Emergency Application — Alaska, et al., Applicants v. Department of Education, et al.
Supreme Court briefJul 5, 2024
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APPENDIX
Order of the Tenth Circuit Court of Appeals Granting a Stay Pending Appeal (June 30, 2024)
................................................................................................................................................................001a
District Court Order Denying an Administrative Stay and Stay Pending Appeal (June 28, 2024)
................................................................................................................................................................003a
Memorandum and Order Granting in Part and Denying in Part Plaintiffs’ Motion for a Preliminary
Injunction (June 24, 2024)
................................................................................................................................................................006a
Memorandum and Order Granting in Part and Denying in Part Defendants’ Motion to Dismiss (June
7, 2024)
................................................................................................................................................................048a
Declaration of Sarah Keyton (May 10, 2024)
................................................................................................................................................................094a
Declaration of Sana Efird (May 10, 2024)
................................................................................................................................................................095a
Declaration of Joseph D. Spate (May 8, 2024)
................................................................................................................................................................098a
Declaration of Kathleen Abrams (April 11, 2024)
................................................................................................................................................................106a
Declaration of Ha Pu Tran (April 8, 2024)
................................................................................................................................................................110a
Declaration of Aaron Yost (April 8, 2024)
................................................................................................................................................................114a
Appellate Case: 24-3089
Document: 010111072742
Date Filed: 06/30/2024
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
_________________________________
STATE OF ALASKA, et al.,
Page: 1
FILED
United States Court of Appeals
Tenth Circuit
June 30, 2024
Christopher M. Wolpert
Clerk of Court
Plaintiffs - Appellees,
v.
No. 24-3089
(D.C. No. 6:24-CV-01057-DDC-ADM)
(D. Kan.)
UNITED STATES DEPARTMENT OF
EDUCATION, et al.,
Defendants - Appellants.
_________________________________
ORDER
_________________________________
Before TYMKOVICH, EBEL, and McHUGH, Circuit Judges.
_________________________________
This matter is before the court on Appellants’ emergency motion for a stay
pending appeal. To decide the motion, the court considers four factors: (1) whether
Appellants have made a strong showing that they will likely succeed on the merits; (2)
whether they will suffer irreparable injury absent a stay; (3) whether a stay will
substantially injure other interested parties; and (4) where the public interest lies. See
Nken v. Holder, 556 U.S. 418, 434 (2009). Appellants have the burden to show that the
circumstances justify a stay. See id. at 433–34.
Having considered the parties’ materials, the court grants Appellants’ motion for a
stay pending appeal. The district court’s preliminary injunction is stayed pending this
appeal. Appellees’ motion to exceed the word limit is granted.
(001a)
Appellate Case: 24-3089
Document: 010111072742
Date Filed: 06/30/2024
Page: 2
Judge Tymkovich would deny the emergency motion for a stay pending appeal.
Entered for the Court
CHRISTOPHER M. WOLPERT, Clerk
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From:
Sent:
To:
Subject:
KSD_CMECF@ksd.uscourts.gov
Friday, June 28, 2024 2:29 PM
ksd_nef@ksd.uscourts.gov
Activity in Case 6:24-cv-01057-DDC-ADM Kansas, State of et al v. Biden et al Order on Motion for
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U.S. District Court
DISTRICT OF KANSAS
Notice of Electronic Filing
The following transaction was entered on 6/28/2024 at 2:28 PM CDT and filed on 6/28/2024
Case Name:
Kansas, State of et al v. Biden et al
Case Number:
6:24‐cv‐01057‐DDC‐ADM
Filer:
Document Number: 84(No document attached)
Docket Text:
ORDER denying Defendant's [80] Motion to Stay Pending Appeal. The Court grants plaintiff's
[82] MOTION for Extension of Time to File Response. Response deadline 6/28/2024 at 11:59
PM. Defendants have moved the court to stay its Preliminary Injunction under Fed. R. Civ. P.
62 while they appeal to the Tenth Circuit. Doc. [80]. Defendants assert that the court's earlier
decisions got it wrong and so, defendants likely will succeed on appeal. The court disagrees.
Defendants also assert that the court's Preliminary Injunction will cause significant and
irreparable harm to defendants and related processes. Defendants also attached two
declarations about this purported harm--but this is the first time the court has seen these
declarations or heard about any of the difficulties that they predict. The court very much
regrets any difficulty imposed by its decisions. But defendants have known for some time
about the Supreme Court's ruling in Biden v. Nebraska and, likewise, have known that it fueled
a fulsome challenge to the SAVE Plan. Defendants nonetheless elected to adhere to the July 1
implementation date despite these risks. In the court's view, the Preliminary Injunction
balances the equities of the case appropriately. The court thus declines defendants' request
for a stay. In the alternative, defendants ask the court to narrow its injunction. Defendants
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assert that the court failed to tailor its injunction appropriately because it's a nationwide
injunction that enjoins the entirety of the SAVE Plan. To be clear, the preliminary injunction
doesn't touch any aspect of the SAVE Plan that already has taken effect. See Doc. [76] at 38-40
("The court declines to enjoin the parts of the SAVE Plan defendants already have
implemented."). The court apprehends defendants' reservations about a nationwide
injunction. That's why the court's Memorandum and Order devoted so much ink to explaining
its reasoning for that broad form injunction. None of defendants' latest arguments convince
the court to narrow the injunction to apply only to the Alaska, South Carolina, and Texas
public instrumentalities. Defendants also ask the court to narrow the injunction to certain
aspects of the SAVE Plan. There's something to be said for this approach, the one used by the
court in the Eastern District of Missouri case. See Preliminary Injunction, Missouri v. Biden,
No. 24-520-JAR (E.D. Mo. June 24, 2024), ECF No. 36. But it surfaces in this Kansas case just
now, for the first time. Asking the court to adopt it on the accelerated schedule defendants
now fashion is both too little and too late. Defendants earlier asked the court to sever unlawful
portions of the SAVE Plan from lawful ones, but they never provided any kind of roadmap for
which portions should make the cut. They didn't, that is, until last night's late-night filing,
when defendants peeled the SAVE Plan apart in a fashion never before furnished to the court.
The court may modify its injunction in the future, but it's not going to do so now on some 15
hours' notice--and without giving plaintiffs a meaningful chance to respond to a request that
defendants could have presented long ago. The court thus denies defendants' Motion for a
Stay Pending Appeal Doc. [80]. Two final notes: First, defendants filed their motion late last
night shortly before midnight, CDT, and asked for a ruling by 3:00 PM CDT today. That
schedule, in effect, gives plaintiffs no meaningful time to respond. Still, plaintiffs have filed a
motion asking for time to respond--until 11:59 PM today. Doc. [82]. The court grants plaintiffs'
motion. While it's not ideal to rule defendants' motion without the benefit of plaintiffs'
response, the court issues its ruling now to allow defendants to seek any appellate relief they
wish to seek. And plaintiffs' response may inform future consideration of narrowing the
injunction--whether by the Circuit or our court. Second, defendants ask, as a final alternative,
for an administrative stay. The court already gave defendants such a stay, staying the
effective date of its earlier rulings until ten o'clock p.m. on June 30. See Doc. 76 at 42 (staying
effective date of court's injunction). This timeline remains in place and defendants haven't
demonstrated why the court should extend the existing administrative stay. So, the court
denies that form of relief as well. Signed by District Judge Daniel D. Crabtree on 6/28/24. (This
is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.) (ss)
6:24‐cv‐01057‐DDC‐ADM Notice has been electronically mailed to:
Kris W. Kobach
kkobach@gmail.com, connie.deckard@ag.ks.gov, kris.kobach@ag.ks.gov
Drew C. Ensign
densign@holtzmanvogel.com
Jeffrey Shaw
jeff@kansasjusticeinstitute.org
Abhishek Kambli
Erin Gaide
abhishek.kambli@ag.ks.gov, SpecialLitigationECF@ag.ks.gov, connie.deckard@ag.ks.gov
erin.gaide@ag.ks.gov, SpecialLitigationECF@ag.ks.gov, connie.deckard@ag.ks.gov
Christian Brian Corrigan
christian.corrigan@mt.gov, edoj@mt.gov
Stephen Michael Pezzi
stephen.pezzi@usdoj.gov, fedprog.ecf@usdoj.gov
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Lincoln J. Korell
lincoln.korell@nebraska.gov
Joshua Nathaniel Turner
Charles K. Eldred
josh.turner@ag.idaho.gov, isaac.considine@ag.idaho.gov
charles.eldred@oag.texas.gov
Eric H. Wessan
eric.wessan@ag.iowa.gov
Joseph D. Spate
josephspate@scag.gov, esmith@scag.gov, rcook@scag.gov, thomashydrick@scag.gov
William E. Milks
bill.milks@alaska.gov, cori.mills@alaska.gov, richard.carter@alaska.gov
Lance F. Sorenson
lancesorenson@agutah.gov
Simon Gregory Jerome
simon.g.jerome@usdoj.gov, fedprog.ecf@usdoj.gov
Edmund G. LaCour, Jr
edmund.lacour@alabamaag.gov, rene.whyard@alabamaag.gov
Kelsey LeeAnn Smith
smithkel@ag.louisiana.gov, nelsone@ag.louisiana.gov
Alexander M. Certo
a.certo@buckeyeinstitute.org
David C. Tryon
d.tryon@buckeyeinstitute.org
6:24‐cv‐01057‐DDC‐ADM Notice has been delivered by other means to:
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
STATE OF ALASKA, et al.,
Plaintiffs,
Case No. 24-1057-DDC-ADM
v.
UNITED STATES DEPARTMENT OF
EDUCATION, et al.,
Defendants.
MEMORANDUM AND ORDER
Plaintiffs have moved the court for a preliminary injunction that would prevent
defendants from implementing their student loan regulations, known as the SAVE Plan. Doc.
23. The SAVE Plan lowers monthly payments for eligible borrowers and reduces the maximum
repayment period for eligible borrowers who took out loans with low original balances. To
t must answer three questions.
First
and political significance that defendants must show that Congress clearly authorized the SAVE
Plan? In Biden v. Nebraska, 143 S. Ct. 2355 (2023), the Supreme Court answered this question.
This recent, binding Supreme Cour
c and consequential tradeoffs
inherent in a mass debt cancellation program are ones that Congress would likely have intended
Id. at 2375 (quotation cleaned up). So, this is an easy yes.
Second, given that the case presents a major question, have defendants shown that the
Higher Education Act clearly authorizes their SAVE Plan? Biden v. Nebraska
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Case 6:24-cv-01057-DDC-ADM Document 76 Filed 06/24/24 Page 2 of 42
this question because that case addressed a different statute with a different regulatory history.
While it’s a close and difficult question, the court answers this second question no. Defendants
have offered colorable, plausible interpretations of the Higher Education Act that could authorize
the SAVE Plan, but those interpretations fall short of clear congressional authorization.
Last, the court must decide whether the preliminary injunction should apply nationwide.
Scope aside, part of plaintiffs’ requested injunction is unworkable, and so the court denies it.
But, for the workable part of plaintiffs’ injunction, the court reluctantly answers yes—it should
apply nationwide. Nationwide injunctions are the subject of much controversy, and this court is
less than enthusiastic about entering one.
With these three answers, the court grants in part and denies in part plaintiffs’ Motion for
Preliminary Injunction (Doc. 23). The court enjoins the SAVE Plan—in part—nationwide. It
declines, however, to unwind the parts of the SAVE Plan already in effect because plaintiffs
have failed to demonstrate those provisions caused irreparable harm. Plaintiffs brought this
lawsuit long after defendants already had implemented those aspects of the SAVE Plan, so the
court doesn’t see how plaintiffs can complain of irreparable harm from them. Nor have plaintiffs
explained how a preliminary injunction could unwind the parts of the SAVE Plan already in
effect. But the court grants plaintiffs’ request to enjoin those aspects of the SAVE Plan not yet
implemented.
The court emphasizes one more thing about its decision. This Order does not decide
whether student loan forgiveness is good policy or bad policy. The popularly elected branches of
our government—the President and the Congress—properly control that decision. Thus, no one
should read this Order to take a position on that question because our Constitution doesn’t assign
any part of it to the federal courts.
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The court explains each one of its decisions, below, beginning with the relevant
background.
I.
Background
The court begins with a fly-over of student loan repayment legislation and the Secretary
of Education’s role in it.
Congress enacted the Higher Education Act (HEA) in 1965 to “strengthen the educational
resources of our colleges and universities and to provide financial assistance for students in
postsecondary and higher education.” Pub. L. No. 89-329, 79 Stat. 1219 (1965). Twenty-eight
years later, Congress passed the “Student Loan Reform Act,” and allowed the Secretary of
Education to issue federal student loans directly from the Department. Pub. L. No. 103-66,
§ 4011–21, 107 Stat. 312 (1993). The Student Loan Reform Act also created income-contingent
repayment plans—the repayment plans at issue here. Id. at § 4021 (codified at 20 U.S.C.
§ 1087e(d)(1)(D)).
Here’s the statutory provision establishing income-contingent repayment plans, which
serves as this case’s axis:
Consistent with criteria established by the Secretary, the Secretary shall offer a
borrower of a loan made under this part a variety of plans for repayment of such
loan, including principal and interest on the loan. The borrower shall be entitled to
accelerate, without penalty, repayment on the borrower’s loans under this part. The
borrower may choose . . . an income contingent repayment plan, with varying
annual repayment amounts based on the income of the borrower, paid over an
extended period of time prescribed by the Secretary, not to exceed 25 years[.]
20 U.S.C. § 1087e(d)(1)(D).
Before the action challenged here, the Secretary of Education—“the Secretary” in the
remainder of this Order—has invoked this statutory authority three times:
1. In 1994, the Secretary created the first income-contingent repayment plan. William D.
Ford Federal Direct Loan Program, 59 Fed. Reg. 61,664 (Dec. 1, 1994) (codified at 34
C.F.R. pt. 685).
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2. In 2012, the Secretary created the PAYE Plan. Federal Perkins Loan Program, Federal
Family Education Loan Program, and William D. Ford Federal Direct Loan Program, 77
Fed. Reg. 66,088 (Nov. 1, 2012) (codified at 34 C.F.R. pts. 674, 682, 685).
3. In 2015, the Secretary created the REPAYE Plan. Student Assistance General
Provisions, Federal Family Education Loan Program, and William D. Ford Federal Direct
Loan Program, 80 Fed. Reg. 67,204 (Oct. 30, 2015) (codified at 34 C.F.R. pts. 668, 682,
685).
Each time, the Secretary imagined forgiving the remaining loan balance after a borrower
had made payments for a specific period of time. See 59 Fed. Reg. at 61,666 (“Some borrowers
in the [income-contingent repayment] plan may not earn sufficient income to fully repay their
loans within the statutory 25-year time period. In this event, the Secretary will forgive any
outstanding loan balance (principal plus interest) that is unpaid after 25 years.”); 77 Fed. Reg. at
66,114 (“The revisions offer eligible borrowers lower payments and loan forgiveness after 20
years of qualifying payments.”); 80 Fed. Reg. 67,209 (“We agree that borrowers are responsible
for repaying their student loans, and we believe that most borrowers repaying their loans under
the REPAYE plan will be successful in repaying their loans, in many cases before the end of the
20- or 25-year repayment period. However, we also believe the REPAYE plan will provide
relief to struggling borrowers who experience financial difficulties that prevent them from
repaying their loans. We note that the REPAYE plan requires 20 or 25 years of qualifying
payments before a loan is forgiven.”).
With this background about income-driven repayment plans, the court next explains
relevant details about a different kind of repayment plan: income-based repayment plans.
Income-Based Repayment (IBR) Plans
In 2007, Congress amended the HEA and created income-based repayment plans for
borrowers with “partial financial hardship.” Pub. L. No. 110-84, 121 Stat. 784 (2007). The
statute defines “partial financial hardship” to mean the borrower’s annual total loan payment,
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based on a 10-year repayment period, exceeds 15% of the amount by which “the borrower’s and
the borrower’s spouse’s . . . adjusted gross income[] exceeds” 150% of the applicable poverty
line. 20 U.S.C. § 1098e(a)(3). And the statute explicitly authorized the Secretary to “repay or
cancel any outstanding balance of principal and interest due on all loans made” under certain
conditions after “a period time prescribed the Secretary, not to exceed 25 years[.]” Id.
§ 1098e(b)(7).
In 2010, Congress amended the IBR statute. Health Care and Education Reconciliation
Act of 2010, Pub. L. No. 111-152, § 2213, 124 Stat. 1029, 1081 (2010) (codified at 20 U.S.C.
§ 1098e(e)). For borrowers taking out a loan on or after July 1, 2014, Congress lowered the cap
on payments for IBR plans to 10%—down from 15%. 20 U.S.C. § 1098e(e)(1). And for those
same borrowers, Congress reduced the maximum payment time window to 20 years—down
from 25 years. Id. § 1098e(e)(2). The Secretary then applied these IBR updates to all student
loans.
Five years later, in 2015, the Secretary created the REPAYE Plan by rulemaking and
applied the 10% payment cap to all borrowers, regardless of when they took out loans. 80 Fed.
Reg. 67,204. The REPAYE Plan also lowered the repayment window for borrowers with
undergraduate debt from 25 years to 20 years. Id. at 67,205 (“For a borrower who only has loans
received to pay for undergraduate study, provide that the remaining balance of the borrower’s
loans that have been repaid under the REPAYE plan is forgiven after 20 years of qualifying
payments.”). The REPAYE Plan set the repayment window for borrowers with graduate debt at
25 years. Id. (“For a borrower who has at least one loan received to pay for graduate study,
provide that the remaining balance of the borrower’s loans that have been repaid under the
REPAYE plan is forgiven after 25 years of qualifying payments.”).
