State of Missouri v. Janet Yellen
39 F.4th 1063
8th Cir.2022Background
- ARPA (2021) allocated federal relief to states and conditioned receipt on certifications; it barred using funds to "offset" tax revenue reductions caused by law changes (the "Offset Restriction").
- Treasury issued an Interim Rule and a Final Rule interpreting the Offset Restriction; Treasury’s test treats a violation as failing to account for net tax revenue losses through non‑ARPA sources (e.g., other revenue increases or non‑ARPA spending cuts).
- Missouri sued shortly after ARPA’s enactment challenging a purportedly "broad" interpretation of the Offset Restriction and sought a preliminary injunction to prevent any interpretation broader than prohibiting the deliberate use of ARPA funds to replace a specific tax cut.
- The district court dismissed for lack of standing and ripeness; Missouri nonetheless accepted ARPA funds (about $2.7 billion allocated).
- On appeal the Eighth Circuit held Missouri lacked Article III standing because it alleged only speculative injury from a hypothetical "broad" interpretation that Treasury disclaimed and because Missouri did not allege intent to take actions that would trigger recoupment under Treasury’s actual interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing—injury in fact | Missouri: Secretary’s statements and uncertainty about enforcement create imminent injury to sovereign taxing power and risk of forfeiting funds | Treasury/Yellen: No concrete or imminent injury; Treasury disclaimed any "broad" interpretation and regs do not adopt it | No standing: alleged harms are conjectural/hypothetical; no imminent injury |
| Pre‑enforcement challenge | Missouri: credible threat of enforcement deters tax‑cut actions; pre‑enforcement relief appropriate | Treasury: Missouri doesn’t allege intent to enact tax changes that would both reduce net revenue and fail to offset by permissible means | Pre‑enforcement test fails: Missouri did not plead intent to commit proscribed conduct |
| Scope of Offset Restriction (broad vs narrow) | Missouri: Offset Restriction could bar any tax cuts that reduce net revenue through 2024 (broad view) | Treasury: Has never endorsed the broad view; regs require accounting for revenue losses via non‑ARPA sources before recoupment | Court: No threatened application of the purported broad interpretation; Treasury disclaimed it |
| Ripeness | Missouri: dispute ripe because uncertainty prevents legislative action | Treasury: dispute speculative until state enacts disallowed conduct or a recoupment decision issued | Court declined to reach ripeness after resolving lack of standing |
Key Cases Cited
- City of Kennett v. EPA, 887 F.3d 424 (8th Cir. 2018) (standard of review for standing/ripeness dismissal)
- Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013) (heightened rigor for speculative future‑harm standing)
- Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014) (pre‑enforcement standing test requires credible threat and intent)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (elements of Article III standing)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (concreteness requirement for injury in fact)
- Golden v. Zwickler, 394 U.S. 103 (1969) (federal courts avoid advisory opinions)
- Preiser v. Newkirk, 422 U.S. 395 (1975) (limits on judicial power to decide non‑concrete disputes)
- Arizona v. Yellen, 34 F.4th 841 (9th Cir. 2022) (contrasting holding: Arizona held it had standing to challenge Offset Restriction as written)