Border Barrier Litigation: Open Questions for Department of Defense Transfer Authority

Border Barrier Litigation: Open Questions for Department of Defense Transfer Authority

Legal Sidebari

Border Barrier Litigation: Open Questions for
Department of Defense Transfer Authority
July 21, 2020
The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) recently added to the growing body of
case law on the Trump Administration’s decision to fund border barrier construction using Department of
Defense (DOD) appropriations. Over a dissent, the Ninth Circuit ruled in two appeals that DOD acted
contrary to law when it used its transfer authority to shift $2.5 billion, previously appropriated for objects
such as personnel expenses, to fund border barriers. DOD may transfer funds only for “unforeseen
military requirements” and not where the “item for which funds are requested has been denied by the
Congress.” The Ninth Circuit held that DOD violated both limitations. (The Ninth Circuit has not yet
decided separate appeals challenging trial court decisions that declared unlawful DOD’s use of military
construction appropriations to fund other border barrier projects.)
The Ninth Circuit’s decisions cover broad ground, but one holding concerns the scope of DOD’s transfer
authority and in particular the limitations on that authority. The majority interpreted the limitations by
giving primary weight to the statute’s ordinary meaning, which it applied in the context of legislative and
executive actions spanning several years. The dissent gave the limitations a more specialized meaning
applied only in the context of the DOD’s FY2019 appropriations process. Given a prior Supreme Court
order entered in one of the two appeals, construction funded through the challenged transfers may
continue for now despite the Ninth Circuit’s decisions. But the decisions are significant all the same, as
they raise important questions for future agency use of funding flexibilities. This Sidebar examines the
Ninth Circuit’s dueling interpretations of DOD’s transfer authority and notes questions raised by the
prevailing view, both for DOD’s transfer authority and, perhaps, for other agencies’ funding flexibilities.
Background
In September 2018, Congress enacted the Department of Defense Appropriations Act, 2019. Congress’s
funding decision followed DOD’s submission, in March 2018, of budget justification materials explaining
the particulars of the Administration’s DOD funding request. As is typical, Congress provided DOD
transfer authority, which is authority to shift budget authority from one appropriation to another. DOD
received general transfer authority to shift funds between the “appropriations or funds” that form its base
budget (generally covering regular DOD expenses other than military construction), and special transfer
authority for overseas contingency operations funds (generally for particular military operations abroad).
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Congress attached “terms and conditions” to both authorities. DOD may not use general or special
transfer authority unless for “higher priority items, based on unforeseen military requirements, than those
for which originally appropriated and in no case where the item for which funds are requested has been
denied by the Congress.” Thus, the statute requires comparison between Congress’s appropriations
decision and DOD’s later proposal to augment one appropriation at the expense of another. But it does not
define any of the key terms used in this comparison, including “unforeseen,” “item,” or “denied.”
For certain other agencies, including the Department of Homeland Security (DHS), Congress did not
enact regular appropriations before the start of FY2019. Instead, Congress enacted continuing resolutions.
This stopgap funding ended in December 2018, leading to a 35-day partial government shutdown.
In February 2019, the President signed into law the Consolidated Appropriations Act, 2019 (CAA),
appropriating $1.375 billion for Customs and Border Protection (CBP) to build pedestrian fencing, far
less than the President’s $5.7 billion request. That same day, the White House issued a Fact Sheet
explaining that up to $8.1 billion would be available for border barriers. DOD would transfer up to $2.5
billion to its “Drug Interdiction and Counter-drug Activities” account (Counterdrug Account). DOD uses
this Account to help federal agencies combat drug trafficking, under authority granted in 10 U.S.C. § 284
(Section 284). When responding to another agency’s Section 284 assistance request, DOD’s support may
include building “roads and fences . . . to block drug smuggling corridors.” DOD made the transfers in
March 2019 and May 2019 to assist DHS with border barrier construction.
Organizations and states filed separate suits in a California federal district court. In June 2019, in both
cases, a district judge declared the transfers unlawful and, in one case, additionally enjoined use of
transferred funds for continued construction. The government appealed. In July 2019, the Supreme Court
stayed the trial court’s injunction, a stay that will remain in effect until the Supreme Court decides
whether to accept any appeal from the Ninth Circuit’s decision.
Dueling Approaches to DOD Transfer Authority
In State of California v. Trump, the Ninth Circuit addressed whether DOD’s transfers were for
“unforeseen military requirements” and, separately, whether the transfers were for an “item for which
funds are requested has been denied by the Congress.” The majority answered both questions “yes,”
deciding that the transfers were unlawful. The dissent answered the same questions “no,” deciding that
the transfers were lawful. The same Ninth Circuit panel, with the same division between majority and
dissenting judges, reached the same conclusions regarding transfer authority in Sierra Club v. Trump.
On whether the transfers were for “unforeseen” requirements, the majority began by determining the
ordinary meaning of that term, settling on “not anticipated or expected.” Thus, “an unforeseen
requirement is one that [DOD] did not anticipate or expect.” The transfers failed to meet this standard, the
majority continued, because cross-border drug smuggling was a “longstanding problem” that President
Trump emphasized since his first presidential campaign. DOD reserved a portion of its FY2018
Counterdrug funds “for possible use in supporting Southwest Border construction” during the last quarter
of that fiscal year (i.e., the period between July 1 and September 30). Congress also did not pass bills
proposing more funding for border barriers, putting “agencies on notice that they might be asked to
finance construction.”
The majority also decided that DOD’s transfers were for an “item” for which Congress had “denied”
funding. The majority considered the relevant “item” to be “funding for the border wall.” While again
noting that Congress did not pass bills proposing more funding for border barriers, the majority placed
particular weight on Congress’s relevant FY2019 appropriation for CBP, which was less than a quarter of
the President’s request. This was “a general denial” that “necessarily encompasse[d] narrower forms of
denial—such as the denial of a Section 284 budgetary line item request.”

