United States District Court, D. Columbia.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
UNITED STATES HOUSE OF REPRESENTATIVES, Plaintiff: Eleni
Maria Roumel, Isaac Benjamin Rosenberg, Kerry William
Kircher, Kimberly Ann Hamm, Todd Barry Tatelman, William
Bullock Pittard, IV, U.S. HOUSE OF REPRESENTATIVES, Office of
the General Counsel, Washington, DC; Jonathan Robert Turley,
GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, Washington, DC.
SYLVIA M. BURWELL, in her official capacity as Secretary of
the United States Department of Health and Human Services,
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, JACOB
J. LEW, in his official capacity as Secretary of the United
States Department of the Treasury, UNITED STATES DEPARTMENT
OF THE TREASURY, Defendants: Joel L. McElvain, LEAD ATTORNEY,
U.S. DEPARTMENT OF JUSTICE, Civil Division, Washington, DC.
STATE OF WEST VIRGINIA, Movant: Elbert Lin, LEAD ATTORNEY,
OFFICE OF THE WEST VIRGINIA ATTORNEY GENERAL, Charleston, WV.
STATE OF OKLAHOMA, Movant: Patrick R. Wyrick, LEAD ATTORNEY,
ATTORNEY GENERAL OF OKLAHOMA, Oklahoma City, OK.
STATE OF LOUISIANA, Movant: James D. Caldwell, LEAD ATTORNEY,
LOUISIANA ATTORNEY GENERAL, Baton Rouge, LA.
STATE OF SOUTH CAROLINA, Movant: Alan McCrory Wilson, LEAD
ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, STATE OF SOUTH
CAROLINA, Columbia, SC.
M. COLLYER, United States District Judge.
I of the United States Constitution established the Congress,
which comprises a House of Representatives and a Senate. U.S.
Const. art. I, § 1. Only these two bodies, acting
together, can pass laws--including the laws necessary to
spend public money. In this respect, Article I is very clear:
" No Money shall be drawn from the Treasury, but in
Consequence of Appropriations made by Law . . . ." U.S.
Const. art. I, § 9, cl. 7.
this lawsuit, the House of Representatives complains that
Sylvia Burwell, the Secretary of Health and Human Services,
Jacob Lew, the Secretary of the Treasury, and their
respective departments (collectively the Secretaries) have
spent billions of unappropriated dollars to support the
Patient Protection and Affordable Care Act. The House further
alleges that Secretary Lew and Treasury have, under the guise
of implementing regulations, effectively amended the
Affordable Care Act's employer mandate by delaying its
effect and narrowing its scope.
Secretaries move to dismiss, arguing that the House lacks
standing to sue. They argue that only the Executive has
authority to implement the laws, and urge this Court to stay
out of a quintessentially political fight in which the House
is already well armed. The House opposes, adamant that it has
been injured in several concrete ways, none of which can be
ameliorated through the usual political processes.
only issue before the Court is whether the House can sue the
Secretaries; the merits of this lawsuit await another day.
Although no precedent dictates the outcome, the case
implicates the constitutionality of another Branch's
actions and thus merits an " especially rigorous"
standing analysis. Ariz. State Legislature v. Ariz.
Indep. Redistricting Comm'n, 135 S.Ct. 2652, 2665
n.12, 192 L.Ed.2d 704 (2015). The House sues, as an
institutional plaintiff, to preserve its power of the purse
and to maintain constitutional equilibrium between the
and the Legislature. If its non-appropriation claims have
merit, which the Secretaries deny, the House has been injured
in a concrete and particular way that is traceable to the
Secretaries and remediable in court. The Court concludes that
the House has standing to pursue those constitutional claims.
contrast, the House's claims that Secretary Lew
improperly amended the Affordable Care Act concern only the
implementation of a statute, not adherence to any specific
constitutional requirement. The House does not have standing
to pursue those claims. The Secretaries' motion to
dismiss will be denied as to the former and granted as to the
background is necessary on the appropriations process under
our Constitution, the workings of the statute at issue, and
how this case came about. The facts alleged in the
House's complaint must be taken as true in this
procedural posture. Baird v. Gotbaum, 792 F.3d 166,
169 n.2 (D.C. Cir. 2015).
passes all federal laws in this country. U.S. Const. art. I,
§ 1 (" All legislative Powers herein granted shall
be vested in a Congress of the United States[.]" ). That
includes both laws that authorize the expenditure of public
monies and laws that ultimately appropriate those monies.
