WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES v. CITY OF NEW
YORK
[June 25, 1998]
JUSTICE STEVENS delivered the opinion of the Court.
The Line Item Veto Act (Act), 110 Stat. 1200, 2 U.S.C. § 691 et seq. (1994 ed., Supp. II), was enacted in April 1996 and became effective on January 1, 1997. The following day, six Members of Congress who had voted against the Act brought suit in the District Court for the District of Columbia challenging its constitutionality. On April 10, 1997, the District Court entered an order holding that the Act is unconstitutional. ...We determined, however, that the Members of Congress did not have standing to sue because they had not "alleged a sufficiently concrete injury to have established Article III standing."
Less than two months after our decision in that case, the President
exercised his authority to cancel one provision in the Balanced Budget
Act of 1997 (PL 105-33) and two provisions in the Taxpayer Relief Act of
1997 (PL 105-34). Appellees, claiming that they had been injured
by two of those cancellations, filed these cases in the District Court.
That Court again held the statute invalid, 985 F. Supp. 168, 177-182 (1998),
and we again expedited our review...We now hold that these appellees have
standing to challenge the constitutionality of the Act and, reaching the
merits, we agree that the cancellation procedures set forth in the Act
violate the Presentment Clause, Art. I, §7, cl. 2, of the Constitution.
We begin by reviewing the canceled items that are at issue in these cases...
Title XIX of the Social Security Act, 79 Stat. 343, as amended, authorizes the Federal Government to transfer huge sums of money to the States to help finance medical care for the indigent....In 1991, Congress directed that those federal subsidies be reduced by the amount of certain taxes levied by the States on health care providers. In 1994, the Department of Health and Human Services (HHS) notified the State of New York that 15 of its taxes were covered by the 1991 Act, and that as of June 30, 1994, the statute therefore required New York to return $955 million to the United States. The notice advised the State that it could apply for a waiver on certain statutory grounds. New York did request a waiver for those tax programs, as well as for a number of others, but HHS has not formally acted on any of those waiver requests. New York has estimated that the amount at issue for the period from October 1992 through March 1997 is as high as $2.6 billion.
Because HHS had not taken any action on the waiver requests, New York turned to Congress for relief. On August 5, 1997, Congress enacted a law that resolved the issue in New York's favor. Section 4722(c) of the Balanced Budget Act of 1997 identifies the disputed taxes and provides that they "are deemed to be permissible health care related taxes and in compliance with the requirements" of the relevant provisions of the 1991 statute.
On August 11, 1997, the President sent identical notices to the Senate and to the House of Representatives canceling "one item of new direct spending," specifying §4722(c) as that item, and stating that he had determined that "this cancellation will reduce the Federal budget deficit." He explained that §4722(c) would have permitted New York "to continue relying upon impermissible provider taxes to finance its Medicaid program" and that "[t]his preferential treatment would have increased Medicaid costs, would have treated New York differently from all other States, and would have established a costly precedent for other States to request comparable treatment."
[Second, a] person who realizes a profit from the sale of securities is generally subject to a capital gains tax. Under existing law, however, an ordinary business corporation can acquire a corporation, including a food processing or refining company, in a merger or stock-for-stock transaction in which no gain is recognized to the seller; the seller's tax payment, therefore, is deferred. If, however, the purchaser is a farmers' cooperative, the parties cannot structure such a transaction because the stock of the cooperative may be held only by its members; thus, a seller dealing with a farmers' cooperative cannot obtain the benefits of tax deferral.
In §968 of the Taxpayer Relief Act of 1997, Congress amended §1042 of the Internal Revenue Code to permit owners of certain food refiners and processors to defer the recognition of gain if they sell their stock to eligible farmers' cooperatives. The purpose of the amendment, as repeatedly explained by its sponsors, was "to facilitate the transfer of refiners and processors to farmers' cooperatives." The amendment to §1042 was one of the 79 "limited tax benefits" authorized by the Taxpayer Relief Act of 1997 and specifically identified in Title XVII of that Act as "subject to [the] line item veto."
On the same date that he canceled the "item of new direct spending"involving
New York's health care programs, the President also canceled this limited
tax benefit. In his explanation of that action, the President endorsed
the objective of encouraging "value-added farming through the purchase
by farmers' cooperatives of refiners or processors of agricultural goods,"
but concluded that the provision lacked safeguards and also "failed to
target its benefits to small-and-medium-size cooperatives."
