Amicus Curiae Brief NCLA 22-3179
Amicus Curiae Brief NCLA 22-3179
22-3179
Appellate Case: 22-3179 Page: 1 Date Filed: 10/25/2022 Entry ID: 5211175
CORPORATE DISCLOSURE STATEMENT
states that amicus curiae New Civil Liberties Alliance is a nonprofit organization under
the laws of the District of Columbia. It has no parent corporation, and no publicly held
/s/John J. Vecchione
John J. Vecchione
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TABLE OF CONTENTS
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TABLE OF AUTHORITIES
Cases
A.I. Trade Fin., Inc. v. Petra Int’l Banking Corp.,
62 F.3d 1454, 1458, 1460, 1463 (D.C. Cir. 1995)........................................................... 9
A.L.A. Schechter Poultry Corp. v. United States,
295 U.S. 495 (1935)........................................................................................................ 4, 7
Chamber of Com. of U.S. v. Edmondson,
594 F.3d 742 (10th Cir. 2010) ................................................................................... 13, 14
Clinton v. City of New York,
524 U.S. 417 (1998)...................................................................................................passim
Comcast Corp. v. Nat’l Assoc. of African AmericanOwned Media,
140 S. Ct. 1009, 1014 (2020) ........................................................................................... 13
Community Financial Services Association of America v. CFPB,
--- F.4th ---, 2022 WL 11054082 (5th Cir. Oct. 19, 2022) ........................................... 9
INS v. Chadha,
462 U.S. 919 (1983)............................................................................................................ 4
Jarkesy v. SEC,
34 F.4th 446 (5th Cir. 2022).............................................................................................. 6
Lujan v. Defs. of Wildlife,
504 U.S. 555, 560–61 (1992) ........................................................................................... 13
Marshall Field & Co. v. Clark,
143 U.S. 649 (1892)............................................................................................................ 5
OPM v. Richmond,
496 U.S. 414 (1990)........................................................................................................... 9
Texas Educ. Agency v. U.S. Dep’t of Educ. ,
992 F.3d 350 (5th Cir. 2021) ............................................................................................ 9
Statutes
20 U.S.C. § 1098aa .................................................................................................................. 4
20 U.S.C. § 1098bb ........................................................................................................passim
Other Authorities
Federal Student Aid Programs,
87 Fed. Reg. 61,512 (Oct. 12, 2022) .............................................................................. 10
Rebecca Falconer, Biden: “The pandemic is over”, Axios (Sep. 18, 2022) ............................. 8
Statements & Releases, White House, FACT SHEET: President Biden Announces Student
Loan Relief for Borrowers Who Need It Most (Aug. 24, 2022) ............................................. 7
Constitutional Provisions
U.S. Const. art. I, § 1 .......................................................................................................... 4, 8
U.S. Const. art. I, § 9 .............................................................................................................. 9
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STATEMENT OF INTEREST
The New Civil Liberties Alliance (NCLA) is a nonprofit, non-partisan civil rights
administrative state. The “civil liberties” of the organization’s name include rights at
least as old as the U.S. Constitution itself, such as jury trial, due process of law, the right
to be tried in front of an impartial and independent judge, and the right to have laws
(i.e., the right to self-government). These selfsame civil rights are also very
the President, federal administrative agencies, and even sometimes the Judiciary, have
constraints on the administrative state. Although the American People still enjoy the
shell of their Republic, there has developed within it a very different sort of
government—a type, in fact, that the Constitution was designed to prevent. This
unconstitutional state within the Constitution’s United States is the focus of NCLA’s
concern.
NCLA is representing the Cato Institute in the United States District Court for
the District of Kansas in a similar challenge against the same Defendants’ invocation of
the Higher Education Relief Opportunities for Students Act of 2003 (“HEROES Act”),
Pub. L. No. 108-76, 117 Stat. 904, to cancel hundreds of billions of dollars of federally
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held student debt. See Cato Institute v. Dep’t of Educ. Case No. 5:22-cv-4055 (D. Kansas).
