Petition for Writ of Certiorari — Missouri, Petitioner v. Janet L. Yellen, Secretary of the Treasury, et al.

Supreme Court briefOct 12, 2022

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No. _____

In the

Supreme Court of the United States

THE STATE OF MISSOURI,

Petitioner,

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

PETITION FOR WRIT OF CERTIORARI

ERIC S. SCHMITT

Missouri Attorney General

D. JOHN SAUER

Solicitor 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

QUESTIONS PRESENTED

In response to the pandemic-related economic

downturn, Congress passed the American Rescue

Plan Act of 2021 (ARPA), Pub. L. No. 117-2, 135

Stat. 4. ARPA provides Missouri with roughly $2.7

billion and a condition: The State cannot use those

funds “to either directly or indirectly offset a reduction

in the net tax revenue of such State or territory

resulting from a change in law, regulation, or

administrative interpretation.” § 9901, 135 Stat. at

227 (codified at 42 U.S.C. § 802(c)(2)(A)).

The

Department of the Treasury (“Treasury”)—consistent

with public comments by Secretary Yellen—reads the

law as prohibiting revenue-reducing tax policies.

Missouri interprets the law as prohibiting only the

deliberate use of ARPA funds to pay for a tax cut, and

the government’s position as unconstitutional. The

Eighth Circuit held Missouri lacked standing to seek

judicial resolution of that difference.

The questions presented are:

1. Does the State of Missouri have standing to

challenge Treasury’s interpretation of the Tax

Mandate as inconsistent with the law?

2. Does the Tax Mandate prohibit only the deliberate

use of ARPA funds to pay for a tax cut?

3. If the Tax Mandate does more than prevent the

deliberate use of ARPA funds to pay for a tax cut,

is it constitutional under Article I, § 8 and Tenth

Amendment?

PARTIES TO THE PROCEEDING

Petitioner is the State of Missouri.

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.

STATEMENT OF RELATED PROCEEDINGS

This case arises from the following proceedings:

•

State Missouri 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; and the U.S. Department of the

Treasury, No. 21-2118 (8th Cir.) (opinion

affirming the order of the district court

dismissing the case issued July 14, 2022); and

•

State Missouri 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; and the U.S. Department of the

Treasury, No. 4:21-cv-376 (E.D. Mo.) (order

dismissing the case entered May 11, 2021).

There are no other proceedings in state or federal

court or this Court directly related to this case within

the meaning of this Court’s Rule 14.1(b)(iii).

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED ....................................... i

PARTIES TO THE PROCEEDING ........................... ii

STATEMENT OF RELATED PROCEEDINGS........ ii

TABLE OF CONTENTS ........................................... iii

TABLE OF AUTHORITIES........................................ v

PETITION FOR WRIT OF CERTIORARI .................1

OPINIONS BELOW ....................................................3

JURISDICTION ..........................................................4

CONSTITUTIONAL

AND

STATUTORY

PROVISIONS INVOLVED .........................................4

STATEMENT OF THE CASE ....................................5

I. The Tax Mandate. .............................................5

II. The Dispute Over the Tax Mandate’s

Meaning. ............................................................6

III. Lower Court Proceedings. .................................8

REASONS FOR GRANTING THE PETITION ....... 10

I. The Eighth Circuit’s Decision Conflicts

with the Ninth Circuit’s Holding that

Arizona Has Standing to Challenge the

Tax Mandate’s Constitutionality.................... 14

A. The Ninth Circuit’s Decision. ..................14

B. The Eighth

Decision.

Circuit’s

Conflicting

II. The Eighth Circuit’s Decision Is Wrong. ........ 21

III. The Court Should Address the Merits. ........... 27

IV. The Questions Presented Are Important

and Cleanly Presented. ................................... 31

CONCLUSION .......................................................... 35

TABLE OF AUTHORITIES

Cases

Page(s)

Am. Fed’n of Musicians v. Wittstein,

379 U.S. 171 (1964) ................................................ 33

Arizona v. Yellen,

34 F.4th 841 (2022) ........................................ passim

Arizona v. Yellen,

550 F. Supp. 3d 791 (D. Ariz. 2021) ...................... 11

Bennett v. Ky. Dep’t of Educ.,

470 U.S. 656 (1985) ................................................ 32

Arlington Central School District Board of

Education v. Murphy,

548 U.S. 291 (2006) ................................................ 24

Bond v. United States,

572 U.S. 844 (2013) ................................................ 28

Bowen v. Pub. Agencies Opposed to Soc. Sec.

Entrapment,

477 U.S. 41 (1986) .................................................. 26

City and County of San Francisco v. Trump,

897 F.3d 1225 (9th Cir. 2018) ................................ 22

Clark v. Martinez,

543 U.S. 371 (2005) ................................................ 29

Clinton v. City of New York,

524 U.S. 417 (1998) ................................................ 24

Czyzewski v. Jevic Holding Corp.,

137 S. Ct. 973 (2017) .............................................. 22

Dep’t of Revenue of Or. v. ACF Indus.,

510 U.S. 332 (1994) .......................................... 26, 29

Dominion Transmission, Inc. v. FERC,

533 F.3d 845 (D.C. Cir. 2008) ................................ 24

Ducey v. Yellen,

2022 WL 2817710 (D. Ariz. July 19, 2022) ........... 23

FEC v. Cruz,

142 S. Ct. 1638 (2022) ............................................ 27

Free Enter. Fund v. Pub. Accounting Oversight Bd.,

561 U.S. 477 (2010) .......................................... 22, 32

Gregory v. Ashcroft,

501 U.S. 452 (1991) ................................................ 29

Jennings v. Rodriguez,

138 S. Ct. 830 (2018) .............................................. 28

Kentucky v. Yellen,

563 F. Supp. 3d 647 (E.D. Ky. 2021) ............... 11, 21

Lane County v. Oregon,

7 Wall. 71 (1868) .............................................. 13, 26

Lujan v. Defs. of Wildlife,

504 U.S. 555 (1992) ................................................ 25

MedImmune, Inc. v. Genetech, Inc.,

549 U.S. 118 (2007) .............................. 22, 23, 27, 32

Murphy v. NCAA,

138 S. Ct. 1461 (2018) ............................................ 30

New York v. United States,

326 U.S. 572 (1946) ................................................ 33

Ohio v. Yellen,

547 F. Supp. 3d 713 (S.D. Ohio 2021) ............. 11, 21

Olmstead v. L.C. ex rel. Zimring,

527 U.S. 581 (1999) ................................................ 33

Pennhurst State School and Hospital v. Halderman,

451 U.S. 1 (1981) .............................................. 16, 24

Rust v. Sullivan,

500 U.S. 173 (2000) ................................................ 30

Sabri v. United States,

541 U.S. 600 (2004) ................................................ 30

Sch. Dist. of the City of Pontiac v. Sec’y of U.S. Dep’t

of Educ.,

584 F.3d 253 (6th Cir. 2009) .................................. 29

NFIB v. Sebelius,

567 U.S. 519 (2012) ........................................ passim

vii

Solid Waste Agency of Northern Cook County v. U.S.

Army Corps of Engineers,

(SWANCC), 531 U.S. 159 (2001) ..................... 28, 29

South Dakota v. Dole,

482 U.S. 203 (1987) .................................... 24, 30, 31

Steward Machine Co. v. Davis,

301 U.S. 548 (1937) ................................................ 32

Susan B. Anthony List v. Driehaus,

(SBA List), 573 U.S. 149 (2014) ................. 14, 22, 23

Tex. Educ. Agency v. U.S. Dep’t of Educ.,

992 F.3d 350 (5th Cir. 2021) ............................ 25, 33

Texas v. Yellen,

2022 WL 1063088 (N.D. Tex. Apr. 8, 2022) .......... 11

Texas v.Yellen,

2022WL 989733 (N.D. Tex. Mar. 4, 2022)............. 21

Thomas v. Anchorage Equal Rights Comm’n,

220 F.3d 1134 (9th Cir. 2000) ................................ 15

Thunder Basin Coal Co. v. Reich,

510 U.S. 200 (1994) ................................................ 32

United States v. Butler,

297 U.S. 1 (1936) .................................................... 31

Virginia v. Am. Booksellers Ass’n, Inc.,

484 U.S. 383 (1988) ................................................ 23

West Virginia v. U.S. Dep’t of Treasury,

571 F. Supp. 3d 1229 (N.D. Ala. 2021) .................. 11

West Virginia v. U.S. Dep’t of Treasury,

2021 WL 2952863 (N.D. Ala. July 14, 2021) ......... 21

Yates v. United States,

574 U.S. 528 (2015) ................................................ 28

Constitutions and Statutes

U.S. Const. art. II, § 1 ................................................ 25

20 U.S.C. §1412 ......................................................... 32

28 U.S.C. §1254 ...........................................................4

viii

28 U.S.C. §1331 ....................................................... 4, 8

42 U.S.C. §802 ................................................... passim

42 U.S.C. §1396a ....................................................... 32

42 U.S.C. §2000cc-1 ................................................... 32

American Rescue Plan Act of 2021, Pub. L. No. 1172, 135 Stat. 4 ............................................................5

Regulations

31 C.F.R. §35.8(b) ............................................ 7, 26, 30

Coronavirus State and Local Fiscal Recovery Funds,

86 Fed. Reg. 26,786 (May 17, 2021) .................... 7, 8

Coronavirus State and Local Fiscal Recovery Funds,

87 Fed. Reg. 4,338 (Jan. 27, 2022)...........................8

Other Authorities

Comm. Legislative Research, L.R. No. 5969H.03P,

Fiscal Note (2022) .................................................. 18

Comm.Legislative Research, L.R. No. 5974S.05P,

Fiscal Note (2022) .................................................. 18

H.B. 3,101st Gen. Assemb., 1st Spec. Sess. (Mo.

2022) ................................................................. 22, 23

Nat’l Ass’n of State Budget Officers, State Recovery

Plans, https://bit.ly/3SOtmAD (last visited Oct. 12,

2022) .........................................................................3

Press Release, Scott Fitzpatrick Mo. State Treasurer,

Missouri Receives $1.3 Billion Payment of

American Rescue Plan Funds (Aug. 5, 2021) ..........6

S.B. 3& 5, 101st Gen.Assemb., 1st Spec. Sess. (Mo.

2022) ................................................................. 22, 23

The Quarterly CARES Act Report on CongressBefore

Senate Committee On Banking, Housing, and

Urban Affairs (2021), https://bit.ly/3tRAobm .........7

U.S.Dep’t of the Treasury, Coronavirus Stateand

Local Fiscal Recovery Funds,

https://bit.ly/2SGyFZ9 (last visited Oct.12, 2022) ...5

PETITION FOR WRIT OF CERTIORARI

Last year, Congress passed ARPA to provide

States—like Missouri—with billions of dollars to

respond to the economic downturn caused by the

COVID-induced shutdowns. Congress also attached a

condition restricting the use of those funds, the Tax

Mandate. The mandate provides that States cannot

use ARPA funds “to either directly or indirectly offset

a reduction in the net tax revenue of such State . . . .”

42 U.S.C. § 802(c)(2)(A).

What the Tax Mandate means is of great

importance to Missouri, since it governs the use of

$2.7 billion of ARPA aid and could affect the State’s

tax policy. Missouri reads the law as prohibiting only

the deliberate use of ARPA funds to pay for a tax cut.

Secretary Yellen and Treasury, however, read it more

broadly. The law, according to them, requires States

to implement a tax policy that increases tax revenue

or, at the very least, is revenue-neutral (with a de

minimis amount of wiggle room).

But the district court and the Eighth Circuit said

Missouri has not suffered an injury-in-fact and so

lacks standing to seek judicial review of that

interpretive dispute. Analyzing Missouri’s standing

under this Court’s pre-enforcement standing

precedents, both courts faulted Missouri for failing to

say it will violate the Tax Mandate as the government

interprets it. But when it bought suit, the State

alleged that it will take ARPA funds and intends to,

and now is, cutting taxes—conduct that could violate

Treasury’s broad interpretation. That is enough. It is

not, and never has been, the rule that a plaintiff must

say it will violate the law in order to have standing. If

it were, then plaintiffs like Missouri would be forced

to choose between judicial review—and the risks of an

adverse judgment, such as the loss of ARPA funds—

or forfeiting their rights.

Thus, Missouri has standing when viewing this

case as a pre-enforcement challenge. But it is not just

that. The Eighth Circuit’s decision ignores Missouri’s

interests in ARPA and its sovereign interests. Using

its Spending Clause power, Congress can attach

conditions to federal funds to achieve goals it could not

accomplish directly. But to protect the States from

being commandeered by Congress, the Constitution

mandates that spending conditions be unambiguous,

related to the federal interest of the program, and not

coercive. Thus, Treasury’s broad interpretation has

already harmed Missouri’s interests.

Under

Missouri’s reading of the law, Treasury altered the

constitutional conditions which Congress had

attached to ARPA, and so trenched on Missouri’s right

to a spending offer with clear and non-coercive terms.

Similarly, for the State’s alternative constitutional

challenge, if Treasury properly interpreted the Tax

Mandate, the law infringes Missouri’s right, rooted in

its sovereignty, to constitutional spending conditions.

Highlighting

the

need

enforce

those

constitutionally-mandated limits is Missouri’s other

sovereign harm: Treasury’s broad interpretation of

the law (or the law itself, if Treasury is correct)

commandeers the State’s tax policy by punishing it for

exercising its sovereign right to cut taxes.

Missouri has therefore suffered two species of

harm, and so has standing. Indeed, the Ninth Circuit

held that Arizona has standing to challenge the Tax

Mandate’s constitutionality under essentially the

same theories. Arizona v. Yellen, 34 F.4th 841 (2022).

Certiorari is warranted to resolve that clear circuit

split on an important issue. How a State can seek

review of spending conditions absent a violation of

those conditions matters a great deal. This case, for

example, involves billions of dollars of federal aid to

help the States handle the aftermath of the

pandemic—which is not an atypical example of how

Congress exercises its Spending Clause authority.

Review is appropriate to clarify how and when States

may challenge conditions attached to federal funding.

The Court should also review the merits. The law,

and Treasury’s interpretation of it, governs $195

billion of ARPA funds, and every State is subject to

the restriction.

