STATE OF WEST VIRGINIA

v.

U.S. DEPARTMENT OF THE TREASURY

BRASHER, Circuit Judge:

The Constitution does not give the federal government authority to require states to enact the laws or policies that Congress prefers. But it does give Congress the power of the purse. The Spending Clause of the U.S. Constitution grants Congress the power to impose taxes and borrow money to "pay the Debts and provide for the general Welfare of the United States." U.S. Const. art. I, § 8, cl. 1. Although the federal government cannot control state conduct directly, Congress often uses its power to tax and spend as a work-around-offering federal funds in exchange for states establishing preferred programs or enacting favored laws.

This appeal is about one of the limits of that authority. Thirteen states sued the Treasury Secretary and related officials to challenge a tax offset provision in the American Rescue Plan Act, a coronavirus stimulus package passed by Congress in 2021. That offset provision prohibits states from using Rescue Plan funds "to either directly or indirectly offset a reduction in [their] net tax revenue" that results from a change in law that “reduces any tax.” 42 U.S.C. § 802(c)(2)(A). The States argued that this "tax mandate" exceeds Congress's authority under the Constitution. The district court agreed and permanently enjoined enforcement of the offset provision. The Secretary appealed.

We must decide two questions that the district court resolved in favor of the States. First, we must decide whether the States' challenge presents a justiciable controversy. Second, if any of the States' claims are justiciable, we must decide whether the offset provision is unconstitutional. We believe the district court answered both questions correctly. Specifically, we conclude that the States' challenge is justiciable and that the condition imposed by the offset provision is not sufficiently ascertainable. Because we conclude that this claim is both justiciable and successful, we do not address the States' other claims.

I.

The seeds of this controversy were sown when Congress passed the American Rescue Plan Act of 2021, a $1.9 trillion stimulus package aimed at mitigating the economic and public health effects caused by the coronavirus pandemic. Pub. L. No. 117-2, 135 Stat. 4. President Biden signed the bill into law on March 11, 2021. The President described the legislation as a tool for "rebuilding the backbone of this country and giving people in this Nation a fighting chance.” Remarks on Signing the American Rescue Plan Act of 2021, 2021 Daily Comp. Pres. Doc. 220 (Mar. 11, 2021).

The Rescue Plan is a voluminous Act spanning hundreds of pages. See Pub. L. No. 117-2, 135 Stat. 4. Central to this appeal, the Act appropriated $195.3 billion to make payments to each of the fifty states and the District of Columbia, 42 U.S.C. § 802(b)(3)(A), which the states may use for four enumerated purposes: (1) "to

22-10168 Opinion of the Court 5

respond to the public health emergency” caused by the coronavirus pandemic or "its negative economic impacts"; (2) to support essential workers; (3) to provide "government services to the extent" that the pandemic reduced states' revenues; and (4) to invest in infrastructure, id. § 802(c)(1)(A)–(D).

But the Act contains some fine print—it imposes several additional restrictions on the states as a condition of receiving funds. Relevant here, states cannot “use [Rescue Plan] funds . . . to either directly or indirectly offset a reduction in the[ir] net tax revenue” resulting from a change in state law "during the covered period that reduces any tax . . . or delays the imposition of any tax or tax increase." Id. § 802(c)(2)(A) (emphasis added). To receive the federal funds, a state must certify that it needs the payment to carry out one of the Act's four enumerated purposes and will comply with this offset provision. Id. § 802(d)(1). States must also provide a "detailed accounting of . . . all modifications to [their] . . . tax revenue sources during the covered period.” Id. § 802(d)(2). The "covered period" began on March³, 2021, and "ends on the last day of the [state's] fiscal year . . . in which all [Rescue Plan] funds . . . have been" spent by the state or have been recovered by or returned to the Treasury Secretary. Id. § 802(g)(1). The Secretary can recoup any funds from the states used in violation of Section 802(c)'s offset provision. Id. § 802(e). The Act provides that funds appropriated for payments to the states will remain available through December 31, 2024. Id. § 802(a)(1).

Some states signed on the dotted line. But on March 31, 2021, thirteen states¹ sued in the United States District Court for the Northern District of Alabama, challenging Section 802(c)'s offset provision, or so-called "tax mandate.” The complaint averred three claims: first, that Section 802(c)'s offset provision is an unconstitutionally ambiguous and coercive condition under the Spending Clause; second, that the offset provision violates the Tenth Amendment's anti-commandeering doctrine; third, that the harms alleged in the first two counts entitle the States to declaratory relief under 28 U.S.C. § 2201.

