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LAMONT v. SCHULTZ

October 2, 1990

CORLISS LAMONT, ET AL., PLAINTIFFS,
v.
GEORGE P. SCHULTZ, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Sand, District Judge.

OPINION

This is a federal taxpayers' suit in which plaintiffs challenge as a violation of the Establishment Clause of the First Amendment the appropriation and expenditure of public funds by the United States for the construction, maintenance and operation of religious schools abroad. Defendants claim that plaintiffs lack standing to bring this suit; that plaintiffs claims present non-justiciable political questions; and that the Establishment Clause does not apply to United States government funded programs overseas, or alternatively, if it applies, it does not bar the challenged grants. The case is before this Court on plaintiffs' motion for summary judgment and defendants' cross motion for summary judgment.

In February, 1988, plaintiffs brought an action for declaratory and injunctive relief on the above mentioned claim. Defendants made a motion to dismiss alleging plaintiffs lacked standing. On April 6, 1988, this Court issued a Memorandum Endorsement denying defendants' motion to dismiss, relying on Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968) and Bowen v. Kendrick, 487 U.S. 589, 108 S.Ct. 2562, 101 L.Ed.2d 520 (1988). In light of recent case law this Court has agreed to reconsider the standing issue. The standing question as well as two other novel issues discussed below are controlling issues of law which may terminate this litigation. For the reasons discussed below, the Court will certify these questions to the Second Circuit before reaching a final judgment.

I. Background

The American Schools and Hospitals Abroad Program ("ASHA") was established under the Foreign Assistance Act of 1961 ("Act"). 22 U.S.C. § 2151-2429a (1988). ASHA is one of a number of programs developed under the Act to assist developing countries acquire "the knowledge and resources essential to development and to build the economic, political, and social institutions which will improve the quality of their lives." 22 U.S.C. § 2151(a). Specifically, ASHA's purpose is to provide funding for schools outside the United States that are founded or sponsored by United States citizens and that serve as "study and demonstration centers for ideas and practices of the United States." 22 U.S.C. § 2174(a).

The program is administered by the Agency for International Development ("AID"), which awards grants to institutions or individuals in the United States that sponsor foreign schools. All of the grant funds are transferred by the United States sponsor directly to the overseas schools. Administration and financial accounting of the grant is the responsibility of the United States sponsor. Likewise, AID communicates any concerns and information regarding the grant to the United States sponsor and has virtually no contact with the foreign affiliate.

The ASHA office solicits and reviews grant applications before making recommendations to the Administrator of AID who is responsible for all final decisions. To assist in making grant decisions AID has published criteria for selecting grantees in the Federal Register. See 44 Fed. Reg. No. 228 (Nov. 26, 1979) (not codified in C.F.R.). Most of the criteria request general information about the foreign institution and its ability to promote United States values. Only one of the eleven criteria discusses religion. Criterion eight provides that "the [overseas institution] must be open to all persons regardless of race, religion, sex, color or national origin . . . [and that] assistance may not be used to train persons for religious pursuits or to construct buildings or other facilities intended for worship or religious instruction." 44 Fed.Reg. No. 228 (Nov. 26, 1979). None of the ASHA criteria bar religiously-affiliated schools or require a determination of whether the institution is pervasively sectarian.

II. Threshold Issues

Before this Court may apply any law relating to the application of the Establishment Clause a number of threshold issues must be resolved. The first question is whether the plaintiffs, as United States taxpayers, have standing to ask the Court to address the violations they allege. If plaintiffs succeed on the standing claim the next inquiry is whether the nature of the violation alleged is a political question beyond the competence of this Court. If there is no bar from the standing or political question doctrines, the Court must decide whether Establishment Clause principles and standards apply to overseas programs funded by the government that were founded by and continue to involve United States sectarian non-profit organizations.

