[Congressional Record Volume 144, Number 11 (Thursday, February 12, 1998)]
[Senate]
[Pages S692-S699]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LINE ITEM VETO ACT FOUND UNCONSTITUTIONAL
Mr. BYRD. Mr. President, as many of my colleagues may already be
aware, in a decision announced today by Judge Thomas F. Hogan of the
United States District Court for the District of Columbia, the Line
Item Veto Act has been found to be unconstitutional, an
unconstitutional delegation of the Congress' power over the purse.
While I congratulate each of the plaintiffs and their attorneys, this
victory does not belong to them alone. This is a victory for the
American people. It is their Constitution, it is their Republic, and
their liberties that have been made more secure.
Judge Hogan's opinion parallels a previous decision by Judge Thomas
Penfield Jackson, also for the U.S. District Court for the District of
Columbia, in Byrd v. Raines, as well as the opinions expressed by
Supreme Court Justice John Paul Stevens in that same earlier case.
While I fully expect this decision today to be appealed and I,
therefore, recognize this as a first step, I nevertheless regard it as
an important step.
For the benefit of my colleagues, I would like to take just a few
moments to read pertinent excerpts from Judge Hogan's decision. I read
now, beginning with that section titled ``Procedural Requirements of
Article I.''
I continue to read from Judge Hogan's opinion:
The Constitution carefully prescribes certain formal
procedures that must be observed in the enactment of laws.
The Line Item Veto Act impermissibly attempts to alter these
constitutional requirements through mere legislative action.
Because the act violates Article I's ``single, finely wrought
and exhaustively considered, procedure,'' . . . it is
unconstitutional.
* * * * *
Both Houses of Congress, through a process of discussion
and compromise, had agreed upon the exact content of the
Balanced Budget Act and the Taxpayer Relief Act. These laws
reflected the best judgment of both Houses. The laws that
resulted after the President's line item veto were different
from those consented to by both Houses of Congress. There is
no way of knowing whether these laws, in their truncated
form, would have received the requisite support from both the
House and the Senate. Because the laws that emerged after the
Line Item Veto are not the same laws that proceeded through
the legislative process, as required, the resulting laws are
not valid.
Furthermore, the President violated the requirements of
Article I when he unilaterally canceled provisions of duly
enacted statutes. Unilateral action by any single participant
in the law-making process is precisely what the Bicameralism
and Presentment Clauses were designed to prevent. Once a bill
becomes law, it can only be repealed or amended through
another, independent legislative enactment, which itself must
conform with the requirements of Article I. Any rescissions
must be agreed upon by a majority of both Houses of Congress.
The President cannot single-handedly revise the work of the
other two participants in the lawmaking process, as he did
here when he vetoed certain provisions of these statutes.
* * * * *
Whatever defendants wish to call the President's action, it
has every mark of a veto.
* * * * *
Finally, Congress' ``indirect attempt[] to accomplish what
the Constitution prohibits . . . accomplishing directly''
cannot stand. . . . ``To argue otherwise is to suggest that
the Framers spent significant time and energy in debating and
crafting Clauses that could be easily evaded.'' Congress knew
that a single Line Item Veto, performed prior to the
President's signature, would violate Article I's requirement
that the president sign or return the bills in toto. This
limitation on the President has been clear since George
Washington's tenure.
Let me quote the words of George Washington as they are quoted in
Judge Hogan's opinion:
(``From the nature of the Constitution, I must approve all
the parts of a Bill, or reject it in toto.'') Congress cannot
evade this long-accepted requirement by merely changing the
timing of the President's cancellation.
Because the Line Item Veto Act produced laws in violation
of the requirement of bicameral passage, because it permitted
the President unilaterally to repeal or amend duly enacted
laws, and because it impermissibly attempts to evade the
requirement that the President sign or reject a bill in toto,
the Act violates the requirements of Article I. For that
reason alone, the Line Item Veto Act is unconstitutional.
Now, under the heading ``Separation of Powers,'' in Judge Hogan's
opinion, I find these words, and I quote from his opinion:
Furthermore, the Line Item Veto Act is unconstitutional
because it impermissibly disrupts the balance of powers among
the three branches of government. The separation of powers
into three coordinate branches is central to the principles
on which this country was founded. . . . The declared purpose
of separating and dividing the powers of government was to
``diffuse power the better to secure liberty.''
* * * * *
Pursuant to the doctrine of separated powers, certain
functions are divided between the legislative and executive
branches. Article I, section I vests all legislative
authority in Congress. Legislative power is the authority to
make laws[,]
Says Judge Hogan.
Executive power, on the other hand, is to ``take Care that
the Laws be faithfully executed.''
* * * * *
With regard to lawmaking, the President's function is
strictly a negative one: to veto a bill in its entirety.
While it is Congress' duty to make laws, Congress can
delegate certain rulemaking authority to other branches, as
long as that delegation is appropriate to the duties of that
branch. (``[T]he lawmaking function belongs to Congress . . .
and may not be conveyed to another branch or entity.'');
* * * * *
The Line Item Veto Act impermissibly crosses the line
between acceptable delegations of rulemaking authority and
unauthorized surrender to the President of an inherently
legislative function, namely, the authority to permanently
shape laws and package legislation. The Act----
Writes Judge Hogan,
enables the President, in his discretion, to pick and choose
among portions of an enacted law to determine which ones will
remain valid. The Constitution, however, dictates that once a
bill becomes law, the President's sole duty is to ``take care
that the laws be faithfully executed.'' His power
Writes Judge Hogan,
cannot expand to that of ``co-designer'' of the law--that is
Congress' domain. Any subsequent amendment of a statute falls
under Congress' responsibility to legislate. The President
cannot take this duty upon himself; nor can Congress
relinquish that power to the Executive Branch.
I shall not quote further excerpts from the opinion of Judge Hogan,
but I ask unanimous consent to have printed in the Record the entire
opinion, following the remarks of Mr. Moynihan and my remarks. I
understand the Government Printing Office estimates it will cost $1,532
to print this opinion in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. BYRD. Mr. President, next Monday is the official observance of
the birthday of our first President, George Washington, who so wisely
observed, as did Judge Hogan, ``From the nature of the Constitution, I
must approve all the parts of a bill or reject it in toto.'' How right
George Washington was! I can think of no greater tribute to his wisdom
than this decision today.
Mr. President, I yield to my distinguished colleague who joined in
preparing the amicus and who has, all the way from the beginning of
these debates, which have gone on for years now, stood like the Irish
oak in opposition to giving the President of the United States--any
President, Republican or Democrat--a line-item veto.
I salute my friend, and I am very grateful to him for the work that
he has done and for his constant support and leadership as we have
stood together with Senator Carl Levin, who cannot be here today
because he is in Europe. If Senator Moynihan had been at the
Constitutional Convention, even though Judge Yates and Mr. Lansing left
the Convention early, leaving only Alexander Hamilton to sign that
great document, Senator Moynihan would have been there to attach his
signature. And not only that, he would have joined with Hamilton and
Madison and Jay in writing one of the greatest documents of all time,
the Federalist Papers. I yield to my friend.
Mr. MOYNIHAN. Mr. President, it is an honor to speak following the
statement by our revered, sometime President pro tempore, Robert C.
Byrd of West Virginia, a man who has brought to our Chamber a
sensibility concerning the Constitution that, I would argue, is
unequaled since those awful days that led to the Civil War, days in
[[Page S693]]
which his lucidity and courage could have produced a very different
outcome.
We have a matter before us of equal consequence. I would offer the
personal judgment that in the history of the Constitution, there has
never come before us an issue considering the relations between the
executive and the legislative branches as important as this one. It is
a course of a peculiar inexplicability that this Chamber is empty--the
distinguished Presiding Officer from Utah, our President pro tempore
sometime from West Virginia and myself--empty because of a particular
politics that for a long time said this was a desirable measure and
enacted it and now faces the court saying, ``But it's
unconstitutional.''
The courts, I dare to say, at the level of those asides that are well
known in our judicial history, the court is also saying, ``Don't you
know your Constitution? Don't you understand what is at stake for
you?'' The courts are not themselves directly involved here, but they
are trying to tell us, in brilliant decisions by Judge Jackson, now by
Judge Hogan, singularly literate decisions.
