How the Biden administration will try to save its student loan relief plan at the Supreme Court

Published

2 years ago

February 26, 2023

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President Biden’s student loan relief plan faces a do-or-die moment on Tuesday as it reaches the Supreme Court for oral arguments.

The up to $20,000 in debt relief that could go to millions of Americans faces two challenges: one from six Republican-led states, Biden v. Nebraska, and another from two student loan borrowers, Department of Education v. Brown.

Biden’s plan to save one of his biggest campaign promises hinges on two arguments.

The administration says that Education Secretary Miguel Cardona had the authority to forgive the debt under the Higher Education Relief Opportunities for Students (HEROES) Act.

But legal observers suggest the closer question could be whether the justices reach the merits at all. The Biden administration contends that neither group of challengers has standing, meaning the legal capacity to sue.

With the lower courts placing the plan on hold, the Biden administration now must face a conservative-majority Supreme Court in its efforts to give borrowers relief.

Here is what you need to know about the legal issues in the two student debt relief cases: What is the HEROES Act?

The Higher Education Relief Opportunities for Students, or HEROES, Act has only recently come back into focus, but it was passed two decades ago with bipartisan support as the country headed to war following the 9/11 terror attacks.

The law gives the education secretary authority to “waive or modify” federal student financial assistance programs “as the Secretary deems necessary in connection with a war or other military operation or national emergency.”

The Trump administration began using HEROES Act authority to pause student loan payments after declaring the coronavirus pandemic a national emergency in 2020.

After Biden took office, his administration extended the emergency and the payment pause before announcing the debt relief plan last year.

The administration has said the HEROES Act’s plain text authorizes Cardona to forgive the debts, and that his decision to do so was reasonable. He has put forward data showing that many borrowers are at risk of defaulting on their loans if the payment pause ends without the debt relief.

“The federal government provides relief to people affected by crises all the time, and that relief flows not just immediately after the crisis, but in the months and years afterwards,” said Jonathan Miller, chief program officer at the Public Rights Project, which filed a brief supporting the administration on behalf of local governments.

“So I think this is a perfectly reasonable and appropriate step for the Secretary to take, given all the information that was before him in the department at the time,” Miller added.

After the Supreme Court took up the challenges, Biden announced the COVID-19 emergency will end in May, but the administration says that doesn’t affect its debt relief plan.

Meanwhile, the administration has argued that ending the emergency moots a separate Supreme Court case involving Title 42, which limits migrants’ ability to seek asylum on public health grounds.

But the White House believes student debt relief is different because it concerns economic consequences that will persist beyond the emergency, rather than stopping the spread of disease, according to people familiar with the administration’s legal strategy.

“Our debt relief plan is needed to prevent defaults and delinquencies as student borrowers transition back to repayment after the end of the payment pause,” an administration official said. “The national emergency formally ending does not change that fact. It also does not change the legal justification for the plan.” How have the courts ruled so far?

Federal appeals courts have blocked the plan in both cases pending further action by the Supreme Court.

In the challenge from the conservative states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — a three-judge panel on the 8th Circuit Court of Appeals, all appointed by Republican presidents, issued a temporary injunction in the fall.

A federal trial judge in Texas ruled in favor of the individual challengers and separately blocked the debt relief plan in November. The 5th U.S. Circuit Court of Appeals later upheld that ruling.

The Biden administration appealed both cases to the Supreme Court, and the justices agreed in December to take up both cases. What do the plan’s opponents say?

Both groups of challengers contend Cardona overstepped his authority under the HEROES Act.

The individual borrowers argue he was required to provide a comment period on the proposal before implementing it.

Both groups argue the debt relief plan invokes the “major questions” doctrine, which requires Congress to speak clearly when authorizing an agency to decide matters of vast economic and political significance.

Echoing a lower court ruling, the plan’s critics assert that taking the administration’s position means the executive branch could cite the pandemic’s lingering effects even 10 years down the road to forgive the debts without consulting Congress.

“This case is not so much about the wisdom of that decision. It’s about in a democratic, self-governing society, how are we going to make these kinds of decisions?” said Casey Mattox, vice president for legal and judicial strategy at Americans for Prosperity, which filed an amicus brief supporting the challengers.

The court has cemented the major questions doctrine in three recent cases: stopping the Centers for Disease and Control and Prevention’s (CDC) eviction freeze during the pandemic, blocking the Biden administration’s vaccine-or-test mandate for large employers and striking down a power plant rule last June.

