                                PUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                               No. 15-1093


UNITED STATES ex rel. JON H. OBERG,

                 Plaintiff - Appellant,

           v.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY,

                 Defendant – Appellee,

           and

NELNET, INC.; KENTUCKY HIGHER EDUCATION STUDENT LOAN CORP.;
SLM   CORPORATION;    PANHANDLE    PLAINS   HIGHER    EDUCATION
AUTHORITY; BRAZOS GROUP; ARKANSAS STUDENT LOAN AUTHORITY;
EDUCATION    LOANS   INC/SD;    SOUTHWEST   STUDENT    SERVICES
CORPORATION; BRAZOS HIGHER EDUCATION SERVICE CORPORATION;
BRAZOS HIGHER EDUCATION AUTHORITY, INC.; NELNET EDUCATION
LOAN   FUNDING,    INC.;   PANHANDLE-PLAINS    MANAGEMENT   AND
SERVICING CORPORATION; STUDENT LOAN FINANCE CORPORATION;
EDUCATION    LOANS    INC.;    VERMONT    STUDENT    ASSISTANCE
CORPORATION,

                 Defendants.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.    Claude M. Hilton, Senior
District Judge. (1:07-cv-00960-CMH-JFA)


Argued:   May 12, 2015                      Decided:   October 21, 2015


Before TRAXLER, Chief Judge, and GREGORY and KEENAN, Circuit
Judges.
Vacated and remanded by published opinion. Chief Judge Traxler
wrote the opinion, in which Judge Gregory and Judge Keenan
concurred.


ARGUED: Bert Walter Rein, WILEY REIN LLP, Washington, D.C., for
Appellant.    Paul D. Clement, BANCROFT PLLC, Washington, D.C.,
for Appellee. ON BRIEF: Michael L. Sturm, Brendan J. Morrissey,
Stephen J. Obermeier, WILEY REIN LLP, Washington, D.C., for
Appellant.   John S. West, Megan C. Rahman, Richmond, Virginia,
Christopher G. Browning, Jr., TROUTMAN SANDERS LLP, Raleigh,
North   Carolina,    for  Appellee  Vermont   Student  Assistance
Corporation; George W. Hicks, Jr., Raymond P. Tolentino,
BANCROFT PLLC, Washington, D.C., Joseph P. Esposito, Jill M.
deGraffenreid, HUNTON & WILLIAMS LLP, Washington, D.C., Daniel
B. Huyett, Neil C. Scur, STEVENS & LEE P.C., Reading,
Pennsylvania,    for   Appellee  Pennsylvania   Higher  Education
Assistance Agency.




                               2
TRAXLER, Chief Judge:

       The        Pennsylvania        Higher          Education       Assistance   Agency

(“PHEAA”), was established by the Commonwealth of Pennsylvania

in 1963 “to improve access to higher education by originating,

financing, and guaranteeing student loans.”                            United States ex

rel. Oberg v. Pa. Higher Educ. Assistance Agency (“Oberg II”),

745 F.3d 131, 135 (4th Cir. 2014).                      In addition to administering

state-funded grant and scholarship programs on behalf of the

Commonwealth, PHEAA conducts nationwide lending, servicing, and

guaranteeing           activities,    and       it    “now    constitutes    one   of   the

nation’s largest providers of student financial aid services.”

Id. at 138.

       Dr.    Jon      H.   Oberg   brought          this    action   against   PHEAA   and

other private and state-created student-loan entities under the

False Claims Act (“FCA”), 31 U.S.C. §§ 3729-33, alleging that

from       2002    through    2006,       the    defendants       fraudulently     claimed

hundreds          of    millions     of     dollars          in   federal   student-loan

interest-subsidy payments to which they were not entitled.                              See

Oberg II, 745 F.3d at 135.                  As this case has proceeded up and

down the appeals ladder, 1 the other defendants have settled or




       1
       See United States ex rel. Oberg v. Ky. Higher Educ.
Student Loan Corp. (“Oberg I”), 681 F.3d 575 (4th Cir. 2012);
United States ex rel. Oberg v. Pa. Higher Educ. Assistance
Agency (“Oberg II”), 745 F.3d 131 (4th Cir. 2014).


                                                3
were    dismissed       from    the     case,        and    PHEAA       is    now    the    sole

remaining defendant.

       The only issue in this appeal is whether PHEAA qualifies as

an “arm of the state” or “alter ego” of Pennsylvania such that

it cannot be sued under the FCA.                       See Vermont Agency of Nat.

Res. v. United States ex rel. Stevens, 529 U.S. 765, 787-88

(2000).     We conclude that PHEAA is not an arm of Pennsylvania,

and we therefore reverse the district court’s order granting

summary    judgment       in    favor      of       PHEAA    and    remand         for    further

proceedings on the merits of Oberg’s FCA claims against PHEAA.

                                            I.

       The FCA imposes civil liability on “any person” who makes

or presents a false claim for payment to the federal government.

31    U.S.C.     §    3729(a)(1).          Corporations,           including         municipal

corporations like cities and counties, are “persons” under the

FCA, see Cook County v. United States ex rel. Chandler, 538 U.S.

119, 126-27, 134 (2003), but states and state agencies are not,

see    Vermont       Agency    of   Nat.    Res.,       529      U.S.    at    787-88.        To

determine      whether    PHEAA     falls       into       the   former       or    the    latter

category, we apply “the arm-of-the-state analysis used in the

Eleventh Amendment context.”                    Oberg II, 745 F.3d at 135.                    If

PHEAA qualifies as an “arm” or “alter ego” of Pennsylvania, then

it is not a “person” subject to liability under the FCA.                                     See

United States ex rel. Oberg v. Ky. Higher Educ. Student Loan

                                                4
Corp. (“Oberg I”), 681 F.3d 575, 580 (4th Cir. 2012) (internal

quotation marks omitted).

      We    evaluate        four   non-exclusive       factors       when   considering

whether     a   state-created           entity     functions   as     an    arm   of   its

creating state:

           (1) whether any judgment against the entity as
      defendant will be paid by the State . . . ;

           (2) the degree of autonomy exercised by the
      entity, including such circumstances as who appoints
      the entity’s directors or officers, who funds the
      entity, and whether the State retains a veto over the
      entity’s actions;

           (3) whether the entity is involved with state
      concerns   as   distinct   from non-state concerns,
      including local concerns; and

           (4) how the entity is treated under state law,
      such as whether the entity’s relationship with the
      State is sufficiently close to make the entity an arm
      of the State.

Id.   (quoting       S.C.    Dep’t      of   Disabilities      &    Special   Needs     v.

Hoover Universal, Inc., 535 F.3d 300, 303 (4th Cir. 2008)).

      Although       the    focus       of   the   first    factor    is    whether    the

“primary legal liability” for a judgment will fall on the state,

Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 428 (1997)

(emphasis added), the practical effect on the state treasury of

a judgment against the entity must also be considered.                             “Where

an agency is so structured that, as a practical matter, if the

agency     is   to   survive,       a    judgment    must    expend    itself     against

state treasuries,” Hess v. Port Auth. Trans–Hudson Corp., 513


                                              5
U.S.   30,     50   (1994)     (alteration      omitted),    the     agency      will   be

found to be an arm of the state, see Oberg II, 745 F.3d at 137;

Cash v. Granville Cnty. Bd. of Educ., 242 F.3d 219, 223 (4th

Cir. 2001).

       “[I]f    the    State    treasury       will   be   called    upon   to    pay    a

judgment against a governmental entity, the [entity is an arm of

its    creating       state],      and   consideration      of    any   other     factor

becomes unnecessary.”               Cash, 242 F.3d at 223.              If the state

treasury will not be liable for a judgment rendered against the

entity, we must consider the remaining factors, which focus on

the nature of the relationship between the state and the entity

it    created.        See    id.    at   224;    accord     Lee-Thomas      v.    Prince

George’s Cty. Pub. Sch., 666 F.3d 244, 248 n.5 (4th Cir. 2012).

       The purpose of the arm-of-state inquiry is to distinguish

arms    or     alter     egos       of   the    state      from     “mere     political

subdivisions of [the] State such as counties or municipalities,”

which, though created by the state, operate independently and do

not share the state’s immunity.                   Kitchen v. Upshaw, 286 F.3d

179, 184 (4th Cir. 2002); see Mt. Healthy Bd. of Educ. v. Doyle,

429 U.S. 274, 280 (1977) (“The issue here thus turns on whether

the Mt. Healthy Board of Education is to be treated as an arm of

the State partaking of the State’s Eleventh Amendment immunity,

or is instead to be treated as a municipal corporation or other

political subdivision to which the Eleventh Amendment does not

                                            6
extend.”).        Although we must consider “the provisions of state

law that define the agency’s character,” Regents, 519 U.S. at

429 n.5, “[u]ltimately . . . , the question whether a particular

state agency has the same kind of independent status as a county

or is instead an arm of the State, and therefore one of the

United States within the meaning of the Eleventh Amendment, is a

question     of     federal     law,”        id.    (internal         quotation      marks

omitted).

     In    our     first   opinion      in       this   case,    we    held    that    the

district court erred by concluding that PHEAA was a state agency

and dismissing Oberg’s complaint without applying the arm-of-

state analysis.       See Oberg I, 681 F.3d at 581.                    On remand, the

district     court    applied    the     arm-of-state           analysis      and    again

granted the motion to dismiss, concluding that PHEAA was not a

person within the meaning of the FCA.

     Oberg again appealed, and we again held that the district

court erred by dismissing the claims against PHEAA.                           See Oberg

II, 745 F.3d at 140-41.           Considering the arm-of-state issue in

light of the statutes governing PHEAA’s operation and the facts

alleged in Oberg’s complaint, we held in Oberg II that Oberg had

plausibly alleged that PHEAA was not an arm of the state but was

instead a “person” subject to suit under the FCA.                       See id.

     We first concluded that Pennsylvania was “neither legally

nor functionally liable for any judgment against PHEAA.”                            Id. at

                                             7
138.     PHEAA was not legally liable because “state law expressly

provides that obligations of PHEAA shall not be binding on the

State,” id. (internal alterations omitted), and requires PHEAA’s

debts to be paid from “‘moneys . . . of the corporation,’” id.

(quoting 24 Pa. Stat. § 5104(3)).                    As to practical or functional

liability,       PHEAA       argued      that       Pennsylvania       was      functionally

liable     for     a     judgment      against        PHEAA     because         Pennsylvania

statutes       require    PHEAA     to    deposit      its     commercially        generated

revenues with the state Treasury and require the Treasurer’s

approval of any payment from state Treasury funds.                              We rejected

that argument, however, given that the statute requiring the

deposit    also     explicitly        granted        control    over      those    funds     to

PHEAA,     not    the     Treasurer,       and       the     funds    were      held    in    a

segregated       account      within     the    Treasury.           See   id.     at   138-39.

Because    PHEAA       had    control     over       “substantial         ‘moneys’     [that]

derive exclusively from its own operations,” id. at 138, “any

judgment in this case [would be paid] with [PHEAA’s] own moneys

from     its     segregated      fund,”        id.    at     139,    and     we    therefore

concluded that Pennsylvania would not be functionally liable for

any judgment against PHEAA.                And because there was no functional

or legal liability, we held that the first arm-of-state factor

weighed “heavily against holding that PHEAA is an arm of the

state.”    Id.



                                                8
     As to the second arm-of-state factor, we noted that the

indicia of autonomy reflected in the statutory framework and the

facts alleged in the complaint pointed in both directions.                  The

composition of PHEAA’s board (gubernatorial appointees and state

legislators) weighed in favor of arm-of-state status, as did the

statutory requirement that the Governor approve any PHEAA bond

issues   and    the   fact   that   PHEAA’s   activities   were   subject    to

audit by the Commonwealth Auditor General.                 See id. at 139.

Nonetheless, other facts “strongly suggest[ed] that PHEAA is not

an arm of the state,” including PHEAA’s financial independence,

its control over its revenues deposited with the state Treasury,

and its corporate powers “to enter into contracts, sue and be

sued, and purchase and sell property in its own name.”                      Id.

Drawing all inferences from these facts in Oberg’s favor, as

required given the procedural posture of the case, we concluded

that the autonomy factor “counsels against holding that PHEAA is

an arm of the state.”        Id.

     As to the third arm-of-state factor, we held it weighed in

favor    of    arm-of-state    status   because   PHEAA    was    focused    on

improving access to higher education, a matter of “legitimate

state concern.”       Id. at 140.     We rejected Oberg’s     argument that

PHEAA was not primarily focused on state concerns, given PHEAA’s

extensive      out-of-state     commercial     activities.        Noting    the

allegation in Oberg’s complaint that one third of PHEAA’s 2005

                                        9
earnings came from out-of-state activities, we held that “it

does    not      seem    plausible        that      by     2006       --   the    last    year

encompassed       by    Dr.    Oberg’s       allegations         --   PHEAA’s     operations

focused primarily out of state.”                         Id.     And as to the fourth

factor, we concluded that state law treated PHEAA as a state

agency, which also weighed in favor of treating PHEAA as an arm

of the state.          See id.

