Opposition Brief — National Ass'n of Counties v. Brady

In the Supreme Court of the Gnited States

OCTOBER TERM, 1988

NATIONAL ASSOCIATION OF COUNTIES, ET AL., PETITIONERS

v.

NICHOLAS F. BRADY, SECRETARY OF THE TREASURY

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

MEMORANDUM FOR THE RESPONDENT IN OPPOSITION

CHARLES FRIED

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Cases:

Bowsher v. Svnar, 478 U.S. 714 (1986) ...........

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984)

City of Los Angeles v. Adams, 556 F.2d 40 (D.C. Cir.

SP a ee cue Mem eda ale eee ee eke’

City of New Haven v. United States, 809 F.2d 900 (D.C.

Kendall v. United States ex rel. Stokes, 37 U.S. (12 Pet.)

eI i bs Nlp. ad as Rae Os eee ure ae

State Highway Comm’n v. Volpe, 479 F.2d 1099 (8th Cir.

i ORE SA eo Oe nee en ree a genres

PVA WV. Fee, O37 US. 1935 C0GTE) 5 ges i vec cic cs

Train vy. City of New York, 420 U.S. 35 (1975)

United States v. Borden Co., 308 U.S. 188 (1939)

United States v. Larionoff, 431 U.S. 864 ....

United States v. Will, 449 U.S. 200 (1980)

Statutes:

Act of Sept. 13, 1982, Pub. L. No. 97-258, ;

BN ea a ee ee a en ae eee

Act of Nov. 25, 1985, Pub. L. No. 99-160, § 1, 99 Stat

. Saray rere re

Act of July 31, 1986, Pub. L. No. 99-366, 100 Stat. 773

Balanced Budget and Emergency Deficit Controi Act ot

1985, Pub. L. No. 99-177, 99 Stat. 1037 (Gramin-

Rudman-Hollings Act), 2 U.S.C. (Supp. III) 901 ef seq.

§ 255(g)(1), 2 U.S.C. (Supp. IIL) 905(2)(1) .

§ 256(a)(2), 2 U.S.C. (Supp. TIL) 906(a)(2)

Consolidated Omnibus Budget Reconciliation

1985, Pub. L. No. 99-272, 100 Stat. 82:

§ 14001, 100 Stat. 327

§ 14001(a)(2), 100 Stat. 328

impoundment Control Act of 1974, 2 U.S.C. 681 ef sey

2 U.S.C. 683

2} S684

(111)

Page

6,

IV

Statutes — Continued: Page

Local Government Fiscal Assistance Amendments of

1983, Pub. L. No. 98-185, 97 Stat. 1309:

4 2, OF Sot, Geo ka a eee l

Sed. OF Bie. 1901... Ga l

Revenue Sharing Act, 31 U.S.C. 6701 ef seq. ........... l

32 4) S00. COD oie ok oe ae tea eee 8

St USA. CHRIS oss 4 vio oe oe eee 2

34 41.50 RO 5 ce ks Oe eee 2,8

3] US... CHO 2 ori eee 2,8

State and Local Fiscal Assistance Act of 1972, Pub. L.

No. 92-512, & BZ, OE Seat. FOO sr es ine wees l

State and Local Fiscal Assistance Amendments of 1976,

Pub. L. No. 94-488, § 6(e)(1), 90 Stat. 2347 .......... l

State and Local Fiscal Assistance Act Amendments of

1980, Pub. L. No. 96-604, § 2(c)(1), 94 Stat. 3517 ..... l

Miscellaneous:

Hearing on H.R. 5313 Before a Subcomm. of the Sen-

ate Comm. on Appropriations, 99th Cong., 2d Sess.

(HES 66 eA ae eee Sper 9

Jn the Supreme Court of the Gnited States

OCTOBER TERM, 1988

No. 88-505

NATIONAL ASSOCIATION OF COUNTIES, ET AL., PETITIONERS

V.

