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Office of the General Counsel:
United States General Accounting Office:
GAO:
January 2004:
Principles of Federal Appropriations Law:
Third Edition:
Volume I:
GAO-04-261SP:
Foreword:
We are pleased to present the third edition of Volume I of Principles
of Federal Appropriations Law, commonly known as the "Red Book." Our
objective in this publication is to present a basic reference work
covering those areas of law in which the Comptroller General renders
decisions. This volume and all other volumes of Principles are
available on GAO's Web site ([Hyperlink, www.gao.gov]) under "GAO
Legal Products."
Our approach in Principles is to lay a foundation with text discussion,
using specific legal authorities to illustrate the principles
discussed, their application, and exceptions. These authorities include
GAO decisions and opinions, judicial decisions, statutory provisions,
and other relevant sources. We would encourage users to start with at
least a brief review of Chapter 1, which provides a general framework
and context for all that follows. Chapter 1 includes a note regarding
citations to GAO case law and other relevant GAO material and an
explanation of those other materials.
We have tried to be simultaneously basic and detailed--basic so that
the publication will be useful as a "teaching manual" and guide for the
novice or occasional user (lawyer and nonlawyer alike) and detailed so
that it will assist those who require a more in-depth understanding.
The purpose of Principles is to describe existing authorities; it
should not be regarded as an independent source of legal authority. The
material in this publication is, of course, subject to changes in
statute or federal and Comptroller General case law. Also, it is
manifestly impossible to cover in this publication every aspect and
nuance of federal appropriations law. We have not attempted to include
all relevant decisions, and we admit (albeit grudgingly) that errors
and omissions probably are inevitable. Principles should therefore be
used as a general guide and starting point, not as a substitute for
original legal research.
It is also important to emphasize that we have focused our attention on
issues and principles of governmentwide application. In various
instances, agency-specific legislation may provide authority or
restrictions somewhat different from the general rule. While we have
noted many of these instances for purposes of illustration, a
comprehensive cataloguing of such legislation is beyond the scope of
this publication. Thus, failure to note agency-specific exceptions in a
given context does not mean that they do not exist.
As with the second edition of Principles, we are publishing the third
edition in a loose-leaf format. However, it will also be available
electronically at [Hyperlink, www.gao.gov]. We plan four volumes with
annual updates. Annual updates will only be published electronically.
Users should retain copies of their five volumes of the second edition
until each volume is revised. We will not update Volume III of the
second edition, which was last revised in November 1994. It deals with
functions that were transferred to the executive branch by the General
Accounting Office Act of 1996 (Public Law 104-316), including claims
against the United States, debt collection, and payment of judgments
against the United States. Future editions and updates of Principles
will not include these subjects.
Volume V, published in April 2002, is a comprehensive index and table
of authorities covering the entire second edition of Principles. It
will continue to apply to the second edition volumes until they are
revised. As each volume of the third edition is issued, it will contain
its own index. Once the third edition is complete, we will publish a
new comprehensive index and table of authorities.
The response to Principles has been both gratifying and encouraging
since the first edition was published in 1982. We express our
appreciation to the many persons in all branches of the federal
government, as well as nonfederal readers, who have offered comments
and suggestions. Our goal now, as it was in 1982, is to present a
document that will serve as a helpful reference for a wide range of
users. To that end, we again invite comments and suggestions for
improvement. We thank our readers for their support and hope that this
publication continues to serve their needs.
Signed by:
Anthony Gamboa:
General Counsel:
January 2004:
[End of section]
Summary of Contents:
Volume I:
Chapter 1 - Introduction:
Chapter 2 - The Legal Framework:
Chapter 3 - Agency Regulations and Administrative Discretion:
Chapter 4 - Availability of Appropriations: Purpose:
Chapter 5 - Availability of Appropriations: Time:
Volume II:
Chapter 6 - Availability of Appropriations: Amount:
Chapter 7 - Obligation of Appropriations:
Chapter 8 - Continuing Resolutions:
Chapter 9 - Liability and Relief of Accountable Officers:
Chapter 10 - Federal Assistance: Grants and Cooperative Agreements:
Chapter 11 - Federal Assistance: Guaranteed and Insured Loans:
Volume III:
Chapter 12 - Acquisition and Provision of Goods and Services:
Chapter 13 - Real Property:
Chapter 14 - Miscellaneous Topics:
Volume IV:
Tables of Authorities Cited:
Index:
[End of section]
Detailed Table of Contents:
Volume I:
Chapters 1-5:
Chapter 1: Introduction:
A. Nature of Appropriations Law:
B. The Congressional "Power of the Purse":
C. Historical Perspective:
1. Evolution of the Budget and Appropriations Process:
2. GAO's Role in the Process:
D. "Life Cycle" of an Appropriation:
1. Executive Budget Formulation and Transmittal:
2. Congressional Action:
a. Summary of Congressional Process:
b. Points of Order:
3. Budget Execution and Control:
a. In General:
b. Impoundment:
4. Audit and Review:
a. Basic Responsibilities:
b. GAO Recommendations and Matters for Consideration:
5. Account Closing:
E. The Role of the Accounting Officers: Legal Decisions:
1. A Capsule History:
a. Accounting Officers Prior to 1894:
b. 1894-1921: Comptroller of the Treasury:
c. 1921 to the Present Time:
2. Decisions of the Comptroller General:
a. General Information:
b. Matters Not Considered:
c. Research Aids:
d. Note on Citations:
3. Other Relevant Authorities:
a. GAO Materials:
b. Non-GAO Materials:
c. Note on Title 31 Recodification:
Chapter 2: The Legal Framework:
A. Appropriations and Related Terminology:
1. Introduction:
2. Concept and Types of Budget Authority:
a. Appropriations:
b. Contract Authority:
c. Borrowing Authority:
d. Monetary Credits:
e. Offsetting Receipts:
f. Loan and Loan Guarantee Authority:
3. Some Related Concepts:
a. Spending Authority:
b. Entitlement Authority:
4. Types of Appropriations:
a. Classification Based on Duration:
b. Classification Based on Presence or Absence of Monetary Limit:
c. Classification Based on Permanency:
d. Classification Based on Availability for New Obligations:
e. Reappropriation:
B. Some Basic Concepts:
1. What Constitutes an Appropriation:
2. Specific versus General Appropriations:
a. General Rule:
b. Two Appropriations Available for Same Purpose:
3. Transfer and Reprogramming:
a. Transfer:
b. Reprogramming:
4. General Provisions: When Construed as Permanent Legislation:
C. Relationship of Appropriations to Other Types of Legislation:
1. Distinction between Authorization and Appropriation:
2. Specific Problem Areas and the Resolution of Conflicts:
a. Introduction:
b. Variations in Amount:
(1) Appropriation exceeds authorization:
(2) Appropriation less than authorization:
(3) Earmarks in authorization act:
c. Variations in Purpose:
d. Period of Availability:
e. Authorization Enacted After Appropriation:
f. Two Statutes Enacted on Same Day:
g. Ratification by Appropriation:
h. Repeal by Implication:
i. Lack of Authorization:
D. Statutory Interpretation: Determining Congressional Intent:
1. The Goal of Statutory Construction:
2. The "Plain Meaning" Rule:
a. In General:
b. The Plain Meaning Rule versus Legislative History:
3. The Limits of Literalism: Errors in Statutes and "Absurd
Consequences":
a. Errors in Statutes:
(1) Drafting errors:
(2) Error in amount appropriated:
b. Avoiding "Absurd Consequences":
4. Statutory Aids to Construction:
a. Definitions, Effective Dates, and Severability Clauses:
b. The Dictionary Act:
c. Effect of Codification:
5. Canons of Statutory Construction:
a. Construe the Statute as a Whole:
b. Give Effect to All the Language: No "Surplusage":
c. Apply the Common Meaning of Words:
d. Give a Common Construction to the Same or Similar Words:
e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not
Controlling:
f. Avoid Constructions That Pose Constitutional Problems:
6. Legislative History:
a. Uses and Limitations:
b. Components and Their Relative Weight:
(1) Committee reports:
(2) Floor debates:
(3) Hearings:
c. Post-enactment Statements:
d. Development of the Statutory Language:
7. Presumptions and "Clear Statement" Rules:
a. Presumption in Favor of Judicial Review:
b. Presumption against Retroactivity:
c. Federalism Presumptions:
d. Presumption against Waiver of Sovereign Immunity:
Chapter 3: Agency Regulations and Administrative Discretion:
A. Agency Regulations:
1. The Administrative Procedure Act:
a. The Informal Rulemaking Process:
b. Informal Rulemaking: When Required:
c. Additional Requirements for Rulemaking:
2. Regulations May Not Exceed Statutory Authority:
3. "Force and Effect of Law":
4. Waiver of Regulations:
5. Amendment of Regulations:
6. Retroactivity:
B. Agency Administrative Interpretations:
1. Interpretation of Statutes:
2. Interpretation of Agency's Own Regulations:
C. Administrative Discretion:
1. Introduction:
2. Discretion Is Not Unlimited:
3. Failure or Refusal to Exercise Discretion:
4. Regulations May Limit Discretion:
5. Insufficient Funds:
Chapter 4: Availability of Appropriations: Purpose:
A. General Principles:
1. Introduction: 31 U.S.C. § 1301(a):
2. Determining Authorized Purposes:
a. Statement of Purpose:
b. Specific Purpose Stated in Appropriation Act:
3. New or Additional Duties:
4. Termination of Program:
a. Termination Desired:
b. Reauthorization Pending:
B. The "Necessary Expense" Doctrine:
1. The Theory:
a. Relationship to the Appropriation:
b. Expenditure Otherwise Prohibited:
c. Expenditure Otherwise Provided For:
2. General Operating Expenses:
a. Training:
b. Travel:
c. Postage Expenses:
d. Books and Periodicals:
e. Miscellaneous Items Incident to the Federal Workplace:
C. Specific Purpose Authorities and Limitations:
1. Introduction:
2. Attendance at Meetings and Conventions:
a. Government Employees:
(1) Statutory framework:
(2) Inability to attend:
(3) Federally sponsored meetings:
(4) Rental of space in District of Columbia:
(5) Military personnel:
b. Nongovernment Personnel:
(1) 31 U.S.C. § 1345:
(2) Invitational travel:
(3) Use of grant funds:
3. Attorney's Fees:
a. Introduction:
b. Hiring of Attorneys by Government Agencies:
c. Suits Against Government Officers and Employees:
d. Suits Unrelated to Federal Employees:
e. Claims by Federal Employees:
(1) Discrimination proceedings:
(2) Other employee claims:
f. Criminal Justice Act:
(1) Types of actions covered:
(2) Miscellaneous cases:
g. Equal Access to Justice Act:
h. Contract Matters:
(1) Bid protests:
(2) Contract disputes:
i. Public Participation in Administrative Proceedings: Funding of
Intervenors:
4. Compensation Restrictions:
a. Dual Compensation:
b. Employment of Aliens:
c. Forfeiture of Annuities and Retired Pay:
(1) General principles:
(2) The Alger Hiss case:
(3) Types of offenses covered:
(4) Related statutory provisions:
5. Entertainment--Recreation--Morale and Welfare:
a. Introduction:
(1) Application of the rule:
(2) What is entertainment?
b. Food for Government Employees:
(1) Working at official duty station under unusual conditions:
(2) Government Employees Training Act:
(3) Award ceremonies:
(4) Cafeterias and lunch facilities:
c. Entertainment for Government Employees Other Than Food:
(1) Miscellaneous cases:
(2) Cultural awareness programs:
d. Entertainment of Nongovernment Personnel:
e. Recreational and Welfare Facilities for Government Personnel:
(1) The rules: older cases and modern trends:
(2) Child care:
f. Reception and Representation Funds:
6. Fines and Penalties:
7. Firefighting and Other Municipal Services:
a. Firefighting Services: Availability of Appropriations:
b. Federal Fire Prevention and Control Act of 1974:
c. Other Municipal Services:
8. Gifts and Awards:
a. Gifts:
b. Contests:
(1) Entry fees:
(2) Government-sponsored contests:
c. Awards:
9. Guard Services: Anti-Pinkerton Act:
a. Evolution of the Law Prior to 57 Comp. Gen. 524:
b. 57 Comp. Gen. 524 and the Present State of the Law:
10. Insurance:
a. The Self-Insurance Rule:
b. Exceptions to the Rule:
(1) Departments and agencies generally:
(2) Government corporations:
c. Specific Areas of Concern:
(1) Property owned by government contractors:
(2) Use of motor vehicles:
(3) Losses in shipment:
(4) Bonding of government personnel:
11. Lobbying and Related Matters:
a. Introduction:
b. Penal Statutes:
c. Appropriation Act Restrictions:
(1) Origin and general considerations:
(2) Self-aggrandizement:
(3) Covert propaganda:
(4) Pending legislation: overview:
(5) Cases involving "grassroots" lobbying violations:
(6) Pending legislation: cases in which no violation was found:
(7) Pending legislation: Providing assistance to private lobbying
groups:
(8) Promotion of legislative proposals: Prohibited activity short of
grass roots lobbying:
(9) Dissemination of political or misleading information:
d. Lobbying with Grant Funds:
e. Informational Activities:
f. Advertising and the Employment of Publicity Experts:
(1) Commercial advertising:
(2) Advertising of government programs, products, or services:
(3) Publicity experts:
12. Membership Fees:
a. 5 U.S.C. § 5946:
b. Attorneys:
13. Personal Expenses and Furnishings:
a. Introduction:
b. Business or Calling Cards:
c. Health, Medical Care and Treatment:
(1) Medical care:
(2) Purchase of health-related items:
(3) The Rehabilitation Act:
d. Office Furnishings (Decorative Items):
e. Personal Qualification Expenses:
f. Photographs:
g. Seasonal Greeting Cards and Decorations:
(1) Greeting cards:
(2) Seasonal decorations:
h. Traditional Ceremonies:
i. Wearing Apparel:
j. Miscellaneous Personal Expenses:
(1) Commuting and parking:
(2) Flexiplace:
(3) Miscellaneous employee expenses:
14. Rewards:
a. Rewards to Informers:
(1) Reward as "necessary expense":
(2) Payments to informers: Internal Revenue Service:
(3) Payments to informers: Customs Service:
b. Missing Government Employees:
c. Lost or Missing Government Property:
d. Contractual Basis:
e. Rewards to Government Employees:
15. State and Local Taxes:
a. Introduction:
b. Tax on Business Transactions Where the Federal Government Is a
Party:
(1) General principles:
(2) Public utilities:
c. Property-Related Taxes:
d. Taxes Paid by Federal Employees:
(1) Parking taxes:
(2) Hotel and meal taxes:
(3) Tolls:
(4) State and local income withholding taxes:
(5) Possessory interest taxes:
(6) Occupational license fees:
e. Refund and Recovery of Tax Improperly Paid:
16. Telephone Services:
a. Telephone Service to Private Residences:
(1) The statutory prohibition and its major exception:
(2) Funds to which the statute applies:
(3) What is a private residence?
(4) Application of the general rule:
(5) Exceptions:
b. Long-distance Calls:
c. Mobile or Cellular Phones:
Chapter 5: Availability of Appropriations: Time:
A. General Principles--Duration of Appropriations:
1. Introduction:
2. Types of Appropriations:
a. Annual Appropriations:
b. Multiple Year Appropriations:
c. No-Year Appropriations:
3. Obligation or Expenditure Prior to Start of Fiscal Year:
B. The Bona Fide Needs Rule:
1. Background:
a. Introduction:
b. The Concept:
2. Future Years' Needs:
3. Prior Years' Needs:
4. Delivery of Materials beyond the Fiscal Year:
5. Services Rendered beyond the Fiscal Year:
6. Replacement Contracts:
7. Contract Modifications and Amendments Affecting Price:
8. Multiyear Contracts:
a. Introduction:
b. Multiple Year and No-Year Appropriations:
c. Fiscal Year Appropriations:
d. Contracts with No Financial Obligation:
9. Specific Statutes Providing for Multiyear and Other Contracting
Authorities:
a. Severable Services Contracts:
b. 5-year Contract Authority:
(1) 10 U.S.C. §§ 2306b, 2306c:
(2) 41 U.S.C. § 254c:
c. Examples of Agency-Specific Multiyear Contracting Authorities:
10. Grants and Cooperative Agreements:
C. Advance Payments:
1. The Statutory Prohibition:
2. Government Procurement Contracts:
a. Background:
b. Contract Financing:
c. Payment:
3. Lease and Rental Agreements:
4. Publications:
5. Other Governmental Entities:
D. Disposition of Appropriation Balances:
1. Terminology:
2. Evolution of the Law:
3. Expired Appropriation Accounts:
4. Closed Appropriation Accounts:
5. Exemptions from the Account Closing Procedures:
6. No-Year Appropriations:
7. Repayments and Deobligations:
a. Repayments:
b. Deobligations:
E. Effect of Litigation on Period of Availability:
Introduction:
A. Nature of Appropriations Law:
B. The Congressional "Power of the Purse":
C. Historical Perspective:
1. Evolution of the Budget and Appropriations Process:
2. GAO's Role in the Process:
D. "Life Cycle" of an Appropriation:
1. Executive Budget Formulation and Transmittal:
2. Congressional Action:
a. Summary of Congressional Process:
b. Points of Order:
3. Budget Execution and Control:
a. In General:
b. Impoundment:
4. Audit and Review:
a. Basic Responsibilities:
b. GAO Recommendations and Matters for Consideration:
5. Account Closing:
E. The Role of the Accounting Officers: Legal Decisions:
1. A Capsule History:
a. Accounting Officers Prior to 1894:
b. 1894-1921: Comptroller of the Treasury:
c. 1921 to the Present Time:
2. Decisions of the Comptroller General:
a. General Information:
b. Matters Not Considered:
c. Research Aids:
d. Note on Citations:
3. Other Relevant Authorities:
a. GAO Materials:
b. Non-GAO Materials:
c. Note on Title 31 Recodification:
[End of section]
Chapter 1: Introduction:
"[T]he protection of the public fisc is a matter that is of interest to
every citizen…"
Brock v. Pierce County, 476 U.S. 253, 262 (1986).
A. Nature of Appropriations Law:
A federal agency is a creature of law and can function only to the
extent authorized by law.[Footnote 1] The Supreme Court has expressed
what is perhaps the quintessential axiom of "appropriations law" as
follows:
"The established rule is that the expenditure of public funds is proper
only when authorized by Congress, not that public funds may be expended
unless prohibited by Congress."
United States v. MacCollom, 426 U.S. 317, 321 (1976). See also
B-288266, Jan. 27, 2003. Thus, the concept of "legal authority" is
central to the spending of federal money. When we use the term "federal
appropriations law" or "federal fiscal law," we mean that body of law
that governs the availability and use of federal funds.
Federal funds are made available for obligation and expenditure by
means of appropriation acts (or occasionally by other legislation) and
the subsequent administrative actions that release appropriations to
the spending agencies. The use or "availability" of appropriations once
enacted and released (that is, the rules governing the purpose,
amounts, manner, and timing of obligations and expenditures) is
controlled by various authorities: the terms of the appropriation act
itself; legislation, if any, authorizing the appropriation; the
"organic" or "enabling" legislation, which prescribes a function or
creates a program that the appropriation funds; general statutory
provisions that allow or prohibit certain uses of appropriated funds;
and general rules that have been developed largely through decisions of
the Comptroller General and the courts. These sources, together with
certain provisions of the Constitution of the United States, form the
basis of "appropriations law"--an area where questions may arise in as
many contexts as there are federal actions that involve spending money.
Although this publication incorporates some other relevant authorities,
its primary focus is on the decisions and opinions of the "accounting
officers of the government"--the Comptroller General of the United
States and his predecessors.[Footnote 2]
B. The Congressional "Power of the Purse":
The congressional "power of the purse" refers to the power of Congress
to appropriate funds and to prescribe the conditions governing the use
of those funds.[Footnote 3] The power derives from specific provisions
of the Constitution of the United States. First, article I, section 8
empowers Congress to "pay the Debts and provide for the common Defence
and general Welfare of the United States," and to--
"make all Laws which shall be necessary and proper for carrying into
Execution the foregoing Powers [listed in art. I, § 8], and all other
Powers vested by this Constitution in the Government of the United
States, or in any Department or Officer thereof."
Next, the so-called Appropriations Clause, the first part of article I,
section 9, clause 7, provides that--
"No Money shall be drawn from the Treasury, but in Consequence of
Appropriations made by Law… ."
The Appropriations Clause has been described as "the most important
single curb in the Constitution on Presidential power."[Footnote 4] It
means that "no money can be paid out of the Treasury unless it has been
appropriated by an act of Congress." Cincinnati Soap Co. v. United
States, 301 U.S. 308, 321 (1937). See also B-300192, Nov. 13, 2002.
Regardless of the nature of the payment--salaries, payments promised
under a contract, payments ordered by a court, whatever--a federal
agency may not make a payment from the United States Treasury unless
Congress has made the funds available. As the Supreme Court stated well
over a century more than 150 years ago:
"However much money may be in the Treasury at any one time, not a
dollar of it can be used in the payment of any thing not… previously
sanctioned [by a congressional appropriation]."
Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1850). This prescription
remains as valid today as it was when it was written.[Footnote 5] In
1990, citing both Cincinnati Soap and Reeside, the Supreme Court
reiterated that any exercise of power by a government agency "is
limited by a valid reservation of congressional control over funds in
the Treasury." Office of Personnel Management v. Richmond, 496 U.S.
414, 425, 110 S. Ct. 2465, 2472 (1990).[Footnote 6]
As these statements by the Supreme Court make clear, the congressional
power of the purse reflects the fundamental proposition that a federal
agency is dependent on Congress for its funding.[Footnote 7] At its
most basic level, this means that it is up to Congress to decide
whether or not to provide funds for a particular program or activity
and to fix the level of that funding.
In exercising its appropriations power, however, Congress is not
limited to these elementary functions. It is also well established that
Congress can, within constitutional limits, determine the terms and
conditions under which an appropriation may be used. See, e.g., New
York v. United States, 505 U.S. 144, 167 (1992); Cincinnati Soap Co.,
301 U.S. at 321; Oklahoma v. Schweiker, 655 F.2d 401, 406 (D.C. Cir.
1981) (citing numerous cases); Spaulding v. Douglas Aircraft Co., 60 F.
Supp. 985, 988 (S.D. Cal. 1945), aff'd, 154 F.2d 419 (9th Cir. 1946).
Thus, Congress can decree, either in the appropriation itself or by
separate statutory provisions, what will be required to make the
appropriation "legally available" for any expenditure. It can, for
example, describe the purposes for which the funds may be used, the
length of time the funds may remain available for these uses, and the
maximum amount an agency may spend on particular elements of a program.
In this manner, Congress may, and often does, use its appropriation
power to accomplish policy objectives and to establish priorities among
federal programs.
Congress can also use its appropriation power for other measures. It
can, for example, include a provision in an appropriation act
prohibiting the use of funds for a particular program. By doing this
without amending the program legislation, Congress can effectively
suspend operation of the program for budgetary or policy reasons, or
perhaps simply defer further consideration of the merits of the
program. The courts recognized the validity of this application of the
appropriation power. See, e.g., United States v. Will, 449 U.S. 200,
222 (1980); United States v. Dickerson, 310 U.S. 554 (1940). For a
recent example of this, see Atlantic Fish Spotters Ass'n v. Evans,
321 F.3d 220, 225, 229 (1st Cir. 2003), which considered an
appropriation act provision banning the use of federal funds to grant
permits to those fishermen who would use "spotter planes" to locate
Atlantic bluefin tuna. At issue was whether the ban was temporary or
permanent in nature. The court found the ban to be a temporary (i.e.,
annual) provision, based on the language used in it.[Footnote 8] The
court commented:
"[We do not] consider it unreasonable for Congress to enact such a ban
for one year only. The record lays out the competing public policy
interests that the ban affects. The choice to balance such interests by
temporizing--putting a ban in place for one year and requiring it to be
reenacted the following year to remain in effect--is a valid exercise
of legislative prerogative. Politics is, after all, the art of
compromise."
321 F.3d at 225.
Congress also may use appropriation act provisions to impose
preconditions on a program's use of the funds being appropriated. The
preconditions on use often effectuate congressional oversight of the
program. In American Telephone & Telegraph v. United States, 307 F.3d
1374, 1376-79 (Fed. Cir. 2003), the court addressed just such a
provision found in the Department of Defense Appropriation Act for
Fiscal Year 1988. The provision specified that:
"[n]one of the funds provided… in this Act may be obligated or expended
for fixed price-type contracts in excess of $10,000,000 for the
development of a major system or subsystem unless the Under Secretary
of Defense for Acquisition determines, in writing, that program risk
has been reduced to the extent that realistic pricing can occur…:
Provided further, That the Under Secretary report to the Committees on
Appropriations of the Senate and House of Representatives in writing,
on a quarterly basis, the contracts which have obligated funds under
such a fixed price-type developmental contract."
Pub. L. No. 100-202, § 8118, 101 Stat. 1329, 1329-84 (1987). The Navy
had entered into a $34.5 million fixed-price contract with American
Telephone & Telegraph (AT&T) for technology to be included in an
advanced submarine detecting sonar system. AT&T performed, but at a
cost of $91 million. When Navy refused to pay the amount in excess of
the contract's fixed price, AT&T sued. AT&T pointed out, and Navy
conceded, that the Under Secretary for Acquisitions had not satisfied
the appropriation act's preconditions on use of the appropriated funds;
AT&T argued that the contract was, therefore, invalid and void ab
initio. The court disagreed. The court said that the language of the
Act "provides for legislative oversight and enforcement. The section
does not create a cause of action inviting private parties to enforce
the provision in courts." AT&T, 307 F.3d at 1379. The court emphasized
the supervisory role of the legislative branch in ensuring compliance
with policies imposed via appropriations act provisions, noting that
such provisions permit "the appropriate legislative committees to
monitor compliance and, presumably, guarantee enforcement in the form
of future reductions in, or limitations on, appropriated funds." Id.
at 1377.
While congressional power of the purse is a very broad power, courts
have invalidated funding restrictions when the courts found that the
restrictions violated some independent constitutional bar. For example,
in United States v. Lovett, 328 U.S. 303 (1946), the Supreme Court held
an appropriation act restriction unconstitutional as a bill of
attainder. The rider in question was a prohibition on the payment of
salary to certain named individuals rather than a condition on the
receipt of funds. In another case, a provision in the 1989 District of
Columbia appropriation act prohibited the use of any funds appropriated
by the act unless the District adopted legislation spelled out in the
rider. The provision was invalidated on first amendment grounds.
Clarke v. United States, 705 F. Supp. 605 (D.D.C. 1988), aff'd,
886 F.2d 404 (D.C. Cir. 1989), vacated en banc as moot, 915 F.2d 699
(D.C. Cir. 1990).
The Supreme Court recognized the breadth of the power of the purse, and
its limitations, in South Dakota v. Dole, 483 U.S. 203 (1987), a
decision addressing Congress's use of its spending power to impose
conditions on the use of federal grants. The court noted that--
"the power of Congress to authorize expenditure of public moneys for
public purposes is not limited by the direct grants of legislative
power found in the Constitution. Thus, objectives not thought to be
within Article I's enumerated legislative fields,… may nevertheless be
attained through the use of the spending power and the conditional
grant of federal funds."
Id. at 207. See also National Endowment for the Arts v. Finley,
524 U.S. 569, 588 (1998) ("So long as legislation does not infringe on
other constitutionally protected rights, Congress has wide latitude to
set spending priorities.").
On the other hand, as the Supreme Court also noted in Dole, "[t]he
spending power is of course not unlimited." Id. The courts have
identified a number of limitations on it. In Dole, the Supreme Court
listed what it referred to as four "general restrictions" established
in previous cases: First, the exercise of the spending power must be in
pursuit of the general welfare. Second, conditions imposed on the use
of federal funds must be reasonably related to the articulated goals.
Third, the intent of Congress to impose conditions must be
authoritative and unambiguous. Fourth, the action in question must not
be prohibited by an independent constitutional bar. Id. at 207-208. See
also, e.g., Nevada v. Skinner, 884 F.2d 445, 447-48 (9th Cir. 1989).
After the Dole Court explained the application of the fourth
restriction, it added, "Our decisions have [also] recognized that in
some circumstances the financial inducement offered by Congress might
be so coercive as to pass the point at which 'pressure turns into
compulsion.'" Id. at 211, quoting Steward Machine Co. v. Davis,
301 U.S. 548, 590 (1937). Some courts have understood this passage to
constitute a "fifth" limitation on congressional spending power. E.g.,
A.W. v. Jersey City Public Schools, 341 F.3d 234, 241 (3rd Cir. 2003);
Kansas v. United States, 214 F.3d 1196, 1201 (10th Cir. 2000);
Litman v. George Mason University, 186 F.3d 544, 552-53 (4th Cir.
1999). Others have simply seen it as an "additional" consideration.
E.g., West Virginia v. Department of Health & Human Services, 289 F.3d
281, 287 (4th Cir. 2002). See also James Island Public Service
District v. City of Charleston, 249 F.3d 323, 327 (4th Cir. 2001).
While the existence of this list might suggest otherwise, there have
actually been few decisions striking down federal statutory spending
conditions.[Footnote 9] Kansas v. United States, 214 F.3d 1196, 1201-
1202, n.6 (10th Cir. 2000). A recent example can be seen in Legal
Services Corp. v. Velazquez, 531 U.S. 533 (2001), wherein a conditional
provision (contained in the annual appropriations for the Legal Service
Corporation (LSC) since 1996) was struck down as inconsistent with the
First Amendment. This provision prohibited LSC grantees from
representing clients in efforts to amend or otherwise challenge
existing welfare law. The Supreme Court found this provision interfered
with the free speech rights of clients represented by LSC-funded
attorneys.[Footnote 10]
In addition to imposing restrictions in appropriation acts, Congress
also exercises its spending power by imposing conditions in the
legislation creating or modifying a program.[Footnote 11] An example of
a statutorily imposed spending condition can be seen in the provisions
of the Children's Internet Protection Act (CIPA), Pub. L. No. 106-554,
114 Stat. 2763, 2763A-335 (Dec. 21, 2000). CIPA barred public libraries
from receiving federal assistance to provide computer access to the
Internet unless they installed software to block obscenity and child
pornography and prevent minors from obtaining access to material
harmful to them. CIPA, § 1711. In United States v. American Library
Ass'n, Inc., ___U.S.___, 123 S. Ct. 2297 (2003), the Supreme Court
upheld CIPA's condition as a legitimate exercise of congressional
spending power. Among the challenges brought against the CIPA condition
was the claim that it constituted an impermissible coercion. The Court
rejected that claim, explaining that CIPA did not penalize libraries
that chose not to install the software. Rather, it simply precluded the
use of taxpayer funds to subsidize those libraries that chose not to
install such software. Id. at 2307-08. The Court also rejected claims
that the condition infringed upon protected First Amendment rights,
noting that CIPA expressly permitted libraries to customize or even
disable the operation of the software for research and other lawful
purposes--at the request of an adult user or, under certain
circumstances, even at the request of a minor user. Id. at 2306-07.
Citing Dole, supra, the Court noted again that, so long as Congress
does not "induce" funding recipients to engage in activities that would
themselves be unconstitutional, "Congress has wide latitude to attach
conditions to the receipt of federal assistance in order to further its
policy objectives." Id. at 2303.
For some additional recent cases upholding statutory funding
conditions, see for example, Kansas v. United States, 214 F.3d 1196
(10th Cir. 2000) (upholding the statutory requirement conditioning
receipt of federal block grants used to provide cash assistance and
other supportive services to low-income families on a state's
participation in and compliance with a federal child support
enforcement program); Litman v. George Mason University, supra (state
university's receipt of federal funds was validly conditioned upon
waiver of the state's Eleventh Amendment immunity from federal
antidiscrimination lawsuits); and California v. United States,
104 F.3d 1086, 1092 (9th Cir. 1997) (acknowledging that although it
originally agreed to the condition for receipt of federal Medicaid
funds on state provision of emergency medical services to illegal
aliens, California now viewed that condition as coerced because
substantial increases in illegal immigration left California with no
choice but to remain in the program to prevent collapse of its medical
system; the complaint was dismissed for failure to state a claim upon
which relief could be granted).
It would appear safe to say that Congress can, as long as it does not
violate the Constitution, appropriate money for any purpose it chooses,
from paying the valid obligations of the United States to what the
Supreme Court has termed "pure charity,"[Footnote 12] and can implement
policy objectives by imposing conditions on the receipt or use of the
money.[Footnote 13]
The Constitution does not provide detailed instructions on how Congress
is to implement its appropriation power, but leaves it to Congress to
do so by statute. Congress has in fact done this, and continues to do
it, in two ways: through the annual budget and appropriations process
and through a series of permanent "funding statutes." As one court has
put it:
" [The Appropriations Clause] is not self-defining and Congress has
plenary power to give meaning to the provision. The Congressionally
chosen method of implementing the requirements of Article I, section 9,
clause 7 is to be found in various statutory provisions."
Harrington v. Bush, 553 F.2d 190, 194-95 (D.C. Cir. 1977) (footnote
omitted). See also, e.g., Walker v. Department of Housing & Urban
Development, 912 F.2d 819, 829 (5th Cir. 1990). There were few
statutory funding controls in the early years of the nation and abuses
were commonplace. As early as 1809, one senator, citing a string of
abuses, introduced a resolution to look into ways to prevent the
improper expenditure of public funds.[Footnote 14] In 1816 and 1817,
John C. Calhoun lamented the "great evil" of diverting public funds to
uses other than those for which they were appropriated.[Footnote 15]
Even as late as the post-Civil War years, the situation saw little
improvement. "Funds were commingled. Obligations were made without
appropriations. Unexpended balances from prior years were used to
augment current appropriations."[Footnote 16]
The permanent funding statutes, found mostly in Title 31 of the United
States Code, are designed to combat these and other abuses. They did
not spring up overnight, but have evolved over the span of nearly more
than two centuries. Nevertheless, when viewed as a whole, they form a
logical pattern. We may regard them as pieces of a puzzle that fit
together to form the larger picture of how Congress exercises its
control "power of the purse." Some of the key statutory directives in
this scheme, each of which is discussed elsewhere in this publication,
are:
* A statute will not be construed as making an appropriation unless it
expressly so states. 31 U.S.C. § 1301(d).
* Agencies may not spend, or commit themselves to spend, in advance of
or in excess of appropriations. 31 U.S.C. § 1341 (Antideficiency Act).
* Appropriations may be used only for their intended purposes.
31 U.S.C. § 1301(a) ("purpose statute").
* Appropriations made for a definite period of time may be used only
for expenses properly incurred during that time. 31 U.S.C. § 1502(a)
("bona fide needs" statute).
* Unless authorized by law, an agency may not keep money it receives
from sources other than congressional appropriations, but must deposit
the money in the Treasury. 31 U.S.C. § 3302(b) ("miscellaneous
receipts" statute).
The second part of article I, section 9, clause 7 of the Constitution
requires that--
"a regular Statement and Account of the Receipts and Expenditures of
all public Money shall be published from time to time."
Implementation of this provision, as a logical corollary of the
appropriation power, is also wholly within the congressional province,
and the courts have so held.[Footnote 17] Washington Post Co. v. United
States Department of State, 685 F.2d 698, 700 (D.C. Cir. 1982) ("the
plenary authority of Congress in this area will be respected"), vacated
as moot, 464 U.S. 979 (1983); United States v. Richardson, 418 U.S.
166, 178 n.11 (1974) ("it is clear that Congress has plenary power to
exact any reporting and accounting it considers appropriate in the
public interest"); Harrington v. Bush, 553 F.2d at 195; Hart's Case, 16
Ct. Cl. 459, 484 (1880), aff'd, Hart v. United States, 118 U.S. 62
(1886) ("[a]uditing and accounting are but parts of a scheme for
payment"). See also B-300192, n.10, Nov. 13, 2002.
The Constitution mentions appropriations in only one other place.
Article I, section 8, clause 12 provides that Congress shall have power
to "raise and support Armies, but no Appropriation of Money to that Use
shall be for a longer Term than two Years."[Footnote 18] The 2-year
limit in clause 12 has been strictly construed as applying essentially
to appropriations for personnel and for operations and maintenance and
not to other military appropriations such as weapon system procurement
or military construction. See B-114578, Nov. 9, 1973; 40 Op. Att'y
Gen. 555 (1948); 25 Op. Att'y Gen. 105 (1904). In any event, Congress
has traditionally made appropriations for military personnel and
operations and maintenance on a fiscal year basis.
Whenever one reflects upon the constitutional prerogatives of the
legislature, it must be against the backdrop of a central theme
underlying much of federal fiscal law and policy--the natural
antithesis of executive flexibility and congressional control. Each
objective is valid and necessary, but it is impossible to
simultaneously maximize both. Either can be enhanced only at the
expense of the other. Finding and maintaining a reasonable and proper
balance is both the goal and the challenge of the legal process.
C. Historical Perspective:
1. Evolution of the Budget and Appropriations Process [Footnote 19]
The first general appropriation act, passed by Congress on
September 29, 1789, appropriated a total of $639,000 and illustrates
what was once a relatively uncomplicated process. We quote it in full
(1 Stat. 95):
"Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That there be appropriated for
the service of the present year, to be paid out of the monies which
arise, either from the requisitions heretofore made upon the several
states, or from the duties on impost and tonnage, the following sums,
viz. A sum not exceeding two hundred and sixteen thousand dollars for
defraying the expenses of the civil list, under the late and present
government; a sum not exceeding one hundred and thirty-seven thousand
dollars for defraying the expenses of the department of war; a sum not
exceeding one hundred and ninety thousand dollars for discharging the
warrants issued by the late board of treasury, and remaining
unsatisfied; and a sum not exceeding ninety-six thousand dollars for
paying the pensions to invalids."
As the size and scope of the federal government have grown, so has the
complexity of the appropriations process.
In 1789, the House established the Ways and Means Committee to report
on revenues and spending, only to disband it that same year following
the creation of the Treasury Department. The House Ways and Means
Committee was re-established to function permanently in 1795 and was
recognized as a standing committee in 1802.
On the Senate side, the Finance Committee was established as a standing
committee in 1816. Up until that time, the Senate had referred
appropriation measures to temporary select committees. By 1834,
jurisdiction over all Senate appropriation bills was consolidated in
the Senate Finance Committee.
In the mid-nineteenth century, a move was begun to restrict
appropriation acts to only those expenditures that had been previously
authorized by law. The purpose was to avoid the delays caused when
legislative items or "riders" were attached to appropriation bills.
Rules were eventually passed by both houses of Congress to require, in
general, prior legislative authorizations for the enactment of
appropriations.
It was during this same period that the concept of a fiscal year
separate and distinct from the calendar year came into
existence.[Footnote 20]
Under the financial strains caused by the Civil War, appropriations
committees first appeared in both the House and the Senate, diminishing
the jurisdiction of the Ways and Means and Finance Committees,
respectively. Years later, the need for major reforms was again
accentuated by the burdens of another war. Following World War I,
Congress passed the Budget and Accounting Act of 1921, Pub. L. No. 67-
13, 42 Stat. 20 (June 10, 1921).
Before 1921, departments and agencies generally made individual
requests for appropriations. These submissions were compiled for
congressional review in an uncoordinated "Book of Estimates." The
Budget and Accounting Act enhanced budgetary efficiency and aided in
the performance of constitutional checks and balances through the
budget process. It required the President to submit a national budget
each year and restricted the authority of the agencies to present their
own proposals. See 31 U.S.C. §§ 1104, 1105. With this centralization of
authority for the formulation of the executive branch budget in the
President and the newly established Bureau of the Budget (now Office of
Management and Budget), Congress also took steps to strengthen its
oversight capability over fiscal matters by establishing the General
Accounting Office.[Footnote 21]
The decades immediately following World War II saw growth in both the
size and the complexity of the federal budget. It became apparent that
the congressional role in the "budget and appropriations" process
centered heavily on the appropriations phase and placed too little
emphasis on the budgetary phase. In other words, Congress responded to
the President's spending and revenue proposals only through the
cumulative result of individual pieces of legislation reached through
an agglomeration of separate actions. Congress did not look at the
budget as a whole, nor did it examine or vote on overall spending or
revenues. There was no process by which Congress could establish its
own spending priorities. Thus, the impetus for a congressional budget
process began in the early 1970s. It was not created in a single step;
rather, it was created in stages--and for the most part new pieces did
not replace but were added to existing processes. As William G.
Dauster, former Chief Counsel on the Committee on the Budget, put it:
"[t]he law governing the budget process resembles nothing so much as
sediment. It has accumulated in several statutes, each layered upon the
prior one… [t]his incremental growth has created something of a legal
nettle." Budget Process Law Annotated, S. Print No. 102-22, at xxvii
(1991).
The first major round of reforms came about with the Congressional
Budget and Impoundment Control Act of 1974.[Footnote 22] Titles I
though IX of the act are referred to as the Congressional Budget Act of
1974, while Title X is referred to as the Impoundment Control Act of
1974. One of the fundamental objectives of the Congressional Budget Act
of 1974 was to establish a process through which Congress could
systematically consider the total federal budget and determine
priorities for allocating budget resources. The design of programs and
the allocation of spending within each mission area would be left to
the authorizing and appropriations committees. The focus was on overall
fiscal policy and an allocation across priorities.[Footnote 23] The
statute made several major changes in the budget and appropriations
process. For example:
* It established a detailed calendar governing the various stages of
the congressional budget and appropriations process. 2 U.S.C. § 631.
* It provided for congressional review of the President's budget, the
establishment of target ceilings for federal expenditures through one
or more concurrent resolutions, and the evaluation of spending bills
against these targets. 2 U.S.C. §§ 632-642. Prior to this time,
Congress had considered the President's budget only in the context of
individual appropriation bills. To implement the new process, the law
created Budget Committees in both the Senate and the House, and a
Congressional Budget Office (CBO). 2 U.S.C. § 601. The law requires the
CBO to prepare estimates of new budget authority, outlays, or revenue
provided by bills or resolutions reported from committees of either
house, or estimates of the costs that the government would incur in
carrying out the provisions of the proposed legislation. 2 U.S.C.
§ 602.
* Prompted by the growth of "backdoor spending,"[Footnote 24] it
enhanced the role of the Appropriations Committees in reviewing
proposals for contract authority, borrowing authority, and mandatory
entitlements. 2 U.S.C. § 651.
The 1974 legislation also imposed limitations on the impounding of
appropriated funds by the executive branch. 2 U.S.C. §§ 681-688.
The next piece of major legislation in the fiscal area was the Balanced
Budget and Emergency Deficit Control Act of 1985, known as the Gramm-:
Rudman-Hollings Act (Gramm-Rudman).[Footnote 25] It was enacted to deal
with a growing budget deficit (excess of total outlays over total
receipts for a given fiscal year). 2 U.S.C. § 622(6). Gramm-Rudman
established "maximum deficit amounts." Pub. L. No. 99-177,
§ 201(a)(1). If the deficit exceeded these statutory limits, the
President was required to issue a sequester order (a cancellation of
budgetary resources) that would reduce all nonexempt spending by a
uniform percentage. Id. § 252. In the spring of 1990, it became clear
that the deficit was going to exceed Gramm-Rudman maximum deficit
limits by a considerable amount. To respond to these large deficits,
President George H.W. Bush and congressional leadership convened
negotiations on the budget in May 1990. In November, the Omnibus Budget
Reconciliation Act of 1990 was enacted, which represented the budget
agreement negotiated between the Bush Administration and Congress. Pub.
L. No. 101-508, 104 Stat. 1388 (Nov. 5, 1990). See S. Print No. 105-67,
supra.
The Omnibus Budget Reconciliation Act of 1990 included the Budget
Enforcement Act (1990 BEA),[Footnote 26] which provided a major
overhaul of the Gramm-Rudman procedures. The law established maximum
adjustable deficit amounts for each fiscal year through fiscal year
1995, but in effect, it replaced the Gramm-Rudman-Hollings system of
deficit limits with two different enforcement mechanisms. The 1990 BEA
established annual caps on spending controllable through the
appropriations process (discretionary spending) and a pay-as-you-go
requirement for spending controllable through substantive legislation
outside of the appropriations process (so-called direct or mandatory
spending) and revenue legislation. The two types of spending were
subject to different rules. If discretionary appropriations were
enacted that exceeded the annual caps, the law provided mechanisms for
making appropriate spending reductions, sequestrations of budget
authority, similar to those provided for in Gramm-Rudman. 2 U.S.C.
§ 903. For the second spending category, mandatory spending and
receipts, the 1990 BEA required that all legislation within a session
of Congress that increased mandatory spending or decreased receipts was
to be fully offset or paid for by corresponding increases in receipts
or decreases in spending so that it was deficit neutral. Failure to
obtain budget neutrality for mandatory spending would trigger an
offsetting sequestration among nonexempt mandatory accounts. 2 U.S.C.
§ 902. This pay-as-you-go requirement was referred to as PAYGO, and
legislation dealing with mandatory spending or receipts was often
referred to as PAYGO legislation.
To determine compliance with the 1990 BEA requirements, the Act
required the Office of Management and Budget (OMB) and CBO to estimate
new budget authority and outlays provided by any new legislation
through a process that came to be called "scorekeeping." 2 U.S.C.
§§ 901, 902. CBO would transmit its estimates to OMB, which would
report any discrepancies to both houses of Congress. The 1990 BEA,
however, required that OMB's estimates be used to determine whether a
sequestration was necessary. 2 U.S.C. §§ 902, 904. The statement of
managers accompanying the conference report on the 1990 BEA instructed
the House and Senate Budget Committees to work in consultation with OMB
and CBO to develop scorekeeping guidelines. H.R. Rept. No. 101-964, at
1172 (1990). The guidelines are printed in OMB Circular A-11,
Preparation, Submission and Execution of the Budget, app. B (July 25,
2003).
In 1993, the discretionary spending limits and the PAYGO rules were
extended through fiscal year 1998. Pub. L. No. 103-66, 107 Stat. 683
(Aug. 10, 1993). The 1997 Budget Enforcement Act (1997 BEA) again
extended the discretionary spending caps and the PAYGO rules through
2002. Pub. L. No. 105-33, title X, 111 Stat. 251, 701 (Aug. 5, 1997).
Although the overall discretionary spending caps expired in 2002,
additional caps on Highway and Mass Transit spending established under
the Transportation Equity Act for the 21st Century (TEA-21)[Footnote
27] continued through 2003, and another set of caps on conservation
spending,[Footnote 28] established as part of the fiscal year 2001
Interior Appropriations Act,[Footnote 29] were set through 2006. In
addition, the sequestration procedures were to apply through 2006 to
the conservation category. However, Pub. L. No. 107-312, 116 Stat. 2456
(Dec. 2, 2002) eliminated the PAYGO sequestration requirement.
While most of the budget enforcement mechanisms in the 1990 BEA have
expired, OMB uses the same scorekeeping rules developed for use with
BEA for purposes of budget execution. OMB determines how much budget
authority must be obligated for individual transactions. OMB interprets
the scorekeeping guidelines to determine the cost that should be
recognized and recorded as an obligation at the time the agency signs a
contract or enters into a lease. "When an agency signs a contract,
budgetary resources to measure the government's contribution to each of
the terms of the contract are set aside (obligated). The 'total score'
refers to the total amount of resources the government must obligate
(set aside) for a given project." Letter from Franklin D. Raines,
Director, Office of Management and Budget, to the Honorable William S.
Cohen, Secretary of Defense, Re: Scoring DOD's Military Housing
Privatization Initiatives, June 25, 1997.
In addition to the statutory spending caps, Congress, in fiscal year
1994, began including overall limits on discretionary spending in the
concurrent budget resolution that have become known as congressional
caps. H.R. Con. Res. 64, 103rd Cong. § 12(b) (1993). Congress
established these caps to manage its internal budget process, while the
BEA statutory caps continued to govern for sequestration purposes. The
congressional caps were enforceable in the Senate by a point of order
that prohibited the consideration of a budget resolution that exceeded
the limits for that fiscal year (the point of order could be waived or
suspended by a three-fifths vote).[Footnote 30] Although the statutory
1997 BEA limits expired at the end of fiscal year 2002, Congress
continues to use the concurrent resolution on the budget to establish
and enforce congressional budgetary limits. H.R. Con. Res. 95, 108th
Cong. § 504 (2003).
2. GAO's Role in the Process:
As the budget and appropriations process has evolved over the course of
the twentieth century, GAO's role with respect to it has also evolved.
Title III of the Budget and Accounting Act of 1921,[Footnote 31] GAO's
basic enabling statute, created two very different roles for the
Comptroller General and the new agency.
First, he was to assume all the duties of the Comptroller of the
Treasury and his six subordinate auditors, and to serve as the chief
accounting officer of the government. To this end, the Comptroller
General was given the authority to settle all claims by and against the
government.[Footnote 32] In 1995, Congress transferred GAO's claim
settlement authority to the executive branch.[Footnote 33]
Second, under the enabling statute the Comptroller General was given
the authority to settle the accounts of the U.S. government, which
includes the authority to issue legal decisions.[Footnote 34] The
issuance of legal decisions is discussed in section E of this chapter.
The Comptroller General was also directed to investigate the receipt,
disbursement, and application of public funds, reporting the results to
Congress;[Footnote 35] and to make investigations and reports upon the
request of either house of Congress or of any congressional committee
with jurisdiction over revenue, appropriations, or
expenditures.[Footnote 36] He was also directed to supply such
information to the President when requested by the President.[Footnote
37] The mandates in the 1921 legislation, together with a subsequent
directive in the Legislative Reorganization Act of 1946 to make
expenditure analyses of executive branch agencies with reports to the
cognizant congressional committees,[Footnote 38] have played a large
part in preparing Congress to consider the merits of the President's
annual budget submission.
The Accounting and Auditing Act of 1950 authorized the Comptroller
General to audit the financial transactions of most[Footnote 39]
executive, legislative, and judicial agencies;[Footnote 40] and to
prescribe, in consultation with the President and the Secretary of the
Treasury, accounting principles, standards, and requirements for the
executive agencies suitable to their needs.[Footnote 41]
The Legislative Reorganization Act of 1970 expanded the focus of GAO's
audit activities to include program evaluations as well as financial
audits.[Footnote 42]
The Congressional Budget and Impoundment Control Act of 1974 gave GAO a
number of additional duties in the budgetary arena. It directs GAO, in
cooperation with Treasury, the Office of Management and Budget, and the
Congressional Budget Office, to "establish, maintain, and publish
standard terms and classifications for fiscal, budget, and program
information of the Government, including information on fiscal policy,
receipts, expenditures, programs, projects, activities, and
functions." Agencies are to use these terms and classifications in
providing information to Congress.[Footnote 43] GAO published this
information in A Glossary of Terms Used in the Federal Budget Process
(Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993). The law
gives GAO a variety of functions relating to obtaining, studying, and
reporting to Congress fiscal, budget, and program information.[Footnote
44] Finally, it gives the Comptroller General the responsibility to
monitor and report to Congress on all proposed impoundments of budget
authority by the executive branch.[Footnote 45]
The Federal Managers' Financial Integrity Act of 1982[Footnote 46] is a
very brief law but one that has had substantial impact. It was intended
to increase governmentwide emphasis on internal accounting and
administrative controls. Agencies are to establish internal accounting
and administrative control systems in accordance with standards
prescribed by the Comptroller General (see U.S. General Accounting
Office, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (Washington, D.C.: Nov. 9, 1999)), conduct annual
reviews of their systems in accordance with Office of Management and
Budget guidelines, and report the results of these reviews to the
President and to Congress. OMB Circular No. A-123, Management
Accountability and Control (June 21, 1995). The act has been beneficial
in focusing management and employee attention on the importance of
internal controls. More recently, however, Congress enacted a number of
statutes to provide a framework for performance-based management and
accountability.[Footnote 47] GAO monitors, and issues governmentwide
reports on, the implementation of these statutes. See, e.g., U.S.
General Accounting Office, Financial Management: FFMIA (Federal
Financial Management Improvement Act) Implementation Necessary to
Achieve Accountability, GAO-03-31 (Washington, D.C.: Oct. 1, 2002);
Managing for Results: Status of the Government Performance and Results
Act, GAO/T-GGD-95-193 (Washington, D.C.: June 27, 1995).