Whether Treasury properly

interpreted the Tax Mandate, and whether it is

constitutional, are issues of constitutional and

nationwide importance. Moreover, of all the cases

challenging the Tax Mandate, this is the only one that

presents an alternative statutory interpretation of the

law that avoids the constitutional problems. All the

other cases just argue that the Tax Mandate is

unconstitutional. Thus, this is the only case that

presents the full range of interpretative and

constitutional issues to the Court.

OPINIONS BELOW

The district court’s opinion is reported at 538 F.

Supp. 3d 906 (E.D. Mo. 2021), and reprinted at 14a–

27a of the Appendix.

The Eighth Circuit’s opinion is reported at 39

F.4th 1063 (2022), and reprinted at 1a–13a of the

Appendix.

JURISDICTION

The district court had jurisdiction under 28 U.S.C.

§ 1331. The Court of Appeals issued its decision on

July 14, 2022. This Court has jurisdiction under 28

U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Spending Clause of the U.S. Constitution,

Article I, § 8, clause 1 is reproduced at App. 28a.

The Tenth Amendment of the U.S. Constitution is

reproduced at App. 29a.

Title 42, section 802 of the U.S. Code is reproduced

at App. 30a–41a.

Title 31, part 35.8 of the Code of Federal

Regulations is reproduced at App. 42a–44a.

STATEMENT OF THE CASE

The Tax Mandate.

In response to the COVID-19 pandemic, the

country shutdown; in response to the shutdown, the

economy shrank and the States lost revenue; and in

response to that shrinkage, Congress passed the

American Rescue Plan Act of 2021, Pub. L. No. 117-2,

135 Stat. 4. ARPA provides $195.3 billion to the

States generally, and $2.7 billion to Missouri

specifically, to respond to the COVID pandemic. See

U.S. Dep’t of the Treasury, Coronavirus State and

Local Fiscal Recovery Funds, https://bit.ly/2SGyFZ9

(last visited Oct. 12, 2022) (allocation chart hyperlink

located under “Allocation Information”).

That

represents between thirteen and fourteen percent of

Missouri’s annual general revenue expenditures for

fiscal years 2019 and 2020. Compare id., with C.A.

App. 17 (providing Missouri’s general revenue

expenditures for fiscal years 2019 and 2020).

Congress also limited how States could use ARPA

funds. The relevant limitation here is the Tax

Mandate (also called the “offset provision”):

A State or territory shall not use the funds

provided under this section . . . to either

directly or indirectly offset a reduction in the

net tax revenue of such State or territory

resulting from a change in law, regulation, or

administrative interpretation during the

covered period that reduces any tax (by

providing for a reduction in a rate, a rebate, a

deduction, a credit, or otherwise) or delays the

imposition of any tax or tax increase.

§ 802(c)(2)(A).

Starting March 3, 2021, the Tax Mandate applies

to States that accept ARPA funds and runs through

December 31, 2024, at the latest. See § 802(c)(2)(A),

(g)(1).

To enforce the Tax Mandate, Congress

authorized the Department of the Treasury to recoup

or to withhold ARPA funds equal to the violation. See

§ 802(e).

During the litigation, Missouri received its ARPA

funds, see Press Release, Scott Fitzpatrick Mo. State

Treasurer, Missouri Receives $1.3 Billion Payment of

American Rescue Plan Funds (Aug. 5, 2021),

https://bit.ly/3vfivEV, as it alleged in the Complaint it

would do, see C.A. App. 16, 23.

II.

The Dispute Over the Tax Mandate’s

Meaning.

The Tax Mandate was immediately controversial.

Attorneys General of twenty-one States, including

Missouri, sent Secretary Yellen a letter noting two

possible readings of the law. One interpretation—the

one that concerned the States—was that the Tax

Mandate penalized States for cutting taxes for any

reason. See C.A. App. 73. Such an interpretation, the

States noted, “would amount to an unprecedented and

unconstitutional

intrusion

the

separate

sovereignty of the States . . . .” Id. To avoid those

issues, the States offered a narrow interpretation of

the law: That it only “precludes express use of [ARPA

funds] for direct tax cuts rather than for the purposes

specified by the Act.” C.A. App. 78.

In response, Secretary Yellen rejected the States’

interpretation. Instead, she signaled her belief in the

broad interpretation: “If States lower certain taxes

but do not use funds under the Act to offset those

cuts—for example, by replacing the lost revenue

through other means—the limitation in the Act is not

implicated.” C.A. App. 81 (emphasis added). She

reiterated her position before the U.S. Senate

Committee on Banking, Housing, and Urban Affairs.

When asked how she “intend[s] to approach the

question of what is directly or indirectly offsetting a

tax cut,” she said that, “given the fungibility of money,

it’s a hard question to answer.” See The Quarterly

CARES Act Report on Congress Before Senate

Committee On Banking, Housing, and Urban Affairs

(2021) (1:10:00–15:00), https://bit.ly/3tRAobm; see

also C.A. App. 538 (discussing the testimony). As the

States pointed out in their letter, money’s “fungibility”

only matters under the broad interpretation of the

Tax Mandate. See C.A. App. 74.

Right before the district court ruled on the State’s

motion for a preliminary injunction, Treasury issued

an interim final rule (IFR) adopting Secretary Yellen’s

broad reading of the Tax Mandate with minor

modifications. See Coronavirus State and Local Fiscal

Recovery Funds, 86 Fed. Reg. 26,786, 26,786 (May 17,

2021). The IFR provides a four-step process, codified

at 31 C.F.R. § 35.8(b), to determine if a State violates

Treasury’s interpretation of the Tax Mandate:

1) Treasury first determines if a State makes a

“covered change”—“a change in law, regulation,

or administrative interpretation,” that does, or

is projected to, reduce tax revenue.

2) Next, Treasury sums all covered changes to

determine if they “exceed[ ] 1 percent of the

State’s” tax baseline, which is the State’s fiscal

year 2019 tax revenue adjusted for inflation.

3) Treasury then determines if a State’s actual tax

revenue is below that baseline.

4) Finally, Treasury sees if the State increased

taxes or cut spending in areas where the State

is not using ARPA funds.

Any reduction “not covered by [sources identified

in Step 4] will be considered to have been offset by

Fiscal Recovery Funds, in contravention of the offset

provision.” 86 Fed. Reg. at 26,807. Thus, the IFR

measures a violation by looking at a State’s entire tax

policy, not whether the State actually uses ARPA

funds to pay for a tax cut.

Before the Eighth Circuit rendered its decision,

Treasury issued a Final Rule implementing the Tax

Mandate. The Final Rule, insofar as Tax Mandate is

concerned, is substantively the same as the IFR. See

Coronavirus State and Local Fiscal Recovery Funds,

87 Fed. Reg. 4,338, 4,424 (Jan. 27, 2022) (“Treasury is

finalizing its implementation of the offset provision

largely without change.”).

III.

Lower Court Proceedings.

Because Treasury’s interpretation of the Tax

Mandate limits Missouri’s ability to receive ARPA

funds and to cut taxes as it wished, the State filed suit

on March 29, 2021. C.A. App. 25. Missouri brought

only federal claims, so jurisdiction was proper under

28 U.S.C. § 1331.

While Missouri’s suit pre-dated the IFR and Final

Rule, it did not predate the effective date of the Tax

Mandate—March 3, 2021. 42 U.S.C. § 802(c)(2)(A),

(g)(1). Because turning down the funds was not a

realistic choice, see C.A. App. 16, 23, the State knew it

would be subject to the Tax Mandate and Treasury’s

interpretation of it. And when Missouri sued, its

legislature was in session and considering eight taxreduction proposals. See C.A. App. 17–18.

Missouri brought two alternative claims: First,

that the Tax Mandate prohibits only the deliberate

and express use of ARPA funds to pay for tax cuts, and

thus Treasury’s broad interpretation is wrong. C.A.

App. 18–20. 1 Second, that if Treasury’s interpretation

is correct, the Tax Mandate exceeds Congress’s power

under the Spending Clause and violates the Tenth

Amendment. C.A. App. 20–24.

The State then moved for a preliminary injunction.

The government argued that the State lacked

standing. See C.A. App. 509–13. On May 11, 2021,

the district court dismissed the case for lack of

standing and because the State’s claims were not ripe.

App. 27a. The State timely appealed. C.A. App. 753.

App. 2a. The

The Eighth Circuit affirmed.

panel’s holding rests on the theory that Missouri had

to allege it will violate Treasury’s interpretation of the

law: “Missouri has not alleged any intent to engage

in conduct that is proscribed by the Offset Restriction

on its face or the Secretary’s interpretation of it.” App.

11a. That is so, the court said, because “tax-reduction

policies . . . do not violate ARPA or” Treasury’s

interpretation of it. Id. Instead, “[t]he Offset

Missouri’s suit was premised, in part, on comments Secretary

Yellen made. See C.A. App. 15. The State uses “Treasury”

because Secretary Yellen was speaking in her official capacity.

The Eighth Circuit did not address the district court’s

ripeness holding. App. 13a.

Restriction simply prohibits states from cutting taxes

in a way that reduces net revenue more than a de

minimis amount and then failing to account for that

reduction through non-ARPA sources.” Id. Thus, the

Eighth Circuit held, Missouri needed to allege “that

[the] tax cuts [its legislature was considering] would

reduce net revenue and that [the State] would fail to

offset the reduction through permissible means.” Id.

The State’s failure to do so meant that it “has only

alleged a conjectural or hypothetical injury, not one

that is actual or imminent. It has also not alleged a

future injury that is certainly impending or even

likely to occur.” App. 12a (footnote, citations, and

quotations omitted).

Missouri timely filed this petition for a writ of

certiorari.

REASONS FOR GRANTING THE PETITION

Congress, through ARPA, provided States with

$195.3 billion to ameliorate the economic downturn

following the COVID-19-driven shutdown. Missouri’s

share of those funds constitutes thirteen to fourteen

percent of the State’s general fund expenditures in the

two years preceding the passage of ARPA. But how

much of that money Missouri receives depends on the

State’s compliance with the Tax Mandate.

Thus, what the Tax Mandate means, and whether

it is constitutional, matters a great deal—as does the

antecedent question of what a State must do to

challenge the law or how Treasury implements it. The

best evidence of that is current litigation involving the

Tax Mandate. Including this case, twenty-one states

have brought suit in six different courts in five

circuits. To date, two circuits have analyzed a State’s

standing to challenge the Tax Mandate or its

implementation.

The Ninth Circuit ruled that

Arizona has standing to challenge the Tax Mandate’s

constitutionality—a decision that is consistent with

the decisions of four district courts. The Eighth

Circuit concluded otherwise here.

That was error. Missouri’s position is simple: The

Tax Mandate prohibits only the deliberate use of

ARPA funds to pay for a tax cut; if it sweeps more

broadly, the law is unconstitutional. At the time

Missouri filed suit, Secretary Yellen’s stated view was

that the Tax Mandate swept more broadly, i.e., that it

mandated a revenue-neutral or revenue-enhancing

tax policy. Since then, Treasury adopted her view via

the IFR and Final Rule, which determine whether a

State violates the Tax Mandate by looking at a State’s

fiscal policy as a whole. If the policy is revenuereducing (subject to a de minimis exception), there is

a violation; if it is revenue-neutral or revenueenhancing, there is no violation. Thus, from the

outset of the litigation, there has been a bona fide

dispute between Missouri and Treasury about the Tax

Mandate’s scope and legality. Yet the Eighth Circuit

concluded Missouri lacks standing because the State

Texas v. Yellen, 2022 WL 1063088 (N.D. Tex. Apr. 8, 2022),

appeal docketed No. 22-10560 (5th Cir.); West Virginia v. U.S.

Dep’t of Treasury, 571 F. Supp. 3d 1229 (N.D. Ala. 2021), appeal

docketed No. 22-10168 (11th Cir.); Kentucky v. Yellen, 563 F.

Supp. 3d 647 (E.D. Ky. 2021), appeal docketed No. 21-6108 (6th

Cir.); Arizona v. Yellen, 550 F. Supp. 3d 791 (D. Ariz. 2021), rev’d

34 F.4th 841 (9th Cir. 2022); Ohio v. Yellen, 547 F. Supp. 3d 713

(S.D. Ohio 2021), appeal docketed No. 21-3787 (6th Cir.).

did not allege it will violate Treasury’s interpretation

of the law.

Article III, however, does not require plaintiffs to

declare they will violate the law in order to receive

judicial review. This Court’s precedents make that

plain. So, too, does logic. The Eighth Circuit’s

analysis requires Missouri to place ARPA funds at

risk to challenge Treasury’s interpretation or to

preserve those funds by complying with a more

onerous, unconstitutional condition that limits its

authority to set tax policy. Given the importance of

federal funds to the States—ARPA, for example,

provides the States billions of dollars of aid to offset

the economic effects of the pandemic response—the

Eighth Circuit’s rule will result in States rejecting the

gamble and accepting unlawful spending conditions.

That is the very coercion that Missouri challenges.

There is a second problem with the Eighth

Circuit’s holding. As this Court has recognized, the

Constitution mandates that conditions on federal

funding meet certain criteria to protect the States’

status as separate sovereigns.

That is, the

Constitution gives the States a right to a certain type

of spending condition. Missouri argues that Treasury

altered the Tax Mandate to the State’s detriment,

thus depriving Missouri of its constitutional right to a

constitutional spending condition. That itself is a

cognizable injury. It also means that Missouri has

standing to raise its constitutional claim that if

Treasury properly interpreted the Tax Mandate, the

law is unconstitutionally ambiguous, unrelated to the

federal interests in ARPA, and coercive. In that case,

Congress failed to respect Missouri’s constitutional

entitlement to a spending condition that meets certain

conditions, and so harmed the State’s sovereign

interest in being able to knowingly and voluntarily

accept the Tax Mandate.

That illustrates the importance of permitting

challenges like Missouri’s. Treasury’s broad reading

of the Tax Mandate punishes States that implement

certain tax reduction policies. But the ability of a

State to set its own tax rules is “indispensable” to its

existence. Lane County v. Oregon, 7 Wall. 71, 76

(1868). So Treasury’s interpretation (or, in the

alternative, the Tax Mandate) causes harm to

Missouri’s sovereign authority. Judicial review is

therefore necessary to correct that harm and to

vindicate the federal system.

The Ninth Circuit was thus correct when it held

that Arizona has standing to challenge the Tax

Mandate’s constitutionality using the same theories

Missouri advances here. This case presents the ideal

vehicle to resolve that split and to clarify when a State

may bring suit to challenge a spending restriction or

the Executive Branch’s interpretation of one.

