Whether the offset provision of the American Rescue Plan Act's Coronavirus State Fiscal Recovery Fund, which restricts States from using federal funds to offset reductions in net tax revenue from tax cuts, is an impermissible condition on federal spending under the Spending Clause due to vagueness or coercion

No question identified. : would be invoked under 28 U.S.C. 1254(1). A copy of the opinion of the court of appeals, which is reported at 54 F.4th 325, is attached. App., infra, la-5la. 1. In the American Rescue Plan Act of 2021 (ARPA), Pub. L. No. 117-2, Tit. IX, Subtit. M, 135 Stat. 223 (42 U.S.C. 802 et seq.), Congress established a Coronavirus State Fiscal Recovery Fund. 42 U.S.C. 802. The Fund provided nearly $200 billion in new federal grants to help States and the District of Columbia “mitigate the fiscal effects” of the COVID-19 pandemic. 42 U.S.C. 802 (a) (1); see 42 U.S.C. 802 (b) (3) (A). Section 802(c) establishes parameters for States’ “Use of funds.” 42 U.S.C. 802(c) (1) (emphasis omitted). Section 802 (c) (1) provides that a State may use fiscal recovery funds to cover broadly defined categories of costs incurred through December 31, 2024, including costs related to the pandemic and certain infrastructure investments. Ibid. As a corollary, in order to ensure that States use the funds for the general purposes that Congress specified, Section 802(c) (2) establishes two “restriction[s] on [the] use” of fiscal recovery funds. 42 U.S.C. 802(c) (2) (emphasis omitted). The restriction at issue here, the offset provision, provides that: A State or territory shall not use the funds provided under this section * * * to either directly or indirectly offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a 3 deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase. 42 U.S.C. 802(c) (2) (A). If a State does not use its fiscal recovery funds in conformity with the conditions in Section 802(c), the Treasury Department may require the State to repay “an amount equal to the amount of funds used in violation of” Section 802(c). 42 U.S.C. 802(e). Congress authorized the Treasury Department “to issue such regulations as may be necessary or appropriate to carry out” Section 802. 42 U.S.C. 802(f). In May 2021, the Treasury Department published an interim final rule implementing Section 802, including the offset provision. Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786 (May 17, 2021); see id. at 26,807-26,811, 26,823. In January 2022, the Treasury Department issued a final rule, which implements the offset provision in substantially the same manner as the interim final rule. Coronavirus State and Local Fiscal Recovery Funds, 87 Fed. Reg. 4338 (Jan. 27, 2022); see id. at 4423-4429, 4452-4453. In brief, the Act and regulations make clear that no recoupment of funds will occur if a State cuts taxes but does not use fiscal recovery funds to pay for the cuts. 2. The States of Kentucky and Tennessee have accepted their allotments of fiscal recovery funds and received approximately $2.1 billion and $3.7 billion respectively. D. Ct. Doc. 23, at 11 (June 21, 2021). They also filed this suit, asserting that the offset provision is an unlawful condition on the grant of funds they accepted. Id. at 19-25. The U.S. District Court for the Eastern District of Kentucky granted summary judgment to the States and permanently enjoined enforcement of the offset provision against them. App., infra, Jla-87a. The court held that both States had Article III standing, id. at 73a-75a, and that the offset provision was unduly coercive and thus exceeded Congress’s power under the Spending Clause due primarily to “the sheer size of the federal government’s offering” of funds, id. at 79a; see id. at 75a-82a. 3. The court of appeals affirmed in part and reversed in part. App., infra, la-5la. As an initial matter, the court held that Kentucky’s claim was nonjusticiable and vacated the district court’s injunction barring enforcement of the offset provision against Kentucky. Id. at 20a. The court of appeals determined, however, th