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The SAVE Plan
In 2023, the Secretary issued regulations creating the SAVE Plan—the plan challenged
here. Improving Income Driven Repayment for the William D. Ford Federal Direct Loan
Program and the Federal Family Education Loan (FFEL) Program, 88 Fed. Reg. 43,820 (July 10,
2023) (to be codified at 34 C.F.R. pts. 682, 685). First, a few notes about the SAVE Plan’s
terminology. The SAVE Plan seeks to combine income-contingent repayment plans and
income-based repayment plans under one umbrella term: income-driven repayment plans. Id. at
43,820. And the SAVE Plan is the new name for the REPAYE plan. Id.
The SAVE Plan first emerged in January 2023, when the Department issued a Notice of
Proposed Rulemaking (NPRM). Doc. 57 at 12 (1st Am. Compl. ¶ 57). The NPRM “propose[d]
to amend the regulations governing income-contingent repayment plans[.]” Improving IncomeDriven Repayment for the William D. Ford Federal Direct Loan Program, 88 Fed. Reg. 1894
(Jan. 11, 2023) (to be codified at 34 C.F.R. pt. 685). After the NPRM and the corresponding
comment period, the Department published the “Final Rule” in July 2023. Doc. 57 at 14 (1st
Am. Compl. ¶ 68); see also Improving Income Driven Repayment for the William D. Ford
Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program, 88 Fed.
Reg. 43,820 (July 10, 2023) (to be codified at 34 C.F.R. pts. 682, 685).
Here, plaintiffs attack several pieces of the Final Rule.1 Specifically, they challenge the
following changes to income contingent repayment plans:
1
those changes defining discretionary income as income above 225% of the applicable
federal poverty guideline;
those changes setting a borrower’s monthly payment amount to $0 if the borrower’s
income falls below 225% of the applicable federal poverty guideline;
This Memorandum and Order uses the terms “Final Rule” and “SAVE Plan” interchangeably.
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those changes capping, for undergraduate loans, a borrower’s monthly payment
amount at 5% of the borrower’s income above 225% of the applicable federal poverty
guideline; and
those changes cancelling, for borrowers whose original principal balance was $12,000
or less, the remaining balance after the borrower has made 120 monthly payments or
the equivalent.
Doc. 57 at 14 (1st Am. Compl. ¶ 70). So, summarizing, the Final Rule raises the floor of
discretionary income, decreases borrowers’ monthly payments, and, for loans with original
balances of $12,000 or less, limits a borrower’s repayment window to 10 years (from 20 or 25)
of qualifying payments.
This Lawsuit
According to plaintiffs, the Final Rule is “plainly unlawful” under the Constitution and
the Administrative Procedures Act (APA). They bring four claims targeting this purportedly
unlawful conduct: (1) agency action in excess of statutory jurisdiction and in violation of
separation of powers, violating Article I of the Constitution; (2) agency action in excess of
statutory authority, violating the Administrative Procedures Act; (3) arbitration and capricious
agency action, violating the APA; and (4) agency action in violation of APA procedures. Doc.
57 at 25–38 (1st Am. Compl. ¶¶ 133–227). Relying on these legal theories, plaintiffs ask the
court to enjoin defendants “from implementing or acting pursuant to the” SAVE Plan. Doc. 23.
II.
Legal Standard
Federal Rule of Civil Procedure 65(a) authorizes federal courts to issue preliminary
injunctions. The courts enjoy broad discretion when deciding whether to grant a preliminary
injunction. Beltronics USA, Inc. v. Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th
Cir. 2009) (citations omitted).
The relief afforded under Rule 65 embraces a limited purpose—a preliminary injunction
serves “merely to preserve the relative positions of the parties until a trial on the merits can be
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held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). The Tenth Circuit instructs that
the moving party—here plaintiffs—must satisfy four factors to deserve a preliminary injunction:
“‘(1) a likelihood of success on the merits; (2) a likelihood that the moving party will suffer
irreparable harm if the injunction is not granted; (3) the balance of equities is in the moving
party’s favor; and (4) the preliminary injunction is in the public interest.’” Verlo v. Martinez,
820 F.3d 1113, 1126 (10th Cir. 2016) (quoting Republican Party of N.M. v. King, 741 F.3d 1089,
1092 (10th Cir. 2013)). When the government is the party opposing the preliminary injunction—
as here—the third and fourth factors merge. Aposhian v. Barr, 958 F.3d 969, 978 (10th Cir.
2020) (citing Nken v. Holder, 556 U.S. 418, 435 (2009)), abrogated on other grounds, Garland
v. Cargill, No. 22-976, 2024 WL 2981505 (U.S. 2024).
“A preliminary injunction is an extraordinary remedy[.]” Winter v. Nat. Res. Def.
Council, Inc., 555 U.S. 7, 24 (2008). So, the moving party must demonstrate a “‘clear and
unequivocal’” right to such relief. Petrella v. Brownback, 787 F.3d 1242, 1256 (10th Cir. 2015)
(quoting Beltronics, 562 F.3d at 1070). “In general, ‘a preliminary injunction . . . is the
exception rather than the rule.’” Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226
(10th Cir. 2007) (quoting GTE Corp. v. Williams, 731 F.2d 676, 678 (10th Cir. 1984)).
III.
Analysis
The court’s analysis of plaintiffs’ Motion for Preliminary Injunction unfolds in this
fashion: it evaluates the three preliminary injunction factors, in turn. Then, after concluding that
all three factors favor entry of a preliminary injunction, the court considers the scope of the relief
warranted. The court begins with the first preliminary injunction factor: plaintiffs’ likelihood of
success on the merits.
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A.
Likelihood of Success on the Merits
Plaintiffs assert they are likely to succeed on their statutory-based claims and their APA
claims. “Where a plaintiff seeks a preliminary injunction and asserts multiple claims upon which
the relief may be granted, the plaintiff need only establish a likelihood of success on the merits of
one of the claims.” George v. Davis Sch. Dist., No. 23-cv-00139, 2023 WL 5000989, at *6 (D.
Utah Aug. 4, 2023) (citation and internal quotation marks omitted). The court’s analysis of this
factor begins and ends with plaintiffs’ statutory claims2—ones asserting that the SAVE Plan
exceeds defendants’ authority under the HEA. To show that their claims are likely to succeed,
plaintiffs argue the SAVE Plan violates the “Major Questions Doctrine.”
To apply the Major Questions Doctrine (MQD), the court must engage in a two-step
analysis. First, the court must determine whether this case presents a major question. Second, if
it does, the court must determine whether the statute the agency invokes provides clear
congressional authorization for the challenged agency action. The court takes up each question,
in turn, below.
2
There’s a slight discrepancy between plaintiffs’ Motion for Preliminary Injunction and their First
Amended Complaint.
Plaintiffs’ First Amended Complaint asserts four claims for relief. In Count I, plaintiffs assert
defendants violated Article I of the Constitution by taking an agency action in excess of statutory
jurisdiction and in violation of the separation of powers. Doc. 57 at 25–28 (1st Am. Compl. ¶¶ 133–54).
In Count II, plaintiffs assert defendants took an agency action in excess of their statutory authority,
violating the APA. Id. at 28–30 (1st Am. Compl. ¶¶ 155–73). Count III asserts defendants took an
arbitrary and capricious agency action, violating the APA. Id. at 30–36 (1st Am. Compl. ¶¶ 174–215).
And in Count IV, plaintiffs assert defendants violated APA procedures. Id. at 36–38 (1st Am. Compl.
¶¶ 216–27).
In contrast, plaintiffs’ brief asserts plaintiffs are likely to succeed on the merits of three claims:
“(1) the final rule exceeds Defendants’ authority under the HEA, (2) the final rule is arbitrary and
capricious, and (3) the rule’s thirty-day comment period violated the APA.” Doc. 24 at 10. The court
assumes that this first “statutory” claim mentioned in plaintiffs’ brief supporting their Motion for
Preliminary Injunction includes Count I and Count II from the First Amended Complaint.
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1.
The MQD Applies Because the SAVE Plan has Vast Economic and
Political Significance.
The “so-called Major Questions Doctrine applies where ‘an agency claims to discover in
a long-extant statute an unheralded power to regulate “a significant portion of the American
economy”’ or make ‘decisions of vast “economic and political significance.”’” Bradford v. U.S.
Dep’t of Labor, 101 F.4th 707, 725 (10th Cir. 2024) (quoting Util. Air Regul. Grp. v. EPA, 573
U.S. 302, 324 (2014) (quoting Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529
U.S 120, 159–60 (2000))). “Although courts generally enforce plain and unambiguous statutory
language according to its terms, where the statute at issue is one that confers authority upon an
administrative agency, there are certain extraordinary cases that provide a reason to hesitate
before concluding that Congress meant to confer such authority.” Id. at 726 (quotation cleaned
up). If the case is an “extraordinary” one, then “the agency must point to clear congressional
authorization for the proposed regulation.” Id. (internal quotation marks, citation, and ellipsis
omitted). In West Virginia v. EPA, the Supreme Court labelled several of its prior decisions as
Major Question cases. 597 U.S. 697, 721 (2022). The court reviews some of these examples,
below, to demonstrate how the MQD works.
In Brown & Williamson, the Supreme Court rejected the FDA’s attempt to regulate
tobacco products under its authority to regulate “drugs” and “devices.” 529 U.S. at 159–60. It
did so because the Court was “confident that Congress could not have intended to delegate a
decision of such economic and political significance to an agency in so cryptic a fashion.” Id. at
160.
In Alabama Association of Realtors v. Department of Health & Human Services, the
Court rejected the CDC’s authority to issue a nationwide eviction moratorium in response to the
COVID-19 pandemic. 594 U.S. 758, 759–60 (2021). The CDC had claimed this kind of
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authority under a provision of the Public Health Service Act because it allowed the CDC to
“‘make and enforce . . . regulations’” that it deemed “‘necessary to prevent the introduction,
transmission, or spread of communicable diseases[.]’” Id. at 760–61 (quoting 42 U.S.C.
§ 264(a)). The Court called the CDC’s “claim of expansive authority” under this statute
“unprecedented” and found the statute “a wafer-thin reed on which to rest such sweeping
power.” Id. at 765. The Court emphasized that the eviction moratorium covered millions at risk
for eviction and likely had an economic impact around $50 billion. Id. at 764.
In Utility Air Regulatory Group v. EPA, the Court rejected the agency’s attempt to
include greenhouse gases under the Clean Air Act’s definition of “air pollutant.” 573 U.S. at
321. The Court concluded EPA’s interpretation “would be incompatible with the substance of
Congress’ regulatory scheme,” id. at 322 (quotation cleaned up), because EPA’s interpretation
relied on “ambiguous statutory text[,]” id. at 324. And, the Court emphasized, EPA’s claimed
authority would give it “unheralded power to regulate ‘a significant portion of the American
economy[.]’” Id. (quoting Brown & Williamson, 529 U.S. at 159). Against this broader
backdrop, the court turns to an MQD case involving student loans: Biden v. Nebraska.
Biden v. Nebraska involved student loan forgiveness under the Higher Education Relief
Opportunities for Students Act (HEROES Act) of 2003, a law enacted out of Congress’s concern
for student loan borrowers in the wake of the September 11 terrorist attacks. 143 S. Ct. at 2363.
The HEROES Act allows the Secretary to “waive or modify any statutory or regulatory
provision applicable to the student financial assistance programs” during a “national
emergency[.]” 20 U.S.C. § 1098bb(a)(1). In August 2022, the Secretary cancelled student loan
debt under the HEROES Act to address financial harm stemming from the COVID-19 pandemic.
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Biden v. Nebraska, 143 S. Ct. at 2364. This plan sought “to reduce and eliminate student debts
directly.” Id. Here’s how that batch of loan forgiveness worked:
For borrowers with an adjusted gross income below $125,000 in either 2020 or
2021 who have eligible federal loans, the Department of Education will discharge
the balance of those loans in an amount up to $10,000 per borrower. Borrowers
who previously received Pell Grants qualify for up to $20,000 in loan cancellation.
Id. at 2364–65 (citations omitted).
Six states challenged this student loan forgiveness plan based on the HEROES Act. Id. at
2365. The Supreme Court—after determining that at least one state had standing—then applied
the MQD. That is, the Court concluded the “economic and political significance of the
[HEROES Act plan was] staggering by any measure.” Id. at 2373 (citation and internal
quotation marks omitted). Given the significance of the Secretary’s HEROES Act loan
forgiveness, the Court found a “reason to hesitate before concluding that Congress meant to
confer such authority.” Id. at 2372 (citation and internal quotation marks omitted). The Court
thus searched—in vain, as it turned out—for “clear congressional authorization for such a
program.” Id. at 2375 (internal quotation marks omitted). And the Court concluded with this:
“[T]he basic and consequential tradeoffs inherent in a mass debt cancellation program are ones
that Congress would likely have intended for itself.” Id. (citation and internal quotation marks
omitted).
Here, defendants correctly point out that this case differs from Biden v. Nebraska. As the
Supreme Court already has noted, “HEROES Act loan relief and HEA loan relief function
independently of each other.” Dep’t of Educ. v. Brown, 600 U.S. 551, 567 (2023). Indeed, the
Supreme Court specified that its HEROES Act decision did “not opine on the substantive
lawfulness of any action the Department might take under the HEA[.]” Id. at 565 n.2. This
difference notwithstanding, Biden v. Nebraska definitively answers the question: is the SAVE
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Plan a major question? The SAVE Plan, like the HEROES Act loan forgiveness, has
“staggering” “‘economic and political significance[.]’” Biden v. Nebraska, 143 S. Ct. at 2373
(quoting West Virginia v. EPA, 597 U.S. at 721). And so, the answer must be yes.
The Supreme Court has determined that student loan debt cancellation plans that forgive
enormous amounts of debt are major questions. Id. at 2375 (“[T]he basic and consequential
tradeoffs inherent in a mass debt cancellation program are ones that Congress would likely have
intended for itself.” (citation and internal quotation marks omitted)). Defendants estimate the net
federal budget effect of the SAVE Plan at $156 billion. 88 Fed. Reg. at 43,886. Recall that the
$50 billion cost of the CDC’s eviction moratorium triggered the MQD in Alabama Association of
Realtors, 594 U.S. at 764. The court thus easily concludes that the SAVE Plan—with a price tag
three times as high—is a “decision[] of vast economic and political significance.” Bradford, 101
F.4th at 725 (citation and internal quotation marks omitted). And so, the court must proceed to
step two of the MQD, scouring the HEA for clear congressional authorization.
2.
The Statute Doesn’t Provide Clear Congressional Authorization
for the SAVE Plan.
Step two is where things get tricky. So, what, exactly, does “clear congressional
authorization” mean? The Supreme Court has dedicated much of its MQD analysis to defining
what doesn’t qualify as clear congressional authorization.3 But the Supreme Court’s decisions to
date have used a two-part approach. First, the cases evaluate the statute’s plain text. Second,
they consider the statute’s context. See West Virginia v. EPA, 597 U.S. at 721–23. The court’s
analysis here, below, uses the same approach.
3
The court is not aware of, nor have the parties cited any MQD case where the Supreme Court has
found clear congressional authorization. Does this absence suggest that the Supreme Court views the
MQD as the equivalent of strict scrutiny for regulations? Our Circuit has answered no. In Bradford, our
Circuit assumed without deciding that the MQD applied and found clear congressional authorization for
the challenged regulation. 101 F.4th at 725–28. More on Bradford later.
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a.
The HEA’s Plain Text Authorizes the SAVE Plan.
Biden v. Nebraska doesn’t answer this case’s statutory interpretation question—at least
not directly—because that case involved an entirely different statute. But it nonetheless
illustrates the kind of routine textual analysis the Supreme Court directs district courts to conduct
when applying the MQD. For example, the HEROES Act authorizes the Secretary to “waive or
modify” student loan programs in connection with a national emergency. 20 U.S.C.
§ 1098bb(a)(1). The Biden v. Nebraska Court carefully considered the meaning of both words.
143 S. Ct. at 2368–69.
First, the Court held that the word “modify” “does not authorize basic and fundamental
changes[.]” Id. at 2368 (citation and internal quotation marks omitted). Instead, the Court
explained, modify “carries a connotation of increment or limitation, and must be read to mean to
change moderately or in minor fashion.” Id. (citation and internal quotation marks omitted).
The Court rejected the change imposed under the HEROES Act loan forgiveness as a
modification. It “modified the cited provisions only in the same sense that the French
Revolution modified the status of the French nobility—it has abolished them and supplanted
them with a new regime entirely.” Id. at 2369 (citation and internal quotation marks omitted).
Second, the Court rejected the Secretary’s reliance on the word “waiver” in the statute.
Previously, the Secretary had used his waiver power to identify particular legal requirements—
i.e., “the requirement that a student provide a written request for a leave of absence”—and waive
such requirements. Id. at 2370. But, under the HEROES Act loan forgiveness, the Secretary
never identified a particular legal requirement he had waived. Id. Ultimately, the Court held that
what the Secretary had “actually done [was] draft a new section of the Education Act from
scratch by ‘waiving’ provisions root and branch and then filling the empty space with radically
new text.” Id. at 2371. The Court thus invalidated the HEROES Act plan because the HEROES
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Act text—allowing the Secretary to “waive or modify”—didn’t clearly authorize student loan
forgiveness. Id. at 2375. So, step two of the MQD analysis begins like any other statutory
interpretation exercise: with the statute’s text.
