Opposition Brief — New Mexico v. Baker

, FILED

No. 84-1105 APR 12 1965

SSCS STEMARs

In the Supreme Court of the Huites- Stays —

OcToBer Term, 1984

STATE OF NEW MEXICO, PETITIONER

Vv.

James A. Baker III, SECRETARY OF

THE TREASURY OF THE UNITED STATES

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE TENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

Rex E. Lee

Solicitor General

GLENN L. ARCHER, JR.

Assistant Attorney General

Ernest J. BROWN

DAvip ENGLISH CARMACK

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

19 /

QUESTION PRESENTED

Whether the court of appeals correctly concluded that the

instant action is one seeking essentially monetary relief

against the United States in an amount in excess of $10,000,

and hence that jurisdiction over the action lies in the Claims

Court and not in the district court.

(I)

Opinions below

Jurisdiction

Statement

Argument

Conclusion

TABLE OF CONTENTS

TABLE OF AUTHORITIES

Cases:

Allied Chemical Corp. v. Daiflon, Inc.,

449 U.S. 33 ..... bERENEROEH OOD DOb0 C08

Austin v. United States, 206 Ct. Cl. 719,

cert. denied, 423 U.S. 911 .............

B.K. Instrument, Inc. v. United States,

Lr ee

Burgos v. Milton, 709 F.2d 1 ...........

Califano v. Sanders, 430 U.S.99 ........

Carter v. Seamans, 411 F.2d 767,

cert. denied, 397 U.S. 941 .............

Dugan v. Rank, 372 U.S. 609 ...........

Estate of Watson v. Blumenthal,

ee Eee cans bese b 600-20 00s

Graham v. Henegar, 640 F.2d 732 .......

Hoopa Valley Tribe v. United States,

CET ClSRGS susp ebabeessovesss

Keller v. MSPB, 679 F.2d 220 ..........

(111)

oseeeeeeeeeeeveeeeeve eee ea eee eeee

seuss 10

IV

Page

Cases—Continued:

Kendall vy. United States, 37 U.S.

Ey OE chase keer beesene chek beneetenns 10

Lenoir vy. Porters Creek Watershed District,

— oot fe ee ee eer rere 7

Louisiana v. McAdoo, 234 U.S. 627 .......... 10

Minnesota v. Heckler, 718 F.2d 852 ...... 7, 8, 10

Murray v. United States, 686 F.2d 1320,

Guat. GORA, Gar Vs BET sec ckewccnccscevecs )

Portsmouth Redevelopment & Housing Authority

v. Pierce, 706 F.2d 471, cert. denied,

ee ee a ki cae avast ecaeesocenss 6, 7, 8, 10

Smith vy. Grimm, 534 F.2d 1346, cert.

ME OE cn cccbcpbcussdeoseeases 10

United States v. Mitchell, No. 81-1748

a ere Tr rere rere 8, 10

United States ex rel. Girard Trust Co. v.

BRE, BEN Gas SD hee b css sncewcsevess 10

Wilbur v. United States ex rel. Kadrie,

oe tas co ak eee ae ewes Oae oe 10

Statutes:

Act of Feb. 25, 1920 (Mineral Lands Leasing

Act of 1920), ch. 85, $ 35, 41 Stat.

i EE, Se oc iccuktisineeecekanens iz

Administrative Procedure Act, 5 U.S.C.

sk ca cates deka hah eked eka ke 4,6,9

Crude Oil Windfall Profit Tax Act, Tit. I,

Pub. L. No. 96-233, 94 Stat. 230,

26 U.S.C. 4986 ef Seq. oc cccccscsccccccccens 2

Page

Statutes—Continued:

ee in ED oo kdb 0s 60 bank eens cake 2

Be EE 60 5 dc cde baeesacuncerbeks 2

Tucker Act:

