National Center for Manufacturing Sciences v. Department of Defense

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 1999 Decided January 4, 2000

No. 98-5576

National Center for Manufacturing Sciences,
Appellant

v.

Department of Defense, et al.,
Appellees

Appeal from the United States District Court
for the District of Columbia
(No. 95cv01817)

Stanley Yorsz argued the cause for appellant. With him on
the briefs were Jeffrey J. Bresch and Attison L. Barnes, III.

Lisa Goldfluss, Assistant U.S. Attorney, argued the cause
for appellees. With her on the briefs were Wilma A. Lewis,
U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attor-
ney.

 Before: Sentelle, Rogers and Tatel, Circuit Judges.

Opinion for the court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Plaintiff-appellant National Cen-
ter for Manufacturing Sciences ("NCMS") appeals from a
judgment of the district court dismissing its complaint for
failure to state a claim. NCMS claims that appellees, De-
partment of Defense ("DOD") and Department of the Air
Force ("Air Force") (along with various officials), improperly
held back approximately $15 million of funds authorized and
appropriated by Congress and earmarked for NCMS. Be-
cause we conclude that Congress rescinded the earmark in
section 1006 of the National Defense Authorization Act for
Fiscal Year 1995, we affirm the district court's dismissal of
the action.

I. Background

NCMS is a non-profit research and development manufac-
turing consortium that receives funding, in part, through
congressional appropriations earmarks. This dispute centers
on whether NCMS is entitled to approximately $15 million of
an original $40 million earmark appropriated for fiscal year
1994.

On November 11, 1993, Congress appropriated
$12,314,362,000 under the heading "Research, Development,
Test and Evaluation, Air Force," which was "to remain
available for obligation until September 30, 1995." One ear-
mark provision stated: "Provided further, That not less than
$40,000,000 of the funds appropriated in this paragraph shall
be made available only for [NCMS]...." Department of
Defense Appropriations Act, 1994, Pub L. No. 103-139, 107
Stat. 1418, 1431-33 (1993) ("1994 Appropriations Act"). La-
ter that month, Congress passed the National Defense Autho-
rization Act for Fiscal Year 1994 ("1994 Authorization Act"),
Pub. L. No. 103-160, 107 Stat. 1547 (1993). Section 201 of
this act authorized $12,289,211,000 for the Air Force--

$25,151,000 short of the amount appropriated. 107 Stat. at
1583.
The Air Force and NCMS entered into a Cooperative
Agreement on September 19, 1994, whereupon the Air Force
released $24,125,000 of the 1994 funds. The remaining
$15,875,000 of the original $40 million was not released,
although the agreement said a release could occur if funds
were made available for allotment.
On October 5, 1994, Congress passed the National Defense
Authorization Act for Fiscal Year 1995 ("1995 Authorization
Act"), Pub. L. No. 103-337, 108 Stat. 2663 (1994). Section
1006, in particular subsection 1006(d), refers to the status of
1994 defense appropriations. We set forth the text of the
section here:

SEC. 1006. AUTHORITY FOR OBLIGATION OF
CERTAIN UNAUTHORIZED FISCAL YEAR 1994
DEFENSE APPROPRIATIONS.

(a) AUTHORITY.--The amounts described in subsection
(b) may be obligated and expended for programs, pro-
jects, and activities of the Department of Defense in
accordance with fiscal year 1994 defense appropriations
except as otherwise provided in subsections (c) and (d).

(b) COVERED AMOUNTS.--The amounts referred to
in subsection (a) are the amounts provided for programs,
projects, and activities of the Department of Defense in
fiscal year 1994 defense appropriations that are in excess
of the amounts provided for such programs, projects, and
activities in fiscal year 1994 defense authorizations.

(c) PROGRAMS NOT AVAILABLE FOR OBLI-
GATION.--Amounts described in subsection (b) which
remain available for obligation on the date of the enact-
ment of this Act may not be obligated or expended for
the following programs, projects, and activities of the
Department of Defense (for which amounts were provid-
ed in fiscal year 1994 defense appropriations): [programs
unrelated to NCMS]

(d) MANUFACTURING TECHNOLOGY.--The Secre-
tary of Defense may obligate fiscal year 1994 defense
appropriations under the Manufacturing Technology De-
velopment program which remain available for obligation
on the date of the enactment of this Act in accordance
with the competition and cost-sharing requirements of
subsection (d) of section 2525 of title 10, United States
Code, as amended by section 256 of this Act, notwith-
standing any other provision of law that specifies (or has
the effect of requiring) that a contract be entered into
with, or a grant be made to, a particular institution or
entity.

(e) DEFINITIONS.--For the purposes of this section:

(1) FISCAL YEAR 1994 DEFENSE APPROPRIA-
TIONS.--The term "fiscal year 1994 defense appropria-
tions" means amounts appropriated or otherwise made
available to the Department of Defense for fiscal year
1994 in the Department of Defense Appropriations Act,
1994 (Public Law 103-139).