Authorization and appropriation by Congress are nonnegotiable
prerequisites to government spending: " No Money shall
be drawn from the Treasury, but in Consequence of
Appropriations made by Law . . . ." U.S. Const. art. I,
§ 9, cl. 7; see also United States v.
MacCollom, 426 U.S. 317, 321, 96 S.Ct. 2086, 48 L.Ed.2d
666 (1976) (" The established rule is that the
expenditure of public funds is proper only when authorized by
Congress, not that public funds may be expended unless
prohibited by Congress." ). The distinction between
authorizing legislation and appropriating legislation is
relevant here and bears some discussion.
legislation establishes or continues the operation of a
federal program or agency, either indefinitely or for a
specific period. GAO Glossary at 15. Such an
authorization may be part of an agency or program's
organic legislation, or it may be entirely separate.
Id. No money can be appropriated until an agency or
program is authorized, although authorization may sometimes
be inferred from an appropriation itself. Id.
legislation " provides legal authority for federal
agencies to incur obligations and to make payments out of the
Treasury for specified purposes." Id. at 13.
Appropriations legislation has " the limited and
specific purpose of providing funds for authorized
programs." Andrus v. Sierra Club, 442 U.S. 347,
361, 99 S.Ct. 2335, 60 L.Ed.2d 943 (1979)
(quoting Tennessee Valley Auth. v. Hill, 437 U.S.
153, 190, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978)). An
appropriation must be expressly stated; it cannot be inferred
or implied. 31 U.S.C. § 1301(d). It is well understood
that the " a direction to pay without a designation of
the source of funds is not an appropriation." U.S.
Government Accounting Office, GAO-04-261SP, Principles of
Federal Appropriations Law (Vol. I) 2-17 (3d ed. 2004)
(GAO Principles ). The inverse is also true: the
designation of a source, without a specific direction to pay,
is not an appropriation. Id. Both are required.
See Nevada, 400 F.3d at 13-14. An
appropriation act, " like any other statute, [must be]
passed by both Houses of Congress and either signed by the
President or enacted over a presidential veto." GAO
Principles at 2-45 (citing Friends of the Earth
v. Armstrong, 485 F.2d 1, 9 (10th Cir. 1973);
Envirocare of Utah Inc. v. United States, 44 Fed.Cl.
474, 482 (1999)).
come in many forms. A " permanent" or "
continuing" appropriation, once enacted, makes funds
available indefinitely for their specified purpose; no
further action is needed from Congress. Nevada, 400
F.3d at 13; GAO Principles at 2-14. A "
current appropriation," by contrast, allows an agency to
obligate funds only in the year or years for which they are
appropriated. GAO Principles at 2-14. Current
appropriations often give a particular agency, program or
function its spending cap and thus constrain what that
agency, program, or function may do in the relevant year(s).
Most current appropriations are adopted on an annual basis
and must be re-authorized in each fiscal year. Such
appropriations are an integral part of our constitutional
checks and balances, insofar as they tie the Executive Branch
to the Legislative Branch via purse string.
111th Congress enacted the Patient Protection and Affordable
Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (ACA),
" to increase the number of Americans covered by health
insurance and decrease the cost of health care."
Nat'l Fed'n of Indep. Bus. v. Sebelius, 132
S.Ct. 2566, 2580, 183 L.Ed.2d 450 (2012); see also
King v. Burwell, 135 S.Ct. 2480, 2485, 192 L.Ed.2d
483 (2015) (" The [ACA] adopts a series of interlocking
reforms designed to expand coverage in the individual health
insurance market." ). No party disputes here whether the
ACA was validly adopted by both houses of Congress and signed
into law by the President.
