apportionment for the fiscal year 1973," 15 which caused the state injury because of "inflation of highway costs" (App. ). The court concluded that-

The reasons relied on [for limiting obligation authority] are related to the prevention of inflation of wages and prices in the national economy. These reasons are impermissible reasons for action which frustrates the purposes and standards of the Act, including but not limited to those in Section 109, Title 23, U.S.C.A. Therefore it is not within the discretion of the Secretary to withhold obligational authority from Missouri. (App. ).

The court enjoined the Secretary from withholding obligational authority as to Missouri's Fiscal 1973 apportionment, and ordered the Secretary to revoke the orders, directives and regulations under which such funds had been withheld. The court also declared that the limitations imposed in the past were illegal and in excess of the Secretary's authority (App. ). The court stayed its judgment pending disposition of the Government's appeal by this Court (App. ).

STATUTE INVOLVED

The Federal-Aid Highway Act, as amended, 23 U.S.C. 101 et seq., provides in relevant part:

§ 101. Definitions and declaration of policy

(a) **

(b) It is hereby declared that the prompt and early completion of the National System of Interstate and Defense Highways *** is essential to the national interest and is one of the most important objectives of this Act. It is the intent of Congress that the Interstate System be completed as nearly as practicable over the period of availability of the twenty years' appropriations authorized * * *

(c) It is the sense of Congress that under existing law no part of any sums authorized to be appropriated for expenditure upon any Federal-aid system which has been apportioned pursuant to the provisions of this title shall be impounded or withheld from obligation, for purposes and projects as provided in this title, by any officer or employee in the executive branch of the Federal Government, except such specific sums as may be determined by the Secretary of Transportation, are necessary to be withheld from obligation for specific periods of time to assure that sufficient amounts will be available in the Highway trust fund to defray the expenditures which will be required to be made from such fund.

(d) No funds authorized to be appropriated from the Highway Trust Fund shall be expended by or on behalf of any Federal department, agency, or instrumentality other than the Federal Highway Administration unless such funds for such expenditure are identified and included as a line item in an appropriation Act and are to meet obligations of the United States heretofore or hereafter incurred under this title attributable to the construction of Federal-aid highways or highway planning, research, or development, or as otherwise specifically authorized to be appropriated from the Highway Trust Fund by Federal-aid highway legislation.

(b) on or before January 1 next preceding the commencement of each fiscal year. *** the Secretary, after making the deduction authorized by subsection (a) of this section, shall apportion the remainder of the sums authorized to be appropriate for expenditure upon the Federal aid systems for that fiscal year, among the several States in the [statutorily prescribed manner].

$105. Programs

(a) As soon as practicable after the apportionments for the Federal-aid systems have been made for any fiscal year, the State highway department of any State desiring to avail itself of the benefits of this chapter shall submit to the Secretary for his approval a program or programs or proposed projects for the utilization of the funds apportioned. The Secretary shall act upon programs submitted to him as soon as practicable after the same have been submitted.

15 To the extent that the Court found that "[p]resently Missouri is forbidden from obligating over $80,000,000 of the apportionment for the fiscal year 1973" (App. -) the finding is clearly erroneous. Prior to the trial, on June 15, 1972, Missouri was informed that its full 1973 obligational authority would be released, and at trial the Government introduced Exhibit 30 which confirms this (App. —).

§ 106. Plans, specifications, and estimates

(a) *** [T]he State highway department shall submit to the Secretary for his approval, as soon as practicable after program approval, such surveys, plans, specifications, and estimates for each proposed project included in an approved program as the Secretary may require. The Secretary shall act upon such surveys, plans, specifications, and estimates as soon as practicable after the same have been submitted, and his approval of any such project shall be deemed a contractual obligation of the Federal Government for the payment of its proportional contribution thereto. In taking such action, the Secretary shall be guided by the provisions of section 109 of this title.

