State of Me. v. Goldschmidt, Civ. No. 80-0130 P.

• Decision Date: 06 June 1980
• Docket Number: Civ. No. 80-0130 P.
• Citation: 494 F. Supp. 93
• Parties: STATE OF MAINE, Plaintiff, v. Neil GOLDSCHMIDT, Secretary of Transportation of the United States, Defendant.
• Court: U.S. District Court — District of Maine

494 F. Supp. 93

STATE OF MAINE, Plaintiff, v. Neil GOLDSCHMIDT, Secretary of Transportation of the United States, Defendant.

Civ. No. 80-0130 P.

United States District Court, D. Maine.

June 6, 1980.

Richard S. Cohen, Atty. Gen., John M. R. Paterson, Deputy Atty. Gen., John B. Wlodkowski, Thomas G. Reeves, Maine Dept. of Transp., Legal Division, Augusta, Me., for plaintiff.

Paula D. Silsby, Asst. U. S. Atty., Portland, Me., Gregory D. Wolfe, Dept. of Transp., S. James Wiese, Richard A. Levie, Dept. of Justice, Federal Programs Branch, Washington, D. C., for defendant.

OPINION AND ORDER

GIGNOUX, District Judge.

On April 23, 1980, the State of Maine filed this action against the defendant Secretary of Transportation (the Secretary) seeking a declaratory judgment and injunctive relief enjoining the Secretary "from rescinding, reducing, deferring, impounding or otherwise refusing to make available for obligation" Federal-aid highway funds legally apportioned to the State for the fiscal year (FY) 1980 pursuant to the Federal-Aid Highway Act of 1956, as amended, 23 U.S.C. § 101 et seq. (the Highway Act). The Court has jurisdiction of the action under 28 U.S.C. § 1331(a), and venue lies in this District pursuant to 28 U.S.C. § 1391(e). On May 16, 1980, this Court (Mitchell, J.) granted plaintiff's motion for a temporary restraining order and directed the Secretary to maintain a fund in an amount sufficient to satisfy Maine's estimated obligations for the remainder of this fiscal year pending a final hearing on the merits. By agreement of the parties, the restraining order is to remain in effect until June 6, 1980. The trial on the merits has been advanced and consolidated with the hearing on the application for a preliminary injunction, Fed.R. Civ.P. 65(a)(2), and the case has been submitted on a stipulated record. The issues have been fully briefed and ably argued by counsel, and this opinion contains the Court's findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a).

I

The Highway Act established a system of grants-in-aid to the States to finance a part of the cost of constructing highways in the Federal-aid highway system. 23 U.S.C. § 103. For Interstate projects, the amount of the federal contribution is, in most cases, 90%; for primary, secondary and urban projects, 75%; and at other rates for other categories of projects. 23 U.S.C. § 120. The Act is administered by the Secretary through the Federal Highway Administration (the FHWA).

The Act provides for a complex funding method. Congress authorizes the expenditure of funds for each fiscal year (October 1-September 30) in periodic appropriations acts. See Note fol. 23 U.S.C. § 101. At the beginning of each fiscal year, the Secretary apportions the annual authorization of funds from Congress among the States in accordance with a formula set forth in 23 U.S.C. § 104(b). Upon apportionment, each State is notified of its share of the national authorization. Once apportioned to a State, the apportioned amount is for its exclusive use, and may be "carried over" for one additional fiscal year (Interstate authorizations) or for three additional fiscal years (non-Interstate authorizations). 23 U.S.C. § 118(b). The apportionment for the current fiscal year, together with its "carryover" apportionments from prior years, constitute the State's available apportionment at the beginning of the year.

The States must follow the statutorily prescribed procedure to receive federal grants. At the beginning of each fiscal year, the State submits for FHWA's approval a program of projects for which federal funds are desired. Id. § 105. If FHWA approves the program, the State submits specific projects for approval. Id. § 106(a). FHWA approves those projects meeting the requirements of 23 U.S.C. § 109. Id. § 106(a). Approval of an individual project creates a contractual obligation of the United States to pay the federal share of the cost of constructing the project. Id. Upon project approval, the State is permitted to obligate the apportioned funds by entering into construction contracts. The State then is reimbursed for actual expenditures as it submits vouchers for work completed. The required funds are paid out of liquidating appropriations, provided by annual appropriations acts. Thus, an obligation created in one year normally has actual expenditure impact on the federal budget in ensuing fiscal years.