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For its part, the dissent insisted on reading the transfer limitations “against the backdrop of the
appropriations process.” The dissent identified “point[s] of reference” for use of transfer authority in
documents generated during the congressional appropriations process: agency justification materials and
congressional committee reports. These documents usually include discussion of how an agency will
allocate funds of a given appropriation among the activities for which the appropriation is available. As
the dissent noted, an agency uses these documents to determine, among other things, when an allocation
constitutes reprogramming. Unlike a transfer, which shifts funds between accounts, an agency reprograms
when it allocates funds within an account in a way that differs from the spending envisioned in
justification materials or committee reports. (An agency often must give notice to Congress of a
reprogramming. Absent statutory limitations, though, an agency has broad discretion to reprogram.)
Viewing reprogramming as relevant context, the dissent argued that justification materials and committee
reports also inform use of transfer authority: “In evaluating a transfer from one appropriation to another,”
DOD “must justify the transfer, not at the broad level of each overall appropriation itself” but rather “at
the same ‘item’ level at which [DOD] would have to justify a reprogramming within an appropriation.”
From this premise, the dissent reasoned that DOD’s transfers were for “unforeseen military
requirements,” because an item is “unforeseen” if DOD did not seek funding for that item in that fiscal
year’s justification materials. Likewise, to identify whether DOD had used its transfer authority for an
“item” for which Congress had “denied” funding, the dissent looked to justification materials and
committee reports. These “records” of the “appropriations process” identified the “original allocation” of
funding among DOD items in the enacted appropriation. According to the dissent, no party claimed that
these materials included a request for funds to cover DHS’s Section 284 request. DHS did not make that
request until February 2019, 11 months after publication of DOD’s FY2019 justification materials. Thus,
DOD did not foresee a requirement of helping DHS combat drug trafficking and Congress did not deny
funding for that item.
Effects on DOD Transfer Authority and Beyond
The Ninth Circuit’s decisions will likely not be the last word on litigation challenging the Trump
Administration’s border barrier funding plan. Next month a different federal appeals court is scheduled to
hear argument in an appeal in which a Texas federal district court held that DOD could not use any of its
appropriations to fund border barrier construction. Moreover, the government might ask the Ninth Circuit
to reconsider its decisions. Further review before the Supreme Court is also possible.
Still, as the first appellate court decisions on the merits of the Administration’s funding plan, the decisions
raise important questions that are not necessarily confined to the type of extraordinary interbranch
funding dispute that prompted the court’s ruling. On the one hand, the majority emphasized the
background fact of the 35-day partial government shutdown as important context for its decision. On the
other hand, the majority’s approach reflects choices in legal method (e.g., favoring ordinary over
specialized meaning, judging whether a requirement was unforeseen by looking beyond an agency’s
budget request) that do not appear limited to transfers amid such extraordinary funding disputes.

