The Volokh Conspiracy

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SDOH Finds That Tax Mandate of American Rescue Plan Act Likely Unconstitutional

The Court declined to enter a preliminary injunction, but set an expedited briefing schedule for a permanent injunction.


In March, I wrote about a potentially-unconstitutional aspect of the American Rescue Plan Act. This omnibus statute imposes a conditional spending program. As I read the law, states that accept federal funds may be barred from reducing taxes. Nearly two dozen attorneys general asked the Treasury Department for clarification. Ohio went ahead and sued the feds.

Today, Judge Douglas Cole of the Southern District of Ohio found that Ohio was likely to prevail. Judge Cole stated that "the conceded ambiguity in the Tax Mandate, as written, establishes that Ohio has a substantial likelihood of showing that the ARPA violates the Spending Clause." But the court denied the state's request for a preliminary injunction. There is no immediate threat of enforcement, so interim relief is premature. The court set an expedited briefing schedule for a permanent injunction.

As I anticipated, the Court's analysis focuses on the "ambiguous" element of the Dole test. There is no need to determine coercion, if the terms of the program are unclear. The Court also addresses a point I raised back in March: can the Treasury Department cure an ambiguous statute through regulations? My tentative answer was no. And Judge Cole seems to agree:

Second, and more fundamentally, it is not at all clear that the Secretary can ever cure a Spending Clause ambiguity program, even through final regulations. As noted above, it may be the case that, because the Spending Clause is an Article I power, it is Congress, not Executive Branch officials, that must provide the requisite clarity.

This last issue is worth clarification by the Supreme Court.

Stay tuned. The permanent injunction briefing should be completed by mid-June.