In addition to its annual authorization for appropriation, Congress sets a limit on the total amount of the apportioned budget authority which may be obligated by the States in each fiscal year. This "obligational ceiling" limits the rate of obligation of authorized funds nationwide, and this ceiling, rather than the total of the States' unused apportionments, becomes the constraint on the national program.

There is no statutorily prescribed procedure for the apportionment of the obligational ceiling similar to the procedure prescribed for the apportionment of the authorized funds by 23 U.S.C. § 104. FHWA has used two different administrative procedures for allocating obligational authority in the recent past. From 1966 to 1975 the total was prorated so that each State had a specific amount available to it each year. Since 1975, FHWA has obligated funds on a first-come, first-served basis. Thus, if the total of all projects approved nationwide reaches the obligational ceiling, further project approvals in all States are halted. The ceiling has in fact been reached only once, in early September 1979, but since a new ceiling became effective as of October 1, the disruptions in States' programs for less than a month were not serious.

For FY 1980 Congress authorized expenditure under the Act of $8.9 billion, of which the Secretary apportioned $7.9 billion among the States according to the formula provided in 23 U.S.C. § 104.¹ Congress then imposed an obligational limit of $8.75 billion. The new apportioned authorization, when combined with "carryovers" from prior years, established a total apportioned budget authority of $13.6 billion. Maine's apportioned share of the $7.9 billion FY 1980 authorization is $49 million. In addition, Maine began FY 1980 with $29.3 million of carryover funds, for an aggregate apportionment of $78.3 million for the year.

In March 1980 the President announced his intention, as an anti-inflation measure, to balance the FY 1981 budget and directed the federal agencies to propose program reductions. On March 14 FHWA, in accordance with the direction of the President, temporarily halted all project approvals. On April 2 FHWA determined to defer $1.15 billion of the remaining FY 1980 obligational authority, reducing the obligational ceiling from $8.75 billion to $7.6 billion, and the President submitted to Congress the deferral message required by Section 1013, 31 U.S.C. § 1403, of the Congressional Budget and Impoundment Control Act of 1974, 31 U.S.C. § 1301 et seq. (the Impoundment Control Act).² By March 14 approximately $5.5 billion of the $8.75 billion available for the year had already been obligated, leaving a balance of approximately $3.2 billion. Upon the reduction of the obligational ceiling from $8.75 billion to $7.6 billion the remaining obligational authority amounted to $2.04 billion. On April 2 FHWA released three-quarters of the remaining authority for project approvals, with the final release of the remaining one-quarter scheduled for August 1.

FHWA administratively determined to allocate the remaining obligational authority by a new procedure. It adopted a formula that allocated the $2.04 billion to the States in accordance with the percentages derived from 23 U.S.C. § 104, and applied the percentages from that formula to the remaining $2.04 billion in unobligated authority, instead of to the $7.6 billion in obligational authority available for the fiscal year.

The combined effect of the reduction in obligational authority and the new allocation formula was to reduce substantially the amount of obligational authority available to Maine for FY 1980. Maine's obligational authority for the remainder of the year was reduced to $11.7 million. As of March 14, Maine had obligated $20.1 million of the $78.3 million available to it for FY 1980, leaving an unobligated apportionment of $58.2 million. As a result, Maine is now unable to spend $46.5 million of its available apportionment during this fiscal year. Maine states that it had intended to obligate $39.8 million during the remainder of the year.

In the present action, Maine challenges the legal authority of the Secretary administratively to reduce the obligational limit established by Congress for the current fiscal year. Alternatively, Maine challenges the method used by FHWA to allocate the remaining obligational authority among the States. Similar actions have been filed in Alaska, Arkansas, California, New Mexico and Vermont.³

II

The question of the lawfulness of the President's deferral of $1.15 billion in obligational authority made available to the States by Congress under the Highway Act requires consideration of the interplay between that Act and the Impoundment Control Act. There is no dispute that the Highway Act itself does not provide the President with that authority. See State Highway Commission v. Volpe, 479 F.2d 1099 (8th Cir. 1973). Volpe unequivocally established that, in the absence of other statutory authority, the President may not defer authority to obligate highway funds previously apportioned to the States under the Highway Act for reasons related to the status of the economy and the need to control inflationary pressures. Id. at 1118. See also Iowa v. Brinegar, 512 F.2d 722 (8th Cir. 1975); Minnesota v. Coleman, 391 F.Supp. 330 (D.Minn.1975); Louisiana v. Brinegar, 388 F.Supp. 1319 (D.D.C.1975); Montana v. Brinegar, 380 F.Supp. 861 (D.Mont.1974). Moreover, in 1973, in the Conference Report on the Federal-Aid Highway Act of 1973, ...