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No. 06-157

In the Supreme Court of the United States

JAY F. HEIN, DIRECTOR, WHITE HOUSE OFFICE OF FAITH-BASED AND COMMUNITY INITIATIVES, ET AL., PETITIONERS

v.

FREEDOM FROM RELIGION FOUNDATION, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONERS

PAUL D. CLEMENT
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

No. 06-157

JAY F. HEIN, DIRECTOR, WHITE HOUSE
OFFICE OF FAITH-BASED AND COMMUNITY
INITIATIVES, ET AL., PETITIONERS

v.

FREEDOM FROM RELIGION FOUNDATION, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONERS1

The court of appeals' decision in this case has created a new and broad Establishment Clause exception to Ar ticle III's case-or-controversy requirement. The court expanded Flast v. Cohen, 392 U.S. 83 (1968), to autho rize taxpayer standing to challenge on Establishment Clause grounds anything an Executive Branch official does that is "funded by money derived from appropria tions," Pet. App. 11a-which, of course, covers every thing the Executive Branch does. Respondents devote the bulk of their brief in opposition to arguing that taxpayer standing should be every bit as broad as the court of appeals authorized. The only question at this junc ture, however, is whether this Court should review the court of appeals' unprecedented expansion of taxpayer standing because it conflicts with this Court's decisions and their "promise" of "narrow application" of the doc trine, DaimlerChrysler Corp. v. Cuno, 126 S. Ct. 1854, 1865 (2006), as well as with the decisions of other courts of appeals. As a majority of the Seventh Circuit's judges agreed, Pet. App. 59a-66a, the confusion in the law and profound implications of the court of appeals' decision warrant this Court's review.

1. The court of appeals' decision departs signifi cantly from this Court's taxpayer-standing decisions. While embracing (Br. in Opp. 4-9) the court of appeals' broad expansion of taxpayer standing, respondents nev ertheless insist there is no conflict with this Court's pre cedent (id. at 9). But taxpayer standing to bring Estab lishment Clause claims cannot simultaneously be as broad as the court of appeals authorized and as narrow as this Court's cases command. See DaimlerChrysler, 126 S. Ct. at 1865 (noting "its narrow application in our precedent"); Bowen v. Kendrick, 487 U.S. 589, 618 (1988) ("[W]e have consistently adhered to Flast and the narrow exception it created to the general rule against taxpayer standing."); Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 481 (1982) (discussing the "rigor with which the Flast exception * * * ought to be applied").

To put the conflict with this Court's precedent more starkly, this Court has carefully cabined the Flast ex ception for taxpayer standing in Establishment Clause cases by requiring that the taxpayer satisfy two criteria. First, "only" challenges to "exercises of congressional power under the taxing and spending clause of Art. I, § 8, of the Constitution" are permitted. Flast, 392 U.S. at 102. Accordingly, all the cases in which this Court has recognized taxpayer standing to raise Establishment Clause challenges involve the disbursement of congres sionally authorized funds to religiously affiliated enti ties. Pet. 16-20. Second, the challenge must be on Es tablishment Clause grounds, as opposed to some other alleged basis of unconstitutionality. Flast, 392 U.S. at 102; see DaimlerChrysler, 126 S. Ct. at 1864.

The court of appeals' decision has eliminated that first prong. The court of appeals recognized taxpayer standing to challenge an exercise of purely execu tive-not congressional-power. Respondents do not challenge the constitutionality of any law passed by Con gress or the disbursement of funds earmarked by Con gress for particular uses. Nor do they question Con gress's power to pass appropriations legislation funding the salaries and activities of White House and agency personnel. Respondents, in fact, have been "unable to identify [any] appropriations" from Congress that they challenge. Pet. App. 10a. Instead, they challenge the decisions of Executive Branch officials to meet with faith-based and secular community organizations and to discuss the role such groups can play in community pro grams. Pet. App. 10a; see id. at 73a, 77a. Recognizing taxpayer standing to bring such a challenge not only fundamentally deviates from Flast, but also directly conflicts with this Court's decision in Doremus v. Board of Education, 342 U.S. 429 (1952), which Flast distin guished in discussing the first prong of its test. See Flast, 392 U.S. at 102; see also Pet. 17 & n.9. Respon dents, by contrast, do not even attempt to distinguish this Court's decision in Doremus.

