about whether a particular funding
4 condition exists. Defs.’ Mot. at 11 (quoting School Dist. of City of Pontiac v. Sec’y
5 of U.S. Dep’t of Educ., 584 F.3d 253, 283 (6th Cir. 2009) (en banc) (Sutton, J., con-
6 curring)). Here, the Spending Clause ambiguity inquiry—as used in Pennhurst,
7 Arlington Central, Mayweathers, and Defendants’ other cited cases—is easily sat-
8 isfied because the offset provision “exists as a condition to Arizona accepting the
9 funds.” Arizona, 550 F. Supp. 3d at 796. If Arizona had any concerns, it should
10 have declined the ARPA funds, sought a better bargain in the halls of Congress,
11 or worked cooperatively with Treasury. Defs.’ Mot. at 11–12. It sued instead.
12 This Court, like Judge Humetewa, should reject Arizona’s arguments.
13 II. ARPA IS NOT COERCIVE OR COMMANDEERING.
14 Arizona again fails to engage with binding precedent, much less its own
15 complaint, in continuing to argue that the offset provision is coercive or com-
16 mandeering. Pl.’s Opp’n at 11–13. For starters, Arizona’s complaint alleges a
17 coercion claim only insofar as the offset provision is interpreted as “prohibit[ing]
18 the States from cutting taxes in essentially any manner.” See Defs.’ Mot. at 12
19 (quoting Compl. ¶¶ 65-66); Arizona, 550 F. Supp. 3d at 795 (noting that Arizona’s
20 claim arises only “under the problematic interpretation”). But that interpreta-
21 tion—which relies on the money-is-fungible theory—has always been a chimer-
22 ical reading of the statute. As a textual matter, “a tax cut, on its own, does not
23 fall within the Offset Provision’s ambit”; “[w]hat [States] cannot do is use ARPA
24 funds as part of [their budget] balancing process.” Arizona, 34 F.4th at 856 (R.
25 Nelson, J., concurring); Missouri, 39 F.4th at 1070 n.6. Arizona’s argument is also
26 moot because, whether or not it was ever a reasonable interpretation, Treasury
27 has affirmatively and repeatedly disavowed the no-tax-cuts interpretation
28
Defs.’ Reply to Mot. to Dismiss| 8
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 14 of 17
1 through its regulations. See Ohio, 53 F.4th at 991-92 (“Treasury repeatedly disa-
2 vowed Ohio’s money-is-fungible reading of the statute.”).
3 In any event, Defendants previously explained that a coercion analysis
4 does not apply to conditions, like the offset provision, that simply specify how
5 the federal funds may be used, because “that is the means by which Congress
6 ensures that the funds are spent according to its view of the ‘general Welfare.’”
7 NFIB, 567 U.S. at 580; Defs.’ Mot. at 13. Arizona doesn’t even attempt to respond
8 to that argument or Defendants’ cited cases.
9 Nor does the State attempt to engage Defendants’ arguments about the Su-
10 preme Court’s precedent in NFIB, which held that the Medicaid expansion was
11 coercive because Congress “penalize[d] States that choose not to participate in that
12 new program by taking away their existing Medicaid funding.” NFIB, 567 U.S. at
13 585 (emphasis added). In contrast, as Judge Humetewa correctly explained,
14 ARPA “will not revoke any federal funding Arizona enjoyed prior to accepting.
15 The downside to declining the ARPA funds is just that—Arizona would not have
16 received ARPA funds.” Arizona, 550 F. Supp. 3d at 799.
17 Nothing in NFIB turned on the sheer amount of federal funding alone, di-
18 vorced from whether it is being newly provided or eliminated. To the contrary,
19 all Justices in NFIB agreed that, despite the amount of funding at issue, “Congress
20 could have made just the new funding provided under the ACA contingent on
21 acceptance of the terms of the Medicaid Expansion.” NFIB, 567 U.S. at 687–88
22 (joint dissent); id. at 576, 585 (plurality) (same); id. at 624–46 (Ginsburg, J., con-
23 curring in part) (finding no coercion). That’s what ARPA does here: if a State
24 misuses ARPA funds, it only loses the amount of funds it misused; no preexisting
25 federal funding is lost. 42 U.S.C. § 802(e); Defs.’ Mot. at 14–15. And Arizona’s
26 reliance on two district court decisions that ignore the Supreme Court’s analy-
27 sis—one already vacated on appeal and one pending on appeal—is no reason for
28 this Court to do the same. See Pl.’s Opp’n at 11–13 (citing Kentucky v. Yellen, 563
Defs.’ Reply to Mot. to Dismiss| 9
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 15 of 17
1 F. Supp. 3d 647, 657 (E.D. Ky. 2021) and Texas v. Yellen, --- F. Supp. 3d. ---, 2022
2 WL 1063088, at *5 (N.D. Tex Apr. 8, 2022)); id. at 11 n.5. If this Court faithfully
3 applies NFIB, as Judge Humetewa did, Arizona’s coercion claim can be easily
4 rejected.