D. "Life Cycle" of an Appropriation:
An appropriate subtitle for this section might be "phases of the budget
and appropriations process." An appropriation has phases roughly
similar to the various stages in the existence of "man"--conception,
birth, death, even an afterlife. The various phases in an
appropriation's "life cycle" may be identified as follows:
* executive budget formulation and transmittal,
* congressional action,
* budget execution and control,
* audit and review, and:
* account closing.
1. Executive Budget Formulation and Transmittal:
The first step in the life cycle of an appropriation is the long and
exhaustive administrative process of budget preparation and review, a
process that may well take place several years before the budget for a
particular fiscal year is ready to be submitted to Congress. The
primary participants in the process at this stage are the agencies and
individual organizational units, which review current operations,
program objectives, and future plans, and the Office of Management and
Budget (OMB),[Footnote 48] which is charged with broad oversight,
supervision, and responsibility for coordinating and formulating a
consolidated budget submission.
Throughout this preparation period, there is a continuous exchange of
information among the various federal agencies, OMB, and the President,
including revenue estimates and economic outlook projections from the
Treasury Department, the Council of Economic Advisers, the
Congressional Budget Office, and the Departments of Commerce and Labor.
The President's budget request must be submitted to Congress on or
before the first Monday in February of each year, for use during the
following fiscal year. 2 U.S.C. § 631.[Footnote 49] Numerous statutory
provisions, the most important of which are 31 U.S.C. §§ 1104-1109,
prescribe the content and nature of the materials and justifications
that must be submitted with the President's budget request. Specific
instructions and policy guidance are contained in OMB Circular No.
A-11, Preparation, Submission and Execution of the Budget (July 25,
2003).
2. Congressional Action:
a. Summary of Congressional Process:
In exercising the broad discretion granted by the Constitution,
Congress can approve funding levels contained in the President's budget
request, increase or decrease those levels, eliminate proposals, or add
programs not requested by the administration.
In simpler times, appropriations were often made in the form of a
single, consolidated appropriation act. The most recent regular
consolidated appropriation act[Footnote 50] was the General
Appropriation Act of 1951, Pub. L. No. 759, 64 Stat. 595 (Sept. 6,
1950). Since that time, appropriations have generally been made in a
series of regular appropriation acts plus one or more supplemental
appropriation acts. Most regular appropriation acts are organized based
on one or more major departments and a number of smaller agencies
(corresponding to the jurisdiction of appropriations subcommittees),
although a few are based solely on function. An agency may receive
funds under more than one appropriation act. The individual structures
are of course subject to change over time. At the present time, there
are 13 regular appropriation acts, as follows:
* Departments of Commerce, Justice, State, the Judiciary, and related
agencies;
* Department of Defense;
* Department of the Interior and related agencies;
* Departments of Labor, Health and Human Services, Education, and
related agencies;
* Department of Homeland Security;
* Departments of Transportation, Treasury, and independent agencies;
* Departments of Veterans Affairs, Housing and Urban Development, and
independent agencies;
* District of Columbia;
* Energy and Water Development;
* Foreign Operations, Export Financing, and related programs;
* Legislative Branch;
* Military Construction; and:
* Department of Agriculture, Rural Development, Food and Drug
Administration, and related agencies.
Before considering individual appropriation measures, however,
Congress must, under the Congressional Budget Act, first agree on
governmentwide budget totals. A timetable for congressional action is
set forth in 2 U.S.C. § 631, with further detail in sections 632-656.
Key steps in that timetable are summarized below.[Footnote 51]
First Monday in February. On or before this date, the President submits
to Congress the Administration's budget request for the fiscal year to
start the following October 1. The deadline under the 1974 Budget Act
had been the first Monday after January 3.[Footnote 52]
February 15. The Congressional Budget Office submits to the House and
Senate Budget Committees its annual report required by 2 U.S.C.
§ 602(e). The report contains the Congressional Budget Office's
analysis of fiscal policy and budget priorities.
Within 6 weeks after President submits a budget request, or at such
time as may be requested by the Committee on the Budget. Each
congressional committee with legislative jurisdiction submits to the
appropriate Budget Committee its views and estimates on spending and
revenue levels for the following fiscal year on matters within its
jurisdiction. 2 U.S.C. § 632(d), as amended. The House and Senate
Budget Committees then hold hearings and prepare their respective
versions of a concurrent resolution, which is intended to be the
overall budget plan against which individual appropriation bills are to
be evaluated.
April 15. Congress completes action on the concurrent resolution, which
includes a breakdown of estimated new budget authority and outlays for
each major budget function. 2 U.S.C. § 632(a). The conference report on
the concurrent resolution allocates the totals among individual
committees. 2 U.S.C. § 633(a). The resolution may also include
"reconciliation directives"--directives to individual committees to
recommend legislative changes in revenues or spending to meet the goals
of the budget plan. 2 U.S.C. § 641(a).
June 10. House Appropriations Committee completes the process of
reporting out the individual appropriation bills.
June 15. Congress completes action on any reconciliation legislation
stemming from the concurrent resolution.
June 30. House of Representatives completes action on annual
appropriation bills.
Of course, House of Representative consideration of the individual
appropriation bills will have begun several months earlier. The first
step is for each subcommittee of the House Appropriations Committee to
study appropriation requests and evaluate the performance of the
agencies within its jurisdiction. Typically, each subcommittee will
conduct hearings at which federal officials give testimony concerning
both the costs and achievements of the various programs administered by
their agencies and provide detailed justifications for their funding
requests. Eventually, each subcommittee reports a single appropriation
bill for consideration by the entire committee and then the full House
membership.
As individual appropriation bills are passed by the House, they are
sent to the Senate. As in the House, each appropriation measure is
first considered in subcommittee and then reported by the full
Appropriations Committee to be voted upon by the full Senate. In the
event of variations in the Senate and House versions of a particular
appropriation bill, a conference committee, including representatives
of both houses of Congress, is formed. It is the function of the
conference committee to resolve all differences, but the full House and
Senate (in that order) must also vote to approve the conference report.
Following either the Senate's passage of the House version of an
appropriation measure, or the approval of a conference report by both
bodies, the enrolled bill is then sent to the President for signature
or veto. The Congressional Budget Act envisions completion of the
process by October 1, the beginning of the new fiscal year.
b. Points of Order:
A number of requirements relevant to an understanding of appropriations
law and the legislative process are found in rules of the Senate and
the House of Representatives. For example, Rule XXI(2), Rules of the
House of Representatives, prohibits appropriations for objects not
previously authorized by law.[Footnote 53] A similar but more limited
prohibition exists in Rule XVI, Standing Rules of the Senate.[Footnote
54] Other examples are the prohibition against including general
legislation in appropriation acts[Footnote 55] (Senate Rule XVI, House
Rule XXI), and the prohibition against consideration by a conference
committee of matters not committed to it by either House (Senate Rule
XXVIII, House Rule XXII). The applicability of Senate and House rules
is exclusively within the province of the particular House.[Footnote
56]
In addition, rather than expressly prohibiting a given item,
legislation may provide that it shall not be in order for the Senate or
House to consider a bill or resolution containing that item. An
important example from the Congressional Budget Act of 1974[Footnote
57] is 2 U.S.C. § 651(a), which provides that it shall not be in order
for either house to consider any bill, resolution, or amendment
containing certain types of new spending authority, such as contract
authority, unless that bill, resolution, or amendment also provides
that the new authority is to be effective for any fiscal year only to
the extent provided in appropriation acts.
The effect of these rules and of statutes like 2 U.S.C. § 651(a) is to
subject the noncomplying bill to a "point of order." A point of order
is a procedural objection raised on the House or Senate floor or in
committees by a Member alleging a departure from a rule or statute
governing the conduct of business. See U.S. General Accounting Office,
A Glossary of Terms Used in the Federal Budget Process (Exposure
Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993). It differs from
an absolute prohibition in that (a) it is always possible that no one
will raise it and (b) if raised, it may or may not be sustained. Also,
some laws, like the Congressional Budget Act, authorize points of order
to be raised, and some measures may be considered under special
resolutions waiving points of order.[Footnote 58] If a point of order
is raised and sustained, the offending provision is effectively killed
and may be revived only if it is amended to cure the noncompliance.
The potential effect of a rule or statute subjecting a provision to a
point of order is limited to the pre-enactment stage. If a point of
order is not raised, or is raised and not sustained, the provision, if
enacted, is no less valid. To restate, a rule or statute subjecting a
given provision to a point of order has no effect or application once
the legislation or appropriation has been enacted. 65 Comp. Gen. 524,
527 (1986); 57 Comp. Gen. 34 (1977); 34 Comp. Gen. 278 (1954);
B-173832, supra; B-123469, Apr. 14, 1955; B-87612, July 26, 1949.
3. Budget Execution and Control:
a. In General:
The body of enacted appropriation acts for a fiscal year, as amplified
by legislative history and the relevant budget submissions, becomes the
government's financial plan for that fiscal year. The "execution and
control" phase refers generally to the period of time during which the
budget authority made available by the appropriation acts remains
available for obligation. An agency's task during this phase is to
spend the money Congress has given it to carry out the objectives of
its program legislation.
The Office of Management and Budget apportions or distributes budgeted
amounts to the executive branch agencies, thereby making funds in
appropriation accounts (administered by the Treasury Department)
available for obligation. 31 U.S.C. §§ 1511-1516. The apportionment
system through which budget authority is distributed by time periods
(usually quarterly) or by activities is intended to achieve an
effective and orderly use of available budget authority, and to reduce
the need for supplemental or deficiency appropriations. Each agency
then makes allotments pursuant to the OMB apportionments or other
statutory authority. 31 U.S.C. §§ 1513(d), 1514. An allotment is a
delegation of authority to agency officials that allows them to incur
obligations within the scope and terms of the delegation.[Footnote 59]
These concepts will be discussed further in Chapter 6. Further detail
on the budget execution phase may also be found in U.S. General
Accounting Office, A Glossary of Terms Used in the Federal Budget
Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.:
Jan. 1993), and OMB Circular No. A-11, Preparation, Submission and
Execution of the Budget, pt. 4, Instructions on Budget Execution
(July 25, 2003).
In addition, OMB exercises a leadership role in executive branch
financial management. This role was strengthened and given a statutory
foundation by the Chief Financial Officers Act of 1990, Pub. L.
No. 101-576, 104 Stat. 2838 (Nov. 15, 1990). The Chief Financial
Officers Act also enacted a new 31 U.S.C. ch. 9, which establishes a
Chief Financial Officer in the cabinet departments and several other
executive branch agencies to work with OMB and to develop and oversee
financial management plans, programs, and activities within the agency.
b. Impoundment:
While an agency's basic mission is to carry out its programs with the
funds Congress has appropriated, there is also the possibility that,
for a variety of reasons, the full amount appropriated by Congress will
not be expended or obligated by the administration. Under the
Impoundment Control Act of 1974, an impoundment is an action or
inaction by an officer or employee of the United States that delays or
precludes the obligation or expenditure of budget authority provided by
Congress. 2 U.S.C. §§ 682(1), 683.[Footnote 60] The act applies to
"Salaries and Expenses" appropriations as well as program
appropriations. 64 Comp. Gen. 370, 375-76 (1985).
There are two types of impoundment actions--deferrals and rescission
proposals. A deferral is a postponement of budget authority in the
sense that an agency temporarily withholds or delays obligation or
expenditure. The President is required to submit a special message to
Congress reporting any deferral of budget authority. Deferrals are
authorized only to provide for contingencies, to achieve savings made
possible by changes in requirements or greater efficiency of
operations, or as otherwise specifically provided by law.[Footnote 61]
A deferral may not be proposed for a period beyond the end of the
fiscal year in which the special message reporting it is transmitted,
although, for multiple year funds, nothing prevents a new deferral
message covering the same funds in the following fiscal year. 2 U.S.C.
§§ 682(1), 684.[Footnote 62]
A rescission involves the cancellation of budget authority previously
provided by Congress (before that authority would otherwise expire),
and can be accomplished only through legislation. The President must
advise Congress of any proposed rescissions, again in a special
message. The President is authorized to withhold budget authority that
is the subject of a rescission proposal for a period of 45 days of
continuous session following receipt of the proposal. Unless Congress
acts to approve the proposed rescission within that time, the budget
authority must be made available for obligation. 2 U.S.C. §§ 682(3),
683, 688.[Footnote 63]
The Impoundment Control Act requires the Comptroller General to monitor
the performance of the executive branch in reporting proposed
impoundments to Congress. A copy of each special message reporting a
proposed deferral or rescission must be delivered to the Comptroller
General, who then must review each such message and present his views
to the Senate and House of Representatives. 2 U.S.C. § 685(b). If the
Comptroller General finds that the executive branch has established a
reserve or deferred budget authority and failed to transmit the
required special message to Congress, the Comptroller General so
reports to Congress. 2 U.S.C. § 686(a); U.S. General Accounting Office,
Impoundment Control: Deferrals of Budget Authority in GSA, GAO/OGC-94-
17 (Washington, D.C.: Nov. 5, 1993) (unreported impoundment of General
Service Administration funds); Impoundment Control: Comments on
Unreported Impoundment of DOD Budget Authority, GAO/OGC-92-11
(Washington, D.C.: June 3, 1992) (unreported impoundment of V-22 Osprey
funds). The Comptroller General also reports to Congress on any special
message transmitted by the executive branch that has incorrectly
classified a deferral or a rescission. 2 U.S.C. § 686(b). GAO will
construe a deferral as a de facto rescission if the timing of the
proposed deferral is such that "funds could be expected with reasonable
certainty to lapse before they could be obligated, or would have to be
obligated imprudently to avoid that consequence." 54 Comp. Gen. 453,
462 (1974).
If, under the Impoundment Control Act, the executive branch is required
to make budget authority available for obligation (if, for example,
Congress does not pass a rescission bill) and fails to do so, the
Comptroller General is authorized to bring a civil action in the U.S.
District Court for the District of Columbia to require that the budget
authority be made available. 2 U.S.C. § 687.
The expiration of budget authority or delays in obligating it resulting
from ineffective or unwise program administration are not regarded as
impoundments unless accompanied by or derived from an intention to
withhold the budget authority. B-229326, Aug. 29, 1989. Similarly, an
improper obligation, although it may violate several other statutes, is
generally not an impoundment. 64 Comp. Gen. 359 (1985).
There is also a distinction between deferrals, which must be reported,
and "programmatic" delays, which are not impoundments and are not
reportable under the Impoundment Control Act. A programmatic delay is
one in which operational factors unavoidably impede the obligation of
budget authority, notwithstanding the agency's reasonable and good
faith efforts to implement the program. B-290659, July 24, 2002; U.S.
General Accounting Office, Impoundment Control: Deferral of DOD Budget
Authority Not Reported, GAO/OGC-91-8 (Washington, D.C.: May 7, 1991);
Impoundment Control: Deferrals of Budget Authority for Military
Construction Not Reported, GAO/OGC-91-3 (Washington, D.C.: Feb. 5,
1991). Since intent is a relevant factor, the determination requires a
case-by-case evaluation of the agency's justification in light of all
of the surrounding circumstances. A programmatic delay may become a
reportable deferral if the programmatic basis ceases to exist.
Delays resulting from the following factors may be programmatic,
depending on the facts and circumstances involved:
* conditions on availability for using funds not met (B-290659, supra);
* contract delays due to shipbuilding design modification,
verification, or changes in scope (GAO/OGC-90-4);
* uncertainty as to the amount of budget authority that will ultimately
be available for the program (B-203057, Sept. 15, 1981; B-207374,
July 20, 1982, noting that the uncertainty is particularly relevant
when it "arises in the context of continuing resolution funding, where
Congress has not yet spoken definitively");
* time required to set up the program or to comply with statutory
conditions on obligating the funds (B-96983, B-225110, Sept. 3, 1987);
* compliance with congressional committee directives (B-221412,
Feb. 12, 1986);
* delay in receiving a contract proposal requested from contemplated
sole source awardee (B-115398, Feb. 6, 1978);
* historically low loan application level (B-115398, Sept. 28, 1976);
* late receipt of complete loan applications (B-195437.3, Feb. 5,
1988);
* delay in awarding grants pending issuance of necessary regulations
(B-171630, May 10, 1976); and:
* administrative determination of allowability and accuracy of claims
for grant payments (B-115398, Oct. 16, 1975).
Where the Department of Defense withheld military construction funds to
improve program efficiency, not because of an unavoidable delay, and
the Department did not take the necessary steps to implement the
program while funds were temporarily unobligated, the withholding was
an impoundment, not a programmatic delay. B-241514.2, Feb. 5, 1991.
4. Audit and Review:
a. Basic Responsibilities:
Every federal department or agency has the initial and fundamental
responsibility to ensure that its application of public funds adheres
to the terms of the pertinent authorization and appropriation acts, as
well as any other relevant statutory provisions. This responsibility--
enhanced by the enactment of the Federal Managers' Financial Integrity
Act and the creation of an Inspector General in many agencies--includes
establishing and maintaining appropriate accounting and internal
controls, one of which is an internal audit program. Ensuring the
legality of proposed payments is also, under 31 U.S.C. § 3528, one of
the basic responsibilities of agency certifying officers. The Chief
Financial Officers Act of 1990 (Pub. L. No. 101-576, §§ 303, 304,
104 Stat. 2838, 2849-53 (Nov. 15, 1990), codified at 31 U.S.C. § 3515
and §§ 3521(e)-(h)) provides for the preparation and audit of financial
statements for those agencies required to establish Chief Financial
Officers. In addition, the Secretary of the Treasury, in coordination
with the Director of the Office of Management and Budget, is required
to annually prepare and submit to the President and Congress a
financial statement for the executive branch of the government that has
been audited by GAO. 31 U.S.C. § 331(e). GAO also regularly audits
federal programs under the various authorities that we summarize in
section C.2 of this chapter.
b. GAO Recommendations and Matters for Consideration:
In carrying out its various responsibilities to examine the financial,
management, and program activities of federal agencies, and to evaluate
the efficiency, effectiveness, and economy of agency operations, GAO
reports to Congress both objective findings and recommendations for
improvement. Recommendations are addressed to agency heads for action
that the agency is authorized to take under existing law. Matters for
consideration are addressed to Congress.
Under section 236 of the Legislative Reorganization Act of 1970,
31 U.S.C. § 720(b), whenever GAO issues a report that contains
recommendations to the head of a federal agency, the agency must submit
a written statement of the actions taken with respect to the
recommendations to (1) the Senate Committee on Governmental Affairs and
the House Committee on Government Reform, not later than 60 days after
the date of the report and (2) the Senate and House Appropriations
Committees in connection with the agency's first request for
appropriations submitted more than 60 days after the date of the
report. As GAO pointed out in a letter to a private inquirer (B-207783,
Apr. 1, 1983, nondecision letter), the law does not require the agency
to comply with the recommendation, merely to report on the "actions
taken," which can range from full compliance to zero. The theory is
that, if the agency disagrees with the GAO recommendation, Congress
will have both positions so that it can then take whatever action it
might deem appropriate.
The term "agency" for purposes of 31 U.S.C. § 720 is broadly defined to
include any department, agency, or instrumentality of the U.S.
government, including wholly owned but not mixed-ownership government
corporations, or the District of Columbia government. 31 U.S.C.
§ 720(a). See also B-114831-O.M., July 28, 1975.
5. Account Closing:
Continuing our "life cycle" analogy, an appropriation "dies" in a sense
at the end of its period of obligational availability. There is,
however, an afterlife to the extent of any unexpended balances.
Unexpended balances, both obligated and unobligated, retain a limited
availability for five fiscal years following expiration of the period
for which the source appropriation was made. At midnight on the last
day of an appropriation's period of availability, the appropriation
account expires and is no longer available for incurring new
obligations. The expired appropriation remains available for 5 years
for the purpose of paying obligations incurred prior to the account's
expiration and adjusting obligations that were previously unrecorded or
under recorded. 31 U.S.C. § 1553(a). After 5 years, the expired account
is closed and the balances remaining are canceled. 31 U.S.C. § 1552(a).
These concepts are discussed in Chapter 5.
E. The Role of the Accounting Officers: Legal Decisions:
1. A Capsule History:
Since the early days of the Republic, Congress, in exercising its
oversight of the public purse, has utilized administrative officials
for the settlement of public accounts and the review of federal
expenditures.
a. Accounting Officers Prior to 1894:
Throughout most of the nineteenth century, the accounting
officers[Footnote 64] consisted of a series of comptrollers and
auditors. Starting in 1817 with two comptrollers and four auditors, the
number increased until, for the second half of the century, there were
three co-equal comptrollers (First Comptroller, Second Comptroller,
Commissioner of Customs) and six auditors (First Auditor, Second
Auditor, etc.), all officials of the Treasury Department. The
jurisdiction of the comptrollers and auditors was divided generally
along departmental lines, with the auditors examining accounts and
submitting their settlements to the appropriate comptroller.
The practice of rendering written decisions goes back at least to 1817.
However, very little of this material exists in published form. (Until
sometime after the Civil War, the decisions were handwritten.)
There are no published decisions of the First Comptroller prior to the
term of William Lawrence (1880-85). Lawrence published his decisions in
a series of six annual volumes. After Lawrence's decisions, a gap of
9 years followed until First Comptroller Robert Bowler published a
single unnumbered volume of his 1893-94 decisions.[Footnote 65]
The decisions of the Second Comptroller and the Commissioner of Customs
were never published. However, volumes of digests of decisions of the
Second Comptroller were published starting in 1852. The first volume,
unnumbered, saw three cumulative editions, the latest issued in 1869
and including digests for the period 1817-69. Three additional volumes
(designated volumes 2, 3, and 4) were published in 1884, 1893, and 1899
(the latter being published several years after the office had ceased
to exist), covering respectively, the periods 1869-84, 1884-93, and
1893-94.[Footnote 66]
Thus, material available in permanent form from this period consists of
Lawrence's six volumes, Bowler's single volume, and four volumes of
Second Comptroller digests.
b. 1894-1921: Comptroller of the Treasury:
In 1894, Congress enacted the so-called Dockery Act, actually a part of
the general appropriation act for 1895 (ch. 174, 28 Stat. 162, 205
(July 31, 1894)), which consolidated the functions of the First and
Second Comptrollers and the Commissioner of Customs into the newly
created Comptroller of the Treasury. (The title was a reversion to one
that had been used before 1817.) The six auditors remained, with
different titles, but their settlements no longer had to be
automatically submitted to the Comptroller.
The Dockery Act included a provision requiring the Comptroller of the
Treasury to render decisions upon the request of an agency head or a
disbursing officer. (Certifying officers did not exist back then.)
Although this was to a large extent a codification of existing
practice, it gave increased significance to the availability of the
decisions. Accordingly, the first Comptroller of the Treasury (Robert
Bowler, who had been First Comptroller when the Dockery Act passed)
initiated the practice of publishing an annual volume of decisions "of
such general character as will furnish precedents for the settlements
of future accounts." 1 Comp. Dec. iv (1896) (Preface).
The Decisions of the Comptroller of the Treasury series consists of 27
volumes covering the period 1894-1921.[Footnote 67] Comptroller of the
Treasury decisions not included in the annual volumes exist in bound
"manuscript volumes," which are now in the custody of the National
Archives, and are thus, unavailable as a practical matter.
c. 1921 to the Present Time:
When the Budget and Accounting Act of 1921 created the General
Accounting Office, the offices of the Comptroller of the Treasury and
the six Auditors were abolished and their functions transferred to the
Comptroller General. Among these functions was the issuance of legal
decisions to agency officials concerning the availability and use of
appropriated funds. Thus, the decisions GAO issues today reflect the
continuing evolution of a body of administrative law on federal fiscal
matters dating back to the Nation's infancy. We turn now to a brief
description of this function under the stewardship of the Comptroller
General.
2. Decisions of the Comptroller General:
a. General Information:
Certain federal officials are entitled by statute to receive GAO
decisions. The Comptroller General renders decisions in advance of
payment when requested by disbursing officers, certifying officers, or
the head of any department or establishment of the federal government,
who may be uncertain whether he or she has authority to make, or
authorize the making of, particular payments. 31 U.S.C. § 3529. The
Comptroller General also renders, for example, decisions to heads of
agency components, including general counsels and inspectors general.
See, e.g., B-291947, Aug. 15, 2003; B-285794, Dec. 5, 2000. The
Comptroller General's decisions are logically known as "advance
decisions."
Decisions are also provided to disbursing and certifying officers who
request review of a settlement of their accounts. 31 U.S.C. §§ 3527,
3528(b). In addition, the Comptroller General may, in his discretion,
render decisions or legal opinions to other individuals or
organizations, both inside and outside the government.
A decision regarding an account of the government is binding on the
executive branch[Footnote 68] and on the Comptroller General
himself,[Footnote 69] but is not binding on a private party who, if
dissatisfied, retains whatever recourse to the courts he would
otherwise have had. The Comptroller General has no power to enforce
decisions. Ultimately, agency officials who act contrary to Comptroller
General decisions may have to respond to congressional appropriations
and program oversight committees.
There is no specific procedure for requesting a decision from the
Comptroller General. A simple letter is usually sufficient. The request
should, however, include all pertinent information or supporting
material and should present any arguments the requestor wishes to have
considered. GAO will also receive requests for decisions by e-mail. To
submit a request by e-mail, refer to the "Legal Products" page of GAO's
Web site, [Hyperlink, www.gao.gov], and follow the instructions
provided therein.
A request for an advance decision submitted by a certifying officer
will usually arise from "a voucher presented… for certification."
31 U.S.C. § 3529(a)(2). At one time, GAO insisted that the original
voucher accompany the request and occasionally declined to render the
decision if this was not done. See, e.g., 21 Comp. Gen. 1128 (1942).
The requirement was eliminated in B-223608, Dec. 19, 1988:
"Consistent with our current practice, submission of the original
voucher need not accompany the request for an advance decision.
Accordingly, in the future, the original voucher should be retained in
the appropriate finance office. A photocopy accompanying the request
for decision will be sufficient. Language to the contrary in prior
decisions may be disregarded."
Even if no voucher is submitted, GAO will most likely render the
decision notwithstanding the absence of a voucher if the question is of
general interest and appears likely to recur. See, e.g., 55 Comp.
Gen. 652 (1976); 53 Comp. Gen. 429 (1973); 53 Comp. Gen. 71 (1973);
52 Comp. Gen. 83 (1972).
Often, requests for decisions will require factual development, and GAO
will contact the agency as necessary to establish and document relevant
facts. It is the usual practice of GAO to obtain the legal positions
and views of the agency or agencies involved in the request for a
decision or opinion.
An involved party or agency may request reconsideration of a decision.
The standard applied is whether the request demonstrates error of fact
or law (e.g., B-184062, July 6, 1976) or presents new information not
considered in the earlier decision. B-271838.2, May 23, 1997. While the
Comptroller General gives precedential weight to prior
decisions,[Footnote 70] a decision may be modified or overruled by a
subsequent decision. In overruling its decisions, GAO tries to follow
the approach summarized by the Comptroller of the Treasury in a 1902
decision:
"I regret exceedingly the necessity of overruling decisions of this
office heretofore made for the guidance of heads of departments and the
protection of paying officers, and fully appreciate that certainty in
decisions is greatly to be desired in order that uniformity of practice
may obtain in the expenditure of the public money, but when a decision
is made not only wrong in principle but harmful in its workings, my
pride of decision is not so strong that when my attention is directed
to such decision I will not promptly overrule it. It is a very easy
thing to be consistent, that is, to insist that the horse is 16 feet
high, but not so easy to get right and keep right."
8 Comp. Dec. 695, 697 (1902).
GAO also entertains informal inquiries, via telephone and e-mail,
regarding matters of appropriations law. To submit such an inquiry by
e-mail, refer to the "Legal Products" page of GAO's Web site,
[Hyperlink, www.gao.gov], and follow the instructions provided therein.
Informal opinions expressed by GAO officers or employees may not
represent the views of the Comptroller General or GAO and are in no
way controlling on any subsequent formal or official determinations by
the Comptroller General. 56 Comp. Gen. 768, 773-74 (1977); 31 Comp.
Gen. 613 (1952); 29 Comp. Gen. 335 (1950); 12 Comp. Gen. 207 (1932); 4
Comp. Gen. 1024 (1925).
b. Matters Not Considered:
There are a number of areas in which, as a matter of law or policy, the
Comptroller General will generally decline to render a decision.
For example, as we discussed earlier in this chapter, effective
June 30, 1996, Congress transferred claims settlement authority under
31 U.S.C. § 3302 to the Director of the Office of Management and Budget
(OMB). Congress gave the director of OMB the authority to delegate this
function to such agency or agencies as he deemed appropriate. See,
e.g., B-278805, July 21, 1999.
Other areas where the Comptroller General will decline to render
decisions include questions concerning which the determination of
another agency is by law "final and conclusive." Examples are
determinations on the merits of a claim against another agency under
the Federal Tort Claims Act (28 U.S.C. § 2672) or the Military
Personnel and Civilian Employees' Claims Act of 1964 (31 U.S.C.
§ 3721). Another example is a decision by the Secretary of Veterans
Affairs on a claim for veterans' benefits (38 U.S.C. § 511). See
56 Comp. Gen. 587, 591 (1977); B-266193, Feb. 23, 1996; B-226599.2,
Nov. 3, 1988 (nondecision letter).
In addition, GAO has traditionally declined to render decisions in a
number of areas that are specifically within the jurisdiction of some
other agency and concerning which GAO would not be in the position to
make authoritative determinations, even though the other agency's
determination is not statutorily "final and conclusive." Thus, GAO will
not "decide" whether a given action violates a provision of the
Criminal Code (Title 18 of the United States Code) since this is within
the jurisdiction of the Justice Department and the courts.[Footnote 71]
If the use of public funds is an element of the alleged violation, the
extent of GAO's involvement will be to determine if appropriated funds
were in fact used and to refer the matter to the Justice Department if
deemed appropriate or if requested to do so.[Footnote 72]
Other examples of areas where GAO has declined to render decisions are
antitrust law,[Footnote 73] political activities of federal employees
under the Hatch Act,[Footnote 74] and determinations as to what is or
is not taxable under the Internal Revenue Code.[Footnote 75]
GAO avoids opining on an issue that is the subject of current
litigation, unless the court expresses an interest in receiving GAO's
opinion.[Footnote 76] GAO's policy with respect to issues that are the
subject of agency administrative proceedings is generally similar to
its litigation policy. See 69 Comp. Gen. 134 (1989) (declining to
render an opinion on the propriety of an attorney's fee award being
considered by the Equal Employment Opportunity Commission). See also
B-259632, June 12, 1995.
Another long-standing GAO policy concerns the constitutionality of acts
of Congress. As an agent of Congress, GAO recognizes that it is neither
our role nor our province to opine on or adjudicate the
constitutionality of duly enacted statutes. Such laws come to GAO with
a heavy presumption in favor of their constitutionality and, like the
courts, GAO will construe statutes narrowly to avoid constitutional
issues.[Footnote 77] Immigration & Naturalization Service v. St. Cyr,
533 U.S. 289, 299, n.12 (2001); B-300192, Nov. 13, 2002 (regarding a
provision in the fiscal year 2003 Continuing Resolution, Pub. L. No.
107-229, § 117, 116 Stat. 1465, 1468 (Sept. 30, 2002), prohibiting the
use of appropriations to acquire private sector printing and
specifically prohibiting the use of appropriations to pay for printing
the President's Budget other than through the Government Printing
Office: "Given our authority to settle and audit the accounts of the
government…, we will apply laws as we find them absent a controlling
opinion that such laws are unconstitutional"). GAO will, however,
express its opinion, upon the request of a Member or committee of
Congress, on the constitutionality of a bill prior to enactment. E.g.,
B-360241, Mar. 18, 2003; B-300192, supra; B-228805, Sept. 28, 1987.
c. Research Aids:
Between July 1921 and September 1994, decisions that the General
Counsel determined had wide applicability were published annually in
hardbound volumes entitled Decisions of the Comptroller General. All
other decisions, after GAO had distributed copies to the requester and
other interested parties, were filed at GAO and available publicly upon
request. There is no legal distinction between a decision published in
Decisions of the Comptroller General and an unpublished decision.
28 Comp. Gen. 69 (1948). Since 1994, all decisions have been posted to
the GAO Internet Web site, [Hyperlink, www.gao.gov]. The decisions are
available at the GAO Web site only for a period of 60 days. After 60
days, the Government Printing Office (GPO) posts GAO's decision to its
GPO Access WAIS system, an archival system. Researchers can access the
GPO system through GAO's Web site. The GPO system includes GAO
decisions issued since January 1996. GAO's Office of General Counsel
will assist researchers who have difficulty locating a copy of GAO
decisions.
Some of the computerized legal research systems (e.g., Lexis, Westlaw)
carry Comptroller General decisions. Researchers might also find
decisions available through the Air Force's Federal Legal Information
Through Electronics (FLITE) Web site. GAO's procurement decisions are
published commercially, and some of the commercial "newsletter"
services include summaries of other GAO issuances, including
appropriations law decisions.
d. Note on Citations:
Decisions of the Comptroller General published in the Decisions of the
Comptroller General volumes are cited by volume, page number on which
the decision begins, and the year. For example: 31 Comp. Gen. 350
(1952). Unpublished decisions before 1994 and all decisions thereafter
are cited by file number and date. For example: B-193282, Dec. 21,
1978. The present file numbering system ("B-numbers") has been in use
since January 1939. From 1924 through 1938, file numbers had an "A"
prefix.[Footnote 78]
3. Other Relevant Authorities:
a. GAO Materials:
GAO expresses its positions in many forms. Most of the GAO materials
cited in this publication are decisions of the Comptroller General.
While these constitute the most significant body of GAO positions on
legal issues, the editors have also included, as appropriate, citations
to the following items:
1. Legal opinions to Congress--GAO prepares legal opinions at the
request of congressional committees or individual Members of Congress.
Congressional opinions are prepared in letter rather than decision
format, but have the same weight and effect as decisions. The citation
form is identical to that for decisions. As a practical matter, except
where specifically identified in the text, the reader will not be able
to distinguish between a decision and a congressional opinion based on
the form of the citation.
2. Office memoranda--Legal questions are frequently presented by other
divisions or offices within GAO. The response is in the form of an
internal memorandum, formerly signed by the Comptroller General, but
now, for the most part, signed by the General Counsel or someone on the
General Counsel's staff. The citation is the same as for an unpublished
decision, except that the suffix "O.M." (Office Memorandum) has
traditionally been added. More recent material tends to omit the
suffix, in which case our practice in this publication is to identify
the citation as a memorandum to avoid confusion with decisions. Office
memoranda are usually not cited in decisions. Technically, an office
memorandum is not a decision of the Comptroller General as provided in
31 U.S.C. § 3529, does not have the same legal or precedential effect,
and should never be cited as a decision. See, e.g., A-10786, May 23,
1927. Instead, office memoranda represent the views of the General
Counsel or members of the General Counsel's staff. Notwithstanding
these limitations, we have included selected citations to GAO office
memoranda, particularly where they provide guidance in the absence of
formal decisions on a given point or contain useful research or
discussion.
3. Audit reports--A GAO audit report is cited by its title, date of
issuance, and a numerical designation. Up to the mid-1970s, the same
file numbering system was used as in decisions ("B-numbers"). From the
mid-1970s until October 2000, the designation for an audit report
consisted of the initials of the issuing division, the fiscal year, and
the report number, although a "B-number" was also assigned. Now the
designation includes only the fiscal year and the report number.
Reports are numbered sequentially within each fiscal year.
Several audit reports are cited throughout this publication either as
authority for some legal proposition or to provide sources of
additional information to supplement the discussion in the text. To
prevent confusion stemming from different citation formats used over
the years, our practice in this publication is to always identify an
audit report as a "GAO report" in the text, in addition to the
citation.
As required by 31 U.S.C. § 719(g), GAO issues monthly and annual lists
of reports. In addition, GAO occasionally prepares bibliographies of
reports and decisions in a given subject area (food, land use, etc.).
The lists and GAO reports can be found at GAO's Web site, [Hyperlink,
www.gao.gov].
In addition to the reports themselves, GAO publishes a number of
pamphlets and other documents relating to its audit function. See,
e.g., U.S. General Accounting Office, Government Auditing Standards,
GAO-03-673G (Washington, D.C.: June 2003) (known as the "Yellow Book").
References to any of these will be fully described in the text where
they occur.
4. Nondecision letters--On occasion, GAO may issue letters, signed by
some subordinate official on the General Counsel's staff, usually to an
individual or organization who has requested information or who has
requested a legal opinion, but is not entitled by law to a formal
decision. Their purpose is basically to convey information rather than
resolve a legal issue. Several of these are cited in this publication,
either because they offer a particularly clear statement of some policy
or position, or to supplement the material found in the decisions. Each
is identified parenthetically. The citation form is otherwise identical
to an unpublished decision. As with the office memoranda, these are not
decisions of the Comptroller General and do not have the same legal or
precedential effect.
5. Circular letters--A circular letter is a letter addressed simply to
the "Heads of Federal Departments and Agencies" or to "Federal
Certifying and Disbursing Officers." Circular letters, although not
common, are used for a variety of purposes and may emanate from a
particular division within GAO or directly from the Comptroller
General. Circular letters that announce significant changes in
pertinent legal requirements or GAO audit policy or procedures are
occasionally cited in this publication. They are identified as such and
often, but not always, bear file designations similar to unpublished
decisions. See B-275605, Mar. 17, 1997 (announcing changes resulting
from the transfer of claims settlement and other related functions).
6. GAO's Policy and Procedures Manual for Guidance of Federal Agencies-
-Originally published in 1957 as a large loose-leaf volume, this was,
for many years, the official medium through which the Comptroller
General issued accounting principles and standards and related material
for the development of accounting systems and internal auditing
programs, uniform procedures, and regulations governing GAO's
relationship with other federal agencies and private parties. Of the
eight original titles of the volume, only three remain in effect. The
title of particular relevance for federal appropriations law is Title
7, "Fiscal Procedures." It is an important complement to this manual.
Researchers can access Title 7 on GAO's Web site, [Hyperlink,
www.gao.gov].
7. A Glossary of Terms Used in the Federal Budget Process (Exposure
Draft), GAO/AFMD-2.1.1 (Jan. 1993)--This publication contains standard
definitions of fiscal and budgetary terms. It is published by GAO as
required by 31 U.S.C. § 1112(c), and is updated periodically.
Definitions used throughout Principles of Federal Appropriations Law
are based on the Glossary unless otherwise noted.
b. Non-GAO Materials:
As we have emphasized, the primary focus of this publication is the
issuance of GAO, particularly legal decisions and opinions. Manifestly,
however, various non-GAO authorities require inclusion.
References to legislative materials should be readily recognizable.
Citations to the United States Code are to the edition or its
supplements current as of the time of publication, unless specified
otherwise. We specify the year only when referring to an obsolete
edition of the Code. Section numbers and even title numbers may change
over the years as a result of amendments or recodifications. For
convenience and (we hope) clarity, we have generally used current
citations even though the referenced decision may have used an older
obsolete citation. Where the difference is significant, it will be
noted in the text.
We have also included relevant decisions and opinions of other
administrative agencies, although our research in these areas has not
been exhaustive. For example, we have included some relevant opinions
of the Attorney General. The Attorney General renders legal opinions
pursuant to various provisions of law. E.g., 28 U.S.C. §§ 511-513.
There are two series of published opinions. Those signed by the
Attorney General are called "formal opinions," and are published in
volumes entitled Official Opinions of the Attorneys General of the
United States Advising the President and Heads of Departments in
Relation to Their Official Duties (cited "Op. Att'y Gen."). The series
started in 1852 and now numbers 43 volumes. They are published at
irregular intervals.
The second series consists of selected opinions by the Justice
Department's Office of Legal Counsel (OLC), which prepares and issues
legal opinions under delegation from the Attorney General. Commencing
in 1977, volumes 1-20 of the Opinions of the Office of Legal Counsel
have thus far been published. Logically enough, they are cited "Op.
Off. Legal Counsel." Given the lengthy intervals in recent decades
between volumes of the "formal" Attorney General opinions, these are
now included in the OLC volumes as well. We have used a parallel
citation format to identify this latter group. Example: 43 Op. Att'y
Gen. 224, 4A Op. Off. Legal Counsel 16 (1980).
A Treasury Department publication cited a number of times is the
Treasury Financial Manual (TFM), Volume I. This, also issued in loose-
leaf form, is the Treasury Department's detailed procedural guidance on
fiscal matters (central accounting and reporting, receipts,
disbursements, etc.). The TFM is indispensable for finance personnel.
c. Note on Title 31 Recodification:
Many of the key statutes of general applicability that govern the use
of appropriated funds are found in Title 31 of the United States Code
(U.S.C.). Title 31 was recodified on September 13, 1982 (Pub. L.
No. 97-258, 96 Stat. 877). A recodification is intended as a--
"compilation, restatement, and revision of the general and permanent
laws of the United States which conforms to the understood policy,
intent, and purpose of the Congress in the original enactments, with
such amendments and corrections as will remove ambiguities,
contradictions, and other imperfections both of substance and of form…."
2 U.S.C. § 285b(1). Enactment of a recodification transforms the title
into "positive law." A recodified title is legal evidence of the law,
and resorting to the Statutes at Large for evidentiary purposes is no
longer necessary.
The recodification of Title 31 is essentially a restatement in updated
form. It is not supposed to make any substantive change in the law.
This point is made in the statute itself (Pub. L. No. 97-258, § 4(a),
96 Stat. 1067, 31 U.S.C. note preceding § 101) and in the accompanying
report of the House Judiciary Committee (H.R. Rep. No. 97-651, at 3
(1982)). In addition, the courts will not read a substantive change
into a recodification in the absence of evidence that Congress intended
a substantive change. E.g., Keene Corp. v. United States, 508 U.S. 200,
209 (1993); United States v. Thompson, 319 F.2d 665, 669 (2nd Cir.
1963).
[End of section]
Chapter 2: The Legal Framework:
A. Appropriations and Related Terminology:
1. Introduction:
2. Concept and Types of Budget Authority:
a. Appropriations:
b. Contract Authority:
c. Borrowing Authority:
d. Monetary Credits:
e. Offsetting Receipts:
f. Loan and Loan Guarantee Authority:
3. Some Related Concepts:
a. Spending Authority:
b. Entitlement Authority:
4. Types of Appropriations:
a. Classification Based on Duration:
b. Classification Based on Presence or Absence of Monetary Limit:
c. Classification Based on Permanency:
d. Classification Based on Availability for New Obligations:
e. Reappropriation:
B. Some Basic Concepts:
1. What Constitutes an Appropriation:
2. Specific versus General Appropriations:
a. General Rule:
b. Two Appropriations Available for Same Purpose:
3. Transfer and Reprogramming:
a. Transfer:
b. Reprogramming:
4. General Provisions: When Construed as Permanent Legislation:
C. Relationship of Appropriations to Other Types of Legislation:
1. Distinction between Authorization and Appropriation:
2. Specific Problem Areas and the Resolution of Conflicts:
a. Introduction:
b. Variations in Amount:
(1) Appropriation exceeds authorization:
(2) Appropriation less than authorization:
(3) Earmarks in authorization act:
c. Variations in Purpose:
d. Period of Availability:
e. Authorization Enacted After Appropriation:
f. Two Statutes Enacted on Same Day:
g. Ratification by Appropriation:
h. Repeal by Implication:
i. Lack of Authorization:
D. Statutory Interpretation: Determining Congressional Intent:
1. The Goal of Statutory Construction:
2. The "Plain Meaning" Rule:
a. In General:
b. The Plain Meaning Rule versus Legislative History:
3. The Limits of Literalism: Errors in Statutes and "Absurd
Consequences":
a. Errors in Statutes:
(1) Drafting errors:
(2) Error in amount appropriated:
b. Avoiding "Absurd Consequences":
4. Statutory Aids to Construction:
a. Definitions, Effective Dates, and Severability Clauses:
b. The Dictionary Act:
c. Effect of Codification:
5. Canons of Statutory Construction:
a. Construe the Statute as a Whole:
b. Give Effect to All the Language: No "Surplusage":
c. Apply the Common Meaning of Words:
d. Give a Common Construction to the Same or Similar Words:
e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not
Controlling:
f. Avoid Constructions That Pose Constitutional Problems:
6. Legislative History:
a. Uses and Limitations:
b. Components and Their Relative Weight:
(1) Committee reports:
(2) Floor debates:
(3) Hearings:
c. Post-enactment Statements:
d. Development of the Statutory Language:
7. Presumptions and "Clear Statement" Rules:
a. Presumption in Favor of Judicial Review:
b. Presumption against Retroactivity:
c. Federalism Presumptions:
d. Presumption against Waiver of Sovereign Immunity:
Chapter 2: The Legal Framework:
A. Appropriations and Related Terminology:
1. Introduction:
The reader will find it useful to have a basic understanding of certain
appropriations law terminology that will be routinely encountered
throughout this publication. Some of our discussion will draw upon
definitions that have been enacted into law for application in various
budgetary contexts. Other definitions are drawn from custom and usage
in the budget and appropriations process, in conjunction with
administrative and judicial decisions.
In addition, 31 U.S.C. § 1112(c), previously noted in Chapter 1,
requires the Comptroller General, in cooperation with the Treasury
Department, Office of Management and Budget, and Congressional Budget
Office, to maintain and publish standard terms and classifications for
"fiscal, budget, and program information," giving particular
consideration to the needs of the congressional budget, appropriations,
and revenue committees. Federal agencies are required by 31 U.S.C.
§ 1112(d) to use this standard terminology when providing information
to Congress.
The terminology developed pursuant to this authority is published in a
GAO booklet entitled A Glossary of Terms Used in the Federal Budget
Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993)
[hereinafter Glossary]. Unless otherwise noted, the terminology used
throughout this publication is based on the Glossary.[Footnote 79] The
following sections present some of the more important terminology in
the budget and appropriations process. Many other terms will be defined
in the chapters that deal specifically with them.
2. Concept and Types of Budget Authority:
Congress finances federal programs and activities by providing "budget
authority." Budget authority is a general term referring to various
forms of authority provided by law to enter into financial obligations
that will result in immediate or future outlays of government funds. As
defined by the Congressional Budget Act, "budget authority" includes:
"(i) provisions of law that make funds available for obligation and
expenditure (other than borrowing authority), including the authority
to obligate and expend the proceeds of offsetting receipts and
collections;
"(ii) borrowing authority, which means authority granted to a Federal
entity to borrow and obligate and expend the borrowed funds, including
through the issuance of promissory notes or other monetary credits;
"(iii) contract authority, which means the making of funds available
for obligation but not for expenditure; and:
"(iv) offsetting receipts and collections as negative budget authority,
and the reduction thereof as positive budget authority.
"The term includes the cost for direct loan and loan guarantee
programs, as those terms are defined by [the Omnibus Budget
Reconciliation Act of 1990, Pub. L. No. 101-508, § 13201(a)]."
[Footnote 80]
a. Appropriations:
Appropriations are the most common form of budget authority. As we have
seen in Chapter 1 in our discussion of the congressional "power of the
purse," the Constitution prohibits the withdrawal of money from the
Treasury unless authorized in the form of an appropriation enacted by
Congress.[Footnote 81] Thus, funds paid out of the United States
Treasury must be accounted for by charging them to an appropriation
provided by or derived from an act of Congress.
The term "appropriation" may be defined as:
"Authority given to federal agencies to incur obligations and to make
payments from Treasury for specified purposes."[Footnote 82]
While other forms of budget authority may authorize the incurring of
obligations, the authority to incur obligations by itself is not
sufficient to authorize payments from the Treasury. See, e.g., National
Ass'n of Regional Councils v. Costle, 564 F.2d 583, 586 (D.C. Cir.
1977); New York Airways, Inc. v. United States, 369 F.2d 743 (Ct. Cl.
1966). Thus, at some point if obligations are paid, they are paid by
and from an appropriation. Section B.1 of this chapter discusses in
more detail precisely what types of statutes constitute appropriations.
Appropriations do not represent cash actually set aside in the
Treasury. They represent legal authority granted by Congress to incur
obligations and to make disbursements for the purposes, during the time
periods, and up to the amount limitations specified in the
appropriation acts. See United States ex rel. Becker v. Westinghouse
Savannah River Co., 305 F.3d 284 (4th Cir. 2002).
Appropriations are identified on financial documents by means of
"account symbols," which are assigned by the Treasury Department, based
on the number and types of appropriations an agency receives and other
types of funds it may control. An appropriation account symbol is a
group of numbers, or a combination of numbers and letters, which
identifies the agency responsible for the account, the period of
availability of the appropriation, and the specific fund
classification. Detailed information on reading and identifying account
symbols is contained in the Treasury Financial Manual (I TFM 2-1500).
Specific accounts for each agency are listed in a publication entitled
Federal Account Symbols and Titles, issued quarterly as a supplement to
the TFM.
b. Contract Authority:
Contract authority is a form of budget authority that permits
obligations to be incurred in advance of appropriations. Glossary at
22. It is to be distinguished from the inherent authority to enter into
contracts possessed by every government agency, but which depends on
the availability of funds.
Contract authority itself is not an appropriation; it provides the
authority to enter into binding contracts but not the funds to make
payments under them. Therefore, contract authority must be funded (or,
in other words, the funds needed to liquidate obligations under the
contracts must be provided) by a subsequent appropriation (called a
"liquidating appropriation") or by the use of receipts or offsetting
collections authorized for that purpose. See PCL Construction Service,
Inc. v. United States, 41 Fed. Cl. 242 (1998); National Ass'n of
Regional Councils v. Costle, 564 F.2d 583, 586 (D.C. Cir. 1977);
B-300167, Nov. 15, 2002; B-228732, Feb. 18, 1988.
Contract authority may be provided in appropriation acts (e.g.,
B-174839, Mar. 20, 1984) or, more commonly, in other types of
legislation (e.g., B-228732, Feb. 18, 1988). Either way, the authority
must be specific. 31 U.S.C. § 1301(d). As we noted in Chapter 1, one of
the objectives of the Congressional Budget and Impoundment Control Act
of 1974 was to provide increased control by the appropriations process
over various forms of so-called "backdoor spending" such as contract
authority. To this end, legislation providing new contract authority
will be subject to a point of order in either the Senate or the House
of Representatives unless it also provides that the new authority will
be effective for any fiscal year only to such extent or in such amounts
as are provided in advance in appropriation acts. 2 U.S.C. § 651(a).
Contract authority has a "period of availability" analogous to that for
an appropriation. Unless otherwise specified, if it appears in an
appropriation act in connection with a particular appropriation, its
period of availability will be the same as that for the appropriation.
If it appears in an appropriation act without reference to a particular
appropriation, its period of availability, again unless otherwise
specified, will be the fiscal year covered by the appropriation act.
32 Comp. Gen. 29, 31 (1952); B-76061, May 14, 1948. See Cray Research,
Inc. v. United States, 44 Fed. Cl. 327, 331 n.4 (1999); Costle,
564 F.2d at 587-88. This period of availability refers to the time
period during which the contracts must be entered into.
As noted above, appropriations constitute budget authority. An
appropriation to liquidate contract authority, however, is not new
budget authority, since contract authority itself constitutes new
budget authority. This treatment is necessary to avoid counting the
amounts twice. B-171630, Aug. 14, 1975.
Since the contracts entered into pursuant to contract authority
constitute obligations binding on the United States, Congress has
little practical choice but to make the necessary liquidating
appropriations. B-228732, Feb. 18, 1988; B-226887, Sept. 17, 1987. As
the Supreme Court has put it:
"The expectation is that appropriations will be automatically
forthcoming to meet these contractual commitments. This mechanism
considerably reduces whatever discretion Congress might have exercised
in the course of making annual appropriations."
Train v. City of New York, 420 U.S. 35, 39 n.2 (1975). A failure or
refusal by Congress to make the necessary appropriation would not
defeat the obligation, and the party entitled to payment would most
likely be able to recover in a lawsuit. E.g., B-211190, Apr. 5, 1983.
c. Borrowing Authority:
"Borrowing authority" is authority that permits agencies to incur
obligations and make payments to liquidate the obligations out of
borrowed moneys.[Footnote 83] Borrowing authority may consist of
(a) authority to borrow from the Treasury (authority to borrow funds
from the Treasury that are realized from the sale of public debt
securities), (b) authority to borrow directly from the public
(authority to sell agency debt securities), (c) authority to borrow
from (sell agency debt securities to) the Federal Financing Bank, or
(d) some combination of the above.