Two weeks later, while their complaint remained pending, the States sought to preliminarily enjoin the offset provision's enforcement, arguing that they needed immediate relief before submitting the certification required by Section 802(d)(1). The district court denied that motion. It concluded that the States had met the three standing requirements injury-in-fact, causation, and redressability. It also found that the States sufficiently alleged a "credible threat" of enforcement in the form of a recoupment action. West Virginia v. U.S. Dep't of Treasury, No. 7:21-cv-00465-LSC, 2021 WL 2952863, at *7 (N.D. Ala. July¹⁴, 2021). But the district court determined that there was “virtually no likelihood” that the

1 The thirteen states were Alabama, Alaska, Arkansas, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, Utah, and West Virginia. The States sued the Treasury Department, Treasury Secretary, and Inspector General of the Treasury Department. We will refer to the plaintiffs as the States and the defendants as the Secretary.

22-10168 Opinion of the Court 7

Secretary would recoup any Rescue Plan funds before the ultimate resolution of the case. Id. at *9. Because the States could not establish a likelihood of irreparable harm during the pendency of the lawsuit, the district court did not issue a preliminary injunction.

On May 17, 2021, before the district court ruled on the States' motion for preliminary injunction, the Treasury Department issued an interim final rule to clarify the Rescue Plan's contours and scope. See Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26786 (May 17, 2021). Recognizing that "money is fungible,” the interim final rule creates a framework for deciding whether a state has improperly offset a reduction in net tax revenue with Rescue Plan funds. Id. at 26807–11. The rule makes clear that "failure to comply with the [offset provision's] restrictions on use may result in recoupment of funds.” Id. at 26811 (footnote omitted). And the rule provides a detailed recoupment procedure. Id. at 26811–12.

The rule sets the net tax revenue baseline for judging compliance with the offset provision at “fiscal year 2019 tax revenue adjusted for inflation.” Id. at 26808. It provides a four-part process to "determin[e] whether, and the extent to which, Fiscal Recovery Funds have been used to offset a reduction in net tax revenue” as compared to the 2019 baseline. Id. at 26807. As part of this rubric, recipient states must “identify and value the changes in law, regulation, or interpretation that would result in a reduction in net tax revenue." Id. If one of these changes results in a reduction from the 2019 baseline as adjusted for inflation, then a state must “identify

sufficient funds from sources other than the Fiscal Recovery Funds to offset the reduction in net tax revenue.” Id. (emphasis added). Permissible funding sources to offset a reduction in net tax revenue include "organic growth, increases in revenue (e.g., an increase in a tax rate), and certain cuts in spending." Id. But the rule prohibits recipient states from offsetting reductions in net tax revenue by cutting spending “in an area where” they had “spent Fiscal Recovery Funds." Id. at 26809.

Shortly thereafter, ten of the thirteen States² stipulated that they had certified their compliance with the offset provision to the Secretary, as required by Section 802(d), and had received Rescue Plan funds. Moreover, all thirteen States enacted tax-related laws (e.g., credits, exemptions, phaseouts, reductions) during the covered period.

The States moved for a permanent injunction and declaratory judgment. This time, the district court granted the States' motion and awarded them a permanent injunction. Like before, the district court concluded that the States had standing to sue. Turning to the merits, the district court reasoned that the offset provision was unconstitutionally ambiguous under the Spending Clause. Noting that (1) "[m]oney is fungible” and (2) the Act did not flesh out what "directly or indirectly” means, the district court concluded that receiving any Rescue Plan money could potentially

2 The ten states were Alabama, Arkansas, Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Utah, and West Virginia.

22-10168 Opinion of the Court 9

constitute an indirect offset “in [a state's] net tax revenue from a change in state law or policy." West Virginia v. U.S. Dep't of Treasury, 571 F. Supp. 3d 1229, 1250 (N.D. Ala. 2021). The Rescue Plan, the district court observed, left states holding the bag, with "no guidance on critical interpretive questions,” like how they can avoid indirectly offsetting net tax revenue with recovery funds. Id. at 1253. The Act is therefore inherently ambiguous, and that ambiguity may disincentivize the States in a way that unconstitutionally infringes on state sovereignty.

Addressing the interim rule, the district court determined that it did not cure the Act's constitutional defects. The district court explained that the Secretary appeared to concede that a federal rule cannot remedy a statute's facial unconstitutionality. The district court also believed that the rule was still too ambiguous on certain points.

