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CITY OF NEW HAVEN v. UNITED STATES

May 16, 1986

CITY OF NEW HAVEN, CONNECTICUT, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant; NATIONAL LEAGUE OF CITIES, et al., Plaintiffs, v. SAMUEL R. PIERCE, JR., et al., Defendants; THE CITY OF CHICAGO, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants



The opinion of the court was delivered by: JACKSON

Thomas Penfield Jackson, U.S. District Judge.

 MEMORANDUM AND ORDER

 These consolidated cases, now before the Court on the parties' cross-motions for summary judgment, present a challenge to the President's deferral of the expenditure of funds appropriated by Congress for various domestic programs in fiscal 1986. *fn1" Specifically, plaintiffs contend that the statute pursuant to which the President has acted to defer "budget authority" *fn2" is unconstitutional by reason of the presence of an inseverable one-House legislative veto provision in the legislation as enacted. For the reasons set forth below, plaintiffs' motions for summary judgment will be granted, defendants' motion for summary judgment denied, and the declaratory and injunctive relief sought will be entered as prayed.

 I.

 In November, 1985, President Reagan signed the fiscal year 1986 appropriations bill for the Department of Housing and Urban Development ("HUD"), Pub. L. No. 99-160, 99 Stat. 909 (1985), which appropriated funds for certain long-standing local housing and community development programs. On February 5, 1986, the President sent impoundment notices to Congress pursuant to the Budget and Impoundment Control Act of 1974 announcing his deferrals of the expenditure of funds for the four programs at issue here. H. Doc. No. 99-161, 99th Cong., 1st Sess. 246-53 (1986); 51 Fed. Reg. 5829, 5953-58 (Feb. 18, 1986). The deferrals were not made in response to the Balanced Budget and Emergency Deficit Control Act of 1985, Pub. L. No. 99-177, 99 Stat. 1038, (1985), but were, rather, intended by the President to bring 1986 spending levels into line with his 1987 proposed budget. H. Doc. No. 99-161 at 246. The deferrals have been put into effect and are indisputably having a present (and by plaintiffs undesired) impact on the programs, their proponents, and their intended beneficiaries.

 Plaintiffs are various representatives of those affected: cities, mayors, community groups, members of Congress, associations of mayors and municipalities, and disappointed expectant recipients of benefits under the programs so diminished. Nominal defendants are the United States, the Secretary of HUD (the "Secretary"), and the Director of the Office of Management and Budget ("OMB").

 Of the four programs in jeopardy the first is known as the Section 8 Housing Assistance Payments Program ("Section 8"), established by the Housing and Community Development Act of 1974, amending the Housing Act of 1937. 42 U.S.C. § 1437f (1982 & Supp. I 1983 & Supp. II 1984). Section 8's purpose is to assist lower-income families in obtaining housing by, inter alia, a direct housing subsidy. The Secretary of HUD disburses funds to state and local housing agencies which, in turn, use the funds to obtain housing for low income families. The HUD appropriations bill for fiscal year 1986 included nearly $2.4 billion for direct housing subsidies, of which the President has deferred all but $184 million.

 The Community Development Block Grant ("CDBG") program originated in Title I of the Housing and Community Development Act of 1974. 42 U.S.C. § 5301 et seq. (1982 & Supp. I 1983 & Supp. II 1984). The CDBG program was designed to consolidate a number of grant programs providing federal assistance to local governments with funds to, inter alia, acquire property, construct public facilities, rehabilitate housing, support economic development projects, and extend social and health services to low income people. The CDBG program allocation for fiscal year 1986 was $3.1 billion. The President deferred $500 million.

 The final program affected was created by Section 312 of the Housing Act of 1964, as amended, 42 U.S.C. § 1452b (1982 & Supp. I 1983) ("Section 312"). Under Section 312, the Secretary lends funds to assist in the rehabilitation of single- and multi-family residential property in low-income neighborhoods. Typically, cities or local public agencies administer the program, lending money to low- and middle-income people who will occupy the housing they will use the funds to rehabilitate. For fiscal year 1986 Congress appropriated no new funds for the Section 312 program, but instead directed that all funds remaining in the program, $166 million, should be made available for new loans in 1986. The President has deferred $135 million of the sum.

