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Plaintiffs’ Supplemental Brief Addressing Questions Raised by the Court on May 22, 2024 — 112 Genesee Street LLC v. United States (Dkt. 17, Fed. Cl.)

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The plaintiffs' supplemental brief addressing questions raised by the court on May 22, 2024, in No. 23-1876C, brought by several plaintiffs against The United States, in the U.S. Court of Federal Claims before Judge Richard Hertling, filed June 5, 2024 as Document 17. It argues that 15 U.S.C. § 9009c(b)(2)(A) does not impose a statutory cap on liability to the plaintiffs under the Restaurant Revitalization Fund. It argues that even if § 9009c capped liability, the plaintiffs state a claim, and that returned funds or the Judgment Fund, 31 U.S.C. § 1304, would be available to satisfy their claims. The brief is filed by Williams & Connolly LLP and runs 17 pages.

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Filed June 5, 2024 in 112 Genesee Street LLC v. United States; one of 3 filings from this case.

Record facts

Court	U.S. Court of Federal Claims
Filed	2024-06-05

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“Plaintiffs’ Supplemental Brief Addressing Questions Raised by the Court on May 22, 2024 — 112 Genesee Street LLC v. United States (Dkt. 17, Fed. Cl.).” U.S. Court of Federal Claims, No. 1:23-cv-01876, Doc. 17, filed 2024-06-05. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/112-genesee-street-llc-v-united-states/2024-06-05-plaintiffs-supplemental-brief-addressing-questions-raised-by-dkt-17/, SHA-256 46aba678d2e3bc4f24020182d44e3cd46920dd4c7ef79c28e7cc88187bae8f9b.

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Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 1 of 17

No. 23-1876C
(Judge Richard Hertling)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

112 GENESEE STREET LLC, et. al.,
Plaintiffs,

THE UNITED STATES,
Defendant.

PLAINTIFFS’ SUPPLEMENTAL BRIEF ADDRESSING QUESTIONS RAISED BY
THE COURT ON MAY 22, 2024

F. Greg Bowman
Robel Yared Edward Reddington
WILLIAMS & CONNOLLY LLP WILLIAMS & CONNOLLY LLP
680 Maine Avenue, SW 680 Maine Avenue, SW
Washington, DC 20024 Washington, DC 20024
202-434-5000 202-434-5000
Of Counsel fbowman@wc.com
Attorneys for Plaintiffs

June 5, 2024

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 2 of 17

TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................. i

TABLE OF AUTHORITIES .......................................................................................................... ii

QUESTIONS PRESENTED............................................................................................................v

ARGUMENT ...................................................................................................................................1

I. Question 1: § 9009c(b)(2)(A) does not impose a statutory cap on liability to the
Plaintiffs. ..............................................................................................................................2

II. Question 2: Even if § 9009c imposed a statutory cap on liability, the Plaintiffs
state a claim upon which relief can be granted. ...................................................................4

A. The obligation to Plaintiffs arose when their applications were received. ..............5

B. Erroneous payments do not foreclose Plaintiffs’ claims..........................................7

C. The FRA rescinds only unobligated funds. .............................................................9

D. Section 9009c(c)(6) does not foreclose Plaintiffs’ claims. ....................................10

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 3 of 17

TABLE OF AUTHORITIES

Cases

Greenlee Cnty., v. United States,
487 F.3d 871 (Fed. Cir. 2007).......................................................................................... passim

Maine Cmty. Health Options v. United States,
140 S. Ct. 1308 (2020) ..............................................................................................1, 2, 4, 5, 7

Molina Healthcare of Cal., Inc. v. United States,
133 Fed. Cl. 14 (2017) ..............................................................................................................2

Salazar v. Ramah Navajo Chapter,
567 U.S. 182 (2012) ..................................................................................................................4