       Considering the factors together, we held that the district

court erred by dismissing Oberg’s complaint:

       [A]lthough the third and fourth factors suggest that
       PHEAA is an arm of the state, the first (strongly) and
       second (albeit less strongly) point in the opposite
       direction.   At this early stage, construing the facts
       in the light most favorable to the plaintiff, we must
       conclude that Dr. Oberg has alleged sufficient facts
       that PHEAA is not an arm of the state, but rather a
       “person” for FCA purposes.

Id. (internal quotation marks omitted).                         We vacated the district

court’s order dismissing Oberg’s complaint, and we instructed

the district court on remand “to permit limited discovery on the

question whether PHEAA [was] truly subject to sufficient state

control     to   render       it    a   part   of   the        state.”      Id.   at     140-41

(internal quotation marks omitted).

       On   remand,      the       parties     engaged     in     discovery,      and    PHEAA

filed a motion for summary judgment on the arm-of-state issue.

The district court granted the motion, holding that all four

factors weighed in favor of arm-of-state status.                                  See United


                                               10
States      ex    rel.    Oberg    v.   Pa.    Higher      Educ.    Assistance    Agency

(“Oberg III”), 77 F. Supp. 3d 493 (E.D. Va. 2015).                               In the

district court’s view, this court’s contrary conclusion could

not    be        sustained    in    light       of   the      post-remand       “factual

development” of the case.                 Id. at 497.              The district court

therefore held that because PHEAA was an arm of Pennsylvania, it

was not subject to suit under the FCA, and the court granted

summary judgment in favor of PHEAA.

                                              II.

       Oberg      again     appeals,    arguing      that    the     district    court’s

analysis of the arm-of-state factors is inconsistent with our

opinion in Oberg II and that its ultimate conclusions as to

those factors are not supported by the record.                       In Oberg’s view,

the Pennsylvania statutes governing PHEAA’s operation and the

factual information developed through discovery establish that

PHEAA is not an arm of Pennsylvania.                    Oberg thus contends that

the district court erred by granting summary judgment in favor

of PHEAA and dismissing his action.

       “We review a grant of summary judgment de novo, applying

the same standard as the trial court and without deference to

the trial court.”            Dash v. Mayweather, 731 F.3d 303, 310 (4th

Cir.   2013),       cert.    denied,    134     S.   Ct.    1761    (2014).      Summary

judgment is appropriate only if “there is no genuine dispute as



                                              11
to any material fact and the movant is entitled to a judgment as

a matter of law.”      Fed. R. Civ. P. 56(a).

     In this case, we see no material dispute about the relevant

facts    detailing      PHEAA’s    operations     and    relationship         with

Pennsylvania.     Instead, the dispute is over the legal effect of

the materially undisputed facts -- whether the relevant statutes

and the facts developed during discovery establish that PHEAA is

the alter ego of Pennsylvania. 2          See Greene v. Barrett, 174 F.3d

1136, 1139-40 (10th Cir. 1999) (“If there is no genuine issue of

material   fact   in    dispute,    we    determine    whether    the    district

court    correctly     applied    the    substantive    law.”).         And   that

question is a pure question of law reviewed de novo.                See United

States ex rel. Lesinski v. S. Fla. Water Mgmt. Dist., 739 F.3d

598, 602 (11th Cir.) (“[W]hether an entity constitutes an arm of

the state [and therefore not a “person” under the FCA] . . . is

a question of law subject to de novo review.”), cert. denied,


     2 While Oberg argues that the evidence establishes that
PHEAA is not an arm of Pennsylvania, he also suggests that arm-
of-state status is a question of fact to be resolved by a jury.
We disagree.    Although we held in Oberg II that whether a
defendant is a “person” is an element of an FCA plaintiff’s
case, see Oberg II, 745 F.3d at 136, we nonetheless agree with
PHEAA that personhood and arm-of-state status nonetheless remain
legal issues to be resolved by the court.    Cf. Farwell v. Un,
902 F.2d 282, 288 (4th Cir. 1990) (although negligence plaintiff
“must prove that defendant owed plaintiff a duty, breached that
duty, and that the breach proximately caused the claimed
injury[,] . . . . whether and in what form any legal duty exists
is a question of law for the courts”).


                                         12
134 S. Ct. 2312 (2014); cf. Hutto v. South Carolina Ret. Sys.,

773 F.3d 536, 542 (4th Cir. 2014) (“Whether an action is barred

by the Eleventh Amendment is a question of law that we review de

novo.”).     We will summarize the statutes and evidence governing

PHEAA’s    authority        and     operations           before    turning      to   Oberg’s

challenges to the district court’s decision.

                                              III.

     PHEAA      was       created       as    “a       body   corporate       and    politic

constituting          a       public              corporation           and      government

instrumentality.”          24 Pa. Stat. § 5101.                PHEAA has the power to

sue and be sued; enter into contracts; and own, encumber, and

dispose of real and personal property.                        See id. § 5104(3); Oberg

II, 745 F.3d at 139.              During the time period relevant to this

appeal, PHEAA was governed by a twenty-member board of directors

composed   of    the       Secretary         of    Education;      three      gubernatorial

appointees;     eight       members          of    the    Senate    appointed        by    the

Senate’s     president;           and    eight         members     of     the    House      of

Representatives appointed by the Speaker of the House.                               See 24

Pa. Stat. § 5103(a) (2006). 3                Board members may be removed by the

official who appointed them.                  See Pa. Const. art. VI, § 7                 (“All

civil officers shall hold their offices on the condition that

     3 In 2010, 24 Pa. Stat. § 5103 was repealed and a revised
version of it was recodified at 71 Pa. Stat. § 111.2.       The
changes to the composition of PHEAA’s board are not relevant to
the disposition of this appeal.


                                                  13
they    behave     themselves       well    while       in    office,       and     shall    be

removed       on   conviction       of   misbehavior          in   office      or    of     any

infamous crime.           Appointed civil officers, other than judges of

the courts of record, may be removed at the pleasure of the

power    by    which   they   shall      have     been       appointed.”);         Burger    v.

School Bd., 923 A.2d 1155, 1162 (Pa. 2007) (“[A]rticle VI, § 7

of]    the    Constitution      does     not     vest    in    the       appointing       power

unfettered discretion to remove.                 Instead, valid removal depends

upon the officer behaving in a manner not befitting the trust

placed in him by the appointing authority.”).

       PHEAA’s     purpose     is     “to   improve          the   higher      educational

opportunities        of    [Pennsylvania]         residents          .     .   .    who     are

attending approved institutions of higher education . . . by

assisting them in meeting their expenses of higher education.”

24 Pa. Stat. § 5102.          To further its statutory purpose, PHEAA is

authorized to issue, purchase, service, and guarantee student

loans.       See 24 Pa. Stat. § 5104.

       PHEAA is statutorily authorized to “borrow moneys by making

and issuing notes, bonds and other evidences of indebtedness of

the agency . . . for the purposes of purchasing, making or

guaranteeing loans.”          Id. § 5104(3).             The Governor must approve

all debt issuances, see id., and the General Assembly has capped

the total amount of debt that PHEAA may incur, see 24 Pa. Stat.

§ 5105.1(a.1).         Under state law, PHEAA bears sole responsibility

                                            14
for   its    bonds     and    other      debts.         See    id.   §   5104(3)      (“[N]o

obligation of [PHEAA] shall be a debt of the State and [PHEAA]

shall have no power to pledge the credit or taxing power of the

State nor to make its debts payable out of any moneys except

those of the corporation.”).                   Because the Pennsylvania General

Assembly has determined that PHEAA is performing an “essential

governmental        function,”       PHEAA      bonds    are    generally       free    from

taxation.      24 Pa. Stat. § 5105.6.

      As     noted,    PHEAA       is    now    “one     of    the   nation’s      largest

providers of student financial aid services.”                            Oberg II, 745

F.3d at 138.           During the time period relevant to this case,

PHEAA’s commercial activity -- much of it conducted under the

trade       names     “American          Education       Services”       and     “FedLoan

Servicing” -- included issuing loans to Pennsylvania students,

servicing loans for non-Pennsylvania students, and guaranteeing

loans      issued     to     students      in       Delaware,    Georgia,       and     West

Virginia.           PHEAA’s       2014   financial       statements      show    revenues

exceeding $600 million, net revenues of more than $220 million,

and unrestricted net assets of more than $700 million.                           See J.A.

3147-48.        The        earnings      from       PHEAA’s     extensive      commercial

operations      have       made    PHEAA   “financially         independent”       of    the

Commonwealth, Oberg II, 745 F.3d at 139, and PHEAA has received

no appropriations to support its operations since 1988.



                                               15
     PHEAA      administers     Pennsylvania’s        State    Grant     Program,

distributing appropriated funds as grants and scholarships to

qualifying students.          PHEAA absorbs the costs of administering

the program, however, and disburses 100% of the appropriated

funds to students.        In 2005, PHEAA contributed $25 million of

its earnings to supplement the State Grant Program, and it has

made contributions ranging from $45 – 75 million in many, but

not all, of the years since.

     During the time period relevant to this case, PHEAA issued

revenue   bonds   to   fund    the    loans   it   originated,      repaying   the

bonds    with   loan-repayment       revenues. 4     PHEAA    created    special-

purpose   entities     incorporated      under     Delaware   law   to   formally

issue the bonds and hold the student-loan receivables as assets.

These revenues are held in trust in accounts outside of the

Pennsylvania Treasury until the bonds are repaid or the release

provisions of the underlying documents are otherwise satisfied.

These trust accounts represent the bulk of PHEAA’s corporate

wealth -- more than $6 billion of $8.6 billion total long term

assets.    See J.A. 3148.




     4 PHEAA stopped originating federally guaranteed student
loans in 2008, “due to the global fiscal crisis.”      J.A. 327.
See J.A. 2440. As of July 1, 2010, the federal government took
over as the originator of all federal student loans. See Health
Care & Educ. Reconciliation Act of 2010, Pub. L. No. 111-152, §§
2201-2213, 124 Stat. 1029, 1074-81.


                                        16
      As to the other revenues generated by PHEAA’s commercial

activities, however, state law requires them to be deposited in

the   Pennsylvania      Treasury,     see    24   Pa.    Stat.    §     5104(3),   a

requirement similar to that applicable to other state agencies.

PHEAA’s revenues on deposit with the state Treasury are held in

a   segregated   fund    known   as   the    “Educational        Loan   Assistance

Fund.”   24 Pa. Stat. § 5105.10.             Although the revenues are in

the custody of the state Treasurer, state law expressly vests

control over the revenues in PHEAA.               See 24 Pa. Stat. § 5104(3)

(requiring revenues earned through financial-services activities

to be “deposited in the State Treasury,” but providing that the

revenues “shall be available" to PHEAA and “may be utilized at

the discretion of the board of directors for carrying out any of

the corporate purposes of the agency”); id. § 5105.10 (“[A]ll

appropriations    and    payments     made    into      the   [Educational     Loan

Assistance Fund] are hereby appropriated to the board and may be

applied and reapplied as the board shall direct and shall not be

subject to lapsing.”).

      Much like funds invested in a mutual fund, PHEAA’s funds,

though separately accounted for, are commingled with the funds

of other Commonwealth agencies for investment purposes.                     See 72

Pa. Stat. § 301.1 (generally authorizing Treasurer to invest

funds held in state depositories); see also J.A. 2474 (PHEAA

treasurer’s description of investment process: “It works kind of

                                       17
like       a     mutual      fund    .    .      .     taking          money    from       [separate

Commonwealth agencies] and keeping track of what each of us has,

but putting it together and putting it into investment funds.”).

The    Treasury         Department        devises          and    executes      the    investment

strategy for the commingled funds.                           See 72 Pa. Stat. § 301.2;

see also J.A. 2796.

       State law prohibits payment “from any of the funds of the

State Treasury” without approval of the Treasurer.                                   72 Pa. Stat.

§ 307.          To obtain approval for payment of funds in the custody

of     the       Treasurer,       PHEAA        must     present          the    Treasurer          with

requisitions for payment.                      The Treasury Department audits the

requisitions            by    reviewing          “backup          documentation            such     as

invoices, contracts, [and] purchase orders” and “confirming the

authority for the payment (e.g., a valid supporting contract),

and    a       match   between      the       amount    due       on    the    invoice      and     the

payment request.”              J.A 673-74.             “If the requisitions appear to

be    lawful      and     correct,       the    Treasurer         issues       his    warrant      for

payment.”          J.A.      673.        If    payment       is    approved,         the    Treasury

Department         transfers        funds      to     PHEAA       electronically           or   sends

PHEAA a check.               The checks are payable to the vendor and are

drawn on the state Treasury account and signed by the Treasurer.