Borrowing from the Treasury is the most common form and is also known
as "public debt financing." As a general proposition, GAO has
traditionally expressed a preference for financing through direct
appropriations on the grounds that the appropriations process provides
enhanced congressional control. E.g., B-301397, Sept. 4, 2003;
B-141869, July 26, 1961. The Congressional Budget Act met this concern
to an extent by requiring generally that new borrowing authority, as
with new contract authority, be limited to the extent or amounts
provided in appropriation acts. 2 U.S.C. § 651(a). GAO has recommended
that borrowing authority be provided only to those accounts that can
generate enough revenue in the form of collections from nonfederal
sources to repay their debt. U.S. General Accounting Office, Budget
Issues: Budgeting for Federal Capital, GAO/AIMD-97-5 (Washington, D.C.:
Nov. 12, 1996); Budget Issues: Agency Authority to Borrow Should Be
Granted More Selectively, GAO/AFMD-89-4 (Washington, D.C.: Sept. 15,
1989).[Footnote 84] On occasion, however, GAO has recommended borrowing
authority when supplemental appropriations might otherwise be
necessary. See U.S. General Accounting Office, Aviation Insurance:
Federal Insurance Program Needs Improvements to Ensure Success, GAO/
RCED-94-151 (Washington, D.C.: July 15, 1994).
d. Monetary Credits:
A type of borrowing authority specified in the expanded definition of
budget authority contained in the Omnibus Budget Reconciliation Act of
1990 is monetary credits. The monetary credit is a relatively uncommon
concept in government transactions. At the present time, it exists
mostly in a handful of statutes authorizing the government to use
monetary credits to acquire property such as land or mineral rights.
Examples are the Rattlesnake National Recreation Area and Wilderness
Act of 1980, discussed in 62 Comp. Gen. 102 (1982), and the Cranberry
Wilderness Act, discussed in B-211306, Apr. 9, 1984.[Footnote 85]
Under the monetary credit procedure, the government does not issue a
check in payment for the acquired property. Instead, it gives the
seller "credits" in dollar amounts reflecting the purchase price. The
holder may then use these credits to offset or reduce amounts it owes
the government in other transactions that may, depending on the terms
of the governing legislation, be related or unrelated to the original
transaction. The statute may use the term "monetary credit" (as in the
Cranberry legislation) or some other designation such as "bidding
rights" (as in the Rattlesnake Act). Where this procedure is
authorized, the acquiring agency does not need to have appropriations
or other funds available to cover the purchase price because no cash
disbursement is made. An analogous device authorized for use by the
Commodity Credit Corporation is "commodity certificates."[Footnote 86]
The inclusion of monetary credits as budget authority has the effect of
making them subject to the appropriation controls of the Congressional
Budget Act, such as the requirements of 2 U.S.C. § 651.
e. Offsetting Receipts:
The federal government receives money from numerous sources and in
numerous contexts. For budgetary purposes, collections are classified
in two major categories, governmental receipts and offsetting
collections.[Footnote 87]
Governmental receipts or budget receipts are collections resulting from
the government's exercise of its sovereign or regulatory powers.
Examples are tax receipts, customs duties, and court fines. Collections
in this category are deposited in receipt accounts and are compared
against total outlays for purposes of calculating the budget surplus or
deficit.
Offsetting collections are collections resulting from business-type or
market-oriented activities, such as the sale of goods or services to
the public, and intragovernmental transactions. Their budgetary
treatment differs from governmental receipts in that they are offset
against (deducted from or "netted against") budget authority in
determining total outlays. Offsetting collections are also divided into
two major categories.[Footnote 88]
First is offsetting collections credited to appropriation or fund
accounts. These are collections which, under specific statutory
authority, may be deposited in an appropriation or fund account under
the control of the receiving agency and which are then available for
obligation by the agency subject to the purpose and time limitations of
the receiving account.
Second is offsetting receipts. Offsetting receipts are offsetting
collections that are deposited in a receipt account.[Footnote 89] For
budgetary purposes, these amounts are deducted from budget authority by
function or subfunction and by agency.[Footnote 90]
The Balanced Budget and Emergency Deficit Control Act of 1985, Pub. L.
No. 99-177, 99 Stat. 1038 (Dec. 12, 1985), first addressed the
budgetary treatment of offsetting receipts by adding the authority "to
collect offsetting receipts" to the definition of budget authority. The
expanded definition in the Omnibus Budget Reconciliation Act of 1990,
Pub. L. No. 101-508, 104 Stat. 1388 (Nov. 5, 1990), is more explicit.
The authority to obligate and expend the proceeds of offsetting
receipts and collections is treated as negative budget authority. In
addition, the reduction of offsetting receipts or collections (e.g.,
legislation authorizing an agency to forego certain collections) is
treated as positive budget authority.[Footnote 91]
f. Loan and Loan Guarantee Authority:
A loan guarantee is any guarantee, insurance, or other pledge with
respect to the payment of all or a part of the principal or interest on
any debt obligation of a nonfederal borrower to a nonfederal
lender.[Footnote 92] The government does not know whether or to what
extent it may be required to honor the guarantee until there has been a
default. Loan guarantees are contingent liabilities that may not be
recorded as obligations until the contingency occurs. See 64 Comp.
Gen. 282, 289 (1985); B-290600, July 10, 2002. See also Chapter 11.
Prior to legislation enacted in November 1990, loan guarantees were
expressly excluded from the definition of budget authority. Budget
authority was created only when an appropriation to liquidate loan
guarantee authority was made.
Statutory reform of the budgetary treatment of federal credit programs
came about in two stages. First, the Balanced Budget and Emergency
Deficit Control Act of 1985 added a definition of "credit authority" to
the Congressional Budget Act, specifically, "authority to incur direct
loan obligations or to incur primary loan guarantee commitments."
2 U.S.C. § 622(10).[Footnote 93] Any bill, resolution, or conference
report providing new credit authority will be subject to a point of
order unless the new authority is limited to the extent or amounts
provided in advance in appropriation acts. 2 U.S.C. § 651(a).[Footnote
94]
The second stage was the Federal Credit Reform Act of 1990,[Footnote
95] effective starting with fiscal year 1992. Under this legislation,
the "cost" of loan and loan guarantee programs is budget authority.
Cost means the estimated long-term cost to the government of a loan or
loan guarantee (defaults, delinquencies, interest subsidies, etc.),
calculated on a net present value basis, excluding administrative
costs. Except for entitlement programs (the statute notes the
guaranteed student loan program and the veterans' home loan guaranty
program as examples) and certain Commodity Credit Corporation programs,
new loan guarantee commitments may be made only to the extent budget
authority to cover their costs is provided in advance or other
treatment is specified in appropriation acts. Appropriations of budget
authority are to be made to "credit program accounts," and the programs
administered from revolving nonbudgetary "financing accounts."
The Federal Credit Reform Act reflects the thrust of proposals by GAO,
the Office of Management and Budget, the Congressional Budget Office,
and the Senate Budget Committee. See U.S. General Accounting Office,
Credit Reform: U.S. Needs Better Method for Estimating Cost of Foreign
Loans and Guarantees, GAO/NSIAD/GGD-95-31 (Washington, D.C.: Dec. 19,
1994); Credit Reform: Case-by-Case Assessment Advisable in Evaluating
Coverage and Compliance, GAO/AIMD-94-57 (Washington, D.C.: July 28,
1994). See also U.S. General Accounting Office, Budget Issues:
Budgetary Treatment of Federal Credit Programs, GAO/AFMD-89-42
(Washington, D.C.: Apr. 10, 1989) (discussion of the "net present
value" approach to calculating costs).
3. Some Related Concepts:
a. Spending Authority:
The Congressional Budget Act of 1974 introduced the concept of
"spending authority." The term is a collective designation for
authority provided in laws other than appropriation acts to obligate
the United States to make payments. It includes, to the extent budget
authority is not provided in advance in appropriation acts, permanent
appropriations (such as authority to spend offsetting collections), the
nonappropriation forms of budget authority described above (e.g.,
contract authority, borrowing authority, and authority to forego
collection of offsetting receipts), entitlement authority, and any
other authority to make payments. 2 U.S.C. § 651(c)(2). The different
forms of spending authority are subject to varying controls in the
budget and appropriations process. See Chapter 1, sections C and D. For
example, as noted previously, proposed legislation providing new
contract authority or new borrowing authority will be subject to a
point of order unless it limits the new authority to such extent or
amounts as provided in appropriation acts.
Further information on spending authority may be found in two 1987 GAO
companion reports--one a summary presentation[Footnote 96] and the
other a detailed inventory[Footnote 97]--as well as in more recent
updates.[Footnote 98]
b. Entitlement Authority:
Entitlement authority is statutory authority, whether temporary or
permanent,
"to make payments (including loans and grants), the budget authority
for which is not provided for in advance by appropriation Acts, to any
person or government if, under the provisions of the law containing
that authority, the United States is obligated to make such payments to
persons or governments who meet the requirements established by that
law."[Footnote 99]
Entitlement authority is treated as spending authority during
congressional consideration of the budget. In order to make
entitlements subject to the reconciliation process, the Congressional
Budget Act provides that proposed legislation providing new entitlement
authority to become effective prior to the start of the next fiscal
year will be subject to a point of order. 2 U.S.C. § 651(b)(1).
Entitlement legislation, which would require new budget authority in
excess of the allocation made pursuant to the most recent budget
resolution, must be referred to the appropriations committees. Id.
§ 651(b)(2).
4. Types of Appropriations:
Appropriations are classified in different ways for different purposes.
Some are discussed elsewhere in this publication.[Footnote 100] The
following classifications, although phrased in terms of appropriations,
apply equally to the broader concept of budget authority.
a. Classification Based on Duration[Footnote 101]
1. One-year appropriation: An appropriation that is available for
obligation only during a specific fiscal year. This is the most common
type of appropriation. It is also known as a "fiscal year" or "annual"
appropriation.
2. Multiple year appropriation: An appropriation that is available for
obligation for a definite period of time in excess of one fiscal year.
3. No-year appropriation: An appropriation that is available for
obligation for an indefinite period. A no-year appropriation is usually
identified by appropriation language such as "to remain available until
expended."
b. Classification Based on Presence or Absence of Monetary
Limit[Footnote 102]
1. Definite appropriation: An appropriation of a specific amount of
money.
2. Indefinite appropriation: An appropriation of an unspecified amount
of money. An indefinite appropriation may appropriate all or part of
the receipts from certain sources, the specific amount of which is
determinable only at some future date, or it may appropriate "such sums
as may be necessary" for a given purpose.
c. Classification Based on Permanency[Footnote 103]
1. Current appropriation: An appropriation made by Congress in, or
immediately prior to, the fiscal year or years during which it is
available for obligation.
2. Permanent appropriation: A "standing" appropriation which, once
made, is always available for specified purposes and does not require
repeated action by Congress to authorize its use.[Footnote 104]
Legislation authorizing an agency to retain and use offsetting receipts
tends to be permanent; if so, it is a form of permanent appropriation.
d. Classification Based on Availability for New Obligations[Footnote
105]
1. Current or unexpired appropriation: An appropriation that is
available for incurring new obligations.
2. Expired appropriation: An appropriation that is no longer available
to incur new obligations, although it may still be available for the
recording and/or payment (liquidation) of obligations properly incurred
before the period of availability expired.
3. Canceled appropriation: An appropriation whose account is closed,
and is no longer available for obligation or expenditure for any
purpose.
An appropriation may combine characteristics from more than one of the
above groupings. For example, a "permanent indefinite" appropriation is
open ended as to both period of availability and amount. Examples are
31 U.S.C. § 1304 (payment of certain judgments against the United
States) and 31 U.S.C. § 1322(b)(2) (refunding amounts erroneously
collected and deposited in the Treasury).
e. Reappropriation:
The term "reappropriation" means congressional action to continue the
availability, whether for the same or different purposes, of all or
part of the unobligated portion of budget authority that has expired or
would otherwise expire. Reappropriations are counted as budget
authority in the first year for which the availability is
extended.[Footnote 106]
B. Some Basic Concepts:
1. What Constitutes an Appropriation:
The starting point is 31 U.S.C. § 1301(d), which provides:
"A law may be construed to make an appropriation out of the Treasury or
to authorize making a contract for the payment of money in excess of an
appropriation only if the law specifically states that an appropriation
is made or that such a contract may be made."
Thus, the rule is that the making of an appropriation must be expressly
stated. An appropriation cannot be inferred or made by implication.
E.g., 50 Comp. Gen. 863 (1971).
Regular annual and supplemental appropriation acts present no problems
in this respect as they will be apparent on their face. They, as
required by 1 U.S.C. § 105, bear the title "An Act making
appropriations … ." There are situations in which statutes other than
regular appropriation acts may be construed as making appropriations,
however. See, e.g., 31 U.S.C. § 1304(a) ("necessary amounts are
appropriated to pay final judgments, awards, compromise settlements");
31 U.S.C. § 1324 ("necessary amounts are appropriated to the Secretary
of Treasury for refunding internal revenue collections").
An appropriation is a form of budget authority that makes funds
available to an agency to incur obligations and make
expenditures.[Footnote 107] 2 U.S.C. § 622(2)(A)(i). See also
31 U.S.C. § 701(2)(C) ("authority making amounts available for
obligation or expenditure"). Consequently, while the authority must be
expressly stated, it is not necessary that the statute actually use the
word "appropriation." If the statute contains a specific direction to
pay and a designation of the funds to be used, such as a direction to
make a specified payment or class of payments "out of any money in the
Treasury not otherwise appropriated," then this amounts to an
appropriation. 63 Comp. Gen. 331 (1984); 13 Comp. Gen. 77 (1933). See
also 34 Comp. Gen. 590 (1955).
For example, a private relief act that directs the Secretary of the
Treasury to pay, out of any money in the Treasury not otherwise
appropriated, a specified sum of money to a named individual
constitutes an appropriation. 23 Comp. Dec. 167, 170 (1916). Another
example is B-160998, Apr. 13, 1978, concerning section 11 of the
Federal Fire Prevention and Control Act of 1974,[Footnote 108] which
authorizes the Secretary of the Treasury to reimburse local fire
departments or districts for costs incurred in fighting fires on
federal property. Since the statute directed the Secretary to make
payments "from any moneys in the Treasury not otherwise appropriated"
(i.e., it contained both the specific direction to pay and a
designation of the funds to be used), the Comptroller General concluded
that section 11 constituted a permanent indefinite appropriation.
Both elements of the test must be present. Thus, a direction to pay
without a designation of the source of funds is not an appropriation.
For example, a private relief act that contains merely an authorization
and direction to pay but no designation of the funds to be used does
not make an appropriation. 21 Comp. Dec. 867 (1915); B-26414, Jan. 7,
1944.[Footnote 109] Similarly, public legislation enacted in 1978
authorized the U.S. Treasury to make an annual prepayment to Guam and
the Virgin Islands of the amount estimated to be collected over the
course of the year for certain taxes, duties, and fees. While it was
apparent that the prepayment at least for the first year would have to
come from the general fund of the Treasury, the legislation was silent
as to the source of the funds for the prepayments, both for the first
year and for subsequent years. It was concluded that while the statute
may have established a permanent authorization, it was not sufficient
under 31 U.S.C. § 1301(d) to constitute an actual appropriation.
B-114808, Aug. 7, 1979. (Congress subsequently made the necessary
appropriation in Pub. L. No. 96-126, 93 Stat. 954, 966 (Nov. 27,
1979).)
The designation of a source of funds without a specific direction to
pay is also not an appropriation. 67 Comp. Gen. 332 (1988).
Thus far, we have been talking about the authority to make
disbursements from the general fund of the Treasury. There is a
separate line of decisions establishing the proposition that statutes,
which authorize the collection of fees and their deposit into a
particular fund, and, which make the fund available for expenditure for
a specified purpose, constitute continuing or permanent appropriations;
that is, the money is available for obligation or expenditure without
further action by Congress. Often it is argued that a law making moneys
available from some source other than the general fund of the Treasury
is not an appropriation. This view is wrong. Statutes establishing
revolving funds and various special deposit funds and making amounts in
those funds available for obligation and expenditure are permanent
appropriations. The reason is that, under 31 U.S.C. § 3302(b), all
money received for the use of the United States must be deposited in
the general fund of the Treasury absent statutory authority for some
other disposition. B-271894, July 24, 1997. Once the money is in the
Treasury, it can be withdrawn only if Congress appropriates
it.[Footnote 110] Therefore, the authority for an agency to obligate or
expend collections without further congressional action amounts to a
continuing appropriation or permanent appropriation of the collections.
E.g., United Biscuit Co. v. Wirtz, 359 F.2d 206, 212 (D.C. Cir. 1965),
cert. denied, 384 U.S. 971 (1966); 69 Comp. Gen. 260, 262 (1990);
73 Comp. Gen. 321 (1994).
Cases involving the "special fund" principle fall into two categories.
In the first group, the question is whether a particular statute
authorizing the deposit and expenditure of a class of receipts makes
those funds available for the specified purpose or purposes without
further congressional action. These cases, in other words, raise the
basic question of whether the statute may be regarded as an
appropriation. Cases answering this question in the affirmative include
59 Comp. Gen. 215 (1980) (mobile home inspection fees collected by the
Secretary of Housing and Urban Development); B-228777, Aug. 26, 1988
(licensing revenues received by the Commission on the Bicentennial);
B-204078.2, May 6, 1988, and B-257525, Nov. 30, 1994 (Panama Canal
Revolving Fund); B-197118, Jan. 14, 1980 (National Defense Stockpile
Transaction Fund); and B-90476, June 14, 1950. See also 1 Comp.
Gen. 704 (1922) (revolving fund created in appropriation act remains
available beyond end of fiscal year where not specified otherwise).
The second group of cases involves the applicability of statutory
restrictions or other provisions that by their terms apply to
"appropriated funds" or exemptions that apply to "nonappropriated
funds." For example, fees collected from federal credit unions and
deposited in a revolving fund for administrative and supervisory
expenses have been regarded as appropriated funds for various purposes.
63 Comp. Gen. 31 (1983), aff'd upon reconsideration, B-210657, May 25,
1984 (payment of relocation expenses); 35 Comp. Gen. 615 (1956)
(restrictions on reimbursement for certain telephone calls made from
private residences). Other situations applying the "special fund as
appropriation" principle are summarized below:
* Various funds held to constitute appropriated funds for purposes of
GAO's bid protest jurisdiction:[Footnote 111] 65 Comp. Gen. 25 (1985)
(funds received by National Park Service for visitor reservation
services); 64 Comp. Gen. 756 (1985) (Tennessee Valley Authority power
program funds); 57 Comp. Gen. 311 (1978) (commissary surcharges).
* Applicability of other procurement laws: United Biscuit Co., supra
(Armed Services Procurement Act applicable to military commissary
purchases); B-217281-O.M., Mar. 27, 1985 (federal procurement
regulations applicable to Pension Benefit Guaranty Corporation
revolving funds); B-275669.2, July 30, 1997 (American Battle Monuments
Commission must comply with the Federal Acquisition Regulations and
Federal Property and Administrative Services Act).
* User fee toll charges collected by the Saint Lawrence Seaway
Development Corporation are appropriated funds. However, many of the
restrictions on the use of appropriated funds will nevertheless be
inapplicable by virtue of the Corporation's organic legislation and its
status as a corporation. B-193573, Jan. 8, 1979, modified and aff'd,
B-193573, Dec. 19, 1979; B-217578, Oct. 16, 1986. The December 1979
decision noted that the capitalization of a government corporation,
whether a lump-sum appropriation in the form of capital stock or the
authority to borrow through the issuance of long-term bonds to the U.S.
Treasury, consists of appropriated funds.
* User fees collected under the Tobacco Inspection Act are appropriated
funds and as such are subject to restrictions on payment of employee
health benefits. 63 Comp. Gen. 285 (1984).
* Customs Service duty collections are appropriations authorized to be
used for administration and collection costs. B-241488, Mar. 13, 1991.
* The Prison Industries Fund is an appropriated fund subject to the
General Services Administration's surplus property regulations.
60 Comp. Gen. 323 (1981).
Other cases in this category are 50 Comp. Gen. 323 (1970); 35 Comp.
Gen. 436 (1956); B-191761, Sept. 22, 1978; and B-67175, July 16, 1947.
In each of the special fund cases cited above, the authority to make
payments from the fund involved was clear from the governing
legislation.
Finally, the cases cited above generally involve statutes that specify
the fund to which the collections are to be deposited. This is not
essential, however. A statute that clearly makes receipts available for
obligation or expenditure without further congressional action will be
construed as authorizing the establishment of such a fund as a
necessary implementation procedure. 59 Comp. Gen. 215 (42 U.S.C.
§ 5419); B-226520, Apr. 3, 1987 (nondecision letter) (26 U.S.C.
§ 7475). See also 13 Comp. Dec. 700 (1907).
Two recent court decisions held that revolving funds do not constitute
"appropriations" for purposes of determining whether those courts have
jurisdiction over claims against the United States under the Tucker Act
(28 U.S.C. § 1491). These decisions--Core Concepts of Florida, Inc. v.
United States, 327 F.3d 1331 (Fed. Cir. 2003), petition for cert.
filed, 72 U.S.L.W. 3148 (Aug. 18, 2003), and AINS, Inc. v. United
States, 56 Fed. Cl. 522 (2002)--concluded that GAO's view of revolving
funds as continuing or permanent appropriations does not apply to
issues of Tucker Act jurisdiction.[Footnote 112] The Court of Appeals
for the Federal Circuit, the Court of Federal Claims, and their
predecessors traditionally hold that Tucker Act jurisdiction does not
extend to "nonappropriated fund instrumentalities" that receive no
traditional general revenue appropriations derived from the general
fund of the Treasury.[Footnote 113] Core Concepts and AINS dealt only
with the issue of Tucker Act jurisdiction in this context and have no
bearing on the status of revolving funds in the broader appropriations
law context discussed above.[Footnote 114]
2. Specific versus General Appropriations:
a. General Rule:
An appropriation for a specific object is available for that object to
the exclusion of a more general appropriation, which might otherwise be
considered available for the same object, and the exhaustion of the
specific appropriation does not authorize charging any excess payment
to the more general appropriation, unless there is something in the
general appropriation to make it available in addition to the specific
appropriation.[Footnote 115] In other words, if an agency has a
specific appropriation for a particular item, and also has a general
appropriation broad enough to cover the same item, it does not have an
option as to which to use. It must use the specific appropriation. Were
this not the case, agencies could evade or exceed congressionally
established spending limits.
The cases illustrating this rule are legion.[Footnote 116] Generally,
the fact patterns and the specific statutes involved are of secondary
importance. The point is that the agency does not have an option. If a
specific appropriation exists for a particular item, then that
appropriation must be used and it is improper to charge the more
general appropriation (or any other appropriation) or to use it as a
"back-up." A few cases are summarized as examples:
* A State Department appropriation for "publication of consular and
commercial reports" could not be used to purchase books in view of a
specific appropriation for "books and maps." 1 Comp. Dec. 126 (1894).
The Comptroller of the Treasury referred to the rule as having been
well established "from time immemorial." Id. at 127.
* The existence of a specific appropriation for the expenses of
repairing the U.S. courthouse and jail in Nome, Alaska, precludes the
charging of such expenses to more general appropriations such as
"Miscellaneous expenses, U.S. Courts" or "Support of prisoners, U.S.
Courts." 4 Comp. Gen. 476 (1924).
* A specific appropriation for the construction of an additional wing
on the Navy Department Building could not be supplemented by a more
general appropriation to build a larger wing desired because of
increased needs. 20 Comp. Gen. 272 (1940). See B-235086, Apr. 24, 1991
(a specific appropriation for the construction and acquisition of a
building precludes the Forest Service from using a more general
appropriation to pay for such a purchase). See also B-278121, Nov. 7,
1997.
* Appropriations of the District of Columbia Health Department could
not be used to buy penicillin to be used for Civil Defense purposes
because the District had received a specific appropriation for "all
expenses necessary for the Office of Civil Defense." 31 Comp. Gen. 491
(1952).
Further, the fact that an appropriation for a specific purpose is
included as an earmark in a general appropriation does not deprive it
of its character as an appropriation for the particular purpose
designated, and where such specific appropriation is available for the
expenses necessarily incident to its principal purpose, such incidental
expenses may not be charged to the more general appropriation. 20 Comp.
Gen. 739 (1941). In the cited decision, a general appropriation for the
Geological Survey contained the provision "including not to exceed
$45,000 for the purchase and exchange … of … passenger-carrying
vehicles." It was held that the costs of transportation incident to the
delivery of the purchased vehicles were chargeable to the specific
$45,000 appropriation and not to the more general portion of the
appropriation. Similarly, a general appropriation for the Library of
Congress contained the provision, "$9,619,000 is to remain available
until expended for the acquisition of books, periodicals, newspapers
and all other materials… ." The Comptroller General held that the
$9,619,000 was an earmark requiring the Library to set aside that money
to purchase books and other library materials. The earmark barred the
Library from transferring or using those funds for another purpose.
B-278121, supra. In deciding the proper appropriation to charge for
administrative costs for Oil Pollution Act claims, the Comptroller
General stated, "As a general rule, an appropriation for a specific
object is available for that object to the exclusion of a more general
appropriation which might otherwise be considered for the same object."
B-289209, supra (citing 65 Comp. Gen. 881 (1986)); B-290005, July 1,
2002.
The rule has also been applied to expenditures by a government
corporation from corporate funds for an object for which the
corporation had received a specific appropriation, where the reason for
using corporate funds was to avoid a restriction applicable to the
specific appropriation. B-142011, June 19, 1969.
Of course, the rule that the specific governs over the general is not
peculiar to appropriation law. It is a general principle of statutory
construction and applies equally to provisions other than appropriation
statutes. E.g., 62 Comp. Gen. 617 (1983); B-277905, Mar. 17, 1998;
B-152722, Aug. 16, 1965. However, another principle of statutory
construction is that two statutes should be construed harmoniously so
as to give maximum effect to both wherever possible. In dealing with
nonappropriation statutes, the relationship between the two principles
has been stated as follows:
"Where there is a seeming conflict between a general provision and a
specific provision and the general provision is broad enough to include
the subject to which the specific provision relates, the specific
provision should be regarded as an exception to the general provision
so that both may be given effect, the general applying only where the
specific provision is inapplicable."
B-163375, Sept. 2, 1971. See also B-255979, Oct. 30, 1995.
As stated before, however, in the appropriations context, this does not
mean that a general appropriation is available when the specific
appropriation has been exhausted. Using the more general appropriation
would be an unauthorized transfer (discussed later in this chapter) and
would improperly augment the specific appropriation (discussed in
Chapter 6).
b. Two Appropriations Available for Same Purpose:
Although rare, there are situations in which either of two
appropriations can be construed as available for a particular object,
but neither can reasonably be called the more specific of the two. The
rule in this situation is this: Where two appropriations are available
for the same purpose, the agency may select which one to charge for the
expenditure in question. Once that election has been made, the agency
must continue to use the same appropriation for that purpose unless the
agency at the beginning of the fiscal year informs the Congress of its
intent to change for the next fiscal year. See U.S. General Accounting
Office, Unsubstantiated DOE Travel Payments, GAO/RCED-96-58R
(Washington, D.C.: Dec. 28, 1995). Of course, where statutory language
clearly demonstrates congressional intent to make one appropriation
available to supplement or increase a different appropriation for the
same type of work, both appropriations are available. See B-272191,
Nov. 4, 1997 (Army permitted to use Operations and Maintenance (O&M)
funds for property maintenance and repair work in Germany even though
Real Property Maintenance, Defense (RPM,D) funds were available for the
same work because Congress said the O&M funds were "in addition to the
funds specifically appropriated for real property maintenance under the
heading [RPM,D]").
3. Transfer and Reprogramming:
For a variety of reasons, agencies have a legitimate need for a certain
amount of flexibility to deviate from their budget estimates. Two ways
to shift money are transfer and reprogramming. While the two concepts
are related in this broad sense, they are nevertheless different.
a. Transfer:
Transfer is the shifting of funds between appropriations.[Footnote 117]
For example, if an agency receives one appropriation for Operations and
Maintenance and another for Capital Expenditures, a shifting of funds
from either one to the other is a transfer.
The basic rule with respect to transfer is simple: Transfer is
prohibited without statutory authority. The rule applies equally to
(1) transfers from one agency to another,[Footnote 118] (2) transfers
from one account to another within the same agency,[Footnote 119] and
(3) transfers to an interagency or intra-agency working fund.[Footnote
120] In each instance, statutory authority is required. An agency's
erroneous characterization of a proposed transfer as a "reprogramming"
is irrelevant. See B-202362, Mar. 24, 1981. Moreover, informal
congressional approval of an unauthorized transfer of funds between
appropriation accounts does not have the force and effect of law.
B-248284.2, Sept. 1, 1992.
The rule applies even though the transfer is intended as a temporary
expedient (for example, to alleviate a temporary exhaustion of funds)
and the agency contemplates reimbursement. Thus, without statutory
authority, an agency cannot "borrow" from another account or another
agency. 36 Comp. Gen. 386 (1956); 13 Comp. Gen. 344 (1934); B-290011,
Mar. 25, 2002. An exception to this proposition is 31 U.S.C. § 1534,
under which an agency may temporarily charge one appropriation for an
expenditure benefiting another appropriation of the same agency, as
long as amounts are available in both appropriations and the accounts
are adjusted to reimburse the appropriation initially charged during or
as of the close of the same fiscal year. This statute was intended to
facilitate "common service" activities. For example, an agency
procuring equipment to be used jointly by several bureaus or offices
within the agency funded under separate appropriations may initially
charge the entire cost to a single appropriation and later apportion
the cost among the appropriations of the benefiting components. See
generally S. Rep. No. 89-1284 (1966).
The prohibition against transfer is codified in 31 U.S.C. § 1532, the
first sentence of which provides:
"An amount available under law may be withdrawn from one appropriation
account and credited to another or to a working fund only when
authorized by law."
In addition to the express prohibition of 31 U.S.C. § 1532, an
unauthorized transfer would violate 31 U.S.C. § 1301(a) (which
prohibits the use of appropriations for other than their intended
purpose); would constitute an unauthorized augmentation of the
receiving appropriation; and could, if the transfer led to
overobligating the receiving appropriation, result in an Antideficiency
Act (31 U.S.C. § 1341) violation as well. E.g., B-286929, Apr. 25,
2001; B-248284.2, Sept. 1, 1992; B-222009-O.M., Mar. 3, 1986; 15 Op.
Off. Legal Counsel 74 (1991).
Some agencies have limited transfer authority either in permanent
legislation or in appropriation act provisions. Such authority will
commonly set a percentage limit on the amount that may be transferred
from a given appropriation and/or the amount by which the receiving
appropriation may be augmented. A transfer pursuant to such authority
is, of course, entirely proper. B-290659, Oct. 31, 2002; B-167637,
Oct. 11, 1973. An example is 7 U.S.C. § 2257, which authorizes
transfers between Department of Agriculture appropriations. The amount
to be transferred may not exceed 7 percent of the "donor"
appropriation, and the receiving appropriation may not be augmented by
more than 7 percent except in extraordinary emergencies. Cases
construing this provision include 33 Comp. Gen. 214; B-218812, Jan. 23,
1987; B-123498, Apr. 11, 1955; and B-218812-O.M., July 30, 1985. See
also B-279886, Apr. 28, 1998 (noting 5 percent limit on transfer in
Department of Justice appropriation).
If an agency has transfer authority of this type, its exercise is not
precluded by the fact that the amount of the receiving appropriation
had been reduced from the agency's budget request. B-151157, June 27,
1963. Also, the transfer statute is an independent grant of authority
and, unless expressly provided otherwise, the percentage limitations do
not apply to transfers under any separate transfer authority the agency
may have. B-239031, June 22, 1990.
Another type of transfer authority is illustrated by 31 U.S.C. § 1531,
which authorizes the transfer of unexpended balances incident to
executive branch reorganizations, but only for purposes for which the
appropriation was originally available. Cases discussing this authority
include 31 Comp. Gen. 342 (1952) and B-92288 et al., Aug. 13, 1971.
Statutory transfer authority does not require any particular "magic
words." Of course the word "transfer" will help, but it is not
necessary as long as the words that are used make it clear that
transfer is being authorized. B-213345, Sept. 26, 1986; B-217093,
supra; B-182398, Mar. 29, 1976 (letter to Senator Laxalt), modified on
other grounds by 64 Comp. Gen. 370 (1985).
Some transfer statutes have included requirements for approval by one
or more congressional committees. In light of the Supreme Court's
decision in Immigration & Naturalization Service v. Chadha, 462 U.S.
919 (1983), such "legislative veto" provisions are no longer valid.
Whether the transfer authority to which the veto provision is attached
remains valid depends on whether it can be regarded as severable from
the approval requirement. This in turn depends on an evaluation, in
light of legislative history and other surrounding circumstances, of
whether Congress would have enacted the substantive authority without
the veto provision. See, e.g., 15 Op. Off. Legal Counsel 49 (1991) (the
Justice Department Office of Legal Counsel (OLC) concluded that an
unconstitutional legislative veto provision of the Selective Service
Act was severable from the statute's grant of authority to the
President to obtain expedited delivery of military contracts); 6 Op.
Off. Legal Counsel 520 (1982) (OLC concluded that a Treasury Department
transfer provision was severable and therefore survived a legislative
veto provision).
The precise parameters of transfer authority will, of course, depend on
the terms of the statute which grants it. The analytical starting point
is the second sentence of 31 U.S.C. § 1532:
"Except as specifically provided by law, an amount authorized to be
withdrawn and credited [to another appropriation account or to a
working fund] is available for the same purpose and subject to the same
limitations provided by the law appropriating the amount."
In a 2001 decision, the Comptroller General found that funds withdrawn
from other agencies' appropriations and credited to the Library of
Congress FEDLINK[Footnote 121] revolving fund retained their time
character and did not assume the time character of the FEDLINK
revolving fund. B-288142, Sept. 6, 2001. The Library of Congress
proposed retaining in the fund amounts of fiscal year money advanced by
other agencies in earlier fiscal years when orders were placed and, to
the extent the advances were not needed to cover the costs of the
orders, applying the excess amounts to new orders placed in subsequent
fiscal years. The Library pointed out that the law establishing the
revolving fund made amounts in the fund available without fiscal year
limitation. The Comptroller General concluded that "amounts withdrawn
from a fiscal year appropriation and credited to a no year revolving
fund, such as the FEDLINK revolving fund, are available for obligation
only during the fiscal year of availability of the appropriation from
which the amount was withdrawn." Id. The Comptroller General noted that
section 1532 is a significant control feature protecting Congress's
constitutional prerogatives of the purse. Placing time limits on the
availability of appropriations is a fundamental means of congressional
control because it permits Congress to periodically review a given
agency's programs and activities. Given the significance of time
restrictions in preserving congressional powers of the purse, GAO looks
for clear legislative expressions of congressional intent before
interpreting legislation to override time limitations that Congress,
through the appropriations process, has imposed on an agency's use of
funds. The Comptroller General rejected the Library's view that the
language in the FEDLINK statute overrode the time limitation imposed on
funds transferred into FEDLINK because, until the Library had earned
those amounts by performing the services ordered from the Library,
these transferred amounts were not a part of the corpus of FEDLINK. Id.
The FEDLINK decision references a situation that GAO addressed in 1944
with regard to a no-year revolving fund called the Navy Procurement
Fund. 23 Comp. Gen. 668 (1944). The Navy incorrectly believed that
because the revolving fund was not subject to fiscal year limitation,
advances to the fund made from annual appropriations were available
until expended. A number of other GAO decisions, several predating the
enactment of 31 U.S.C. § 1532, have made essentially the same point--
that, except to the extent the statute authorizing a transfer provides
otherwise, transferred funds are available for purposes permissible
under the donor appropriation and are subject to the same limitations
and restrictions applicable to the donor appropriation. An example of
this is the Economy Act, 31 U.S.C. § 1535.[Footnote 122]
Restrictions applicable to the receiving account but not to the donor
account may or may not apply. Where transfers are intended to
accomplish a purpose of the source appropriation (Economy Act
transactions, for example), transferred funds have been held not
subject to such restrictions. E.g., 21 Comp. Gen. 254 (1941); 18 Comp.
Gen. 489 (1938); B-35677, July 27, 1943; B-131580-O.M., June 4, 1957.
However, for transfers intended to permit a limited augmentation of the
receiving account (7 U.S.C. § 2257, for example), this principle is
arguably inapplicable in view of the fundamentally different purpose of
the transfer.
As noted above, in the context of working funds, the prohibition
against transfer applies not only to interagency funds, but to the
consolidation of all or parts of different appropriations of the same
agency into a single fund as well. In a few instances, the "pooling" of
portions of agency unit appropriations has been found authorized where
necessary to implement a particular statute. In B-195775, Sept. 10,
1979, the Comptroller General approved the transfer of portions of unit
appropriations to an agencywide pool to be used to fund the Merit Pay
System established by the Civil Service Reform Act of 1978. The
transfers, while not explicitly authorized in the statute, were seen as
necessary to implement the law and carry out the legislative purpose.
Following this decision, the Comptroller General held in 60 Comp.
Gen. 686 (1981) that the Treasury Department could pool portions of
appropriations made to several separate bureaus to fund an Executive
Development Program also authorized by the Civil Service Reform Act.
However, pooling that would alter the purposes for which funds were
appropriated is an impermissible transfer unless authorized by statute.
E.g., B-209790-O.M., Mar. 12, 1985. It is also impermissible to
transfer more than the cost of the goods or services provided to an
ordering agency. 70 Comp. Gen. 592, 595 (1991).
The reappropriation of an unexpended balance for a different purpose is
a form of transfer. Such funds cease to be available for the purposes
of the original appropriation. 18 Comp. Gen. 564 (1938); A-79180,
July 30, 1936. Cf. 31 U.S.C. § 1301(b) (reappropriation for different
purpose to be accounted for as a new appropriation). If the
reappropriation is of an amount "not to exceed" a specified sum, and
the full amount is not needed for the new purpose, the balance not
needed reverts to the source appropriation. 18 Comp. Gen. at 565.
The prohibition against transfer would not apply to "transfers" of an
agency's administrative allocations within a lump-sum appropriation
since the allocations are not legally binding.[Footnote 123] This is a
reprogramming, which we discuss below. Thus, where the then Department
of Health, Education, and Welfare received a lump-sum appropriation
covering several grant programs, it could set aside a portion of each
program's allocation for a single fund to be used for "cross-cutting"
grants intended to serve more than one target population, as long as
the grants were for projects within the scope or purpose of the lump-
sum appropriation. B-157356, Aug. 17, 1978.
b. Reprogramming:
In 1985, the Deputy Secretary of Defense made the following statement:
"The defense budget does not exist in a vacuum. There are forces at
work to play havoc with even the best of budget estimates. The economy
may vary in terms of inflation; political realities may bring external
forces to bear; fact-of-life or programmatic changes may occur. The
very nature of the lengthy and overlapping cycles of the budget process
poses continual threats to the integrity of budget estimates.
Reprogramming procedures permit us to respond to these unforeseen
changes and still meet our defense requirements."[Footnote 124]
The thrust of this statement, while made from the perspective of the
Defense Department, applies at least to some extent to all agencies.
Reprogramming is the utilization of funds in an appropriation account
for purposes other than those contemplated at the time of
appropriation.[Footnote 125] In other words, it is the shifting of
funds from one object to another within an appropriation. The term
"reprogramming" appears to have come into use in the mid-1950s although
the practice, under different names, predates that time.[Footnote 126]
The authority to reprogram is implicit in an agency's responsibility to
manage its funds; no statutory authority is necessary. See Lincoln v.
Vigil, 508 U.S. 182, 192 (1993) ("After all, the very point of a lump-
sum appropriation is to give an agency the capacity to adapt to
changing circumstances and meet its statutory responsibilities in what
it sees as the most effective or desirable way."). See also 4B Op. Off.
Legal Counsel 701 (1980) (discussing the Attorney General's authority
to reprogram to avoid deficiencies); B-196854.3, Mar. 19, 1984
(Congress is "implicitly conferring the authority to reprogram" by
enacting lump-sum appropriations). Indeed, reprogramming is usually a
nonstatutory arrangement. This means that there is no general statutory
provision either authorizing or prohibiting it, and it has evolved
largely in the form of informal (i.e., nonstatutory) agreements between
various agencies and their congressional oversight committees. These
informal arrangements do not have the force and effect of law.
Blackhawk Heating & Plumbing Co. v. United States, 622 F.2d 539, 548
(Ct. Cl. 1980). See also 56 Comp. Gen. 201 (1976), holding that the
Navy's failure to complete a form required by Defense Department
reprogramming regulations was not sufficient to support a claim for
proposal preparation costs by an unsuccessful bidder upon cancellation
of the proposal.
Thus, as a matter of law, an agency is free to reprogram unobligated
funds as long as the expenditures are within the general purpose of the
appropriation and are not in violation of any other specific limitation
or otherwise prohibited. E.g., B-123469, May 9, 1955; B-279338, Jan. 4,
1999. This is true even though the agency may already have
administratively allotted the funds to a particular object. 20 Comp.
Gen. 631 (1941). In some situations, the agency's discretion may rise
to the level of a duty. E.g., Blackhawk Heating & Plumbing, 622 F.2d at
552 n.9 (satisfaction of obligations under a settlement agreement).
There are at present no reprogramming guidelines applicable to all
agencies. As one might expect, reprogramming policies, procedures, and
practices vary considerably among agencies.[Footnote 127] In view of
the nature of its activities and appropriation structure, the Defense
Department has detailed and sophisticated procedures.[Footnote 128]
In some cases, Congress has attempted to regulate reprogramming by
statute, and of course any applicable statutory provisions control.
B-283599.2, Sept. 29, 1999; B-279886, Apr. 28, 1998; B-164912-O.M.,
supra. For example, a provision in the fiscal year 2002 Defense
Department appropriation act prohibits the use of funds to prepare or
present a reprogramming request to the Appropriations Committees "where
the item for which reprogramming is requested has been denied by the
Congress."[Footnote 129] The Comptroller General has construed this
provision as prohibiting a reprogramming request that would have the
effect of restoring funds which had been specifically deleted in the
legislative process; that is, the provision is not limited to the
denial of an entire project. See U.S. General Accounting Office,
Legality of the Navy's Expenditures for Project Sanguine During Fiscal
Year 1974, LCD-75-315 (Washington, D.C.: Jan. 20, 1975).
Under Defense's arrangement as reflected in its written instructions,
reprogramming procedures apply to funding shifts between program
elements, but not to shifts within a program element. Thus, the denial
of a request to reprogram funds from one program element to another
does not preclude a military department from shifting available funds
within the element. 65 Comp. Gen. 360 (1986). The level at which
reprogramming procedures and restrictions will apply depends on
applicable legislation, if any, and the arrangements an agency has
worked out with its respective committees.
In the absence of a statutory provision such as the Defense provision
noted above, a reprogramming that has the effect of restoring funds
deleted in the legislative process has been held not legally
objectionable. B-195269, Oct. 15, 1979.
Reprogramming frequently involves some form of notification to the
appropriations and/or legislative committees. In a few cases, the
notification process is prescribed by statute. However, in most cases,
the committee review process is nonstatutory and derives from
instructions in committee reports, hearings, or other correspondence.
Sometimes, in addition to notification, reprogramming arrangements also
provide for committee approval. As in the case of transfer, under the
Supreme Court's decision in Immigration & Naturalization Service v.
Chadha, 462 U.S. 919 (1983), statutory committee approval or veto
provisions are no longer permissible. However, an agency may continue
to observe committee approval procedures as part of its informal
arrangements, although they would not be legally binding. B-196854.3,
supra.
In sum, reprogramming procedures provide an element of congressional
control over spending flexibility short of resort to the full
legislative process. They are for the most part nonbinding, and
compliance is largely a matter of "keeping faith" with the pertinent
committees.
4. General Provisions: When Construed as Permanent Legislation:
Appropriation acts, in addition to making appropriations, frequently
contain a variety of provisions either restricting the availability of
the appropriations or making them available for some particular use.
Such provisions come in two forms: (a) "provisos" attached directly to
the appropriating language and (b) general provisions. A general
provision may apply solely to the act in which it is contained ("No
part of any appropriation contained in this Act shall be used …"), or
it may have general applicability ("No part of any appropriation
contained in this or any other Act shall be used …").[Footnote 130]
General provisions may be phrased in the form of restrictions or
positive authority.
Provisions of this type are no less effective merely because they are
contained in appropriation acts. It is settled that Congress may
repeal, amend, or suspend a statute by means of an appropriation bill,
so long as its intention to do so is clear. Robertson v. Seattle
Audubon Society, 503 U.S. 429, 440 (1992); McHugh v. Rubin, 220 F.3d
53, 57 (2nd Cir. 2000); see also United States v. Dickerson, 310 U.S.
554 (1940); Cella v. United States, 208 F.2d 783, 790 (7th Cir. 1953),
cert. denied, 347 U.S. 1016 (1954); NLRB v. Thompson Products, Inc.,
141 F.2d 794, 797 (9th Cir. 1944); B-300009, July 1, 2003; 41 Op. Att'y
Gen. 274, 276 (1956).
Congress likewise can enact general or permanent legislation in
appropriation acts, but again its intent to do so must be clear. This
point was made as follows in Building & Construction Trades Department,
AFL-CIO v. Martin, 961 F.2d 269, 273 (D.C. Cir.), cert. denied,
506 U.S. 915 (1992):
"While appropriations are 'Acts of Congress' which can substantively
change existing law, there is a very strong presumption that they do
not … and that when they do, the change is only intended for one fiscal
year."
In Atlantic Fish Spotters Ass'n v. Evans, 321 F.3d 220, 224 (1st Cir.
2003), the court cautioned:
"Congress may create permanent, substantive law through an
appropriations bill only if it is clear about its intentions. Put
another way, Congress cannot rebut the presumption against permanence
by sounding an uncertain trumpet."
As noted in Chapter 1, rules of both the Senate and the House of
Representatives prohibit "legislating" in appropriation acts. However,
this merely subjects the provision to a point of order and does not
affect the validity of the legislation if the point of order is not
raised, or is raised and not sustained. Thus, once a given provision
has been enacted into law, the question of whether it is "general
legislation" or merely a restriction on the use of an appropriation,
that is, whether it might have been subject to a point of order, is
academic.
This section deals with the question of when provisos or general
provisions appearing in appropriation acts can be construed as
permanent legislation.
Since an appropriation act is made for a particular fiscal year, the
starting presumption is that everything contained in the act is
effective only for the fiscal year covered. Thus, the rule is: A
provision contained in an annual appropriation act is not to be
construed to be permanent legislation unless the language used therein
or the nature of the provision makes it clear that Congress intended it
to be permanent. The presumption can be overcome if the provision uses
language indicating futurity or if the provision is of a general
character bearing no relation to the object of the appropriation.
65 Comp. Gen. 588 (1986); 62 Comp. Gen. 54 (1982); 36 Comp. Gen. 434
(1956); 32 Comp. Gen. 11 (1952); 24 Comp. Gen. 436 (1944); 10 Comp.
Gen. 120 (1930); 5 Comp. Gen. 810 (1926); 7 Comp. Dec. 838 (1901).
In analyzing a particular provision, the starting point in ascertaining
Congress's intent is, as it must be, the language of the statute. The
question to ask is whether the provision uses "words of futurity." The
most common word of futurity is "hereafter" and provisions using this
term have often been construed as permanent. For specific examples, see
Cella v. United States, 208 F.2d at 790; 70 Comp. Gen. 351 (1991);
26 Comp. Gen. 354, 357 (1946); 2 Comp. Gen. 535 (1923); 11 Comp.
Dec. 800 (1905); B-108245, Mar. 19, 1952; B-100983, Feb. 8, 1951;
B-76782, June 10, 1948. However, use of the word hereafter may not
guarantee that an appropriation act provision will be found to
constitute permanent law. Thus, in Auburn Housing Authority v.
Martinez, 277 F.3d 138 (2nd Cir. 2002), the court declined to give
permanent effect to a provision that included the word hereafter. The
court acknowledged that hereafter generally denoted futurity, but held
that this was not sufficient to establish permanence in the
circumstances of that case. To read hereafter as giving permanence to
one provision would have resulted in repealing another provision
enacted in the same act.[Footnote 131] The court concluded that this
result was not what Congress had intended.
As Auburn Housing Authority indicates, mere use of the word hereafter
may not be adequate as an indication of future effect to establish
permanence. Other facts such as the precise location of the word
hereafter and the sense in which it is used are also important.
Moreover, the use of the word hereafter may not be sufficient, for
example, if it appears only in an exception clause and not in the
operative portion of the provision, B-228838, Sept. 16, 1987, or if it
is used in a way that does not necessarily connote futurity beyond the
end of the fiscal year. Williams v. United States, 240 F.3d 1019, 1063
(Fed. Cir. 2001).
Words of futurity other than hereafter have also been deemed
sufficient. Thus, there is no significant difference in meaning between
hereafter and "after the date of approval of this act." 65 Comp. Gen.
at 589; 36 Comp. Gen. at 436; B-209583, Jan. 18, 1983. Using a specific
date rather than a general reference to the date of enactment produces
the same result. B-287488, June 19, 2001; B-57539, May 3, 1946.
"Henceforth" may also do the job. B-209583, supra. So may specific
references to future fiscal years. B-208354, Aug. 10, 1982. On the
other hand, the word "hereinafter" was not considered synonymous with
hereafter by the First Circuit Court of Appeals and was not deemed to
establish a permanent provision. Atlantic Fish Spotters Ass'n, supra.
Rather, the court held that hereinafter is universally understood to
refer only to what follows in the same writing (i.e., statute). 321
F.3d at 225-26.
In 24 Comp. Gen. 436, the Comptroller General viewed the words "at any
time" as words of futurity in a provision which authorized reduced
transportation rates to military personnel who were "given furloughs at
any time." In that decision, however, the conclusion of permanence was
further supported by the fact that Congress appropriated funds to carry
out the provision in the following year as well and did not repeat the
provision but merely referred to it.
The words "or any other act" in a provision addressing funds
appropriated in or made available by "this or any other act" are not
words of futurity. They merely refer to any other appropriation act for
the same fiscal year. Williams v. United States, 240 F.3d at 1063;
65 Comp. Gen. 588; B-230110, Apr. 11, 1988; B-228838, supra; B-145492,
Sept. 21, 1976.[Footnote 132] See also A-88073, Aug. 19, 1937 ("this or
any other appropriation"). Similarly, the words "notwithstanding any
other provision of law" are not words of futurity and, standing alone,
offer no indication as to the duration of the provision. B-271412,
June 13, 1996; B-208705, Sept. 14, 1982.
The words "this or any other act" may be used in conjunction with other
language that makes the result, one way or the other, indisputable. The
provision is clearly not permanent if the phrase "during the current
fiscal year" is added. Norcross v. United States, 142 Ct. Cl. 763
(1958). Addition of the phrase "with respect to any fiscal year" makes
the provision permanent. B-230110, supra.
If words of futurity indicate permanence, it follows that a proviso or
general provision that does not contain words of futurity will
generally not be construed as permanent. 65 Comp. Gen. 588; 32 Comp.
Gen. 11; 20 Comp. Gen. 322 (1940); 10 Comp. Gen. 120; 5 Comp. Gen. 810;
3 Comp. Gen. 319 (1923); B-209583, supra; B-208705, supra; B-66513,
May 26, 1947; A-18614, May 25, 1927. The courts have applied the same
analysis. See United States v. Vulte, 233 U.S. 509, 514 (1914);
Minis v. United States, 40 U.S. (15 Pet.) 423 (1841); Bristol-Myers
Squibb Company v. Royce Laboratories, Inc., 69 F.3d 1130, 1136 (Fed.
Cir. 1995); United States v. International Business Machines Corp., 892
F.2d 1006, 1009 (Fed. Cir. 1989); NLRB v. Thompson Products, Inc.,
supra; City of Hialeah v. United States Housing Authority, 340 F. Supp.
885 (S.D. Fla. 1971).
In particular, the absence of the word hereafter is viewed as telling
evidence that Congress did not intend a provision to be permanent.
E.g., Building & Construction Trades Department, 961 F.2d at 273;
International Business Machines Corp., supra; Department of Justice,
Office of Legal Counsel Memorandum for James S. Gilliland, General
Counsel, Department of Agriculture, Severability and Duration of
Appropriations Rider Concerning Frozen Poultry Regulations, June 4,
1996. For example, the court in Building & Construction Trades
Department concluded that the absence of the word hereafter in an
appropriation provision was more significant than the inclusion of
other language that might have indicated permanence.
