Clinton v. City of New York

141 L. Ed. 2d 393, 118 S. Ct. 2091, 11 Fla. L. Weekly Fed. S 735, 524 U.S. 417, 98 Daily Journal DAR 6893, 1998 Colo. J. C.A.R. 3191, 81 A.F.T.R.2d (RIA) 2416, 1998 U.S. LEXIS 4215, 98 Cal. Daily Op. Serv. 4905, 66 U.S.L.W. 4543
Supreme Court of the United States·Decided June 25, 1998·No. 97-1374·Published·Cited by 636 cases

Opinions

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 [421]*421and 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. Byrd v. Raines, 956 F. Supp. 25. In obedience to the statutory direction to allow a direct, expedited appeal to this Court, see §§692(b)-(e), we promptly noted probable jurisdiction and expedited review, 520 U. S. 1194 (1997). 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,” Raines v. Byrd, 521 U. S. 811, 830 (1997); thus, “[i]n ... light of [the] overriding and time-honored concern about keeping the Judiciary’s power within its proper constitutional sphere,” id., at 820, we remanded the case to the District Court with instructions to dismiss the complaint for lack of jurisdiction.

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, Pub. L. 105-38, 111 Stat. 251, 515, and two provisions in the Taxpayer Relief Act of 1997, Pub. L. 105-34, 111 Stat. 788, 895-896, 990-993. Ap-pellees, 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, 522 U. S. 1144 (1998). 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.

I

We begin by reviewing the canceled items that are at issue in these cases.

[422]*422 Section J¡.722(c) of the Balanced Budget Act

Title XIX of the Social Security Act, 79 Stat. 848, as amended, authorizes the Federal Government to transfer huge sums of money to the States to help finance medical care for the indigent. See 42 U. S. C. § 1396d(b). In 1991, Congress directed that those federal subsidies be reduced by the amount of certain taxes levied by the States on health care providers.1 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(e) 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.2

[423]*423On 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(e) 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.”3

Section 968 of the Taxpayer Relief Act of 1997

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 stoek-for-stock transaction in which no gain is recognized to the seller, see 26 U. S. C. §§ 354(a), 368(a); 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, see § 521(b)(2); thus, a seller dealing with a. farmers’ cooperative cannot obtain the benefits of tax deferral.

[424]*424In §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.4 The purpose of the amendment, as repeatedly explained by its sponsors, was “to facilitate the transfer of refiners and processors to farmers’ cooperatives.”5 The [425]*425amendment 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.”6

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,”7 but concluded that the provision lacked safeguards and also “failed to target its benefits to small-and-medium-size cooperatives.”8

hH

Appellees filed two separate actions against the President9 and other federal officials challenging these two cancellations. The plaintiffs in the first ease 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.

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Clinton v. City of New York, 141 L. Ed. 2d 393, 118 S. Ct. 2091, 11 Fla. L. Weekly Fed. S 735, 524 U.S. 417, 98 Daily Journal DAR 6893, 1998 Colo. J. C.A.R. 3191, 81 A.F.T.R.2d (RIA) 2416, 1998 U.S. LEXIS 4215, 98 Cal. Daily Op. Serv. 4905, 66 U.S.L.W. 4543 (U.S. 1998).

141 L. Ed. 2d 393 (Clinton v. City of New York) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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