Finding that (1) the States “suffered an irreparable injury," (2) no adequate remedy at law could “compensate for that injury," (3) balancing the parties' hardships favored the States, and (4) an injunction would serve the public interest, the district court permanently enjoined the Secretary from enforcing the offset provision. Id. at 1255 (quotation omitted). The district court did not reach the States' coercion and anti-commandeering concerns. Nor did it enter a declaratory judgment for the States because the permanent injunction would fully rectify the harm.

The Secretary timely appealed. The Secretary also implemented a final rule on January 27, 2022, which did not materially

differ from the interim final rule. See Coronavirus State and Local Fiscal Recovery Funds, 87 Fed. Reg. 4338 (Jan. 27, 2022).

II.

We will uphold a district court's decision to enter a permanent injunction unless we perceive an abuse of discretion. See Jones v. Governor of Fla., 975 F. 3d 1016, 1028 (11th Cir. 2020). We review underlying legal conclusions and a challenged statute's constitutionality de novo, but factual findings for clear error. Id.; Fresenius Med. Care Holdings, Inc. v. Tucker, 704 F. 3d 935, 939 (11th Cir. 2013).

III.

The States argue that the offset provision is unconstitutional for three independent reasons: first, the condition it imposes is not ascertainable under the Spending Clause; second, it is coercive under the Spending Clause; third, it violates the Tenth Amendment by unlawfully commandeering the States. Conversely, the Secretary contends that the suit is not justiciable and that, on the merits, the offset provision violates neither the Spending Clause nor the Tenth Amendment. Because we agree with the district court that (1) the suit is justiciable and (2) the condition imposed by the offset provision is not ascertainable, we do not address the States' remaining constitutional claims. We will start with the Secretary's justiciability arguments and then address the merits of the States' ascertainability claim.

22-10168 Opinion of the Court 11

A.

The Secretary contends that this case does not present a justiciable controversy and that the "posture of this suit is unprecedented." Appellants' Br. at 7. The Secretary makes two arguments on this front. First, she argues that the States lack standing to challenge the offset provision because the Secretary has not initiated a recoupment action against any of them. Thus, so the argument goes, because our interpretation of the offset provision would occur in a hypothetical context, it would constitute an improper exercise of judicial authority under Article III of the Constitution. Second, the Secretary's argument suggests that the States' challenge is moot because the Secretary's recent regulation makes it unlikely that the offset provision will be enforced against the States. The reasoning would be that, because the regulation adopts a limiting construction of the offset provision, the States are unlikely to act in a way that will result in a recoupment action going forward.

We address each of these arguments in turn. Although we recognize these arguments carry some persuasive force, we conclude that the States have standing and that the Secretary's regulation does not moot their ascertainability challenge.

1.

We start with standing. We assess Article III standing at the time the complaint is filed. See Trichell v. Midland Credit Mgmt., Inc., 964 F. 3d 990, 1003 (11th Cir. 2020). "Standing doctrine functions to ensure, among other things, that the scarce resources of

the federal courts are devoted to those disputes in which the parties have a concrete stake.” Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 191 (2000). Standing "in no way depends on the merits” of the plaintiff’s claim. Warth v. Seldin, 422 U.S. 490, 500 (1975). Instead, the “irreducible constitutional minimum of standing” requires three elements: (1) an "injury in fact" that is "concrete and particularized" and "actual or imminent," (2) a "causal connection between the injury and the conduct complained of," and (3) redressability. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (quotations omitted).

Starting with injury-in-fact, the States have two theories for why they have suffered an actual and concrete harm.³ First, the States argue that their inability to ascertain the condition imposed by the offset provision has already infringed, and continues to infringe, on the States’ sovereign prerogatives as parties to a contract with the federal government. Second, the States argue that they are subject to the threat of a recoupment action if they spend funds contrary to the offset provision. We agree that these theories establish that the States have suffered an injury-in-fact.

First, we conclude that the offset provision’s ambiguity has injured, and continues to injure, the States’ sovereign interests. The States are challenging a so-called “unconstitutional condition” that was attached to federal funding. See Bourgeois v. Peters, 387 F. 3d 1303, 1324 (11th Cir. 2004). Though not “all contract-law rules

3 The States also raise other grounds for injury-in-fact, which we do not reach.

22-10168 Opinion of the Court 13

apply to Spending Clause legislation,” Barnes v. Gorman, 536 U.S. 181, 186 (2002), we can analogize the relationship between Congress and the States in Spending Clause situations to that between contracting parties. In essence, the States say that they were coerced into accepting an offer with an unascertainable condition, they did accept the offer with the condition, and the terms of the resulting contract are presently in force and effect. Indeed, the Secretary concedes that the offset provision limits the ways in which the States can spend funds.

