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

No. 22-___

In the Supreme Court of the United States

______________________________

STATE OF OHIO,

Petitioner,

v.

JANET YELLEN, IN HER OFFICIAL CAPACITY AS

SECRETARY OF THE TREASURY, RICHARD K. DELMAR, IN

HIS OFFICIAL CAPACITY AS ACTING INSPECTOR GENERAL

OF THE DEPARTMENT OF THE TREASURY, AND THE U.S.

DEPARTMENT OF THE TREASURY,

Respondents.

______________________________

ON PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

______________________________

APPENDIX

______________________________

DAVE YOST

Ohio Attorney General

BENJAMIN M. FLOWERS*

*Counsel of Record

Ohio Solicitor General

ZACHERY P. KELLER

MAY MAILMAN

MATHURA J. SRIDHARAN

Deputy Solicitors General

30 E. Broad St., 17th Floor

Columbus, Ohio 43215

614-466-8980

bflowers@ohioago.gov

Counsel for Petitioner

TABLE OF CONTENTS

Page

Appendix A: Opinion, United States Court of

Appeals for the Sixth Circuit, November 18,

2022 ........................................................................... 1a

Appendix B: Opinion and Order, United

States District Court for the Southern District

of Ohio, July 1, 2021 ............................................... 25a

Appendix C: Opinion and Order, United

States District Court for the Southern District

of Ohio, May 12, 2021 ............................................. 79a

Appendix D: Declaration of Kimberly

Murnieks, United States District Court for the

Southern District of Ohio, June 7, 2021 .............. 117a

Appendix E: Declaration of Kimberly

Murnieks, United States District Court for the

Southern District of Ohio, May 19, 2021 ............. 120a

1a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Case No.

21-3787

STATE OF OHIO,

Plaintiff-Appellee,

v.

JANET YELLEN, in her official capacity as Secretary

of the U.S. Department of the Treasury; RICHARD K.

DELMAR, in his official capacity as Acting Inspector

General of the U.S. Department of the Treasury;

UNITED STATES DEPARTMENT OF THE

TREASURY,

Defendants-Appellants.

Appeal from the United States District Court for the

Southern District of Ohio at Cincinnati.

No. 1:21-cv-00181—Douglas Russell Cole,

District Judge.

Argued: January 26, 2022

Decided and Filed: November 18, 2022

Before: GRIFFIN, DONALD, and BUSH,

Circuit Judges.

______________________________

COUNSEL

ARGUED: Daniel Winik, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for

Appellants. Benjamin M. Flowers, OFFICE OF THE

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OHIO ATTORNEY GENERAL, Columbus, Ohio, for

Appellee. ON BRIEF: Daniel Winik, Sarah E.

Harrington, Alisa B. Klein, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for

Appellants. Benjamin M. Flowers, Sylvia May Davis,

OFFICE OF THE OHIO ATTORNEY GENERAL,

Columbus, Ohio, for Appellee. Joseph D. Henchman

NATIONAL TAXPAYERS UNION FOUNDATION,

Washington, D.C., Paul D. Clement, KIRKLAND &

ELLIS LLP, Washington, D.C., Gary P. Gordon, Jason

T. Hanselman, Kyle M. Asher, DYKEMA GOSSETT

PLLC, Lansing, Michigan, Robert Alt, THE

BUCKEYE INSTITUTE, Columbus, Ohio, John J.

Vecchione, NEW CIVIL LIBERTIES ALLIANCE,

Washington, D.C., Timothy Sandefur, Jacob Huebert,

GOLDWATER INSTITUTE, Phoenix, Arizona, Drew

C. Ensign, OFFICE OF THE ARIZONA ATTORNEY

GENERAL, Phoenix, Arizona, for Amici Curiae.

______________________________

OPINION

______________________________

JOHN K. BUSH, Circuit Judge. Seeking to

mitigate the devastating economic effects of COVID19, Congress enacted the American Rescue Plan Act

(“ARPA” or “the Act”) in March 2021. See 42 U.S.C. §

802 et seq. ARPA appropriated $195.3 billion in aid to

the states and the District of Columbia. But to get the

money, states had to certify that they would comply

with several conditions. One was ARPA’s “Offset

Provision,” which forbids a state from using the funds

“to either directly or indirectly offset a reduction in the

net tax revenue” that “result[s] from” a tax cut. §

802(c)(2)(A). Claiming that this condition amounts to

a prohibition on tax cuts during ARPA’s “covered

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period,” id., and that such a condition would violate

the Constitution in multiple respects, Ohio brought

the present challenge. See, e.g., Mot. for Prelim.

Injunction at 1–2, 5, R. 3. And the district court found

Ohio’s objections persuasive, permanently enjoining

enforcement of the Offset Provision on the ground that

its terms are “unconstitutionally ambiguous” under

the Spending Clause. Ohio v. Yellen, 547 F. Supp. 3d

713, 740 (S.D. Ohio. 2021).

The Treasury Department appeals, arguing,

among other things, that the district court should

never have reached the merits of this case, as Ohio

failed to establish a justiciable controversy. We agree

with Treasury. Regardless of standing, the

controversy is moot. Treasury later promulgated a

regulation

(the

“Rule”)

disavowing

Ohio’s

interpretation of the Offset Provision and explaining

that it would not enforce the Provision as if it barred

tax cuts per se. See Coronavirus State and Local Fiscal

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

17, 2021) (interim final rule); see also Coronavirus

State and Local Fiscal Recovery Funds, 87 Fed. Reg.

4,338 (Jan. 27, 2022) (final rule); 31 C.F.R. § 35 et seq.

We have no reason to believe that Treasury will not

abide by its disavowal of Ohio’s interpretation of the

Offset Provision as it administers the statute. So, we

hold, Treasury’s credible disavowal of Ohio’s broad

view of the Offset Provision mooted the case. We thus

reverse the district court’s determination that the case

is justiciable and vacate the permanent injunction.

I.

Like its sister-states, Ohio stood poised to receive

billions of dollars from the federal government if it

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agreed, in accepting its ARPA funds, to abide by a

number of attached conditions. For instance, the Act

provides that states must expend their funds in four

particular areas that Congress deemed relevant to

recovery from the pandemic:

(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;

(C) for the provision of government services to the

extent of the reduction in revenue of such State,

territory, or Tribal government due to the

COVID-19 public health emergency relative to

revenues collected in the most recent full fiscal

year of the State, territory, or Tribal

government prior to the emergency; or

(D) to make necessary investments in water, sewer,

or broadband infrastructure.

42 U.S.C. § 802(c)(1)(A)–(D).

The Act also provides that states may not use their

ARPA funds for two particular applications. For

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instance, “[n]o State or territory may use funds made

available under this section for deposit into any

pension fund.” § 802(c)(2)(B). Nor may the states use

ARPA 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 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). This is the so-called “Offset

Provision”—which Ohio has labeled the “Tax

Mandate”—that lies at the center of the present suit.

Accompanying the Offset Provision are a couple of

related enforcement mechanisms. First is the

statute’s reporting requirement, which instructs the

states:

To 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.

§ 802(d)(2)(A)–(B). Second is the statute’s recoupment

procedure. Should a state violate the Act’s

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requirements, Treasury may initiate a recoupment

action to seek reimbursement from a state “equal to

the amount of funds used in [the] violation.” § 802(e).

Six days after President Biden signed this text into

law, Ohio filed its complaint outlining its objections to

the Offset Provision. First was its Spending Clause

coercion argument. In essence, Ohio said, by offering

such a generous aid package during an economic

crisis, the federal government left Ohio with “no real

choice” but to accept the funds. Complaint ¶40, R. 1.

And such coercion was especially egregious because of

its intrusion upon Ohio’s “sovereign authority to set

tax policy as it sees fit.” Id. ¶41. Specifically, “because

changes to tax policy that reduce revenues violate the

Tax Mandate,” Ohio alleged, the federal government

had essentially conditioned the aid on Ohio’s promise

not to reduce taxes during ARPA’s “covered period.”

Id. Otherwise, “[s]uch violations could be used to force

the State to return funding received through the Act.”

Id. Second, Ohio claimed that the Offset Provision also

violates the Spending Clause because “it is ambiguous

regarding what precisely constitutes a change in tax

policy that ‘indirectly’ offsets a loss in revenue.” Id.

¶43. Yet “Spending Clause legislation must articulate

‘unambiguously’ the conditions it imposes on the

states.” Id. (citing South Dakota v. Dole, 483 U.S. 203,

207 (1983)).1 And last, Ohio relatedly alleged that

1 Ohio appears to have made these arguments in the alternative:

that the Offset Provision either (1) forbids tax cuts, making it an

unconstitutional intrusion upon state taxing authority, or,

alternatively, (2) at least could be read to forbid tax cuts, but does

not forbid such cuts sufficiently clearly to satisfy the Spending

Clause.

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Congress had violated the Tenth Amendment by

“commandeer[ing] state taxing authority” with the

Offset Provision. Id. ¶48.

On the same day it filed its complaint, Ohio also

moved for a preliminary injunction. See Mot. for

Prelim. Injunction, R. 3. It asked the district court to

restrain the Treasury Department from pursuing any

recoupment action during the litigation—until the

district court could rule on Ohio’s ultimate request for

permanent-injunctive relief. And its accompanying

memorandum further described the nature of Ohio’s

constitutional challenges. As to ambiguity, Ohio

pointed out the basic principle that “[m]oney is

fungible.” Id. at 1 (citing Holder v. Humanitarian Law

Project, 561 U.S. 1, 37 (2010)). Thus, it said, “any

money that a State receives through the Act will

necessarily offset, either directly or indirectly, every

tax reduction that the State might pursue.” Id. So the

Offset Provision, which contains a prohibition on

“indirectly” offsetting a tax cut with ARPA funds,

could at least arguably be construed to bar states’

ability to pursue tax cuts. See, e.g., id. at 5 (“[E]very

change in tax policy that leads to a decrease in tax

revenue violates the Tax Mandate.”). But even

assuming that Congress might otherwise be able to

impose such a condition with unambiguous text, Ohio

argued alternatively, it couldn’t have done so in these

circumstances. For offering the state $5.5 billion in

the midst of a crisis went beyond mere “mild

encouragement” to surrender control over state

taxation policy. Id. Such a generous offer was instead

asserted to represent the very “coercion” and

“dragooning” the Supreme Court has held the

Spending Clause to forbid. Id. at 10–11 (citing Nat’l

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Fed. of Indep. Bus. v. Sebelius, 567 U.S. 519, 582

(2012) (opinion of Roberts, C.J.)). Accordingly, Ohio

asked the district court to enjoin enforcement of—and

only of—the Offset Provision. Id. at 18 (“Ohio seeks to

enjoin only the Tax Mandate[.]”). It thus left

unchallenged ARPA’s corollary restrictions, such as

the four approved spending categories and the

reporting requirement.

Treasury responded about a month later. It argued

as an initial matter that Ohio’s challenge was not

justiciable under Article III. Ohio lacked standing, it

said, because it had not alleged that it planned to

enact “any tax cut, let alone shown that any

hypothetical tax cut [would] decrease net tax

revenue[,] or that the State plans to use Rescue Plan

funds to offset that theoretical reduction.” Opp’n to

Mot. for Prelim. Injunction at 1, R. 29. Relatedly, it

argued that Ohio’s challenge was unripe. Id. at 1–2;

see also id. at 8–12. Ohio’s asserted injury was a

potential recoupment action, yet Ohio had given the

court no reason to think such enforcement proceedings

were imminent. And it opposed Ohio’s merits

arguments across the board, contending that the

Offset Provision was neither coercive (it does not

threaten to take away existing state funds) nor

ambiguous (it clearly conditions states’ receipt of

ARPA funds on a promise not to use such funds to

finance state tax cuts). See id. at 12–23.

Soon after that briefing, the district court held a

hearing on the preliminary injunction, and it issued

its decision denying such relief in May 2021. It agreed

with the Treasury Department that Ohio’s imminentrecoupment theory could not suffice for Article III

9a

jurisdiction, given that an enforcement action was

then “too remote to satisfy the injury-in-fact

requirement.” Op. & Order at 17, R. 36. The district

court reasoned that Ohio had not yet accepted ARPA

funds at that point, so it was difficult to see why any

enforcement proceeding might soon transpire. Id. For

the same reason, it declined to issue a preliminary

injunction on the merits: Because it was doubtful that

Treasury would pursue recoupment before the district

court could rule on Ohio’s request for permanent

relief, the district court exercised its equitable

discretion to withhold preliminary relief. Id. at 32–35.

But the district court declined to dismiss Ohio’s

entire case on justiciability grounds, given its

conclusion that Ohio was suffering a distinct,

justiciable injury: the receipt of an “unconstitutionally

ambiguous” spending offer. Id. at 15, 17–18. The

district court reasoned that, under the Supreme

Court’s Spending Clause jurisprudence, states have

the right to receive a spending offer that is

unambiguous about whatever conditions it requires.

See, e.g., id. at 9 (citing Pennhurst State Sch. & Hosp.

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

Provision was far from clear. See, e.g., id. at 27. Its

prohibition on “indirect” offsets, for instance, at least

arguably could be read in the way that Ohio asserted

it could: to prohibit essentially any tax cuts during

ARPA’s covered period. Id. at 26–27. True, Treasury

disputed Ohio’s reading and attempted to offer its own

narrowing construction. See, e.g., Opp’n to Mot. for

Prelim. Injunction at 2–3, 21–23, R. 29. But because

the Offset Provision itself did not clearly proscribe

such cuts, the district court said, Ohio had suffered an

“affront” to its sovereignty. Op. at 17, R. 36. In

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essence, it was forced to “ponder accepting an

ambiguous deal.” Id. at 15. So the district court

believed that injury, even if insufficient for a

preliminary injunction, sufficed to establish

jurisdiction concerning the case overall. Id.

A day later, on May 13, 2021, Ohio accepted its

ARPA funds. See Murnieks Dec. ¶3, R. 38-1. It thus

certified to the federal government that it would

comply with the Offset Provision and the “regulations

implementing [it].” Award Terms & Conditions, R. 381. Six days later, however, it filed its combined motion

for a declaratory judgment that the Offset Provision is

unconstitutional and a permanent injunction against

the Offset Provision’s enforcement.

Treasury’s response argued, once again, that

Ohio’s challenge was both nonjusticiable and failed on

the merits. At the permanent-injunction stage,

however, it offered slightly different justiciability

objections. First, Treasury pointed out that Ohio could

no longer rely upon the injury the district court had

first found persuasive: that the state was being forced

to decide whether to accept the funds under the cloud

of allegedly ambiguous conditions. Opp’n to Mot. for

Permanent Injunction at 7–8, R. 45. For Ohio now had

accepted the funds, mooting any concern about

whether Ohio was suffering “a cognizable injury from

uncertainty over the proposed deal.” Id. at 8. Second,

even if the Offset Provision itself were ambiguous,

Treasury had now promulgated an Interim Final Rule

(“IFR”)—posted three days before Ohio had accepted

the funds and published in the Federal Register four

days

after—that

clarified

Ohio’s

particular

obligations. Id. at 8–9. And, indeed, the IFR

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disavowed Ohio’s broad, money-is-fungible reading of

the Offset Provision. See 86 Fed. Reg. at 26,807.

Treasury explained that it did not read the Offset

Provision to proscribe tax cuts per se, but only to bar

tax cuts that (1) result in revenue reductions, and (2)

for which a state fails to identify a permissible source

of alternative offsetting funds, such as funds derived

from a state tax increase on another activity, from a

state spending cut in an area where the state is not

expending ARPA funds, or from macroeconomic

growth. Id. So Treasury claimed that the IFR had

likewise mooted Ohio’s “supposed ambiguity-asinjury” argument. Opp’n to Mot. for Permanent

Injunction at 8, R. 45. And last, Treasury again

pressed its view that the Offset Provision was neither

coercively imposed nor a violation of the Tenth

Amendment. Id. at 10–23.

The district court confronted these issues in its

opinion and order on the permanent injunction, issued

on July 1, 2021. See Ohio, 547 F. Supp. 3d at 713. Of

particular importance is the district court’s rationale

for why it believed Ohio’s challenge remained

justiciable—even after Ohio’s acceptance of the funds

and after Treasury’s promulgation of the IFR. The

district court acknowledged that the initial reason for

why it believed Ohio’s challenge justiciable—that

Ohio was “contemplating whether to accept an

ambiguous deal”—was “now gone.” Id. at 724–25.

Ohio had already accepted the funds, in other words,

and so it was no longer “ponder[ing]” whether to

accept the deal under a cloud of uncertainty. Id. But

with that injury moot, the district court reasoned that

the challenge remained justiciable because of a

different injury Ohio was now suffering: that, having

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accepted the funds, it faced an “unlawfully-imposed

quandary in determining how to exercise its sovereign

taxing power.” Id. at 725.

This particular theory of injury was intertwined

with the district court’s merits conclusion about the

Offset Provision—that it is “unconstitutionally

ambiguous” under the Spending Clause. Id. In

essence, it said, because of the Offset Provision’s

indeterminacies, Ohio still labors under significant

uncertainty about when Treasury might deem it to

have “indirectly offset” a tax cut with ARPA spending.

Id. at 725–27. And so the Offset Provision continued

to unlawfully intrude upon Ohio’s sovereign taxing

authority, since it “cast[s] a pall over legislators’

abilities to contemplate such tax changes.” Id. at 725.