§ 118. Availability of sums apportioned

(a) On and after the date that the Secretary has certified to each State highway department the sums apportioned to each Federal-aid system or part thereof pursuant to an authorization under this title, or under prior Acts, such sums shall be available for expenditure under the provisions of this title.

(b) Such sums shall continue available for expenditure in that State for the appropriate Federal-aid system or part thereof for a period of two years after the close of the fiscal year for which such sums are authorized and any amounts so apportioned remaining unexpended at the end of such period shall lapse ***. Such sums for any fiscal year shall be deemed to be expended if a sum equal to the total of the sums apportioned to the State for such fiscal year and previous fiscal years is covered by formal project agreements providing for the expenditure of funds authorized by each Act which contains provisions authorizing the appropriation of funds for Federal-aid highways. * * *.

(c) The total payments to any State shall not at any time during a current fiscal year exceed the total of all apportionments to such State in accordance with section 104 of this title for such fiscal year and all proceeding fiscal years.

ARGUMENT

I. THE DISTRICT COURT ERRED IN HOLDING THAT THE EXECUTIVE BRANCH HAS NO DISCRETION TO CONTROL THE RATE OF OBLIGATION OF FUNDS APPORTIONED UNDER THE FEDERAL-AID HIGHWAY ACT.

Introduction

We emphasize at the outset that this appeal does not present any substantial constitutional question of the extent to which Congress can direct the Executive Branch to spend appropriated funds which the Executive determines should not be spent. The obligational limitations imposed on authorized but not appropriated Federal-aid highway funds does not constitute an impound [ing of] money the Congress clearly directed to be spent," nor does it involve “a legislative program cancelled or abbreviated ***." See Senate Hearings, supra, pp. 92, 122. Rather than impounding funds, the Executive has merely deferred their obligation with a resultant delay in the program amounting to approximately five months, with no loss whatever of funds Congress authorized (Add 17A-18A, 26A).16

At issue then is simply the proper construction of the Federal-Aid Highway Act, and particularly section 101 (c) thereof, which the district court concluded imposed a mandatory duty on the Executive Branch" to permit immediate obligation of all apportioned highway funds. We submit that this conclusion is completely inconsistent with the repeated Congressional refusal to mandate the obligation of these funds.

16 The evidence plainly demonstrated that, with regard to the specific apportionments for Missouri. the Commission had been permitted to obligate every penny of the funds apportioned to it through the 1973 fiscal year (App. -). Congress has not yet permitted apportionment for fiscal 1974 (see Add. 2A), and Missouri both at the time of the trial and at present has been permitted to obligate everything to which it claims a legal right. (See Add. 1A; App. -).

17 The amount of apportioned funds that the states will be permitted to obligate is established by the Office of Management and Budget, whose Director is an appellant here (App.). In Reorganization Plan No. 2 of 1970, effective July 1, 1970. 35 F.R. 7959, 5 U.S.C. Appendix, § 101, all functions vested by law in the Bureau of the Budget or its director were transferred to the President. The plan designated the Bureau as the Office of Management and Budget. In Executive Order No. 11541 (July 1, 1970), the President delegated the functions transferred to him to the Director of the Office of Management and Budget. In delegating such functions, the President stated: "Such functions shall be carried out by the Director under the direction of the President and pursuant to such further instructions as the President from time to time may issue." 6 Pres. Doc. 83.

As we show at length in Point A below, Congress-with full knowledge that the Executive had asserted the authority to defer obligations-has consciously refrained from imposing a mandatory spending requirement with regard to Federal-aid highway funds. The deliberate choice by Congress of horatory or advisory language, rather than mandatory language, reflects a Congressional recognition that many factors must be weighed by the Executive in determining the extent to which apportioned funds will be made available for obligation. Compare 23 U.S.C. 101 (c) with 23 U.S.C. 101(d). Moreover, Congress has on numerous occasions rejected efforts to amend the Federal-Aid Highway Act to make its language mandatory.

In these circumstances, the district court erred in ordering the Secretary to permit immediate obligation of funds apportioned under the Act.