(2) FISCAL YEAR 1994 DEFENSE AUTHORIZA-
TIONS.--The term "fiscal year 1994 defense authoriza-
tions" means amounts authorized to be appropriated for
the Department of Defense for fiscal year 1994 in the
National Defense Authorization Act for Fiscal Year 1994
(Public Law 103-160).

108 Stat. at 2835-36.

A few weeks prior to the passage of the 1995 Authorization
Act, NCMS filed suit in the district court seeking the unpaid
$15 million. The complaint invoked the mandamus statute, 28
U.S.C. s 1361 (1994), the Declaratory Judgment Act, 28
U.S.C. s 2201 (1994), the Administrative Procedure Act, 5
U.S.C. ss 701-06 (1994), and requested specific performance
of the Cooperative Agreement. After preliminary injunctive
relief was denied, the Air Force filed a motion to dismiss, or
in the alternative, to transfer the claim to the Court of
Federal Claims as a contract action against the government
under the Cooperative Agreement. The district court grant-
ed the transfer motion. NCMS appealed to the Federal
Circuit, who reversed and remanded to the district court,
holding that the action was not a contract action. See Na-
tional Ctr. for Mfg. Sciences v. United States, 114 F.3d 196
(Fed. Cir. 1997).

 Upon return of the case to the district court, the district
court initially denied appellees' motion to dismiss. On recon-
sideration, however, the court granted the motion to dismiss
in December of 1998. Noting that the parties agreed that the
$40 million had been both authorized and appropriated, the
court held that subsection 1006(d) of the 1995 Authorization
Act rescinded the unobligated $15 million. NCMS appeals
the dismissal, which we review de novo. See, e.g., Moore v.
Valder, 65 F.3d 189, 192 (D.C. Cir. 1995).

Upon initial review of the record, it was unclear whether
the Air Force had retained funds with which NCMS's claim
could be satisfied. We therefore ordered supplemental brief-
ing prior to oral argument on the issue of mootness in light of
City of Houston v. Department of Hous. and Urban Dev., 24
F.3d 1421 (D.C. Cir. 1994). City of Houston makes clear that
once an appropriation lapses or the relevant funds have been
obligated, "a court cannot reach them in order to award
relief." Id. at 1426. Taking care to avoid such an "insupera-
ble" difficulty and ensure that we had the power to remedy
appellees' alleged wrong, we requested the additional brief-
ing. 13A Charles Alan Wright, et al., Federal Practice and
Procedure s 3533.3 (2d ed. 1984). We find that the case is
not moot. Appellees' brief clarifies that while the specific
funds referred to by subsection 1006(d) were reallocated,
there are sufficient remaining funds in the fiscal year 1994
Research, Development, Test, and Evaluation, Air Force ac-
count available to liquidate NCMS's claim.

II. Discussion

Section 114 of 10 U.S.C. states, in relevant part, that "[n]o
funds may be appropriated for any fiscal year to or for the
use of any armed force or obligated or expended for ... any
research, development, test, or evaluation, or procurement or
production related thereto ... unless funds therefor have
been specifically authorized by law." 10 U.S.C. s 114(a)(2)
(1994). Authorization acts limit the amount of funds Con-
gress can appropriate for a given purpose. See Office of
Management and Budget, The Budget System and Concepts 2-

3 (1997). Because of the existence of 10 U.S.C. s 114, it is
clear that any monies appropriated for NCMS by Congress
for research must be authorized before they can be appropri-
ated and distributed. The parties agree that NCMS's $40
million earmark was both appropriated and authorized. They
dispute whether section 1006 rescinded the unpaid portion of
that earmark. We hold that it does.

Section 1006(d) states that 1994 defense appropriations in
NCMS's research province "which remain available for obli-
gation" may be obligated by competition notwithstanding any
specific grants otherwise. The $15 million of unreleased
funds, which was "available for obligation" because it was
already authorized, was thus freed from its earmark status by
this provision. Therefore, NCMS no longer has any rights to
the funds on which its claim is based.

Attempting to avoid this result, NCMS claims that section
1006 only applies to previously unauthorized funds (i.e., the
$25 million shortfall between the 1994 Authorization Act and
1994 Appropriation Act) and thus had no effect on the unre-
leased $15 million. It also argues that funds are "available
for obligation" when they are appropriated. This is generally
true because authorization acts generally precede appropria-
tions acts, and not all appropriations require matching autho-
rizations. But funds which must be authorized by statute and
are not so authorized cannot be "available for obligation."
Because 10 U.S.C. s 114(a)(2) requires authorization of these
funds before they become available, appropriation alone is
insufficient. Section 1006 itself is an authorization section
which would be unnecessary but for the authorization require-
ment. Therefore, the term "available for obligation" in the
context of section 1006 refers to funds that are authorized.
Nothing limits the operation of subsection 1006(d) to previ-
ously unauthorized funds.