Appellees filed two separate actions against the President and other
federal officials challenging these two cancellations. The plaintiffs in
the first case are the City of New York, two hospital associations, one
hospital, and two unions representing health care employees. The plaintiffs
in the second are a farmers' cooperative consisting of about 30 potato
growers in Idaho and an individual farmer who is a member and officer of
the cooperative. The District Court consolidated the two cases and determined
that at least one of the plaintiffs in each had standing under Article
III of the Constitution.... The District Court correctly concluded that
the State, and the appellees, "suffered an immediate, concrete injury the
moment that the President used the Line Item Veto to cancel section 4722(c)
and deprived them of the benefits of that law." ....Once it is determined
that a particular plaintiff is harmed by the defendant, and that the harm
will likely be redressed by a favorable decision, that plaintiff has standing-regardless
of whether there are others who would also have standing to sue. Thus,
we are satisfied that both of these actions are Article III "Cases" that
we have a duty to decide.
The Line Item Veto Act gives the President the power to "cancel in whole" three types of provisions that have been signed into law: "(1) any dollar amount of discretionary budget authority; (2) any item of new direct spending; or (3) any limited tax benefit." It is undisputed that the New York case involves an "item of new direct spending" and that the Snake River case involves a "limited tax benefit" as those terms are defined in the Act. It is also undisputed that each of those provisions had been signed into law pursuant to Article I, §7, of the Constitution before it was canceled.
The Act requires the President to adhere to precise procedures whenever he exercises his cancellation authority. In identifying items for cancellation he must consider the legislative history, the purposes, and other relevant information about the items. See 2 U.S.C. § 691(b) (1994 ed., Supp. II). He must determine, with respect to each cancellation, that it will "(i) reduce the Federal budget deficit; (ii) not impair any essential Government functions; and (iii) not harm the national interest." §691(a)(A). Moreover, he must transmit a special message to Congress notifying it of each cancellation within five calendar days (excluding Sundays) after the enactment of the canceled provision. See §691(a)(B). It is undisputed that the President meticulously followed these procedures in these cases.
A cancellation takes effect upon receipt by Congress of the special message from the President. See §691b(a). If, however, a "disapproval bill" pertaining to a special message is enacted into law, the cancellations set forth in that message become "null and void." The Act sets forth a detailed expedited procedure for the consideration of a "disapproval bill," see §691d, but no such bill was passed for either of the cancellations involved in these cases.
A majority vote of both Houses is sufficient to enact a disapproval bill. The Act does not grant the President the authority to cancel a disapproval bill, see §691(c), but he does, of course, retain his constitutional authority to veto such a bill.
....In both legal and practical effect, the President has amended two Acts of Congress by repealing a portion of each. "[R]epeal of statutes, no less than enactment, must conform with Art. I." INS v. Chadha, 462 U.S. 919, 954 (1983). There is no provision in the Constitution that authorizes the President to enact, to amend, or to repeal statutes. Both Article I and Article II assign responsibilities to the President that directly relate to the lawmaking process, but neither addresses the issue presented by these cases. The President "shall from time to time give to the Congress Information on the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient . . . ." Art. II, §3. Thus, he may initiate and influence legislative proposals. Moreover, after a bill has passed both Houses of Congress, but "before it become[s] a Law," it must be presented to the President. If he approves it, "he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it." Art. I, §7, cl. 2. 28
His "return" of a bill, which is usually described as a "veto," is subject to being overridden by a two-thirds vote in each House. There are important differences between the President's "return" of a bill pursuant to Article I, §7, and the exercise of the President's cancellation authority pursuant to the Line Item Veto Act. The constitutional return takes place before the bill becomes law; the statutory cancellation occurs after the bill becomes law. The constitutional return is of the entire bill; the statutory cancellation is of only a part. Although the Constitution expressly authorizes the President to play a role in the process of enacting statutes, it is silent on the subject of unilateral Presidential action that either repeals or amends parts of duly enacted statutes.
There are powerful reasons for construing constitutional silence on this profoundly important issue as equivalent to an express prohibition. The procedures governing the enactment of statutes set forth in the text of Article I were the product of the great debates and compromises that produced the Constitution itself. Familiar historical materials provide abundant support for the conclusion that the power to enact statutes may only "be exercised in accord with a single, finely wrought and exhaustively considered, procedure." Chadha, 462 U.S., at 951 . Our first President understood the text of the Presentment Clause as requiring that he either "approve all the parts of a Bill, or reject it in toto."
What has emerged in these cases from the President's exercise of his statutory cancellation powers, however, are truncated versions of two bills that passed both Houses of Congress. They are not the product of the "finely wrought" procedure that the Framers designed.
....The Government advances two related arguments to support its position that despite the unambiguous provisions of the Act, cancellations do not amend or repeal properly enacted statutes in violation of the Presentment Clause. First, relying primarily on Field v. Clark, 143 U.S. 649 (1892), the Government contends that the cancellations were merely exercises of discretionary authority granted to the President by the Balanced Budget Act and the Taxpayer Relief Act read in light of the previously enacted Line Item Veto Act. Second, the Government submits that the substance of the authority to cancel tax and spending items "is, in practical effect, no more and no less than the power to 'decline to spend' specified sums of money, or to 'decline to implement' specified tax measures." Neither argument is persuasive.
