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CITY OF NEWARK v. BLUMENTHAL

January 17, 1978

CITY OF NEWARK, NEW JERSEY, et al., Plaintiffs,
v.
W. Michael BLUMENTHAL, Secretary of the Treasury, et al., Defendants



The opinion of the court was delivered by: GESELL

MEMORANDUM

By this civil action the Cities of Newark and Baltimore seek judicial review of a discretionary decision made by the Secretary of the Treasury affecting their respective entitlements under provisions of the State and Local Fiscal Assistance Act of 1972, 31 U.S.C. § 1221, Et seq. (Supp. V 1975) (hereinafter referred to as Revenue Sharing Act), and a direction that their past and future allocations under that Act be increased. Plaintiffs completed discovery into the facts and circumstances underlying the challenged decision of the Secretary. Defendants then renewed an earlier motion to dismiss or, in the alternative, for summary judgment. Plaintiffs cross-moved for summary judgment, and after receiving briefs and hearing oral argument the issues are now ripe for decision. No material fact is in dispute.

 The Revenue Sharing Act establishes seven entitlement periods and appropriates money to a trust fund from which the Secretary of the Treasury is directed to allocate funds to state and local governments pursuant to specified formulae and other statutory limitations. Population is, of course, one factor the Secretary must consider. The Act specifies that "population shall be determined on the same basis as resident population is determined by the Bureau of the Census for general statistical purposes." 31 U.S.C. § 1228(a)(1) (Supp. V 1975). Subsection (a)(7), dealing with uniformity of data, further provides:

 
(A) General rule. Except as provided in subparagraph (B), the data used shall be the most recently available data provided by the Bureau of the Census or the Department of Commerce, as the case may be.
 
(B) Use of estimates, etc. Where the Secretary determines that the data referred to in subparagraph (A) are not current enough or are not comprehensive enough to provide for equitable allocations, he may use such additional data (including data based on estimates) as may be provided for in regulations.

 The origin of the present controversy is found in a paper presented April 1973 by Jacob S. Siegel, a Senior Statistician of the Census Bureau, which analyzed the 1970 Census and indicated that the Census Bureau had underestimated national population by 5.3 million persons. Siegel broke this undercount down further, estimating an undercount rate of 7.7% For black residents nationally and a 1.9% Undercount rate for white residents nationally. Since the Secretary quite properly had been relying on the 1970 Census for allocations to the some 38,000 participating states, counties, and municipalities, it was not surprising that Newark and Baltimore, with black populations of 52% And 47% Respectively, sensed a possible basis for claiming a larger population and thus obtaining larger allocations under the Revenue Sharing formula. Newark sought administrative relief and when unsuccessful filed this suit. Before an answer was filed, and over defendants' objections, the complaint was amended to add Baltimore as a party plaintiff.

 Plaintiffs here contend that the Secretary, who was aware of this national undercount through his delegees, abused his discretion and acted capriciously in not adopting a mathematical formula for adjusting revenue allotments by translating this national undercount estimate to estimates at the local level. They seek an order (1) directing the Secretary to prepare such estimates as will take into account the undernumeration of blacks and more correctly reflect the population of Newark and Baltimore for each entitlement period, and (2) requiring the Secretary then to recalculate the additional revenue sharing monies to which each city is entitled on the basis of such estimates and to pay them accordingly for each entitlement period.

 Defendants strongly contest the Court's jurisdiction to review decisions by the Secretary allocating tax revenues to the political entities participating in the Revenue Sharing program. The Revenue Sharing Act provides for judicial review by the Courts of Appeals of any decision by the Secretary to reduce or withhold payments to a state or unit of local government. Id. § 1263(c). It contains no affirmative grant of jurisdiction to review the general scheme of allocation or any recipient's proportionate share of that allocation. Plaintiffs proceed on the theory, however, that under 28 U.S.C.A. § 1331(a) (West Supp. 1977) and section 10 of the Administrative Procedure Act (APA), 5 U.S.C. § 702 (1970), the Court has jurisdiction to review the Secretary's alleged abuse of discretion in not adjusting revenue allocation to reflect the estimated black population undercount indicated in Siegel's paper.

 The APA authorizes review of agency action on behalf of any "person suffering legal wrong because of (that) action." Id. By its own terms, however, review is not available (1) where another statute precludes judicial review, or (2) of any agency action wholly committed by law to agency discretion. Id. § 701(a). Review in this instance has not been expressly precluded, and the Court will not imply preclusion from the limited grant of review in the Revenue Sharing Act, especially given the absence of any legislative intent toward that end. See Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967); Consumer Federation of America v. FTC, 169 U.S.App.D.C. 136, 139, 515 F.2d 367, 370 (1975).

 The Secretary's action does, however, appear to be one wholly committed to his discretion. *fn1" The Revenue Sharing Act provides, as already noted, that the Secretary "May " use additional data (including estimates) if data provided by Census is not "comprehensive enough to provide for equitable allocations." 31 U.S.C. § 1228(a)(7)(B) (Supp. V 1975) (emphasis added). There is no requirement that additional data in fact be used, nor is there any statutory standard that even suggests when such general terms as "comprehensive enough" or "equitable allocations" come into play. In arguing nonetheless that the Secretary does not have complete discretion as a matter of law, plaintiffs rely on Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971), and Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970). In plaintiffs' view the law is found in the statutory language "equitable allocations," a term carried over into the Secretary's own regulations without further definition. 31 C.F.R. § 51.28 (1976).

 Thus this case, unlike those cited above, presents one of "those rare instances where "statutes are drawn in such broad terms that . . . there is no law to apply.' " Id. at 410, 91 S. Ct. at 821 (quoting S.Rep. No. 752, 79th Cong., 1st Sess. 26 (1945)). The Revenue Sharing Act simply allows the Secretary to use estimates as a tool in carrying out his duties if he so chooses. In no situation is the Secretary required to do so. It therefore cannot under any circumstances be arbitrary and capricious not to use estimates rather than simply to follow the figures of Census, which Congress set as the controlling standard. In this instance the Court cannot order the Secretary to make a discretionary determination, and his decision not to do so is therefore nonreviewable. Wheelabrator Corporation v. Chafee, 147 U.S.App.D.C. 238, 455 F.2d 1306 (1971). *fn2"

 The administration of the complex Revenue Sharing program involved allocations to many different state, county, and local governments. The Secretary through his delegee, Graham W. Watt, Director of Revenue Sharing, carefully considered the possibility of adjusting for the undercount when the Siegel paper was brought to his attention. A method of estimating the undercount at the state and local level was needed to translate the national figure, itself an estimate, to localities in aid of allocation. This was recognized as a highly technical and intricate undertaking: because factors such as population composition and trends and census procedures *fn3" varied widely among localities, no flat, across-the-board estimate would have been equitable or proper. Seeking a statistically valid comprehensive technique, Watt had a series of discussions with top technical experts at Census. Although as early as April 1973 Census had advised that it was not practical to make allocations of the undercount to local levels, Watt continued to pursue the matter. Stanford Research Institute was contracted to consider whether there were statistically valid data available in or out of Census. The Institute reported there was no such data. This report as well as Census material were reviewed by ...


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