Biden v. Nebraska

by Supreme Court of the United States

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

BIDEN, PRESIDENT OF THE UNITED STATES, ET AL. v. NEBRASKA ET AL.
CERTIORARI BEFORE JUDGMENT TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
No. 22–506. Argued February 28, 2023—Decided June 30, 2023

Title IV of the Higher Education Act of 1965 (Education Act) governs federal financial aid mechanisms, including student loans. 20 U. S. C. §1070(a). The Act authorizes the Secretary of Education to cancel or reduce loans in certain limited circumstances. The Secretary may cancel a set amount of loans held by some public servants, see §§1078–10, 1087j, 1087ee. He may also forgive the loans of borrowers who have died or become “permanently and totally disabled,” §1087(a)(1); borrowers who are bankrupt, §1087(b); and borrowers whose schools falsely certify them, close down, or fail to pay lenders. §1087(c).

The issue presented in this case is whether the Secretary has authority under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to depart from the existing provisions of the Education Act and establish a student loan forgiveness program that will cancel about $430 billion in debt principal and affect nearly all borrowers. Under the HEROES Act, the Secretary “may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the [Education Act] as the Secretary deems necessary in connection with a war or other military operation or national emergency.” §1098bb(a)(1). As relevant here, the Secretary may issue such waivers or modifications only “as may be necessary to ensure” that “recipients of student financial assistance under title IV of the [Education Act affected by a national emergency] are not placed in a worse position financially in relation to that financial assistance because of [the national emergency].” §§1098bb(a)(2)(A), 1098ee(2)(C)–(D).

In 2022, as the COVID–19 pandemic came to its end, the Secretary invoked the HEROES Act to issue “waivers and modifications” reducing or eliminating the federal student debt of most borrowers. Borrowers with eligible federal student loans who had an income below $125,000 in either 2020 or 2021 qualified for a loan balance discharge of up to $10,000. Those who previously received Pell Grants—a specific type of federal student loan based on financial need—qualified for a discharge of up to $20,000.

Six States challenged the plan as exceeding the Secretary’s statutory authority. The Eighth Circuit issued a nationwide preliminary injunction, and this Court granted certiorari before judgment.

Held:

1. At least Missouri has standing to challenge the Secretary’s program. Article III requires a plaintiff to have suffered an injury in fact—a concrete and imminent harm to a legally protected interest, like property or money—that is fairly traceable to the challenged conduct and likely to be redressed by the lawsuit. Lujan v. Defenders of Wildlife, 504 U. S. 555, 560–561. Here, as the Government concedes, the Secretary’s plan would cost MOHELA, a nonprofit government corporation created by Missouri to participate in the student loan market, an estimated $44 million a year in fees. MOHELA is, by law and function, an instrumentality of Missouri: Labeled an “instrumentality” by the State, it was created by the State, is supervised by the State, and serves a public function. The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself. The Court reached a similar conclusion 70 years ago in Arkansas v. Texas, 346 U. S. 368.

The Secretary emphasizes that, as a public corporation, MOHELA has a legal personality separate from the State. But such an instrumentality—created and supervised by the State to serve a public function—remains “(for many purposes at least) part of the Government itself.” Lebron v. National Railroad Passenger Corporation, 513 U. S. 374, 397. The Secretary also contends that because MOHELA can sue on its own behalf, it—not Missouri—must be the one to sue. But where a State has been harmed in carrying out its responsibilities, the fact that it chose to exercise its authority through a public corporation it created and controls does not bar the State from suing to remedy that harm itself. See Arkansas, 346 U. S. 368. With Article III satisfied, the Court need not consider the States’ other standing arguments. Pp. 7–12.

2. The HEROES Act allows the Secretary to “waive or modify” existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal. Pp. 12–26.

(a) The text of the HEROES Act does not authorize the Secretary’s loan forgiveness program. The Secretary’s power under the Act to “modify” does not permit “basic and fundamental changes in the scheme” designed by Congress. MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U. S. 218, 225. Instead, “modify” carries “a connotation of increment or limitation,” and must be read to mean “to change moderately or in minor fashion.” Ibid. That is how the word is ordinarily used and defined, and the legal definition is no different.

The authority to “modify” statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them. Prior to the COVID–19 pandemic, “modifications” issued under the Act were minor and had limited effect. But the “modifications” challenged here create a novel and fundamentally different loan forgiveness program. While Congress specified in the Education Act a few narrowly delineated situations that could qualify a borrower for loan discharge, the Secretary has extended such discharge to nearly every borrower in the country. It is “highly unlikely that Congress” authorized such a sweeping loan cancellation program “through such a subtle device as permission to ‘modify.’ ” Id., at 231.