EE: A bbe wk vdénbbadtdatusecbiveds 5

Be UB. TOR ccc ccicescnsvccveess 6,7

ee es NE ak bke nb ickddcakacsseuen 5

Be ie PEED ic cic cdcdndcccoduwac 6,7

BP EE ik os Weed ccdckaseee 4, 5,6, 7,9

We a Eo sdk and ce de veaueteueee 4,5, 6,9

Se Ss UE 8 6k boo cde Kc000dnuKd korean 5

Se a: BD Geb dkb due dodddcseeeiiceee le 4

Miscellaneous:

125 Cong. Rec. (1979):

EEE Weobndaoek das kkwekeoe eee 2

shone ek Cha aeted ee Kee ee nee 2

126 Cong. Rec. (1980):

I ae a eae eee 2

EE baa bch nt eeeekeuseneevawnies 2

EE 6. k sG0 060 0S605 ees ebua bance 2

St, SEY. 6 si 6 660 bb 66000 0c encesceus 2

SN oo oa Ca poe ee 2

EE LAA Sic sdeedun wasn ves ceeens 2

A Von kah ceseddbensdacdenkeenauewces 2

H.R. Rep. 94-1656, 94th Cong., 2d Sess.

CEUTE -k00nndebnessaesensdaak cee 5

Inu the Supreme Court of the Hnited States

OCTOBER TERM, 1984

No. 84-1105

STATE OF NEW MEXICO, PETITIONER

Vv.

JAMES A. BAKER III, SECRETARY OF

THE TREASURY OF THE UNITED STATES

ON PETITION FOR A WRIT OF CER7IORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE TENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-10a) is

reported at 745 F.2d 1318. The memorandum of the district

court (Pet. App. 1ia-22a) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on

October 9, 1984. The petition for a writ of certiorari was

filed on January 7, 1985. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Under the Mineral Lands Leasing Act of 1920, the

Secretary of the Interior is authorized to lease federally-

owned lands containing oil deposits to third parties for the

purpose of extracting oil. Act of Feb. 25, 1920, ch. 85, $ 35,

41 Stat. 450 (currently codified at 30 U.S.C. 191). The Act

(1)

2

directs that “[a]ll money received from * * * royalties * * *

and rentals of the public lands” shall be paid into the United

States Treasury and thereafter be apportioned according to

formula (30 U.S.C. 191). Under that apportionment for-

mula (with certain exceptions applicable to Alaska), the

Secretary of the Treasury is directed to pay 50% of the

royalties to the state “within the boundaries of which the

leased land * * * are * * * located,” to pay 40% of the

royalties to a Reclamation Fund established by Congress in

1902, and to credit 10% of the royalties to miscellaneous

receipts (30 U.S.C. 191).

On April 2, 1980, Congress enacted the Crude Oil Wind-

fall Profit Tax Act, Tit. I, Pub. L. No. 96-233, 94 Stat. 230 er

seq. (currently codified at 26 U.S.C. 4986 et seq.). That

statute imposes an excise tax on windfall profits realized

from the production of domestic crude oil after February

29, 1980. The United States is subject to tax on windfall

profits derived from oil removed from federally-owned

lands (26 U.S.C. 4986(b), 4996(a)). During congressional

consideration of the windfall profits legislation, senators

from several oil-producing states (including New Mexico)

attempted to prevent oil in which the United States owns an

economic interest from being subjected to the tax, express-

ing concern that the amounts the states would receive under

the Mineral Act would thereby be reduced. See 125 Cong.

Rec. 36290, 36491 (1979); 126 Cong. Rec. 5839-5840, 6062-

6063, 6193-6194, 6658 (1980). They were unsuccessful.

Remarks made during the floor debate by Senator Long,

the Chairman of the Senate Finance Committee, and other

oil-state senators evidenced their understanding that the

statute as enacted would subject the states’ 50% share of

federal oil royalties to diminution by the windfall profit tax.

See 126 Cong. Rec. 2623-2624, 2825-2826, 3030-3031

(1980).