NICHOLAS F. BRADY, SECRETARY OF THE TREASURY

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

MEMORANDUM FOR THE RESPONDENT IN OPPOSITION

Petitioners challenge the ruling of the court of appeals

that the Secretary of the Treasury had no authority to dis-

burse to local governments $180 million in Revenue Shar-

ing Trust Funds sequestered by Congress during the final

year of the Revenue Sharing Program.

1. The Revenue Sharing Act, 31 U.S.C. 6701 ef seq.

(repealed 1986), established a financial assistance program

for local governments authorized through fiscal year (FY)

1986.' The payments to the local governments were made

' As initially enacted in 1972, the Revenue Sharing Act authorized

and appropriated funds for the original five-year duration of the pro-

gram. Thereafter, the program was reenacted and amended several

times to authorize appropriations for several years at a time. See Pub.

L. No. 92-512, § 102, 86 Stat. 919; Pub. L. No. 94-488, § 6(e)(1), 90

Stat. 2347; Pub. L. No. 96-604, § 2(c)(1), 94 Stat. 3517; Pub. L. No.

97-258, § 1, 96 Stat. 1012; Pub. L. No. 98-185, §§ 2, 9(a), 97 Stat.

1309, 1311.

(1)

2

through the State and Local Government Fiscal Assistance

Trust Fund, of which the Secretary of the Treasury was

the trustee (Pet. App. 3a). The Trust Fund was funded en-

tirely by appropriations earmarked for “entitlement

period[s],” which coincided with fiscal years (31 U.S.C.

6703(b)). Qualified local governments were awarded a pro

rata share of the money appropriated for any given entitle-

ment period (31 U.S.C. 6707-6709). The trustee was

authorized to pay out the money appropriated for these

entitlement periods beyond the end of the fiscal year (31

U.S.C. 6703(a)(2)).

The last reauthorization of the Revenue Sharing Pro-

gram expired with the FY 1986 entitlement period. In ad-

dition, Congress affirmatively terminated the program in

the Consolidated Omnibus Budget Reconciliation Act of

1985 (COBRA), Pub. L. No. 99-272, § 14001, 100 Stat.

327, and made provisions for an orderly winding down at

the close of the FY 1986 entitlement period.

For the FY 1986 entitlement period, Congress originally

authorized $4,566,700,000 for the Trust Fund but subse-

quently reduced that appropriation to $4,185,000,000.

Pub. L. No. 99-160, § 1, 99 Stat. 924. In addition, 4.3%

of the $4.185 billion was required to be sequestered pur-

suant to the so-called “Gramm-Rudman-Hollings” Act.

Balanced Budget and Emergency Deficit Control Act of

1985, Pub. L. No. 99-177, 99 Stat. 1037 (codified at 2

U.S.C. (Supp. II1) 901 ef seq.).2 The $180 million at stake

in this case represents the 4.3% sequestered under

Gramm-Rudman-Hollings.

Section 256(a)(2) of Gramm-Rudman-Hollings, 2

U.S.C. (Supp. III) 906(a)(2), provides generally that

> After this Court invalidated the President’s sequestration order,

Congress passed legislation ratifying that order. Pub. L. No. 99-366,

100 Stat. 773.

3

budget authority required to be sequestered under the act

“{is] permanently cancelled.” Section 256(a)(2) also pro-

vides, however, that amounts sequestered in trust funds

“shall remain in such funds and be available in accordance

with and to the extent permitted by law.” As the court of

appeals noted (Pet. App. 16a, 20a), the meaning of that

provision is the crux of this case, for it determines whether

in fact the $180 million remained appropriated after the

trust fund was terminated at the end of the sequestration

year.

The Secretary of the Treasury took the position that,

because the Revenue Sharing Trust Fund, unlike any other

trust fund affected by Gramm-Rudman-Hollings, was ter-

minated with the close of the FY 1986 entitlement period,

he had no authority to release the money to the local

governments at the end of the sequestration period. Pur-

suant to Section 14001(a)(2) of COBRA, 100 Stat. 328, he

returned the money to the General Fund of the Treasury.

