Clinton v. City of New York (1998)

Clinton v. City of New York (1998)

524 U.S. 417

The Line Item Veto Act authorizes the president to “cancel in whole” three types of provisions that have been signed into law: “(1) any dollar amount of discretionary budget authority; (2) any item of new direct spending; or (3) any limited tax benefit.” In doing so, he must determine that the cancellation will “(i) reduce the Federal budget deficit; (ii) not impair any essential Government functions; and (iii) not harm the national interest.” He must also transmit a special message to Congress notifying it of each cancellation within five calendar days after the enactment of the canceled provision. The effect of a cancellation, according to the act, is to prevent the canceled item from “having legal force or effect.” Congress by majority vote of both houses can enact a “disapproval bill,” rendering the cancellations “null and void.” Although the president cannot cancel a disapproval bill, he retains his constitutional authority to veto such a bill. The Line Item Veto Act became effective on January 1, 1997. On January 2, six members of Congress who had opposed the act brought suit, claiming that it violated the Presentment Clause (Article I, Section 7, Clause 2, of the Constitution), which specifies the procedure for enactment of legislation. The district court agreed, but the Supreme Court in Raines v. Byrd (1997) ruled that the members of Congress did not have standing to sue because they had not “alleged a sufficiently concrete injury to have established Article III standing.”

Less than two months after this ruling, President Clinton exercised his authority under the act. He canceled Section 4722(c) of the Balanced Budget Act of 1997, which waived the federal government’s statutory right to recoup as much as $2.6 billion in taxes that the State of New York had levied against Medicaid providers, and Section 968 of the Taxpayer Relief Act of 1997, which permitted the owners of certain food refiners and processors to defer recognition of capital gains if they sold their stock to eligible farmers’ cooperatives. The City of New York filed suit, challenging the first cancellation, and the Snake River farmers’ cooperative challenged the second. The district court consolidated the cases, determined that the plaintiffs had standing under Article III, and ruled the act’s cancellation procedures unconstitutional. The Supreme Court then granted expedited review.

Opinion of the Court: Stevens, Rehnquist, Kennedy, Souter, Thomas, Ginsburg.

Concurring opinion: Kennedy.

Concurring in part and dissenting in part: Scalia, O’Connor, Breyer (in part).

Dissenting opinion: Scalia, O’Connor, Breyer (in part); Breyer, O’Connor (in part), Scalia (in part).

JUSTICE STEVENS delivered the opinion of the Court.

We hold that these appellees have standing to challenge the constitutionality of the Act and, reaching the merits, we agree that the cancellation procedures set forth in the Act violate the Presentment Clause, Art. I, sec. 7, cl. 2, of the Constitution.

III

As in the prior challenge to the Line Item Veto Act, we initially confront jurisdictional questions. The appellees invoked the jurisdiction of the District Court under the section of the Act entitled “Expedited Review.” That section expressly authorizes “any Members of Congress or any individual adversely affected” by the Act to bring an action for declaratory judgment or injunctive relief on the ground that any provision of the Act is unconstitutional. The Government argues that, with the exception of Mike Cranney, the appellees are not “individuals” within the meaning of section 692(a)(1). In the context of the entire section, Congress undoubtedly intended the word “individual” to be construed as synonymous with the word “person.” The special section authorizing expedited review evidences an unmistakable congressional interest in a prompt and authoritative judicial determination of the constitutionality of the Act. There is no plausible reason why Congress would have intended to provide for such special treatment of actions filed by natural persons and to have precluded entirely jurisdiction over comparable cases brought by corporate persons. Acceptance of the Government’s newfound reading of section 692 “would produce an absurd and unjust result which Congress could not have intended.”

We are also unpersuaded that appellees’ challenge to the constitutionality of the Act is nonjusticiable. In both the New York and the Snake River cases, the Government argues that the appellees are not actually injured because the claims are too speculative. We find no merit in the suggestion that New York’s injury is merely speculative because the State now has a multibillion dollar contingent liability that had been eliminated by section 4722(c) of the Balanced Budget Act of 1997.