Judge Hogan begins his historical analysis, if you will, with a
citation from Gibbon's ``Decline and Fall of the Roman Empire'':
The principles of a free constitution are irrecoverably
lost when the legislative power is nominated by the
executive.
That is how he saw the decline of the Roman Senate, inexorably
followed by the decline of Roman civilization. That is what we are
dealing with here today.
As Senator Byrd has so forcefully stated, George Washington, whose
birthday we observe on Monday, who presided over the Constitutional
Convention, in his later writings put it as explicitly as only he could
do with that clarity and simplicity he had. Washington said:
From the nature of the Constitution, I must approve all the
parts of a Bill or reject it in toto.
That could not be more plain. And we find the courts saying to us--I
don't presume to say this is obiter dicta, but I can see the courts
pleading: ``Senators, do you not know what is at stake?''
As for the claims of efficiency and economy and this and that--
legitimate claims--but the court refers in this particular decision,
Judge Hogan refers to a wonderful passage from Chadha, which was so
true about the original understandings of the political and Government
process of the founders. He said in the Immigration and Naturalization
Service v. Chadha, a decision in 1983--as I recall, it is on the one-
House veto--the court said:
The fact that a given law or procedure is efficient,
convenient and useful in facilitating functions of government
standing alone will not save it if it is contrary to
the Constitution. Convenience and efficiency are not the
primary objectives or the hallmarks of democratic
government.
That was the great perception of our founders. In the Federalist
Papers, which Senator Byrd has so generously mentioned, they ask
openly, given the fugitive and turbulent existence of earlier
republics, the Roman Republic, what makes you think this Republic will
work?
They said, fair question, but we have a new science of politics. It
is a science that does not assume virtue in men, it assumes conflict,
and it provides for the resolution of conflict by equal and opposing
forces. It does not fear debate. It welcomes it, it assumes self-
interest on the part of regions, of sectors in the economy, of groups
in the population. No fear.
And here is a central idea which was part of our amicus brief and
which we find, I think, echoed in Judge Hogan's remarks, which I don't
assert but I offer the thought. When we put together on the Senate
floor a bill--I will say a Finance Committee bill, as I am now ranking
member, was one time chairman of Finance--we think of balancing
interests, conflicting or often unrelated, but there are 100 Members of
this Chamber. They represent 50 States and 550 different points of
view. We accommodate them. We provide for this interest and for that
interest and hope and, I think, in the main see that the public
interest is served by the opportunities of governing.
If you were to take one of those provisions out or two or three, it
would be quite possible you would not have the votes to pass the bill.
There could be a filibuster, or there simply could not be the 51 votes.
However, with the line-item veto, the President can subsequently take
out such provisions such that the statute books will contain a law
which never could have passed the U.S. Congress.
How say we, the statute books will have a law that could not have
passed the Congress? Here it is, this is the arrangement. The courts
are so clear on this, and I so look forward to a final decision by the
Supreme Court.
It is interesting, if I may say, just to give an illustration of the
compound interests of people involved, on the one hand we have two
plaintiffs here, the City of New York, et al. The City of New York
being the Greater New York Hospital Association, those great hospitals
and the union of hospital employees which work there. The city, great
science centers, ordinary persons who clean floors and care for
patients. They are one group.
Across the continent, another group, the Snake River Potato Growers,
Incorporated--about 30 farmers. They grow potatoes. They have an
interest. It was in a bill, and it was taken out. That interest, I
think, would have had real effect on the decision how to vote of the
two Senators in this Chamber who represent those potato growers.
So you have radiologists and potato growers and people who scrub
floors and people who go beyond the limits of conceivable knowledge in
the biological and medical sciences. All these interests are always
represented here, and only here.
Congress makes the laws. The President is required to see that they
are faithfully executed. But, sir, and in closing, if nothing else will
bring this Chamber to its wits, perhaps this will. The President's
power under this line-item veto is likely rarely to be directly
exercised. It will be threatened.
A President will say to a Senator, ``You know, I would so very much
like to be of assistance to Utah as regards irrigation and other
matters which are so important to me, but there's a foreign policy
matter which also is important to me. And cannot I expect, in the
spirit of exchange and understanding, that I will have your support
here in return for my choice not to veto a measure now enacted by
Congress?'' It will go on over and over again. It is the formula for
executive tyranny.
Sir, within this day, one of the most learned, experienced men I know
in Washington said, ``If LBJ,'' meaning Lyndon B. Johnson, ``had had
this power, we would have had Nero.'' I mean no disrespect; I was a
member of President Johnson's subcabinet, and served him as well as I
could do. But you have to have experienced Lyndon Johnson close up,
without this power, to know what the powers of persuasion of a
President can be.
But given this power, you produce an imbalance in your constitutional
system which the founders pleaded with us not to do. They produced a
system that has worked well. We are the oldest continuous
constitutional government on Earth. If we wish to change the
Constitution there is a way to do that, too, but not through statute.
And that is what the court has now for the second time ruled, and I
hope that the Supreme Court will agree.
I would particularly like to thank Mayor Rudolph W. Giuliani of New
York, who stepped right up to this issue when many people suggested he
not do. And most particularly, to the counsel who have served us pro
bono so well: Michael Davidson; Charles J. Cooper; Paul A. Crotty,
former Corporation Counsel of the City of New York; Louis R. Cohen,
Lloyd N. Cutler, Alan Morrison. And finally, sir, any number of
professors of law have offered their counsel. Most particularly
Laurence H. Tribe, of the Harvard Law School, and Michael J. Gerhardt,
the dean of Case Western Reserve Law, have been unstinting in their
willingness to advise us in a matter they consider just as important as
we do.
Mr. President, I thank the Chair for its courtesy. I thank my leader,
my beloved and revered leader, Senator Byrd.
I yield the floor.
[[Page S694]]
Exhibit No. 1
[United States District Court for the District of Columbia, Civ. No.
97-2393 (TFH)]
City of New York, et al., plaintiff, v. William J. Clinton, et al.,
defendant
____
[United States District Court for the District of Columbia, Civ. No.
97-2463 (TFH)]
Snake River Potato Growers, Inc., et al., plaintiff, v. Robert E.
Rubin, et al., defendant
memorandum opinion
This case requires the Court to adjudge the
constitutionality of the Line Item Veto Act. Before reaching
the constitutional challenge, however, the Court must first
conclude that it has jurisdiction to hear the case, by
determining that Plaintiffs in this action have Article III
standing. Based on the briefs and exhibits submitted by the
parties and amici curiae,\1\ and argument at a hearing
conducted on January 14, 1998, the Court finds that these
Plaintiffs have demonstrated the requisite injury to have
standing; furthermore, it finds that the Line Item Veto Act
violates the procedural requirements ordained in Article I of
the United States Constitution and impermissibly upsets the
balance of powers so carefully prescribed by its Framers. The
Line Item Veto Act therefore is unconstitutional.
---------------------------------------------------------------------------
Footnotes at end of exhibit.
---------------------------------------------------------------------------
I. Background
A. The Line Item Veto Act \2\
Unable to control its voracious appetite for ``pork,''
Congress passed, and the President signed into law, the Line
Item Veto Act. Pub. L. No. 104-130, 110 Stat. 1200 (1996).\3\
The Act is designed as an amendment to, and an enhancement
of, Title X of the Congressional Budget and Impoundment
Control Act of 1974 (``ICA''). 2 U.S.C. Sec. Sec. 681 et seq.