Petitioners, several local governments and_ several

organizations of local governments, brought suit seeking

an injunction requiring the Secretary to release the funds.

The district court held that the Secretary was required to

disburse the funds (Pet. App. 30a-4la). The court rea-

soned that Section 256(a)(2) of Gramm-Rudman-Hollings

had the effect of merely “freezing” the money for one year

(Pet. App. 34a). The court found the authority for dis-

tributing the money at the end of the sequestration in two

provisions: in the Revenue Sharing Act’s provision that

trust fund monies could generally be paid out after the

close of the fiscal year, and in COBRA’s provision that all

entitlement payments “required to be made” be “complete-

ly made” before any remaining monies revert to the

Treasury (/d. at 35a, 38a).

2. The court of appeals unanimously reversed. The

court first looked to the plain language of Section 256(a)

4

(2), agreeing with the district court that the monies se-

questered in trust funds were to remain “available,” but

finding that the “dispositive issue,” which the district court

failed to address, was whether the funds remained avail-

able beyond the expiration of FY 1986 (Pet. App. 1Sa-17a,

20a-2la). The court interpreted the language that the

funds remain “ ‘available in accordance with and to the ex-

tent permitted by law’ ” as “requiring the funds to remain

available in the applicable Trust Fund as FY 87 budgetary

resources,” which could be spent only if some “independ-

ent source of legislation” applicable to FY 1987 authorized

its expenditure (id. at 16a-17a). The court then concluded

that, “[s]Jince COBRA repealed the Revenue Sharing Act

and its programs, the Secretary has no FY 87 authority to

disburse the sequestered funds” (id. at 17a).

The court of appeals found its reading of Section 256(a)

(2) consistent with the limited available legislative history

and with interpretations of Section 256(a)(2) rendered by

both the Comptroller General and the Office of Manage-

ment and Budget (Pet. App. 19a-20a, 23a-25a). The court

also found its reading the “only plausible interpretation”

in view of Gramm-Rudman-Hollings’ goal of reducing the

deficit (id. at 17a-18a) and noted that, for trust funds

other than the terminated Revenue Sharing Trust Fund,

the sequestered funds would not be lost, but would be car-

ried forward as FY 1987 budgetary resources (id. at

18a-19a).

Finally, the court of appeals found inapplicable all of

the provisions of the Revenue Sharing Act or COBRA re-

lied on by petitioners and the district court, because those

provisions merely mandated the release of monies that in

fact remained appropriated for the Trust Fund (Pet. App.

2la-22a). The court held that the Secretary fully executed

his duties as trustee by releasing to the local governments

“their entire FY 86 entitlements —4.185 billion minus the

4.3% reduction mandated by Gramm-Rudman-Hollings’

and that he did “the only thing that he could do,” which

was to return the $180 million to the General Fund of the

Treasury, as authorized by COBRA (id. at 21a).

3. The decision of the court of appeals ts correct, has

little if any prospective significance, and does not conflict

with any decision of this Court or of any other court of ap-

peals. Accordingly, further review is not warranted.

Petitioners urge on this Court an inapplicable legal

standard and are thus simply wrong in asserting that the

decision below conflicts with prior rulings of this Court.

The issue in Train v. City of New York, 420 U.S. 35

(1975), and State Highway Comm’n v. Volpe, 479 F.2d

1099 (8th Cir. 1973), the so-called “impoundment” cases

on which petitioners chiefly rely, was whether Congress

had intended to give the Executive Branch discretion to

spend less than the entire amount Congress had appropri-

ated for a program.’ In the present case, the issue ts

whether Congress in fact appropriated the funds; the

Secretary has never sought to assert any discretionary

authority with regard to the funds. Indeed, the Secretary’s

consistent position has been that he had no choice but to

return the $180 million to the General Treasury, because

the provisions in the three statutes involved in this case et-

fected a congressional cancellation of any appropriations

} Similarly, the issue in Aendall v. United States ex rel. Stokes, 37

U.S. (12 Pet.) $24 (1838), was whether Congress intended to conter

discretion on the Executive not to follow the decision of an arbitrator

to whom Congress had delegated the spending decison. The decision

in Cuy of New Haven. United States, 809 F.2d 900 (D.C. Cir. 1987),

is concerned solely with Congress’s intent in passing the Impoundment

Control Act of 1974, 2 U.S.C. 683, 684, and ts thus of no aid in this

case except as a reminder that, if this case really involved an issue ot

discretionary spending, petitioners certainly would have argued that

the Impoundment Control Act was violated.