3

2. Reading the relevant provisions of the above-described

statutes together in light of the latter’s legislative history,

the Secretary of the Treasury determined that the windfall

profit tax should be applied against the federal! govern-

ment’s gross royalties from federal oil-producing lands,

before making the apportionment called for by the Mineral

Act. As a result, the burden of the tax was borne ratably by

the states’ 50% share, the Reclamation Fund’s 40% share,

and the general revenue’s 10% share of the royalties. Since

the passage of the Windfall Profit Tax Act in 1980, the

Secretary has consistently paid to the states oil royalty

distributions that reflected their 50% share of the royalties

diminished by a ratable share of the tax. Pet. App. 2a; R.

12-13.

On December 17, 1980, the Attorney General of New

Mexico protested the Secretary’s computation. He con-

tended that the Mineral Act required the Treasury to remit

to the states 50% of gross federal oil royalties, undimin-

ished by any windfall profit tax, and that the entire burden

of the tax should thus be borne by the United States (R.

14-15). The Secretary denied the protest. Under New Mexi-

co’s position, he pointed out, the imposition of the windfall

profit tax on federal royalty income, contrary to Congress’s

intent, would raise no net revenue, since an increase in

federal tax revenue would be precisely offset by a decline in

federal royalty revenue. And the State’s position, he noted,

would make it impossible for him to apportion 40% of the

royalties to the Reclamatien Fund and 10% of the royalties

to miscellaneous Treasury receipts, as the Mineral Act

requires.

3. Following the denial of its protest, the State brought

this action against the Secretary in the United States Dis-

trict Court for the District of New Mexico. The State

framed its complaint to seek (1) a declaratory judgment that

the Mineral Act entitles it to receive 50% of royalties from

4

federally-owned, oil-producing lands in New Mexico undi-

minished by any windfali profit tax; and (2) an order com-

pelling the Secretary to pay over to the State the amount of

windfall profit tax (plus interest) alleged to have been with-

held illegally, and directing him to cease withholding such

amounts in the future.

The district court characterized the action as one “seek-

ing declaratory, mandamus and specific relief” and took

jurisdiction under 28 U.S.C. 1331, 1361, 2201 and 5 U.S.C.

702 (Pet. App. 15a). The court seemed to recognize that, if

the action were characterized as “a suit for money dam-

ages,” exclusive jurisdiction would lie in the Claims Court

(id. at 14a-15a). But the court reasoned that the suit

requested not money damages but “specific relief” in the

form of “the very monies which were used by the United

States to pay the tax rather than distributed to the State”

(id. at 14a). The fact that New Mexico claimed money he'd

by the Treasury did not mean that “the requested relief

[was] for money damages,” in the district court's view, since

“[djamages are a sum of money used as substitutionary

relief,” whereas specific relief “is an attempt to give back to

the plaintiff that which he actually lost, not a sum measured

by the amount of the loss, but the loss itself” (ibid.). Turning

to the merits, the district court accepted the State’s interpre-

tation of the relevant statutes and granted in all respects the

relief it requested (id. at 1Sa-22a).

The court of appeals held that the district court lacked

jurisdiction and ordered the case transferred to the Claims

Court (Pet. App. la-10a). It reasoned that the lawsuit, while

nominally against the Secretary of the Treasury, was in

reality against the United States and hence could not be

maintained in the district court absent the government’s

consent to such suit (id. at 4a). The court found a limited

waiver of sovereign immunity in 5 U.S.C. 702, which pro-

vides that a suit for review of agency action “seeking relief

5

other tha[n] money damages * * * shall not be dismissed

* * * on the ground that it is against the United States.”

After analyzing the legislative history of that Section, how-

ever, the court concluded that Congress did not waive sov-

ereign immunity to district court suits which, “read with a

practical eye, * * * involve a claim for money” in excess of

$10,000, since a contrary view would “run counter to the

Tucker Act’s express scheme for monetary claims against

the United States” (Pet. App. 6a-7a & n.3, citing 28 U.S.C.