The ICA authorized the President to defer spending of
Congressional appropriations during the course of a fiscal
year or other period of availability, as long as Congress
intended for those appropriations to be permissive rather
than mandatory. Id. The President also could propose the
total rescission of an appropriation to Congress, but unless
Congress approved the rescission, the President was obligated
to release the funds. Id. Sec. Sec. 683(b), 688. Because it
generally failed to make the rescissions recommended by the
President, Congress found this arrangement to be an
unsatisfactory mechanism for controlling deficit spending.\4\
As large deficits persisted, Congress considered various
amendments to the ICA to alleviate its perceived defects. One
proposal, called ``expedited rescission,'' would amend the
ICA to streamline the process for Congressional approval of
rescissions proposed by the President. See e.g., H.R. 2164,
102d Cong. (1991). Other proposals included amending the
Constitution to give the President a line item veto, see
e.g., H.R.J. Res. 6, 104th Cong. (1995); H.R.J. Res. 4, 103d
Cong. (1993), or adopting a congressional procedure for
presenting each spending provision to the President as a
separate bill, for approval or veto. See, e.g., S. 137,
104th Cong. (1995); S. 238, 104th Cong. (1995). Congress
settled on an ``enhanced rescission'' proposal, codified
in the Line Item Veto Act, that makes Executive
rescissions automatic in defined circumstances, subject to
congressional disapproval. By making appropriations
``conditional'' during the period in which the President
has authority to veto provisions, and ``by placing the
onus on Congress to overturn the President's cancellation
of spending and limited tax benefits,'' H.R. Conf. Rep.
No. 104-491, at 16 (1996), the Line Item Veto Act reverses
the appropriation presumptions under the 1CA.
The Line Item Veto Act gives the President the authority to
``cancel in whole,'' at any time within five days (excluding
Sundays) after signing a bill into law, (1) ``any dollar
amount of discretionary budget authority;'' (2) ``any item of
new direct spending;'' and (3) ``any limited tax benefit.'' 2
U.S.C. Sec. 691a (1997).
A ``dollar amount of discretionary budget authority'' is
defined as ``the entire dollar amount of budget authority''
that is specified in the text of an appropriations law or
found in the tables, charts, or explanatory text of
statements or committee reports accompanying a bill. Id. at
Sec. 691e(7). An ``item of new direct spending'' is a
specific provision that will result in ``an increase in
budget authority or outlays'' for entitlements, food stamps,
or other specified programs. Id. at Sec. Sec. 691e(8),
691e(5). A ``limited tax benefit'' is a revenue-losing
provision that gives tax relief to 100 or fewer beneficiaries
in any fiscal year, or a tax provision that ``provides
temporary or permanent transitional relief for ten or fewer
beneficiaries in any fiscal year'' \5\ Id. at Sec. 691e(9).
With respect to any dollar amount of discretionary budget
authority, the Act defines ``cancel'' as ``to rescind.'' Id.
Sec. 691e(4)(A). Cancellation of an item of new direct
spending or a limited tax benefit prevents it from having
``legal force or effect.'' Id. at Sec. 691e(4)(B). Canceled
funds may not be used for any purpose other than deficit
reduction. Id. at Sec. Sec. 691c(a)-(b).
To exercise cancellation authority, the President must
submit a ``special message'' to Congress within five calendar
days of signing a bill containing the item being canceled.
Id. at Sec. 691a(c)(1). The President's special message must
set forth the reasons for the cancellation; the President's
estimate of the ``fiscal, economic, and budgetary effect'' of
the cancellation; an estimate of ``the . . . effect of the
cancellation upon the objects, purposes and programs for
which the canceled authority was provided;'' and the
geographic distribution of the canceled spending. Id. at
Sec. 691a(b). The President may exercise this authority only
after determining that doing so will ``(i) reduce the Federal
budget deficit; (ii) not impair any essential Government
functions; and (iii) not harm the national interest.'' Id. at
Sec. 691(a)(A).
A cancellation takes effect upon Congress' receipt of the
President's special message. Id. at Sec. 691b(a). Congress
can restore a canceled item by passing a ``disapproval
bill,'' which is not subject to the President's Line Item
Veto authority, but is subject to the veto provisions
detailed in Article I. Id. Disapproval bills must comport
with the requirements prescribed in Article I, section 7,
although the Line Item Veto Act provides for expedited
consideration of these bills. Id. at Sec. Sec. 691e(6),
692(c). If a disapproval bill is enacted into law, the
President's cancellation is nullified and the canceled
items become effective. Id. at Sec. 691b(a).
In terms of judicial review, the Line Item Veto Act
provides that ``[a]ny member of Congress or any individual
adversely affected . . . may bring an action in the United
States District Court for the District of Columbia, for
declaratory judgment and injunctive relief on the ground that
any provision of [the Act] violates the Constitution.'' Id.
at Sec. 692(a)(1). The Act provides for direct appeal to the
Supreme Court and directs both Courts ``to expedite to the
greatest possible extent the disposition of any matter
brought under [this provision.]'' Id. at 692(b)-(c).
B. Factual Background in New York City v. Clinton
The City of New York plaintiffs consist of the City itself,
two hospital associations (Greater New York Hospital
Association, or GNYHA, and New York City Health and Hospitals
Corporation, or NYCHHC), one hospital (the Jamaica Hospital
Medical Center), and two unions that represent health care
employees (District Council 37, American Federation of State,
County and Municipal Employees and Local 1199, National
Health and Human Service Employees).
The City of New York Plaintiffs' claims arise out of a
dispute over Federal Medicaid payments to the State of New
York. The Health Care Financing Administration of the
Department of Health and Human Services (``HCFA'') provides
federal financial participation (``FFP'') to match certain
state Medicaid expenditures. (See Brown Decl., Defs.' Ex. 1
at para.3.) The FFP provided by the Federal Medicaid program
to match state expenditures is reduced by the revenue that
the state receives from health care related taxes. Id. at
para.4. The FFP is not reduced, however, by tax revenue that
meets specific criteria, including that the taxes are
``broad-based'' (i.e., applied to all health care providers
within the same class) and ``uniform'' (i.e., applied equally
to all taxed providers). Id.
New York State taxes its health care providers and uses
this tax revenue to pay for health care for the poor. (See
Wang Decl., Pls.' Ex. 2 at para.4.) The State exempts certain
revenues (e.g., those derived from particular charities) of
some health care providers (e.g., the plaintiff health care
providers) from the health care provider tax. (See van Leer
Decl., Pls.' Ex. 3 at para.3.) That is, New York exempts
plaintiff health care providers from taxes that other health
care providers must pay.
On December 19, 1994, HCFA notified New York State that 19
of its tax programs violated HCFA's requirements. (See Dear
State Medicaid Director Letter, Pls.' Ex. 2D.) Since then,
New York has submitted over 60 waiver applications to HCFA,
which to date have neither been approved nor denied. (See
Wang Decl., at para.7.) A finding by HCFA that a State's
taxes are impermissible effects a disallowance of the State's
Medicaid expenditures and allows HCFA to recoup the matching
funds that it has already paid to the State. Id. at para.6.
If HCFA denies a waiver request, the State may appeal the
denial to the Departmental Appeals Board. (See Brown Decl. at
para.6.)
If HCFA ultimately deems New York's taxes impermissible,
New York State law provides that those health care providers
that were previously excluded from the taxes must pay them
retroactively. (See Wang Decl. at para.8.) For example,
NYCHHC's tax liability is estimated to be more than $4
million for each year at issue. In total, $2.6 billion may be
subject to recoupment from New York State. Id. at
para.para.7-8.
The Balanced Budget Act of 1997, Pub. L. No. 105-33,
included a provision, section 4722(c), that would have
alleviated this exposure to liability. It established that
New York State expenditures derived from certain health care
provider taxes qualified for FFP under the Medicaid program.
Id. at para. 9. This section signified that New York State
would not have to return the funds in question to HCFA; for
Plaintiffs, it meant that they were relieved of their
liability to New York State should HCFA deny New York's
waiver requests.
The President signed the Balanced Budget Act into law on
August 5, 1997. Six days later, he identified section 4722(c)
as an item of new direct spending and canceled it, thus
reinstating Plaintiffs' exposure to liability. Cancellation
No. 97-3, 62 Fed. Reg. 43,263 (1997). The President adopted
the Congressional Budget Office's estimate that the
cancellation of section 4722(c) would reduce the federal
deficit by $200 million in FY 1998. Id.
[[Page S695]]
C. Factual Background in Snake River Potato Growers, Inc. v.
Rubin
Snake River Potato Growers, Inc. is, according to
Plaintiffs, an ``eligible farmers' cooperative'' within the
meaning of section 968 of the Taxpayer Relief Act. (See
Cranney Decl., Pls.' Ex. 2 at para. 9.) Its membership
consists of approximately 30 potato growers located
throughout Idaho, who each owns shares of the cooperative.