A. Congress Has Deliberately Refused to Impose a Mandatory Spending Requirement Under the Federal-Aid Highway Act, and the District Court Erred in Imposing Just Such a Requirement.

1. Appropriation acts, and certainly authorization legislation, do not constitute mandates to spend the funds authorized. There can be little doubt that, absent specific mandatory language, appropriation acts have generally been considered to be "of a fiscal and permissive nature and do not in themselves impose upon the executive branch an affirmative duty to expend the funds." 42 Opinions of the Attorney General 32 (Add. 9A); see McKay v. Central Electric Power Cooperative, 223 F.2d 623, 625 (C.A.D.C., 1955). Congress is, of course, well aware of the rule that an appropriations act does not constitute a mandate to spend the funds. The classic exposition of this view is found in the House Appropriations Committee Report on the General Appropriation Bill, 1951, submitted by the late Chairman Clarence Cannon :

18

RESPONSIBILITY OF THE EXECUTIVE BRANCH

Economy neither begins nor ends in the Halls of Congress. The Congress *** decides the maximum amounts which must be appropriated for ** various activities, and the annual appropriation bill provides the sums so determined by the Congress.

Appropriation of a given amount for a particular activity constitutes only a ceiling upon the amount which should be expended for that activity. *** [It is the] responsibility [of every Government official] to so control and administer the activities under his jurisdiction as to expend as little as possible out of the funds appropriated.

H. Rep. No. 1797, 81st Cong., 2d Sess., p. 9.

Representative Cannon's view has been more recently echoed by Representative Mahon, Chairman of the House Appropriations Committee:

[T]he weight of experience and practice bears out the general proposition than an appropriation does not constitute a mandate to spend every dollar appropriated. That is a generally accepted concept. It squares with the rule of common sense. I subscribe fully to it. The Congress does not administer the government * * *.

18 An early example of Presidential impoundment of appropriated funds occurred in the early 1940's when the economy of the United States shifted to wartime production. At that time President Roosevelt directed that projects having a lower priority would have to be postponed or even cancelled, despite the availability of apportioned funds. The President informed Congress, in response to complaints about this curtailment:

"It should, of course, be clearly understood that what you refer to as 'the practice of the Bureau [of the Budget] of impounding funds duly appropriated by the Congress' is in fact action by the Chief Executive, and has two purposes. The first purpose is compliance with the Anti-Deficiency Act, which requires that apportioned funds be so apportioned over the fiscal year as to insure against deficiency spending. ** Secondly, the appor tionment procedure is used as a decisive means of reducing expenditures and saving money wherever and whenever such savings appear possible.

"While our statutory system of fund apportionment is not a substitute for item or blanket veto power, and should not be used to set aside or nullify the expressed will of Congress, I cannot believe that Congress as a whole would take exception to either of these purposes which are common to sound business management everywhere. In other words, the mere fact that Congress, by the appropriation process, has made available specified sums for the various programs and functions of the Government is not a mandate that such funds must be fully expended. Such a premise would take from the Chlef Executive every incentive for good management and the practice of commonsense economy. This is particularly true in times of rapid change in general economic conditions and with respect to programs and activities in which exact standards or levels of operation are not and cannot well be prescribed by statute."

Hearings before a Subcommittee, Committee on Appropriations, Senate, 78th Cong., 1st Sess., on H.R. 3598, p. 739.

I believe it is fundamentally desirable that the Executive have limited powers of impoundment in the interests of good management and constructive economy in public expenditures.

Quoted in Fisher, "The Politics of Impounded Funds," 15 Administrative Science Quarterly 361, 373 (Sept., 1969). In the same vein, then Senator Truman observed that "[w]hen the Congress appropriates funds it gives the executive branch an authority to incur obligations. Certainly none of us hold that we give a mandate to expend the funds appropriated." 89 Cong. Rec. 10362.