In Field v. Clark , the Court upheld the constitutionality of the Tariff Act of 1890. Act of Oct. 1, 1890, 26 Stat. 567. That statute contained a "free list" of almost 300 specific articles that were exempted from import duties "unless otherwise specially provided for in this act." 26 Stat. 602. Section 3 was a special provision that directed the President to suspend that exemption for sugar, molasses, coffee, tea, and hides "whenever, and so often" as he should be satisfied that any country producing and exporting those products imposed duties on the agricultural products of the United States that he deemed to be "reciprocally unequal and unreasonable. . . ." 26 Stat. 612, quoted in Field , 143 U.S., at 680 . The section then specified the duties to be imposed on those products during any such suspension. The Court provided this explanation for its conclusion that §3 had not delegated legislative power to the President:
Thus, the conclusion in Field v. Clark that the suspensions mandated by the Tariff Act were not exercises of legislative power does not undermine our opinion that cancellations pursuant to the Line Item Veto Act are the functional equivalent of partial repeals of Acts of Congress that fail to satisfy Article I, §7. The Government's reliance upon other tariff and import statutes, discussed in Field , that contain provisions similar to the one challenged in Field is unavailing for the same reasons....The Line Item Veto Act authorizes the President himself to effect the repeal of laws, for his own policy reasons, without observing the procedures set out in Article I, §7. The fact that Congress intended such a result is of no moment. Although Congress presumably anticipated that the President might cancel some of the items in the Balanced Budget Act and in the Taxpayer Relief Act, Congress cannot alter the procedures set out in Article I, §7, without amending the Constitution.....
....Although they are implicit in what we have already written, the profound importance of these cases makes it appropriate to emphasize three points.
First, we express no opinion about the wisdom of the procedures authorized by the Line Item Veto Act. Many members of both major political parties who have served in the Legislative and the Executive Branches have long advocated the enactment of such procedures for the purpose of "ensur[ing] greater fiscal accountability in Washington." H. R. Conf. Rep. 104-491, p. 15 (1996).
The text of the Act was itself the product of much debate and deliberation in both Houses of Congress and that precise text was signed into law by the President. We do not lightly conclude that their action was unauthorized by the Constitution.
We have, however, twice had full argument and briefing on the question and have concluded that our duty is clear.
Second, although appellees challenge the validity of the Act on alternative grounds, the only issue we address con- cerns the "finely wrought" procedure commanded by the Constitution. Chadha , 462 U.S., at 951 . We have been favored with extensive debate about the scope of Congress' power to delegate law-making authority, or its functional equivalent, to the President. The excellent briefs filed by the parties and their amici curiae have provided us with valuable historical information that illuminates the delegation issue but does not really bear on the narrow issue that is dispositive of these cases. Thus, because we conclude that the Act's cancellation provisions violate Article I, §7, of the Constitution, we find it unnecessary to consider the District Court's alternative holding that the Act "impermissibly disrupts the balance of powers among the three branches of government."
Third, our decision rests on the narrow ground that the procedures authorized by the Line Item Veto Act are not authorized by the Constitution. The Balanced Budget Act of 1997 is a 500-page document that became "Public Law 105-33" after three procedural steps were taken: (1) a bill containing its exact text was approved by a majority of the Members of the House of Representatives; (2) the Senate approved precisely the same text; and (3) that text was signed into law by the President. The Constitution explicitly requires that each of those three steps be taken before a bill may "become a law." Art. I, §7. If one paragraph of that text had been omitted at any one of those three stages, Public Law 105-33 would not have been validly enacted. If the Line Item Veto Act were valid, it would authorize the President to create a different lawone whose text was not voted on by either House of Con gress or presented to the President for signature. Something that might be known as "Public Law 105-33 as modified by the President" may or may not be desirable, but it is surely not a document that may "become a law" pursuant to the procedures designed by the Framers of Article I, §7, of the Constitution.
If there is to be a new procedure in which the President will play a different role in determining the final text of what may "become a law," such change must come not by legislation but through the amendment procedures set forth in Article V of the Constitution.
The judgment of the District Court is affirmed.
It is so ordered.
JUSTICE BREYER, dissenting.
I agree with the Court that the parties have standing, but I do not agree with its ultimate conclusion. In my view the Line Item Veto Act does not violate any specific textual constitutional command, nor does it violate any implicit Separation of Powers principle. Consequently, I believe that the Act is constitutional.
...The Court believes that the Act violates the literal text of the Constitution. A simple syllogism captures its basic reasoning:
Major Premise: The Constitution sets forth an exclusive method for enacting, repealing, or amending laws. Minor Premise: The Act authorizes the President to "repea[l] or amen[d]" laws in a different way, namely by announcing a cancellation of a portion of a previously enacted law. Conclusion: The Act is inconsistent with the Constitution. I find this syllogism unconvincing, however, because its Minor Premise is faulty. When the President "canceled" the two appropriation measures now before us, he did not repeal any law nor did he amend any law. He simply followed the law, leaving the statutes, as they are literally written, intact.
