Yesterday, the U.S. District Court for the Northern District of Texas, Fort Worth Division held that the Biden Administration’s attempt to apply the post-9/11 HEROES Act to achieve $400 billion in generalized student loan forgiveness is unconstitutional. Coming a few days after the 2022 midterm election, in which some, including Biden, have attributed a sharp increase in mobilization of young voters for the Democrats for blunting the expected “red wave” of Republican victories, this decision vacating the administration’s action joins a temporary order in October by the U.S. Court of Appeals for the Eighth Circuit putting the debt forgiveness on hold pending appeal by several state attorneys general.1
So, the litigation over this administrative overreach, which effectively increases the debt of the U.S. government without an act of Congress2, won’t be resolved very soon. Nor will the students3 who were promised student debt forgiveness by the Democrats, and who may have voted on that expectation, see any money anytime soon.
But let’s take a look at the Texas court’s decision.
The court starts by giving a general overview of the various federal assistance programs available to students, and previous failed attempts by Congress to provide forgiveness of federal student loans. The student loan industry was virtually nationalized in 2010 under the Obama-Biden administration as one means of providing revenue for the Obamacare health insurance law, and the Democrats have since tried to knock another of the props out from under that tottering edifice in an effort to buy votes.
But the votes they didn’t have were in Congress, where as the court observes, bills to provide limited student debt forgiveness were introduced, but failed to be enacted into law. The Trump Administration’s Department of Education examined using executive action to provide student debt relief under the very same law that is at issue here, and concluded that they lacked legal authority to do so. As recently as last summer,
House speaker Nancy Pelosi agreed with the Department’s conclusion: “People think that the president of the United States has the power for debt forgiveness. . . He does not. He can postpone, he can delay, but he does not have that power. That has to be [accomplished through] an act of Congress.”
District court opinion, p.34
But with a change of administration, comes a change in the lawyers at the Department of Education’s general counsel’s office, which, quelle surprise, concluded that the Biden Administration could use the HEROES Act (20 U.S.C. §1098aa, et seq.) to bypass Congress, and enact a $400 billion+ debt forgiveness policy after all.
The HEROES Act, passed in 2003, empowered the Secretary of Education to modify the student loans of “affected individuals.” The court begins its analysis, as it should, by looking at the law in question.
The waiver or modification must also “be necessary to ensure that” certain objectives are achieved. §1098bb(a)(2). The first of those objectives is “to ensure that . . . recipients of student financial assistance under title IV of the [HEA] who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.” § 1098bb(a)(2)(A). The HEROES Act defines “affected individuals” to include people who reside or are employed “in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency” or who “suffered direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.” § 1098ee(2)(C)–(D).
opinion, p.4
Which surely means every student loan borrower in the country, below a certain income limit. I mean, it’s plain as day! We’re all “affected individuals” now, thanks to COVID …at least to the Biden Dept. of Education’s lawyers.5
The court continues:
The second objective provides that “administrative requirements placed on affected individuals . . . are minimized, to the extent possible without impairing the integrity of the student financial assistance programs, to ease the burden on such students and avoid inadvertent, technical violations or defaults.” § 1098bb(a)(2).10 If the objectives of § 1098bb(a)(2) are met, “[n]otwithstanding section 1232 of this title and section 553 of title 5, the Secretary shall, by notice in the Federal Register, publish the waivers or modification.” § 1098bb(b)(1).
Id.
There are other listed objectives in the law, but the court says in a footnote that none of those “are at issue or relevant to the Court’s analysis.” fn.10
That really should do it for the policy, when the HEROES Act’s definition of “affected individuals” pretty clearly wasn’t intended to apply to everyone who’s taken out a federal student loan. But there are still some other aspects to consider.
Besides bypassing Congress, the Biden Administration bypassed the Administrative Procedure Act (APA), the federal law which governs the process of administrative regulation-making.
Among their claims, the plaintiffs in the Texas case sued because they “could not voice their disagreement because the Program did not undergo notice-and-comment rulemaking procedures under the Administrative Procedure Act (‘APA’).” (opinion p.6). Notice-and-comment rulemaking is the process by which a federal agency publishes a proposed new regulation as a notice in the Federal Register, and solicits public feedback from interested parties about the proposed regulation, supposedly to help decide whether to modify it or scrap it before giving it the force of law. It’s a foundation of what has evolved in the 20th Century as “administrative law.” The plaintiffs also “also contend that the Secretary lacks the authority to implement the Program under the HEROES Act.” Id.
Because “no material facts are in dispute, and the issues here are pure questions of law,” the Texas court notified the parties6 that it intended to rule on the merits of the case, and the majority of the rest of the opinion deals with why that was appropriate, despite the Biden Administration’s opposition.
At the hearing on the plaintiffs’ motion for a preliminary injunction, the Biden Administration challenged the plaintiffs’ standing to bring the case, which is fine, and appropriate. But they gave an astonishingly arrogant reason.
