City of Los Angeles, a Municipal Corporation v. Brock Adams, As Secretary of Transportation of the Unitedstates, et al., Appellants, 556 F.2d 40 (D.C. Cir. 1977)

This case arises from tension between substantive legislation and the corresponding appropriations. The district court granted relief to the City of Los Angeles based on its conclusion that the city had a vested right to funds for the development of its airport, as allocated to it by the Airport and Airway Development Act of 1970, 49 U.S.C. §§ 1701 et seq. (the "Act"). This right was held to be firm in amount despite the fact that subsequent appropriations limited expenditures to less than that provided by the Act.

We have attentively examined the pertinent enactments and legislative history in order to discern Congress's intent. We conclude that the amount of dollars available for the airport development program was determined by the appropriations measures passed by Congress. However, the Federal Aviation Administration (FAA) went too far when it, in effect, used the discrepancy between the substantive provisions of the Act and the provisions of the appropriations laws as a hinge for enlarging its discretion to decide which projects to fund. The sound underlying doctrine calls for an intermesh of the measures that provides maximum possible respect for and application of both measures. We conclude that in this case the appropriations acts can be given full effect in limiting the amounts available, while the Act is given maximum effect, within the appropriations constraints, in dictating how the limited amounts should be allocated and administered.

On remand, the district court will compose a suitable decree to implement this opinion.

The City of Los Angeles owns and operates the Los Angeles International Airport. The City applied in October, 1974, to the FAA for a grant to reimburse it for part of a $21.4 million land acquisition for expansion of the Airport. It applied for $11.5 million under the provisions of the Act, but only claims $9.6 million as of right from its entitlements accrued in fiscal years (FY's) 1974 and 1975.

In March, 1975, the FAA informed the City that the grant would not be made, in spite of the acceptability of the project and the City's apportionment under the enplanement provisions of the Act (which will be discussed presently). This denial was based on the FAA's position that it was obliged to distribute less funds than apportioned by the Act, that it had instituted a priority system to choose which projects to fund, and that other projects with higher priority than Los Angeles's land acquisition would exhaust the available funds.

The City brought suit on May 1, 1975, seeking declaratory and injunctive relief to compel execution by the FAA of a $9.6 million grant. On May 2, the district court granted a temporary restraining order that prohibited the FAA from granting the $9.6 million to anyone other than the plaintiff. This was followed by a preliminary injunction on May 14 and a memorandum opinion on June 23, finding Los Angeles entitled to the grant. City of Los Angeles v. Coleman, 397 F. Supp. 547 (D.D.C. 1975). This was enforced in an order of June 26, 1975.

The Airport and Airway Development Act of 1970, 49 U.S.C. §§ 1701 et seq., provides for the formulation of a national airport system plan, § 1712, and for federal funding of airport development, § 1714, from a trust fund accumulated from air transportation use taxes, § 1742.

The amount available for airports was the subject of § 14(a) of the Act, 49 U.S.C. § 1714(a).¹  This authorized the Secretary of Transportation who has delegated his duties under the Act to the FAA to make grants of "not less than" $250 million in each of FY's 1971-75 for airports serving CAB certified carriers and certain general aviation airports, with $30 million for other airports. In 1973, these amounts were increased to $275 and $35 million, respectively, for FY's 1974-75.

Apportionment of funds for airports is governed, as to the larger airports, by § 15(a) (1) of the Act, codified as 49 U.S.C. § 1715(a) (1).²  This subsection requires that the funds be apportioned: (1) one-third to the states in proportion to their area and population, (2) one-third to existing airports serving CAB certificated carriers in proportion to passengers served (the "enplanement formula"), and (3) one-third to be distributed at the discretion of the FAA (discretionary fund). Section 1715(a) (3) provides that amounts apportioned to "sponsors" (public airport authorities applying for airport development grants) under the enplanement formula are to be available for approved airport development projects for the year in which apportioned and two successive years. Any sums not obligated by grant at the expiration of that time are transferred to the discretionary fund.

Congress plainly intended mandatory apportionment of the amounts specified in § 1714(a) to airport sponsors according to the three-fold formula of § 1715(a). The Senate Report explained the policy behind this formula:

This apportionment formula will satisfy two important needs. First, it will assure that at least one-third of the total funds will be expended in the airport areas of the highest traffic density and where the need is greatest. Secondly, by apportioning at least one-third of the available funds to projects in the States using the "area/population" formula, projects in smaller States and those projects which are not of primary importance will not be neglected.

