[00:00:00] Speaker 02: Welcome to Denver. [00:00:07] Speaker 02: This is an expedited appeal of Alaska versus the Department of Education. [00:00:17] Speaker 02: Courtroom deputy has told you that we're going to allow 20 minutes per side since this is our only case and we've got plenty of time so we'll start with that and the clock inevitably will now fail sometime during this but we'll keep track of things and we'll be somewhat flexible [00:00:40] Speaker 02: Mr. Huron will wave at you or stand up or say something if the clock breaks and give fair warnings. [00:00:48] Speaker 02: So with that, let's get started. [00:00:54] Speaker 02: This case is 24-3089, State of Alaska versus Department of Education. [00:00:59] Speaker 02: And Mr. Brewer for the department, he may go first. [00:01:12] Speaker 04: May it please the Court, Simon Brewer for the Department and the Secretary of Education. [00:01:16] Speaker 04: I'd like to reserve four minutes for rebuttal. [00:01:19] Speaker 04: Three decades ago, Congress provided for income contingent repayment of federal direct student loans. [00:01:25] Speaker 04: These plans are based on two core principles that Congress enacted into the text of the statute. [00:01:31] Speaker 04: The first is that payments are based on a borrower's income. [00:01:34] Speaker 04: This means that for some persistently low-income borrowers, they will not be able to repay the entire balance of a loan over the lifetime of a loan. [00:01:43] Speaker 04: The second principle is that no borrower will be required to make payments in perpetuity. [00:01:47] Speaker 04: Instead, Congress capped the length of the repayment term at 25 years. [00:01:54] Speaker 04: Since 1993, every income contingent repayment plan offered by the Department has complied with those two principles, and the SAVE plan is based on those same two principles. [00:02:04] Speaker 04: Accordingly, the District Court erred in adjoining parts of the SAVE plan. [00:02:09] Speaker 02: What's been happening after 25 years since we have these? [00:02:14] Speaker 02: Are the borrowers, is the debt forgiven or do they go into default or is there a combination of those remedies? [00:02:24] Speaker 04: In every income contingent repayment plan ever offered, there has been a loan forgiveness component at the end of the borrower's repayment term. [00:02:33] Speaker 04: No borrower has ever been required to go into default or anything like that following the end of their repayment term under these plans. [00:02:40] Speaker 04: And so the SAVE plan in that sense is a continuation of the same core features that every income contingent repayment plan has included. [00:02:49] Speaker 01: I am very concerned about [00:02:54] Speaker 01: whether there's anything we can do to help you in light of the Eighth Circuit entering a universal injunction. [00:03:03] Speaker 01: And in your supplemental brief, you say, all this court can do is create confusion by disagreeing with the Eighth Circuit, but nothing this court says or does can displace the Eighth Circuit's injunction. [00:03:18] Speaker 01: You agree with that statement? [00:03:20] Speaker 04: I believe that's the state's supplemental brief, Your Honor. [00:03:22] Speaker 01: Oh, I'm sorry. [00:03:22] Speaker 01: Okay, yours says something similar. [00:03:24] Speaker 01: It says that the Eighth Circuit has entered a conflicting order, and because of its universal scope, it nullifies our stay order. [00:03:34] Speaker 01: That's correct, right? [00:03:36] Speaker 04: That's correct, Your Honor. [00:03:37] Speaker 01: The Eighth Circuit... Well, let me ask you this. [00:03:39] Speaker 01: Do we as the 10th Circuit have any power to dissolve the universal injunction entered by the 8th Circuit? [00:03:48] Speaker 04: No, Your Honor, but the Department has applied to the Supreme Court to vacate the injunction. [00:03:52] Speaker 01: And they do have some power over this issue. [00:03:58] Speaker 01: But I, for the life of me, cannot understand how there is anything we can do that has any impact in the real world. [00:04:09] Speaker 04: Two responses, Your Honor. [00:04:11] Speaker 04: So the first is that the fact that another court has entered a conflicting injunction should not be a way to insulate the district court's injunction here from review. [00:04:20] Speaker 01: Well, it should not be, but it is. [00:04:22] Speaker 01: I mean, Justice Gorsuch, I think, wrote a very good, I think it was a concurrence. [00:04:30] Speaker 01: I can't remember. [00:04:32] Speaker 01: But explaining the problem with universal injunctions and basically you get a district court somewhere in the country who's the first one to get the issue, issues a universal injunction [00:04:44] Speaker 01: And everybody else's hands are tied because the order wasn't limited to the parties before that particular court. [00:04:53] Speaker 01: That's exactly what we have here. [00:04:56] Speaker 04: That is, of course, a correct understanding of the problem with universal injunctions, and that's one of the reasons the Eighth Circuit aired. [00:05:01] Speaker 01: But I don't think that that should... Well, but we can't decide the Eighth Circuit aired. [00:05:05] Speaker 04: No, but Your Honors can decide that the District Court here erred, and reversing the preliminary injunction will ensure that if the Supreme Court vacates the Eighth Circuit injunction, then the Department is not enjoined from implementing the statement. [00:05:18] Speaker 01: So it has no impact in the real world, but hypothetically in the future, depending on what the Supreme Court does, it might. [00:05:25] Speaker 04: I don't think it's right that it has no impact on the real world. [00:05:28] Speaker 04: It ensures that there is review of the district court's injunction as it was entered at the time that the district court acted. [00:05:35] Speaker 04: And the fact that the department has subsequently taken compliance measures to comply with a different injunction is not part of the record on which the district court's injunction here is reviewed. [00:05:48] Speaker 00: Surely it's in the record, or at least it's public information we can take judicial notice of. [00:05:54] Speaker 04: I certainly have no objection to your Honor's understanding that the Eighth Circuit has issued this injunction. [00:06:00] Speaker 04: But when this court reviews a preliminary injunction issued by a district court, it reviews whether the district court acted properly at the time that the injunction issued. [00:06:09] Speaker 00: So at the time that injunction was issued, there was no Eighth Circuit opinion? [00:06:13] Speaker 00: Exactly, Your Honor. [00:06:17] Speaker 00: I have another jurisdictional question as well. [00:06:23] Speaker 00: I'm troubled about how the states could have any case or controversy involving them where relief could be granted because they're saying we could lose [00:06:45] Speaker 00: our money from these loan agreements, but the loan agreements are specifically giving the students the power to stop at any time. [00:07:02] Speaker 00: In other words, the states do not have a legal right to continue those loan agreements. [00:07:10] Speaker 00: That's exactly right. [00:07:15] Speaker 00: the quote right at the beginning of some language that one of the requirements is that there be a legal right, and there isn't. [00:07:30] Speaker 00: So how do they have standing to even address the issue? [00:07:37] Speaker 04: That's exactly right, Your Honor. [00:07:38] Speaker 04: The states lack standing for the reasons you articulated. [00:07:41] Speaker 04: To have an Article 3 injury in fact, the plaintiffs must allege, in the words of Lujan, the invasion of a legally protected interest. [00:07:49] Speaker 04: But the states have no legally protected interest in future interest payments under these federal family education loans [00:07:56] Speaker 04: following the repayment in full of those loans. [00:07:59] Speaker 04: And that's exactly what happens when a borrower consolidates. [00:08:02] Speaker 02: What was the basis of the district court's finding that there'd be at least $100,000 of financial effect to Alaska? [00:08:11] Speaker 04: The Alaska Declaration says that Alaska stands to lose $100,000 in interest. [00:08:17] Speaker 04: But it makes no effort to establish that Alaska is entitled to such interest following the consolidation of those loans. [00:08:23] Speaker 00: That was the problem I noticed in all the briefing. [00:08:25] Speaker 00: Yes, they could lose it, but they don't have a legal right not to lose it. [00:08:31] Speaker 00: Exactly. [00:08:31] Speaker 