The Secretary responds that the Act authorizes him to “waive” legal provisions as well as modify them—and that this additional term “grant[s] broader authority” than would “modify” alone. But the Secretary’s invocation of the waiver power here does not remotely resemble how it has been used on prior occasions, where it was simply used to nullify particular legal requirements. The Secretary next argues that the power to “waive or modify” is greater than the sum of its parts: Because waiver allows the Secretary “to eliminate legal obligations in their entirety,” the combination of “waive or modify” must allow him “to reduce them to any extent short of waiver” (even if the power to “modify” ordinarily does not stretch that far). But the challenged loan forgiveness program goes beyond even that. In essence, the Secretary has drafted 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.

The Secretary also cites a procedural provision in the HEROES Act directing the Secretary to publish a notice in the Federal Register, “includ[ing] the terms and conditions to be applied in lieu of such statutory and regulatory provisions” as the Secretary has waived or modified. §1098bb(b)(2). In the Government’s view, that language authorizes both “waiving and then putting [the Secretary’s] own requirements in”—a sort of “red penciling” of the existing law. But rather than implicitly granting the Secretary authority to draft new substantive statutory provisions at will, §1098bb(b)(2) simply imposes the obligation to report any waivers and modifications he has made. The Secretary’s ability to add new terms “in lieu of” the old is limited to his authority to “modify” existing law. As with any other modification issued under the Act, no new term or condition reported pursuant to §1098bb(b)(2) may distort the fundamental nature of the provision it alters.

In sum, the Secretary’s comprehensive debt cancellation plan is not a waiver because it augments and expands existing provisions dramatically. It is not a modification because it constitutes “effectively the introduction of a whole new regime.” MCI, 512 U. S., at 234. And it cannot be some combination of the two, because when the Secretary seeks to add to existing law, the fact that he has “waived” certain provisions does not give him a free pass to avoid the limits inherent in the power to “modify.” However broad the meaning of “waive or modify,” that language cannot authorize the kind of exhaustive rewriting of the statute that has taken place here. Pp. 13–18.

(b) The Secretary also appeals to congressional purpose, arguing that Congress intended “to grant substantial discretion to the Secretary to respond to unforeseen emergencies.” On this view, the unprecedented nature of the Secretary’s debt cancellation plan is justified by the pandemic’s unparalleled scope. But the question here is not whether something should be done; it is who has the authority to do it. As in the Court’s recent decision in West Virginia v. EPA, given the “ ‘history and the breadth of the authority’ ” asserted by the Executive and the “ ‘economic and political significance’ of that assertion,” the Court has “ ‘reason to hesitate before concluding that Congress’ meant to confer such authority.” 597 U. S. ___, ___ (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120, 159–160).

This case implicates many of the factors present in past cases raising similar separation of powers concerns. The Secretary has never previously claimed powers of this magnitude under the HEROES Act; “[n]o regulation premised on” the HEROES Act “has even begun to approach the size or scope” of the Secretary’s program. Alabama Assn. of Realtors v. Department of Health and Human Servs., 594 U. S. ___, ___ (per curiam). The “ ‘economic and political significance’ ” of the Secretary’s action is staggering. West Virginia, 597 U. S., at ___ (quoting Brown & Williamson, 529 U. S., at 160). And the Secretary’s assertion of administrative authority has “conveniently enabled [him] to enact a program” that Congress has chosen not to enact itself. West Virginia, 597 U. S., at ___. The Secretary argues that the principles explained in West Virginia and its predecessors should not apply to cases involving government benefits. But major questions cases “have arisen from all corners of the administrative state,” id., at ___, and this is not the first such case to arise in the context of government benefits. See King v. Burwell, 576 U. S. 473, 485.

All this leads the Court to conclude that “[t]he basic and consequential tradeoffs” inherent in a mass debt cancellation program “are ones that Congress would likely have intended for itself.” West Virginia, 597 U. S., at ___. In such circumstances, the Court has required the Secretary to “point to ‘clear congressional authorization’ ” to justify the challenged program. Id., at ___, ___ (quoting Utility Air Regulatory Group v. EPA, 573 U. S. 302, 324). And as explained, the HEROES Act provides no authorization for the Secretary’s plan when examined using the ordinary tools of statutory interpretation—let alone “clear congressional authorization” for such a program. Pp. 19–25.

Reversed and remanded.

Roberts, C. J., delivered the opinion of the Court, in which Thomas, Alito, Gorsuch, Kavanaugh, and Barrett, JJ., joined. Barrett, J., filed a concurring opinion. Kagan, J., filed a dissenting opinion, in which Sotomayor and Jackson, JJ., joined.

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