As the preceding paragraphs indicate, the language of the statute is
the crucial determinant. However, other factors may also be taken into
consideration. Thus, the repeated inclusion of a provision in annual
appropriation acts indicates that it is not considered or intended by
Congress to be permanent. 32 Comp. Gen. 11; 10 Comp. Gen. 120;
B-270723, Apr. 15, 1996; A-89279, Oct. 26, 1937; 41 Op. Att'y Gen. at
279-80. However, where adequate words of futurity exist, the repetition
of a provision in the following year's appropriation act has been
viewed simply as an "excess of caution." 36 Comp. Gen. at 436. This
factor is of limited usefulness, since the failure to repeat in
subsequent appropriation acts a provision that does not contain words
of futurity can also be viewed as an indication that Congress did not
consider it to be permanent and simply did not want it to continue. See
18 Comp. Gen. 37 (1938); A-88073, supra. Thus, if the provision does
not contain words of futurity, then repetition or nonrepetition lead to
the same result--that the provision is not permanent. If the provision
does contain words of futurity, then nonrepetition indicates permanence
but repetition, although it suggests nonpermanence, is inconclusive.
The inclusion of a provision in the United States Code is relevant as
an indication of permanence but is not controlling. 36 Comp. Gen. 434;
24 Comp. Gen. 436. Failure to include a provision in the Code would
appear to be of no significance. A reference by the codifiers to the
failure to reenact a provision suggests nonpermanence. 41 Op. Att'y
Gen. at 280-81.
Legislative history is also relevant, but has been used for the most
part to support a conclusion based on the presence or absence of words
of futurity. See Cella v. United States, 208 F.2d at 790 n.1; NLRB v.
Thompson Products, 141 F.2d at 798; 65 Comp. Gen. 588; B-277719,
Aug. 20, 1997; B-209583, supra; B-208705, supra; B-108245, supra;
B-57539, supra. In B-192973, Oct. 11, 1978, a general provision
requiring the submission of a report "annually to the Congress" was
held not permanent in view of conflicting expressions of congressional
intent. Legislative history by itself has not been used to find
futurity where it is missing in the statutory language. See Building &
Construction Trades Department, 961 F.2d at 274.
The degree of relationship between a given provision and the object of
the appropriation act in which it appears or the appropriating language
to which it is appended is a factor to be considered. If the provision
bears no direct relationship to the appropriation act in which it
appears, this is an indication of permanence. For example, a provision
prohibiting the retroactive application of an energy tax credit
provision in the Internal Revenue Code was found sufficiently unrelated
to the rest of the act in which it appeared, a supplemental
appropriations act, to support a conclusion of permanence. B-214058,
Feb. 1, 1984. See also 62 Comp. Gen. at 56; 32 Comp. Gen. 11; 26 Comp.
Gen. at 357; B-37032, supra; A-88073, supra. The closer the
relationship, the less likely it is that the provision will be viewed
as permanent. A determination under rules of the Senate that a proviso
is germane to the subject matter of the appropriation bill will negate
an argument that the proviso is sufficiently unrelated as to suggest
permanence. B-208705, supra.
The phrasing of a provision as positive authorization rather than a
restriction on the use of an appropriation is an indication of
permanence, but usually has been considered in conjunction with a
finding of adequate words of futurity. 36 Comp. Gen. 434; 24 Comp.
Gen. 436. An early decision, 17 Comp. Dec. 146 (1910), held a proviso
to be permanent based solely on the fact that it was not phrased as a
restriction on the use of the appropriation to which it was attached,
but this decision seems inconsistent with the weight of authority and
certainly with the Supreme Court's decision in Minis v. United States,
cited above.
Finally, a provision may be construed as permanent if construing it as
temporary would render the provision meaningless or produce an absurd
result. 65 Comp. Gen. 352 (1986); 62 Comp. Gen. 54; B-200923, Oct. 1,
1982. These decisions dealt with a general provision designed to
prohibit cost-of-living pay increases for federal judges "except as may
be specifically authorized by Act of Congress hereafter enacted." Pub.
L. No. 97-92, § 140, 95 Stat. 1183, 1200 (Dec. 15, 1981). The provision
appeared in a fiscal year 1982 continuing resolution, which expired on
September 30, 1982. The next applicable pay increase would have been
effective October 1, 1982. Thus, if the provision were not construed as
permanent, it would have been meaningless "since it would have been
enacted to prevent increases during a period when no increases were
authorized to be made." 62 Comp. Gen. at 56-57.[Footnote 133]
Similarly, a provision was held permanent in 9 Comp. Gen. 248 (1929)
although it contained no words of futurity, because it was to become
effective on the last day of the fiscal year and an alternative
construction would have rendered it effective for only 1 day, clearly
not the legislative intent. See also 65 Comp. Gen. at 590; B-214058,
supra; B-270723, supra.
In sum, the six additional factors mentioned above are all relevant
indicia of whether a given provision should be construed as permanent.
However, the presence or absence of words of futurity remains the
crucial factor, and the additional factors have been used for the most
part to support a conclusion based primarily on this presence or
absence. Four of the factors--occurrence or nonoccurrence in subsequent
appropriation acts, inclusion in United States Code, legislative
history, and phrasing as positive authorization--have never been used
as the sole basis for finding permanence in a provision without words
of futurity. The two remaining factors--relationship to rest of statute
and meaningless or absurd result--can be used to find permanence in the
absence of words of futurity, but the conclusion is almost invariably
supported by at least one of the other factors, such as legislative
history.
C. Relationship of Appropriations to Other Types of Legislation:
"As usual, this court has been dealt the difficult hand which results
when Congress does not get its 'Act[s]' together."
American Federation of Government Employees, Local 1945 v. Cheney,
CV92-PT-2453-E, (N.D. Ala., Dec. 21, 1992) (Propst, J.), Slip Op at 8.
1. Distinction between Authorization and Appropriation:
Appropriation acts must be distinguished from two other types of
legislation: "enabling" or "organic" legislation and "appropriation
authorization" legislation. Enabling or organic legislation is
legislation that creates an agency, establishes a program, or
prescribes a function, such as the Department of Education Organization
Act or the Federal Water Pollution Control Act. While the organic
legislation may provide the necessary authority to conduct the program
or activity, it, with relatively rare exceptions, does not provide any
money.
Appropriation authorization legislation, as the name implies, is
legislation which authorizes the appropriation of funds to implement
the organic legislation. It may be included as part of the organic
legislation or it may be separate. As a general proposition, it too
does not give the agency any actual money to spend. With certain
exceptions (discussed in section B.1 of this chapter), only the
appropriation act itself permits the withdrawal of funds from the
Treasury. The principle has been stated as follows:
"The mere authorization of an appropriation does not authorize
expenditures on the faith thereof or the making of contracts obligating
the money authorized to be appropriated."
16 Comp. Gen. 1007, 1008 (1937). Restated, an authorization of
appropriations does not constitute an appropriation of public funds,
but contemplates subsequent legislation by Congress actually
appropriating the funds. 35 Comp. Gen. 306 (1955); 27 Comp. Dec. 923
(1921).[Footnote 134]
Like the organic legislation, authorization legislation is considered
and reported by the committees with legislative jurisdiction over the
particular subject matter, whereas the appropriation bills are
exclusively within the jurisdiction of the appropriations committees.
There is no general requirement, either constitutional or statutory,
that an appropriation act be preceded by a specific authorization act.
E.g., 71 Comp. Gen. 378, 380 (1992). The existence of a statute
(organic legislation) imposing substantive functions upon an agency
that require funding for their performance is itself sufficient
authorization for the necessary appropriations. B-173832, July 16,
1976; B-173832, Aug. 1, 1975; B-111810, Mar. 8, 1974. However,
statutory requirements for authorizations do exist in a number of
specific situations. An example is section 660 of the Department of
Energy Organization Act, 42 U.S.C. § 7270 ("Appropriations to carry out
the provisions of this chapter shall be subject to annual
authorization"). Another example is 10 U.S.C. § 114(a), which provides
that no funds may be appropriated for military construction, military
procurement, and certain related research and development "unless funds
therefor have been specifically authorized by law."
In addition, rules of the House of Representatives prohibit
appropriations for expenditures not previously authorized by law. See
Rule XXI(2), Rules of the House of Representatives. The effect of this
Rule is to subject the offending appropriation to a point of order. A
more limited provision exists in Rule XVI, Standing Rules of the
Senate.
The majority of appropriations today are preceded by some form of
authorization although, as noted, it is not statutorily required in all
cases.
Authorizations take many different forms, depending in part on whether
they are contained in the organic legislation or are separate.
Authorizations contained in organic legislation may be "definite"
(setting dollar limits either in the aggregate or for specific fiscal
years) or "indefinite" (authorizing "such sums as may be necessary to
carry out the provisions of this act"). An indefinite authorization
serves little purpose other than to comply with House Rule XXI.
Appropriation authorizations enacted as separate legislation resemble
appropriation acts in structure, for example, the annual Department of
Defense Authorization Acts.
An authorization act is basically a directive to Congress itself, which
Congress is free to follow or alter (up or down) in the subsequent
appropriation act. A statutory requirement for prior authorization is
also essentially a congressional mandate to itself. Thus, for example,
if Congress appropriates money to the Defense Department in violation
of 10 U.S.C. § 114, there are no practical consequences. The
appropriation is just as valid, and just as available for obligation,
as if section 114 had been satisfied or did not exist.
In sum, the typical sequence is: (1) organic legislation;
(2) authorization of appropriations, if not contained in the organic
legislation; and (3) the appropriation act. While this may be the
"normal" sequence, there are deviations and variations, and it is not
always possible to neatly label a given piece of legislation. Consider,
for example, the following:
"The Secretary of the Treasury is authorized and directed to pay to the
Secretary of the Interior … for the benefit of the Coushatta Tribe of
Louisiana … out of any money in the Treasury not otherwise
appropriated, the sum of $1,300,000."[Footnote 135]
This is the first section of a law enacted to settle land claims by the
Coushatta Tribe against the United States and to prescribe the use and
distribution of the settlement funds. Applying the test described above
in section B.1, it is certainly an appropriation--it contains a
specific direction to pay and designates the funds to be used--but, in
a technical sense, it is not an appropriation act. Also, it contains
its own authorization. Thus, we have an authorization and an
appropriation combined in a statute that is neither an authorization
act (in the sense described above) nor an appropriation act. General
classifications may be useful and perhaps essential, but they should
not be expected to cover all situations.
2. Specific Problem Areas and the Resolution of Conflicts:
a. Introduction:
Appropriation acts, as we have seen, do not exist in a vacuum. They are
enacted against the backdrop of program legislation and, in many cases,
specific authorization acts. This section deals with two broad but
closely related issues. First, what precisely can Congress do in an
appropriation act? Is it limited to essentially "rubber stamping" what
has previously been authorized? Second, what does an agency do when
faced with what it perceives to be an inconsistency between an
appropriation act and some other statute?
The remaining portions of this section raise these issues in a number
of specific contexts. In this introduction, we present four important
principles. The resolution of problems in the relationship of
appropriation acts to other statutes will almost invariably lie in the
application of one or more of these principles.
First, as a general proposition, appropriations made to carry out
authorizing laws "are made on the basis that the authorization acts in
effect constitute an adjudication or legislative determination of the
subject matter." B-151157, June 27, 1963. Thus, except as specified
otherwise in the appropriation act, appropriations to carry out
enabling or authorizing laws must be expended in strict accord with the
original authorization both as to the amount of funds to be expended
and the nature of the work authorized. 36 Comp. Gen. 240, 242 (1956);
B-258000, Aug. 31, 1994; B-220682, Feb. 21, 1986; B-204874, July 28,
1982; B-151157, supra; B-125404, Aug. 31, 1956. While it is true that
one Congress cannot bind a future Congress, nor can it bind subsequent
action by the same Congress, an authorization act is more than an
academic exercise and its requirements must be followed unless changed
by subsequent legislation.
Second, Congress is free to amend or repeal prior legislation as long
as it does so directly and explicitly and does not violate the
Constitution. It is also possible for one statute to implicitly amend
or repeal a prior statute, but it is firmly established that "repeal by
implication" is disfavored, and statutes will be construed to avoid
this result whenever reasonably possible. E.g., Tennessee Valley
Authority v. Hill, 437 U.S. 153, 189-90 (1978); Morton v. Mancari,
417 U.S. 535, 549 (1974); Posadas v. National City Bank of New York,
296 U.S. 497, 503 (1936); 72 Comp. Gen. 295, 297 (1993); 68 Comp.
Gen. 19, 22-23 (1988); 64 Comp. Gen. 143, 145 (1984); 58 Comp.
Gen. 687, 691-92 (1979); B-290011, Mar. 25, 2002; B-261589, Mar. 6,
1996; B-258163, Sept. 29, 1994; B-236057, May 9, 1990. Repeals by
implication are particularly disfavored in the appropriations context.
Robertson v. Seattle Audubon Society, 503 U.S. 429, 440 (1992).
A repeal by implication will be found only where "the intention of the
legislature to repeal [is] clear and manifest." Posadas, 296 U.S. at
503; B-290011, supra; B-236057, supra. The principle that implied
repeals are disfavored applies with special weight when it is asserted
that a general statute repeals a more specific statute. 72 Comp.
Gen. at 297 and cases cited.
A corollary to the "cardinal rule" against repeal by implication, or
perhaps another way of saying the same thing, is the rule of
construction that statutes should be construed harmoniously so as to
give maximum effect to both wherever possible. E.g., Posadas, 296 U.S.
at 503; Strawser v. Atkins, 290 F.3d 720 (4th Cir.), cert. denied,
537 U.S. 1045 (2002); 53 Comp. Gen. 853, 856 (1974); B-290011, supra;
B-208593.6, Dec. 22, 1988. See B-258000, supra, for an example of
harmonizing ambiguous appropriation and authorization provisions in
order to effectuate congressional intent.
Third, if two statutes are in irreconcilable conflict, the more recent
statute, as the latest expression of Congress, governs. As one court
concluded in a statement illustrating the eloquence of simplicity,
"[t]he statutes are thus in conflict, the earlier permitting and the
later prohibiting," so the later statute supersedes the earlier.
Eisenberg v. Corning, 179 F.2d 275, 277 (D.C. Cir. 1949). In a sense,
the "last in time" rule is yet another way of expressing the repeal by
implication principle. We state it separately to highlight its
narrowness: it applies only when the two statutes cannot be reconciled
in any reasonable manner, and then only to the extent of the conflict.
E.g., Posadas, 296 U.S. at 503; B-203900, Feb. 2, 1989; B-226389,
Nov. 14, 1988; B-214172, July 10, 1984, aff'd upon reconsideration,
64 Comp. Gen. 282 (1985).
We will see later in this section that while the last in time rule can
be stated with eloquent simplicity, its application is not always so
simple.
The fourth principle we state in two parts:
First, despite the occasional comment to the contrary in judicial
decisions (a few of which we will note later), Congress can and does
"legislate" in appropriation acts. E.g., Preterm, Inc. v. Dukakis,
591 F.2d 121 (1st Cir.), cert. denied, 441 U.S. 952 (1979); Friends of
the Earth v. Armstrong, 485 F.2d 1 (10th Cir. 1973), cert. denied,
414 U.S. 1171 (1974); Eisenberg v. Corning, supra; Tayloe v. Kjaer,
171 F.2d 343 (D.C. Cir. 1948). See also the Dickerson, Cella, and
Thompson Products cases cited above in section B.4, and the discussion
of the congressional power of the purse in Chapter 2, section B. It may
well be that the device is "unusual and frowned upon." Preterm,
591 F.2d at 131; Building & Construction Trades Department, AFL-CIO v.
Martin, 961 F.2d 269, 273 (D.C. Cir.), cert. denied, 506 U.S. 915
(1992) ("While appropriations are 'Acts of Congress' which can
substantively change existing law, there is a very strong presumption
that they do not … and that when they do, the change is only intended
for one fiscal year."). It also may well be that the appropriation act
will be narrowly construed when it is in apparent conflict with
authorizing legislation. Calloway v. District of Columbia, 216 F.3d 1,
9 (D.C. Cir. 2000); Donovan v. Carolina Stalite Co., 734 F.2d 1547,
1558 (D.C. Cir. 1984). Nevertheless, appropriation acts are, like any
other statute, passed by both Houses of Congress and either signed by
the President or enacted over a presidential veto. As such, and subject
of course to constitutional strictures, they are "just as effective a
way to legislate as are ordinary bills relating to a particular
subject." Friends of the Earth, 485 F.2d at 9; Envirocare of Utah
Inc. v. United States, 44 Fed. Cl. 474, 482 (1999).
Second, legislative history is not legislation. As useful and important
as legislative history may be in resolving ambiguities and determining
congressional intent, it is the language of the appropriation act, and
not the language of its legislative history, that is enacted into law.
E.g., Shannon v. United States, 512 U.S. 573, 583 (1994) (declining to
give effect to "legislative history that is in no way anchored in the
text of the statute."). As the Supreme Court stated in a case
previously cited, which we will discuss in more detail later:
"Expressions of committees dealing with requests for appropriations
cannot be equated with statutes enacted by Congress … ."
Tennessee Valley Authority v. Hill, 437 U.S. at 191; see also
Lincoln v. Vigil, 508 U.S. 182, 192 (1993); Thompson v. Cherokee Nation
of Oklahoma, 334 F.3d 1075 (Fed. Cir. 2003).
These, then, are the "guiding principles" that will be applied in
various combinations and configurations to analyze and resolve the
problem areas identified in the remainder of this section. For the most
part, our subsequent discussion will merely note the applicable
principle(s). A useful supplemental reference on many of the topics we
discuss is Louis Fisher, The Authorization-Appropriation Process in
Congress: Formal Rules and Informal Practices, 29 Cath. U.L. Rev. 51
(1979).
b. Variations in Amount:
(1) Appropriation exceeds authorization:
Generally speaking, Congress is free to appropriate more money for a
given object than the amount previously authorized. As the Comptroller
General stated in a brief letter to a Member of Congress:
"While legislation providing for an appropriation of funds in excess of
the amount contained in a related authorization act apparently would be
subject to a point of order under rule 21 of the Rules of the House of
Representatives, there would be no basis on which we could question
otherwise proper expenditures of funds actually appropriated."
B-123469, Apr. 14, 1955.
The governing principle was stated as follows in 36 Comp. Gen. 240, 242
(1956):
"It is fundamental … that one Congress cannot bind a future Congress
and that the Congress has full power to make an appropriation in excess
of a cost limitation contained in the original authorization act. This
authority is exercised as an incident to the power of the Congress to
appropriate and regulate expenditures of the public money."
If we are dealing with a line-item appropriation or a specific earmark
in a lump-sum appropriation, the quoted statement would appear beyond
dispute. However, complications arise where the authorization for a
given item is specific and a subsequent lump-sum appropriation includes
a higher amount for that item specified only in legislative history and
not in the appropriation act itself. In this situation, the rule that
one Congress cannot bind a future Congress or later action by the same
Congress must be modified somewhat by the rule against repeal by
implication. The line of demarcation, however, is not precisely
defined.
In 36 Comp. Gen. 240, Congress had authorized the construction of two
bridges across the Potomac River "at a cost not to exceed" $7 million.
A subsequent appropriation act made a lump-sum appropriation that
included funds for the bridge construction (specified in legislative
history but not in the appropriation act itself) in excess of the
amount authorized. The decision concluded that the appropriation, as
the latest expression of Congress on the matter, was available for
expenditure. Similarly, it was held in B-148736, Sept. 15, 1977, that
the National Park Service could expend its lump-sum appropriation for
planning and construction of parks even though the expenditures for
specific parks would exceed amounts authorized to be appropriated for
those parks.
Both of these cases were distinguished in 64 Comp. Gen. 282 (1985),
which affirmed a prior decision, B-214172, July 10, 1984. Authorizing
legislation for the Small Business Administration (SBA) provided
specific funding levels for certain SBA programs. SBA's 1984
appropriation act contained a lump-sum appropriation for the programs
which, according to the conference report, included amounts in excess
of the funding levels specified in the authorization. Relying in part
on Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978), GAO
concluded that the two statutes were not in conflict, that the
appropriation did not implicitly repeal or amend the authorizations,
and that the spending levels in the authorization were controlling. The
two prior cases were distinguished as being limited in scope and
dealing with different factual situations. 64 Comp. Gen. at 285. For
example, it was clear in the prior cases that Congress was knowingly
providing funds in excess of the authorization ceilings. In contrast,
the SBA appropriation made explicit reference to the authorizing
statute, thus suggesting that Congress did not intend that the
appropriation be inconsistent with the authorized spending levels. Id.
at 286-87.
(2) Appropriation less than authorization:
Congress is free to appropriate less than an amount authorized either
in an authorization act or in program legislation, again, as in the
case of exceeding an authorization, at least where it does so directly.
E.g., 53 Comp. Gen. 695 (1974). This includes the failure to fund a
program at all, that is, not to appropriate any funds. United States v.
Dickerson, 310 U.S. 554 (1940).
A case in point is City of Los Angeles v. Adams, 556 F.2d 40 (D.C. Cir.
1977). The Airport and Airway Development Act of 1970 authorized
airport development grants "in aggregate amounts not less than"
specified dollar amounts for specified fiscal years, and provided an
apportionment formula. Pub. L. No. 91-258, title I, 84 Stat. 219
(May 21, 1970). Subsequent appropriation acts included specific
limitations on the aggregate amounts to be available for the grants,
less than the amounts authorized. The court concluded that both laws
could be given effect by limiting the amounts available to those
specified in the appropriation acts, but requiring that they be
distributed in accordance with the formula of the authorizing
legislation. In holding the appropriation limits controlling, the court
said:
"According to its own rules, Congress is not supposed to use
appropriations measures as vehicles for the amendment of general laws,
including revision of expenditure authorization… . Where Congress
chooses to do so, however, we are bound to follow Congress's last word
on the matter even in an appropriations law."
Id. at 48-49.
Relying on City of Los Angeles v. Adams, the court in Ramah Navajo
School Board, Inc. v. Babbitt, 87 F.3d 1338 (D.C. Cir. 1996), held
that, while appropriations in amounts less than envisioned in
authorization acts control, an agency must still adhere as much as
possible to the authorizing statute in distributing such funds:
"[I]t is clear that the Congress responsible for the ISDA [Indian Self-
Determination Act] did not intend, in the case of insufficient funding,
for the numerous detailed provisions of the Act to be shunted aside by
a Secretary exercising total discretion in allocation of the funds.
Nor, as the legislative history shows, did the 1995 Congress which
appropriated insufficient funds intend for its shortfall to eviscerate
the substantive provisions of the earlier Act."
87 F.3d at 1349 (emphasis in original).
Where the amount authorized to be appropriated is mandatory rather than
discretionary, Congress can still appropriate less, or can suspend or
repeal the authorizing legislation, as long as the intent to suspend or
repeal the authorization is clear. The power is considerably
diminished, however, with respect to entitlements that have already
vested. The distinction is made clear in the following passage from the
Supreme Court's decision in United States v. Larionoff, 431 U.S. 864,
879 (1977):
"No one disputes that Congress may prospectively reduce the pay of
members of the Armed Forces, even if that reduction deprived members of
benefits they had expected to be able to earn… . It is quite a
different matter, however, for Congress to deprive a service member of
pay due for services already performed, but still owing. In that case,
the congressional action would appear in a different constitutional
light."
Several earlier cases provide concrete illustrations of what Congress
can and cannot do in an appropriation act to reduce or eliminate a
nonvested mandatory authorization. In United States v. Fisher, 109 U.S.
143 (1883), permanent legislation set the salaries of certain
territorial judges. Congress subsequently appropriated a lesser amount,
"in full compensation" for that particular year. The Court held that
Congress had the power to reduce the salaries, and had effectively done
so. "It is impossible that both acts should stand. No ingenuity can
reconcile them. The later act must therefore prevail… ." Id. at 146.
See also United States v. Mitchell, 109 U.S. 146 (1883). In the
Dickerson case cited above, the Court found a mandatory authorization
effectively suspended by a provision in an appropriation act
prohibiting the use of funds for the payment in question
"notwithstanding the applicable portions of" the authorizing
legislation.
In the cases in the preceding paragraph, the "reduction by
appropriation" was effective because the intent of the congressional
action was unmistakable. The mere failure to appropriate sufficient
funds is not enough. In United States v. Langston, 118 U.S. 389 (1886),
for example, the Court refused to find a repeal by implication in
"subsequent enactments which merely appropriated a less amount … and
which contained no words that expressly, or by clear implication,
modified or repealed the previous law." Id. at 394. A similar holding
is United States v. Vulte, 233 U.S. 509 (1914). A failure to
appropriate in this type of situation will prevent administrative
agencies from making payment, but, as in Langston and Vulte, is
unlikely to prevent recovery by way of a lawsuit. See also Wetsel-
Oviatt Lumber Co., Inc. v. United States, 38 Fed. Cl. 563, 570-571
(1997); New York Airways, Inc. v. United States, 369 F.2d 743 (Ct. Cl.
1966); Gibney v. United States, 114 Ct. Cl. 38 (1949).
Thus, appropriating less than the amount of a nonvested mandatory
authorization, including not appropriating any funds for it, will be
effective under the "last in time" rule as long as the intent to
suspend or repeal the authorization is clear. However, by virtue of the
rule against repeal by implication, a mere failure to appropriate
sufficient funds will not be construed as amending or repealing prior
authorizing legislation.
Another complication arises when an authorization act creates what
would otherwise be an entitlement to funds, but then makes that
entitlement "subject to the availability of appropriations." A case in
point is the Indian Self-Determination and Education Assistance Act,
25 U.S.C. §§ 450-450n. The complex provisions of the Act in effect
guarantee Indian tribes a certain level of reimbursement for their
costs in administering federal programs. However, the Act makes this
guarantee subject to the availability of appropriations and further
provides that the Secretary of the Interior is not required to reduce
program funding for other tribes or tribal organizations in order to
satisfy this guarantee. See 25 U.S.C. § 450j-1(a) and (b). These
provisions have spawned much litigation, including the Ramah Navajo
School Board case, discussed previously.
The courts have agreed that the "subject to the availability of
appropriations" language conditions the Act's entitlement, so that the
reimbursement amounts intended by the Act must be reduced where
Congress has clearly appropriated insufficient funds to meet them in
full. See in addition to Ramah: Thompson v. Cherokee Nation of
Oklahoma, 334 F.3d 1075 (Fed. Cir. 2003) (Cherokee Nation II); Cherokee
Nation of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002)
(Cherokee Nation I); Shoshone-Bannock Tribes of the Fort Hall
Reservation v. Thompson, 279 F.3d 660 (9th Cir. 2002); and Babbitt v.
Oglala Sioux Tribal Public Safety Department, 194 F.3d 1374 (Fed. Cir.
1999), cert. denied, 530 U.S. 1203 (2000). However, the courts differ
on whether Congress did or did not provide insufficient funds for
particular fiscal years. Compare Cherokee Nation II with Cherokee
Nation I and Shoshone-Bannock.
(3) Earmarks in authorization act:
In Chapter 6, section B, we set forth the various types of language
Congress uses in appropriation acts when it wants to "earmark" a
portion of a lump-sum appropriation as either a maximum or a minimum to
be spent on some particular object. These same types of earmarking
language can be used in authorization acts.
A number of cases have considered the question of whether there is a
conflict when an authorization establishes a minimum earmark ("not less
than," "shall be available only"), and the related appropriation is a
lump-sum appropriation which does not expressly mention the earmark. Is
the agency in this situation required to observe the earmark? Applying
the principle that an appropriation must be expended in accordance with
the related authorization unless the appropriation act provides
otherwise, GAO has concluded that the agency must observe the earmark.
64 Comp. Gen. 388 (1985); B-220682, Feb. 21, 1986 ("an earmark in an
authorization act must be followed where a lump sum is appropriated
pursuant to the authorization"); B-207343, Aug. 18, 1982; B-193282,
Dec. 21, 1978. See also B-131935, Mar. 17, 1986. This result applies
even though following the earmark will drastically reduce the amount of
funds available for nonearmarked programs funded under the same
appropriation. 64 Comp. Gen. at 391. (These cases can also be viewed as
another application of the rule against repeal by implication.)
If Congress expressly appropriates an amount at variance with a
previously enacted authorization earmark, the appropriation will
control under the last in time rule. For example, in 53 Comp. Gen. 695
(1974), an authorization act had expressly earmarked $18 million for
the United Nations International Children's Emergency Fund (UNICEF) for
specific fiscal years. A subsequent appropriation act provided a lump
sum, out of which only $15 million was earmarked for UNICEF. The
Comptroller General concluded that the $15 million specified in the
appropriation act was controlling and represented the maximum available
for UNICEF for that fiscal year.
c. Variations in Purpose:
As noted previously, it is only the appropriation, and not the
authorization by itself, that permits the incurring of obligations and
the making of expenditures. It follows that an authorization does not,
as a general proposition, expand the scope of availability of
appropriations beyond what is permissible under the terms of the
appropriation act. The authorized purpose must be implemented either by
a specific appropriation or by inclusion in a broader lump-sum
appropriation. Thus, an appropriation made for specific purposes is not
available for related but more extended purposes contained in the
authorization act but not included in the appropriation. 19 Comp.
Gen. 961 (1940). See also 37 Comp. Gen. 732 (1958); 35 Comp. Gen. 306
(1955); 26 Comp. Gen. 452 (1947).
In addition to simply failing to appropriate funds for an authorized
purpose, Congress can expressly restrict the use of an appropriation
for a purpose or purposes included in the authorization. E.g., B-24341,
Apr. 1, 1942 ("whatever may have been the intention of the original
enabling act it must give way to the express provisions of the later
act which appropriated funds but limited their use").
Similarly, by express provision in an appropriation act, Congress can
expand authorized purposes. In 67 Comp. Gen. 401 (1988), for example,
an appropriation expressly included two mandatory earmarks for projects
beyond the scope of the related authorization. Noting that "the
appropriation language provides its own expanded authorization for
these programs," GAO concluded that the agency was required to reserve
funds for the two mandatory earmarks before committing the balance of
the appropriation for discretionary expenditures.
Except to the extent Congress expressly expands or limits authorized
purposes in the appropriation act, the appropriation must be used in
accordance with the authorization act in terms of purpose. Thus, in
B-125404, Aug. 31, 1956, it was held that an appropriation to construct
a bridge across the Potomac River pursuant to a statute authorizing
construction of the bridge and prescribing its location was not
available to construct the bridge at a slightly different location even
though the planners favored the alternate location. Similarly, in
B-193307, Feb. 6, 1979, the Flood Control Act of 1970 authorized
construction of a dam and reservoir for the Ellicott Creek project in
New York. Subsequently, legislation was proposed to authorize channel
construction instead of the dam and reservoir, but was not enacted. A
continuing resolution made a lump-sum appropriation for flood control
projects "authorized by law." The Comptroller General found that the
appropriation did not repeal the prior authorization, and that
therefore, the funds could not properly be used for the alternative
channel construction.
d. Period of Availability:
An authorization of appropriations, like an appropriation itself, may
authorize appropriations to be made on a multiple year or no-year, as
well as fiscal year, basis. The question we address here is the extent
to which the period of availability specified in an authorization or
enabling act is controlling. Congress can, in an appropriation act,
enact a different period of availability than that specified in the
authorization. The implications for an appropriation of language in the
authorization of that appropriation specifying a period of availability
for the appropriation being authorized is a matter of statutory
construction.
Thus, an appropriation of funds "to remain available until expended"
(no-year) was found controlling over a provision in the authorizing
legislation that authorized appropriations on a 2-year basis. B-182101,
Oct. 16, 1974. See also B-149372, B-158195, Apr. 29, 1969 (2-year
appropriation of presidential transition funds held controlling
notwithstanding provision in Presidential Transition Act of 1963, which
authorized services and facilities to former President and Vice
President only for 6 months after expiration of term of office). In a
1982 decision, 61 Comp. Gen. 532, GAO reconciled an authorization act
and an appropriation act by finding the appropriation to be a no-year
appropriation, except to the extent the related authorization specified
a lesser period of availability. The authorization act had authorized
funds to be appropriated for a particular project "for fiscal year
1978." The fiscal year 1978 funds for that project were included in a
larger lump sum appropriated "as authorized by law, to remain available
until expended." In reconciling the two statutes, GAO concluded that
funds for the project in question from the lump-sum appropriation were
available for obligation only during fiscal year 1978.
Until 1971, the test GAO applied in cases like these was whether the
appropriation language specifically referred to the authorization. If
it did, then GAO considered the provisions of the authorization act--
including any multiple year or no-year authorizations--to be
incorporated by reference into the provisions of the appropriation act.
This was regarded as sufficient to overcome 31 U.S.C. § 1301(c), which
presumes that an appropriation is for one fiscal year unless the
appropriation states otherwise, and to overcome the presumption of
fiscal year availability derived from the enacting clause of the
appropriation act. If the appropriation language did not specifically
refer to the authorization act, the appropriation was held to be
available only for the fiscal year covered by the appropriation act.
45 Comp. Gen. 508 (1966); 45 Comp. Gen. 236 (1965); B-147196, Apr. 5,
1965; B-127518, May 10, 1956; B-37398, Oct. 26, 1943. The reference had
to be specific; the phrase "as authorized by law" was not enough.
B-127518, May 10, 1956.
By 1971, however, Congress was enacting (and continues to enact) a
general provision in all appropriation acts: "[n]o part of any
appropriation contained in this Act shall remain available for
obligation beyond the current fiscal year unless expressly so provided
herein." Now, if an appropriation act contains the provision quoted in
the preceding paragraph, it will not be sufficient for an appropriation
contained in that act to merely incorporate a multiple year or no-year
authorization by reference. The effect of this general provision is to
require the appropriation language to expressly provide for
availability beyond one year in order to overcome the enacting clause.
50 Comp. Gen. 857 (1971).
The general provision resulted from the efforts of the House Committee
on Appropriations in connection with the 1964 foreign aid
appropriations bill. In its report on that bill, the Committee first
described then-existing practice:
"The custom and practice of the Committee on Appropriations has been to
recommend appropriations on an annual basis unless there is some valid
reason to make the item available for longer than a one-year period.
The most common technique in the latter instances is to add the words
'to remain available until expended' to the appropriation paragraph.
"In numerous instances, … the Congress has in the underlying enabling
legislation authorized appropriations therefor to be made on an
'available until expended' basis. When he submits the budget, the
President generally includes the phrase 'to remain available until
expended' in the proposed appropriation language if that is what the
Executive wishes to propose. The Committee either concurs or drops the
phrase from the appropriation language."
H.R. Rep. No. 88-1040, at 55 (1963). The Committee then noted a
situation in the 1963 appropriation that had apparently generated some
disagreement. The President had requested certain refugee assistance
funds to remain available until expended. The report goes on to state:
"The Committee thought the funds should be on a 1-year basis, thus the
phrase 'to remain available until expended' was not in the bill as
reported. The final law also failed to include the phrase or any other
express language of similar import. Thus Congress took affirmative
action to limit the availability to the fiscal year 1963 only."
Id. at 56. The Committee then quoted what is now 31 U.S.C. § 1301(c),
and stated:
"The above quoted 31 U.S.C. [§ 1301(c)] seems clearly to govern and, in
respect to the instant class of appropriation, to require the act
making the appropriation to expressly provide for availability longer
than 1 year if the enacting clause limiting the appropriations in the
law to a given fiscal year is to be overcome as to any specific
appropriation therein made. And it accords with the rule of reason and
ancient practice to retain control of such an elementary matter wholly
within the terms of the law making the appropriation. The two hang
together. But in view of the question in the present case and the
possibility of similar questions in a number of others, consideration
may have to be given to revising the provisions of 31 U.S.C.
[§ 1301(c)] to make its scope and meaning crystal clear and perhaps
update it as may otherwise appear desirable."
Id. (emphasis in original).
Section 1301(c) was not amended, but soon after the above discussion
appeared, appropriation acts started including the general provision
stating that "[n]o part of any appropriation contained in this Act
shall remain available for obligation beyond the current fiscal year
unless expressly so provided herein." This added another ingredient to
the recipe that had not been present in the earlier decisions, although
it took several years before the new general provision began appearing
in almost all appropriation acts.
When the issue arose again in a 1971 case, GAO considered the new
appropriation act provision and the 1963 comments of the House
Appropriations Committee. In that decision, GAO noted that "it seems
evident that the purpose [of the new general provision] is to overcome
the effect of our decisions … regarding the requirements of 31 U.S.C.
[§ 1301(c)]," and further noted the apparent link between the
discussion in House Report 1040 and the appearance of the new
provision. 50 Comp. Gen. at 859. See also 58 Comp. Gen. 321 (1979);
B-207792, Aug. 24, 1982. Thus, the appropriation act will have to
expressly repeat the multiple year or no-year language of the
authorization, or at least expressly refer to the specific section of
the authorizing statute in which it appears.
Changes in the law from year to year may produce additional
complications. For example, the National Historic Preservation Act,
Pub. L. No. 89-665, § 103(b), 80 Stat. 915, 916 (Oct. 15, 1966)
(authorization), provided that funds appropriated and apportioned to
states would remain available for obligation for three fiscal years,
after which time any unobligated balances would be reapportioned. This
amounted to a no-year authorization. For several years, appropriations
to fund the program were made on a no-year basis, thus permitting
implementation of the authorization provision. Starting with fiscal
year 1978, however, the appropriation act was changed and the funds
were made available for two fiscal years. See Pub. L. No. 95-74,
91 Stat. 289 (July 26, 1977). This raised the question of whether the
appropriation act had the effect of overriding the apparently
conflicting authorizing language, or if it meant merely that
reapportionment could occur after two fiscal years instead of three,
thus effectively remaining a no-year appropriation.
GAO concluded that the literal language and plain meaning of the
appropriation act must govern. In addition to the explicit
appropriation language, the appropriation acts contained the general
provision restricting availability to the current fiscal year unless
expressly provided otherwise therein. Therefore, any funds not
obligated by the end of the 2-year period would expire and could not be
reapportioned. B-151087, Feb. 17, 1982; B-151087, Sept. 15, 1981.
For purposes of the rule of 50 Comp. Gen. 857 and its progeny, it makes
no difference whether the authorization is in an annual authorization
of appropriations act or in permanent enabling legislation. It also
appears to make no difference whether the authorization merely
authorizes the longer period of availability or directs it. See, for
example, 58 Comp. Gen. 321, supra, in which the general provision
restricting availability to the current fiscal year, as the later
expression of congressional intent, was held to override 25 U.S.C.
§ 13a, which provides that the unobligated balances of certain Indian
assistance appropriations "shall remain available for obligation and
expenditure" for a second fiscal year. See also 71 Comp. Gen. 39, 40
(1991); B-249087, June 25, 1992. Similarly, in Dabney v. Reagan, No. 82
Civ. 2231-CSH (S.D. N.Y. June 6, 1985), the court held that a 2-year
period of availability specified in appropriation acts would override a
"mandatory" no-year authorization contained in the Solar Energy and
Energy Conservation Bank Act.
e. Authorization Enacted After Appropriation:
Our discussion thus far has, for the most part, been in the context of
the normal sequence--that is, the authorization act is passed before
the appropriation act. Sometimes, however, consideration of the
authorization act is delayed and it is not enacted until after the
appropriation act. Determining the relationship between the two acts
involves application of the same general principles we have been
applying when the acts are enacted in the normal sequence.
The first step is to attempt to construe the statutes together in some
reasonable fashion. To the extent this can be done, there is no real
conflict, and the reversed sequence will in many cases make no
difference. Earlier, for example, we discussed the rule that a specific
earmark in an authorization act must be followed when the related
appropriation is an unspecified lump sum. In two of the cases cited for
that proposition--B-220682, Feb. 21, 1986, and B-193282, Dec. 21, 1978-
-the appropriation act had been enacted prior to the authorization, a
factor that did not affect the outcome.
In B-193282, for example, the 1979 Justice Department authorization act
authorized a lump-sum appropriation to the Immigration and
Naturalization Service (INS) and provided that $2 million "shall be
available" for the investigation and prosecution of certain cases
involving alleged Nazi war criminals. The 1979 appropriation act made a
lump-sum appropriation to the INS but contained no specific mention of
the Nazi war criminal item. The appropriation act was enacted on
October 10, 1978, but the authorization act was not enacted until
November. In response to a question as to the effect of the
authorization provision on the appropriation, the Comptroller General
advised that the two statutes could be construed harmoniously, and that
the $2 million earmarked in the authorization act could be spent only
for the purpose specified. It was further noted that the $2 million
represented a minimum but not a maximum. B-193282, supra, amplified by
B-193282, Jan. 25, 1979. This is the same result that would have been
reached if the normal sequence had been followed.
Similarly, in B-226389, Nov. 14, 1988, a provision in the 1987 Defense
Appropriation Act prohibited the Navy from including certain provisions
in ship maintenance contracts. The 1987 authorization act, enacted
after the appropriation, amended a provision in Title 10 of the United
States Code to require the prohibited provisions. Application of the
last in time rule would have negated the appropriation act provision.
However, it was possible to give effect to both provisions by
construing the appropriation restriction as a temporary exemption from
the permanent legislation in the authorization act. Again, this is the
same result that would have been reached if the authorization act were
enacted first.
If the authorization and appropriation cannot be reasonably reconciled,
the last in time rule will apply just as it would under the normal
sequence, except here the result will be different because the
authorization is the later of the two. A 1989 case will illustrate. The
1989 Treasury Department appropriation act contained a provision
prohibiting placing certain components of the Department under the
oversight of the Treasury Inspector General. A month later, Congress
enacted legislation placing those components under the Inspector
General's jurisdiction and transferring their internal audit staffs to
the Inspector General "notwithstanding any other provision of law." But
for the "notwithstanding" clause, it might have been possible to use
the same approach as in B-226389 and find the appropriation restriction
a temporary exemption from the new permanent legislation. In view of
that clause, however, GAO found that the two provisions could not be
reconciled, and concluded that the Inspector General legislation, as
the later enactment, superseded the appropriation act provision.
B-203900, Feb. 2, 1989.
Two other examples of invoking the last in time rule can be found in
dueling Defense Department authorization and appropriation act
provisions. In one case, the Defense appropriations act for 1992
directed the Defense Department to extend a contract relating to the
Civilian Heath and Medical Program for Uniformed Services (CHAMPUS)
program for another year. However, the defense authorization act for
1992 countermanded that mandate and permitted the Defense Department to
award a new contract. In B-247119, Mar. 2, 1992, the Comptroller
General had little difficulty concluding that the two provisions were
irreconcilably in conflict. Indeed, the legislative history
demonstrated that the drafters of the appropriation and authorization
acts sought to trump each other on this point as their two bills
proceeded through Congress. The more difficult issue was how to apply
the last in time rule to the case. The complication was that, while
Congress had completed action on the authorization bill first (1 day
before the appropriation bill), the President acted in the opposite
order--signing the appropriation bill into law 9 days before he signed
the authorization bill. Noting that the date on which the President
signs a bill is clearly the date it becomes law, the Comptroller
General held that the authorization act was the later in time, and
thus, its provisions controlled.
The other case involved competing provisions in the Defense
authorization and appropriation acts for fiscal year 1993. Section
351(a) of the authorization act (Pub. L. No. 102-484, 106 Stat. 2377),
which the President signed into law on October 23, 1992, required the
use of competitive procedures before Defense took action to consolidate
certain maintenance activities at a single depot. Section 9152 of the
appropriation act (Pub. L. No. 102-396, 106 Stat. 1943), which the
President had signed several weeks earlier on October 6, provided that,
notwithstanding section 351(a) of the authorization act, no funds could
be used to prevent or delay the depot consolidation. In the ensuing
litigation, the court ultimately determined that the two provisions
could be reconciled. American Federation of Government Employees, Local
1945 v. Cheney, CV92-PT-2453-E (N.D. Ala., Dec. 21, 1992). However,
citing B-247119 among other sources, the court added that if the
provisions were irreconcilable, the later in time would prevail. In
this connection, the court noted that the tension between the two
provisions apparently stemmed from efforts by individual Members of
Congress to protect federal facilities within their districts and
observed:
"There is perhaps even more reason to apply the more objective
standards of 'last enacted prevails' and/or the requirement of a 'clear
manifestation of intent to repeal' when the legislation is more
significantly influenced by individual Congressmen than by the 'intent'
of Congress."
AFGE, Local 1945, Slip Op. at 24.
Just as with any other application of the last in time rule, the later
enactment prevails only to the extent of the irreconcilable conflict.
B-61178, Oct. 21, 1946 (specific limitations in appropriation act not
superseded by after-enacted authorization absent indication that
authorization was intended to alter provisions of prior appropriation).
Sometimes, application of the standard principles fails to produce a
simple answer. For example, Congress appropriated $75 million for
fiscal year 1979 for urban formula grants "as authorized by the Urban
Mass Transportation Act of 1964." When the appropriation was enacted,
legislation was pending--and was enacted 3 months after the
appropriation--repealing the existing formula and replacing it with a
new and somewhat broader formula. The new formula provision specified
that it was to be applicable to "sums appropriated pursuant to
subparagraph (b) of this paragraph." On the one hand, since the
original formula had been repealed, it could no longer control the use
of the appropriation. Yet on the other hand, funds appropriated 3
months prior to passage of the new formula could not be said to have
been appropriated "pursuant to" the new act. Hence, neither formula was
clearly applicable to the $75 million. The Comptroller General
concluded that the $75 million earmarked for the grant program had to
be honored and that it should be distributed in accordance with those
portions of the new formula that were "consistent with the terms of the
appropriation," that is, the funds should be used in accordance with
those elements of the new formula that had also been reflected in the
original formula. B-175155, July 25, 1979.
f. Two Statutes Enacted on Same Day:
The Supreme Court has said that the doctrine against repeal by
implication is even more forceful "where the one act follows close upon
the other, at the same session of the Legislature." Morf v. Bingaman,
298 U.S. 407, 414 (1936); see also Auburn Housing Authority v.
Martinez, 277 F.3d 138, 145 (2nd Cir. 2002); B-277905, Mar. 17, 1998.
This being the case, the doctrine reaches perhaps its strongest point,
and the "last in time" rule is correspondingly at its weakest, when
both statutes are enacted on the same day. Except in the very rare case
in which the intent of one statute to affect the other is particularly
manifest, it makes little sense to apply a last in time concept where
the time involved is a matter of hours, or as in one case (B-79243,
Sept. 28, 1948), 7 minutes. Thus, the starting point is the
presumption--applicable in all cases but even stronger in this
situation--that Congress intended both statutes to stand together.
67 Comp. Gen. 332, 335 (1988); B-204078.2, May 6, 1988.
When there is an apparent conflict between an appropriation act and
another statute enacted on the same day, the approach is to make every
effort to reconcile the statutes so as to give maximum effect to both.
In some cases, it will be found that there is no real conflict. In
67 Comp. Gen. 332, for example, one statute authorized certain
Commodity Credit Corporation appropriations to be made in the form of
current, indefinite appropriations, while the appropriation act,
enacted on the same day, made line-item appropriations. There was no
conflict because the authorization provision was a directive to
Congress itself that Congress was free to disregard, subject to a
possible point of order, when making the actual appropriation.
Similarly, there was no inconsistency between an appropriation act
provision, which required that Panama Canal Commission appropriations
be spent only in conformance with the Panama Canal Treaty of 1977 and
its implementing legislation, and an authorization act provision,
enacted on the same day, requiring prior specific authorizations.
B-204078.2, supra.
In other cases, applying traditional rules of statutory construction
will produce reconciliation. For example, if one statute can be said to
be more specific than the other, they can be reconciled by applying the
more specific provision first, with the broader statute then applying
to any remaining situations. See B-231662, Sept. 1, 1988; B-79243,
supra.
Legislative history may also help. In B-207186, Feb. 10, 1989, for
example, authorizing legislation extended the life of the Solar Energy
and Energy Conservation Bank to March 15, 1988. The 1988 appropriation,
enacted on the same day, made a 2-year appropriation for the Bank. Not
only were there no indications of any intent for the appropriation to
have the effect of extending the Bank's life, there were specific
indications to the contrary. Thus, GAO regarded the appropriation as
available, in theory for the full 2-year period, except that the
authority for anyone to obligate the appropriation would cease when the
Bank went out of existence.
The most extreme situation, and one in which the last in time rule by
definition cannot possibly apply, is two conflicting provisions in the
same statute. Even here, the approaches outlined above will usually
prove successful. See, e.g., B-211306, June 6, 1983. We have found only
one case, 26 Comp. Dec. 534 (1920), in which two provisions in the same
act were found irreconcilable. One provision in an appropriation act
appropriated funds to the Army for the purchase of land; another
provision a few pages later in the same act expressly prohibited the
use of Army appropriations for the purchase of land. The Comptroller of
the Treasury concluded, in a very brief decision, that the prohibition
nullified the appropriation. The advantage of this result, although not
stated this way in the decision, is that Congress would ultimately have
to resolve the conflict and it is easier to make expenditures that have
been deferred than to recoup money after it has been spent.
The fact that two allegedly conflicting provisions were contained in
the same statute influenced the court to reconcile them in Auburn
Housing Authority, supra. The funding restriction provision used the
word "hereafter," which, as the court acknowledged, ordinarily connotes
permanence. However, the court nonetheless held that this provision
applied only for the duration of the fiscal year and did not constitute
an implied repeal of the other provision. The opinion observed in this
regard:
"Given the unique circumstances of this case, the court is not
convinced that the mere presence of the word 'hereafter' in section 226
clearly demonstrates Congress's intent to repeal section 519(n). This
could be a different case if sections 226 and 519(n) appeared in
separate statutes, but that is not the question we consider in the
instant appeal."
277 F.3d at 146.
g. Ratification by Appropriation:
"Ratification by appropriation" is the doctrine by which Congress can,
by the appropriation of funds, confer legitimacy on an agency action
that was questionable when it was taken. Clearly Congress may ratify
that which it could have authorized. Swayne & Hoyt, Ltd. v. United
States, 300 U.S. 297, 301-02 (1937). It is also settled that Congress
may manifest its ratification by the appropriation of funds. Greene v.
McElroy, 360 U.S. 474, 504-06 (1959); Ex Parte Endo, 323 U.S. 283, 303
n.24 (1944); Brooks v. Dewar, 313 U.S. 354, 360-61 (1941).
Having said this, however, we must also emphasize that "ratification by
appropriation is not favored and will not be accepted where prior
knowledge of the specific disputed action cannot be demonstrated
clearly." District of Columbia Federation of Civic Ass'ns v. Airis,
391 F.2d 478, 482 (D.C. Cir. 1968); Associated Electric Cooperative,
Inc. v. Morton, 507 F.2d 1167, 1174 (D.C. Cir. 1974), cert. denied,
423 U.S. 830 (1975); American Legion v. Derwinski, 827 F. Supp. 805,
809 (D.D.C. 1993), aff'd, 54 F.3d 789 (D.C. Cir. 1995), cert. denied,
516 U.S. 1041 (1996).
Thus, a simple lump-sum appropriation, without more, will generally not
afford sufficient basis to find a ratification by appropriation. Endo,
323 U.S. at 303 n.24; Airis, 391 F.2d at 481-82; Wade v. Lewis, 561 F.
Supp. 913, 944 (N.D. Ill. 1983); B-213771, July 10, 1984. The
appropriation "must plainly show a purpose to bestow the precise
authority which is claimed." Endo, 323 U.S. at 303 n.24. Accord:
Schism v. United States, 316 F.3d 1259, 1289-1290 (Fed. Cir. 2002),
cert. denied, ___ U.S. ___, 123 S. Ct. 2246 (2003) ("ratification
ordinarily cannot occur in the appropriations context unless the
appropriations bill itself expressly allocates funds for a specific
agency or activity"); A-1 Cigarette Vending, Inc. v. United States,
49 Fed. Cl. 345, 354 (2001), aff'd sub nom. 304 F.3d 1349 (Fed. Cir.
2002), cert. denied sub nom. ___ U.S. ___, 123 S. Ct. 1570 (2003)
("[S]imply because the lack of an appropriation demonstrates a lack of
authority does not mean that an appropriation by itself will create
such authority… . [A] general appropriation of funds for an overall
program is not sufficient to bestow authority upon a particular aspect
of an agency's program.").
Some courts have used language which, when taken out of context,
implies that appropriations cannot serve to ratify prior agency action.