In the HEA, Congress gave the Secretary the following authority to set incomecontingent repayment plans:
Consistent with criteria established by the Secretary, the Secretary shall offer a
borrower of a loan made under this part a variety of plans for repayment of such
loan, including principal and interest on the loan. The borrower shall be entitled to
accelerate, without penalty, repayment on the borrower’s loans under this part. The
borrower may choose . . . an income contingent repayment plan, with varying
annual repayment amounts based on the income of the borrower, paid over an
extended period of time prescribed by the Secretary, not to exceed 25 years[.]
20 U.S.C. § 1087e(d)(1)(D). Plaintiffs argue this statute doesn’t clearly authorize the SAVE
Plan because it consistently uses the word “repayment.” Doc. 24 at 14. According to plaintiffs,
the statute’s operative term—“repayment”—“affirmatively precludes massive debt forgiveness.”
Id. (emphasis in original).
Plaintiffs argue that repay means “to pay back.” Doc. 24 at 14 (citing Repay, American
Heritage Dictionary (4th ed. 2001)); see also Repay, Black’s Law Dictionary (6th ed. 1990)
(defining repay first as “[t]o pay back”); Antonin Scalia & Bryan A. Garner, A Note on the Use
of Dictionaries, 16 Green Bag 2d 419, 428 (2013) (approving use of Black’s Law Dictionary
sixth edition for legal terms from 1951–2000). Taking one more step, plaintiffs argue that repay
means to pay back the entirety of the principal borrowed, with some interest. Doc. 24 at 14–15.
Plaintiffs also point out that the statute requires “repayment . . . including principal and interest
on the loan.” 20 U.S.C. § 1087e(d)(1). Plaintiffs see the statutory terms “principal” and
“interest” as signals that Congress intended for borrowers to repay the entire principal and at
least some interest. But plaintiffs’ argument ignores the rest of the statute.
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The statute also requires annual payments “paid over an extended period of time
prescribed by the Secretary, not to exceed 25 years[.]” 20 U.S.C. § 1087e(d)(1)(D). What
happens when 25 years’ worth of payments doesn’t “repay[]” a loan? Loan forgiveness. Indeed,
every Secretary of Education since the HEA’s enactment has interpreted this provision to mean
that the Secretary must forgive the remaining balance of the loan after 25 years. 59 Fed. Reg. at
61,666 (“Some borrowers in the [income-contingent repayment] plan may not earn sufficient
income to fully repay their loans within the statutory 25-year time period. In this event, the
Secretary will forgive any outstanding loan balance (principal plus interest) that is unpaid after
25 years.”); 77 Fed. Reg. at 66,114 (“The revisions offer eligible borrowers lower payments and
loan forgiveness after 20 years of qualifying payments.”); 80 Fed. Reg. 67,209 (“We agree that
borrowers are responsible for repaying their student loans, and we believe that most borrowers
repaying their loans under the REPAYE plan will be successful in repaying their loans, in many
cases before the end of the 20- or 25-year repayment period. However, we also believe the
REPAYE plan will provide relief to struggling borrowers who experience financial difficulties
that prevent them from repaying their loans. We note that the REPAYE plan requires 20 or 25
years of qualifying payments before a loan is forgiven.”).
In the court’s view, the Secretary’s longstanding interpretation of the statute is the correct
one. The statute sets an upper limit for repayments. Congress wanted borrowers on incomecontingent repayment plans to make payments for no more than 25 years. As defendants aptly
put it, “a plan for partial repayment of a loan or slower repayment of a loan are both still ‘plans
for repayment of such loan, including principal and interest on the loan.’” Doc. 47 at 34
(emphases in original) (quoting 20 U.S.C. § 1087e(d)(1)). Plaintiffs’ interpretation inserts the
word “full” in the statute, rendering it to require “full repayment” of the loan’s principal and
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some interest. But that’s just not what the statute says. The court thus agrees with the
Secretary’s time-honored interpretation that the statute imagines repayment for less than 25
years, with forgiveness at the end. See Walker v. United Parcel Serv., Inc., 240 F.3d 1268, 1276
(10th Cir. 2001) (“‘Where an agency’s statutory construction has been fully brought to the
attention of the public and the Congress, and the latter has not sought to alter that interpretation
although it has amended the statute in other respects, then presumably the legislative intent has
been correctly discerned.’” (quoting N. Haven Bd. of Educ. v. Bell, 456 U.S. 512, 535 (1982))).
The court doesn’t buy plaintiffs’ argument about the HEA’s plain text. It next addresses
plaintiffs’ arguments about the statute’s context.
b.
The HEA’s Context Does Not Provide Clear Congressional
Authorization for the SAVE Plan.
The Justices have emphasized that a statute’s context plays an important role in the MQD
analysis. See West Virginia v. EPA, 597 U.S. at 721 (emphasizing that “the words of a statute
must be read in their context and with a view to their place in the overall statutory scheme” and,
in ordinary cases, “context has no great effect on the appropriate analysis” but “there are
‘extraordinary cases’ that call for a different approach” (quotation cleaned up)); see also Biden v.
Nebraska, 143 S. Ct. at 2376 (Barrett, J., concurring) (responding to “the charge that the [Major
Questions] doctrine is inconsistent with textualism” by “understand[ing] it to emphasize the
importance of context when a court interprets a delegation to an administrative agency”
(emphasis in original) (citation omitted)). To that end, a statute’s context can tell the court a lot
about Congress’s authorization in an MQD case. As avid footnote readers already know, our
Circuit addressed this very issue in Bradford, 101 F.4th at 725–28.4
4
None of the parties here cited Bradford in its papers. See Doc. 24; Doc. 47; Doc. 50. The court’s
analysis nonetheless uses Bradford because it’s binding Circuit precedent and it provides a helpful
framework for a developing doctrine. As the court already mentioned, the Supreme Court has directed
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In Bradford, the Tenth Circuit assumed without deciding that the MQD applied to a
Department of Labor rule requiring recreational service outfitters operating on federal land to
pay their employees a $15 minimum wage, rescinding an exemption the outfitters previously
enjoyed. Id. at 713. After assuming the MQD applied, the Circuit asked whether the Congress
clearly had authorized the Department of Labor’s rule. In its clear congressional authorization
analysis, the Circuit identified four touchstones: (1) whether the agency “seeks to locate
expansive authority in modest words, vague terms or ancillary provisions[;]” (2) whether the rule
is “an enormous and transformative expansion in regulatory authority without clear
congressional authorization[;]” (3) whether the agency is “claim[ing] to discover regulatory
authority for the first time in a long-extant statute[;]” and (4) whether “the agency issuing the
. . . rule lacks expertise in the relevant area of policymaking.”5 Id. at 725–28 (quotation cleaned
most of its MQD efforts to deciding what is not clear congressional authorization. Bradford, on the other
hand, demonstrates what is clear congressional authorization. And, in any event, the parties’ papers make
arguments that fall well within Bradford, though they don’t structure them in Bradford’s style.
5
The court recognizes that our Circuit didn’t explicitly name these four touchstones as
considerations for the clear congressional authorization analysis. The court nonetheless interprets
Bradford this way because these four touchstones resemble Justice Gorsuch’s four “clues” for a clear
congressional authorization analysis, as laid out in his West Virginia v. EPA concurrence. West Virginia
v. EPA, 597 U.S. at 746–49 (Gorsuch, J., concurring). There, Justice Gorsuch identified four “telling
clues” for a court’s clear congressional authorization inquiry: (1) whether the agency relies on “[o]blique
or elliptical language” or “seek[s] to hide elephants in mouseholes[;]” (2) “the age and focus of the statute
the agency invokes in relation to the problem the agency seeks to address[;]” (3) “the agency’s past
interpretations of the relevant statute[;]” and (4) whether “there is a mismatch between an agency’s
challenged action and its congressionally assigned mission and expertise.” Id. at 746–48 (Gorsuch, J.,
concurring) (citations and internal quotation marks omitted).
Justice Gorsuch’s four “clues” don’t match our Circuit’s four Bradford touchstones perfectly, but
they’re awfully close:
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up). The court applies each of these touchstones, below, to discern whether the Congress clearly
has authorized the measures adopted in the SAVE Plan.
First, the court considers whether the Department of Education’s SAVE Plan “seeks to
locate expansive authority in ‘modest words,’ ‘vague terms or ancillary provisions.’” Id. at 725
(citing Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001)). Even if a regulation has “a
colorable textual basis[,]” a statute’s context can make “it very unlikely that Congress” delegated
such expansive power to the agency. West Virginia v. EPA, 597 U.S. at 722–23. “Extraordinary
grants of regulatory authority are rarely accomplished through ‘modest words,’ ‘vague terms,’ or
‘subtle devices.’” Id. at 723 (brackets omitted) (quoting Whitman, 531 U.S. at 468). To survive
MQD scrutiny, the Secretary must show “something more than a merely plausible textual basis
for the agency action[.]” Id.
Here, defendants haven’t shown that something more. As demonstrated above,
defendants have identified a colorable, even plausible textual basis for the SAVE Plan. The
1
2
3
4
Touchstones from Bradford v. U.S. Dep’t of
Labor, 101 F.4th at 725–28.
Whether the agency “seeks to locate expansive
authority in modest words, vague terms or
ancillary provisions.”
Whether the challenged rule is “an enormous and
transformative expansion in regulatory
authority without clear congressional
authorization.”
“Clues” in West Virginia v. EPA, 597 U.S.
at 746–49 (Gorsuch, J., concurring).
Whether the agency relies on “[o]blique or
elliptical language[.]”
“[E]xamine the age and focus of the statute
the agency invokes in relation to the problem
the agency seeks to address. . . . [I]t is
unlikely that Congress will make
extraordinary grants of regulatory
authority through vague language in a longextant statute.”
“[C]ourts may examine the agency’s past
interpretations of the relevant statute.”
Whether the agency is “claim[ing] to discover
regulatory authority for the first time in a longextant statute.”
Whether “the agency issuing the . . . rule lacks
expertise in the relevant area of policymaking.”
“[S]kepticism may be merited where there is
a mismatch between an agency’s challenged
action and its congressionally assigned
mission and expertise.”
The court thus applies these four touchstones in its clear congressional authority analysis.
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SAVE Plan creates “an income contingent repayment plan, with varying annual repayment
amounts based on the income of the borrower, paid over an extended period of time prescribed
by the Secretary, not to exceed 25 years[.]” 20 U.S.C. § 1087e(d)(1)(D). While it’s plausible to
interpret the SAVE Plan to comply with the statute, plausibility won’t suffice. Take, for
example, “not to exceed 25 years[.]” Id. Recall that the SAVE Plan limits some borrowers’
repayment window to 10 years. To be sure, 10 years of repayments doesn’t exceed 25. And the
Secretary’s discretion to set a repayment time window is constrained by the phrase “extended
period of time[.]” 20 U.S.C. § 1087e(d)(1)(D) (emphasis added). But defendants’ plausible
textual basis doesn’t rise to the level of “clear.” The statute sets a clear ceiling, but not a clear
floor. That is why the statute’s language is, at most, a “subtle device[]” and so, it can’t support
an “[e]xtraordinary grant[] of regulatory authority[.]” West Virginia v. EPA, 597 U.S. at 723
(internal quotation marks and citation omitted). Without a clear floor—only a plausible floor
and a “subtle device”—the court can’t find clear congressional authorization for the SAVE Plan.
Second, the court asks whether the SAVE Plan is “an ‘enormous and transformative
expansion in regulatory authority without clear congressional authorization.’” Bradford, 101
F.4th at 726 (ellipsis omitted) (quoting Utility Air, 573 U.S. at 324). In Utility Air, summarized
above, the Supreme Court struck down the EPA’s interpretation of the term “air pollutant”
because—though plausible—the interpretation gave the EPA “unheralded power to regulate a
significant portion of the American economy[.]” 573 U.S. at 324 (citation and internal quotation
marks omitted).
Here, defendants estimate the SAVE Plan will cost $156 billion over 10 years. 88 Fed.
Reg. at 43,820. But, when defendants calculated that number, they assumed the Supreme Court
would uphold the HEROES Act loan forgiveness. The Supreme Court invalidated the HEROES
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Act loan forgiveness in Biden v. Nebraska, and none of those loans were cancelled. And that has
significant implications for the SAVE Plan’s cost. Plaintiffs proffer a new SAVE Plan cost
estimate that accounts for Biden v. Nebraska, and that cost is $475 billion over ten years. Doc.
24 at 23 (citing Penn Wharton, Biden’s New Income-Driven Repayment (“SAVE”) Plan:
Budgetary Cost Estimate Update, University of Pennsylvania (July 17, 2023),
https://budgetmodel.wharton.upenn.edu/issues/2023/7/17/biden-income-driven-repaymentbudget-update). As points of reference, the REPAYE Plan cost an estimated $15.4 billion. 80
Fed. Reg. at 67,225. This difference—$475 billion versus $15.4 billion—expands agency
authority to such an extent that it alters it.6 So, the court concludes that the SAVE Plan
represents “an ‘enormous and transformative expansion in regulatory authority without clear
congressional authorization.’” Bradford, 101 F.4th at 726 (ellipsis omitted) (quoting Utility Air,
573 U.S. at 324).
6
The court recognizes that this second Bradford touchstone seems to overlap with step one of the
MQD analysis. The court differentiates between the two this way: step one of the MQD analysis asks
about the sheer size of the regulatory action—i.e., is it one of huge economic and political significance?
The second Bradford touchstone asks, in contrast, not only whether the regulatory action is enormous but,
crucially, whether the regulatory action is transformative. This requires the court’s context analysis to
look back at the agency’s previous actions and compare them to the challenged action.
Justice Barrett provided a helpful example in her Biden v. Nebraska concurrence, where she
explained the importance of context:
[I]magine a grocer instructs a clerk to “go to the orchard and buy apples for the store.”
Though this grant of apple-purchasing authority sounds unqualified, a reasonable clerk
would know that there are limits. For example, if the grocer usually keeps 200 apples on
hand, the clerk does not have actual authority to buy 1,000—the grocer would have spoken
more directly if she meant to authorize such an out-of-the-ordinary purchase.
143 S. Ct. at 513 (Barrett, J., concurring). So, comparing prior apple orders to the existing apple orders
provided important context. And the court must look for “out-of-the-ordinary” grants of authority. All
this is to say: the sheer cost of the SAVE Plan is relevant to MQD step one; the cost of the SAVE Plan
compared to the cost of the REPAYE Plan is relevant to Bradford’s second touchstone.
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Beyond cost, the SAVE Plan is a transformative expansion in regulatory authority in
another important way: it represents the first time the Secretary has gone beyond the number set
by Congress. Recall that Congress modified the laws for income-based repayment programs in
2010. Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, § 2213, 124
Stat. 1029, 1081 (2010) (codified at 20 U.S.C. § 1098e(e)). For borrowers who had taken out a
loan on or after July 1, 2014, Congress lowered the cap on payments for IBR plans to 10%—
down from 15%. 20 U.S.C. § 1098e(e)(1). And for those same borrowers, Congress reduced the
maximum repayment window to 20 years—down from 25 years. Id. § 1098e(e)(2). In 2015, the
REPAYE Plan took these numbers—10% instead of 15% and 20 years instead of 25 years—and
applied them to eligible loans taken out before July 2014.7 Putting it another way, the REPAYE
Plan took Congress’s generosity with income-based repayment plans from § 1098e(e) and
applied that generosity to some income-driven repayment plans. So, the REPAYE Plan took
Congressionally-blessed numbers and applied them more broadly.
Not so here. Both the monthly payment cap and the payment period limitation overreach
any generosity Congress has authorized before. Here, the SAVE Plan caps a borrower’s monthly
payment amount at 5% of the borrower’s income above 225% of the applicable federal poverty
guideline. Congress has gone as low as 10%, but it’s never gone as low as 5%. The SAVE Plan
also cancels the remaining balance after the borrower has made 120 monthly payments for
borrowers whose original principal balance was $12,000 or less. Congress has gone as low as 20
years, but it’s never gone as low as 10 years. Because the Final Rule goes beyond Congress’s
limits—for the first time—the SAVE Plan is a “‘transformative expansion in regulatory authority
7
Borrowers with graduate debt were excepted. The REPAYE Plan still required those borrowers
to pay for 25 years.
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without clear congressional authorization.’” Bradford, 101 F.4th at 726 (ellipsis omitted)
(quoting Utility Air, 573 U.S. at 324).
Third, the court asks whether the Secretary is “claim[ing] to discover regulatory authority
for the first time in a long-extant statute.” Id. at 726–27 (citation and internal quotation marks
omitted). This Bradford touchstone favors defendants. The Secretary has used its HEA
authority three times before: to create the first income-contingent repayment plan, to create the
PAYE Plan, and to create the REPAYE Plan.
Last, the court considers whether the Department of Education “lacks ‘expertise’ in the
relevant area of policymaking.” Id. at 728. That is not the case here. The current record
demonstrates that the Department of Education has a great deal of expertise in the area of student
loans. This final touchstone also favors defendants.
In sum, two of the touchstones guiding the MQD favor plaintiffs. Two favor defendants.
But this calculus doesn’t produce a dead heat. That’s so because one of the touchstones favors
plaintiffs so compellingly that it overpowers the others. It’s the second factor: whether the
SAVE Plan represents “an enormous and transformative expansion in statutory authority without
clear congressional authorization.” Bradford, 101 F.4th at 726 (quotation cleaned up).
Unquestionably it does.
