Court Opinion

ID: 9372004
Source: CourtListenerOpinion
Date Created: 2023-02-17 16:00:47.984056+00
Date Added: 2024-06-11T17:16:31.757812
License: Public Domain

Case: 22-1377    Document: 44    Page: 1   Filed: 02/17/2023

   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, Spring-
 field, MO, argued for plaintiffs-appellants. Also repre-
 sented 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: 2    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 Reinvest-
 ment 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 Amer-
 ica Bonds (BABs). § 1531, 123 Stat. at 358–360.
      The type of bonds at issue, “Direct Payment BABs,” en-
 titled bond issuers to a tax refund from the U.S. Depart-
 ment 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 pay-
 ments are funded by the permanent, indefinite appropria-
 tion 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 col-
 lectively 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: 3    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 spend-
 ing 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 2013–2030 1 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 Fed-
 eral Claims agreed that (1) no statutory claim existed be-
 cause 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 Gov-
 ernment’s motion to dismiss and the order denying recon-
 sideration. 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.
Case: 22-1377    Document: 44       Page: 4   Filed: 02/17/2023

 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 interpreta-
 tion 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 dis-
 cretion. 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 opinions 2 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).