00: They entered into a contract that could be terminated. [00:08:34] Speaker 00: That was their legal right. [00:08:35] Speaker 00: So somebody says, I'm going to exercise that right. [00:08:37] Speaker 00: I'm going to terminate. [00:08:38] Speaker 00: They have that right. [00:08:39] Speaker 00: There's no cognizable injury that we can grant any relief on. [00:08:43] Speaker 00: There is no cognizable injury. [00:08:45] Speaker 00: And that particular argument, I didn't see foreclosed by any of our precedent. [00:08:51] Speaker 00: The other cases in the Supreme Court [00:08:55] Speaker 00: address this issue, talk about, oh, they can lose a lot of money and so forth, and therefore you have standing. [00:09:00] Speaker 00: But I did not see anywhere that any Supreme Court or 10th Circuit case addressed the problem that they [00:09:09] Speaker 00: don't have a right to the continuation of these plans at all. [00:09:12] Speaker 04: Exactly right, Your Honor. [00:09:13] Speaker 04: And it would be truly remarkable if a plaintiff could assert standing on the theory that it is injured when a loan is repaid in full, and that borrower has... According to the right of the borrower. [00:09:24] Speaker 04: Exactly. [00:09:25] Speaker 04: And because federal law here specifically provides borrowers the right to accelerate the payment of those loans, [00:09:30] Speaker 04: at any time when they make those consolidation payments, they have fully fulfilled their obligations to the lenders under them. [00:09:37] Speaker 00: So we have two jurisdictional concerns, the one that Judge McHugh raised and the one that you and I have been talking about. [00:09:44] Speaker 00: Why don't we go to the merits? [00:09:47] Speaker 04: On the merits, Your Honor, the District Court recognized that the SAVE Plan is authorized by the plain text of the Higher Education Act. [00:09:54] Speaker 04: And that's right for the reasons that I articulated in my opening statement. [00:09:57] Speaker 04: It complies with those two core principles that Congress enacted into the text. [00:10:01] Speaker 02: How do you square that statement, though, with the difference between the income contingent plans and the income base plans? [00:10:09] Speaker 02: The income base repayment plan clearly, statutorily, authorizes loan forgiveness in hardship and for public service, but the income contingent plan [00:10:23] Speaker 02: does not. [00:10:24] Speaker 02: It's silent as to that. [00:10:27] Speaker 02: Given that Congress said it in one place and not in the other, that's kind of the core of my concern about the major question doctrine. [00:10:35] Speaker 02: What's your [00:10:36] Speaker 02: response to that. [00:10:37] Speaker 04: So I want to start with the text, Your Honor, and then I'll come back to the major questions doctrine. [00:10:41] Speaker 04: So as to the text, I don't agree that the statute is silent. [00:10:44] Speaker 04: The statute provides for forgiveness by enacting this camp on the length of time. [00:10:50] Speaker 01: Can you put this, to answer the question in a helpful way, what are we talking about in terms of the provisions? [00:10:57] Speaker 01: Are you looking at the entire SAVE plan? [00:11:00] Speaker 01: Are you looking only at the provisions enjoined [00:11:03] Speaker 01: by the district court here. [00:11:05] Speaker 04: I had understood Judge Timkovich's question to be specifically about the forgiveness, the shortened timeline to forgiveness, which was not one of the provisions enjoined by the district court. [00:11:13] Speaker 04: I would be glad to address the other contests. [00:11:14] Speaker 01: No, I just want to make sure I understood what we're talking about. [00:11:16] Speaker 00: But that issue, I mean, I've been troubled by that. [00:11:19] Speaker 00: I originally thought when we dealt with the preliminary injunction that we were limited to the small issue being raised by the Department of Education. [00:11:29] Speaker 00: But we've got a cross appeal by the state that [00:11:32] Speaker 00: puts everything else at issue as well. [00:11:35] Speaker 00: So don't we have the entire regulation before us now? [00:11:40] Speaker 00: Yes, Your Honor. [00:11:41] Speaker 04: You have all three of the provisions that have been specifically contested by the states. [00:11:45] Speaker 00: And they are legitimately and properly raised on appeal to some of the next jurisdictions. [00:11:49] Speaker 04: Yes, Your Honor. [00:11:51] Speaker 04: I agree with all of that. [00:11:52] Speaker 04: I just understood Judge Timkovich's question to be specifically about the shortened timeline to forgiveness. [00:11:56] Speaker 01: OK. [00:11:56] Speaker 01: Sorry. [00:11:57] Speaker 04: So as an initial matter, the text does provide for forgiveness in the way that I described. [00:12:02] Speaker 02: And every iteration of the- And actually, my question is broader in general, forgiveness of the debt at the end of the shortened timeline. [00:12:11] Speaker 04: OK. [00:12:11] Speaker 04: So step back for a moment, then, and talk about all three of the provisions. [00:12:16] Speaker 04: The text specifically provides that the Secretary will determine [00:12:19] Speaker 04: the income of the borrower on which payments will be made. [00:12:23] Speaker 04: And every secretary to promulgate one of these plans across five administrations has determined that it is appropriate to protect a percentage of the borrower's income and then base payments on a remainder of the income. [00:12:35] Speaker 04: That follows straightforwardly from the text granting that discretion to the secretary. [00:12:39] Speaker 01: Are there any limits on that? [00:12:41] Speaker 01: I mean, could the secretary define the income that's available for calculation of the payment so low as to virtually no one has any payment? [00:12:54] Speaker 04: I think that would be difficult to square with the statutory requirement. [00:12:58] Speaker 01: Where's the line? [00:12:59] Speaker 04: I don't know that there's a specific numerical threshold, and Congress didn't provide for a specific numerical threshold in contrast to other plans where it did. [00:13:07] Speaker 04: Instead, Congress asked the Secretary to set an appropriate amount [00:13:10] Speaker 04: and invested the secretary with discretion in determining that, provided the secretary could offer a reasoned explanation through the normal rulemaking process. [00:13:19] Speaker 04: And so I don't understand that the states here have challenged that the secretary acted arbitrarily and capriciously in, for example, setting the protected income threshold at 225% of the federal poverty line. [00:13:30] Speaker 04: In any event, that was based on an analysis of where borrowers struggle to make their utility payments or perhaps struggle with food insecurity. [00:13:39] Speaker 04: nor do I understand them to have made a similar challenge with the result to the 5% of discretionary income with respect to undergraduate borrowers, which was based on the fact that those borrowers were still defaulting or going into doing what seemed unacceptable. [00:13:51] Speaker 02: Under your legal, and coming back to judgment, under your theory of the case, those are merely prudential judgments by the secretary. [00:13:59] Speaker 02: The 5% could be 1,000%. [00:14:04] Speaker 02: The ten years could be five years, one year. [00:14:07] Speaker 02: I mean, are those prudential judgments that we have to defer to? [00:14:11] Speaker 04: There are judgments as well. [00:14:13] Speaker 04: The time for repayment has to be an extended period of time, is what Congress provided. [00:14:17] Speaker 04: And again, the Secretary explained here why for some low balance of hours, as few as ten years would represent an extended period of time. [00:14:25] Speaker 04: But I think that ultimately, all of these are based on the same understanding of the statutory authority, which is to set payments in this formulaic way that I've described, and then forgive the remaining balance that every income contingent repayment plan has embodied. [00:14:40] Speaker 00: The statute doesn't use the word forgiveness, I don't think, does it? [00:14:44] Speaker 00: No, Your Honor. [00:14:45] Speaker 00: It simply says you should take into account, you should make special plans for economic [00:14:51] Speaker 00: ability to pay. [00:14:52] Speaker 00: That's not a quote, but that's the essence of it. [00:14:55] Speaker 04: There's no magic words requirement. [00:14:57] Speaker 04: Congress was not required to use any particular formulation to express its intent to have loan forgiveness. [00:15:04] Speaker 