Samish Indian Nation v. United States,
657 F.3d 1330 (Fed. Cir. 2011), rehrg. and rehrg. en banc denied,
vacated as moot, 568 U.S. 936 (2012) .....................................................................2, 3, 4, 7, 10

Star-Glo Assocs., LP v. United States,
414 F.3d 1349 (Fed. Cir. 2005)..............................................................................................3, 6

State of S. Carolina v. United States,
144 Fed. Cl. 277 (2019) ........................................................................................................6, 7

Sutton v. United States,
256 U.S. 575 (1921) ...............................................................................................................7, 8

Statutes

Anti-Deficiency Act, 31 U.S.C. § 1341(a)(1)(A) ........................................................................3, 7

Fiscal Responsibility Act of 2023 (June 3, 2023),
Pub. L. 118-5, Div. B, Title I, Section 52, 137 Stat. 28 .........................................................2, 9, 10

15 U.S.C. § 9009c ...................................................................................................................1, 4, 5

15 U.S.C. § 9009c(b)(2)(A) .........................................................................................................2, 9

15 U.S.C. § 9009c(c)(6) ............................................................................................................5, 10

Purpose Statute, 31 U.S.C. § 1301(a) .............................................................................................8

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 4 of 17

Judgment Fund, 31 U.S.C. § 1304 .................................................................................1, 2, 3, 8, 10

31 U.S.C. § 1502(b) .........................................................................................................................9

31 U.S.C. § 1551(a)(1).....................................................................................................................9

31 U.S.C. § 1552(a) ........................................................................................................................3

31 U.S.C. § 1553(a) ...................................................................................................................9, 10

31 U.S.C. § 1555 ....................................................................................................................3, 9, 10

Other Authorities

Congressional Budget Office, CBO Explains How It Estimates Savings From Rescissions,
May 23, 2023, https://www.cbo.gov/system/files/2023-05/58915-Rescissions.pdf .......................9

Congressional Research Service, Expiration and Cancellation of Unobligated Funds,
February 26, 2024, https://crsreports.congress.gov/product/pdf/IF/IF12329/3 ...............................9

Department of Justice, Office of Legal Counsel, Application of the Miscellaenous
Receipts Act to the Settlement of False Claims Act Suits Concerning Contracts With the
General Services Administration, January 10, 2006,
https://www.justice.gov/opinion/file/786171/dl ............................................................................10

Department of Justice Press Release, Former Montgomery County Restaurant Owner
Charged with PPP and RRF Loan Fraud, May 17, 2024, https://www.justice.gov/usao-
edpa/pr/former-montgomery-county-restaurant-owner-charged-ppp-and-rrf-loan-fraud .............10

Government Accountability Office:

Comptroller General Decision B-265901, Oct. 14, 1997 ........................................................10

Comptroller General Decision B-302366, July 12, 2004 ........................................................10

Comptroller General Decision B-310725, May 20, 2008 .......................................................10

Principles of Federal Appropriations Law,
Chapter 6, Availability of Appropriations: Amount (3d ed. 2006) ..........................................10

Principles of Federal Appropriations Law,
Chapter 7, Obligation of Appropriations (3d ed. 2006) ........................................................5, 7

iii

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 5 of 17

Principles of Federal Appropriations Law,
Chapter 9, Liability and Relief of Accountable Officers (3d ed. 2006) ...................................10

Principles of Federal Appropriations Law,
Chapter 10, Federal Assistance: Grants and Cooperative Agreements (3d ed. 2006) ...........10
Principles of Federal Appropriations Law,
Chapter 14, Claims against and by the Government (3d ed. 2008) ..........................................8

Letter from Anthony H. Gamboa, General Counsel, GAO, to Christopher Bond,
Chairman, and Barbara Mikulski, United States Senate (April 9, 2003), B-300480
https://www.gao.gov/assets/b-300480.pdf .................................................................................7

Steven N. Tomanelli, Appropriations Law: Principles and Practice (2003)....................................5

U.S. Cert. Pet., United States v. Samish Indian Nation,
2012 WL1961403, No. 11-1448 (June 1, 2012) ………………………………………. 3, 4

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 6 of 17

QUESTIONS PRESENTED

1 – Does 15 U.S.C. § 9009c(b)(2)(A) impose a statutory cap on the amount of money to

be spent under the Restaurant Revitalization Fund, or does § 9009c create an uncapped liability

to support an award to the plaintiffs, either directly or through the Judgment Fund?