The record here contains just one estimate of the price tag for the SAVE Plan’s
forgiveness: $475 billion, over ten years. Biden v. Nebraska reported the total value of all
outstanding federal student loans at $1.6 trillion. 143 S. Ct. at 2362. So, the SAVE Plan
forgives nearly one-third of all student loan debt. And while this $1.6 trillion figure is a 2022
number—the record here doesn’t contain a current figure—the court has no doubt that $475
billion in forgiveness qualifies as “enormous” and a “transformative expansion.” Bradford, 101
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F.4th at 726 (quotation cleaned up). Indeed, the SAVE Plan’s forgiveness towers over earlier
iterations. For instance, the REPAYE Plan cost $15.4 billion.
This unprecedented and dramatic expansion shifts the overall balance of Bradford’s four
touchstones in favor of plaintiffs. The court finds that plaintiffs are likely to prevail on the first
of their statutory claims, i.e., that the SAVE Plan exceeds the Secretary’s authority under the
HEA. The court so finds even though defendants have mustered a plausible construction
suggesting that Congress conferred such authority. But they haven’t assembled what Biden v.
Nebraska and the MQD require: a clear showing of such authority. The court thus concludes
that plaintiffs are likely to prevail on the merits of their bellwether claim.
Next, the court analyzes the second preliminary injunction factor.
B.
Irreparable Harm
At the hearing on this motion, plaintiffs emphasized that the SAVE Plan will cause
irreparable harm to their public instrumentalities. A “plaintiff satisfies the irreparable harm
requirement by demonstrating ‘a significant risk that he or she will experience harm that cannot
be compensated after the fact by monetary damages.’” RoDa Drilling Co. v. Siegal, 552 F.3d
1203, 1210 (10th Cir. 2009) (quoting Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250,
1258 (10th Cir. 2003)). According to plaintiffs, their public instrumentalities hold FFEL loans,
and the SAVE Plan incentivizes student loan borrowers to consolidate their loans away from
FFEL loans. And, according to plaintiffs, borrowers already have consolidated their loans,
seeking to reap the benefits of the SAVE Plan. Once a borrower consolidates an FFEL loan, that
loan is gone, depriving the public instrumentalities of interest income. And plaintiffs can’t
recover money damages from defendants due to sovereign immunity. So, plaintiffs argue,
they’ve suffered an irreparable harm.
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As an initial matter, the court must reiterate its concerns about plaintiffs’ evidence of the
harms to their public instrumentalities. As mentioned in the Memorandum and Order deciding
defendants’ Motion to Dismiss, South Carolina’s evidence about its public instrumentality
doesn’t demonstrate that the SAVE Plan is leading to FFEL loan consolidation, nor does it show
that FFEL loan consolidation leads to decreased interest revenue. Doc. 68 at 18–20. And
Texas’s evidence merely shows that—assuming borrowers consolidate their loans—loan
consolidation will cause revenue loss to Texas’s public instrumentality in the future. See Doc.
53-7 at 2 (Keyton Decl. ¶ 4) (“To the extent that federal policy results in borrowers consolidating
their loans out of FFELP into the Direct Loan Program, those consolidations will cause the State
of Texas to lose revenue.” (emphasis added)). Only Alaska’s evidence adduces evidence of a
current harm to its public instrumentality. See Doc. 53-8 at 3 (Efird Decl. ¶ 9) (“[T]he enticed
consolidation has already harmed and will continue to harm ASLC[.]”). So, plaintiffs’ theories
of irreparable harm aren’t all that substantial.
Defendants argue that plaintiffs’ delay in seeking a preliminary injunction further
undermines their claims of irreparable harm. To evaluate this argument, the court divides its
analysis of plaintiffs’ irreparable harm in two: (i) irreparable harm from the SAVE Plan
provisions already in effect and (ii) irreparable harm from the SAVE Plan provisions set to go
into effect on July 1.
1.
Plaintiffs Have Failed to Show an Irreparable Harm from SAVE
Plan Provisions Already in Effect.
Defendants point out that the Secretary published the Final Rule in July 2023—nine
months before plaintiffs filed suit in March 2024. A party’s “delay in seeking preliminary relief
cuts against finding irreparable injury.” RoDa Drilling, 552 F.3d at 1211 (citation and internal
quotation marks omitted). In response, plaintiffs emphasize that the Final Rule is scheduled to
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go into effect on July 1, 2024. For that reason, plaintiffs argue, they didn’t delay their suit at all.
But plaintiffs’ argument misses an important point: parts of the SAVE Plan already took effect
in February 2024, and plaintiffs didn’t file their lawsuit until March 28, 2024.8 Doc. 1.
Specifically, two provisions of the SAVE Plan already are in effect: (i) the increase in
the discretionary income line from 150% to 225% of the federal poverty line and (ii) the shorter
path to forgiveness for borrowers who took out small loans—i.e., ten years of payments for a
borrower who took out $12,000 or less. Indeed, plaintiffs’ First Amended Complaint confirms
that the Department began implementing the rule in February. Doc. 57 at 3 (1st Am. Compl.).
The Secretary implemented this outcome by using his authority to designate provisions for early
implementation—authority plaintiffs don’t challenge here. And defendants published advance
warning that they would implement these provisions early. When the Final Rule was published
on July 23, 2023, it specifically tagged the increase to 225% of the federal poverty line for early
implementation. 88 Fed. Reg. at 43,821. And, according to defendants, they announced early
implementation of forgiveness for borrowers with low original balances a month in advance. All
of this is to ask why: if these parts of the SAVE Plan promised an irreparable harm to plaintiffs,
why didn’t they move to enjoin the SAVE Plan before they took effect?
Plaintiffs attributed the delay to their need to gather data on FFEL loan consolidation.
Otherwise, they reason, they would’ve had to rely on speculative, insufficient harm. The court
isn’t persuaded. Plaintiffs didn’t include any allegations about FFEL loan consolidation when
8
Defendants argue that the SAVE Plan is severable. So, defendants assert, “to the extent the Court
concludes that only some portions of the Rule are unlawful . . . [the court] should still decline Plaintiffs’
invitation to enjoin the Rule in its entirety.” Doc. 47 at 57. Plaintiffs’ brief never responds to this
argument. Plaintiffs argued against severability at the court’s hearing on this motion, but the court
considers this argument waived. Murphy v. City of Tulsa, 950 F.3d 641, 645 n.4 (10th Cir. 2019)
(“‘[A]rguments made for the first time at oral argument are waived.’” (quoting Ross v. Univ. of Tulsa, 859
F.3d 1280, 1294 (10th Cir. 2017))).
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they filed their Complaint. See generally Doc. 1. Plaintiffs’ original Complaint alleged
Louisiana has a state instrumentality that would suffer irreparable harm from the SAVE Plan
“because broader loan cancellation under the SAVE plan would decrease demand for its
services.” Doc. 1 at 21 (Compl. ¶¶ 108– 11). Plaintiffs didn’t assert their FFEL loan
consolidation theory for plaintiffs South Carolina, Texas, and Alaska until May 10, 2024. Doc.
50. And plaintiffs ultimately abandoned their theory based on harm to Louisiana’s public
instrumentality. So, if plaintiffs delayed filing this lawsuit to gather information about FFEL
loan consolidations to supply factual assertions in their declarations, that information didn’t
actually find its way into the March 2024 Complaint. The court declines to excuse plaintiffs’
delay on this basis.
Nor does the court credit plaintiffs’ assertion that they needed time to develop their tax
revenue theory of harm. Here’s an overview of plaintiffs’ tax revenue theory: nine states tie
their definition of taxable income to the federal definition of income or adjusted gross income.
Doc. 57 at 17 (1st Am. Compl. ¶ 90). And the federal tax code defines taxable income to include
student loan forgiveness granted under income-driven repayment plans. But the American
Rescue Plan Act of 2021 provides that all student loan forgiveness won’t “count toward the
federal definition of taxable income until December 31, 2025.” Doc. 57 at 17 (1st Am. Compl.
¶ 89). So, the states can’t tax student loan debt forgiveness income until 2026. Plaintiffs alleged
the Final Rule “will reduce income tax revenue by decreasing the amount of outstanding student
loan debt.” Doc. 57 at 18 (1st Am. Compl. ¶ 96). This is so, they say, because the “Final Rule
accelerates the timeline for cancelation on income-driven repayment plans to as low as 10 years
for certain loan balances.” Id. (1st Am. Compl. ¶ 92). Under the old version of the rule, the
federal government wouldn’t forgive these loans for 20 to 25 years. So, plaintiffs allege, “but for
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the Final Rule, significant amounts of federal loan cancellation would occur after December 31,
2025” for residents of the relevant states. Id. (1st Am. Compl. ¶ 95) (emphasis in original). In
this but-for world, the relevant states would have more student loan forgiveness income to tax.
Id. The challenged Final Rule, in contrast, “shift[s] forward some debt forgiveness that would
otherwise occur in a period in which it would be taxable income . . . into a period where it is not
taxable[.]” Id. (1st Am. Compl. ¶ 96).
Plaintiffs assert that they delayed filing suit so that this tax revenue theory of harm could
coalesce and thus become less speculative. The court isn’t convinced. All pieces of this tax
revenue theory—the states’ income tax definition, the American Rescue Plan, and the SAVE
Plan’s shift in forgiveness—were present long before plaintiffs filed their Complaint in March
2024.
Plaintiffs thus have failed to proffer a reasonable explanation for the delay. “‘[D]elay is
an important consideration in the assessment of irreparable harm for purposes of a preliminary
injunction.’” Mont. Wyo. State Area Conf. of NAACP v. U.S. Election Integrity Plan, No. 22-cv00581, 2022 WL 1061906, at *5 (D. Colo. Apr. 8, 2022) (collecting cases) (quoting GTE Corp.,
731 F.2d at 679); see also 11A Mary Kay Kane et al., Federal Practice & Procedure § 2948.1
(3d ed. 2024) (“A long delay by plaintiff after learning of the threatened harm also may be taken
as an indication that the harm would not be serious enough to justify a preliminary injunction.”).
The court is not impressed by plaintiffs’ timing. The delay—combined with plaintiffs’
abstractions about harm—fail to establish an irreparable harm. The court thus concludes that
plaintiffs haven’t demonstrated irreparable harm attributable to the parts of the SAVE Plan
already in effect.
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2.
Plaintiffs Have Shown an Irreparable Harm from the SAVE Plan
Provisions Not Yet in Effect.
The court reaches a different conclusion for the parts of the SAVE Plan that have yet to
go into effect. Plaintiffs haven’t delayed their lawsuit challenging the SAVE Plan’s
unimplemented parts, so their delay doesn’t prevent a finding of irreparable harm. And plaintiffs
correctly point out that their harms are “irrecoverable.” Doc. 24 at 29. That is so because the
sovereign immunity bars plaintiffs from recovering monetary damages from the federal
government. See Kan. Health Care Ass’n, Inc. v. Kan. Dep’t of Social & Rehab. Servs., 31 F.3d
1536, 1543 (10th Cir. 1994) (“Because the Eleventh Amendment bars a legal remedy in
damages, and the court concluded no adequate state administrative remedy existed, the court
held that plaintiffs’ injury was irreparable. We agree.”).
Plaintiffs also point out that “[o]ne cannot unscramble this egg; loan forgiveness has an
‘irreversible impact.’” Doc. 24 at 29 (quoting Nebraska v. Biden, 52 F.4th 1044, 1047 (8th Cir.
2022)). Indeed, before the case reached the Supreme Court, the Eighth Circuit concluded that
the HEROES Act student loan forgiveness posed irreparable harm “considering the irreversible
impact the Secretary’s debt forgiveness action would have[.]”9 Nebraska v. Biden, 52 F.4th at
9
Nebraska v. Biden provides more support for differentiating between parts of the SAVE Plan
already in effect and those parts set to go into effect on July 1. In that case, the Eighth Circuit enjoined
the HEROES Act student loan forgiveness before it went into effect. The Circuit explained,
the equities strongly favor an injunction considering the irreversible impact the Secretary’s
debt forgiveness would have as compared to the lack of harm an injunction would presently
impose. Among the considerations is the fact that collection of student loan payments as
well as accrual of interest on student loans have both been suspended.
Nebraska v. Biden, 52 F.4th at 1047–48. Not so here—the SAVE Plan is far from suspended. Plaintiffs
ask the court to enjoin defendants “from implementing or acting pursuant to the Final Rule[.]” Doc. 23 at
1. Yet they acknowledge that the Department already has “unilaterally erased the debt of 153,000
borrowers.” Doc. 57 at 3 (1st Am. Compl.). And, as plaintiffs elegantly phrase it, “[o]ne cannot
unscramble this egg; loan forgiveness has an irreversible impact.” Doc. 24 at 29 (quotation cleaned up).
As explained below, when considering the scope of the preliminary injunction, plaintiffs’ failure to take
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1047. The court thus concludes that plaintiffs have shown an irreparable harm if the SAVE Plan
is allowed to take full effect on July 1, 2024.
C.
Public Interest
As the final merged factor in the preliminary injunction analysis, the court must examine
whether plaintiffs have shown that their “threatened injury outweighs the harms that the
preliminary injunction will cause the government or that the injunction, if issued, will not
adversely affect the public interest.” Aposhian, 958 F.3d at 990. Plaintiffs argue they’ve
satisfied this standard because they face harm to their public instrumentalities and defendants
“have no interest in enforcing a rule that completely bypasses constitutional separation of powers
principles.” Doc. 24 at 30. Defendants respond that the SAVE Plan serves the public interest
because it solves a long list of harms: student loan defaults and delinquencies; adverse effects on
credit scores; decreased liquidity for large purchases; decreased enrollment in higher education;
drags on national growth; and increased reliance on federal welfare programs. Doc. 47 at 54.
How to weigh these competing interests?
The Supreme Court’s decision in National Federation of Independent Business v.
Department of Labor, Occupational Safety & Health Administration, 595 U.S. 109 (2022), is
helpful here. It involved a challenge to OSHA’s COVID-19 vaccine mandate. Id. at 112–13.
Several entities filed petitions for review and moved for a stay pending judicial review10 of
OSHA’s mandate. Id. at 113.
into account the loan forgiveness already in effect makes their proposed injunction unworkable. See
below, § III.D.2.
10
Of course, a stay pending judicial review is a different procedural creature than a preliminary
injunction. Compare Fed. R. Civ. P. 62, and Fed. R. App. P. 8(a), with Fed. R. Civ. P. 65. But the
standard governing a stay still requires the court to weigh the public interest. The stay factors include:
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Petitioners maintained “that OSHA’s mandate w[ould] force them to incur billions of
dollars in unrecoverable compliance costs and w[ould] cause hundreds of thousands of
employees to leave their jobs.” Id. The federal government countered “that the mandate w[ould]
save over 6,500 lives and prevent hundreds of thousands of hospitalizations.” Id. at 120. The
Court declined to compare the two: “It is not our role to weigh such tradeoffs.” Id. And the
Court emphasized that Congress hadn’t given OSHA the power it sought to exercise. Id. The
Court thus agreed with petitioners that they were entitled to a stay, because, among other things,
the Court concluded the “equities do not justify withholding interim relief.”
The court can’t weigh the tradeoffs here either. A layperson might wonder how Alaska’s
relatively meager harm—$100,000 in lost FFEL loan interest over two years—can justify
blocking millions of student loan borrowers nationwide from getting billions in debt relief. But
in “our system of government,” weighing these tradeoffs “is the responsibility of those chosen by
the people through democratic processes.” Id. In the court’s view, Congress—a branch of
government elected by the people—didn’t delegate to the Secretary clear power to enact the
SAVE Plan. The equities thus favor a preliminary injunction of some sort. But what sort of
injunction do they favor? That’s a more daunting question, and the court takes it up next.
(1) whether the stay applicant has made a strong showing that he is likely to succeed on
the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether
issuance of the stay will substantially injure the other parties interested in the proceeding;
and (4) where the public interest lies.
Hilton v. Braunskill, 481 U.S. 770, 776 (1987). The Supreme Court applied this standard in National
Federation of Independent Businesses, which means that it had to evaluate the public interest and balance
the equities. 595 U.S. at 120. So, even though National Federation of Independent Businesses occupied
a different procedural posture and thus applied a different procedural standard, the Supreme Court still
weighed the public interest—exactly what the court must do here.
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D.
Scope of Relief
Having concluded that plaintiffs have shouldered their burden under the preliminary
injunction standard, the court must fashion an injunction with an appropriate scope. Rule
65(d)(1)(C) requires the court to “describe in reasonable detail—and not by referring to the
complaint or other document—the act or acts restrained or required.” The Supreme Court has
emphasized that “the specificity provisions of Rule 65(d) are no mere technical requirements.
The Rule was designed to prevent uncertainty and confusion on the part of those faced with
injunctive orders, and to avoid the possible founding of a contempt citation on a decree too
vague to be understood.” Schmidt v. Lessard, 414 U.S. 473, 476 (1974) (citation omitted).
Plaintiffs’ Motion for Preliminary Injunction requests two forms of injunctive relief.
One, it asks the court to enjoin defendants “their agents, employees, and attorneys from
implementing or acting pursuant to the Final Rule[.]” Doc. 23 at 1. And two, it seeks to enjoin
defendants “from undertaking any form of student debt relief not expressly authorized by
Congress.” Id. The court begins with plaintiffs’ second request.
This vague request—asking the court to enjoin defendants from undertaking any form of
unlawful debt relief—is not helpful. Indeed, plaintiffs never mention it in their supporting briefs.
See generally Doc. 24; Doc. 50. Our Circuit has held that “injunctions simply requiring the
defendant to obey the law are too vague” to enforce and they thus violate Fed. R. Civ. P. 65(d).
Keyes v. Sch Dist. No. 1, Denver, Colo., 895 F.2d 659, 668 (10th Cir. 1990); see also 11A Mary
Kay Kane et al., Federal Practice & Procedure § 2955 (3d ed. 2024) (“[O]rders simply requiring
defendants to ‘obey the law’ uniformly are found to violate the specificity requirement.”). The
court will not enter such a broad, unguided injunction. The court thus denies this part of
plaintiffs’ motion.