In addition, the Committee believes it important that the Secretary have at his discretion a significant portion of the allocated revenue in order to provide additional financial assistance to projects which have a high priority in the National Airport System Plan. The discretionary fund may be particularly useful in assisting development of new jetport facilities being planned in the high density hub areas in which a high initial investment is required.

S.Rep. No. 565, 91st Cong., 1st Sess. 28 (1969).

In addition to assuring return of one-third of the funds to their airports of origin to deal with current congestion, the Senate Report stresses the need for commitment of certain minimum sums to airport sponsors to facilitate long term planning. Id. at 22, 25:

Second, the program, which has been subject to annual appropriations for general revenues, has failed to provide a firm, long term and reliable source of revenue upon which airport sponsors could depend for Federal grant-in-aid assistance. The vagaries of year-to-year general appropriations coupled with the fact that grant recipients were generally chosen on a year-to-year basis, and could never rely upon any certain level of Federal assistance, in effect, rendered Federal grants under the program less effective than is now necessary.

Second, the Federal Government must provide assurances that project grant assistance will be available and predictable over a relatively long time period and that grants to the airports most in need will be available in some minimum amounts.

First of all, this bill is a long-range program in that trust fund revenues for airport development grants are authorized for expenditures for 10 years. In addition to providing a full 10-year authorization of trust fund revenues for airport development grants, the committee believes it equally important to establish a 10-year allocation of user charge derived trust fund revenue for airport development grants, subject to review, so that airport operators may be assured that a minimum level of airport development grants will be available during the program period.

Next, a reasonable apportionment of the airport development funds is made, again subject to review in 5 years, which will guarantee that some of the airport development funds authorized will be reserved for those airports whose needs are the greatest.

As originally enacted, § 1714(b) contained an overall limitation of $840 million on the amount to be obligated in the first five years of the program.³  As the federal officials defending the lawsuit point out, the $840 million limit in § 1714(b) is inconsistent with interpreting § 1714 (a) to provide a full entitlement to $280 million annually for five years. However, the last sentence of § 1714(b) suggests that from the start Congress may have intended finality for the first three years of the program, with a second look for the last two years. In any event, that is what Congress did when it amended the Act in 1973. P.L. 93-44, § 3, 87 Stat. 89 (1973). The amendment raised the authorization amounts of § 1714(a) from $280 million to $310 million for FY's 1974-75. The same 1973 law amended § 1714(b).⁴  Summarizing this not uncomplicated amendment, the limit on cumulative obligations to be liquidated was extended through FY 1975 and reconciled with the minimum amounts set forth in § 1714(a). These provisions had the effect of using the same amounts as both minima and maxima, as to the amounts to be obligated under each part of the formula. Technical problems were generated by the amendment but as to the case before us, which concerns what the FAA was required to grant in FY 1975, there is no inconsistency or ambiguity in the Act's mandate to the FAA.

In each year's appropriations act for the FAA, there was a nearly identical provision limiting the FAA's administrative funds, a provision which in our view put specific limits on the amount of total airport development grants. For example, the appropriations measure for FY 1975⁵  provided:

None of the funds provided in this Act shall be available for administrative expenses in connection with commitments for grants-in-aid for airport development aggregating more than $310,000,000 in fiscal year 1975.

The FAA correctly interpreted § 302 and its predecessors as substantive limitations on its granting authority.

The problem of grants in FY 1975 arises in large part from the circumstances that during FY's 1971, 1973 and 1974, the FAA obligated even less than was available under its own interpretation of the annual appropriations acts.⁶  By FY 1975, there was a backlog of $193.7 million allocated to sponsors, but not obligated. Under the FAA interpretation, it was prohibited from liquidating the sponsors' "entitlements" under the Act the FY 1975 apportionments plus the backlog by the statutory deadline of June 30, 1975 that ended FY 1975.

The district court ruled that "(t)he Appropriations Act does not alter the obligation power in any way but rather serves to limit FAA administrative expenses."⁷  The district court reasoned that it would be "illogical" of Congress to limit the FAA's obligational authority with the result of freezing money in the Trust Fund.⁸ 

The district court's interpretation would mean that this $310 million figure which reflected an annual tussle between the House (favoring a slightly lower figure) and the Senate was a solemn combat to declare an amount which in any event was far in excess of administrative expenses. It seems obvious to us that numbers like $310 million are intended to relate to the amounts of the grants to sponsors, not to the FAA's expenses (salaries, travel, stationery, and the like) in making the grants.