2 – Presuming that § 9009c caps liability and that § 9009c(c)(1) required the SBA to

award grants strictly in the order in which applications were received, does the exhaustion of the

available funds through the award of grants to entities who submitted their applications after the

plaintiffs foreclose the plaintiffs from stating a claim for relief? What effect does the Fiscal

Responsibility Act’s de-obligation provision and § 9009c(c)(6)’s requirement that unspent funds

be returned to the Treasury have on this question?

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 7 of 17

ARGUMENT

The Supreme Court in Maine Community Health stressed that its holdings “reflect a

principle as old as the Nation itself: The Government should honor its obligations.” 141 S. Ct.

1308, 1331 (2020). Pursuant to fundamental tenets of appropriations law implementing that

bedrock principle, Plaintiffs here have stated a claim.

In § 9009c Congress mandated that the SBA award grants to a particular group of

applicants and appropriated a fixed sum for that purpose. Congress did not confine its mandate

to the “availability of appropriations”—language that has been said to “limit liability.” Congress

instead directed SBA to award grants in the order applications were received, thus identifying

applicants to whom the statutory obligation would run, and to whom it would not. Plaintiffs’

claims therefore effectuate Congressional intent rather than contravene it. In fact, when

presented a similar situation, the Federal Circuit unanimously held that a fixed appropriation did

not cap the Government’s liability to the plaintiffs, and the Judgment Fund could satisfy any

damages award. That Federal Circuit decision was voluntarily dismissed by plaintiffs and then

vacated as moot, but it remains persuasive.

Even if § 9009c capped liability (as in Greenlee County), that would not change the

outcome. Erroneous disbursements do not extinguish the Government’s liability to a claimant it

is obligated to pay, even if the appropriation has been depleted. Disbursements made by the

SBA to ineligible applicants or later applicants (i.e., those whose applications were received

outside of the first $28.6 billion in applications) were contrary to Congress’s statutory mandate,

and, therefore, could not extinguish the statutory obligation to Plaintiffs or foreclose their claims.

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 8 of 17

The Fiscal Responsibility Act (“FRA”) does not affect the viability of Plaintiffs’ claims

because money was previously obligated to Plaintiffs by operation of law when Plaintiffs’

applications were received, and the FRA requires only unobligated funds to be returned to the

Treasury. Because SBA erroneously disbursed funds (that were obligated to Plaintiffs) to entities

to whom it was neither obligated nor authorized to pay, the agency has a legal duty to recover

those disbursements. Any such returned funds (previously obligated to Plaintiffs) would be

available to satisfy Plaintiffs’ claims. And even if they are not because the RRF account is (or

becomes) legally unavailable—as SBA has argued—the Judgment Fund would be available.

I. Question 1: § 9009c(b)(2)(A) does not impose a statutory cap on liability to the
Plaintiffs.

Section 9009c(b)(2)(A) does not impose a statutory cap on liability as that term is used in

Maine Community Health and Greenlee County because Congress did not make the obligation to

pay “subject to available appropriations,” or the equivalent. In fact, Congress unambiguously

did the opposite by stating that the appropriation was “in addition to amounts otherwise

available,” and therefore it would be “inappropriate to rely upon legislative history to establish

the existence of a statutory cap that is not contained in the text of the statute itself.” Molina

Healthcare of Cal. v. United States, 133 Fed. Cl. 14, 39-40 (2017) (cleaned up). While not

imposing a liability cap, the appropriation of a fixed sum did narrow the group of entities SBA

was obligated to pay (based on the order applications were received). Pls.’ Opp’n 13-14. The

fixed appropriation did not limit liability for amounts the agency was obligated to pay. In this

regard, this case is like Samish Indian Nation in which the Federal Circuit unanimously rejected

the argument that a liability cap defeated plaintiff’s claims. 657 F.3d 1330, 1339-41 (Fed. Cir.