Moreover, it concluded, the IFR could not cure that

“pall” by providing the guidance required to make the

funding conditions sufficiently clear to satisfy the

Spending Clause. It grounded that conclusion on two

bases. First, as it had already explained in its

preliminary-injunction opinion, the IFR was just

that—an interim final rule—and so its details could at

least potentially change after the notice-and-comment

period when Treasury promulgated its Final Rule. Op.

at 28, R. 36. And second, in any event, the district

court suggested that the Rule was simply ultra vires

agency action. Ohio, 547 F. Supp. 3d at 734–39. For

under the federalism canon and the major-questions

doctrine, Congress had not delegated to Treasury,

with sufficient clarity, the authority to promulgate a

rule attempting to clarify the Offset Provision. Id. The

district court thus concluded that the IFR’s

promulgation had not mooted Ohio’s case.

13a

On the merits, the district court then explained its

view that the Offset Provision is “unconstitutionally

ambiguous” under the Spending Clause. Id. at 740.

Two major indeterminacies in the text of the Provision

drove that conclusion. First, its prohibition on

“indirect” offsets provides little guidance about when

Treasury might deem Ohio to have used ARPA funds

for an impermissible purpose. Id. at 731–33. Money is

fungible, after all, and so the Offset Provision at least

arguably could be read to proscribe Ohio’s desired tax

cuts during ARPA’s “covered period.” Id. at 733.

Moreover, the Offset Provision itself never explains

the fiscal-year baseline against which Treasury will

measure a “reduction” in net tax revenue. Id. at 731–

32. And, depending on whichever baseline Treasury

selects, Ohio’s obligations could change substantially.

The district court thus permanently enjoined the

Treasury Department from enforcing the Offset

Provision against Ohio. Id. at 741. Treasury timely

appealed.

II.

The district court’s permanent-injunction order

was a “final decision.” See, e.g., Trayling v. St. Joseph

Cnty. Emps. Chap. of Local #2995, 751 F.3d 425, 426

(6th Cir. 2014). As a result, we have statutory

jurisdiction to consider Treasury’s appeal under 28

U.S.C. § 1291. We examine Article III jurisdiction

below.

III.

A fundamental principle under Article III is that

we may adjudicate only live cases or controversies.

See, e.g., Hollingsworth v. Perry, 570 U.S. 693, 700

(2013). Thus, the plaintiff must show at the outset of

14a

the suit its standing to sue—that it has suffered an

actual or imminent and concrete and particularized

injury in fact traceable to the defendant and likely to

be redressed by a favorable decision. See Lujan v. Defs.

of Wildlife, 504 U.S. 555, 560–61 (1992). And the

plaintiff must continue to have a live interest in such

a remedy throughout the proceeding. Trump v. New

York, 141 S. Ct. 530, 534 (2020). If that interest is

lost—for instance, through the advent of an

“intervening circumstance” after the complaint is

filed—then the plaintiff’s case may become moot.

Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 72

(2013). When that intervening circumstance is the

defendant’s voluntary abandonment of a contested

behavior, however, the case remains live unless the

defendant establishes that there is no “reasonable

possibility” it will resume such behavior. Resurrection

Sch. v. Hertel, 35 F.4th 524, 529 (6th Cir. 2022) (en

banc).

Applying those principles, we conclude that,

irrespective of whether Ohio established its initial

standing to sue, its challenge is now moot.2 As the

2 Though we must dismiss a cause before reaching the merits

upon the discovery of a jurisdictional defect, “there is no

mandatory ‘sequencing of jurisdictional issues.’” Sinochem

Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422,

431 (2007) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S.

574, 584 (1999)). Rather, “a federal court has leeway ‘to choose

among threshold grounds for denying audience to a case on the

merits.’” Id. (citing Ruhrgas, 526 U.S. at 585). Thus, we need not

conclusively decide whether Ohio’s theories sufficed to establish

its standing when the complaint was first filed. We are barred

from reaching the merits in any event because of our

15a

district court itself acknowledged, the injury that Ohio

asserted in its complaint—that it was “ponder[ing]”

whether to accept its ARPA funds under a cloud of

uncertainty about the Offset Provision’s meaning—“is

now gone.” Ohio, 547 F. Supp. 3d at 724. Ohio accepted

the funds nonetheless, and so it is no longer

contemplating whether to take them. That alleged

injury is now well in the past. But there is, of course,

no jurisdiction for injunctive relief unless the plaintiff

establishes why a past harm is inflicting some injury

at present or is likely to inflict some injury in the

future. City of Los Angeles v. Lyons, 461 U.S. 95, 105

(1983); see also Kanuszweski v. Mich. Dep’t of Health

& Hum. Servs., 927 F.3d 396, 406 (6th Cir. 2019).

Thus, as the district court recognized, Ohio cannot

rest on its claim that it was injured by having had to

“ponder” a deal with unclear conditions. Ohio, 547 F.

Supp. 3d at 724. It instead must illustrate some

ongoing or imminent future injury to keep the case

alive.

The district court thought that showing satisfied,

however, by what we will label the “pall” theory—that,

at present, the Offset Provision “casts a pall over

[Ohio’s] abilities to contemplate” desired tax changes

because it must labor under “an unlawfully-imposed

quandary in determining how to exercise its sovereign

taxing power.” Id. at 725. The district court believed

that this “pall” theory was distinct from the question

whether any recoupment action is imminent, and so

Ohio’s challenge remained live even if there were no

determination that Ohio’s challenge is moot. See Steel Co. v.

Citizens for a Better Env’t, 523 U.S. 83, 94 (1998).

16a

realistic, imminent prospect of recoupment. Id. at

726–27 (claiming that Ohio “need not rely on the

prospect of future recoupment to avoid mootness”). So

it deemed the case live on that basis and entered its

injunction accordingly.

Yet we cannot agree that Ohio’s challenge

remained live even absent any imminent recoupment

action. The very reason why there might be some

“pall” over Ohio’s tax policy is because pursuing a

particular policy could entail a real-world

consequence—a recoupment action. It is not enough

that a statute may impose some “subjective chill” in

the abstract upon a plaintiff’s desired course of

conduct.3 See, e.g., Laird v. Tatum, 408 U.S. 1, 13–14

(1972) (quotation marks omitted); see also Morrison v.

Bd. of Educ. of Boyd Cnty., 521 F.3d 602, 610 (6th Cir.

2008). Rather, to mount a pre-enforcement challenge

and obtain an injunction, the plaintiff must show why

there is some realistic, likely risk of an enforcement

proceeding if it were to engage in its desired behavior.

See, e.g., Babbitt v. United Farm Workers Nat’l Union,

442 U.S. 289, 298 (1979). After all, equity does not

enjoin laws themselves, but enjoins officials from

3 We also note that it is difficult to see how the “pall” theory aligns

with Ohio’s real-world behavior. Even before the district court

imposed its injunction, Ohio enacted a sizeable tax cut. See

Appellee’s Br. at 42. True, that was after the district court

deemed the Offset Provision likely unconstitutional in its opinion

denying a preliminary injunction. Id. at 48. But Ohio presented

no evidence that its legislators considered any potential

ramifications from the Offset Provision before enacting that tax

cut. See Appellants’ Br. at 10 (“Ohio identifies nothing in the

record suggesting that the Offset Provision played any role in

state legislators’ enactment of that budget.”).

17a

taking action based upon those laws. See Whole

Woman’s Health v. Jackson, 141 S. Ct. 2494, 2495

(2021) (“[F]ederal courts enjoy the power to enjoin

individuals tasked with enforcing laws, not the laws

themselves.” (citing California v. Texas, 141 S. Ct.

2104, 2115–16 (2021)). And, moreover, justiciability

must be established with the degree of evidence

required at each successive stage of the proceeding.

Lujan, 504 U.S. at 561. To obtain a permanent

injunction, therefore, Ohio needed to submit concrete

evidence about why Treasury might imminently

pursue a recoupment action in response to its behavior

past, present, or future.

But in this regard, Ohio came up short. Its

steadfast contention below was that Treasury could

read the Offset Provision in a broad way—as barring

any tax cut during ARPA’s covered period—and thus

that it risked recoupment should it exercise its

sovereign prerogative to cut taxes. Yet Treasury

repeatedly disavowed Ohio’s money-is-fungible

reading of the statute. It did so in its briefing below,

in the Interim Final Rule,4 in its briefing before us,

4 As we mentioned, the district court held that the Interim Final

Rule did not suffice to moot the case because it was merely

interim and thus could be revised through the notice-andcomment process. Op. at 28, R. 36. But even if we assume that

particular ruling is correct, Ohio has conceded that the Final

Rule is the same as the Interim Final Rule in all respects

material to this dispute. See Flowers Letter, ECF No. 49

(“Because the Final Rule is materially identical to the interim

final rule in all respects relevant to this case, its issuance does

not affect the analysis of the questions presented.”). So even if

there were a possibility Treasury could have modified its view of

the Offset Provision from the Interim Final Rule to the Final

18a

and in the Final Rule as well.5 See, e.g., Opp’n to Mot.

for Prelim. Injunction at 17–18, R. 29; 86 Fed. Reg. at

26,807; Appellants’ Br. at 5; 87 Fed. Reg. at 4,426. In

the face of those facts, we conclude that Treasury

established there is no “reasonable possibility” it will

adopt Ohio’s broad view of the Offset Provision.

Rule in a way that could have saved Ohio’s claims, in actual fact,

it did not.

5 We have no need to opine here on whether agency regulations

may validly clarify an otherwise-ambiguous Spending Clause

condition or whether, even if an agency could do so for ordinary

spending legislation, it could not have done so here under the

major-questions doctrine or federalism canon. Contra Ohio, 547

F. Supp. 3d at 734–39. The argument that the Rule is ultra vires

under the major-questions doctrine or federalism canon might

have supported an attempt to seek vacatur of the Rule under 5

U.S.C. § 706, but Ohio has never asked for vacatur of the Rule.

So the still-standing Rule continues to bind Treasury in its

administration of the statute. The justiciability of Ohio’s preenforcement constitutional challenge thus hinges on whether it

showed it would violate the Rule—irrespective of whether the

Rule is potentially unauthorized or does not represent the best

reading of the statute—since violation of the Rule is what would

provoke recoupment. In other words, even if the underlying

spending legislation here is constitutionally infirm, the

unchallenged Rule has prevented Ohio, based on the harms it

asserted, from having established a concrete controversy in

which it could advance its merits objections to the Offset

Provision. We would also note that even if the Rule were vacated,

Treasury has consistently represented that the text of the Offset

Provision alone refutes the money-is-fungible interpretation. See,

e.g., Opp’n to Mot. for Prelim. Injunction at 17–18, R. 29

(explaining Treasury’s position, before the advent of the IFR,

that the text of the Offset Provision alone did not support Ohio’s

reading); see also Recording of Oral Arg. at 7:21–9:00

(disclaiming that the validity of the Offset Provision hinges “in

any way” on the Rule, calling the Rule “not relevant,” and

arguing that the statute is valid on its own).

19a

Resurrection Sch., 35 F.4th at 525. As a result, Ohio

needed to establish why it would not only enact a tax

cut, but also that such a cut would (1) result in a

reduction in its net tax revenue, and (2) that Ohio

would then offset such a reduction with ARPA funds,

or (3) fail to identify a permissible source of offsetting

funds from a state spending cut, state tax increases in

some other area, or macroeconomic growth. 86 Fed.

Reg. at 26,807; 87 Fed. Reg. at 4,426. Only then would

Treasury seek recoupment. But we have no evidence

that Ohio will pursue that course of conduct. So we

have no reason to believe that Treasury will initiate

recoupment against any policy that Ohio has shown,

with evidence, it intends to pursue.

Resisting that conclusion, Ohio claims on appeal

that it still suffers five distinct and cognizable injuries

from the Offset Provision, and so its challenge

remains live. We find none of those arguments

persuasive, however, and we will address them one by

one.

First, Ohio says, it was injured when it was denied

its entitlement to an unambiguous and non-coercive

offer. Appellee’s Br. at 46–48. Yet we have already

largely dealt with this assertion above. Even

assuming that the initial offer was ambiguous or

coercive, those are merely past injuries. That a past

offer could have been clearer or fairer does not create

jurisdiction for injunctive relief. Rather, Ohio had to

establish why that past injury had some continuing

negative effect redressable with a prospective remedy.

See Lyons, 461 U.S. at 105; see also Kanuszweski, 927

F.3d at 406. So this theory of injury is insufficient, by

itself, to establish jurisdiction.

20a

Second, perhaps realizing this prospectivity issue,

Ohio asserts that the Offset Provision “arguably

proscribes” its desired tax policies. Appellee’s Br. at

41–43, 49. Ohio makes that argument by asserting,

again, that “any revenue-negative reduction in tax

rates could be read to contravene the Mandate.” Id. at

42. But even assuming that’s true, Treasury

subsequently explained that it does not, in fact, read

the Offset Provision as proscribing “any revenuenegative reduction in tax rates.” Id. (emphasis added).

Nor will it take enforcement actions based on tax cuts

per se. Rather, it has repeatedly explained its position

that it will pursue recoupment under the Offset

Provision only should a state enact a revenuereducing tax cut and then fail to identify a permissible

source of offsetting funds, such as those derived from

other state tax increases, state spending cuts, or

macroeconomic growth. So even if the Offset Provision

“could be read” in a broader way, Treasury pointedly

does not read it that way. Given that Treasury has

repeatedly and credibly disavowed Ohio’s broad

reading of the Offset Provision, we fail to see why

there is a reasonable possibility of a recoupment

action predicated on that broad reading. See Missouri

v. Yellen, 39 F.4th 1063, 1069 (8th Cir. 2022).

Third, Ohio asserts, with little elaboration, that

the Offset Provision interferes with its sovereign

authority and the “orderly management” of its affairs.

Appellee’s Br. at 43–44. Again, however, we cannot

see how this can be so, when, after Treasury’s

disavowals, Ohio never established any particular

conduct it wishes to pursue but against which

Treasury may credibly take action. Nor, as we explain

below, did Ohio put forth any concrete evidence about

21a

how the Offset Provision interferes with the “orderly

management” of its affairs, at least in a way that

might be redressed by enjoining enforcement solely of

the Offset Provision.

Fourth, Ohio argues that it was injured when it

was forced to choose between “receiving federal

benefits” or “surrendering some of its sovereign

authority over tax policy.” Appellee’s Br. at 45. But for

the reasons we have already explained, a past choice

without a demonstrated continuing negative effect

does not establish jurisdiction for injunctive relief. See

Lyons, 461 U.S. at 105; see also Kanuszweski, 927 F.3d

at 406. Nor has Ohio established a continuing and

concrete harm, given that it has identified no policy it

wishes to pursue but that Treasury regards as

proscribed. So there is no reason to suppose, based on

what Ohio has shown it wishes to do, that there is a

reasonable possibility Treasury will hale it into a

recoupment action that a federal court of equity might

enjoin.

Fifth and last, Ohio claims that the Offset

Provision inflicts compliance costs upon it that would

be redressed by letting the injunction stand.

Appellee’s Br. at 45–46. It says that these costs arise

in two discrete ways. First, “States that accept Rescue

Plan funds are statutorily bound to provide a ‘detailed

accounting’ proving their compliance with, among

other things, the Mandate.” Id. at 46 (citing 42 U.S.C.

§ 802(d)(2)). And second, it asserts, Ohio has been

“forced to reallocate resources to ensuring compliance

with the Mandate.” Id. Yet, separate from our

mootness analysis above, we find neither of these

22a

points sufficient to have even established Ohio’s

standing to seek an injunction of the Offset Provision.

Take the point about the reporting requirement

first. Unlike the Offset Provision—which represents a

substantive prohibition on how states may use ARPA

funds—the reporting requirement simply instructs

states to report “the uses of [such] funds” and “other

information” pertinent to “the administration of this

section.” 42 U.S.C. § 802(d)(2)(A)–(B). So it is possible

for a state to be in compliance with the Offset

Provision—using ARPA funds exclusively for

permissible purposes—yet in violation of the reporting

requirement, should it fail to convey a “detailed

accounting” of those permissible uses to Treasury. Id.

Or, conversely, a state could violate the Offset

Provision—directly or indirectly offsetting tax cuts

with ARPA funds—and remain in compliance with the

reporting requirement, so long as it informed

Treasury that it was using ARPA funds for

impermissible purposes. Compare 42 U.S.C. §

802(c)(2)(A), with § 802(d)(2)(A)–(B). So the Offset

Provision and the reporting requirement are simply

different portions of the statute with different

purposes and different effects on the states.

But those facts are fatal to Ohio’s compliance-costs

argument. For even if enforcement of the Offset

Provision were enjoined, Ohio still would have to

furnish a “detailed accounting” of how it used its

ARPA funds so that Treasury could ensure Ohio’s

compliance with all the other unchallenged use

restrictions. See, e.g., 42 U.S.C. § 802(c)(1)(A)–(D).

Additionally, Ohio never waged the uphill battle that

the Offset Provision and reporting requirement are

23a

inseverable, so that an injunction against the Offset

Provision brings down the reporting requirement as

well. Cf. Seila Law, LLC v. CFPB, 140 S. Ct. 2183,

2209 (2020); Free Enter. Fund v. Pub. Co. Acc.

Oversight Bd., 561 U.S. 477, 508 (2010). To the

contrary, Ohio was adamant that its challenge is only

to the Offset Provision; it makes no claim that the

reporting requirement itself is void or unenforceable.

See, e.g., Mot. for Prelim. Injunction at 18, R. 3 (“Ohio

seeks to enjoin only the Tax Mandate[.]”). Thus, to

establish a compliance-costs injury from the reporting

requirement redressable by enjoining enforcement of

the separate Offset Provision, Ohio would have

needed evidence about why the reporting-costs burden

would have been lowered from the injunction even if

the reporting requirement itself were left operable.

Yet Ohio furnished no such evidence to the district

court. So we have no evidentiary basis to conclude that

an injunction against the Offset Provision is somehow

redressing a compliance-costs injury traceable to the

separate and unchallenged reporting requirement.