1346, 1491 and H.R. Rep. 94-1656, 94th Cong., 2d Sess.

20-24 (1976)). The court was unpersuaded by the district

court’s “semantic discussion of the meaning of the word

‘damages,’ ” and followed a long line of cases holding that

“when the ‘prime objective’ or ‘essential purpose’ of the

complaining party is to obtain money from the federal

government (in an amount in excess of $10,000), the Claims

Court’s exclusive jurisdiction is triggered” (Pet. App. 6a, 7a

(citing cases)). The court held that the primary thrust of the

instant action was for monetary relief and that its equitable

aspects were “merely incidental and subordinate to the

basic suit for money” (Pet. App. 8a). The court further held

(id. at 8a-9a) that 28 U.S.C. 1361, which confers mandamus

powers upon the district courts, is inapplicable where (as

here) the Claims Court can provide appropriate relief, and

ordered the case transferred to that court “in the interest

of justice” under 28 U.S.C. 1631 (Pet. App. 9a-10a).

ARGUMENT

The only issue presented here concerns the proper federal

forum for this litigation. The court of appeals’ decision

— that the Tucker Act’s specific grant of Claims Court

jurisdiction prevails over the general grant of federal ques-

tion jurisdiction in 28 U.S.C. 1331 — is correct. That decision

does not conflict with any decision of this Court or of

another court of appeals. This Court last Term denied

6

review of a case presenting a substantially identical ques-

tion. Portsmouth Redevelopment & Housing Authority v.

Pierce, 464 U.S. 960 (1983). There is no basis for further

review here.

Petitioner does not seriously dispute that the Tucker Act

would permit the Claims Court to exercise jurisdiction over

this case. There can be little doubt that the three require-

ments for Tucker Act jurisdiction are met. The State seeks a

money judgment in excess of $10,000. The State’s claim is

founded upon federal law. And the claim is “against the

United States” because “the judgment sought would expend

itself on the public treasury” and would “restrain the

Government from acting, or * * * compel it to act.” Dugan

v. Rank, 372 U.S. 609, 620-621 (1963) (original quotation

marks omitted). What petitioner contends is that the court

of appeals erroneously found the Claims Court’s jurisdic-

tion to be exclusive, thereby rejecting the argument that

jurisdiction in the district court could be predicated on 28

U.S.C. 1331 (federal question jurisdicuon), 5 U.S.C. 702

(Administrative Procedure Act), or 28 U.S.C. 1361 (man-

damus jurisdiction). As the court of appeals correctly

pointed out, however, none of those provisions furnishes

jurisdiction here.

Section 1331 grants the district courts “original jurisdic-

tion of all civil actions arising under the Constitution, laws,

or treaties of the United States.” But the courts of appeals

have repeatedly recognized that the more specific grant of

jurisdiction to the Claims Court under 28 U.S.C. 1346(a)(2)

and 1491(a\1) in suits arising under federal law for

amounts in excess of $10,000, where applicable, prevails

over the general grant of jurisdiction to the district courts in

Section 1331. E.g., Portsmouth Redevelopment & Housing

Authority v. Pierce, 706 F.2d 471, 473-475 (4th Cir.), cert.

denied, 464 U.S. 960 (1983); Keller v. MSPB,679 F.2d 220,

7

222 (11th Cir. 1982); Graham v. Henegar, 640 F.2d 732,

734-735 (Sth Cir. 1981); Lenoir v. Porters Creek Watershed

District, 586 F.2d 1081, 1087-1088 (6th Cir. 1978). Other-

wise, the exclusive jurisdiction of the Claims Court would

be largely destroyed because most cases falling within its

jurisdiction could also be brought within Section 1331. See

Graham, 640 F.2d at 734. Indeed, the distinction Congress

drew in the Tucker Act between suits for amounts less than,

or in excess of, $10,000 would on petitioner’s theory be

obliterated. Compare 28 U.S.C. 1546(a)(2) with 28 U.S.C.