02: The consequence here, like in Missouri versus Biden, is that the consequences of the final rule would be a mass debt cancellation program. [00:15:15] Speaker 02: So that seems presumptively to fit within the Supreme Court's major question doctrine. [00:15:21] Speaker 02: Really the issue for this panel is whether... [00:15:24] Speaker 02: the statute clearly stated enough that we could basically authorize $450 billion in debt cancellation. [00:15:33] Speaker 02: So do you disagree that we start with the major question doctrine and then see if the statute permits it, or are you flipping it somehow? [00:15:41] Speaker 04: I think Your Honors can either assume the major questions doctrine applies and still reach the conclusion that the statute clearly authorizes this, or Your Honors could conclude, as we have argued, that the major questions doctrine doesn't apply here. [00:15:53] Speaker 00: Does your department take the position that this is a major question or not? [00:15:58] Speaker 00: This is not a major questions case. [00:16:01] Speaker 02: How does it differ from the Missouri versus Biden? [00:16:05] Speaker 02: That seems inconsistent. [00:16:07] Speaker 02: If that was, how could this not be? [00:16:08] Speaker 02: This is a bigger program. [00:16:10] Speaker 02: Same outcome. [00:16:11] Speaker 02: No, Your Honor. [00:16:13] Speaker 04: Is Your Honor referring to Nebraska against Biden, the Supreme Court case? [00:16:16] Speaker 04: Yes, so Nebraska reached that conclusion after considering many different factors and one among them was past practice under the statute. [00:16:24] Speaker 04: And the Supreme Court explained that what the Secretary's plan there did would be unprecedented. [00:16:30] Speaker 04: It looked at the past waivers and modifications under the HEROES Act and saw that this program would be a completely different one. [00:16:37] Speaker 04: That's in stark contrast to the situation here, where the states have conceded the legality of the pre-existing income contingent repayment plans. [00:16:45] Speaker 04: And this income contingent repayment plan is based on exactly the same statutory authority. [00:16:51] Speaker 00: Is there any Supreme Court case that found major issue strictly on the basis of the amount of money, economic impact? [00:16:59] Speaker 00: No, Your Honor, there is no such case. [00:17:00] Speaker 00: No Supreme Court case to that effect? [00:17:02] Speaker 00: There's no Supreme Court case to that effect. [00:17:04] Speaker 00: Is there a 10th Circuit case that says that alone [00:17:06] Speaker 04: is all we need to look at. [00:17:08] Speaker 00: No. [00:17:08] Speaker 04: In fact, Bradford says the opposite, Your Honor. [00:17:10] Speaker 04: In Bradford, this court rejected the plaintiff's there reliance on the economic impact of the contested agency action alone, which the plaintiff there asserted was sufficient to trigger the major questions doctrine. [00:17:23] Speaker 04: Again, this court considered the full range of factors, which among them include whether this is an assertion of newfound authority, which the SAFE plan is not, the past practice under the statute, the agency's expertise, all of which support the department's position. [00:17:39] Speaker 04: a factor alone under the major question doctrine? [00:17:42] Speaker 04: I don't think it could never be a consideration. [00:17:44] Speaker 04: I think the Supreme Court has thought of that as one of the considerations. [00:17:47] Speaker 04: But I don't think it is an overriding consideration. [00:17:50] Speaker 00: And on the cost piece, I don't think- How do we weigh these four factors? [00:17:55] Speaker 00: They're not equal. [00:17:56] Speaker 00: We don't put them on a scale and measure them. [00:18:04] Speaker 00: The second one, enormous and transformative, [00:18:07] Speaker 00: And while we're talking about that, I think we almost have to agree it's enormous. [00:18:14] Speaker 00: But the phraseology from Bradford and Utility Air, Supreme Court, is enormous and transformative. [00:18:23] Speaker 00: So let's assume it's enormous. [00:18:25] Speaker 00: I think there's a question about whether it's transformative since [00:18:30] Speaker 00: Debt relief has been granted right from the very beginning. [00:18:33] Speaker 00: What is your position on that? [00:18:34] Speaker 04: It is not transformative for exactly the reason your honor identified. [00:18:37] Speaker 04: These features of income contingent repayment plans have been consistent across three decades. [00:18:43] Speaker 04: They were interpretations that were issued contemporaneously with the enactment of the statute, which Loper Wright teaches us is entitled to significant weight. [00:18:50] Speaker 04: The same is true in Justice Gorsuch's concurrence in West Virginia. [00:18:54] Speaker 04: And so I think the fact that the secretary's authored a consistent interpretation of the statute, and this plan is simply based on those same features, means that this is not of a piece with the major questions doctrine. [00:19:05] Speaker 02: The department then, in principle, could wipe out all student debt, right? [00:19:10] Speaker 02: No. [00:19:10] Speaker 02: Is there any limitation? [00:19:12] Speaker 04: Yes, Your Honor. [00:19:13] Speaker 04: The extended period of time is at the? [00:19:15] Speaker 04: The extended period of time and payments must vary based on the appropriate share of the income of the borrower. [00:19:20] Speaker 04: And again, this will require reasoned decision making and explanation [00:19:23] Speaker 04: why the secretary is making those judgments. [00:19:25] Speaker 00: If it wasn't reasoned, would the attack be under the ABA, that you're not using the Procedures Act properly? [00:19:33] Speaker 00: Would the argument be, if you just said, all dead, out, they would say that's just a irrational and arbitrary decision? [00:19:42] Speaker 00: Yes. [00:19:42] Speaker 04: I struggle to see how that would be consistent with the statute, or consistent with reasoned decision-making under the statute. [00:19:48] Speaker 04: I see my time is running low, and I'd like to reserve a few minutes for Buffalo. [00:19:51] Speaker 04: Sir, Buffalo. [00:19:52] Speaker 04: Thank you. [00:19:55] Speaker 03: All right, let's hear from Mr. Nielsen. [00:20:00] Speaker 03: Thank you, your honor. [00:20:01] Speaker 03: Aaron Nielsen, may it please the court, my colleague, Jake Beach, to let me at council's table. [00:20:07] Speaker 03: So the SAFE plan is essentially the HEROES plan part two. [00:20:13] Speaker 03: And like most sequels, it's worse than the original. [00:20:17] Speaker 03: It's worse because it's a lot more expensive. [00:20:20] Speaker 03: It's also worse because the legal basis for it is much weaker. [00:20:25] Speaker 03: And I say this with some hesitation. [00:20:27] Speaker 03: I've taught administrative law for 10 years. [00:20:30] Speaker 03: I have never seen a more flagrant violation of the APA than what has happened in this case. [00:20:36] Speaker 03: Is that an issue before us today? [00:20:37] Speaker 00: Yes, Your Honor. [00:20:38] Speaker 00: The APA? [00:20:38] Speaker 03: Yes, it certainly is, Your Honor. [00:20:40] Speaker 00: Abuse and discretion. [00:20:41] Speaker 00: Correct. [00:20:42] Speaker 01: Well, you have two grounds for why you say it violates the APA. [00:20:47] Speaker 01: One is that they didn't give enough appropriate time for notice and comment. [00:20:51] Speaker 03: Yes, Your Honor. [00:20:52] Speaker 01: Do you have any authority that says, they give 30 days, right? [00:20:55] Speaker 01: Sure. [00:20:55] Speaker 03: Yes, we do have. [00:20:57] Speaker 01: I mean, there's nothing in the APA that requires more than 30 days for notice and comment, is there? [00:21:03] Speaker 03: We have Prometheus radio from the Third Circuit, which said 28 days wasn't meaningful. [00:21:07] Speaker 03: We also have the Lifeline program from the DC Circuit, which said 14 days. [00:21:11] Speaker 03: But the one I would like to focus on, which I'm happy to [00:21:16] Speaker 03: I don't want to cut you off, Your Honor, but the one that struck me as the most egregious that I have ever seen is they said in the final rule that we are confident we are going to prevail in Nebraska. [00:21:30] Speaker 03: So we don't need to calculate the costs if we don't prevail in Nebraska. [00:21:35] Speaker 03: But they had already lost in Nebraska. [00:21:39] Speaker 03: The final rule was issued July 10, 2023. [00:21:41] Speaker 03: The Supreme Court decided in Nebraska June 30, 2023. [00:21:46] Speaker 03: 10 