The Defendants argue that the HEROES Act should be read broadly to grant them
license to make virtually any modification or waiver of prior acts of Congress they deem
necessary to address the COVID-19 pandemic, including wiping out debt owned to the
Treasury. But if construed so broadly, the Act would divest to an executive agency
SUMMARY OF ARGUMENT
Under the Constitution, individuals are to be bound only by laws made with their
consent through their elected legislature. Confirming this principle is the separation of
powers, under which legislative power is exercised by Congress. The Framers decided
against any congressional delegation of power. Their intent found expression in the
Constitution’s Vesting Clause, which states that “[a]ll legislative Powers herein granted
shall be vested in a Congress of the United States[.]” U.S. Const. Art. I, § 1 (emphasis
added). The Framers also made clear that the power of the purse must reside solely in
the legislature. To this end, the Constitution’s Appropriations Clause explicitly provides
that “No Money shall be drawn from the Treasury, but in Consequence of
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Defendants’ invocation of the HEROES Act to rewrite statutory provisions to
cancel hundreds of billions of dollars owed to the Treasury violates both the Vesting
directly reduces funds that would otherwise flow into the Treasury. The HEROES Act
the Department of Education—to amend statutes and appropriate funds. See Clinton v.
City of New York, 524 U.S. 417, 440-41 (1998) (holding Line Item Veto Act was
the HEROES Act to justify Mass Debt Cancellation guarantees that Plaintiffs will
Plaintiffs will also suffer concrete and irreparable injuries absent an injunction.
In addition to the injuries set forth the in Plaintiffs’ Motion for Injunction Pending
Appeal, Mass Debt Cancellation further injures Plaintiffs by taking away congressionally
enacted incentives under the Public Service Loan Forgiveness (“PSLF”) program for
jobs). The loss of such incentives is both concrete for the purposes of Article III
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standing and irreparable. The Court should therefore put the unlawful Mass Debt
Cancellation scheme on pause while it considers the parties’ arguments on the merits.
ARGUMENT
shall be vested in a Congress of the United States.” Congress may not “abdicate or …
transfer to others the essential legislative functions with which it is thus vested.” A.L.A.
Schechter Poultry Corp. v. United States, 295 U.S. 495, 529 (1935).
attacks “to support the members of the United States military and provide [student
loan] assistance with their transition into and out of active duty and active service.” 20
U.S.C. § 1098aa(b). Under the HEROES Act, “[t]he Secretary of Education … may
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In Clinton v. City of New York, the Court rejected the President’s authority under
the Line-Item Veto Act to “cancel” certain types of statutory “provisions that have
been signed into law.” 524 U.S. at 436. Because the effect of cancellation was to
“prevent[] the item ‘from having legal force or effect,’” the Court reasoned that its “legal
and practical effect” was to “amend[] … Acts of Congress” “after the bill[s] become[s]
law.” Id. at 437–39. It was of no moment that the cancellations did not formally “effect
a repeal” and that cancelled items continued to occupy space in the U.S. Code. What
mattered was that “the President made [the cancelled statutory provisions] entirely
inoperative as to appellees.” Id. at 441. The Court made clear that such changes to a
statute must “accord with a single, finely wrought and exhaustively considered,
difference between the cancellation of the budgetary provision rejected by the Court in
Clinton and the authority to “waive or modify any statutory … provision,” ostensibly
The Clinton Court distinguished Marshall Field & Co. v. Clark, 143 U.S. 649 (1892),
where the Court held a foreign-policy statute requiring the President to suspend certain
Clinton Court emphasized that in Field, “Congress itself made the decision to suspend
or repeal the particular provisions at issue upon the occurrence of particular events,”
and “when the President determined that the contingency had arisen, he had a duty to
suspend” the statute. 524 U.S. at 443, 445 (emphasis added). In other words, the
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delegation of the power to suspend a statute was constitutional because there was no
room for “the President himself to effect the repeal of laws[] for his own policy
reasons.” Id. at 445. The constitutionality of this delegation was further supported by
the fact that “in the foreign affairs arena, the President has a degree of discretion and
freedom … which would not be admissible were domestic affairs alone involved.” Id.
(cleaned up).
Here, in contrast, not only is higher education financing a domestic matter, but
unlike the Field suspensions, the Secretary of Education does not have a duty to issue
While the Secretary may exercise this power only in service of certain statutory
objectives, see id. § 1098bb(a)(2), the Act grants him unfettered discretion in choosing
whether and when to do so. The Secretary also has the unfettered discretion to act “as
provisions are waived and what “terms and conditions” he replaces them with, id.
“affected individuals” and may rewrite the law as he sees fit as applied to those
individuals. In Jarkesy v. SEC, 34 F.4th 446, 461 (5th Cir. 2022), the Fifth Circuit held
securities fraud suit for monetary penalties within the agency [or] in an Article III court”
failed the intelligible-principle test and therefore violated the Vesting Clause. The
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HEROES Act, as construed and applied by Defendants, confers far greater discretion.