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The court next evaluates plaintiffs’ request that the court enjoin defendants from
implementing the SAVE Plan. It divides this analysis into two considerations: whether to issue
a nationwide injunction and whether to enjoin the SAVE Plan in its entirety. The analysis
concludes by considering whether the court may enjoin the President of the United States, a
defendant and a target of plaintiffs’ motion.
1.
The Injunction Should Apply Nationwide.
Plaintiffs request a nationwide injunction.11 The court must tread carefully here because
a nationwide injunction risks an overbroad injunction. “Traditionally, when a federal court finds
11
The proper terminology for this request is unsettled. Some, like the parties here, use the term
“nationwide injunction” because plaintiffs seek an injunction that applies nationwide. Others, like Justice
Jackson and Justice Gorsuch, use the term “universal injunction.” See Labrador v. Poe ex rel. Poe, 144 S.
Ct. 921, 936 (2024) (Jackson, J., dissenting) (“Idaho maintains that this case is certworthy because it
raises the question of whether a district court can issue an injunction that grants relief directed to all
potentially impacted parties—a so-called ‘universal injunction.’”); United States v. Texas, 599 U.S. 670,
694 (2023) (Gorsuch, J., concurring) (“[T]he routine issuance of universal injunctions has proven
unworkable, sowing chaos for litigants, the government, courts, and all those affected by these sometimes
conflicting decrees.” (citation, internal quotation marks, and brackets omitted)). Here, the court uses the
parties’ term—nationwide injunction.
Plaintiffs’ request for a nationwide injunction is a loaded one. Nationwide injunctions are the
subject of much debate. Justice Gorsuch has questioned whether nationwide injunctions are consistent
with separation of powers principles and Supreme Court precedent. United States v. Texas, 599 U.S. at
694–95 (Gorsuch, J., concurring) (“Universal injunctions continue to intrude on powers reserved for the
elected branches.”); see also Labrador, 144 S. Ct. at 926–27 (Gorsuch, J., concurring) (calling
“universal” injunctions “a relatively new phenomenon” that “virtually guarantee[] that a rising number of
‘high-profile’ cases will find their way to” the Supreme Court and lamenting that “universal injunction
practice is almost by design a fast and furious business”). Justice Thomas shares the same concerns.
Trump v. Hawaii, 585 U.S. 667, 713 (2018) (Thomas, J., concurring) (“I am skeptical that district courts
have the authority to enter universal injunctions. These injunctions did not emerge until a century and a
half after the founding. And they appear to be inconsistent with longstanding limits on equitable relief
and the power of Article III counts.”).
The debate rages outside the Supreme Court, too. “Some scholars, jurists, and attorneys criticize
the practice of district courts issuing nationwide injunctions as an inappropriate abuse of power. Others
defend nationwide injunctions as a powerful way to check federal agency overreach and ensure robust
relief for plaintiffs.” District Court Reform: Nationwide Injunctions, 137 Harv. L. Rev. 1701, 1702 (Apr.
2024).
The court wades into this controversy reluctantly, and with caution.
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a remedy merited, it provides party-specific relief, directing the defendant to take or not take
some action relative to the plaintiff.” United States v. Texas, 599 U.S. 670, 693 (2023)
(Gorsuch, J., concurring). In contrast, a nationwide injunction forbids a defendant from taking
some action against everyone—not just plaintiffs. With the gravity of this request in mind, the
court briefly outlines the parties’ arguments for and against a nationwide injunction.
Plaintiffs’ First Amended Complaint asks the court to “set aside” the SAVE Plan. Doc.
57 at 28, 30 (1st Am. Compl. ¶¶ 154, 173). This language comes from the APA, which allows
courts to “hold unlawful and set aside agency action[.]” 5 U.S.C. § 706(2). Plaintiffs assert that
when “‘a reviewing court determines that agency regulations are unlawful, the ordinary result is
that the rules are vacated—not that their application to the individual petitioners is
proscribed.’”12 Doc. 24 at 31 (quoting Harmon v. Thornburg, 878 F.2d 484, 495 n.21 (D.C. Cir.
1989)). And when a court finds agency action unlawful, it often issues a nationwide injunction.
See, e.g., Texas v. United States, 787 F.3d 733, 768–69 (5th Cir. 2015) (affirming district court’s
nationwide injunction of program benefitting undocumented immigrant parents of American
citizens in suit where the state of Texas—and only Texas—had standing because there was “a
substantial likelihood that a partial injunction would be ineffective because [program]
beneficiaries would be free to move between states”); Faust v. Vilsack, 519 F. Supp. 3d 470, 478
12
The court acknowledges the controversial nature of this proposition—and, indeed, other
propositions throughout this Order:
Courts have supposed that the APA’s instruction to “set aside” agency action authorizes
vacatur. There are, however, good reasons to conclude that “set aside,” properly
understood, merely instructs a court to ignore an illegal agency action for the purpose of
resolving the case before it—much like a court ignores (rather than vacates or erases) an
unconstitutional statute when resolving a case. At oral argument, the Chief Justice
responded to this rather shocking assault on a long accepted, foundational aspect of judicial
control of agency action with an understated “[w]ow.”
33 Richard Murphy et al., Federal Practice & Procedure § 8381 (2d ed. 2024).
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(E.D. Wisc. 2021) (applying “universal” injunction to Department of Agriculture program
forgiving debts of Black farmers); Guilford Coll. v. McAleenan, 389 F. Supp. 3d 377, 384–85,
397–98 (M.D.N.C. 2019) (issuing nationwide injunction against U.S. Citizenship and
Immigration Services’ policy memorandum changing USCIS policy on calculating unlawful
presence under the Immigration and Nationality Act); Texas v. United States, 201 F. Supp. 3d
810, 815–16, 836 (N.D. Tex. 2016) (applying nationwide injunction to federal policy requiring
that “all persons must be afforded the opportunity to have access to restrooms, locker rooms,
showers, and other intimate facilities which match their gender identity rather than their
biological sex”).
In support of their nationwide injunction, plaintiffs also invoke the Eighth Circuit’s
opinion in Nebraska v. Biden, 52 F.4th 1044 (8th Cir. 2022). This decision became the ruling
reviewed by the Supreme Court in Biden v. Nebraska. The Eighth Circuit reversed a district
court’s decision denying a preliminary injunction against loan forgiveness based on the
HEROES Act. Nebraska v. Biden, 52 F.4th at 1045–46, rev’g 636 F. Supp. 3d 991 (E.D. Mo.
2022). The Eighth Circuit then granted a preliminary injunction pending appeal, concluding,
after “balancing the equities,” that “the merits of the appeal before this court involve substantial
questions of law which remain to be resolved, but the equities strongly favor an injunction
considering the irreversible impact the Secretary’s debt forgiveness action would have as
compared to the lack of harm an injunction would presently impose.” Id. at 1047 (citation and
internal quotation marks omitted). The Circuit thus imposed the requested injunction pending
future orders by that court or the Supreme Court. Id. at 1048.
The President and his fellow defendants quickly petitioned the Supreme Court, asking it
to vacate the injunction entered by the Eighth Circuit. The Court declined in a Memorandum
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Decision issued by Justice Kavanaugh. Biden v. Nebraska, 143 S. Ct. 477 (2022) (Mem.). The
Justice’s Memorandum Decision elected to treat the application to vacate the injunction as also
amounting to a petition for a writ of certiorari before judgment. Id. The Court granted that
request. Id. And ultimately, of course, the Supreme Court’s decision on the merits held for
plaintiffs. The Court thus reversed the “judgment of the Eastern District of Missouri” and denied
as moot defendants’ “application to vacate the Eighth Circuit’s injunction[.]” Biden v. Nebraska,
143 S. Ct. at 2376.
This series of appellate decisions embraced the proposition that the HEROES Act student
loan forgiveness program required a nationwide injunction. Id. at 1048. The Circuit explained
that “an injunction limited to the plaintiff States, or even more broadly to student loans affecting
the States, would be impractical and would fail to provide complete relief to the plaintiffs.” Id.
The Circuit emphasized that MOHELA—Missouri’s public instrumentality that conferred
standing on the state of Missouri because of impending harm to MOHELA’s service fees—was
“purportedly one of the largest nonprofit student loan secondary markets in America.” Id.
Because of “MOHELA’s national role in servicing accounts,” the Eighth Circuit could “discern
no workable path in this emergency posture for narrowing the scope of relief.” Id. Plaintiffs ask
the court to apply the same analysis here and reach the same result.
Defendants, for their part, Doc. 46 at 55, emphasize the Supreme Court’s bedrock
principle “that injunctive relief should be no more burdensome to the defendant than necessary to
provide complete relief to the plaintiffs[,]” Califano v. Yamasaki, 442 U.S. 682, 702 (1979).
And defendants emphasize two things. The Eighth Circuit’s decision doesn’t control our court.
And the Supreme Court’s decision never addressed the propriety of a nationwide injunction.
Biden v. Nebraska, 143 S. Ct. at 2355. They’re right about the first part. Eighth Circuit
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decisions aren’t binding precedent here. But the court’s not so sure about defendants’ second
point. The Eighth Circuit plainly enjoined the Secretary from implementing his “debt
forgiveness action.” Nebraska v. Biden, 52 F.4th at 1047. And the Supreme Court explicitly
reversed the district court’s decision denying an injunction. Biden v. Nebraska, 143 S. Ct. at
2376.
Defendants also emphasize that the Eighth Circuit relied on MOHELA’s national role in
finding a preliminary injunction necessary, and plaintiffs haven’t proffered any evidence that
their public instrumentalities play a similarly important national role. Defendants are right about
that point, too. But ultimately, defendants’ arguments can’t carry the day.
The court concludes that it must issue a nationwide injunction. A broad rule, like the
SAVE Plan, requires a broad injunction, given the compelling need for nationwide uniformity in
the Department’s administration of student loan programs. See Nebraska v. Biden, 52 F.4th at
1048 (worrying that “tailoring an injunction to address the alleged harms to the remaining States
would entail delving into complex issues and contested facts that would make any limits
uncertain in their application and effectiveness”). Also, a limited injunction like the one
defendants promote would stand the court’s conclusion here on its head. Imagine the scenario
advanced by defendants. In it, the court would confine its injunction to the three states with
standing to sue. This scenario would free the Secretary to implement the SAVE Plan in the other
47 states. Thus, the Secretary could grant loan forgiveness to students under a regulation that the
Secretary—under this court’s conclusion, at least—lacked legal authority to promulgate.
Defendants have articulated no good reason why student debtors in 47 states should do better
than those in the three plaintiff states with standing to sue. And the court can imagine no such
reason.
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2.
The Court Doesn’t Enjoin the SAVE Plan in its Entirety.
The court has concluded that a nationwide injunction should issue, and now it must
decide what the injunction should, well, enjoin. Plaintiffs move the court “for a Preliminary
Injunction enjoining Defendants . . . , their agents, employees, and attorneys from implementing
or acting pursuant to the Final Rule[.]” Doc. 23 at 1. But as discussed already, there’s a problem
with this request: defendants already have implemented parts of the SAVE Plan. Plaintiffs’
papers fail to account for this reality.13 And so plaintiffs have failed to present the court with any
meaningful direction—i.e., what a preliminary injunction undoing the already-active parts of the
SAVE Plan would look like. This presents a formidable problem for the court.
Plaintiffs’ First Amended Complaint explicitly mentions that defendants “unilaterally
erased the debt of 153,000 borrowers” in February 2024. Doc. 57 at 3 (1st Am. Compl.). To
enjoin the entire SAVE Plan thus would require defendants to unwind those actions, modifying
the status quo. To be sure, usually, the “status quo refers to the last peaceable uncontested status
existing between the parties before the dispute developed.” Am. Civil Liberties Union of Kan.
and W. Mo. v. Praeger, 815 F. Supp. 2d 1204, 1208 (D. Kan. 2011) (citing Nova Health Sys. v.
Edmondson, 460 F.3d 1295, 1298 n.5 (10th Cir. 2006)). But by this point, the SAVE Plan has
been in effect for months. See Louisiana ex rel. Landry v. Biden, No. 22-30087, 2022 WL
866282, at *3 (5th Cir. Mar. 16, 2022) (“The Interim Estimates were published in February 2021.
This lawsuit was filed in April 2021. The Plaintiff States moved for a preliminary injunction in
July 2021. And the preliminary injunction was entered in February 2022. By the time the
13
Plaintiffs’ briefing devotes most of its requested relief to arguing that any injunction should apply
nationwide. See Doc. 24 at 31–32; Doc. 50 at 27–28. And when arguing about their delay in bringing
suit, plaintiffs emphasize that they brought suit before the Final Rule’s July 2024 effective date, without
acknowledging that parts of the Final Rule already have taken effect. Doc. 50 at 27. Their approach
grossly oversimplifies the state of play.
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preliminary injunction was entered, the Interim Estimates had been in place for one year. The
status quo at this point is the continued use of the Interim Estimates.”). And plaintiffs never
dispute that defendants gave them explicit advance warning of their early implementation of the
SAVE Plan.
The court thus declines to enjoin the parts of the SAVE Plan defendants already have
implemented. “Crafting a preliminary injunction is an exercise of discretion and judgment, often
dependent as much on the equities of a given case as the substance of the legal issues it
presents.” Trump v. Int’l Refugee Assistance Project, 582 U.S. 571, 579–80 (2017). The “court
need not grant the total relief sought by the applicant but may mold its decree to meet the
exigencies of the particular case.” Id. at 580 (citation and internal quotation marks omitted).
The equities of this case simply don’t favor unwinding the parts of the SAVE Plan that
defendants already have implemented. Plaintiffs waited until defendants already had done so to
bring suit. And, because of this delay, plaintiffs have failed to show an irreparable injury from
the parts of the SAVE Plan already in effect that a preliminary injunction could forestall. See
above § III.B.
Even without the delay, the court would decline to enjoin the entire SAVE Plan because
plaintiffs have failed to present a workable injunction. Plaintiffs ask for an injunction barring
defendants “from implementing or acting pursuant to the Final Rule[.]” Doc. 23 at 1. But
defendants already have “implement[ed]” a part of the Final Rule and “act[ed] pursuant to the
Final Rule[.]” Id. Defendants have persuaded the court that, at this point, a preliminary
injunction that would enjoin the entire SAVE Plan would create pointless uncertainty. Such a
disruptive preliminary injunction is disfavored, and the court won’t enter one here. RoDa
Drilling, 552 F.3d at 1208 n.3 (“Certain types of preliminary injunctions are disfavored: (1)
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preliminary injunctions that alter the status quo, (2) mandatory preliminary injunctions, and (3)
preliminary injunctions that give the movant all the relief it would be entitled to if it prevailed in
a full trial.” (citation omitted)). This outcome may not qualify as a perfect one. But it’s the best
one the court can craft based on the information supplied to date.
The court thus will enter a preliminary injunction that forbids defendants from
implementing the parts of the Final Rule set to take effect on July 1, 2024. Such a preliminary
injunction will “preserve the relative positions of the parties until a trial on the merits can be
held.” Camenisch, 451 U.S. at 395.
3.
The Court Lacks Jurisdiction Over the President.
Defendants assert that this court lacks authority to enjoin the President, whom plaintiffs
have named as a defendant. Doc. 47 at 58–59. They’re right. “With regard to the President,
courts do not have jurisdiction to enjoin him . . . and have never submitted the President to
declaratory relief[.]” Newdow v. Roberts, 603 F.3d 1002, 1013 (D.C. Cir. 2010) (first citing
Mississippi v. Johnson, 71 U.S. 475, 501 (1866), then citing Franklin v. Massachusetts, 505 U.S.
788, 827–28 (1992)). Plaintiffs never dispute this proposition. See generally Doc. 50. The court
thus dismisses the President of the United States as a party defendant in this action. The court
also directs the Clerk to recaption the case so that it doesn’t portray the President as a defendant.
IV.
Conclusion and Next Steps
The courts grants in part and denies in part plaintiffs’ Motion for Preliminary Injunction
(Doc. 23). The court will enter the following preliminary injunction: Defendants United States
Department of Education and United States Secretary of Education Miguel Cardona, and their
agents, employees, and attorneys, are enjoined from implementing or acting pursuant to the parts
of Final Rule—promulgated by the Department of Education titled “Improving Income Driven
Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family
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Education Loan (FFEL) Program,” 88 Fed. Reg. 43,820—set to become effective on July 1,
2024.14
The court is mindful of the gravity of this ruling. Drawing the legal conclusions leading
to it required the court to apply a developing legal doctrine to complex legislative and regulatory
terrain. And all on a limited evidentiary record.
The court is equally mindful that human infallibility is what it is. It thus temporarily
stays the effective date of this Preliminary Injunction to permit the parties to seek any appellate
relief they deem appropriate. See, e.g., Fish v. Kobach, 189 F. Supp. 3d 1107, 1152 (D. Kan.
2016) (staying preliminary injunction for 14 days to give parties time to appeal). Absent further
order by this court or any reviewing court, this court’s injunction will take effect at ten o’clock
p.m. Central Daylight Time on June 30, 2024.
As a final note, the court emphasizes that any decision about a preliminary injunction is
just that: preliminary. Given the importance of the issues in this case, the court orders the
parties immediately to confer and seek a scheduling conference with United States Magistrate
Judge Angel D. Mitchell. The court orders the parties to formulate and present to Judge Mitchell
a schedule that will enable the court to reach a final decision (including a trial on the merits, if
one is required) as soon as practicable.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs’ Motion for
Preliminary Injunction (Doc. 23) is granted in part and denied in part, as set forth in full in this
Order.