Thomas Berry, editor-in-chief of “Cato Supreme Court Review” at the Cato Institute, which filed an amicus brief siding with the challengers, said the precedents give a clear indication that a majority of the justices will be skeptical of the debt relief plan.

“If they reach the merits, I would be fairly confident that the action will be struck down,” Berry said. “I think the closer question is whether they reach the merits at all.” Biden admin argues challengers lack standing to sue

The Biden administration believes none of the plaintiffs have standing to challenge the debt relief.

Three states cited economic impacts from how some borrowers are now consolidating their loans, and four said their tax revenues will take a hit.

Missouri shows perhaps the most compelling theory by arguing the plan will harm its student loan service, legal observers say, but the administration is likely to push back that any harm is still speculative.

“I just don’t think it really comports here, because it’s very clear that loan forgiveness ultimately is a net benefit for the states,” said Miller.

His group’s brief argues that forgiveness would make it easier for borrowers to start a business or own a home, spurring economic growth. Republicans request documents from Biden’s Supreme Court commission Appeals court rules North Carolina can’t ban undercover cameras from PETA

The two individual borrowers, who did not qualify for the relief, contend that they can bring their suit because Cardona’s failure to provide a comment period unfairly deprived them of a concrete interest.

The Biden administration asserts stopping the debt relief would not redress their injury, a component needed for standing.

“That judgment leaves Brown’s financial position unchanged; she would still receive no loan forgiveness,” the administration wrote in its brief. “And it would leave Taylor worse off than before; he would receive neither the $10,000 the plan provides nor the $20,000 he purports to seek, but instead nothing at all.”

Politics

More than 36,000 migrants crossed English Channel to UK in 2024 – up 25% on 2023

Published

17 mins ago

January 1, 2025

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More than 36,000 migrants crossed English Channel to UK in 2024 - up 25% on 2023

A total of 36,816 migrants crossed the English Channel to the UK in 2024, provisional government figures show.

The figure is up 25% on 2023 when 29,437 people arrived in small boats.

The number successfully making the journey in 2024 is the second-highest since records began in 2018. The total, however, is down 20% on the record 45,774 arrivals in 2022.

The number of people who died while making the hazardous journey across the busiest shipping lane in the world was not published in the Home Office data, though 2024 was considered the deadliest for Channel crossings.

According to the French coastguard 53 people died across the 12 months.

The number of people who have made the crossing has jumped significantly in recent years.

In 2018, when the figures were first collated, there were 299 people who arrived, in 2019 there were 1,843 which more than quadrupled to 8,466 in 2020 before tripling to 28,526 individuals in 2021.

Those fleeing countries such as Ukraine and Afghanistan have safe and legal routes to the UK open to them.

Refugees recognised by the UN High Commissioner for Refugees and close family members of refugees can apply to legally settle in the UK, as can people escaping Hong Kong.

Others can arrive via alternative routes, but these are sometimes illegal and can rely on criminal gangs and people smugglers.

The last crossings of the year took place on 29 December, when 291 people made the journey from France in six boats.

Weather is a large determinant of whether people risk the voyage. Stormy weather means fewer take a chance, while calmer conditions see more boats launching.

A Home Office spokesperson said: “The people-smuggling gangs do not care if the vulnerable people they exploit live or die, as long as they pay. We will stop at nothing to dismantle their business models and bring them to justice.”

The National Crime Agency said it has around 70 live investigations into organised immigration crime or human trafficking.

Both biggest UK political parties have vowed to bring down the number of people crossing the Channel with Labour saying they’ll “smash the gangs”.

Former prime minister Rishi Sunak made stopping small boat crossings one of the five key pledges of his premiership.

Environment

Starting today, California is coming for your e-bike throttles

Published

33 mins ago

January 1, 2025

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Starting today, California is coming for your e-bike throttles

Last September, California Governor Gavin Newsom signed into law SB-1271, which redefines and adds to several electric bicycle regulations in the state. Chief among them is a clarification of the three-class e-bike system, which is likely to now rule that many of the throttle-enabled electric bikes currently available and on the road in California will no longer be street legal.

As a refresher, California has long used the same three-class system employed by most states in the US to classify electric bicycles and ensure their road-legal status.

Class 1 e-bikes have been limited to 20 mph (32 km/h) on pedal assist, while Class 2 e-bikes can reach the same 20 mph speed but with a throttle (a hand-activated device to engage the motor without pedaling). Class 3 e-bikes have been permitted to reach faster speeds of up to 28 mph (45 km/h) on pedal assist, but can’t use a throttle to reach that speed. All three have been limited to a generally accepted “continuous power rating” of 750W, or one horsepower. That’s important, but more on that in a moment.