Other subsections, and indeed the title of section 1006,
refer to unauthorized funds, but none of those various subsec-
tions alter the effect of subsection (d). A brief review of the
sections makes this clear.

 Subsection (a) provides "AUTHORITY" to "obligate[ ]"
certain funds as long as subsection (c) and (d) do not provide
otherwise. This subsection was necessary because authoriza-
tion for defense spending is required by statute. Conferring
the required authority by stating the funds "may be obligat-
ed," subsection (a) demonstrates that funds "available for
obligation" in section 1006 are authorized.

Subsection (b) describes which funds are authorized by
subsection (a). The language describes the funds that made
up the $25 million shortfall between the 1994 Authorization
Act and 1994 Appropriations Act.

Subsection (c) acts to limit the authority conferred by
subsection (a). It requires that the newly authorized funds
"may not be obligated or expended" on certain enumerated
programs. Note that subsection (c), by its terms, applies
only to funds defined in subsection (b).

Subsection (d) operates on its own. It refers to appropria-
tions which remain available for obligation, and it is not
limited only to funds authorized via subsection (a). While
subsection (c) limits its operation to amounts available for
obligation under subsection (b), subsection (d) contains no
such limitation. It applies to all funds and not only those
freed up by subsection (a).

Although subsection (b) refers to previously unauthorized
funds, and subsection (a) refers to what they can be spent on,
neither of these subsections modify subsection (d). NCMS
argues that the mention of subsection (d) in subsection (a)
limits the application of subsection (d) to only unauthorized
funds. This has it backwards. Instead, subsection (d) is
limiting the operation of subsection (a).

Perhaps the matter would have been clearer if Congress
had enacted subsection (d) as a freestanding section, but its
placement is not illogical. Instead of repeating the language
of subsection (d) in subsection (a), it was rational to merely
reference subsection (d) and retain it within section 1006.
Further, the title of section 1006, which suggests that the
entire section addresses only previously unauthorized funds,

is also no impediment. The plain meaning of a statute cannot
be limited by its title, see Pennsylvania Dep't of Corrections
v. Yeskey, 118 S. Ct. 1952, 1956 (1998), and provisions in a
statute do not always align with its title, see Hadden v. The
Collector, 72 U.S. (5 Wall.) 107, 110 (1866). There is no
reason to cloud the plain meaning of subsection (d) because of
its placement in section 1006.

Therefore, we hold that the operation of subsection 1006(d)
is not limited to funds authorized by subsection 1006(a).
Subsection (d) allowed the funds that NCMS seeks to be
obligated pursuant to the competition provisions of 10 U.S.C.
s 2525, "notwithstanding" the provision of the 1994 Appropri-
ations Act that "specifie[d]" that "a grant be made to" NCMS.
Because NCMS no longer has a legal right to the funds it
seeks, it cannot state a claim upon which relief can be
granted.

III. Reconsideration Issue

Appellant raises additional issues which are without merit.
While there is no need to comment on the majority of these
arguments, we shall devote a small amount of time to one of
them.

Appellant claims that the district court improperly granted
appellees' motion for reconsideration of the motion to dismiss
because, in its view, no clear errors of law existed in the
initial ruling. It thus contends that the district court could
not reverse itself. Not only is appellant's argument incorrect,
it is pointless.

True, a district court should not grant a motion for recon-
sideration unless the moving party shows new facts or clear
errors of law which compel the court to change its prior
position. See, e.g., Moro v. Shell Oil Co., 91 F.3d 872, 876
(7th Cir. 1996); Assassination Archives & Research Ctr. v.
CIA, 48 F. Supp. 2d. 1, 13 (D.D.C. 1999). But here the
motion was correctly granted based upon on what the court
found to be clear errors of law. Even if the district court's
finding that clear errors of law existed were incorrect, there
is nothing to be gained by appealing that specific holding

because an appeal of the underlying merits issue will dispose
of the question. If we had held that the district court erred
in its interpretation of section 1006, we would have reversed
the ruling on the motion to dismiss. It is a waste of time to
go further and argue that the district court also should not
have granted the motion for reconsideration. Because of the
merger of the issues, our job is done.

IV. Conclusion

We conclude that the district court correctly granted appel-
lees' motion to dismiss for failure to state a claim. We hold
that subsection 1006(d) of the 1995 Authorization Act rescind-
ed the unreleased portion of NCMS's funding earmark for
fiscal year 1994. Accordingly, NCMS has no legal entitle-
ment to the funds claimed. The district court's judgment is

Affirmed.