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States Urge Court to Reverse Dismissal of Arizona's ARPA Suit 

Posted on Sep. 3, 2021

Twenty-two state attorneys general have urged the Ninth Circuit to reverse the dismissal of Arizona’s suit challenging a federal COVID-19 relief law provision that prevents states from using federal aid to offset reductions in net tax revenue.

Arizona filed an appeal with the Ninth Circuit after the U.S. District Court for the District of Arizona in July denied Republican Attorney General Mark Brnovich’s request to block the U.S. Treasury Department from enforcing the provision in section 9901 of the American Rescue Plan Act of 2021 (P.L. 117-2) and dismissed the case for lack of subject matter jurisdiction. The district court said the state failed to “demonstrate it suffered a concrete injury sufficient to establish standing.”

In an August 27 amicus brief, the 22 state attorneys general, who are also suing to block the provision’s enforcement, argue that the Ninth Circuit should reverse the lower court’s ruling “and then reach the merits and remand with instructions to issue the injunction Arizona asked for.”

The amici include Ohio, Alabama, Alaska, Arkansas, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, and West Virginia.

Brnovich filed the lawsuit March 25 against Treasury, Treasury Secretary Janet Yellen, and Richard K. Delmar, the department’s acting inspector general, over the provision shortly after Yellen responded in a March 23 letter to Brnovich and a coalition of Republican attorneys general about their concerns regarding the restriction. Brnovich later filed a motion to block Treasury from enforcing the restriction.

The states argue that the district court erred in its decision because “its reasoning conflates standing, which is a jurisdictional issue, with the merits, which is not.”

The states acknowledge that courts can dismiss a case for lack of subject matter jurisdiction when the claims are so “completely devoid of merit as not to involve a federal controversy,” but they argue that their constitutional arguments have merit, noting that in Ohio v. Yellen the U.S. District Court for the Southern District of Ohio issued a decision permanently enjoining the provision.

Brnovich makes a similar argument in Arizona’s opening brief, saying that the district court erred in both its explicit standing and merits holdings and that it “committed a fundamental and patent error” because “it failed to evaluate standing/jurisdiction separately from the constitutional merits, instead blending them together into one muddled mess.”

In the state’s final arguments in the district court case, Brnovich said the provision is “among the greatest infringements on state sovereignty in American history” as “ARPA has coerced the states into accepting an ambiguous condition limiting their sovereign fiscal authority through 2024, effectively threatening the states with billions in claw backs if they enact policies that meet [Yellen’s] disapproval.”

The Goldwater Institute, the U.S. Chamber of Commerce, and the National Federation of Independent Business’s Small Business Legal Center have also submitted amicus briefs in support of Arizona.

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