Moreover, because the Eighth Circuit’s analysis

implicitly resolved the meaning and constitutionality

of the Tax Mandate, this case is also a proper vehicle

to address those issues. Indeed, it is the ideal vehicle.

All the other challenges to the Tax Mandate

percolating through the lower courts challenge the

constitutionality of the law. This is the only case that

presents a constitutional interpretation of the Tax

Mandate, and so the only case that preserves the law

as Congress intended.

The Eighth Circuit’s Decision Conflicts

with the Ninth Circuit’s Holding that

Arizona Has Standing to Challenge the

Tax Mandate’s Constitutionality.

The Ninth Circuit’s Decision.

Arizona v. Yellen, 34 F.4th 841 (9th Cir. 2022),

involves the State of Arizona’s challenge to the Tax

Mandate on the basis “that [it] violates the Spending

Clause and the Tenth Amendment” because the law

“is unconstitutionally ambiguous under the Spending

Clause”

and

“unduly

coercive

and

unconstitutionally commander[s Arizona’s] sovereign

power to set its own tax policy in violation of the Tenth

Amendment.” Id. at 847. Arizona raised three

standing theories: (1) “that it has standing because of

the compliance costs imposed by the Treasury

Department’s IFR,” (2) that it had standing to bring a

pre-enforcement challenge to the Tax Mandate, and

(3) that the Tax Mandate “inflicts cognizable

sovereign injuries upon the States by being

unconstitutionally ambiguous and coercive.” Id. at

848. The Ninth Circuit rejected the first, see id., but

held that the latter two are viable.

Pre-enforcement Standing: In analyzing whether

Arizona has pre-enforcement standing, the Ninth

Circuit considered whether the State alleged “(1) an

‘intention to engage in a courts of conduct arguably

affected with a constitutional interest,’ (2) ‘but

proscribed by statute’ ” and (3) whether there was “ ‘a

credible threat of prosecution’ . . . .” Id. at 849 (quoting

Susan B. Anthony List v. Driehaus (SBA List), 573

U.S. 149 (2014)).

As to the first factor, the Ninth Circuit concluded

Arizona alleged that it intended “to do an act arguably

affected by a constitutional interest”—the coerced

acceptance of ARPA funds with an ambiguous

condition. Id. at 849 (quotations omitted).

As to the second factor, the Ninth Circuit noted

that “Arizona has accepted ARPA funds, certified that

it will meet ARPA’s conditions, and passed a $1.9

billion tax cut.” Id. The panel majority rejected the

claim that Arizona also needed to allege that its tax

cut “will result in a reduction in its ‘net tax revenue,’ ”

and that the State intended to use “ARPA funds to

offset the tax cut.” Id. Requiring such allegations

“approximates requiring Arizona to admit to violating

a law in order to have standing to challenge it, a

prerequisite the Supreme Court has repeatedly

rejected.” Id. Judge Nelson disagreed, saying that

Arizona’s needed to “allege that it has (or plans to)

directly or indirectly offset a reduction in net tax

revenue.” Id. at 856 (Nelson, J., concurring).

As to the third factor, the panel majority analyzed

“(1) whether the plaintiffs have articulated a concrete

plan’ to violate the law in question, (2) whether the

prosecuting authorities have communicated a specific

warning or threat to initiate proceedings, and (3) the

history of past prosecution or enforcement under the

challenged statute.” Id. at 850 (quotations omitted)

(quoting Thomas v. Anchorage Equal Rights Comm’n,

220 F.3d 1134, 1139 (9th Cir. 2000) (en banc)). But

because the Tax Mandate “is new,” the court said, “the

history of past enforcement carries little, if any

weight.” Id.

That left the first two considerations. As to the

first, the panel majority found it sufficient that the

State recently passed a tax cut. See id. As to the

second, the panel majority found three facts

relevant—“[t]hat the federal government has not

disavowed enforcement of the Offset Provision,” that

Secretary Yellen “wrote a letter confirming that the

[Tax Mandate] will be enforced,” and that the IFR

provided a “detailed and specific process that will be

used to recoup funds from States that violate the” Tax

Mandate. Id. Judge Nelson again disagreed, saying

“Treasury has explicitly disavowed any prohibition

against states enacting tax cuts,” and so the threat of

enforcement was speculative. Id. at 856 (Nelson, J.,

concurring).

Because, the panel majority concluded, Arizona

“has done everything short of confessing a desire to

use ARPA funds ‘directly or indirectly’ to offset the tax

cut it passed,” there was “a realistic danger” of

recoupment. Id. at 850–51. The State could bring a

pre-enforcement challenge. See id.

Sovereign Injuries: For its theory of injury to its

sovereign interests, Arizona argued “that the [Tax

Mandate’s] ambiguity prevents Arizona from being

able to exercise its choice voluntarily to accept ARPA

funds and understand the consequences of agreeing to

ARPA’s conditions. Arizona also contended that by

coercing the States into accepting the Offset

Provision, ARPA threatens Arizona’s sovereign

prerogative to ‘tax its residents as it sees fit.’ ” Id. at

851.

The full panel agreed.

Examining Arizona’s

“sovereign injury theory for standing through the lens

of Spending Clause legislation being ‘in the nature of

a contract,’” id. (quoting Pennhurst State School and

Hospital v. Halderman, 451 U.S. 1, 17 (1981)), the

court noted that the Constitution imposes “inherent

limitations on Congress’s power” under the Spending

Clause, id. at 851–52. Analogizing to contract suits

involving ambiguous terms or duress, the Ninth

Circuit reasoned that “the quasi-contractual funding

offer at issue here can be challenged by Arizona at the

outset

for

offering

conditions

that

are

unconstitutionally ambiguous or coercive.” Id. at 852.

Such an offer “offends state sovereignty and gives rise

to a cognizable injury in fact.” Id. “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.” Id. at 853. That sufficed for

standing.

The Eighth

Decision.

Circuit’s

Conflicting

As to pre-enforcement standing, the Eighth

Circuit’s analysis is no different from Judge Nelson’s.

The Eighth Circuit concluded that Missouri had to

allege it was going to violate the Tax Mandate—as

interpreted by Secretary Yellen and Treasury—to

have standing:

“[A]lthough Missouri may have

alleged that it intends to accept ARPA funds and that

it is considering tax cuts, it has not alleged that those

tax cuts would reduce net revenue and that it would

fail to offset the reduction through permissible

means.” App. 11a. Compare id., with Arizona, 34

F.4th at 856 (Nelson, J., concurring) (“A tax cut, on its

own, does not fall within the Offset Provision’s ambit.

Without more, we cannot infer both (1) a reduction in

net tax revenue and (2) conduct that might count as

an ‘offset.’ ”). The conflict is plain.

Indeed, it is plainer than ever. Like Arizona, see

Arizona, 34 F.4th at 847, Missouri has now cut taxes.

In September, the State implemented two tax cuts.

One is a reduction in income tax rates that the State

Department of Revenue estimates could reduce

revenue by over $130 million in fiscal year 2023 and

over $330 million in fiscal year 2024. 4 Comm.

Legislative Research, L.R. No. 5974S.05P, Fiscal Note

1, 4 (2022). The other is a tax credit program that is

estimated to cost roughly $40 million in fiscal year

2024.

Comm. Legislative Research, L.R. No.

5969H.03P, Fiscal Note 1 (2022). 5 This case and

Arizona are thus factually similar, and the different

holdings are irreconcilable.

This case, to be sure, involves differing

interpretations of the Tax Mandate as well as a

constitutional challenge while Arizona involves just a

constitutional challenge, but that does not render the

two decisions compatible. Indeed, that Missouri

raises the same constitutional arguments as Arizona

in support of its interpretation and, alternatively, its

constitutional challenge to the Tax Mandate show

that the cases are indistinguishable.

And, to be clear, there are interpretative

differences—the Eighth Circuit’s claim that “the

Secretary has never endorsed or adopted the broad

interpretation,” App. 10a, notwithstanding. Even

though Treasury has not said that the Tax Mandate

categorically bars tax cuts, see id., it has conceded that

its reading of the Tax Mandate is broader than

The difference is due to the fact the reduction affects part of

fiscal year 2023.

The Tax Mandate applies to tax credits.

§ 802(c)(2)(A).

42 U.S.C.

Missouri’s.

See Br. for Appellees at 7 (calling

Missouri’s interpretation “mistaken”). In all events,

the Eighth Circuit’s statement is a red-herring, for the

court still said that for Missouri to have standing, it

needed to allege that it will violate Treasury’s reading

of the law—the exact rule the Ninth Circuit rejected.

See Arizona 34 F.4th at 850. Indeed, the Eighth

Circuit’s view even on this front mirrors Judge

Nelson’s. In his partial dissent, he said there was no

realistic chance of enforcement because “Treasury has

explicitly disavowed any prohibition against states

enacting tax cuts.” Arizona, 34 F.4th at 856. The

majority rejected the claim. While Treasury may have

“disavowed enforcing the law in the way Arizona

fears,” it still intended to enforce it. Id. at 850.

Similarly here—even if Treasury is not enforcing an

interpretation of the Tax Mandate that bars all tax

cuts, it is enforcing 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. That’s what matters. 6 See

Arizona, 34 F.4th at 850 (saying, under such

circumstances, Arizona need not “allege an intention

The Eight Circuit seemed to believe that Missouri challenges

“a specific potential interpretation . . . .” App. 9a. As the

complaint makes clear, however, Missouri challenges Secretary

Yellen’s and Treasury’s failure “to adopt the narrow, correct, and

constitutional interpretation of the Tax Mandate . . . .” C.A. App.

20; see also C.A. App. 19 (providing reasons why “[a] broader

interpretation of the Tax Mandate” violates clear-statement

rules); C.A. App. 50 (asking the district court to enjoin Treasury

from “enforcing any interpretation of the Tax Mandate . . . that is

broader than prohibiting the deliberate and express use of the

Act’s relief funds to offset revenue losses from a specific tax cut”).

to use ARPA funds ‘directly or indirectly’ to offset the

resulting net revenue reduction from its tax cut”).

The Eighth and Ninth Circuits also diverge in

analyzing the sovereign interests at stake. Like

Arizona, Missouri pointed to its “interest in the offer

Congress provided to the State,” App. 9a—that is, the

State’s interest in accepting ARPA funds on

Congress’s constitutional terms, not Treasury’s

unconstitutional interpretation.

Both States

therefore advance the same thesis—unconstitutional

spending restrictions “offend[ ] state sovereignty and

give rise to a cognizable injury in fact.” Arizona, 34

F.4th at 852.

The Arizona decision did deal with the claim that

Congress exceeded its constitutional authority, while

Missouri’s argument here is that Treasury’s

interpretation of a law is improper—and the Eighth

Circuit distinguished the two cases on that basis. See

App. 9a n.5. But the principles animating the Ninth

Circuit’s reasoning in Arizona—“the inherent

limitations on Congress’s power” under the Spending

Clause which “create constitutionally-imposed and

enforceable criteria that ‘contractual’ funding offers

from the federal government must meet,” Arizona, 34

F.4th at 852—animate Missouri’s statutory analysis,

which relies, in part, on the unconstitutionality of the

a broad reading of the Tax Mandate. See e.g., C.A.

App. 19, 474–75. And in all events, because Missouri

claims, in the alternative, that if Treasury properly

interpreted the law, the Tax Mandate is

unconstitutional, see, e.g., C.A. App. 20–24, the State

does raise the same claims, and the same theory of

standing, as Arizona.

Thus, the Eighth Circuit was wrong when it said

Missouri “develop[ed] no argument as to how it has

suffered a concrete injury under either of these

theories, nor has it explained how such an injury could

still exist after it has accepted the funds.” App. 9a n.5.

The State did; they are the ones the Ninth Circuit

identified: The violations of the constitutionally

mandated criteria for spending conditions, which

“offends state sovereignty,” Arizona, 34 F.4th at 852,

and the loss of “control over its taxing policies” as a

result of Treasury’s broad reading of the Tax

Mandate, id. at 853.

***

Thus, the Eighth Circuit and Ninth Circuit

reached contrary conclusions when faced with the

same basic facts and legal theories. The two decisions

are irreconcilable. Certiorari is warranted to resolve

this clear circuit split. 7

II.

The Eighth Circuit’s Decision Is Wrong.

Certiorari is also necessary because the Eighth

Circuit’s decision is wrong. Treasury’s broad reading

of the Tax Mandate inflicts five injuries on the State

that fall into three categories.

See App. 9a

(summarizing them). All are sufficient.

While the Eighth and Ninth Circuits are the only appellate

courts to have discussed this issue, four district courts have

found standing based on the same, or similar, reasoning. See

Texas v. Yellen, 2022 WL 989733, at *4–*5, *6 (N.D. Tex. Mar. 4,

2022); Kentucky, 563 F. Supp. 3d at 652–53; West Virginia v. U.S.

Dep’t of Treasury, 2021 WL 2952863, at *6–*7 (N.D. Ala. July 14,

2021); Ohio, 547 F. Supp. 3d at 723. Those decisions are on

appeal, and their resolution will only deepen this split.

First, are pocketbook injuries, such as costs

Missouri will face to comply with a broad

interpretation of the Tax Mandate and the increased

risk the State will lose ARPA funds under the broad

interpretation. See Czyzewski v. Jevic Holding Corp.,

137 S. Ct. 973, 983 (2017) (“[A] loss of even a small

amount of money is ordinarily an ‘injury.’ ”); City and

County of San Francisco v. Trump, 897 F.3d 1225,

1236 (9th Cir. 2018) (finding standing if enforcement

of federal law results in the loss of federal funds).

Second, Missouri has standing under the Court’s

pre-enforcement standing analysis. At the time it

filed suit, Missouri alleged it must take ARPA funds,

see C.A. App. 16, and was considering tax cuts that

could violate a broad interpretation of the Tax

Mandate, see C.A. App. 17–18, 466–67. The State has

now cut taxes. See S.B. 3 & 5, 101st Gen. Assemb., 1st

Spec. Sess. (Mo. 2022); H.B. 3, 101st Gen. Assemb.,

1st Spec. Sess. (Mo. 2022). Accepting Congress’s

spending offers and cutting taxes constitutes conduct

“arguably affected with a constitutional interest.”