14
To comply with the separate document rule, the court will enter plaintiffs’ preliminary injunction
separately. MillerCoors LLC v. Anheuser-Busch Cos., 940 F.3d 922, 923 (7th Cir. 2019) (remanding for
district court to enter preliminary injunction on separate document); Beukema’s Petrol. Co. v. Admiral
Petrol. Co., 613 F.2d 626, 627 (6th Cir. 1979) (“[I]t appears to the court that the express provisions of
Rule 58 for entry of judgment on a separate document applies not only to final judgments in the ordinary
sense but also to preliminary injunctions entered pursuant to Rule 65[.]”).
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IT IS FURTHER ORDERED THAT defendants United States Department of
Education and United States Secretary of Education Miguel Cardona, and their agents,
employees, and attorneys, are enjoined from implementing or acting pursuant to the parts of
Final Rule—promulgated by the Department of Education titled “Improving Income Driven
Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family
Education Loan (FFEL) Program,” 88 Fed. Reg. 43,820—set to become effective on July 1,
2024.
IT IS FURTHER ORDERED THAT the injunction will take effect at 10:00 PM
Central Daylight Time on June 30, 2024.
IT IS FURTHER ORDERED THAT defendant Joseph R. Biden, in his official
capacity as the President of the United States, is dismissed from the case for lack of jurisdiction.
IT IS SO ORDERED.
Dated this 24th day of June, 2024, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
STATE OF KANSAS, et al.,
Plaintiffs,
Case No. 24-1057-DDC-ADM
v.
JOSEPH R. BIDEN, et al.,
Defendants.
MEMORANDUM AND ORDER
A plaintiff must have standing to bring a lawsuit. As future Justice Scalia once
explained, standing asks, “What’s it to you?”1 And if a plaintiff can’t answer that question, that
plaintiff doesn’t have standing.
This case requires the court to answer a daunting question: When do states have standing
to sue the federal government? The Supreme Court addressed this question in Biden v.
Nebraska, 143 S. Ct. 2355 (2023). There, several states challenged a Department of Education
student loan forgiveness plan. The Supreme Court held that one state had standing. Missouri
had standing to sue on behalf of its “public instrumentality”—a nonprofit, government
corporation that owned and serviced student loans. That public instrumentality had suffered
harm because the Department’s plan forgave student loan debt, thereby reducing the number of
student loans, and, as a result, reducing the service fees the public instrumentality would collect.
And so, harm to Missouri’s public instrumentality conferred standing on Missouri. This case,
1
Antonin Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers,
17 Suffolk U. L. Rev. 881, 882 (1983) (revised version of Ninth Donahue Lecture at Suffolk University
Law School) (cited in TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021)).
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though it involves different states and a different student loan forgiveness plan, sits in the
shadow of Biden v. Nebraska.
Plaintiffs here are 11 states challenging the Department of Education’s new student loan
regulations, called the SAVE Plan. As relevant here, the SAVE Plan does two things. First, it
lowers monthly payments for eligible borrowers. Second, it shortens the maximum repayment
period for eligible borrowers who took out small original loans. That is, if a student borrowed
$12,000 or less, the new regulations require that borrower to make payments for 10 years—
instead of 20 or 25 years. After 10 years of payments, the Department will forgive the remainder
of the debt. Plaintiffs claim the new regulations violate the Constitution’s separation of powers
and the Administrative Procedures Act.
Defendants have moved to dismiss, arguing plaintiffs lack standing because the SAVE
Plan doesn’t cause the states any direct harm. Doc. 45. In response, plaintiffs argue the new
regulations will harm them in three ways: (1) reduced revenue for the states’ public
instrumentalities who own student loans, (2) reduced tax revenue, and (3) a competitive harm to
their ability to recruit and retain employees to state public service employment. The first theory
works, thanks to Biden v. Nebraska. But the other two don’t.
In short, plaintiffs have shouldered their burden to show the SAVE Plan likely will
reduce the revenue of South Carolina, Texas, and Alaska’s public instrumentalities—but just
barely. Their standing theory is weaker than the one that prevailed in Biden v. Nebraska. And
the allegations and declarations supporting their standing theory are conflicting. Plaintiffs even
tried to sandbag their standing obligation. Their initial Complaint didn’t allege standing facts
adequately. Instead, plaintiffs wanted to hold onto their standing allegations until the
preliminary injunction hearing. The court rejected that approach since standing, in federal court,
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is an essential ingredient of subject matter jurisdiction. So, they eventually filed an Amended
Complaint disclosing their standing assertion. This approach is far from perfect.
But despite these issues, plaintiffs have shouldered their burden to show that the new
regulations, more likely than not, will injure South Carolina, Texas, and Alaska’s public
instrumentalities. The other eight states—those without a public instrumentality participating in
the student loan market—haven’t shouldered their burden to show that the regulations will cause
them any direct harm.
The other eight plaintiffs assert that they have standing because the SAVE Plan will
reduce their income tax revenues. But this is an incidental effect of the SAVE Plan, traceable to
plaintiffs’ own decisions about how to tax revenue. Alternatively, these eight plaintiffs also
assert that the SAVE Plan harms them directly because it reduces their ability to recruit staff to
public service within state agencies. No court has ever bought into this theory, and this court
declines to become the first. These plaintiffs simply have no skin in the game. Their answer to
Justice Scalia’s colloquial expression of standing—What’s it to you?—is this: It’s nothing.
The court thus grants defendants’ Motion to Dismiss (Doc. 45) in part and denies it in
part. Plaintiffs South Carolina, Texas, and Alaska have standing based on their public
instrumentalities. The other eight states don’t, and, exercising discretion conferred by Circuit
authority, the court dismisses them from this action. This is precisely how the court handles any
lawsuit where some plaintiffs have viable claims and others don’t. Fed. R. Civ. P. 1 (directing
courts to “secure the just, speedy, and inexpensive determination of every action and
proceeding”). The court explains this result, below, beginning with the relevant background.
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I.
Background
The court begins with the statutory scheme that defendants here used to enact the SAVE
Plan. The court then recounts the details of the SAVE Plan and concludes this section with a
short summary of this lawsuit.
The Higher Education Act (HEA)
Congress enacted the Higher Education Act in 1965 “to assist in making available the
benefits of postsecondary education to eligible students . . . in institutions of higher education[.]”
20 U.S.C. § 1070. Initially, the HEA didn’t authorize the federal government to loan money
directly to students. Doc. 57 at 10 (1st Am. Compl. ¶ 46). Instead, the federal government
guaranteed private loans. Id. That changed in 1993, when Congress amended the HEA and
authorized the federal government to loan money directly to students. Id. This 1993 amendment
also required the Department of Education to offer students a variety of repayment plans. Id.;
see also 20 U.S.C. § 1087e(d)(1). Only one variety of repayment plan matters here: income
contingent repayment plans. Doc. 57 at 10 (1st Am. Compl. ¶ 47); see also 20 U.S.C.
§ 1087e(d)(1)(D). As the name implies, these plans base a borrower’s loan repayments on the
borrower’s income. The relevant statute provides for “an income contingent repayment plan,
with varying annual payments based on the income of the borrower, paid over an extended
period of time prescribed by the Secretary, not to exceed 25 years[.]” 20 U.S.C.
§ 1087e(d)(1)(D).
The SAVE Plan
Plaintiffs challenge the Department’s SAVE Plan, which sets new rules for income
contingent (also known as income driven) repayment plans. This section recounts the SAVE
Plan’s history and explains how it works.
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In January 2023, the Department issued a Notice of Proposed Rulemaking (NPRM).
Doc. 57 at 12 (1st Am. Compl. ¶ 57). The NPRM “propose[d] to amend the regulations
governing income-contingent repayment plans[.]” Improving Income-Driven Repayment for the
William D. Ford Federal Direct Loan Program, 88 Fed. Reg. 1894, 1894 (Jan. 11, 2023) (to be
codified at 34 C.F.R. pt. 685). After the NPRM and the comment period, the Department
published the “Final Rule” in July 2023. Doc. 57 at 14 (1st Am. Compl. ¶ 68); see also
Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and
the Federal Family Education Loan (FFEL) Program, 88 Fed. Reg. 43820 (July 10, 2023) (to be
codified at 34 C.F.R. pts. 682, 685).
Relevant here, the Final Rule2 makes the following changes to income contingent
repayment plans:
Defines discretionary income as income above 225% of the applicable federal
poverty guideline;
Sets a borrower’s monthly payment amount to $0 if the borrower’s income falls
below 225% of the applicable federal poverty guideline;
For undergraduate loans, caps a borrower’s monthly payment amount at 5% of the
borrower’s income above 225% of the applicable federal poverty guideline; and
For borrowers whose original principal balance was $12,000 or less, cancels the
remaining balance after the borrower has made 120 monthly payments or the
equivalent.
Doc. 57 at 14 (1st Am. Compl. ¶ 70). To summarize, the Final Rule decreases borrowers’
monthly payments and, for loans with original balances of $12,000 or less, limits a borrower’s
repayment window to 10 years (from 20 or 25) of qualifying payments.
This Lawsuit
2
This Memorandum and Order uses the terms “Final Rule” and “SAVE Plan” interchangeably.
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Eleven states now sue Secretary of Education Miguel Cardona, the United States
Department of Education, and President Joseph R. Biden. According to these states, the Final
Rule is “plainly unlawful” under the Constitution and the Administrative Procedures Act,
especially in light of Biden v. Nebraska, 143 S. Ct. 2355 (2023). They bring four claims: (1)
agency action in excess of statutory jurisdiction and in violation of separation of powers,
violating Article I of the Constitution; (2) agency action in excess of statutory authority,
violating the Administrative Procedures Act (APA); (3) arbitration and capricious agency action,
violating the APA; and (4) agency action in violation of APA procedures. Doc. 57 at 25–38 (1st
Am. Compl. ¶¶ 133–227).
With this background, the court next recites the legal standard governing defendants’
Motion to Dismiss.3
II.
Legal Standard
Defendants move for dismissal under Fed. R. Civ. P. 12(b)(1), arguing plaintiffs lack
standing, and so this court lacks subject matter jurisdiction. Rule 12(b)(1) motions take one of
two forms: a facial attack or a factual attack. Stuart v. Colo. Interstate Gas Co., 271 F.3d 1221,
1225 (10th Cir. 2001). “A facial attack asserts that the allegations in the complaint, even if true,
are insufficient to establish subject matter jurisdiction. By contrast, a factual attack on the
complaint challenges the veracity of the allegations upon which subject matter jurisdiction
depends.” Cnty. Comm’rs v. U.S. Dep’t of the Interior, 614 F. Supp. 3d 944, 951 (D.N.M. 2022)
(citation and internal quotation marks omitted). Here, defendants bring a factual attack.4
3
Though defendants filed their Motion to Dismiss before plaintiffs filed their First Amended
Complaint, the parties previously asked the court and it agreed to apply the Motion to Dismiss arguments
to plaintiffs’ First Amended Complaint. Doc. 60 at 3.
4
Though defendants present no evidence of their own, the parties agreed at the hearing that this is
a factual attack on the court’s subject matter jurisdiction.
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A factual attack allows the court to “reference . . . evidence outside the pleadings”
including “affidavits, other documents, and [even conduct] a limited evidentiary hearing to
resolve disputed jurisdictional facts.” Stuart, 271 F.3d at 1225 (citation and internal quotation
marks omitted). “When reviewing a factual attack on subject matter jurisdiction, a district court
may not presume the truthfulness of the complaint’s factual allegations.” Holt v. United States,
46 F.3d 1000, 1003 (10th Cir. 1995), abrogated on other grounds by Cent. Green Co. v. United
States, 531 U.S. 425, 437 (2001). Instead, “when considering a Rule 12(b)(1) motion to dismiss,
the court may weigh the evidence and make factual findings.” Los Alamos Study Grp. v. U.S.
Dep’t of Energy, 692 F.3d 1057, 1063 (10th Cir. 2012).
“If jurisdiction is challenged, the burden is on the party claiming jurisdiction to show it
by a preponderance of the evidence.” Celli v. Shoell, 40 F.3d 324, 327 (10th Cir. 1994). So,
when facing a factual attack, a plaintiff must “present affidavits or other evidence sufficient to
establish the court’s subject matter jurisdiction by a preponderance of the evidence.” U.S. ex rel.
Hafter D.O. v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1160 n.5 (10th Cir. 1999); see
also Sapp v. F.D.I.C., 876 F. Supp. 249, 251 (D. Kan. 1995) (“The allegations contained in the
complaint are initially accepted as true, but if challenged the plaintiff has the duty to support the
allegations with competent proof.”). Our Circuit has analogized plaintiffs’ Rule 12(b)(1) burden
to the nonmovant’s burden under Fed. R. Civ. P. 56(e). Hafter D.O., 190 F.3d at 1160 n.5
(“Whether we consider [defendant’s] motion as a motion to dismiss under Rule 12(b)(1) or a
motion for summary judgment, [plaintiffs’] burden remains essentially the same—they must
present affidavits or other evidence sufficient to establish the court’s subject matter jurisdiction
by a preponderance of the evidence.”).
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Defendants seek dismissal of plaintiffs’ claims under Rule 12(b)(1) because, they assert,
plaintiffs lack Article III standing. Article III of our Constitution limits federal courts’
jurisdiction to “cases” and “controversies.” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 408
(2013). To present a case or controversy under Article III, a plaintiff must establish that it has
standing to sue. Id. (citations omitted). To have standing, “a plaintiff needs a ‘personal stake’ in
the case.” Biden v. Nebraska, 143 S. Ct. at 2365 (2023) (quoting TransUnion LLC v. Ramirez,
594 U.S. 413, 423 (2021)). “To demonstrate their personal stake, plaintiffs must be able to
sufficiently answer the question: ‘What’s it to you?’” TransUnion, 594 U.S. at 423 (citation and
internal quotation marks omitted). “[N]o principle is more fundamental to the judiciary’s proper
role in our system of government than the constitutional limitation of federal-court jurisdiction to
actual cases or controversies.” Spokeo, Inc. v. Robins, 578 U.S. 330, 337 (2016) (citation and
internal quotation marks omitted).
Article III’s standing analysis requires three things:
(1) an “injury in fact—an invasion of a legally protected interest which is (a) concrete
and particularized, and (b) actual or imminent, not conjectural or hypothetical[;]”
(2) “a causal connection between the injury and the conduct complained of—the injury
has to be fairly . . . trace[able] to the challenged action of the defendant, and not . . .
th[e] result [of] the independent action of some third party not before the court[;]” and
(3) that it is “likely, as opposed to merely speculative, that the injury will be redressed by
a favorable decision.”
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (internal quotation marks and citations
omitted).
Plaintiffs must establish standing “in the same way as any other matter on which the
plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the
successive stages of the litigation.” Id. at 561. At “the pleading stage, the plaintiff must clearly
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allege facts demonstrating each element” of standing. Spokeo, 578 U.S. at 338 (citation, internal
quotation marks, and ellipsis omitted). “If at least one plaintiff has standing, the suit may
proceed.” Biden v. Nebraska, 143 S. Ct. at 2365 (citation omitted).
III.
Analysis
Plaintiffs assert three5 distinct theories of standing. First, plaintiffs argue that the Final
Rule harms their public instrumentalities—organizations who own and service student loans.
Second, they argue that the Final Rule causes them direct injury because the Final Rule will
decrease their tax revenues. Last, plaintiffs allege the Final Rule hurts their ability to recruit
employees into state employment. The court considers each theory, in turn, below.
A.
Public Instrumentalities
Plaintiffs’ public instrumentality theory alleges, in a nutshell, that three of the plaintiff
states have government corporations who own and service student loans, and the Final Rule will
cause these organizations to lose revenue. The organizations are public instrumentalities of the
states, plaintiffs argue, so a harm to three instrumentalities is a direct injury to the three states
themselves. Because this standing theory relies on Biden v. Nebraska, 143 S. Ct. 2355, the court
reviews that case’s standing discussion, in detail, below.
1.
Biden v. Nebraska
Biden v. Nebraska involved student loan forgiveness under the Higher Education Relief
Opportunities for Students Act (HEROES Act) of 2003, a law enacted out of Congress’s concern
for student loan borrowers in the wake of the September 11 terrorist attacks. 143 S. Ct. at 2363.
5
In their original Complaint, plaintiffs alleged a fourth kind of injury: “increased law enforcement
costs[.]” Doc. 1 at 21 (Compl. ¶ 113). Plaintiffs alleged that the SAVE Plan “will create enormous
opportunities for fraudsters to exploit student debt borrowers that would not otherwise exist.” Id.
Plaintiffs’ First Amended Complaint doesn’t mention this injury. See generally Doc. 57 (1st Am.
Compl.). And during the hearing on this motion, plaintiffs’ counsel confirmed. Plaintiffs have
abandoned this theory.
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The HEROES Act allows the Secretary of Education to “waive or modify any statutory or
regulatory provision applicable to the student financial assistance programs” during a “national
emergency[.]” 20 U.S.C. § 1098bb(a)(1). During the COVID-19 pandemic, the Secretary used
the HEROES Act to suspend interest accrual and repayment obligations on federal student loans
several times. Biden v. Nebraska, 143 S. Ct. at 2364. In August 2022, the Secretary took a step
further, and cancelled student loan debt under the HEROES Act to address financial harm
stemming from the COVID-19 pandemic. Id. This plan sought “to reduce and eliminate student
debts directly.” Id. Here’s how that batch of loan forgiveness worked:
For borrowers with an adjusted gross income below $125,000 in either 2020 or
2021 who have eligible federal loans, the Department of Education will discharge
the balance of those loans in an amount up to $10,000 per borrower. Borrowers
who previously received Pell Grants qualify for up to $20,000 in loan cancellation.
