On February 28—three weeks from today—the Supreme Court will hear oral argument in Biden v. Nebraska, which concerns whether President Biden’s purported cancelation of hundreds of billions of dollars in student loans is lawful. The prevailing legal wisdom on the case has (so it seems to me) come in two parts: The loan-cancellation program is blatantly illegal, but the states challenging it might not have standing to pursue their challenge.
Based on the briefs that the states and their amici have just filed, the case for the states’ standing appears to be very robust. I offer some excerpts from the brief filed by the state plaintiffs (Nebraska, Missouri, Iowa, and Arkansas) on Missouri’s standing to redress the injuries to the Missouri Higher Education Loan Authority, or MOHELA, but I encourage interested readers to read the full argument:
The Government does not seriously dispute that the [loan-cancellation] Program will inflict great financial harm on MOHELA. Nor could it. Last fiscal year, MOHELA earned $88.9 million—roughly 77.5 percent of its operating revenue—from servicing 5.2 million Direct Loan accounts. This revenue depends on how many accounts MOHELA services—the more accounts, the more it earns. But the Department [of Education] estimates that the Program will completely eliminate the debt of nearly half of all borrowers….
Missouri has standing because MOHELA is a public instrumentality of the State. “Government-created and -controlled corporations are” often “part of the Government itself.” Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 397 (1995). Such corporations exist when the Government (1) “creates [the] corporation by special law,” (2) “for the furtherance of governmental objectives,” and (3) “retains for itself permanent authority to appoint a majority of the directors.” Id. at 399. It matters not if those entities lack “sovereign immunity,” id. at 392, or possess “the authority to-sue-and-be-sued,” Keifer & Keifer v. Reconstruction Fin. Corp., 306 U.S. 381, 390 (1939)….
Because MOHELA is a Missouri-created and -controlled entity, the State may sue in its name to vindicate harms to MOHELA. Indeed, Missouri law authorizes its Attorney General to sue “in the name and on the behalf of the state . . . to protect the rights and interests of the state.” Mo. Rev. Stat. §27.060. Caselaw involving federally created corporations supports Missouri’s standing. It is “well settled” that “when the United States acts through the agency of a wholly owned corporation, it may sue in its own name for the protection of its interest, without the joinder of the corporation.” Ins. Co. of N. Am. v. United States,
159 F.2d 699, 702 (4th Cir. 1947) (collecting cases).
In an amicus brief, seventeen states outside the Eighth Circuit have likewise weighed in on the standing question. Some excerpts:
Respondent States will suffer real, imminent, and particularized Article III injuries if the Secretary’s program goes into effect. That is especially obvious with respect to Missouri, since the program will inflict financial harm on MOHELA—a non-profit governmental entity created by Missouri statute to achieve “essential” government objectives. MOHELA is part of the State of Missouri. The State created MOHELA as “a public instrumentality.” Mo. Rev. Stat. § 173.360. It tasked MOHELA with, among other things: ensuring that “all eligible postsecondary education students have access to student loans;” supporting “the efforts of public colleges and universities to create and fund capital projects;” and supporting the “Missouri technology corporation’s ability to work with colleges and universities in identifying opportunities for commercializing technologies.” Id. MOHELA’s board consists of Governor-appointed and Senate-confirmed directors, all of whom can be removed by the Governor for cause and who serve term limits defined by Missouri law. Id. And all of MOHELA’s powers and duties are prescribed by statute. See Mo. Rev. Stat. §§ 173.350–173.450.
All this makes MOHELA part of the State of Missouri for constitutional purposes. That follows from this Court’s cases, which have repeatedly recognized that government corporations are the government for constitutional purposes when they are “created by the Government, … controlled by the Government, and operate[d] for the Government’s benefit.” Dep’t of Transp. v. Ass’n of Am. R.Rs., 575 U.S. 43, 53-54 (2015); see also Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 399 (1995); Arkansas v. Texas, 346 U.S. 368, 371 (1953); Erickson v. United States, 264 U.S. 246, 248–49 (1924). Because MOHELA is part of the State of Missouri, and because the challenged program will injure MOHELA financially, Missouri has standing to sue.