days earlier. [00:21:47] Speaker 03: That is a flagrant misstatement of a material point in the final rule. [00:21:53] Speaker 02: How many ROs covered by the Heroes Act would also be covered by the SAVE plan? [00:21:59] Speaker 02: If we're doing a Venn diagram, how many people that lost out under Heroes because of Nebraska would kind of have their forgiveness saved under the SAVE plan? [00:22:13] Speaker 03: I don't know the answer to that. [00:22:16] Speaker 03: that was brought to the department's attention during the notice and comment process, and they didn't put it in the final rule, which goes to my point why this is arbitrary and capricious. [00:22:25] Speaker 03: We do know from the Wharton model that the Supreme Court used in Nebraska that if you don't account for Nebraska and the end of the Heroes Act, this program becomes three times more expensive. [00:22:35] Speaker 03: So I don't know the exact number, but I assume it's got to be millions of people to make the program become three times more expensive. [00:22:43] Speaker 00: Could you address the two jurisdictional questions that we've [00:22:46] Speaker 00: bounced around. [00:22:46] Speaker 00: One is whether we have just, is there any meaningful relief we could give in light of the Eighth Circuit case, as opposed to just advisory opinion? [00:22:56] Speaker 00: And number two, is there a case or controversy if, in fact, there is no legal right that the states can assert, since there's always a right by the students to change financing terms? [00:23:13] Speaker 03: Yes, Your Honor. [00:23:14] Speaker 03: As to the first question, [00:23:16] Speaker 03: I don't think there's anything this court can do so long as the Eighth Circuit's injunction is in place. [00:23:21] Speaker 03: Whatever this court says and does, as we said in our letter to the court, nothing changes. [00:23:28] Speaker 03: Essentially, until, I don't know if maybe it's a jurisdictional matter if it is, in a technical sense, but in the real world sense, it would do nothing. [00:23:36] Speaker 03: And that's why as soon as the Eighth Circuit issued its decision, I wrote a letter to the Supreme Court and said, so long as this injunction is in place, we don't need emergency relief from the Supreme Court. [00:23:47] Speaker 03: So that's your first question. [00:23:49] Speaker 02: The Supreme Court grants relief to the department in the Missouri case then. [00:23:55] Speaker 03: We're back in action. [00:23:57] Speaker 03: Yes, Your Honor, and we told the Supreme Court that if they're going to grant the United States' application, that makes our application that much more important, because then the only thing stopping, even under their view of the scope of the injunction, would be this court's stay of the district court's injunction here. [00:24:15] Speaker 03: And the Supreme Court's done nothing with [00:24:17] Speaker 03: No. [00:24:17] Speaker 03: The application in this case. [00:24:19] Speaker 03: Correct, Your Honor. [00:24:19] Speaker 03: I assume that when the Eighth Circuit issues administrative stay more than a month ago, the Supreme Court said, well, let's see how that plays out before we decide what to do with our application. [00:24:29] Speaker 00: But the Eighth Circuit also only, once we get out of the Supreme Court and we get back to what the Eighth Circuit has done, the Eighth Circuit has not granted the full degree of relief that is being sought here. [00:24:42] Speaker 00: Correct, Your Honor. [00:24:43] Speaker 00: So there still would be, at that point, [00:24:46] Speaker 00: I think once the stay is resolved as to the one issue or the limited issues in the Eighth Circuit, we would then have a case or controversy again. [00:24:55] Speaker 00: Yes. [00:24:56] Speaker 03: I mean, I don't want to fight too hard because I think it's helpful to us because we like the Eighth Circuit injunction. [00:25:03] Speaker 03: I don't think there's a lack of a case or controversy in front of this Court because there's always a possibility. [00:25:09] Speaker 03: Right. [00:25:09] Speaker 03: What kind of relief could we give today? [00:25:11] Speaker 03: Well, we urge broader relief than the Eighth Circuit gave. [00:25:15] Speaker 03: We think the entire rule should be vacated, whereas they left in place the ancillary provisions. [00:25:20] Speaker 01: But you don't identify, and even in your request for relief, you don't really identify what these ancillary provisions are or how they are relevant to anything while the Eighth Circuit [00:25:36] Speaker 01: injunction is in place. [00:25:37] Speaker 03: Correct, Your Honor. [00:25:38] Speaker 03: So the ancillary provisions are the ones that the United States talks about at the end of their brief. [00:25:42] Speaker 03: And our point is, under the APA violation, all of those are unlawful and will have to be set aside. [00:25:51] Speaker 01: But they're irrelevant so long as the circuit injunction's in place. [00:25:56] Speaker 03: Practically, yes, Your Honor. [00:25:58] Speaker 03: As to your second question, I think it's very important. [00:26:02] Speaker 03: The case I would urge the court to look at is Wyoming v. Oklahoma. [00:26:06] Speaker 03: from the United States Supreme Court. [00:26:08] Speaker 03: There, Wyoming sold coal. [00:26:11] Speaker 03: Wyoming had no legal right that people were going to buy Wyoming coal. [00:26:16] Speaker 03: Oklahoma then had a different program that made people stop buying Wyoming coal. [00:26:23] Speaker 03: And the Supreme Court said, that's a case of controversy. [00:26:25] Speaker 03: which I think is totally on point with your honor's question. [00:26:28] Speaker 00: How could they do that? [00:26:29] Speaker 00: How could they decide that? [00:26:32] Speaker 00: Because it's an intervening act by independent people, and Wyoming didn't have any right. [00:26:38] Speaker 00: I mean, I haven't read that case, but the way you're describing it strikes me as odd. [00:26:46] Speaker 03: I have some hesitance. [00:26:46] Speaker 03: I don't think it's odd at all. [00:26:48] Speaker 03: And the reason why I don't think it's odd is I thought about it is this. [00:26:52] Speaker 03: We know, going back to Hammurabi's code, [00:26:55] Speaker 03: that interest has been part of the lending industry. [00:26:59] Speaker 00: Right. [00:27:00] Speaker 00: They will lose interest. [00:27:01] Speaker 00: We all agree on that. [00:27:02] Speaker 00: But they don't have a right not to lose interest because they've got a habit or a practice made, but they don't have a right not to lose that interest since every buyer has the right to walk to change payoff or to leave or to refinance any time they want. [00:27:20] Speaker 03: I mean, the implications of that position would be extraordinary because it would mean that imagine that, not student loans, credit cards. [00:27:31] Speaker 03: Imagine that the administration said, we're going to pay off everybody's balance of your credit cards for the entire country. [00:27:37] Speaker 03: No legal authorization whatsoever for that. [00:27:40] Speaker 03: The entire credit industry would collapse. [00:27:42] Speaker 03: That's true for all the finance industries, which rely on interest. [00:27:46] Speaker 03: And to say that there's not even a procedural injury such that they couldn't file comments in a notice and comment period would be truly extraordinary. [00:27:54] Speaker 00: The other side of the coin, though, is that you're really arguing that the federal government is essentially a stop from offering more attractive financing programs now or forever in the future. [00:28:09] Speaker 00: Because any program they offer that might be more attractive [00:28:13] Speaker 00: could cause people to leave an old program. [00:28:16] Speaker 00: And that's almost like saying federal estoppel, which we know can't happen. [00:28:19] Speaker 00: Nobody's using those phrases. [00:28:22] Speaker 00: But you're saying basically that there's going to be a legal obligation to you if the federal government comes up with a new improved version of anything, if it means that people aren't going to use the old version anymore. [00:28:36] Speaker 00: And I just don't see how the government can run with that kind of a burden over them. [00:28:41] Speaker 03: I mean, if I'm saying that, I apologize. [00:28:42] Speaker 03: That's not what I'm trying to say. [00:28:44] Speaker 03: I am saying that there is Article III standing because there is an injury. [00:28:49] Speaker 00: Now the question we get to the merits. [00:28:50] Speaker 00: But injury is always defined as a violation of a legal