United States Court of Appeals 

for the Federal Circuit ______________________ 

INDIANA MUNICIPAL POWER AGENCY, 

MISSOURI JOINT MUNICIPAL ELECTRIC 

UTILITY COMMISSION, NORTHERN ILLINOIS 

MUNICIPAL POWER AGENCY, AMERICAN 

MUNICIPAL POWER, INC., ILLINOIS MUNICIPAL 

ELECTRIC AGENCY, KENTUCKY MUNICIPAL 

POWER AGENCY,

Plaintiffs-Appellants

v.

UNITED STATES,

Defendant-Appellee

______________________ 

2022-1377

______________________ 

Appeal from the United States Court of Federal Claims 

in No. 1:20-cv-02038-RAH, Judge Richard A. Hertling.

______________________ 

Decided: February 17, 2023

______________________ 

PEGGY A. WHIPPLE, Healy Law Offices, LLC, Springfield, MO, argued for plaintiffs-appellants. Also represented by DOUGLAS HEALY; JOHN C. HAYES, JR., BRIAN J.

WHITTAKER, Nixon Peabody LLP, Washington, DC. 

 STEVEN MICHAEL MAGER, Commercial Litigation 

Branch, Civil Division, United States Department of 

Case: 22-1377 Document: 44 Page: 1 Filed: 02/17/2023
2 INDIANA MUNICIPAL POWER AGENCY v. US

Justice, Washington, DC, argued for defendant-appellee. 

Also represented by BRIAN M. BOYNTON, ERIC P. BRUSKIN,

PATRICIA M. MCCARTHY. 

 ______________________ 

Before PROST, REYNA, and HUGHES, Circuit Judges.

HUGHES, Circuit Judge.

On appeal is the Court of Federal Claims’ judgment

that sequestration applies to reduce government payments 

for Build America Bonds and that Appellants do not have 

a contractual right to these payments. We affirm and adopt 

the trial court’s reasoning. 

I 

Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA) to stabilize the U.S. economy in 

the wake of the 2008 financial crisis. Pub. L. No. 111-5, 123 

Stat. 115 (2009). Section 1531 of the ARRA created two 

types of government-subsidized bonds called Build America Bonds (BABs). § 1531, 123 Stat. at 358–360. 

The type of bonds at issue, “Direct Payment BABs,” entitled bond issuers to a tax refund from the U.S. Department of the Treasury (“Treasury”) equal to 35 percent of 

the interest paid on their BABs. Treasury annually pays 

issuers of BABs upon receiving a timely Form 8038-CP 

filed by the issuers. I.R.S. Notice 2009-26, § 3.1. The payments are funded by the permanent, indefinite appropriation for refunds of internal revenue collections. 31 U.S.C. § 

1324 (providing for the appropriation of “[n]ecessary 

amounts . . . for refunding internal revenue collections”).

Appellants are a group of local power agencies that collectively issued over four billion dollars in qualifying Direct 

Payment BABs before January 1, 2011. From January 

2010 through the end of 2012, Treasury paid the full 35 

percent of the bonds’ interest payments. 

Case: 22-1377 Document: 44 Page: 2 Filed: 02/17/2023
INDIANA MUNICIPAL POWER AGENCY v. US 3

In 2011 and 2013, Congress passed legislation reviving 

sequestration: “[T]he cancellation of budgetary resources 

provided by discretionary appropriations or direct spending law.” 2 U.S.C. §§ 900(c)(2), 901(a); see Budget Control 

Act, Pub. L. No. 112-25, 125 Stat. 240 (2011); American 

Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 

2313 (2013). Pursuant to this sequestration legislation, 

Treasury stopped making payments to Appellants at the 

rate of 35 percent. Instead, since 2013, Appellants have 

been paid the reduced rates as determined by the Office of 

Management and Budget’s sequestration calculations. For 

example, 2013 payments were reduced from 35 percent to 

8.7 percent in accordance with the 2013 sequestration rate. 

On December 30, 2020, Appellants filed a complaint 

with the Court of Federal Claims, which was later 

amended. The amended complaint seeks the full 35 percent 

of interest payments for 2013–20301 under two theories: (1) 

a statutory theory that the Government violates § 1531 of 

the ARRA by not making the full 35 percent payments, and 

(2) a contractual theory that the Government has breached 

a contract that arises out of § 1531. The Government moved 

to dismiss for failure to state a claim, and the Court of Federal Claims agreed that (1) no statutory claim existed because sequestration applied to these payments, and (2) no 

contractual claim existed because the ARRA did not create

a contract between the government and Appellants. 

Appellants filed a motion for reconsideration, which 

was denied. They now appeal the order granting the Government’s motion to dismiss and the order denying reconsideration. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(3).

1 Plaintiffs’ amended complaint seeks payments 

through 2030 because sequestration has been extended 

through that date. J.A. 4–5. 

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4 INDIANA MUNICIPAL POWER AGENCY v. US

II

We review the Court of Federal Claims’ dismissal for 

failure to state a claim and issues of statutory interpretation de novo. Turping v. United States, 913 F.3d 1060, 1064 

(Fed. Cir. 2019); Genentech, Inc. v. Immunex R.I. Corp., 964 

F.3d 1109, 1111 (Fed. Cir. 2020). We review the Court of 

Federal Claims’ denial for reconsideration for abuse of discretion. Entergy Nuclear FitzPatrick, LLC v. United States, 

711 F.3d 1382, 1386 (Fed. Cir. 2013).

III

Having considered all of Appellants’ arguments, we 

find no basis to overturn the decision of the trial court and 

agree with the trial court’s well-reasoned analysis. As for 

Appellants’ statutory claim, we agree that sequestration 

applies to Direct Payment BABs because these payments 

are issued from the permanent, indefinite appropriation 

provided by 31 U.S.C. § 1324, which constitutes direct 

spending. As for Appellants’ contractual claim, we agree 

that Appellants did not plead the elements of a contract 

because they rely solely on a statutory provision that does 

not create a government contract. 

We therefore affirm the trial court’s judgment and 

adopt its published opinions2 as our own. 

AFFIRMED

2 Ind. Mun. Power Agency v. United States, 154 Fed. 

Cl. 752 (2021); Ind. Mun. Power Agency v. United States, 

156 Fed. Cl. 744 (2021). 

Case: 22-1377 Document: 44 Page: 4 Filed: 02/17/2023