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ALABAMA v. BOWSHER

March 30, 1990

STATE OF ALABAMA, et al., Plaintiffs,
v.
CHARLES A. BOWSHER, et al., Defendants


George H. Revercomb, United States District Judge.


The opinion of the court was delivered by: REVERCOMB

GEORGE H. REVERCOMB, UNITED STATES DISTRICT JUDGE

 The plaintiffs in this matter are twenty-three States who claim the right pursuant to their respective unclaimed property laws to custody of monies belonging to their respective citizens and contained in the United States Treasury trust fund receipt account "Unclaimed Moneys of Individuals Whose Whereabouts are Unknown" as established by 31 U.S.C. § 1322. The defendants in this matter are the Comptroller General of the United States ("Comptroller General") and the Secretary of the Treasury of the United States ("Secretary"). The plaintiffs seek to compel the Secretary and the Comptroller General to settle their claims for the monies in their favor and to disburse the monies accordingly. The plaintiffs also seek to compel the Secretary to provide information regarding the unclaimed monies.

 This matter is before the Court pursuant to defendants' Motion for Judgment on the Pleadings or, in the Alternative, for Summary Judgment. The defendants contend that this action is barred by sovereign immunity, standing, ripeness, failure to state a claim, the Supremacy Clause and exhaustion.

 I. STATUTORY AND ADMINISTRATIVE BACKGROUND

 A. Unclaimed Monies Accounts

 The account "Unclaimed Moneys of Individuals Whose Whereabouts are Unknown" is established in 31 U.S.C. § 1322. *fn1" That provision requires the Secretary to transfer to that account those funds which had been in trust fund accounts listed in 31 U.S.C. § 1321(a)(1)-(82) or analogous trust funds listed in § 1321(b) for more than one year and which represent money belonging to individuals whose whereabouts are unknown. *fn2" Section 1322 expressly provides that subsequent claims to those monies are to be paid from that account and that necessary amounts will be appropriated for payment of those claims.

 The Treasury Department has designated two funds to receive deposits of monies deemed unclaimed pursuant to 31 U.S.C. § 1322. Trust fund account number 20X6133 serves as a depository for monies in the amounts of $ 25.00 or more which meet certain criteria, and miscellaneous receipt account number 1060 serves as a depository for monies in amounts of less than $ 25.00 and for those monies which do not otherwise meet the criteria for transfer into Account 20X6133. *fn3" See 1 Treasury Financial Manual ("TFM") § 6-3030.

 The separate accounts were created to facilitate bookkeeping by the Treasury. Account 1060 is a true "miscellaneous receipts" account; deposits made into this account (unlike Account 20X6133) are not directly available for disbursement. In the event that claims are received by the transferring agencies for items transferred to Account 1060, and the facts indicate that refunds are justified, such claims are paid from account 20X1807 ("Refund of Moneys Erroneously Received and Covered") in accordance with the provisions of 1 TFM § 6-3075.

 B. Procedures for Transfer of Unclaimed Monies Into the Secretary's Custody

 The Secretary directs the federal agencies to analyze their various trust, revolving and deposit accounts periodically to determine whether they are holding unclaimed monies and, if so, to take appropriate action to initiate the transfer of such monies to the "unclaimed moneys" accounts. 1 TFM § 6-3030. Although the Treasury Department serves a centralized role as custodian of government funds, it has neither the access to agency records necessary to determine which monies have been held for over one year in the agency accounts nor certifying authority to order the transfer of monies from those accounts to the unclaimed monies accounts. Agencies transfer monies into the unclaimed monies accounts by submitting either a Statement of Transaction (Standard Form 224) or its electronic equivalent. 1 TFM § 6-3040.

 The Treasury Department, through its Financial Management Service ("FMS"), maintains only the cumulative or government-wide balance of the unclaimed monies accounts, which reflects the monthly composite balance of deposits and withdrawals. The FMS maintains no records about the nature or origin of any monies transferred into the unclaimed monies accounts by the various agencies, including those within the Treasury Department (e.g., Internal Revenue Service, Bureau of Public Debt). Any such records would be maintained exclusively by the various agencies themselves. 1 TFM § 6-3085. The exact nature of these records may vary from agency to agency. The FMS has no independent knowledge of the internal accounting practices of any other agency or bureau concerning unclaimed monies and has no government-wide auditing function.

