National Ass'n of Counties v. Baker

• Decision Date: 11 March 1988
• Docket Number: No. 87-5287,87-5287
• Citation: 268 U.S.App.D.C. 373,842 F.2d 369
• Parties: , 56 USLW 2513 NATIONAL ASSOCIATION OF COUNTIES, et al. v. James A. BAKER, III, Secretary of the Treasury, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 369

842 F.2d 369

268 U.S.App.D.C. 373, 56 USLW 2513

NATIONAL ASSOCIATION OF COUNTIES, et al. v. James A. BAKER, III, Secretary of the Treasury, Appellant.

No. 87-5287.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 24, 1987.

Decided March 11, 1988.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 87-00414).

Barbara C. Biddle, Atty., Dept. of Justice, with whom Richard K. Willard, Asst. Atty. Gen., Dept. of Justice, Joseph E. diGenova, U.S. Atty., and John F. Cordes, Atty., Dept. of Justice, Washington, D.C., were on the brief, for appellant.

David C. Vladeck, with whom Alan B. Morrison and Thomas H. Stanton, Washington, D.C., were on the brief, for appellees.

Before WALD, Chief Judge, SENTELLE, Circuit Judge, and GIBSON, ^* Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge FLOYD R. GIBSON.

FLOYD R. GIBSON, Senior Circuit Judge:

James A. Baker, III, Secretary of the Treasury (Secretary), appeals an order of the district court ¹ which requires the Secretary to disburse to the individual local governments entitled to payment under the Revenue Sharing Program approximately 180 million dollars of Revenue Sharing Trust Fund monies which were sequestered pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985. (Gramm-Rudman-Hollings). ² The plaintiffs, a number of individual local governments and three associations representing local governments, challenged the transfer of these funds to the General Fund of the Treasury and sought an injunction requiring the Secretary to release the funds to the local governments. The district court held the transfer of funds unlawful and ordered the Secretary to disburse the funds. The district court reasoned that although the Secretary lawfully sequestered the funds for Fiscal Year (FY) 1986 pursuant to Gramm-Rudman-Hollings, the funds should be distributed in FY 1987 in compliance with Gramm-Rudman-Hollings Sec. 256(a)(2), codified at 2 U.S.C. Sec. 906(a)(2) (Supp. IV 1986), which deals with the effect of the sequestration order.

The Secretary raises two arguments on appeal. First, the Secretary argues that the district court lacked subject matter jurisdiction over this case because the claims raised by the local governments are Tucker Act claims which may only be brought in the Claims Court. Second, the Secretary argues that the district court erred in holding that the Revenue Sharing Trust Funds sequestered under Gramm-Rudman-Hollings were required to be disbursed to the local governments. While we disagree with the Secretary's argument that the district court lacked subject matter jurisdiction, we agree with the Secretary that the district court erred in requiring the sequestered Revenue Sharing Trust Funds to be disbursed to the local governments. Accordingly, we reverse.

I. BACKGROUND

Congress enacted the Revenue Sharing Act, 31 U.S.C. Sec. 6701 (1982), to provide noncategorical financial assistance to local governmental units in the form of annual entitlements. Pursuant to the Act payments to the local governments are made through the State and Local Government Fiscal Assistance Trust Fund, of which the Secretary of the Treasury is personally the trustee. Id. Sec. 6703(a).

Congress appropriated $4,566,700,000 to the Trust Fund for the entitlement period coinciding with FY 1986; however, this amount was subsequently reduced by an Act of Congress to $4,185,000,000. Pub.L. 99-160, 99 Stat. 909, 924 (Nov. 25, 1985). On December 12, 1985, the President signed into law the Balanced Budget and Emergency Deficit Control Act of 1985, Pub.L. 99-177, 99 Stat. 1037, codified at 2 U.S.C. Sec. 901 et seq. (Supp. IV 1986), popularly known as "Gramm-Rudman-Hollings." The purpose of the Gramm-Rudman-Hollings legislation is to eliminate the federal budget deficit by 1991.

On February 1, 1986, the President issued an order pursuant to Gramm-Rudman-Hollings Sec. 252(a)(1), codified at 2 U.S.C. Sec. 902(a)(1), which sequestered, inter alia, $179,955,000, or 4.3%, of the monies appropriated to the State and Local Government Fiscal Assistance Trust Fund. 3 C.F.R. 254 (1987). In Bowsher v. Synar, 478 U.S. 714, 106 S.Ct. 3181, 92 L.Ed.2d 583 (1986), the Supreme Court invalidated the President's sequestration order. However, Congress passed and the President signed legislation ratifying the President's February 1st order. P.L. 99-366, 100 Stat. 773 (July 31, 1986).