5 III. THE OFFSET PROVISION RELATES TO ARPA’S PURPOSES.
6 Arizona’s relatedness claim should also be dismissed. Again, the com-
7 plaint alleges a relatedness claim only insofar as the offset provision is inter-
8 preted as “prohibit[ing] the States from cutting taxes in essentially any manner.”
9 See Defs.’ Mot. at 16; Arizona, 550 F. Supp. 3d at 795 (noting that Arizona’s claim
10 arises only “under the problematic interpretation”). And again, that no-tax-cuts
11 interpretation is both wrong and repeatedly rejected by the Treasury Depart-
12 ment. See Section II., supra.
13 In any event, a condition “that public funds [are] spent for the purposes for
14 which they were authorized,” like the offset provision, is a paradigmatic exam-
15 ple of a condition that is related to the purposes of the statute. Rust v. Sullivan,
16 500 U.S. 173, 196 (1991). The offset provision specifies how States may use the
17 newly appropriated federal funds to ensure that they serve the public-health and
18 economic-recovery purposes of the Act. See Sabri v. United States, 541 U.S. 600,
19 608 (2004); Oklahoma v. U.S. Civ. Serv. Comm’n, 330 U.S. 127, 143 (1947). This sort
20 of condition easily satisfies the relatedness requirement of the Spending Clause,
21 and more than meets the “minimal standard of rationality.” Benning v. Georgia,
22 391 F.3d 1299, 1308 (11th Cir. 2004); Mayweathers, 314 F.3d at 1067 (conditions
23 need only “bear some relationship to the purpose of the federal spending”); City
24 of Los Angeles, 929 F.3d at 1175 (recognizing that the relatedness standard “is not
25 demanding” and that “the Court has never struck down a condition on federal
26 grants based on this relatedness prong”); New York v. United States, 505 U.S. 144,
27 172 (1992) (finding sufficient relation where “both the conditions and the pay-
28 ments embody Congress’ efforts to address the pressing problem of radioactive
Defs.’ Reply to Mot. to Dismiss| 10
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 16 of 17
1 waste disposal”); South Dakota v. Dole, 483 U.S. 203, 208–09 (1987) (finding that
2 the federal interest in a uniform drinking age was sufficiently related to States’
3 receipt of highway funds).
4 Arizona does not engage with Defendants’ argument, Defendants’ cited
5 cases, or the relevant legal standard. Instead, the State quibbles with Congress’s
6 policy choice embodied in the offset provision. See Pl.’s Mot. at 13–14. But that
7 objection is wrongly premised on the idea that the offset provision prohibits
8 “states from making any tax reductions—no matter the justification or causal re-
9 lationship to ARPA funds[.]” Id. at 13. Again, that’s not what the offset provision
10 means; no party is advocating for that interpretation and Treasury has repeat-
11 edly rejected it. See Section I–II., supra. And although Arizona emphasizes that
12 ARPA itself provides tax relief (while they regard the offset provision as inhibit-
13 ing state tax relief), that policy choice was for Congress to make. Pl.’s Opp’n at
14 13–14. All that matters here is whether the offset provision “bear[s] some rela-
15 tionship to the purpose of the federal spending.” Mayweathers, 314 F.3d at 1067
16 (quoting New York, 505 U.S. at 167). It does. Congress did not provide the Rescue
17 Plan funds to replace purposeful decreases in net tax revenue; it provided the
18 money to help States economically recover from the pandemic in ways they oth-
19 erwise could not. Defs.’ Mot. at 16.
20 CONCLUSION
21 The Court should dismiss this case or enter judgment for Defendants. See
22 Air Line Pilots Ass’n v. Alaska Airlines, Inc., 898 F.2d 1393, 1397 n.4 (9th Cir. 1990).
23
24
25
26
27
28
Defs.’ Reply to Mot. to Dismiss| 11
2:21-cv-00514-ROS
Case 2:21-cv-00514-ROS Document 91 Filed 12/23/22 Page 17 of 17
1 DATED: December 23, 2022 Respectfully submitted,
2 BRIAN M. BOYNTON
3 Principal Deputy Assistant Attorney General
4
ALEXANDER K. HAAS
5 Director, Federal Programs Branch
6
BRIGHAM J. BOWEN
7
Assistant Director, Federal Programs Branch
8
9
/s/ Stephen Ehrlich
MICHAEL P. CLENDENEN
10 STEPHEN EHRLICH
11 Trial Attorneys
Civil Division, Federal Programs Branch
12
U.S. Department of Justice
13 1100 L Street, NW
14 Washington, DC 20005
Phone: (202) 305-9803
15 Email: stephen.ehrlich@usdoj.gov
16
Counsel for Defendants
17
18
19
20
21
22
23
24
25
26
27
28
Defs.’ Reply to Mot. to Dismiss| 12
2:21-cv-00514-ROS
File and source
- File
- 91-reply-to-response-to-motion.pdf
- Size
- 276,032 bytes
- SHA-256
- 8e20930d17a3c0907965c30e8777ce15dfd9b4b20a4d4ebae87b8442599c1859
- Original
- storage.courtlistener.com