Caseflicks

Supreme Court of the United States • 1998

Clinton v. City of New York

524 U.S. 417 | 118 S. Ct. 2091 | 141 L. Ed. 2d 393 | 1998 U.S. LEXIS 4215 | 98 Cal. Daily Op. Serv. 4905 | 66 U.S.L.W. 4543 | 98 Daily Journal DAR 6893 | 1998 Colo. J. C.A.R. 3191 | 11 Fla. L. Weekly Fed. S 735

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Takeaway

In short, this case held that Congress cannot give the President a statutory line-item veto that lets him cancel parts of laws already enacted; changing a federal statute requires bicameral passage and presentment under Article I.

Background

Congress enacted the Line Item Veto Act in 1996. The Act authorized the President, after signing a bill into law, to “cancel” specified discretionary spending, new direct-spending items, and limited tax benefits if he made prescribed findings concerning deficit reduction, essential government functions, and the national interest. A cancellation took effect unless Congress enacted a disapproval bill, which itself would be subject to the President’s ordinary veto power.

In August 1997, President Clinton used the Act to cancel two provisions relevant here. First, he canceled a provision of the Balanced Budget Act that relieved New York from substantial potential Medicaid-related liabilities. Second, he canceled a Taxpayer Relief Act provision permitting certain owners of food-processing businesses to defer capital-gains tax when selling to eligible farmers’ cooperatives.

The City of New York, health-care providers, and related organizations alleged that the first cancellation revived substantial contingent liabilities. Snake River Potato Growers, a cooperative seeking to acquire a processing facility, and one of its members alleged that the second cancellation deprived them of a tax advantage Congress had specifically designed to facilitate such purchases. The District Court held that at least one plaintiff in each action had standing and that the Line Item Veto Act was unconstitutional. The Supreme Court affirmed.

Issues

Issue #1

Whether the Act’s expedited-review provision allowed these corporate and governmental plaintiffs, as well as a natural person, to invoke the District Court’s jurisdiction.

Holding

Yes. In this statutory context, “individual” included corporate and governmental persons adversely affected by the Act.

Reasoning

The expedited-review provision authorized suit by “[a]ny Member of Congress or any individual adversely affected” by the Act. Read in isolation, “individual” can mean a natural person. But the surrounding provisions showed that Congress wanted prompt, authoritative review of the Act’s constitutionality and gave both Houses of Congress opportunities to participate in every such suit.

reasoning continues?

Issue #2

Whether the New York and Snake River plaintiffs had Article III standing to challenge the President’s cancellations.

Holding

Yes. Both sets of plaintiffs alleged concrete, personal injuries caused by the cancellations and redressable by invalidating them.

Reasoning

The New York plaintiffs suffered an immediate injury when cancellation of the Medicaid provision revived substantial contingent liabilities. New York law automatically required the City and health-care providers to bear portions of any recoupment owed to the Federal Government. A contingent liability of that scale affects financial planning, borrowing capacity, and fiscal strength even before the ultimate liability is fixed.

The Snake River plaintiffs also alleged a concrete economic injury. Congress enacted the limited tax benefit specifically to help qualifying farmers’ cooperatives acquire processors, and Snake River had organized to make such acquisitions, had discussed a qualifying transaction with a processor’s owner, and continued to seek facilities. Removing the benefit deprived the cooperative of a statutory bargaining advantage and created a sufficiently likely economic injury.

These injuries differed from the abstract institutional injury asserted by Members of Congress in Raines v. Byrd. They were personal injuries flowing directly from completed presidential cancellations, and a judgment invalidating those cancellations would restore the statutory protections and benefits.

Issue #3

Whether the Line Item Veto Act’s cancellation authority violated the Presentment Clause of Article I, Section 7.

Holding

Yes. By permitting the President to make enacted spending and tax provisions without legal force or effect, the Act gave him the functional power to amend or repeal statutes without bicameral passage and presentment.

Reasoning

Each disputed provision had passed both Houses in the same text and had been signed by the President. The Act then allowed the President, acting alone, to prevent particular provisions from having “legal force or effect.” In legal and practical terms, that changed the statutes Congress enacted by eliminating selected portions of them.

Article I establishes a single, carefully structured method for making federal law: passage by both Houses and presentment to the President. The President may recommend legislation and may veto an entire bill before it becomes law, but the Constitution does not authorize him to unilaterally alter parts of a statute after it has become law. Repeal, no less than enactment, must comply with Article I procedures.