       For purposes of the “Commonwealth Attorneys Act,” 71 Pa.

Stat.      §§     732-101     –     732-506,         the    term       “Commonwealth         agency”

includes         “independent”           and     “executive”            agencies;          PHEAA     is

                                                 18
classified as an independent agency, see id. § 732-102.                                  As is

the   case    with       other     Commonwealth           agencies,       if   the    Attorney

General provides PHEAA with a legal opinion, PHEAA must follow

the advice set out in the opinion.                    See id. § 702-204(a)(1).

      While PHEAA has the authority to enter into contracts, it

must,     like      other     Commonwealth            agencies,         submit       contracts

involving more than $20,000 for a “form and legality” review by

the Attorney General.              71 Pa. Stat. § 732-204(f).                      The review

involves determining “whether the contract has all of the legal

terms   that      the     Commonwealth         requires      and     no    terms      that    are

prohibited”; whether “PHEAA has the authority to enter into the

contract”; and whether “the contract is constitutional under the

State and Federal constitutions.”                     J.A. 713; see 71 Pa. Stat. §

732-204(f) (requiring Attorney General to determine whether a

“contract is in improper form, not statutorily authorized or

unconstitutional”).           If an agency seeks to enter into a contract

with a party who owes money to the Commonwealth, the Attorney

General will not review the contract until the debt has been

satisfied.        See J.A. 2856.

      PHEAA       is     authorized       to    pursue       student-loan            collection

actions      independently,         see    24       Pa.    Stat.    §     5104.3,      but    the

Commonwealth           Attorneys    Act     otherwise         requires         the    Attorney

General      to    represent        PHEAA       in    civil        litigation        absent     a

delegation of authority, see 71 Pa. Stat. § 732-204(c).                                 PHEAA’s

                                               19
standard   practice       is   to    seek    such     delegations   in    all    non-

collection actions; PHEAA’s general counsel could not recall a

request ever being denied.             A private law firm serves as counsel

to   PHEAA’s    board.     The      Attorney    General’s     office     would   have

conducted the form-and-legality review of the contract engaging

the law firm, but the decision to engage counsel did not require

a delegation from or other review by the Attorney General. 5

      Pennsylvania law treats PHEAA as a typical state agency in

other respects.          PHEAA is authorized to promulgate and enact

regulations,      but     the       regulations        must   be    approved      by

Pennsylvania’s Regulatory Review Commission.                    See 71 Pa. Stat.

§§ 745.3, 745.5.         PHEAA must report its year-end condition to

the Governor and the legislature.              See 24 Pa. Stat. § 5108.            It

is subject to examination by the Commonwealth’s Auditor General,

see id., and was in fact the subject of a “special performance

audit” in 2008.      J.A. 2312.         Its property and income are exempt

from state taxation, see 24 Pa. Stat. § 5107, and all of its

properties revert to the Commonwealth upon dissolution, see id.

§ 5109.

      PHEAA’s    employees       are    paid   through    the    state    Treasury,

receive    healthcare      benefits         through    the    Commonwealth,      and

participate in the Commonwealth’s retirement system.                        PHEAA’s

      5In 2013, PHEAA paid outside counsel a total of more than
$7 million.


                                          20
board members and executives are subject to state ethics laws.

See 65 Pa. Cons. Stat. §§ 1102-03.                PHEAA executives, however,

are not paid in accordance with state pay scales.                         At least

until   2007,   PHEAA’s      top    executives    were      compensated    under    a

“unique” and very generous pay scale created by the PHEAA board.

J.A. 2342.

     For accounting purposes, the Commonwealth treats PHEAA as a

“component unit” of the “primary government,” J.A. 595, and it

includes    PHEAA’s       financial   information      in    the    Commonwealth’s

Comprehensive Annual Financial Report.                 The Report defines the

“primary     government”      to    include     the    Commonwealth       and     “all

Commonwealth    departments,        agencies,     boards,     and    organizations

that are not legally separate.”                J.A. 595.       “Component units”

are defined as “all legally separate organizations for which the

[primary     government]      is    financially       accountable,       and     other

organizations for which the nature and significance of their

relationship       with    the     [primary     government]        are   such    that

exclusion    [of    their     financial       information]     would     cause    the

financial statements to be misleading or incomplete.”                    Id.

                                        IV.

     We turn now to Oberg’s specific challenges to the district

court’s analysis of the arm-of-state issue.

                              A.    State Treasury



                                        21
     The    first      arm-of-state         factor     focuses     on    “whether     any

judgment against the entity as defendant will be paid by the

State,”    Oberg      I,    681   F.3d     at    580   (internal    quotation       marks

omitted),      an     inquiry       that        includes   legal        or   functional

liability, see Oberg II, 745 F.3d at 137.                    We held in Oberg II

that Pennsylvania was not legally liable, see id. at 138, and

that conclusion remains controlling in this appeal, see Everett

v. Pitt Cty. Bd. of Educ., 788 F.3d 132, 142 (4th Cir. 2015)

(explaining that under the “law of the case” doctrine, rulings

by an appellate court on questions of law generally “must be

followed in all subsequent proceedings in the same case in the

trial    court   or    on    a    later    appeal”     (internal    quotation       marks

omitted)). 6     Our analysis in this appeal, therefore, will focus

on functional liability.




     6 The law-of-the-case doctrine does not apply if “the prior
decision   was  clearly   erroneous  and  would   work  manifest
injustice.” TFWS, Inc. v. Franchot, 572 F.3d 186, 191 (4th Cir.
2009) (internal quotation marks omitted).        Although PHEAA
suggests, almost in passing, that we erred by rejecting legal
liability in Oberg II, see Brief of Respondent at 22 n.6, “[a]
prior decision does not qualify for this . . . exception by
being just maybe or probably wrong; it must strike us as wrong
with the force of a five-week-old, unrefrigerated dead fish.”
TFWS, 572 F.3d at 194 (internal quotation marks and alteration
omitted).   Given the previously discussed statutory provisions
disclaiming liability for PHEAA’s obligations and requiring
PHEAA’s debts to be paid from moneys of the corporation, Oberg
II’s no-legal-liability holding doesn’t strike us as wrong at
all, much less dead-fish wrong.


                                            22
      The functional-liability analysis looks to whether, as a

practical matter, a judgment against a state-created entity puts

state funds at risk, despite the fact that the state is not

legally liable for the judgment.                 Thus, functional liability

will be found “[w]here an agency is so structured that, as a

practical matter, if the agency is to survive, a judgment must

expend itself against state treasuries.”                Hess, 513 U.S. at 50,

cited in Oberg II, 745 F.3d at 137; Ristow v. South Carolina

Ports Auth., 58 F.3d 1051, 1054 (4th Cir. 1995) (finding Ports

Authority to be an arm of the state despite absence of legal

liability because the state “provides whatever economic support

is necessary over and above the Port Authority’s net revenues to

insure its continued vitality” and “takes back any portion of

the   Authority’s         net   revenues,      which,     in   its   legislative

judgment,     is     not    necessary     or     desirable     for    the     Ports

Authority’s    operation”).         A    state   may    also   be    functionally

liable if the funds available to pay any judgment effectively

belong to the state rather than the agency.

      Applying these principles in Oberg II, we concluded that

Pennsylvania       was    not   functionally     liable    because    PHEAA    was

statutorily vested with control over the significant revenues

generated by its extensive commercial activities, such that the

judgment    would    be    paid   with   funds    belonging     to    PHEAA,   not

Pennsylvania.       See Oberg II, 745 F.3d at 139 (“[B]ecause state

                                         23
law instructs that PHEAA would pay any judgment in this case

with its own moneys from its segregated fund, the first factor

weighs    heavily      against    holding       that     PHEAA    is    an     arm    of    the

state.” (citation omitted)); id. at 138 (noting that “PHEAA’s

substantial       ‘moneys’        derive          exclusively          from      its        own

operations”).

       The    district    court      rejected       that   conclusion          on    remand,

however.        Believing     that    this    court’s      analysis       could       not    be

sustained in light of the post-remand “factual development” in

the case, Oberg III, 77 F. Supp. 3d at 497, the district court

held   that     Pennsylvania      would      be    functionally         liable       for    any

judgment entered against PHEAA.                   In the district court’s view,

the    fact    that    PHEAA’s    earnings         are   deposited       in     the    state

Treasury, where they are commingled with other state funds and

cannot be spent without approval of the Treasurer, showed that

“the     Commonwealth       retains     [such]         significant        control          over

PHEAA’s       assets    and    generated          revenue”       that    “[p]ractically

speaking, PHEAA’s money becomes State money.”                            Id.        We agree

with Oberg that the district court’s analysis on this point is

largely inconsistent with our decision in Oberg II.

       Notwithstanding the district court’s “factual development”

reference, its analysis did not depend on the evidence developed

during discovery, but instead turned on its understanding of the

general statutory framework governing PHEAA’s operation.                               As we

                                           24
have already explained, however, this court in Oberg II rejected

the all-funds-are-state-funds argument.                       Instead, we held that

because PHEAA was statutorily vested with control over the funds

on deposit with the state Treasury, PHEAA’s revenues remained

“moneys     .   .   .     of     the   corporation”       despite       the        statutory

provisions relied on by the district court.                         Oberg II, 745 F.3d

at 138 (internal quotation marks omitted).

     Given      that    we      were   reviewing        the    granting       of    a   Rule

12(b)(6) motion to dismiss in Oberg II, our holding was based on

an assumption that the control statutorily vested in PHEAA was

in fact exercised by PHEAA.                 Nonetheless, because we held that

Oberg had plausibly alleged that PHEAA was not an arm of the

state,    we    necessarily       concluded      that    the    statutory          framework

governing       PHEAA’s        operations    did    not,       in    and   of       itself,

establish a level of control sufficient to make PHEAA an arm of

Pennsylvania.       If the relevant statutory facts focused on by the

district court -- that PHEAA’s revenues are held in the state

Treasury and cannot be used for payment without approval of the

Treasurer -- were enough to establish functional liability even

in the face of the PHEAA’s statutorily granted power over those

revenues, then we would have affirmed, not vacated, the district

court’s arm-of-state conclusion in Oberg II.

     In finding Pennsylvania functionally liable, the district

court thus ignored the statutory facts that we found critical to

                                            25
the issue -- PHEAA’s control over its significant independent

funds -- and gave the other relevant statutory facts a legal

effect that we rejected in Oberg II.                 We therefore agree with

Oberg that the district court erred by analyzing the functional

liability question in an manner inconsistent with the approach

dictated by Oberg II.

      This court, however, “review[s] judgments, not opinions.”

Catawba Indian Tribe of S.C. v. City of Rock Hill, 501 F.3d 368,

372 n.4 (4th Cir. 2007) (per curiam).                  Thus, even though the

district     court’s    analysis    of    the      state-treasury       factor      was

erroneous,     reversal    would    not       be   required     if    the    evidence

developed through discovery shows a level of control actually

exercised by the Commonwealth that changes the Oberg II calculus

and establishes that Pennsylvania is functionally liable for a

judgment    against    PHEAA.      See    Oberg     II,   745    F.3d       at    140-41

(remanding for “limited discovery on the question whether PHEAA

is truly subject to sufficient state control to render it a part

of   the   state”   (emphasis    added;       internal    quotation         marks   and

alterations omitted)).       We turn to that question now.

                                         1.

      Discovery       produced     substantial         evidence        of        PHEAA’s

financial strength and independence.

      PHEAA’s financial success, which has never really been in

dispute, is clearly established in the record.                       For 2006, when

                                         26
the last of the conduct alleged in Oberg’s complaint took place,

PHEAA’s         financial      statements       show       gross     revenues    of    $416

million, net revenues of $156 million, and total net assets of

$498 million.           J.A 2573-74.           PHEAA’s 2014 financial statements

show impressive growth – gross revenues of $640 million, net

revenues of $222 million, with total net assets of $1 billion

and unrestricted net assets of $709 million. 7                        See J.A. 3147-48.

The     evidence        thus    establishes         that    PHEAA     has    “substantial

moneys,” as we assumed to be true in Oberg II.                          745 F.3d at 138

(internal quotation marks omitted).

       PHEAA is statutorily vested with control over its funds on

deposit with the Treasury Department, and discovery confirmed

that       PHEAA   is    in     fact    exercising         control    over    its     funds.