The Snake River farmers’ cooperative also suffered an immediate injury when the President canceled the limited tax benefit that Congress had enacted to facilitate the acquisition of processing plants. Three critical facts identify the specificity and the importance of that injury. First, Congress enacted section 968 for the specific purpose of providing a benefit to a defined category of potential purchasers of a defined category of assets. The members of that statutorily defined class received the equivalent of a statutory “bargaining chip” to use in carrying out the congressional plan to facilitate their purchase of such assets. Second, the President selected section 968 as one of only two tax benefits in the Taxpayer Relief Act of 1997 that should be canceled. The cancellation rested on his determination that the use of those bargaining chips would have a significant impact on the Federal budget deficit. Third, the Snake River cooperative was organized for the very purpose of acquiring processing facilities, it had concrete plans to utilize the benefits of section 968, and it was engaged in ongoing negotiations with the owner of a processing plant who had expressed an interest in structuring a tax-deferred sale when the President canceled section 968. Moreover, it is actively searching for other processing facilities for possible future purchase if the President’s cancellation is reversed; and there are ample processing facilities in the State that Snake River may be able to purchase. By depriving them of their statutory bargaining chip, the cancellation inflicted a sufficient likelihood of economic injury to establish standing under our precedents. Appellees’ injury in this regard is at least as concrete as the injury suffered by the respondents in Bryant v. Yellen (1980).

IV

The Line Item Veto Act gives the President the power to “cancel in whole” three types of provisions that have been signed into law: “(1) any dollar amount of discretionary budget authority; (2) any item of new direct spending; or (3) any limited tax benefit.” It is undisputed that the New York case involves an “item of new direct spending” and that the Snake River case involves a “limited tax benefit” as those terms are defined in the Act. It is also undisputed that each of those provisions had been signed into law pursuant to Article I, section 7, of the Constitution before it was canceled.

In both legal and practical effect, the President has amended two Acts of Congress by repealing a portion of each. “[R]epeal of statutes, no less than enactment, must conform with Art. I.” INS [Immigration and Naturalization Service] v. Chadha (1983). There is no provision in the Constitution that authorizes the President to enact, to amend, or to repeal statutes. . . . There are important differences between the President’s “return” [veto] of a bill pursuant to Article I, section 7, and the exercise of the President’s cancellation authority pursuant to the Line Item Veto Act. The constitutional return takes place before the bill becomes law; the statutory cancellation occurs after the bill becomes law. The constitutional return is of the entire bill; the statutory cancellation is of only a part. Although the Constitution expressly authorizes the President to play a role in the process of enacting statutes, it is silent on the subject of unilateral Presidential action that either repeals or amends parts of duly enacted statutes.

There are powerful reasons for construing constitutional silence on this profoundly important issue as equivalent to an express prohibition. The procedures governing the enactment of statutes set forth in the text of Article I were the product of the great debates and compromises that produced the Constitution itself. Familiar historical materials provide abundant support for the conclusion that the power to enact statutes may only “be exercised in accord with a single, finely wrought and exhaustively considered, procedure.” Chadha. Our first President understood the text of the Presentment Clause as requiring that he either “approve all the parts of a Bill, or reject it in toto.” What has emerged in these cases from the President’s exercise of his statutory cancellation powers, however, are truncated versions of two bills that passed both Houses of Congress. They are not the product of the “finely wrought” procedure that the Framers designed.

At oral argument, the Government suggested that the cancellations at issue in these cases do not effect a “repeal” of the canceled items because under the special “lockbox” provisions of the Act, a canceled item “retain[s] real, legal budgetary effect” insofar as it prevents Congress and the President from spending the savings that result from the cancellation. The text of the Act expressly provides, however, that a cancellation prevents a direct spending or tax benefit provision “from having legal force or effect.” That a canceled item may have “real, legal budgetary effect” as a result of the lockbox procedure does not change the fact that by canceling the items at issue in these cases, the President made them entirely inoperative as to appellees. Section 968 of the Taxpayer Relief Act no longer provides a tax benefit, and section 4722(c) of the Balanced Budget Act of 1997 no longer relieves New York of its contingent liability. Such significant changes do not lose their character simply because the canceled provisions may have some continuing financial effect on the Government. The cancellation of one section of a statute may be the functional equivalent of a partial repeal even if a portion of the section is not canceled.