Plaintiff Mike Cranney, a potato grower with farms located in
Idaho, is a member, Director and Vice Chairman of the
cooperative. Id. at para. 2. Snake River was formed in May
1997 to assist Idaho potato growers in marketing their crops
and stabilizing prices, in part though a strategy of
acquiring potato processing facilities. Id. at para. 9. These
facilities allow individual growers to aggregate their crops
and process and deliver them to market jointly. Furthermore,
they allow members to retain revenues formerly paid out to
third-party processors. Id. at para. 13.
On August 5, 1997, the President signed into law the
Taxpayer Relief Act, Pub. L. No. 105-34, 111 Stat. 788
(``TRA''). Section 968 of the TRA amended the Internal
Revenue Code to allow the owner of the stock of a qualified
agricultural refiner or processor to defer recognition of
capital gains on the sale of such stock to an eligible
farmers' cooperative. That is, it would have allowed a
processor to sell its facilities to an eligible cooperative
without paying tax currently on any capital gain. The stated
purpose of section 968 was to aid farmers' cooperatives in
the purchase of processing and refining facilities.\6\ (See
Dear Colleague Letter by Reps. Roberts and Stenholm of 12/1/
95, Pls.' Ex. 5.) On August 11, 1997, the President
identified this provision as a ``limited tax benefit,''
within the meaning of the Line Item Veto Act, and canceled
it. Cancellation No. 97-2, 62 Fed. Reg. 43,267 (1997). In his
cancellation message, the President estimated that sellers
could have used section 968 to defer paying $98 million in
taxes over the next five years, and $155 million over the
next ten. Id.
Snake River had actively pursued at least one transaction
that could have taken advantage of section 968. In May 1997,
when Congress initially was considering the proposals in
section 968, Mike Cranney and another officer of Snake River
discussed with Howard Phillips, a principal owner of Idaho
Potato Packers (``IPP''), the purchase by Snake River of the
stock of a company that owned an IPP potato processing
facility in Blackfoot, Idaho. (See Cranney Decl. at para.
19.) Plaintiffs contend that this company would have been a
``qualified processor'' under section 968 and that a deal
with Phillips could have been structured so as to comply with
all requirements of section 968. Id. at para.para. 21-
23. Plaintiffs maintain that Phillips was interested in
pursuing the sale because he could defer taxes on his gain
if section 968 passed. Id. at para. 23. The negotiations
did not continue after the President canceled section 968.
Id. at para. 24.
II. Justiciability
Before tackling the merits of this case, the Court must
first determine whether it has jurisdiction to hear it. Under
Article III, section 2 of the Constitution, the federal
courts have jurisdiction over a dispute only if it is a
``case'' or ``controversy.'' See Raines v. Byrd, 117 S.Ct.
2312 (1997). The Supreme Court has regarded the case or
controversy prerequisite as a ``bedrock requirement'' and has
observed that ``[n]o principle is more fundamental to the
judiciary's proper role in our system of government than the
constitutional limitation of federal-court jurisdiction to
actual cases or controversies.'' Id. citing Valley Forge
Christian College v. Americans United for Separation of
Church and State, Inc., 454 U.S. 464, 471 (1982).
The central jurisdictional requirement that controls the
analysis of these consolidated cases is the doctrine of
standing. The Supreme Court has emphasized that the standing
inquiry is ``especially rigorous when reaching the merits of
the dispute would force us to decide whether an action taken
by one of the other two branches of the Federal Government
was unconstitutional.'' Raines, 117 S.Ct. at 2317-18. It has
cautioned,
``the law of Art. III standing is built on a single basic
idea--the idea of separation of powers.'' In the light of
this overriding and time-honored concern about keeping the
Judiciary's power within its proper constitutional sphere, we
must put aside the natural urge to proceed directly to the
merits of this important dispute and to `settle' it for the
sake of convenience and efficiency.
It is with these admonitions soundly in mind that this Court
proceeds with its standing analysis regarding the plaintiffs
now before it.
A. Standing
While the Supreme Court has candidly acknowledged that
``the concept of `Article III Standing' has not been defined
with complete consistency in all of the various cases decided
by this Court which have discussed it.'' \7\ Valley Forge
Christian College, 454 U.S. at 475, certain basic principles
have been distilled from the Court's decisions:
To establish an Art. III case or controversy, a litigant
first must clearly demonstrate that he has suffered an
``injury in fact.'' That injury, we have emphasized
repeatedly, must be concrete in both a qualitative and
temporal sense. The complainant must allege an injury to
himself that is ``distinct and palpable,'' as opposed to
merely ``abstract,'' and the alleged harm must be actual or
imminent, not ``conjectural'' or ``hypothetical.'' Further,
the litigant must satisfy the ``causation'' and
``redressability'' prongs of the Art. III minima by showing
that the injury ``fairly can be traced to the challenged
action'' and ``is likely to be redressed by a favorable
decision.'' The litigant must clearly and specifically set
forth facts sufficient to satisfy these Art. III standing
requirements. A federal court is powerless to create its own
jurisdiction by embellishing otherwise deficient allegations
of standing.
Whitmore v. Arkansas, 495 U.S. 149 (1990) (internal
citations omitted). Here, the principal standing inquiry is
whether Plaintiffs can demonstrate sufficient injury,
``actual or threatened.'' See Valley Forge Christian College,
454 U.S. at 472.
Although these plaintiffs do not neatly fit into any
category of plaintiffs that the Supreme Court has already
found to have standing, this Court finds that they meet the
Article III requirements. The President directly injured both
the City of New York plaintiffs and the Snake River
plaintiffs when he canceled legislation that provided a
benefit to them.
1. City of New York Plaintiffs\8\
Plaintiffs suffered an immediate, concrete injury the
moment that the President used the Line Item Veto to cancel
section 4722(c) and deprived them of the benefits of that
law. The Court thus finds that Plaintiffs have suffered
sufficient injury to have Article III standing.
When the President signed the Balanced Budget Act of 1997,
section 4722(c) became law. See La Abra Silver Mining Co. v.
United States, 175 U.S. 423, 454 (1899). Consequently, every
New York State tax program held not to meet HCFA's
requirements was deemed permissible by federal legislation.
The State's liability was eliminated and the hospitals upon
which that liability would fall were exonerated of their
burden. Plaintiffs possessed a valuable protection against
any liability that otherwise might befall them. This
protection constituted a benefit to Plaintiffs. When the
President canceled section 4722(c), Plaintiffs were divested
of the benefit conferred upon them by the legislation. In the
simplest terms, Plaintiffs had a benefit, and the President
took that benefit away. That is injury.
Defendants argue that, because there are still
administrative options available to Plaintiffs, Plaintiffs
were not injured by the President's cancellation of this
legislative solution. The Court disagrees. Plaintiffs had two
independent avenues that they could have pursued to avoid
potential liability: one legislative and one administrative.
The legislative approach yielded complete success. The fact
that there are two mechanisms that could produce a result
does not mean that a party is not injured when one of those
mechanisms produces the desired result, and then that result
is obliterated. Analogously, if Plaintiffs were pursuing a
challenge to a final agency action, the fact that there might
also be pending legislation would not deprive them of
standing to challenge the final agency action. See INS v.
Chadha, 462 U.S. 919, 936-37 (1983) (Burger, C.J.) (finding
that the existence of other speculative avenues of relief
does not constitute a prudential bar to the Court's
consideration of a case). The Court finds that the
availability of administrative relief does not eliminate
Plaintiff's injury in the legislative arena.