right. [00:28:54] Speaker 00: The district court opinion, your own briefs have said that. [00:28:58] Speaker 03: But I guess I would be telling your honor, consistent with the Supreme Court decision in Wyoming v. Oklahoma, which I think, again, resolves your honor's [00:29:06] Speaker 03: concern, you have a common law right if you are an insurer, a lender of money, that you're going to get your interest. [00:29:15] Speaker 01: If your contract, though, says you loan me money and we agree to a contractual term that says that I can pay it off in full any time I want without penalty, you don't have any legal injury if I pay it off in 30 days without paying any interest. [00:29:33] Speaker 03: And the pushback I would have, again, on that, Your Honor, one, again, I'm going to lean on the Supreme Court. [00:29:39] Speaker 03: I think Wyoming v. Oklahoma resolves that concern. [00:29:41] Speaker 03: But second, that really would mean that the United States could pay off every credit card of anybody or pay off every house of anybody completely outlawlessly, not based on any statute. [00:29:52] Speaker 03: And nobody could sue, even though it would destroy the finance industry of the United States. [00:29:56] Speaker 02: So are you saying that there's a business model here that assumes that only [00:30:02] Speaker 02: some percentage of borrowers will prepay the debt and that, you know, there's an underlying assumption that the model works because not everybody does. [00:30:15] Speaker 02: Exactly. [00:30:16] Speaker 02: And so are you saying that because they incentivize and accomplish the prepayment, how does that generate the injury that Judge Ebell's looking for? [00:30:27] Speaker 03: Yeah. [00:30:28] Speaker 03: Exactly, Your Honor. [00:30:30] Speaker 03: how this would work is the model does not work if everybody pays off early, which again, we said in our briefing, how do credit cards work? [00:30:39] Speaker 03: The Federal Reserve says the only reason the credit cards exist is because people don't pay off their balance every month. [00:30:45] Speaker 03: So it would be destruction of the credit card industry. [00:30:47] Speaker 03: But as to your point there, and I think this goes to your point as well, Your Honor, often it will be perfectly lawful for them to make a program that is better [00:30:58] Speaker 03: than what the states or somebody else can offer, and then people will go to that. [00:31:02] Speaker 03: And we will have no claim on the merits to such a claim. [00:31:06] Speaker 03: Here, the difference is, this is patently unlawful under the Supreme Court's decision in Nebraska. [00:31:14] Speaker 03: And I want to just emphasize the major question doctrine here. [00:31:17] Speaker 03: The Supreme Court said in Nebraska, it's economically and politically staggering by any measure. [00:31:24] Speaker 03: Staggering was the word that the Chief Justice used for both economics [00:31:28] Speaker 03: and politics. [00:31:29] Speaker 03: It has not become less staggering in the last year. [00:31:32] Speaker 03: If anything, the Heroes Plan was $430 billion. [00:31:38] Speaker 03: This is $475 billion. [00:31:39] Speaker 03: We know from Alabama Realtors, from the Supreme Court, that even $50 billion is a major question. [00:31:45] Speaker 03: So the delta between the Heroes Plan and the SAFE Plan is itself a major question. [00:31:52] Speaker 03: So they need to point to some clear language. [00:31:55] Speaker 03: And the Alabama Realtors case from the Supreme Court says exceedingly clear language. [00:32:00] Speaker 00: But there's no- This is important to me. [00:32:03] Speaker 00: Are you saying that based upon a Nebraska case and Alabama Realtors, that size alone will be transformative and sufficient? [00:32:17] Speaker 03: No, Your Honor. [00:32:19] Speaker 03: But the way they said it in Nebraska, [00:32:21] Speaker 03: was they said, economically and politically staggering. [00:32:25] Speaker 03: The Supreme Court already addressed Your Honor's concern about loan payment specifically, and they addressed. [00:32:32] Speaker 03: Sorry, Your Honor. [00:32:35] Speaker 03: I hope they got my point. [00:32:36] Speaker 03: I would urge the court to look at the part before Nebraska. [00:32:38] Speaker 02: Go ahead and answer this question, and then judge. [00:32:40] Speaker 03: But they say it's both economically and politically staggering. [00:32:44] Speaker 03: And they mentioned that in the single session of Congress, [00:32:49] Speaker 03: You know, there were scores of language and proposals for loan cancellation that was enacted. [00:32:54] Speaker 03: And Congress said no. [00:32:56] Speaker 03: And they also quoted the language from Nancy Pelosi, where she said, the president can't do this. [00:33:01] Speaker 03: And they said, this is politically staggering, not just economically staggering. [00:33:05] Speaker 03: I'm sorry. [00:33:06] Speaker 01: So to me, it appears you're jumping over the first question, is whether there's a case of controversy because there is an injury. [00:33:16] Speaker 01: There's a breach of a legal right, a loss of a legal right here. [00:33:21] Speaker 01: And I don't care how big it is, you've got to first meet that step before we get there. [00:33:28] Speaker 01: And in Biden versus Nebraska, the court relied on loan servicing fees, not interest. [00:33:37] Speaker 01: It's a different animal than what you're asserting here. [00:33:41] Speaker 01: And as Judge Ebell has pointed out, [00:33:45] Speaker 01: If you had an entity that was getting the servicing fees, it's one thing, but if you've got an interest loss that's based on exercise of a contractual term that gives these borrowers the right to pay off early without penalty, it's much more difficult to find the breach of a legal right there. [00:34:06] Speaker 03: I wasn't trying to skip over. [00:34:08] Speaker 03: I just want to make sure, because I only have so much time, that I can answer some of the questions about the major question doctrine. [00:34:13] Speaker 03: I'm happy to go back to standing. [00:34:15] Speaker 03: Again, I think that Wyoming v. Oklahoma is dispositive. [00:34:19] Speaker 03: Wyoming had no right for anybody to purchase. [00:34:21] Speaker 01: Anything other than Wyoming versus Oklahoma? [00:34:23] Speaker 01: I mean, none of the cases on student loans help us. [00:34:26] Speaker 03: Not on student loans. [00:34:28] Speaker 03: But to follow the district court's analysis here, which I think is plainly correct, [00:34:33] Speaker 03: I mean, you can rely on California v. Texas that you can assume that people will enroll in valuable government programs. [00:34:41] Speaker 03: That's from the Supreme Court. [00:34:43] Speaker 03: We have clear findings of fact from the district court that that's what's going to happen here. [00:34:48] Speaker 03: So then the only question is, you know, this question about legal right, which of course is, except the basis of the entire credit industry of the United States. [00:34:55] Speaker 03: So the states are enormous. [00:34:57] Speaker 03: if we were to adopt that view. [00:34:59] Speaker 03: And you don't have to adopt that view because the Supreme Court in Wyoming, the Oklahoma, said there's an injury, even though of course Wyoming had no right that people were going to buy Wyoming coal. [00:35:09] Speaker 03: Nonetheless, the Supreme Court still said that there's an injury. [00:35:11] Speaker 02: Does it matter here that there's not new state-supported student loans being issued? [00:35:17] Speaker 03: Not at all, Your Honor. [00:35:19] Speaker 03: It doesn't because [00:35:21] Speaker 03: We still own them. [00:35:23] Speaker 03: We are still receiving the interest on them. [00:35:25] Speaker 03: And now we're receiving less of the interest, because they're consolidating into the federal program. [00:35:30] Speaker 03: So that's pocketbook injuries, again, since Habarabi. [00:35:35] Speaker 03: So another point that I want to emphasize, and I don't want to skip over, but the other point I'd like to emphasize is the limiting principle here. [00:35:44] Speaker 03: They don't have one. [00:35:45] Speaker 03: The limiting principle they say it's appropriate. [00:35:49] Speaker 03: Well, that is not a limiting principle. [00:35:51] Speaker 03: And the case I point to that, the one that we cite in our brief is Mostretta, footnote seven of Mostretta, which goes back to the Benzene case. [00:36:02] Speaker 03: That language there was, if anything, more expansive than the language here. [00:36:07] Speaker 03: The court said no. [00:36:09] Speaker 03: In our reply brief in this