The reasonably clear meaning of § 302 is this: Congress used the "administrative expenses" provision as a device to limit total grants made in each year. This interpretation is supported by the plain and natural meaning of the words used; by the absurdity of a contrary construction; and by the legislative history of the appropriations measure.⁹  Year after year, the House proposed these limitations, the Senate objected that they were inconsistent with the provisions and purposes of the Act, and the House prevailed in including the limitation provision, while sometimes compromising on its amount.

Thus for FY 1971, although the amount contemplated by the substantive 1970 Act would have been $280 million, the House bill provided only $220 million. The Senate Appropriations Committee objected:

The Committee recommends the deletion of Section 303 of the House bill.

The language in the House version of the bill would negate the long-term contracting authority which has been provided in the Airport and Airway Development Act (P.L. 91-258).¹⁰ 

As the Conference Report reveals, the House prevailed on the principle of an amount less than that contemplated by the 1970 Act, while compromising on the exact figure:

Amendment No. 33: Restores House provision and limits commitments for grants-in-aid for airport development to $250,000,000 instead of $220,000,000 as proposed by the House.¹¹ 

The pattern was repeated for FY 1972, when the amount contemplated by the 1970 Act would have been $280 million plus a backlog of $110 million (see note 6, supra) . The House appropriations proposal was described in the House report:

As in the last year's bill, a limitation on obligations for development grants in fiscal year 1972 is included in the bill. The limitation recommended is $280,000,000. . . .¹² 

The Senate demurred:

The Committee was informed that the 1972 program level for the airport development program will be $280 million, the minimum annual level authorized (Sec. 14, P.L. 91-258). Section 303 of the House bill sets a limitation at the authorization level on grant-in-aid commitments.

The Committee has recommended deletion of Section 303 of the House bill in order to comply with the provisions of the Airport and Airways Development Act (P.L. 91-258).¹³ 

The conference committee restored the House provision:

Amendment No. 37: Restores the House provision limiting commitments for grants-in-aid for airport development to $280,000,000.¹⁴ 

This pattern was repeated again in the appropriations process for FY 1973.¹⁵  For FY's 1974 and 1975, the principle had been established and the disagreement was only over the amount of the limitation.¹⁶ 

It will be noted that these appropriations reports, on both the House and Senate sides, referred to the figure set in the appropriations bills as limitations on the grants in aid. The same reference recurred when Congress subsequently increased the amount for FY 1975 by $25 million.¹⁷  These references undercut the district court's interpretation that the amount was only a limit on the FAA's administrative expense.

According to its own rules, Congress is not supposed to use appropriations measures as vehicles for the amendment of general laws, including revision of expenditure authorization.¹⁸  In general, the doctrine disfavoring repeals by implications is said to apply "with full vigor" when the subsequent law is an appropriations measure.¹⁹  Where Congress chooses to do so, however, we are bound to follow Congress's last word on the matter even in an appropriations law. "There can be no doubt that Congress could suspend or repeal the authorization contained in § 9; and it could accomplish its purpose by an amendment to an appropriation bill, or otherwise." United States v. Dickerson, 310 U.S. 554, 555, 60 S. Ct. 1034, 1035, 84 L. Ed. 1356 (1940). Courts have treated appropriations measures as amendments in a number of cases.²⁰ 

We are of course aware of the impoundment cases.²¹  They are not dispositive of this case, however, because this case does not involve independent refusal by the Executive or agency to spend the amounts that Congress has required. Here, the FAA was caught in a statutory squeeze where the later appropriations directive it had to follow prevented it from carrying out the scheme established by the 1970 Act. Congress knew of the backlog of money allocated by the Act which had not been granted to sponsors by the FAA. By the § 302 limitation on granting, Congress froze this backlog in the Trust Fund, perhaps for later use. This was not executive "impoundment" of the legislative appropriations; it was a congressional reduction if an impoundment at all, an impoundment by statute.

We have concluded that the appropriations measures considered in Part III prevented the FAA from making the "minimum" grants provided by the 1970 Act, thereby necessarily modifying the FAA's course in administering the program. We turn to the question of defining the FAA mandate as modified, and build on the premise that as much of the 1970 Act as possible should be retained, consistent with the provisions and purpose of the modifying appropriations.

If Congress does not appropriate enough money to meet the needs of a class of beneficiaries prescribed by Congress, and if Congress is silent on how to handle this predicament, the law sensibly allows the administering agency to establish reasonable priorities and classifications.²² 

However, in the case before us, the shortfall of obligational authority in no way prevented the FAA from adhering to the distributional formula in the mandate of the Act.