E.g., Concerned Residents of Buck Hill Falls v. Grant, 537 F.2d 29, 35
n.12 (3rd Cir. 1976); University of the District of Columbia Faculty
Ass'n v. Board of Trustees of the University of the District of
Columbia, 994 F. Supp. 1, 10 (D.D.C. 1998). Nevertheless, while the
doctrine may not be favored, it does exist. The courts demonstrate
their reluctance to apply this doctrine by giving extra scrutiny to
alleged ratifications by appropriation. Their reluctance to find such
ratifications probably stems from a more general judicial aversion to
interpreting appropriation acts as changing substantive law. Thus, the
court observed in Thomas v. Network Solutions, Inc., 2 F. Supp. 2d 22,
32 at n.12 (D.D.C. 1998), aff'd, 176 F.3d 500 (D.C. Cir. 1999), cert.
denied, 528 U.S. 1115 (2000) (citations omitted):
" [I]t is well recognized that Congress does not normally perform
legislative functions--such as ratification--through appropriations
bills… . This does not mean that Congress cannot effect a ratification
through an appropriations bill, but it does mean that Congress must be
especially clear about its intention to do so."
We turn now to some specific situations in which the doctrine of
ratification by appropriation has been accepted or rejected.
Presidential reorganizations have generated perhaps the largest number
of cases. Generally, when the President has created a new agency or has
transferred a function from one agency to another, and Congress
subsequently appropriates funds to the new agency or to the old agency
for the new function, the courts have found that the appropriation
ratified the presidential action. Fleming v. Mohawk Wrecking & Lumber
Co., 331 U.S. 111, 116 (1947); Isbrandtsen-Moller Co. v. United States,
300 U.S. 139, 147 (1937). The transfer to the Equal Employment
Opportunity Commission (EEOC) in 1978 of enforcement responsibility for
the Age Discrimination in Employment Act and the Equal Pay Act produced
a minor flood of litigation. The cases were complicated by the
existence of a legislative veto issue, with the ratification issue
having to be faced only if the reorganization authority were found
severable from the legislative veto. Although the courts were not
uniform, a clear majority found that the subsequent appropriation of
funds to the EEOC ratified the transfer. EEOC v. Dayton Power & Light
Co., 605 F. Supp. 13 (S.D. Ohio 1984); EEOC v. Delaware Dept. of Health
& Social Services, 595 F. Supp. 568 (D. Del. 1984); EEOC v. New York,
590 F. Supp. 37 (N.D. N.Y. 1984); EEOC v. Radio Montgomery, Inc., 588
F. Supp. 567 (W.D. Va. 1984); EEOC v. City of Memphis, 581 F. Supp. 179
(W.D. Tenn. 1983); Muller Optical Co. v. EEOC, 574 F. Supp. 946 (W.D.
Tenn. 1983), aff'd on other grounds, 743 F.2d 380 (6th Cir. 1984).
Contra EEOC v. Martin Industries, 581 F. Supp. 1029 (N.D. Ala.), appeal
dismissed, 469 U.S. 806 (1984); EEOC v. Allstate Insurance Co., 570 F.
Supp. 1224 (S.D. Miss. 1983), appeal dismissed, 467 U.S. 1232 (1984).
Congress resolved any doubt by enacting legislation in 1984 to
expressly ratify all prior reorganization plans implemented pursuant to
any reorganization statute.[Footnote 136]
Another group of cases that has refused to find ratification by
appropriation concern proposed construction projects funded under lump-
sum appropriations where the effect would be either to expand the scope
of a prior congressional authorization or to supply an authorization
required by statute but not obtained. Libby Rod & Gun Club v. Poteat,
594 F.2d 742 (9th Cir. 1979); National Wildlife Federation v. Andrus,
440 F. Supp. 1245 (D.D.C. 1977); Atchison, Topeka & Santa Fe Railway
Co v. Callaway, 382 F. Supp. 610 (D.D.C. 1974); B-223725, June 9, 1987.
A few additional cases in which ratification by appropriation was found
are summarized below:
* The Tennessee Valley Authority (TVA) had asserted the authority to
construct power plants. TVA's position was based on an interpretation
of its enabling legislation that the court found consistent with the
purpose of the legislation although the legislation itself was
ambiguous. The appropriation of funds to TVA for power plant
construction ratified TVA's position. Young v. Tennessee Valley
Authority, 606 F.2d 143 (6th Cir. 1979), cert. denied, 445 U.S. 942
(1980).
* The authority of the Postmaster General to conduct a mail
transportation experiment was ratified by the appropriation of funds to
the former Post Office Department under circumstances showing that
Congress was fully aware of the experiment. The court noted that
existing statutory authority was broad enough to encompass the
experiment and that nothing prohibited it. Atchison, Topeka & Santa Fe
Railway Co. v. Summerfield, 229 F.2d 777 (D.C. Cir. 1955), cert.
denied, 351 U.S. 926 (1956).
* The authority of the Department of Justice to retain private counsel
to defend federal officials in limited circumstances, while not
explicitly provided by statute, is regarded as ratified by the specific
appropriation of funds for that purpose. 2 Op. Off. Legal Counsel 66
(1978).
* Another Office of Legal Counsel opinion described instances in which
Congress has ratified by appropriation the use of United States combat
forces. The opinion concludes on this point:
"In sum, basic principles of constitutional law--and, in particular,
the fact that Congress may express approval through the appropriations
process--and historical practice in the war powers area, as well as the
bulk of the case law and a substantial body of scholarly opinion,
support the conclusion that Congress can authorize hostilities through
its use of the appropriations power. Although it might be the case that
general funding statutes do not necessarily constitute congressional
approval for conducting hostilities, this objection loses its force
when the appropriations measure is directly and conspicuously focused
on specific military action."[Footnote 137]
Note that in all of the cases in which ratification by appropriation
was approved, the agency had at least an arguable legal basis for its
action. See also Airis, 391 F.2d at 481 n.20; B-232482, June 4, 1990.
The doctrine has not been used to excuse violations of law. Also, when
an agency action is constitutionally suspect, the courts will require
that congressional action be particularly explicit. Greene v. McElroy,
360 U.S. at 506-07; Martin Industries, 581 F. Supp. at 1033-37; Muller
Optical Co., 574 F. Supp. at 954.
In B-285725, Sept. 29, 2000, the Comptroller General condensed the
foregoing principles into this test for ratification by appropriation:
"To conclude that Congress through the appropriations process has
ratified agency action, three factors generally must be present. First,
the agency takes the action pursuant to at least arguable authority;
second, the Congress has specific knowledge of the facts; and third,
the appropriation of funds clearly bestows the claimed authority."
The opinion in B-285725 rejected an assertion by the District of
Columbia government that Congress had ratified certain funding
practices that otherwise violated the Antideficiency Act, 31 U.S.C.
§ 1341. Specifically, it held that information contained in the
District's budget justifications and said to constitute notice to
Congress (1) lacked clarity and precision, (2) did not create any
awareness that could be imputed to Congress as a whole, and (3) was not
reflected in any legislative language that could reasonably be viewed
as authorizing the practices in question.
h. Repeal by Implication:
We have on several occasions referred to the rule against repeal by
implication. The leading case in the appropriations context is
Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978) (hereafter
TVA v. Hill). In that case, Congress had authorized construction of the
Tellico Dam and Reservoir Project on the Little Tennessee River, and
had appropriated initial funds for that purpose. Subsequently, Congress
passed the Endangered Species Act of 1973, 16 U.S.C. §§ 1531 et seq.
Under the provisions of that Act, the Secretary of the Interior
declared the "snail darter," a 3-inch fish, to be an endangered
species. It was eventually determined that the Little Tennessee River
was the snail darter's critical habitat and that completion of the dam
would result in extinction of the species. Consequently, environmental
groups and others brought an action to halt further construction of the
Tellico Project. In its decision, the Supreme Court held in favor of
the plaintiffs, notwithstanding the fact that construction was well
under way and that, even after the Secretary of the Interior's actions
regarding the snail darter, Congress had continued to make yearly
appropriations for the completion of the dam project.
The appropriation involved was a lump-sum appropriation that included
funds for the Tellico Dam but made no specific reference to it.
However, passages in the reports of the appropriations committees
indicated that those committees intended the funds to be available
notwithstanding the Endangered Species Act. The Court held that this
was not enough. The doctrine against repeal by implication, the Court
said, applies with even greater force when the claimed repeal rests
solely on an appropriation act:
"When voting on appropriations measures, legislators are entitled to
operate under the assumption that the funds will be devoted to purposes
which are lawful and not for any purpose forbidden."
Id. at 190. Noting that "[e]xpressions of committees dealing with
requests for appropriations cannot be equated with statutes enacted by
Congress" (id. at 191), the Court held that the unspecified inclusion
of the Tellico Dam funds in a lump-sum appropriation was not sufficient
to constitute a repeal by implication of the Endangered Species Act
insofar as it related to that project.[Footnote 138] In other words,
the doctrine of ratification by appropriation we discussed in the
preceding section does not apply, at least when the appropriation is an
otherwise unspecified lump sum, where the effect would be to change an
existing statutory requirement.
TVA v. Hill is important because it is a clear and forceful statement
from the Supreme Court. In terms of the legal principle involved,
however, the Court was breaking little new ground. A body of case law
from the lower courts had already laid the legal foundation. One group
of cases, for example, had established the proposition that the
appropriation of funds does not excuse noncompliance with the National
Environmental Policy Act. Environmental Defense Fund v. Froehlke,
473 F.2d 346 (8th Cir. 1972); Committee for Nuclear Responsibility v.
Seaborg, 463 F.2d 783 (D.C. Cir. 1971); National Audubon Society v.
Andrus, 442 F. Supp. 42 (D.D.C. 1977); Environmental Defense Fund v.
Corps of Engineers, 325 F. Supp. 749 (E.D. Ark. 1971). Cases supporting
the general proposition of TVA v. Hill in other contexts were also not
uncommon. See Associated Electric Cooperative, Inc. v. Morton, 507 F.2d
1167 (D.C. Cir.), cert. denied, 423 U.S. 830 (1974); District of
Columbia Federation of Civic Ass'ns v. Airis, 391 F.2d 478 (D.C. Cir.
1968); Maiatico v. United States, 302 F.2d 880 (D.C. Cir. 1962).
Some subsequent cases applying the concept of TVA v. Hill (although not
all citing that case) include Donovan v. Carolina Stalite Co., 734 F.2d
1547 (D.C. Cir. 1984); 64 Comp. Gen. 282 (1985); B-208593.6, Dec. 22,
1988; B-213771, July 10, 1984; B-204874, July 28, 1982; and B-193307,
Feb. 6, 1979. In B-204874, for example, the Comptroller General advised
that the otherwise unrestricted appropriation of coal trespass receipts
to the Bureau of Land Management did not implicitly amend or repeal the
provisions of the Federal Land Policy and Management Act prescribing
the use of such funds.
In reading the cases, one will encounter the occasional sweeping
statement such as "appropriations acts cannot change existing law,"
National Audubon Society v. Andrus, 442 F. Supp. at 45. Such statements
can be misleading, and should be read in the context of the facts of
the particular case. It is clear from TVA v. Hill, together with its
ancestors and its progeny, that Congress cannot legislate by
legislative history. It seems equally clear that the appropriation of
funds, without more, is not sufficient to overcome a statutory
requirement. If, however, instead of an unrestricted lump sum, the
appropriation in TVA v. Hill had provided a specific line-item
appropriation for the Tellico project, together with the words
"notwithstanding the provisions of the Endangered Species Act," it is
difficult to see how a court could fail to give effect to the express
mandate of the appropriation.
Thus, the message is not that Congress cannot legislate in an
appropriation act. It can, and we have previously cited a body of case
law to that effect. The real message is that, if Congress wants to use
an appropriation act as the vehicle for suspending, modifying, or
repealing a provision of existing law, it must do so advisedly,
speaking directly and explicitly to the issue.
The Supreme Court conveyed this message succinctly in Robertson v.
Seattle Audubon Society, 503 U.S. 429, 440 (1992) (citations omitted),
holding that--
"[A]lthough repeals by implication are especially disfavored in the
appropriations context, Congress nonetheless may amend substantive law
in an appropriations statute, as long as it does so clearly."
In Robertson, the Court found an implied repeal by appropriation act to
be clear and explicit.
Subsequent judicial decisions, of course, apply the Robertson approach
to alleged implied repeals by appropriation. Since the issue is one of
basic statutory construction, the courts naturally reach different
results depending on the particular statutory language involved. For
example, Pontarelli v. United States Department of the Treasury,
285 F.3d 216 (3rd Cir. 2002), held that an annual appropriation
restriction enacted for many years stating that "[n]one of the funds
appropriated herein shall be available to investigate or act upon
applications for relief from Federal firearms disabilities under
18 U.S.C. § 925(c)" clearly superseded the provision in Title 18 of the
United States Code. Pontarelli cites many other decisions that reached
the same conclusion with respect to this particular appropriation
language. Another case finding a clear implied repeal by appropriation
is Bald Eagle Ridge Protection Ass'n, Inc. v. Mallory, 119 F. Supp. 2d
473 (M.D. Pa. 2000), aff'd, 275 F.3d 33 (3rd 2001).
Examples of cases that reconciled the appropriation and other statutory
provisions, and thus found no implied repeal include: Strawser v.
Atkins, 290 F.3d 720 (4th Cir.), cert. denied, 537 U.S. 1045 (2002);
Auburn Housing Authority v. Martinez, 277 F.3d 138 (2nd Cir. 2002);
Firebaugh Canal Co. v. United States, 203 F.3d 568 (9th Cir. 2000);
Ramey v. Stevedoring Services of America, 134 F.3d 954 (9th Cir. 1998);
Environmental Defense Center v. Babbitt, 73 F.3d 867 (9th Cir. 1995).
Still other cases hold that appropriation restrictions alleged to be
permanent in superseding other laws were effective only for a fiscal
year. E.g., Auburn Housing Authority, supra; Building & Construction
Trades Department, AFL-CIO v. Martin, 961 F.2d 269, 273 (D.C. Cir.),
cert. denied, 506 U.S. 915 (1992). In a related context, the court in
Williams v. United States, 240 F.3d 1019 (Fed. Cir. 2001), cert.
denied, 535 U.S. 911 (2002), disagreed with a series of Comptroller
General decisions and held that appropriation language enacted in 1982
that required specific congressional authorization for pay raises for
judges was not permanent legislation but expired at the end of fiscal
year 1982.
i. Lack of Authorization:
As we have previously noted, there is no general statutory requirement
that appropriations be preceded by specific authorizations, although
they are required in some instances. Where authorizations are not
required by law, Congress may, subject to a possible point of order,
appropriate funds for a program or object that has not been previously
authorized or which exceeds the scope of a prior authorization, in
which event the enacted appropriation, in effect, carries its own
authorization and is available to the agency for obligation and
expenditure. E.g., 67 Comp. Gen. 401 (1988); B-219727, July 30, 1985;
B-173832, Aug. 1, 1975.
It has also been held that, as a general proposition, the appropriation
of funds for a program whose funding authorization has expired, or is
due to expire during the period of availability of the appropriation,
provides sufficient legal basis to continue the program during that
period of availability, absent indication of contrary congressional
intent. 65 Comp. Gen. 524 (1986); 65 Comp. Gen. 318, 320-21 (1986);
55 Comp. Gen. 289 (1975); B-131935, Mar. 17, 1986; B-137063, Mar. 21,
1966. The result in these cases follows in part from the fact that the
total absence of appropriations authorization legislation would not
have precluded the making of valid appropriations for the programs.
E.g., B-202992, May 15, 1981. In addition, as noted, the result is
premised on the conclusion, derived either from legislative history or
at least the absence of legislative history to the contrary, that
Congress did not intend for the programs to terminate.[Footnote 139]
There are limits on how far this principle can be taken, depending on
the particular circumstances. One illustration is B-207186, Feb. 10,
1989. A 1988 continuing resolution provided funds for the Solar Bank,
to remain available until September 30, 1989. Legislation enacted on
the same day provided for the Bank to terminate on March 15, 1988.
Based in part on legislative history indicating the intent to terminate
the Bank on the specified sunset date, GAO distinguished prior
decisions in which appropriations were found to authorize program
continuation and concluded that the appropriation did not authorize
continuation of the Solar Bank beyond March 15, 1988.
The Comptroller General's decision in 71 Comp. Gen. 378 (1992) provides
another variant. Section 8 of the Civil Rights Commission's authorizing
act stated that "the provisions of this Act shall terminate on
September 30, 1991." While Congress was actively working on
reauthorization legislation for the Commission toward the end of fiscal
year 1991, this legislation was not enacted until after September 30,
1991. Nevertheless, Congress had enacted a continuing resolution for
the early part of fiscal year 1992 that specifically included funding
for the Commission. The Comptroller General first observed that the
line of cases discussed above permitting programs to continue after
expiration of their authorization did not apply. Unlike the mere
authorization lapse in those cases, the statute here provided that the
Commission would "terminate" on September 30. The Comptroller General
also distinguished the Solar Bank case, discussed above, since the
provision for termination of the Commission was enacted long before the
continuing resolution that provided for the Commission's funding after
September 30. In the final analysis, the decision held that the funding
provision for the Commission was irreconcilable with the section 8
termination provision and effectively suspended the operation of
section 8. In reaching this conclusion, the decision noted the clear
intent of Congress that the Commission continue to operate without
interruption after September 30, 1991.
A device Congress has used on occasion to avoid this type of problem is
an "automatic extension" provision under which funding authorization is
automatically extended for a specified time period if Congress has not
enacted new authorizing legislation before it expires. An example is
discussed in B-214456, May 14, 1984.
Questions concerning the effect of appropriations on expired or about-
to-expire authorizations have tended to arise more frequently in the
context of continuing resolutions. The topic is discussed further,
including several of the cases cited above, in Chapter 8.
Where specific authorization is statutorily required, the case may
become more difficult. In Libby Rod & Gun Club v. Poteat, 594 F.2d 742
(9th Cir. 1979), the court held that a lump-sum appropriation available
for dam construction was not, by itself, sufficient to authorize a
construction project for which specific authorization had not been
obtained as required by 33 U.S.C. § 401. The court suggested that
TVA v. Hill and similar cases do not "mandate the conclusion that
courts can never construe appropriations as congressional
authorization," although it was not necessary to further address that
issue in view of the specific requirement in that case. Poteat,
594 F.2d at 745-46. The result would presumably have been different if
Congress had made a specific appropriation "notwithstanding the
provisions of 33 U.S.C. § 401." It should be apparent that the
doctrines of repeal by implication and ratification by appropriation
are relevant in analyzing issues of this type.
D. Statutory Interpretation: Determining Congressional Intent:
"[T]his is a case for applying the canon of construction of the wag who
said, when the legislative history is doubtful, go to the statute."
Greenwood v. United States, 350 U.S. 366, 374 (1956) (Frankfurter, J.).
1. The Goal of Statutory Construction[Footnote 140]
As we have noted elsewhere, an appropriation can be made only by means
of a statute. In addition to providing funds, the typical appropriation
act includes a variety of general provisions. Anyone who works with
appropriations matters will also have frequent need to consult
authorizing and program legislation. It should thus be apparent that
the interpretation of statutes is of critical importance to
appropriations law.[Footnote 141]
The objective of this section is to provide a brief overview, designed
primarily for those who do not work extensively with legislative
materials. The cases we cite are but a sampling, selected for
illustrative purposes or for a particularly good judicial statement of
a point. The literature in the area is voluminous, and readers who need
more than we can provide are encouraged to consult one of the
established treatises such as Sutherland's Statutes and Statutory
Construction (hereafter "Sutherland").[Footnote 142]
The goal of statutory construction is simply stated: to determine and
give effect to the intent of the enacting legislature. Philbrook v.
Glodgett, 421 U.S. 707, 713 (1975); United States v. American Trucking
Ass'ns, Inc., 310 U.S. 534, 542 (1940); 55 Comp. Gen. 307, 317 (1975);
38 Comp. Gen. 229 (1958). While the goal may be simple, the means of
achieving it are complex and often controversial. The primary vehicle
for determining legislative intent is the language of the statute
itself. There is an established body of principles, known as "canons"
of construction, that are designed to aid in arriving at the best
interpretation of statutory language. The statute's legislative history
also is usually consulted to aid in the effort.
At this point, it is important to recognize that the concept of
"legislative intent" is in many cases a fiction. Where not clear from
the statutory language itself, it is often impossible to ascribe an
intent to Congress as a whole.[Footnote 143] As we will note later, a
committee report represents the views of that committee. Statements by
an individual legislator represent the views of that individual. Either
may, but do not necessarily or inherently, reflect a broader
congressional perception.
Even interpretive aids that rely on the statutory language itself do
not provide hard and fast rules that can pinpoint congressional intent
with scientific precision. One problem is that, more often than not, a
statute has no obvious meaning that precisely answers a particular
issue in dispute before the courts, the Comptroller General, or another
decision maker. If the answers were that obvious, most of the cases
discussed in this section would never have arisen.
The reality is that there probably is (and was) no actual
"congressional intent" with respect to most specific issues that find
their way to the courts, GAO, or other forums. In all likelihood,
Congress did not affirmatively consider these specific issues for
purposes of forming an intent about them. Necessarily, Congress writes
laws in fairly general terms that convey broad concepts, principles,
and policies. It leaves administering agencies and courts to fill in
the gaps. Indeed, Congress sometimes deliberately leaves issues
ambiguous because it lacks a sufficient consensus to resolve them in
the law.
To point out the challenges in statutory interpretation, however, is by
no means to denigrate the process. Applying the complex maze of
interpretive aids, imperfect as they may be, serves the essential
purpose of providing a common basis for problem solving and determining
what the law is.
This in turn is important for two reasons. First, everyone has surely
heard the familiar statement that our government is a government of
laws and not of men.[Footnote 144] This means that you have a right to
have your conduct governed and judged in accordance with identifiable
principles and standards, not by the whim of the decision maker. The
law should be reasonably predictable. A lawyer's advice that a proposed
action is or is not permissible amounts to a reasoned and informed
judgment as to what a court is likely to do if the action is
challenged. While this can never be an absolute guarantee, it once
again must be based on identifiable principles and standards. Conceding
its weaknesses, the law of statutory construction represents an
organized approach for doing this.
Second, predictability is important in the enactment of statutes as
well. Congress legislates against the background of the rules and
principles that make up the law of statutory construction, and must be
able to anticipate how the courts will apply them in interpreting the
statutes it enacts.[Footnote 145]
2. The "Plain Meaning" Rule:
"The Court's task is to construe not English but congressional
English."
Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 95 (1959)
(Frankfurter, J., dissenting).
a. In General:
By far the most important rule of statutory construction is this: You
start with the language of the statute. Countless judicial decisions
reiterate this rule. E.g., Hartford Underwriters Insurance Co. v. Union
Planters Bank, N.A., 530 U.S. 1 (2000); Robinson v. Shell Oil Co.,
519 U.S. 337 (1997); Connecticut National Bank v. Germain, 503 U.S. 249
(1992); Mallard v. United States District Court for the Southern
District of Iowa, 490 U.S. 296, 300 (1989). The primary vehicle for
Congress to express its intent is the words it enacts into law. As
stated in an early Supreme Court decision:
"The law as it passed is the will of the majority of both houses, and
the only mode in which that will is spoken is in the act itself; and we
must gather their intention from the language there used … ."
Aldridge v. Williams, 44 U.S. (3 How.) 9, 24 (1845). A somewhat better
known statement is from United States v. American Trucking Ass'ns,
310 U.S. 534, 543 (1940):
"There is, of course, no more persuasive evidence of the purpose of a
statute than the words by which the legislature undertook to give
expression to its wishes."
If the meaning is clear from the language of the statute, there is no
need to resort to legislative history or any other extraneous source.
As the Supreme Court observed in Connecticut National Bank v. Germain:
"[I]n interpreting a statute a court should always turn first to one,
cardinal canon before all others. We have stated time and again that
courts must presume that a legislature says in a statute what it means
and means in a statute what it says there… . When the words of a
statute are unambiguous, then, this first canon is also the last:
judicial inquiry is complete."
503 U.S. at 253-254 (citations and quotation marks omitted). See also
Hartford Underwriters Insurance Co., supra; Robinson v. Shell Oil Co.,
519 U.S. 337 (1997); Mallard, 490 U.S. 296; United States v. Ron Pair
Enterprises, Inc., 489 U.S. 235, 241 (1989); Tennessee Valley
Authority v. Hill, 437 U.S. 153, 184 n.29 (1978); 56 Comp. Gen. 943
(1977); B-287158, Oct. 10, 2002; B-290021, July 15, 2002; B-288173,
June 13, 2002; B-288658, Nov. 30, 2001.
This is the so-called "plain meaning" rule. If the meaning is "plain,"
that's the end of the inquiry and you apply that meaning. The unanimous
opinion in Robinson v. Shell Oil Co. stated the rule as follows:
"Our first step in interpreting a statute is to determine whether the
language at issue has a plain and unambiguous meaning with regard to
the particular dispute in the case. Our inquiry must cease if the
statutory language and 'the statutory scheme is coherent and
consistent.'…:
"The plainness or ambiguity of statutory language is determined by
reference to the language itself, the specific context in which that
language is used, and the broader context of the statute as a whole."
519 U.S. at 340-341 (citations omitted).
The plain meaning rule thus embodies the universal view that
interpretations of a statute should be anchored in, and flow from, the
statute's text. Its application to a particular statutory provision
turns on subjective judgments over which reasonable and intelligent
people will differ.
An example of this is Smith v. United States, 508 U.S. 223 (1993), in
which the Justices agreed that the case should be resolved on the basis
of the statute's plain meaning, but reached sharply divergent
conclusions as to what that plain meaning was. In Smith, the defendant
had traded his gun for illegal drugs. He was convicted under a statute
that provided enhanced penalties for the "use" of a firearm "during and
in relation to … [a] drug trafficking crime." The majority affirmed his
conviction, reasoning that exchanging a firearm for drugs constituted a
"use" of the firearm within the plain meaning of the statute--that is,
use in the sense of employ. Three Justices dissented, contending
vehemently that the plain meaning of the statute covered only the use
of a firearm for its intended purpose as a weapon.[Footnote 146]
b. The Plain Meaning Rule versus Legislative History:
The extent to which sources outside the statute itself, particularly
legislative history, should be consulted to help shed light on the
statutory scheme has been the subject of much controversy in recent
decades. One school of thought, most closely identified with Supreme
Court Justice Antonin Scalia, holds that resort to legislative history
is never appropriate. This approach is sometimes viewed as a variant of
the plain meaning rule.[Footnote 147] A more widely expressed statement
of the plain meaning rule is that legislative history can be consulted
but only if it has first been determined that the statutory language is
"ambiguous"--that is, that there is no plain meaning.
As a practical matter, however, courts generally examine the
legislative history as an integral part of statutory construction.
Thus, Sutherland observes:
"[I]t has been said, usually a court looks into the legislative history
to clear up some statutory ambiguity… but such ambiguity is not the
sine qua non for judicial inquiry into legislative history … the plain
meaning rule is not to be used to thwart or distort the intent of
Congress by excluding from consideration enlightening material from the
legislative files… ."
2A Sutherland, § 48:01, at 412-413 (citations and quotation marks
omitted).
In other words, like all "rules" of statutory construction, the plain
meaning rule is "rather an axiom of experience than a rule of law, and
does not preclude consideration of persuasive evidence if it exists."
Boston Sand & Gravel Co. v. United States, 278 U.S. 41, 48 (1928)
(Holmes, J.), quoted in Watt v. Alaska, 451 U.S. 259, 266 (1981). In
another often-quoted statement, the Supreme Court said:
"When aid to construction of the meaning of words, as used in the
statute, is available, there certainly can be no 'rule of law' which
forbids its use, however clear the words may appear on 'superficial
examination.'"
United States v. American Trucking Ass'ns, Inc., 310 U.S. 534, 543-44
(1940), as quoted in Train v. Colorado Public Interest Research Group,
Inc., 426 U.S. 1, 10 (1976) (footnotes omitted).
Indeed, the Supreme Court, like other courts, routinely consults the
legislative history even if the statutory language seems
unambiguous.[Footnote 148] One example is Conroy v. Aniskoff, 507 U.S.
511 (1993), in which the Court found the relevant statute to be
"unambiguous, unequivocal, and unlimited." Id. at 514. Nevertheless,
Justice Stevens, writing for the Court, examined the legislative
history in detail to confirm that its literal reading of the statute
was not absurd, illogical, or contrary to congressional intent. Justice
Scalia, however, wrote a spirited concurring opinion that described the
inquiry into the legislative history as "a waste of research time and
ink" as well as a "disruptive lesson in the law." Id. at 519.
3. The Limits of Literalism: Errors in Statutes and "Absurd
Consequences":
"There is no surer way to misread any document than to read it
literally."
Guiseppi v. Walling, 144 F.2d 608, 624 (2nd Cir. 1944) (Learned Hand,
J.).
Even the strictest adherence to the plain meaning rule does not justify
application of the literal terms of a statute in all cases. There are
two well-established exceptions. The first is that statutory language
will not be enforced literally when that language is the product of an
obvious drafting error. In such cases, courts (and other decision
makers) will, in effect, rewrite the statute to correct the error and
conform the statute to the obvious intent.
The second exception is the frequently cited canon of construction that
statutory language will not be interpreted literally if doing so would
produce an "absurd consequence" or "absurd result," that is, one that
the legislature, presumably, could not have intended.
a. Errors in Statutes:
(1) Drafting errors:
A statute may occasionally contain what is clearly a technical or
typographical error which, if read literally, could alter the meaning
of the statute or render execution effectively impossible. In such a
case, if the legislative intent is clear, the intent will be given
effect over the erroneous language. One recent example is Chickasaw
Nation v. United States, 534 U.S. 84 (2001). The decision turned on the
effect of a parenthetical reference to the Tax Code that had been
included in the Indian Gaming Regulatory Act. After examining the
structure and language of the Indian Gaming Regulatory Act as a whole,
as well as its legislative history, the Court concluded that the
parenthetical reference was "simply a drafting mistake"--specifically,
the failure to delete a cross-reference from an earlier version of the
bill--and declined to give it any effect. Chickasaw Nation, 534 U.S. at
91.
In a number of other cases, courts have followed the same approach by
correcting obvious printing or typographical errors. See United States
National Bank of Oregon v. Independent Insurance Agents of America,
Inc., 508 U.S. 439 (1993); Ronson Patents Corp. v. Sparklets Devices,
Inc., 102 F. Supp. 123 (E.D. Mo. 1951); Fleming v. Salem Box Co., 38 F.
Supp. 997 (D. Ore. 1940); Neely v. State of Arkansas, 877 S.W.2d 589
(Ark.1994); Pressman v. State Tax Commission, 102 A.2d 821 (Md. 1954);
Johnson v. United States Gypsum Co., 229 S.W.2d 671 (Ark. 1950);
Baca v. Board of Commissioners of Bernalillo County, 62 P. 979 (N.M.
1900).[Footnote 149]
Comptroller General decisions have likewise repaired obvious drafting
errors. In one situation, a supplemental appropriation act provided
funds to pay certain claims and judgments as set forth in Senate
Document 94-163. Examination of the documents made it clear that the
reference should have been to Senate Document 94-164, as Senate
Document 94-163 concerned a wholly unrelated subject. The manifest
congressional intent was held controlling, and the appropriation was
available to pay the items specified in Senate Document 94-164.
B-158642-O.M., June 8, 1976. The same principle had been applied in a
very early decision in which an 1894 appropriation provided funds for
certain payments in connection with an election held on "November
fifth," 1890. The election had in fact been held on November 4.
Recognizing the "evident intention of Congress," the decision held that
the appropriation was available to make the specified payments. 1 Comp.
Dec. 1 (1894). See also 11 Comp. Dec. 719 (1905); 8 Comp. Dec. 205
(1901); 1 Comp. Dec. 316 (1895).
Other decisions follow the same approach. See, e.g., 64 Comp. Gen. 221
(1985) (erroneous use of the word "title" instead of "subchapter");
B-261579, Nov. 1, 1995 (mistaken cross-reference to the wrong section
of another law); B-127507, Dec. 10, 1962 (printing error causing the
statute to refer to "section 12" of a certain township for inclusion in
a national forest, rather than "section 13").
The Justice Department's Office of Legal Counsel applied Comptroller
General decisions in an opinion dated May 21, 1996, that addressed an
obvious problem with the application of an appropriations act.[Footnote
150] The act required the United States Information Agency to move an
office to south Florida "not later than April 1, 1996," and made funds
available for that purpose. However, the act was not signed into law
until April 26, 1996. Recognizing that the act could not be implemented
as written, the opinion concluded that the funds remained available to
finance the move after April 1.
(2) Error in amount appropriated:
A 1979 decision illustrates one situation in which the above rule will
not apply. A 1979 appropriation act contained an appropriation of $36
million for the Inspector General of the Department of Health,
Education, and Welfare. The bills as passed by both Houses and the
various committee reports specified an appropriation of only $35
million. While it seemed apparent that the $36 million was the result
of a typographical error, it was held that the language of the enrolled
act signed by the President must control and that the full $36 million
had been appropriated. The Comptroller General did, however, inform the
Appropriations Committees. 58 Comp. Gen. 358 (1979). See also 2 Comp.
Dec. 629 (1896); 1 Bowler, First Comp. Dec. 114 (1894).
However, if the amount appropriated is a total derived from adding up
specific sums enumerated in the appropriation act, then the amount
appropriated will be the amount obtained by the correct addition,
notwithstanding the specification of an erroneous total in the
appropriation act. 31 U.S.C. § 1302; 2 Comp. Gen. 592 (1923).
b. Avoiding "Absurd Consequences":
Departures from strict adherence to the statutory text go beyond cases
involving drafting and typographical errors. In fact, it is more common
to find cases in which the courts do not question that Congress meant
to choose the words it did, but conclude that it could not have meant
them to apply literally in a particular context. The generally accepted
principle here is that the literal language of a statute will not be
followed if it would produce a result demonstrably inconsistent with
clearly expressed congressional intent.
The case probably most frequently cited for this proposition is Church
of the Holy Trinity v. United States, 143 U.S. 457 (1892), which gives
several interesting examples. One of those examples is United States v.
Kirby, 74 U.S. (7 Wall.) 482 (1868), in which the Court held that a
statute making it a criminal offense to knowingly and willfully
obstruct or retard a driver or carrier of the mails did not apply to a
sheriff arresting a mail carrier who had been indicted for murder.
Another is an old English ruling that a statute making it a felony to
break out of jail did not apply to a prisoner who broke out because the
jail was on fire. Holy Trinity, 143 U.S. at 460-61. An example from
early administrative decisions might be 24 Comp. Dec. 775 (1918),
holding that an appropriation for "messenger boys" was available to
hire "messenger girls."[Footnote 151]
In cases decided after Holy Trinity, the Court has emphasized that
departures from the plain meaning rule are justified only in "rare and
exceptional circumstances," such as the illustrations used in Holy
Trinity. Crooks v. Harrelson, 282 U.S. 55, 60 (1930). See also United
States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242 (1989);
Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982);
Tennessee Valley Authority v. Hill, 437 U.S. 153, 187 n.33 (1978)
(citing Crooks v. Harrelson with approval; hereafter TVA v. Hill).
This exception to the plain meaning rule is also sometimes phrased in
terms of avoiding absurd consequences. E.g., United States v. Ryan,
284 U.S. 167, 175 (1931). As the dissenting opinion in TVA v. Hill
points out (437 U.S. at 204 n.14), there is a bit of confusion in this
respect in that Crooks--again, cited with approval by the majority in
TVA v. Hill--explicitly states that avoiding absurd consequences is not
enough, although the Court has used the absurd consequence formulation
in post-Crooks cases such as Ryan. In any event, as a comparison of the
majority and dissenting opinions in TVA v. Hill will demonstrate, the
absurd consequences test is not always easy to apply in that what
strikes one person as absurd may be good law to another.
The case of United States v. Singleton, 144 F.3d 1343 (10th Cir. 1998),
vacated on reh'g en banc, 165 F.3d 1297, cert. denied, 527 U.S. 1024
(1999), provides another illustration of this point. Ms. Singleton was
convicted of various crimes following testimony against her by a
witness who had received a plea bargain in exchange for his testimony.
She maintained that her conviction was tainted because the plea bargain
constituted a violation of 18 U.S.C. § 201(c)(2), which provides in
part:
"Whoever … directly or indirectly … promises anything of value to any
person, … because of the testimony under oath or affirmation given or
to be given by such person as a witness upon trial … before any court …
shall be fined under this title or imprisoned for not more than two
years, or both."
A three judge panel of the Tenth Circuit agreed and reversed her
conviction. They held that the word "whoever" by its plain terms
applied to the federal prosecutor and, just as plainly, the plea
bargain promised something of value because of testimony to be given as
a witness upon trial.
The full Tenth Circuit vacated the panel's ruling and reinstated the
conviction. The majority held that the panel's construction of the
statute was "patently absurd" and contradicted long-standing
prosecutorial practice. 165 F.3d at 1300. The three original panel
members remained unconvinced and dissented. Far from being "absurd,"
they viewed their construction as a "straight-forward interpretation"
of the statute that honored important constitutional values. One such
value, they said, was "the proper role of the judiciary as the law-
interpreting, rather than lawmaking, branch of the federal government."
Id. at 1309.
While the absurd consequences rule must be invoked with care, it does
have useful applications. The Comptroller General invoked this rule in
holding that an appropriation act proviso requiring competition in the
award of certain grants did not apply to community development block
grants, which were allocated by a statutory formula. B-285794, Dec. 5,
2000 ("Without an affirmative expression of such intent, we are
unwilling to read the language of the questioned proviso in a way that
would clearly produce unreasonable and impractical consequences."). See
also B-260759, May 2, 1995 (rejecting a literal reading of a statutory
provision that would defeat its purpose and produce anomalous results).
4. Statutory Aids to Construction:
The remainder of this section discusses various sources to assist in
determining the meaning of statutory language, plain or otherwise. We
start with sources that are contained in the statute being construed or
in other statutes that provide interpretive guidance for general
application. The main advantage of these statutory aids is that, as
laws themselves, they carry authoritative weight. Their main
disadvantage is that, while useful on occasion, they have limited scope
and address relatively few issues of interpretation.
a. Definitions, Effective Dates, and Severability Clauses:
Statutes frequently contain their own set of definitions for terms that
they use. Obviously, these definitions take precedence over other
sources to the extent that they apply.
A statute may also contain an effective date provision that sets forth
a date (or dates) when it will become operative. These provisions are
most frequently used when Congress intends to delay or phase in the
effectiveness of a statute in whole or in part. The general rule, even
absent an effective date provision, is that statutes take effect on the
date of their enactment and apply prospectively. See, e.g., B-300866,
May 30, 2003, and authorities cited. Therefore, effective date
provisions are unnecessary if the normal rule is intended. (Later in
this chapter we will discuss more complicated issues concerning the
retroactive application of statutes.)
Another provision sometimes included is a so-called "severability"
clause. The purpose of this provision is to set forth congressional
intent in the unhappy event that part of a statute is held to be
unconstitutional. The clause states whether or not the remainder of the
statute should be "severed" from the unconstitutional part and continue
to be operative. Again, the general rule is that statutes will be
considered severable absent a provision to the contrary or some other
clear indication of congressional intent that the whole statute should
fall if part of it is declared unconstitutional. Thus, the clause is
unnecessary in the usual case. However, the absence of a severability
clause will not create a presumption against severability. See, e.g.,
New York v. United States, 505 U.S. 144, 186-187 (1992).
b. The Dictionary Act:
Chapter 1 of Title 1 of the United States Code, §§ 1-8, commonly known
as the "Dictionary Act," provides certain rules of construction and
definitions that apply generally to federal statutes. For example,
section 1 provides in part:
"In determining the meaning of any Act of Congress, unless the context
indicates otherwise--
"the words 'person' and 'whoever' include corporations, companies,
associations, firms, partnerships, societies, and joint stock
companies, as well as individuals … ."
Occasionally, the courts use the Dictionary Act to resolve questions of
interpretation. E.g., United States v. Reid, 206 F. Supp. 2d 132 (D.
Mass. 2002) (an aircraft is not a "vehicle" for purposes of the USA
PATRIOT Act); United States v. Belgarde, 148 F. Supp. 2d 1104 (D.
Mont.), aff'd, 300 F.3d 1177 (9th Cir. 2001) (a government agency,
which the defendant was charged with burglarizing, is not a "person"
for purposes of the Major Crimes Act). Courts also hold on occasion
that the Dictionary Act does not apply. See Rowland v. California Men's
Colony, 506 U.S. 194 (1993) (context refutes application of the Title
1, United States Code, definition of "person").
c. Effect of Codification:
Congress regularly passes laws that "codify," or enact into positive
law, the contents of various titles of the United States Code. The
effect of such codifications is to make that United States Code title
the official evidence of the statutory language it contains.[Footnote
152] Codification acts typically delete obsolete provisions and make
other technical and clarifying changes to the statutes they codify.
Codification acts usually include language stating that they should not
be construed as making substantive changes in the laws they replace.
See, e.g., Pub. L. No. 97-258, § 4(a), 96 Stat. 877, 1067 (1982)
(codifying Title 31 of the United States Code); 69 Comp. Gen. 691
(1990).[Footnote 153]
5. Canons of Statutory Construction:
As discussed previously, under the plain meaning rule--the overriding
principle of statutory construction--the meaning of a statute must be
anchored in its text. Over the years, courts have developed a host of
conventions or guidelines for ascertaining the meaning of statutory
text that are usually referred to as "canons" of construction. They
range from broad principles that apply in virtually every case (such as
the canon that statutes are construed as a whole) to narrow rules that
apply in limited contexts.
Like all other aids to construing statutes, the canons represent rules
of thumb that are often useful but do not lend themselves to
mechanistic application or slavish adherence. As the Supreme Court
observed in Chickasaw Nation v. United States:
"[C]anons are not mandatory rules. They are guides that need not be
conclusive… . They are designed to help judges determine the
Legislature's intent as embodied in particular statutory language. And
other circumstances evidencing congressional intent can overcome their
force."
534 U.S. 84, 94 (2001) (citations and quotation marks omitted).
One problem with the canons is that they often appear to contradict
each other. In a frequently cited law review article, Professor Karl
Llewellyn presented an analysis demonstrating that for many canons,
there was an offsetting canon to the opposite effect.[Footnote 154]
Recognizing their limitations, this section will briefly describe some
of the more frequently invoked canons.
a. Construe the Statute as a Whole:
We start with one canon that virtually always applies and is rarely if
ever contradicted. As Sutherland puts it:
"A statute is passed as a whole and not in parts or sections and is
animated by one general purpose and intent. Consequently, each part or
section should be construed in connection with every other part or
section so as to produce a harmonious whole."
2A Sutherland, § 46:05 at 154.
Like all other courts, the Supreme Court follows this venerable canon.
E.g., United States v. Cleveland Indians Baseball Co., 532 U.S. 200,
217 (2001) ("it is, of course, true that statutory construction 'is a
holistic endeavor' and that the meaning of a provision is 'clarified by
the remainder of the statutory scheme'"); FDA v. Brown & Williamson
Tobacco Corp., 529 U.S. 120 (2000); Gustafson v. Alloyd Co., Inc.,
513 U.S. 561, 569 (1995) ("the Act is to be interpreted as a
symmetrical and coherent regulatory scheme, one in which the operative
words have a consistent meaning throughout"); Brown v. Gardner,
513 U.S. 115, 118 (1994) ("[a]mbiguity is a creature not of
definitional possibilities but of statutory context").
The Court elaborated on this canon in FDA v. Brown & Williamson Tobacco
Corp., noting as well that the "holistic" approach may embrace more
than a single statute:
"[A] reviewing court should not confine itself to examining a
particular statutory provision in isolation. The meaning--or ambiguity-
-of certain words or phrases may only become evident when placed in
context… . It is a fundamental canon of statutory construction that the
words of a statute must be read in their context and with a view to
their place in the overall statutory scheme… . A court must therefore
interpret the statute as a symmetrical and coherent regulatory scheme,
… and fit, if possible, all parts into an harmonious whole… .
Similarly, the meaning of one statute may be affected by other Acts,
particularly where Congress has spoken subsequently and more
specifically to the topic at hand."
529 U.S. at 132-133 (citations and quotation marks omitted).
Comptroller General decisions, of course, also follow this canon:
"In interpreting provisions of a statute, we follow the settled rule of
statutory construction that provisions with unambiguous language and
specific directions may not be construed in any manner that will alter
or extend their plain meaning… . However, if giving effect to the plain
meaning of words in a statute leads to an absurd result which is
clearly unintended and at variance with the policy of the legislation
as a whole, the purpose of the statute rather than its literal words
will be followed… . Consequently, statutory phrases and individual
words cannot be viewed in isolation."
B-287158, Oct. 10, 2002 (citations omitted).[Footnote 155]
The following decisions illustrate applications of the "whole statute"
rule:
* B-290125.2, B-290125.3, Dec. 18, 2002 (redacted): Viewed in
isolation, the phrase "notwithstanding any other provision of law"
might be read as exempting a procurement from GAO's bid protest
jurisdiction under the Competition in Contracting Act. However, when
the statute is read as a whole, as it must be, it does not exempt the
procurement from the Act.
* B-286661, Jan. 19, 2001: The Department of Energy's interpretation of
the statutory phrase "expenses of privatization" conflicts with the
plain meaning of the statute as a whole as well as the legislative
history.
* B-261522, Sept. 29, 1995: The statute as a whole supports the Social
Security Administration's contention that it can use wage data
collected by the Internal Revenue Service in certifying wages to the
Secretary of the Treasury.
b. Give Effect to All the Language: No "Surplusage":
Closely related to the "whole statute" canon is the canon that all
words of a statute should be given effect, if possible. The theory is
that all of the words have meaning since Congress does not include
unnecessary language, or "surplusage."
The courts and the Comptroller General regularly invoke the "no
surplusage" canon. Some examples follow:
* Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 216 (1995): Words in a
statute will not be treated as "utterly without effect" even if the
consequence of giving them effect is to render the statute
unconstitutional.
* Ratzlaf v. United States, 510 U.S. 135, 140-141 (1994): The no
surplusage canon applies with even greater weight when the arguably
surplus words are part of the elements of a crime. In this case, the
Court declined to treat as surplusage the word "willfully" in a statute
that subjected to criminal penalties anyone willfully violating certain
prohibitions.
* 70 Comp. Gen. 351 (1991): Appropriation act language stating that
none of the funds provided in this or any other act shall hereafter be
used for certain purposes constitutes permanent legislation. The
argument that the word hereafter should be construed only to mean that
the provision took effect on the date of its enactment is unpersuasive.
Since statutes generally take effect on their date of enactment, this
construction would inappropriately render the word hereafter
superfluous.
* B-261522, Sept. 29, 1995: The Social Security Act requires the Social
Security Administration to calculate employee wage data "in accordance
with such reports" of wages filed by employers with the Internal
Revenue Service (IRS). The "such reports" language cannot be read as
referring only to a particular report that the IRS no longer requires
since this would render the language meaningless, contrary to
established maxims of statutory construction.
Although frequently invoked, the no surplusage canon is less absolute
than the "whole statute" canon. One important caveat, previously
discussed, is that words in a statute will be treated as surplus and
disregarded if they were included in error. E.g., Chickasaw Nation v.
United States, 534 U.S. 84, 94 (2001) (emphasis in original):
"The canon requiring a court to give effect to each word 'if possible'
is sometimes offset by the canon that permits a court to reject words
'as surplusage' if 'inadvertently inserted or if repugnant to the rest
of the statute …'"
c. Apply the Common Meaning of Words:
When words used in a statute are not specifically defined, they are
generally given their "plain" or ordinary meaning rather than some
obscure usage. E.g., Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187
(1995); Federal Deposit Insurance Corp. v. Meyer, 510 U.S. 471, 476
(1994); Mallard v. United States, 490 U.S. 296, 301 (1989); 70 Comp.
Gen. 705 (1991); 38 Comp. Gen. 812 (1959); B-261193, Aug. 25, 1995.
One commonsense way to determine the plain meaning of a word is to
consult a dictionary. E.g., Mallard, 490 U.S. at 301; American Mining
Congress v. EPA, 824 F.2d 1177, 1183-84 & n.7 (D.C. Cir. 1987). Thus,
the Comptroller General relied on the dictionary in B-251189, Apr. 8,
1993, to hold that business suits did not constitute "uniforms," which
would have permitted the use of appropriated funds for their purchase.
See also B-261522, Sept. 29, 1995.
As a perusal of any dictionary will show, words often have more than
one meaning.[Footnote 156] The plain meaning will be the ordinary,
everyday meaning. E.g., Mallard, 490 U.S. at 301; 38 Comp. Gen. 812
(1959). If a word has more than one ordinary meaning and the context of
the statute does not make it clear which is being used, there may well
be no plain meaning for purposes of that statute. See Smith v. United
States, 508 U.S. 223 (1993), discussed previously.
d. Give a Common Construction to the Same or Similar Words:
When Congress uses the same term in more than one place in the same
statute, it is presumed that Congress intends for the same meaning to
apply absent evidence to the contrary. E.g., United States v. Cleveland
Indians Baseball Club, 532 U.S. 200, 213 (2001); Ratzlaf v. United
States, 510 U.S. 135 (1994). The Comptroller General stated the
principle as follows in 29 Comp. Gen. 143, 145 (1949), a case involving
the term "pay and allowances":
"[I]t is a settled rule of statutory construction that it is reasonable
to assume that words used in one place in a legislative enactment have
the same meaning in every other place in the statute and that
consequently other sections in which the same phrase is used may be
resorted to as an aid in determining the meaning thereof; and, if the
meaning of the phrase is clear in one part of the statute and in others
doubtful or obscure, it is in the latter case given the same
construction as in the former."
A corollary to this principle is that when Congress uses a different
term, it intends a different meaning. E.g., 56 Comp. Gen. 655, 658
(1977) (term "taking line" presumed to have different meaning than
"taking area," which had been used in several other sections in the
same statute).
Several different canons of construction revolve around these seemingly
straightforward notions. Before discussing some of them, it is
important to note once more that these canons, like most others, may or
may not make sense to apply in particular settings. Indeed, the basic
canon that the same words have the same meaning in a statute is itself
subject to exceptions. In Cleveland Indians Baseball Club, the Court
cautioned:
"Although we generally presume that identical words used in different
parts of the same act are intended to have the same meaning, … the
presumption is not rigid, and the meaning [of the same words] well may
vary with the purposes of the law."
532 U.S. at 213 (citations and quotation marks omitted). To drive the
point home, the Court quoted the following admonition from a law review
article:
"The tendency to assume that a word which appears in two or more legal
rules, and so in connection with more than one purpose, has and should
have precisely the same scope in all of them … has all the tenacity of
original sin and must constantly be guarded against."
Id. Of course, all bets are off if the statute clearly uses the same
word differently in different places. See Robinson v. Shell Oil Co.,
519 U.S. 337, 343 (1997) ("[o]nce it is established that the term
'employees' includes former employees in some sections, but not in
others, the term standing alone is necessarily ambiguous").
Two canons are frequently applied to the use of similar--but not
identical--words in a statute when they are part of the same phrase.
These canons are known as "ejusdem generis," or "of the same kind," and
"noscitur a sociis," loosely meaning that words are known by the
company they keep.
In Washington State Department of Social and Health Services v.
Guardianship Estate of Keffeler, 537 U.S. 371 (2003), the issue was
whether the state's retention of Social Security Act benefits to cover
some of its costs for providing foster care violated a provision of the
Act that shielded benefits from "execution, levy, attachment,
garnishment, or other legal process." The Court noted that, under the
two canons--
"'where general words follow specific words in a statutory
enumeration, the general words are construed to embrace only objects
similar in nature to those objects enumerated by the preceding specific
words.'"
537 U.S. at 379, quoting Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 114-115 (2001). Applying the canons, the Court held that the
state's receipt of the Social Security benefits as a "representative
payee" did not constitute "other legal process" within the Act's
meaning. It reasoned that, based on the accompanying terms, "other
legal process" required at a minimum the use of some judicial or quasi-
judicial process.
Gustafson v. Alloyd Co., 513 U.S. 561, 573-74 (1995), concerned the
scope of statute that defined the term "prospectus" to mean--
"any prospectus, notice, circular, advertisement, letter, or
communication, written or by radio or television, which offers any
security for sale or confirms the sale of any security."
Applying noscitur a sociis to the list of items in section 12(2), the
Court held that the definition of "prospectus" connoted some sort of
public offering of a security and, therefore, did not extend to private
sales agreements.