That leaves us with Ohio’s vague claim about how

it has been “forced to reallocate resources to ensuring

compliance with the Mandate.” Appellee’s Br. at 46.

Ohio never made this allegation in its complaint, see

Recording of Oral Arg. at 12:20–12:40; cf. Lynch v.

Leis, 382 F.3d 642, 647 (6th Cir. 2004) (“Standing is to

be determined as of the time the complaint is filed.”

(cleaned up)), and it has provided no insight about the

alleged resources it is referring to. Moreover, Ohio had

the burden to establish whatever such costs have

ensued with evidence; conclusory allegations about

them in its briefing could not suffice. Yet Ohio put

forth no “specific facts” by “affidavit or other evidence”

24a

about what, if any, particular resources it has

reallocated to ensure compliance with the Offset

Provision. Lujan, 504 U.S. at 561.6 As to the resourcereallocation claim, therefore, we lack the requisite

basis to conclude that Ohio established a concrete and

particularized injury in fact.

IV.

As Treasury itself acknowledges, our decision

today does not permanently deprive Ohio of the

opportunity to challenge any of ARPA’s funding

conditions. Appellants’ Br. at 10–11; Reply Br. at 7–8.

Rather, should a future, justiciable dispute arise, Ohio

may reassert its merits arguments therein. Id. But

Ohio did not establish that this challenge is

justiciable. Accordingly, we reverse the district court’s

determination otherwise and vacate the permanent

injunction.

6 That the Supreme Court was speaking here in the context of the

showing required to illustrate justiciability at a summaryjudgment proceeding only underscores the deficiency of Ohio’s

showing. For “the proof required for the plaintiff to obtain a

[permanent] injunction is much more stringent than the proof

required to survive a summary judgment motion.” Leary v.

Daeschner, 228 F.3d 729, 739 (6th Cir. 2000); see also McNeilly v.

Land, 684 F.3d 611, 615 (6th Cir. 2012).

25a

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

Case No.

1:21-cv-181

JUDGE DOUGLAS R. COLE

STATE OF OHIO,

Plaintiff,

v.

JANET YELLEN, SECRETARY OF THE

TREASURY, et al., 1

Defendants.

OPINION AND ORDER

Through the American Rescue Plan Act (“ARPA”),

Congress has exercised its power under the Spending

Clause to make nearly $200 billion available to the

States to assist with their COVID-19-ravaged state

coffers. But that money comes at a price. To receive its

share, a State must agree to be bound by certain

conditions. In this action, Ohio sues the Secretary of

the Treasury (who is charged with enforcing aspects

of ARPA) claiming that one of those conditions—which

it calls the “Tax Mandate”—exceeds Congress’s

1 The Defendants to this lawsuit are Janet Yellen, in her official

capacity as Secretary of the Treasury; Richard K. Delmar, in his

official capacity as acting inspector general of the Department of

Treasury; and the United States Department of the Treasury.

The Court refers to the Defendants collectively throughout this

opinion as “Secretary.”

26a

authority. Ohio argues that this overstep threatens to

undermine the federalist system our Constitution

enacts.

Before accepting the funds ARPA made available,

and thereby subjecting itself to ARPA’s conditions,

Ohio sought a preliminary injunction to prohibit the

Secretary from enforcing the Tax Mandate while this

suit is ongoing. The Court denied that request. Now,

having opted in to ARPA, Ohio seeks a permanent

injunction to prevent the Secretary from enforcing the

Tax Mandate against the State.

Ohio’s action raises fundamental constitutional

concerns. The Constitution incorporates strong

separation-of-powers principles. That is true both as

between the federal government and the States, which

the Constitution makes dual sovereigns, and within

the federal government itself, where the Constitution

allocates separate powers to the Legislature, the

Executive, and the Judiciary. And this is not division

for division’s sake. At its founding, the country had

just escaped a system that concentrated vast

governmental power in a single person—the monarch.

The Framers adopted a system of checks and balances

meant to prevent that coalescence from reemerging

here—a structural mechanism to promote the

underlying goal of individual liberty.

Ohio’s arguments here, and the Secretary’s

response, require the Court to consider both

federal/state (sometimes called “vertical”) and intrafederal (sometimes called “horizontal”) separation-ofpowers principles. In particular, Ohio claims that the

Tax Mandate is ambiguous, and that this ambiguity

violates settled Spending Clause jurisprudence that

27a

requires Congress to clearly state any conditions it

imposes on federal grants offered to the States. And

here, Ohio says, that violation results in an

impermissible federal intrusion on the States’

sovereign authority to tax, a power that the Supreme

Court has long recognized as “indispensable” to the

States’ very “existence.” Gibbons v. Ogden, 22 U.S. (9

Wheat.) 1, 199 (1824).

The Secretary’s efforts to refute these ambiguity

concerns, meanwhile, implicate horizontal separationof-powers concerns. That is so because, according to

the Secretary, even if the Tax Mandate were

unconstitutionally ambiguous (which the Secretary

disputes), recently issued Treasury Department

regulations clarify the Tax Mandate’s contours, and

thus cure any potential constitutional defect. But that

argument raises questions about the extent to which

Congress can delegate to an agency the power to “fix”

shortcomings in legislative enactments that make

conditional grants to the States under the spending

power, a thorny issue in its own right.

Separately, the Secretary also raises a

jurisdictional challenge to this Court’s power to hear

the case, which is itself another aspect of the

horizontal separation-of-powers framework. Under

the Constitution, the judicial power extends only to

“live” disputes. Here, the Secretary notes that the

original harm that Ohio claimed in filing suit—the

difficulty that the Tax Mandate’s ambiguity created

for Ohio in deciding whether to accept the funding—

ended when, ambiguity notwithstanding, Ohio filed

its certification with the Secretary, which bound Ohio

to ARPA’s terms. And the Tax Mandate’s alleged

28a

ambiguity cannot harm Ohio going forward, the

Secretary says, as the Treasury Department

regulations have now clarified the Tax Mandate’s

terms.

None of these are easy questions. As to many parts

of the necessary analysis, case law is sparse or itself

somewhat ambiguous. Ultimately, though, the Court

concludes that Ohio has articulated an ongoing harm

arising from the alleged ambiguity in the Tax

Mandate, thus creating jurisdiction for this Court to

hear Ohio’s challenge. On the merits, the Court

concludes that the Tax Mandate, as written, falls

short of the clarity that Supreme Court precedent

requires for Spending Clause legislation that provides

conditional grants to the States. And the Court also

rejects the Secretary’s argument that the Treasury

Department regulations cure that ambiguity. In that

regard, the Court stops short of holding that Congress

can never authorize an agency to supply the requisite

clarity, but instead holds that, under ARPA, Congress

did not do so here.

Accordingly, the Court finds that the Tax Mandate

exceeds Congress’s power under the Constitution. The

Court further finds that Ohio has met the conditions

for injunctive relief to prevent the ongoing harm that

this constitutional violation is causing. Thus, the

Court PERMANENTLY ENJOINS the Secretary

from enforcing the Tax Mandate against Ohio. But,

because the permanent injunction suffices to remedy

29a

Ohio’s ongoing harm, the Court DENIES Ohio’s

requested declaratory relief.2

BACKGROUND

A.

The COVID-19 Pandemic.

As the Court explained in its previous Opinion,3

the COVID-19 pandemic has inflicted far-reaching,

unprecedented consequences on nearly every aspect of

life, not only in the United States, but around the

world. While the United States appears to be

emerging from the worst of the pandemic, at least in

terms of ongoing public health and economic impacts,

the lingering economic consequences of earlier

pandemic-related disruptions continue to present

challenges for state budgets, including Ohio’s.

B.

The America Rescue Plan Act.

On March 11, 2021, President Biden signed ARPA

into law. ARPA represents Congress’s latest effort to

address the harms, including economic harms, that

COVID-19 caused. It is a wide-ranging law that

commits the federal government to spending up to

roughly $1.9 trillion on a host of goods, services, and

other forms of governmental assistance.

Consistent with the above, the Court also DENIES the

Secretary’s Motion to Dismiss.

3 The Court issued a previous Opinion (Doc. 36) in this matter on

May 12, 2021, denying Ohio’s request for a preliminary

injunction. In that Opinion, the Court covered many of the same

background facts, and many of the same legal issues, that this

Opinion addresses. To prevent the need to read both Opinions

together, the Court endeavors to make this Opinion a standalone

document, although that necessarily involves some repetition of

the materials presented in the earlier Opinion.

2

30a

Central to this case, ARPA appropriates

approximately $195.3 billion in funding designed to

assist the States with their COVID-19-related

financial woes. See 42 U.S.C. § 802(b)(3)(A). Ohio’s

share of that funding amounts to $5.4 billion.

(Murnieks Decl., Doc. 48-1, #778). Ohio argues, and

the Secretary does not dispute, that this amount

reflects roughly 7.4% of the State’s total spending last

year. (Mot. for Prelim. Inj., Doc. 3, #33).

As is often the case with federal dollars, ARPA

money comes with strings attached. In particular, to

qualify for the funding, a State must “provide the

Secretary [of the Treasury] with a certification, signed

by an authorized officer of such State … that such

State … requires the payment … to carry out the

activities specified in subsection (c) … and will use any

payment under this section … in compliance with

subsection (c).” 42 U.S.C. § 802(d)(1). The Secretary is

to “make the payment required for the State … not

later than 60 days after the date on which th[at]

certification … is provided to the Secretary.” Id. §

802(b)(6)(A)(i).

As the above language suggests, the conditions

themselves are set forth in subsection (c). That

subsection provides that a State shall only use the

funds to cover the following types of costs incurred by

the State:

(A) to respond to the public health emergency

with respect to [COVID-19] or its negative

economic impacts …

31a

(B) to respond to workers performing essential

work during the COVID-19 public health

emergency …

(C) for the provision of government services to

the extent of the reduction in revenue of such

State … due to the COVID-19 public health

emergency relative to revenues collected in

the most recent full fiscal year of the State …

prior to the [pandemic] … or

(D) to make necessary investments in water,

sewer, or broadband infrastructure.

Id. § 802(c)(1)(A)–(D). And the State must use the

funds for those purposes by December 31, 2024. Id. §

802(c)(1).

Ohio does not dispute the validity of any of the

above conditions. But ARPA also imposes certain

other terms. As relevant here, in a section labeled

“Further Restriction On Use Of Funds,” ARPA

provides that:

(A) IN GENERAL.—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.

Id. § 802(c)(2)(A). Ohio refers to this provision as the

Tax Mandate, and that provision forms the gist of the

dispute here.

32a

C.

Ohio Sues The Secretary And Seeks A

Preliminary Injunction.

On March 17, 2021, Ohio filed this suit claiming

that the Tax Mandate is unconstitutional. This is so,

Ohio says, for two reasons. First, the Tax Mandate

allegedly violates the Spending Clause in two ways—

it is both unconstitutionally coercive and

unconstitutionally ambiguous. (Compl., Doc. 1, #9–

10). And second, Ohio claims that the Tax Mandate

violates the Tenth Amendment, in that it

unconstitutionally

commandeers

state

taxing

authority. (Id. at #11).

On the same day it sued, Ohio moved for a

preliminary injunction preventing the Secretary from

enforcing the Tax Mandate during this litigation’s

pendency. (Doc. 3). The Court heard argument on that

motion on April 30, 2021. During that argument, the

parties focused on the Spending Clause, and

particularly the ambiguity issue. The Secretary

largely conceded that the Tax Mandate was at least

somewhat unclear as written, but offered a few

arguments as to why that ambiguity did not amount

to a Spending Clause problem this Court could

redress. As a threshold matter, the Secretary said,

Ohio lacked standing. That was so, the argument

went, because the State was not currently suffering an

injury in fact absent an imminent threat of

recoupment. On the merits, the Secretary pressed two

arguments. First, the Secretary argued that a statute

need only make clear that there is a condition on the

federal grant, not provide clarity as to what the terms

of that condition are. Second, the Secretary argued,

while the statutory text may not be clear as written,

33a

help was on the way in the form of upcoming Treasury

Department regulations to provide further guidance

about the Tax Mandate’s meaning.

True to its word, on May 10, 2021, the Treasury

Department issued an Interim Final Rule (“IFR”)

expounding on how the Department would assess

compliance with the Tax Mandate. The Secretary

provided this Court a Notice of that rule. (Doc. 33).

The IFR is further described below, as relevant.

D.

The Court Denies Ohio’s Request For A

Preliminary Injunction.

Two days after the Department issued the IFR, on

May 12, 2021, the Court denied Ohio’s motion for a

preliminary injunction. The Court started by

addressing the jurisdictional question. On that front,

the Court held that the Spending Clause entitled Ohio

to clarity regarding the “terms of the deal,” so that

Ohio could exercise its sovereign prerogative of

electing whether to accept the federal government’s

offer, or not. (Op. and Order, Doc. 36, #554). Depriving

Ohio of the constitutionally-mandated clarity

regarding that decision, the Court said, was a

sufficient injury for Article III standing purposes, if

“barely.” (Id., #553).

As for the appropriateness of a preliminary

injunction, the Court began by finding that Ohio had

shown a likelihood of success on the merits of its

constitutional claim. More specifically, the Court

concluded that the Tax Mandate’s language fell well

short of the clarity threshold that Spending Clause

jurisprudence

imposes.

(Id.,

#556).

While

acknowledging the IFR, the Court noted that the

regulation’s impact on the Spending Clause analysis

34a

was, at the time, uncertain and unbriefed. (Id., #558).

And, given that Ohio needed only to show that it had

a likelihood of success, not a certainty of it, the Court

concluded that Ohio had met this requirement. (Id.,

#560).

The Court also found that Ohio was suffering

ongoing irreparable harm. In particular, the Court

concluded that the same harm that sufficed to show

standing—that Ohio was forced to contemplate

accepting a “deal” while in the dark as to its terms—

also constituted irreparable harm for preliminary

injunction purposes. (Id., #567).

But notwithstanding these findings, the Court

denied the requested preliminary relief. The Court

concluded that the preliminary injunction that Ohio

sought would not prevent Ohio from incurring the

ongoing irreparable harm that Ohio asserted. (Id.,

#568). That was so because a preliminary injunction

would last only during the pendency of the action. This

type of interim relief could not provide Ohio the clarity

it sought in terms of deciding whether to accept the

deal. And, as a practical matter, enjoining the

Secretary from enforcing the Tax Mandate during the

pendency of the suit was meaningless, as it was

unlikely (indeed virtually impossible) that the

Secretary would seek recoupment during that time.

E.

Ohio Seeks A Permanent Injunction, And

Requests Expedited Briefing.

Ohio responded by requesting a permanent

injunction and final declaratory relief. It also sought

an expedited briefing schedule. According to Ohio,

speed was of the essence, as the Tax Mandate’s

validity and enforceability against Ohio might have

35a

an impact on the Ohio General Assembly’s

consideration of the budget for the then-upcoming

biennium, which the General Assembly was required

to enact by June 30, 2021.4 To accommodate that

concern, the parties agreed to a briefing schedule that

resulted in the federal government filing the final

brief on June 11, 2021.

Two other factual developments merit mention. On

May 13, 2021, the day after the Court issued its

Opinion denying Ohio’s requested preliminary

injunction, and three days after the Treasury

Department issued its IFR, Ohio submitted its

certification stating that it would participate under

ARPA. As required, Ohio represented that it would

“use any payment under this section … in compliance

with subsection (c) of” 42 U.S.C. § 802. (See Murnieks

Decl., Doc. 38-1, #603). Second, on May 18, 2021, Ohio

received its first tranche of funds under the Act. (Id.,

#604).

With briefing now complete, the matter is before

the Court.

4 “Required” is a bit of an overstatement. To be sure, the current

budget and its accompanying appropriations lapse at the end of

a biennium, which is June 30, but the General Assembly can

adopt “budget extensions” if no new budget is in place at that

time. For example, the General Assembly enacted the budget bill

for the previous biennium on July 17, 2019, and the Governor

signed it the next day. That said, it appears from news reports

that Ohio’s General Assembly passed a budget bill for the

upcoming biennium on June 28, 2021, and that Governor DeWine

has now signed that bill, albeit with some line-item vetoes.

36a

LAW AND ANALYSIS

As was true at the preliminary injunction stage,

resolving Ohio’s request for a permanent injunction

and declaratory relief requires the Court to address

difficult issues as to both jurisdiction and the merits.

Because the former go to the extent of the Court’s

power, the Court starts there. The Court concludes,

though, that it continues to have jurisdiction over this

action. Accordingly, the Court then turns its

consideration to the merits of Ohio’s Spending Clause

challenge.

A.

The Court Has Jurisdiction Over This

Case.

“Time and again,” the Supreme Court has

“reaffirmed the importance in our constitutional

scheme of the separation of [federal] governmental

power into the three coordinate branches.” Morrison

v. Olson, 487 U.S. 654, 693 (1988) (citing cases). Those

separation-of-powers principles constrain the judicial

branch, just as they do the other two branches.

“[U]nder our constitutional system, courts are not

roving commissions assigned to pass judgment on the

validity of the Nation’s laws.” United States v.

Sineneng-Smith, 140 S. Ct. 1575, 1585 (2020) (cleaned

up) (Thomas, J., concurring) (quoting Broadrick v.

Oklahoma, 413 U.S. 601, 610–611 (1973)). Rather,

“[t]he Constitution gives federal courts the power to

adjudicate only genuine ‘Cases’ and ‘Controversies.’”

California v. Texas, 539 U.S.

, No. 19-840, slip op.

at 4 (June 17, 2021) (quoting U.S. CONST. art. III, §

2); see also, e.g., Davis v. Fed. Election Comm’n, 554

U.S. 724, 732 (2008) (“Article III restricts federal

courts to the resolution of cases and controversies.”).