V

The Government advances two related arguments to support its position that despite the unambiguous provisions of the Act, cancellations do not amend or repeal properly enacted statutes in violation of the Presentment Clause. First, relying primarily on Field v. Clark (1892), the Government contends that the cancellations were merely exercises of discretionary authority granted to the President by the Balanced Budget Act and the Taxpayer Relief Act read in light of the previously enacted Line Item Veto Act. Second, the Government submits that the substance of the authority to cancel tax and spending items “is, in practical effect, no more and no less than the power to ‘decline to spend’ specified sums of money, or to ‘decline to implement’ specified tax measures.” Neither argument is persuasive.

In Field v. Clark, the Court upheld the constitutionality of the Tariff Act of 1890. That statute contained a “free list” of almost 300 specific articles that were exempted from import duties “unless otherwise specially provided for in this act.” Section 3 was a special provision that directed the President to suspend that exemption for sugar, molasses, coffee, tea, and hides “whenever, and so often” as he should be satisfied that any country producing and exporting those products imposed duties on the agricultural products of the United States that he deemed to be “reciprocally unequal and unreasonable.” The section then specified the duties to be imposed on those products during any such suspension.

The Court identifies three critical differences between the power to suspend the exemption from import duties and the power to cancel portions of a duly enacted statute. First, the exercise of the suspension power was contingent upon a condition that did not exist when the Tariff Act was passed: the imposition of “reciprocally unequal and unreasonable” import duties by other countries. In contrast, the exercise of the cancellation power within five days after the enactment of the Balanced Budget and Tax Reform Acts necessarily was based on the same conditions that Congress evaluated when it passed those statutes. Second, under the Tariff Act, when the President determined that the contingency had arisen, he had a duty to suspend; in contrast, while it is true that the President was required by the Act to make three determinations before he canceled a provision, those determinations did not qualify his discretion to cancel or not to cancel. Finally, whenever the President suspended an exemption under the Tariff Act, he was executing the policy that Congress had embodied in the statute. In contrast, whenever the President cancels an item of new direct spending or a limited tax benefit he is rejecting the policy judgment made by Congress and relying on his own policy judgment. Thus, the conclusion in Field v. Clark that the suspensions mandated by the Tariff Act were not exercises of legislative power does not undermine our opinion that cancellations pursuant to the Line Item Veto Act are the functional equivalent of partial repeals of Acts of Congress that fail to satisfy Article I, section 7.

The Government’s reliance upon other tariff and import statutes that contain provisions similar to the one challenged in Field is unavailing for the same reasons. The cited statutes all relate to foreign trade, and this Court has recognized that in the foreign affairs arena, the President has “a degree of discretion and freedom from statutory restriction which would not be admissible were domestic affairs alone involved.” United States v. ­Curtiss-Wright Export Corp. (1936). More important, when enacting the statutes discussed in Field, Congress itself made the decision to suspend or repeal the particular provisions at issue upon the occurrence of particular events subsequent to enactment, and it left only the determination of whether such events occurred up to the President. The Line Item Veto Act authorizes the President himself to effect the repeal of laws, for his own policy reasons, without observing the procedures set out in Article I, section 7. The fact that Congress intended such a result is of no moment. Although Congress presumably anticipated that the President might cancel some of the items in the Balanced Budget Act and in the Taxpayer Relief Act, Congress cannot alter the procedures set out in Article I, section 7, without amending the Constitution.

Neither are we persuaded by the Government’s contention that the President’s ­authority to cancel new direct spending and tax benefit items is no greater than his traditional authority to decline to spend appropriated funds. . . . The critical difference between this statute and all of its predecessors is that this Act gives the President the unilateral power to change the text of duly enacted statutes. None of the Act’s predecessors could even arguably have been construed to authorize such a change.

VI

We express no opinion about the wisdom of the procedures authorized by the Line Item Veto Act. Many members of both major political parties who have served in the Legislative and the Executive Branches have long advocated the enactment of such procedures for the purpose of “ensur[ing] greater fiscal accountability in Washington.” But if there is to be a new procedure in which the President will play a different role in determining the final text of what may “become a law,” such change must come not by legislation but through the amendment procedures set forth in Article V of the Constitution.