In April 1986 the President signed the Consolidated Omnibus Budget Reconciliation Act of 1985, Pub.L. 99-272, 100 Stat. 82, 327, Sec. 14001 (April 7, 1986) (COBRA). COBRA terminated the Revenue Sharing Program and provided for the winding down of the program at the close of the 1986 entitlement period.

In January and February 1987 representatives of the local governments requested the Secretary to release the Trust Fund monies sequestered under Gramm-Rudman-Hollings. The Secretary informed them that the funds would not be released and had been transferred to the General Fund of the Treasury.

The local governments filed an action for declaratory and injunctive relief in the district court. Cross motions for summary judgment were filed and the district court granted the local governments' motion.

II. DISCUSSION

A. Jurisdiction

The Secretary argues that the district court lacked subject matter jurisdiction over this case because the claim raised by the local governments is a claim for "money damages" and thus may only be brought in the Claims Court pursuant to the Tucker Act. We disagree.

We begin this analysis by determining whether any other federal statute provides a waiver of sovereign immunity for the type of relief sought by the local governments. The local governments argue that the Administrative Procedure Act (APA) provides such a waiver and that 28 U.S.C. Sec. 1331 (1982) provides subject matter jurisdiction for the district court to decide this substantial federal question. Section 702 of the Administrative Procedure Act provides a waiver of sovereign immunity for actions "stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority" provided, however, that the relief sought is "relief other than money damages." 5 U.S.C. Sec. 702 (Supp. IV 1986). Thus we must first determine whether the relief the local governments seek is "money damages" within the meaning of the Administrative Procedure Act.

The Secretary argues that the relief sought by the local governments, although framed in equitable terms, is tantamount to a money judgment and thus the APA's waiver of sovereign immunity is unavailable to the local governments. This court, however, rejected the Secretary's analysis in Maryland Department of Human Resources v. Department of Health and Human Services, 763 F.2d 1441 (D.C.Cir.1985). In Maryland, this court concluded that the term "money damages" as used in the APA refers to compensatory relief or damages "given to the plaintiff to substitute for a suffered loss, whereas specific remedies 'are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.' " Id. at 1446 (emphasis in original) (quoting D. Dobbs, Handbook on the Law of Remedies 135 (1973)). We do not believe that it is necessary to repeat all of what was said in Maryland, the principal precedent on which we rely.

In the present case the relief sought by the local governments is not money damages as that term is used in the APA. The local governments are seeking funds to which a statute allegedly entitles them rather than money in compensation for the losses they may have suffered by virtue of the withholding of those funds. Therefore, the relief sought by the local governments is specific relief and not classical money damages. If the relief the local governments sought was compensation for damages resulting from the Secretary's actions and not the disbursal of the withheld funds, then the APA would not have provided a waiver of sovereign immunity.

We note that several other circuits have followed a different approach. For example the Tenth Circuit explicitly rejected the approach followed in Maryland stating "a plaintiff may not transform a claim for monetary relief into an equitable action simply by asking for an injunction that orders the payment of money." State of New Mexico v. Regan, 745 F.2d 1318, 1322 (10th Cir.1984), cert denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d 496 (1985); see also Commonwealth of Massachusetts v. Departmental Grant Appeals Bd., 815 F.2d 778, 783 (1st Cir.1987) ("We read the words 'money damages' to mean any monetary relief, whether it is in the nature of damages or in the nature of specific relief."); cf. Chula Vista City School Dist. v. Bennett, 824 F.2d 1573, 1579 (Fed.Cir.1987) ("It is well settled that where the prime effort of the plaintiff is to obtain money from the Government, the exclusive jurisdiction of the Claims Court cannot be avoided by drafting a complaint which appears to seek only injunctive, mandatory, or declaratory relief against the Government.") (footnote omitted), cert. denied, --- U.S. ----, 108 S.Ct. 774, 98 L.Ed.2d 861 (1988); Amoco Production Co. v. Hodel, 815 F.2d 352, 361 (5th Cir.1987) ("in the 'murky' area of Tucker Act jurisprudence ... one of the few clearly established principles is that the substance of the pleadings must prevail over their form"), pet. for cert. filed, 56 U.S.L.W. 3184 (Sept. 22, 1987); State of Minnesota by Noot v. Heckler, 718 F.2d 852, 858-59 (8th Cir.1983). See generally Gibson v. Block, 619 F.Supp. 1572, 1575 (N.D.Ind.1985) (surveying the "different formulae [that] exist to test the essence of the plaintiff's claim").

We believe that the relief sought by the local governments is not a claim for money damages within the meaning of the APA, notwithstanding the fact that the claim, if successful, may...