PHEAA’s control over fiscal matters is established, first and

foremost, by PHEAA’s own officials.                        Timothy Guenther, PHEAA’s

treasurer, repeatedly testified in his deposition that financial

decisions were made by PHEAA’s Board of Directors.                                  Guenther

testified        that    PHEAA’s       board    approves      PHEAA’s       annual    budget

based      on    revenue       and   expenses       estimates      developed    by    PHEAA

staff; decides each year what portion (if any) of its earnings


       7
       As noted, PHEAA stopped originating student loans in 2008.
Despite the loss of that line of business, PHEAA’s revenues have
increased dramatically. That increase is primarily attributable
to a contract with the federal government to service federally
issued student loans.


                                               27
will     be   used    to    supplement        the      State        Grant     Program;       and

establishes PHEAA’s corporate investment policy.                              And as to the

annual    report     of     its   major      financial        decisions         and    overall

financial     condition       that     PHEAA      is    required         to    make    to    the

Governor and General Assembly, Guenther acknowledged that the

financial     decisions       reflected        in      that    report         were    made    by

PHEAA’s board.        See J.A. 2469.

        The declaration of PHEAA’s chairman of the board likewise

shows     that   PHEAA,       not    the      Commonwealth,              controls      PHEAA’s

operations and its funds.               See J.A. 246 (“PHEAA’s Board makes

sure that as much excess revenue, in light of PHEAA’s long-term

operational      and       financial      requirements,             is    contributed        to

programs      and      financial       assistance             for     the          benefit   of

Pennsylvania students” (emphasis added)); J.A. 249 (“The Board

oversees PHEAA, makes the policy decisions for the direction of

[the] agency, and tasks PHEAA’s executives and managers with

implementing        those    decisions       and    directions           on    a    day-to-day

basis.”);     id.    (“PHEAA’s       Board     reviews,        analyzes        and    approves

PHEAA’s internal budget, which is proposed by management and

presented to the Board.”); see also J.A. 2406 (“Briefing Book”

preparing PHEAA CEO for appearance before legislative committee

stating that “[t]he board is responsible for how we spend our

money”).



                                             28
     Specific      incidents       and       events     described       in     the    record

provide further evidence of PHEAA’s control.                         For example, when

Commonwealth      revenues       fall    short    of     expectations,         it    is   not

unusual for the Governor to ask state agencies to cut spending

and return a portion of their budget to the General Assembly.

The record contains two gubernatorial letters requesting PHEAA’s

assistance, and these letters distinguish PHEAA from other state

agencies    and   make     it    clear    that     PHEAA      has     control    over     its

budget that other agencies do not.                     See J.A. 3118 (letter from

Gov. Corbett stating that he had “directed agencies under [his]

jurisdiction to freeze . . . spending” but was “ask[ing] that

[PHEAA]    make   the     same    sacrifice       as    the     agencies     under     [his]

jurisdiction”      (emphasis      added));        J.A.    3120       (letter    from      Gov.

Rendell noting that he had “directed commonwealth agencies to

place     1.9%    of    their     discretionary           budgets       into    budgetary

reserve”    but    “ask[ing]       [PHEAA]        to     make     the    same       spending

reductions that our commonwealth agencies are making” (emphasis

added)).

     In    addition,      in    2007,    PHEAA     settled       a    dispute    with     the

Department of Education related to the interest-subsidy issue

raised in Oberg’s complaint for $11.3 million.                               According to

PHEAA’s treasurer, PHEAA paid the Department of Education with

loan-repayment         funds    held    in    trust      in   accounts       outside      the

Pennsylvania Treasury.            PHEAA also settled a dispute with the

                                             29
IRS for $12.3 million, and a portion of the IRS settlement was

also paid      from    assets     held    in    trust.       See   J.A.    2480.      The

Attorney      General    would     have    conducted         the   form-and-legality

review of the settlements, but it otherwise had no involvement

in    the    substantive       decision    to    settle      the   disputes      or   the

negotiation of the settlement terms.                     See J.A. 2845, 2847-48.

The    General       Assembly      was     not     required        to     approve     the

settlements, and it did not appropriate funds to replace those

spent by PHEAA.         In our view, PHEAA’s actions in settling the

disputes demonstrates PHEAA’s control over its funds and its

financial independence from the Commonwealth.                      And the fact that

the settlements were paid with a portion of the $6 billion held

in trust outside the state Treasury is additional evidence of

PHEAA’s ability to fund a judgment without the use of state

funds.

       PHEAA’s    creation      and   support     of     the   Pennsylvania        Higher

Education Foundation (“PHEF”) also provides compelling evidence

of PHEAA’s financial independence and control. 8                        Although PHEAA

itself is authorized to solicit and receive private donations,

see 24 Pa. Stat. § 5104(3) & (8); id. § 5106, PHEAA officials

believed      that    “‘many    private    donors      are     reluctant    to     donate

funds to a government agency,’” 2008 Auditor General’s Report at

       8   PHEF has been inactive since 2009.



                                           30
74,   Exhibit         1    to       Oberg’s   Opposition     to    PHEAA’s   Motion     for

Summary Judgment (“2008 Auditor General’s Report”). 9                         PHEAA thus

created          PHEF,          a      one-employee, 10      tax-exempt       charitable

organization, for the purpose of soliciting private corporate

donations.        PHEAA provided the funds and administrative services

necessary for PHEF’s operation.                       From 2001 through 2007, PHEAA

provided PHEF with more than $86 million in cash and donated

services.         Over that same period, PHEF collected $11.1 million

in private donations.                  See 2008 Auditor General’s Report at 75.

While PHEAA has the general authority “[t]o perform such . . .

acts as may be necessary or appropriate to carry out effectively

the objects and purposes of the agency,” 24 Pa. Stat. § 5104(7),

PHEAA      had   no       specific      statutory      authority    to   create   or   make

donations to a charitable organization, see J.A. 2410 (“Briefing

Book”      preparing        PHEAA       CEO   for     appearance    before   legislative

committee        stating        that     there      was   “[n]o    express   legislative

authority” for PHEAA’s funding of PHEF).

      In our view, the evidence outlined above establishes the

critical facts assumed in Oberg II when we rejected the claim of


      9The parties included only a portion of this report in the
Joint Appendix.

      10PHEF’s single employee is its president and CEO.   From
PHEF’s inception through at least August 2008, PHEF’s president
and CEO was a former president and CEO of PHEAA itself.     See
2008 Auditor General’s Report at 75.


                                                 31
functional liability:              that PHEAA has substantial, commercially

generated     revenues          held    both     inside      and      outside      the    state

Treasury,     and        that    PHEAA    exercises       its      statutory        right    to

control those revenues.                See Burrus v. State Lottery Comm’n, 546

F.3d   417,       420    (7th    Cir.    2008)      (“Because       the    Lottery       raises

revenue      on    its     own     account,         controls       and     funds    its     own

operations,        and    does    not    expose      state      coffers     when     monetary

judgments are rendered against it, we conclude that it is an

entity financially independent from the state.”).                            As we discuss

below, state law does impose some restrictions on PHEAA’s use of

its funds, but those restrictions do not divest PHEAA of control

over its funds or otherwise establish that the Commonwealth is

functionally liable for a judgment against PHEAA.

                                               2.

       The   primary       way    the    Commonwealth        exercises       some        control

over PHEAA’s funds is through the statutory requirements that

PHEAA deposit its commercial revenues in the Treasury Department

and the Treasurer approve any payment of funds held by Treasury.

       To the extent that PHEAA continues to assert that these

statutory     provisions         establish       that     all    of      PHEAA’s    funds    on

deposit      in    the     state       Treasury       effectively         belong     to     the




                                               32
Commonwealth, 11 that argument is foreclosed by Oberg II, which

necessarily concluded that these statutory requirements do not,

in and of themselves, transform PHEAA funds into Commonwealth

funds.        See Oberg II, 745 F.3d at 138; cf. Fitchik v. New Jersey

Transit Rail Operations, Inc., 873 F.2d 655, 661 (3d Cir. 1989)

(en banc) (“The [statutory] designation of the money as ‘public’

simply does not answer the question of who has dominion over the

money     in      [state-created       entity’s]          accounts.”).          Indeed,

Pennsylvania law expressly recognizes that not all funds held by

the Treasurer actually belong to the Commonwealth.                          See 72 Pa.

Stat.     §     301   (requiring      Treasurer      to     deposit    in     specified

accounts       “all     moneys   of   the        Commonwealth      received    by   it,

including moneys not belonging to the Commonwealth but of which

the Treasury Department or the State Treasurer is custodian”

(emphasis added)).

     PHEAA       also    contends,     however,      that    the    actual     payment-

approval         process,        as    established           through        discovery,

“significantly constrain[s]” its spending and signifies a level

     11 In support of this argument, PHEAA points to the
testimony of PHEAA treasurer Timothy Guenther, who stated in his
deposition that “[a]ll PHEAA funds held in the Treasury are
funds of the Commonwealth.” J.A. 2447. To the extent Guenther
asserts that the funds are Commonwealth funds simply because
they are deposited in the state Treasury, that argument is
foreclosed by Oberg II. Moreover, whether PHEAA funds belong to
the Commonwealth for purposes of the arm-of-state analysis is
ultimately a question of federal law that cannot be established
by a witness’s conclusory assertion of the ultimate legal issue.


                                            33
of    control   that    makes     the     Commonwealth        functionally        liable.

Brief of Respondent at 18.           We disagree.

       The Treasury Department’s review-and-approval process, as

described by the evidence in the record, is not particularly

complicated.     PHEAA prepares and submits a payment request; the

Treasury Department reviews the payment request and its “backup

documentation     such     as     invoices,           receipts,    contracts,       [and]

purchase     orders,”    to     confirm         the    existence     of     a    contract

authorizing payment and an invoice matching the payment request.

J.A 673.     If the review raises questions, the Department rejects

the   request   and     returns      it    to    PHEAA    for     resolution      of    the

issues.      If the review shows the payment request “to be lawful

and correct, the Treasurer issues his warrant for payment.”                             Id.

When a check is required, the vendor is paid with a check drawn

on the state Treasury and signed by the Treasurer.

       The   approval     process         clearly       reflects     some       level   of

Commonwealth     control      over      PHEAA,    as     it   effectively        requires

PHEAA to adopt certain book-keeping procedures if it wants its

vendors to be paid.        The Treasury Department’s review, however,

is not a substantive review.               The Department does not evaluate

the wisdom of the underlying contract or the reasonableness of

the agreed-upon price, but instead simply confirms that a valid

contract authorizes payment and that the payment amount sought

matches the amount agreed to in the contract.                             The approval

                                           34
process    thus      does     not     constrain     or    otherwise        interfere        with

PHEAA’s statutory authority to make the substantive decisions

controlling the use of its revenues.                     See 24 Pa. Stat. § 5104(3)

(PHEAA revenues held in the state Treasury “shall be available”

to    PHEAA    and     “utilized       at    the    discretion        of    the     board    of

directors for carrying out any of the corporate purposes of the

agency”); id. § 5105.10 (deposits into PHEAA’s segregated state

Treasury account “are hereby appropriated to the board and may

be applied and reapplied as the board shall direct”).                                   Indeed,

the   approval       process        doesn’t    even      commence        until     PHEAA    has

exercised its discretion to enter into a contract or otherwise

take action that requires a payment to be made.

       PHEAA,       however,        argues    that,       “[a]s      the        thousands    of

examples       of    requisition          questions      and     denials         produced     in

discovery      clearly        show,    Treasury’s        review     is     no    mere    rubber

stamp.”        Brief     of    Respondent      at   19.        In    PHEAA’s       view,    the

approval       process      “is     not    ministerial      in      nature”       because    it

“involves a comprehensive, multi-step process involving several

levels    of    submission,         substantive       review,       and    authorization.”

Brief of Respondent at 19 (internal quotation marks omitted).

We disagree.

       Whether       the      review-and-approval          process         is     ministerial

depends on the nature of the review, not on the frequency with

which the review identifies problems.                      And here, the undisputed

                                              35
evidence shows that Treasury Department officials simply check,

cross-check, and confirm the information contained in contracts,

purchase        orders,    and    invoices.         Complicated        contracts      may

sometimes lead to lengthy email exchanges trying to unravel the

agreed-upon pricing terms, but even then, the Department’s role

is   simply      to    confirm    that    a    valid     contract      authorizes    the

payment being sought in the amount being sought. 12

      We recognize, of course, that by dictating the steps to be

followed for payment to be made to a PHEAA vendor, the approval

requirement       places    some     not-insignificant          constraints     on    the

manner     in    which    PHEAA    pays    its     bills.       Dictating     specific

payment     procedures,       however,        is   not   the    same    as    dictating

spending        policy     and     priorities.            Because       the    Treasury

Department’s          ministerial,       checklist-focused        approval      process

does not substantively constrain PHEAA’s fiscal discretion, the

approval        requirement       does     not,     in    and    of     itself,      give

      12 When   arguing  that  the   approval   process  is  not
ministerial, PHEAA notes that “after receiving a $63 invoice
from PHEAA’s outside counsel seeking reimbursement for a meal,
Treasury demanded an itemized receipt from PHEAA and inquired
whether the meal included alcohol.”    Brief of Respondent at 19
n.5.   Given that Pennsylvania’s reimbursement policy precludes
reimbursement for alcoholic beverages and requires “[c]omplete
justification” for reimbursement requests, see Commonwealth
Travel Procedures Manual §§ 4.1, 7.1 (Nov. 1, 2011) (PDF file
saved as ECF opinion attachment), the Treasury Department simply
asked PHEAA to provide the information necessary to show that
payment was authorized.   We see no relevant difference between
that request and a request for PHEAA to provide the contract
underlying a given invoice.