 C. The Claims-Payment Scheme

 Accountability for public monies in civilian agencies generally rests with the certifying official of the transferring agency, who has been charged with the responsibility of reviewing, inter alia, the "information stated in the certificate, voucher, and supporting records . . . [and] the legality of a proposed payment under the appropriation or fund involved" and, if appropriate, certifying vouchers for payment. 31 U.S.C. § 3528; see also 1 TFM §§ 6-3060, 3075. If the certifying official has a question regarding the legality or propriety of the claim -- and if Congress has not vested claims settlement in that administrative agency -- the agency can submit the matter to the General Accounting Office. 1 TFM § 6-3050; see also GAO Policy and Procedures Manual for Guidance of Federal Agencies, title 7, § 21.11 (1983). *fn4"

 Should the transferring agency determine that the claim for monies is legal and proper, the certifying official will initiate payment through the certification of a Voucher and Schedule of Payment Standard Form 1166 or its electronic certification equivalent. 1 TFM § 6-3060. This payment voucher is then transmitted to a disbursing official, who for most civilian Executive Branch agencies is an employee or official of the Treasury Department. *fn5" 31 U.S.C. § 3321(a). Since the Secretary's authority to act as disbursing official is expressly limited by 31 U.S.C. § 3321(a) to executive agencies, the Legislative and Judicial Branch agencies have their own disbursing authority. See 2 U.S.C. § 104a (House of Representatives); 2 U.S.C. §§ 142b, d, e (Library of Congress); 2 U.S.C. § 143 (Architect of the Capitol); 28 U.S.C. § 604(a)(8) (Administrative Office of the U.S. Courts).

 Pursuant to 31 U.S.C. § 3325(a), "[a] disbursing official in the executive branch of the United States Government shall (1) disburse money only as provided by a voucher certified by (A) the head of the executive agency concerned; or (B) an officer or employee of the executive agency having written authorization from the head of the agency to certify vouchers." For those agencies for which Treasury Department officials are the disbursing officials, vouchers are sent by the transferring agencies to FMS' Regional Financial Centers instructing payments according to the information contained in the vouchers. The disbursing officials do not review the vouchers to determine the legality or propriety of the underlying claims but, rather, the Regional Financial Centers examine the vouchers to determine if they are in the proper format, have been duly certified and are correctly computed. 31 U.S.C. § 3325(a)(2). The FMS then mails out the payments to the address contained on the form. The Agency Confirmation Report is transmitted to the finance office of the transferring agency as a record of payment. *fn6" The other agencies which have both certifying and disbursing authority will issue their own payments and notify the Treasury Department of the composite monthly balance. 1 TFM §§ 6-3060, 3075.

 D. Plaintiffs' Contacts with the Defendants and the Transferring Agencies

 None of the plaintiff States claim to have escheated the monies they seek, that is, to have obtained legal title to or actual ownership of the monies through due process procedures which divest the owners of their interests therein. The plaintiff States have not filed claims for custody of monies contained in the unclaimed monies accounts with the transferring agencies. *fn8" Indeed, the plaintiff States have not even contacted the transferring agencies for information on how to proceed or for the identification of unclaimed monies which belong to the citizens of their respective States.

 On December 14, 1988, six States, Arizona, Delaware, Illinois, Kansas, Kentucky and Pennsylvania, sent a letter to the Comptroller General which requested: (1) "an acknowledgment that the states have a valid claim" to unspecified monies in the unclaimed monies accounts; (2) a listing of existing trust funds from which the monies had been transferred and of the amounts transferred, as well as the identities of the transferring agencies; (3) "A listing of any procedures, administrative or otherwise, that the states must complete in order to perfect their claims;" and (4) "assurances" that the monies would not be disbursed except to the "lawful owners of the moneys or their respective states of residence." The States threatened to sue if they did not "receive an acknowledgment of the validity of their claim asserted herein" within two weeks.

 On December 30, 1988, the six States, plus the State of Rhode Island, filed the instant action.

 On January 3, 1989, Gary L. Kepplinger, Associate General Counsel of the GAO, responded to the December 14, 1988 letter. Kepplinger stated that although GAO "has the statutory authority to settle claims against the United States," such claims "usually involve a claim for a specific amount due." He noted that the December 14 letter, in contrast, "merely requests a general acknowledgment or declaration of your clients' rights and status vis-a-vis funds in the unclaimed moneys account as well as the necessary information to perfect your clients' claims. Such a declaratory action is beyond the realm of the [GAO's] claims settlement jurisdiction." Kepplinger further stated that payments from the "unclaimed moneys account" are made "without settlement action by GAO." GAO would only consider such claims "in those cases where the Treasury Department or other agency questions the legality or propriety of any claim."