2011), reh’g and reh’g en banc denied, vacated as moot, 568 U.S. 936 (2012).

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 9 of 17

In Samish, the Federal Circuit addressed statutory grant programs with fixed

appropriations. The funds had been fully disbursed and the pertinent accounts expired before

suit was filed. 657 F.3d at 1335. The Government argued liability was capped because

legislative history indicated the appropriation of a fixed amount was “essential” so the program’s

cost would be “definite and ascertainable beforehand.” U.S. Cert. Pet. at 9, No. 11-1448 (June 1,

2012) (“U.S. Pet.”). The Government further argued that because all funds had been expended

and lapsed, the Anti-Deficiency Act (“ADA”) precluded the Court from granting relief. See 657

F.3d at 1339-41. The Federal Circuit unanimously rejected these arguments. It held that even

though the appropriations in Samish were fixed (as in the RRF), the Revenue Act was not

“capped in a manner that restricts the government’s liability for damages” because the obligation

to pay was not subject to the limiting language of the statutes in Star-Glo and Greenlee County.

Id. at 1340. Although agency accounts in Samish expired and would have closed long before the

suit was filed, 31 U.S.C. §§ 1552(a), 1555, the Judgment Fund could pay money damages. 657

F.3d at 1341. The Federal Circuit noted that the ADA “does not limit the Court of Federal

Claims’ power to enter a judgment in damages to compensate a plaintiff for an injury on a claim

brought under the Tucker Act.” Id. at 1338. Because courts had determined the plaintiff tribe

should have been federally recognized, the Government was obligated to pay the plaintiff. This

obligation was owed even though the Government had exhausted the appropriation by, in effect,

overpaying other participants by omitting plaintiff from the allocation scheme. In short, because

the plaintiff’s claims were within the statutory obligation, exhaustion and expiration of the

appropriation, including by paying too much to other participants, did not foreclose the claims.

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 10 of 17

The Government petitioned the Supreme Court for a writ of certiorari and informed the

Court that a “materially similar question” was presented in Salazar v. Ramah Navajo Chapter,

which was pending. U.S. Cert. Pet. at 15. On June 18, 2012, the Supreme Court rejected the

Government’s arguments in Ramah. 567 U.S. 182 (2012). The Supreme Court later confirmed

that the principles underpinning Ramah apply to statutory Tucker Act cases arising from a

money-mandating statute in addition to claims sounding in contract. Maine Cmty. Health, 140 S.

Ct. at 1319-20, 1321-22. After the Samish plaintiffs informed the Supreme Court of their

voluntary dismissal, the Court granted certiorari and vacated the decision below as moot. The

reasoning of the three Circuit judges in Samish remains a persuasive analysis of a situation

that—like here—involved claims within a statutory obligation for which the fixed appropriation

had been exhausted and expired. The Federal Circuit had no difficulty concluding that those

factors neither foreclosed claims nor relieved the government of liability. This Court should

reach the same conclusion.

II. Question 2: Even if § 9009c imposed a statutory cap on liability, the Plaintiffs state
a claim upon which relief can be granted.

Plaintiffs’ claims would be cognizable even if Congress had capped liability under the

RRF by making the payment obligation subject to available appropriations. Pls.’ Opp’n 17-20.

