State of Tex. v. United States

• Decision Date: 09 July 1976
• Docket Number: No. 374-73.,374-73.
• Citation: 537 F.2d 466
• Parties: STATE OF TEXAS v. The UNITED STATES.
• Court: U.S. Claims Court

537 F.2d 466

STATE OF TEXAS v. The UNITED STATES.

No. 374-73.

United States Court of Claims.

July 9, 1976.

Robert H. Koehler, Washington, D.C., atty. of record, for plaintiff. Patton, Boggs & Blow, Washington, D.C., John L. Hill and Elizabeth Levatino, Austin, Tex., of counsel.

Thomas W. Petersen, Washington, D.C., with whom was Asst. Atty. Gen., Rex E. Lee, Washington, D.C., for defendant.

Before DURFEE, Senior Judge, and NICHOLS and BENNETT, Judges.

DURFEE, Senior Judge.

By motion for summary judgment the Government asks the court to grant it judgment dismissing plaintiff's petition asserting that in refusing to grant plaintiff's requests for additional disaster relief funds under the Federal Disaster Act defendant breached its Disaster Assistance Agreement with plaintiff or alternatively acted arbitrarily and capriciously.

Responding by cross-motion for summary judgment nominal plaintiff, the State of Texas, seeks judgment on behalf of two of its counties on the above asserted claims of wrongful Government action in the amount of $656,245. Defendant's motion is granted and plaintiff's motion denied for the reasons set forth below.

On September 20, 1967 Hurricane Beulah struck the southeastern portion of the State of Texas devastating a twenty-nine-county area of the State including Cameron and Willacy Counties. In the aftermath of the disaster the Office of Emergency Planning (OEP) administratively located in the Executive Office of the President established field offices in the disaster area and Regional OEP officials, together with various other Federal authorities, met with State and local Government representatives to discuss Federal disaster relief assistance to the hurricane-stricken area. As a result of these meetings Federal officials advised the State and local authorities that the southeastern portion of Texas would probably be declared a major disaster area by the President pursuant to the Federal Disaster Act (42 U.S.C. §§ 1855-1855g)¹ which would thereby activate the disaster relief provisions of the Act. Federal officials further advised the State and local representatives that they could undertake necessary emergency work pending the Presidential disaster declaration by contracting with qualified private contractors.

On September 28, 1967 the President declared a 29-county area of Texas, including Cameron and Willacy Counties, a major disaster area pursuant to the Federal Disaster Act. On September 27, 1967 and October 9, 1967 Cameron and Willacy Counties respectively entered into contracts with a private contractor for debris removal and other related disaster relief work. These contracts were contingent upon the availability of Federal funds. On October 5, 1967 OEP and the State of Texas executed a Disaster Assistance Agreement. The initial agreement authorized OEP's expenditure of not more than 2.5 million dollars for use in furnishing disaster assistance. A November 1967 supplement to the agreement provided an additional 7.5 million dollars in disaster assistance funds. A June 1970 supplement to the agreement authorized the use of such additional funds as the OEP Director found necessary for Federal disaster assistance within the limits of funds available from Congressional appropriations for such purposes and authorized by the President. The record indicates that OEP has provided plaintiff with all of the ten million dollars authorized by the President for Federal assistance to the State and is devoid of any Presidential authorization to OEP to expend Federal disaster assistance funds in excess of that amount.

Following the execution of the Federal State Disaster Assistance Agreement both Cameron and Willacy Counties submitted project applications for Federal disaster relief financial assistance. The applications after State approval were submitted to OEP for approval. Project applications describe the estimated amount of necessary disaster relief work and the estimated cost thereof. Cameron County submitted its project application on November 13, 1967 requesting $1,461,040.62 in financial disaster assistance. Of this amount the State approved $621,786 and OEP concurred in the State's approved amount of Cameron County's project application. On December 6, 1967 both the State and OEP approved Willacy County's submitted project application in the amount of $258,248. In both cases the amounts approved by the State and awarded by OEP were the amounts set forth in the Federal Damage Survey Reports on the hurricane damage to the two counties prepared by Federal inspection teams following Hurricane Beulah's devastation.