37a

The case-or-controversy requirement takes effect

through the doctrines of standing, ripeness, and

mootness. A plaintiff seeking federal court review

must show at the outset that he has standing, and

that the dispute is ripe for review. Moreover, even

when those requirements are met, the judicial power

extends only so long as the dispute remains live (i.e.,

non-moot). Here, the federal government claims that

(1) Ohio lacks standing, and (2) that, even if Ohio once

had standing, the matter is now moot given events

that have occurred since Ohio filed suit.

Start with standing. It is well settled that “[t]he

plaintiff bears the burden of establishing standing.”

Lyshe v. Levy, 854 F.3d 855, 857 (6th Cir. 2017) (citing

Summers v. Earth Island Inst., 555 U.S. 488, 493

(2009)). “To satisfy the ‘irreducible constitutional

minimum of standing,’ the plaintiff must establish

that: (1) he has suffered an injury in fact that is (a)

concrete and particularized and (b) actual or

imminent rather than conjectural or hypothetical; (2)

that there is a causal connection between the injury

and the defendant’s alleged wrongdoing; and (3) that

the injury can likely be redressed.” Id. (citing Lujan v.

Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). Or as

the Supreme Court put it recently, “[a] plaintiff has

standing only if he can ‘allege personal injury fairly

traceable to the defendant’s allegedly unlawful

conduct and likely to be redressed by the requested

relief.’” California, slip op. at 4 (quoting

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342

(2006)).

Importantly, those elements are assessed as of the

time the plaintiff filed suit. Davis, 554 U.S. at 732

38a

(describing standing as “the ‘personal interest that

must exist at the commencement of the litigation’”)

(quoting Friends of Earth, Inc. v. Laidlaw Envtl.

Servs. (TOC), Inc., 528 U.S. 167, 189 (2000)). Or, as

the Court put it in Lujan, “[t]he existence of federal

jurisdiction ordinarily depends on the facts as they

exist when the complaint is filed.” 504 U.S. at 569, n.4

(emphasis in original) (quoting Newman–Green, Inc.

v. Alfonzo–Larrain, 490 U.S. 826, 830 (1989)). But see

Memphis A. Philip Randolph Inst. v. Hargett, No. 206141, 2021 WL 2547052, at *4 (6th Cir. June 22, 2021)

(noting that the Supreme Court “has implied that in

certain cases a plaintiff may have to maintain

standing throughout the lawsuit,” but that the

“Supreme Court … has not explicitly overruled past

precedent that confined the standing inquiry to the

moment when the lawsuit was filed”).

The principal dispute between the parties as to

standing here centers on the question of injury in fact.

In its previous Opinion, this Court found that Ohio

had sufficiently established such an injury. In

particular, the Court noted that Spending Clause

jurisprudence requires Congress to state clearly the

terms upon which it extends an offer of conditional

funding to the States. Stated differently, when

presented with a federal grant that has strings

attached, States are entitled to clarity regarding those

strings. And, as the Court also observed, that clarity

is critical to a State’s ability to exercise its sovereign

prerogative of deciding whether to accept that offer.

Thus, the Court concluded, Ohio suffered an injury in

fact when it was presented an unconstitutionally

ambiguous deal.

39a

In reaching that result, the Court conceded in its

prior Opinion that that legitimate questions could be

raised as to whether such an injury was “concrete and

particularized,” as opposed to intangible or

amorphous. Still, it concluded that Ohio’s injury

cleared the standing hurdle, if barely. This Court

noted for example, that in National Federation of

Independent Business v. Sebelius, 567 U.S. 519 (2012)

(“NFIB”), the Supreme Court had not raised any

standing concerns with a State’s pre-enforcement

challenge under the Spending Clause to a provision in

the Affordable Care Act. (See Op. and Order, Doc. 36,

#556). That matters because federal courts bear an

independent obligation to dismiss suits containing a

jurisdictional defect, even if the parties do not raise

that issue. Summers, 555 U.S. at 499. So, the Supreme

Court’s silence on jurisdiction in NFIB provides at

least an implicit recognition that this type of injury

creates standing. And, although the Court did not

mention it at the time, the “special solicitude” to which

States are entitled in the standing analysis, at least

when “protecting … quasi-sovereign interests,” see

Massachusetts v. EPA, 549 U.S. 497, 520 (2007), lends

further credence to this result.

The Secretary presses two arguments seeking a

different result now. Neither changes the Court’s

earlier determination.

First, noting that this Court characterized Ohio’s

injury as “barely” sufficient, the Secretary stresses

that the evidentiary showing is greater at this stage

of the litigation (where final relief is sought) than it

was at the earlier stage. (Mot. to Dismiss, Doc. 45,

#725–26 (citing Vonderhaar v. Vill. of Evendale, 906

40a

F.3d 397, 401 (6th Cir. 2018))). Thus, the Secretary

argues, what was barely sufficient then is insufficient

now.

To be sure, Ohio bears a stronger evidentiary

burden now (i.e., when seeking final relief) as

compared to when it sought a preliminary injunction.

Lujan, 504 U.S. at 561 (observing the increased

“burden of proof” applying to “the manner and degree

of evidence required at the successive stages of the

litigation”). But that applies to factual showings, not

legal questions. In relying on that increased burden,

the Secretary misunderstands the sense in which this

Court was using the term “barely” in its earlier

decision. The Court was not suggesting that, as an

evidentiary matter, Ohio had barely cleared the

hurdle in terms of demonstrating the fact of injury.

Rather, the point was that the nature of the injury—

the harm that arises when a State must ponder

accepting an ambiguous deal—made the injury-in-fact

question a close call as a legal matter. In other words,

there was no doubt that Ohio in fact had suffered the

injury on which the Court relied. Instead, the

question—a purely legal question—was whether an

injury of that nature satisfied the injury-in-fact

requirement. Thus, while the Secretary may well be

correct that the evidentiary burden on standing is now

higher, see Vonderhaar, 906 F.3d at 401, that does not

impact the Court’s earlier legal conclusion about

Ohio’s injury.

The Secretary’s other argument is that the harm

on which the Court relied to support standing—the

injury Ohio was suffering in facing an

unconstitutionally ambiguous offer—is now gone, as

41a

Ohio has agreed to accept the deal, ambiguity and all.

But that argument, while it may be germane to

mootness (a topic to which the Court turns next) does

not affect standing. As already noted, standing is

measured at the time the suit is filed, rendering any

later factual developments wholly irrelevant to that

inquiry. See Lujan, 504 U.S. at 569, n.4. Thus, on the

standing front, this argument is a non-starter.

That still leaves mootness. And in fairness to the

Secretary, mootness appears to be the principal thrust

of her current argument against ongoing jurisdiction.

(See Mot. to Dismiss, Doc. 45, #725–26).

The mootness argument starts on firm legal

footing. The Secretary is undoubtedly correct that

“‘when the issues presented [in a case] are no longer

“live” or the parties lack a legally cognizable interest

in the outcome’ the case is moot and must be

dismissed.” (Id., #726 (quoting Speech First, Inc. v.

Schlissel, 939 F.3d 756, 767 (6th Cir. 2019))). But

some important qualifiers apply to that statement.

First, as this Court observed in its previous Opinion,

“[t]he ‘heavy burden’ of demonstrating mootness falls

on the party asserting it.” (Op. and Order, Doc. 36,

#557 (quoting Thomas v. City of Memphis, 996 F.3d

318, 324 (6th Cir. 2021)). Second, the original injury is

not the only injury that a court can consider in

determining mootness. See Freedom From Religion

Found. Inc. v. New Kensington Arnold Sch. Dist., 832

F.3d 469, 476 (3d Cir. 2016) (“‘[A] court will not

dismiss a case as moot,’ even if the nature of the injury

changes during the lawsuit, if ‘secondary or

“collateral” injuries survive after resolution of the

primary injury.’”) (quoting Chong v. Dist. Dir., I.N.S.,

42a

264 F.3d 378, 384 (3d Cir. 2001)). Rather, assuming

that there was jurisdiction at the outset of the case,

any related harm arising from the challenged conduct

will suffice to keep that case alive. Id.; accord Spencer

v. Kemna, 523 U.S. 1, 7–8 (1998).

The combination of those two principles dooms the

Secretary’s mootness argument here. First, the

Secretary appears to believe that Ohio, rather than

the Secretary, bears the burden of proof on this issue.

That is wrong, as the Sixth Circuit confirmed once

again just recently. Hargett, 2021 WL 2547052, at *4

(quoting Cleveland Branch, N.A.A.C.P. v. City of

Parma, 263 F.3d 513, 531 (6th Cir. 2001)). Any failure

of evidence on the question of ongoing harm, then, cuts

against the Secretary, not against Ohio.

In any event, on the facts here, there is little doubt

that Ohio continues to suffer ongoing harm, at least

on Ohio’s version of what the Spending Clause

requires when Congress makes conditional grants to

the States. To be sure, the precise harm on which the

Court relied in its previous decision—the harm a State

incurs in contemplating whether to accept an

ambiguous deal—is now gone. But as the Court also

noted, a similar type of harm (i.e., harm to a State’s

ability to exercise its sovereign prerogatives) arises

from that same ambiguity when the State is bound to

such a deal, as Ohio is now. (Op. and Order, Doc. 36,

#550). To expand on that a bit, Ohio has now

committed itself to complying with the Tax Mandate,

and the State has received funding based on that

commitment. Thus if, as Ohio claims, the Tax

Mandate is unconstitutionally ambiguous, Ohio now

faces an unlawfully-imposed quandary in determining

43a

how to exercise its sovereign taxing power. Ohio

legislators considering tax changes will have

unconstitutionally insufficient information (assuming

Ohio is right about what the Spending Clause

requires) to determine the impact that such changes

will have on Ohio’s ability to retain the federal grant

money that the State has begun to receive. That

ambiguity, in turn, will cast a pall over legislators’

abilities to contemplate such tax changes.

The State argues that this is particularly

meaningful now, as Ohio was in the throes of enacting

its budget for the next biennium at the time it filed its

brief, a task that must be completed on or about June

30, 2021. But the Court’s analysis of the ongoing harm

is not tied to that date. As a practical matter, the

General Assembly’s contemplation of taxation and

spending changes for the upcoming biennium started

many months ago. It is thus unlikely that any decision

by this Court, which could have occurred at the

earliest only after briefing was completed in midJune, would have a meaningful impact on the

legislature’s taxation decisions for the 2022–23

budget. And it now appears that the General

Assembly has completed its work on that topic by

enacting a budget bill, further undercutting any

theory of ongoing harm inextricably linked to the

biennium’s end date.

At the same time, though, those same

considerations serve to illustrate more broadly the

type of ongoing harm that Ohio will continue to suffer,

even now, with the budget bill in the rearview mirror.

To start, the General Assembly can, and sometimes

does, make changes to taxation during a biennium.

44a

Indeed, in an example perhaps particularly apropos

here, Governor DeWine announced last year that, due

to revenue shortfalls associated with the COVID-19

pandemic and the State’s response to that pandemic,

the legislature may need to consider mid-biennium

tax changes for the second year of the previous

biennium. See, e.g., Randy Ludlow, Coronavirus in

Ohio: $775 Million in Budget Cuts Due to Pandemic

Include $300 Million Reduction to Schools,

COLUMBUS

DISPATCH

(May

5,

2020),

https://www.dispatch.com/news/20200505/coronaviru

s-in-ohio-775-million-in-budget-cuts-due-topandemic-include-300-million-reduction-to-schools.

The economic uncertainty surrounding the State’s

emergence from the pandemic could well lead to just

such considerations again.

And more generally, issues regarding taxation are

never

completely

removed

from

legislative

consideration. With a two-year budget cycle and a

balanced-budget requirement, planning, at least

informal

planning,

regarding

taxation

and

expenditures will start anew as a practical matter,

almost immediately. Exactly when may be difficult to

say, but that just underscores the point—one cannot

reliably conclude that the ambiguity surrounding

Ohio’s use of its taxing powers is not harming Ohio in

the exercise of its sovereign prerogatives now. Given

the burden of proof on mootness, Thomas, 996 F.3d at

324, that is enough.

Nor is it any answer to say that it would be more

appropriate to wait and see what specific tax changes

Ohio adopted in its recently-enacted budget, or may

have in mind for the future, before addressing

45a

whether the Tax Mandate is ambiguous. (See Mot. to

Dismiss, Doc. 45, #729). The Secretary notes, for

example, that Ohio will have a right to challenge any

recoupment action. A challenge at that time, the

Secretary argues, would have the benefit of a specific

set of tax changes against which to consider the

ambiguity question, suggesting that consideration of

that issue is not ripe now. (Id.). But, as the Court

described in its previous decision, the question of

whether the Tax Mandate is unconstitutionally

ambiguous turns on the statute’s language,5 and more

specifically on whether that language provides

sufficient semantic content on the topic of permissible

tax changes in general to satisfy the clarity

requirement articulated in Spending Clause

jurisprudence. Showing that the Tax Mandate may be

clear as to some subset of specific types of potential

state tax changes does not address that problem.

With that in mind, the problem with a wait-andsee approach becomes apparent. As noted, it is not

merely the recoupment that harms Ohio. Rather, if

the Tax Mandate is ambiguous as to a broad range of

potential tax changes, then that ambiguity will have

consequences of its own. The uncertainty itself,

uncertainty that exists now that Ohio has tendered its

certification, will continue to exert pressure on state

legislators not to consider any tax change, or set of tax

changes, as to which the Tax Mandate implications

cannot be assessed. As further described below, that

Or, possibly, the statute’s language as supplemented by the

IFR. The Court discusses that issue when addressing the merits

of the Spending Clause challenge.

5

46a

essentially means that Ohio’s legislature may be

disinclined to consider any rate reduction, as to any

state tax, because the Secretary could interpret that

reduction as triggering a right to recoupment. Or, at

the very least, Ohio legislators will have incentives to

minimize the size of any such reductions in hopes of

reducing the magnitude of any associated

recoupment.

That type of thumb on the legislative scale is a

current and ongoing injury to Ohio in its sovereign

capacity. To be sure, it may be a different injury from

the one that gave Ohio standing at the time it filed

suit. But the claimed harm strikes the same

constitutional chord—a harm to Ohio’s ability to

exercise its sovereign powers—and it arises from the

same

source—the

allegedly

unconstitutional

ambiguity in the Tax Mandate. That is enough to

prevent mootness. In sum, in light of the ongoing

injury caused by the allegedly unconstitutional

ambiguity, especially when coupled with the billions

of dollars that are at risk based on that ambiguity, the

Secretary falls short of the “heavy burden” she bears

in showing that this case is moot. Thomas, 996 F.3d at

324; Hargett, 2021 WL 2547052, at *4.

Separately, while Ohio need not rely on the

prospect of future recoupment to avoid mootness, that

prospect may nonetheless provide an alternative basis

for jurisdiction here. At the time Ohio originally sued,

it was not bound by the Tax Mandate’s terms, as it had

not accepted the ARPA deal. But now Ohio has filed

its certification, and thus any decisions it makes (or

has made) on taxes are subject to ARPA’s terms. That

in turn means that Ohio faces a real prospect of

47a

enforcement if the Treasury Secretary were to

conclude that Ohio had violated the terms of the Tax

Mandate. And, if anything, that prospect is now even

greater, as Ohio’s General Assembly has passed a

budget bill that reportedly includes a $1.64 billion

income tax cut. Given the ambiguity, as described

below, in the Tax Mandate’s language, the Secretary

certainly could conclude that this tax cut gives rise to

a right to recoupment under the statute. Thus, Ohio

now has an even more concrete example of an “injury

that is the result of the statute’s actual or threatened

enforcement, whether today or in the future,” than it

did before. California, slip op. at 6. Moreover, “the

likelihood of [such] future enforcement” is, if anything,

more substantial now than it was then, id., and, as

noted, such enforcement raises the prospect of billions

of dollars in potential recoupment.

The contrast between the current case and the

Supreme Court’s recent decision in California v. Texas

further illustrates why jurisdiction is appropriate

here. In California, the parties sought to attack an

aspect of the Affordable Care Act that created a duty

on the part of individuals to maintain a minimum

level of insurance. At one time, that duty was enforced

by a penalty, but “[i]n 2017, Congress effectively

nullified the penalty be setting its amount at $0.” Id.,

slip op. at 1. The parties attacking that provision

nonetheless asserted standing based on various

arguments about alleged financial consequences that

the now-nullified provision continued to have on

people’s behavior (and the resulting financial impacts

on the States). In finding no jurisdiction to consider

that challenge, the Supreme Court emphasized that

the lack of any prospect that the provision would be

48a

enforced meant that the alleged current harms did not

count for standing purposes. Here, by contrast, the

current harms on which the Court relies to support

jurisdiction grow directly out of the prospect of future

enforcement of the Tax Mandate. In other words,

absent the prospect of enforcement (as was the case in

California), the Tax Mandate’s alleged ambiguity

would not in any way impact Ohio legislators’

consideration of proposed tax changes. But, unlike in

California, here the Secretary admits that the Tax

Mandate is enforceable. That makes all the difference.

In sum, if the Tax Mandate is indeed

unconstitutionally ambiguous, as Ohio asserts, then

Ohio was suffering an injury in fact at the time it sued,

and it continues to suffer an injury in fact after

binding itself to that deal. To be sure, both then and

now, Ohio faces a unique form of injury. But that is

not surprising, as the injury here ties directly to a

State’s unique role as a sovereign under the

Constitution. Moreover, both the original and ongoing

injuries arise directly from, and thus are traceable to,

the prospect of future enforcement of the allegedly

ambiguous—and

therefore

allegedly

unconstitutional—Tax Mandate. Nor, as a final point,

can there be any real question regarding

redressability as to the ongoing harm. Enjoining the

Secretary from enforcing the Tax Mandate against

Ohio, or declaring that the provision is

unconstitutional as applied to the State, would

remedy the uncertainty surrounding Ohio’s legislative

efforts relating to taxation, which is the harm that

Ohio is currently suffering. Accordingly, the Court

finds that it had—and still has—jurisdiction to

consider Ohio’s Spending Clause challenge to the Tax

49a

Mandate, although the Court acknowledges, once

again, that this is a close call.