In a capped liability fund (like in Greenlee County), damages claims fail if they expand a

program’s obligations beyond the appropriation. Id. at 16-17. Plaintiffs’ claims here do not

expand and instead are within the statutory obligation, even if it is capped. This is so because

SBA’s erroneous disbursement in violation of the statutory mandate did not satisfy the obligation

to Plaintiffs (nor create an obligation to those erroneously paid). Whether or not SBA complies

with its legal duty to recover erroneous expenditures, id. at 13, the purported exhaustion of the

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 11 of 17

RRF through erroneous payments has no legal effect on the viability of Plaintiffs’ claims, id. at

19-20. And neither the FRA nor §9009c(c)(6) forecloses Plaintiffs’ claims.

A. The obligation to Plaintiffs arose when their applications were received.

“The timing of obligations is critical in determining whether an agency has complied

with the time, purpose, and amount restrictions established by Congress for each appropriation.”

Steven N. Tomanelli, Appropriations Law 43 (2003) (“Appropriations Law”). In Maine

Community Health, the Supreme Court explained that “Congress can create an obligation

directly through statutory language” and “impose[] a legal duty of the United States that could

mature into legal liability . . . .” 140 S. Ct. at 1320. Here, that obligation arose “by operation of

law” as mandated by statute, GAO Redbook 7-41, and that occurred in the order Plaintiffs’

applications were received (as indicated by the date/time applications were uploaded to SBA’s

platform). See Compl. ¶ 129; Pls.’ Opp’n at 11-12; 22-27; Tr. (ECF 15) (Oral arg. May 22,

2024), at 63 (noting SBA’s argument on meaning of “received” was one of its “weaker”

arguments).

“[T]he determination of whether an obligation exceeds the amount available in the

appropriation is based on the unobligated balance in the appropriation account on the day the

obligation is created.” Appropriations Law 43 (emphasis added). SBA’s obligation to pay

Plaintiffs arose on or before May 3, 2021, when their applications were received, which was

before the RRF was exhausted either by valid obligations or erroneous disbursements. Compl.

¶¶ 140-41. For this reason, Plaintiffs’ claims are within the scope of the substantive obligation

created by § 9009c and fundamentally different from the claims in Greenlee County.

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 12 of 17

The program in Greenlee County provided pro-rated reduced awards to all participants

because the funds appropriated were insufficient. The plaintiff there received its properly

prorated award, but sought a full award (with no allegation of erroneous expenditures). The

Federal Circuit held that liability was capped because the money-mandating obligation was

expressly “subject to available appropriations.” The failure to pay a full grant to plaintiff did not

violate the agency’s legal duty because that duty was limited by the cap. Greenlee Cnty. v.

United States, 487 F.3d 871, 880 (Fed. Cir. 2007); Pls.’ Opp’n 16-17. The situation here is

fundamentally different because there is no proration of grants, and the SBA wrongfully paid

funds it was obligated to pay Plaintiffs to entities it was neither obligated nor authorized to pay.

Other capped fund cases are of no help to SBA. In State of South Carolina v. United

States, 144 Fed. Cl. 277 (2019), after amending the money-mandating statute to make it “subject

to available appropriations,” id. at 280, Congress appropriated no money. Id. at 282, 284,

290. The result was there was never an obligation, and thus no statutory violation. Id. at 288-

89. In Star-Glo Assocs., LP v. United States, 414 F.3d 1349, 1355 (Fed. Cir. 2005), the Court

found the agency’s interpretation of the statute was correct, with the same result. Id. at 1357-58.

These cases turned on the question whether the Government was statutorily obligated to

pay disputed amounts, but in each case the disputed amounts exceeded the obligation as limited

by the appropriation. Here, it is alleged (and not plausibly disputed) that the SBA violated the

statutory mandate to award grants in the order applications were received and, in contrast to

Greenlee, RRF mandated full (not prorated) awards to a limited group of applicants in the order

received (not to everyone who applied). Plaintiffs’ well-pled factual allegations establish they

are within that group to whom the Government’s obligation ran. Pls.’ Opp’n 10-11. Unlike

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 13 of 17

Greenlee County and South Carolina, Plaintiffs’ claims here are not predicated on expanding the

government’s obligation beyond the first $28.6 billion of eligible applications received by SBA.