A. Standing

A resolution of the standing issue in this action is determined primarily by reference to three taxpayer cases, all involving Establishment Clause challenges. The holdings of these cases are built on more general standing concepts developed by the Supreme Court over the period of a decade beginning with Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). In Allen, the Supreme Court made it clear that the doctrine of standing is rooted in Article III of the United States Constitution, which limits federal courts to adjudicating actual "cases and controversies." Id. at 750, 104 S.Ct. at 3324. If a plaintiff fails to establish that an action presents an actual case or controversy capable of judicial resolution, a court lacks subject matter jurisdiction. See Valley Forge Christian College v. Americans United, 454 U.S. 464, 483, 102 S.Ct. 752, 764, 70 L.Ed.2d 700 (1982). The general rule is that in order to have standing a plaintiff must allege a personal injury that is reasonably traceable to the defendants' alleged unlawful conduct and which is likely to be redressed by the relief requested. Allen, 468 U.S. at 751, 104 S.Ct. at 3324.

Standing requirements for federal taxpayer suits are quite specific. Since the days of Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078 (1923), the Supreme Court has consistently held that federal taxpayers do not have standing to challenge how the federal government uses tax revenues. See Ex parte Levitt, 302 U.S. 633, 58 S.Ct. 1, 82 L.Ed. 493 (1937); Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974); United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973). There is, however, a narrow exception. In Flast, the first of the three cases that are central to the standing issue in this action, the Court held that the Frothingham barrier should be lowered in one specific instance. 392 U.S. at 102-06, 88 S.Ct. at 1953-55. Standing should be present for taxpayer challenges to a federal statute on the ground that it violated the Establishment Clause of the First Amendment when the allegedly unconstitutional action was authorized by Congress under the Taxing and Spending Clause of Article I, § 8. Id.

In Flast, the Court outlined the standards plaintiffs must meet to satisfy the Article III case and controversy nexus requirements. First, the "[t]axpayer must establish a logical link between [taxpayers] status and the type of legislative enactment attacked." Second, the "[t]axpayer must establish a nexus between [taxpayer] status and the precise nature of the constitutional infringement alleged." 392 U.S. at 102, 88 S.Ct. at 1954. When both these requirements are met in an Establishment Clause violation claim, a federal taxpayer suit is properly before an Article III court.

Plaintiffs in the present case fit squarely within the Flast nexus requirements. First, they challenge expenditures made under a congressional appropriation pursuant to the Taxing and Spending Clause. Specifically, plaintiffs challenge expenditures under 22 U.S.C. § 2174(c). Plaintiffs meet the second test by challenging a congressional enactment that allegedly exceeds specific limits imposed on the Taxing and Spending Clause.

The Supreme Court affirmed Flast and expanded the analysis in Kendrick, 487 U.S. 589, 618, 108 S.Ct. 2562, 2579, 101 L.Ed.2d 520. The Court held that in Establishment Clause claims, taxpayer standing is available to challenge executive branch administration of a statute enacted pursuant to Taxing and Spending Clause authority. Id. at 618, 108 S.Ct. at 2579. In allowing a taxpayer standing to challenge a statute as applied as well as on its face, the Court stated "[it is no] less a challenge to Congress' taxing and spending power simply because the funding authorized by Congress has flowed through and been administered by the [executive branch]." Id. at 619, 108 S.Ct. at 2579. This is the second case of significance to this action since plaintiffs' challenge is based primarily on an "as applied" theory.

The third case that impacts significantly on plaintiffs' standing is In re United States Catholic Conference, 885 F.2d 1020 (2nd Cir. 1989), cert. denied, ___ U.S ___, 110 S.Ct. 1946, 109 L.Ed.2d 309 (1990). ("USCC"). In USCC, plaintiffs alleged that the Internal Revenue Service ("IRS"), the executive branch agency responsible for oversight under the Internal Revenue Code ("Code"), was not performing its job properly. Id. at 1028. Plaintiffs claimed that the IRS was not enforcing the Code's prohibition on lobbying by religious tax-exempt organizations. The allegation was that by not halting the lobbying practices of these organizations, the IRS was acting in contravention of the express terms of the statute and disregarding congressional intent. Id. at 1027-28. The Second Circuit held that plaintiffs were not challenging the underlying statute and Congress' exercise of its taxing and spending power either facially or as applied. Rather, plaintiffs were challenging the actions or lack of actions of executive branch employees. Id. Accordingly, the USCC Court concluded that there was no nexus between plaintiffs' allegation and Congress' exercise of their taxing and spending power. Id. at 1028. Therefore, plaintiffs lacked standing.