While we are in agreement with the FAA that the annual appropriations measures subjected it to contraints beyond those in the Act, our agreement does not extend to FAA's response to the statutory squeeze. What the FAA did was to take the constraints as authorizing it to establish a priority system to determine which of the § 1715(a) entitlements to grant to sponsors within the § 302 appropriations limit. The priority system was applied equally to a sponsor's entitlement for the current year and the backlog due under 49 U.S.C. § 1715(a) (3). The priority system involves a numerical rating based on the type of airport, the essentiality of the work, and the timing of the need for the project, but in the last analysis the decision as to which projects to fund was a matter of the FAA's judgment.²³  In this case, although the City of Los Angeles had a project that on its own merits had approval, it was granted only a small portion of its apportionment for FY's 1974-75 $0.95 million of $5.7 million for 1974 and $0.54 million of $5.4 million for 1975.

We think the FAA acted impermissibly when it used the confrontation and resolution of conflicting statutory mandates on total amounts, as a basis for asserting a new discretion concerning the disbursement of airport development allocations that flew in the face of Congress's unambiguous and uncontradicted demarcation of that discretion. When Congress modifies a statute by an appropriations measure, or any other amendment, the agency administering the statute is required to effectuate the original statutory scheme as much as possible, within the limits of the added constraint. Section 302 only restricted the amount the FAA could obligate. Section 302 said not a word about the method of distributing the money available. We hold that the FAA was required to distribute the money available so as to preserve the allocation formula provided by § 1715(a).

The explicit formula of § 1715(a) (1) limits the FAA's discretion to only one-third of the total money available for the development of large airports. Congress not only gave the airports a one-third allocation, but further provided in § 1715(a) (3), that the sponsors' entitlement to their funds allocated under the enplanement formula would continue for two years after the year of initial apportionment. There is an explicit provision for remission to the FAA's discretionary fund if the funds allocated by the enplanement formula are not used within the 3-year period (the initial year of allocation plus two leeway years). The FAA had no valid basis for reaching out for still more discretionary funds. The legislative history of the Act shows that the 2/3 mandatory, 1/3 discretionary scheme of § 1715(a) was deliberately chosen to serve the policies Congress perceived.²⁴ 

This results, in our view, in a construction whereby the overall amount of the appropriations measure is allocated, pro rata, in accordance with the formula of the Act. It appears from our research that a direction to preserve the allocation formula in the event of an insufficiency of funds was initially proposed by the House,²⁵  but was not incorporated in the Act as passed, in 1970.

The pro rata reduction we have provided is consistent with the Act's goal of encouraging long term planning with the mandatory enplanement funds. Despite a sponsor's entitlement under the Act, and even after "obligation" by the FAA, actual receipt of the money is contingent on appropriation by Congress. There is an unavoidable contingency which materialized in this instance, that the money a sponsor was counting on would not be fully appropriated. But the uncertainty facing the airport sponsor is less under our pro rata approach, than if the FAA had discretion to withhold apportioned funds virtually in entirety.

We remand the case to the district court to determine the percentage reduction to be applied to Los Angeles's $9.6 million enplanement portion. This course is necessitated by the state of the record. Neither party advocated the solution to the statutory puzzle which we find best complies with Congress's intent. They each presented an all-or-nothing approach. Thus we lack the advocacy of the parties, the pertinent facts of the FAA's history of granting enplanement funds, and expert advice available in the government. That expert advice is available not only in the strictly Executive Branch but in the General Accounting Office, for we have in mind that the district court may be well advised to obtain assistance from the Comptroller General's expertise in matters of expenditures, reductions by appropriations, and impoundments.²⁶ 

Section 1714(b), as it was during the time we are called on to judge the FAA's duty, FY 1975, prohibited the FAA from incurring any obligation under that subsection's authorization after June 30, 1975. Relief for Los Angeles is nonetheless possible now under that provision because of the order entered by the district court on June 25, 1975. Having found for the plaintiff, the court ordered the FAA to obligate the full $9.6 million to Los Angeles before the June 30 deadline, subject to modification by the court for any statutory deficiencies in Los Angeles's project.²⁷  Thus, the district court established jurisdiction over Los Angeles's full entitlement and can proceed to order the payment of the appropriately reduced amount on remand.

We remand the case to the district court to determine, in accordance with this opinion, the method of pro rata reduction the FAA should have used in granting enplanement funds up to the limits set by the appropriations act for FY 1975. The court shall also apply this method to the facts of FY 1975, including the amount of approvable applications submitted by sponsors with enplanement apportionments and the total obligation of enplanement funds mandated by the Act. The court shall then order the FAA to grant to the City of Los Angeles what it would have gotten if the FAA had been using during FY 1975 the method that, in our view, was mandated by Congress.

So ordered.