Plaintiffs also have shown with reasonable certainty that
they will be liable for millions of dollars now that Section
4722(c) has been canceled. Under the current law, it is
highly likely that the State of New York will be required to
return to HCFA at least some of the funds that HCFA paid to
the State. First of all, HCFA has already deemed the taxes
impermissible. HHS has stated that in the absence of
legislation (like Section 4277(c)), by August 1998, ``the
Secretary will move forward to complete the process already
begun to apply with full force the current law.'' (Dear State
Medicaid Directors Letter, Pls.' Ex. 2D.) Next, to exercise
Line Item Veto authority, the President was required to
certify that the veto would reduce the federal deficit; he
complied with that requirement by certifying that
cancellation of Section 4277(c) would result in a reduction
in federal outlays in FY 1998 of $200 million. Cancellation
No. 97-3, 62 Fed. Reg. 43,263 (1997). Finally, at a press
briefing on the cancellation, Office of Management and Budget
Director Franklin Raines described Section 4722(c) as ``a
provision that provided special relief to the State of New
York for provider taxes that had been determined by HCFA to
be illegal under a 1991 statute.'' (Pls.' Ex 2C (emphasis
added).) Raines added that ``New York will not be able'' to
use the taxes to increase its FFP. Id. Thus, this Court
concludes that it is more likely than not that the State of
New York will be required to refund at least some of the
payments it has received from HCFA.
Likewise, the Court finds that Plaintiffs are highly likely
to be required to indemnify the State for its HCFA
recoupments. Defendants do not dispute that New York State
law imposes automatic liabilities upon hospitals and nursing
homes upon a finding that New York's provider taxes are not
permissible. (See Wang Decl., Pls.' Ex. 2 at para.8).
Plaintiffs would avoid liability only in the unlikely event
that the State of New York would rescind these laws or
decline to enforce them. Again, the Court finds that this
scenario is less likely than one in which Plaintiffs are
required to indemnify the State.
Therefore, by finding that the City of New York plaintiffs
have demonstrated sufficient
[[Page S696]]
injury, the Court concludes that they have standing to
challenge the constitutionality of the Line Item Veto Act.
2. Snake River Plaintiffs
Like the City of New York plaintiffs, the Snake River
plaintiffs suffered an immediate, concrete injury when the
President canceled section 968. Section 968 conferred a
benefit on Plaintiffs by putting them on equal footing with
investor-owned businesses. Before section 968 was passed,
investor-owned businesses could structure acquisitions of
processing facilities as tax-deferred stock-for-stock
exchanges. Farmers' cooperatives could not exchange their
stock because a cooperative's stock can be held only by its
members. Section 968 would have allowed sellers to defer
capital gains taxes on sales to farmers' co-ops, thus putting
co-cops in the same competitive position as investor-owned
businesses.\9\
The Supreme Court has held that the inability to compete on
an equal basis in the bidding process is injury in fact. See
Northeastern Florida Chapter of the Associated Gen.
Contractors of America v. City of Jacksonville, 508 U.S. 656
(1993). In that case, the Court found that contractors that
regularly bid on, and performed, construction work for the
City of Jacksonville, and would have bid on designated set-
aside contracts but for the restrictions imposed, had
standing, even though they failed to allege that they would
have been awarded a contract but for the challenged
ordinance. Here, regardless of whether Plaintiffs can prove
that they would have actually consummated purchases under
section 968, they are injured by the fact that section 968
put them on equal footing with their competitors and its
cancellation disabled them from competing on an equal basis.
When the President canceled section 968, Plaintiffs were
divested of the benefit conferred upon them by the
legislation and therefore were concretely injured.
In addition, it is highly likely that the Snake River
plaintiffs would have been able to take advantage of the
benefits conferred by section 968 and that they therefore
will be injured by the President's cancellation of it. Snake
River Potato Growers, Inc. was formed for the purpose of
acquiring potato processing facilities. Although the sellers
of processing and refining facilities would be the direct
beneficiaries of the capital gains tax deferral, it is likely
that the fact that the processors would be able to defer
these taxes would benefit Plaintiffs in a concrete way.\10\
For example, in a deal in which there are not other
prospective purchasers, even if a seller chose to completely
absorb the monetary benefits of the capital gains tax
deferral, the fact that the seller would be able to defer the
taxes would, at the very least, likely give Plaintiffs some
room to negotiate in terms of price; in a competitive
situation, it would allow Plaintiffs to pay a lower purchase
price than they would have in a scenario in which they were
not on equal footing with the other would-be purchasers.\11\
While Plaintiffs cannot demonstrate with certainty that
they would be able to take advantage of the benefits provided
by section 968, such certainty is not required. In Bryant v.
Yellen, 447 U.S. 352 (1980), for example, farm workers
wishing to purchase land had standing even though they could
not with certainty establish that they would be able to
purchase it. In that case, a reclamation law forbid delivery
of reclamation project water to any irrigable land held in
private ownership by one owner in excess of 160 acres. If
this law were enforced, owners of land in excess of 160 acres
would probably sell their excess acreage and would probably
be forced to sell at below current market prices. The Court
reasoned that farm workers who desired to purchase farmlands
in the area had standing, because it was ``unlikely'' that
the owners of excess lands would sell at below-market prices
without the law, and it was ``likely'' that excess lands
would become available at less than market prices if the law
were applied.
Likewise, the Snake River plaintiffs need only show that
the existence of section 968 would have made it more likely
that they could acquire processing and refining
facilities. As illustrated above, by putting Plaintiffs on
equal footing with other bidders, it is likely that
Plaintiffs would be able to make a purchase by offering
less than they would have without the benefit of section
968. Also, the tax deferral would, at the very least, give
Plaintiffs more room to negotiate in terms of price. Thus,
section 968 would have helped the Snake River plaintiffs
in their efforts to purchase processing and refining
facilities.
Defendants argue that Plaintiffs cannot meet the
redressability requirement of the standing doctrine. They
cite Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26
(1976), and Allen v. Wright, 468 U.S. 737 (1984), to support
their contention that there is no way for the Court to know
whether any sellers would be motivated by the benefits of
section 968 to sell to Plaintiffs. This case is
distinguishable from Simon and Allen, however, because here,
Plaintiffs have sufficiently demonstrated that if this Court
struck the Line Item Veto Act and reinstated section 968,
they would be more likely to be able to competitively bid on,
and prevail in purchasing, processing and refining
facilities.
In Simon, the Supreme Court determined that low-income
plaintiffs lacked standing to challenge a tax regulation
establishing the amount of free medical care that a
charitable hospital must provide to maintain its tax-exempt
status. The Supreme Court explained that it was ``purely
speculative'' to assume that the challenged regulation caused
charitable hospitals to provide less service that they would
otherwise provide free of charge, and it was ``equally
speculative'' to assume that increasing the amount of free
service required for tax exemption would in fact increase the
amount of free service provided. Simon, 426 U.S. at 42-43.
The Court commented that the hospitals might elect to forgo
favorable tax treatment to avoid the financial drain of
providing more free treatment.
In Allen, the Supreme Court concluded that parents of
public school children lacked standing to challenge the
legality of a tax exemption that benefitted racially
discriminatory private schools. The plaintiffs claimed that
the tax exemption made it easier for white children to enroll
in private schools, the result being that the public schools
were less diverse, to the plaintiffs' detriment. The Supreme
Court indicated that it would be ``entirely speculative'' to
conclude that withdrawal of the tax exemption would lead any
private school to change it exclusionary policies. Allen, 468
U.S. at 758.
In both of these cases, there was arguably some
disincentive to the institutions' taking advantage of the tax
benefit. The hospitals in Simon would have to admit more non-
paying patients; the schools in Allen would have to admit a
more diverse student body, against their wishes. In these
cases, it may indeed have been speculative to attempt to
determine whether the hospitals and schools would be willing
to make these changes in order to take advantage of the tax
incentive. Here, Defendants do not allege that there is any
``cost'' to the selling processors and refiners in taking
advantage of the tax benefits that section 968 would offer.
Unlike the schools and hospitals in Allen and Simon, the
sellers' decision likely would be a purely financial one.
Defendants also contend that Plaintiffs' submissions
regarding Mike Cranney's planned purchase of the IPP
processing facility are barren of facts that would
demonstrate whether section 968 would have had any impact on
that transaction, because of the specific requirements of
section 968.\12\ While the Court will not speculate as to
whether Cranney's deal with Phillips would have been brought
to fruition but for the President's cancellation of section
968, or even if that particular deal would have satisfied the
requirements of section 968, the negotiations at the very
least make it clear to the Court that Plaintiffs were
actively spending their time and money pursuing purchases and
that the President's cancellation of section 968 interfered
with those plans. Compare, Lujan v. Defenders of Wildlife,
504 U.S. 555 (1991) (holding that plaintiffs lacked standing
to challenge an environmental regulation because, although
plaintiffs had a desire to return to the habitat of certain
endangered species, they failed to present any concrete plans
of an actual visit).