 After the instant suit was filed, five of the plaintiff States (Arizona, Illinois, Kansas, Nevada and Utah) sent letters to Bettsy H. Hettinger, the Director of the Cash Management Division of the Financial Management Service at Treasury, requesting her, in effect, to "search her records for, and produce a listing of, unclaimed property in the custody of federal agencies which are the property of residents of their States." One of the States, Nevada, also asked that Hettinger "report and remit" the monies listed to the State's Unclaimed Property Division. Hettinger replied to the five States, by letter dated April 24, 1989, that "FMS does not maintain any record of these deposits other than a cumulative dollar figure. The depositing agencies retain the only supporting documentation necessary to identify these funds." Hettinger advised the States that "in order to file claims on any of these funds, you will need to contact the individual agencies believed to be holding funds payable to your residents."

 On April 10, 1989, the complaint was amended to add as plaintiffs Alabama, Hawaii, Minnesota, Ohio, Nevada, South Dakota and Utah. On October 6, 1989, the complaint was amended to add as plaintiffs Florida, Iowa, Louisiana, Missouri and Oklahoma. On December 29, 1989, the complaint was amended to add as plaintiffs Montana, New Hampshire, West Virginia and Wisconsin.

 II. SOVEREIGN IMMUNITY

 The defendants contend that the instant action is barred by the doctrine of sovereign immunity where the plaintiffs seek, inter alia, to compel the defendants to disburse funds in the possession of the federal government and to disburse information. See Dugan v. Rank, 372 U.S. 609, 620, 10 L. Ed. 2d 15, 83 S. Ct. 999 (1963); Stafford v. Briggs, 444 U.S. 527, 542 n. 10, 63 L. Ed. 2d 1, 100 S. Ct. 774 (1980). The defendants contend the plaintiffs "must establish that the United States has waived its immunity with respect to this type of lawsuit." State of Florida v. United States Dep't of the Interior, 768 F.2d 1248, 1253 (11th Cir. 1985), cert. denied, 475 U.S. 1011, 106 S. Ct. 1186, 89 L. Ed. 2d 302 (1986); see also United States v. Mitchell, 445 U.S. 535, 538, 63 L. Ed. 2d 607, 100 S. Ct. 1349 (1980); United States v. Testan, 424 U.S. 392, 399, 47 L. Ed. 2d 114, 96 S. Ct. 948 (1976).

 Congress has expressly waived sovereign immunity in suits seeking equitable relief against the federal government in section 702 of the Administrative Procedure Act ("APA") which provides:

 5 U.S.C. § 702. *fn9"

 Although the instant suit is not brought under the APA, the caselaw of this circuit confirms that "the waiver applies to any suit, whether under the APA, [28 U.S.C.] § 1331, § 1361, or any other statute." P. Bator, P. Mishkin, D. Meltzer & D. Shapiro, Hart and Wechsler's The Federal Courts and The Federal System 1154 (3d ed. 1988); see, e.g., National Ass'n of Counties v. Baker, 268 U.S. App. D.C. 373, 842 F.2d 369, 373 (D.C.Cir. 1988), cert. denied, 488 U.S. 1005, 109 S. Ct. 784, 102 L. Ed. 2d 775 (1989) (section 702 waived sovereign immunity in action to compel the Secretary to disburse certain appropriated funds); Schnapper v. Foley, 215 U.S. App. D.C. 59, 667 F.2d 102, 212 U.S.P.Q. (BNA) 235 (D.C.Cir. 1981), cert. denied, 455 U.S. 948, 102 S. Ct. 1448, 71 L. Ed. 2d 661 (1982) (section 702 waived sovereign immunity in copyright case); Sea-land Service, Inc. v. Alaska R.R., 212 U.S. App. D.C. 197, 659 F.2d 243, 244 (D.C. Cir. 1981), cert. denied, 455 U.S. 919, 102 S. Ct. 1274, 71 L. Ed. 2d 459 (1982). The issue of whether section 702 acts as a waiver to actions other than those brought under the APA was definitively put to rest by the Supreme Court in Bowen v. Massachusetts, 487 U.S. 879, 108 S. Ct. 2722, 101 L. Ed. 2d 749 (1988). In Bowen v. Massachusetts, the State of Massachusetts brought suit in federal court, invoking 28 U.S.C. § 1331, to challenge a decision by the Secretary of Health and Human Services disallowing reimbursement for certain State expenditures for mental health services under 42 U.S.C. § 1316(d). The Court expressly held that section 702 operated as a waiver of sovereign immunity to judicial review of the action brought by the State challenging the Secretary's disallowance decision. Id. 108 S. Ct. at 2731.

 The defendants nonetheless contend that the terms of the waiver in section 702 do not apply to the instant action because the plaintiffs cannot demonstrate that they have been wronged by final agency action. *fn10" The defendants argue that there is no final agency action which has wronged the plaintiffs because they have failed to apply to the transferring agencies who are the necessary parties to act upon plaintiffs' claims. ...


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