The main issue over the years with interpreting the three-class system is whether or not Class 3 e-bikes are permitted to have throttles installed at all, even if they don’t work above 20 mph. Most e-bike makers in the US interpret the law to mean that Class 3 e-bikes can have a handlebar-mounted throttle, but that it must cut out at 20 mph. After that point, the motor can help to achieve faster speeds of up to 28 mph, but only when the rider is pedaling.

California’s new clarification of the three-class system now codifies that Class 1 and Class 3 e-bikes can not be capable of operating on motor power alone. In other words, a Class 1 or Class 3 e-bike can not have any functional hand throttle to power the motor without pedal input, regardless of the speed the throttle can help the bike reach. Throttles are still legal, but purely on e-bikes marketed and sold as Class 2 e-bikes.

The text of the law has now been updated to read that Class 1 and Class 3 e-bikes are bicycles “equipped with a motor that provides assistance only when the rider is pedaling, that is not capable of exclusively propelling the bicycle,” with one specific exception.

That exception is a throttle or walk button that powers the bike up to 3.7 mph. Why 3.7 mph? Likely because that is exactly 6 km/h, which is the regulation used in most EU countries that allow throttles to operate up to 6 km/h. That regulation exists because in such cases, the walking-speed throttle can essentially be used as a parking assist feature or to slowly roll the bike under its own power for repositioning purposes.

Under the new California law, Class 1 and Class 3 e-bikes with throttles can only be powered by the throttle up to 3.7 mph. Class 2 e-bikes remain permitted to feature throttles that allow the e-bike to be exclusively powered by the throttle up to 20 mph.

The law also affects motor power ratings, removing some ambiguity in the way manufacturers have often rated electric bicycle motor power output. The new law removes the word “continuous” from the legal definition, instead defining an e-bike as a bicycle with operable pedals and “an electric motor that does not exceed 750 watts of power.”

In the past, most e-bike legal definitions in the US have limited electric bicycle motors to a maximum “continuous power” rating of 750W, or approximately one horsepower. The continuous power is the amount of power a motor can output indefinitely, without overheating. However, depending on their designs, electric motors are capable of outputting higher power for shorter periods of time. For example, many nominally 750W electric motors with sufficient thermal mass for effective cooling can output over 1,000W of power for several minutes or 1,500W for several seconds. This extra power is often useful when climbing hills or accelerating from a stop, scenarios that generally require only a few seconds or minutes of higher power.

The actual amount of power output by a nominally 750W motor depends on the motor’s design as well as the electronic limits programmed by the e-bike maker.

This is why it is common to see electric bicycles in the US advertised as featuring 750W motors that output several hundred watts higher of peak power. In practice, nearly all 750W nominally-rated e-bike motors found in the US output higher peak ratings.

The same game is played in Europe, albeit less openly, when it comes to the lower EU-defined e-bike power limit of 250W. Major German motor makers such as Bosch and Brose manufacture a range of e-bike motors rated at 250W, but that can be easily dynamometer-tested to reveal an output of several hundred watts higher under peak loading conditions.

The new California law is likely to create uncertainty in the US e-bike industry, where nearly all e-bike companies offer their products in many states and generally don’t produce multiple formats to comply with different state laws.

Unlike in Europe, the US e-bike market is dominated by throttle-controlled electric bicycles. And unlike Europeans, Americans largely operate e-bikes by throttle.

Of course, plenty of Class 1 throttle-less e-bikes exist and have been sold in the US, but sales figures clearly underscore the trend that throttle-enabled electric bikes are the predominant type of e-bikes in the US. Among those, Class 3 e-bikes capable of 28 mph (45 km/h) have proven incredibly popular, with riders often cruising at 20 mph (32 km/h) on throttle only when not accessing the higher top speed enabled by pedaling on most Class 3 e-bikes.

Under the new law, Class 3 electric bicycles capable of speeds up to 28 mph will no longer be able to feature a functional throttle. That means starting today, if a manufacturer wants to sell a Class 3 e-bike in California, it must come without a functional throttle. And if a rider in California wants to use a Class 3 e-bike on California roads and bike lanes, but it is found to have functional throttle, that rider could be on the hook for a non-compliant vehicle.

It is not clear whether previously manufactured e-bikes could be grandfathered in under the new law, similar to how pre-1985 cars in California aren’t required to have seatbelts.

Can e-bike makers still skirt around the new law?

Yes, they can.