The Court finds that the Snake River plaintiffs suffered an
injury when the President canceled Section 968. Plaintiffs
lost the benefit of being on equal footing with their
competitors and will likely have to pay more to purchase
processing facilities now that the sellers will not be able
to take advantage of section 968's tax breaks. The Court
therefore concludes that the Snake River plaintiffs have
demonstrated sufficient injury to have Article III standing.
III. Constitutional Analysis of the Line Item Veto Act
Having determined that it has jurisdiction to hear this
case, the Court now turns to the merits of Plaintiffs'
constitutional challenges. The Court begins with the
presumption that the Line Item Veto Act is valid. See e.g.,
INS v. Chadha, 462 U.S. 919, 944 (1983). The Chadha Court
cautioned, however,
The fact that a given law or procedure is efficient,
convenient, and useful in facilitating functions of
government, standing alone, will not save it if it is
contrary to the Constitution. Convenience and efficiency are
not the primary objectives--or the hallmarks--of democratic
government . . .
Id.
The Court's constitutional analysis is two-fold. First, the
Court examines the Line Item Veto Act in terms of the
procedural requirements set forth in Article I, section 7;
next, the Court discusses the doctrine of separation of
powers. The Court concludes that the Line Item Veto Act fails
both of these examinations.
A. Procedural Requirements of Article I
The Constitution carefully prescribes certain formal
procedures that must be observed in the enactment of laws.
The Line Item Veto Act impermissibly attempts to alter these
constitutional requirements through mere legislative
actions.\13\ Because the Act violates Article I's ``single,
finely wrought and exhaustively considered, procedure,''
Chadha, 462 U.S. at 951, it is unconstitutional.
Article I, section 7 of the Constitution sets forth dual
requirements for the enactment of statutes: bicameral passage
and presentment to the President. See U.S. Const. art. I,
Sec. 7, cl. 2 (``Every Bill which shall have passed the House
of Representatives and the Senate, shall, before it become a
Law, be presented to the President of the United States; If
he approve he shall sign it, but if not he shall return in .
. .'') (the Bicameralism and Presentment Clauses). The
considerations behind the Great Compromise, under which one
House was viewed as representing the People and the other,
the States, dictated that the
[[Page S697]]
Bicameralism and Presentment Clauses would serve essential
constitutional functions. ``By providing that no law could
take effect without the concurrence of the prescribed
majority of the Members of both Houses, the Framers
reemphasized their belief . . . that legislation should not
be enacted unless it has been carefully and fully considered
by the Nation's elected officials.'' Chadha, 462 U.S. at 948-
49. At the heart of the notion of bicameralism is the
requirement that any bill must be passed by both Houses of
Congress in exactly the same form.
The Constitution requires that both the amendment and
repeal of statutes also conform with these Article I
requirements. Chadha, 462 U.S. at 954. It makes only four
narrow exceptions to this single mechanism by which the
provisions of a law may be canceled. See U.S. Const. art. I,
Sec. 2, cl. 6; art. 1, Sec. 3, cl. 5; art. II, Sec. 2, cl. 2;
art. II, Sec. 2, cl. 2. Congress may not add to this
exclusive list without amending the Constitution. In the
words of the Chadha court,
The bicameral requirement, the Presentment Clauses, the
President's veto, and Congress' power to override a veto were
intended to erect enduring checks on each Branch and to
protect the people from the improvident exercise of power by
mandating certain prescribed steps. To preserve those checks,
and maintain the separation of powers, the carefully defined
limits on the power of each Branch must not be eroded. To
accomplish what has been attempted [here] requires action in
conformity with the express procedures of the Constitution's
prescription for legislative action: passage by a majority of
both Houses and presentment to the President.
Chadha, 462 U.S. at 957-58.
Here, while the initial passage of the Balanced Budget Act
and the Taxpayer Relief Act complied with the Article I
requirements, the Line Item Veto Act then authorized the
President to violate those requirements by producing laws
that had not adhered to those requirements. Both Houses of
Congress, through a process of discussion and compromise, had
agreed upon the exact content of the Balanced Budget Act and
the Taxpayer Relief Act. These laws reflected the best
judgment of both Houses. The laws that resulted after the
President's line item veto were different from those
consented to by both Houses of Congress. There is no way of
knowing whether these laws, in their truncated form, would
have received the requisite support from both the House
and the Senate. Because the laws that emerged after the
Line Item Veto are not the same laws that proceeded
through the legislative process, as required, the
resulting laws are not valid.
Furthermore, the President violated the requirements of
Article I when he unilaterally canceled provisions of duly
enacted statutes. Unilateral action by any single participant
in the law-making process is precisely what the Bicameralism
and Presentment Clauses were designed to prevent. Once a bill
becomes law, it can only be repealed or amended through
another, independent legislative enactment, which itself must
conform with the requirements of Article I. Any rescissions
must be agreed upon by a majority of both Houses of Congress.
The President cannot single-handedly revise the work of the
other two participants in the lawmaking process, as he did
here when he vetoed certain provisions of these statutes.
Defendants, curiously, contend that, despite its title, the
Line Item Veto Act does not authorize the President to
``veto'' anything. They maintain that under the Act, ``[t]he
Bill stays as law, unless the President were to exercise his
constitutional power to veto. Nothing changes about the bill.
The law remains law. . . . The law remains on the books and
the law remains valid.'' (Tr. of Mot. Hr'g, Jan. 14, 1998 at
71, 78.) The Court does not follow Defendants' logic. In the
words of Richard Cardinal Cushing, ``When I see a bird that
walks like a duck and swims like a duck and quacks like a
duck, I call that bird a duck.'' Whatever defendants wish to
call the President's action, it has every mark of a veto. The
Line Item Veto Act states explicitly that ``cancel'' means
``to rescind'' or to render the provision as having no
``legal force or effect.'' How a ``canceled'' provision
``remains on the books'' and ``remains valid'' defies logic.
The only way to restore these canceled provisions is for
Congress to pass and present new bills according to the
procedure prescribed in Article I. Clearly, this is an
indication that the canceled law no longer exists. Therefore,
despite Defendants' contentions, the Court finds that when
the President canceled these provisions pursuant to his Line
Item Veto authority, he unilaterally repealed duly enacted
provisions and amended duly enacted laws, which Article I
does not permit him to do.
Finally, Congress' ``indirect attempt[] to accomplish the
Constitution prohibits . . . accomplishing directly'' cannot
stand. U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 829
(1995). ``To argue otherwise is to suggest that the Framers
spent significant time and energy in debating and crafting
Clauses that could be easily evaded.'' Id. at 831. Congress
knew that a simple Line Item Veto, performed prior to the
President's signature, would violate Article I's requirement
that the president sign or return the bills in toto. See Line
Item Veto: The President's Constitutional Authority, Hearing
on S. Res. 195 Before the Subcomm. on the Constitution of the
Comm. on the Judiciary, 103d Cong. (1994). This limitation on
the President has been clear since George Washington's
tenure. See 33 Writings of George Washington 96 (John C.
Fitzpatrick ed. 1940) (``From the nature of the Constitution,
I must approve all the parts of a Bill, or reject it in
toto.'') Congress cannot evade this long-accepted requirement
by merely changing the timing of the President's
cancellation.
Because the Line Item Veto produced laws in violation of
the requirement of bicameral passage, because it permitted
the President unilaterally to repeal or amend duly enacted
laws, and because it impermissibly attempts to evade the
requirement that the President sign or reject a bill in toto,
the Act violates the requirements of Article I. For that
reason alone, the Line Item Veto Act is unconstitutional.
B. Separation of Powers
Furthermore, the Line Item Veto Act is unconstitutional
because it impermissibly disrupts the balance of powers among
the three branches of government.\14\ The separation of
powers into three coordinate branches is central to the
principles on which this country was founded. See, e.g.,
Mistretta v. United States, 488 U.S. 361, 380 (1989). The
declared purpose of separating and dividing the powers of
government was to ``diffuse power the better to secure
liberty.'' Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S.