This injury to state sovereignty is, to be sure, intangible. But it is nonetheless concrete. States “are not normal litigants for the purposes of invoking federal jurisdiction” and may suffer injuries to their sovereignty that private parties do not. Massachusetts v. EPA, 549 U.S. 497, 518 (2007). That the offset provision restricts the ways in which states may reduce tax receipts or change tax rates heightens its effect on state sovereignty. See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 428 (1819) (noting that the power to tax “is essential to the very existence of government”).

Moreover, this injury has already occurred and is continuing. The offset provision is in effect until the “last day of the [last] fiscal year” in which a state spends the Act’s funds or returns them to the Secretary. 42 U.S.C. § 802(g)(1). And, by the Act’s terms, the funds are available until December 31, 2024. Id. § 802(a)(1). All the States have now accepted the deal with its allegedly unconstitutional condition, and that condition is a present and continuous infringement on state sovereignty. Any state that "has failed to

comply" with the offset provision is "required to repay to the Secretary an amount equal to the amount of funds used in violation of [the Act]." Id. § 802(e). To the extent the States seek a remedy to this sovereign injury, this litigation is not a pre-enforcement challenge. Instead, the States seek to remedy an injury that has already happened and that the States continue to experience.

We are not the first court of appeals to address this theory of state standing to sue over the offset provision, and we find the Ninth Circuit's reasoning on this point particularly persuasive. Analogizing to contract law, the Ninth Circuit reasoned that "[j]ust as a contract can be challenged under state law for containing ambiguous terms or being a product of duress, so too . . . the quasicontractual funding offer at issue here can be challenged by Arizona at the outset for offering conditions that are unconstitutionally ambiguous or coercive.” Arizona v. Yellen, 34 F. 4th 841, 853 (9th Cir. 2022). Because the injury to state sovereignty occurs when a state must accept or reject an unascertainable funding offer, the state does "not need to first violate a condition of an allegedly unconstitutional contract to have standing to challenge it." Id.; see also Henry v. Att❜y Gen., Ala., 45 F. 4th 1272, 1288 (11th Cir. 2022).

Turning to the States' second theory for an injury-in-fact, the States say that they are injured by the threat of a recoupment proceeding. The States submitted evidence that they have enacted tax cuts and related revenue laws that could reduce their net tax revenue and trigger the offset provision, which the Secretary is

22-10168 Opinion of the Court 15

committed to enforcing. This evidence, the States say, establishes their standing for a pre-enforcement challenge to the offset provision.

We also agree that the States have an injury-in-fact under this pre-enforcement theory. A plaintiff need not "expose himself to liability” to have standing to challenge the enforcement of a law. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128–29 (2007). Instead, in a pre-enforcement constitutional challenge, the injuryin-fact requirement can be satisfied by establishing "a realistic danger of sustaining direct injury” from "the statute’s operation or enforcement.” Ga. Latino All. for Hum. Rts. v. Governor of Ga., 691 F. 3d 1250, 1257 (11th Cir. 2012) (quotations omitted) (analyzing a constitutional challenge to a state statute). A plaintiff must establish "(1) that he has ‘an intention to engage in a course of conduct arguably affected with a constitutional interest,’ (2) that his conduct is ‘arguably proscribed,’ and (3) that he is subject to ‘a credible threat of enforcement.'" Speech First, Inc. v. Cartwright, 32 F. 4th 1110, 1119–20 (11th Cir. 2022) (quoting Susan B. Anthony List v. Driehaus, 573 U.S. 149, 159, 162 (2014)).

We believe the States have met the test for a pre-enforcement lawsuit. There is no question that the States intend to continue cutting taxes and modifying their overall revenue. All the States enacted revenue-related laws dealing with, among other things, tax credits, exemptions, phaseouts, and reductions after March³, 2021, the beginning of the Rescue Plan’s "covered period." Moreover, the States submitted a declaration by Alabama

State Senator Albritton, who noted that state legislatures must ensure that expenditures do not exceed estimated revenues and resources. This balancing exercise requires understanding how tax receipts will affect overall revenue, and state legislators often pass tax-related laws to assist with budget balancing and to benefit constituents. There is also no dispute that the Secretary intends to enforce the offset provision against the States if she thinks they have violated it. The Secretary’s interim final rule underscores that recoupment actions are still on the table if States impermissibly offset reductions in net tax revenue with Rescue Plan funds. Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. at 26808 (describing how the interim final rule "implements a process for recouping Fiscal Recovery Funds” used in violation of the Act).

