Nat'l Center Mfr. Science v. Dept. of Defense

• Decision Date: 04 January 2000
• Docket Number: No. 98-5576,98-5576
• Citation: 199 F.3d 507
• Parties: (D.C. Cir. 2000) National Center for Manufacturing Sciences, Appellant v. Department of Defense, et al.,Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 507

199 F.3d 507 (D.C. Cir. 2000)

National Center for Manufacturing Sciences, Appellant v. Department of Defense, et al.,Appellees

No. 98-5576

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 1999

Decided January 4, 2000

Appeal from the United States District Court for the District of Columbia(No. 95cv01817)

Stanley Yorsz argued the cause for appellant. With him on the briefs were Jeffrey J. Bresch and Attison L. Barnes, III.

Lisa Goldfluss, Assistant U.S. Attorney, argued the cause for appellees. With her on the briefs were Wilma A. Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

Before: Sentelle, Rogers and Tatel, Circuit Judges.

Opinion for the court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge:

Plaintiff-appellant National Center for Manufacturing Sciences ("NCMS") appeals from a judgment of the district court dismissing its complaint for failure to state a claim. NCMS claims that appellees, Department of Defense ("DOD") and Department of the Air Force ("Air Force") (along with various officials), improperly held back approximately $15 million of funds authorized and appropriated by Congress and earmarked for NCMS. Because we conclude that Congress rescinded the earmark in section 1006 of the National Defense Authorization Act for Fiscal Year 1995, we affirm the district court's dismissal of the action.

I. Background

NCMS is a non-profit research and development manufacturing consortium that receives funding, in part, through congressional appropriations earmarks. This dispute centers on whether NCMS is entitled to approximately $15 million of an original $40 million earmark appropriated for fiscal year 1994.

On November 11, 1993, Congress appropriated $12,314,362,000 under the heading "Research, Development, Test and Evaluation, Air Force," which was "to remain available for obligation until September 30, 1995." One earmark provision stated: "Provided further, That not less than $40,000,000 of the funds appropriated in this paragraph shall be made available only for [NCMS]...." Department of Defense Appropriations Act, 1994, Pub L. No. 103-139, 107 Stat. 1418, 1431-33 (1993) ("1994 Appropriations Act"). Later that month, Congress passed the National Defense Authorization Act for Fiscal Year 1994 ("1994 Authorization Act"), Pub. L. No. 103-160, 107 Stat. 1547 (1993). Section 201 of this act authorized $12,289,211,000 for the Air Force-$25,151,000 short of the amount appropriated. 107 Stat. at 1583.

The Air Force and NCMS entered into a Cooperative Agreement on September 19, 1994, whereupon the Air Force released $24,125,000 of the 1994 funds. The remaining $15,875,000 of the original $40 million was not released, although the agreement said a release could occur if funds were made available for allotment.

On October 5, 1994, Congress passed the National Defense Authorization Act for Fiscal Year 1995 ("1995 Authorization Act"), Pub. L. No. 103-337, 108 Stat. 2663 (1994). Section 1006, in particular subsection 1006(d), refers to the status of 1994 defense appropriations. We set forth the text of the section here:

SEC. 1006. AUTHORITY FOR OBLIGATION OFCERTAIN UNAUTHORIZED FISCAL YEAR 1994DEFENSE APPROPRIATIONS.

(a) AUTHORITY.--The amounts described in subsection(b) may be obligated and expended for programs, pro-jects, and activities of the Department of Defense inaccordance with fiscal year 1994 defense appropriationsexcept as otherwise provided in subsections (c) and (d).

(b) COVERED AMOUNTS.--The amounts referred toin subsection (a) are the amounts provided for programs,projects, and activities of the Department of Defense infiscal year 1994 defense appropriations that are in excessof the amounts provided for such programs, projects, andactivities in fiscal year 1994 defense authorizations.

(c) PROGRAMS NOT AVAILABLE FOR OBLI-GATION.--Amounts described in subsection (b) whichremain available for obligation on the date of the enact-ment of this Act may not be obligated or expended forthe following programs, projects, and activities of theDepartment of Defense (for which amounts were provid-ed in fiscal year 1994 defense appropriations): [programsunrelated to NCMS]

(d) MANUFACTURING TECHNOLOGY.--The Secre-tary of Defense may obligate fiscal year 1994 defenseappropriations under the Manufacturing Technology De-velopment program which remain available for obligationon the date of the enactment of this Act in accordancewith the competition and cost-sharing requirements ofsubsection (d) of section 2525 of title 10, United StatesCode, as amended by section 256 of this Act, notwith-standing any other provision of law that specifies (or hasthe effect of requiring) that a contract be entered intowith, or a grant be made to, a particular institution orentity.