Assuming arguendo that “affected individuals” exist who satisfy the Act’s predicates for
receiving relief, the Secretary has unfettered discretion to provide them no relief at all
or, according to Defendants, completely cancel their debt. Because the HEROES Act
waiver or modification. Clinton, 524 U.S. at 445. The effects of this discretion are evident
here because the Secretary’s choice of whether to enact debt cancellation was motivated
1980” and the aim of “[a]dvanc[ing] racial equity.” Statements & Releases, White House,
FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most
(Aug. 24, 2022) (“This plan offers targeted debt relief as part of a comprehensive effort
to address the burden of growing college costs and make the student loan system more
manageable for working families.”). Such policy reasons also may have informed the
Secretary’s choice of when to enact debt cancellation: just weeks before a midterm
congressional election that will take place after the President declared “the pandemic is
over.” Rebecca Falconer, Biden: “The pandemic is over,” Axios (Sep. 18, 2022).1
1
Available at: https://www.axios.com/2022/09/19/biden-covid-pandemic-over (last
visited Oct. 21, 2022).
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It is therefore clear that the President and his Secretary’s “own policy reasons”
for enacting debt cancellation impermissibly directed the Secretary’s choice to invoke
waiver and modification under § 1098bb. Clinton, 423 U.S. at 445. Even if that were not
so, the capacious discretion allowed by the HEROES Act (as interpreted by
Defendants) would certainly allow the Secretary’s own policy considerations to control
the timing and manner of a waiver or modification. Either way, the Act contradicts the
precedential requirement that “Congress itself ma[k]e the decision” of whether, when,
and how to suspend the laws, especially those with direct effects on the Treasury. Id.
The HEROES Act’s supposed grant of authority upon the Secretary to suspend
the statutory provisions concerning debt owed to the Treasury, to “modify” them with
his own “terms and conditions,” 20 U.S.C. § 1098bb(a)(1), (b)(2), and to do so when
and how “[he] deems necessary,” id. § 1098bb(a)(1), violates Article I, § 1 of the
Act to authorize the outright cancellation of debt owed to the Treasury would also
which provides: “No Money shall be drawn from the Treasury, but in Consequence of
Appropriations made by Law.” This Clause reflects the Framers’ decision to “carefully
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separate[] the ‘purse’ from the ‘sword’ by assigning to Congress and Congress alone the
power of the purse.” Texas Educ. Agency v. U.S. Dep’t of Educ., 992 F.3d 350, 362 (5th
Cir. 2021) (quoting The Federalist Nos. 78 (Alexander Hamilton); See also The Federalist
Nos. 48 (James Madison) (“[T]he legislative department alone has access to the pockets
of the people.”). By requiring that “no money can be paid out of the Treasury unless it
that public funds will be spent according to the letter of the difficult judgments reached
by Congress as to the common good and not according to the individual favor of
Government agents[.]” OPM v. Richmond, 496 U.S. 414, 428 (1990) (citation omitted).
In Community Financial Services Association of America v. CFPB, --- F.4th ---, 2022
WL 11054082, at *14 (5th Cir. Oct. 19, 2022), the Fifth Circuit held that Congress may
not divest its power of the purse to an executive agency. Congress enacted a statute that
allows the Consumer Financial Protection Bureau to “requisition[] from the Federal
carry out’ the Bureau’s functions” and “[t]he Federal Reserve must grant that request
so long as it does not exceed 12% of the Federal Reserve’s ‘total operating expenses.’”
Congress’s power of the purse because “[t]he funds siphoned by the Bureau, in effect,
reduce amounts that would otherwise flow to the general fund of the Treasury.” Id.
The Fifth Circuit held the self-funding statute violated the Appropriations Clause
because Congress was prevented from exercising any control over how much funds
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CFBP siphons from the Treasury. Id. at *15 (“So the Bureau’s funding is double-
insulated on the front end from Congress’s appropriations power. And Congress
of debt likewise would allow an executive agency to wield the power of the purse
without Congressional control. To start, any cancellation of debt owed to the Treasury
requisitions, it “reduce amounts that would otherwise flow to the general fund of the
Treasury.” Id. at *14. Congress also has neither direct nor indirect control over this
whenever the President declares one. See Federal Student Aid Programs, 87 Fed. Reg.
61,512, 61,513 (Oct. 12, 2022) (justifying cancellation because “the President declared
interpretation of the HEROES Act to authorize the Secretary to cancel debt owed to
and explicit command’ ensur[ing] Congress’s exclusive power over the federal purse.”