The Secretary argues that the offset provision does not proscribe the States’ conduct because "its text makes clear” that States may cut taxes so long as they "pay" for a tax cut without using Rescue Plan funds. Appellants' Reply Br. at 2. This argument—that the offset provision is clear—goes to the merits of the States’ claims, not their standing to raise them. When we assess standing, we "'must be careful not to decide the questions on the merits for or against the plaintiff, and must therefore assume that on the merits the plaintiffs would be successful in their claims.'" Culverhouse v. Paulson & Co., 813 F. 3d 991, 994 (11th Cir. 2016) (quoting City of Waukesha v. EPA, 320 F. 3d 228, 235 (D.C. Cir. 2003)).

Reviewing the text of the statute for standing purposes, we believe the States have shown that the offset provision arguably

22-10168 Opinion of the Court 17

proscribes their conduct. The offset provision prohibits states from using federal funds to "either directly or indirectly offset a reduction in the[ir] net tax revenue” resulting from a change in state law “during the covered period that reduces any tax . . . or delays the imposition of any tax or tax increase.” 42 U.S.C. § 802(c)(2)(A). Money is fungible. By prohibiting both direct and "indirect" offsets, the provision arguably proscribes a state from accepting the money if it enacts any tax cut. The only way for the States to achieve unequivocal compliance with the Act is to refrain from cutting taxes during the covered period.

Having concluded that the States have suffered an injury-infact, we turn to the second and third elements of standing. The Secretary does not contest traceability and redressability, but we will address them anyway given our obligation to ensure our jurisdiction. See, e.g., Bischoff v. Osceola Cnty., 222 F. 3d 874, 877–78 (11th Cir. 2000); Univ. of S. Ala. v. Am. Tobacco Co., 168 F. 3d 405, 410 (11th Cir. 1999). The States’ injury is "fairly . . . trace[able]" to the challenged conduct, namely, the promulgation and enforcement of the allegedly unconstitutional offset provision. Lujan, 504 U.S. at 560 (alteration in original). And this injury is plainly redressable. No one disputes that—absent court intervention—the States are bound to comply with the offset provision and that the Secretary intends to enforce it going forward. Like any other contracting party bound to an objectionable provision in a contract, the States’ injury can be redressed by declaring that provision null and void. This is a standard remedy when a single provision of a contract is

contrary to public policy. See Restatement (Second) of Contracts § 178 & cmt. f (Am. L. Inst. 1981); id. § 183. And it redresses the States' injury by preventing the enforcement of the objectionable provision. See Harrell v. The Fla. Bar, 608 F. 3d 1241, 1257 (11th Cir. 2010) ("As for the redressability prong, if the challenged rules are stricken as unconstitutional, Harrell simply need not contend with them any longer.").

In short, the States argue that the agreement's terms are not "reasonably certain,” Restatement § 33(1), because no one knows what a "reduction in the net tax revenue” and “indirectly offset" mean. They contend that Congress cannot craft a deal that explains “only some of the strings attached." Appellees' Br. at 33. And they argue that, because of the offset provision's ambiguity, they cannot determine at what point a breach will occur. Id. § 33(2). The States request a judicial remedy so that they do not have to comply with any aspect of the offset provision, which they contend is unenforceable in all respects. The States have standing to make these claims.

2.

We turn now to the Secretary's related (and somewhat implicit) argument that, even if the States had standing to file this suit initially, it has become moot. “Mootness can occur due to a change in circumstances, or . . . a change in the law." Coral Springs St. Sys., Inc. v. City of Sunrise, 371 F. 3d 1320, 1328 (11th Cir. 2004). The Secretary says that she has disclaimed the broad reading of the offset provision that would stop the States from cutting taxes.

22-10168 Opinion of the Court 19

Accordingly, the Secretary does not intend to enforce the provision to recoup money based on tax cuts "as long as [the States] can pay for the tax cuts using their own funds." Appellants' Reply Br. at 2. The Secretary explains that she has formalized this reading of the offset provision in a regulation.