The Court also invoked the noscitur canon in Gutierrez v. Ada, 528 U.S.
250, 254-255 (2000), to construe the term "any election":
"The reference to 'any election' is preceded by two references to
gubernatorial election and followed by four. With 'any election' so
surrounded, what could it refer to except an election for Governor and
Lieutenant Governor, the subject of such relentless repetition? To ask
the question is merely to apply an interpretive rule as familiar
outside the law as it is within, for words and people are known by
their companions."
Another familiar canon dealing with word patterns in statutes is
"expressio unius est exclusio alterius," meaning that the expression of
one thing is the exclusion of another. Sutherland describes this canon
as simply embodying the commonsense notion that when people say one
thing, they generally do not mean something else. 2A Sutherland,
§ 45:14. As usual, care must be used in applying this canon. See
Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003); United States v.
Vonn, 535 U.S. 55 (2002). The Court observed in Vonn:
"At best, as we have said before, the canon that expressing one item of
a commonly associated group or series excludes another left unmentioned
is only a guide, whose fallibility can be shown by contrary indications
that adopting a particular rule or statute was probably not meant to
signal any exclusion of its common relatives."
537 U.S. at 65 (citations omitted).
e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not
Controlling:
Punctuation, grammar, titles, and preambles are part of the statutory
text. As such, they are fair game for consideration in construing
statutes. However, as discussed below, they carry less weight than the
substantive terms of the statute. The common principle that applies to
these sources is that they can be consulted to help resolve ambiguities
in the substantive text, but they cannot be used to introduce ambiguity
that does not otherwise exist.
Punctuation and Grammar. Punctuation may be taken into consideration
when no better evidence exists. For example, whether an "except" clause
is or is not set off by a comma may help determine whether the
exception applies to the entire provision or just to the portion
immediately preceding the "except" clause. E.g., B-218812, Jan. 23,
1987. Punctuation was a relevant factor in the majority opinion in
United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241-42
(1989). A number of additional cases, which we do not repeat here, are
cited in Justice O'Connor's dissenting opinion, 489 U.S. at 249.
On the other hand, punctuation or the lack of it should never be the
controlling factor. As the Supreme Court stated in United States
National Bank of Oregon v. Independent Insurance Agents of America,
Inc., 508 U.S. 439, 454 (1993), "a purported plain-meaning analysis
based only on punctuation is necessarily incomplete and runs the risk
of distorting a statute's true meaning." In that case, the Court
disregarded an interpretation based on the placement of quotation marks
in a statute, finding that all other evidence in the statute pointed to
a different interpretation.
Likewise, a statute's grammatical structure is useful but not
conclusive. In Arcadia, Ohio v. Ohio Power Co., 498 U.S. 73 (1991), the
Court devoted considerable attention to the placement of the word "or"
in a series of clauses. It questioned the interpretation proffered by
one of the parties that would have given the language an awkward
effect, noting: "In casual conversation, perhaps, such absentminded
duplication and omission are possible, but Congress is not presumed to
draft its laws that way." Arcadia, Ohio, 498 U.S. at 79. By contrast,
in Nobelman v. American Savings Bank, 508 U.S. 324, 330 (1993), the
Court rejected an interpretation, noting: "We acknowledge that this
reading of the clause is quite sensible as a matter of grammar. But it
is not compelled."
Titles and Headings. The title of a statute is relevant in determining
its scope and purpose. By "title" in this context we mean the line on
the slip law immediately following the words "An Act," as distinguished
from the statute's "popular name," if any. For example, Public Law 97-
177, 96 Stat. 85 (May 21, 1982), is "An Act [t]o require the Federal
Government to pay interest on overdue payments, and for other purposes"
(title); section 1 says that the act may be cited as the "Prompt
Payment Act" (popular name). A public law may or may not have a popular
name; it always has a title.
The title of an act may not be used to change the plain meaning of the
enacting clauses. It is evidence of the act's scope and purpose,
however, and may legitimately be taken into consideration to resolve
ambiguities. E.g., Lapina v. Williams, 232 U.S. 78, 92 (1914); White v.
United States, 191 U.S. 545, 550 (1903); Church of the Holy Trinity v.
United States, 143 U.S. 457, 462-63 (1892); United States v. Fisher,
6 U.S. (2 Cranch) 358, 386 (1805); 36 Comp. Gen. 389 (1956); 19 Comp.
Gen. 739, 742 (1940). To illustrate, in Church of the Holy Trinity, the
Court used the title of the statute in question, "An act to prohibit
the importation and migration of foreigners and aliens under contract
or agreement to perform labor in the United States," as support for its
conclusion that the statute was not intended to apply to professional
persons, specifically in that case, ministers and pastors.[Footnote
157]
The same considerations apply to a statute's popular name and to the
headings, or titles, of particular sections of the statute. See
Immigration & Naturalization Service v. St. Cyr, 533 U.S. 289, 308-309
(2001); Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206,
212 (1998). In St. Cyr, the Supreme Court concluded that a section
entitled "Elimination of Custody Review by Habeas Corpus" did not, in
fact, eliminate habeas corpus jurisdiction. It found that the
substantive terms of the section were less definitive than the title.
Preambles. Federal statutes often include an introductory "preamble" or
"purpose" section before the substantive provisions in which Congress
sets forth findings, purposes, or policies that prompted it to adopt
the legislation. Such preambles have no legally binding effect.
However, they may provide indications of congressional intent
underlying the law. Sutherland states with respect to preambles:
"[T]he settled principle of law is that the preamble cannot control the
enacting part of the statute in cases where the enacting part is
expressed in clear, unambiguous terms. In case any doubt arises in the
enacted part, the preamble may be resorted to to help discover the
intention of the law maker."
2A Sutherland, § 47:04 at 221-222.[Footnote 158]
f. Avoid Constructions That Pose Constitutional Problems:
It is well settled that courts will attempt to avoid a construction of
a statute that would render the statute unconstitutional. E.g., Edward
J. DeBartolo Corp. v. Florida Gulf Coast Building & Construction Trades
Council, 485 U.S. 568, 575 (1988) and the host of precedents it cites
in observing:
"[W]here an otherwise acceptable construction of a statute would raise
serious constitutional problems, the Court will construe the statute to
avoid such problems unless such construction is plainly contrary to the
intent of Congress… . This cardinal principle … has for so long been
applied by this Court that it is beyond debate… . [T]he elementary rule
is that every reasonable construction must be resorted to, in order to
save a statute from unconstitutionality. This approach not only
reflects the prudential concern that constitutional issues not be
needlessly confronted, but also recognizes that Congress, like this
Court, is bound by and swears an oath to uphold the Constitution. The
courts will therefore not lightly assume that Congress intended to
infringe constitutionally protected liberties or usurp power
constitutionally forbidden it." (Citations and quotation marks
omitted.)
As the Court put it in Immigration & Naturalization Service v. St. Cyr,
533 U.S. 289, 300 (2001), where an alternative to a constitutionally
problematic interpretation "is fairly possible, … we are obligated to
construe the statute to avoid such problems." (Citations and quotation
marks omitted.)
Two cases arising under the Federal Advisory Committee Act (known as
"FACA"), 5 U.S.C. App. §§ 1 et seq., illustrate the lengths to which
courts will go to avoid constitutional problems. In Public Citizen v.
United States Department of Justice, 491 U.S. 440 (1989), the Court
held that the Justice Department did not "utilize" within the meaning
of FACA an American Bar Association committee that reported to the
Department on federal judicial nominees and rated their qualifications.
Taking its lead from Public Citizen, the Court of Appeals for the
District of Columbia Circuit held in Association of American
Physicians & Surgeons, Inc. v. Clinton, 997 F.2d 898 (D.C. Cir. 1993),
that the First Lady was a full-time officer or employee of the federal
government within the meaning of the Act. Therefore, a task force she
chaired was exempt from FACA under a provision of the Act that excluded
"any committee which is composed wholly of full-time officers or
employees of the Federal Government." The constitutional issue in both
Public Citizen and Association of American Physicians & Surgeons was
whether application of FACA to the advisory committees involved in
those cases would violate separation of powers by infringing upon the
President's ability to obtain advice in the performance of his
constitutional responsibilities.[Footnote 159]
However, there are outer limits to interpretations designed to avoid
constitutional problems. See Pennsylvania Department of Corrections v.
Yeskey, 524 U.S. 206, 212 (1998) ("[t]hat doctrine [of avoidance]
enters in only 'where a statute is susceptible of two constructions'");
Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 216 (1995) ("[t]o avoid
a constitutional question by holding that Congress enacted, and the
President approved, a blank sheet of paper would indeed constitute
'disingenuous evasion'").
6. Legislative History:
a. Uses and Limitations:
The term "legislative history" refers to, and is comprised of, the body
of congressionally generated written documents relating to a bill from
the time of introduction to the time of enactment. As we will discuss,
there are at least two basic ways to use legislative history. One is to
examine the documents that make up the legislative history in order to
determine what they say about the meaning and intent of the
legislation. The other is to examine the evolution of the bill's
language through the legislative process. Changes made to a bill during
its consideration are often instructive in determining its final
meaning.
Legislative history is always relevant in the sense that it is never
"wrong" to look at it. Thus, as previously noted, most cases purporting
to apply the plain meaning rule also review legislative history--if for
no other reason than to establish that nothing in that history
contradicts the court's view of what the plain meaning is. The converse
of the plain meaning rule is that it is legitimate and proper to resort
to legislative history when the meaning of the statutory language is
not plain on its face. Again, we start with an early Supreme Court
passage, this one a famous statement by Chief Justice John Marshall:
"Where the mind labours to discover the design of the legislature, it
seizes every thing from which aid can be derived … ."
United States v. Fisher, 6 U.S. (2 Cranch) 358, 386 (1805). See also
United States v. Donruss Co., 393 U.S. 297, 302-03 (1969); Caminetti v.
United States, 242 U.S. 470, 490 (1917) (legislative history "may aid
the courts in reaching the true meaning of the legislature in cases of
doubtful interpretation").
It is entirely proper to use legislative history to seek guidance on
the purpose of a statute (to see, for example, what kinds of problems
Congress wanted to address), or to confirm the apparent plain meaning,
or to resolve ambiguities. A classic example of the latter is a statute
using the words "science" or "scientific." Either term, without more,
does not tell you whether the statute applies to the social sciences as
well as the physical sciences. E.g., American Kennel Club, Inc. v.
Hoey, 148 F.2d 920, 922 (2nd Cir. 1945); B-181142, Aug. 5, 1974 (GAO
recommended that the term "science and technology" in a bill be defined
to avoid this ambiguity). If the statute does not include a definition,
you would look next to the legislative history.
The use becomes improper when the line is crossed from using
legislative history to resolve things that are not clear in the
statutory language to using it to rewrite the statute. E.g., Shannon v.
United States, 512 U.S. 573, 583 (1994) (declining to give effect to "a
single passage of legislative history that is in no way anchored in the
text of the statute"); Ratzlaf v. United States, 510 U.S. 135, 147-148
(1994) (declining to "resort to legislative history to cloud a
statutory text that is clear"). The Comptroller General put it this
way:
"[A]s a general proposition, there is a distinction to be made between
utilizing legislative history for the purpose of illuminating the
intent underlying language used in a statute and resorting to that
history for the purpose of writing into the law that which is not
there."
55 Comp. Gen. 307, 325 (1975).
A recent Comptroller General decision illustrates this point. An
appropriation rider sponsored by Senator McCain prohibited the Air
Force from using funds to lease certain aircraft "under any contract
entered into under any procurement procedures other than pursuant to"
the Competition in Contracting Act (CICA), Pub. L. No. 98-369, 98 Stat.
1175 (July 18, 1984), classified generally to 41 U.S.C. §§ 251 et seq.
In a floor statement on the bill, Senator McCain said that his language
would require "full and open competition" for the aircraft and preclude
a "sole source" award. However, CICA clearly does not require full and
open competition or prohibit sole-source awards. Therefore, the
Comptroller General upheld the Air Force's award of a sole-source
contract:
"Since section 8147, by its plain terms, only requires compliance with
CICA, and does not provide that competitive procedures must be used for
the Boeing transport/VIP aircraft procurement, we find no basis for
reading such a requirement into the provision."
B-291805, Mar. 26, 2003.
b. Components and Their Relative Weight:
In discussing legislative history, we will first consider use of the
explanatory documents that go into it. These documents fall generally
into three categories: committee reports, floor debates, and hearings.
For probative purposes, they bear an established relationship to one
another. Let us emphasize before proceeding, however, that listing
items of legislative history in an "order of persuasiveness" is merely
a guideline. The evidentiary value of any piece of legislative history
depends on its relationship to other available legislative history and,
most importantly, to the language of the statute.
(1) Committee reports:
The most authoritative single source of legislative history is the
conference report. E.g., United States v. Commonwealth Energy System &
Subsidiary Cos., 235 F.3d 11, 16 (1st Cir. 2000); Resolution Trust
Corp. v. Gallagher, 10 F.3d 416, 421 (7th Cir. 1993); Squillacote v.
United States, 739 F.2d 1208, 1218 (7th Cir. 1984); B-142011, Apr. 30,
1971. See also Bay View, Inc. v. United States, 278 F.3d 1259, 1264
(Fed. Cir. 2001), cert. denied, 537 U.S. 826 (2002). This is especially
true if the statutory language in question was drafted by the
conference committee. The reason the conference report occupies the
highest rung on the ladder is that it must be voted on and adopted by
both houses of Congress and thus is the only legislative history
document that can be said to reflect the will of both houses.
Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 94 (1959)
(Frankfurter, J., dissenting).
Next in sequence are the reports of the legislative committees that
considered the bill and reported it out to their respective houses. The
Supreme Court has consistently been willing to rely on committee
reports when otherwise appropriate. E.g., Demore v. Hyung Joon Kim,
___ U.S. ___, 123 S. Ct. 1708, 1714-1716 (2003); Lorillard Tobacco
Co. v. Reilly, 533 U.S. 525, 543-544 (2001); Duplex Printing Press
Co. v. Deering, 254 U.S. 443, 474 (1921); United States v. St. Paul,
Minneapolis & Manitoba Railway Co., 247 U.S. 310, 318 (1918); Lapina v.
Williams, 232 U.S. 78, 90 (1914).
However, material in committee reports, even a conference report, will
ordinarily not be used to controvert clear statutory language.
Squillacote, 739 F.2d at 1218; Hart v. United States, 585 F.2d 1025
(Ct. Cl. 1978); B-278121, Nov. 7, 1997; B-33911, B-62187, July 15,
1948.
The following excerpt from a colloquy between Senators Armstrong and
Dole demonstrates why committee reports must be used with caution:
"Mr. ARMSTRONG. Mr. President, did members of the Finance Committee
vote on the committee report?
"Mr. DOLE. No.
"Mr. ARMSTRONG. Mr. President, the reason I raise the issue is not
perhaps apparent on the surface… . The report itself is not considered
by the Committee on Finance. It was not subject to amendment by the
Committee on Finance. It is not subject to amendment now by the Senate.
"I only wish the record to reflect that this is not statutory language.
It is not before us. If there were matter within this report which was
disagreed to by the Senator from Colorado or even by a majority of all
Senators, there would be no way for us to change the report. I could
not offer an amendment tonight to amend the committee report.
"… [F]or any jurist, administrator, bureaucrat, tax practitioner, or
others who might chance upon the written record of this proceeding, let
me just make the point that this is not the law, it was not voted on,
it is not subject to amendment, and we should discipline ourselves to
the task of expressing congressional intent in the statute."[Footnote
160]
Notwithstanding the imperfections of the system, in those cases where
there is a need to resort to legislative history, committee reports
remain generally recognized as the best source. In this regard,
Sutherland observes:
"Increasingly, courts have turned to reports of standing committees for
aid in interpretation. This movement has coincided with an improvement
in the preparation of reports by standing committees and their
counsel."
2A Sutherland, § 48:06 at 445.
(2) Floor debates:
Proceeding downward on the ladder, after committee reports come floor
debates. Statements made in the course of floor debates have
traditionally been regarded as suspect in that they are "expressive of
the views and motives of individual members." Duplex Printing Press
Co. v. Deering, 254 U.S. 443, 474 (1921). In addition--
"[I]t is impossible to determine with certainty what construction was
put upon an act by the members of a legislative body that passed it by
resorting to the speeches of individual members thereof. Those who did
not speak may not have agreed with those who did, and those who spoke
might differ from each other… "
United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 318
(1897). Some of the earlier cases, such as Trans-Missouri Freight,
indicate that floor debates should never be taken into consideration.
Under the more modern view, however, they may be considered, the real
question being the weight they should receive in various circumstances.
Floor debates are less authoritative than committee reports. Garcia v.
United States, 469 U.S. 70, 76 (1984); Zuber v. Allen, 396 U.S. 168,
186 (1969); United States v. O'Brien, 391 U.S. 367, 385 (1968); United
States v. United Automobile Workers, 352 U.S. 567, 585 (1957); Bay
View, Inc. v. United States, 278 F.3d 1259, 1264 (Fed. Cir. 2001),
cert. denied, 537 U.S. 826 (2002). It follows that they will not be
regarded as persuasive if they conflict with explicit statements in
more authoritative portions of legislative history such as committee
reports. United States v. Wrightwood Dairy Co., 315 U.S. 110, 125
(1942); B-114829, June 27, 1975. Conversely, they will carry more
weight if they are mutually reenforcing. National Data Corp. &
Subsidiaries v. United States, 50 Fed. Cl. 24, 32, n.14 (2001), aff'd,
291 F.3d 1381 (Fed. Cir.), cert. denied, 537 U.S. 1045 (2002).[Footnote
161]
Debates will carry considerably more weight when they are the only
available legislative history as, for example, in the case of a post-
report floor amendment. Northeast Bancorp, Inc. v. Board of Governors
of the Federal Reserve System, 472 U.S. 159, 169-70 (1985); Preterm,
Inc. v. Dukakis, 591 F.2d 121, 128 (1st Cir.), cert. denied, 441 U.S.
952 (1979). Indeed, the Preterm court suggested that "heated and
lengthy debates" in which "the views expressed were those of a wide
spectrum" of Members might be more valuable in discerning congressional
intent than committee reports, "which represent merely the views of
[the committee's] members and may never have come to the attention of
Congress as a whole." Preterm, 591 F.2d at 133.
The weight to be given statements made in floor debates varies with the
identity of the speaker. Thus, statements by legislators in charge of a
bill, such as the pertinent committee chairperson, have been regarded
as "in the nature of a supplementary report" and receive somewhat more
weight. United States v. St. Paul, Minneapolis & Manitoba Railway Co.,
247 U.S. 310, 318 (1918). See also McCaughn v. Hershey Chocolate Co.,
283 U.S. 488, 493-94 (1931) (statements by Members "who were not in
charge of the bill" were "without weight"); Duplex v. Deering, 254 U.S.
at 474-75; NLRB v. Thompson Products, Inc., 141 F.2d 794, 798 (9th Cir.
1944). The Supreme Court's statement in St. Paul Railway Co. gave rise
to the entirely legitimate practice of "making" legislative history by
preparing questions and answers in advance, to be presented on the
floor and answered by the Member in charge of the bill.[Footnote 162]
Statements by the sponsor of a bill are also entitled to somewhat more
weight. E.g., Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S.
384, 394-95 (1951); Ex Parte Kawato, 317 U.S. 69, 77 (1942); Bedroc
Limited v. United States, 50 F. Supp.2d 1001, 1006 (D. Nev. 1999),
aff'd, 314 F.3d 1080 (9th Cir. 2002). However, they are not
controlling. Chrysler Corp. v. Brown, 441 U.S. 281, 311 (1979).
Statements by the opponents of a bill expressing their "fears and
doubts" generally receive little, if any, weight. Shell Oil Co. v. Iowa
Department of Revenue, 488 U.S. 19, 29 (1988); Schwegmann, 341 U.S. at
394. However, even the statements of opponents may be "relevant and
useful," although not authoritative, in certain circumstances, such as
where the supporters of a bill make no response to opponents'
criticisms. Arizona v. California, 373 U.S. 546, 583 n.85 (1963);
Parlane Sportswear Co. v. Weinberger, 513 F.2d 835, 837 (1st Cir.
1975); Bentley v. Arlee Home Fashions, Inc., 861 F. Supp. 65, 67 (E.D.
Ark. 1994).
Where Senate and House floor debates suggest conflicting
interpretations and there is no more authoritative source of
legislative history available, it is legitimate to give weight to such
factors as which house originated the provision in question and which
house has the more detailed and "clear cut" history. Steiner v.
Mitchell, 350 U.S. 247, 254 (1956); 49 Comp. Gen. 411 (1970).
(3) Hearings:
Hearings occupy the bottom rung on the ladder. They are valuable for
many reasons: they help define the problem Congress is addressing; they
present opposing viewpoints for Congress to consider; and they provide
the opportunity for public participation in the lawmaking process. As
legislative history, however, they are the least persuasive form. The
reason is that they reflect only the personal opinion and motives of
the witness. It is more often than not impossible to attribute these
opinions and motives to anyone in Congress, let alone Congress as a
whole, unless more authoritative forms of legislative history expressly
adopt them. As one court has stated, an isolated excerpt from the
statement of a witness at hearings "is not entitled to consideration in
determining legislative intent." Pacific Insurance Co. v. United
States, 188 F.2d 571, 572 (9th Cir. 1951). "It would indeed be absurd,"
said another court, "to suppose that the testimony of a witness by
itself could be used to interpret an act of Congress." SEC v. Collier,
76 F.2d 939, 941 (2nd Cir. 1935).
There is one significant exception. Testimony by the government agency
that recommended the bill or amendment in question, and which often
helped draft it, is entitled to special weight. Shapiro v. United
States, 335 U.S. 1, 12 n.13 (1948); SEC v. Collier, 76 F.2d at 941.
Also, testimony at hearings can be more valuable as legislative history
if it can be demonstrated that the language of a bill was revised in
direct response to that testimony. Relevant factors include the
presence or absence of statements in more authoritative history linking
the change to the testimony; the proximity in time of the change to the
testimony; and the precise language of the change as compared to what
was offered in the testimony. See Premachandra v. Mitts, 753 F.2d 635,
640-41 (8th Cir. 1985). See also Allen v. State Board of Elections,
393 U.S. 544, 566-68 (1969); SEC v. Collier, 76 F.2d at 940, 941.
c. Post-enactment Statements:
Observers of the often difficult task of discerning congressional
intent occasionally ask, isn't there an easier way to do this? Why
don't you just call the sponsor or the committee and ask what they had
in mind? The answer is that post-enactment statements have virtually no
weight in determining prior congressional intent. The objective of
statutory construction is to ascertain a collective intent, not an
individual's intent or, worse yet, an individual's characterization of
the collective intent. It is impossible to demonstrate that the
substance of a post hoc statement reflects the intent of the pre-
enactment Congress, unless it can be corroborated by pre-enactment
statements, in which event it would be unnecessary. Or, as the Supreme
Court has said:
"Since such statements cannot possibly have informed the vote of the
legislators who earlier enacted the law, there is no more basis for
considering them than there is to conduct postenactment polls of the
original legislators."
Pittston Coal Group v. Sebben, 488 U.S. 105, 118-19 (1988). See also
Gustafson v. Alloyd Co., 513 U.S. 561, 580 (1995) ("If legislative
history is to be considered, it is preferable to consult the documents
prepared by Congress when deliberating."); 2A Sutherland, § 48:04 (to
be considered legislative history, material should be generally
available to legislators and relied on by them in passing the bill).
In expressing their unwillingness to consider post-enactment
statements, courts have not viewed the identity of the speaker
(sponsor, committee, committee chairman, etc.) or the form of the
statement (report, floor statement, letter, affidavit, etc.) to be
relevant. There are numerous cases in which the courts, and
particularly the Supreme Court, have expressed the unwillingness to
give weight to post-enactment statements. See, e.g., Bread Political
Action Committee v. Federal Election Commission, 455 U.S. 577, 582 n.3
(1982); Quern v. Mandley, 436 U.S. 725, 736 n.10 (1978); Regional Rail
Reorganization Act Cases, 419 U.S. 102, 132 (1974); United States v.
Southwestern Cable Co., 392 U.S. 157, 170 (1968); Haynes v. United
States, 390 U.S. 85, 87 n.4 (1968). See also General Instrument
Corp. v. FCC, 213 F.3d 724, 733 (D.C. Cir. 2000) (referring to post-
enactment statements as "legislative future" rather than legislative
history); Cavallo v. Utica-Watertown Health Insurance Co., 3 F. Supp.
2d 223, 230 (N.D. N.Y. 1998).
Courts have not found expressions of intent concerning previously
enacted legislation that are made in committee reports or floor
statements during the consideration of subsequent legislation to be
relevant either. E.g., O'Gilvie v. United States, 519 U.S. 79, 90
(1996) ("the view of a later Congress cannot control the interpretation
of an earlier enacted statute"); Huffman v. Office of Personnel
Management, 263 F.3d 1341, 1354 (Fed. Cir. 2001) (post-enactment
statements made in the legislative history of the 1994 amendments have
no bearing in determining the legislative intent of the drafters of the
1978 and 1989 legislation).
GAO naturally follows the principle that post-enactment statements do
not constitute legislative history. E.g., 72 Comp. Gen. 317 (1993);
54 Comp. Gen. 819, 822 (1975). Likewise, the Office of Legal Counsel
has virtually conceded that presidential signing statements fall within
the realm of post-enactment statements that carry no weight as
legislative history. See 17 Op. Off. Legal Counsel 131 (1993).[Footnote
163]
As with all other principles relating to statutory interpretation, the
rule against consideration of post-enactment statements is not
absolute. Even post-enactment material may be taken into consideration,
despite its very limited value, when there is absolutely nothing else.
See B-169491, June 16, 1980.
d. Development of the Statutory Language:
As previously noted, examination of legislative history includes not
only what the drafters of a bill said about it, but also what they did
to it as the bill progressed through the enactment process. Changes
made to a bill may provide insight into what the final language means.
For example, the deletion from the final version of language that was
in the original bill may suggest an intent to reject what was covered
by that language. See generally 2A Sutherland, § 48:04. The same is
true of language offered in an amendment that was defeated. Id.,
§ 48:18.
The courts consider the evolution of legislative language in different
contexts. See, for example:
* Chickasaw Nation v. United States, 534 U.S. 84, 91 (2001): The
original Senate bill applied both to taxation and to reporting and
withholding. The final version applied only to reporting and
withholding, thereby suggesting that a cross-reference to another law
dealing with taxation was left in by error.
* Landgraf v. USI Film Products, 511 U.S. 244, 255-256 (1994): The
President vetoed a 1990 version of a civil rights bill in part because
he objected to the bill's broad retroactivity provisions. This
indicates that the absence of comparable retroactivity provisions in
the version of the bill enacted in 1991 was not an oversight, but
rather part of a political compromise.
See also Resolution Trust Corp. v. Gallagher, 10 F.3d 416 423 (7th Cir.
1993); Davis v. United States, 46 Fed. Cl. 421 (2000).
As always, care must be exercised when interpreting language changes in
a bill, particularly when the accompanying documents do not discuss
them. Unless the legislative history explains the reason for the
omission or deletion or the reason is clear from the context, drawing
conclusions is inherently speculative. Perhaps Congress did not want
that particular provision; perhaps Congress felt it was already covered
in the same or other legislation. Absent an explanation, the effect of
such an omission or deletion is inconclusive. Fox v. Standard Oil Co.,
294 U.S. 87, 96 (1935); Southern Packaging & Storage Co. v. United
States, 588 F. Supp. 532, 549 (D.S.C. 1984); 63 Comp. Gen. 498, 501-02
(1984); 63 Comp. Gen. 470, 472 (1984).
7. Presumptions and "Clear Statement" Rules:
In a perhaps growing number of specific areas, courts apply extra
scrutiny in construing statutes that they regard as departing from
traditional norms of legislation. In these areas, the courts require a
greater than usual showing that Congress did, in fact, mean to depart
from the norm. Typically, the courts will raise the bar by imposing a
"presumption" that must be overcome in order to establish that Congress
intended the departure. Alternatively but to the same effect, courts
sometimes require a "clear statement" by Congress that it intended the
departure.
Such presumptions and clear statement rules have been described as
"substantive canons" as opposed to "linguistic canons" since, rather
than aiding in the interpretation of statutory language per se, they
are designed to protect "substantive values drawn from the common law,
federal statutes, or the United States Constitution."[Footnote 164] A
few examples are given below.
a. Presumption in Favor of Judicial Review:
There is a "strong presumption" in favor of judicial review of
administrative actions. E.g., Demore v. Hyung Joon Kim, ___ U.S. ___,
123 S. Ct. 1708 (2003); Immigration & Naturalization Service v. St.
Cyr, 533 U.S. 289 (2001); McNary v. Haitian Refugee Center, Inc.,
498 U.S. 479 (1991); Bowen v. Michigan Academy of Family Physicians,
476 U.S. 667 (1986). In Bowen, the Court stated the presumption as
follows:
"We begin with the strong presumption that Congress intends judicial
review of administrative action. From the beginning, 'our cases [have
established] that judicial review of a final agency action by an
aggrieved person will not be cut off unless there is persuasive reason
to believe that such was the purpose of Congress.'"
476 U.S. at 670, quoting Abbott Laboratories v. Gardner, 387 U.S. 136,
140 (1967).
The Court in Bowen went on to note that the presumption of
reviewability can be rebutted:
"Subject to constitutional constraints, Congress can, of course, make
exceptions to the historic practice whereby courts review agency
action. The presumption of judicial review is, after all, a
presumption, and like all presumptions used in interpreting statutes,
may be overcome by, inter alia, specific language or specific
legislative history that is a reliable indicator of congressional
intent or a specific congressional intent to preclude judicial review
that is fairly discernable in the detail of the legislative scheme."
Id. at 672-673 (quotation marks omitted).
Later decisions indicate that a particularly strong showing is required
to establish a congressional intent to preclude judicial review of
constitutional claims through habeas corpus petitions. See Demore and
St. Cyr, supra. Thus, the Court observed in St. Cyr, 533 U.S. at 299:
"Implications from statutory text or legislative history are not
sufficient to repeal habeas jurisdiction; instead, Congress must
articulate specific and unambiguous statutory directives to effect
repeal."
Finally, it is important to note one area in which the usual
presumption in favor of judicial review becomes a presumption against
judicial review: exercises of discretion by the President. In
Franklin v. Massachusetts, 505 U.S. 788 (1992), the Supreme Court held
that the President is not an "agency" for purposes of the
Administrative Procedure Act (APA); therefore, presidential actions are
not subject to judicial review under the APA. The Court recognized that
the general definition of "agency" in the APA (5 U.S.C. § 551(1))
covered "each authority of the Government of the United States" and
that the President was not explicitly excluded from this definition.
However, the Court held:
"Out of respect for the separation of powers and the unique
constitutional position of the President, we find that textual silence
is not enough to subject the President to the provisions of the APA. We
would require an express statement by Congress before assuming it
intended the President's performance of his statutory duties to be
reviewed for abuse of discretion."
505 U.S. at 800-801 (emphasis supplied).
Several subsequent cases have followed and extended Franklin. See
Dalton v. Specter, 511 U.S. 462 (1994); Tulare County v. Bush, 185 F.
Supp. 2d 18 (D.D.C. 2001), aff'd, 306 F.3d 1138 (D.C. Cir. 2002), reh'g
en banc denied, 317 F.3d 227 (D.C. Cir.), cert. denied, ____ U.S. ___,
71 U.S.L.Week 3724 (Oct. 6, 2003).[Footnote 165]
b. Presumption against Retroactivity:
As noted previously, statutes and amendments to statutes generally are
construed to apply prospectively only (that is, from their date of
enactment or other effective date if one is specified). However, while
Congress generally has the power to enact retroactive statutes,
[Footnote 166] the Supreme Court has held:
"Retroactivity is not favored in the law. Thus, congressional
enactments … will not be construed to have retroactive effect unless
their language requires this result."
Bowen v. Georgetown University Hospital, 488 U.S. 204, 208 (1988).
The Court reaffirmed the presumption against retroactivity of statutes
in several recent decisions. E.g., Immigration & Naturalization
Service v. St. Cyr, 533 U.S. 289 (2001); Martin v. Hadix, 527 U.S. 343
(1999); Lindh v. Murphy, 521 U.S. 320 (1997); Landgraf v. USI Film
Products, 511 U.S. 244 (1994). In Landgraf, the Court elaborated on the
policies supporting the presumption against retroactivity:
"Because it accords with widely held intuitions about how statutes
ordinarily operate, a presumption against retroactivity will generally
coincide with legislative and public expectations. Requiring clear
intent assures that Congress itself has affirmatively considered the
potential unfairness of retroactive application and determined that it
is an acceptable price to pay for the countervailing benefits. Such a
requirement allocates to Congress responsibility for fundamental policy
judgments concerning the proper temporal reach of statutes, and has the
additional virtue of giving legislators a predictable background rule
against which to legislate."
511 U.S. at 272-273.
Landgraf also resolved the "apparent tension" between the presumption
against retroactivity in its Bowen line of decisions and another
decision, Bradley v. Richmond School Board, 416 U.S. 696 (1974), which
held that when a law changes subsequent to the judgment of a lower
court, an appellate court must apply the new law, that is, the law in
effect when it renders its decision, unless applying the new law would
produce "manifest injustice" or unless there is statutory direction or
legislative history to the contrary.[Footnote 167] It affirmed that the
presumption embraces statutes that have "genuinely" retroactive effect,
by which it meant statutes that apply new standards "affecting
substantive rights, liabilities, or duties" to conduct that occurred
prior to their enactment. 511 U.S. at 277-278.[Footnote 168]
By way of summary, the Supreme Court in Landgraf set forth the
following test for determining whether the presumption against
retroactivity applies:
"When a case implicates a federal statute enacted after the events in
suit, the court's first task is to determine whether Congress has
expressly prescribed the statute's proper reach. If Congress has done
so, of course, there is no need to resort to judicial default rules.
When, however, the statute contains no such express command, the court
must determine whether the new statute would have retroactive effect,
i.e., whether it would impair rights a party possessed when he acted,
increase a party's liability for past conduct, or impose new duties
with respect to transactions already completed. If the statute would
operate retroactively, our traditional presumption teaches that it does
not govern absent clear congressional intent favoring such a result."
Id. at 280.
The Comptroller General also applies the traditional rule that statutes
are not construed to apply retroactively unless a retroactive
construction is required by their express language or by necessary
implication or unless it is demonstrated that this is what Congress
clearly intended. 64 Comp. Gen. 493 (1985); 38 Comp. Gen. 103 (1958);
34 Comp. Gen. 404 (1955); 28 Comp. Gen. 162 (1948); 16 Comp. Gen. 1051
(1937); 7 Comp. Gen. 266 (1927); 5 Comp. Gen. 381 (1925); 2 Comp.
Gen. 267 (1922); 26 Comp. Dec. 40 (1919); B-205180, Nov. 27, 1981;
B-191190, Feb. 13, 1980; B-162208, Aug. 28, 1967.
This rule was recently applied to a statute (Pub. L. No. 107-103,
§ 605, 115 Stat. 976, 1000 (Dec. 27, 2001)) that authorized the United
States Court of Appeals for Veterans Claims to reimburse its employees
for a portion of their professional liability insurance payments. Since
nothing in the statute or its legislative history indicated that the
statute was to have retroactive effect, the Comptroller General held
that the statute did not authorize reimbursement for insurance payments
made prior to December 27, 2001. B-300866, May 30, 2003.
Another line of cases has dealt with a different aspect of
retroactivity. GAO is reluctant to construe a statute to retroactively
abolish or diminish rights that had accrued before its enactment unless
this was clearly the legislative intent. For example, the Tax Reduction
Act of 1975 authorized $50 "special payments" to certain taxpayers.
Legislation in 1977 abolished the special payments as of its date of
enactment. GAO held in B-190751, Apr. 11, 1978, that payments could be
made where payment vouchers were validly issued before the cutoff date
but lost in the mail. Similarly, payments could be made to eligible
claimants whose claims had been erroneously denied before the cutoff
but were later found valid. B-190751, Sept. 26, 1980.
c. Federalism Presumptions:
Under the Constitution's Supremacy Clause (U.S. Const. art. VI, cl. 2),
Congress, when acting within the scope of its own assigned
constitutional authority, can preempt state and local laws. As the
Court noted in Wisconsin Public Intervenor v. Mortier, 501 U.S. 597,
604 (1991), "[t]he ways in which federal law may pre-empt state law are
well established and in the first instance turn on congressional
intent." Specifically, Congress may preempt either by an explicit
statutory provision or by establishing a federal statutory scheme that
is so pervasive as to leave no room for supplementation by the states.
In either event, however, the Court stated:
"When considering pre-emption, 'we start with the assumption that the
historic police powers of the States were not to be superseded by the
Federal Act unless that was the clear and manifest purpose of
Congress.'"
501 U.S. at 605, quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218,
230 (1947).
The Court continues to apply the "clear and manifest purpose" test to
preemption cases. See City of Columbus v. Ours Garage and Wrecker
Service, Inc., 536 U.S. 424 (2002). In City of Columbus, the Court
construed a statute that included an explicit preemption provision; the
issue concerned its scope. Acknowledging that the language could be
read to preempt safety regulation by local governments, the Court
refused to find preemption:
"[R]eading [the statute's] set of exceptions in combination, and with a
view to the basic tenets of our federal system pivotal in Mortier, we
conclude that the statute does not provide the requisite 'clear and
manifest indication that Congress sought to supplant local
authority.'"
536 U.S. at 434.
There also is a presumption against construing federal statutes to
abrogate the immunity from suit that states enjoy under the Eleventh
Amendment to the United States Constitution. Congress must make its
intent to abrogate such immunity "unmistakably clear in the language of
the statute." See Nevada Department of Human Resources v. Hibbs, ___
U.S. ___, 123 S. Ct. 1972, 1976 (2003); Hoffman v. Connecticut
Department of Income Maintenance, 492 U.S. 96, 101 (1989) and cases
cited. The necessary unmistakable intent to preempt was supplied by the
express language of the statute in Hibbs, but such intent was found
lacking in Hoffman.
Finally, the Court fashioned a "plain statement" rule based on
federalism principles in considering whether the federal Age
Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621 et seq.,
superseded a state constitutional provision for the mandatory
retirement of judges at age 70. Gregory v. Ashcroft, 501 U.S. 452
(1991). The Act's definition of "employer" included state and local
governments;[Footnote 169] however, its definition of "employee"
excluded an "appointee at the policymaking level." The Court held that
this exclusion covered judges and, therefore, they were not subject to
the Act. Recognizing that the Act's language was at best ambiguous on
this point, the Court reasoned:
"'[A]ppointee at the policymaking level,' particularly in the context
of the other exceptions that surround it, is an odd way for Congress to
exclude judges; a plain statement that judges are not 'employees' would
seem the most efficient phrasing. But in this case we are not looking
for a plain statement that judges are excluded. We will not read the
ADEA to cover state judges unless Congress has made it clear that
judges are included."
501 U.S. at 467 (emphasis in original).
d. Presumption against Waiver of Sovereign Immunity:
There is a strong presumption against waiver of the federal
government's immunity from suit. The courts have repeatedly held that
waivers of sovereign immunity must be "unequivocally expressed." E.g.,
United States v. Nordic Village, Inc., 503 U.S. 30 (1992); Shoshone
Indian Tribe of the Wind River Reservation, Wyoming v. United States,
51 Fed. Cl. 60 (2001) and cases cited. Legislative history does not
help for this purpose. The relevant statutory language in Nordic
Village was ambiguous and could have been read, evidently with the
support of the legislative history, to impose monetary liability on the
United States. The Court rejected such a reading, applying instead the
same approach as described above in its federalism jurisprudence:
"[L]egislative history has no bearing on the ambiguity point. As in the
Eleventh Amendment context, see Hoffman, supra, … the 'unequivocal
expression' of elimination of sovereign immunity that we insist upon is
an expression in statutory text. If clarity does not exist there, it
cannot be supplied by a committee report."
503 U.S. at 37.
[End of section]
Chapter 3: Agency Regulations and Administrative Discretion:
A. Agency Regulations:
1. The Administrative Procedure Act:
a. The Informal Rulemaking Process:
b. Informal Rulemaking: When Required:
c. Additional Requirements for Rulemaking:
2. Regulations May Not Exceed Statutory Authority:
3. "Force and Effect of Law":
4. Waiver of Regulations:
5. Amendment of Regulations:
6. Retroactivity:
B. Agency Administrative Interpretations:
1. Interpretation of Statutes:
2. Interpretation of Agency's Own Regulations:
C. Administrative Discretion:
1. Introduction:
2. Discretion Is Not Unlimited:
3. Failure or Refusal to Exercise Discretion:
4. Regulations May Limit Discretion:
5. Insufficient Funds:
Chapter 3: Agency Regulations and Administrative Discretion:
This chapter deals with certain topics in administrative law that,
strictly speaking, are not "appropriations law" or "fiscal law."
Nevertheless, the material covered is so pervasive in all areas of
federal law, appropriations law included, that a brief treatment in
this publication is warranted. We caution that it is not our purpose to
present an administrative law treatise, but rather to highlight some
important "crosscutting" principles that appear in various contexts in
many other chapters. The case citations should be viewed as an
illustrative sampling.
A. Agency Regulations:
As a conceptual starting point, agency regulations fall into three
broad categories. First, every agency head has the authority, largely
inherent but also authorized generally by 5 U.S.C. § 301,[Footnote 170]
to issue regulations to govern the internal affairs of the agency.
Regulations in this category may include such subjects as conflicts of
interest, employee travel, and delegations to organizational
components. This statute is nothing more than a grant of authority for
what are called "housekeeping" regulations. Chrysler Corp. v. Brown,
441 U.S. 281, 309 (1979); Smith v. Cromer, 159 F.3d 875, 878 (4th Cir.
1998), cert. denied, 528 U.S. 826 (1999); NLRB v. Capitol Fish Co.,
294 F.2d 868, 875 (5th Cir. 1961). It confers "administrative power
only." United States v. George, 228 U.S. 14, 20 (1913); 54 Comp. Gen.
624, 626 (1975). Thus, the statute merely grants agencies authority to
issue regulations that govern their own internal affairs; it does not
authorize rulemaking that creates substantive legal rights. Schism v.
United States, 316 F.3d 1259, 1278-1284 (Fed. Cir. 2002), cert. denied,
___ U.S. ___, 123 S. Ct. 2246 (2003).
Second, agencies also have inherent authority to issue procedural rules
to govern their internal processes as well as "interpretive" rules that
express the agency's policy positions or views in a way that does not
bind outside parties or the agency itself. See Richard J. Pierce, Jr.,
Administrative Law Treatise § 6.2 at 306 (4th ed. 2000), citing
Skidmore v. Swift & Co., 323 U.S. 134 (1944) and other cases.
The third category consists of so-called "legislative" or "statutory"
regulations. Regulations in this category, which can only be issued
pursuant to a specific statutory grant of authority, create rights and
obligations and address other substantive matters in ways that have the
force and effect of law. [Footnote 171] In effect, these regulations
constitute the exercise of authority delegated to the agency by law to
further "legislate" by fleshing out the underlying statute that the
agency is charged with implementing. As discussed in section B of this
chapter, the scope and specificity of such a congressional delegation
of legislative authority to an agency will often determine how much
deference the courts will accord to the agency's regulations and to the
agency's interpretation of the laws it implements.
It is not unusual for Congress to grant agencies statutory authority to
issue such regulations. When Congress enacts a new program statute, it
typically does not prescribe every detail of the statute's
implementation but leaves it to the administering agency to "fill in
the gaps" by regulation. Chevron, Inc. v. Natural Resources Defense
Council, 467 U.S. 837, 843-844 (1984); Morton v. Ruiz, 415 U.S. 199,
231 (1974). There are many reasons for this. It is often not possible
to foresee in advance every detail that ought to be covered. In other
cases, there may be a need for flexibility in implementation that is
simply not practical to detail in the legislation. In many cases,
Congress prefers to legislate a policy in terms of broad standards,
leaving the details of implementation to the agency with program
expertise. Finally, it is much easier for an agency to amend a
regulation to reflect changing circumstances than it would be for
Congress to have to go back and amend the basic legislation. Thus,
agency legislative regulations have become an increasingly vital
element of federal law.
1. The Administrative Procedure Act:
The key statute governing the issuance of agency regulations is the
Administrative Procedure Act (APA), originally enacted in 1946 and now
codified in Title 5 of the United States Code, primarily sections 551-
559 (administrative procedure) and 701-706 (judicial review).[Footnote
172] The APA deals with two broad categories of administrative action:
rulemaking and adjudication. Our concern here is solely with the
rulemaking portions.
a. The Informal Rulemaking Process:
The APA uses the term "rule" rather than "regulation." In the context
of the APA, the issuance of a regulation is called "rulemaking." The
term "rule" is given a very broad definition in 5 U.S.C. § 551(4):
"'[R]ule' means the whole or a part of an agency statement of general
or particular applicability and future effect designed to implement,
interpret, or prescribe law or policy or describing the organization,
procedure, or practice requirements of an agency …."
It is apparent from this definition that a great many agency issuances,
regardless of what the agency chooses to call them, are rules.
The APA prescribes two types of rulemaking, which have come to be known
as "formal" and "informal." Formal rulemaking under the APA involves a
trial-type hearing (witnesses, depositions, transcript, etc.) and is
governed by 5 U.S.C. §§ 556 and 557. This more rigorous, and today
relatively uncommon, procedure is required only where the governing
statute requires that the proceeding be "on the record." 5 U.S.C.
§ 553(c); United States v. Florida East Coast Railway Co., 410 U.S. 224
(1973).
Most agency regulations are the product of informal rulemaking--the
notice and comment procedures prescribed by 5 U.S.C. § 553. The first
step in this process is the publication of a proposed regulation in the
Federal Register. The Federal Register is a daily publication printed
and distributed by the Government Printing Office. 44 U.S.C.
§ 1504.[Footnote 173] Publication of a document in the Federal Register
constitutes legal notice of its contents. 44 U.S.C. § 1507; Federal
Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947); 63 Comp. Gen. 293
(1984); B-242329.2, Mar. 12, 1991.[Footnote 174]
The agency then allows a period of time during which interested parties
may participate in the process, usually by submitting written comments,
although oral presentations are sometimes permitted. Next, the agency
considers and evaluates the comments submitted, and determines the
content of the final regulation, which is also published in the Federal
Register, generally at least 30 days prior to its effective date.
5 U.S.C. §§ 553(b)-(d).
The agency is also required to publish a "concise general statement" of
the basis and purpose of the regulation. 5 U.S.C. § 553(c). This is
commonly known as the preamble, the substance of which appears in the
Federal Register under the heading "Supplementary Information."
The preamble is extremely important since it is the primary means for a
reviewing court to evaluate compliance with section 553. The courts
have cautioned not to read the terms "concise" and "general" too
literally. Automotive Parts & Accessories Ass'n v. Boyd, 407 F.2d 330,
338 (D.C. Cir. 1968). Rather, the preamble must be adequate--
"to respond in a reasoned manner to the comments received, to explain
how the agency resolved any significant problems raised by the
comments, and to show how that resolution led the agency to the
ultimate rule."
Rodway v. Department of Agriculture, 514 F.2d 809, 817 (D.C. Cir.
1975). See also Home Box Office, Inc. v. FCC, 567 F.2d 9, 36 (D.C.
Cir.), cert. denied, 434 U.S. 829 (1977); Automotive Parts, 407 F.2d at
338. As one court stated, "the agencies do not have quite the
prerogative of obscurantism reserved to the legislatures." United
States v. Nova Scotia Food Products Corp., 568 F.2d 240, 252 (2nd Cir.
1977). The preamble does not have to address every item included in the
comments. Id.; Automotive Parts, 407 F.2d at 338. However, Professor
Pierce cautions that, over time, the courts have come to focus
increasing scrutiny on the preamble as the venue for agencies to
demonstrate that their regulations are not "arbitrary and capricious":
"No court today would uphold a major agency rule that incorporates only
a 'concise and general statement of basis and purpose.' To have any
reasonable prospect of obtaining judicial affirmance of a major rule,
an agency must set forth the basis and purpose of the rule in a
detailed statement, often several hundred pages long, in which the
agency refers to the evidentiary basis for all factual predicates,
explains its method of reasoning from factual predicates to the
expected effects of the rule, relates the factual predicates and
expected effects of the rule to each of the statutory goals or purposes
the agency is required to further or to consider, responds to all major
criticisms contained in the comments on its proposed rule, and explains
why it has rejected at least some of the most plausible alternatives to
the rule it has adopted. Failure to fulfill one of these judicially
prescribed requirements of a 'concise general statement of basis and
purpose' has become the most frequent basis for reversal of agency
rules."
Richard J. Pierce, Jr., Administrative Law Treatise, § 7.4 at 442
(4th ed. 2000) (citations omitted).
As discussed later in this section, Congress and the President also
have increasingly imposed requirements governing the development of
agency regulations that must be addressed in the preamble.
The preamble normally accompanies publication of the final regulation,
although this is not required as long as it is sufficiently close in
time to make clear that it is in fact contemporaneous and not a "post
hoc rationalization." Action on Smoking & Health v. Civil Aeronautics
Board, 713 F.2d 795, 799 (D.C. Cir. 1983); Tabor v. Joint Board for
Enrollment of Actuaries, 566 F.2d 705, 711 n. 14 (D.C. Cir. 1977).
Apart from questions of judicial review, the preamble serves another
highly important function. It provides, as its title in the Federal
Register indicates, useful supplementary information. Viewed from this
perspective, the preamble serves much the same purpose with respect to
a regulation as legislative history does with respect to a statute.
[Footnote 175]
Codifications of agency regulations are issued in bound and permanent
form in the Code of Federal Regulations. The "C.F.R." is supplemented
or republished at least once a year. 44 U.S.C. § 1510. Unfortunately,
with rare exceptions, the preamble does not accompany the regulations
into the C.F.R., but is found only in the original Federal Register
issuance. The C.F.R. does, however, give the appropriate Federal
Register citation. Regulations on the use of the Federal Register and
the C.F.R. are found in 1 C.F.R. ch. I.
Agencies may supplement the APA procedures, but are not required to
unless directed by statute. The Supreme Court has admonished that a
court should:
"not stray beyond the judicial province to explore the procedural
format or to impose upon the agency its own notion of which procedures
are 'best' or most likely to further some vague, undefined public
good."
Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense
Council, Inc., 435 U.S. 519, 549 (1978). The Court repeated its caution
the following year in Chrysler Corp. v. Brown, 441 U.S. 281, 312-13
(1979).
The Court of Appeals for the District of Columbia Circuit, in Home Box
Office, Inc. v. FCC, provided the following summary of the APA's
informal rulemaking requirements:
"The APA sets out three procedural requirements: notice of the proposed
rulemaking, an opportunity for interested persons to comment, and 'a
concise general statement of (the) basis and purpose' of the rules
ultimately adopted…. As interpreted by recent decisions of this court,
these procedural requirements are intended to assist judicial review as
well as to provide fair treatment for persons affected by a rule…. To
this end there must be an exchange of views, information and criticism
between interested persons and the agency…. Consequently, the notice
required by the APA, or information subsequently supplied to the
public, must disclose in detail the thinking that has animated the form
of a proposed rule and the data upon which that rule is based….
Moreover, a dialogue is a two-way street: the opportunity to comment is
meaningless unless the agency responds to significant points raised by
the public…."
567 F.2d at 35-36 (emphasis added).
In the Negotiated Rulemaking Act of 1990, Pub. L. No. 101-648,
104 Stat. 4969 (Nov. 29, 1990), codified at 5 U.S.C. §§ 561-570a,
Congress enacted a framework for agencies to consult with interested
parties in the development of regulations.[Footnote 176] Under this
legislation, a proposed regulation is drafted by a committee composed
of representatives of the agency and other interested parties. An
agency may use this procedure if it determines, among other things,
that there are a limited number of identifiable interests that will be
significantly affected by the regulation, and that there is a
reasonable likelihood that a committee can reach a consensus without
unreasonably delaying the rulemaking process. Once the proposed
regulation is developed in this manner, it remains subject to the APA's
notice and comment requirements. The negotiated rulemaking procedure is
optional; an agency's decision to use or not use it is not subject to
judicial review. Furthermore, use of the procedure does not entitle the
regulation to any greater deference than it would otherwise receive. 5
U.S.C. § 570; see also Center for Law & Education v. United States
Department of Education, 209 F. Supp. 2d 102, 106-107 (D.D.C. 2002).