Id. at 2364–65 (citations omitted).
Six states challenged this HEROES Act plan. Id. at 2365. The district court concluded
the states lacked standing. Id. The Eighth Circuit disagreed, concluding the state of Missouri
likely had standing based on the Missouri Higher Education Loan Authority (MOHELA). Id.
The Supreme Court granted certiorari before judgment and, relevant here, concluded Missouri
had standing because “the Secretary’s plan harm[ed] MOHELA and thereby directly injure[d]
Missouri[.]” Id.
The Court explained that MOHELA, a nonprofit government corporation, participated in
the student loan market. Id. MOHELA owned over $1 billion in Federal Family Education
Loans (FFELs) and serviced $150 billion in federal loans. Id. at 2365–66. The Court’s standing
analysis focused on service fees. Id. The Department of Education had hired MOHELA “to
collect payments and provide customer service to borrowers. MOHELA receive[d] an
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administrative fee for each of the five million federal accounts it services[.]” Id. (citations
omitted).
Enter the HEROES Act student loan forgiveness plan. Under this “plan, roughly half of
all federal borrowers would have their loans completely discharged.” Id. at 2366. This meant
“MOHELA could no longer service those closed accounts, costing it, by Missouri’s estimate, $4
million a year in fees that it otherwise would have earned under its contract with the Department
of Education.” Id. The Court concluded that this financial harm from reduced service fees
qualified as “an injury in fact directly traceable to the Secretary’s plan[.]” Id. The Court went
on to explain that MOHELA was a public instrumentality of Missouri, so a “harm to MOHELA
in the performance of its public function [was] necessarily a direct injury to Missouri itself.” Id.
On that basis, Missouri had standing to sue and challenge that iteration of loan forgiveness.
With Biden v. Nebraska’s standing analysis firmly in mind, the court outlines plaintiffs’
public instrumentality arguments here.
2.
Plaintiffs’ Standing Theory Based on South Carolina, Texas, and
Alaska’s Public Instrumentalities
Plaintiffs allege that—like Missouri and MOHELA—South Carolina, Alaska, and Texas
have “state instrumentalities or quasi instrumentalities” who will suffer financial harm under the
SAVE Plan. Doc. 57 at 23 (1st Am. Compl. ¶ 116). These instrumentalities “(1) provide student
loans to residents of the state, (2) hold loans issued by the Federal Family Education Loan
Program (“FFELP6 loans”), and/or (3) service student debt taken out by residents, former
residents, and out-of-state students.” Id. The court pauses here to explain FFEL loans because
they provide an important part of plaintiffs’ public instrumentality harm theory.
6
Plaintiffs use the acronym “FFELP” in their First Amended Complaint to describe Federal
Family Education loans. Defendants use the acronym “FFEL” to reference these loans. Biden v.
Nebraska used the acronym “FFEL”. This Order uses FFELP and FFEL interchangeably.
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FFEL loans are student loans held by private corporations and guaranteed by the federal
government. “While FFELs . . . are no longer issued, many remain outstanding.” Biden v.
Nebraska, 143 S. Ct. at 2362. Holders of FFEL loans own the assets outright. Doc. 65 at 14.
The federal government doesn’t pay the holder to service the loans. Id. And federal law requires
FFEL holders to pay rebate fees on certain FFEL loans to the government—fees the holders
can’t pass on to the borrower. Id. (first citing 20 U.S.C. § 1078-3(f), then citing 34 C.F.R.
§§ 682.406(a)(12), 682.202).
To understand plaintiffs’ standing theory, the court also must explain FFEL loan
consolidation. Borrowers with FFEL loans can “consolidate” their loans into federal direct
loans. “Consolidate” is something of a term of art here because, it appears, consolidate seems to
mean convert FFEL loans into federal direct loans. That is, borrowers can exchange their FFEL
loans—ones owned by private corporations—into direct loans owned by the federal government.
When borrowers consolidate their FFEL loans, the federal government pays the loan’s holder the
principal loan amount owed and accrued interest. Putting it more succinctly, a consolidation
cashes out the private corporation holding the FFEL loan.
Returning to plaintiffs’ public instrumentality theory, plaintiffs allege that South
Carolina, Texas, and Alaska have public instrumentalities who hold FFEL loans. Plaintiffs
allege the three instrumentalities “derive income from their loan portfolios, such as through
collecting interest owed or service fees.” Doc. 57 at 23 (1st Am. Compl. ¶ 117). So, plaintiffs
allege, the instrumentalities’ “amount of income thus collected is directly proportional to the size
of the debt portfolio: i.e., decreasing the size of the portfolio will decrease the income collected
by the instrumentalities/quasi-instrumentalities.” Id. (1st Am. Compl. ¶ 119).
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Enter the Final Rule. Plaintiffs allege the “Final Rule is virtually certain to decrease the
size of these student-debt portfolios by inducing individuals to consolidate their FFELP loans
into direct federal loans in order to take advantage of the extraordinary (and unlawful) generosity
of the Final Rule.” Id. (1st Am. Compl. ¶ 120). Put a slightly different way, plaintiffs argue that
the SAVE Plan will incentivize debtors to consolidate these FFEL loans into direct federal loans,
shrinking the instrumentalities’ debt portfolios, and decreasing their revenue. Doc. 50 at 17–18.
Defendants have several problems with this theory.
Defendants correctly point out that plaintiffs’ theory of public instrumentality harm is
different—and weaker—than the public instrumentality harm that prevailed in Biden v.
Nebraska. Biden v. Nebraska says nothing about FFEL loans and consolidation. That case
involved a simpler student loan forgiveness plan and a simpler state instrumentality harm. Start
with the plan. The student loan forgiveness under the HEROES Act forgave $10,000 to $20,000
per eligible loan. Here, the SAVE Plan operates with more finesse. It reduces monthly payment
amounts and, for loans with original balances of $12,000 or less, limits a borrower’s repayment
window to 10 years (from 20 or 25) of qualifying payments. Next consider the harm to the state
instrumentality. In Biden v. Nebraska, the HEROES Act loan forgiveness would result in
millions of fully forgiven loans. So, MOHELA no longer could service those closed accounts,
costing it revenues formerly derived from servicing direct loans. Here, in contrast, plaintiffs
haven’t alleged any loss of revenue from servicing loans. Instead, plaintiffs allege that the Final
Rule will cost them interest revenue because third parties have incentive to consolidate their
FFEL loans into direct loans—and thus pay interest to the federal government as the sole lender
of direct loans.7
7
It’s not clear from plaintiffs’ First Amended Complaint or briefing how, exactly, the SAVE Plan
will reduce the instrumentalities’ revenue. Plaintiffs talk about “revenue” without differentiating between
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At bottom, plaintiffs’ theory of standing is more attenuated—and therefore weaker—than
MOHELA’s standing in Biden v. Nebraska. Despite these issues, the court nonetheless
concludes that South Carolina, Texas, and Alaska have pleaded plausibly and sufficiently
established a likely injury to their state instrumentalities.
3.
Plaintiffs Plausibly Have Alleged an Injury in Fact to South
Carolina, Texas, and Alaska’s Public Instrumentalities, Fairly
Traceable to the SAVE Plan
Because plaintiffs’ theory of harm differs from MOHELA’s harm in Biden v. Nebraska,
the court must look beyond that case’s holding. It must consider additional precedent defining
the standing inquiry that applies to this dispute. Defendants argue that plaintiffs’ public
instrumentality theory fails two elements of standing: injury in fact and traceability. The court
thus briefly recites the governing law.
To demonstrate Article III standing, a “plaintiff must have suffered an ‘injury in fact’”
and that injury must be “actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at
560–61 (citations and internal quotation marks omitted). Plaintiffs allege an imminent injury,
claiming the Final Rule will cause them financial harm in the future. Under Clapper, a future
injury satisfies the “imminence” requirement only if it is “certainly impending.” 568 U.S. at
401. The Supreme Court has “repeatedly reiterated that threated injury be certainly impending to
revenue from interest and revenue from fees. Plaintiffs’ First Amended Complaint glosses over the
difference, alleging the instrumentalities “derive income from their loan portfolios, such as through
collecting interest owed or service fees.” Doc. 57 at 23 (1st Am. Compl. ¶ 117). And plaintiffs’ briefing
applies more gloss, arguing that each instrumentality “holds a portfolio of FFELP loans, and the
interest/fees that they receive from those portfolios is directly proportional to their portfolio’s size.” Doc.
50 at 17 (emphasis added).
Fortunately, at the hearing, plaintiffs confirmed that their public instrumentality theory relies on
reduced interest revenue—not fees.
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constitute injury in fact, and that allegations of possible future injury are not sufficient.” Id. at
409 (emphases in original) (citation, brackets, and internal quotation marks omitted).
In addition to a future injury, plaintiffs also allege an indirect injury. When “a plaintiff’s
asserted injury arises from the government’s allegedly unlawful regulation . . . of someone else,”
the Supreme Court has instructed courts to require “much more.” Lujan, 504 U.S. at 561–62
(emphasis in original). “In that circumstance, causation and redressability ordinarily hinge on
the response of the regulated . . . third party the government action or inaction—and perhaps on
the response of others as well.” Id. at 562. When such
essential elements of standing depend[] on the unfettered choices made by
independent actors not before the courts and whose exercise of broad and legitimate
discretion the courts cannot presume to either control or to predict . . . , it becomes
the burden of the plaintiff to adduce facts showing that those choices have been or
will be made in such a manner as to produce causation and permit redressability of
injury.
Id. (citations and internal quotation marks omitted).
So, to show standing, plaintiffs must show two things: (1) borrowers likely will
consolidate their FFEL loans into direct federal loans and (2) this consolidation likely will reduce
the instrumentalities’ revenue. To meet this burden, plaintiffs have provided declarations from
each of the three state instrumentalities. The court reviews the evidence submitted by each
instrumentality below, starting with South Carolina. After its review of each package of
evidence, the court evaluates the evidence together. And, ultimately, the court concludes South
Carolina, Texas, and Alaska have standing—at least for now.
a.
South Carolina’s SEAA
Plaintiffs allege that South Carolina has a public instrumentality called the State
Education Assistance Authority (SEAA). Doc. 57 at 23–24 (1st Am. Compl. ¶ 121). The First
Amended Complaint alleges that “since 2011, SEAA’s portfolio has decreased from
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approximately $31.3 million to $6.4 million, which has reduced the amount of income generated
for South Carolina’s benefit[.]” Id. at 24 (1st Am. Compl. ¶ 122). Plaintiffs allege the SAVE
Plan “will further decrease the size of SEAA’s portfolio as borrowers convert FFELP loans to
take advantage of available debt forgiveness.” Id.
Plaintiffs submitted a declaration from South Carolina officials confirming the
information about SEAA. Doc. 53-6 (Spate Decl.). The declaration’s exhibits confirm that
SEAA holds FFEL loans, id. at 7 (Spate Decl. Ex. 2), and SEAA’s FFEL portfolio has decreased
steadily since 2011, id. at 8 (Spate Decl. Ex. 2). The exhibit provides three figures. The first
figure shows SEAA’s FFEL loan portfolio decreasing over time:
Id.
The exhibit’s second figure attributes this decrease to borrower consolidation, showing
that borrowers have consolidated SSEA’s FFEL loans for years. At the hearing on the Motion to
Dismiss, plaintiffs’ counsel explained the following figure shows the total value of FFEL loans
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consolidated each year (first column) and the value of FFEL loans paid down by FFEL
borrowers (second column):
Id.
But, though SEAA’s FFEL portfolio has gone down each year since 2011, the interest
revenue doesn’t follow that same pattern:
Id.
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This SEAA evidence creates some evident problems for South Carolina’s standing
theory. Remember, plaintiffs need to show two things: (1) the SAVE Plan makes it likely that
borrowers will consolidate their loans and (2) if borrowers consolidate their loans, the public
instrumentalities likely will suffer financial harm in the form of reduced interest payments. The
SEAA evidence undermines both propositions.
The SEAA evidence casts doubt on plaintiffs’ allegation that the SAVE Plan makes
FFEL loan consolidation more likely. The SEAA evidence shows that SEAA’s FFEL loan
portfolio has decreased steadily since 2010. So, borrowers already were consolidating their
loans long before the SAVE Plan’s incentives. This conclusion poses a causation problem for
plaintiffs. And this problem demonstrates the difficulty of establishing standing when a theory
of harm relies on decisions by third parties. Where “the independent action of some third party
not before the court—rather than that of the defendant—was the direct cause of the plaintiff’s
harm, causation may be lacking.” Habecker v. Town of Estes Park, Colo., 518 F.3d 1217, 1225
(10th Cir. 2008) (citation and internal quotation marks omitted). Trying to cure this problem,
plaintiffs direct the court to Alaska’s declaration. It explains why the SAVE Plan incentivizes
borrowers to consolidate their FFEL. Critically, the Alaska declaration alleges that borrowers
already are consolidating their loans. More on Alaska in a moment.
The SEAA evidence also casts doubt on plaintiffs’ theory that, as the instrumentalities’
FFEL loan portfolios decrease, their interest revenue necessarily will decrease vis-à-vis interest
revenue in the what if world where the SAVE Plan didn’t happen. SEAA’s FFEL portfolio has
decreased steadily over the years, but SEAA’s interest revenue on FFEL loans has moved up and
moved down. Put differently, a graph of interest revenue wouldn’t have the negative slope
plaintiffs need.
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At the hearing, plaintiffs introduced an additional layer of confusion about this data.
Plaintiffs argued that the SEAA evidence demonstrates loan consolidation from the HEROES
Act loan forgiveness. Plaintiffs argued that the jump from -$954,393.67 in consolidation in
fiscal year 2021 to -$2,112,224.90 in fiscal year 2022 resulted from defendants announcing the
HEROES Act forgiveness. This announcement, plaintiffs contend, led borrowers to consolidate
their loans to take advantage. To be sure, this would support plaintiffs’ view that borrowers
respond to incentives created by federal student loan forgiveness programs—i.e., when
borrowers thought they could benefit from the HEROES Act, they consolidated their loans. But
plaintiffs’ argument makes it harder to attribute loan consolidation to the SAVE Plan loan
forgiveness, and not the HEROES Act loan forgiveness.
And plaintiffs’ argument is just that: an argument. Plaintiffs haven’t adduced any
evidence that purports to suss out the amount of consolidation caused by the HEROES Act, the
SAVE Plan, and general market forces individually. This gap particularly presents a problem
given the timing of the two loan forgiveness plans. Plaintiffs explained during the hearing that
the fiscal year 2022 number captures HEROES Act-related consolidation. According to
plaintiffs, this increase in loan consolidation—from -$954,393.67 in fiscal year 2021 to $2,112,224.90 in fiscal year 2022— shows the effects of the HEROES Act loan forgiveness—
i.e., borrowers consolidated their FFEL loans to take advantage of the HEROES Act. That’s all
well and good, until the court considers the SAVE Plan. Defendants announced the proposed
rule in January 2023—within fiscal year 2022. That leaves two loan forgiveness plans in play
during one fiscal year. And the court has no way to tell how much loan consolidation to attribute
to the HEROES Act and how much to attribute to the SAVE Plan.
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Given these issues with the South Carolina evidence, plaintiffs’ theory finds its way to
some thin ice. Fortunately, for them, plaintiffs’ evidence from Texas helps them show that
consolidation would cause reduced income revenue.
b.
Texas’s THECB
Plaintiffs allege that Texas has an agency named the Texas Higher Education
Coordinating Board (THECB). Doc. 57 at 24 (1st Am. Compl. ¶ 127). THECB is a “student
debt servicing public entity[.]” Id. Plaintiffs allege “THECB owns over $1,1295,236 [sic] in
FFELP loans” and “collected $114,479 in interest in 2023.” Id. at 25 (1st Am. Compl. ¶ 130).
The record isn’t clear if this is $11.2 million in FFEL loans or $1.12 million. Plaintiffs allege
that if the SAVE Plan “were to decrease the size of that student debt portfolio, the amount of
income that the THECB would collect would decrease.” Id. (1st Am. Compl. ¶ 131).
Plaintiffs submitted a declaration from THECB. See Doc. 53-7 (Keyton Decl.). The
declaration confirms the above amounts. Id. at 2 (Keyton Decl. ¶ 3). And, critically, the
declarant testifies:
To the extent that federal policy results in borrowers consolidating their loans out
of FFELP into the Direct Loan Program, those consolidations will cause the State
of Texas to lose revenue. Upon consolidation, the federal government compensates
the holder (THECB) only for principal and accrued interest. Thus, such
consolidations will result in reduced revenue [to the] THECB and therefore the
State of Texas. The THECB would no longer collect interest on FFELP loans that
have been consolidated, diminishing the value of its portfolio.
Id. (Keyton Decl. ¶ 4). So, declarant says, the “SAVE Plan could cause pecuniary harm to the
State of Texas and THECB measured by a reduction in revenue to the State’s FFELP program.”
Id. (Keyton Decl. ¶ 5). Defendants point out that this declaration “skims over consolidation
entirely.” Doc. 65 at 14. That is, the declarant assumes, without explaining, that borrowers will
consolidate their loans.