Senator Truman added:

After funds are appropriated and control has temporarily left the hands of Congress, there are two principal changes which may take place in a program and which, it seems to me, call for action in the offices of the President ***. The first is a change in conditions which might require that the project priority be changed and the work deferred a short while, or even for an indefinite period. When this comes about, the Executive should set the funds aside for later use.

Id. Recently Representative Anderson, an opponent of withholding appropriated funds, conceded that "It is true that we in Congress *** establish 'upper limits' in various programs ***." 118 Cong. Rec. 4364 (daily ed.).19

Thus an appropriation act places an upper and not a lower limit on expenditures, and the duty of the President to see the laws are faithfully executed, Constitution, Article II, Sec. 3, does not require that funds made available must be fully expended. See Comp. Gen. Dec. B-160891, February 24, 1967 (unreported) (Add. 4A). This principle has received frequent statutory recognition. See, e.g., the Anti-Deficiency Act, 31 U.S.C. 665 (c), authorizing the executive branch to effectuate savings of appropriated funds; 31 U.S.C. 701, providing that unexpended appropriated funds shall revert to the Treasury; the Revenue and Expenditure Control Act of 1968, P.L. 90-364, §§ 202, 203, 82 Stat. 251, 271-272, directing the President to reduce expenditures by $6 billion in Fiscal 1969 without specifying the appropriations to be reduced; the Supplemental Appropriations Act of 1970, P.L. 91-305, Title IV, V, 84 Stat. 376, 405-407, directing reduction in expenditures for Fiscal 1970 and 1971.

This prevailing view is summarized by Professor Miller as follows:

A common view among the few constitutional scholars (mostly political scientists) who have considered the question is that an appropriation is permissive rather than mandatory. By this it is meant that the Executive Branch is authorized but not required to spend funds up to a given amount for designated purposes. Thus Professor Edward S. Corwin stated that the provision in article 1, section 9, of the Constitution "assumes that expenditure is primarily an executive function, and conversely that the participation of the legislative branch is essentially for the purpose simply of setting bounds to executive discretion-a theory confirmed by early practice under the Constitution." Under that view, then, the President would have discretion to spend or not to spend, a view that is supported by practice over the past twenty and more years. [Footnotes omitted.] Miller, "Presidential Power to Impound Appropriated Funds: An Exercise in Constitutional Decision-Making," 43 North Carolina Law Rev. 502, 511-512 (1965), reprinted in Senate Hearings, supra, pp. 315-360.

These considerations apply with even greater force where, as here, the funds deferred represent authorizations rather than appropriations. Congress specifically recognized this in the amendments to a bill authorizing the construction of Naval vessels. The House had passed a bill by which the President was "authorized and directed to undertake the construction of not to exceed 50,000 tons of modern naval vessels ***." H. Rep. No. 1715, 81st Cong., 2d Sess., p.. The Senate Committee on Armed Services amended the bill by striking the word directed, observing that—

19 The agency charged with this responsibility has been the Bureau of the Budget, now the Office of Management and Budget. Former Assistant Director of the Bureau, William D. Carey informed the Subcommittee on Separation of Powers that the Bureau had followed the views of Appropriation Committee chairman and viewed appropriations as "not a mandate to spend but an authorization to do so, in the absence of an explicit legislative directive which leave[s] no room for discretion. The presumption was that the Congress expected the Executive to use intelligence and judgment in managing appropri ated funds. Several kinds of circumstances could lead to placing a portion of appropriated funds in reserve. The situation might arise where inflationary pressures in the economy were so strong that the Executive would feel a responsibility to manage the government's fiscal impact on the economy by restraining or rationing obligational authority. In such a situation, the Bureau would obtain the President's approval to sequester obligational authority on a temporary basis." Senate Hearings, supra, p. 275.