                                              36
Pennsylvania a level of control over PHEAA funds sufficient to

transform     PHEAA’s    independently           earned   revenues       into      money

belonging to the Commonwealth.

       PHEAA also argues that Pennsylvania is functionally liable

because PHEAA’s funds on deposit in the Treasury are commingled

with state funds and invested by the Treasurer.                        We disagree.

That PHEAA’s revenues were commingled with state revenues and

invested by the Treasurer were statutory facts before the court

in Oberg II but were insufficient, standing alone, to establish

functional     liability.        While     discovery      has    added       to    those

statutory facts and establishes that the Treasurer makes the

decisions    about     investing    these      commingled     funds,       we     do   not

believe that adds much to the analysis.                      The commingling and

investing -- a process that PHEAA’s own treasurer compared to an

ordinary mutual fund -- may reflect the Treasurer’s custodial

control over the funds on deposit, but it does not establish a

lack   of    substantive    control      by      PHEAA.      That    is,     PHEAA      is

statutorily vested with the power to control its commercially

generated revenues on deposit in the Treasury.                      The Treasurer’s

concurrent authority to use those funds to generate interest

does   not   somehow    divest     PHEAA    of     control    over     its   funds      or

otherwise interfere with PHEAA’s exercise of substantive control

over   its   funds.      Accordingly,         we   conclude     that    PHEAA’s        own

“moneys,”    generated     through    PHEAA’s       commercial       activities        and

                                         37
held in a segregated account, are not transformed into “moneys”

of   the   Commonwealth       simply       because      they   are   commingled      with

other state funds for investment purposes.

       PHEAA also contends that it is “fiscally dependent” on the

Commonwealth,       and   the   Commonwealth            is   therefore   functionally

liable, because it must submit annual budget requests to obtain

appropriations from the General Assembly, the legislature has

capped     the    total   amount      of    debt     PHEAA     can   incur,   and     the

Governor must approve all debt issuances.                       Brief of Respondent

at 19.     Again, we disagree.

       As the record establishes, PHEAA submits budget requests

only to receive the appropriated funds to be distributed under

the State Grant Program.           PHEAA is not required to submit budget

requests to gain access to its independently generated revenues,

and the General Assembly does not take PHEAA’s revenues to fill

holes in the Commonwealth’s budget.                      PHEAA’s participation in

the state budgeting process in its capacity as administrator of

the State Grant Program thus does not cast doubt on PHEAA’s

power to control its extensive, independent funds, nor does it

otherwise make PHEAA fiscally dependent on Pennsylvania.

       As to the statutory limit on PHEAA’s total debt and the

gubernatorial-approval          requirement,         these     provisions     may    well

make     PHEAA     fiscally     dependent          on    Pennsylvania       for     state

accounting       purposes.      See    Commonwealth’s          Comprehensive      Annual

                                            38
Financial Report, J.A. 595-96 (treating PHEAA as a “component

unit” of the Commonwealth’s “primary government” because “PHEAA

is fiscally dependent, as the Governor must approve the issuance

of   its     debt”).      For     purposes    of    the    arm-of-state       inquiry,

however, we do not believe these restrictions suffice to make

Pennsylvania functionally liable for a judgment against PHEAA.

      Preliminarily,        we    note   that      while        the    debt-limit    and

gubernatorial-approval provisions do place some constraints on

PHEAA’s business activities, nothing in the statutes directly

addresses PHEAA’s control over its revenues, which is the key to

the functional liability question in this case.                        Moreover, these

statutory      requirements       obviously     have      not    been    obstacles       to

PHEAA’s financial success, and there is no basis in the record

for us to conclude that Pennsylvania in the future would use

these      powers   to   shrink    PHEAA’s    operations         and    revenues    to    a

point where it could not withstand a judgment against it.                            See

Hess, 513 U.S. at 50.

      In any event, while these statutory provisions do restrict

PHEAA’s      financial     independence       to    some    degree,       Pennsylvania

municipalities--which are subject to liability under the FCA--

also face similar requirements. 13                 These statutes thus provide


      13See Pa. Const. art. IX, § 10 (“[T]he General Assembly
shall prescribe the debt limits of all units of local government
including municipalities and school districts.”); 53 Pa. Cons.
(Continued)
                                         39
little   help     in    “draw[ing]     the      line    between      a    State-created

entity   functioning        independently       of     the   State       from   a   State-

created entity functioning as an arm of the State or its alter

ego.”    Oberg    I,    681    F.3d   at     580     (internal       quotation      marks

omitted).    The debt-limit and gubernatorial-approval provisions

were among the statutory facts that we considered in Oberg II

and found insufficient, in and of themselves, to compel arm-of-

state status, and there is nothing in this record establishing

that these statutory facts should be given more weight than we

gave them in Oberg II.

                                           3.

       Under these facts, the district court erred in concluding

that Pennsylvania was functionally liable for a judgment against

PHEAA.       As        we     have    explained,         PHEAA’s         “substantial,”

independently generated corporate wealth, Oberg II, 745 F.3d at

138, and PHEAA’s control over that wealth, were key to Oberg

II’s    functional-liability          analysis.          The   evidence         discussed

above confirmed the existence of these facts.




Stat.  §   8022(a)   (placing  limitations   on  the  amount of
nonelectoral debt incurred by local government units); 53 Pa.
Cons. Stat. § 8110(a) (requiring local governments to submit a
“debt statement” to the Department of Community and Economic
Development of the Commonwealth before issuing bonds); 53 Pa.
Cons. Stat. § 8111 (Department must approve local government’s
application before local government may issue bonds).


                                           40
       Far from being a thinly capitalized agency, see Hess, 513

U.S. at 50, PHEAA earns hundreds of millions of dollars a year

through its commercial financial services operations and holds

more    than   $1   billion     in   net    assets.       While   its    commercial

earnings are deposited in the Pennsylvania Treasury, PHEAA is

statutorily vested with control over those revenues.                     See 24 Pa.

Stat. § 5104(3); id. § 5105.10.                  And as outlined above, the

evidence produced through discovery confirms that PHEAA is in

fact exercising the control granted to it by statute and that

substantive decisions about the use of its substantial revenues

are made by PHEAA, not the Governor or the General Assembly.

This point is exemplified by PHEAA’s creation of PHEF and its

donation to PHEF of $86 million in cash and services goods, all

without specific statutory authority.

       Of    course,    PHEAA   is   subject       to   some   measure    of   state

control over its finances, including the gubernatorial-approval

requirement, the legislative cap on total debt, and the Treasury

payment-approval requirement.               Oberg II held that those facts

did    not   outweigh    the    control    PHEAA    had   over    its   independent

funds, however, and the record contains no evidence that causes

us to reach a different conclusion.                 The gubernatorial-approval

requirement      and    legislative        cap   may    theoretically      place   a

ceiling on PHEAA’s earning capacity at some as-yet unestablished

level, but an income ceiling does not affect PHEAA’s right or

                                           41
ability to control the revenues it actually earns.                           The Treasury

payment-approval process, though not an entirely inconsequential

burden, is nonetheless a purely ministerial process that does

not in any way restrict PHEAA’s authority to set policy and make

all substantive decisions about where and how its funds are best

directed.       None of these facts, whether considered individually

or     collectively,       materially       diminish        or    constrain        PHEAA’s

substantive control (vested by law and exercised in fact) over

its funds and financial decisions.

       PHEAA, however, objects to any consideration of the extent

of    its    corporate     wealth     and   its       ability    to   fund    a   judgment

through its own resources, insisting that arm-of-state status

cannot depend on whether the state-created entity happens to be

“flush at a particular juncture.”                      Brief of Respondent at 25.

PHEAA argues that for the first two decades of its existence, it

depended on state appropriations to fund its operations.                             PHEAA

contends that in those early years, “the Commonwealth would have

been    on    the   hook   to   pay    a    judgment      against     PHEAA,”       and   it

contends that “[t]here is no principled basis for rescinding

PHEAA’s status as an arm of the Commonwealth simply because it

now    enjoys       financial   success          by    discharging      its       statutory

mission.”      Brief of Respondent at 26.               We disagree.

       First, Oberg II requires us to consider PHEAA’s wealth and

its ability to use its funds to pay a judgment.                        Those facts, as

                                            42
previously discussed, were the critical facts on which Oberg

II’s functional-liability decision was grounded.                     Oberg II thus

established     that      PHEAA’s   access      to   its   substantial     corporate

wealth was relevant to the functional-liability question, and

that determination is a legal ruling that remains applicable in

this appeal.     See TFWS, Inc. v. Franchot, 572 F.3d 186, 191 (4th

Cir. 2009) (“The law of the case doctrine posits that when a

court decides upon a rule of law, that decision should continue

to   govern   the    same    issues   in     subsequent     stages    in   the   same

case.” (internal quotation marks omitted)).

      Moreover, even were we to ignore Oberg II’s focus on these

facts,   case       law    would    still       require    their     consideration.

Specifically, the Supreme Court’s decision in Hess establishes

that an agency’s access to independent funds is relevant to the

functional-liability question.

      In Hess, the Court explained that, “[w]here an agency is so

structured that, as a practical matter, if the agency is to

survive, a judgment must expend itself against state treasuries,

common sense and the rationale of the eleventh amendment require

that sovereign immunity attach to the agency.”                     Hess, 513 U.S.

at 50 (internal quotation marks omitted).                     “There is no such

requirement where the agency is structured . . . to be self-




                                           43
sustaining.”       Id. 14    When determining whether the state-created

entity was “structured” to be “self-sustaining,” the Hess Court

considered the entity’s financial statements, which showed that

the entity “had over $2.8 billion in net assets and $534 million

in its General Reserve Fund,” id. at 36 n.6, as well as the

entity’s independent source of revenues, which “account[ed] for

the Authority’s secure financial position,” id. at 36.                   Although

the    creating    states     otherwise        exercised    a   not-insignificant

amount of control over the entity, see id. at 36-37, the Court

held in Hess that the entity was not entitled to share in the

states’       Eleventh      Amendment     immunity         given   the   entity’s

“anticipated and actual financial independence,” id. at 49; see

also    id.   at   52    (“[T]he   Port    Authority       is   financially   self-

sufficient; it generates its own revenues, and it pays its own

debts.      Requiring the Port Authority to answer in federal court

. . . does not touch the concerns -- the States’ solvency and

dignity -- that underpin the Eleventh Amendment.”).

       In our view, the Court’s approach in Hess forecloses any

argument that an entity’s independent financial resources and

its ability to fund any judgments against it are not relevant to

the functional-liability inquiry.               PHEAA suggests, however, that

       14
        Although Hess involved an entity created by two states,
we have held that “the same general principles identified in
[Hess] must also apply in the single state context.”    Gray v.
Laws, 51 F.3d 426, 432 (4th Cir. 1995).


                                          44
Hess’s focus on the financial circumstances of the state-created

entity was subsequently rejected by the Supreme Court in Regents

of the University of California v. Doe, 519 U.S. 425 (1997),

which PHEAA contends held that the state’s “potential” liability

was the key factor in the arm-of-state inquiry.                               We disagree.

     In    Regents,         the   question       was   whether        the       University    of

California      was     an    arm    of    the    state     for      Eleventh          Amendment

purposes.       Although there was no dispute that California was

legally liable for the University’s debts, see id. at 428, the

Ninth Circuit nonetheless concluded that the University was not

an   arm   of     California        because       a    contractual             indemnification

agreement       with    the       federal    government         would          have     relieved

California of the financial consequences of a judgment in that

case,    see    id.         The   Supreme    Court     reversed.               Rejecting     “the

notion     that       the    presence       or    absence       of        a    third    party’s

undertaking to indemnify the agency should determine whether it

is the kind of entity that should be treated as an arm of the

State,” id. at 431, the Supreme Court held that “with respect to

the underlying Eleventh Amendment question, it is the entity’s

potential legal liability, rather than its ability or inability

to require a third party to reimburse it, or to discharge the

liability       in     the    first       instance,      that        is       relevant,”     id.