B.

The Statutory Language Of The Tax

Mandate Violates The Spending Clause

Requirement Of Clarity As To The Terms

Of A Conditional Grant Offered To The

States.

Having concluded that it has jurisdiction, the

Court must consider the merits of Ohio’s

constitutional challenge. Mata v. Lynch, 576 U.S. 143,

150 (2015) (“[W]hen a federal court has jurisdiction, it

also has a virtually unflagging obligation to exercise

that authority.”) (quotation omitted). Here, that

inquiry proceeds in two parts. First, the Court

considers whether the Tax Mandate, as written,

satisfies the clarity requirement the Spending Clause

imposes. As the Court’s previous Opinion previewed,

the Court concludes that the Tax Mandate does not

meet that bar. Second, the Court considers the impact,

if any, that the IFR has on the Tax Mandate’s failure,

as enacted, to meet those clarity requirements. That

inquiry, the Court concludes, turns less on Spending

Clause jurisprudence, and more on delegation

principles (and the strictures that typically apply to

such delegations).

1.

As Drafted, The Tax Mandate Falls

Short Of The Clarity Required For

Spending Clause Legislation.

As this Court recently observed in denying Ohio’s

motion for a preliminary injunction, the Supreme

Court’s jurisprudence relating to conditional grants

under the Spending Clause rests on federalism

concerns. It is an outgrowth of the fact that “[i]n our

50a

federal system, the National Government possesses

only limited powers; the States and the people retain

the remainder.” NFIB, 567 U.S. at 533. Stated

differently,

the

“Federal

Government

‘is

acknowledged by all to be one of enumerated powers,’”

and “[t]he Constitution’s express conferral of some

powers makes clear that it does not grant others.” Id.

at 534. The States, by contrast, retain a “general

power of governing,” typically called the “police

power.” Id. at 536. That power is, of course, subject to

federal constitutional limitations—such as those

imposed by the Equal Protection Clause—but beyond

that, “state governments do not need constitutional

authorization to act.” Id. at 535.

Importantly, the Supreme Court has also

explained that this division of power is not about

preserving state power, so much as it is about

promoting individual liberty. Id. at 536 (“State

sovereignty is not just an end in itself: Rather,

federalism secures to citizens the liberties that derive

from the diffusion of sovereign power.”). As the Court

put it in Murphy v. National Collegiate Athletic

Association:

The Constitution does not protect the sovereignty

of States for the benefit of the States or state

governments as abstract political entities. To the

contrary, the Constitution divides authority

between federal and state governments for the

protection of individuals.

138 S. Ct. 1461, 1477 (2018) (quotations and citations

omitted).

This protection for individual liberty arises from

two sources. First, under this dual-sovereign design,

51a

“the facets of governing that touch on citizens’ daily

lives are normally administered by smaller

governments closer to the governed.” NFIB, 567 U.S.

at 536. Second, the division “den[ies] any one

government complete jurisdiction over the concerns of

public life, [thereby] protect[ing] the liberty of the

individual from arbitrary power.” Id. (quoting Bond v.

United States, 564 U.S. 211, 222 (2011)). In that sense,

the “separation of the two spheres is one of the

Constitution’s structural protections of liberty.” Printz

v. United States, 521 U.S. 898, 921 (1997). “Just as the

separation and independence of the coordinate

branches of the Federal Government serve to prevent

the accumulation of excessive power in any one

branch, a healthy balance of power between the States

and the Federal Government will reduce the risk of

tyranny and abuse from either front.” Id.; accord

Murphy, 138 S. Ct. at 1477. In short, limiting

Congress to its enumerated powers, thereby reserving

certain functions to the States, plays an important

role in our constitutional design.

One of Congress’s enumerated powers, though, is

the power to spend:

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.

U.S. CONST., art. I, § 8, cl. 1 (the “Spending Clause”).

And “[i]ncident to this power, Congress may attach

conditions on the receipt of federal funds.” South

Dakota v. Dole, 483 U.S. 203, 206 (1987). That is, the

federal government can seek to purchase from the

States their acquiescence in the exercise of the States’

52a

sovereign powers, acquiescence that the federal

government otherwise could not command.

The Supreme Court has recognized that unfettered

use of this power, especially when coupled with

Congress’s power to tax, could quickly alter the

balance of powers between the federal government

and the States. In NFIB, for example, seven Justices,

spread across two different opinions, articulated

versions of that very point. Four Justices described it

this way: “This formidable power [i.e., the spending

power], if not checked in any way, would present a

grave threat to the system of federalism created by our

Constitution.” 567 U.S. at 675 (Scalia, J., dissenting).

Indeed, they went on, if the power is “limited only by

Congress’ notion of the general welfare, the reality,

given the vast financial resources of the Federal

Government, is that the Spending Clause gives power

to the Congress to tear down the barriers, to invade

the states’ jurisdiction, and to become a parliament of

the whole people, subject to no restrictions save such

as are self-imposed.” Id. (quotation omitted). Three

other Justices framed it slightly differently, but the

thrust is the same: “Respecting this limitation [on the

Spending Clause] is critical to ensuring that Spending

Clause legislation does not undermine the status of

the States as independent sovereigns in our federal

system. … Otherwise the two-government system

established by the Framers would give way to a

system that vests power in one central government

and individual liberty would suffer.” Id. at 577

(opinion of Roberts, C.J.). In short, unbridled use of

the spending power would allow Congress to expand

beyond its otherwise enumerated powers.

53a

Consistent with such concerns, the Supreme Court

has repeatedly held that “[t]he spending power is of

course not unlimited, but is instead subject to several

general restrictions articulated in our cases.” Dole,

483 U.S. at 207 (citation omitted). These limitations

admittedly do not arise from the text of the Spending

Clause. But they are nonetheless animated by the

structural concerns—in this case, federalism—that

the Constitution reflects and embodies.

In particular, Spending Clause jurisprudence has

recognized three limitations on Congress’s ability to

induce States to bargain away their sovereign powers.

First, “Congress may not impose conditions ‘unrelated

to the federal interest’ in enacting spending

legislation.” Sch. Dist. of City of Pontiac v. Sec’y of U.S.

Dept. of Educ., 584 F.3d 253, 284 (6th Cir. 2009) (en

banc) (Sutton, J., concurring) (quoting Dole, 483 U.S.

at 207–08). Second, it may not “‘coerce’ the States into

accepting funds and the regulations that come with

them.” Id. (citing Dole, 483 U.S. at 211). Third, “given

[Congress’s] authority under the Spending Clause to

regulate the States beyond the limited and

enumerated powers the Constitution otherwise gives

it and given that the States are not represented in the

Halls of Congress, the federal courts have required

Congress to state those conditions ‘unambiguously’ in

54a

the text of the statute.” Id. (citing Pennhurst State

Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981)).6, 7

Although Ohio raises both coercion and ambiguity

in support of its Spending Clause challenge, the

Court’s resolution of this case rests on ambiguity

concerns. Thus, a few more words regarding that

limitation are in order. As at least twelve Sixth Circuit

judges observed in City of Pontiac (albeit across two

separate opinions), this limitation derives largely

from analogy to contract law. See id. at 276–77 (citing

Pennhurst, 451 U.S. at 17) (opinion of Cole, J.); and id.

at 284–85 (Sutton, J., concurring) (also citing

Pennhurst, 451 U.S. at 17). “Viewing the Spending

Clause relationship between a State and the federal

government as a contract, the Supreme Court has

6 In his concurrence in Pontiac, Judge Sutton described this third

limitation as “statutory,” see City of Pontiac, 584 F.3d at 283,

which it is in the sense that it imposes a requirement on how

Congress goes about drafting statutes. That is, the limitation is

not directed at the substance of the conditions, but rather at

ensuring, as a drafting matter, that the conditions are clearly

expressed. But, while describing the limitation as statutory,

Judge Sutton acknowledged that it has “constitutional roots.” Id.

at 284.

7 The four dissenting Justices in NFIB described a fourth

limitation: Congress cannot use a conditional grant to “induce the

States to engage in activities that would themselves be

unconstitutional.” NFIB, 567 U.S. at 676 (Scalia, J., dissenting)

(quoting Dole, 483 U.S. at 210). For present purposes this Court

need not decide whether that limitation is better understood as

arising under the Spending Clause, or instead merely as

reflecting the notion that accepting federal grants made under

the Spending Clause does not free States from other

constitutional obligations. That is because no party has argued

that this limitation, if that is what it is, is implicated here.

55a

stated that the legitimacy of Congress’ power to

legislate under the spending power thus rests on

whether the State voluntarily and knowingly accepts

the terms of th[at] contract.” Id. at 276–77 (opinion of

Cole, J.) (citing Pennhurst, 451 U.S. at 17) (cleaned

up). True, the Supreme Court has been “careful not to

imply that all contract-law rules apply to Spending

Clause legislation,” but it has also “regularly applied

a contract-law analogy in cases” involving receipt of

federal funds. Barnes v. Gorman, 536 U.S. 181, 186

(2002).

Under those principles, it is not sufficient that the

State receives funds merely knowing that some kind

of strings are attached. Rather, the question is

“whether such a state official would clearly

understand the obligations” attendant in accepting

the grant. City of Pontiac, 584 F.3d at 277 (opinion of

Cole, J.) (quoting Arlington Cent. Sch. Dist. Bd. of

Educ. v. Murphy, 548 U.S. 291, 296 (2006)) (cleaned

up) (emphasis added). And “States cannot knowingly

accept conditions of which they are ‘unaware’ or which

they are ‘unable to ascertain.’” Id. at 268 (quoting

Arlington, 548 U.S. at 296) (in turn quoting

Pennhurst, 451 U.S. at 17). Thus, “‘[b]y insisting that

Congress speak with a clear voice,’ the Supreme Court

enables States ‘to exercise their choice knowingly,

cognizant of the consequences of their participation.’”

Id. (quoting Pennhurst, 451 U.S. at 17). So, not only

does the Constitution require Congress to tell States

that there are conditions, but Congress must also tell

States what those conditions are.

Beyond

formulations

such

as

“clear

understanding” or “clear voice” like those noted above,

56a

however, case law is somewhat sparse on describing

the exact level of clarity that the Spending Clause

requires. That said, one thing is certain—exactitude is

not necessary. For example, the Supreme Court has

observed that Congress need not “prospectively

resolve every possible ambiguity concerning

particular

applications

of

[a

program’s]

requirements.” Bennett v. Ky. Dep’t of Educ., 470 U.S.

656, 669 (1985). Rather, it is only when a state official

is “unable to ascertain” the obligations that a

conditional grant imposes, that constitutional

problems arise. Arlington, 548 U.S. at 296. And a

standard akin to “unable to ascertain” seems

consistent with the analogy to contract law that drives

much of Spending Clause jurisprudence. That is

because contractual indefiniteness likewise involves

something like an “impossible to understand”

standard. See, e.g., Shell’s Disposal & Recycling, Inc.

v. City of Lancaster, 504 F. App’x 194, 202 (3d Cir.

2012) (“[A] contract fails for indefiniteness when it is

‘impossible to understand’ what the parties agreed to

because the essential terms are ambiguous or poorly

defined.”). Importantly, though, in determining

whether ARPA clears whatever the exact hurdle the

Spending Clause imposes, the Court “must not be

guided by a single sentence or member of a sentence,

but look to the provisions of the whole law, and to its

object and policy.” Pennhurst, 451 U.S. at 18 (citations

and quotations omitted).

Even though divining the exact standard for

unconstitutional ambiguity under the Spending

Clause may be difficult, that matters little here. That

is because the Tax Mandate, even when read in

context, fails to put the State on “clear notice” of its

57a

obligations, see Arlington, 548 U.S. at 296, under any

reasonable definition of “clear.”

Start with the text:

(A) IN GENERAL.—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.

42 U.S.C. § 802(c)(2)(A). As the Court observed in its

previous Opinion, parts of that language are clear.

“Change in law,” for example, refers to new laws.

Likewise, the definition of “reduc[ing] any tax,” is

sufficiently clear—it includes reducing the tax rate, or

providing a rebate, deduction, credit, or any other

mechanism for reducing that tax.

But, as the Court also observed, beyond that is

where things get tricky. That is particularly true

when it comes to “indirectly offset[ting] a reduction in

the net tax revenue.” That phrase raises a host of

interpretive problems. Start with this—the notion of

“reducing net tax revenue” necessarily assumes some

baseline. The IFR expressly provides that missing

baseline (i.e., 2019, the last full fiscal year before the

onset of the COVID-19 pandemic), see 86 Fed. Reg.

26,807 (May 17, 2021), or at least provides that fiscal

year 2019 revenues will serve as a safe harbor for

calculating the baseline for net revenue reductions, id.

58a

But, putting aside that regulatory guidance, the

statutory language itself provides no mechanism for

determining whether a State’s net tax revenues are

“reduced” or not. For example, imagine that the only

change Ohio made to its taxes was to reduce its tax

rate on gasoline. But further imagine that the total

amount of gasoline purchased in FY 2022 (which

starts on July 1, 2021) is higher than in FY 2021,

given, for example, the impact that the pandemic had

on commuting or travel in the earlier fiscal year. Are

Ohio’s tax revenues “reduced” under the Tax

Mandate? Arguably, they are “reduced” from what

Ohio would have collected at the higher tax rate

(although, depending on the elasticity of demand for

gasoline, that may not be the case). But gas tax

revenues may still be higher in FY 2022 than they

were in FY 2021 because of the change in demand for

gasoline as Ohio emerges from the pandemic. In that

sense, there would be an “increase,” not a “reduction,”

in Ohio’s net tax revenues. The Tax Mandate’s

language does not select between those two competing

views.

Relatedly, the statutory language does not explain

whether the prohibition applies to expected tax

revenues, or actual tax revenues. In other words,

when Ohio legislators enact a lower rate on a given

tax, they may do so based on a belief that actual tax

collections will go up (for example, because more

transactions will occur, given the lower tax rate). Or,

even more likely, the Ohio legislature may enact a

package of tax changes, with an anticipation that the

changes, overall, will be revenue neutral or revenue

enhancing. But plans are one thing, and actual tax

receipts are another. Especially as Ohio emerges from

59a

a nationwide pandemic, with the accompanying

economic dislocations, the tax revenues that Ohio

actually receives based on a set of changes in its taxes

may differ significantly from the State’s initial

estimate. Again, the IFR provides rules for how to

“score” tax changes, but that strikes the Court as an

essential aspect of ensuring that “a state official would

clearly understand the obligations” that ARPA

imposes, see City of Pontiac, 584 F.3d at 277 (opinion

of Cole, J.) (quoting Arlington, 548 U.S. at 296)

(cleaned up), and one on which the Tax Mandate itself

says nothing.

That on its own would be bad enough, but ARPA

then lumps “indirectly offset” on top. In its previous

Opinion, the Court observed that it could not ascertain

what an indirect offset may (or may not) be. And the

Court was not alone in that. At oral argument on the

motion for preliminary injunction, the Secretary

declined to take any position on that term either.

Perhaps unsurprisingly, Ohio too expressed confusion

regarding the contours of the phrase.

The Secretary’s more recent briefing on the

permanent injunction does not resolve the Court’s

confusion regarding that term. Even armed with the

Court’s guidance as to the source of the ambiguity, the

Secretary provides no workable definition of what an

“indirect offset” is. Indeed, if anything, the briefing

confirms that even the Secretary struggles to

distinguish between a “direct” and an “indirect” offset,

at least based solely on the statutory text.

Rather than offer a definition of one or both terms,

the Secretary seeks to illustrate the difference by

reference to an example. (See Mot. to Dismiss, Doc. 45,

60a

#733). The problem is that the example the Secretary

offers for a “direct offset” is substantively identical to

the one the Secretary provides for an “indirect offset,”

if stated slightly differently. More specifically,

according to the Secretary, a “direct offset” would

occur if a State: (1) received $2 billion in ARPA funds,

(2) “cut its income tax by an amount expected to equal

$2 billion,” and then (3) “use[d] the [ARPA funds] to

offset the revenue loss.” (Id.). In contrast (or at least

the Secretary says it is a contrast), an “indirect offset”

would arise if a State: (1) received the same $2 billion,

(2) used that money to “replace $2 billion in planned

state expenditures on COVID19 testing,” and then (3)

passed that $2 billion along to Ohio citizens in the

form of a “$2 billion reduction in state income tax.”

(Id.).

That amounts to two slightly different ways of

saying the same thing, albeit swapping the order in

which steps 2 and 3 are presented. In both the “direct”

and “indirect” examples that the Secretary provides,

the State uses the conditional grant to replace (the

Secretary calls it “offset” in the first example and

“replace” in the second) state funding for certain

current state expenditures. That in turn frees up

existing state funds, which the State then uses for a

tax refund. The only difference between the two

examples, besides the reordering of steps 2 and 3, is

that, in the “indirect offset” scenario, the Secretary

identified where the federal-for-state dollar swap

occurred (i.e., COVID-19 testing expenditures),

whereas in the “direct offset” example, the Secretary

left the area of the federal-for-state dollar swap

unidentified. But the Secretary offers no explanation

as to why those non-substantive differences would

61a

change the “directness” of the offset, and the Court

cannot see any reason why that would be the case. In

short, it appears that even now the Secretary lacks a

coherent theory as to what an “indirect offset” may be,

as distinct from a “direct offset,” further confirming

the Court’s suspicion that the phrase is unintelligible

as used in the context of the Tax Mandate.