The President’s action was not equivalent to the traditional discretion to spend less than an authorized maximum. Earlier appropriations statutes gave the Executive flexibility in administering funds, but none authorized the President to change the text or legal operation of a duly enacted statute. Here, the Act expressly made selected statutory provisions inoperative.

Field v. Clark did not control. The tariff statute upheld in Field made Congress’s own policy contingent on later factual circumstances and required presidential action once the specified condition existed. The Line Item Veto Act instead allowed the President, within days of enactment and on the same facts Congress considered, to reject Congress’s policy judgments for his own policy reasons.

The Act’s budgetary “lockbox” did not alter the conclusion. Even if a canceled provision retained some budgetary consequence for deficit calculations, the cancellations made the New York protection and the farmers’ cooperative tax benefit inoperative as to the affected parties.

The Court did not decide whether the Act also violated general separation-of-powers or nondelegation principles. Its holding rested narrowly on the Presentment Clause: a new presidential role in determining the final text of a law would require a constitutional amendment, not an ordinary statute.

Concurrences

Justice Kennedy

Reasoning

Justice Kennedy joined the Court’s opinion but wrote separately to emphasize that the separation of powers protects individual political liberty, not merely the institutional interests of the branches. The constitutional structure prevents the concentration of power that can occur when one branch both shapes policy and exercises it without adequate checks.

In his view, the Act gave the President a new capacity to favor or disfavor identifiable groups through spending and tax decisions. Congress could not cure that structural problem by voluntarily surrendering part of its own authority, because one Congress cannot relinquish constitutional powers that secure the liberty of citizens and later Congresses.

Fiscal discipline may be an important objective, but failure of political will cannot justify an unconstitutional remedy. The Constitution supplies political accountability, federalism, and separated powers as the means for addressing excessive spending.

Dissents

Justice Scalia

Reasoning

Justice Scalia agreed that the New York plaintiffs had standing, but he concluded that Snake River lacked standing. In his view, the cooperative alleged only a speculative loss of a possible bargaining advantage from favorable tax treatment available to sellers. It had not shown that it was likely to purchase a processing facility, that a seller would have accepted a qualifying deal, or that the cancellation caused an actual economic loss.

He also disagreed with the majority’s construction of the expedited-review provision. “Individual” ordinarily means a natural person, and the statute itself distinguished individuals from businesses and other persons. Although he would have found ordinary federal-question jurisdiction and treated the appeal as certiorari before judgment because of the case’s public importance, he would not rewrite the special expedited-review statute.

On the merits, Justice Scalia argued that the Presentment Clause was fully satisfied because Congress passed the Balanced Budget Act and the President signed it before any cancellation occurred. The constitutional question was not whether the President had complied with presentment, but whether Congress had delegated too much legislative authority.

For direct-spending items, he saw no constitutionally meaningful difference between authorizing the President to cancel an item and authorizing him to decline to spend an appropriated amount. Congress has long given Presidents substantial discretion to spend or withhold funds, including through statutes permitting sequestration and discretionary appropriations. He would therefore uphold the cancellation of New York’s spending item and would not reach the tax-benefit cancellation because Snake River lacked standing.

Justice Breyer

Reasoning

Justice Breyer agreed that the plaintiffs had standing, but he viewed the Line Item Veto Act as a constitutional exercise of Congress’s power to delegate implementation authority. The Act did not literally repeal or amend statutes; instead, it created, as part of the law enacted through bicameralism and presentment, a conditional presidential power to prevent specified provisions from taking effect.

In his view, the majority treated the word “cancel” as dispositive while overlooking the Act’s structure. Congress itself enacted the conditions under which a spending item or limited tax benefit would have legal effect, and the President acted within those congressionally enacted conditions. The lockbox feature also meant that a cancellation did not simply restore the legal status quo as if the item had never been enacted.

Justice Breyer maintained that the relevant limit was the nondelegation doctrine, not the Presentment Clause. The Act supplied an intelligible principle: the President had to consider statutory purposes and legislative history and determine that a cancellation would reduce the deficit, not impair essential government functions, and not harm the national interest. Those standards were at least as definite as broad delegations the Court had previously upheld.

The delegation did not improperly aggrandize the President or strip Congress of its essential authority. Congress defined which provisions could be canceled, could exempt future provisions from the Act, and could enact a disapproval bill restoring a cancellation. The Act was a limited budgetary experiment designed to address the practical difficulty of giving the President meaningful choices within massive modern appropriations measures.

Although delegating authority over limited tax benefits raised additional concerns, Justice Breyer concluded that those benefits were narrow, revenue-losing departures from general tax policy and functioned like a specialized form of spending. He would uphold both the spending and tax-benefit cancellation provisions.