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III. MASS DEBT CANCELLATION INFLICTS ADDITIONAL CONCRETE AND
IRREPARABLE INJURY
Plaintiffs’ brief identifies several concrete injuries sufficient for Article III
standing that Mass Debt Cancellation inflicts and explains why such injuries are
irreparable. Appellants’ Br. at 8-15, 25. Even if the Court disagrees with Plaintiffs, an
injunction pending appeal is still appropriate because the Cancellation scheme inflicts
additional concrete and irreparable injuries on Plaintiffs by taking away PSLF incentives
that Congress enacted to help state governments recruit and retain college-educated
workers. The Court is permitted to consider these PSLF injuries as an alternative basis
for subject-matter jurisdiction. See A.I. Trade Fin., Inc. v. Petra Int’l Banking Corp., 62 F.3d
1454, 1458, 1460, 1463 (D.C. Cir. 1995) (rejecting plaintiff’s subject-matter jurisdiction
arguments based on diversity and 28 U.S.C. § 1331 but holding that the district court
PSLF does this by promising student-loan borrowers that their outstanding loan
balances will be completely discharged after they make 120 monthly payments (10 years)
while working at qualifying public-service employers. Id.; see also 34 C.F.R. § 685.219.
Because of PSLF, all else being equal, working for a qualifying employer is more
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financially advantageous to the estimated 40 million student-loan borrowers than
working for the same pay (or even higher pay) at a nonqualifying employer.
job market, Congress purposefully gave qualifying employers a valuable advantage over
each employee with outstanding student-loan debt. As state governments, Plaintiffs are
qualifying employers for purposes of PSLF and thus are among the employers that
Mass Debt Cancellation undermines that benefit and would eliminate it entirely in many
cases. With the wave of an administrative wand, Defendants would vaporize most or
all of the outstanding student debt owed by the vast majority of current and prospective
borrowers to seek and stay in jobs with state governments. In equal measure, the
scheme would raise Plaintiffs’ effective compensation costs because, all other things
being equal, Plaintiffs would need to raise the compensation they offer and pay to
and immediate competitive and financial harm on Plaintiffs, which satisfies the injury-
in-fact requirement for Article III standing. Indeed, the Supreme Court “routinely
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recognizes probable economic injury resulting from [governmental actions] that alter
requirement.]” Clinton, 524 U.S. at 433 (1998) (quoting 3 K. Davis & R. Pierce,
because “but for [their] unlawful conduct, [Plaintiffs’] alleged injury would not have
occurred.” Comcast Corp. v. Nat’l Assoc. of African American-Owned Media, 140 S. Ct. 1009,
1014 (2020). And a favorable decision by this Court halting Mass Debt Cancellation
would redress the injury. Plaintiffs therefore satisfy the injury-in-fact, traceability, and
redressability elements of Article III standing. Lujan v. Defs. of Wildlife, 504 U.S. 555,
560–61 (1992).
The competitive and financial injury that Plaintiffs would suffer because of the
loss of PSLF incentives is irreparable because there is no way for Plaintiffs to recover
money damages against Defendants who are immune from suit. Chamber of Com. of U.S.
v. Edmondson, 594 F.3d 742, 770–71 (10th Cir. 2010) (“Imposition of monetary damages
that cannot later be recovered for reasons such as sovereign immunity constitutes
in student debt, the toothpaste cannot be put back in the tube, and therefore belated
injunctive relief from this or another court cannot replace the lost PSLF incentives. The
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competitive injuries would start becoming permanent as soon as cancellations begin to
occur and can only be fully prevented by an injunction pending appeal now.
CONCLUSION
For these reasons, the Court should grant Plaintiffs’ Motion for Injunction
Pending Appeal.
Respectfully submitted,
/s/John J. Vecchione
John J. Vecchione
Sheng Li
Mark Chenoweth
NEW CIVIL LIBERTIES ALLIANCE
1225 19th St. NW, Suite 450
Washington, DC 20036
(202) 869-5210
[email protected]
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CERTIFICATE OF SERVICE
I hereby certify that on October 24, 2022, an electronic copy of the foregoing
brief amicus curiae was filed with the Clerk of Court for the United States Court of
Appeals for the Eight Circuit using the CM/ECF filing system and that service upon
counsel for the parties will be accomplished using the CM/ECF system.
/s/John J. Vecchione
John J. Vecchione
CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limit of Federal Rule of Appellate
Procedure 29(a)(5) because it contains 3,224 words. This brief also complies with the
(6) because it was prepared using Microsoft Word 2016 in 14-point Garamond, a
/s/John J. Vecchione
John J. Vecchione
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