Defendants insinuate that nobody has standing to challenge the Program—stating, “Article III of the Constitution imposes limitations on the judiciary. And sometimes the result is that there is executive or legislative action for which there isn’t an appropriate plaintiff.”
opinion, p.10-11 (citation omitted).
In other words, there are some things the federal government does for which there is no recourse in court, because nobody has legal standing to bring the case. The district court concludes, after several pages of legal and procedural analysis, that not only is the government wrong to assert there is nobody with standing to challenge its executive action, but the plaintiffs in this case have satisfied the requirements for standing so far as the motion for a preliminary injunction are concerned.
The court moves on to consider the merits, given that there are no material facts in dispute, and what remains are simply questions of law —whether the Biden Administration was obliged to follow the Administrative Procedure Act in implementing the policy, with its requirement for notice-and-comment rulemaking, and whether the policy was even constitutional to begin with under the power given to the Secretary of Education by the HEROES Act.
The district court, examining the HEROES Act, finds that the law authorizes the Secretary to not have to comply with the APA notice-and-comment rulemaking procedures, so long as the Secretary uses the alternative notice procedures provided in the HEROES Act, which he did. So there was no violation of the APA, at least on its face.
Because the Program was issued under the HEROES Act, which exempts notice-and-comment, the Program did not violate the APA’s procedural requirements. Whether the HEROES Act authorized the program is a different story.
opinion, p.18
Ordinarily, notes the court, federal courts have deferred to an agency’s interpretation of its own enabling legislation, so long as the interpretation is “reasonable,” an administrative law doctrine known as “Chevron deference,” after the 1984 U.S. Supreme Court case that established it.7
In recent years however, the Supreme Court has chipped away at Chevron —giving back the “benefit of the doubt about the meaning of an ambiguous law to the individual” instead of the government.
The most recent example of Chevron’s fall is the crystallization of the long-developing major-questions doctrine in West Virginia v. EPA, 142 S.Ct. 2587 (2022).
opinion, p.19 (citations omitted)
I discussed that important case in detail here when it came out back in July, and the Texas U.S. district court applies it in this case, explaining in a footnote that
The major-questions doctrine’s precise relationship to the Chevron framework is unclear, because the [Supreme] Court did not mention Chevron in that case. Defendants [the government, in this case] stated at the preliminary-injunction hearing that Chevron does not apply if the major-questions doctrine applies. Nor does either party mention Chevron in their briefs. For those reasons, the Court reasons that Chevron is not applicable here. But even if it were applicable, the major-questions doctrine compels the same result —the Secretary lacks “clear congressional authorization” to implement the Program— regardless of how the major-questions doctrine fits into the Chevron framework.
fn 16, Id. (citation omitted)8
I won’t go further into the details of the court’s opinion explaining why under the HEROES Act there isn’t a “clear congressional authorization” for what the Biden Administration tried to do, but I will note that it doesn’t get much better for a district court than to be able to rely on the guidance of recently decided U.S. Supreme Court case that’s on-point to the issue before it.
Good luck with your appeals, Biden lawyers. You’re gonna need it!
The plaintiffs in the Texas case filed a notice with copy of the Eighth Circuit order in their case, which I’ve linked to here because the Eighth Circuit order is on the federal courts’ paid PACER document service.
My title is taken from the traditional satirical translation of Ph.D., but definitely applies to the trajectory of the public debt.
Dare I say, “suckers”?
Perhaps Speaker Pelosi was defending the Congress’ prerogatives, as the Framers of our Constitution intended? The U.S. News article cited by the court presents Pelosi as opposed on policy grounds, but she certainly wouldn’t have wanted President Trump to “steal” one of their issues, if the Trump Department of Education had decided otherwise. Once the Biden Administration found its way to providing some legal cover, she hasn’t exactly objected to bypassing Congress. After all, that’s lot easier than having to legislate, and negotiate with the evenly divided Senate.
Yes, that’s really the Biden Administration’s argument, writes the district court. “[A]ccording to the Secretary [of Education], every portion of the country is ‘a disaster area due to COVID-19,’ and ‘every person with a federal student loan under Title IV of the HEA is an ‘affected individual.’’” (opinion, p.5)
I note with a little amusement that the Texas case is styled (titled) Brown, et al. v. U.S. Dept. of Education. (Brown v. Board of Education of Topeka KS being the famous 1954 U.S. Supreme Court case that found racial segregation laws unconstitutional.)
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 47 U.S. 837 (1984).
As an aside, this footnote illustrates a quirk of the capitalization of the word “court.” The U.S. Supreme Court should always be capitalized when referred to as simply “the Court,” and here, the district court is referring to itself, so it uses “the Court” again. I added “Supreme” in front of the first usage of “Court” for clarity. Generally, I would only capitalize “the Court” here when referring to the U.S. Supreme Court, and not a U.S. district court, but then again, I am not speaking as “the Court” and not filing something in court, in which case you capitalize out of respect.
If you haven't read it, I recommend reading my coverage from July of the Supreme Court decision in West Virginia v. EPA, which the district court builds its opinion around.
https://darulharb.substack.com/p/a-shift-in-the-climate
Excellent article!