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One such question is how DOD is to identify the types of denials that render transfer authority
unavailable. DOD has distinguished between those items “known to be of special interest to one or more
of the congressional committees and those items specifically denied by the Congress.” (The phrase
special-interest item includes an item for which Congress “specifically reduced” funding from the
President’s request.) DOD’s policies state that it does not invoke transfer authority for items specifically
denied by Congress, and while DOD gives special treatment to reprogramming actions affecting special-
interest items, DOD does not expressly bar use of transfer authority to augment funding-reduced items.
The majority’s approach could require DOD to reevaluate its treatment of funding-reduced items. The
majority held that Congress’s decision to appropriate less funds ($1.375 billion) for CBP border barrier
construction than the President’s request ($5.7 billion) was a “general denial” of funding that necessarily
encompassed “narrower forms of denial” (the $2.5 billion in DOD transfers for border barrier purposes).
This same reasoning would seem to prevent transfers to augment programs for which, as frequently
happens, Congress appropriates less than the President’s request. Congress’s appropriations decision
could be viewed as a “general denial” encompassing a later attempt to increase funding for a program via
a transfer. Transfer authority might then be available only for those items funded at, or above, the
President’s request. The Department of Veterans Affairs and the Director of National Intelligence receive
transfer authority with nearly identical limiting language to that used for DOD, potentially raising similar
questions for these agencies as well.
DOD might also consider the continued relevance of justification materials and committee reports when
deciding whether transfer authority is available. In a provision of the statute not addressed by the
majority, the dissent, or the government, Congress designated the information contained in these budget
documents as forming the “baseline” for applying transfer authority. That is, since FY2008, Congress has
conditioned DOD’s use of transfer authority on DOD first submitting to Congress a report that establishes
a “baseline for application of reprogramming and transfer authorities” (the “DD 1414 report”). (DOD
submitted similar reports before FY2008, which Congress appears to have converted to a statutory
requirement to correct prior report shortcomings.) The DD 1414 report includes a table for each
appropriation. Each table delineates an appropriation “by budget activity and program, project, and
activity as detailed in the Budget Appendix.” Table columns list amounts requested by the President for
that appropriation, any “adjustments made by Congress” (either adjustments in committee reports or
enacted rescissions), and the enacted amount. DOD must also flag special-interest items.
There could be tension between the process apparently contemplated by this statutory directive and the
majority’s application of the transfer limitations. The DD 1414 report appears to envision comparison of
requests and enacted funding at the justification or report line-item level. (This comparison method is
similar to that urged by the dissent, but the two differ insofar as the dissent primarily rooted its approach
in analogy to broader legal concepts and not in provisions of statute.) In deciding that “funding for the
border wall” was the relevant “item,” though, the majority did not rely on line-item information. If at the
end of border barrier litigation the majority’s analysis stands as the federal courts’ interpretation, DOD
may assess how these two processes intersect or seek clarification from Congress.
DOD’s transfer authority may continue to spark congressional interest in the coming months. DOD most
recently used this authority for border barriers purposes in February 2020, transferring $3.83 billion in
FY2020 funds to its Counterdrug Account for further Section 284 assistance to DHS. The plaintiffs who
prevailed in the Ninth Circuit have filed new lawsuits challenging the FY2020 transfer. The issues poised
for resolution in the new cases are similar to the issues addressed by the Ninth Circuit.
Congress is also considering DOD’s FY2021 appropriations request, which includes $9.5 billion in
general and special transfer authority in FY2021 (up from $6 billion enacted in FY2020). H.R. 7617, the
Department of Defense Appropriations Act, 2021, would largely preserve the transfer authority limitations
discussed above and would provide $1.9 billion in total transfer authority. And the House Committee on

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Appropriations would direct DOD to report on its use of transfer authority over the last 10 fiscal years,
suggesting congressional interest in transfer authority reform.

Author Information

Sean M. Stiff

Legislative Attorney

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