(emphasis added).



                                             45
         The Regents Court thus held that if the state is legally

liable        for    a   judgment      against        the      state-created           entity,      the

entity is entitled to Eleventh Amendment immunity and does not

lose     that       immunity     by    virtue       of    an     indemnity        agreement      that

ultimately shifts the state’s loss to a third party.                                    See id. at

430-31; see also Cash, 242 F.3d at 221-22 n.1 (“[I]n Regents,

the Court held that the fact that a judgment against the State

would be covered by the voluntary indemnification agreement of a

third party did not strip away the State’s Eleventh Amendment

immunity        because        the    State    still       bore     the        legal   risk    of    an

adverse judgment.” (internal quotation marks omitted)).                                       Because

Regents         addressed       Hess     and    built          on    Hess’s       analysis       when

reaching         its     own    ruling,       see    Regents,            519    U.S.    at    430-31,

Regents’ focus on legal liability cannot somehow be understood

as   a        silent     rejection      of     the       heart      of    Hess’s       analysis     of

functional liability. 15


         15
       This court has concluded that Regents’ use of “potential”
liability, Regents, 519 U.S. at 431, requires us to consider the
effect of a “hypothetical” judgment that exceeds the entity’s
revenues.   See Hutto v. S.C. Ret. Sys., 773 F.3d 536, 545 (4th
Cir. 2014) (“[T]he proper inquiry is not whether the state
treasury   would   be  liable   in  this   case,  but   whether,
hypothetically speaking, the state treasury would be subject to
potential legal liability if the [state-created entity] did not
have the money to cover the judgment.” (internal quotation marks
omitted)).   We have already held that the Commonwealth is not
legally liable for a judgment against PHEAA. See Oberg II, 745
F.3d at 138. And for the reasons previously discussed, PHEAA’s
control over significant cash reserves means there is little
(Continued)
                                                 46
     In       sum,     PHEAA    is    engaged       in     nationwide,        commercial

financial-aid activities that bring in hundreds of millions of

dollars    in    net    revenues      every    year      and   have    allowed    it    to

accumulate      more    than    one   billion    dollars       in     net   assets,    and

PHEAA has substantive control over those independent funds.                              A

judgment in this case would thus be paid with PHEAA funds, not

funds belonging to the Commonwealth.                     And given PHEAA’s control

over its sizeable corporate wealth, there is little likelihood

that a judgment against PHEAA, even one that exceeds its current

revenues, would imperil its survival such that the Commonwealth

would     effectively      be    required      to     swoop     in     with   financial

support. 16     Accordingly,     in    light    of       PHEAA’s     “anticipated      and




likelihood that the Commonwealth’s help would be required to
satisfy the hypothetical judgment.    To the extent that PHEAA
suggests that Hutto’s “hypothetical” inquiry requires us to
imagine not only a judgment that exceeds PHEAA’s revenues, but
also that PHEAA’s accumulated cash and other assets have
vanished, that proposition is not only an over-reading of Hutto,
but also inconsistent with Hess, which considered real, not
imaginary, financial information when rejecting arm-of-state
status. See Hess, 513 U.S. at 36.

     16 Although PHEAA’s chairman stated in his declaration that
the Commonwealth “would have no choice but to appropriate money”
for PHEAA if a “significant judgment” were entered against it,
J.A. 248, the chairman did not identify any facts supporting his
opinion.   Cf. Williams v. Giant Food, Inc., 370 F.3d 423, 433
(4th Cir. 2004) (explaining that a “mere[] . . . self-serving
opinion . . . cannot, absent objective corroboration, defeat
summary judgment”).   Moreover, the record evidence that shines
light on this issue points to the opposite conclusion, given
that the Commonwealth did not replenish PHEAA’s coffers after it
(Continued)
                                          47
actual     financial    independence,”        Hess,    513     U.S.    at   49,    the

district court erred in finding the Commonwealth of Pennsylvania

functionally liable for a judgment against PHEAA.                       And because

Pennsylvania    is     neither   legally      nor    functionally      liable,     the

state-treasury factor therefore “weighs heavily against holding

that PHEAA is an arm of the state.”                 Oberg II, 745 F.3d at 139;

see Cash, 242 F.3d at 225 (explaining that if the state treasury

will not be affected by a judgment, that fact weighs against

arm-of-state status).

                                  B.    Autonomy

     The    second     arm-of-state      factor     requires    us    to    determine

“the degree of autonomy exercised by the entity, including such

circumstances     as     who     appoints     the     entity’s        directors    or

officers, who funds the entity, and whether the State retains a

veto over the entity’s actions.”                   Oberg I, 681 F.3d at 580

(internal    quotation     marks       omitted).      “Also     relevant      to   the

autonomy inquiry is the determination whether an entity has the

ability to contract, sue and be sued, and purchase and sell




paid millions of dollars to settle the disputes with the
Department of Education and the IRS, nor did the Commonwealth
provide extra funds when PHEAA had a $27-million operating loss
in 2008.   Under these circumstances, the chairman’s unsupported
opinion about actions the Commonwealth might take cannot
establish functional liability.     Cf. Cash, 242 F.3d at 225
(speculative effect on state treasury insufficient to establish
functional liability).


                                         48
property, and whether it is represented in legal matters by the

state attorney general.”           Oberg II, 745 F.3d at 137 (citations

omitted).

                                       1.

      In Oberg II, we held that while the composition of PHEAA’s

board, the gubernatorial-approval requirement for bond issuances

and the Auditor General’s oversight over PHEAA pointed towards

arm-of-state status, other relevant factors, including PHEAA’s

financial    independence      and     its    corporate       powers     “strongly

suggest[ed] that PHEAA is not an arm of the state.”                    Id. at 139.

Giving Oberg the benefits of all reasonable inferences, we held

that the autonomy factor “counsels against holding that PHEAA is

an arm of the state.”       Id.

      On   remand,   the   district     court    concluded      that    the    facts

developed    through     discovery    made    “Pennsylvania’s       control     over

PHEAA . . . quite clear.”             Oberg III, 77 F. Supp. 3d at 498.

The   district    court    believed    that    the    composition      of   PHEAA’s

board   --   gubernatorial     appointees       and    state    legislators       or

officials -- “gives the Commonwealth significant control over

the   direction     of   PHEAA.”      Id.      The    court    also    noted   that

“Pennsylvania retains several forms of veto power over PHEAA’s

actions.     The Treasurer must, as with all agencies, approve all

expenditures,     the    Governor    must    approve    all    of   PHEAA’s     debt

issuances,    and    the   Attorney    General       must   approve     all    PHEAA

                                       49
contracts         in    excess      of      $20,000.”          Id.         The     district      court

explained that, “[a]lthough PHEAA’s funding and partial fiscal

autonomy weighs against a finding that PHEAA is a state agency,

most of the evidence shows substantial Commonwealth control and

supports finding PHEAA to be an arm of Pennsylvania.”                                    Id.

       Oberg argues on appeal that the district court’s analysis

of    the    autonomy         factor     is      inconsistent            with    our    analysis   in

Oberg       II.        In    Oberg’s        view,      the     evidence          produced      through

discovery demonstrates that PHEAA in fact operates autonomously,

without significant oversight or control by the Commonwealth.

We agree with Oberg that the statutory scheme governing PHEAA’s

operation         and       the   evidence        in     the    record          establish      PHEAA’s

operational autonomy.                See Oberg II, 745 F.3d at 141 (describing

the    ultimate         question       as     whether     “PHEAA          is    truly    subject    to

sufficient        state       control       to    render       it    a    part     of    the    state”

(emphasis         added;          internal        quotation          marks        and    alteration

omitted)).

                                                    2.

        The record contains substantial evidence showing that PHEAA

operates autonomously, largely free from state interference in

its substantive decisions.

       The    “[m]ost         critical[]”         evidence          of    PHEAA’s       autonomy    is

evidence of its “financial[] independen[ce].”                                    Id.     As already

discussed,        the       evidence     developed           through       discovery      confirmed

                                                    50
the financial independence we assumed in Oberg II.                         PHEAA is not

dependent on state money for its survival and has not received

appropriated funds for operational support since 1988.                               PHEAA

supports    itself        through    its       commercial        financial-services

activities,       through    which   it    earns     hundreds        of    millions    of

dollars annually and has accumulated more than $1 billion in net

assets.     PHEAA is statutorily vested with control over those

funds, see 24 Pa. Stat. §§ 5104(3), 5105.10, and the evidence

from    PHEAA’s     own     officials     establishes         that    PHEAA     in   fact

exercises that statutory control, see, e.g., J.A. 2469 (PHEAA

treasurer   acknowledging        that     PHEAA    board      makes       the   financial

decisions reflected in PHEAA’s annual report to Governor and

General Assembly); J.A. 249 (“PHEAA’s Board reviews, analyzes

and    approves    PHEAA’s     internal        budget,    which      is    proposed    by

management and presented to the Board.”).                     PHEAA’s control over

its     substantial,         independently         generated          revenues        thus

establishes PHEAA’s financial independence, which is a critical

component of operational autonomy.                 See Oberg II, 745 F.3d at

139.

       Testimony from PHEAA board members also shows the lack of

involvement       by   the    General     Assembly       in    PHEAA’s      operational

affairs.    When asked whether the General Assembly “submit[ted]

policy or business recommendations” to PHEAA, one of the non-

legislative members of the board responded,

                                          51
      The Legislature created PHEAA. . . . [I]t told them
      what they have to do, give them the business operation
      to take care of the students of Pennsylvania.

           That was the Legislature’s role.    That’s their
      only role at this point. They change their mind, they
      can create a statute to change it.

J.A. 3353.         The absence of significant legislative control or

oversight     is     also    reflected    in     the    testimony   of     PHEAA’s

chairman, who stated that “[i]f the Speaker of the House or any

member of the General Assembly would ask me a question regarding

PHEAA, I certainly would meet with them and discuss whatever the

matter is with them.          But I do not report back to anyone in the

General Assembly.”           J.A. 2696; see also Declaration of PHEAA

Chairman    of     the   Board,   J.A.   249    (“The   Board   oversees    PHEAA,

makes the policy decisions for the direction of [the] agency,

and   tasks      PHEAA’s    executives    and    managers   with    implementing

those decisions and directions on a day-to-day basis.”). 17




      17In his declaration in support of PHEAA’s motion for
summary judgment, PHEAA’s chairman stated that “I know from my
tenure on the Board and as its Chairman that by virtue of the
composition of PHEAA’s Board with members of the legislative and
executive branches, the Commonwealth exercises absolute control
over PHEAA.”   J.A. 248 (emphasis added).   Oberg II, of course,
forecloses any argument that the composition of the board
establishes absolute control.    Moreover, as we have previously
indicated, a witness’s conclusory assertion of the answer to a
legal question is not controlling.     Cf. Doren v. Battle Creek
Health Sys., 187 F.3d 595, 598-599 (6th Cir. 1999) (explaining
that conclusory affidavits “restating the requirements of the
law” but containing no “specific facts” do not “create a genuine
issue of material fact sufficient to defeat summary judgment”).


                                         52
     The broad range of powers statutorily granted to PHEAA is

also important evidence of PHEAA’s operational autonomy.                    “PHEAA

has the power to enter into contracts, sue and be sued, and

purchase and sell property in its own name, all of which suggest

operational autonomy.”         Oberg II, 745 F.3d at 139.            The statutes

granting    PHEAA    control    over    its    funds     on    deposit    with   the

Treasury similarly are evidence of PHEAA’s operational autonomy.

See 24 Pa. Stat. §§ 5104(3), 5105.10,

     PHEAA’s creation and support of PHEF also provides powerful

evidence of PHEAA’s autonomy.            Even though PHEAA is statutorily

authorized     to    solicit    and    accept      charitable     donations,      it

created PHEF and gave PHEF more than $10 million a year to do

that job. 18    And it did so in the absence of express statutory

authority      to    create    and     support      a    dependent       charitable

organization, and without any involvement of the Governor or

General      Assembly     beyond       the     routine        review-and-approval

processes of the Treasury Department and the Attorney General.

PHEF thus provides a telling example of PHEAA exercising the

financial and operational autonomy granted to it by statute.

     Another        telling    example        of    PHEAA’s      financial       and

operational autonomy involves an unsolicited, $1-billion buy-out

     18 From all that appears in the record, PHEF did its job
quite   poorly.     PHEF  collected   $11   million  in   private
contributions over a six-year period in which PHEAA provided
PHEF with more than $86 million in cash and donated services.


                                        53
offer    made     in    2005    by       the   SLM    Corporation,      better       known    as

Sallie     Mae.        PHEAA’s       board     rejected      the     offer    on    its    own,

without direction from the Governor or General Assembly.