We cannot say that the Secretary's decision to disclaim a broad reading of the offset provision moots the States' ambiguity challenge. There is no doubt that the Secretary's narrow construction of the offset provision reduces its effect on state sovereignty. But the justiciability question is not quantitative; "rather, the focus is on the qualitative nature of the [plaintiffs] injury, regardless of how small the injury may be." See Salcedo v. Hanna, 936 F. 3d 1162, 1172 (11th Cir. 2019) (quotation omitted). Even if the Secretary gives it a narrow reading, the offset provision continues to limit how the States may use federal funds. To the extent the limitation is unascertainable, it remains an unconstitutional condition on those funds.

The Secretary cites the Eighth Circuit's decision that states do not have standing to challenge the constitutionality of the "broad interpretation” of the offset provision. Missouri v. Yellen, 39 F. 4th 1063, 1069–70 (8th Cir. 2022). But we think this case is distinguishable. In Missouri, unlike in this case, the state was "not challenging the Offset Restriction as written, but rather a specific potential interpretation of the provision.” Id. at 1069. The Secretary disclaimed that interpretation of the provision, and the court reasoned that it could not "declare, in the abstract, what a statute does

not mean.” Id. at 1070. Here, on the other hand, the States are challenging the offset provision’s ascertainability. They seek not a judicial determination of what it means, but a judicial determination that it is too ambiguous to be enforced in any respect. Even if we were to extend the Eighth Circuit’s reasoning on the standing question to apply in the mootness context, the Secretary’s regulation and litigating position do not moot that claim.

The Sixth Circuit has concluded that the Secretary’s embrace of a narrower construction, as represented by her regulation and litigation position, mooted certain state challenges to the offset provision. See Ohio v. Yellen, 53 F. 4th 983, 990–92 (6th Cir. 2022); Kentucky v. Yellen, 54 F. 4th 325, 340–41 & n.11 (6th Cir. 2022). The court explained that the Secretary had disclaimed enforcement of the offset provision except in limited circumstances. Kentucky, 54 F. 4th at 340–41. Addressing the states’ injuries, the court reasoned that “because the States failed to provide evidence that they intend to specifically violate the Rule (and provoke recoupment), and because Treasury established that there is no realistic prospect it will enforce the States’ expansive interpretation of the Offset Provision, we deem the imminent-recoupment and sovereign-authority theories moot.” Id. at 341.

We disagree with this reasoning. A case is moot "only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Knox v. Serv. Emps. Int’l Union, Loc. 1000, 567 U.S. 298, 307 (2012) (quotations omitted). Although the Secretary has adopted a narrow construction of the offset provision, she

22-10168 Opinion of the Court 21

has not disclaimed an intent to enforce the provision. Instead, she has done the opposite, adopting a regulation that warns the States that they must comply with a provision that they contend is unconstitutional in all respects. We see no basis in mootness doctrine to conclude that the Secretary’s willingness to provide a lesser remedy (a narrower construction) to address the States’ constitutional challenge moots the States’ request for a more substantial remedy (facial invalidation). “Even with the Rules, the States still need injunctive and declaratory relief to avoid Treasury’s enforcement of ARPA’s unconstitutionally vague conditions.” Kentucky, 54 F. 4th at 362 (Nalbandian, J., concurring in part and dissenting in part).

Our answer to the mootness question would be different if the Secretary had disclaimed an intention to enforce the allegedly unconstitutional provision at all. Indeed, “this Court has consistently held that a challenge to a government policy that has been unambiguously terminated will be moot in the absence of some reasonable basis to believe that the policy will be reinstated if the suit is terminated.” Troiano v. Supervisor of Elections in Palm Beach Cnty., 382 F. 3d 1276, 1285 (11th Cir. 2004). But an agency cannot "cure” a standardless grant of authority by "adopting in its discretion a limiting construction.” See Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 472 (2001). Likewise, an executive agency’s narrow construction cannot moot a plaintiff’s constitutional challenge when the very constitutional problem is that the statute provides too vague a standard. It is "the existence, not the imposition, of standardless requirements that causes” an injury. CAMP Legal

Def. Fund, Inc. v. City of Atlanta, 451 F. 3d 1257, 1275 (11th Cir. 2006); see also City of Lakewood v. Plain Dealer Publ❜g Co., 486 U.S. 750, 757, 772 (1988) (holding that a statute "placing unbridled discretion in the hands of a government official or agency" is unconstitutional). Despite the Secretary's regulation and her litigation position adopting a narrow construction of the offset provision, the States have a continuing interest in challenging the validity of the offset provision, and the Secretary has a continuing interest in defending its facial constitutionality.