Whatever form they take, consultations with interested parties in the
development of regulations cannot undercut the notice and comment
procedures of the APA. The Comptroller General has found that an
agreement to issue, with specified content, a regulation otherwise
subject to the APA not only violates the APA but is invalid as contrary
to public policy. B-212529, May 31, 1984. In effect, a promise to issue
a regulation with specified content amounts to a promise to disregard
any adverse public comments received, clearly a violation of the APA.
Likewise, in USA Group Loan Services, Inc. v. Riley, 82 F.3d 708, 714
(7th Cir. 1996), the court held that agreements reached between
interested parties and agency officials through consultations pursuant
to the Negotiated Rulemaking Act are not legally binding, since to
enforce them would "extinguish notice and comment rulemaking."
b. Informal Rulemaking: When Required:
A great many things are required by one statute or another to be
published in the Federal Register. One example is "substantive rules of
general applicability adopted as authorized by law, and statements of
general policy or interpretations of general applicability formulated
and adopted by the agency." 5 U.S.C. § 552(a)(1)(D). Privacy Act
notices are another example. 5 U.S.C. § 552a(e)(4). Other items
required or authorized to be published in the Federal Register are
specified in 44 U.S.C. § 1505. However, the mere requirement to publish
something in the Federal Register is not, by itself, a requirement to
use APA procedures.
As a starting point, anything that falls within the definition of a
"rule" in 5 U.S.C. § 551(4) and for which formal rulemaking is not
required, is subject to the informal rulemaking procedures of 5 U.S.C.
§ 553 unless exempt. This statement is not as encompassing as it may
seem, since section 553 itself provides several very significant
exemptions. These exemptions, according to a line of decisions by the
U.S. Court of Appeals for the District of Columbia Circuit, will be
"narrowly construed and only reluctantly countenanced." Utility Solid
Waste Activities Group v. EPA, 236 F.3d 749, 754 (D.C. Cir. 2001);
Asiana Airlines v. Federal Aviation Administration, 134 F.3d 393, 396-
397 (D.C. Cir. 1998); Tennessee Gas Pipeline Co. v. Federal Energy
Regulatory Commission, 969 F.2d 1141, 1144 (D.C. Cir. 1992); New Jersey
Department of Environmental Protection v. EPA, 626 F.2d 1038, 1045
(D.C. Cir. 1980).[Footnote 177] Be that as it may, they appear in the
statute and cannot be disregarded. For example, section 553 does not
apply to matters "relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts." 5 U.S.C.
§ 553(a)(2).
Several agencies have published in the Federal Register a statement
committing themselves to follow APA procedures with respect to matters
that would otherwise be exempt from APA rulemaking. To the extent an
agency has done this, it has voluntarily waived the benefit of the
exemption and must follow the APA. E.g., Flagstaff Medical Center,
Inc. v. Sullivan, 962 F.2d 879, 886 (9th Cir. 1992); Alcaraz v.
Block, 746 F.2d 593 (9th Cir. 1984); Humana of South Carolina, Inc. v.
Califano, 590 F.2d 1070 (D.C. Cir. 1978); Rodway v. Department of
Agriculture, 514 F.2d 809 (D.C. Cir. 1975); Abbs v. Sullivan, 756 F.
Supp. 1172, 1188 (W.D. Wis. 1990); Herron v. Heckler, 576 F. Supp. 218
(N.D. Cal. 1983); Ngou v. Schweiker, 535 F. Supp. 1214 (D. D.C. 1982);
B-202568, Sept. 11, 1981.[Footnote 178] If an agency has not waived its
exemption with respect to the specified matters, it need not follow the
APA. California v. EPA, 689 F.2d 217 (D.C. Cir. 1982); City of Grand
Rapids v. Richardson, 429 F. Supp. 1087 (W.D. Mich. 1977).[Footnote
179]
Another significant exemption, found in 5 U.S.C. § 553(b), is for
"interpretative rules, general statements of policy, or rules of agency
organization, procedure, or practice." Again, much litigation has
ensued over whether a given regulation is "substantive" or
"legislative," in which event section 553 applies, or whether it is
"interpretative," in which event it does not. See, e.g., ANR Pipeline
Co. v. Federal Energy Regulatory Commission, 205 F.3d 403 (D.C. Cir.
2000); Caruso v. Blockbuster-Sony Music Entertainment Centre at the
Waterfront, 193 F.3d 730 (3rd Cir. 1999); Paralyzed Veterans of
America v. District of Columbia Arena L.P., 117 F.3d 579 (D.C. Cir.
1997), cert. denied, 523 U.S. 1003 (1998); Hoctor v. Department of
Agriculture, 82 F.3d 165 (7th Cir. 1996); Health Insurance Association
of America, Inc. v. Shalala, 23 F.3d 412 (D.C. Cir. 1994), cert.
denied, 513 U.S. 1147 (1995); American Mining Congress v. Mine Safety &
Health Administration, 995 F.2d 1106 (D.C. Cir. 1993).
The agency's own characterization of a regulation is the "starting
point" for the analysis. Professionals & Patients for Customized
Care v. Shalala, 56 F.3d 592, 596 (5th Cir. 1995); Metropolitan School
District of Wayne Township, Marion County, Indiana v. Davila, 969 F.2d
485, 489 (7th Cir. 1992), cert. denied, 507 U.S. 949 (1993). However,
the agency's characterization, while relevant, is not controlling.
E.g., Davila; General Motors Corp. v. Ruckelshaus, 742 F.2d 1561 (D.C.
Cir. 1984), cert. denied, 471 U.S. 1074 (1985); American Frozen Food
Institute, Inc. v. United States, 855 F. Supp. 388, 396 (C.I.T. 1994)
("The court must focus on the intended legal effect of the rule
adopted, not the stated intent of the agency, to determine whether a
rule is legislative or interpretive.").
The case law is not entirely consistent in the criteria used to
determine whether a regulation is legislative or interpretive.
Professor Pierce points to the District of Columbia Circuit's decision
in American Mining Congress, cited above, as an exemplary opinion that
has been followed in several other circuits. Based largely on American
Mining Congress, he recommends a test consisting of the following four
questions:
"(1) whether in the absence of the rule there would not be an adequate
legislative basis for enforcement action or other agency action to
confer benefits or ensure the performance of duties;
(2) whether the legislative rule the agency is claiming to interpret is
too vague or open-ended to support the interpretative rule;
(3) whether the agency had explicitly invoked its legislative
authority; or:
(4) whether the rule effectively amends a prior legislative rule."
If the answer to any of these questions is yes, the rule is legislative
rather than interpretative. Richard J. Pierce, Administrative Law
Treatise, § 6.4 at 345 (4th ed. 2000).[Footnote 180]
While contests over the applicability of 5 U.S.C. § 553 frequently
center on whether a regulation is legislative or interpretive, they can
arise in many other contexts as well. Agency issuances may be called
many things besides regulations: manuals, handbooks, instruction
memoranda, etc. For purposes of determining applicability of the APA,
the test is the substance and effect of the document rather than what
the agency chooses to call it. E.g., Guardian Federal Savings & Loan
Ass'n v. Federal Savings & Loan Insurance Corp., 589 F.2d 658, 666
(D.C. Cir. 1978); Herron v. Heckler, 576 F. Supp. at 230; Saint Francis
Memorial Hospital v. Weinberger, 413 F. Supp. 323, 327 (N.D. Cal.
1976). As we will discuss later in this section and in section B of
this chapter, a functional analysis of the nature of these varied
agency issuances not only dictates whether APA rulemaking procedures
apply to them, but also determines their legal effects on the agency
and outside parties as well as the extent to which courts will defer to
any statutory interpretations that they embody.
A regulation that is subject to 5 U.S.C. § 553, but which is issued in
violation of the required procedures (including a nonexistent or
inadequate preamble), stands an excellent chance of being invalidated.
If so, the court may simply declare the regulation invalid, or "void."
E.g., Chemical Manufacturers Ass'n v. EPA, 28 F.3d 1259 (D.C. Cir.
1994); W.C. v. Bowen, 807 F.2d 1502 (9th Cir. 1987); National
Nutritional Foods Ass'n v. Mathews, 557 F.2d 325, 338 (2nd Cir. 1977).
In the alternative, the court may "vacate" the regulation and remand it
to the agency for further proceedings in compliance with the APA, the
extent of the further proceedings depending on the degree of
noncompliance. E.g., Tabor v. Joint Board for Enrollment of Actuaries,
566 F.2d 705, 712 (D.C. Cir. 1977); Rodway v. Department of
Agriculture, 514 F.2d 809, 817 (D.C. Cir. 1975); Detroit Edison Co. v.
EPA, 496 F.2d 244, 249 (6th Cir. 1974).
Increasingly, however, courts decline to vacate defective regulations
on remand if they conclude that the agency can fairly readily correct
the deficiency or if other considerations militate against nullifying
the regulation. E.g., Idaho Farm Bureau Federation v. Babbitt, 58 F.3d
1392 (9th Cir. 1995); American Medical Ass'n v. Reno, 57 F.3d 1129
(D.C. Cir. 1995); Allied Signal, Inc. v. United States Nuclear
Regulatory Commission, 988 F.2d 146 (D.C. Cir. 1993); Independent
United States Tanker Owners Committee v. Dole, 809 F.2d 847 (D.C.
Cir.), cert. denied, 484 U.S. 819 (1987).[Footnote 181] Finally, a
court may sever the invalid portions of a regulation on remand and
leave intact the portions of the regulation that are not affected by
the reversal. E.g., Davis County Solid Waste Management v. EPA,
108 F.3d 1454 (D.C. Cir. 1997).
c. Additional Requirements for Rulemaking:
Within the context of APA rulemaking, Congress and the President have
imposed a series of requirements that, in effect, regulate the
regulators. For the most part, these requirements do not limit or
otherwise affect the application of the APA.[Footnote 182] Rather, they
seek primarily to ensure that certain consequences of agency
regulations--such as costs, benefits, and other impacts--are fully
considered and explained as part of the normal APA rulemaking process.
The following are examples of some of these statutory requirements:
* The National Environmental Policy Act, 42 U.S.C. §§ 4321 et seq.,
requires agencies to prepare an environmental impact statement for
"major Federal actions [including regulations] significantly affecting
the quality of the human environment..."
* The Paperwork Reduction Act, 44 U.S.C. §§ 3501 et seq., generally
requires agencies to provide 60 days advance notice and obtain approval
from the Office of Management and Budget's Office of Information and
Regulatory Affairs for regulations that involve the collection of
information (including recordkeeping requirements) from 10 or more
nonfederal persons. The Act requires the agency to demonstrate that the
collection of information is needed for performance of the agency's
functions and is not unnecessarily duplicative or burdensome.
* The Regulatory Flexibility Act, 5 U.S.C. §§ 601-612, requires
agencies to conduct a "regulatory flexibility analysis" of proposed
regulations that would have a significant economic impact on a
substantial number of "small entities," for example, small businesses.
The analysis must consider, among other things, alternative ways of
accomplishing the objective of the regulation in a way that would
minimize its impact on small entities.[Footnote 183]
* Title II of the Unfunded Mandates Reform Act, 2 U.S.C. §§ 1531-1538,
generally requires agencies to prepare a written assessment of the
impact of a regulation containing a federal mandate that may impose
costs in excess of $100 million per year on state, local, or tribal
governments, or on the private sector.
* The so-called "Congressional Review Act" (CRA), 5 U.S.C. §§ 801-808,
requires agencies to submit a report on each final rule to Congress and
to the Comptroller General before the rule takes effect.[Footnote 184]
The report is to include: a copy of the rule; a copy of any cost-
benefit analysis of the rule; an explanation of any actions the agency
has taken with respect to the Regulatory Flexibility Act and the
Unfunded Mandates Reform Act, discussed above; and any actions the
agency has taken with respect to other relevant statutes or relevant
executive orders (some of which are mentioned hereafter). The Act
defines "major rules" as, among other things, those having an annual
economic impact of $100 million or more. 5 U.S.C. § 804(2). In the case
of major rules, the agency generally must delay the effective date of
the rule for 60 days pending congressional review. The Comptroller
General must report to Congress on the agency's compliance with
applicable procedural requirements with respect to each major rule. The
CRA further provides expedited procedures whereby Congress may reject a
rule submitted to it by enactment of a joint resolution of
disapproval.[Footnote 185]
Like Congress, Presidents have also imposed additional requirements
governing various aspects of the rulemaking process, primarily by the
use of executive orders. The following list is illustrative but by no
means exhaustive:[Footnote 186]
* Executive Order No. 12630 ("Governmental Actions and Interference
with Constitutionally Protected Property Rights") prescribes policies
and procedures to ensure that actions potentially impacting property
rights in a manner requiring compensation under the Fifth Amendment are
undertaken on a well-reasoned basis. 53 Fed. Reg. 8859 (Mar. 15, 1988),
5 U.S.C. § 601 note.
* Executive Order No. 12866 ("Regulatory Planning and Review")
establishes a number of procedural and analytical requirements
governing agency rulemaking, including review of certain rules by the
Office of Management and Budget's Office of Information and Regulatory
Affairs. 58 Fed. Reg. 51735 (Sept. 30, 1993), as amended by Exec. Order
No. 13258, 67 Fed. Reg. 9385 (Feb. 28, 2002), 5 U.S.C. § 601 note.
* Executive Order No. 12988 ("Civil Justice Reform") promotes clear
drafting of rules with respect to a number of legal issues in order to
avoid burdening the courts with litigation over unnecessary
ambiguities. For example, section 3(b)(2) of the order requires that
rules specify in clear language what, if any, preemptive and
retroactive effects the rules should be given. It also requires that
rules provide a clear legal standard of conduct for affected parties.
61 Fed. Reg. 4729 (Feb. 7, 1996), 28 U.S.C. § 519 note.
* Executive Order No. 13132 ("Federalism") sets policies and procedural
requirements for regulations (and other agency actions) that have
significant implications in relation to state and local governments. 64
Fed. Reg. 43255 (Aug. 10, 1999), 5 U.S.C. § 601 note.
* Executive Order No. 13272 ("Proper Consideration of Small Entities in
Agency Rulemaking") establishes policies and procedures to facilitate
compliance with the Regulatory Flexibility Act, discussed above.
67 Fed. Reg. 53461 (Aug. 16, 2002), 5 U.S.C. § 601 note.
2. Regulations May Not Exceed Statutory Authority:
It is a fundamental proposition that agency regulations are bound by
the limits of the agency's statutory and organic authority. An often
quoted statement of the principle appears in the Supreme Court's
decision in Manhattan General Equipment Co. v. Commissioner of Internal
Revenue, 297 U.S. 129, 134 (1936):
"The power of an administrative officer or board to administer a
federal statute and to prescribe rules and regulations to that end is
not the power to make law--for no such power can be delegated by
Congress--but the power to adopt regulations to carry into effect the
will of Congress as expressed by the statute. A regulation which does
not do this, but operates to create a rule out of harmony with the
statute, is a mere nullity."
This truism is reflected in a host of subsequent judicial and
administrative decisions. E.g., Health Insurance Ass'n of America,
Inc. v. Shalala, 23 F.3d 412, 416 (D.C. Cir. 1994); Killip v. Office of
Personnel Management, 991 F.2d 1564, 1569 (Fed. Cir. 1993), and cases
cited. Thus, as the Killip court put it:
"Though an agency may promulgate rules or regulations pursuant to
authority granted by Congress, no such rule or regulation can confer on
the agency any greater authority than that conferred under the
governing statute."[Footnote 187]
To take an example of particular relevance to this publication, an
agency may not expend public funds or incur a liability to do so based
on a regulation, unless the regulation is implementing authority given
to the agency by law. A regulation purporting to create a liability on
the part of the government not supported by statutory authority is
invalid and not binding on the government. Atchison, Topeka & Santa Fe
Railroad Co. v. United States, 55 Ct. Cl. 339 (1920); Holland-America
Line v. United States, 53 Ct. Cl. 522 (1918), rev'd on other grounds,
254 U.S. 148 (1920); Illinois Central Railroad Co. v. United States,
52 Ct. Cl. 53 (1917). See also B-201054, Apr. 27, 1981, discussed
below. In other words, the authority to obligate or expend public funds
cannot be created by regulation; Congress must confer that basic
authority. See also Harris v. Lynn, 555 F.2d 1357 (8th Cir.), cert.
denied, 434 U.S. 927 (1977) (agency cannot extend benefits by
regulation to a class of persons not included within the authorizing
statute); Tullock v. State Highway Commission of Missouri, 507 F.2d
712, 716-17 (8th Cir. 1974); Pender Peanut Corp. v. United States,
20 Cl. Ct. 447, 455 (1990) (monetary penalty not authorized by statute
cannot be imposed by regulation).
Further illustrations may be found in the following decisions of the
Comptroller General:
* Where the program statute provided that federal grants "shall be" a
specified percentage of project construction costs, the grantor agency
could not issue regulations providing a mechanism for reducing the
grants below the specified percentage. 53 Comp. Gen. 547 (1974).
* Where a statute provided that administrative costs could not exceed a
specified percentage of funds distributed to states under an allotment
formula, the administering agency could not amend its regulations to
relieve states of liability for over expenditures or to raise the
ceiling. B-178564, July 19, 1977, aff'd 57 Comp. Gen. 163 (1977).
* Absent a clear statutory basis, an agency may not issue regulations
establishing procedures to accept government liability or to forgive
indebtedness based on what it deems to be fair or equitable. B-201054,
supra. See also B-118653, July 15, 1969.
See also B-288266, Jan. 27, 2003 (agencies should not incur obligations
for food and light refreshments in reliance on a General Services
Administration (GSA) travel regulation for which GSA has no authority);
62 Comp. Gen. 116 (1983); 56 Comp. Gen. 943 (1977); B-201706, Mar. 17,
1981.
3. "Force and Effect of Law":
A very long line of decisions holds that legislative or statutory
regulations that are otherwise valid (i.e., within the bounds of the
agency's statutory authority) have the force and effect of law. E.g.,
53 Comp. Gen. 364 (1973); 43 Comp. Gen. 31 (1963); 37 Comp. Gen. 820
(1958); 33 Comp. Gen. 174 (1953); 31 Comp. Gen. 193 (1951); 22 Comp.
Gen. 895 (1943); 15 Comp. Gen. 869 (1936); 2 Comp. Gen. 342 (1922);
21 Comp. Dec. 482 (1915); B-248439 et al., Oct. 22, 1992. The thrust of
these decisions is that the regulations are binding on all concerned,
the issuing agency included, and that the agency cannot waive their
application on an ad hoc or situational basis.
In Chrysler Corp. v. Brown, 441 U.S. 281 (1979), the Supreme Court
provided detailed instruction as to when an agency regulation is
entitled to the force and effect of law. The regulation "must have
certain substantive characteristics and be the product of certain
procedural requisites." 441 U.S. at 301. Specifically, the Court listed
three tests that must be met:
* The regulation must be a substantive or legislative regulation
affecting individual rights or obligations. Regulations that are
interpretative only generally will not qualify.[Footnote 188]
* The regulation must be issued pursuant to, and subject to any
limitations of, a statutory grant of authority. For purposes of this
test, 5 U.S.C. § 301 does not constitute a sufficient grant of
authority. 441 U.S. at 309-11.
* The regulation must be issued in compliance with any procedural
requirements imposed by Congress. This generally means the APA, unless
the regulation falls within one of the exemptions previously
discussed.[Footnote 189]
A regulation that meets these three tests will be given the force and
effect of law. A regulation with the force and effect of law is
"binding on courts in a manner akin to statutes" (Chrysler Corp.,
441 U.S. at 308); it has the same legal effect "as if [it] had been
enacted by Congress directly" (Federal Crop Insurance Corp. v. Merrill,
332 U.S. 380, 385 (1947)); it "is as binding on a court as if it were
part of the statute" (Joseph v. United States Civil Service Commission,
554 F.2d at 1153); it is "as binding on the courts as any statute
enacted by Congress" (Production Tool Corp. v. Employment & Training
Administration, 688 F.2d at 1165). See also Stinson v. United States,
508 U.S. 36, 40-42 (1993).
This is strong language. It cautions a reviewing court (or reviewing
administrative agency) not to substitute its own judgment for that of
the agency, and not to invalidate a regulation merely because it would
have interpreted the law differently. A regulation with the force and
effect of law is controlling, subject to the "arbitrary and capricious"
standard of the APA (5 U.S.C. § 706). Batterton v. Francis, 432 U.S.
416, 425-26 (1977); Georgia Pacific Corp. v. Occupational Safety &
Health Administration, 25 F.3d 999, 1003-1004 (11th Cir. 1994);
Metropolitan School District of Wayne Township, Marion County,
Indiana v. Davila, 969 F.2d 485, 490 (7th Cir. 1992); Guardian Federal
Savings & Loan Ass'n v. Federal Savings & Loan Insurance Corp.,
589 F.2d 658, 664-65 (D.C. Cir. 1978).
A regulation will generally be found arbitrary and capricious--
"if the agency has relied on factors which Congress has not intended it
to consider, entirely failed to consider an important aspect of the
problem, offered an explanation for its decision that runs counter to
the evidence before the agency, or is so implausible that it could not
be ascribed to a difference in view or the product of agency
expertise."
Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile
Insurance Co., 463 U.S. 29, 43 (1983).
For cases applying the Chrysler standards in determining that various
regulations do or do not have the force and effect of law, see Qwest
Communications International, Inc. v. FCC, 229 F.3d 1172, 1180 (D.C.
Cir. 2000); United States v. Alameda Gateway Ltd., 213 F.3d 1161, 1168
(9th Cir. 2000); Horner v. Jeffrey, 823 F.2d 1521 (Fed. Cir. 1987); St.
Mary's Hospital, Inc. v. Harris, 604 F.2d 407 (5th Cir. 1979);
Intermountain Forest Industry Ass'n v. Lyng, 683 F. Supp. 1330 (D. Wyo.
1988).
4. Waiver of Regulations:
When you ask whether an agency can waive a regulation, you are really
asking to what extent an agency is bound by its own regulations. If a
given regulation binds the issuing agency, then the agency should not
be able to grant ad hoc waivers, unless the governing statute has given
it that authority and the agency has built it into the regulation.
As discussed previously, a legislative regulation with the force and
effect of law that was issued in compliance with the Administrative
Procedure Act (APA) and the statute it implements clearly binds the
issuing agency. The courts treat such a regulation essentially the same
as a statute; thus, the agency cannot waive the regulation any more
than it could waive the statute. See section A.3 of this chapter and
cases cited. The underlying philosophy--still valid--was expressed as
follows in a 1958 GAO decision:
"Regulations must contain a guide or standard alike to all individuals
similarly situated, so that anyone interested may determine his own
rights or exemptions thereunder. The administrative agency may not
exercise discretion to enforce them against some and to refuse to
enforce them against others."
37 Comp. Gen. 820, 821 (1958); see also B-243283.2, Sept. 27,
1991.[Footnote 190]
Sometimes legislative regulations or the statutes they implement do
explicitly authorize "waivers" in certain circumstances. Here, of
course, the waiver authority is an integral part of the underlying
statutory or regulatory scheme. Accordingly, courts give effect to such
waiver provisions and, indeed, they may even hold that an agency's
failure to consider or permit waiver is an abuse of discretion.
However, the courts usually accord considerable deference to agency
decisions on whether or not to grant discretionary waivers. For
illustrative cases, see People of the State of New York & Public
Service Commission of the State of New York v. FCC, 267 F.3d 91
(2nd Cir. 2001); BellSouth Corporation v. FCC, 162 F.3d 1215 (D.C. Cir.
1999); Rauenhorst v. United States Department of Transportation,
95 F.3d 715 (8th Cir. 1996).
While duly promulgated legislative regulations are almost
always[Footnote 191] held to be binding absent a statutory or
regulatory provision for waiver, the results are much less definitive
when one enters the realm of "nonlegislative" regulations and other
agency issuances. As discussed previously, these may include
regulations that were published in the Federal Register under APA
procedures but which are classified as interpretative. They also
include a variety of non-Federal Register documents, such as manuals,
handbooks, and internal agency products, some of which may not amount
to "regulations" in any obvious sense.
As a general proposition, nonlegislative regulations and other agency
products do not impose legally binding obligations on the agencies that
issue them any more than they impose legally enforceable rights or
obligations on parties outside of the agency. This makes sense since,
at least conceptually, nonlegislative products--in contrast to
legislative regulations--by definition do not carry the force and
effect of law. See generally Pierce, Administrative Law Treatise §§ 6.1
and 6.6.
Nonlegislative regulations are particularly open to waiver where the
regulations are for the primary benefit of the agency and failure to
follow them would not adversely affect private parties. See, e.g.,
60 Comp. Gen. 208, 210 (1981) (an agency could waive its internal
guidelines prescribing the specific evidence required to demonstrate a
grantee's financial responsibility when the agency was otherwise
satisfied that the government's interests were adequately protected).
An interesting variation occurred in Health Systems Agency of Oklahoma,
Inc. v. Norman, 589 F.2d 486 (10th Cir. 1978). An application for
designation as a health systems agency was submitted to the then
Department of Health, Education, and Welfare (HEW) 55 minutes past the
deadline announced in the Federal Register, because the applicant's
representative overslept. HEW refused to accept the application.
Finding that the deadline was not statutory, that its purpose was the
orderly transaction of business, and that internal HEW guidelines
permitted some discretion in waiving the deadline, the court held HEW's
refusal to be an abuse of discretion.
On the other hand, there is a substantial body of case law holding that
agencies are bound by certain nonlegislative rules. The most
significant line of cases here--United States ex rel. Accardi v.
Shaughnessy, 347 U.S. 260 (1954), and its progeny--are discussed later
in this chapter.[Footnote 192] These cases generally hold that agencies
are bound by procedural requirements that they voluntarily impose on
themselves when noncompliance with those requirements could prejudice
individuals who are facing potential adverse action by the agency.
Beyond the Accardi line of cases, courts seem to assess the binding
effect (if any) of nonlegislative pronouncements more generally in
terms of whether the pronouncement amounts to a "regulation" by which
the agency "intends" to be bound. Thorpe v. Housing Authority of
Durham, 393 U.S. 268 (1969); New England Tank Industries of New
Hampshire, Inc. v. United States, 861 F.2d 685 (Fed. Cir. 1988);
Fairington Apartments of Lafayette v. United States, 7 Cl. Ct. 647
(1985).[Footnote 193] Intent to be bound is ascertained by examining
"the provision's language, its context, and any available extrinsic
evidence." Chiron Corp. & PerSeptive Biosystems, Inc. v. National
Transportation Safety Board, 198 F.3d 935, 944 (D.C. Cir. 1999); Doe v.
Hampton, 566 F.2d 265, 281 (D.C. Cir. 1977). The Comptroller General
likewise has rejected a "form over substance" approach that turns on
what an agency chooses to call its regulation. As stated in one GAO
decision:
"That the Bureau's policy and procedure memoranda were never intended
as 'regulations' is of no particular import since whether or not they
are such must be determined by their operative nature."
43 Comp. Gen. 31, 34 (1963).
In assessing the binding nature of a nonlegislative regulation or other
agency document, the language of the document itself is obviously an
important starting point. Brock v. Cathedral Bluffs Shale Oil Co.,
796 F.2d 533, 537-38 (D.C. Cir. 1986); City of Williams v. Dombeck,
151 F. Supp. 2d 9 (D.D.C. 2001). Other factors that may provide some
indication of intent, although they are not dispositive, are whether
the item has been published in the Federal Register (failure to do so
suggests an intent that the item be nonbinding), and, more
significantly, whether it has been published in the Code of Federal
Regulations (under 44 U.S.C. § 1510, the C.F.R. is supposed to contain
only documents with "legal effect"). Brock, 796 F.2d at 538-39.
For further reading on this interesting and still evolving topic of
what agency products have binding effect, see: William R. Anderson,
Informal Agency Advice--Graphing the Critical Analysis, 54 Admin. L.
Rev. 595 (2002); Robert A. Anthony, "Interpretive" Rules, "Legislative"
Rules and "Spurious" Rules: Lifting the Smog, 8 Admin. L. J. Am. U. 1
(1994); Joshua I. Schwartz, The Irresistible Force Meets the Immovable
Object: Estoppel Remedies for an Agency's Violation of Its Own
Regulations or Other Misconduct, 44 Admin. L. Rev. 653 (1992); Peter
Raven-Hansen, Regulatory Estoppel: When Agencies Break Their Own
'Laws,' 64 Tex. L. Rev. 1 (1985); and Note, Violations by Agencies of
Their Own Regulations, 87 Harv. L. Rev. 629 (1974).
5. Amendment of Regulations:
It has long been recognized that the authority to issue regulations
includes the authority to amend or revoke those regulations, at least
prospectively. E.g., 21 Comp. Dec. 482, 484 (1915). This commonsense
proposition is reflected in the Administrative Procedure Act's (APA)
definition of rulemaking as the "agency process for formulating,
amending, or repealing a rule." 5 U.S.C. § 551(5). An amendment to a
regulation, like the parent regulation itself, must of course remain
within the bounds of the agency's statutory authority. B-221779,
Mar. 24, 1986; B-202568, Sept. 11, 1981.
As the APA's definition of rulemaking makes clear, an amendment to a
regulation is subject to the APA to the same extent as the parent
regulation. Thus, if a regulation is required to follow the notice and
comment procedures of 5 U.S.C. § 553, an amendment or repeal of that
regulation must generally follow the same procedures. Utility Solid
Waste Activities Group v. EPA, 236 F.3d 749 (D.C. Cir. 2001); Consumer
Energy Council of America v. Federal Energy Regulatory Commission,
673 F.2d 425, 446 (D.C. Cir. 1982), aff'd and cert. denied, 463 U.S.
1216 (1983); Detroit Edison Co. v. EPA, 496 F.2d 244 (6th Cir. 1974);
Citibank, Federal Savings Bank v. Federal Deposit Insurance Corp.,
836 F. Supp. 3, 7 (D.D.C. 1993); B-221779, supra.
If a regulation is subject to the APA's informal rulemaking
requirements, an unpublished agency document that purports to amend
that regulation is invalid. Utility Solid Waste Activities Group,
236 F.3d at 754; Fiorentino v. United States, 607 F.2d 963, 968 (Ct.
Cl. 1979), cert. denied, 444 U.S. 1083 (1980); 65 Comp. Gen. 439
(1986); B-226499, Apr. 1, 1987.
It is possible to have a regulation subject to 5 U.S.C. § 553 with an
amendment to that regulation that falls within one of the exemptions,
in which event the amendment need not comply with the APA procedures.
See Detroit Edison, 496 F.2d at 245, 249; B-202568, Sept. 11, 1981;
5 Op. Off. Legal Counsel 104 (1981).
If a parent regulation is exempt from compliance with the APA but the
agency has, without formally waiving the exemption, published it under
APA procedures anyway, the voluntary compliance will not operate as a
waiver. The agency may subsequently amend or repeal the regulation
without following the APA. Baylor University Medical Center v. Heckler,
758 F.2d 1052 (5th Cir. 1985); Malek-Marzban v. Immigration &
Naturalization Service, 653 F.2d 113 (4th Cir. 1981); Washington
Hospital Center v. Heckler, 581 F. Supp. 195 (D.D.C. 1984). Thus, in
Malek-Marzban the Immigration and Naturalization Service (INS) had
issued a regulation without advance notice and comment, citing the
"foreign affairs" exception from APA rulemaking requirements in 5
U.S.C. § 553(a)(1). The court held that the agency was not bound to
follow APA rulemaking procedures in this case even though it had
voluntarily used such procedures for past regulations that were
likewise subject to the foreign affairs exception:
"We are not persuaded by the petitioners' argument that the INS is
estopped from asserting the foreign affairs exception because it has
routinely complied with the APA rulemaking requirements in the past.
Voluntarily submitting a policy decision involving a foreign affairs
function to rulemaking procedures is commendable, but it does not
restrict an agency's prerogatives when circumstances require swift
action."
653 F.2d at 116.[Footnote 194]
6. Retroactivity:
A number of decisions have pointed out that amendments to regulations
should be prospective only. E.g., 35 Comp. Gen. 187 (1955); 32 Comp.
Gen. 315 (1953); 2 Comp. Gen. 342 (1922); 21 Comp. Dec. 482 (1915). The
theory is that amendments should not affect rights or reliance accruing
under the old regulation. While these are still crucial concerns, the
law is not quite that simple.
At the outset, it may be useful to understand the difference between
"primary" and "secondary" retroactivity. Primary retroactivity changes
the past legal consequences of past actions. Secondary retroactivity
changes the future legal consequences of past actions. See generally
Bowen v. Georgetown University Hospital, 488 U.S. 204, 219-20 (1988)
(Justice Scalia, concurring).
To take a concrete illustration, when Individual Retirement Accounts
(IRA) were first authorized, most people could take an income tax
deduction for amounts deposited into an IRA, up to a statutory ceiling.
A few years later, Congress changed the law to eliminate the deduction
for persons covered by certain types of retirement plans. This is an
example of secondary retroactivity. Persons affected by the amendment
could no longer deduct IRA contributions in the future, but the
deductions they had taken in the past were not affected. (A purely
prospective amendment would have applied only to new IRAs opened on or
after the effective date of the amendment.) If Congress had attempted
to invalidate deductions taken prior to the amendment, this would have
been primary retroactivity.
Although statutes are generally presumed to operate prospectively,
Congress has the authority to make its laws retroactive (in both the
primary and the secondary sense) subject, of course, to such
constitutional limitations as due process, the impairment of contracts,
and the prohibition against "ex post facto" laws.[Footnote 195] The
same cannot be said of agency regulations.
There is no blanket prohibition on secondary retroactivity in agency
regulations, subject to the "arbitrary or capricious" standard of the
APA. See Bowen, 488 U.S. at 220; Celtronix Telemetry v. FCC, 272 F.3d
585 (D.C. Cir. 2001), cert. denied, 536 U.S. 923 (2002); United States
Airwaves, Inc. v. FCC, 232 F.3d 227 (D.C. Cir. 2000). With respect to
primary retroactivity, however, the Bowen Court held that:
"[A] statutory grant of legislative rulemaking authority will not, as a
general matter, be understood to encompass the power to promulgate
retroactive rules unless that power is conveyed by Congress in express
terms."
Id. at 208. See also Orrego v. 833 West Buena Joint Venture,
943 F.2d 730, 736 (7th Cir. 1991).
The Bowen decision has been criticized, but it has never been
overruled. See Richard J. Pierce, Jr., Administrative Law Treatise
§ 6.7 (4th ed. 2000 & 2003 Supp.). Thus, agencies generally cannot
engage in rulemaking that involves primary retroactivity without
specific statutory authority. There may be some room for exceptions
even from the strict proscription of the Bowen rule, based on a
balancing of interests in a particular case. See Bowen, 488 U.S. at
224-25; Citizens to Save Spencer County v. EPA, 600 F.2d 844, 879-81
(D.C. Cir. 1979); Saint Francis Memorial Hospital v. Weinberger, 413 F.
Supp. 323, 332-33 (N.D. Cal. 1976). Reduced stringency may also be
appropriate in the case of a policy statement,[Footnote 196] or certain
interpretative rules.[Footnote 197] Furthermore, rules that are held to
merely clarify prior rules do not run afoul of the Bowen prohibition
against retroactivity. See Clay v. Johnson, 264 F.3d 744 (7th Cir.
2001).
The prohibition on retroactivity in rulemaking does not apply to
adjudication. Bowen, 488 U.S. at 220-21 (concurring opinion). In the
context of adjudication, retroactivity is measured against a standard
of reasonableness and a balancing of interests. E.g., Laborers'
International Union of North America, AFL-CIO v. Foster Wheeler Energy
Corp., 26 F.3d 375 386-395 (3rd Cir.), cert. denied, 513 U.S. 946
(1994); Tennessee Gas Pipeline Co. v. Federal Energy Regulatory
Commission, 606 F.2d 1094, 1116 n.77 (D.C. Cir. 1979), cert. denied,
445 U.S. 920 (1980) and 447 U.S. 922 (1980); NLRB v. Majestic Weaving
Co., 355 F.2d 854 (2nd Cir. 1966); Shell Oil Co. v. Kleppe, 426 F.
Supp. 894, 908 (D. Colo. 1977). As suggested above, the extent to which
a balancing approach might justify exceptions from the Bowen rule with
respect to regulations remains to be determined.
B. Agency Administrative Interpretations:
"There is more ado to interpret interpretations than to interpret the
things, and more books upon books than upon all other subjects; we do
nothing but comment upon one another."
Michel Eyquem, seigneur de Montaigne, Book iii, Chap. xiii, Of
Experience.
"We begin our analysis with the language of the exemption itself which,
at the critical part, is as clear as mud."
In re Whalen, 73 B.R. 986, 988 (C.D. Ill. 1987).
1. Interpretation of Statutes:
The interpretation of a statute, by regulation or otherwise, by the
agency Congress has charged with the responsibility for administering
it, is entitled to considerable weight. This principle is really a
matter of common sense. An agency that works with a program from day to
day develops an expertise that should not be lightly disregarded. Even
when dealing with a new law, Congress does not entrust administration
to a particular agency without reason, and this decision merits
respect. This, in addition to fundamental fairness, is why GAO
considers it important to obtain agency comments wherever possible
before rendering a decision.[Footnote 198]
In the often-cited case of Udall v. Tallman, 380 U.S. 1, 16 (1965), the
Supreme Court stated the principle this way:
"When faced with a problem of statutory construction, this Court shows
great deference to the interpretation given the statute by the officers
or agency charged with its administration."
In what is now recognized as one of the key cases in determining how
much "deference" is due an agency interpretation, Chevron, Inc. v.
Natural Resources Defense Council, 467 U.S. 837 (1984), the Court
formulated its approach to deference in terms of two questions. The
first question is "whether Congress has directly spoken to the precise
question at issue." Id. at 842. If it has, the agency must of course
comply with clear congressional intent, and regulations to the contrary
will be invalidated. Thus, before you ever get to questions of
deference, it must first be determined that the regulation is not
contrary to the statute, a question of delegated authority rather than
deference. "If a court, employing traditional tools of statutory
construction, ascertains that Congress had an intention on the precise
question at issue, that intention is the law and must be given effect."
Id. at 843 n.9.
Once you cross this threshold, that is, once you determine that "the
statute is silent or ambiguous with respect to the specific issue," the
question becomes "whether the agency's answer is based on a permissible
construction of the statute." Id. at 843. The Court went on to say:
"If Congress has explicitly left a gap for the agency to fill, there is
an express delegation of authority to the agency to elucidate a
specific provision of the statute by regulation. Such legislative
regulations are given controlling weight unless they are arbitrary,
capricious, or manifestly contrary to the statute. Sometimes the
legislative delegation to an agency on a particular question is
implicit rather than explicit. In such a case, a court may not
substitute its own construction of a statutory provision for a
reasonable interpretation made by the administrator of an agency."
Id. at 843-44 (footnotes omitted).
Reiterating the traditional deference concept, the Court then said that
the proper standard of review is not whether the agency's construction
is "inappropriate," but merely whether it is "a reasonable one." Id. at
844-45.
When the agency's interpretation is in the form of a regulation with
the force and effect of law, the deference, as we have seen, is at its
highest.[Footnote 199] The agency's position is entitled to Chevron
deference and should be upheld unless it is arbitrary or capricious.
There should be no question of substitution of judgment. If the agency
position can be said to be reasonable or to have a rational basis
within the statutory grant of authority, it should stand, even though
the reviewing body finds some other position preferable. See Yellow
Transportation, Inc. v. Michigan, 537 U.S. 36 (2002); Shalala v.
Illinois Council on Long Term Care, Inc., 529 U.S. 1, 20-21 (2000);
American Telephone & Telegraph Corp. v. Iowa Utility Board, 525 U.S.
366 (1999). Chevron deference is also given to authoritative agency
positions in formal adjudication. See Immigration & Naturalization
Service v. Aguirre-Aguirre, 526 U.S. 415 (1999) (holding that a Bureau
of Indian Affairs statutory interpretation developed in case-by-case
formal adjudication should be accorded Chevron deference). For an
extensive list of Supreme Court cases giving Chevron deference to
agency statutory interpretations found in rulemaking or formal
adjudication, see United States v. Mead Corp., 533 U.S. 218, 231 at
n.12 (2001).
When the agency's interpretation is in the form of an interpretative
regulation, manual, handbook, etc.--anything short of a regulation with
the force and effect of law or formal adjudication--the standard of
review has traditionally been somewhat lessened, and it is here that
the question of deference really comes into play. In the past,
deference in this context has not been a fixed concept, but has been
variable, depending on the interplay of several factors.[Footnote
200]The Supreme Court explained the approach as follows in Skidmore v.
Swift & Co., 323 U.S. 134, 140 (1944):
"We consider that the rulings, interpretations and opinions of the
Administrator under this Act, while not controlling upon the courts by
reason of their authority [i.e., the statements in question were not
regulations with the force and effect of law], do constitute a body of
experience and informed judgment to which courts and litigants may
properly resort for guidance. The weight of such a judgment in a
particular case will depend upon the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors which give it
power to persuade, if lacking power to control."
Courts have found that the degree of weight to be given an agency
administrative interpretation varies with several factors:
* The nature and degree of expertise possessed by the agency.
Barnhart v. Walton, 535 U.S. 212 (2002); Batterton v. Francis, 432 U.S.
at 425 n.9; NLRB v. Oklahoma Fixture Co., 332 F.3d 1284 (10th Cir.
2003); Schuetz v. Banc One Mortgage Corp., 292 F.3d 1004, 1012
(9th Cir. 2002); Herman v. Springfield Massachusetts Area, Local 497,
American Postal Workers Union, AFL-CIO, 201 F.3d 1, 5 (1st Cir. 2000).
* The duration and consistency of the interpretation. Good Samaritan
Hospital v. Shalala, 508 U.S. 402, 417 (1993); Chrysler Corp., 441 U.S.
at 315; Batterton, 432 U.S. at 425 n.9; Skidmore, 323 U.S. at 140;
Zeigler Coal Co. v. Director, Office of Workers' Compensation Programs,
Department of Labor, 326 F.3d 894, 901 (7th Cir. 2003); Herman,
201 F.3d at 5; United States v. Occidental Chemical Corp., 200 F.3d
143, 151-52 (1999); Reich v. Gateway Press, 13 F.3d 685, 692-93 (1994);
B-284610, Mar. 3, 2000. While consistency may not always be a virtue,
inconsistency will not help your case in court. See Equal Employment
Opportunity Commission v. Arabian American Oil Co., 499 U.S. 244 (1991)
(superseded by statute); Immigration & Naturalization Service v.
Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987).
* The soundness and thoroughness of reasoning underlying the position.
Skidmore, 323 U.S. at 140; Arriaga v. Florida Pacific Farms, L.L.C.,
305 F.3d 1228, 1239 (11th Cir. 2002).
* Evidence (or lack thereof) of congressional awareness of, and
acquiescence in, the administrative position. United States v. American
Trucking Ass'n, 310 U.S. 534, 549-50 (1940); Helvering v. Winmill,
305 U.S. 79, 82-3 (1938); Norwegian Nitrogen Products Co. v. United
States, 288 U.S. 294, 313-15 (1933); Collins v. United States, 946 F.2d
864 (Fed. Cir. 1991); Davis v. Director, Office of Workers'
Compensation Programs, Department of Labor, 936 F.2d 1111, 1115-16
(10th Cir. 1991); 41 Op. Att'y Gen. 57 (1950); B-114829-O.M., July 17,
1974.
"[I]ncreasingly muddled" Supreme Court decisions on the scope of
Chevron have left unclear the amount of deference due less formal
pronouncements like interpretive rules and informal
adjudications.[Footnote 201] In 2000, the Supreme Court appeared to
resolve the issue of how much deference was due these less formal
pronouncements. The Court distinguished less formal pronouncements that
"lack the force of law" from statutory interpretations in legislative
rules and formal adjudications, holding that actions other than orders
that are issued through use of the notice and comment procedure are
only entitled to Skidmore deference. Christensen v. Harris County,
529 U.S. 576 (2000). However, the Supreme Court later retreated from
this position in Mead Corp., 533 U.S. 218, holding that Chevron
deference may extend to statutory interpretations beyond those
contained in legislative rules and adjudications where there is "a
comparable congressional intent" to give such interpretations the force
of law.
More recent decisions further indicate that Chevron deference may
extend beyond legislative rules and formal adjudications. Most notably,
the Supreme Court observed in dicta in Barnhart v. Walton, 535 U.S. at
222, that Mead Corp. "denied [any] suggestion" in Christensen that
Chevron deference was limited to interpretations adopted through formal
rulemaking. The Barnhart opinion went on to say that:
"In this case, the interstitial nature of the legal question, the
related expertise of the Agency, the importance of the question to the
administration of the statute, the complexity of that administration,
and the careful consideration the Agency has given the question over a
long period of time all indicate that Chevron provides the appropriate
legal lens through which to view the legality of the Agency
interpretation here at issue."
Id. at 222.[Footnote 202]
At least one court has viewed this passage from Barnhart as suggesting
a merger between Chevron deference and the Skidmore approach of varying
the deference an agency receives based on a number of factors. See
Krzalic v. Republic Title Co., 314 F.3d 875, 878-79 (7th Cir. 2002),
cert. denied, ___ U.S. ___, 123 S. Ct. 2641 (2003).
Circuit court decisions have added to the confusion. See James v. Von
Zemenszky, 301 F.3d 1364 (Fed. Cir. 2002) (ignoring Barnhart factors
because the agency statutory interpretation contained in a directive
and handbook "f[e]ll within the class of informal agency
interpretations that do not ordinarily merit Chevron deference");
Federal Election Commission v. National Rifle Ass'n, 254 F.3d 173 (D.C.
Cir. 2001) (holding that Federal Election Committee (FEC) advisory
opinions are entitled to Chevron deference); Matz v. Household
International Tax Reduction Investment Plan, 265 F.3d 572 (7th Cir.
2001) (holding that an Internal Revenue Service (IRS) statutory
interpretation in an amicus brief, supported by an IRS Revenue Ruling
and agency manual, was not entitled to Chevron deference);
Klinedinst v. Swift Investments, Inc., 260 F.3d 1251 (11th Cir. 2001)
(holding that a Department of Labor handbook was not due Chevron
deference); Teambank v. McClure, 279 F.3d 614 (8th Cir. 2001) (holding
that Office of the Controller of the Currency informal adjudications
are due Chevron deference); In re Sealed Case, 223 F.3d 775 (D.C. Cir.
2000) (holding that FEC's probable cause determinations are entitled to
Chevron deference). As Professor Pierce notes:
"After Mead, it is possible to know only that legislative rules and
formal adjudications are always entitled to Chevron deference, while
less formal pronouncements like interpretative rules and informal
adjudications may or may not be entitled to Chevron deference. The
deference due a less formal pronouncement seems to depend on the
results of judicial application of an apparently open-ended list of
factors that arguably qualify as 'other indication[s] of a comparable
congressional intent' to give a particular type of agency pronouncement
the force of law."[Footnote 203]
For illustrations of how GAO has applied the deference principle in
recent decisions, see:
* 69 Comp. Gen. 274 (1990) (holding that the Defense Personnel Support
Center's long-standing interpretation of a Department of Defense
appropriation act provision is entitled to deference).
* B-290744, Sept. 13, 2002 (declining to apply Chevron or Skidmore
deference to the Federal Highway Administration's interpretation of a
statute because the interpretation was not a reasonable construction of
the statute).
* B-288658, Nov. 30, 2001 (finding that neither Chevron nor Skidmore
deference was due a Department of Agriculture interpretation of a
statute because the agency interpretation did not derive from a
rulemaking or adjudication and generally lacked "persuasive weight").
* B-286800, Feb. 21, 2001 (finding that a Department of Defense
interpretation of its regulation deserves great weight, that the
agency's interpretation of its regulations was reasonable, and viewing
as significant the fact that the agency was consistent in its
interpretation).
* B-286661, Jan. 19, 2001 (declining to apply principle of deference to
a Department of Energy statutory interpretation because it was not
based on a reasonable interpretation of the statute).
* B-286026, June 12, 2001 (applying Chevron deference to Office of
Personnel Management's guidance on the Government Employees Training
Act).
* B-285066.2, Aug. 9, 2000 (applying Chevron deference to Department of
Housing and Urban Development's interpretation of the Operation Safe
Home appropriation as making funds available for gun buybacks).
In the past, an agency's litigating position was not accorded any
deference unless that position was also expressed in the regulations,
rulings, or administrative practice of the agency. Bowen v. Georgetown
University Hospital, 488 U.S. 204, 212 (1988). Some recent cases,
however, have given some deference to an agency's statutory
interpretation developed only in the course of litigation. For example,
in Brown v. United States, 327 F.3d 1198 (D.C. Cir. 2003), the court
did not reach the question of whether an agency's statutory
interpretation developed in the course of litigation was due Chevron
deference, holding that the interpretation prevailed under Skidmore.
See also Vernazza v. SEC, 327 F.3d 851 (9th Cir. 2003) (agency's
statutory interpretation advanced in enforcement action is not entitled
to Chevron deference, but is entitled to Skidmore deference); Chao v.
Russell P. Le Frois Builder, Inc., 291 F.3d 219 (2nd Cir. 2002)
(holding that the Secretary of Labor's statutory interpretation set
forth only in litigation was not due Chevron deference, but merited
Skidmore deference).
The deference principle does not apply to an agency's interpretation of
a statute that is not part of its program or enabling legislation or is
a statute of general applicability. See Adams v. SEC, 287 F.3d 183
(D.C. Cir. 2002); Contractor's Sand & Gravel v. Federal Mine Safety &
Health Commission, 199 F.3d 1335 (D.C. Cir. 2000); Association of
Civilian Technicians v. Federal Labor Relations Authority, 200 F.3d 590
(9th Cir. 2000).
As noted above, a regulation with the force and effect of law merits
Chevron deference. In this connection, it is necessary to elaborate
somewhat on one of the tests in Chrysler Corp. v. Brown, 441 U.S. 281
(1979)--that the regulation be issued pursuant to a statutory grant of
'legislative' (i.e., rulemaking) authority. How specific must the
statutory delegation be? Chrysler itself provides somewhat conflicting
signals. In one place, in the course of listing the three tests for
determining if a regulation has the force and effect of law, the Court
gives as an example the proxy rules of the Securities and Exchange
Commission (SEC). Chrysler, 441 U.S. at 302-03. These are issued under
the explicit delegation of 15 U.S.C. § 78n, which authorizes the SEC to
issue proxy rules. Yet in another place, the Court said:
"This is not to say that any grant of legislative authority to a
federal agency by Congress must be specific before regulations
promulgated pursuant to it can be binding on courts in a manner akin to
statutes. What is important is that the reviewing court reasonably be
able to conclude that the grant of authority contemplates the
regulations issued."
Chrysler, 441 U.S. at 308.
While a court is certainly more likely to find that Chevron deference
is due when the delegation of authority is specific, courts have also
found that more general delegations are entitled to Chevron deference.
See United States v. Haggar Apparel Co., 526 U.S. 380 (1999) (holding
that Chevron deference was due to a Customs Service regulation
interpreting a statute that required the Court of International Trade
to "reach the correct decision" in determining the proper
classification of goods). A good example is the deference that courts
have accorded to IRS regulations. The Secretary of the Treasury has
general authority to "prescribe all needful rules and regulations" to
administer the Internal Revenue Code. 26 U.S.C. § 7805. In addition,
various other provisions of the Internal Revenue Code authorize the
issuance of regulations dealing with specific topics. Regulations
issued under the general authority of 26 U.S.C. § 7805--statutory
though they may be--are not given the force and effect of law, and have
often been accorded less deference than regulations issued under one of
the more specific provisions. See United States v. Vogel Fertilizer
Co., 455 U.S. 16, 24 (1982); Rowan Cos. v. United States, 452 U.S. 247,
252-53 (1981); E. Norman Peterson Marital Trust v. Commissioner of
Internal Revenue, 78 F.3d 795, 798 (2nd Cir. 1996); Nalle v.
Commissioner of Internal Revenue, 997 F.2d 1134, 1138 (5th Cir. 1993);
McDonald v. Commissioner of Internal Revenue, 764 F.2d 322, 328
(5th Cir. 1985); Gerrard v. United States Office of Education, 656 F.