In the present action, plaintiffs are not claiming that the actions taken by AID contravene a statute. Unlike the plaintiffs in USCC, the taxpayers in this action claim that Congress, in its broad delegation of power under Section 2174, actually authorized ASHA's expenditures. The logical extension of plaintiffs' argument is that AID, as administrator, is simply implementing that which Congress legislated. As regulator, AID developed criteria to implement the program according to the statute. Criterion 8, for example, requires that ASHA funded institutions must be open to all persons and that ASHA funds not be used to train persons for religious pursuits or to construct facilities intended for worship or religious instruction. This criterion imposes no other restrictions e.g., that institutions not be pervasively sectarian. As such, plaintiffs contend that the funding challenged here is consistent with the broad congressional mandate. Plaintiffs do not allege that AID acted against congressional will, but rather that the statute, as applied by AID, is unconstitutional. Consequently, the nexus requirements outlined in Flast, affirmed in Kendrick and explained in USCC are satisfied by plaintiffs in the present action.

Defendants argue that in Kendrick and Flast, where the Supreme Court held that federal taxpayers had standing, the relevant statutes expressly directed aid to sectarian institutions. This is arguably correct in Kendrick where the statute at issue explicitly indicated that religious organizations may be involved in program implementation of The Adolescent Family Life Act, 42 U.S.C. § 300z et seq. (1982 ed. and Supp. IV); See also Kendrick, 487 U.S. 589, 606, 108 S.Ct. 2562, 2572. In Flast, however, the statute at issue had no language pertaining to religious institutions. See 20 U.S.C. § 241e(a)(2); 20 U.S.C. § 823(a)(3)(B). Plaintiffs in Flast did not challenge a statutory directive of funds to private schools, but rather the actual delivery of some of the funds to sectarian schools, which was an executive decision authorized by the legislation. See 392 U.S. at 86, 88 S.Ct. at 1945; See also Walker v. San Francisco Unified School District, 741 F. Supp. 1386 (N.D.Calif. 1990). In "as applied" challenges, the Supreme Court has held standing exists whether or not the language in the statute specifically mentions the role of sectarian organizations. The facts in Flast and the "as applied" theory articulated in Kendrick are similar to the circumstances and claims that appear in this case. Therefore, plaintiffs have standing to challenge the ASHA Program.

This Court, however, does not reach the conclusion that plaintiffs have standing without doubt and a significant examination of the relevant case law. There is a paradox in the law of standing which this Court notes but does not find dispositive. If a taxpayer plaintiff challenges an act of Congress passed pursuant to the Taxing and Spending Clause as constitutionally invalid under the Establishment Clause, the Supreme Court has held standing exists. Flast, 392 U.S. at 106, 88 S.Ct. at 1955. Thus enactments which have been determined by the Congress and the President to pass constitutional muster are judicially reviewable. The paradox is that standing is denied when a taxpayer complaint centers on a decision made by an executive branch official or employee alleged to be violative of congressional directions. Actions which do not have the added protection of congressional and presidential approval are not judicially reviewable,*fn1 although actions with these protections are subject to such review. In the end, it may be that standing is an imperfect doctrine but this Court, while noting the paradox, does not need to resolve it in order to decide this case. We conclude plaintiffs have standing to maintain this action.

B. Political Question

The second threshold question goes to the nature of the claim asserted and whether it is barred by the political question doctrine. Unlike issues involving standing, the court is not concerned with the plaintiffs' injury or the potential for remedy. Rather, the focus is on the claim itself and whether it asserts a judicially enforceable right derived from a provision of the Constitution. If the court finds a constitutional right at stake in a question that involves international programs, the court must determine whether it has jurisdiction to hear the claim on the merits in a manner consistent with ...


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