Finally, as we have already explained, the States are not undifferentiated members of the public seeking to enjoin the enforcement of a law of general applicability. They are more like parties to a contract, seeking to adjudicate its terms. That contract provides funds until the end of 2024, and its obligations run until the "last day of the [last] fiscal year" in which the funds are spent or returned. 42 U.S.C. § 802(g)(1). We conclude that the States' lawsuit is not moot.

B.

We now turn to the merits of the States' constitutional claim. The States argue that the offset provision violates the Spending Clause because they cannot ascertain the condition it imposes on Rescue Plan funds. We agree.

The Spending Clause authorizes Congress to "lay and collect Taxes, . . . to pay the Debts and provide for the common Defence and general Welfare of the United States.” U.S. Const. art. I, § 8, cl.

1. This clause gives Congress a wide berth not only to tax and spend but also to exert influence on the states by attaching strings to federal funding. See Nat’l Fed’n of Indep. Bus. v. Sebelius (NFIB), 567 U.S. 519, 576 (2012) (opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.). Congress may, within limits, compel states to "tak[e] certain actions that [it] could not [otherwise] require them to take," and a state’s acceptance of the federal funds will generally constitute consent to the conditions imposed by Congress. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 686 (1999).

The Supreme Court’s leading authority on the limits of the Spending Clause is Pennhurst State School and Hospital v. Halderman, 451 U.S. 1 (1981). There, the Supreme Court held that, by virtue of the Spending Clause, Congress can amplify its enumerated Article I powers and influence state regulatory policy by "fix[ing] the terms on which it shall disburse federal money to the States.” Id. at 17. In this sense, "legislation enacted pursuant to the spending power" is a species of contract. Id. But the Court recognized that this broad authority is not limitless, and Congress must speak "unambiguously" and "with a clear voice" when it imposes conditions on federal funds. Id. Specifically, Congress must speak clearly enough for "the States to exercise their choice knowingly, cognizant of the consequences of their participation." Id. The Court explained that a state cannot knowingly accept a condition if it "is unable to ascertain what is expected of it." Id.

The Court elaborated on this ascertainability principle in South Dakota v. Dole, 483 U.S. 203 (1987). In Dole, the Court identified five elements that conditional funding grants must satisfy to pass constitutional muster under the Spending Clause: (1) the expenditure must "advance the general welfare"; (2) any attached condition must be "unambiguous[]"; (3) conditions must relate "to the federal interest in particular national projects or programs"; (4) conditions cannot violate another constitutional provision; and (5) conditions cannot "be so coercive [that] pressure turns into compulsion." See id. at 207–11 (quotations omitted). If the expenditure or condition does not satisfy these elements, then it is unconstitutional.

It is against this backdrop that we turn to the merits. The Secretary makes three arguments for why the offset provision is a proper exercise of Congress's spending powers. First, the Secretary contends that the ascertainability principle set out in Pennhurst— and refined in Dole—is a rule of statutory construction, not a basis for holding a congressional spending condition facially unconstitutional. Second, the Secretary posits that the offset provision is clear enough for the States to ascertain what is expected of them as a condition of accepting funds. Third, the Secretary says that her rule provided an ascertainable condition by resolving ambiguities in the offset provision. We are not persuaded.

22-10168 Opinion of the Court 25

1.

As an initial matter, the Secretary urges us to view Pennhurst's ascertainability principle and Dole's "unambiguous" requirement as rules of construction, not reasons to enjoin the enforcement of a spending condition. The Secretary argues that these are merely "tool[s] of statutory interpretation” to be applied "in resolving concrete disputes." Appellants' Reply Br. at 5. We believe our precedent compels a different result. But even if it did not, we think Dole and basic contract principles independently demand such a result.

We will start with our precedent. We addressed the ascertainability requirement in Benning v. Georgia, which involved a prisoner's claim that the State of Georgia had infringed on his right to practice his religion by denying him a kosher diet and not allowing him to wear a yarmulke. See 391 F. 3d 1299,1303 (11th Cir. 2004). He alleged that such conduct violated section³ of the Religious Land Use and Institutionalized Persons Act (RLUIPA), a federal statute that prohibited state prisons receiving federal funds from burdening prisoners' religious freedom. Id. RLUIPA "applie[d] strict scrutiny to government actions that substantially burden[ed]" prisoners' religious exercise and waived Georgia's sovereign immunity in "suits filed by prisoners to enforce” the Act. Id. at 1304-05.