SBA List, 573 U.S. at 159 (quotations omitted). And,

based on Treasury’s interpretation of the Tax

Mandate, it is conduct that could lead to recoupment.

That suffices. “Nothing in this Court’s decisions

requires a plaintiff who wishes to challenge the

constitutionality of a law to confess that he will in fact

violate that law.” SBA List, 573 U.S. at 163; see Free

Enter. Fund v. Pub. Accounting Oversight Bd., 561

U.S. 477, 490 (2010) (Article III does not “require

plaintiffs to ‘bet the farm ... by taking the violative

action’ before ‘testing the validity of the law.’ ”

(quoting MedImmune, Inc. v. Genetech, Inc., 549 U.S.

118, 129 (2007)).

Yet that is what the Eighth Circuit demanded.

The Court faulted Missouri for failing to allege that

the tax cuts it pointed to “would reduce net revenue

and that [the State] would fail to offset the reduction

through permissible means.” App. 11a. The court’s

claim notwithstanding, see id., that requires Missouri

to “confess that [it] will in fact violate the law,” SBA

List, 573 U.S. at 163. The Ninth Circuit correctly

rejected such a requirement. See Arizona, 34 F.4th at

849 (rejecting the district court’s “reasoning [which]

approximates requiring Arizona to admit to violating

a law in order to have standing to challenge it.”).

Indeed, now that Missouri has passed significant tax

cuts, see Mo. S.B. 3 & 5; Mo. H.B. 3, the State has

clearly done “everything short of confessing a desire

to use ARPA funds ‘directly or indirectly’ to offset a

tax cut it passed,” Arizona, 34 F.4th at 850. That is

sufficient here, just as it was sufficient in Arizona. See

id. at 850–51.

Finally, Treasury intends to enforce its broader

reading of the Tax Mandate. The Final Rule codifies

an interpretation broader than Missouri’s, which

Secretary Yellen publicly rejected, see C.A. App. 81–

82. That evidence established Arizona’s standing to

challenge the Tax Mandate, see Arizona, 34 F.4th at

850, and establishes injury here. Indeed, Treasury is

actively looking for ARPA violations. See Ducey v.

Yellen, 2022 WL 2817710, at *2 (D. Ariz. July 19,

2022), appeal docketed No. 22-16101 (9th Cir.). There

is thus no reason to believe Treasury will abstain from

enforcing its version of the Tax Mandate. See, e.g.,

Virginia v. Am. Booksellers Ass’n, Inc., 484 U.S. 383,

393 (1988) (Standing exists because “[t]he State has

not suggested that the newly enacted law will not be

enforced.”).

Third, there are the harms to Missouri’s sovereign

interests, which are intertwined with the State’s

interest in ARPA. The Eighth Circuit dismissed those

harms, grouping them in its pre-enforcement

standing analysis. See App. 9a–10a. That was error.

Spending clause legislation “is much in the nature

of a contract,” Arlington Central School District Board

of Education v. Murphy, 548 U.S. 291, 296 (2006)

(quotations omitted), so Treasury’s alteration of the

Tax Mandate by reading it broadly, and to Missouri’s

detriment, is a cognizable injury, see, e.g., Dominion

Transmission, Inc. v. FERC, 533 F.3d 845, 852 (D.C.

Cir. 2008) (“FERC’s alteration of Dominion’s

obligations under the 2001 and 2005 Settlements” is

an injury-in-fact); see also Clinton v. City of New York,

524 U.S. 417, 430–31 (1998) (using the line-item veto

to impose liabilities Congress removed results in an

injury-in-fact).

That also inflicts a concrete, particular injury to

Missouri’s constitutionally protected sovereignty.

The Constitution requires spending conditions to

meet certain criteria so that the conditions do “not

undermine the status of the States as independent

sovereigns . . . .” NFIB v. Sebelius, 567 U.S. 519, 577

(2012) (opinion of Roberts, C.J.); see id. at 675–76

(Scalia, Kennedy, Thomas, and Alito, JJ., dissenting)

(making the same point). That is, the Constitution

gives Missouri a constitutional right to a particular

type of offer—an unambiguous, non-coercive one—as

a means of protecting Missouri’s sovereign status. See

South Dakota v. Dole, 482 U.S. 203, 207–08 (1987)

(listing conditions); Pennhurst, 451 U.S. at 17 (“The

legitimacy of Congress’ power to legislate under the

spending power thus rests on whether the State

voluntarily and knowingly accepts the terms of the

contract.”) (quotations omitted). An offer that violates

those conditions “offends state sovereignty and gives

rise to a cognizable injury in fact.” Arizona, 34 F.4th

at 852. It follows that when an agency alters a

spending condition to render it unconstitutional, as

Missouri alleged here, the same injury occurs. Indeed,

it is a double harm. The Constitution requires

Congress to impose spending conditions. See, e.g., Tex.

Educ. Agency v. U.S. Dep’t of Educ., 992 F.3d 350,

361–62 (5th Cir. 2021) (noting that agencies cannot

cure ambiguous spending clause conditions because

Congress is the only actor empowered to act under the

Spending Clause). It does not permit an agency,

which is not accountable to the States in any way, to

do so. See U.S. Const. art. II, § 1. So here, Treasury’s

interpretation harms Missouri’s constitutional right

to a certain type of injury and its right to have a

particular federal actor create that condition.

Moreover,

Treasury’s

reading

turns

constitutional condition into an unconstitutional one.

So even if the agency could alter spending clause

conditions, and do so to Missouri’s detriment,

Missouri has standing to challenge the interpretation

as unconstitutional. See NFIB, 567 U.S. at 575

(opinion of Roberts, C.J.), 624 (Ginsburg, J.,

concurring in part and dissenting in part), 671 (Scalia,

Kennedy, Thomas, Alito, JJ., dissenting) (addressing

the States’ Spending Clause challenge on the merits).

The State is “the object” of the restriction and so—as

with all regulated entities—“there is ordinarily little

question that” the restriction on its ability to set tax

policy on pain of losing ARPA funds “caused [it]

injury.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561–

62 (1992).

After all, Treasury’s broader interpretation

punishes Missouri for enacting certain tax and fiscal

policies. The broad interpretation Treasury adopted

essentially requires the State to maintain a revenueneutral or revenue-enhancing tax policy by keying

violations to reductions in total tax revenue (with a de

minimis safe harbor). See 31 C.F.R. § 35.8(b). In

essence, Treasury penalizes revenue-reducing tax

policies. But a State’s “taxation authority” is “central

to” its sovereignty. Dep’t of Revenue of Or. v. ACF

Indus., 510 U.S. 332, 345 (1994); see, e.g., Lane

County v. Oregon, 7 Wall. 71, 76 (1868) (“[T]o the

existence of the States, . . . the power of taxation is

indispensable.”). Missouri has “a judicially cognizable

interest in the preservation of its own sovereignty”

and thus standing to sue for “a diminishment of that

sovereignty . . . .” Bowen v. Pub. Agencies Opposed to

Soc. Sec. Entrapment, 477 U.S. 41, 50 n.17 (1986)

(quoting the district court).

Finally, those standing theories apply to

Missouri’s challenge to Treasury’s interpretation of

the Tax Mandate and the State’s constitutional claim.

If the Tax Mandate is unconstitutional because

Treasury’s interpretation is correct, the costs it

imposes on Missouri in terms of compliance and risk

of loss of federal funds is a cognizable harm. If the

Tax Mandate is unconstitutional because Treasury’s

interpretation is correct, it is an ambiguous, coercive

offer, and Missouri has standing to challenge the

harm to its constitutionally protected, sovereign right

to a clear, non-coercive spending condition. And if the

Tax Mandate is unconstitutional because Treasury’s

interpretation is correct, the law unlawfully

commandeers Missouri’s tax policy by penalizing the

State for reducing tax revenue.

***

At core, Missouri’s standing stems from the fact

that the State interprets the Tax Mandate to require

it to act one way to preserve its ARPA funds and

Treasury believes that the law requires more. So like

a party to a contract who is unsure about the

contract’s terms, or a regulated entity who is unsure

of what the law requires, Missouri has standing to

seek clarity about the meaning of the Tax Mandate.

See, e.g., MedImmune, 549 U.S. at 129, 134–35. That

the Constitution protects Missouri’s sovereignty by

requiring spending conditions to meet certain criteria

means that Treasury’s broad reading of the Tax

Mandate—or, if Treasury is correct, the Tax Mandate

itself—harms the State’s constitutionally protected

sovereign interests. Those are viable bases for

standing.

III.

The Court Should Address the Merits.

The Court should also grant certiorari to review

the meaning and constitutionality of the Tax

Mandate. Both are “important question[s] of federal

law that [have] not been, but should be, settled by this

Court.” Sup. Ct. R. 10(c).

Both issues are fairly presented because the

Eighth Circuit’s standing analysis conflates

(improperly, see, e.g., FEC v. Cruz, 142 S. Ct. 1638,

1647–48 (2022)) the merits with standing. According

to the Eighth Circuit, Missouri needed to allege that

it will implement tax cuts that reduce net tax revenue

and “fail to offset the reduction through permissible

means” because “[t]he [Tax Mandate] simply prohibits

states from cutting taxes in a way that reduces net

revenue more than a de minimis amount and then

failing to account for that reduction through non-

ARPA sources.” App. 11a. That is, according to the

Eighth Circuit, the Tax Mandate says what Treasury

says it does. The issue is therefore wrapped up in, and

can be reviewed concurrently with, Missouri’s

standing. Moreover, because the constitutionality of

Treasury’s interpretation of the Tax Mandate is

integral to the law’s meaning, see, e.g., Jennings v.

Rodriguez, 138 S. Ct. 830, 842 (2018) (discussing the

canon of constitutional avoidance); Solid Waste

Agency of Northern Cook County v. U.S. Army Corps

of Engineers (SWANCC), 531 U.S. 159, 172 (2001)

(requiring clear congressional authorization when an

agency’s “interpretation of a statute invokes the outer

limits of Congress’ power”), Missouri’s constitutional

arguments are fairly encompassed in this issue.

Missouri’s arguments are also meritorious. The

Tax Mandate prohibits using ARPA funds “to either

directly or indirectly offset a reduction in the net tax

revenue of such State.” 42 U.S.C. § 802(c)(2)(A)

(emphasis added). “Offset” means “[t]o balance or

calculate against; to compensate for.” Offset, Black’s

Law Dictionary (11th ed. 2019); see also Offset,

Webster’s Third New International Dictionary (2002)

(“counterbalance, compensate”).

Because those

definitions imply an intentional act, the Tax

Mandate’s plain terms prohibit only deliberately

using ARPA funds to replace lost tax revenues. See

Yates v. United States, 574 U.S. 528, 537 (2015)

(plurality opinion) (“Ordinarily, a word’s usage

accords with its dictionary definition.”).

That conclusion is consistent with the requirement

that Congress speak clearly before upsetting “the

‘usual balance of federal and state powers.’ ” Bond v.

United States, 572 U.S. 844, 858 (2013) (quoting

Gregory v. Ashcroft, 501 U.S. 452, 460 (1991) (quoting

another source)). This Court applied—was, “in fact

compel[led]” to apply—that principle in the tax

context when it interpreted a provision of the Railroad

Revitalization and Regulatory Reform Act (R-4 Act)

narrowly to avoid limiting the States’ ability to

provide tax exemptions. See ACF Indus., 510 U.S. at

344–45. So too here. Missouri’s narrow, textually

supported

interpretation

respects

federalism.

Treasury’s does not.

Missouri’s reading also follows from the canon that

courts should avoid reading laws to render them

unconstitutional, see, e.g., Clark v. Martinez, 543 U.S.

371, 379 (2005), and the requirement that Congress

speak clearly before authorizing an agency to push

constitutional boundaries, see SWANCC, 531 U.S. at

172. By contrast, Treasury’s reading of the Tax

Mandate renders the law an invalid exercise of

Congress’s spending power and unconstitutional

under the Tenth Amendment.

First, Treasury’s reading renders the law

ambiguous. For example, if Treasury’s reading is

permissible, then the phrase “directly or indirectly

offset” has no determinate meaning.

Besides

authorizing the Final Rule, it could also justify

reading the Tax Mandate to apply to any tax cut

because money is fungible, see C.A. App. 538, or even

support Missouri’s reading.

Those “plausible

alternative interpretation[s] of the law” would render

it unconstitutionally ambiguous (and do, if Treasury’s

interpretation is valid). Sch. Dist. of the City of

Pontiac v. Sec’y of U.S. Dep’t of Educ., 584 F.3d 253,

284 (6th Cir. 2009) (en banc) (Sutton, J., concurring in

the order) (emphasis omitted).

Second, there is a relatedness problem. See Dole,

483 U.S. at 207. Treasury’s interpretation

impermissibly leverages ARPA funds to regulate

“conduct outside the scope of the federally funded

program.” Rust v. Sullivan, 500 U.S. 173, 196–97

(2000). In measuring a violation by considering a

State’s tax policy writ large, see at 31 C.F.R. § 35.8(b),

Treasury’s interpretation penalizes States for tax or

fiscal decisions they make that are unrelated to the

State’s receipt of ARPA funds. So if Treasury is right,

the Tax Mandate is “a means for bringing federal

economic might to bear on a State’s own choices of

public policy,” Sabri v. United States, 541 U.S. 600,

608 (2004), and not a means to ensure that the funds

are “spent for the purposes for which they are

authorized,” Rust, 500 U.S. at 196.

Third, and relatedly, that would mean ARPA—via

the Tax Mandate—unconstitutionally commandeers

States by forcing them to implement revenue-neutral

or revenue-enhancing tax policies. See Murphy v.

NCAA, 138 S. Ct. 1461, 1478 (2018).

Finally, the Tax Mandate is coercive if it supports

Treasury’s interpretation. Treasury’s interpretation

would mean the Tax Mandate does more than “govern

the use of [ARPA] funds,” it is “a means of pressuring

the States to” reject revenue-reducing tax policies.

NFIB, 567 U.S. at 580 (opinion of Roberts, C.J.). Here,

however, pressure has turned into compulsion. Dole,

483 U.S. at 211. The $2.7 billion the law provides the

State is the equivalent of thirteen to fourteen percent

of its annual general revenue expenditures from fiscal

years 2019 and 2020. See Statement of the Case § I,

supra. As the State alleged, it cannot realistically

turn down that money—especially as it, like the rest

of the world, recovers from the COVID-19 pandemic.

