IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 20-40368

In re: HIDALGO COUNTY EMERGENCY SERVICE FOUNDATION, 

Debtor.

HIDALGO COUNTY EMERGENCY SERVICE FOUNDATION, 

Appellee,

versus

JOVITA CARRANZA, U.S. Small Business Administration, 

Appellant.

Appeal from the United States District Court 

for the Southern District of Texas

Before SMITH, HIGGINSON, and ENGELHARDT, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

As the reality of the coronavirus global pandemic took hold, markets 

plummeted and unemployment soared. Congress responded with the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat. 

United States Court of Appeals

Fifth Circuit

FILED

June 22, 2020

Lyle W. Cayce

Clerk

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No. 20-40368 

2

281 (2020) (“CARES Act”). The CARES Act, inter alia, made $659 billion of 

government-guaranteed loans available to qualified small businesses through 

the Paycheck Protection Program (“PPP”).1 The PPP is implemented under 

section 7(a) of the Small Business Act, 15 U.S.C. § 636, which is administered 

by the Small Business Administration (“SBA”).

The SBA quickly promulgated several regulations concerning PPP 

eligibility. At issue here is its determination that “[i]f [an] applicant . . . is the 

debtor in a bankruptcy proceeding, . . . th[at] applicant is ineligible to receive 

a PPP loan.” Business Loan Program Temporary Changes; Paycheck Protection Program—Requirements—Promissory Notes, Authorizations, Affiliation, 

and Eligibility, 85 Fed. Reg. 23,450, 23,451 (Apr. 28, 2020).

Hidalgo County Emergency Service Foundation (“Hidalgo”)—which is in 

Chapter 11 bankruptcy—alleges that it was denied a PPP loan based on its

status as a bankruptcy debtor. It filed an adversary proceeding against the 

SBA in bankruptcy court, contending that the SBA’s decision to preclude 

bankrupt parties from obtaining PPP loans (1) violates 11 U.S.C. § 525(a), 

which prohibits discrimination based on bankruptcy status under certain 

circumstances, (2) is “arbitrary, capricious, an abuse of discretion, or otherwise 

not in accordance with law,” 5 U.S.C. § 706(2)(A), and (3) is “in excess of 

statutory jurisdiction, authority, or limitations, or short of statutory right,” id.

§ 706(2)(C). 

The bankruptcy court sided with Hidalgo and issued a preliminary 

injunction mandating that the SBA handle Hidalgo’s PPP application without 

consideration of its ongoing bankruptcy. The district court stayed the 

1 Congress initially funded the PPP with $349 billion, CARES Act § 1102(b)(1), 

134 Stat. at 293, then increased that to $659 billion, Paycheck Protection Program and 

Health Care Enhancement Act, Pub. L. No. 116-139, § 101(a)(1), 134 Stat. 620, 620 (2020).

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preliminary injunction and certified the case for direct appeal to the Fifth 

Circuit. We granted permission to take the direct appeal under 28 U.S.C. 

§ 158(d).

As a threshold matter, the SBA Administrator contends that the Small 

Business Act forecloses injunctive relief by providing that “no . . . injunction . . . 

shall be issued against the Administrator or his property.” 15 U.S.C. 

§ 634(b)(1). Additionally—and as Hidalgo concedes—“this [c]ircuit has concluded that all injunctive relief directed at the SBA is absolutely prohibited.”2

Hidalgo requests that we create “an exception” to that absolute prohibition

“under the extreme facts and highly compressed time frame presented in this 

case” or that the doctrine “should be revisited entirely.” Under our wellrecognized rule of orderliness, however, a panel of this court is bound by circuit 

precedent. See Teague v. City of Flower Mound, 179 F.3d 377, 383 (5th Cir. 

1999).

The issue at hand is not the validity or wisdom of the PPP regulations 

and related statutes, but the ability of a court to enjoin the Administrator, 

whether in regard to the PPP or any other circumstance. Because, under wellestablished Fifth Circuit law, the bankruptcy court exceeded its authority 

when it issued an injunction against the SBA Administrator, we VACATE its 

preliminary injunction.

2 Enplanar, Inc. v. Marsh, 11 F.3d 1284, 1290 n.6 (5th Cir. 1994) (emphasis added) 

(quotation marks omitted); see also Valley Constr. Co. v. Marsh, 714 F.2d 26, 29 (5th Cir. 

1983) (“The Small Business Act, 15 U.S.C. § 634(b)(1), precludes injunctive relief against the 

SBA.”); Expedient Servs., Inc. v. Weaver, 614 F.2d 56, 58 (5th Cir. 1980) (“Section 634(b)(1) 

provides, inter alia, that no ‘injunction . . . or other similar process . . . shall be issued against 

the Administrator.’ . . . [A] suit praying solely for injunctive relief against the Administrator 

is barred by the language of § 634(b)(1). Since we have determined that the sole relief prayed 

for in the instant case was injunctive in nature, the suit should have been dismissed.”). 

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