United States Court of Appeals for the Federal Circuit ______________________

INDIANA MUNICIPAL POWER AGENCY, MISSOURI JOINT MUNICIPAL ELECTRIC UTILITY COMMISSION, NORTHERN ILLINOIS MUNICIPAL POWER AGENCY, AMERICAN MUNICIPAL POWER, INC., ILLINOIS MUNICIPAL ELECTRIC AGENCY, KENTUCKY MUNICIPAL POWER AGENCY, Plaintiffs-Appellants

v.

UNITED STATES, Defendant-Appellee ______________________

2022-1377 ______________________

Appeal from the United States Court of Federal Claims in No. 1:20-cv-02038-RAH, Judge Richard A. Hertling. ______________________

Decided: February 17, 2023 ______________________

PEGGY A. WHIPPLE, Healy Law Offices, LLC, Spring- field, MO, argued for plaintiffs-appellants. Also repre- sented by DOUGLAS HEALY; JOHN C. HAYES, JR., BRIAN J. WHITTAKER, Nixon Peabody LLP, Washington, DC.

STEVEN MICHAEL MAGER, Commercial Litigation Branch, Civil Division, United States Department of Case: 22-1377 Document: 44 Page: 2 Filed: 02/17/2023

2 INDIANA MUNICIPAL POWER AGENCY v. US

Justice, Washington, DC, argued for defendant-appellee. Also represented by BRIAN M. BOYNTON, ERIC P. BRUSKIN, PATRICIA M. MCCARTHY. ______________________

Before PROST, REYNA, and HUGHES, Circuit Judges. HUGHES, Circuit Judge. On appeal is the Court of Federal Claims’ judgment that sequestration applies to reduce government payments for Build America Bonds and that Appellants do not have a contractual right to these payments. We affirm and adopt the trial court’s reasoning. I Congress passed the American Recovery and Reinvest- ment Act of 2009 (ARRA) to stabilize the U.S. economy in the wake of the 2008 financial crisis. Pub. L. No. 111-5, 123 Stat. 115 (2009). Section 1531 of the ARRA created two types of government-subsidized bonds called Build Amer- ica Bonds (BABs). § 1531, 123 Stat. at 358–360. The type of bonds at issue, “Direct Payment BABs,” en- titled bond issuers to a tax refund from the U.S. Depart- ment of the Treasury (“Treasury”) equal to 35 percent of the interest paid on their BABs. Treasury annually pays issuers of BABs upon receiving a timely Form 8038-CP filed by the issuers. I.R.S. Notice 2009-26, § 3.1. The pay- ments are funded by the permanent, indefinite appropria- tion for refunds of internal revenue collections. 31 U.S.C. § 1324 (providing for the appropriation of “[n]ecessary amounts . . . for refunding internal revenue collections”). Appellants are a group of local power agencies that col- lectively issued over four billion dollars in qualifying Direct Payment BABs before January 1, 2011. From January 2010 through the end of 2012, Treasury paid the full 35 percent of the bonds’ interest payments. Case: 22-1377 Document: 44 Page: 3 Filed: 02/17/2023

INDIANA MUNICIPAL POWER AGENCY v. US 3

In 2011 and 2013, Congress passed legislation reviving sequestration: “[T]he cancellation of budgetary resources provided by discretionary appropriations or direct spend- ing law.” 2 U.S.C. §§ 900(c)(2), 901(a); see Budget Control Act, Pub. L. No. 112-25, 125 Stat. 240 (2011); American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 2313 (2013). Pursuant to this sequestration legislation, Treasury stopped making payments to Appellants at the rate of 35 percent. Instead, since 2013, Appellants have been paid the reduced rates as determined by the Office of Management and Budget’s sequestration calculations. For example, 2013 payments were reduced from 35 percent to 8.7 percent in accordance with the 2013 sequestration rate. On December 30, 2020, Appellants fil