court, we cited the Sixth Circuit's case just a few weeks ago. [00:36:13] Speaker 00: Why isn't the limiting principle here 20 years? [00:36:18] Speaker 00: Because they're shorter than 20 years. [00:36:21] Speaker 00: Yeah, but it is a limit. [00:36:23] Speaker 00: It happens to be a limit that is higher than what they're using. [00:36:29] Speaker 00: But there is a limit. [00:36:30] Speaker 00: Congress has put a limit on there. [00:36:32] Speaker 00: And presumably, if they said 20 is as long as you can do, I think that necessarily implies anything under 20 is OK. [00:36:43] Speaker 03: So Your Honor, I mean, to push back, could they do a week? [00:36:48] Speaker 03: That essentially would give everybody the mic. [00:36:49] Speaker 03: And I take my friend on the other side, disavow that, say, no, no, no, that wouldn't work. [00:36:54] Speaker 03: But the question is, why wouldn't that work? [00:36:56] Speaker 02: Well, the statute says an extended period of time. [00:36:59] Speaker 02: Why isn't that an enforceable limiting principle here? [00:37:05] Speaker 02: Well, what do they mean? [00:37:06] Speaker 02: They've gone from 20 to 10, right? [00:37:09] Speaker 02: And so you're saying it's 10, not an extended period of time? [00:37:15] Speaker 03: Well, I thought we were asking for what is their limiting principle. [00:37:18] Speaker 03: Right. [00:37:19] Speaker 03: Their limiting principle. [00:37:19] Speaker 03: I'm saying that's an extended period of time. [00:37:21] Speaker 03: Extended period of time. [00:37:22] Speaker 03: But could they not then go to five? [00:37:24] Speaker 03: Could they go to three? [00:37:25] Speaker 00: We'll worry about that. [00:37:27] Speaker 00: Let some other panel worry about that. [00:37:29] Speaker 03: Well, my pushback on that, I hear it, Your Honor, and that's a temptation. [00:37:32] Speaker 03: But the Supreme Court of West Virginia said you can't do that. [00:37:35] Speaker 03: You need to look at the breadth of the power asserted to decide whether this is a major question. [00:37:40] Speaker 03: So you can't just say, well, save that for another day. [00:37:43] Speaker 03: Again, let's say I'm wrong about all of that. [00:37:45] Speaker 03: Let's say, you know, my major questions argument is wrong, notwithstanding the Raskin, Raskin never happened. [00:37:51] Speaker 03: This still is the most egregious APA violation I think this court will ever find. [00:37:57] Speaker 03: And if I didn't come clear to that in my briefing, I want to make sure, I want to stress that today. [00:38:01] Speaker 00: And the APA violation is because they assumed they would win the 8th Circuit case and that's wrong. [00:38:08] Speaker 00: Is that the APA violation? [00:38:10] Speaker 03: The one I'm emphasizing right here, yes. [00:38:12] Speaker 03: And we know that that is a fatal error because the Supreme Court said so two months ago in Ohio VEPA. [00:38:18] Speaker 03: The Supreme Court said there, [00:38:20] Speaker 03: The EPA assumed that they were going to prevail in lower court decisions, not Supreme Court decisions, lower court decisions, and thus didn't prepare a workable plan in case they were to lose. [00:38:32] Speaker 03: They lost, and the Supreme Court said, to be sure, 5-4, but that's a holding of the Supreme Court. [00:38:38] Speaker 03: That is arbitrary and capricious. [00:38:40] Speaker 03: Here, it's even more than that, because even under their best argument for why they somehow are okay, it's that they rushed to beat the Supreme Court out the door. [00:38:50] Speaker 03: What is going on here where we have agencies who are trying to evade decisions of the United States Supreme Court? [00:38:57] Speaker 03: That is a threat to this court, that's a threat to the judiciary, and the Supreme Court, I trust, will not stand for it, see Ohio VEPA. [00:39:05] Speaker 02: Is the underlying problem, though, that because of that process they underestimated the cost of the program? [00:39:16] Speaker 02: Or is there something in addition to that that's at play? [00:39:19] Speaker 03: So in Ohio, the EPA, it was whether they could make the clean air programs work, and they had to have a certain number of states to write a critical mass. [00:39:27] Speaker 03: And they assumed that they were going to get that, and they didn't. [00:39:30] Speaker 03: And even there, they had more so than here. [00:39:33] Speaker 03: They had a carve out what happens if we lose, which the court said that's not at all satisfactory. [00:39:39] Speaker 03: Here, they didn't even have that carve out. [00:39:40] Speaker 03: Here, they just said we're going to win. [00:39:42] Speaker 02: But the implication of that assumption is that, [00:39:47] Speaker 02: The plan tripled in cost, basically. [00:39:49] Speaker 02: Correct. [00:39:50] Speaker 03: And they knew it. [00:39:52] Speaker 03: That's the part that, to me, is the most astonishing that makes this. [00:39:54] Speaker 03: And why does that violate the APA? [00:39:58] Speaker 03: Because you can only uphold an agency decision based on the reasons the agency gave at the time. [00:40:05] Speaker 03: That's Chenery. [00:40:05] Speaker 03: That's as black letter law as administrative law gets. [00:40:08] Speaker 03: And that's also what they reiterated in Iowa. [00:40:11] Speaker 03: You can ignore the red for now until we're done. [00:40:14] Speaker 03: So that's the first thing. [00:40:16] Speaker 03: They have to look at what the reason that they gave. [00:40:18] Speaker 03: Here, this program is three times more expensive. [00:40:21] Speaker 03: That already was a major question. [00:40:22] Speaker 03: Now I've seen this is the most expensive regulation of all time. [00:40:26] Speaker 03: I'm not sure that's right, but we're in the 99.999th percentile of regulations. [00:40:30] Speaker 03: If you're going to be in there, you need to know what the costs are. [00:40:34] Speaker 03: But the department says it doesn't have to consider costs at all. [00:40:37] Speaker 03: Correct. [00:40:37] Speaker 03: And that fails under Chenery. [00:40:40] Speaker 03: That's the point that I'm trying to reiterate. [00:40:41] Speaker 03: They didn't put that in the final rule. [00:40:43] Speaker 03: The final rule doesn't say we don't have to consider costs. [00:40:46] Speaker 03: The final rule says we're confident we're going to prevail in the Supreme Court, even though they had already lost in the Supreme Court. [00:40:53] Speaker 03: That is a black and white violation of Chenery. [00:40:55] Speaker 03: 1943, Supreme Court, there's a rule that is, like I said, is black letters, administrative law gets, and they lose. [00:41:02] Speaker 03: But say I'm wrong about that. [00:41:04] Speaker 03: They surely, under appropriate, have discretion to consider costs. [00:41:10] Speaker 03: That's Michigan DEPA, which is also about the word appropriate. [00:41:13] Speaker 03: They have discretion to consider costs, so they have to explain why they are not considering costs, and they didn't do that either. [00:41:20] Speaker 03: So they either lose under Tenerate or they lose under Michigan DEPA, but if this was allowed, like, what is going on in arbitrary and precinct review? [00:41:29] Speaker 03: Arbitrary and precinct review no longer has any teeth at all. [00:41:32] Speaker 02: I'll give Mr. Brewers some time. [00:41:34] Speaker 02: I thought over a few minutes. [00:41:35] Speaker 02: I know. [00:41:35] Speaker 02: But I do want you to address his key merits argument, and that is that the statute clearly authorizes loan forgiveness under an income contingent repayment plan. [00:41:53] Speaker 03: Yeah. [00:41:54] Speaker 03: So again, remember, it has to be exceedingly clear. [00:41:57] Speaker 03: because we're in the world of the major question, they don't have any language that actually forgives loans in these ICR plans. [00:42:05] Speaker 03: Instead, they're relying on an inference about, well, what happens after 25 years? [00:42:10] Speaker 03: I don't know if that argument even works in an ordinary case after Lope or Bright. [00:42:16] Speaker 03: That's a question of if there's ambiguity, they've got to figure that out. [00:42:19] Speaker 03: But it's certainly not an exceedingly clear statement. [00:42:22] Speaker 03: And the other point, this is not a continuation of what they've done in the past for the reasons explained by the district court. [00:42:27] Speaker 03: Never before now, in any other plan, have they gone beyond the numbers of the IBR plans. [00:42:33] Speaker 03: Now, what are the IBR plans? [00:42:34] Speaker 03: Those are the plans for people who have partial