"The committee also took notice of a recommendation of the Secretary of the Navy that the bill be amended by deleting a direction to the Presi dent of the United States to carry out the terms of this bill. In view of the fact that this is merely an authorization and not an appropriations bill the committee concurred in the Secretary's recommendation. It would be futile to direct the President to carry on a program unless the appropria tion bill granting the necessary funds carried a similar direction." S. Rep. No. 1860, 81st Cong., 2d Sess., p. 2. The bill passed as amended. See 96 Cong. Rec. 11022, 11380.2

20

2. Congress specifically used horatory, rather than mandatory language, in the Federal-Aid Highway Act, and refused to amend the language to prohibit deferral of obligation authority. The Congressional declaration of policy regarding the expenditure of funds under the Federal-Aid Highway Act is set forth in 23 U.S.C. 101. There Congress-in sharply contrasting language--has provided:

(c) It is the sense of Congress that under existing law no part of any sums authorized to be appropriated for expenditure upon any Federal-aid system which has been apportioned pursuant to the provisions of this title shall be impounded or withheld from obligation ***.

(d) No funds authorized to be appropriated from the Highway Trust Fund shall be expended by on behalf [of nonhighway programs]. [all emphasis supplied]. Section 101, while providing in mandatory terms that federal-aid highway funds shall not be used for other purposes, uses non-mandatory language regarding the duty to obligate authorized funds.

As Professor Bickel, a constitutional law specialist serving as a consultant to the Senate Subcommittee on Separation of Powers has pointed out, this “sense of Congress language is generally not mandatory language.” Senate Hearings, supra, p. 84.2 Senator Ervin, who chairs the Subcommittee, agreed that the language used by Congress "is sort of like what we used to call prefatory language in the will." Id. We now demonstrate that the choice of this non-mandatory language was not inadvertent.

The "sense of Congress" provision was added to the Act by section 15 of the Federal-Aid Highway Act of 1968, P.L. 90-495, 82 Stat. 822. In response to what the House report describes as "the cutbacks and freezes on the availability of trust fund money for obligation by the States after those funds have been ap portioned." the Public Works Committee proposed language which "specifically prohibits the impoundment or witholding from obligation of any funds which have been apportioned to the States ***." H. Rep. No. 1584, 90th Cong., 2d Sess. p. 11-12. Section 14 of the House bill would have amended 23 U.S.C. 104, adding a section (f) to provide:

No part of any sums authorized to be apportioned for expenditure upon any Federal-aid system which has been apportioned pursuant to the provisions of this section shall be impounded or withheld from obligation * **. H. Rep. No. 1584, supra, p. 29.

The Senate Committee on Public Works, although aware that highway authorizations were being deferred by the President to fight inflation, indicated that it "fully understands the importance of the reasons leading to such action." It therefore limited itself to expressing "the sense of the Committee on Public Works that no reductions be made in funds available for obligation * * *. S. Rep. No. 1340, 90th Cong., 2d Sess., p. 19. The Conference Committee refused to accept the mandatory House language, instead adopting the Senate bill which “contained no comparable provision" to section 14 "prohibit[ing] the impoundment or withholding of any apportioned funds." See H. Rep. 1799, 90th Cong.. 2d Sess., p. 31.

When he signed the 1968 Act into law on August 28, 1968, President Johnson specifically took note of the "sense of Congress" provision of section 101 (c) :

See also the remarks of Congressman Bennett. a strong opponent of exeentire impoundment, distinguishing between an authorization and an appropriation, concluding that "an authorization may be considered as only constituting permission to expend funds for particular purpose ***." Senate Hearings, supra, p. 41.

Professor Bickel was commenting in response to the construction given section 101 (e) by the Subcommittee by Federal Highway Administrator Turner. Mr. Turner had indicated that the Administration would not "do anything other than abide by what 101(e) says, which is that it is the sense of Congress that we shall do such and so. which I think would be interpreted by anybody to be nonmandatory type language." Senate Hearings, supra, p. 83.

22 The original bill to prohibit deferral of highway-aid authorizations was introduced by Representative Harsha as H.R. 14641, 90th Cong. 2d Sess., and was adopted as part of H.R. 17134. See H. Rep. 1584, supra, p. 50.