1491(a)(1).

The courts are likewise in agreement that the exclusive

jurisdiction of the Claims Court under 28 U.S.C. 1491(a)(1)

cannot be avoided “by framing a complaint to appear to

seek only injunctive, mandatory or declaratory relief

against government officials when the result would be the

equivalent of obtaining of money damages.” B.K. Instru-

ment, Inc. v. United States, 715 F.2d 713, 727 (2d Cir.

1983) (citing cases). Where a complaint seeks both mone-

tary and equitable relief, and the primary objective or essen-

tial purpose of the lawsuit is to obtain money under a

federal statute from the federal government in excess of

$10,000, the Claims Court’s jurisdiction is exclusive. E.g.,

B.K. Instrument, Inc., 715 F.2d at 727; Portsmouth Rede-

velopment & Housing Authority, 706 F.2d at 474; Keller v.

MS PB, 679 F.2d at 222-223; Hoopa Valley Tribe vy. United

States, 596 F.2d 435, 436, 443 (Ct. Cl. 1979). The courts

have recognized that a district court may retain jurisdiction

over an equitable claim where the latter is “paramount.”

E.g., Minnesota v. Heckler,718 F.2d 852, 858-860 (8th Cir.

1983). But “[a] district court does not gain jurisdiction over

a Tucker Act claim simply because the complaint couples

requests for monetary relief with requests for injunctive

relief.” Portsmouth Redevelopment & Housing Authority,

706 F.2d at 474.

8

Under these principles, the court of appeals plainly

reached the right result here. Petitioner seeks an amount of

money equal to the windfall profit tax allocable to its share

of Mineral Act royalties, interest on that sum, and a decia-

ration that the Secretary pay those royalties in future free of

that tax. As the court below properly concluded, New Mex-

ico’s suit is thus “essentially one designed to reach money

which the government owns” and to “fix the government’s

* * * liability” to petitioner with respect to that money

(Pet. App. 8a). Accord, e.g., Hoopa Valley Tribe, 596 F.2d

at 436, 443. Although petitioner’s suit has ancillary equita-

ble aspects, it will suffer no deprivation of rights by being

routed to the Claims Court. That court is empowered to

award declaratory relief that is “tied to and subordinate to a

monetary award.” Austin v. United States, 206 Ct. Cl.

719, 723, cert. denied, 423 U.S. 911 (1975). See United

States v. Mitchell, No. 81-1748 (June 27, 1983), slip op. 10

n.15; Portsmouth Redevelopment & Housing Authority,

706 F.2d at 474.!

‘Petitioner errs in asserting (Pet. 7) that “the circuits are badly split”

as to the circumstances under which a case should be bifurcated

between the Claims Court and the district court, the former taking

jurisdiction of the damages claim and the latter retaining jurisdiction of

the injunctive and declaratory claims. Petitioner's reliance in this

respect on Minnesota v. Heckler, supra, is misplaced. The State there

sought declaratory and injunctive relief as to its rights to federal Medi-

caid funds; although the suit arose from the disallowance of federal

funds for costs incurred in three facilities, the Eighth Circuit concluded

that the primary obje:t of the lawsuit involved the fundamental ques-

tion of what was an “institution for mental diseases” under the relevant

federal statute—a determination that would affect far more than those

three facilities (718 F.2d at 859). The court thus held that jurisdiction of

the equitable claims lay in the district court, the monetary claims being

transferred to the Claims Court (id. at 857-860). Here, by contrast, New

Mexico’s suit goes no further than to fix the monetary liability of the

government to it, and the Claims Court plainly has the power to grant

sufficient “equitable relief collateral to a monetary award in order to

resolve [the] entire controversy” (id. at 858). And while the Eighth

Circuit in Minnesota v. Heckler suggested (718 F.2d at 858 n.11)

9

Petitioner’s position is not improved by its reliance (Pet.