See, e.g., C.A. App. 16. Given that, if the Tax Mandate

is as broad as Treasury says it is, ARPA coerces States

to accept the mandate and give up a portion of their

sovereign taxing authority. See NFIB, 567 U.S. at 582

(opinion of Roberts, C.J.) (“The threatened loss of over

10 percent of a State’s overall budget, in contrast, is

economic dragooning that leaves the States with no

real option but to acquiesce in the Medicaid

expansion.”).

Thus, Missouri’s reading, unlike Treasury’s,

avoids rendering the Tax Mandate unconstitutional, 8

and so is the better interpretation. Because it is also

textually supported and consistent with this Court’s

clear statement rules, it is also the right reading.

And, for the reasons noted above, if Missouri’s

interpretation is incorrect, the Tax Mandate is

unconstitutional.

IV.

The

Questions

Presented

Are

Important and Cleanly Presented.

With its spending power, Congress may exercise

power over areas “not thought to be within Article I’s

‘enumerated legislative fields.’ ” Dole, 483 U.S. at 207

(quoting United States v. Butler, 297 U.S. 1, 65

(1936)). That gives Congress an incentive to use the

federal government’s vast resources to force States to

implement federal policies. See NFIB, 567 U.S. at 577

(opinion of Roberts, C.J.) (noting that concern). “That

insight has led this Court to strike down federal

legislation that commandeers a State’s legislative or

In the alternative, establish that the Tax Mandate is

unconstitutional if Treasury is correct.

administrative apparatus for federal purposes [and]

to scrutinize Spending Clause legislation to ensure

that Congress is not using financial inducements to

exert a ‘power akin to undue influence.’ ” Id. (quoting

Steward Machine Co. v. Davis, 301 U.S. 548, 590

(1937)).

Requiring States—as the Eighth Circuit did

here—to claim they will violate a spending restriction

denies them “a ‘meaningful’ avenue of relief ,” and

thus a means of ensuring the federal government does

not use spending conditions to infringe on their

sovereignty. Free Enter. Fund, 561 U.S. at 490

(quoting Thunder Basin Coal Co. v. Reich, 510 U.S.

200, 212 (1994)). Such a rule puts States “to the choice

between abandoning [their] rights or risking” the loss

of federal funds. MedImmune, 549 U.S. at 130. Here,

for example, Missouri alleged it had “no real choice

but to accept” ARPA funds in light of the pandemicinduced economic downturns.

C.A. App. 23

(quotations and citation omitted). So under the

Eighth Circuit’s test, the State must either admit it

will violate Treasury’s reading of the law to seek

judicial review—thus risking needed ARPA funds—or

forfeit judicial review and part of its sovereignty to

preserve them.

This is also an issue that is likely to recur.

Congress routinely provides States funding subject to

conditions. See, e.g., 20 U.S.C. § 1412 (IDEA); 42

U.S.C. § 1396a (Medicaid); 42 U.S.C. § 2000cc-1

(RLUIPA); NFIB, 567 U.S. at 575 (opinion of Roberts,

C.J.) (Medicaid expansion). And federal agencies

routinely have a role in implementing and

interpreting those conditions. See Bennett v. Ky. Dep’t

of Educ., 470 U.S. 656, 660 (1985); Tex. Educ. Agency,

992 F.3d at 361. That will not stop any time soon. In

fiscal year 2020, for example, twenty-one federal block

grants provided States and localities “about $58.4

billion . . . .” Cong. Research Serv., R40486, Block

Grants: Perspectives and Controversies 1 (2021). So

the fact-pattern and legal issues this case presents

will almost certainly recur, and determining when

and how States may challenge spending conditions or

an agency’s interpretations of them is an issue that

will arise again.

Equally important is the Tax Mandate’s meaning

and constitutionality. The Tax Mandate, and

Treasury’s interpretation of it, governs the use of $195

billion and affects tax policy in all fifty States and the

District of Columbia. See Nat’l Ass’n of State Budget

Officers,

State

Recovery

Plans,

https://bit.ly/3SOtmAD (last visited Oct. 12, 2022)

(showing all the States and the District of Columbia

provide ARPA-mandated reports). So what the Tax

Mandate means—and whether it is constitutional—is

“an important [question] of first impression” that

justifies certiorari review. Am. Fed’n of Musicians v.

Wittstein, 379 U.S. 171, 175 (1964); see Olmstead v.

L.C. ex rel. Zimring, 527 U.S. 581, 596 (1999)

(granting certiorari “in view of the importance of the

question presented to the States”); New York v.

United States, 326 U.S. 572, 574 (1946) (“The strong

urging of New York for further clarification of the

amenability of States to the taxing power of the

United States led us to grant certiorari.”).

This case is also the ideal vehicle to address those

questions. On the standing front, the dueling opinions

from the Eighth and Ninth Circuits, including the

partial dissent by Judge Nelson in the Ninth Circuit,

render further percolation unnecessary. On the

merits, the Eighth Circuit’s decision rests—in large

part—on the meaning of the Tax Mandate, which is a

merits issue that implicates the constitutional issue.

Thus, analyzing Missouri’s standing will also involve

the State’s statutory and constitutional arguments.

Both issues are also purely legal ones.

The

government did not raise a factual attack on

Missouri’s standing, and the meaning and

constitutionality of the Tax Mandate are pure

questions of law.

Finally, this case is the only one that provides a

constitutional interpretation of the Tax Mandate. So

far as Missouri is aware, all the other challenges to

the Tax Mandate argue that the law is

unconstitutional. Thus, this is the only case that

preserves the law as Congress intended instead of

putting the Court to the choice of finding the entire

law unconstitutional or sanctioning an interpretation

that would permit Treasury to penalize a State for

exercising its sovereign right to reduce tax revenues.

CONCLUSION

The petition for writ of certiorari should be

granted.

Respectfully submitted,

ERIC S. SCHMITT

Missouri Attorney General

D. JOHN SAUER

Solicitor 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

APPENDIX

TABLE OF CONTENTS

APPENDIX A – Eighth Circuit’s Decision Issued

February 15, 2022 ..................................................... 1a

APPENDIX B – Opinion, Memorandum and Order of

the United States District Court Eastern District of

Missouri Eastern Division dated February 15,

2022 .......................................................................... 14a

APPENDIX C – U.S. Constitution The Spending

Clause, Article I, § 8, clause 1 ................................. 28a

APPENDIX D – U.S. Constitution The Spending

Clause, Article I, § 8, clause 1 ................................. 29a

APPENDIX E – 42 U.S.C. § 802 Coronavirus State

Fiscal Recovery Fund .............................................. 30a

APPENDIX F – 31 C.F.R. §35.8 ............................. 42a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

————

No. 21-2118

————

State of Missouri

Plaintiff – Appellee

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; U.S. Department of the

Treasury

Defendants – Appellees

————

Appeal from United States District Court

for the Eastern District of Missouri

————

Submitted: February 15, 2022

Filed: July 14, 2022

————

Before SMITH, Chief Judge, BENTON and KELLY,

Circuit Judges.

————

KELLY, Circuit Judge.

Missouri challenges the Secretary of the

Treasury’s implementation of the American Rescue

Plan Act of 2021 (ARPA), Pub. L. No. 117-2, 135

Stat. 4.

Missouri argues that the Secretary’s

“erroneously broad interpretation” of a provision in

ARPA—the “Offset Restriction”—is unconstitutional.

The district court1 dismissed the case, finding that

Missouri lacked standing and that Missouri’s claims

were not ripe for adjudication. Having jurisdiction

under 28 U.S.C. § 1291, we affirm.

ARPA, which was enacted in March 2021,

appropriates over $200 billion to states, territories,

and tribal governments to “mitigate the fiscal effects”

of the COVID-19 pandemic. 42 U.S.C. § 802(a).

Before an entity can receive funds, it must certify to

the Secretary that it will comply with ARPA’s

provisions. Id. § 802(d)(1). ARPA funds must be used:

(A) to respond to the public health emergency

with respect to the Coronavirus Disease

2019 (COVID-19) or its negative economic

impacts,

including

assistance

households,

small

businesses,

and

nonprofits, or aid to impacted industries

such as tourism, travel, and hospitality;

(B) to respond to workers performing essential

work during the COVID-19 public health

emergency by providing premium pay to

The Honorable Henry E. Autrey, United States District

Judge for the Eastern District of Missouri.

eligible workers of the State, territory, or

Tribal government that are performing

such essential work, or by providing

grants to eligible employers that have

eligible workers who perform essential

work;

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

State, territory, or Tribal government

prior to the emergency; or

(D) to make necessary investments in water,

sewer, or broadband infrastructure.

Id. § 802(c)(1).

ARPA also identifies two specific restrictions on

the use of allocated funds. At issue in this case,2 the

Act’s “Offset Restriction” provides:

A State or territory shall not use the

funds provided under this section . . . to

either directly or indirectly offset a

reduction in the net tax revenue of such

State or territory resulting from a change

in law, regulation, or administrative

interpretation during the covered period

that reduces any tax . . . or delays the

imposition of any tax or tax increase.

ARPA also prohibits states and territories from depositing

ARPA funds into any pension fund. 42 U.S.C. § 802(c)(2)(B).

Id. § 802(c)(2)(A) (emphasis added). If a state

violates the Offset Restriction, it “shall be required to

repay the Secretary” an amount equal to the lesser of

(1) “the amount of the applicable reduction to net tax

revenue attributable to such violation,” and (2) the

amount of ARPA funds received by the state. Id.

§ 802(e).

On May 17, 2021, the Department of the Treasury

issued an Interim Rule implementing the Offset

Restriction, 86 Fed. Reg. 26,786 (May 17, 2021), and

on January 27, 2022, it issued a Final Rule, which

went into effect on April 1, 2022,3 87 Fed. Reg. 4338

(Jan. 27, 2022) (31 C.F.R. § 35.1 et seq.). The Final

Rule states that Treasury will consider a recipient to

have impermissibly used ARPA funds to offset a

reduction in net tax revenue if it fails to offset that

reduction through means unrelated to the ARPA

funds. More specifically, the Offset Restriction is

violated if: (1) the recipient implements a change in

law or regulation that the recipient assesses has had

or predicts to have the effect of reducing tax revenue;

(2) the reduction caused by the change is more than

de minimis, meaning it exceeds one percent of the

recipient’s baseline tax revenue for 2019, adjusted for

inflation; (3) the recipient reports a reduction in net

tax revenue; and (4) the aggregate reduction is greater

than the sum of other changes. 31 C.F.R. § 35.8(b).

The “other changes” considered under the fourth

The Interim Rule and Final Rule are substantially the same,

though the Final Rule adds a requirement for ARPA recipients

to exhaust certain procedures before seeking judicial review of a

recoupment decision and amends slightly the definition of a

“Covered Change.” See 31 C.F.R. §§ 35.10(e), 35.10(g), 35.3.

element include increases in tax revenue, spending

cuts in departments that do not utilize ARPA funds,

and—in departments that do use ARPA funds—

spending cuts that are greater than the ARPA funds

used. Id.

II.

Missouri filed suit on March 29, 2021, shortly after

ARPA was enacted and before Treasury issued the

Interim Rule implementing the Offset Restriction. In

its complaint, Missouri describes two potential

interpretations of the Offset Restriction. Under one,

which it deems the “narrow” and “correct”

interpretation, the Offset Restriction “merely

prohibits the States from taking COVID-19 relief

funds and deliberately applying them to offset a

specific tax reduction of a similar amount.” Under a

second, “broad” interpretation, the Offset Restriction

“would prohibit a State from enacting any taxreduction policy that would result in a net reduction

of revenue through 2024 or risk forfeiting its COVID19 relief funds.” Missouri alleges that several states

contacted the Secretary for clarification about which

interpretation Treasury would adopt. According to

Missouri, the Secretary declined to endorse the

narrow interpretation, and her response and

subsequent

public

comments

“generate[d]

uncertainty, confusion, and doubt for state

legislatures that are currently considering and

debating tax-reduction policies.”

Shortly after filing its complaint, Missouri moved

for a preliminary injunction, asking the district court

to enjoin any interpretation of the Offset Restriction

“that is broader than prohibiting the deliberate and

express use of the Act’s relief funds to offset revenue

losses from a specific tax cut” or, alternatively, to

enjoin enforcement of the Offset Restriction as

unconstitutional under the Spending Clause and the

Tenth Amendment because it is an unclear condition

on a congressional appropriation. The district court

held a hearing on Missouri’s motion on May 4, 2021.

A week later, the district court dismissed the case,

concluding that Missouri lacked standing and that the

case was not ripe for adjudication because Missouri’s

alleged harm was too speculative, abstract, and

remote.

Missouri has since been allocated

approximately $2.7 billion through ARPA and has

received at least some of that funding.

III.

We review de novo a district court’s dismissal of a

case on standing or ripeness grounds.

City of

Kennett v. EPA, 887 F.3d 424, 430 (8th Cir. 2018).

We begin with standing.

“Federal court

jurisdiction is restricted to ‘cases and controversies.’”

Wieland v. U.S. Dep’t of Health & Human Servs., 793

F.3d 949, 954 (8th Cir. 2015) (quoting Flast v. Cohen,

392 U.S. 83, 94 (1968)). “The law of Article III

standing, which is built on separation-of-powers

principles, serves to prevent the judicial process from

being used to usurp the powers of the political

branches.” Clapper v. Amnesty Int’l USA, 568 U.S.

398, 408 (2013). In keeping with this purpose, the

“standing inquiry has been especially rigorous when

reaching the merits of the dispute would force [a

court] to decide whether an action taken by one of the

other two branches of the Federal Government was

unconstitutional.” Id. (quoting Raines v. Byrd, 521

U.S. 811, 819–20 (1997)).

“ ‘The irreducible constitutional minimum of

standing’ requires: (1) an injury in fact; (2) a causal

connection between the injury and the challenged

conduct; and (3) a likelihood that a favorable decision

will redress the injury.” Carson v. Simon, 978 F.3d

1051, 1057 (8th Cir. 2020) (per curiam) (cleaned up)

(quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–

61 (1992)). “Standing is to be determined as of the

commencement of the suit,” Iowa League of Cities v.

EPA, 711 F.3d 844, 869 (8th Cir. 2013) (cleaned up)

(quoting Lujan, 504 U.S. at 570 n.5), and it is the

plaintiff’s burden to establish these elements.