Nor is the problem simply that the two examples

are the same. If an “indirect offset” is simply the same

as a “direct offset,” that would not make the term

inherently ambiguous. The problem, though, is that,

while offering identical examples, the Secretary

insists that there is a difference between the two

terms, and believes that the examples illustrate that

difference. In other words, the Secretary’s briefing

contends that the term “indirect offset” conveys

something different from the term “direct offset,” yet

cannot articulate what that difference is.

And there is still a broader problem. Even if the

Secretary had identified an example of an “indirect

offset” that was different from a “direct offset,” the

Secretary still has not provided any definition of the

former term, let alone one that flows either from the

statutory language, or from the use of that term in the

context of the statute more generally. Merely

providing a single example of an “indirect offset,”

without more, does little to establish the outer

contours of the phrase. Compounding that

shortcoming, providing Ohio an example of something

that the Secretary says would count as an indirect

offset hardly fixes Ohio’s problem. It is far more

important for Ohio to know what the Secretary would

not count as such an offset.

62a

And it bears noting that the ambiguity at issue

here is a particularly troubling type of ambiguity.

Based on the Tax Mandate’s language, the Secretary

could deem essentially any reduction in the rate of any

one or more state taxes—even if other tax rates were

increased—to be a “change in [tax] laws” that results

in an “indirect[] offset [of] a reduction in [Ohio’s] net

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

sweeping language with the ambiguities identified

above—it is almost as though Congress had written

the Tax Mandate, as follows: “Each certifying State

agrees that, if a State reduces any tax rate, on any tax,

the Secretary may recoup ARPA funding to the extent

that the Secretary determines, in her discretion, that

the rate reduction resulted in the State losing tax

revenues, and the Secretary further determines, in

her discretion, that those losses were offset with

ARPA funding.” Without knowing more about how the

Secretary is to make those decisions, that would not

cut it under Spending Clause jurisprudence. Yet,

given the ambiguity in the phrases “indirect offset”

and “net tax revenues,” the Tax Mandate arguably

says just that. And that ambiguity may disincentivize

Ohio’s General Assembly from considering any

reduction in rates as to any state tax, for fear of

forfeiting the grant that Ohio received under ARPA,

or at the very least, the legislature may minimize any

such rate reduction, in hopes of mitigating the

magnitude of the potential forfeiture. That is the type

of federal invasion of state sovereignty that Spending

Clause jurisprudence disfavors.

The bottom line is this—in its previous Opinion,

the Court identified aspects of the Tax Mandate that

were too ambiguous, at least based on a first look, to

63a

pass Spending Clause muster. The Secretary’s

subsequent briefing fails to convince the Court

otherwise. Accordingly, the Court finds that Tax

Mandate’s language, in and of itself, falls short of the

clarity required when Congress exercises its powers

under the Spending Clause.

2.

The Interim Final Rule Does Not

Change That Result.

If the Tax Mandate were the only text at issue, the

Court’s finding above would be the end of the matter.

But here, two days before the Court issued its previous

Opinion, the Secretary promulgated the IFR seeking

to provide additional clarity as to the Tax Mandate’s

meaning. The issuance of that rule raises two

additional questions. First, to what extent can an

administrative regulation provide the clarity needed

for a conditional grant to comply with Spending

Clause

strictures?

Second,

assuming

an

administrative regulation can bridge the gap, does the

IFR do so? The Court’s decision on the first issue,

though, obviates the Court’s need to consider the

second. In particular, the Court concludes that, while

Congress may be able to delegate authority to an

agency to supply the requisite clarity, Congress must

provide for such delegation in clear and unambiguous

terms. And Congress did not do so here.

The question of whether regulations can provide

the clarity the Spending Clause requires is, at some

level, more a matter of delegation principles than

Spending Clause jurisprudence. To be sure, one could

argue that the Spending Clause, as an Article I power,

is a power that the Constitution grants to Congress,

and thus a court should look only to the

64a

congressionally enacted language (i.e., the statute), in

deciding whether Congress has validly exercised that

power. And, as already cited above, there are

Spending Clause cases that could be understood to

provide at least passing support to that proposition, as

they seem to tie the Spending Clause ambiguity

question to whether “Congress” has provided the

necessary clarity. See, e.g., Dole, 483 U.S. at 206

(“Congress may attach conditions on the receipt of

federal funds.”); Pennhurst, 451 U.S. at 17 (requiring

that “Congress speak with a clear voice”); Bennett, 470

U.S. at 665 (“Congress must express clearly its intent

to impose conditions.”); Pontiac, 584 F.3d at 284

(Sutton, J., concurring) (“[G]iven its authority under

the Spending Clause to regulate the States beyond the

limited and enumerated powers the Constitution

otherwise gives it and given that the States are not

represented in the Halls of Congress, the federal

courts have required Congress to state those

conditions ‘unambiguously’ in the text of the

statute.”).

At the same time, though, those cases do not

address the precise issue here—the extent to which

agency regulations can provide the necessary clarity.

Thus, the reference to “Congress” in such cases is

perhaps merely a generic reference to the federal

government, and not to Congress exclusively. And, as

for any suggestion that the Constitution strictly

forbids Congress from delegating any aspect of its

Article I powers, that ship has sailed.

Moreover, there are also Spending Clause cases

that suggest that the “conditions” that Congress

imposes in connection with federal spending can

65a

include compliance with administrative regulations.

Dole, for example, stated that, under the Spending

Clause power, “Congress may attach conditions on the

receipt of federal funds, and has repeatedly employed

the power ‘to further broad policy objectives by

conditioning receipt of federal moneys upon

compliance by the recipient with federal statutory and

administrative directives.” 483 U.S. at 206 (quoting

Fullilove v. Klutznick, 448 U.S. 448, 474 (1980)

(opinion of Burger, C.J.)) (emphasis added). And, in

Bennett, the Court noted that, by accepting the federal

grants there, each State had “agreed to comply with

… the legal requirements in place when the grants

were made,” which included “statutory provisions,

regulations, and other guidelines.” 470 U.S. at 670

(emphasis added).

Such cases may simply mean, however, that when

Congress specifies the grant conditions, Congress

must provide the requisite detail, but can do so

through incorporating by reference any then-existing

administrative regulations. In such situations, of

course, the clarity would be present at the time the

statute is enacted, or at the very least by the time the

conditional spending is available to the States. Laterenacted regulations, by contrast, like those the

Secretary relies on here, may raise different

constitutional concerns, as the requisite clarity is not

available at the time that Congress extends the

conditional offer to the States.

As Ohio observes, it appears that the sole court to

address this issue head on is the Fourth Circuit. See

Va. Dep’t of Educ. v. Riley, 106 F.3d 559 (4th Cir. 1997)

(en banc). That court concluded that only the statutory

66a

language, and not any regulatory follow-on, is what

matters for Spending Clause clarity purposes. Id. at

567 (adopting the dissenting opinion of Judge Luttig

from the panel stage). In Riley, the en banc court

reconsidered a panel decision on the question of

whether the IDEA, which is Spending Clause

legislation, required States to continue to provide

“educational services to handicapped students

expelled for reasons unrelated to their handicap.” Id.

at 565. The Secretary of Education acknowledged the

lack of explicit statutory language mandating that

result but argued that the Department of Education

could require that condition as a reasonable

interpretation of the statute. In a 2-1 decision, the

panel accepted that argument.

The en banc court reversed. Eight of the fourteen

judges joined the portion of the panel dissent

applicable here, holding that the court could not defer

to

agency

interpretation,

even

“reasonable

interpretation by the agency,” to defeat a claim of

unconstitutional ambiguity under the Spending

Clause:

The Department of Justice argues … that in the

event of ambiguity in the IDEA provision at issue,

we defer to a reasonable interpretation by the

agency, as if we were interpreting a statute which

has no implications for the balance of power

between the Federal Government and the States.

We do not. It is axiomatic that statutory ambiguity

defeats altogether a claim by the Federal

Government that Congress has unambiguously

conditioned the States’ receipt of federal monies in

67a

the manner asserted. As the Court stated in

Gregory v. Ashcroft:

“Inasmuch as this Court in Garcia v. San Antonio

Metro. Transit Auth., 469 U.S. 528 (1985), has left

primarily to the political process the protection of

the States against intrusive exercises of Congress’

Commerce Clause powers, we must be absolutely

certain that Congress intended such an exercise.

To give the state-displacing weight of federal law

to mere congressional ambiguity would evade the

very procedure for law-making on which Garcia

relied to protect states’ interests.”

Riley, 106 F.3d at 567 (quoting Gregory v. Ashcroft,

501 U.S. 452, 464 (1991)) (cleaned up) (emphasis

added).

But, while Riley’s language appears on point, the

Court offers two observations. First, the decision does

not bind this Court. Second, the cited reasoning

asserts that it is “axiomatic” that regulations cannot

provide the missing clarity, an axiom it locates in

Ashcroft’s admonition that courts should be cautious

about congressional ambiguity in the face of

federalism concerns. But, on an issue of this

importance, the Court hesitates to simply adopt Riley

without further exploring why it is “axiomatic” under

such principles that Congress, and Congress alone,

must provide the clarity.

At some level, whether agency regulations should

“count” for Spending Clause clarity purposes may

depend on what motivates Spending Clause

jurisprudence. One author has suggested, for

example, that this jurisprudence could be

characterized as animated either by concerns about

68a

protecting state choice (a contractual autonomy

notion), on the one hand, or concerns about political

accountability, on the other. See generally, Peter J.

Smith, Pennhurst, Chevron, and the Spending Power,

110 YALE L.J. 1187 (2001). To the extent that the

former is correct, then the point is merely that the deal

must be clear in order for the State (as an offeree) to

accept it. Under that view, it does not matter so much

what the source of that clarity is, but rather only that

the clarity exists. Thus, agency clean-up of statutory

ambiguity, so long as it is binding, generally would

satisfy Spending Clause limitations under this view.

The accountability view of the Spending Clause, by

contrast, starts from the notion that the principal

protection for state sovereignty is the political process,

and in particular Congress’s political accountability to

the States. See id. at 1202 (citing Garcia v. San

Antonio Metro Transit Auth., 469 U.S. 528 (1985)).

Under this view, Congress must impose the condition

at the requisite level of clarity, as only Congress, not

unelected agency regulators, are subject to that

accountability. Id. The Congress-only view, then,

would serve that structural accountability notion.

Relatedly, the clarity requirement perhaps instead

may be seen as imposing a resource constraint on

Congress. Requiring Spending Clause legislation that

offers conditional funds to the States to include more

detail than other types of legislation makes such

legislation more time-consuming to enact. That in

turn limits, at least as a practical matter, how

frequently Congress can do so. And, if the concern is

that Congress’s use of its spending powers to make

conditional grants to the States may allow Congress

69a

to expand its legislative reach beyond its otherwise

enumerated powers, such a constraint serves as a

structural mechanism to promote the Constitution’s

federalist underpinnings. That idea only works,

though, if it is Congress, and not executive branch

agencies, that must provide the requisite detail.

A problem in selecting among these various views,

though, is that it is not at all clear that the

contractual-autonomy

and

politicalaccountability/structural federalism conceptions of

Spending Clause jurisprudence present an either-or

choice. Certainly, the Supreme Court “has repeatedly

characterized … Spending Clause legislation as ‘much

in the nature of a contract.’” NFIB, 567 U.S. at 576–

77 (quoting Barnes, 536 U.S. at 186 (in turn quoting

Pennhurst, 451 U.S. at 17)) (cleaned up). At the same

time, much of Spending Clause jurisprudence,

including many of the same cases that discuss the

analogy to contract law, also makes clear that the

jurisprudence reflects structural concerns about

protecting federalism. See e.g., NFIB, 567 U.S. at 577

(opinion of Roberts, C.J.) (noting, immediately after

discussing the contractual nature of Spending Clause

jurisprudence, that “[r]especting this limitation is

critical to ensuring that Spending Clause legislation

does not undermine the status of the States as

independent sovereigns in our federal system”). It is

perhaps most fair to say that both contract-drivenautonomy notions and sensitivity to structural

concerns are complementary ways of promoting the

federalism principles that ultimately motivate the

relevant jurisprudence. But if that is so, discussions

regarding such distinctions do little to answer the doregulations-count question.

70a

Given the lack of clarity on this issue in Spending

Clause case law, the Court considers delegation

principles more generally. After all, the Spending

Clause is merely one of many enumerated powers

afforded to Congress, and questions regarding the

extent to which Congress can delegate to agency

personnel the authority to complete Congress’s

drafting obligations often arise as to those other

enumerated powers, as well.

From that delegation case law, certain principles

emerge. First, in delegating to agencies the power to

draft substantive requirements, Congress must, at the

very least, articulate an intelligible principle, as

otherwise agency discretion would be unbounded,

essentially transferring Congress’s Article I

legislative powers to unelected agency personnel.

Whitman v. Am. Trucking Assocs., 531 U.S. 457, 472

(2001); Gundy v. United States, 139 S. Ct. 2116, 2123

(2019) (“[W]e have held, time and again, that a

statutory delegation is constitutional as long as

Congress ‘lay[s] down by legislative act an intelligible

principle to which the person or body authorized to

[exercise the delegated authority] is directed to

conform.’”) (quoting Mistretta v. United States, 488

U.S. 361, 372 (1989) (quoting J.W. Hampton, Jr., &

Co. v. United States, 276 U.S. 394, 409 (1928))). And

when Congress fails to provide such a principle, the

agency cannot “cure” the statute by doing so in its

stead. Whitman, 531 U.S. at 472. In other words, if a

statute provides an agency too much discretion, the

agency cannot “cure” that delegation by unilaterally

limiting its own scope of powers. Id. (“We have never

suggested that an agency can cure an unlawful

71a

delegation of legislative power by adopting in its

discretion a limiting construction of the statute.”).

Second, even when Congress articulates an

intelligible principle, if Congress intends for an

agency to answer “major questions” relating to a

statute, FDA v. Brown & Williamson, 529 U.S. 120,

159 (2000)—i.e., a question of deep “economic and

political significance” that is central to the statutory

scheme—then Congress must clearly say so. King v.

Burwell, 576 U.S. 473, 485–86 (2015); see also Dep’t of

Homeland Sec. v. Regents of the Univ. of Cal., 140 S.

Ct. 1891, 1925 (2020) (Thomas, J., concurring) (“[T]he

major questions doctrine … is based on the

expectation that Congress speaks clearly when it

delegates the power to make ‘decisions of vast

economic and political significance.’”).

Third, when Congress intends to “upset federalism

norms” through its enactments, it again must

“legislate[] clearly.” Carter v. Welles-Bowen Realty,

Inc., 736 F.3d 722, 734 (6th Cir. 2013) (Sutton, J.,

concurring) (citing Gregory, 501 U.S. at 460). That is,

while Congress itself may have the power to displace

such norms, at least when it speaks clearly, it is by no

means clear that “agencies [can] upset federalism

norms when Congress legislates ambiguously.” Id.

(citing Solid Waste Agency of N. Cook Cnty. v. U.S.

Army Corps of Eng’rs, 531 U.S. 159, 172–73 (2001)).

In light of these delegation principles, the Court

concludes that it need not answer the question of

whether the Spending Clause allows Congress to

delegate to an agency the power to create the requisite

clarity, i.e., the issue that Riley reached. That is

72a

because, even assuming Congress can do so, it did not

do so here.

The Court arrives at that answer based both on the

Tax Mandate’s statutory language and ARPA’s overall

structure. Start with the former. Even assuming that

the Tax Mandate meets the “intelligible principle”

standard, there can be little doubt that the language

of that provision leaves open “major questions.” The

Tax Mandate “involv[es] billions of dollars in spending

each year,” see Burwell, 576 U.S. at 485, and is

expressly directed at a core State function, the power

to tax, that has long been recognized as

“indispensable” to the States’ very existence. See, e.g.,

Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 199 (1824)

(“The power of taxation is indispensable to [the

States’] existence.”); Bode v. Barrett, 344 U.S. 583, 585

(1953) (observing that the power of a State to tax is

“basic to its sovereignty”); Dows v. City of Chicago, 78

U.S. (11 Wall.) 108, 110 (1871) (“It is upon taxation

that the several States chiefly rely to obtain the means

to carry on their respective governments.”).

Given the scope of the ambiguity in the Tax

Mandate’s language, the choices made in deciding how

to resolve that ambiguity and implement the mandate

cannot help but raise “question[s] of deep ‘economic

and political significance.’” Burwell, 576 U.S. at 486

(quoting Util. Air Regulatory Grp. v. EPA, 573 U.S.

320, 324 (2014)). Thus, just as the Supreme Court

observed in Burwell, “had Congress wished to assign

that question to an agency, it surely would have done

so expressly.” Id. (citing Util. Air Regulatory Grp., 573

U.S. at 324 (quoting FDA v. Brown & Williamson, 529

U.S. at 160)). A general provision that “[t]he Secretary

73a

shall have the authority to issue such regulations as

may be necessary or appropriate to carry out this

section,”8 42 U.S.C. § 802(f) does not suffice—indeed,

as Ohio points out, the statute at issue in Burwell had

a similar provision.

The point is simply this—when Congress seeks to

alter the constitutional design by delegating its

powers to agencies on topics of such importance,

Congress must do so clearly, especially when

federalism concerns are at issue. Carter, 736 F.3d at

734; see also Ala. Assoc. of Realtors v. Dept. of Health

and Human Servs., 594 U.S. (June 29, 2021)

(Kavanaugh, J., concurring in denial of certiorari)

(explaining that “clear and specific congressional

authorization (via new legislation) would be

necessary” for an agency to extend an eviction

mortarium after the scheduled deadline passed).

Congress did not do so here.

Then consider the statutory scheme overall. The

Spending Clause entitles the States to clarity

regarding the strings attached to federal funding.