8-10) on 5 U.S.C. 702. Whereas Section 1331 contains no

“general waiver of immunity” (B.K. Instrument, Inc., 715

F.2d at 724), Section 702 does waive sovereign immunity in

certain suits for judicial review of administrative action. But

Section 702 confers no “implied grant of subject-matter

jurisdiction to review agency actions” (Califano v. Sand-

ers, 430 U.S. 99, 105 (1977)). Subject-matter jurisdiction in

the district court would have to be predicated here on 28

U.S.C. 1331, and, as we have noted above, Section 1331

must yield to the Tucker Act in cases of this sort. Section

702, moreover, waives sovereign immunity only in actions

“seeking relief other tha[n] money damages.” Since, as the

court below properly held, the instant action is primarily

and essentially one for monetary relief, Section 702 has no

application here. See, e.g., B.K. Instrument, Inc., 715 F.2d

at 726-727.

Equally inapplicable as a source of district court jurisdic-

tion is 28 U.S.C. 1361, which grants the district courts

“original jurisdiction of any action in the nature of manda-

mus to compel an officer or employee of the United States

* * * to perform a duty owed to the plaintiff.” To begin

with, that Section is not an all-purpose waiver of sovereign

immunity allowing raids on the United States Treasury. See

Murray v. United States, 686 F.2d 1320, 1325-1326 (8th

Cir. 1982), cert. denied, 459 U.S. 1147 (1983); Estate of

Watson v. Blumenthal, 586 F.2d 925, 935 (2d Cir. 1978);

that “{aj split of authority exists” between those courts (like itself)

that use a “primary purpose” test and other courts (like the Eleventh

Circuit in Keller v. MSPB, supra) that supposedly allow the monetary

claim to dictate exclusive Claims Court jurisdiction regardless of which

claim is primary, the Keller court in fact employed a primary purpose

analysis (679 F.2d at 223). In any event, the alleged conflict is irrelevant

here because under either test the Claims Court would have exclusive

jurisdiction of the instant case in its entirety.

10

Smith v. Grimm, 534 F.2d 1346, 1352 n.9 (9th Cir.), cert.

denied, 429 U.S. 980 (1976). And even if there were a waiver

of sovereign immunity, mandamus jurisdiction is available

only where the duty owed the complainant is ministerial

and leaves nothing to the discretion of the official involved.

Louisiana v. McAdoo, 234 U.S. 627, 633-634 (1914); Ken-

dall vy. United States, 37 U.S. (12 Pet.) 524, 610 (1838).

“(Where the duty * * * depends upon a statute or statutes

the construction or application of which is not free from

doubt, it is regarded as involving the character of judgment

or discretion which cannot be controlled by mandamus.”

Wilbur v. United States ex rel. Kadrie, 281 U.S. 206, 219

(1930) (footnote omitted). That is plainly the situation here.

Finally, it is well settled that mandamus is not available

where there exists an adequate remedy at law. Allied Chem-

ical Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980); United

States ex rel. Girard Trust Co. v. Helvering, 301 U.S. 540,

544 (1937); Minnesota v. Heckler, 718 F.2d at 859 n.12;

Burgos v. Milton, 708 F.2d 1, 3 (1st Cir. 1983); Carter v.

Seamans, 411 F.2d 767, 773 (Sth Cir. 1969), cert. denied,

397 U.S. 941 (1970). New Mexico plainly has an adequate

remedy in the Claims Court: that court has the power to fix

the government’s liability to the State on its monetary

claim, and also, if monetary relief is granted, to grant

declaratory relief tied to such claim. United States v. Mit-

chell, slip op. 10.15; Portsmouth Redevelopment & Hous-

ing Authority, 706 F.2d at 474.

11

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

Rex E. Lge

Solicitor General

GLENN L. ARCHER, JR.

Assistant Attorney General

ERNEST J. BROWN

DAviID ENGLISH CARMACK

Attorneys

APRIL 1985

DOJ-1985-04