       PHEAA’s response to a dispute about billing calculations

with     the    agency       administering            Commonwealth      employee-benefit

programs        provides        another         concrete           example     of     PHEAA’s

independence from the Commonwealth.                         After the billing dispute

arose, PHEAA’s board first explored the possibility of providing

health      benefits         “outside”          the     Commonwealth.          J.A.        2880.

Eventually, the board unilaterally reduced the amount it paid

the agency for its employees’ health benefits.                               See J.A. 2881.

In our view, these actions show autonomy on the part of PHEAA,

not domination by the Commonwealth.

       Moreover,       PHEAA        itself     routinely      asserts        its    financial

strength       and     its    independence           from    the    Commonwealth.            For

example, PHEAA has described itself as an “independent public

corporation,” J.A. 3407, and as “a self-funded organization with

operations      similar        to    a    not-for-profit        business,”         J.A.    3408.

See also J.A. 3020 (letter from a PHEAA vice-president to a

Pennsylvania         newspaper       defending        PHEAA’s      salaries    and    bonuses

and distinguishing PHEAA from a “typical state agency”).

       Similarly,       the     Commonwealth          has    indicated,       through      both

formal and less-formal channels, its lack of control over PHEAA.

On   the   formal       side,       the    Commonwealth’s           Comprehensive         Annual

                                                54
Financial        Reports        state   that         the        Commonwealth       “does        not

significantly impose its will on the PHEAA.”                               J.A. 596.           Less

formally, after PHEAA rejected the Sallie Mae offer, a spokesman

for then-Governor Edward Rendell stated, “We have no influence

over PHEAA’s decision-making.”                 J.A. 3364.

        When     this        evidence   is     considered              along    with     PHEAA’s

statutory corporate powers and its statutory control over its

funds on deposit with the Treasury, we believe it convincingly

establishes           that      PHEAA        operates           independently,           without

significant interference from the Commonwealth.                                See, e.g., Vogt

v. Board of Commissioners, 294 F.3d 684, 694-95 (5th Cir. 2002)

(finding        levee     district      to    be      autonomous          for     arm-of-state

purposes because district “has considerable management authority

.   .   .     [and]     no    branch    of    government          exercises        supervisory

control over the day-to-day operations of the levee district”

(internal quotation marks omitted)).

                                              3.

        While     there       is    evidence       showing         a     certain       level       of

Commonwealth control over PHEAA, it does not change our view of

PHEAA’s autonomy.

        The    most     significant     evidence           of    state     control      is     that

involving the Attorney General.                    As described above, PHEAA must

submit      contracts        over   $20,000     to    the       Attorney       General       for    a

“form and legality” review determining whether the “contract is

                                              55
in         improper       form,        not         statutorily         authorized       or

unconstitutional.”               71   Pa.     Stat.   §   732-204(f)).          A   Deputy

Attorney General explained the review process:

            Our standard under the statute is form and
       legality, and what that includes is . . . the form of
       the contract. . . . Does it comply with the contract
       law, also does it include terms that are required of a
       Commonwealth contract, and does it not include terms
       that would be prohibited in a Commonwealth contract.

            Then we look to authority. Does the agency as a
       public agency have the statutory authority to engage
       in this type of transaction, are there any other
       statutes or court decisions that would allow or
       preclude the contract. And then, thirdly, we look at
       the constitutionality.   As a public agency, is this
       type of thing constitutional in the state or federal
       constitution.

            If all that is all right, we approve it. We do
       not look to business judgment.     We do not look to
       financial issues. We do not look to political issues.

J.A.       3055;    see   also    J.A.      3058   (agreeing     that    “the   Attorney

General’s Office is not getting involved in business matters,”

only       “legal     formalities        to    ensure     that    it    complies      with

Pennsylvania law”; J.A. 3095 (“I don’t look at the business.                             I

don’t look [at whether it] is . . . a good idea.                          I don’t look

[at whether it] is . . . what I would do in their place.                            I look

to legal issues.”).              Thus, much like the Treasury Department’s

payment-approval process, the Attorney General’s review process

is     a     checklist-driven,           essentially       non-substantive          review

process.




                                              56
        Although the review process is largely ministerial, there

is no doubt that it amounts to an exercise of state control that

restricts PHEAA’s autonomy to some degree.                         The other aspects of

the Attorney General’s involvement in PHEAA’s affairs, such as

the requirement that the Attorney General represent PHEAA in

litigation       absent     a     delegation        of    authority      and      the     binding

nature of any legal opinions issued by the Attorney General,

likewise must be understood as restrictions on PHEAA’s autonomy.

       Other indications of PHEAA’s lack of autonomy relied upon

by PHEAA derive from the general statutory provisions governing

PHEAA’s    finances         and    operations:            PHEAA    was    created         by    the

Commonwealth, can exercise only those powers granted to it by

the   Commonwealth,         and    can    be    dissolved         by   the     Commonwealth.

Under the statute in force during the time relevant to Oberg’s

complaint, PHEAA’s 20-member board was composed of gubernatorial

appointees and state officials, which suggests some level of

state control.         See Oberg II, 745 F.3d at 139.                             In addition,

PHEAA     must    deposit         its    commercial         revenues         in     the    state

Treasury,    and      the    Treasurer         must      approve    payments        made       from

those funds.       The Governor must approve PHEAA’s debt issuances,

and the General Assembly has capped the total amount of debt

PHEAA can incur.             PHEAA is required to report its financial

condition annually to the Governor and General Assembly, and it

is    subject    to    audit       by    the    Commonwealth’s           Auditor        General.

                                               57
PHEAA is also subject to the Commonwealth’s Sunshine Act, see 65

Pa. Cons. Stat. § 701, and its Right-To-Know Law, see 65 Pa.

Cons. Stat. § 67.102. 19         All of these statutory facts were

considered by the court in Oberg II but were insufficient in the

face of PHEAA’s statutory control over its funds to tip the

autonomy factor to PHEAA’s favor.              Our review of the record

gives us no basis for striking a different balance.

     Of   the   various   statutory    strings    that   tie   PHEAA   to   the

Commonwealth, some are more important than others.              For example,

the requirement that PHEAA annually report to the Governor and

General Assembly, and the applicability to PHEAA of the open-

meetings and right-to-know laws, are “minor strings,” Takle v.

Univ. of Wis. Hosp. & Clinics Auth., 402 F.3d 768, 771 (7th Cir.

2005), that have little practical effect on PHEAA’s independence

and are not dissimilar from requirements imposed by the state on

other political subdivisions. 20           While they are relevant to the


     19 Certain of PHEAA’s contracts are exempt from the Right-
To-Know Law. See 24 Pa. Stat. § 5104(1.1)(iii).

     20 See 65 Pa. Cons. Stat. § 703 (Sunshine Act applies to
“any political subdivision of the Commonwealth,” which is
defined to include “[a]ny county [or] city”); 65 Pa. Cons. Stat.
§ 67.102 (Right-To-Know Law applies to a “local agency,” which
is defined as “[a]ny political subdivision, intermediate unit,
charter school, cyber charter school or public trade or
vocational    school,”   and   “[a]ny   local,   intergovernmental,
regional   or   municipal   agency,   authority,  council,   board,
commission or similar governmental entity.”); 53 Pa. Cons. Stat.
§ 8110 (requiring local governments to submit a “debt statement”
(Continued)
                                      58
arm-of-state analysis, these minor strings ultimately do little

work   in   distinguishing     arms   of    the     state   from   independent

political subdivisions.        See Regents, 519 U.S. at 429, n.5 (arm-

of-state inquiry seeks to determine whether “a particular state

agency has the same kind of independent status as a county or is

instead an arm of the State”).             Accordingly, while we conclude

that these minor strings do point towards arm-of-state status,

they do not carry much weight in the final analysis.

       There is no doubt, however, that some of the more important

statutory strings tying PHEAA to the state, such as the payment-

approval process of the Treasury Department and the oversight

exercised by the Attorney General, operate to restrict PHEAA’s

autonomy    to   a   certain    degree.       The     arm-of-state   inquiry,

however, does not turn on whether the entity is subject to any

amount of state regulation at all, or whether it is subject to

more regulation than a private business, but whether the entity

functions    independently      of    the     state    despite     the   state

regulation to which it is subject.           See Oberg I, 681 F.3d at 580

(explaining that the arm-of-state factors “endeavor to draw the

line between a State-created entity functioning independently of

the State from a State-created entity functioning as an arm of




to the Department of Community and Economic Development of the
Commonwealth before issuing bonds).


                                      59
the State or its alter ego” (internal quotation marks omitted));

Univ. of R.I. v. A.W. Chesterton Co., 2 F.3d 1200, 1205 (1st

Cir. 1993) (“[The arm-of-state factors] are designed to disclose

the extent to which state law endows the incorporated State-

related entity with the operational authority, discretion, and

proprietary resources with which to function independently of

the State.”).

     In this case, the relevant state statutes simply do not

amount to “pervasive control over PHEAA,” as PHEAA contends.

Brief of Respondent at 27.          These statutory restrictions operate

predominantly    at   the       administrative   edges     rather    than    the

discretionary heart of PHEAA’s authority.            They may dictate the

manner in which PHEAA pays its bills, or require the inclusion

or exclusion of a few contract clauses, but they do not intrude

on PHEAA’s exercise of its substantive discretion. 21                When the

question   is   whether     a   state   exercises   such   control    over   an

entity that the entity “is simply a tool of the state,” Oberg

II, 745 F.3d at 139, control over matters of substance is what


     21 In 2007, a firestorm of criticism erupted after PHEAA
spent more than $80,000 on tickets to Hershey Park for employees
and   their  guests   as   part  of   PHEAA’s  annual   “Employee
Appreciation Day” at the park.    J.A. 3019.   The contracts and
payments associated with the event were routinely processed
through and approved by the Attorney General’s office and the
Treasury Department.    See J.A. 2478, 2840.    Had these review
processes been substantive, as PHEAA insists they are, the road
to approval of these expenses would likely have been bumpier.


                                        60
matters.       See     United    States        ex    rel.   Sikkenga     v.   Regence

BlueCross BlueShield of Utah, 472 F.3d 702, 720 (10th Cir. 2006)

(state-created entity autonomous under arm-of-state test because

entity’s     board    of   directors      “sets       policies     and   operational

objectives” and entity’s “day-to-day operations are independent”

(internal quotation marks omitted)); cf. Lebron v. Nat’l R.R.

Passenger Corp., 513 U.S. 374, 385, 399 (1995) (finding Amtrak

to be a governmental entity against whom a First Amendment claim

could be brought, notwithstanding statutory directive that it

“be operated and managed as a for profit corporation,” because

the   federal    government       exerts        control     over    Amtrak    “as    a

policymaker”         (emphasis    added;            internal     quotation       marks

omitted)).

      As discussed above, the record establishes that PHEAA, not

the   Commonwealth,        controls       PHEAA’s       funds      and   makes      the

substantive decisions governing the focus and direction of the

company and its day-to-day operations. 22                   We therefore conclude


      22According to PHEAA, it does not matter whether the
Commonwealth actually exercises control over PHEAA; “[i]t is the
Commonwealth’s indisputable authority to veto PHEAA’s legal
decisions that is relevant.”   Brief of Respondent at 34, n.16.
In making this argument, PHEAA again ignores Oberg II, which
vacated and remanded for discovery “on the question whether
PHEAA is truly subject to sufficient state control to render it
a part of the state.”     Oberg II, 745 F.3d at 141 (internal
quotation marks and alteration omitted). If the mere existence
of authority flowing from the statutes relied upon by PHEAA were
sufficient to resolve the autonomy question, discovery would not
(Continued)
                                          61
that   the   autonomy       factor    weighs     heavily    against    arm-of-state

status.

                               C.    State Concerns

       The   third    arm-of-state        factor     requires    us    to     consider

“whether the entity is involved with state concerns as distinct

from non-state concerns, including local concerns.”                           Oberg I,

681 F.3d at 580 (internal quotation marks omitted).                     “‘Non-state

concerns,’       however,    do     not   mean   only   ‘local’       concerns,    but

rather    also    encompass       other   non-state     interests      like    out-of-

state operations.”          Oberg II, 745 F.3d at 137.

       In Oberg II, we found this factor weighed in favor of arm-

of-state status because PHEAA’s focus on improving access to

higher education was a matter of “legitimate state concern.”

Oberg II, 745 F.3d at 140.                In the course of this ruling, we

rejected Oberg’s argument that “due to PHEAA’s commercial focus,

its    operations    do     not     involve     an   area   of   legitimate      state

concern,” id. at 139-40, as well as his argument that PHEAA’s

extensive out-of-state commercial activities showed that PHEAA

was not primarily focused on state concerns, see id. at 140.




have been required.   Moreover, given the based-on-the-pleadings
conclusion in Oberg II that the autonomy factor weighed against
arm-of-state status, see Oberg II, 745 F.3d at 139, the Oberg II
court necessarily concluded that the level of state control
reflected in the governing statutes was outweighed by PHEAA’s
statutorily vested control over its funds.