To be sure, the court of appeals considered it impor tant (Pet. App. 11a) that those Executive Branch activi ties were "funded by money derived from appropria tions." But that reduces the first prong of Flast to a pleading ritual. All Executive Branch activity is under taken by officials whose salaries are "funded by money derived from appropriations," and who employ govern ment resources (whether papers, pens, or electricity in their office space) that are "funded by money derived from appropriations." Indeed, the court of appeals ac knowledged "the fact that almost all executive branch activity is funded by appropriations." Id. at 12a.

Respondents cogently capture (Br. in Opp. 7) the jurisprudential transformation wrought by the court of appeals' decision, explaining that taxpayers now need allege only "a claim that tax dollars are being misused" by Executive Branch officials. But those are not "exer cises of congressional power under the taxing and spending clause of Art. I, § 8, of the Constitution," Flast, 392 U.S. at 102 (emphasis added), and this Court has made clear that "the expenditure of public funds in an allegedly unconstitutional manner is not an injury suffi cient to confer standing," Valley Forge, 454 U.S. at 477.

In fact, if the court of appeals' decision were the law, as respondents suppose, this Court's decision in Valley Forge-which denied taxpayer standing for a challenge to the Executive Branch's transfer of federal property to a religious entity, 454 U.S. at 479-would have to be overruled. Respondents attempt (Br. in Opp. 9) to dis tinguish Valley Forge on the ground that it "involved an agency decision to transfer a parcel of federal property," rather than a challenge to congressional legislation. But respondents make no effort to explain how the use of appropriated funds (in terms of salaries and resources) to deal with, process, and transfer property to a reli gious entity is different from the use of appropriated funds to meet and talk with religious entities, which is the sole predicate for taxpayer standing in this case. The difference that this Court saw between Valley Forge and Flast was of constitutional magnitude. Valley Forge, 454 U.S. at 474-481. The court of appeals has reduced it to a pleading error.

Recognizing the implications of its decision, the court of appeals excepted those cases where "the marginal or incremental cost to the taxpaying public of the alleged violation of the establishment clause would be zero." Pet. App. 12a. Whatever the value of such an "incre mental cost" test-and there is little in constitutional history, law, or logic to commend it-that is not this Court's test. The court of appeals' decision to jettison the first prong of the Flast test in favor of a new juris prudence of non-de minimis incremental cost is in such conflict with this Court's decisions and raises such im portant Article III and separation of powers concerns as to warrant this Court's review.2

2. Respondents argue (Br. in Opp. 5-7) that Bowen eliminated the requirement that the taxpayer challenge a congressional exercise of the taxing and spending power and expanded taxpayer standing to any Estab lishment Clause "claim that tax dollars are being mis used." Br. in Opp. 7. This Court said the opposite in Bowen, explaining that standing to challenge "adminis tratively made grants" fits Flast's mold because the au thorizing statute "is at heart a program of disbursement of funds pursuant to Congress' taxing and spending powers, and appellees' claims call into question how the funds authorized by Congress are being disbursed pur suant to the [Act]'s statutory mandate." 487 U.S. at 619- 620. Under those circumstances, the claim that "funds are being used improperly by individual grantees is [no] less a challenge to congressional taxing and spending power simply because the funding authorized by Con gress has flowed through and been administered by the Secretary [of Health, Education and Welfare]." Id. at 619. What was key to standing, the Court concluded, was that the taxpayers' allegations "call[ed] into ques tion how * * * funds authorized by Congress are being disbursed pursuant to * * * statutory mandate." Id. at 620. In short, Bowen reaffirmed, rather than dispensed with, the requirement that taxpayers challenge Con gress's exercise of its taxing and spending power.