Against that backdrop, if Congress had intended

merely to sketch out in broad brushstrokes the terms

of the proposed conditional spending deal, and then

have an agency complete the drafting, presumably

Congress would have adopted a delayed effective date,

or something of the sort, so that this additional work

could have been done before presenting the offer to the

8 It bears noting that “this section” is not a specific reference to

the Tax Mandate, but rather to all of the Coronavirus State

Fiscal Recovery Fund provisions, which include the Tax Mandate

as one provision.

74a

States. For example, Congress could have provided

that the Treasury Department would have 180 days to

draft the regulations necessary to implement the Tax

Mandate, at which time States could then decide

whether to certify their acceptance. In that way,

Congress could have ensured that the requisite clarity

was present at the outset of State eligibility for the

conditional funding.

Under ARPA as written, though, States were

authorized to send in certifications immediately upon

the effective date of the Act. That is strong evidence

that Congress considered the terms of the deal to be

complete as of that date. At the very least, the timing

here does not provide the necessary evidence that

Congress meant to conscript agency drafters into

completing its legislative efforts.

Further confirming this view, without something

like a delayed effective date, the conditional-spending

offer here—which included the Tax Mandate, but not

yet the regulations—violated the Constitution when

first presented to the States. It is one thing to rely on

an agency’s drafting efforts to avoid a constitutional

violation in the first place, as may be the case with a

delayed effective date. But it is another to charge an

agency

with

curing

an

already-occurring

constitutional violation. See Whitman, 531 U.S. at

472.

In sum, even assuming that Congress can

outsource to an agency the obligation to provide the

answers needed to meet the Spending Clause clarity

requirement, Congress made no such delegation in

ARPA. Accordingly, the Tax Mandate must sink or

swim on its own. And, as already explained above, the

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Court concludes that the Tax Mandate’s language

falls short of what settled law requires in terms of

such clarity. Thus, the Court finds that the Tax

Mandate violates the Spending Clause, the IFR

notwithstanding.

C.

Injunctive And Declaratory Relief Are

Warranted.

Even though the Court finds that the Tax Mandate

falls short of constitutional requirements, there is the

separate question of the appropriate remedy. Ohio

requests both (1) an injunction preventing the

Secretary from enforcing the Tax Mandate against

Ohio, and (2) a declaration that the Tax Mandate is

unconstitutional. The Court concludes that the first is

appropriate, but, in light of its decision on the

injunctive-relief issue, determines that the second is

not.

Start with the injunction. Both parties agree that

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388

(2006), controls the analysis. (See Doc. 38, #597 (Ohio);

Doc. 45, #742 (Secretary)). eBay sets forth the

following four elements that Ohio must show to obtain

a permanent injunction:

(1) that it suffered an irreparable injury; (2) that

remedies available at law, such as monetary

damages, are inadequate to compensate for that

injury; (3) that, considering the balance of

hardships between the plaintiff and defendant, a

remedy in equity is warranted; and (4) that the

public interest would not be disserved by a

permanent injunction.

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547 U.S. at 391. And even then, the issue is committed

to the Court’s “equitable discretion.” Id.

Here, all four elements are present. First, as

described

above,

in

being

bound

to

an

unconstitutionally ambiguous “deal,” Ohio is suffering

irreparable harm to the exercise of its “indispensable”

sovereign power to tax. See Ogden, 22 U.S. (9 Wheat.)

at 199. Second, the federal government has sovereign

immunity against claims for money damages. See

F.D.I.C. v. Meyer, 510 U.S. 471, 475 (1994) (“Absent a

waiver, sovereign immunity shields the Federal

Government and its agencies from suit.”).9 And in any

event, such damages would do nothing to cure the

irreparable harm that Ohio is currently suffering. As

for the balance of harms, unlike Ohio’s current harm,

the Secretary will endure no meaningful hardship if

the Court enjoins operation of the Tax Mandate

against Ohio. The Secretary remains free to enforce,

through use of ARPA’s recoupment powers, the other

conditions on the grant (i.e., those statutory conditions

specifying the various types of goods, services, and

other uses, on which Ohio can spend the federal funds

it receives under ARPA), and the Secretary has no

judicially cognizable interest in enforcing a provision

(like the Tax Mandate) that is unconstitutionally

ambiguous. Finally, issuing the requested injunction

will promote the public interest. As described above,

the limitations on Congress’s ability to use its

9 By contrast, even though this is an official-capacity suit, and

thus a suit against the federal government, sovereign immunity

does not bar a claim for injunctive relief to prevent an

unconstitutional act. See, e.g., Larson v. Domestic & Foreign

Commerce Corp., 337 US. 682, 690 (1949).

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Spending Clause authority to make funding offers to

the States are designed to protect this country’s dualsovereign structure, which in turn is meant to

promote individual liberty. Accordingly, enforcing

those limitations will serve that interest, an interest

that qualifies as “public.” Thus, the Court concludes

that an injunction is appropriate. In awarding that

injunctive relief, though, the Court specifically notes

that the injunction extends only to prohibiting the

Secretary from enforcing a single ARPA provision—

the Tax Mandate, 42 U.S.C. § 802(c)(2)(A)—and only

as to a single State—Ohio.

Separately, Ohio also requests declaratory relief.

As Ohio concedes, “[t]he Declaratory Judgment Act

leaves federal courts with ‘unique and substantial

discretion in deciding whether to declare the rights of

litigants.’” (Doc. 38, #598 (quoting W. World Ins. Co. v.

Hoey, 773 F.3d 755, 758 (6th Cir. 2014) (quoting

Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)))).

Here, the Court’s grant of injunctive relief fully

protects Ohio against every aspect of the ongoing

irreparable harm that Ohio is suffering. Moreover, the

Court’s discussion of the grounds on which it awarded

such relief fully explains the Court’s reasoning.

Accordingly, the declaratory relief that Ohio seeks

would add nothing to the Court’s resolution of this

matter. Thus, exercising its “unique and substantial

discretion,” the Court denies Ohio’s request for such

relief.

CONCLUSION

For the above reasons, the Court finds (1) that it

has jurisdiction, (2) that Ohio has met its burden of

establishing that the Tax Mandate, due to its

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ambiguity, exceeds Congress’s authority under the

Spending Clause, and (3) that the IFR does not cure

that constitutional violation. Moreover, Ohio is

suffering irreparable harm due to that violation. And,

unlike the case at the preliminary injunction stage, a

permanent injunction will prevent that ongoing harm.

Further, such an injunction is in the public interest.

Accordingly, this Court GRANTS Ohio’s Motion for a

Permanent Injunction (Doc. 38), and enjoins the

Secretary from seeking to enforce the Tax Mandate,

42 U.S.C. § 802(c)(2)(A), against Ohio. Given that

injunction, however, the Court DENIES Ohio’s

request in that same motion for declaratory relief.

(Id.). The Court further DENIES the Secretary’s

Motion to Dismiss (Doc. 45). The Court DIRECTS the

Clerk to enter judgment accordingly.

SO ORDERED.

July 1, 2021

DATE

s/ DOUGLAS R. COLE

DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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APPENDIX C

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

Case No.

1:21-cv-181

JUDGE DOUGLAS R. COLE

STATE OF OHIO,

Plaintiff,

v.

JANET YELLEN, SECRETARY OF THE

TREASURY, et al., 1

Defendants.

OPINION AND ORDER

Our Constitution enacts a system of dual

sovereigns—federal and state—allocating certain

powers to each. Questions about that distribution of

powers, though, are “perpetually arising, and will

probably continue to arise, as long as our system shall

exist.” McCulloch v. Maryland, 4 Wheat. 316, 405, 4

L.Ed. 579 (1819). Answering such questions can be a

daunting task. That is particularly true about

constitutional limitations arising under the Spending

Clause, an area in which case law is both sparse and

1 The Defendants to this lawsuit are Janet Yellen, in her official

capacity as Secretary of the Treasury; Richard K. Delmar, in his

official capacity as acting inspector general of the Department of

Treasury; and the United States Department of the Treasury.

The Court refers to the Defendants collectively throughout this

opinion as “Secretary.”

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murky. And, much as in NFIB, “resolving the

controversy this case presents “requires [this Court]

to examine both the limits of the Government’s power,

and [the] limited role [that Article III courts play] in

policing those boundaries.” Nat’l Fed’n of Indep. Bus.

v. Sebelius, 567 U.S. 519, 534 (2012) (“NFIB”). Here,

Ohio challenges one provision in the American Rescue

Plan Act of 2021 (“ARPA”). Among a host of other

provisions, the ARPA makes block grants available to

the States for specified purposes. But, before a State

can receive those funds, it must certify to the

Secretary of the Treasury (the “Secretary”) that the

State will comply with multiple conditions that the

law imposes. Ohio claims that one of those

conditions—which Ohio labels the “Tax Mandate”—

exceeds Congress’s power under the Spending Clause

and the Tenth Amendment. (Compl., Doc. 1, #10–11).

Thus, Ohio filed this action seeking a declaratory

judgement and permanent injunction preventing

enforcement of the allegedly unconstitutional

provision. (Id. at #11).

The matter is currently before the Court on Ohio’s

Motion for a Preliminary Injunction (Doc. 3) seeking

to enjoin the Secretary from enforcing the Tax

Mandate against Ohio (and only Ohio, as the State

made clear at oral argument) while this suit is

pending. This Court can grant that relief only if the

Court finds both that it has jurisdiction over this

action, and that such relief is appropriate on the

substance of Ohio’s claim as presented in Ohio’s

Complaint. Both issues present close questions.

Interestingly, that is not because the merits are

particularly close—the conceded ambiguity in the Tax

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Mandate, as written,2 establishes that Ohio has a

substantial likelihood of showing that the ARPA

violates the Spending Clause. Rather, what makes

this a close case are issues relating to timing, which

impact the analysis of both justiciability generally,

and the appropriateness of preliminary relief now.

Ultimately, the Court determines that, although the

matter is justiciable, the preliminary relief that Ohio

seeks is not warranted. Accordingly, the Court

DENIES Ohio’s request for a preliminary injunction.

BACKGROUND

A.

The COVID-19 Pandemic.

The COVID-19 pandemic has imposed farreaching, unprecedented consequences on nearly

every aspect of life, not only in the United States, but

around the world. The pandemic has sickened, and

killed, people across the globe, as well as straining (or,

in some countries, nearly crippling) healthcare

systems. What is more, businesses have suffered

financially, and many people have found themselves

in financial straits, be it from losing employment or

incurring other pandemic-related expenses. And as a

result of the pandemic-related disruptions and

economic dislocations, the need for, and use of,

2 Two days ago, the Secretary filed a notice that the Treasury

Department has now issued an “Interim Final Rule

implementing the relevant portions of the [ARPA].” (Notice of

Interim Final Rule, Doc. 33, #356). The impact of those interim

regulations, if any, on Ohio’s claims has yet to be addressed in

full by the parties. As the Court is denying the preliminary

injunction, though, the Count concludes there is no reason to

delay issuing this Opinion for additional consideration of that

issue at this time.

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governmental services and assistance has ballooned.

Not surprisingly then, in addition to inflicting human

costs, the pandemic has wreaked havoc on state

budgets. Ohio is no exception.

B.

The America Rescue Plan Act.

On March 11, 2021, President Biden signed the

ARPA into law. The ARPA is Congress’s latest effort

to address the harms, including economic harms, that

COVID-19 has caused. It is a wide-ranging law that

commits the federal government to spending up to

roughly $1.9 trillion on a host of goods, services, and

forms of government assistance. Included in the ARPA

is a provision meant to provide aid directly to the

States to assist with their budget woes. In particular,

the ARPA provides some $195.3 billion in aid to the

States and the District of Columbia. See 42 U.S.C. §

802(b)(3)(A).3 Ohio’s share of the pot, should it elect to

take it, is $5.5 billion. According to Ohio’s Motion, that

amounts to roughly 7.4% of the State’s total spending

last year. (Mot. for Prelim. Inj., Doc. 3, #33).

As is sometimes the case with federal dollars, the

money comes with certain strings attached. In

particular, to qualify for the funding, a State must

“provide the Secretary [of the Treasury] with a

certification, signed by an authorized officer of such

State … that such State … requires the payment … to

3 Section 9901 of the ARPA amends Title VI of the Social Security

Act by adding a new Section 602. As Section 601 of that Act is

codified at 42 U.S.C. § 801, presumably the new section will be

codified at 42 U.S.C. § 802. That is where the newly enacted

language appears on Westlaw, and the Court will thus cite to 42

U.S.C. § 802, rather than the Statutes at Large, in this Opinion.

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carry out the activities specified in subsection (c) …

and will use any payment under this section … in

compliance with subsection (c).” 42 U.S.C. § 802(d)(1).

The Secretary is to “make the payment required for

the State … not later than 60 days after the date on

which th[at] certification … is provided to the

Secretary.” Id. § 802(b)(6)(A)(i).

As the above language suggests, the conditions

themselves are set forth in subsection (c). That

subsection provides that a State shall only use the

funds to cover costs incurred by the State:

(A) to respond to the public health emergency

with respect to [COVID-19] or its negative

economic impacts …

(B) to respond to workers performing essential

work during the COVID-19 public health

emergency …

(C) for the provision of government services to

the extent of the reduction in revenue of such

State … relative to revenues collected in the

most recent full fiscal year of the State …

prior to the [pandemic] … or

(D) to make necessary investments in water,

sewer, or broadband infrastructure.

Id. § 802(c)(1)(A)–(D). And the State must use the

funds by December 31, 2024. Id. § 802(c)(1). Ohio does

not dispute the validity of any of those conditions. But

the ARPA also imposes one more term. In particular,

in a section labeled “Further Restriction On Use Of

Funds,” the ARPA provides that:

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“(A) IN GENERAL.—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.

Id. § 802(c)(2)(A). Ohio refers to this provision as the

Tax Mandate, and that provision forms the gist of the

dispute here.

C.

Ohio’s Lawsuit And The Pending Motion.

In its lawsuit, Ohio claims that the Tax Mandate

is unconstitutional. This is so, Ohio says, for two

reasons. First, the Tax Mandate allegedly violates the

Spending Clause in two ways—it is both

unconstitutionally coercive, and unconstitutionally

ambiguous. (Compl., Doc. 1, #9–10). And second, Ohio

claims that the Tax Mandate violates the Tenth

Amendment

in

that

it

unconstitutionally

commandeers state taxing authority. (Id. at #11).

On the same day Ohio filed its Complaint, March

17, 2021, the State filed a Motion for a Preliminary

Injunction and Memorandum in Support (Doc. 3). In

that Motion, the State requested the Court to “enjoin

the Tax Mandate.” The Court established a briefing

schedule for the Motion, and several amici filed briefs

supporting Ohio.

The Secretary opposed Ohio’s requested relief.

More specifically, the Secretary first claimed that the

Court does not have jurisdiction, as (1) Ohio lacks

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standing, and (2) Ohio’s claims are not ripe. (Resp. in

Opp’n, Doc. 29, #237). Second, the Secretary asserted

that Ohio has failed to show that a preliminary

injunction is warranted. (Id. at #238). Finally, the

Secretary argued that any injunctive relief should be

limited solely to Ohio. (Id. at #263).

The parties completed briefing on April 22, 2021,

and the Court heard oral argument on April 30, 2021.

At the argument, Ohio clarified that the relief it is

seeking through its Motion is an Order enjoining the

Secretary from enforcing the Tax Mandate only as

against the State of Ohio.

Two additional factual developments have

occurred since argument. First, two days ago, the

Secretary provided this Court a Notice of Interim

Final Rule (Doc. 33), attaching the interim rule (Doc.

33–1). In the Notice, the Secretary explained that the

rule “has been submitted to the Office of the Federal

Register (OFR) for publication in the Federal

Register.” (Notice of Interim Final Rule, Doc. 33,

#356). Second, yesterday Ohio filed a combined Motion

for Leave to File Response to Notice and the

corresponding Response to Notice.4 (Doc. 34). With the

impact of those additional filings in mind, Ohio’s

Motion is now pending.

4 As the contents of Ohio’s Response do not change the outcome

as to the preliminary relief sought here, the Court determines it

need not await a response from the federal government to Ohio’s

latest filing to address the pending motion.

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LAW AND ANALYSIS

Resolving

the

pending

motion

requires

consideration of both jurisdictional and merits issues.

Typically, when a jurisdictional challenge is raised,

the Court would start its analysis there. Here, though,

the two issues are inextricably intertwined. That is

because the questions of (1) whether Ohio has suffered

an injury in fact, and (2) whether its suit is ripe both

turn to a large extent on how the injury is

characterized. That in turn requires the Court to

analyze the nature of the rights that the Spending

Clause confers to the States when offered conditional

funding. But that issue is also closely related to the

likelihood of success on the merits, as well as the

nature of the harm that Ohio is currently suffering, if

any. And both of those inquiries go to the

appropriateness of preliminary injunctive relief. The

Court thus starts its discussion by considering the

nature of the rights that the Spending Clause creates,

and then turns to the implications of its findings on

that front for the jurisdictional and preliminary

injunction issues, respectively.

A.

The Spending Clause Prevents Congress

From Offering The States Money On

Ambiguous Terms.

Under our constitutional design, the Framers

“split the atom of sovereignty.” Saenz v. Roe, 526 U.S.

489, 504 n.17 (1999) (quoting United States Term

Limits v. Thornton, 514 U.S. 779, 838 (1995)

(Kennedy, J., concurring)). But it was not an even

split. The federal sovereign is supreme, see U.S.

CONST., art. VI, cl. 2, but only in the exercise of its

enumerated powers. That is, “[t]he States have broad

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authority to enact legislation for the public good—

what we have often called a ‘police power.’” Bond v.