 Plaintiffs have submitted numerous affidavits - of mayors, city managers, directors of local public agencies, and intended beneficiaries of the depleted programs - attesting to the observable impact the budget deferrals have had and will have on local affairs. The affidavits assert (presently without contradiction), for example, that only a fraction of the eligible low-income families will receive Section 8 assistance this year; that no elderly or handicapped people will receive rent subsidies; and that no loans to rehabilitate housing in depressed neighborhoods will be made. The mayors and city managers state that they have had to cut their CDBG programs, necessitating the layoff of staff and a substantial reduction in such social and health services as shelters for the homeless, meals to elderly, public transportation for the elderly and handicapped, job training, health and dental care for low-income people, and child care for single parents.

 In deferring the expenditure of appropriated funds the President acted pursuant to the Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344, 88 Stat. 297, or more precisely, Title X of the Act, also known as the Impoundment Control Act of 1974 (the "Act" or "ICA"), Pub. L. No. 93-344, §§ 1001-1017, 88 Stat. 297, 323-37 (codified at 2 U.S.C. §§ 681-688 (1982 & Supp. II 1984)). Under the Act the President can impound funds in two ways. First, he may propose to "rescind," or cancel, all or part of the budget authority Congress has appropriated for a particular program. 2 U.S.C. § 683. To propose a rescission the President must send a special message to Congress detailing the amount of the proposed rescission, the reasons for it, and a summary of the effects the rescission would have on the programs involved. Congress then has 45 days within which to approve the proposed rescission by a "rescission bill" that must be passed by both houses. Id. If it fails of approval, the President must allow the full amount appropriated to be spent.

 It is this latter provision of the Act that plaintiffs challenge as unconstitutional, allowing, as it does, for a so-called one-House legislative veto of impoundments proposed by the President. Defendants concede, of course, that a one-House veto is unconstitutional under the Supreme Court decision in Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 77 L. Ed. 2d 317, 103 S. Ct. 2764 (1983), but they argue that the morbid provision alone may be excised from the Act, leaving the remainder of the statute intact, including the deferral authority itself. Plaintiffs vigorously dispute the severability of the one-House veto from the grant of power it was expected to contain, contending that Congress would never have passed a statute conferring such authority without it. The principal question presented, therefore, is whether the one-House veto is discretely severable from the rest of the ICA, and if not, how much other statutory tissue must accompany it. *fn3"

 II.

 In Chadha, the Supreme Court ruled that "invalid portions of a statute are to be severed '"unless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not."'" 462 U.S. at 931-32, quoting Buckley v. Valeo, 424 U.S. 1, 108, 46 L. Ed. 2d 659, 96 S. Ct. 612 (1976), quoting Champlin Refining Co. v. Corporation Comm'n of Oklahoma, 286 U.S. 210, 234, 76 L. Ed. 1062, 52 S. Ct. 559 (1932)). The presence of a severability clause in the legislation creates a presumption of severability, id. at 932, and a "provision is further presumed severable if what remains after severance 'is fully operable as a law.'" Chadha, 462 U.S. at 934, quoting Champlin, 286 U.S. at 234. *fn4"

 The Court of Appeals for this circuit has recently had occasion to apply Chadha in Alaska Airlines, Inc. v. Donovan, 247 U.S. App. D.C. 132, 766 F.2d 1550 (D.C. Cir. 1985), cert. granted, 475 U.S. 1044, 106 S. Ct. 1259, 89 L. Ed. 2d 569 (1986), in a severability case. *fn5" Holding that the proponents of inseverability had not met their burden of overcoming the presumption of severability, the court articulated the analytical process it would follow:

 
Our charge is to save as much of the statute as we can, consistent of course with the underlying legislative intent. Only if we conclude that Congress would not have included a provision absent the constitutionally flawed portion is that provision to fall. The issue cannot be whether Congress preferred the statute with the unconstitutional provision over the same statute without that provision. Manifestly, Congress' preference is abundantly clear from its inclusion of the unconstitutional provision. Nor is the question whether Congress would have passed some alternative version of the statute if it knew that it could not lawfully have included the offending provision. That is, "the question is not whether Congress would have enacted th[is] exact statute[] had it known at the time of enactment that the legislative veto provisions were invalid, but rather, whether Congress would have preferred th[is] ...

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