Judicial Review of Rescissions and Deferrals Under the Impoundment Control Act

Judicial Review of Rescissions and Deferrals Under the Impoundment Control Act

Legal Sidebari

Judicial Review of Rescissions and Deferrals
Under the Impoundment Control Act
May 14, 2018
On May 8, 2018, the Trump Administration proposed rescissions totaling approximately $15.4 billion of
unobligated funds appropriated in prior fiscal years. The proposed rescissions target funds appropriated
for a variety of federal activities, including, but not limited to, animal and plant health programs, rural
rental assistance, U.S. Forest Service land acquisition, loans to automobile manufacturers to produce
advanced technology vehicles, and funding to states under the Children’s Health Insurance Program
(CHIP). In many cases, the proposed rescissions relate to programs whose authority has lapsed or
programs that are not expected to require the amounts proposed to be rescinded under current spending
projections. As a result, the Office of Management and Budget (OMB) estimates that the proposed
rescission of $15.4 billion in appropriated funds would translate to a $3 billion reduction in outlays from
the Treasury.
A proposed rescission is one of two types of presidential actions authorized under the Impoundment
Control Act of 1974 (ICA), which was enacted to regularize the process by which the Executive
impounded, or withheld, funds that had been appropriated by Congress. Although impoundments of
federal funds have been made by the executive branch as far back as the Jefferson Administration to avoid
waste or inefficient spending, it was the increased use of impoundments during the 1970s in furtherance
of broader policy or economic goals that precipitated the enactment of the ICA.
Under the ICA, the President may propose rescissions of budget authority by sending a special message to
both houses of Congress specifying the amount of funds to be rescinded. The special message must
include the specific project or governmental functions involved with the funds; the reasons for the
rescission; the fiscal, economic, and budgetary effects of the proposed rescission; and all facts,
circumstances, and considerations bearing upon the proposed reservation and the estimated effect of the
proposed rescission on the objects, purposes, and programs for which the budget authority had been
provided. The ICA also authorizes deferrals of budget authority, which are temporary delays in the release
of funds for obligation. No deferrals were included as part of the May 8 special message.
As discussed in this CRS report, the transmittal of a special message proposing rescissions under the ICA
does not automatically result in the permanent rescission of such funds. Instead, once the special message
is received, the ICA provides expedited procedures under which Congress may consider legislation
approving some or all of the proposed rescissions, referred to as a “rescission bill.” If legislation
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providing for such rescissions is not enacted within 45 days of continuous session after receipt of the
special message, the ICA states that the funds which were proposed to be rescinded “shall be made
available for obligation.” Following the President’s May 8 special message, H.R. 3 was introduced,
rescinding most of the funds proposed in the President’s special message.
While Congress considers such legislation, a related issue arises that may be addressed in the judicial
branch: namely, whether the actions taken by the President under the ICA are subject to judicial review.
Although the applicable case law is not extensive, courts have found such actions to be justiciable in
certain circumstances, and have gone so far as to hold purported impoundments under the ICA to be
unlawful when the impoundments conflict with other statutory directives requiring funds to be made
available for obligation.
For example, in Maine v. Goldschmidt, the State of Maine successfully challenged President Carter’s
deferral under the ICA of Federal-Aid Highway Act (FHWA) funds. The deferral, undertaken to combat
inflation, had the effect of cutting the amount of highway funds available to Maine for FY1980 by
approximately $46.5 million. While conceding that the FHWA did not itself authorize any delays in
making funds available for obligation, the Carter Administration argued that the ICA provides an
“independent statutory basis for the President’s action.” However, the court noted that a “disclaimer”
provision of the ICA stated that the ICA shall not be construed as “superseding any provision of law
which requires the obligation of budget authority or the making of outlays thereunder.” After closely
inspecting the statutory scheme under the FHWA for the allocation of funds among the states, the court
concluded that it was a “mandatory obligation” statute and held that the ICA was consequently
inapplicable to it. Consistent with this holding, the court granted an injunction to the state barring the
Secretary of Transportation “from rescinding, reducing, deferring, impounding or otherwise refusing to
make [the highway funds] available for obligation.” Similar results were obtained in challenges to the
same deferral action brought by other states, though not uniformly. Although Congress subsequently
enacted legislation disapproving of the deferrals, rendering these cases moot, the litigation prompted the
Comptroller General to issue a 1982 opinion agreeing with the majority of the courts’ application of the
disclaimer provision to the FHWA.
What takeaways can be gleaned from these cases with respect to the potential for judicial review of the
pending proposed rescissions? First, it seems that the particular statutory authority under which the funds
in question are provided informs whether it is the type of “mandatory spending” statute that removes the
applicability of the ICA. In the words of the Comptroller General’s 1982 opinion, this question does not
turn simply on whether a statute uses the word “shall,” but requires consideration of the statute as a whole
to “ascertain congressional intent.”
Second, before a federal court reaches the merits of that question, it may be required to ask what
harm, if any, the plaintiff has suffered as a result of the impoundment. Maine and other states
demonstrated that they would suffer a real monetary loss as a result of the deferral. Establishing
this kind of concrete injury that is fairly traceable to the Executive’s action under the ICA is a
necessary element to invoking the court’s jurisdiction under Article III of the Constitution. For at
least some of the rescissions proposed by the Trump Administration, this injury may be difficult
to establish as OMB has concluded that the affected programs would still be fully funded
through other means, that there would be no effect on planned outlays, or that the authority to
obligate new funds has expired. Insofar as these characterizations are correct and there is no
concrete injury arising from the proposed rescissions under the ICA, there is unlikely to be any
opportunity for judicial review of those proposals.

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Author Information

Edward C. Liu

Legislative Attorney

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