579, 635 (1952). In writing about the principle of separated
powers, Madison stated, ``No political truth is certainly of
greater intrinsic value or is stamped with the authority of
more enlightened patrons of liberty.'' The Federalist No. 47,
at 324 (J. Cooke ed. 1961). Madison later wrote, ``But the
great security against a gradual concentration of the several
powers in the same department, consists in giving to those
who administer each department, the necessary constitutional
means, and personal motives, to resist encroachments of the
others.'' The Federalist No. 51, at 349 (J. Cooke ed. 1961).
The Framers ``regarded the checks and balances that they
built into the tripartite Federal Government as a self-
executing safeguard against the encroachment or
aggrandizement of one branch at the expense of the other.''
Buckley v. Valeo, 424 U.S. at 122.
Pursuant to the doctrine of separated powers, certain
functions are divided between the legislative and executive
branches. Article I, section 1 vests all legislative
authority in Congress. Legislative power is the authority to
make laws. Myers v. United States, 272 U.S. 52 (1926).
Executive power, on the other hand, is to ``take Care that
the Laws be faithfully executed.'' U.S. Const., art. II,
Sec. 3. With regard to lawmaking, the President's function is
strictly a negative one: to veto a bill in its entirety.
While it is Congress' duty to make laws, Congress can
delegate certain rulemaking authority to other branches, as
long as that delegation is appropriate to the duties of that
branch. See Mistretta, 488 U.S. at 388. Congress may not,
however, delegate its inherent lawmaking authority. See,
e.g., Loving v. United States, 116 S.Ct. 1737, 1744 (1996)
(``[T]he lawmaking function belongs to Congress . . . and may
not be conveyed to another branch or entity.''); Field v.
Clark, 143 U.S. 649, 692 (1892) (``That Congress cannot
delegate legislative power to the president is a principle
universally recognized as vital to the integrity and
maintenance of the system of government ordained by the
Constitution.''); Edward Gibbon, History of the Decline and
Fall of the Roman Empire 33 (1838) (``The principles of a
free constitution are irrecoverably lost, when the
legislative power is nominated by the executive.''); Sir
William Blackstone, 1 Commentaries on the Laws of England,
146 (9th ed., reprinted 1978) (1783) (``In all tyrannical
governments the supreme magistracy, or the right of both
making and of enforcing the laws, is vested in one and the
same man, or one and the same body of men; and wherever these
two powers are united together, there can be no public
liberty.'').
The line between permissible delegations of rulemaking
authority and impermissible abandonments of lawmaking power
is a thin one. As one court described the distinction, ``The
legislature cannot delegate its power to make a law, but it
can make a law to delegate a power to determine some fact or
state of things upon which the law makes, or intends to make,
its own action depend.'' Field, 143 U.S. at 694. Stated
another way, ``The true distinction . . . is between the
delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring
an authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot
be done; to the latter no valid objection can be made.''
Hampton v. United States, 276 U.S. 394 (1928).
The Line Item Veto Act impermissibly crosses the line
between acceptable delegations of rulemaking authority and
unauthorized surrender to the President of an inherently
legislative function, namely, the authority to permanently
shape laws and package legislation. The Act enables the
President, in his discretion, to pick and choose among
portions of an enacted law to determine which ones will
remain valid. The Constitution, however, dictates that once a
bill becomes law, the President's sole duty is to ``take care
that the laws be faithfully executed.'' His power cannot
expand to that of ``co-designer'' of the law--that is
Congress' domain. Any subsequent amendment of a statute falls
under Congress' responsibility to legislate. The President
cannot take this duty upon himself; nor can Congress
relinquish that power to the Executive Branch.
[[Page S698]]
The Defendants contend that the Line Item Veto is no
different than the many delegations of legislative authority
that Congress has made in the past. See, e.g., Field v.
Clark, 143 U.S. 649. Unlike other delegations of
Congressional authority, however, the Line Item Veto Act
authorizes the President to permanently extinguish laws.
These laws cannot be revived even if the President (or his
successor) feels that they are needed. Further, the Line Item
Veto Act empowers the President to make permanent changes to
the text of the Internal Revenue Code, as he did in the Snake
River case. Such delegations are unprecedented.
Defendants further urge the Court to find that the Line
Item Veto provides the President with ``intelligible
standards'' as required by the delegation doctrine. See
Mistretta, 488 U.S. at 372. While it is true that the
delegation doctrine has enjoyed a liberal reading in the last
60 years or so, see, e.g., Federal Radio Comm'n v. Nelson
Bros., 289 U.S. 266 (1933) (upholding a delegation based on
``public convenience, interest or necessity''), by trying to
bypass the maxim that Congress can delegate authority only if
that authority is, in fact, delegable, the Government
attempts to ``leap a chasm in two bounds.'' (Benjamin
Disraeli, Earl of Beaconsfield.) It is irrelevant whether the
Line Item Veto Act provides intelligible principles in its
delegation of authority to the President because, as
discussed above, the Act impermissibly attempts to transfer
non-delegable legislative authority to the Executive Branch.
The separation of powers between the President and Congress
is clear:
In the framework of our Constitution, the President's power
to see that laws are faithfully executed refutes the idea
that he is to be a lawmaker. The Constitution limits his
functions in the lawmaking process to the recommending of
laws he thinks wise and the vetoing of laws he thinks bad.
And the Constitution is neither silent nor equivocal about
who shall make laws which the President is to execute.
Youngstown, 343 U.S. at 587-88. By ceding inherently
legislative authority to the President, the Line Item Veto
Act violates this constitutional framework. For that reason,
and for the reason that it violates the letter and spirit of
the procedural requirements of Article I, the Line Item Veto
Act is unconstitutional.
IV. Conclusion
Although the Line Item Veto Act may have presented an
innovative and effective manner in which to control runaway
spending by Congress, the Framers held loftier values. The
Chadha Court recognized this tension between uncomplicated
administration of government and the values honored in the
Constitution:
The choices we discern as having been made in the
Constitutional convention impose burdens on governmental
processes that often seem clumsy, inefficient, even
unworkable, but those hard choices were consciously made by
men who had lived under a form of government that permitted
arbitrary governmental acts to go unchecked. There is no
support in the Constitution or decisions of this court for
the proposition that the cumbersomeness and delays often
encountered in complying with explicit Constitutional
standards may be avoided, either by the Congress or by the
President. With all the obvious flaws of delay, untidiness,
and potential for abuse, we have not yet found a better way
to preserve freedom than by making the exercise of power
subject to the carefully crafted restraints spelled out in
the Constitution.
Chadha, 462 U.S. at 959. Because the Line Item Veto
impermissibly violates the central tenets of our system of
government, it cannot stand.
Therefore, because the Court finds that Plaintiffs have
demonstrated the requisite injury to have standing and,
furthermore, that the Line Item Veto Act violates the
provisions of Article I, section 7 of the United States
Constitution and the separation of powers doctrine, this
Court declares that the Line Item Veto Act is
unconstitutional. Accordingly, the Court will grant
Plaintiffs' Motions for Summary Judgment and deny Defendants'
Motion to Dismiss and Motion for Summary Judgment. An Order
will accompany this Opinion.
footnotes
\1\ Amici curiae briefs were submitted by Senators Robert C.
Byrd, Daniel Patrick Moynihan, and Carl Levin, in support of
Plaintiffs' motions to declare the Line Item Veto Act
unconstitutional; the United States Senate, in support of the
constitutionality of the Act; and Congressman Dan Burton, in
support of the constitutionality of the Act.
\2\ The Constitutionality of the Line Item Veto Act was
litigated in this court a mere six months before the
complaints in this case were filed. See Byrd v. Raines, 956
F.Supp. 25 (D.D.C. 1997). In Byrd, Judge Jackson declared the
Act unconstitutional. Id. On a direct appeal of that District
Court decision, the Supreme Court held that appellees, six
members of Congress, lacked standing to bring the suit, and
therefore vacated the District Court opinion and directed
that the complaint be dismissed. See Raines v. Byrd, 117
S.Ct. 2312, 2323 (1997).