6

authorizing disbursement of the funds; the money was

withdrawn by operation of law.

Because the true issue in this case was whether Congress

intended the $180 million to remain appropriated, and not

whether the Secretary had discretion with regard to un-

questionably appropriated funds, this case presented to

the court of appeals an ordinary Statutory construction

problem. The court answered that problem by correctly

turning to traditional statutory construction principles and

correctly rejected petitioners’ proffered legal standard.+

See United States v. Will, 449 U.S. 200, 221-224 (1980) (in

determining whether Congress had in fact repealed pre-

viously enacted salary increases, the Court looked to lan-

guage of the statute and its legislative history to discern in-

tent); City of Los Angeles v. Adams, $56 F.2d 40, 47

(D.C. Cir. 1977) (in determining whether Congress had in

tact decreased its original appropriation, the court looked

to the plain meaning of the statute, the legislative history,

and the “absurdity” of a contrary construction).

Petitioners suggest (Pet. 12) that the court of appeals in-

appropriately deferred to the agency interpretation of the

Statutes at isSte under Chevron U.S.A. Inc. v. NRDC, 467

U.S. 837 (1984). But the court of appeals explicitly de-

* In any event, we do not believe that Train and Volpe establish the

Principle petitioners assert regarding the need for an “express” con-

gressional command before an intent to grant discretion to the Execu-

tive will be tound. Indeed, Wolpe held that Congress had not “express-

ly or impliedly” given discretion to the Executive to withhold tunds

(479 F.2d at 1118).

‘In language equally applicable to this case, the City of Los

Angeles court noted ($56 F.2d at 49 & n.21. cuing Train, bolpe, and

other “impoundment” cases) that the case betore it did “not involve in-

dependent refusal by the Executive or agency to spend the amounts

that Congress has required. * * * This was not execulive ‘impound-

ment’ of the legislative appropriations: it was a congressional reduc-

fon —if an impoundment at all, an impoundment by statute.”

-

clined to decide “the extent to which we should defer, if at

all, to the Secretary’s interpretation” (Pet. App. 23a). In

any case, there would have been nothing inappropriate

about applying Chevron deference to this funding

dispute.°

Petitioners’ citation (Pet. 10) of “repeal by implication’

cases is similarly inapposite. Two of the cases’ addressed

the asserted repeal of a substantive measure by way of an

appropriations act, an especially disfavored statutory con-

struction, whereas this case involves the reduction of a

previous appropriation by a later appropriations measure.

A third case, United States v. Will, supra, which involved

a reduction in previously enacted salary increases, actually

supports the court of appeals here: “[W]hen Congress

desires to suspend or repeal a statute in force, ‘[t}here can

be no doubt that. . . it could accomplish its purpose by an

amendment to an appropriation bill, or otherwise.’ * * *

‘The whole question depends on the intention of Congress

as expressed in the statutes.’ ” 449 U.S. at 222 (citations

J

®* In the portion of its opinion that noted the consistency of the

court’s result with administrative interpretations of the statutes al

issue (Pet. App. 23a-25a), the court of appeals did not look to the

Secretary's interpretation but to those of the Office of Management

and Budget and the Comptroller General. The latter 1s an official of

the Legislative Branch, not ithe Executive (see Bowsher v. Synar, 478

U.S. 714, 727-732 (1986)), and his interpretation agrees with that of

the relevant Executive Branch officials. Petitioners’ misconceived

assertions that this case involves “a conflict between Congress and the

Executive Branch” (Pet. 12) and that “the court of appeals gave weight

to the Secretary’siinterpretation” (/bid. (emphasis added)) thus serve

only to obscure the real issues in this case.