(e) DEFINITIONS.--For the purposes of this section:

(1) FISCAL YEAR 1994 DEFENSE APPROPRIA-TIONS.--The term "fiscal year 1994 defense appropria-tions" means amounts appropriated or otherwise madeavailable to the Department of Defense for fiscal year1994 in the Department of Defense Appropriations Act,1994 (Public Law 103-139).

(2) FISCAL YEAR 1994 DEFENSE AUTHORIZA-TIONS.--The term "fiscal year 1994 defense authoriza-tions" means amounts authorized to be appropriated forthe Department of Defense for fiscal year 1994 in theNational Defense Authorization Act for Fiscal Year 1994(Public Law 103-160).

108 Stat. at 2835-36.

A few weeks prior to the passage of the 1995 Authorization Act, NCMS filed suit in the district court seeking the unpaid $15 million. The complaint invoked the mandamus statute, 28 U.S.C. § 1361 (1994), the Declaratory Judgment Act, 28 U.S.C. § 2201 (1994), the Administrative Procedure Act, 5 U.S.C. §§ 701-06 (1994), and requested specific performance of the Cooperative Agreement. After preliminary injunctive relief was denied, the Air Force filed a motion to dismiss, or in the alternative, to transfer the claim to the Court of Federal Claims as a contract action against the government under the Cooperative Agreement. The district court granted the transfer motion. NCMS appealed to the Federal Circuit, who reversed and remanded to the district court, holding that the action was not a contract action. See National Ctr. for Mfg. Sciences v. United States, 114 F.3d 196 (Fed. Cir. 1997).

Upon return of the case to the district court, the district court initially denied appellees' motion to dismiss. On reconsideration, however, the court granted the motion to dismiss in December of 1998. Noting that the parties agreed that the $40 million had been both authorized and appropriated, the court held that subsection 1006(d) of the 1995 Authorization Act rescinded the unobligated $15 million. NCMS appeals the dismissal, which we review de novo. See, e.g., Moore v. Valder, 65 F.3d 189, 192 (D.C. Cir. 1995).

Upon initial review of the record, it was unclear whether the Air Force had retained funds with which NCMS's claim could be satisfied. We therefore ordered supplemental briefing prior to oral argument on the issue of mootness in light of City of Houston v. Department of Hous. and Urban Dev., 24 F.3d 1421 (D.C. Cir. 1994). City of Houston makes clear that once an appropriation lapses or the relevant funds have been obligated, "a court cannot reach them in order to award relief." Id. at 1426. Taking care to avoid such an "insuperable" difficulty and ensure that we had the power to remedy appellees' alleged wrong, we requested the additional briefing. 13A Charles Alan Wright, et al., Federal Practice and Procedure § 3533.3 (2d ed. 1984). We find that the case is not moot. Appellees' brief clarifies that while the specific funds referred to by subsection 1006(d) were reallocated, there are sufficient remaining funds in the fiscal year 1994 Research, Development, Test, and Evaluation, Air Force account available to liquidate NCMS's claim.

II. Discussion

Section 114 of 10 U.S.C. states, in relevant part, that "[n]o funds may be appropriated for any fiscal year to or for the use of any armed force or obligated or expended for ... any research, development, test, or evaluation, or procurement or production related thereto ... unless funds therefor have been specifically authorized by law." 10 U.S.C. § 114(a)(2) (1994). Authorization acts limit the amount of funds Congress can appropriate for a given purpose. See Office of Management and Budget, The Budget System and Concepts 2-3 (1997). Because of the existence of 10 U.S.C. § 114, it is clear that any monies appropriated for NCMS by Congress for research must be authorized before they can be appropriated and distributed. The parties agree that NCMS's $40 million earmark was both appropriated and authorized. They dispute whether section 1006 rescinded the unpaid portion of that earmark. We hold that it does.

Section 1006(d) states that 1994 defense appropriations in NCMS's research province "which remain available for obligation" may be obligated by competition notwithstanding any specific grants otherwise. The $15 million of unreleased funds, which was "available for obligation" because it was already authorized, was thus freed from its earmark status by this provision. Therefore, NCMS no longer has any rights to the funds on which its claim is based.

Attempting to avoid this result, NCMS claims that section 1006 only applies to previously unauthorized funds (i.e., the $25 million shortfall between the 1994 Authorization Act and 1994 Appropriation Act) and thus had no effect on the unreleased $15 million. It also argues that funds are "available for obligation" when they are appropriated. This is generally true because authorization acts generally precede appropriations acts, and not all appropriations require matching authorizations. But funds which must be authorized by statute and are not so authorized cannot be "available for obligation."Because 10 U.S.C. § 114(a)(2) requires authorization of these...