United States, 572 U.S. 844, 854 (2014) (quoting

United States v. Lopez, 514 U.S. 549, 567 (1995)). “The

Federal Government, by contrast, has no such

authority and ‘can exercise only the powers granted to

it.’” Id. (quoting McCulloch, 4 Wheat. at 405).

But one of the federal government’s enumerated

powers creates at least some wiggle room on that

front. According to Art. I, § 8, cl. 1, of the Constitution,

typically called the Spending Clause:

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.

This provision authorizes Congress to pay money to

the States. And “[i]ncident to this power, Congress

may attach conditions on the receipt of federal funds.”

South Dakota v. Dole, 483 U.S. 203, 206 (1987). In a

sense, then, Congress can leverage its spending power

to “encourage” States to use their police powers in the

fashion that Congress desires. That is, Congress can

seek to purchase acquiescence from state

governments that Congress otherwise lacks authority

to order.

Perhaps recognizing that Congress’s unbridled use

of the Spending Clause (especially when coupled with

the power to tax) could undermine the balance of

powers in our dual-sovereign federalist system, the

Supreme Court has held that there are limits,

inherent in the Clause itself, on how Congress can

deploy this power. As the Supreme Court put it in

Dole, “[t]he spending power is of course not unlimited,

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but is instead subject to several general restrictions

articulated in our cases.” Id. at 207 (citation omitted).

The recognized limitations on the Spending Clause

powers are threefold. First, “Congress may not impose

conditions ‘unrelated to the federal interest’ in

enacting spending legislation.” Sch. Dist. of City of

Pontiac v. Sec’y of U.S. Dept. of Educ., 584 F.3d 253,

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

(quoting Dole, 483 U.S. at 207–08). Second, it may not

“coerce the States into accepting funds and the

regulations that come with them.” Id. (citing Dole, 483

U.S. at 211). Third, “given [Congress’s] authority

under the Spending Clause to regulate the States

beyond the limited and enumerated powers the

Constitution otherwise gives it and given that the

States are not represented in the Halls of Congress,

the federal courts have required Congress to state

those conditions ‘unambiguously’ in the text of the

statute.” Id. (citing Pennhurst State Sch. & Hosp. v.

Halderman, 451 U.S. 1, 17 (1981)).5

Ohio raises both the second and third of those

limitations—coercion

and

ambiguity—in

its

Complaint and its briefing here. The Court’s

resolution of the Motion, however, focuses principally

5 In his concurrence in Pontiac, Judge Sutton described this third

limitation as “statutory,” see City of Pontiac, 584 F.3d at 283,

which it is in the sense that it imposes a requirement on how

Congress goes about drafting statutes. That is, the limitation is

not directed at the substance of the conditions, but rather at

ensuring, as a drafting matter, that the conditions are clearly

expressed. But, while describing the limitation as statutory,

Judge Sutton acknowledged that it has “constitutional roots.” Id.

at 284.

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on the ambiguity issue. Thus, a few more words

regarding that limitation are in order. As a majority

of Sixth Circuit judges observed in City of Pontiac, this

limitation derives largely from analogy to contract

law. See id. at 276–77 (citing Pennhurst, 451 U.S. at

17), 284–85 (Sutton, J., concurring) (citing Pennhurst,

451 U.S. at 17). “Viewing the Spending Clause

relationship between a State and the federal

government as a contract, the Supreme Court has

stated that the legitimacy of Congress’ power to

legislate under the spending power thus rests on

whether the State voluntarily and knowingly accepts

the terms of th[at] contract.” Id. at 276–77 (citing

Pennhurst, 451 U.S. at 17) (cleaned up). True, the

Supreme Court has been “careful not to imply that all

contract-law rules apply to Spending Clause

legislation,” but it has also “regularly applied the

contract-law analogy in cases” involving receipt of

federal funds. Barnes v. Gorman, 536 U.S. 181, 186

(2002).

Under those principles, it is not sufficient that the

State receive funds merely knowing that some kind of

strings are attached. Rather, the question is “whether

such a state official would clearly understand the

obligations.” City of Pontiac, 584 F.3d at 277 (quoting

Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548

U.S. 291, 296 (2006)) (cleaned up) (emphasis added).

That makes sense, as “States cannot knowingly accept

conditions of which they are ‘unaware’ or which they

are ‘unable to ascertain.’” Id. at 268 (quoting

Arlington, 548 U.S. at 296) (in turn quoting

Pennhurst, 451 U.S. at 17). “‘By insisting that

Congress speak with a clear voice,’ the Supreme Court

enables States ‘to exercise their choice knowingly,

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cognizant of the consequences of their participation.’”

Id. (quoting Pennhurst, 451 U.S. at 17). So, not only

does the Constitution require Congress to tell States

that there are conditions, but Congress must also tell

States what those conditions are.

B.

Ohio Has Established That It Has

Standing And That At Least Its Challenge

Under The Spending Clause Is Ripe.

Against that backdrop, let’s consider the nature of

Ohio’s challenge here. Because the federal

government has raised justiciability issues, the Court

starts there. The federal government claims both that

Ohio lacks standing, and that this matter is not ripe.

As to the first, it is well settled that “[t]he plaintiff

bears the burden of establishing standing.” Lyshe v.

Levy, 854 F.3d 855, 857 (6th Cir. 2017) (citing

Summers v. Earth Island Inst., 555 U.S. 488, 493

(2009)). “To satisfy the ‘irreducible constitutional

minimum of standing,’ the plaintiff must establish

that: (1) he has suffered an injury in fact that is (a)

concrete and particularized and (b) actual or

imminent rather than conjectural or hypothetical; (2)

that there is a causal connection between the injury

and the defendant’s alleged wrongdoing; and (3) that

the injury can likely be redressed.” Id. (citing Lujan v.

Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). The

principal challenge here goes to the first of those, or

the injury-in-fact requirement.

Beyond standing, “[i]t is [also] the plaintiff’s

burden to prove that its claim is ripe.” B&N Coal, Inc.

v. Blue Racer Midstream, LLC, 414 F. Supp. 3d 1049,

1056 (S.D. Ohio 2019) (citing Los Alamos Study Grp.

v. U.S. Dep’t of Energy, 692 F.3d 1057, 1064 (10th Cir.

91a

2012)); see also Andrew v. Lohr, 445 F. App’x 714, 715

(4th Cir. 2011) (per curiam); Dealer Comput. Servs.,

Inc. v. Dub Herring Ford, 623 F.3d 348, 354 (6th Cir.

2010). “A claim is ripe where it is ‘fit for judicial

decision’ and where ‘withholding court consideration’

will cause hardship to the parties.” Hill v. Snyder, 878

F.3d 193, 213 (6th Cir. 2017) (quoting Abbott Labs. v.

Gardner, 387 U.S. 136, 149 (1967)).

Before diving into details, the Court considers the

preliminary question of whether the necessary

jurisdictional showings run to the suit itself, or instead

to the specific relief sought through this motion. One

well-established principle provides a starting point:

the Supreme Court’s “standing decisions make clear

that ‘standing is not dispensed in gross.’” Town of

Chester v. Laroe Ests., Inc., 137 S. Ct. 1645, 1650

(2017) (quoting Davis v. Fed. Election Comm’n, 554

U.S. 724, 734 (2008)) (in turn quoting Lewis v. Casey,

518 U.S. 343, 358 n. 6 (1996) (alteration omitted)).

Rather, “a plaintiff must demonstrate standing for

each claim he seeks to press and for each form of relief

that is sought.” Id. (quoting Davis, 524 U.S. at 734).

There is Sixth Circuit case law that could perhaps

be read as suggesting that a preliminary injunction is

a “form of relief,” and thus a plaintiff must establish

Article III requirements as to that form of relief itself.

In its recent decision in Online Merchants Guild v.

Cameron, for example, that court observed that “a

preliminary injunction is warranted only where the

party seeking relief is likely to establish: (1) an injury

in fact; (2) traceability; and (3) redressability.” No. 205723, 2021 WL 1680265, at *4 (6th Cir. Apr. 29, 2021).

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But the Sixth Circuit did not specifically say

whether the plaintiff was required to make those

showings as to the relief sought by the suit, or as to

the requested preliminary injunction. And it appears

that the Supreme Court’s reference to “form of relief”

for standing purposes, means form of relief “requested

in the complaint.” Town of Chester, 137 S. Ct. at 1651

(“At least one plaintiff must have standing to seek

each form of relief requested in the complaint.”)

(emphasis added). So, for example, if a plaintiff sought

both damages and a permanent injunction, the

plaintiff would need to establish Article III standing

for both aspects of its suit. Id. at 1650 (citing Los

Angeles v. Lyons, 461 U.S. 95, 105–106, and n. 7 (1983)

(finding that a plaintiff who has standing to seek

damages must also demonstrate standing to pursue

injunctive relief)).

Of course, a preliminary injunction is not a “form

of relief requested in the complaint.” Id. at 1651.

Rather it is a form of temporary relief sought by way

of a motion in a pending action over which the Court

has jurisdiction. Thus, the Court concludes that the

jurisdictional inquiry properly runs to the suit (i.e.,

the claims asserted, and relief sought, in the

Complaint), not the relief sought by way of a motion

for preliminary injunction.6

That is not to suggest that issues such as whether the

preliminary injunction will provide the plaintiff relief are

irrelevant to the issue of whether to grant the motion. To the

contrary, as described below (see infra, Section C), the Court

concludes that the question of whether the requested injunction

will provide meaningful relief, which is a type of redressability

inquiry, is part of the second prong of the preliminary injunction

6

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That also makes sense based on Article III’s

language. The judicial power extends to “cases” or

“controversies,” and thus it is the “cases” or

“controversies” themselves that should be the focus of

the jurisdictional inquiry. During the pendency of

such “cases” or “controversies,” the Court may be

called upon to decide a host of issues—motions to

compel, motions to quash, etc. So long as a court has

jurisdiction over the claim itself, this Court is not

familiar with precedent that would require the party

seeking relief by way of such motions to identify the

“injury in fact,” “causation,” and “redressability,”

associated with that specific relief each motion seeks.

Nor would that approach make sense, either as a

conceptual or a practical matter.

Based on that understanding, Ohio must show that

it has standing to pursue its Complaint against the

federal government, which sets forth claims under the

Spending Clause and the Tenth Amendment, and

must also establish that those claims are ripe. Or

more specifically, Ohio must show that both standing

and ripeness existed when it filed its Complaint.

Lujan, 504 U.S. at 606, n.4 (noting the “longstanding

rule that jurisdiction is to be assessed under the facts

existing when the complaint is filed”).

Start with standing. As noted, the principal

question here goes to injury in fact. As is so often the

case, whether an injury in fact exists turns on the

framework, which addresses questions of irreparable harm. But

that goes to whether it is appropriate for the Court to grant a

preliminary injunction, not to whether the Court has the power

to do so, which is the jurisdictional inquiry here.

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nature of the right that is protected, and the claims as

to how that right was violated. For now, let’s focus on

the Spending Clause ambiguity argument. As

described above, Supreme Court precedent suggests

that the constitutional violation occurs when the

federal government offers money on ambiguous terms.

It is Congress passing the Act, not the State accepting

the money, that violates the Constitution. And that

makes sense, of course, as the limitation at issue is a

limitation on Congress’s powers, not those of the

States. So, if the ARPA violates the Spending Clause,

that violation already has occurred.

But that does not answer the separate inquiry of

whether the violation is (or was at the time suit was

filed) harming Ohio (or any other State). There are at

least three ways that one could conceptualize the

nature of the harm that flows to the States (including

Ohio) as a result of that violation. First, the States

may claim that the right violated is their right to an

unambiguous understanding of the deal that Congress

is offering under its spending power. Understood that

way, a State would start suffering harm immediately

upon receipt of the offer. Ohio could say, “The State is

entitled to a clear offer, and you have presented an

unclear one.”

Second, Ohio could claim that it is injured upon

sending its certification to the Secretary. After all, it

is the certification that binds Ohio to the conditions—

including the Tax Mandate that Ohio maintains is

unconstitutional.

Third, it may be that the harm does not arise until

the Secretary invokes the allegedly ambiguous term

in an effort to recoup money from the State. In some

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ways, this final one tracks better with typical

understandings of harm. Wrongfully taking money

from another is a classic example of common law

notions of injury in fact.

Here, the difference among these may matter for

justiciability purposes. Under the ARPA, States

apparently have been free to send in their

certifications since the effective date of the Act, March

11, 2021 (that was the date that President Biden

signed the law, and the ARPA appropriated funds

from the current fiscal year). In other words, it

appears the “deal” was available to Ohio at the time it

brought this action. So, under the first theory above,

Ohio was already suffering harm at that time in the

form of being forced to ponder whether to accept an

unconstitutionally ambiguous deal. Stated differently,

forcing Ohio to determine how to respond to the offer

of funding under the cloud of an ambiguous term acts

as the injury in fact. Nor is it an answer to say that

Ohio knows that the Tax Mandate is ambiguous, and

thus can decide whether to take the risks associated

with that ambiguity. The Spending Clause prohibits

Congress from offering an ambiguous deal, precisely

because the States, as sovereigns, are entitled to

clarity. So, if ambiguity constitutes injury in fact, Ohio

has alleged it here.

But, under either of the latter two injury-in-fact

theories, it is more difficult to see that Ohio has

suffered an injury in fact, or at least had suffered one

as of the time it filed its Complaint. To be sure, this is

in part a declaratory judgment action, which is

inherently a form of prospective relief. But that “does

not alter [jurisdictional] rules or otherwise enable

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federal courts to deliver ‘an expression of opinion’

about the validity of laws.” Saginaw County v. STAT

Emergency Med. Servs., Inc., 946 F.3d 951, 954 (6th

Cir. 2020). Ohio still must show that, at the time it

filed its Complaint, it was suffering “an actual or

imminent injury.” Youkhanna v. City of Sterling

Heights, 934 F.3d 508, 515 (6th. Cir. 2019) (quoting

Crawford v. United States Dep’t of Treasury, 868 F.3d

438, 452 (6th Cir. 2017)). And Ohio did not state, for

example, that it was currently prepared to send the

certification, which is the harm under theory two, let

alone that it had done so. As for the last theory, Ohio

has not yet received any funding, and, in any event,

the federal government says that much more work

remains to be done in terms of shaping even how the

Secretary would decide whether recoupment is

warranted in a given case, before any actual

recoupment attempt occurs. (Indeed, that is one of the

topics that the Interim Final Rule addresses.) Under

such circumstances, it is difficult to conceive that

some potential, far-in-the-future recoupment efforts

could rise to the level of “imminent.”

Determining which of these three theories of injury

in fact Ohio asserts, and whether that supports

standing here, is not straightforward. Ohio appears to

be relying largely on the first one, with a nod to the

latter two. In its Complaint, it alleges that the Tax

Mandate “unconstitutionally intrud[ed] on the State’s

sovereign authority” (which seems to invoke the first

theory above), and created a “risk that [Ohio] may be

made to return funding to the federal government”

(which could be understood as invoking one of the

latter two injury theories). (Compl., Doc, 1, #3). The

Court concludes that the latter stated “harm” does not

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suffice. The “risk” of which Ohio complains (“returning

funding”) is currently too remote to satisfy the injuryin-fact requirement. And even if it could, the many

contingencies that would need to occur before such

recovery is sought would doom that asserted harm on

ripeness grounds.

But that still leaves the first theory. Ohio’s

argument on this front could be labeled as a sort of

affront-to-sovereignty theory. That is, Ohio asserts

the right, as a co-sovereign under our constitutional

structure, to have Congress “bargain” according to the

constitutionally imposed strictures of “good faith,”

which include a requirement that Congress present

the terms of a proposed Spending Clause “deal” in an

unambiguous fashion at the time the offer is made.

Congress has injured Ohio, the State would say, by

depriving Ohio of that right.

The Court acknowledges that such an injury could

be characterized as “abstract,” or “intangible,” rather

than “concrete and particularized.” But the Court

ultimately disagrees with that view. If Ohio is correct

on the merits of its Spending Clause claim (a topic to

which the Court returns below), then Congress has

fallen short in delivering the constitutionally required

clarity. If so, Ohio suffered an injury in its role as

sovereign. When Ohio brought this action, it had the

present ability to send the statutorily-required

certification (Ohio could do so upon the effective date

of the ARPA), but lacked the information necessary to

understand the deal. Therefore, Ohio could not

exercise its sovereign prerogative, as it had no way of

knowing whether accepting these funds, in exchange

for agreeing to be bound by the inscrutable Tax

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Mandate, represented a good deal or a bad deal for the

citizens of this State—information to which it is

entitled under the Constitution.

The Court acknowledges that this is perhaps an

odd form of injury in fact. But that grows out of the

unique nature of the constitutional guarantee at issue

here (i.e., a right to clear terms), coupled with Ohio’s

role as a co-sovereign. When considering both of those,

intruding on Ohio’s sovereign right to receive a clear

offer strikes the Court as a sufficient injury in fact to

support Article III standing, if just barely.

The federal government might well argue, of

course, that any such “harm,” in addition to being

ephemeral, is voluntarily incurred. After all, the State

can wait to send the certification until down the road.

Moreover, at argument, the federal government noted

that additional clarity might soon arrive in the form

of regulations. And, as noted, just two days ago the

Secretary published an “Interim Final Rule” that

purports to provide additional clarity as to what the

Tax Mandate means.

But two responses to that. First, as noted above,

standing and ripeness are measured as of the time a

party files its complaint. Lujan, 504 U.S. at 606, n.4.

At that time, waiting was its own form of harm. As

Ohio noted, it is in the middle of budgeting for the next

biennium right now, so a lack of clarity as to potential

funding sources creates current hardships for that

process. Moreover, as part of that budgeting process,

Ohio was (and is

This text is long and has been trimmed here. Open the source document for the complete record.