’ TWA v. Hill, 437 U.S. 153 (1978) (snail darter’s designation as an

endangered species not impliedly repealed by appropriations tor com-

pletion of dam); Demby v. Schweiker, 671 F.2d 507 (D.C. Cir. 1981)

(substantive formula tor distribution of tunds not impliedly repealed

by appropriations Measure reducing total amount available).

ee

8

omitted). The “repeal by implication” doctrine— which

involves gleaning whether Congress implicitly intended by

way of a later, assertedly inconsistent statute to affect an

earlier measure—has no real application to this case, in

which the court interpreted statutory language explicitly

intended to affect an earlier measure in order to discern

the manner in which the earlier measure was affected.

Finally, petitioners gain nothing by their citation (Pet.

10-11) of United States v. Larionoff, 431 U.S. 864 (1977),

for the proposition that constitutional problems would be

presented by congressional reduction of an “entitlement”

benefit. Here, petitioners have not presented a constitu-

tional challenge, and, by not challenging Congress’s initial

reduction in the FY 1986 appropriation from $4.566

billion to $4.185 billion (after the beginning of FY 1986),

they have in essence conceded that no “entitlement” to

Revenue Sharing Trust Funds attaches except as to the pro

rata share of monies actually appropriated. See 31 U.S.C.

6702(a), 6703(b), 6707-6709. As the court of appeals noted

(Pet. App. 17a n.7), petitioners’ “entitlement” argument

“begs the question,” because the issue in this case concerns

how much money in fact remained appropriated and avail-

able for payment of the “entitlements.” °

* The fourth case, United States v. Borden Co., 308 U.S. 188

(1939), does not deal with appropriations at all, but rather with the ex-

tent to which subsequent substantive law will be read to repeal by im-

plication earlier substantive law.

» Petitioners fault the court of appeals for not addressing what they

label the “savings provision” (Pet. 8) of Gramm-Rudman-Hollings,

1.e., Section 255(g)(1), 2 U.S.C. (Supp. III) 905(g)(1), which exempted

from sequestration (along with other accounts) the “Payments to state

and local government assistance trust fund (20-2111-0-1-851).” Peti-

tioners elsewhere (Pet. 4, 11, 13) cite the provision as evidence that

Congress accorded special treatment to the Revenue Sharing Trust

Fund, leaving the impression that possibly the Trust Fund was to have

9

The decision of the court of appeals also announced no

generally applicable legal principles and has little if any

prospective importance. The Revenue Sharing Program

has been terminated, and the court’s statutory construc-

tion of Gramm-Rudman-Hollings would be relevant in a

future case only if (1) sequestration is again required for

trust funds, and (2) the sequestration applies to a par-

ticular trust fund that has been terminated independently

of the sequestration law.

It is therefore respectfully submitted that the petition

for a writ of certiorari should be denied.

CHARLES FRIED

Solicitor General

NOVEMBER 1988

been exempt from sequestration altogether. But petitioners conceded

below that the Trust Fund was subject to sequestration (Pet. App. 15a

n.6, 31a n.2) and they are attempting now to contuse the Issue. As ex-

plained to Congress by Treasury officials, Section 255(g)(1)’s provi-

sion was necessary because of a peculiar accounting device. Hearings

on H.R. 5313 Before a Subcomm. of the Senate Comm. on Ap-

propriations, 99th Cong., 2d Sess. 481-482 (1986). Since the Fund has

no source of revenue other than appropriations, there were two line

accounts for administering the Trust Fund: the “payments to” the

Revenue Sharing Trust Fund and the Trust Fund itself. If Congress

had not exempted the first from sequestration, there would have been

a double sequestration (/bid.).

US GOVERNMENT PRINTING OFFICE 1988— 241.699/60776