• The Supreme Court reaffirmed that agencies may not exercise sweeping powers that would fundamentally revise congressional policies absent clear statutory authorization.
• The Secretary of Education’s power to “modify” the student loan program did not confer the power to make wholesale changes to the program. Standard principles of statutory interpretation guided the Court’s analysis, and the major questions doctrine reinforced it.
• The decision reflects yet another step by the Court to impose constitutional and statutory constraints upon sweeping agency claims to delegated power.

On June 30, 2023, the Supreme Court held in Biden v. Nebraska that the Secretary of Education did not have authority under the HEROES Act to forgive US$430 billion in student loan debt.

Background

The Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) provides that the Secretary of Education “may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under [federal law] as the Secretary deems necessary in connection with a war or other military operation or national emergency.”¹

In 2022, at the tail end of the national emergency occasioned by the COVID pandemic, the Secretary of Education invoked the HEROES Act in an effort to reduce or eliminate roughly US$430 billion in student debt, which would provide relief to 98.5% of all borrowers.²

Six States (including Missouri) sued to block the relief plan on the grounds that it exceeded the Department’s statutory authority under the HEROES Act.³

The Supreme Court’s Decision

The Court concluded that the State of Missouri had Article III standing to challenge the plan.⁴ Missouri had created a non-profit organization, MOHELA, to service student loans. Since MOHELA is an arm of the State (it performs a public function and is subject to the State’s control), its estimated US$44 million loss in loan servicing fees thanks to the Secretary’s relief plan inflicted a tangible injury on Missouri.⁵

On the merits, the Court reasoned that the critical question was whether the Secretary’s loan-forgiveness program could be viewed as “modifying” the terms of the program. Relying upon a past case interpreting the word “modify” in another statute, the Court reasoned that “[t]he Secretary’s plan has ‘modified’ the cited provisions only in the same sense that ‘the French Revolution ‘modified’ the status of the French nobility’—it has abolished them and supplanted them with a new regime entirely.”⁶ To “modify” means to make changes that are “moderate” or “minor,” rather than to create a “novel and fundamentally different loan forgiveness program.”⁷ Neither could the Secretary rely on the authority to “waive” provisions of the HEROES Act because he could not point to any particular statutory provision that had been waived.⁸ Finally, the Court rejected the idea that “waive or modify,” in combination, conferred greater authority: “[W]hen the Secretary seeks to add to existing law, the fact that he has ‘waived’ certain provisions does not give him a free pass to avoid the limits inherent in the power to ‘modify.’”⁹

The Court also relied on the major questions doctrine to reinforce this conclusion.¹⁰ As in West Virginia v. EPA,¹¹ an executive branch agency had asserted novel and broad authority over a question of great “economic and political significance.”¹² The agency had never claimed such authority before, and the agency’s action was estimated to cost taxpayers between US$469 and US$519 billion.¹³ The Court contrasted Congress’s unanimous passage of the HEROES Act with the “sharp debates” that arose in response to the Secretary’s relief plan.¹⁴ As West Virginia taught, it is the job of Congress, not executive branch agencies, to make such consequential decisions.¹⁵ Finally, the Court rejected the government’s argument that the major questions doctrine should apply only when an agency regulates private parties, not when it provides benefits. In view of the critical importance of Congress’s power over the purse, “[i]t would be odd to think that separation of powers concerns evaporate simply because the Government is providing monetary benefits rather than imposing obligations.”¹⁶

In a concurrence, Justice Barrett rejected Justice Kagan’s charge, in her dissenting opinion, that the major questions doctrine reflected a retreat from textualism. According to Justice Barrett, the major questions doctrine is consistent with textualism because it places the statutory text in the necessary context, recognizing that Congress will not confer vast powers through ambiguous statutory provisions.¹⁷ The major questions doctrine is not a canon of construction that “instruct[s] a court to adopt something other than the statute’s most natural meaning.”¹⁸ Although some have described the doctrine as a “clear statement rule” that reinforces the nondelegation doctrine,¹⁹ Justice Barrett disagreed.²⁰ Justice Barrett’s take thus appears to differ from that of Justice Gorsuch, who in his concurrence in West Virginia v. EPA, observed that “[t]he major questions doctrine works . . . to protect the Constitution’s separation of powers.”²¹ To “ensure that the government does not inadvertently cross constitutional lines,” Justice Gorsuch argued, the doctrine requires that Congress offer a “clear legislative mandate” if it intends to delegate “unprecedented power.”²² There appears, then, to be two potential views of this emerging administrative law doctrine that the Court has increasingly deployed to rein in aggressive agency actions.

Conclusion

The Court’s decision in Biden v. Nebraska continues its pattern of carefully scrutinizing the precise authority delegated to executive branch agencies before greenlighting consequential executive actions. The Court found that both traditional statutory interpretation principles and the major questions doctrine cut against the Secretary of Education’s claim of authority in this case.

Disclosure: Dechert LLP filed an amicus brief on behalf of Senator Marsha Blackburn and 42 other members of the United States Senate in support of the respondents in this case.

* The authors would like to thank Thomas Koenig and Benjamin Pontz for their contributions to this OnPoint.

1. 20 U.S.C. §1098bb(a)(1).
2. Biden v. Nebraska, Slip Op. at 14.
3. Id. at 1.
4. Id. at 8.
5. Id. at 8, 9.
6. Id. at 14–15 (quoting MCI Telecomms. Corp. v. AT&T Co., 512 U.S. 218, 228 (1994)).
7. Id. at 14.
8. Id. at 16.
9. Id. at 18.
10. Id. at 25 (“[T]he HEROES Act provides no authorization for the Secretary’s plan even when examined using the ordinary tools of statutory interpretation—let alone ‘clear congressional authorization’ for such a program” as required by the major questions doctrine.).
11. 597 U.S. __ (2022).
12. Biden v. Nebraska, Slip Op. at 20 (quoting West Virginia, 597 U.S. at __, slip op. at 17).
13. Id. at 20–21.
14. Id. at 22.
15. Id.
16. Id. at 24.
17. Id. at 2 (Barrett, J., concurring).
18. Id. at 3.
19. Id. at 4 (citing Cass Sunstein, There Are Two ‘Major Questions’ Doctrines, 73 Admin. L. Rev. 475, 483–84 (2021)).
20. Biden, Slip Op. at 5 (Barrett, J., concurring).
21. 597 U.S. at __, Slip Op. at 3 (2022) (Gorsuch, J., concurring); id. at 7 (Gorsuch, J., concurring) (quoting Indus. Union Dept., AFL–CIO v. Am. Petroleum Inst., 448 U.S. 607, 645 (1980) (plurality opinion)).
22. Id. at 6, 8 (cleaned up; citations omitted).