Subsidies under Sections 1401 and 1402 of the Affordable Care
provides monetary subsidies in several forms; two are
relevant here. First, in order to assist certain individuals
with the cost of insurance on the newly-established
exchanges, Congress enacted a " premium tax credit"
under the Internal Revenue Code for coverage of statutory
beneficiaries with household incomes from 100% to 400% of the
federal poverty level. See 26 U.S.C. § 36B; 42
U.S.C. § § 18081, 18082; King, 135 S.Ct.
at 2487. These premium tax credits were enacted in Section
1401 of the ACA, and the Court will
therefore refer to this subsidy as the " Section 1401
Premium Tax Credit."
Section 1402 of the ACA requires insurers to reduce the cost
of insurance to certain, eligible statutory beneficiaries.
See 42 U.S.C. § 18071(a)(2). Specifically,
these " cost-sharing" provisions require insurance
companies that offer qualified health plans through the ACA
to reduce the out-of-pocket cost of insurance coverage for
policyholders who qualify. See generally id. §
18071. The federal government then offsets
the added costs to insurance companies by reimbursing them
with funds from the Treasury. See 42 U.S.C. §
18071(c)(3) (" An issuer of a qualified health plan
making reductions under this subsection shall notify the
Secretary of such reductions and the Secretary shall make
periodic and timely payments to the issuer equal to the value
of the reductions." ). The Court will refer to this
subsidy as the " Section 1402 Cost-Sharing Offset."
determinations for either subsidy can be made in advance, as
can payments. See 42 U.S.C. § 18082(a)(1)
(requiring the Secretaries of Health and Human Services (HHS)
and Treasury to consult and establish a program to make
advance determinations " with respect to the income
eligibility of individuals . . . for the premium tax credit
allowable under section 36B of title 26 and the cost-sharing
reductions under section 18071" ). The Section 1401
Premium Tax Credits are paid directly to insurance companies,
who then " reduce the premium charged the insured for
any period by the amount of the advance payment."
Id. § 18082(c)(2)(B)(i). Treasury pays Section
1402 Cost-Sharing Offsets to the insurers " at such time
and in such amount as the Secretary [of HHS] specifies."
Id. § 18082(c)(3).
House alleges that there is a marked, and constitutionally
significant, difference in the way these two subsidies are
funded. See Compl. ¶ 29 (citing 31 U.S.C.
§ 1324). Essentially, the House contends that Section
1401 Premium Tax Credits are funded by a permanent
appropriation in the Internal Revenue Code, whereas Section
1402 Cost-Sharing Offsets must be funded and re-funded by
annual, current appropriations. Id. The House
alleges further that " Congress has not, and never has,
appropriated any funds (whether through temporary
appropriations or permanent appropriations) to make any
Section 1402 Offset Program payments to Insurers."
Id. ¶ 28.
The Affordable Care Act's Employer Mandate
from its monetary subsidies, the ACA provides incentives for
employers to offer health insurance coverage to their
employees. Under the title " Shared Responsibility for
Employers Regarding Health Coverage," Section 1513 of
the ACA adds a new chapter to the Internal Revenue Code that
subjects every non-conforming employer to an "
assessable payment," i.e., a tax. See
26 U.S.C. § 4980H(a). Cf. id. §
4980H(c)(7) (" For denial of deduction for the
tax imposed by this section . . . ." )
(emphasis added); Independent Business, 132 S.Ct. at
2580, 2601 (concluding that the " [s]hared
responsibility payment" in the ACA's individual
mandate, 26 U.S.C. § 5000A(b)(1), could
" reasonably be read as a tax" ). The substance of
Section 1513 is only relevant here insofar as it requires any
" applicable large employer" to " offer its
full-time employees (and their dependents) the opportunity to
enroll in minimum essential coverage under an eligible
employer-sponsored plan" or else to pay the tax. 26
U.S.C. § 4980H(a)-(b). Section 1513 concludes: "
The amendments made by this section shall apply to months
beginning after December 31, 2013." Id. §
Budgetary Requests and Appropriation Acts
House alleges that the " Administration repeatedly has
acknowledged that it requires temporary appropriations to
fund Section 1402," namely through the budget request
process since the ACA's enactment. Compl. ¶ 31.
