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Breaking: Arizona Sues Biden For Threatening To Withhold Relief Funds Over State’s Anti-Mandate Requirement

Gov. Doug Ducey alleged violations of the Administrative Procedure Act, the Spending Clause, and the non-delegation doctrine.

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Arizona sued the Biden administration on Friday over the Treasury Department’s threat to withhold federal COVID relief funds from the state and to seek recoupment over previously paid stimulus money unless Arizona removes its no-masking mandate condition on grant funds.

Republican Gov. Doug Ducey filed the four-count complaint in a federal court in Arizona Friday alleging two violations of the Administrative Procedure Act, a violation of the Spending Clause of the U.S. Constitution, and a violation of the non-delegation doctrine.

The lawsuit comes one week after the Treasury Department dispatched a letter to Arizona informing the state that two of the grant programs financed by the “Coronavirus State and Local Fiscal Recovery Funds” (SLFRF) portion of the federal government’s stimulus plan, known as the “American Rescue Plan,” violated federal regulations. The Treasury Department then gave Arizona 60 days to remediate the purported issues with the plans or potentially lose federal dollars and even risk having previously expended funds clawed back.

The two programs at issue were Arizona’s COVID-19 Educational Recovery Benefit program and its Education Plus-Up Grant Program. The Educational Recovery Benefit program provided up to $7,000 per student for families, with some income limitations, to pay for transportation to school, online tutoring, childcare, or tuition. However, to qualify for these grants, parents were required to “demonstrate that their current school is isolating, quarantining, or subjecting children to physical COVID-19 constraints in schools, such as requiring the use of masks or providing preferential treatment to vaccinated students.”

The Education Plus-Up Grant Program provided “every K-12 public and charter school the opportunity to receive up to $1,800 per pupil funding.” This program, however, was limited to schools that left masking decisions to parents: Public and charter schools mandating masks did not qualify for these grants.

In today’s lawsuit, Arizona pointed out that at the time it had established both its Educational Recovery Benefit Program and the Education Plus-Up Grant program, the Treasury Department regulations did not include any rules related to masking mandates. And while the Treasury Department’s final regulations provided that “a recipient may not use SLFRF funds for a program, service, or capital expenditure that includes a term or condition that undermines efforts to stop the spread of COVID-19,” those regulations are neither retroactive nor effect until April 1, 2022, the complaint stresses.

Gov. Ducey’s lawsuit goes further, alleging the Treasury Department lacked the authority under the SLFRF to adopt the Final Regulations. “That statute did not confer Treasury with power to prohibit States from expending SLFRF monies in a manner that in Treasury’s subjective and extraordinary determination ‘would undermine efforts to stop the spread of COVID-19 or discourage compliance with recommendations and guidelines in CDC guidance for stopping the spread of COVID-19,’” the complaint alleges. Likewise, the lawsuit charges that the Treasury Department’s letter threatening to revoke and claw back Arizona’s stimulus funds violates the Administrative Procedure Act because it exceeds their delegated authority.

Significantly, in the complaint, Gov. Ducey added two constitutional claims, one under the Spending Clause and one under the non-delegation doctrine.

The Spending Clause claim is premised on Article I, Section 8, clause 1 of the U.S. Constitution, which empowers Congress to “lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” The Supreme Court has held, however, that if Congress “desires to condition the States’ receipt of federal funds,” then it “must do so unambiguously … enabl[ing] the States to exercise their choice knowingly, cognizant of the consequences of their participation.”

Arizona maintains that Congress in passing the SLFRF failed to provide the “States any notice that SLFRF monies could, at some future date, be withheld or recouped based on Treasury’s determination that the State’s use of the monies ‘undermine[s] efforts to stop the spread of COVID-19.’” Accordingly, the complaint alleges that even if the Treasury Department held authority to issue its Final Rule, that rule is unconstitutional.

The final count in Arizona’s complaint alleges a violation of the non-delegation doctrine. That doctrine flows from Article I, Section 1, of the U.S. Constitution which vests “[a]ll legislative Powers herein granted … in a Congress of the United States.” Because the constitution grants Congress the legislative powers, there are limits on Congress’ ability to delegate lawmaking to an Administrative Agency.

Arizona claims in its lawsuit that the SLFRF provided no “intelligible principle” to guide the Treasury Department in the conditioning of stimulus funds on its assessment of whether programs will stop the spread of COVID, and, as such, there is a violation of the non-delegation doctrine.

It will be some time before the court reaches the merits of Arizona’s lawsuit. Gov. Ducey, however, is already taking the case to the court of public opinion, appearing Friday afternoon on Fox News with Martha MacCallum. President Biden is obsessed with masks and mandates, Gov. Ducey told MacCallum, stressing that Arizona is working to get kids back into classrooms and back to learning.

The majority of parents are on Ducey’s side and the law is as well, making one wonder why the Biden administration thought this was a fight worth having. But after Wednesday’s press conference, it seems clear our president hasn’t thought through much at all.