\3\ President Clinton signed the Line Item Veto Act into law
on April 9, 1996, it became effective January 1, 1997, and it
remains effective until January 1, 2005.
\4\ Since 1974, Presidents have recommended $72.8 billion in
rescissions, but Congress has passed legislation rescinding
only $22.9 billion. S. Rep. No. 104-13, at 2 (1995).
\5\ The Joint Congressional Committee on Taxation is
responsible for identifying cancelable items in tax bills.
Id. at Sec. 691f.
\6\ Before the passage of section 968, farmers' cooperatives
were at a competitive disadvantage vis a vis investor-owned
businesses. Co-ops could not exchange their stock for the
stock of processing companies, because a cooperative's stock
can be held only by its members. (See Cranney Decl. at para.
15.)
\7\ But see Ralph Waldo Emerson, Essays: Self-Reliance
(1841), ``A foolish consistency is the hobgoblin of little
minds.''
\8\ The Court's standing analysis focuses on the plaintiff
health care providers. As long as the Court determines that
at least one of the New York plaintiffs has standing, it does
not need to consider the standing issue as to the other
plaintiffs in that action. See Bowsher v. Synar, 478 U.S.
714, 721 (1986).
\9\ As a simplified example, if an investor-owned business
and a farmers' co-op each offered $1 million for a processing
plant, the investor-owned business would always prevail
because the processor would actually net $1 million from that
sale, whereas it would net less than $1 million from the sale
to the farmers' co-op, because it would have to pay capital
gains tax on that sale. Therefore, to compete for a piece of
property with an investor-owned business, the farmers' co-op
would have to offer more than the investor-owned business to
make up for the capital gains tax that the purchaser would
have to pay.
\10\ Defendants argue that because Plaintiffs themselves
would not have received the capital gains tax deferral, they
are not the beneficiaries of section 968. The Court
disagrees. The express purpose of section 968 was to help
farmers to buy refining and processing facilities by
eliminating a tax obstacle facing sellers who sell to them.
Thus, although the direct recipient of the tax deferral was
the sellers, it was plainly understood that the intention was
to benefit the farmers; a cancellation of the tax deferral
would really injure the farmers, not the owners of the
processing plants, because the owners could already get the
tax deferral simply by selling to investor-owned businesses.
\11\ For example, in the illustration provided in footnote 9,
supra, instead of having to offer, say, $1.3 million to
compete with the investor-owned business, the co-op could
offer an amount in the $1 million range.
\12\ To qualify for a deferral of capital gains taxes under
section 968(g), the seller must transfer 100% of the stock of
the qualified processor to the farmers' cooperative. Section
968(a) requires that, during the one-year period preceding
the date of sale, the qualified refiner or processor purchase
at least 50% of the products to be refined or processed from
the farmers who make up the eligible farmers' cooperative
that is purchasing the corporations' stock or from the
cooperative itself.
\13\ This approach has been cautioned against since the
founding of our democracy. ``If in the opinion of the People,
the distribution or modification of the Constitutional powers
be in any particular wrong, let it be corrected by an
amendment in the way which the Constitution designates. But
let there be no change by usurpation; for though this, in one
instance may be the instrument of good, it is the customary
weapon by which free governments are destroyed.'' George
Washington, Farewell Address, September 19, 1796 in 35 The
Writings of George Washington 229 (John C. Fitzpatrick ed.,
1940).
\14\ While this analysis focuses on the balance of powers
between the legislative and executive branches, the Line Item
Veto could also affect judicial independence. It is possible
that the President might use the Line Item Veto to manipulate
the judiciary's budget, thus exerting pressure on its
members. See Robert Destro, Whom Do You Trust? Judicial
Independence, the Power of the Purse & the Line Item Veto,
44-Jan. Fed. Law. 26, 29 (1997).
February 12, 1998.
Thomas F. Hogan,
U.S. District Judge.
Mr. BENNETT addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, I hesitate to intrude on this debate, but
confession is good for the soul.
I campaigned on behalf of a line-item veto. I worked on this floor
for the passage of the line-item veto. I enthusiastically voted for the
line-item veto. I learned one thing in basic training when I was in the
military service of this country that has remained with me. One of the
things they taught us was that the best time to escape is immediately
after you are captured. Don't wait until you have been taken to the
back lines. Don't wait until you have been put in a prison camp to try
to plot your escape. Escape immediately after you are captured, when
you are within 100 yards of your own lines. You are in the confusion of
the battlefield, you are under the control of troops who are not
trained to hold on to prisoners.
I have applied that principle in my life. When I make a mistake I
want to escape from it as quickly as possible instead of waiting until
I have been put into prison later on behind the enemy lines.
I reasoned that the experience of State Governors, 47 of whom have
line-item vetoes, bade well for the line-item veto. My own Governor in
the State of Utah has it. And it has not been the source of mischief in
the process of legislation in the State.
I have seen that it has become the source of mischief here in this
body. And, as I said to my revered colleague on the Appropriations
Committee when this came up--and our chairman was expressing his usual
enthusiasm; in this case in anger for his position--it may be that I
will have to eat a little crow.
So as I receive the news of the action having been taken by the court
in this case, I stand now to say that I would not support an effort to
try to overturn that decision. The time to escape is immediately after
you are captured. And we have been captured. And I will escape from my
previous posture.
[[Page S699]]
I apologize, albeit much too late, to my primary opponent who stood
in opposition to the line-item veto. And this was a matter of
difference between the two of us in the primary. I think I made some
progress because as we got near the vote he recanted and came to my
side so as to try to get the people who were in favor of a line-item
veto to vote for him instead of me.
But I believe the arguments that have been repeated here, the
information given here from the decision of the judge, are sufficiently
persuasive that I need to make this apology and this recanting of a
previous position. While I may not be with my two colleagues on many
other matters, I try to be with them on constitutional matters.
It is on this basis that I opposed a constitutional amendment
regarding flag burning. That puts me at odds with my senior colleague
from Utah, which always distresses me. It is for this purpose that I
oppose McCain-Feingold campaign finance reform because I think it is
unconstitutional. I believe the courts have ruled in similar cases that
the guts of the McCain-Feingold bill is in fact an intrusion on the
first amendment.
But I think there is no more important function that we have in this
Chamber, whatever our disagreements on the specifics, than the function
of protecting the Constitution against the whims of the hour.
And so I thank Senator Byrd and Senator Moynihan for their
scholarship and for their leadership on this issue, and I, as one
Senator at least on the other side of the issue, throw in the towel,
eat a little crow, and declare my willingness to escape from a previous
position.
Mr. BYRD. Mr. President, will the Senator yield very briefly?
Mr. BENNETT. I am happy to yield.
Mr. BYRD. Mr. President, I thank the distinguished Senator for his
remarks.
Diogenes walked the streets of Athens in broad daylight with his
lighted lantern. He was asked why. He answered, ``I am looking for a
man.'' Plato, when visiting Sicily, was asked by Hiero, the tyrannical
head of the Government, why he came to Sicily. He said, ``I am seeking
an honest man.''
May I say, Mr. President, today I have found an honest man --the
distinguished Senator from Utah.
Mr. BENNETT. I thank the Senator from West Virginia. There could be
no higher tribute. I am grateful to him.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. May I add, not only honest but a courageous man. In
some 21 years on the Senate floor I have not heard a more refreshing
and inspiriting statement. It is not surprising coming from the Senator
from Utah, but it is all the more amazing. There are few places in this
world today where such a statement could be made and praised.
It is a tribute to you, sir; also a tribute to the U.S. Army, I
believe. But we will not get into that. I thank you for your remarks,
sir.
Mr. BENNETT. I thank the senior Senator from New York. Both of my
senior friends are far too lavish in their praise, but I will accept it
anyway in the spirit of the moment.
I yield the floor.
Mr. BROWNBACK. Mr. President, I ask unanimous consent to speak for up
to 5 minutes, and further that Senator Dorgan have the 1 hour that has
been allotted to him following at the end of my 5 minutes.
The PRESIDING OFFICER. Is there objection? Hearing none, without
objection, it is so ordered.
Mr. BROWNBACK. Thank you, Mr. President.
____________________