Georgia defended the lawsuit on the grounds that section³ of RLUIPA was unenforceable because it was facially

26 Opinion of the Court 22-10168

unconstitutional. Id. at 1303. Specifically, Georgia argued that "the standard of least restrictive means is too ambiguous to allow a state an informed choice.” Id. at 1305. We disagreed. We explained that Congress must spell out a condition "clearly enough for the states to make an informed choice." Id. at 1306. But we concluded that condition was ascertainable because it (1) clearly caused "states [to] incur an obligation when they accept[ed] federal funds" and (2) imposed strict scrutiny, a well understood means-end test, which was "far from ambiguous." Id. at 1306–07. Thus, Congress validly exercised its spending power in enacting the statute, even if it did not "specifically identify and proscribe in advance every conceivable state action that would be improper." Id. at 1306 (quotation omitted). We held that "[i]t is sufficient for the text of RLUIPA to link unambiguously its conditions to the receipt of federal funds and define those conditions clearly enough for the states to make an informed choice." Id.

The Secretary’s rule-of-construction argument is inconsistent with Benning. To resolve that case, we followed a core tenet from Dole––"conditions on the state receipt of federal funds must be unambiguous.” Id. at 1305 (citing Dole) (emphasis added). And we applied it to Georgia’s argument that section³ of RLUIPA was constitutionally invalid on its face, resolving that claim on its merits. See id. at 1303–04, 1313. Benning therefore established the proposition that the ascertainability principle is more than a precatory rule of construction to be used in as-applied challenges—it is a binding constitutional command.

22-10168 Opinion of the Court 27

We think Benning is dispositive, but even if it were not, we would still reject the Secretary's argument on this front. The Supreme Court's precedents leave little doubt that the ascertainability requirement is more than a rule of construction. In Dole, for example, the Supreme Court expressly stated that a spending condition must be "unambiguous[]." 483 U.S. at 207 (quotation omitted). Likewise in Pennhurst, the Court said Congress must speak "unambiguously" when it imposes conditions on federal funds. 451 U.S. at 17. Neither Pennhurst nor Dole suggests that this clarity element is hortatory.

Similarly, Dole's treatment of coercion buttresses our belief that unascertainability alone can render a spending restriction facially unconstitutional. Dole made clear that coercion will sometimes rise to unconstitutional compulsion, which can render a spending restriction unenforceable. See 483 U.S. at 211. And the Supreme Court has enjoined spending conditions that flunked this coercion test. See NFIB, 567 U.S. at 579–81, 588 (opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.); id. at 681–89 (joint dissent of Scalia, Kennedy, Thomas, and Alito, JJ.). A lack of coercion is one of the five elements that a conditional funding grant must satisfy to pass constitutional muster under the Spending Clause. The Dole factors are not hierarchical; none of them, not even coercion, is owed preferential treatment by the courts. All five factors are equally important and equally required. It therefore cannot be true that the presence of coercion suffices to invalidate a spending condition, but a lack of clarity does not.

28 Opinion of the Court 22-10168

Finally, we think principles of contract law are also illustrative. Here, Congress, the offeror, has contracted with the States, the offeree. It is hornbook contract law that an offeree cannot accept a bargain’s terms "so as to form a contract unless the terms . . . are reasonably certain.” Restatement (Second) of Contracts § 33(1) (Am. L. Inst. 1981). "[R]easonably certain" terms "provide a basis for determining" whether a breach occurred and "for giving an appropriate remedy." Id. § 33(2). Moreover, the problem of indefiniteness is not always a mere issue of construction in contract law; it may go to the validity of the contract itself. See id. § 33 cmt. a (noting that "determining whether a manifestation of intention is intended to be understood as an offer” may require ensuring that the agreement can "be[] given an exact meaning and that all the performances to be rendered [are] certain”); 17A Am. Jur. 2d Contracts § 188 (2022) ("Definiteness as to material matters is of the very essence of contract law, and impenetrable vagueness and uncertainty will not do."). An enforceable contract "must be sufficiently definite as to its essential or material terms," including "subject matter, quantity, and duration, so that the promises and performance to be rendered by each party are reasonably certain." 17A Am. Jur. 2d Contracts § 188 (2022) (footnotes omitted).

Accordingly, our decision in Benning compels today’s holding that ascertainability is not merely a rule of construction, but a stand-alone constitutional requirement. Even without this precedent, however, we would hold that spending restrictions imposed by Congress must be ascertainable to be enforceable. We therefore

22-10168 Opinion of the Court 29

reject the Secretary’s argument that a spending condition may be facially constitutional even if it is not ascertainable outside of an asapplied challenge.