636 F.Supp.3d 991
E.D. Mo.2022Background
- Six states (Nebraska, Missouri, Arkansas, Iowa, Kansas, South Carolina) sued President Biden, Secretary Cardona, and the U.S. Department of Education challenging the Administration’s August 24, 2022 student‑loan debt‑relief plan (up to $20,000 for Pell recipients; $10,000 for others; income caps) as beyond statutory authority and arbitrary and capricious under the APA.
- The Department relied on the HEROES Act (20 U.S.C. §§1098bb–ee) as authority to waive or modify Title IV provisions in connection with the COVID‑19 national emergency; the Secretary previously used HEROES and CARES Act authority to pause loan payments/interest.
- Plaintiffs moved for a preliminary injunction (filed Sept. 29, 2022); the Court held a hearing Oct. 12, 2022 and noted Defendants would not implement relief before Oct. 23, 2022.
- Several plaintiff states alleged injuries tied to loan servicing entities (MOHELA, ASLA), incentives to consolidate FFELP loans into Direct Loans, lost revenues to state entities (e.g., SLABS investments), or future lost state tax revenue from discharge exclusions.
- The Department announced a Sept. 29, 2022 consolidation cutoff (making FFELP consolidated after that date ineligible for the one‑time relief), undermining alleged ongoing consolidation incentives.
- The Court dismissed the case for lack of Article III standing, concluding plaintiffs failed to show concrete, particularized, and imminent injuries traceable to Defendants that a favorable judgment would redress.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (threshold) | States claim concrete injuries from lost revenues, impaired public entities, and tax losses from loan cancellations | Relief is prospective; alleged harms are speculative, attenuated, or not traceable; some harms depend on third‑party actions | Court: Plaintiffs lack Article III standing; dismissal for want of jurisdiction |
| Missouri’s reliance on MOHELA’s harms | Missouri asserts state sovereign/quasi‑sovereign injury because MOHELA’s revenue loss will impair state services | MOHELA is a financially independent instrumentality; state not liable for its debts; harms are MOHELA’s, not Missouri’s | Court: Missouri cannot sue on behalf of MOHELA; no standing derived from MOHELA’s alleged harms |
| Consolidation incentive (ASLA, NIC, Arkansas, Nebraska) | Consolidation into Direct Loans will reduce FFELP servicing revenue and SLABS values, causing imminent financial harm | Department announced consolidation cutoff (Sept. 29, 2022); any remaining risk is speculative or depends on agency policy changes | Court: Cutoff eliminates the ongoing consolidation incentive; plaintiffs’ chain of injury is speculative—no standing |
| Future lost state tax revenue (NE, IA, KS, SC) | States will lose future income tax revenue because federal discharge exclusion now but may end in 2026, changing tax bases | Future tax losses are speculative and not imminent; states retain sovereign taxing power to respond | Court: Future tax‑revenue effects are too attenuated and speculative to support standing |
Key Cases Cited
- Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008) (preliminary injunction is extraordinary relief and requires showing of likely success and irreparable harm)
- Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109 (8th Cir. 1981) (four‑factor test for preliminary injunction/balance of equities)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact, causation, and redressability)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (standing requires concrete and particularized injury)
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (2013) (alleged future injuries must be certainly impending, not speculative)
- Raines v. Byrd, 521 U.S. 811 (1997) (party invoking federal jurisdiction bears the burden to establish standing)
- Warth v. Seldin, 422 U.S. 490 (1975) (standing focuses on whether plaintiff has alleged injury, not merits)
- Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000) (traceability and redressability requirements for standing)
- Regents of the Univ. of Cal. v. Doe, 519 U.S. 425 (1997) (arm‑of‑the‑state analysis requires reference to state law defining an agency’s character)
- Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014) (party invoking jurisdiction bears burden to establish standing)