hardship. [00:42:37] Speaker 03: In other words, the people who are struggling financially. [00:42:40] Speaker 03: Congress was concerned about them. [00:42:42] Speaker 03: So when President Obama and the State of the Union said, well, let's help them, Congress helped them. [00:42:49] Speaker 03: This is more beneficial for everybody than what Congress said we're going to give to people suffering from financial hardship. [00:42:56] Speaker 03: They had never done that before in any plan, and this would be the very first time. [00:43:01] Speaker 03: That is transformative. [00:43:03] Speaker 03: I think it fails under ordinary interpretation. [00:43:05] Speaker 03: The specific governs the general, but it's certainly not a clear statement. [00:43:10] Speaker 02: Do you think if the department's been canceling loans under ICR plans in the past, do you think that that's impermissible, that's illegal, even though they've been doing it? [00:43:22] Speaker 03: Yeah, that's the point. [00:43:24] Speaker 03: I'm not quite sure. [00:43:25] Speaker 03: The Eighth Circuit essentially says that that's always been unlawful. [00:43:29] Speaker 03: I think under Loper-Brite, that might very well always have been unlawful. [00:43:33] Speaker 03: Remember, they decided this in 1994 when they first did this. [00:43:36] Speaker 03: This is well in the age of Chevron. [00:43:39] Speaker 03: So they could do that. [00:43:40] Speaker 03: We're not in Chevron anymore. [00:43:42] Speaker 03: So I don't know if that works. [00:43:44] Speaker 03: But I do know that this is orders of magnitude larger. [00:43:47] Speaker 03: The repay plan before now was the largest. [00:43:51] Speaker 03: That cost the United States $15 billion. [00:43:52] Speaker 03: We're now at $475 billion. [00:43:55] Speaker 03: The pay plan and the 1994 plan, these were essentially cost neutral. [00:44:01] Speaker 03: So we have one time where they go over a little bit and cost the United States $15 billion. [00:44:05] Speaker 03: And they say, well, from that we can cost the United States $475 billion. [00:44:09] Speaker 02: One last question. [00:44:09] Speaker 02: I'll ask this for Mr. Brewer also. [00:44:12] Speaker 02: If the final rule is enjoined, [00:44:18] Speaker 02: which it is in the Eighth Circuit. [00:44:19] Speaker 02: Does the replay plan spring back into action, or are we in a legal limbo until we get merits decisions from this court, the Eighth Circuit, and the Supreme Court? [00:44:34] Speaker 03: I think we're in legal limbo. [00:44:36] Speaker 03: And that's, to go back to my arbitrary, capricious point, and the point about the notice period. [00:44:42] Speaker 03: If they, and again, I don't want to fault them too harsh. [00:44:46] Speaker 03: I don't know what was going on internally. [00:44:48] Speaker 03: But if they wanted to do it right, what they would have done is they would have, one, anticipated and addressed what happens in Nebraska. [00:44:55] Speaker 03: And two, they would have had a fallback. [00:44:58] Speaker 03: What happens if a court says this is unlawful? [00:45:02] Speaker 03: What's the remedy? [00:45:04] Speaker 03: They can do that in the rule. [00:45:06] Speaker 03: And if they had thought it through, they would have said, well, if that happens, we go back to the repay plan. [00:45:11] Speaker 03: But they didn't do that, which I think was, I mean, [00:45:16] Speaker 03: almost the most irresponsible thing I have seen an agency do, because you have millions of people who depend on it, and rather than looking after them, they said, what we're going to do is we're going to take a legal risk, and they're the people who are going to bear the risk, are not the agency, it's the people who are now stuck in forbearance because they didn't anticipate Nebraska, even though Nebraska had been decided before they issued the final rule. [00:45:39] Speaker 02: So the net effect of the Eighth Circuit stays, and you can confirm this. [00:45:44] Speaker 02: The borrower is in forbearance until further notice. [00:45:48] Speaker 02: That's my understanding of what the department is doing. [00:45:51] Speaker 00: Do you have any other questions for the state? [00:45:53] Speaker 00: Oh, so many. [00:45:55] Speaker 00: Well, we have all the time in the world. [00:45:57] Speaker 00: I think we're still hearing from one more person, but I do think we've had very [00:46:03] Speaker 00: very helpful arguments from both of you. [00:46:06] Speaker 00: Do you have any further questions? [00:46:07] Speaker 02: Okay, thank you. [00:46:08] Speaker 03: Thank you. [00:46:08] Speaker 03: I know it got over. [00:46:09] Speaker 03: I really appreciate it, Your Honor. [00:46:10] Speaker 03: We ask the court for broad injunctive release. [00:46:12] Speaker 03: Thank you. [00:46:14] Speaker 03: And why don't you give five minutes for Mr. Brewer. [00:46:23] Speaker 04: Thanks very much, Chair. [00:46:25] Speaker 04: So I want to start with the case or controversy question. [00:46:28] Speaker 04: I didn't understand my friend on the other side to be saying that this case is moot because this Eighth Circuit issued an explicitly temporary injunction pending appeal. [00:46:37] Speaker 04: And so I don't think that there's a case or controversy problem with the fact that the Eighth Circuit has issued a nationwide injunction. [00:46:43] Speaker 04: But even if I were wrong about that, there would be no problem sequencing jurisdictional issues [00:46:48] Speaker 04: So this court can still hold that there is no standing for the states and vacate the preliminary injunction on that basis, even assuming there were some other jurisdictional question about the effect of the Eighth Circuit's order. [00:47:01] Speaker 00: Why does standing have a privileged position here? [00:47:06] Speaker 04: Standing is a core Article III jurisdictional issue, and the Supreme Court has been clear that jurisdictional issues can be tackled in whatever order is appropriate under the circumstances. [00:47:17] Speaker 04: So I think it would be, in the circumstances here, appropriate to vacate the preliminary injunction based on lack of standing. [00:47:23] Speaker 01: But Article III, case of controversy, is also a core jurisdictional issue. [00:47:29] Speaker 01: Undoubtedly, Your Honor. [00:47:30] Speaker 01: And so if we don't have any power to do anything, [00:47:35] Speaker 01: so long as a universal injunction is in place, we don't have a case of controversy. [00:47:40] Speaker 04: But that would be the equally true for lack of standing. [00:47:42] Speaker 04: And so because those both go to Article III power, assuming that the Eighth Circuit's order really does sound in muteness or something like that, it would still be appropriate to address standing here. [00:47:52] Speaker 04: The second thing I want to address is my friend's argument about the cost of the rule. [00:47:57] Speaker 04: It's not the case that the effect of Nebraska is simply to triple the economic impact of the safe plan. [00:48:04] Speaker 04: And that's because the Penn-Warton model that they now rely on is based on fundamentally different data and assumptions than the department's estimates here. [00:48:12] Speaker 04: So it's not appropriate to just assume that the cost will triple. [00:48:16] Speaker 04: If you look at the CDO estimates, for example, the ones that they cited in their complaint in this case, the cost increased by about 20% when accounting for the effects of Nebraska. [00:48:26] Speaker 02: Did you offer any... [00:48:27] Speaker 02: alternative costs in your briefing? [00:48:31] Speaker 04: We pointed to the CDO estimate in our brief, which again was cited in plaintiff's complaint, so it's appropriate. [00:48:36] Speaker 02: The Supreme Court did rely on the Wharton model, though, didn't it, in Nebraska? [00:48:40] Speaker 04: The Supreme Court relied on the Wharton model in Nebraska, but there's a CDO, which is a more official estimate available here. [00:48:46] Speaker 04: But even if, you know, it doesn't matter whether or not the court needs to pick one or the other. [00:48:51] Speaker 04: The point is just that there's no reason to assume that the costs are going to triple. [00:48:55] Speaker 02: in the way that the states do. [00:48:57] Speaker 02: I think it's fair. [00:48:58] Speaker 02: We can assume it's a big-ticket program. [00:49:00] Speaker 02: The question is whether costs are even relevant. [00:49:03] Speaker 02: I think you're saying that whether it's triple or [00:49:06] Speaker 02: a third, it's not really relevant. [00:49:08] Speaker 04: That's right, Your Honor. [00:49:09] Speaker 04: And that