Subsequently both counties submitted supplemental project applications requesting additional disaster relief funds in excess of those approved on submission of their initial project applications. Cameron County requested an additional $840,252 and Willacy County sought an additional $443,695. After consideration of these supplemental applications the OEP Regional Director in June 1969 awarded Cameron and Willacy Counties additional disaster relief funds in the respective amounts of $32,574 and $14,191. With the award of these additional funds Cameron County received $730,553 of its requested amount of $1,538,231 and Willacy County received $429,504 out of a requested funding of $615,839.

Dissatisfied with the OEP Regional Director's partial disallowance of the funding requested in the two counties' project applications, the State of Texas appealed to the OEP National Director for full allowance of the sums requested by the counties, and approved by the State for disaster relief work. The State sought $807,678 on behalf of Cameron County and $186,335 on behalf of Willacy County. Incident to the State's two appeals OEP commissioned a private engineering report by Bovay Engineers, Inc. to assist and advise OEP in evaluation of the State's claims. The drafts of the Bovay report reached conclusions critical of OEP's accuracy in estimating the cost and amount of disaster relief work. OEP-suggested revisions of the draft Bovay reports, subsequently incorporated into the final report, diluted some of the report's criticism of OEP's underestimating of actual damage relief work in the two Texas counties.

Following receipt of the final Bovay report the OEP staff prepared its own report to the OEP Director reviewing the two counties' claims and concluding that the claims should be partially allowed. On July 7, 1970 the OEP Director notified the State that based on a review and re-evaluation of all information provided by the OEP staff and Bovay Engineers, Inc. that he had approved additional disaster relief funding in the amounts of $321,352 for Cameron County and $127,525 for Willacy County. The Director's decision raised OEP-approved disaster relief funding to $1,051,905 for Cameron County and $557,029 for Willacy County. Contending that there were apparent deficiencies in OEP computations of the sums approved for disaster work in the two counties, the State requested the OEP Director to approve the additional amounts requested by the two counties, i. e., $486,326 and $58,810 respectively. This the OEP Director declined to do and confirmed his July 7, 1970 decision as to the amounts approved for funding of disaster relief work in the two counties.

After an unsuccessful appeal to the Comptroller General this action followed with the State contending that OEP had either breached its Disaster Assistance Agreement with the State and/or acted arbitrarily and capriciously in denying the full amounts of OEP disaster relief funding requested by Cameron and Willacy Counties in their project applications.

At the outset both parties devote considerable argument as to whether their Disaster Assistance Agreement is, as plaintiff contends, a contract, or as defendant asserts, not "a binding contract in the traditional sense." In our view defendant's valid execution of a document, which it prepared and titled "Federal-State Disaster Assistance Agreement," specifying that "Federal assistance will be made available in accordance with various specified laws, Executive Orders and regulations" obligates defendant to provide such assistance as called for by the parties' Agreement.² See State of Arizona v. United States, 494 F.2d 1285, 204 Ct.Cl. 171 (1974). After consideration of the various other arguments presented by the parties, the court views the question of whether defendant performed its obligations according to the parties' Agreement as the dispositive issue in this case. We hold that it has.

By the Federal Disaster Act Congress authorized Federal agencies to effectuate the intent of the Act³ by providing disaster assistance as directed by the President.⁴ In turn the President by Executive Order⁵ authorized the Director of OEP to exercise the authority conferred on the President by the Act. This delegation of authority included the direction, upon the determination that a major disaster had occurred, to provide Federal assistance to the devastated State from funds allocated by the President to the OEP Director for disaster relief assistance in the devastated State.⁶ The Federal assistance was to be provided from funds allocated by the President to the OEP Director to furnish such assistance to State and local Governments in a major disaster on the basis of an agreement jointly executed by the State's Governor and the OEP Director. As the basis for the provision of Federal Disaster Assistance to States such agreements were to contain State assurances that reasonable amounts of State and/or local Governments' funds would be expended to alleviate damage caused by the disaster and such other terms and conditions that the OEP Director would require consistent with the provisions of the Act. By promulgated regulations⁷ and OEP Circulars supplied to States at the time of a major disaster, the OEP Director prescribed the terms and conditions under which Federal assistance would be made...