B. Erroneous payments do not foreclose Plaintiffs’ claims.

The agency has argued that as of November 2022 it exhausted all $28.6 billion when it

awarded recovered RRF funds to other applicants. Compl. ¶ 69; SBA Mot. (ECF 7), at 2-3. To

the extent all RRF money was disbursed, the ADA likely would prevent the agency from

disbursing additional money, absent recovery of erroneous disbursements. 31 U.S.C. §

1341(a)(1)(A). More fundamentally, the ADA is a constraint on agency disbursements and

obligations, not a defense to statutory violations. To the extent the agency tied its own hands by

wrongfully disbursing funds, Plaintiffs’ remedy is a damages claim in this Court (which is not

constrained by the ADA under these circumstances). Maine Cmty. Health, 140 S. Ct. at 1322.

Exhaustion of the RRF through erroneous disbursements does not foreclose Plaintiffs’

damages claims. Had the agency followed the statute and properly recorded obligations in the

order applications were received, funds for Plaintiffs’ awards would have been reserved within

the fixed appropriation (just like Samish). The agency was required to record obligations as

applications were received. GAO Redbook 7-41 to 7-42. Those obligated balances could be

adjusted to reflect additional information during agency review. Id; B-300480 at 6 (Apr. 9,

2003). Neither SBA’s failure to properly record obligations nor its erroneous disbursements

determine the existence of an obligation: “[F]ailing to record a valid obligation in no way

diminishes its validity or affects the fiscal year to which it is properly chargeable. . . .” GAO

Redbook at 7-8. The Supreme Court long ago made clear that erroneous disbursements do not

foreclose damages claims even if there is a statutory cap on the Government’s liability: “Unless

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 14 of 17

the parties can agree as to the facts, the case should be remanded to the Court of Claims to

determine what, if any, amount was erroneously charged against the appropriations . . . ; and for

the amount of such improper charges, if any, judgment should be entered for the petitioner.”

Sutton v. United States, 256 U.S. 575, 582 (1921) (Brandeis, J.).

That additional money may be expended through the Judgment Fund for damages caused

by SBA’s statutory violations does not expand the appropriation. Since receipt of their

applications, the SBA always has been obligated to Plaintiffs and never was obligated (or

authorized) to pay ineligible or later applicants. GAO Redbook 14-50 (explaining “[p]ayment to

the wrong person obviously does not discharge the government’s obligation. If, through

administrative mistake of fact or law or clerical error, a payment is made to a person not entitled

to it, the government is still obligated to make payment to the proper claimant . . . .”).

The separate problem presented by erroneous disbursements—a violation of the Purpose

Statute, 31 U.S.C. § 1301(a)—cannot be remedied by this case and must be addressed through

attempted recovery, see GAO Redbook 14-50, and Congressional oversight. But SBA’s

erroneous distributions are not a basis for dismissing Plaintiffs’ claims. See GAO Redbook 14-

50 (explaining that “payment to the proper claimant should not be held up pending recovery of

the erroneous payment, even though this may result in a duplicate payment”). The Sutton Court

remanded to the Court of Claims for this precise reason—potential erroneous disbursements did

not foreclose plaintiff’s damages claims even though the agency disbursed all available funds.

256 U.S. at 582. Thus, even if payment of Plaintiffs’ claims would cause total expenditures (at

least temporarily) to exceed $28.6 billion, those expenditures would not be inconsistent with a

cap on liability.

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 15 of 17

C. The FRA rescinds only unobligated funds.

The RRF is available for an “indefinite” period because it “remains available until

expended”; it does not “expire” and remains available until it is “closed,” at which point it

becomes legally unavailable. See 31 U.S.C. §1555; CRS, Expiration and Cancellation of

Unobligated Funds 1-2 (Feb. 26, 2024). Closure of the RRF will not occur until October 2025

after two consecutive fiscal years have elapsed since the last disbursement. 31 U.S.C. §1555.