                                           62
       The         district         court         on       remand      concluded           that,

notwithstanding           PHEAA’s       substantial        out-of-state         activity      and

income, PHEAA’s activities primarily involve state, rather than

“non-state concerns.”               See Oberg III, 77 F. Supp. 3d at 499.                       In

the court’s view, “[t]he fact that PHEAA purchases, services,

and guarantees loans to borrowers throughout the country does

not    constitute         non-state       concerns         because    this      was    done     to

generate earnings to return to Pennsylvania students and defray

their costs.”            Id.

       On appeal, Oberg argues that after discovery, the state-

concerns       factor          weighs    against       arm-of-state        status.         As    a

sanction for PHEAA's discovery violations, the magistrate judge

ordered that “it shall be taken as established . . . that from

2002    to    [October         2014],     the   majority      of     PHEAA’s      revenue     and

income       was    derived       from    out-of-state           activity.”         J.A.    172.

Oberg     contends         that     our     analysis        in     Oberg     II    makes      the

percentage          of    out-of-state          earnings         determinative        of      this

factor.        Accordingly, because it is now established that the

majority       of    PHEAA’s        revenues       are     generated       by     out-of-state

activities,         Oberg        argues    that      the    district       court      erred     in




                                                63
concluding that the state-concern factor weighed in favor of

arm-of-state status. 23

      Although Oberg II clearly makes the amount of out-of-state

activity relevant, see Oberg II, 745 F.3d at 137, we do not

believe    it    makes      out-of-state    activity      dispositive,       as   Oberg

argues.       Addressing Oberg’s argument in the prior appeal that

PHEAA’s operations “were so focused out of state that PHEAA was

not involved primarily with state concerns,” we noted that the

complaint alleged that in 2005, “one-third of PHEAA’s earnings

came from outside the Commonwealth.”                 Oberg II, 745 F.3d at 140

(internal quotation marks and alterations omitted).                           We then

explained       that   if    “one-third    of    PHEAA’s    earnings     came     from

outside Pennsylvania in 2005, it does not seem plausible that by

2006 -- the last year encompassed by Dr. Oberg’s allegations --

PHEAA’s operations focused primarily out of state.”                    Id.

      Oberg II’s observation that the complaint did not plausibly

allege that the majority of PHEAA’s revenues were earned outside

the   state     cannot      be   understood     as   an   acceptance    of    Oberg’s


      23PHEAA makes various arguments about why Oberg’s focus on
the out-of-state percentage is irrelevant or unwise. See Brief
of Respondent at 37-39. In making these arguments, however,
PHEAA fails to acknowledge that Oberg II explicitly held that
out-of-state operations are relevant to the state-concerns
factor.   See Oberg II, 745 F.3d at 137 (“‘Non-state concerns,’
however, do not mean only ‘local’ concerns, but rather also
encompass    other   non-state   interests   like   out-of-state
operations.” (second emphasis added)).


                                           64
argument that an entity cannot be primarily involved in state

concerns if the entity earns more than half of its revenues from

out of state.          After all, Oberg II’s analysis of the state-

concerns factor considered facts beyond the in- versus out-of-

state source of PHEAA’s earnings, see id. at 140, and there is

no reason to think those facts would suddenly become irrelevant

the    moment    out-of-state       earnings        cross    the   halfway      point.

Accordingly,     while    we    find    it   highly    relevant    to    the    state-

concerns factor that “the majority of PHEAA’s revenue and income

was derived from out-of-state activity,” J.A. 172, we do not

believe that fact to be dispositive.

       Instead, when evaluating this factor, we must continue to

give weight to the fact that PHEAA’s work -- “facilitat[ing] the

attainment      of    education    by    supplying      student     financial      aid

services,”      Oberg    II,      745   F.3d    at     140    --   involves       what

Pennsylvania         believes     to    be     an     “essential        governmental

function,” 24 Pa. Stat. § 5105.6, and what we have concluded

“is clearly of legitimate state concern,” Oberg II, 745 F.3d at

140.    We must also consider the fact that PHEAA does provide

significant services to the citizens of Pennsylvania.                          See Ram

Ditta v. Md. Nat’l Capital Park & Planning Comm’n, 822 F.2d 456,

459 (4th Cir. 1987) (considering whether the services provided

by the entity inured primarily to the benefit of local residents

rather than state citizens in general).                     PHEAA administers the

                                         65
State Grant Program and distributes every penny of its state

appropriations to qualifying students, and it has on several

occasions made significant contributions of its own earnings to

the state program.           Thus, to the extent that PHEAA’s business

activities inure to the benefit of anyone other than itself and

its   employees,      they     inure    to     the    benefit      of   Pennsylvania

citizens.

      After    considering      all    of    these    facts     and     the    relevant

statutory provisions, we conclude that PHEAA’s case for arm-of-

state status under this factor has been weakened by discovery.

The extent of PHEAA’s out-of-state earnings is relevant to the

state-concern       factor,    see     Oberg    II,    745    F.3d      at    137,    and

discovery has established those earnings at a level Oberg II

believed “implausible,” id. at 140.                   Nonetheless, in light of

the other relevant facts noted above, we believe this factor

still points towards arm-of-state status, but just barely.

                       D. Treatment under State Law

      The final arm-of-state factor requires us to consider how

the   entity   is    treated    under       state    law.    “In   addressing        this

factor, a court may consider both the relevant state statutes,

regulations,    and    constitutional          provisions     which     characterize

the entity, and the holdings of state courts on the question.”

Id. at 138 (internal quotation marks omitted). Noting that PHEAA

was created to perform an “essential government function” for

                                         66
the benefit of the state’s citizens and that Pennsylvania courts

treat PHEAA as a state agency, this court in Oberg II concluded

that   the    state-law   factor     weighed    in   favor     of    arm-of-state

status.      Oberg II, 745 F.3d at 140.

       The district court reached the same conclusion on remand.

The    district   court   observed     that    PHEAA     was   created    by   the

General   Assembly,    that   “[a]ll    of     PHEAA’s    limited     powers   and

authority come from the General Assembly by statute,” Oberg III,

77 F. Supp. 3d at 499, that it is exempt from state taxation,

that it is subject to Pennsylvania open-meeting and right-to-

know laws, and that its employees are treated as Commonwealth

employees.      The district court thus concluded that “Pennsylvania

law clearly regards PHEAA as a state agency,” id. at 499, a

conclusion that “weighs heavily in favor of finding PHEAA to be

an arm of the state,” id. at 500 (emphasis added).

       We agree with the district court that PHEAA is generally

treated as a state agency under state law.                 We see nothing in

the record, however, to support the heavy weight the district

court assigned to this factor.               As the district court noted,

discovery      established    that   PHEAA     employees       are   treated    as

Commonwealth employees for purposes of payroll, retirement, and

health-care benefits, which perhaps shows that the state treats

PHEAA as it does traditional state agencies.               But discovery also

yielded evidence showing the state treats PHEAA differently than

                                       67
it does traditional agencies -- for example, PHEAA management

employees   are    not    paid     in    accordance        with   Commonwealth       pay

scales; governors ask PHEAA to return appropriated funds when

times are tight but direct other agencies to do so; and the

Commonwealth acknowledges in its financial reports that it does

not impose its will on PHEAA.                  While the statutes and state-

court decisions relied on in Oberg II remain sufficient to tip

this factor towards arm-of-state status, see Oberg II, 745 F.3d

at 140, the factual information learned through discovery falls

fairly evenly on both sides of the scale.                    Accordingly, although

this factor weighs in favor of arm-of-state status, we cannot

conclude that it weighs heavily in favor.

                                          V.

       Our analysis of the arm-of-state factors thus brings us to

this   point.       As   to    the      state-treasury        factor,    Oberg      II’s

determination     that   Pennsylvania          is    not    legally   liable     for    a

judgment    against      PHEAA       remains        controlling.        And    as      to

functional liability, the keys facts assumed by the court in

Oberg II -- PHEAA’s control over its significant, independent

corporate    wealth      --   were       confirmed         through    discovery     and

foreclose   a     finding     of   functional         liability.        Because     the

Commonwealth of Pennsylvania is neither legally nor functionally

liable for a judgment against PHEAA, the state Treasury is not



                                          68
implicated in this case, and the first factor weighs heavily

against arm-of-state status.

      As      to     the     autonomy     factor,      the    statutes          and     evidence

described above establish that PHEAA exercises control over its

revenues,      makes       policy      decisions,      sets     its    own       budget,      and

otherwise          manages    the     day-to-day       activities          of    the    company

without      significant         interference        from    the    Commonwealth.             The

areas    in    which       the    state      exercises       some    amount        of    control

primarily          involve     ministerial       matters       and     do       not     diminish

PHEAA’s       control         over     substantive          matters.             Because      the

Commonwealth vests PHEAA with a significant amount of autonomy,

this factor also weighs heavily against arm-of-state status.

      As to the state-concerns factor and the state-law factor,

both weigh in favor of arm-of-state status.                            Since it has been

established         for    purposes     of    this    case     that    the       majority      of

PHEAA’s       revenues       during     the    relevant       period        were      generated

through       out-of-state        activities,        however,        the     state-concerns

factor only weakly points to arm-of-state status.

      If we simply did the math, so to speak, the factors would

add     up     to     “political        subdivision,”          not      “alter          ego    of

Pennsylvania.”             Arm-of-state status, however, is a question of

balance, not math.               In cases like this one, where the arm-of-

state “indicators point in different directions, the Eleventh

Amendment’s         twin     reasons    for    being     remain       our       prime    guide.”

                                               69
Hess, 513 U.S. at 47.        In our view, these twin reasons -- “the

protection of state treasuries and respect for the sovereign

dignity of the states,” Gray v. Laws, 51 F.3d 426, 432 (4th Cir.

1995) -- guide us to the same conclusion:                    For purposes of

federal law, PHEAA is a political subdivision, not an arm or

alter ego of Pennsylvania.

      PHEAA is a very wealthy corporation engaging in nationwide

commercial    student-loan     financial-services         activities.      It   is

statutorily vested with substantive control over its commercial

revenues, and it in fact exercises control over those revenues.

Its   commercial     revenues       have     made   PHEAA     entirely     self-

sufficient, and the Commonwealth has not appropriated funds for

PHEAA’s operational support since 1988.               The Commonwealth does

not assert ownership of PHEAA’s commercial revenues, and it is

neither legally nor functionally liable for a judgment against

PHEAA.    Permitting this action to proceed against PHEAA thus

does not place the Pennsylvania treasury at risk.

      Permitting the action to proceed likewise does not offend

the   sovereign      dignity       of   Pennsylvania.           Although        the

Commonwealth has imposed some not-insignificant restrictions on

PHEAA’s   operations,    the    Commonwealth        has   nonetheless    vested

PHEAA with broad power over its finances and operations.                 PHEAA,

not the Governor or the General Assembly, sets policy for the

corporation    and   makes   the    substantive     fiscal    and   operational

                                        70
decisions.            Indeed,    the   Commonwealth            admits     in    its    public

financial statements that it cannot impose its will on PHEAA.

Thus, the Commonwealth has structured PHEAA to be financially

and    operationally        independent,           and    PHEAA      in    fact       operates

independently, without significant Commonwealth interference or

substantive          supervision.        In    light      of     PHEAA’s       intended   and

actual independence from the Commonwealth, we cannot conclude

that it would be an affront to Pennsylvania’s sovereign dignity

to permit this action to proceed against PHEAA.                             See Hess, 513

U.S.     at     52     (“[T]he    Port        Authority        is    financially        self-

sufficient; it generates its own revenues, and it pays its own

debts.        Requiring the Port Authority to answer in federal court

. . . does not touch the concerns -- the States’ solvency and

dignity -- that underpin the Eleventh Amendment.”).

       We      therefore    conclude          that       PHEAA      is    an    independent

political subdivision, not an arm of the Commonwealth, and that

PHEAA is therefore a “person” subject to liability under the

False Claims Act.          In our view, any other conclusion “would . .

.   heighten     a     mystery   of    legal       evolution”       by    “spread[ing]     an

Eleventh Amendment cover over an agency that consumes no state

revenues but contributes to the State’s wealth.”                           Hess, 513 U.S.

at 51, n.21 (internal quotation marks omitted).                           Accordingly, we

hereby vacate the district court’s grant of summary judgment in



                                              71
favor of PHEAA, and we remand for further proceedings on the

merits of Oberg’s FCA claims against PHEAA.

                                              VACATED AND REMANDED




                               72