The judgment of the District Court is affirmed.

JUSTICE SCALIA, with whom JUSTICE O’CONNOR joins, and with whom JUSTICE BREYER joins as to Part III, concurring in part and dissenting in part.

Today the Court acknowledges the “overriding and time-honored concern about keeping the Judiciary’s power within its proper constitutional sphere.” It proceeds, however, to ignore the prescribed statutory limits of our jurisdiction by permitting the expedited-review provisions of the Line Item Veto Act to be invoked by persons who are not “individual[s],” and to ignore the constitutional limits of our jurisdiction by permitting one party to challenge the Government’s denial to another party of favorable tax treatment from which the first party might, but just as likely might not, gain a concrete benefit. In my view, the Snake River appellees lack standing to challenge the President’s cancellation of the “limited tax benefit,” and the constitutionality of that action should not be addressed. I think the New York appellees have standing to challenge the President’s cancellation of an “item of new direct spending”; I believe we have statutory authority (other than the expedited review provision) to address that challenge; but unlike the Court I find the President’s cancellation of spending items to be entirely in accord with the Constitution.

I

The Court’s unrestrained zeal to reach the merits of this case is evident in its disregard of the statute’s expedited review provision, which extends that special procedure to “[a]ny Member of Congress or any individual adversely affected by [the Act].” With the exception of Mike Cranney, a natural person, the appellees—corporations, cooperatives, and governmental entities—are not “individuals” under any accepted usage of that term. Worse still, the first provision of the United States Code confirms that insofar as this word is concerned, Congress speaks English like the rest of us: “In determining the meaning of any Act of Congress, unless the context indicates otherwise . . . the wor[d] ‘person’ . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” And doubly worse, one of the definitional provisions of this very Act expressly distinguishes “individuals” from “persons.” The Court majestically sweeps the plain language of the statute aside, declaring that “[t]here is no plausible reason why Congress would have intended to provide for such special treatment of actions filed by natural persons and to have precluded entirely jurisdiction over comparable cases brought by corporate persons.” Indeed, the Court says, it would be “absurd” for Congress to have done so. But Congress treats individuals more favorably than corporations and other associations all the time. There is nothing whatever extraordinary—and surely nothing so bizarre as to permit this Court to declare a “scrivener’s error”—in believing that individuals will suffer more seriously from delay in the receipt of “vetoed” benefits or tax savings than corporations will, and therefore according individuals (but not corporations) expedited review. It may be unlikely that this is what Congress actually had in mind; but it is what Congress said, it is not so absurd as to be an obvious mistake, and it is therefore the law.

II

Not only must we be satisfied that we have statutory jurisdiction to hear this case; we must be satisfied that we have jurisdiction under Article III. “To meet the standing requirements of Article III, ‘[a] plaintiff must allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.’” Raines, quoting Allen v. Wright (1984). In the first action before us, appellees Snake River Potato Growers, Inc. (Snake River) and Mike Cranney, Snake River’s Director and Vice-Chairman, challenge the constitutionality of the President’s cancellation of section 968 of the Taxpayer Relief Act of 1997. The Snake River appellees have standing, in the Court’s view, because section 968 gave them “the equivalent of a statutory ‘bargaining chip,’” and “[b]y depriving them of their statutory bargaining chip, the cancellation inflicted a sufficient likelihood of economic injury to establish standing under our precedents.” It is unclear whether the Court means that deprivation of a “bargaining chip” itself suffices for standing, or that such deprivation suffices in the present case because it creates a likelihood of economic injury. The former is wrong as a matter of law, and the latter is wrong as a matter of fact, on the facts alleged.

Even if harm to one’s bargaining position were a legally cognizable injury, Snake River has not alleged, as it must, facts sufficient to demonstrate that it personally has suffered that injury. Snake River has presented no evidence to show that it was engaged in bargaining, and that that bargaining was impaired by the President’s cancellation of section 968. All we know from the record is that Snake River had two discussions with IPP concerning the sale of its processing facility on the tax deferred basis the Act would allow; that IPP was interested; and that Snake River ended the discussions after the President’s action. On these facts it is pure conjecture to say that Snake River suffered an impaired bargaining position. As we have said many times, conjectural or hypothetical injuries do not suffice for Article III standing. See Lujan v. Defenders of Wildlife (1992).