After the May 28, 2015 hearing on the pending motion, the
Court ordered supplemental briefing on these budget requests.
See 6/1/2015 Minute Order. The parties filed a joint
stipulation of facts in response, see Dkt. 30
(Stipulation). The stipulated facts are clear, even
if the parties dispute their relevance. See
Stipulation at 1-2.
April 10, 2013, the Office of Management and Budget submitted
its Fiscal Year 2014 Budget of the U.S. Government.
Budget [Dkt. 30-1]. The Appendix to that budget contained
" more detailed financial information on individual
programs and appropriation accounts than any of the other
budget documents." App. to Budget [Dkt. 30-2] at 3. The
Appendix included, among other things, " explanations of
the work to be performed and the funds needed."
Id. In the April 2013 Appendix, the Administration
requested the following:
For carrying out, except as otherwise provided, sections 1402
[Reduced Cost-Sharing] and 1412 of the Patient Protection and
Affordable Care Act (Public Law 111-148), such sums as
necessary. For carrying out, except as otherwise provided,
such sections in the first quarter of fiscal year 2015
(including upward adjustments to prior year payments),
Id. at 453.
same day, HHS separately submitted to the relevant
appropriations committees a Justification of Estimates
for Appropriations Committees. Justification [Dkt.
30-3]. In that document, HHS explained:
The FY 2014 request for Reduced Cost Sharing for Individuals
Enrolled in Qualified Health Plans is $4.0 billion in the
first year of operations for Health Insurance Marketplaces,
also known as Exchanges. CMS also requests a $1.4 billion
advance appropriation for the first quarter of FY 2015 in
this budget to permit CMS to reimburse issuers who provided
reduced cost-sharing [under Section 1402] in excess of the
monthly advanced payments received in FY 2014 through the
cost-sharing reduction reconciliation process.
Id. at 14. In its conclusion, HHS referred to the
" Cost-Sharing Reductions" as one
of " five annually-appropriated accounts."
Id. In a later graphic entitled " Reduced Cost
Sharing," HHS listed " --" under " Budget
Authority" for " FY 2013 Current Law,"
id. at 193. That fact indicates that no prior
appropriation applied to Section 1402. HHS compared the
Section 1402 program to " other appropriated
entitlements such as Medicaid." Id.
17, 2013, the Administration submitted a number of amendments
to its budget request. Amendments [Dkt. 30-4]. The House
contends that these amendments are relevant because as they
" did not withdraw or otherwise alter in any respect the
Administration's FY 2014 request for an annual
appropriation for the Section 1402 Offset Program," Pl.
Supp. Mem. at 7 n.6.
20, 2013, OMB issued its Sequestration Preview
Report for Fiscal Year 2014, which listed " Reduced
Cost Sharing" as subject to sequestration in the amount
of $286 million, or 7.2% of the requested appropriation.
Report [Dkt. 30-18] at 4. The House believes that because
" payments properly made under [Section 1401 of the ACA]
are exempt from sequestration," OMB's inclusion of
Section 1402 Cost-Sharing Offsets on a list of
sequestration-required programs was " an acknowledgement
that the permanent appropriation codified at 31 U.S.C. §
1324 cannot be the funding source for such payments."
Stipulation at 7 n.2.
13, 2013, the Senate Appropriations Committee adopted S.
1284, a bill appropriating monies to HHS and other agencies.
An accompanying report stated that " [t]he Committee
recommendation does not include a mandatory appropriation,
requested by the administration, for reduced cost sharing
assistance . . . as provided for in sections 1402 and 1412 of
the ACA." S. Rep. No. 113-71, 113th Cong., at 123
(2013). No subsequent consideration of funding for Section
1402 appears in the record.
October 17, 2013, the President signed into law the first of
two continuing resolutions to keep the government running
pending a consolidated appropriations act. See
Continuing Appropriations Act for 2014, Pub. L. 113-46, 127
Stat. 558 (2013); Joint Resolution, Pub. L. 113-73, 128 Stat.