Wieland, 793 F.3d at 954. However, the extent of that

burden varies depending on the stage of litigation. At

the dismissal stage, “the plaintiffs must allege

sufficient facts to support a reasonable inference that

they can satisfy the elements of standing.” Animal

Legal Def. Fund v. Vaught, 8 F.4th 714, 718 (8th

Cir. 2021).

The district court concluded that Missouri had

failed to allege an injury in fact. For this element, “a

plaintiff must show that he or she suffered an

invasion of a legally protected interest that is concrete

and particularized and actual or imminent, not

conjectural or hypothetical.” Carson, 978 F.3d at 1057

(cleaned up) (quoting Spokeo, Inc. v. Robins, 578 U.S.

330, 339 (2016)). “An allegation of future injury may

suffice if the threatened injury is ‘certainly

impending,’ or there is a ‘substantial risk’ that the

harm will occur.” Susan B. Anthony List v. Driehaus,

573 U.S. 149, 158 (2014) (quoting Clapper, 568 U.S. at

414 n.5). Thus, a plaintiff may still have standing to

challenge the threatened enforcement of the law.

Under this so-called “pre-enforcement test,” the

plaintiff must “allege[ ] ‘an intention to engage in a

course of conduct arguably affected with a

constitutional interest, but proscribed by a statute,

and there exists a credible threat of prosecution

thereunder.’ ” Id. at 159 (quoting Babbitt v. Farm

Workers, 442 U.S. 289, 298 (1979)).

In its complaint, Missouri alleges that it has

standing because, “[u]nder the threatened broad

interpretation,” the Offset Restriction would “injure

Missouri and other States by unconstitutionally

intruding on their sovereign taxing authority,

interfering with the orderly management of their

fiscal affairs, interfering with state legislative

functions, and creating the risk that the States may

face forfeiture of billions of dollars in federal funds.”

Missouri also alleges that the broad interpretation

“diminish[es] . . . Missouri’s power to adopt tax policies

as it sees fit.” Finally, Missouri contends that “[t]he

lack of clarity” provided by Secretary Yellen in her

response to the inquiring states and in public

comments about the Offset Restriction “inflicts

immediate interference and irreparable injury” on

Missouri’s ability to dictate its tax policy and that her

failure to embrace the narrow interpretation creates

“uncertainty and confusion,” which hampers

Missouri’s

ability

consider

tax-reduction

proposals.

Missouri’s argument is essentially that the Secretary’s early

comments about the Offset Restriction created confusion about

how Treasury would enforce the provision. The Secretary has

since issued the Interim and Final Rules, which set forth clearly

On appeal, Missouri identifies five specific ways it

has been injured: (1) the broad interpretation of the

Offset Restriction punishes Missouri for exercising its

constitutional right to set taxes; (2) the Secretary’s

“embrace of the broad interpretation” has harmed

Missouri’s interest in the offer Congress provided to

the State; (3) Treasury’s regulations make ARPA’s

requirement more onerous, leading to greater

compliance costs; (4) under the broad interpretation,

there is an increased chance Missouri will lose ARPA

funds; and (5) under the pre-enforcement test,

Missouri has alleged an intention to engage in conduct

arguably affected with constitutional interest, but

proscribed by statute, with a credible threat of

enforcement hanging over it.

What Missouri’s complaint and appeal make clear

is that the State is not challenging the Offset

Restriction as written, but rather a specific potential

interpretation

the

provision—the

“broad

interpretation.” In fact, Missouri explicitly states

how Treasury will determine whether a recipient of ARPA funds

has violated the Offset Restriction.

After this case was argued and submitted, the Ninth Circuit

held that Arizona had standing to challenge the Offset

Restriction. See Arizona v. Yellen, 34 F.4th 841 (9th Cir. 2022).

However, unlike Missouri, Arizona did not challenge a

hypothetical “broad interpretation” of the Offset Restriction but

instead argued that, as written, the Offset Restriction is

unconstitutionally ambiguous and unduly coercive. Id. at 852.

Missouri does briefly allege in its complaint that the Offset

Restriction is unconstitutionally vague if it prohibits more than

the deliberate use of ARPA funds to offset a specific tax

reduction, and on appeal it asserts that it has a constitutional

right to clarity regarding the conditions of congressional

appropriations. But it develops no argument as to how it has

10a

that

its

“suit

challenges

the

threatened

unconstitutional application” of the Offset Restriction.

The problem for Missouri, however, is that there is no

threatened application of the broad interpretation.

The Secretary explained to the district court and to

this court, and Treasury reiterated in the Interim and

Final Rules, that the Secretary has never endorsed or

adopted the broad interpretation.

Missouri’s

insistence

the

contrary

mischaracterizes the Interim and Final Rules and is

premised on a shifting definition of the so-called

“broad interpretation.” In its complaint, Missouri

defines the broad interpretation as “prohibit[ing] a

State from enacting any tax-reduction policy that

would result in a net reduction of revenue through

2024.” Yet the letter that Missouri and other states

sent to the Secretary urged her to reject a broad

interpretation that would “prohibit tax cuts or relief

of any stripe.”

Nevertheless, throughout this

litigation, the Secretary has been clear that a

recipient of ARPA funds will be deemed to have

violated the Offset Restriction only if it cannot

account for net revenue losses through non-ARPA

sources. And contrary to Missouri’s position on

appeal, Treasury has not adopted either version of the

“broad

interpretation”

its

regulations

implementing ARPA.

suffered a concrete injury under either of these theories, nor has

it explained how such an injury could still exist after it has

accepted the funds. Instead, Missouri repeatedly argues that it

is injured by a “threatened” “broad interpretation” that has never

been adopted

11a

Moreover, although a plaintiff generally need not

“confess that he will in fact violate [a] law” in order to

challenge it, see Susan B. Anthony List, 573 U.S.

at 163, a plaintiff must still allege “an intention to

engage in a course of conduct . . . proscribed by a

statute,” id. at 159 (quotation omitted). Missouri has

not alleged any intent to engage in conduct that is

proscribed by the Offset Restriction on its face or the

Secretary’s interpretation of it. While Missouri’s

complaint alleges that its legislature was then

considering tax-reduction policies, such policies alone

do not violate ARPA or any interpretation of ARPA

embraced by the Secretary. The Offset Restriction

simply prohibits states from cutting taxes in a way

that reduces net revenue more than a de minimis

amount and then failing to account for that reduction

through non-ARPA sources, such as through organic

economic growth, increases in revenue from other

sources, or spending cuts in sectors not related to

ARPA. See 31 C.F.R. § 35.8(b). And although

Missouri may have alleged that it intends to accept

ARPA funds and that it is considering tax cuts, it has

not alleged that those tax cuts would reduce net

revenue and that it would fail to offset the reduction

through permissible means.6 Thus, it has not alleged

In fact, Missouri acknowledges in its briefing that its

legislature is required to balance the State’s budget every year.

This suggests that whenever the legislature anticipates revenue

decreases, it must find a way within its own budget to offset those

decreases. What Missouri cannot do is use ARPA funds as part

of that balancing process, such as by taking an action that

reduces net revenue, cutting spending in departments related to

ARPA, and then using ARPA funds to replace that spending.

Missouri has not alleged that it plans to use ARPA funds in this

way, nor does it have a “constitutional interest” in doing so. See

12a

any intent to engage in conduct that would likely

subject it to recoupment of any ARPA funds.

Simply put, Missouri has only alleged a

“conjectural or hypothetical” injury, not one that is

actual or imminent.7 See Carson, 978 F.3d at 1057

(quoting Spokeo, 578 U.S. at 339). It has also not

alleged a future injury that is “certainly impending”

or even likely to occur. See Susan B. Anthony List,

573 U.S. at 158. Instead, Missouri asks us to declare,

in the abstract, what a statute does not mean. It asks

us to enjoin a hypothetical interpretation of the Offset

Restriction that the Secretary has explicitly

disclaimed, without alleging any concrete, imminent

injury from the Secretary’s actual interpretation.

That would be a quintessential advisory opinion. See

Golden v. Zwickler, 394 U.S. 103, 108 (1969)

(explaining that federal courts “do not render advisory

opinions. For adjudication of constitutional issues[,]

concrete legal issues, presented in actual cases, not

abstractions are requisite.

This is as true of

Susan B. Anthony List, 573 U.S. at 159 (quoting Babbitt, 442

U.S. at 298).

Although the Supreme Court has suggested that “States are

not normal litigants for the purposes of invoking federal

jurisdiction,” Massachusetts v. EPA, 549 U.S. 497, 518 (2007), it

has not eliminated the basic requirements for standing just

because a state is the plaintiff, see id. at 521–23 (assessing

injury, causation, and redressability and concluding that

Massachusetts, which owns a substantial portion of its coastline,

had alleged a concrete and particularized injury from sea level

rise along its coast). Here, even if Missouri “is entitled to special

solicitude” in this standing analysis, see id. at 520, it has still

failed to allege any intent to take action that would subject it to

recoupment under ARPA or Treasury regulations.

13a

declaratory judgments as any other field” (cleaned up)

(quoting United Pub. Workers of Am. (C.I.O.) v.

Mitchell, 330 U.S. 75, 89 (1947))); Ringo v. Lombardi,

677 F.3d 793, 796 (8th Cir. 2012) (“A federal court has

neither the power to render advisory opinions nor to

decide questions that cannot affect the rights of

litigants in the case before them.” (cleaned up)

(quoting Preiser v. Newkirk, 422 U.S. 395, 401

(1975))). We thus conclude that Missouri has failed to

establish that it has standing to bring its claims.

IV.

Because we conclude that Missouri has not alleged

an injury in fact, we need not reach the question of

whether its claims are ripe. See Summers v. Earth

Island Inst., 555 U.S. 488, 500–01 (2009). The

judgment of the district court is affirmed.

14a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

STATE OF MISSOURI, )

)

Plaintiff,

)

JANET YELLEN, et al., )

)

Defendants.

)

Case No.

4:21CV376 HEA

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Plaintiff’s

Motion for Preliminary Injunction, [Doc. No. 6]. The

matter is fully briefed, and the court conducted a

hearing on the Motion on May 4, 2021. After a

thorough review of the pleadings and for the reasons

discussed below, Plaintiff lacks standing, and this

matter is not ripe for adjudication. The case will be

dismissed for lack of jurisdiction.

Facts and Background

Plaintiff State of Missouri brought this case

challenging

“the

threatened

unconstitutional

application” of section 9901 of the American Rescue

Plan Act of 2021, Pub. L. No. 117-2, § 9901 (codified at

42 U.S.C. §§ 802-805) (the “ARPA”).

The ARPA’s “Coronavirus State Fiscal Recovery

Fund” allocates almost $220 billion “for making

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payments under this section to States, territories, and

Tribal governments to mitigate the fiscal effects

stemming from the public health emergency with

respect to the Coronavirus Disease (COVID–19),”

with $195.3 billion reserved for the States and District

of Columbia. 42 U.S.C. § 802(a)(1).

Missouri

estimates that it will receive almost $2.8 billion under

ARPA, which represents about 14% of Missouri’s

general expenditures and is “sorely needed” as the

state works through the COVID-19 pandemic.

The ARPA provides that through December 31,

2024, a State may use the recovery funds “to cover

costs incurred”:

(A) to respond to the public health emergency

with respect to the COVID–19 or its

negative economic impacts, including

assistance

households,

small

businesses, and nonprofits, or aid to

impacted industries such as tourism,

travel, and hospitality;

(B) to respond to workers performing essential

work during the COVID–19 public health

emergency by providing premium pay to

eligible workers of the State, territory, or

Tribal government that are performing

such essential work, or by providing

grants to eligible employers that have

eligible workers who perform essential

work;

the extent of the reduction in revenue of

such State, territory, or Tribal government

due to the COVID– 19 public health

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emergency relative to revenues collected

in the most recent full fiscal year of the

State, territory, or Tribal government

prior to the emergency; or

(D) to make necessary investments in water,

sewer, or broadband infrastructure.

Id. § 802(c)(1).

Section 802(c)(2)(A) of the ARPA prohibits a State

from using the relief funds to “directly or indirectly

offset a reduction in net tax revenue of such State [ ]

resulting from a change in law, regulation, or

administrative interpretation during the covered

period that reduces any tax (by providing for a

reduction in a rate, a rebate, a deduction, a credit, or

otherwise),” (the “Offset Restriction”). In the event a

State does not comply with the Offset Restriction, it

“shall be required to repay to the Secretary [of the

Treasury] an amount equal to the amount of funds

used in violation [thereof].” Id. § 802(e).

Missouri contends that two interpretations of the

Offset Restriction exist, one correct and the other

representing an unconstitutional intrusion by the

federal government upon the States’ sovereign power

to set their own tax policies.

The narrow

interpretation only prohibits a state from taking

COVID-19 recovery funds and deliberately applying

them to offset a specific tax reduction of a similar

amount; this is the interpretation Missouri argues is

correct. The second, broad interpretation would

prohibit a State from enacting any tax-reduction

policy that would result in a net reduction of revenue

through 2024 or risk forfeiting its COVID-19 relief

funds. Missouri argues that application of the broad

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interpretation would allow the federal government to

coerce States to adopt federal rules and policy and to

commandeer the States’ taxing authority, in violation

of the Tenth Amendment.

Missouri argues that some U.S. Senators have

endorsed the broad interpretation of the Offset

Restriction and that Defendant Secretary of the

Treasury Janet Yellen has “carefully left open” the

potential application of the broad interpretation. On

March 16, 2021, the Attorneys General of Missouri

and 20 other States sent a letter to Secretary Yellen,

seeking her guarantee that the Department of the

Treasury would apply the narrow interpretation to

the Offset Restriction. On March 23, 2021, Secretary

Yellen responded with a letter that Missouri reads as

“declin[ing] to endorse the narrow and correct

interpretation of the Tax Mandate” and “le[aving]

open the possibility that the Department of the

Treasury might require States receiving federal aid to

‘replac[e] lost revenue by other means’ if they choose

to enact tax cuts.” Missouri alleges that Secretary

Yellen’s response generates uncertainty, confusion,

and doubt for the Missouri state legislature, which is

currently considering and debating tax-reduction

policies. The uncertainty and the possibility of the

Treasury

Department

imposing

the

broad

interpretation, Missouri argues, “threatens grave,

immediate, and irreparable injury to the State of

Missouri.”