Nor has Snake River demonstrated, as the Court finds, that “the cancellation inflicted a sufficient likelihood of economic injury to establish standing under our precedents.” Presumably the economic injury the Court has in mind is Snake River’s loss of a bargain purchase of a processing plant. But there is no evidence, and indeed not even an allegation, that before the President’s action such a purchase was likely. All we know is that a potential seller was “interested” in talking about the subject before the President’s action, and that after the President’s action Snake River itself decided to proceed no further. If this establishes a “likelihood” that Snake River would have made a bargain purchase but for the President’s action, or even a “likelihood” that the President’s action rendered “more difficult” a purchase that was realistically within Snake River’s grasp, then we must adopt for our standing jurisprudence a new definition of likely: “plausible.”

The closest case the Court can appeal to as precedent for its finding of standing is Bryant v. Yellen (1980). However, the reasoning of Bryant should not govern the present case because it represents a crabbed view of the standing doctrine that has been superseded. Bryant was decided at the tailend of “an era in which it was thought that the only function of the constitutional requirement of standing was ‘to assure that concrete adverseness which sharpens the presentation of issues,’” Spencer v. Kemma (1998), quoting Baker v. Carr (1962). Thus, the Bryant Court ultimately afforded the respondents standing simply because they “had a sufficient stake in the outcome of the controversy,” not because they had demonstrated injury in fact, causation and redressability. “That parsimonious view of the function of Article III standing has since yielded to the acknowledgement that the constitutional requirement is a ‘means of “defin[ing] the role assigned to the judiciary in a tripartite allocation of power,’” and ‘a part of the basic charter . . . provid[ing] for the interaction between [the federal] government and the governments of the several States,’” Spencer, quoting Valley Forge Christian College v. Americans United for Separation of Church and State (1982). While Snake River in the present case may indeed have enough of a “stake” to assure adverseness, the matter it brings before us is inappropriate for our resolution because its allegations do not establish an injury in fact, attributable to the Presidential action it challenges, and remediable by this Court’s invalidation of that Presidential action.

Because, in my view, Snake River has no standing to bring this suit, we have no jurisdiction to resolve its challenge to the President’s authority to cancel a “limited tax benefit.”

III

The Presentment Clause requires, in relevant part, that “[e]very Bill which shall have passed the House of Representatives and the Senate, shall, before it becomes a Law, be presented to the President of the United States; if he approves he shall sign it, but if not he shall return it.” There is no question that enactment of the Balanced Budget Act complied with these requirements: the House and Senate passed the bill, and the President signed it into law. It was only after the requirements of the Presentment Clause had been satisfied that the President exercised his authority under the Line Item Veto Act to cancel the spending item. Thus, the Court’s problem with the Act is not that it authorizes the President to veto parts of a bill and sign others into law, but rather that it authorizes him to “cancel”—prevent from “having legal force or effect”—certain parts of duly enacted statutes.

Article I, section 7 of the Constitution obviously prevents the President from canceling a law that Congress has not authorized him to cancel. But that is not this case. It was certainly arguable, as an original matter, that Art. I, sec. 7 also prevents the President from canceling a law which itself authorizes the President to cancel it. But as the Court acknowledges, that argument has long since been made and rejected. In 1809, Congress passed a law authorizing the President to cancel trade restrictions against Great Britain and France if either revoked edicts directed at the United States. Joseph Story regarded the conferral of that authority as entirely unremarkable in The Orono (1812). The Tariff Act of 1890 authorized the President to “suspend, by proclamation to that effect” certain of its provisions if he determined that other countries were imposing “reciprocally unequal and unreasonable” duties. This Court upheld the constitutionality of that Act in Field v. Clark (1892), reciting the history since 1798 of statutes conferring upon the President the power to “discontinue the prohibitions and restraints hereby enacted and declared, suspend the operation of the aforesaid act,” and “declare the provisions of this act to be inoperative.”