The distinction between an agency's role as a conduit for congressionally directed disbursements and an agency's conduct of its routine internal operations is important, because the congressionally directed dis bursement of funds outside the government to a reli gious entity or for religious ends is critical to reconciling taxpayer standing with Article III's case-or-controversy requirement. Flast found an Article III injury rooted in the historic constitutional concern-unique to the Estab lishment Clause-that a taxpayer not be "force[d] * * * to contribute three pence only of his property for the support of any one establishment," Flast, 392 U.S. at 103 (citation omitted). Given the unique constitutional and historical pedigree of that concern, the Court held that an individual's claim that "his tax money is being ex tracted and spent in violation of [that] specific constitu tional protection[] against such abuses of legislative power" could satisfy the individualized-injury require ment for Article III standing. Id. at 106; see Daimler Chrysler, 126 S. Ct. at 1865 (under Flast, "the 'injury' [is] * * * the very 'extract[ion] and spen[ding] of 'tax money' in aid of religion") (quoting Flast, 392 U.S. at 106).

When the court of appeals in this case abandoned that nexus to the disbursement of funds-the extraction and spending of funds to aid religious groups-it elimi nated the existence of a cognizable Article III injury in its taxpayer standing cases. While the Establishment Clause recognizes a distinct constitutional injury to tax payers in having their "three pence" used to pay a minis ter's salary, Flast, 392 U.S. at 103 (citing Madison's "famous Memorial and Remonstrance Against Religious Assessments"), there is no such constitutional tradition of a cognizable individualized injury arising from the payment of government officials' salaries when they make speeches or attend meetings, even with religious content. See Pet. 20 & n.10. To the contrary, from Pres ident Washington to President Lincoln to the present day, Presidents and other Executive Branch officials have made speeches invoking religion and have met with religious leaders without constitutional incident. See Pet. 20-21 & n.10.

The court of appeals thus transformed Flast from an exceptional determination that Article III is satisfied when taxpayers challenge Congress's use of its taxing and spending power to disburse funds to outside groups into a wholesale exception to Article III. That funda mental uprooting of this Court's taxpayer-standing ju risprudence "has serious implications for judicial gover nance," Pet. App. 63a (Ripple, Manion, Kanne & Sykes, JJ., dissenting from the denial of rehearing en banc), and "put[s] the judicial and the political branches of the federal government," as well as state governments," at odds." Pet. App. 60a (Easterbrook, J., concurring in the denial of rehearing en banc); see Ind. Amicus Br. at 8- 10.

3. As noted by the four Seventh Circuit judges who dissented from the denial of rehearing en banc, the court of appeals' decision also creates an inter-circuit conflict that merits this Court's resolution. Pet. App. 24a-26a, 65a-66a. Respondents' argument confirms the conflict.

First, respondents have no answer to the argument that the court of appeals' ruling conflicts with the D.C. Circuit's decision in American Jewish Congress v. Vance, 575 F.2d 939 (1978), which denied taxpayer standing to challenge the actions not of Congress, but of "executive officials" who allegedly "expended govern mental funds to effectuate cooperative programs" with third parties in a manner that violated the First Amend ment. Id. at 944.3

Respondents essentially concede the conflict with the Second Circuit, admitting that its decision in In re United States Catholic Conference, 885 F.2d 1020 (1989), cert. denied, 495 U.S. 918 (1990), "comes closest to supporting" the government's view. Br. in Opp. 10. Respondents argue, however, that Catholic Conference "no longer reflects the position" of the Second Circuit. Ibid. That is wrong. The court's taxpayer-standing analysis in that decision has never been overruled or even questioned in that circuit. Quite the opposite, the Second Circuit explained in Lamont v. Woods, 948 F.2d 825 (1991), that Catholic Conference continues to control when plaintiffs challenge purely executive action and "d[o] not impugn Congress's exercise of its taxing and spending power." Id. at 831.4 Far from "limit[ing] the applicability" of Catholic Conference (Br. in Opp. 10), Lamont thus reaffirmed that when the challenge is to Executive Branch activity, rather than to Congress's use of its taxing and spending power to disburse funds, tax payer standing will be denied. 948 F.2d at 830-831; see id. at 831 (Catholic Conference governs when "[t]here [i]s no claim * * * that Congress had authorized the chal lenged agency action"). That is the opposite of the Sev enth Circuit's decision here.5

* * * * *

For the foregoing reasons and those stated in the petition, the petition for a writ of certiorari should be granted.

