Arizona sues Biden administration over threat to claw back COVID-19 funds

Arizona Gov. Doug Ducey (R) on Friday sued the Biden administration after it threatened to claw back its COVID-19 funding unless the state stops sending it to schools without mask mandates.

Last week, the Treasury Department warned the state in a letter that it would move to recoup COVID-19 relief that had been issued to the state if Arizona did not properly direct the funding.

The Biden administration had said that programs or services that include conditions counter to curbing COVID-19 spread could not use federal funding.

In Arizona, up to $7,000 can be provided per student to parents whose children go to schools that impose "unnecessary closures and school mandates," thereby creating educational and financial barriers. In addition to that $10 million Educational Recovery Benefit Program, the state also has a Plus-Up Grant Program where only schools who do not impose mask mandates can receive funds.

"Treasury's actions far exceed the statutory authority granted to it under" the American Rescue Plan Act, Ducey's lawsuit against the Biden administration said.

"Nothing in that underlying statute authorizes Treasury to condition the use of [Coronavirus State and Local Fiscal Recovery Fund] monies on following measures that, in the view of Treasury, stop the spread of COVID-19," it added. "If Congress had truly intended to give Treasury the power to dictate public health edicts to the States, and recoup or withhold SLFRF monies based on an alleged lack of compliance with such edicts, it would have spoken clearly on the matter. It did not."

The lawsuit claimed that even if the Treasury had been given broad authority over setting conditions to COVID-19 relief aid, it would have violated the Constitution's spending clause and a nondelegation doctrine.

"This Court should declare the Final Rule invalid, declare that Treasury has acted arbitrarily and capriciously and has abused its discretion, and enjoin Treasury's legislative overreach," the lawsuit said, which was filed in the U.S. District Court for the District of Arizona.

The lawsuit comes as the Biden administration grapples with a series of lawsuits waged by mostly Republican state officials over COVID-19 protocols, particularly vaccine mandates. Several Republican governors, including Ducey, have spoken out against mask mandates, though health officials have argued they will help prevent further spread of the virus.

The Hill has reached out to the Treasury Department for comment.