The State of California, a Sovereign State v. Caspar W. Weinberger, Secretary of the United States Department of Health, Education and Welfare

This case is a companion of County of Alameda v. Weinberger (9th Cir. (1975) 520 F.2d 344 , decided today. In September 1968, pursuant to a recommendation by the United States Department of Health, Education, and Welfare [“HEW”], plaintiffs instituted a new method of computing and allocating the State’s costs in administering its federally-funded food stamp programs. Plaintiffs claim and defendants deny that HEW approved the new method. In September 1971, an audit of California’s food stamp programs resulted in a decision by HEW to require the State (1) to revise its method of computing and allocating the relevant costs and (2) return to the federal government $3,279,520 in “overpayments” to the State caused by California’s allegedly faulty cost-allocation method. HEW further decided that it would recoup its overpayments by deducting that amount from its current quarterly payments to California of the federal share of the costs of the food stamp programs.

The State and the other plaintiffs sued to enjoin HEW from withholding the funds. Upon HEW’s motion, the district court dismissed the suit for lack of jurisdiction of the subject matter, and plaintiffs appeal.…