In their response to Missouri’s motion for

preliminary injunction, the Defendants (Secretary

Yellen, along with Inspector General of the

Department of the Treasury Richard Delmar and the

Department of the Treasury) assert that the basis of

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Missouri’s argument—the belief that the Treasury is

poised to implement the broad interpretation of the

Offset Restriction—is an “incorrect premise.” The

Defendants argue that the ARPA affords States

considerable flexibility in setting their tax policies. Of

the Offset Restriction, Defendants state:

By its plain text, the offset provision

addresses only a reduction in a State’s “net

tax revenues.” 42 U.S.C. § 802(c)(2)(A)

(emphasis added). A State is thus free to

change its tax law as it believes

appropriate, cutting some taxes and

increasing others. And even if a State

chooses to make changes that result in a

reduction in net tax revenue, the Act bars

a State only from using Rescue Plan

funds—as opposed to other means—to

offset that reduction. Id. The Act also

makes clear that if a State chooses to use

Rescue Plan funds to offset a reduction in

net tax revenue resulting from changes in

state law, the only consequence would be a

loss of monies commensurate with the

amount of federal funding used for that

offset. See id. § 802(e).

Defendants argue that Missouri does not have

standing to challenge the Offset Restriction because it

has not enacted or alleged any hypothetical tax cut

that would decrease net tax revenues, nor has

Missouri alleged that it plans to use federal recovery

funds in a way that would violate the ARPA.

Defendants also argue that Missouri’s challenge to the

ARPA is not ripe because Missouri has not alleged

conduct that has resulted in recoupment and the

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Department of the Treasury has not indicated an

imminent plan to recoup funds from Missouri.

Legal Standard

Article III of the Constitution limits the

jurisdiction of federal courts to “Cases” and

“Controversies.” U.S. Const., Art. III, § 2. “Article III

standing is a threshold question in every federal court

case.” United States v. One Lincoln Navigator 1998,

328 F .3d 1011, 1013 (8th Cir. 2003). The “irreducible

constitutional minimum” of standing consists of three

elements. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547

(2016) (citing Lujan v. Defenders of Wildlife, 504 U.S.

555, 560 (1992)). “The plaintiff must have (1) suffered

an injury in fact, (2) that is fairly traceable to the

challenged conduct of the defendant, and (3) that is

likely to be redressed by a favorable judicial decision.”

Id. The Supreme Court has explained that the injury

in fact requirement means showing “an invasion of a

legally protected interest which is (a) concrete and

particularized and (b) actual or imminent, not

conjectural or hypothetical.” Lujan, 504 U.S. at 560

(citations and quotation omitted).

“Although

imminence is concededly a somewhat elastic concept,

it cannot be stretched beyond its purpose, which is to

ensure that the alleged injury is not too speculative

for Article III purposes—that the injury is certainly

impending.” Clapper v. Amnesty Int’l USA, 568 U.S.

398, 409 (2013) (emphasis in original). “[T]hreatened

injury must be certainly impending to constitute

injury in fact, allegations of possible future injury” are

not sufficient.” Id.

“The law of Article III standing, which is built on

separation-of-powers principles, serves to prevent the

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judicial process from being used to usurp the powers

of the political branches.” Id. at 408. “Proper respect

for a coordinate branch of the government requires

that we strike down an Act of Congress only if the lack

of constitutional authority to pass the act in question

is clearly demonstrated.” Nat’l Fed’n of Indep. Bus. v.

Sebelius, 567 U.S. 519, 538 (2012) (internal quotation

omitted). When a lawsuit seeks pre-enforcement

review of a threatened government action, “a plaintiff

satisfies the injury-in-fact requirement where he

alleges an intention to engage in a course of conduct

arguably affected with a constitutional interest, but

proscribed by a statute, and there exists a credible

threat of prosecution thereunder.” Susan B. Anthony

List v. Driehaus, 573 U.S. 149, 159 (2014).

“The party invoking federal jurisdiction bears the

burden of establishing standing.” Id. at 158. “Each

element must be supported in the same way as any

other matter on which the plaintiff bears the burden

of proof, i.e., with the manner and degree of evidence

required at the successive stages of the litigation.” Id.

Discussion

Missouri asks the Court to enjoin Defendants from

enforcing any interpretation of the Offset Restriction

that is broader than the narrow interpretation it

advances and endorses. Missouri has failed to

establish Article III standing or ripeness, especially

considering that Missouri requests the Court

preemptively bind its coordinate branches of

government and the elected leaders of this Nation.

See Nat’l Fed’n of Indep. Bus., 567 U.S. at 537–38

(“Members of this Court are vested with the authority

to interpret the law; we possess neither the expertise

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nor the prerogative to make policy judgments. Those

decisions are entrusted to our Nation’s elected

leaders, who can be thrown out of office if the people

disagree with them. It is not our job to protect the

people from the consequences of their political

choices.”).

Standing

Missouri lacks standing because it has not shown

that it has suffered an injury-in-fact.

This

determination is based on the three injury-in-fact

requirements for pre-enforcement review of a

threatened government action as set out in Susan B.

Anthony List: (1) plaintiff alleges an intention to

engage in a course of conduct arguably affected with a

constitutional interest, (2) but proscribed by a statute,

and (3) there exists a credible threat of prosecution

thereunder. 573 U.S. at 159.

To the extent that Missouri alleges that its

legislature intends to pass1 tax-cut litigation, it has

demonstrated an intention to engage in a course of

conduct

arguably

affected

with

State’s

constitutional interest in setting in its own tax policy.

However, in its reply memorandum, Missouri cites

“cutting taxes and accepting [ARPA] funds” as the

conduct forming the first injury-in-fact requirement.

(Emphasis added).

Missouri does not have a

constitutional interest in accepting ARPA funds. Its

reliance on City and County of San Francisco v.

Trump, 897 F.3d 1225 (9th Cir. 2018) for its

This Court does not suggest that the legislature’s mere

proposal and discussion of such legislation satisfies the first preenforcement standing prong

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contention that a scenario in which a State must

choose between a state policy or federal funds

constitutes injury-in-fact is misplaced. The San

Francisco plaintiffs challenged an Executive Order

that directed Executive Agency heads to refuse to

disperse federal grants to any “sanctuary”

jurisdictions.

These federal grants represented

money that was appropriated for the jurisdictions by

acts of Congress. The Ninth Circuit stated that a “loss

of funds promised under federal law satisfies Article

III’s standing requirement.” 897 F.3d at 1235

(internal quotation marks and punctuation omitted)

(emphasis added).

The facts of the instant case are readily and boldly

distinguishable. The ARPA recovery funds were not

“promised” to Missouri by Congress, then taken away

by some other act of Congress or the Executive

Branch. Rather, in passing the ARPA, Congress both

appropriated recovery funds and placed a condition on

a State’s receipt of the funds. See Nat'l Fed'n of Indep.

Bus., 567 U.S. at 537 (“[I]n exercising its spending

power, Congress may offer funds to the States, and

may

condition those offers on compliance with

specified conditions.”). Therefore, Missouri’s interest

in accepting the ARPA recovery funds does not

establish standing and is not relevant to the injury-infact analysis.

Proceeding with Missouri’s interest in setting its

own tax policy, the second injury-in-fact requirement

is not met. The ARPA does not prohibit States from

proposing, enacting, or implementing legislation that

cuts taxes for its citizens and businesses.

Defendants state in their memorandum in opposition

to Missouri’s motion:

23a

[T]o ensure that the new federal funds

are used for those purposes and not

others Congress chose not to support,

the [ARPA] requires a State to agree

that it will not use the federal funds to

offset a reduction in net tax revenue

resulting from changes to state law.

The Rescue Plan does not prohibit a

State from cutting taxes; it merely

restricts a

State’s ability to use federal funds

distributed under the [ARPA] to offset

a reduction in net tax revenue. No

State has a sovereign interest in using

federal funds for that purpose.

(Emphasis in original). In short, State tax cuts are

not proscribed by the ARPA. Missouri’s sovereign

power to set its own tax policy is not implicated by the

ARPA. The Missouri legislature is free to propose and

pass tax cuts as it sees fit.

Relatedly, the third requirement for injury-in-fact,

a credible threat of prosecution, is not met. Because

the ARPA does not prohibit a State from

implementing its own tax policy, Missouri does not

face a credible threat of prosecution if it decides to

pass tax cutting measures. Missouri disagrees,

arguing that they stand to lose billions of federal

recovery dollars if the State legislature enacts

legislation that results in a net revenue reduction.

However, recoupment is not triggered by a reduction

in State tax revenue, it is triggered by a State’s use of

federal recovery fund to offset a reduction in its net tax

24a

revenue. Again, Missouri’s ability to set its own tax

policy is not implicated.

Missouri has not alleged an injury-in-fact and

therefore does not have Article III standing to bring

the lawsuit. Additionally, this case is not ripe.

Ripeness

It is axiomatic that “[r]ipeness is a justiciability

doctrine designed ‘to prevent the courts, through

avoidance of premature adjudication, from entangling

themselves

abstract

disagreements

over

administrative policies, and also to protect the

agencies from judicial interference until an

administrative decision has been formalized and its

effects felt in a concrete way by the challenging

parties.’ ” Nat’l Park Hosp. Ass’n v. Dep’t of Interior,

538 U.S. 803, 807–08 (2003) (quoting Abbott

Laboratories v. Gardner, 387 U.S. 136, 148–149

(1967)). “A party seeking review must show both the

fitness of the issues for judicial decision and the

hardship to the parties of withholding court

consideration.” Iowa League of Cities v. E.P.A.,

711 F.3d 844, 867 (8th Cir. 2013) (internal quotation

omitted). “Both of these factors are weighed on a

sliding scale, but each must be satisfied to at least

aminimal degree.” Id. (internal quotation omitted).

In Texas v. United States, 523 U.S. 296 (1998),

Texas had sought administrative preclearance of a

statute as required by Section 5 of the Voting Rights

Act. The United States Assistant Attorney General in

charge of preclearance did not object to two sections

of the Texas statute, but cautioned that “under certain

foreseeable circumstances their implementation may

25a

result in a violation of Section 5 which would require

preclearance.” Id. at 298–99. Texas filed suit seeking

a declaration that Section 5 did not apply to the two

sections of the Texas statute. Id. at 299. The

Supreme Court held that Texas’s claim was not ripe.

Id. First, the claim impermissibly “rest[ed] upon

‘contingent future events that may not occur as

anticipated, or indeed may not occur at all.’ ” Id. at

300 (quoting Thomas v. Union Carbide Agricultural

Products Co., 473 U.S. 568, 580–581 (1985)). Next,

the issue was not fit for judicial decision because

“determination of the scope . . . of legislation in

advance of its immediate adverse effect in the context

of a concrete case involves too remote and abstract an

inquiry for the proper exercise of the judicial

function.” Texas, 523 U.S. at 301 (ellipsis in original).

As to hardship to the parties, the Supreme Court

noted that “Texas [was] not required to engage in, or

to refrain from, any conduct, unless and until it

chooses to implement one of the noncleared remedies.”

Id. The Supreme Court even suggested that “[i]f

Texas is confident that” the implementation of a

noncleared remedy did not violate Section 5, “it should

simply go ahead” with the implementation. Id. at 3012. Finally, the Supreme Court held that “a threat to

federalism” was an abstraction inadequate to support

suit. Id. at 302.

The Supreme Court’s findings in Texas are

instructive here. As in Texas, Missouri’s claim is

based upon contingent future events that may not

occur. These contingencies include: the passage of tax

cuts by the State legislature, a decrease in net revenue

due to those tax cuts, and the Department of the

Treasury’s recoupment of funds based on a broad

26a

interpretation of the Offset Provision. Notably,

Defendants, through counsel, have explicitly asserted

that they do not agree with the “broad interpretation”

proposed by Missouri, Hr’g Tr. 19:5-11 [Doc. No. 27],

further attenuating Missouri’s claim of the

“threatened” broad interpretation.

As to fitness for review, Missouri asks the Court to

determine the scope of the ARPA’s Offset Restriction

well in advance of any adverse effect and in a wholly,

non-actionable hypothetical context. As in Texas,

Missouri’s request “involves too remote and abstract

an inquiry for the proper exercise of the judicial

function.” 523 U.S. at 301. Additionally, “fitness rests

primarily on whether a case would ‘benefit from

further factual development,’ and therefore cases

presenting purely legal questions are more likely to be

fit for judicial review.” Id. (quoting Pub. Water Supply

Dist. No. 10 of Cass Cnty. v. City of Peculiar, 345 F.3d

570, 573 (8th Cir. 2003). Although Missouri asserts

that this action presents the purely legal question of

the correct interpretation of the Offset Restriction, it

is readily apparent that this case would benefit from

further factual development.

For example, the

Treasury Department has not yet promulgated

regulations interpreting

the

ARPA’s

Offset

Restriction. It is premature for the Court to interfere

before Treasury can even promulgate regulations,

much less have those regulation affect Missouri “in a

concrete way.” See Nat'l Park Hosp. Ass'n, 538 U.S.

at 807–08.

The Court also finds that the hardship to the

parties factor weighs against ripeness. The Offset

Restriction does not require Missouri to engage in, or

refrain from, any conduct, including legislative

27a

conduct regarding tax policy.

The alleged

infringement on Missouri’s sovereign right to set its

own tax policy is an abstraction inadequate to support

suit, since the Offset Restriction does not touch

Missouri’s “primary conduct.” Texas, 523 U.S. at 301.

Moreover, “[a]bstract injury is not enough [to satisfy

the “hardship” factor]. It must be alleged that the

plaintiff has sustained or is immediately in danger of

sustaining some direct injury as the result of the

challenged statute or official conduct.” Pub. Water

Supply Dist., 345 F.3d at 573. Missouri’s purported

injuries to legislative proceedings and the prospect of

recoupment of federal recovery funds are too abstract

and remote to constitute significant hardship.

Missouri’s claim is not ripe for adjudication.

Conclusion

This Court lacks jurisdiction to hear this case.

Missouri has failed to establish Article III standing,

and its claim is not ripe for adjudication. The alleged

harm to Missouri is too speculative, abstract, and

remote to establish justiciability. The case will be

dismissed.

Accordingly,

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED that this action is DISMISSED.

Dated this 11th day of May, 2021.