Respectfully submitted.

PAUL D. CLEMENT
Solicitor General

NOVEMBER 2006

1 Pursuant to Supreme Court Rule 35(3), Jay F. Hein has been substituted for his predecessor, Dennis Grace, who had been the Acting Director of the White House Office of Faith-Based and Community Initiatives.

2 In the wake of its decision in this case, the Seventh Circuit has gone so far as to dispense not only with the first prong of the Flast test, but also with the requirement of a suit against a governmental entity that is bound by the Establishment Clause. See Laskowski v. Spellings, 443 F.3d 930 (7th Cir.) (extending taxpayer standing to suits for recoup ment against private grantees of federal funds), amended on reh'g, 456 F.3d 702 (2006), petition for cert. pending, No. 06-582 (filed Oct. 24, 2006). While that case underscores the need for this Court to provide guidance on the proper scope of taxpayer standing in Establishment Clause cases, the case at hand presents an antecedent breach of Flast's limitations and reflects a general breakdown in standing jurisprudence that could recur any time that one of the more than 11 million taxpayers within the Seventh Circuit takes exception on Establishment Clause grounds to Executive Branch action occurring anywhere in the United States or perhaps even abroad. The question presented in Laskowski involves the distinct circumstance of remedying Establishment Clause violations when the underlying claim has been mooted and no action remains against the government. See Pet. at i, 9-10, University of Notre Dame v. Laskowski, No. 06-582 (filed Oct. 24, 2006). Accordingly, this Court should grant certiorari in this case without awaiting disposition of the Laskowski petition, which might not be positioned for review this Term.

3 Respondents stress (Br. in Opp. 9-10) that Public Citizen, Inc. v. Simon, 539 F.2d 211 (D.C. Cir. 1976), did not involve an Establishment Clause challenge. But as to the first prong of Flast, the D.C. Circuit held in Simon that "mere executive activity that entails some expendi tures" does not suffice for taxpayer standing. Id. at 218-219. That directly conflicts with the court of appeals' decision here. And, in any event, there is clearly a split between the Seventh Circuit's decision and the law of the D.C. Circuit, whether or not the latter is embodied in one decision or two.

4 Lamont involved a challenge to a federal statute that authorized disbursements "to individuals or organizations in the United States for the benefit of specific foreign schools" on the ground that some of the schools were affiliated with sectarian sponsors. 948 F.2d at 828. As such, that suit against the federal agency that disbursed congressional funds fit the traditional Flast model of taxpayer standing because "Congress authorized the disbursements that are alleged to violate the Establishment Clause: [the agency] simply carried out Congress's scheme pursuant to its statutory mandate." Id. at 830.

5 Respondents' reliance (Br. in Opp. 8-9) on Minnesota Federation of Teachers v. Randall, 891 F.2d 1354 (8th Cir. 1989), is equally in apposite. That case also involved the statutorily authorized disburse ment of funds to, inter alia, religious schools. Id. at 1355. The Eighth Circuit has since reaffirmed that a demonstrated nexus to legislative taxing and spending is critical. Friedmann v. Sheldon Cmty. Sch. Dist., 995 F.2d 802, 803-804 (8th Cir. 1993). In any event, even if that court's dicta in Randall, 891 F.2d at 1358, that taxpayer standing exists "when expenditures are made from general funds" were to be applied in a manner as divorced from the Flast criteria as the Seventh Circuit did here, that would simply deepen the inter-circuit conflict that already warrants this Court's review.