The way the law is written, there is limited yet sufficient room for e-bike makers to wiggle around the letter of the law in California. Yes, retailers will no longer be able to market or sell a Class 3 e-bike with a functional throttle. But even today, most companies ship their 28 mph-capable electric bikes as Class 2 e-bikes that are limited to 750W and 20 mph, throttle included.

Riders who wish to reach higher speeds of up to 28 mph are then required to enter the settings menu of their e-bike and adjust the speed limiter up to a higher figure, usually maxing out at 28 mph.

Many of the most popular Class 3 e-bikes we think of in the US market are technically marketed as Class 2 e-bikes that are merely capable of having their pedal assist speed unlocked to 28 mph. This practice would technically meet the requirements of the new California law.

Technically, the new California law would not prevent the sale of user-modifiable Class 2 e-bikes as long as the throttle-enabled electric bike 1) is listed as Class 2 in its marketing, 2) could only be user-modified to reach speeds above 20 mph on pedal assist and not by throttle, and 3) the motor remained limited to 750W of power even after user modification. The bikes couldn’t be marketed by the manufacturer as Class 3 e-bikes if they have a throttle, but as long as they are marketed as Class 2 e-bikes, the language of the law as written does not prevent them from being sold with programming that allows them to be modified to reach speeds up to 20 mph on throttle and to reach speeds higher than 20 mph on pedal assist, provided that the motor power does not surpass 750W. Thus, the biggest immediate impact of this law on many manufacturers is that they would no longer be able to advertise their peak power ratings, and would need to hide behind a generic “750W” label.

That isn’t to say that the e-bike would still fit the legal definition of an electric bicycle in California after being “unlocked” for higher-speed pedal assist. It would no longer be a legal e-bike in California, since it can exceed 20 mph AND would have a functional throttle installed (even if the throttle is inactive above 20 mph). However, at that point, it would have become the rider’s responsibility to physically remove the throttle from the bike so that it again conforms to the new law as a now throttle-less Class 3 e-bike.

This is because the law only outlaws the sale of e-bikes that are intended to be unlocked to reach speeds above 20 mph with a throttle, or which are intended to be unlocked to power levels above 750W. As long as the e-bike’s throttle still cuts out at 20 mph and the motor doesn’t exceed 750W, the bike could technically be capable of being unlocked to travel at higher speeds (actually, even higher than 28 mph) purely on pedal assist and still be permitted for sale – even if it would no longer be considered legal for riding on public roads in its unlocked state.

Theoretically, manufacturers could also be compliant by adjusting their e-bikes’ firmware so that unlocking the 28 mph speed would also electronically remove throttle functionality above 3.7 mph, but this would likely be a no-go for most American e-bike shoppers who rely on occasional or frequent throttle use at speeds up to 20 mph. Practically speaking, most are likely to either advise their customers to remove their throttle in California if unlocking 28 mph speeds, or simply avoid addressing the issue altogether as the law then puts the onus on the rider.

To summarize, e-bike makers could legally sell throttle-enabled electric bikes that conform to Class 2 regulations, but that are user-modifiable to faster than 20 mph on pedal assist, and the bike would only become illegal under California law once that modification is performed, which has now become the responsibility of the rider.

I’m not saying this is right or fair. I’m merely saying that it doesn’t take an expensive law degree to see the cargo bike-sized gap in the language of this new law.

What does this mean for the industry?

Because the user-unlocking higher speed pedal assist loophole still exists for the sale of throttle e-bikes in California, this law will first impact the e-bikes that are capable of operating at more than 20 mph on throttle only. Some popular US-based electric bike brands, such as SUPER73, are well known for offering “off-road modes” that allow faster throttle operation, though this is more common among Asian-based electric bike brands. We’ve seen plenty of these types of e-bikes before, and while they are widely considered to be outside the three-class system, there is no shortage of options on the market.

The new law clearly outlaws such e-bikes from being sold in California, and riders of these out-of-class electric bikes will now find that their e-bike is no longer considered an e-bike under California law. The feature to reach more than 20 mph on throttle-only is likely to begin fading from future models as companies realize they need to comply with the laws in the largest e-bike market in the US.

The bigger question will be how this affects future legislation in other states or at the federal level, and if the user-unlocking workaround is addressed in the future. Additionally, whether or not this new law is actually enforced will also determine its impact in practice.

Of note, as these new e-bike regulations are currently being implemented, California law still allows anyone holding a basic Class C driver’s license, obtainable at age 16, to operate large cars, SUVs, and trucks weighing up to 26,000 lb (12,000 kg) on public roadways.