was the next point I wanted to make, which is that, again, even assuming that the department erred here in all of the ways that the states have asserted in assessing costs, you have not heard them assert any prejudice based on the cost estimate. [00:49:21] Speaker 04: There's not a word about prejudice in their briefs. [00:49:24] Speaker 04: There's not a word about prejudice at argument here today. [00:49:26] Speaker 04: And the rule of prejudicial error is a fundamental aspect of APA review. [00:49:31] Speaker 02: And there's no prejudice because the secretary was going to do it anyway, no matter what the cost? [00:49:34] Speaker 04: There's at least no reason to believe that if the costs were spread across two agency actions rather than one agency action, that would change the secretary's decision about whether or not those costs were worth it. [00:49:45] Speaker 04: So I don't think your honors need to think that the secretary would do this no matter the cost. [00:49:49] Speaker 04: But their argument is that because the costs were attributable to one action, [00:49:54] Speaker 04: rather than two, that that might have led to a different outcome. [00:49:57] Speaker 04: And there's simply no basis to believe that in the record. [00:49:59] Speaker 00: I'm confused about that. [00:50:00] Speaker 00: It may take more time, but I don't understand the one versus two action point that you're making. [00:50:08] Speaker 04: The state's theory is that the plan became more expensive because of the invalidation of the HEROES Act debt cancellation in Nebraska. [00:50:16] Speaker 04: And so the states say the department failed to account for it. [00:50:19] Speaker 04: OK, I understand. [00:50:20] Speaker 04: And that is true, though, isn't it? [00:50:22] Speaker 04: It did become more expensive. [00:50:23] Speaker 04: It did become more expensive. [00:50:24] Speaker 04: So some costs shifted from that prior agency action to the second agency. [00:50:28] Speaker 04: I just didn't know what your two were, and now I do understand it. [00:50:31] Speaker 04: Thank you, Your Honor. [00:50:32] Speaker 04: And so there's no reason to believe that simply because some costs shifted from one agency action, the secretary previously deemed [00:50:38] Speaker 04: appropriate to another one, which he deemed appropriate, that he would reach a different conclusion. [00:50:42] Speaker 01: So your argument is there was no net change in the costs. [00:50:49] Speaker 01: It was just whether it fell under one statute as opposed to the other statute. [00:50:53] Speaker 04: That's the state's theory, is that some costs were shifted from the Heroes Act forgiveness to this plan, and whether or not it's attributable to one action or another that the secretary had taken. [00:51:02] Speaker 04: There's no reason to believe that there would be prejudice or that the secretary would reach a different decision. [00:51:06] Speaker 01: And is it also your position, I think Judge Timkovich said, that that cost was irrelevant to the secretary in making this decision? [00:51:16] Speaker 04: It's our position that the secretary was not obliged to consider costs under the statute. [00:51:20] Speaker 04: The secretary, of course, laid out an analysis under the executive orders, which create no private right of action and plaintiffs are not allowed to enforce under the APA. [00:51:29] Speaker 04: And in that vein, the Department responded to comments about the costs under those executive orders, but that's not part of the arbitrary and nutritious review. [00:51:37] Speaker 04: The third thing I would like to address is about the IVR statute, the income-based repayment. [00:51:42] Speaker 04: So income-based repayment did not exist when the Secretary promulgated the first income contingent repayment plan. [00:51:48] Speaker 04: So it's a little strange to say that the Secretary has never before gone beyond the parameters of the income-based repayment plan. [00:51:54] Speaker 04: program. [00:51:55] Speaker 04: That aside, there are reasons that Congress may have specified more particular parameters in that latter statute, which is that income-based repayment is available to these federal family education loans as well as department-held loans. [00:52:10] Speaker 04: And so Congress may well have judged that the department should have more discretion in setting the terms of repayment for loans exclusively held by the department compared to these loans that were held by private lenders. [00:52:22] Speaker 02: That sounds like they made a clear statement. [00:52:25] Speaker 02: for those plans and for the income contingent plans, we have silence. [00:52:31] Speaker 02: So how do I infer a clear statement under major question from their silence? [00:52:37] Speaker 04: Again, Your Honor, I don't think there's any requirement that Congress use magic words and the fact that it used different language in two provisions enacted at different points in time [00:52:45] Speaker 04: where there is no textual indication of exclusivity in the income-based repayment provisions. [00:52:51] Speaker 04: I don't think that supports the kind of negative inference that my friends on the other side are trying to draw. [00:52:55] Speaker 02: You can turn off the clock. [00:52:57] Speaker 02: I had a couple other questions. [00:52:59] Speaker 02: Are the borrowers in legal limbo forbearance [00:53:02] Speaker 02: until the Supreme Court does something with this case. [00:53:05] Speaker 04: So that all of the borrowers who are enrolled in the same... In other words, repay but doesn't spring back into action, does it? [00:53:12] Speaker 04: Under the terms of the Eighth Circuit's injunction, it seems not to. [00:53:16] Speaker 04: It seems that they are in limbo or they are not? [00:53:20] Speaker 04: It seems that they are currently in limbo under the terms of the Eighth Circuit. [00:53:23] Speaker 04: So they're not making any payments right now? [00:53:24] Speaker 04: That's right. [00:53:24] Speaker 04: They're... These are not legally obligated? [00:53:26] Speaker 04: Because they're in forbearance. [00:53:28] Speaker 04: Is interest still accruing? [00:53:31] Speaker 04: I believe interest does accrue under the term. [00:53:34] Speaker 04: Excuse me, sorry. [00:53:34] Speaker 04: I believe interest does not accrue under the terms of the forbearance. [00:53:38] Speaker 02: OK. [00:53:38] Speaker 02: And then Mr. Nielsen mentioned Wyoming versus Oklahoma on standing to each other in response to that case. [00:53:47] Speaker 04: That is a tax revenue theory case. [00:53:49] Speaker 04: So the theory was that there was an impairment of the state's right to collect tax revenues, these specific coal tax revenues. [00:53:57] Speaker 04: And we've explained why that's inapposite to their tax revenue theory in our briefs. [00:54:01] Speaker 04: But the states have never pointed to any case holding that there is an Article III injury based on repayment in full of a loan. [00:54:11] Speaker 04: And I think, again, that would be a truly extraordinary proposition. [00:54:13] Speaker 02: Didn't South Carolina have a tax revenue [00:54:17] Speaker 04: They do, and that argument fails for the reasons explained in our briefs. [00:54:23] Speaker 04: South Carolina's choices about how to structure its tax code are attributable to them, not to the department. [00:54:30] Speaker 01: And they relied on the federal definition. [00:54:32] Speaker 01: Is that the argument there? [00:54:34] Speaker 01: That's right. [00:54:34] Speaker 01: They just adopted it. [00:54:36] Speaker 04: And that was their choice to do so. [00:54:37] Speaker 04: There is nothing in either the federal tax code or any action by the department, of course, that obliged them to do that. [00:54:44] Speaker 00: So you're distinguishing [00:54:47] Speaker 00: because here there is no, at least, assertion of standing based on tax. [00:55:00] Speaker 04: There's no assertion based on standing for Texas and for Alaska, which have no state income tax, and South Carolina's tax arguments fail for the reasons explained. [00:55:10] Speaker 04: regulated and formulated the way they did. [00:55:12] Speaker 04: The Supreme Court's decisions in Pennsylvania established that principle, and its decision in the Federal Election Commission against Cruz reaffirmed that principle. [00:55:23] Speaker 04: I'd be glad to answer any other questions the panel may have. [00:55:26] Speaker 02: Hearing none, thank you, counsel. [00:55:27] Speaker 02: Your excuse, the case shall be submitted. [00:55:29] Speaker 02: We appreciate you coming to Denver, and we appreciate the fine audience.