3 (2014). Neither resolution included an appropriation for
the Section 1402 Cost-Sharing Offset program.
on January 17, 2014, the President signed the Consolidated
Appropriations Act for 2014, Pub. L. 113-76, 128 Stat. 5
(2014). That law similarly did not appropriate monies for the
Section 1402 Cost-Sharing Offset program. Indeed, the
Secretaries have conceded that " [t]here was no 2014
statute appropriating new
money" for the Section 1402 Cost-Sharing Offset program.
5/28/15 Tr. at 27.
Background of this Case
House alleges that the Secretaries, despite Congress's
refusal to fund the Section 1402 Cost-Sharing Offsets through
a current appropriation, nonetheless drew and spent public
monies on that program beginning in January 2014. Compl.
¶ 35. The House also alleges that Secretary Lew has
effectively " legislate[d] changes" to Section
1513, both by delaying the employer mandate beyond December
31, 2013 and by altering the percentage of employees that
must be offered coverage. Id. ¶ ¶ 45, 46.
These changes to the mandate are said by the House to have
" usurp[ed] its Article I legislative authority."
Id. ¶ 50.
right these perceived wrongs, the House took legal action. On
July 30, 2014, it adopted House Resolution 676, which
authorized the Speaker of the House to file suit in federal
court against the head of an Executive department or agency
for " failure . . . to act in a manner consistent with
that official's duties under the Constitution and laws of
the United States with respect to implementation of any
provision of the Patient Protection and Affordable Care
Act." H.R. Res. 676, 113th Cong. (2014). Section 3(a) of
the same Resolution authorized the House's Office of
General Counsel, assisted by outside counsel, to represent
the House in court. Id. After this suit commenced,
the 113th Congress ended and the 114th Congress began. The
new House adopted House Resolution 5 on January 6, 2015,
which provided in part that the 114th House of
Representatives could succeed the 113th House of
Representatives as plaintiff in this lawsuit. H.R. Res. 5,
§ 3(f)(2)(A), 114th Cong. (2015).
Secretaries moved to dismiss the case on January 26, 2015.
See Mot. to Dismiss [Dkt. 20] (Mot.); Mem. in
Support [Dkt. 20-1] (Mem.). The House opposes. Mem. in
Opp'n [Dkt. 22] (Opp'n). The Secretaries have filed a
reply. Reply to Opp'n to Mot. [Dkt. 26] (Reply). Oral
argument was held on May 28, 2015. The motion is thus ripe
Court will analyze the pending motion under the following
Motion to Dismiss
Secretaries move to dismiss the complaint under the Federal
Rule of Civil Procedure 12(b)(1) for lack of subject matter
jurisdiction and under Rule 12(b)(6) for failure to state a
claim upon which relief can be granted.
to Rule 12(b)(1), a defendant can move to dismiss a
complaint, or any portion thereof, for lack of subject matter
jurisdiction in federal court. Fed.R.Civ.P. 12(b)(1). No
action by the parties can confer subject matter jurisdiction
on a federal court, because subject matter jurisdiction is
both a statutory requirement and an Article III requirement.
Akinseye v. District of Columbia, 339 F.3d 970, 971,
358 U.S. App.D.C. 56 (D.C. Cir. 2003). The party claiming
subject matter jurisdiction bears the burden of demonstrating
that such jurisdiction exists. Khadr v. United
States, 529 F.3d 1112, 1115, 381 U.S. App.D.C. 408 (D.C.
Cir. 2008); see Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128
L.Ed.2d 391 (1994) (noting that federal courts have limited
jurisdiction and that " [i]t is to be presumed that a
outside this limited jurisdiction, and the burden of
establishing the contrary rests upon the party asserting
jurisdiction" ) (internal citations omitted). When
reviewing a motion to dismiss for lack of jurisdiction under
Rule 12(b)(1), a court must construe the complaint liberally,
giving the plaintiff the benefit of all inferences that can
be derived from the facts alleged. Barr v. Clinton,
370 F.3d 1196, 1199, 361 U.S. App.D.C. 472 (D.C. Cir. 2004).
Nevertheless, " the court need not accept factual
inferences drawn by plaintiffs if those inferences are not
supported by facts alleged in the ...