The FRA, enacted June 3, 2023, permanently rescinded “unobligated balances” made

available by § 9009c(b)(2)(A). A judgment of liability in this case would have the effect of

confirming unliquidated obligations to Plaintiffs based upon legal liabilities that matured on or

before May 3, 2021, when their applications were received. Any recoveries of erroneous

distributions returned to the RRF after May 3, 2021, were already “obligated” to first-in-time

applicants and outside the reach of the FRA. See 31 U.S.C. §1551(a)(1) (defining “obligated

balance”); see also 31 U.S.C. §1502(b) (“A provision of law requiring that the balance of an

appropriation or fund be returned to the general fund of the Treasury at the end of a definite

period does not affect the status of lawsuits or rights of action involving the right to an amount

payable from the balance.”). This is highlighted by CBO’s scoring, which estimates no savings

from rescissions where budget authority is fully obligated (as it was in RRF before FRA’s

enactment). CBO Explains How It Estimates Savings from Rescissions (May 2023), at 4. CBO

scores entitlement programs the same way. Id.

FRA has no effect on obligated balances and does not “de-obligate” previously obligated

funds. Rescission of unobligated funds is akin to expiration after which an account “shall . . .

remain available for recording, adjusting, and liquidating obligations properly chargeable to that

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 16 of 17

account.” 31 U.S.C. §1553(a); see also B-265901 (Oct. 14, 1997) (expired funds could be used

to satisfy obligation retroactively adjudicated). Rescission is different from closure, which

applies to both “obligated” and “unobligated” balances. 31 U.S.C. §1555. Additionally, FRA

did not rescind a separate $840 million account available to RRF. See Pls.’ Opp’n. at 20 n.16.

At any rate, if SBA is correct that agency funds are legally unavailable, the Judgment Fund

would be available (as in Samish). Id. at 16 n.13; 20 n.16.

D. Section 9009c(c)(6) does not foreclose Plaintiffs’ claims.

Section 9009c(c)(6) requires award recipients to return unused funds to the Treasury.

Such funds would be legally unavailable to the agency once returned to the Treasury, but Section

9009c(c)(6) is narrow and does not purport to (a) address the agency’s use of other previously

obligated funds; or (b) negate the agency’s obligation to seek return of erroneous disbursements

(whether used or unused). GAO Redbook 9-137, 10-132; B-302366 (Jul. 12, 2004). It also does

not constrain the agency’s use of recovered erroneous disbursements to satisfy Plaintiffs’

damages claims. GAO Redbook 6-170 to 6-171; Pls.’ Opp’n at 20-22, 32-35. Efforts to recover

erroneous disbursements are ongoing. Compl. ¶¶ 7, 69-70, 88, 90, 120-23; DOJ Press Release

(May 17, 2024), available at https://shorturl.at/NJnLm. Any such recovered funds may be used

for the same purpose and time limitations as the original appropriation so long as the account has

not closed. See B-310725 (May 20, 2008); OLC Memorandum, Application of the

Miscellaneous Receipts Act (Jan. 10, 2006), at 57. Accordingly, they are a potential source to

satisfy a money judgment here as long as the RRF account remains open.

Section 9009c(c)(6) also has no bearing on the availability of the Judgment Fund.

Case 1:23-cv-01876-RAH Document 17 Filed 06/05/24 Page 17 of 17

Respectfully submitted,

/s/ F. Greg Bowman
F. Greg Bowman
Edward Reddington
WILLIAMS & CONNOLLY LLP
680 Maine Avenue, SW
Washington, DC 20024
202-434-5000
fbowman@wc.com
Attorneys for Plaintiffs

Robel Yared
WILLIAMS & CONNOLLY LLP
680 Maine Avenue, SW
Washington, DC 20024
202-434-5000
Of Counsel