To understand why one cannot say, literally speaking , that the President has repealed or amended any law, imagine how the provisions of law before us might have been, but were not, written. Imagine that the canceled New York health care tax provision at issue here...had instead said the following:
Section One. Taxes . . . that were collected by the State of New York from a health care provider before June 1, 1997 and for which a waiver of provisions [requiring payment] have been sought . . . are deemed to be permissible health care related taxes . . . provided however that the President may prevent the justmentioned provision from having legal force or effect if he determines x, y and z . (Assume x, y and z to be the same determinations required by the Line Item Veto Act). Whatever a person might say, or think, about the constitutionality of this imaginary law, there is one thing the English language would prevent one from saying. One could not say that a President who "prevent[s]" the deeming language from "having legal force or effect," has either repealed or amended this particular hypothetical statute. Rather, the President has followed that law to the letter. He has exercised the power it explicitly delegates to him. He has executed the law, not repealed it....
[Breyer gives other examples.] ....All of these examples, like the Act, delegate a power to take action that will render statutory provisions "without force or effect." Every one of these examples, like the present Act, delegates the power to choose between alternatives, each of which the statute spells out in some detail. None of these examples delegates a power to "repeal" or "amend" a statute, or to "make" a new law. Nor does the Act. Rather, the delegated power to nullify statutory language was itself created and defined by Congress, and included in the statute books on an equal footing with (indeed, as a component part of) the sections that are potentially subject to nullification. As a Pennsylvania court put the matter more than a century ago: "The legislature cannot delegate its power to make a law; but it can make a law to delegate a power." Locke's Appeal , 72 Pa. 491, 498 (1873).
In fact, a power to appoint property offers a closer analogy to the power delegated here than one might at first suspect. That is because the Act contains a "lockbox" feature, which gives legal significance to the enactment of a particular appropriations item even if, and even after, the President has rendered it without "force or effect." .... That is why the Government says that the Act provides a "lockbox," and why it seems fair to say that, despite the Act's use of the word "cancel," the Act does not delegate to the President the power truly to cancel a line item expenditure (returning the legal status quo to one in which the item had never been enacted). Rather, it delegates to the President the power to decide how to spend the money to which the line item refers-either for the specific purpose mentioned the item, or for general deficit reduction via the "lockbox" feature.
....If there is a Separation of Powers violation, then, it must rest, not upon purely conceptual grounds, but upon some important conflict between the Act and a significant Separation of Powers objective. The Act does not undermine what this Court has often described as the principal function of the Separation of Powers, which is to maintain the tripartite structure of the Federal Government-and thereby protect individual liberty-by providing a "safeguard against the encroachment or aggrandizement of one branch at the expense of the other." Buckley v . Valeo , 424 U.S. 1, 122 (1976).... In contrast to these cases, one cannot say that the Act "encroaches" upon Congress' power, when Congress retained the power to insert, by simple majority, into any future appropriations bill, into any section of any such bill, or into any phrase of any section, a provision that says the Act will not apply....and, if an individual Member of Congress, who say, favors aid to Country A but not to Country B, objects to the Act on the ground that the President may "rewrite" an appropriations law to do the opposite, one can respond, "But a majority of Congress voted that he have that power; you may vote to exempt the relevant appropriations provision from the Act; and if you command a majority, your appropriation is safe." Where the burden of overcoming legislative inertia lies is within the power of Congress to determine by rule. Where is the encroachment? Nor can one say the Act's grant of power "aggrandizes" the Presidential office. The grant is limited to the context of the budget. It is limited to the power to spend, or not to spend, particular appropriated items, and the power to permit, or not to permit, specific limited exemptions from generally applicable tax law from taking effect....
In sum, I recognize that the Act before us is novel. In a sense, it
skirts a constitutional edge. But that edge has to do with means, not ends.
The means chosen do not amount literally to the enactment, repeal, or amendment
of a law. Nor, for that matter, do they amount literally to the "line item
veto" that the Act's title announces. Those means do not violate any basic
Separation of Powers principle. They do not improperly shift the constitutionally
foreseen balance of power from Congress to the President. Nor, since they
comply with Separation of Powers principles, do they threaten the liberties
of individual citizens. They represent an experiment that may, or may not,
help representative government work better. The Constitution, in my view,
authorizes Congress and the President to try novel methods in this way.
Consequently, with respect, I dissent.
JUSTICE SCALIA dissented in part, concurred in part [found that the cooperative had no standing to sue; that New York did; and that Congress could delegate cancellation of spending authority to the president.]