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Defendants have the better end of that narrow issue. The Texas declaration doesn’t help
plaintiffs shoulder their burden to show that borrowers will consolidate their FFEL loans into
direct loans—the first piece of the standing puzzle. In contrast, the Texas declaration does help
plaintiffs with the second piece of the standing puzzle: it’s evidence that consolidation will
cause revenue loss to Texas through THECB. The mismatched puzzle piece here is the SEAA
exhibit, which contradicts the Texas evidence because the SEAA data shows that decreased
FFEL portfolios don’t necessarily mean decreased FFEL interest revenue. Doc. 53-6 at 8 (Spate
Decl. Ex. 2).
With these those two states behind us, the court turns to plaintiffs’ strongest evidence:
Alaska’s declaration.
c.
Alaska’s ASLC
Plaintiffs allege that Alaska’s instrumentality is a public corporation, known as the
Alaska Student Loan Corporation (ASLC). It owns $16.8 million in FFEL loans. Doc. 57 at 24
(1st Am. Compl. ¶¶ 123–24). Plaintiffs allege the SAVE Plan will cause Alaska to lose
significant revenues. Id. (1st Am. Compl. ¶ 125). Specifically, plaintiffs allege “ASLC
estimates that the Final Rule will result in ASLC losing approximately $100,000 over just the
next two years that it would otherwise collect as a FFELP loan holder.” Id. (1st Am. Compl.
¶ 126).
Plaintiffs also submitted a declaration from ASLC. The declarant testifies, “The SAVE
Plan entices borrowers to consolidate their loans away from FFELP into the Direct Loan
Program (DLP), comprising loans held by the federal government.” Doc. 53-8 at 2 (Efird Decl.
¶ 6). According to the declarant, three features of the SAVE Plan entice borrowers to
consolidate their FFEL loans into direct loans:
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1. The SAVE Plan offers benefits to direct loans only—i.e., capped payments, waiving
residual interest, and full forgiveness after ten years of payments;
2. The SAVE Plan doesn’t treat consolidated loans as new loans, so borrowers’
repayment clocks won’t restart if they consolidate—a feature that previously
disincentivized borrowers from consolidating; and
3. The federal government is advertising and encouraging borrowers to consolidate.
Id. at 2–3 (Efird Decl. ¶¶ 6–8). So, the declarant provides, “the federal government is
strongly . . . incentivizing borrowers to consolidate their loans away from FFELP and into
[direct] loans held by the federal government.”8 Id. at 3 (Efird Decl. ¶ 8).
This testimony resembles—at some level anyway—theoretical, in-a-vacuum, “basic
economic theory” allegations that struggle to carry plaintiffs’ standing burden. See Mackinac
Ctr. for Pub. Pol’y v. Cardona, 102 F.4th 343, 2024 WL 2237667, at *8 (6th Cir. May 17, 2024)
(“Plaintiffs’ allegations regarding supply and demand and the impact of financial incentive on
third-party student-loan debtors are wholly speculative.”). But the ASLC declaration goes a step
further. It testifies, “Because these benefits are not available to borrowers with commerciallyheld FFELP loans, borrowers are rapidly consolidating their loans away from FFELP loans held
by ASLC and into Direct Loans held by the federal government.” Id. at 2 (Efird Decl. ¶ 6).
ASLC’s declarant testifies these “consolidations will cause Alaska to lose significant
revenues.” Id. at 3 (Efird Decl. ¶ 9). Here’s how: an FFEL loan is a loan held by a corporation
(here, ASLC) and guaranteed by the federal government. When a borrower consolidates an
FFEL loan into a direct loan from the federal government, the federal government compensates
the holder (here, ASLC) for principal and accrued interest. Id. So, consolidation means the
8
The ASLC declaration contains several legal conclusions. For example, the declarant testifies
that “the federal government is strongly, and likely unlawfully, incentivizing borrowers to consolidate
their loans away from FFELP and into loans held by the federal government.” Doc. 53-8 at 3 (Efird Decl.
¶ 8) (emphasis added). The lawfulness of the SAVE Plan is a legal conclusion reserved for the court to
decide. The court declines to consider the declaration’s legal conclusions.
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holder (here, ASLC) will no longer collect interest on those consolidated FFEL loans. Id.
Because of this phenomenon, “ASLC estimates that the SAVE Plan will result in ASLC losing
approximately $100,000 over just the next two years that it would otherwise collect as a FFELP
holder.” Id. (Efird Decl. ¶ 11). This declaration represents plaintiffs’ best evidence.
The Alaska declaration provides evidentiary support for both pieces of the standing
puzzle: (1) borrowers are likely to consolidate their FFEL loans into direct loans because of the
SAVE Plan and (2) when borrowers consolidate, it will cause the public instrumentality to lose
interest revenue. Defendants fault this declaration for “nakedly” stating that ASLC will lose
$100,000 “because of the SAVE Plan, without explaining how or why.” Doc. 65 at 14. While
there’s some truth to defendants’ criticism, Alaska has adduced some facts. The court can’t say
the same for defendants. They’ve proffered no evidence of their own. Without any
contradictory evidence, defendants have given no facts to reach a different conclusion. In short,
the court currently has no reason to doubt ASLC’s $100,000, nor any other part of the
declaration.
Having summarized all three components of the public instrumentality evidence, the
court, next, synthesizes this information.
d.
Summary of State Public Instrumentality Theory
Considering all three sources of evidence together, plaintiffs have shouldered their
burden to allege standing. Recall that plaintiffs had to show two things to show an injury: (1)
the SAVE Plan makes it likely that borrowers will consolidate their loans and (2) if borrowers
consolidate their loans, the states’ public instrumentalities will suffer harm. Plaintiffs have
shouldered their burden on both fronts.
First, plaintiffs have shown by a preponderance of the evidence that the SAVE Plan will
cause FFEL borrowers to consolidate their loans into direct loans. This inquiry relies on the
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choices of third parties not before the court, which means plaintiffs must allege “facts showing
that those choices have been or will be made in such manner as to produce causation and permit
redressability of injury.” Lujan, 504 U.S. at 562. Alaska’s ASLC declarant testifies that
consolidation makes economic sense for borrowers because the SAVE Plan provides benefits for
direct loans that FFEL loan borrowers can’t access. And, critically, the ASLC declarant alleges
“borrowers are rapidly consolidating their loans away from FFELP loans held by ASLC and into
Direct loans held by the federal government.” Doc. 53-8 at 2 (Efird Decl. ¶ 6).
To be sure, plaintiffs’ SEAA evidence presents some problems for this theory because it
shows borrowers consolidating their FFEL loans without the SAVE Plan. The Alaska evidence
overcomes these issues. Alaska’s ASLC declaration, in contrast, explains the SAVE Plan’s
incentives for borrowers to consolidate and testifies that the SAVE Plan already is causing
borrowers to consolidate. And defendants haven’t rebutted this evidence with any evidence of
their own. So, despite the SEAA evidence,9 plaintiffs have shouldered their burden to show “that
third parties will likely react in predictable ways to” the SAVE Plan. Dep’t of Comm. v. New
York, 139 S. Ct. 2551, 2566 (2019).
Second, plaintiffs have shown that, when borrowers consolidate their loans, the states’
public instrumentalities—and therefore the states—will suffer harm in the form of reduced
interest income. Plaintiffs’ own evidence from SEAA casts doubt on this theory. SEAA’s FFEL
loan portfolio has decreased steadily overtime, but its interest income has both increased and
decreased over the same period. Doc. 53-6 at 8 (Spate Decl. Ex. 2). Despite these issues, the
9
South Carolina has squeaked over the preponderance of the evidence standard thanks to Alaska’s
evidence and a lack of evidence from defendants. The court notes that the “need to satisfy the[] three
[standing] requirements persists throughout the life of the lawsuit.” Wittman v. Personhuballah, 578 U.S.
539, 543 (2016). Given its narrow victory here, the court questions whether South Carolina’s evidence
(at least the evidence plaintiffs have presented here) could survive if defendants submitted any contrary
evidence at all.
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Texas THECB and Alaska ASLC evidence suffices to confer standing to the three public
instrumentalities.
The THECB declarant alleges that, if borrowers consolidate their FFEL loans into direct
loans, “those consolidations will cause the State of Texas to lose revenue” because the “THECB
will no longer collect interest on FFELP loans that have been consolidated, diminishing the value
of its portfolio.” Doc. 53-7 at 2 (Keyton Decl. ¶ 4). And the THECB’s declarant further testifies
the “SAVE Plan could cause pecuniary harm to the State of Texas and THECB measured by a
reduction in revenue to the State’s FFELP program.” Id. (Keyton Decl. ¶ 5). Defendants argue
that this declaration doesn’t help plaintiffs shoulder their burden because the THECB “declarant
skims over consolidation entirely”—that is, the declarant assumes that borrowers will
consolidate their loans. Doc. 65 at 14. But, as just explained, plaintiffs have marshaled some
evidence that some borrowers likely will consolidate their FFEL loans into direct loans. And
Alaska’s evidence also shows borrowers already are consolidating. Because it’s likely that
borrowers will consolidate, it’s likely that Texas will suffer harm.
The same goes for Alaska’s ASLC. The ASLC declarant testifies that “consolidations
will cause Alaska to lose significant revenues.” Doc. 53-8 at 3 (Efird Decl. ¶ 9). The declarant
explains how consolidation will affect revenues. Id. And “ASLC estimates that the SAVE Plan
will result in ASLC losing approximately $100,000 over just the next two years that it would
otherwise collect as a FFELP holder.” Id. (Efird Decl. ¶ 11). Plaintiffs thus have shouldered
their current burden to allege a non-speculative, imminent, future injury to the public
instrumentalities,10 traceable to the SAVE Plan. And so, on the current record, South Carolina,
Texas, and Alaska have standing.
10
The court again notes that South Carolina has succeed in showing standing by the thinnest of
margins.
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Before the court leaves the public instrumentality analysis altogether, it responds to
another of defendants’ arguments.
4.
Harm v. Benefit
Defendants argue plaintiffs haven’t shown that these three instrumentalities likely will
suffer an injury. They argue that holding “a FFEL loan in no way guarantees interest income”
for the instrumentalities. Doc. 65 at 14. According to defendants, many “FFEL borrowers are
on income-based repayment plans under which they pay $0 monthly. And a FFEL borrower is
as susceptible to default as any other.” Id. Defendants thus assert that the FFEL borrowers most
likely to benefit from the SAVE Plan—and thus the borrowers most likely to consolidate—
“would tend to be those borrowers at highest risk of delinquency and default[.]” Id. at 14–15.
Delinquency and default, of course, would reduce the instrumentalities’ revenue. Id. at 15.
When a borrower consolidates an FFEL loan, however, the instrumentality avoids delinquency
and default. Indeed, “when a FFEL loan is consolidated, its prior owner receives payment for
the full value of the loan’s principal and outstanding interest.” Id. (first citing 20 U.S.C. § 10783(b)(1)(D), then citing 34 C.R.F. § 685.220(f)(1)). So, defendants argue, the SAVE Plan actually
could benefit the instrumentalities.
Tying this to standing, defendants argue plaintiffs
need to show that a potential loss of uncertain interest revenues to these entities is
not outweighed by the certain profits of consolidation—including guaranteed
payment and the elimination of rebate fees—to say nothing of the potential for
reinvestment of the cash value of the loan at higher market interest rates.
Id. (citing 20 U.S.C. § 1107a(k), (l) (setting FFEL interest rates)). While the court recognizes the
logic of defendants’ bottom-line, economic argument, it can’t carry the day for them.
Plaintiffs cite authority that “[o]nce injury is shown, no attempt is made to ask whether
the injury is outweighed by benefits the plaintiffs has enjoyed from the relationship with the
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defendant.” 13A Edward H. Cooper, Federal Practice & Procedure, Jurisdiction § 3531.4 (3d
ed. 2023). District courts within our Circuit have cited a rule from a Second Circuit case: “‘the
fact that an injury may be outweighed by other benefits, while often sufficient to defeat a claim
for damages, does not negate standing.’” Budicak, Inc. v. Lansing Trade Grp., LLC, 452 F.
Supp. 3d 1029, 1044 n.36 (D. Kan. 2020) (quoting Ross v. Bank of Am., N.A. (USA), 524 F.3d
217, 222 (2d Cir. 2008)); Plant Oil Powered Diesel Fuel Sys., Inc. v. ExxonMobil Corp., 801 F.
Supp. 2d 1163, 1179 (D.N.M. 2011) (same).
Plaintiffs’ counterargument misses the point, defendants contend. Defendants’ argument
doesn’t weigh harm against benefit. Instead, it asserts that there’s simply no injury to begin with
because the SAVE Plan will make money for the states’ public instrumentalities. The problem
with defendants’ rejoinder is a basic one: they haven’t adduced any evidence to support their
theory. More problematic yet, plaintiffs have marshaled evidence nullifying the theory.
Alaska’s “ASLC estimates that the SAVE Plan will result in ASLC losing approximately
$100,000 over just the next two years that it would otherwise collect as a FFELP holder.” Doc.
53-8 at 3 (Efird Decl. ¶ 11). Defendants may disagree with this calculation, but they don’t
proffer any evidence or accounting of their own. The court lacks any basis to find that this
$100,000 doesn’t account for the potential benefits of the SAVE Plan. Similarly, the Texas
declarant alleges that, if borrowers consolidate their FFEL loans into direct loans, “those
consolidations will cause the State of Texas to lose revenue” because the “THECB will no longer
collect interest on FFELP loans that have been consolidated, diminishing the value of its
portfolio.” Doc. 53-7 at 2 (Keyton Decl. ¶ 4). Without any evidence to the contrary, the court
accredits the declarant’s testimony that the SAVE Plan will cause THECB, and therefore Texas,
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to lose interest revenue. Again, there’s no reason to believe that the THECB declarant failed to
account for the SAVE Plan’s potential benefits.
The court thus rejects defendants’ argument that plaintiffs have failed to show an injury
because the SAVE Plan might benefit the public instrumentalities. As a result, South Carolina,
Texas, and Alaska have suffered an injury in fact, fairly traceable to the SAVE Plan. The court
denies defendants’ Motion to Dismiss South Carolina, Texas, and Alaska.
But what about the other states? If some plaintiff states have standing, do they all have
standing?
5.
“Standing for One is Standing for All”
When the court asked this question at the hearing, plaintiffs urged the court to answer this
question yes. They directed the court to Biden v. Nebraska, which held: “If at least one plaintiff
has standing, the suit may proceed.” 143 S. Ct. at 2365 (citing Rumsfeld v. Forum for Acad. &
Institutional Rights, Inc., 547 U.S. 47, 52 n.2 (2006)). And plaintiffs all bring the same legal
claims. Plaintiffs thus argue—correctly—that this suit will proceed. And they ask the court to
end its standing inquiry there: conclude South Carolina, Texas and Alaska have standing and
allow the suit to proceed with the other states tagging along. The court declines this invitation.
Our Circuit, albeit in an unpublished opinion, has rejected the idea that “standing for one
is” necessarily “standing for all.” Thiebaut v. Colo. Springs Utils., 455 F. App’x 795, 802 (10th
Cir. 2011). The Supreme Court, as shown in Biden v. Nebraska, doesn’t require district courts to
consider the standing of all plaintiffs. 143 S. Ct. at 2365; see also Massachusetts v. EPA, 549
U.S. 497, 518 (2007) (“Only one of the petitioners needs to have standing to permit [the Court]
to consider the petition for review.”). The court realizes that moving on after deciding that at
least one plaintiff has standing may “encourage[] judicial efficiency by permitting a court to
proceed to the merits of a case involving multiple plaintiffs seeking identical relief when it is
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clear that at least one plaintiff has standing.” Thiebaut, 455 F. App’x at 802. “But . . . nothing in
the cases addressing this principle suggests that a court must permit a plaintiff that lacks standing
to remain in a case whenever it determines that a co-plaintiff has standing.” Id. (emphases in
original); see also M.M.V. v. Garland, 1 F.4th 1100, 1110–11 (D.C. Cir. 2021) (“The [Rumsfeld
v. Forum for Academic & Institutional Rights, Inc.] line of cases stands only for the proposition
that a court ‘need not’ decide the standing of each plaintiff seeking the same relief.” (quoting
Clinton v. City of N.Y., 524 U.S. 417, 431 n.19 (1998))).
This alternative approach explains why the court “retain[s] discretion to analyze the
standing of all plaintiffs in a case and to dismiss those plaintiffs that lack standing.” Thiebaut,
455 F. App’x at 802 (first citing Utah Ass’n of Cntys. v. Bush, 455 F.3d 1094, 1098 (10th Cir.
2006) (noting district court concluded one plaintiff had standing, so court declined to address
other plaintiff’s standing in interest of judicial economy); then citing Mount Evans Co. v.
Madigan, 14 F.3d 1444, 1451–53 (10th Cir. 1994) (analyzing individual plaintiffs’ standing
separately and dismissing some plaintiffs for lack of standing even though other plaintiffs had
standing); and then citing We Are Am./Somos Am. v. Maricopa Cnty. Bd. of Supervisors, 809 F.
Supp. 2d 1084, 1091 (D. Ariz. 2011) (“Th[e] general rule [that only one plaintiff needs standing]
does not strictly prohibit a district court, in a multiple plaintiff case such as this, from
considering the standing of the other plaintiffs even if it finds that one plaintiff has standing.”));
see also M.M.V., 1 F.4th at 1111 (concluding the general rule—that court needn’t decide
standing of each plaintiff seeking same relief—“does not prohibit the court from paring down a
case by eliminating plaintiffs who lack standing or otherwise fail to meet the governing
jurisdictional requirements” (emphasis in original)).
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Here, the court, in its discretion, concludes that paring down the case and dismissing the
plaintiffs without standing aligns with the charter purposes recognized in Fed. R. Civ. P. 1. At
bottom, plaintiffs contend that uninjured plaintiffs can borrow another plaintiff’s injury
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