As much as the Court goes on about Art. I, sec. 7, therefore, that provision does not demand the result the Court reaches. It no more categorically prohibits the Executive reduction of congressional dispositions in the course of implementing statutes that authorize such reduction, than it categorically prohibits the Executive augmentation of congressional dispositions in the course of implementing statutes that authorize such augmentation—generally known as substantive rulemaking. There are, to be sure, limits upon the former just as there are limits upon the latter—and I am prepared to acknowledge that the limits upon the former may be much more severe. Those limits are established, however, not by some categorical prohibition of Art. I, sec. 7, which our cases conclusively disprove, but by what has come to be known as the doctrine of unconstitutional delegation of legislative authority: When authorized Executive reduction or augmentation is allowed to go too far, it usurps the nondelegable function of Congress and violates the separation of powers. It is this doctrine, and not the Presentment Clause, that was discussed in the Field opinion, and it is this doctrine, and not the Presentment Clause, that is the issue presented by the statute before us here. That is why the Court is correct to distinguish prior authorizations of Executive cancellation, such as the one involved in Field, on the ground that they were contingent upon an Executive finding of fact, and on the ground that they related to the field of foreign affairs, an area where the President has a special “degree of discretion and freedom.” These distinctions have nothing to do with whether the details of Art. I, sec. 7 have been complied with, but everything to do with whether the authorizations went too far by transferring to the Executive a degree of political, law-making power that our traditions demand be retained by the Legislative Branch.

I turn, then, to the crux of the matter: whether Congress’s authorizing the President to cancel an item of spending gives him a power that our history and traditions show must reside exclusively in the Legislative Branch. I may note, to begin with, that the Line Item Veto Act is not the first statute to authorize the President to “cancel” spending items. In Bowsher v. Synar (1986), we addressed the constitutionality of the Balanced Budget and Emergency Deficit Control Act of 1985, which required the President, if the federal budget deficit exceeded a certain amount, to issue a “sequestration” order mandating spending reductions specified by the Comptroller General. The effect of sequestration was that “amounts sequestered shall be permanently cancelled.” We held that the Act was unconstitutional, not because it impermissibly gave the Executive legislative power, but because it gave the Comptroller General, an officer of the Legislative Branch over whom Congress retained removal power, “the ultimate authority to determine the budget cuts to be made, functions plainly entailing execution of the law in constitutional terms.” The President’s discretion under the Line Item Veto Act is certainly broader than the Comptroller General’s discretion was under the 1985 Act, but it is no broader than the discretion traditionally granted the President in his execution of spending laws.

Insofar as the degree of political, “lawmaking” power conferred upon the Executive is concerned, there is not a dime’s worth of difference between Congress’s authorizing the President to cancel a spending item, and Congress’s authorizing money to be spent on a particular item at the President’s discretion. And the latter has been done since the Founding of the Nation. The constitutionality of such appropriations has never seriously been questioned. Rather, “that Congress has wide discretion in the matter of prescribing details of expenditures for which it appropriates must, of course, be plain. Appropriations and other acts of Congress are replete with instances of general appropriations of large amounts, to be allotted and expended as directed by designated government agencies.” Cincinnati Soap Co. v. United States (1937).

The short of the matter is this: Had the Line Item Veto Act authorized the President to “decline to spend” any item of spending contained in the Balanced Budget Act of 1997, there is not the slightest doubt that authorization would have been constitutional. What the Line Item Veto Act does instead—authorizing the President to “cancel” an item of spending—is technically different. But the technical difference does not relate to the technicalities of the Presentment Clause, which have been fully complied with; and the doctrine of unconstitutional delegation, which is at issue here, is preeminently not a doctrine of technicalities. The title of the Line Item Veto Act, which was perhaps designed to simplify for public comprehension, or perhaps merely to comply with the terms of a campaign pledge, has succeeded in faking out the Supreme Court. The President’s action it authorizes in fact is not a line-item veto and thus does not offend Art. I, sec. 7; and insofar as the substance of that action is concerned, it is no different from what Congress has permitted the President to do since the formation of the Union.

For the foregoing reasons, I respectfully dissent.