HENRY EDWARD AUTREY

UNITED STATES DISTRICT JUDGE

28a

APPENDIX C

U.S. Constitution

The Spending Clause, Article I, § 8, clause 1

The Congress shall have Power To lay and collect

Taxes, Duties, Imposts and Excises, to pay the Debts

and provide for the common Defence and general

Welfare of the United States; but all Duties, Imposts

and Excises shall be uniform throughout the United

States.

29a

APPENDIX D

U.S. Constitution

The Spending Clause, Article I, § 8, clause 1

The powers not delegated to the United States by

the Constitution, nor prohibited by it to the States, are

reserved to the States respectively, or to the people.

30a

APPENDIX E

42 U.S.C. § 802

Coronavirus State Fiscal Recovery Fund

(a) Appropriation

In addition to amounts otherwise available, there is

appropriated for fiscal year 2021, out of any money in

the Treasury not otherwise appropriated(1) $219,800,000,000, to remain available through

December 31, 2024, for making payments under

this section to States, territories, and Tribal

governments to mitigate the fiscal effects stemming

from the public health emergency with respect to

the Coronavirus Disease (COVID-19); and

(2) $50,000,000, to remain available until

expended, for the costs of the Secretary for

administration of the funds established under this

subchapter.

(b) Authority to make payments

(1) Payments to territories

(A) In general

The Secretary shall reserve $4,500,000,000 of the

amount appropriated under subsection (a)(1) to

make payments to the territories.

(B) Allocation

the

amount

subparagraph (A)-

reserved

under

(i) 50 percent of such amount shall be allocated

by the Secretary equally to each territory; and

31a

(ii) 50 percent of such amount shall be

allocated by the Secretary as an additional

amount to each territory in an amount which

bears the same proportion to ½ of the total

amount reserved under subparagraph (A) as

the population of the territory bears to the total

population of all such territories.

The Secretary shall pay each territory the total of

the amounts allocated for the territory under

subparagraph

(B)

accordance

with

paragraph (6).

(2) Payments to Tribal governments

(A) In general

The Secretary shall reserve $20,000,000,000 of

the amount appropriated under subsection (a)(1)

to make payments to Tribal governments.

(B) Allocation

Of the amount reserved under subparagraph (A)(i) $1,000,000,000 shall be allocated by the

Secretary equally among each of the Tribal

governments; and

(ii) $19,000,000,000 shall be allocated by the

Secretary to the Tribal governments in a

manner determined by the Secretary.

The Secretary shall pay each Tribal government

the total of the amounts allocated for the Tribal

government under subparagraph (B) in

accordance with paragraph (6).

32a

(3) Payments to each of the 50 States and the

District of Columbia

(A) In general

The Secretary shall reserve $195,300,000,000 of

the amount appropriated under subsection (a)(1)

to make payments to each of the 50 States and

the District of Columbia.

(B) Allocations

the

amount

subparagraph (A)-

reserved

under

(i) $25,500,000,000 of such amount shall be

allocated by the Secretary equally among each

of the 50 States and the District of Columbia;

(ii) an amount equal to $1,250,000,000 less the

amount allocated for the District of Columbia

pursuant to section 801(c)(6) of this title shall

be allocated by the Secretary as an additional

amount to the District of Columbia; and

(iii) an amount equal to the remainder of the

amount reserved under subparagraph (A) after

the application of clauses (i) and (ii) of this

subparagraph shall be allocated by the

Secretary as an additional amount to each of

the 50 States and the District of Columbia in

an amount which bears the same proportion to

such remainder as the average estimated

number of seasonally-adjusted unemployed

individuals (as measured by the Bureau of

Labor Statistics Local Area Unemployment

Statistics program) in the State or District of

Columbia over the 3-month period ending with

December 2020 bears to the average estimated

33a

number of seasonally-adjusted unemployed

individuals in all of the 50 States and the

District of Columbia over the same period.

(i) In general

Subject to clause (ii), the Secretary shall pay

each of the 50 States and the District of

Columbia, from the amount reserved under

subparagraph (A), the total of the amounts

allocated for the State and District of Columbia

under subparagraph (B) in accordance with

paragraph (6).

(ii) Minimum payment requirement

(I) In general

The sum of(aa) the total amounts allocated for 1 of

the 50 States or the District of Columbia

under subparagraph (B) (as determined

without regard to this clause); and

(bb) the amounts allocated under section

803 of this title to the State (for

distribution

the

State

nonentitlement units of local government

in the State) and to metropolitan cities

and counties in the State;

shall not be less than the amount

allocated to the State or District of

Columbia for fiscal year 2020

under section 801 of this title,

including any amount paid directly

34a

to a unit of local government in the

State under such section.

(II) Pro rata adjustment

The Secretary shall adjust on a pro rata

basis the amount of the allocations for each

of the 50 States and the District of Columbia

determined under subparagraph (B)(iii)

(without regard to this clause) to the extent

necessary to comply with the requirement of

subclause (I).

(4) Pro rata adjustment authority

The amounts otherwise determined for allocation

and payment under paragraphs (1), (2), and (3) may

be adjusted by the Secretary on a pro rata basis to

the extent necessary to ensure that all available

funds are allocated to States, territories, and Tribal

governments in accordance with the requirements

specified in each such paragraph (as applicable).

(5) Population data

For purposes of determining allocations for a

territory under this section, the population of the

territory shall be determined based on the most

recent data available from the Bureau of the

Census.

(6) Timing

(A) States and territories

(i) In general

To the extent practicable, subject to clause (ii),

with respect to each State and territory

allocated a payment under this subsection, the

35a

Secretary shall make the payment required for

the State or territory not later than 60 days

after the date on which the certification

required under subsection (d)(1) is provided to

the Secretary.

(ii) Authority to split payment

(I) In general

The Secretary shall have the authority to

withhold payment of up to 50 percent of the

amount allocated to each State and territory

(other than payment of the amount allocated

under paragraph (3)(B)(ii) to the District of

Columbia) for a period of up to 12 months

from the date on which the State or territory

provides the certification required under

subsection (d)(1).

The Secretary shall

exercise such authority with respect to a

State

territory

based

the

unemployment rate in the State or territory

as of such date.

(II) Payment of withheld amount

Before paying to a State or territory the

remainder of an amount allocated to the

State or territory (subject to subclause (III))

that has been withheld by the Secretary

under subclause (I), the Secretary shall

require the State or territory to submit a

second certification under subsection (d)(1),

in addition to such other information as the

Secretary may require.

36a

(III) Recovery of amounts subject to

recoupment

If a State or territory is required under

subsection (e) to repay funds for failing to

comply with subsection (c), the Secretary

may reduce the amount otherwise payable to

the State or territory under subclause (II) by

the amount that the State or territory would

otherwise be required to repay under such

subsection (e).

(B) Tribal governments

To the extent practicable, with respect to each

Tribal government for which an amount is

allocated under this subsection, the Secretary

shall make the payment required for the Tribal

government not later than 60 days after

March 11, 2021.

The Secretary shall pay the amount allocated

under paragraph (3)(B)(ii) to the District of

Columbia not later than 15 days after March 11,

2021.

(1) Use of funds

Subject to paragraph (2), and except as provided in

paragraph (3), a State, territory, 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 title, to cover

costs incurred by the State, territory, or Tribal

government, by December 31, 2024-

37a

(A) to respond to the public health emergency

with respect to the Coronavirus Disease 2019

(COVID-19) or its negative economic impacts,

including assistance to households, small

businesses, and nonprofits, or aid to impacted

industries such as tourism, travel, and

hospitality;

(B) to respond to workers performing essential

work during the COVID-19 public health

emergency by providing premium pay to eligible

workers of the State, territory, or Tribal

government that are performing such essential

work, or by providing grants to eligible employers

that have eligible workers who perform essential

work;

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 State, territory, or Tribal government

prior to the emergency; or

(D) to make necessary investments in water,

sewer, or broadband infrastructure.

(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 territory resulting

from a change in law, regulation, or

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administrative interpretation during the covered

period that reduces any tax (by providing for a

reduction in a rate, a rebate, a deduction, a credit,

or otherwise) or delays the imposition of any tax

or tax increase.

(B) Pension funds

No State or territory may use funds made

available under this section for deposit into any

pension fund.

(3) Transfer authority

A State, territory, or Tribal government receiving a

payment from funds made available under this

section may transfer funds to a private nonprofit

organization (as that term is defined in

section 11360(17) of this title), a Tribal

organization (as that term is defined in section 5304

of Title 25), a public benefit corporation involved in

the transportation of passengers or cargo, or a

special-purpose unit of State or local government.

(4) Use of funds to satisfy non-Federal

matching requirements for

authorized

Bureau of Reclamation water projects

Funds provided under this section for an authorized

Bureau of Reclamation project may be used for

purposes of satisfying any non-Federal matching

requirement required for the project.

(d) Certifications and reports

(1) In general

In order for a State or territory to receive a payment

under this section, or a transfer of funds under

section 803(c)(4) of this title, the State or territory

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shall provide the Secretary with a certification,

signed by an authorized officer of such State or

territory, that such State or territory requires the

payment or transfer to carry out the activities

specified in subsection (c) of this section and will

use any payment under this section, or transfer of

funds under section 803(c)(4) of this title, in

compliance with subsection (c) of this section.

(2) Reporting

Any State, territory, or Tribal government receiving

a payment under this section shall provide to the

Secretary periodic reports providing a detailed

accounting of(A) the uses of funds by such State, territory, or

Tribal government, including, in the case of a

State or a territory, all modifications to the

State's or territory's tax revenue sources during

the covered period; and

(B) such other information as the Secretary may

require for the administration of this section.

(e) Recoupment

Any State, territory, or Tribal government that has

failed to comply with subsection (c) shall be required

to repay to the Secretary an amount equal to the

amount of funds used in violation of such subsection,

provided that, in the case of a violation of subsection

(c)(2)(A), the amount the State or territory shall be

required to repay shall be lesser of-(1) the amount of the applicable reduction to net tax

revenue attributable to such violation; and

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(2) the amount of funds received by such State or

territory pursuant to a payment made under this

section or a transfer made under section 803(c)(4) of

this title.

(f) Regulations

The Secretary shall have the authority to issue such

regulations as may be necessary or appropriate to

carry out this section.

(g) Definitions

In this section:

(1) Covered period

The term “covered period” means, with respect to a

State, territory, or Tribal government, the period

that(A) begins on March 3, 2021; and

(B) ends on the last day of the fiscal year of such

State, territory, or Tribal government in which

all funds received by the State, territory, or

Tribal government from a payment made under

this section or a transfer made under section

803(c)(4) of this title have been expended or

returned to, or recovered by, the Secretary.

(2) Eligible workers

The term “eligible workers” means those workers

needed to maintain continuity of operations of

essential critical infrastructure sectors and

additional sectors as each Governor of a State or

territory, or each Tribal government, may designate

as critical to protect the health and well-being of the

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residents of their State, territory, or Tribal

government.

(3) Premium pay

The term “premium pay” means an amount of up to

$13 per hour that is paid to an eligible worker, in

addition to wages or remuneration the eligible

worker otherwise receives, for all work performed

by the eligible worker during the COVID-19 public

health emergency. Such amount may not exceed

$25,000 with respect to any single eligible worker.

(4) Secretary

The term “Secretary” means the Secretary of the

Treasury.

(5) State

The term “State” means each of the 50 States and

the District of Columbia.

(6) Territory

The term “territory” means the Commonwealth of

Puerto Rico, the United States Virgin Islands,

Guam, the Commonwealth of the Northern

Mariana Islands, and American Samoa.

(7) Tribal Government

The term “Tribal Government” means the

recognized governing body of any Indian or Alaska

Native tribe, band, nation, pueblo, village,

community, component band, or component

reservation, individually identified (including

parenthetically) in the list published most recently

as of March 11, 2021, pursuant to section 5131 of

Title 25.

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APPENDIX F

31 C.F.R. § 35.8

(a) Restriction. A State or Territory shall not use

funds to either directly or indirectly offset a reduction

in the net tax revenue of the State or Territory

resulting from a covered change during the covered

period.

(b) Violation. Treasury will consider a State or

Territory to have used funds to offset a reduction in

net tax revenue if, during a reporting year:

(1) Covered change. The State or Territory has

made a covered change that, either based on a

reasonable statistical methodology to isolate the

impact of the covered change in actual revenue or

based on projections that use reasonable

assumptions and do not incorporate the effects of

macroeconomic growth to reduce or increase the

projected impact of the covered change, the State or

Territory assesses has had or predicts to have the

effect of reducing tax revenue relative to current

law;

(2) Exceeds the de minimis threshold. The

aggregate amount of the measured or predicted

reductions in tax revenue caused by covered

changes identified under paragraph (b)(1) of this

section, in the aggregate, exceeds 1 percent of the

State’s or Territory’s baseline;

(3) Reduction in net tax revenue. The State or

Territory reports a reduction in net tax revenue,

measured as the difference between actual tax

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revenue and the State's or Territory's baseline, each

measured as of the end of the reporting year; and

(4) Consideration of other changes. The

aggregate amount of measured or predicted

reductions in tax revenue caused by covered

changes is greater than the sum of the following, in

each case, as calculated for the reporting year:

(i) The aggregate amount of the expected

increases in tax revenue caused by one or more

covered changes that, either based on a

reasonable statistical methodology to isolate the

impact of the covered change in actual revenue or

based on projections that use reasonable

assumptions and do not incorporate the effects of

macroeconomic growth to reduce or increase the

projected impact of the covered change, the State

or Territory assesses has had or predicts to have

the effect of increasing tax revenue; and

(ii) Reductions in spending, up to the amount of

the State's or Territory's net reduction in total

spending, that are in:

(A) Departments, agencies, or authorities in

which the State or Territory is not using funds;

and

(B) Departments, agencies, or authorities in

which the State or Territory is using funds, in

an amount equal to the value of the spending

cuts in those departments, agencies, or

authorities, minus funds used.

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or Territory is considered to be in violation pursuant

to paragraph (b) of this section, the amount used in

violation of paragraph (a) of this section is equal to the

lesser of:

(1) The reduction in net tax revenue of the State or

Territory for the reporting year, measured as the

difference between the State’s or Territory’s

baseline and its actual tax revenue, each measured

as of the end of the reporting year; and,

(2) The aggregate amount of the reductions in tax

revenues caused by covered changes identified in

paragraph (b)(1) of this section, minus the sum of

the amounts in identified in paragraphs (b)(4)(i)

and (ii) of this section.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.