Supp. 570, 574 n.4 (N.D. Cal. 1987); Lima Surgical Associates, Inc. v.
United States, 20 Cl. Ct. 674, 679 n.8 (1990). In some recent cases,
however, courts have given Chevron deference to IRS regulations issued
through notice and comment rulemaking under the general authority of
section 7805. Atlantic Mutual Insurance Co. v. Commissioner of Internal
Revenue, 523 U.S. 382 (1998); Kikalos v. Commissioner of Internal
Revenue, 190 F.3d 791 (7th Cir. 1999); Redlark v. Commissioner of
Internal Revenue, 141 F.3d 936 (9th Cir. 1998); Bankers Life & Casualty
Co. v. United States, 142 F.3d 973 (7th Cir. 1998); Tate & Lyle,
Inc. v. Commissioner of Internal Revenue, 87 F.3d 99 (3rd Cir. 1996).
We began this chapter by noting the increasing role of agency
regulations in the overall scheme of federal law. We conclude this
discussion with the observation that this enhanced role makes continued
litigation on the issues we have outlined inevitable. The proliferation
and complexity of case law perhaps lends credence to Professor Davis's
mild cynicism:
"Unquestionably one of the most important factors in each decision on
what weight to give an interpretative rule is the degree of judicial
agreement or disagreement with the rule."[Footnote 204]
2. Interpretation of Agency's Own Regulations:
The principle of giving considerable deference to the administering
agency's interpretation of a statute applies at least with equal force
to an agency's interpretation of its own regulations. The Udall v.
Tallman Court, after making the statement quoted at the beginning of
this section, went on to state that "[w]hen the construction of an
administrative regulation rather than a statute is in issue, deference
is even more clearly in order." Udall v. Tallman, 380 U.S. 1, 16
(1965).
Perhaps the strongest statement is found in a 1945 Supreme Court
decision, Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 413-14:
"Since this involves an interpretation of an administrative regulation
a court must necessarily look to the administrative construction of the
regulation if the meaning of the words used is in doubt. The intention
of Congress or the principles of the Constitution in some situations
may be relevant in the first instance in choosing between various
constructions. But the ultimate criterion is the administrative
interpretation, which becomes of controlling weight unless it is
plainly erroneous or inconsistent with the regulation."[Footnote 205]
A good illustration of how all of this can work is found in B-222666,
Jan. 11, 1988. The Defense Security Assistance Agency (DSAA) is
responsible for issuing instructions and procedures for Foreign
Military Sales (FMS) transactions. These appear in the Security
Assistance Management Manual. A disagreement arose between DSAA and an
Army operating command as to whether certain "reports of discrepancy,"
representing charges for nonreceipt by customers, should be charged to
the FMS trust fund (which would effectively pass the losses on to all
FMS customers) or to Army appropriated funds. DSAA took the latter
position. GAO reviewed the regulation in question, and found it far
from clear on this point. The decision noted that "both of the
conflicting interpretations in this case appear to have merit, and both
derive support from portions of the regulation." However, while the
regulation may have been complex, the solution to the problem was
fairly simple. DSAA wrote the regulation and GAO, citing the standard
from the Bowles case, could not conclude that DSAA's position was
plainly erroneous or inconsistent with the regulation. Therefore,
DSAA's interpretation must prevail. See Shalala v. Guernsey Memorial
Hospital, 514 U.S. 87 (1995); Thomas Jefferson University v. Shalala,
512 U.S. 504 (1994); Stinson v. United States, 508 U.S. 36 (1993);
Williams v. United States, 503 U.S. 193 (1992); Immigration &
Naturalization Service v. Stanisic, 395 U.S. 62, 72 (1969); Navarro-
Miranda v. Ashcroft, 330 F.3d 672 (5th Cir. 2003); Tozzi v. Department
of Health & Human Services, 271 F.3d 301 (D.C. Cir. 2001); Legal
Environmental Assistance Foundation v. EPA, 276 F.3d 1253 (11th Cir.
2001); 72 Comp. Gen. 241 (1993); 57 Comp. Gen. 347 (1978); 56 Comp.
Gen. 160 (1976); B-279250 (May 26, 1998). See also McLean Hospital
Corp. v. United States, 26 Cl. Ct. 1144 (1992) (holding that an agency
interpretation of a regulation is not entitled to deference when it
violates the plain meaning of the regulation).
Just as with the interpretation of statutes, inconsistency in the
application of a regulation will significantly diminish the deference
courts are likely to give the agency's position. E.g., Western States
Petroleum Ass'n v. EPA, 87 F.3d 280 (9th Cir. 1996); Murphy v. United
States, 22 Cl. Ct. 147, 154 (1990).
Several recent court decisions have held that agency interpretations of
regulations are subject to some degree of deference even if they derive
from "mere litigating positions" rather than formal rules or
adjudications. See Auer v. Robbins, 519 U.S. 452 (1997); Bigelow v.
Department of Defense, 217 F.3d 875 (D.C. Cir. 2000), cert. denied,
532 U.S. 971 (2001); National Wildlife Federation v. Browner, 127 F.3d
1126 (D.C. Cir. 1997); Bradberry v. Director, Office of Workers'
Compensation, Department of Labor, 117 F.3d 1361 (11th Cir. 1997). In
this context, some courts have begun to refer to "Auer deference." See
Christensen v. Harris County, 529 U.S. 576, 577 (2000); Moore v. Hannon
Food Service, 317 F.3d 489, 494-95 (5th Cir. 2003); League of
Wilderness Defenders/Blue Mountain Biodiversity Project v. Forsgren,
309 F.3d 1181, 1189 (9th Cir. 2002); Drake v. Federal Aviation
Administration, 291 F.3d 59, 68 (D.C. Cir. 2002). See also Wells Fargo
Bank of Texas v. James, 321 F.3d 488, 494 (5th Cir. 2003) ("Auer v.
Robbins offer[s] the standard to be used where an agency interprets its
own regulation."). In order to warrant Auer deference, the text of a
regulation must fairly support the agency's interpretation. See
Christiansen, 529 U.S. at 577; Drake, 291 F.3d at 68; Wells Fargo Bank
of Texas v. James, 321 F.3d at 494; Ashtabula County Medical Center v.
Thompson, 191 F. Supp. 2d 884, 888 (N.D. Ohio 2002). Thus, Auer will
not apply if the plain and unambiguous language of the regulation is at
odds with the agency's interpretation. In such a case, the agency's
"interpretation" really amounts to a de facto amendment of the
regulation.
In limited contexts, some recent court decisions have suggested that a
somewhat lesser degree of deference than that in Bowles applies to
agency interpretations of their regulations. For example, a series of
decisions have applied a lesser degree of deference to ambiguous agency
regulations. See Director, Office of Workers' Compensation Programs,
Department of Labor v. Greenwich Collieries, 512 U.S. 267 (1994);
Mission Group Kansas, Inc. v. Riley, 146 F.3d 775 (10th Cir. 1998).
Another line of circuit court decisions accords less deference to
agency interpretations of regulations that impose penalties. See Walker
Stone Co. v. Secretary of Labor, 156 F.3d 1076 (10th Cir. 1998);
Stillwater Mining Co. v. Federal Mine Safety & Health Review
Commission, 142 F.3d 1179 (9th Cir. 1998); United States v. Chrysler
Corp., 158 F.3d 1350 (D.C. Cir. 1998); United States v. Apex Oil Co.,
132 F.3d 1287 (9th Cir. 1997).
C. Administrative Discretion:
"[S]ome play must be allowed to the joints if the machine is to work."
Tyson & Brother v. Banton, 273 U.S. 418, 446 (1927) (Justice Holmes,
dissenting).
1. Introduction:
Throughout this publication, the reader will encounter frequent
references to administrative discretion. The concept of discretion
implies choice or freedom of judgment, and appears in a variety of
contexts. There are many things an agency does every day that involve
making choices and exercising discretion.
One type of discretion commonly occurs in the context of purpose
availability. A decision may conclude that an appropriation is legally
available for a particular expenditure if the agency, in its
discretion, determines that the expenditure is a suitable means of
accomplishing an authorized end.
To put this another way, there is often more than one way to do
something, and reasonable minds may differ as to which way is the best.
The thing to keep in mind from the legal perspective is that if a given
choice is within the actor's legitimate range of discretion, then,
whatever else it may be, it is not illegal. For example, as we will see
in Chapter 4, an agency has discretionary authority to provide
refreshments at award ceremonies under the Government Employees
Incentive Awards Act, 31 U.S.C. §§ 4501-4507. Agency A may choose to do
so while agency B chooses not to. Under this type of discretion, agency
B's reasons are irrelevant. It may simply not want to spend the money.
As a matter of law, both agencies are correct.
Another type of discretion is implicit in all of the preceding
discussions of agency regulations. This type occurs when Congress
charges an agency with responsibility for implementing a program or
statute, but leaves much of the detail to the agency. In the course of
carrying out the program or statute, the agency may be required to make
various decisions, some of which may be expressly committed to agency
discretion by the governing statute. Subject to certain fundamental
concepts of administrative law, the agency is free to make those
decisions in accordance with the sound exercise of discretion. See
Chevron, Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-
844, 865-66 (1984).
Under the Administrative Procedure Act (APA), action that is "committed
to agency discretion by law" is not subject to judicial review.
5 U.S.C. § 701(a)(2). As the Supreme Court has pointed out, this is a
"very narrow exception" applicable in "rare instances" where, quoting
from the APA's legislative history, "statutes are drawn in such broad
terms that in a given case there is no law to apply." Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 (1971). As
noted, the "no law to apply" exception is uncommon, and most exercises
of discretion will be found reviewable at least to some
extent.[Footnote 206] See Drake v. Federal Aviation Administration,
291 F.3d 59 (D.C. Cir. 2002); Fox Television Stations, Inc. v. FCC,
280 F.3d 1027 (D.C. Cir. 2002); City of Los Angeles v. Department of
Commerce, 307 F.3d 859 (9th Cir. 2002); Diebold v. United States,
947 F.2d 787 (6th Cir. 1992).
This being said, however, the presumption of reviewability is at its
strongest in constitutional and habeas corpus matters. As Professor
Pierce has noted, Overton Park is the "high water mark of the Court's
presumption of reviewability" and "[s]ubsequent decisions have both
weakened the presumption where it continues to exist and narrowed the
scope of the presumption."[Footnote 207] For demonstrations of the
weakening of the presumption of reviewability, see:
* Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1
(2000) (debating whether there is a "presumption in favor of
preenforcement review" or a presumption against preclusion of all
review);
* Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (holding that a
comprehensive administrative review procedure under the Federal Mine
Safety and Health Amendments Act revealed a congressional intent to
preclude judicial review);
* Dalton v. Specter, 511 U.S. 462 (1994) ("where, as here, a statute
commits decisionmaking to the President's discretion, judicial review
of his decision is not available");
* Lincoln v. Vigil, 508 U.S. 182 (1993) (holding that allocation of
funds under a lump-sum appropriation is traditionally committed to
agency discretion and, therefore, not subject to judicial review under
the APA absent more specific restrictions);
* Lopez v. Federal Aviation Administration, 318 F.3d 242 (D.C. Cir.
2003) and Steenholdt v. Federal Aviation Administration, 314 F.3d 633
(D.C. Cir. 2003) (holding that the Federal Aviation Administration's
(FAA) rescission or nonrenewal of designation of individuals to inspect
aircraft is committed to agency discretion by law and nonreviewable
under a statute that allows FAA to rescind such a designation "at any
time for any reason the Administrator considers appropriate").
At this point, we should emphasize that these introductory comments are
largely oversimplified; they are intended merely to lay a foundation
for a discussion of the principles that follow.
2. Discretion Is Not Unlimited:
To say that an agency has freedom of choice in a given matter does not
mean that there are no limits to that freedom. Discretion is not
unbridled license. The decisions have frequently pointed out that
discretion means legal discretion, not unlimited discretion. The point
was stated as follows in 18 Comp. Gen. 285, 292 (1938):
"Generally, the Congress in making appropriations leaves largely to
administrative discretion the choice of ways and means to accomplish
the objects of the appropriation, but, of course, administrative
discretion may not transcend the statutes, nor be exercised in conflict
with law, nor for the accomplishment of purposes unauthorized by the
appropriation …."
See also 72 Comp. Gen. 310, 311 (1993); 35 Comp. Gen. 615, 618 (1956);
4 Comp. Gen. 19, 20 (1924); 7 Comp. Dec. 31 (1900); 5 Comp. Dec. 151
(1898); B-253338, Nov. 23, 1993; B-130288, Feb. 27, 1957; B-49169,
May 5, 1945; A-24916, Nov. 5, 1928.
In Lincoln v. Vigil, 508 U.S. 182 (1993), the Supreme Court concluded
that, absent statutory elaboration, decisions about how to allocate
funds within a lump-sum appropriation are committed to agency
discretion by law. The Court noted that "the very point of a lump-sum
appropriation is to give an agency the capacity to adapt to changing
circumstances and meet its statutory responsibilities in what it sees
as the most effective or desirable way." Id. at 191. Therefore, the
Court held that judicial review of the agency's decision to discontinue
a program that had been previously funded through a lump-sum
appropriation was precluded. (See Chapter 6 for a more detailed
discussion of the availability of appropriations.) See also 55 Comp.
Gen. 307 (1975); B-278121, Nov. 7, 1997.
Discretion must be exercised before the obligation is incurred.
Approval after the fact is merely a condoning of what has already been
done and does not constitute the exercise of discretion. 22 Comp.
Gen. 1083 (1943); 14 Comp. Gen. 698 (1935); A-57964, Jan. 30, 1935.
(This point should not be confused with an agency's occasional ability
to ratify an otherwise unauthorized act. See, for example, the
discussion of quantum meruit claims in Chapter 12 in Volume III of the
second edition of Principles of Federal Appropriations Law.)
One way to illustrate the concept of "legal discretion" is to visualize
a person standing in the center of a circle. The circumference of the
circle represents the limits of discretion, imposed either by law or by
the difficult to define but nonetheless real concept of "public
policy."[Footnote 208] The person is free to move in any direction, to
stay near the center or to venture close to the perimeter, even to
brush against it, but must stay within the circle. If our actor crosses
the line of the circumference, he has exceeded or, to use the legal
term, "abused" his discretion.
When GAO is performing its audit function, it may criticize a
particular exercise of discretion as ill-conceived, inefficient, or
perhaps wasteful. From the legal standpoint, however, there is no
illegal expenditure as long as the actor remains within the circle. We
may also note that the size of the circle may vary. For example, as we
will see in Chapter 14 (Volume III of the third edition of Principles
of Federal Appropriations Law), government corporations frequently have
a broader range of discretion than noncorporate agencies.
When Congress wishes to confer discretion unrestrained by other law,
its practice has been to include the words "notwithstanding the
provisions of any other law" or similar language. 14 Comp. Gen. 578
(1935). Even this is not totally unfettered, however. For example, even
this broad authority would not, at least as a general proposition, be
sufficient to permit violation of the criminal laws. Also, agency power
to act is always bound by the Constitution. Short of an amendment to
the Constitution itself, no statute, however explicit, can be construed
to authorize constitutional violations.
In addition, depending on the context and circumstances, federal laws
of general applicability may be found to remain applicable. See
District of Columbia Federation of Civic Ass'ns v. Volpe, 459 F.2d
1231, 1265 (D.C. Cir. 1971), cert. denied, 405 U.S. 1030 (1972)
(provision of Federal-Aid Highway Act directing construction of a
bridge "notwithstanding any other provision of law" did not render
inapplicable certain federal statutes regarding protection of historic
sites); B-290125.2, B-290125.3, Dec. 18, 2002 (finding that statutory
directions governing certain aspects of an agency procurement
"notwithstanding any other provision of law" do not override GAO's bid
protest jurisdiction under the Competition in Contracting Act).
An example of a statute permitting action without regard to other laws
is 50 U.S.C. § 1431, under which the President may authorize an agency
with national defense functions to enter into or modify contracts
"without regard to other provisions of law relating to the making,
performance, amendment, or modification of contracts, whenever he deems
that such action would facilitate the national defense." Provisions of
this type are not self-executing but contemplate specific
administrative determinations in advance of the proposed action. In
other words, the "other provisions of law" continue to apply unless and
until waived by an authorized official. 35 Comp. Gen. 545 (1956). See
also 22 Comp. Gen. 400 (1942).
3. Failure or Refusal to Exercise Discretion:
Where a particular action or decision is committed to agency discretion
by law, the agency is under a legal duty to actually exercise that
discretion. In one line of cases, the principle has evolved that the
failure or refusal to exercise discretion committed by law to the
agency is itself an abuse of discretion. As the following cases
demonstrate, the fact of exercising discretion and the particular
results of that exercise are two very different things.
We start with a Supreme Court decision, Work v. United States ex rel.
Rives, 267 U.S. 175 (1925). That case involved section 5 of the Dent
Act, ch. 94, 40 Stat. 1272, 1274 (Mar. 2, 1919), under which Congress
authorized the Secretary of the Interior to compensate a class of
people who incurred losses in furnishing supplies or services to the
government during World War I. The Secretary's determinations on
particular claims were to be final and conclusive. The statute "was a
gratuity based on equitable and moral considerations" (id. at 181),
vesting the Secretary with the ultimate power to determine which losses
should be compensated.
The plaintiff in Rives had sought mandamus to compel the Secretary to
consider and allow a claim for a specific loss incurred as a result of
the plaintiff's obtaining a release from a contract to buy land. The
Secretary had previously denied the claim because he had interpreted
the statute as not embracing money spent on real estate. In holding
that the Secretary had done all that was required by law, the Court
cited and distinguished a line of cases--
"in which a relator in mandamus has successfully sought to compel
action by an officer who has discretion concededly conferred on him by
law. The relator [plaintiff] in such cases does not ask for a decision
any particular way but only that it be made one way or the other."
Id. at 184.
The Secretary had made a decision on the claim, had articulated reasons
for it, and had not exceeded the bounds of his statutory authority.
That was enough. A court could compel the Secretary to actually
exercise his discretion, that is, to act on a claim one way or the
other, but could not compel him to exercise that discretion to achieve
a particular result.
In Simpkins v. Davidson, 302 F. Supp. 456 (S.D. N.Y. 1969), the
plaintiff sued to compel the Small Business Administration (SBA) to
make a loan to him. The court found that the plaintiff was entitled to
submit an application, and to have the SBA consider that application
and reach a decision on whether or not to grant the loan. However, he
had no right to the loan itself, and the court could not compel the SBA
to exercise its discretion to achieve a specific result. A very similar
case on this point is Dubrow v. Small Business Administration, 345 F.
Supp. 4 (C.D. Cal. 1972). See also B-226121-O.M., Feb. 9, 1988, citing
and applying these cases.
Another case involved a provision of the Farm and Rural Development Act
that authorized the Secretary of Agriculture to forgo foreclosure on
certain delinquent loans. The plaintiffs were a group of farmers who
alleged that the Secretary had refused to consider their requests. The
district court held that the Secretary was required to consider the
requests. Matzke v. Block, 542 F. Supp. 1107 (D. Kans. 1982). "When
discretion is vested in an administrative agency, the refusal to
exercise that discretion is itself an abuse of discretion." Id. at
1115. The Court of Appeals for the Tenth Circuit affirmed that portion
of the decision in Matzke v. Block, 732 F.2d 799 (10th Cir. 1984),
stating at page 801:
"The word 'may,' the Secretary 'may' permit deferral, is, in our view,
a reference to the discretion of the Secretary to grant the deferral
upon a showing by a borrower. It does not mean as the Secretary argues
that he has the discretion whether or not to implement the Act at all
and not to consider any 'requests' under the statutory standards."
The Comptroller General applied these principles in 62 Comp. Gen. 641
(1983). The Military Personnel and Civilian Employees' Claims Act of
1964, 31 U.S.C. § 3721, gives agencies discretionary authority to
consider and settle certain employee personal property claims. An
agency asked whether it had discretion to adopt a policy of refusing
all claims submitted to it under the Act. No, the concept of
administrative discretion does not extend that far, replied the
Comptroller. While GAO would not purport to tell another agency which
claims it should or should not consider--that part was discretionary--
the decision noted that "a blanket refusal to consider all claims is,
in our opinion, not the exercise of discretion" (id. at 643), and held
"that an agency has the duty to actually exercise its discretion and
that this duty is not satisfied by a policy of refusing to consider all
claims" (id. at 645). Thus, for example, an agency would be within its
discretion to make and announce a policy decision not to consider
claims of certain types, such as claims for stolen cash, or to impose
monetary ceilings on certain types of property, or to establish a
minimum amount for the filing of claims. What it cannot do is disregard
the statute in its entirety.
Additional cases illustrating this concept are California v. Settle,
708 F.2d 1380 (9th Cir. 1983); Rockbridge v. Lincoln, 449 F.2d 567
(9th Cir. 1971); and Jacoby v. Schuman, 568 F. Supp. 843 (E.D. Mo.
1983).
Several other cases, however, have suggested that the refusal of an
agency to consider the exercise of its discretion will be subject to
judicial review only where that refusal stems from a legal error by the
agency (e.g., the agency wrongly concludes that it lacks jurisdiction
or authority to exercise discretion) or where its refusal to exercise
discretion can be tied to a statutory or constitutional violation. See
Immigration & Naturalization Service v. St. Cyr, 533 U.S. 289, 307
(2001); Gutierrez-Chavez v. Immigration & Naturalization Service,
298 F.3d 824 (9th Cir. 2002); Byrd v. Moore, 252 F. Supp. 2d 293 (W.D.
N.C. 2003).
4. Regulations May Limit Discretion:
By issuing regulations, an agency may voluntarily (and perhaps even
inadvertently) limit its own discretion. A number of cases have held
that an agency must comply with its own regulations, even if the action
is discretionary by statute.
The leading case is United States ex rel. Accardi v. Shaughnessy,
347 U.S. 260 (1954). The Attorney General had been given statutory
discretion to suspend the deportation of aliens under certain
circumstances, and had, by regulation, given this discretion to the
Board of Immigration Appeals. The Supreme Court held that, regardless
of what the situation would have been if the regulations did not exist,
the Board was required under the regulations to exercise its own
judgment, and it was improper for the Attorney General to attempt to
influence that judgment, in this case, by issuing a list of "unsavory
characters" he wanted to have deported. "In short, as long as the
regulations remain operative, the Attorney General denies himself the
right to sidestep the Board or dictate its decision in any manner." Id.
at 267. Of course, the Attorney General could always amend his
regulations, but an amendment could operate prospectively only.
Awards under the Government Employees Incentive Awards Act, 5 U.S.C.
§§ 4501-4507, as we will discuss in Chapter 4, are wholly
discretionary. In a 1982 decision, GAO reviewed Army regulations which
provided that "awards will be granted" if certain specified criteria
were met, and noted that the Army had circumscribed its own discretion
by committing itself to make an award if those conditions were met.
B-202039, May 7, 1982. Reviewing Air Force regulations under similar
legislation applicable to military personnel, the Court of Claims noted
in Griffin v. United States, 215 Ct. Cl. 710, 714 (1978):
"Thus, we think that the Secretary may have originally had uncontrolled
and unreviewable discretion … but as he published procedures and
guidelines, as he received responsive suggestions, as he implemented
them and through his subordinates passed upon compensation claims, we
think by his choices he surrendered some of his discretion, and the
legal possibility of abuse of discretion came into the picture."
Another group of cases in this category are those, previously noted in
section A.1 of this chapter, in which an agency has waived an exemption
from the APA and was held bound by that waiver.
For additional authority on the proposition that an agency can, by
regulation, restrict otherwise discretionary action, see United
States v. Nixon, 418 U.S. 683 (1974); Vitarelli v. Seaton, 359 U.S. 535
(1959); Service v. Dulles, 354 U.S. 363 (1957); United States v.
Morgan, 193 F.3d 252 (4th Cir. 1999); Clarry v. United States, 85 F.3d
1041 (2nd Cir. 1996); Waldron v. Immigration & Naturalization Service,
17 F.3d 511, 519 (2nd Cir. 1994); Montilla v. Immigration &
Naturalization Service, 926 F.2d 162 (2nd Cir. 1991); 67 Comp. Gen. 471
(1988).
Recent case law has recognized a number of limits, caveats, and nuances
to the Accardi doctrine. While there are occasional exceptions, the
doctrine generally will not be applied to bind an agency by its
informal rules, policies, or other issuances that the court concludes
are intended to provide internal guidance rather than to confer rights
or benefits on the public. See Farrell v. Department of the Interior,
314 F.3d 584, 591 (Fed. Cir. 2002) (holding that agency statement that
was not formally promulgated is not binding on the agency unless the
agency intended to be bound by it). Even if a court concludes that a
rule, or policy document, is binding on the agency under Accardi, the
court may not invalidate the agency action if it concludes that the
departure from the rule was nonprejudicial or "harmless error." See
Wilkinson v. Legal Services Corp., 27 F. Supp. 2d 32 (D.D.C. 1998). In
addition, the courts are very reluctant to apply Accardi to criminal
proceedings or exercises of prosecutorial-type discretion such as an
agency decision not to initiate an enforcement action. See Carranza v.
Immigration & Naturalization Service, 277 F.3d 65, 68 (1st Cir. 2002);
United States v. Lee, 274 F.3d 485 (8th Cir. 2001); United States v.
Shakir, 113 F. Supp. 2d 1182 (M.D. Tenn. 2000); United States v.
Briscoe, 69 F. Supp. 2d 738, 747 (D. V.I. 1999), aff'd, 234 F.3d 1266
(3rd Cir. 2000); Nichols v. Reno, 931 F. Supp. 748 (D. Colo. 1996);
Walker v. Reno, 925 F. Supp. 124 (N.D. N.Y. 1995).
5. Insufficient Funds:
Congress occasionally legislates in such a manner as to restrict its
own subsequent funding options. An example is contract authority,
described in Chapter 2. Another example is entitlement legislation not
contingent upon the availability of appropriations. A well-known
example here is social security benefits. Where legislation creates, or
authorizes the administrative creation of, binding legal obligations
without regard to the availability of appropriations, a funding
shortfall may delay actual payment but does not authorize the
administering agency to alter or reduce the "entitlement."
In the far more typical situation, however, Congress merely enacts a
program and authorizes appropriations. For any number of reasons--
budgetary constraints, changes in political climate, etc.--the actual
funding may fall short of original expectations. What is an agency to
do when it finds that it does not have enough money to accommodate an
entire class of beneficiaries? Obviously, it can ask Congress for more.
However, as any program administrator knows, asking and getting are two
different things. If the agency cannot get additional funding and the
program legislation fails to provide guidance, there is solid authority
for the proposition that the agency may, within its discretion,
establish reasonable classifications, priorities, and/or eligibility
requirements, as long as it does so on a rational and consistent
basis.[Footnote 209]
The concept was explained by the Supreme Court in Morton v. Ruiz,
415 U.S. 199, 230-31 (1974), a case involving an assistance program
administered by the Bureau of Indian Affairs (BIA):
"[I]t does not necessarily follow that the Secretary is without power
to create reasonable classifications and eligibility requirements in
order to allocate the limited funds available to him for this purpose.
[Citations omitted.] Thus, if there were only enough funds appropriated
to provide meaningfully for 10,000 needy Indian beneficiaries and the
entire class of eligible beneficiaries numbered 20,000, it would be
incumbent upon the BIA to develop an eligibility standard to deal with
this problem, and the standard, if rational and proper, might leave
some of the class otherwise encompassed by the appropriation without
benefits. But in such a case the agency must, at a minimum, let the
standard be generally known so as to assure that it is being applied
consistently and so as to avoid both the reality and the appearance of
arbitrary denial of benefits to potential beneficiaries."
In Suwannee River Finance, Inc. v. United States, 7 Cl. Ct. 556 (1985),
the plaintiff sued for construction differential subsidy payments under
the Merchant Marine Act, administered by the Maritime Administration
(MarAd). In response to a sudden and severe budget reduction, MarAd had
cut off all subsidies for nonessential changes after a specified date,
and had notified the plaintiff to that effect. Noting that "[a]fter
this budget cut, MarAd obviously could no longer be as generous in
paying subsidies as it had been before," the court held MarAd's
approach to be "a logical, effective and time-honored method for
allocating the burdens of shrinking resources" and well within its
administrative discretion. Id. at 561.
Another illustration is Ramah Navajo School Board v. Babbitt, 87 F.3d
1338 (D.C. Cir. 1996), concerning the Secretary of the Interior's
allocation of funds to Indian tribes where an appropriations shortfall
prevented the full allocation contemplated by the authorizing statute.
The court held that the Secretary's determination of how to allocate
funds in the face of a funding shortfall was subject to judicial
review, reversing the district court's opinion that had relied on
Lincoln v. Vigil, and that the Secretary had exceeded his statutory
authority. For additional case law on this point, see Cherokee Nation
of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002); Shoshone-
Bannock Tribes of the Fort Hall Reservation v. Secretary, Department of
Health & Human Services, 279 F.3d 660 (9th Cir. 2002); Babbitt v.
Oglala Sioux Tribal Public Safety Department, 194 F.3d 1374 (Fed. Cir.
1999).
An illustration from the Comptroller General's decisions is B-202568,
Sept. 11, 1981. Due to a severe drought in the summer of 1980, the
Small Business Administration (SBA) found that its appropriation was
not sufficient to meet demand under the SBA's disaster loan program.
Rather than treating applicants on a "first come, first served" basis,
SBA amended its regulations to impose several new restrictions,
including a ceiling of 60 percent of actual physical loss. GAO reviewed
SBA's actions and found them completely within the agency's
administrative discretion.
In a 1958 case, Congress had, by statute, directed the Interior
Department to transfer $2.5 million from one appropriation to another.
Congress had apparently been under the impression that the "donor"
account contained a sufficient unobligated balance. The donor account
in fact had ample funds if both obligated and unobligated funds were
counted, but had an unobligated balance of only $1.3 million. The
Interior Department was in an impossible position. It could not
liquidate obligations in both accounts. If it transferred the full $2.5
million, some valid obligations under the donor appropriation would
have to wait; if it transferred only the unobligated balance, it could
not satisfy the entire obligation under the receiving account. First,
GAO advised that the transfer would not violate the Antideficiency Act
(31 U.S.C. § 1341) since it was not only authorized but directed by
statute. As to which obligation should be liquidated first--that is,
which could be paid immediately and which would have to await a
supplemental appropriation--the best answer GAO could give was that
"the question is primarily for determination administratively." In
other words, there was no legally mandated priority, and all the agency
could do was use its best judgment. GAO added, however, that it might
be a good idea to first seek some form of congressional clarification.
38 Comp. Gen. 93 (1958).
An early case, 22 Comp. Dec. 37 (1915), considered the concept of
prorating. Congress had appropriated a specific sum for the payment of
a designated class of claims against the Interior Department. When all
claims were filed and determined, the total amount of the allowed
claims exceeded the amount of the appropriation. The question was
whether the amount appropriated could be prorated among the claimants.
The Comptroller of the Treasury declined to approve the prorating,
concluding that "action should be suspended until Congress shall
declare its wishes by directing a pro rata payment …or by appropriating
the additional amount necessary to full payment." Id. at 40. If the
decision was saying merely that the agency should attempt to secure
additional funds--or at least explore the possibility--before taking
administrative action that would reduce payments to individual
claimants, then it is consistent with the more recent case law and
remains valid to that extent. If, however, it was suggesting that the
agency lacked authority to prorate without specific congressional
sanction, then it is clearly superseded by Morton v. Ruiz and the other
cases previously cited. There is no apparent reason why prorating
should not be one of the discretionary options available to the agency
along with the other options discussed in the various cases. It has one
advantage in that each claimant will receive at least something.
A conceptually related situation is a funding shortfall in an
appropriation used to fund a number of programs. Again, the agency must
allocate its available funds in some reasonable fashion. Mandatory
programs take precedence over discretionary ones.[Footnote 210] Within
the group of mandatory programs, more specific requirements should be
funded first, such as those with specific time schedules, with
remaining funds then applied to the more general requirements.
B-159993, Sept. 1, 1977; B-177806, Feb. 24, 1978 (nondecision letter).
These principles apply equally, of course, to the allocation of funds
between mandatory and nonmandatory expenditures within a single-program
appropriation. E.g., 61 Comp. Gen. 661, 664 (1982).
Other cases recognizing an agency's discretion in coping with funding
shortfalls are City of Los Angeles v. Adams, 556 F.2d 40, 49-50 (D.C.
Cir. 1977), and McCarey v. McNamara, 390 F.2d 601 (3rd Cir. 1968).
[End of section]
Chapter 4: Availability of Appropriations: Purpose:
A. General Principles:
1. Introduction: 31 U.S.C. § 1301(a):
2. Determining Authorized Purposes:
a. Statement of Purpose:
b. Specific Purpose Stated in Appropriation Act:
3. New or Additional Duties:
4. Termination of Program:
a. Termination Desired:
b. Reauthorization Pending:
B. The "Necessary Expense" Doctrine:
1. The Theory:
a. Relationship to the Appropriation:
b. Expenditure Otherwise Prohibited:
c. Expenditure Otherwise Provided For:
2. General Operating Expenses:
a. Training:
b. Travel:
c. Postage Expenses:
d. Books and Periodicals:
e. Miscellaneous Items Incident to the Federal Workplace:
C. Specific Purpose Authorities and Limitations:
1. Introduction:
2. Attendance at Meetings and Conventions:
a. Government Employees:
(1) Statutory framework:
(2) Inability to attend:
(3) Federally sponsored meetings:
(4) Rental of space in District of Columbia:
(5) Military personnel:
b. Nongovernment Personnel:
(1) 31 U.S.C. § 1345:
(2) Invitational travel:
(3) Use of grant funds:
3. Attorney's Fees:
a. Introduction:
b. Hiring of Attorneys by Government Agencies:
c. Suits Against Government Officers and Employees:
d. Suits Unrelated to Federal Employees:
e. Claims by Federal Employees:
(1) Discrimination proceedings:
(2) Other employee claims:
f. Criminal Justice Act:
(1) Types of actions covered:
(2) Miscellaneous cases:
g. Equal Access to Justice Act:
h. Contract Matters:
(1) Bid protests:
(2) Contract disputes:
i. Public Participation in Administrative Proceedings: Funding of
Intervenors:
4. Compensation Restrictions:
a. Dual Compensation:
b. Employment of Aliens:
c. Forfeiture of Annuities and Retired Pay:
(1) General principles:
(2) The Alger Hiss case:
(3) Types of offenses covered:
(4) Related statutory provisions:
5. Entertainment--Recreation--Morale and Welfare:
a. Introduction:
(1) Application of the rule:
(2) What is entertainment?
b. Food for Government Employees:
(1) Working at official duty station under unusual conditions:
(2) Government Employees Training Act:
(3) Award ceremonies:
(4) Cafeterias and lunch facilities:
c. Entertainment for Government Employees Other Than Food:
(1) Miscellaneous cases:
(2) Cultural awareness programs:
d. Entertainment of Nongovernment Personnel:
e. Recreational and Welfare Facilities for Government Personnel:
(1) The rules: older cases and modern trends:
(2) Child care:
f. Reception and Representation Funds:
6. Fines and Penalties:
7. Firefighting and Other Municipal Services:
a. Firefighting Services: Availability of Appropriations:
b. Federal Fire Prevention and Control Act of 1974:
c. Other Municipal Services:
8. Gifts and Awards:
a. Gifts:
b. Contests:
(1) Entry fees:
(2) Government-sponsored contests:
c. Awards:
9. Guard Services: Anti-Pinkerton Act:
a. Evolution of the Law Prior to 57 Comp. Gen. 524:
b. 57 Comp. Gen. 524 and the Present State of the Law:
10. Insurance:
a. The Self-Insurance Rule:
b. Exceptions to the Rule:
(1) Departments and agencies generally:
(2) Government corporations:
c. Specific Areas of Concern:
(1) Property owned by government contractors:
(2) Use of motor vehicles:
(3) Losses in shipment:
(4) Bonding of government personnel:
11. Lobbying and Related Matters:
a. Introduction:
b. Penal Statutes:
c. Appropriation Act Restrictions:
(1) Origin and general considerations:
(2) Self-aggrandizement:
(3) Covert propaganda:
(4) Pending legislation: overview:
(5) Cases involving "grassroots" lobbying violations:
(6) Pending legislation: cases in which no violation was found:
(7) Pending legislation: Providing assistance to private lobbying
groups:
(8) Promotion of legislative proposals: Prohibited activity short of
grass roots lobbying:
(9) Dissemination of political or misleading information:
d. Lobbying with Grant Funds:
e. Informational Activities:
f. Advertising and the Employment of Publicity Experts:
(1) Commercial advertising:
(2) Advertising of government programs, products, or services:
(3) Publicity experts:
12. Membership Fees:
a. 5 U.S.C. § 5946:
b. Attorneys:
13. Personal Expenses and Furnishings:
a. Introduction:
b. Business or Calling Cards:
c. Health, Medical Care and Treatment:
(1) Medical care:
(2) Purchase of health-related items:
(3) The Rehabilitation Act:
d. Office Furnishings (Decorative Items):
e. Personal Qualification Expenses:
f. Photographs:
g. Seasonal Greeting Cards and Decorations:
(1) Greeting cards:
(2) Seasonal decorations:
h. Traditional Ceremonies:
i. Wearing Apparel:
j. Miscellaneous Personal Expenses:
(1) Commuting and parking:
(2) Flexiplace:
(3) Miscellaneous employee expenses:
14. Rewards:
a. Rewards to Informers:
(1) Reward as "necessary expense":
(2) Payments to informers: Internal Revenue Service:
(3) Payments to informers: Customs Service:
b. Missing Government Employees:
c. Lost or Missing Government Property:
d. Contractual Basis:
e. Rewards to Government Employees:
15. State and Local Taxes:
a. Introduction:
b. Tax on Business Transactions Where the Federal Government Is a
Party:
(1) General principles:
(2) Public utilities:
c. Property-Related Taxes:
d. Taxes Paid by Federal Employees:
(1) Parking taxes:
(2) Hotel and meal taxes:
(3) Tolls:
(4) State and local income withholding taxes:
(5) Possessory interest taxes:
(6) Occupational license fees:
e. Refund and Recovery of Tax Improperly Paid:
16. Telephone Services:
a. Telephone Service to Private Residences:
(1) The statutory prohibition and its major exception:
(2) Funds to which the statute applies:
(3) What is a private residence?
(4) Application of the general rule:
(5) Exceptions:
b. Long-distance Calls:
c. Mobile or Cellular Phones:
Chapter 4: Availability of Appropriations: Purpose:
A. General Principles:
1. Introduction: 31 U.S.C. § 1301(a):
This chapter introduces the concept of the "availability" of
appropriations. The decisions are often stated in terms of whether
appropriated funds are or are not "legally available" for a given
obligation or expenditure. This is simply another way of saying that a
given item is or is not a legal expenditure. Whether appropriated funds
are legally available for something depends on three things:
1. the purpose of the obligation or expenditure must be authorized;
2. the obligation must occur within the time limits applicable to the
appropriation; and:
3. the obligation and expenditure must be within the amounts Congress
has established.
Thus, there are three elements to the concept of availability: purpose,
time, and amount. All three must be observed for the obligation or
expenditure to be legal. Availability as to time and amount will be
covered in Chapters 5 and 6. This chapter discusses availability as to
purpose.
One of the fundamental statutes dealing with the use of appropriated
funds is 31 U.S.C. § 1301(a):
"Appropriations shall be applied only to the objects for which the
appropriations were made except as otherwise provided by law."
Simple, concise, and direct, this statute was originally enacted in
1809 (ch. 28, § 1, 2 Stat. 535, (Mar. 3, 1809)) and is one of the
cornerstones of congressional control over the federal purse. Because
money cannot be paid from the Treasury except under an appropriation
(U.S. Const. art. I, § 9, cl. 7), and because an appropriation must be
derived from an act of Congress, it is for Congress to determine the
purposes for which an appropriation may be used. Simply stated,
31 U.S.C. § 1301(a) says that public funds may be used only for the
purpose or purposes for which they were appropriated. It prohibits
charging authorized items to the wrong appropriation, and unauthorized
items to any appropriation. Anything less would render congressional
control largely meaningless. An earlier Treasury Comptroller was of the
opinion that the statute did not make any new law, but merely codified
what was already required under the Appropriations Clause of the
Constitution. 4 Lawrence, First Comp. Dec. 137, 142 (1883).
Administrative applications of the purpose statute can be traced back
almost to the time the statute was enacted. See, for example, 36 Comp.
Gen. 621, 622 (1957), which quotes part of a decision dated February
21, 1821. In an 1898 decision captioned "Misapplication of
Appropriations," the Comptroller of the Treasury talked about 31 U.S.C.
§ 1301(a) in these terms:
"It is difficult to see how a legislative prohibition could be
expressed in stronger terms. The law is plain, and any disbursing
officer disregards it at his peril."
4 Comp. Dec. 569, 570 (1898).
The starting point in applying 31 U.S.C. § 1301(a) is that, absent a
clear indication to the contrary, the common meaning of the words in
the appropriation act and the program legislation it funds governs the
purposes to which the appropriation may be applied. To illustrate, the
Comptroller General held in 41 Comp. Gen. 255 (1961) that an
appropriation available for the "replacement" of state roads damaged by
nearby federal dam construction could be used only to restore those
roads to their former condition, not for improvements such as widening.
Similarly, funds provided for the modification of existing dams for
safety purposes could not be used to construct a new dam, even as part
of an overall safety strategy. B-215782, Apr. 7, 1986.
If a proposed use of funds is inconsistent with the statutory language,
the expenditure is improper, even if it would result in substantial
savings or other benefits to the government. Thus, while the Federal
Aviation Administration (FAA) could construct its own roads needed for
access to FAA facilities, it could not contribute a share for the
improvement of county-owned roads, even though the latter undertaking
would have been much less expensive. B-143536, Aug. 15, 1960. See also
39 Comp. Gen. 388 (1959).
The limitation in 31 U.S.C. § 1301(a) applies to revolving funds. GAO
has held that revolving funds are appropriations, and, accordingly,
that the legal principles governing appropriations also apply to
revolving funds. See B-247348, June 22, 1992; B-240914, Aug. 14, 1991.
See also 63 Comp. Gen. 110, 112 (1983), and decisions cited therein.
The concept of purpose permeates much of this publication. Thus, many
of the rules discussed in Chapter 2 relate to purpose. For example:
* A specific appropriation must be used to the exclusion of a more
general appropriation that might otherwise have been viewed as
available for the particular item. Chapter 2, section B.2.
* Transfer between appropriations is prohibited without specific
statutory authority, even where reimbursement is contemplated. Chapter
2, section B.3.
It follows that deliberately charging the wrong appropriation for
purposes of expediency or administrative convenience, with the
expectation of rectifying the situation by a subsequent transfer from
the right appropriation, violates 31 U.S.C. § 1301(a). 36 Comp.
Gen. 386 (1956); 26 Comp. Gen. 902, 906 (1947); 19 Comp. Gen. 395
(1939); 14 Comp. Gen. 103 (1934); B-248284.2, Sept. 1, 1992; B-104135,
Aug. 2, 1951; B-97772, May 18, 1951.[Footnote 211] The fact that the
expenditure would be authorized under some other appropriation is
irrelevant. Charging the "wrong" appropriation, unless authorized by
some statute such as 31 U.S.C. § 1534, violates the purpose statute.
For several examples, see U.S. General Accounting Office, Improper
Accounting for Costs of Architect of the Capitol Projects, PLrd-81-4
(Washington, D.C.: Apr. 13, 1981).
The transfer rule illustrates the close relationship between 31 U.S.C.
§ 1301(a) and statutes relating to amount such as the Antideficiency
Act, 31 U.S.C. § 1341. An unauthorized transfer violates 31 U.S.C.
§ 1301(a) because the transferred funds would be used for a purpose
other than that for which they were originally appropriated. B-279886,
Apr. 28, 1998; B-278121, Nov. 7, 1997; B-248284.2, Sept. 1, 1992. If
the receiving appropriation is exceeded, the Antideficiency Act is also
violated. Further, informal congressional approval of an unauthorized
transfer of funds between appropriation accounts does not have the
force and effect of law. B-278121 and B-248284.2, supra.
Although every violation of 31 U.S.C. § 1301(a) is not automatically a
violation of the Antideficiency Act, and every violation of the
Antideficiency Act is not automatically a violation of 31 U.S.C.
§ 1301(a), cases frequently involve elements of both. Thus, an
expenditure in excess of an available appropriation violates both
statutes. The reason the purpose statute is violated is that, unless
the disbursing officer used personal funds, he or she must necessarily
have used money appropriated for other purposes. 4 Comp. Dec. 314, 317
(1897). The relationship between purpose violations and the
Antideficiency Act is explored further in Chapter 6.
Brief mention should also be made of the axiom that an agency cannot do
indirectly what it is not permitted to do directly. Thus, an agency
cannot use the device of a contract, grant, or agreement to accomplish
a purpose it could not do by direct expenditure. See 18 Comp. Gen. 285
(1938) (contract stipulation to pay wages in excess of Davis-Bacon Act
rates held unauthorized). See also B-259499, Aug. 22, 1995 (agreement
to provide personal services to agency that is not authorized to
contract for personal services is not authorized under the Economy
Act).
Similarly, a grant of funds for unspecified purposes would be improper.
55 Comp. Gen. 1059, 1062 (1976). Settlements cannot include benefits
that the agency does not have authority to provide. See B-247348,
June 22, 1992 (broad authority to provide remedies for claims arising
under Title VII of the Civil Rights Act does not permit an agency to
provide unauthorized benefits). See also B-239592, Aug. 23, 1991.
2. Determining Authorized Purposes:
a. Statement of Purpose:
Where does one look to find the authorized purposes of an
appropriation? The first place, of course, is the appropriation act
itself and its legislative history. If the appropriation is general, it
may also be necessary to consult the legislation authorizing the
appropriation, if any, and the underlying program or organic
legislation, together with their legislative histories.
The actual language of the appropriation act is always of paramount
importance in determining the purpose of an appropriation. Every
appropriation has one or more purposes in the sense that Congress does
not provide money for an agency to do with as it pleases, although
purposes are stated with varying degrees of specificity. One end of the
spectrum is illustrated by this old private relief act:
"[T]he Secretary of the Treasury …is hereby, authorized and directed to
pay to George H. Lott, a citizen of Mississippi, the sum of one hundred
forty-eight dollars …."
Act of March 23, 1896, ch. 71, 29 Stat. 711.
This is one extreme. There is no need to look beyond the language of
the appropriation; it was available to pay $148 to George H. Lott, and
for absolutely nothing else. Language this specific leaves no room for
administrative discretion. For example, the Comptroller General has
held that language of this type does not authorize reimbursement to an
agency where the agency erroneously paid the individual before the
private act had been passed. In this situation, the purpose for which
the appropriation was made had ceased to exist. B-151114, Aug. 26,
1964.
At the other extreme, smaller agencies may receive only one
appropriation. The purpose of the appropriation will be to enable the
agency to carry out all of its various authorized functions. For
example, the Consumer Product Safety Commission receives but a single
appropriation "for necessary expenses of the Consumer Product Safety
Commission."[Footnote 212] To determine permissible expenditures under
this type of appropriation, it would be necessary to examine all of the
agency's substantive legislation, in conjunction with the "necessary
expense" doctrine discussed later in this chapter.
Between the two extremes are many variations. A common form of
appropriation funds a single program. For example, the Interior
Department receives a separate appropriation to carry out the Payments
in Lieu of Taxes Act (PILT), 31 U.S.C. § 6901-6904.[Footnote 213] While
the appropriation is specific in the sense that it is limited to PILT
payments and associated administrative expenses, it is nevertheless
necessary to look beyond the appropriation language and examine the
PILT statute to determine authorized expenditures.
Once the purposes have been determined by examining the various pieces
of legislation, 31 U.S.C. § 1301(a) comes into play to restrict the use
of the appropriation to these purposes only, together with one final
generic category of payments--payments authorized under general
legislation applicable to all or a defined group of agencies and not
requiring specific appropriations. For example, legislation enacted in
1982 amended 12 U.S.C. § 1770 to authorize federal agencies to provide
various services, including telephone service, to employee credit
unions. Pub. L. No. 97-320, § 515, 96 Stat. 1469, 1530 (Oct. 15, 1982).
Prior to this legislation, an agency would have violated 31 U.S.C.
§ 1301(a) by providing telephone service to a credit union, even on a
reimbursable basis, because this was not an authorized purpose under
any agency appropriation. 60 Comp. Gen. 653 (1981). The 1982 amendment
made the providing of special services to credit unions an authorized
agency function, and hence an authorized purpose, which it could fund
from unrestricted general operating appropriations. 66 Comp. Gen. 356
(1987). Similarly, a recently enacted statute gives agencies the
discretion to use appropriated funds to pay the expenses their
employees incur for obtaining professional credentials. 5 U.S.C.
§ 5757(a). See also B-289219, Oct. 29, 2002. Prior to this legislation,
agencies could not use appropriated funds to pay fees incurred by their
employees in obtaining professional credentials. See, e.g., 47 Comp.
Gen. 116 (1967). Other examples are interest payments under the Prompt
Payment Act (31 U.S.C. §§ 3901-3907) and administrative settlements
less than $2,500 under the Federal Tort Claims Act (28 U.S.C. §§ 2671
et seq.).
b. Specific Purpose Stated in Appropriation Act:
Where an appropriation specifies the purpose for which the funds are to
be used, 31 U.S.C. § 1301(a) applies in its purest form to restrict the
use of the funds to the specified purpose. For example, an
appropriation for topographical surveys in the United States was not
available for topographical surveys in Puerto Rico. 5 Comp. Dec. 493
(1899). Similarly, an appropriation to install an electrical generating
plant in the customhouse building in Baltimore could not be used to
install the plant in a nearby post office building, even though the
plant would serve both buildings and thereby reduce operating expenses.
11 Comp. Dec. 724 (1905). An appropriation for the extension and
remodeling of the State Department building was not available to
construct a pneumatic tube delivery system between the State Department
and the White House. 42 Comp. Gen. 226 (1962). In another example
involving a line-item appropriation for a grant project, because the
funds were made available for a specific grantee in a specific amount
to accomplish a specific purpose, the agency could not grant less than
Congress has directed by using some of the appropriation to pay its
administrative costs. 72 Comp. Gen. 317 (1993); 69 Comp. Gen. 660, 662
(1990). And, as noted previously, an appropriation for the
"replacement" of state roads could not be used to make improvements on
them. 41 Comp. Gen. 255 (1961).
It is well settled, but warrants repeating, that even an expenditure
that may be reasonably related to a general appropriation may not be
paid out of that appropriation where the expenditure falls specifically
within the scope of another appropriation. 63 Comp. Gen. 422 (1984);
B-300325, Dec. 13, 2002; B-290005, July 1, 2002. It is also well
settled that when two appropriations are available for the same
purpose, the agency must select which to use, and that once it has made
an election, the agency must continue to use the same appropriation for
that purpose unless the agency, at the beginning of the fiscal year,
informs Congress of its intent to change for the next fiscal year.
B-272191, Nov. 4, 1997. See also, 68 Comp. Gen. 337 (1989); 59 Comp.
Gen. 518 (1980). An exception to this requirement is when Congress
specifically authorizes the use of two appropriation accounts.
B-272191, supra (statutory language makes clear that Congress intended
that the "funds appropriated to the Secretary [of the Army] for
operation and maintenance" in the fiscal year 1993 Defense
Appropriations Act are "[i]n addition to …the funds specifically
appropriated for real property maintenance under the heading [RPM,D]"
in that appropriation act).
The following cases will further illustrate the interpretation and
application of appropriation acts denoting a specific purpose to which
the funds are to be dedicated. In each of the examples, the
appropriation in question was the U.S. Forest Service's appropriation
for the construction and maintenance of "Forest Roads and Trails."
In 37 Comp. Gen. 472 (1958), the Forest Service sought to construct
airstrips on land in or adjacent to national forests. The issue was the
extent to which the costs could be charged to the Roads and Trails
appropriation as opposed to other Forest Service appropriations such as
"Forest Protection and Utilization." At hearings before the
appropriations committees, Forest Service officials had announced their
intent to charge most of the landing fields to the Roads and Trails
appropriation. The appropriation act in question provided that
"appropriations available to the Forest Service for the current fiscal
year shall be available for" construction of the landing fields up to a
specified dollar amount, but the item was not mentioned in any of the
individual appropriations. GAO concluded that the proposal to
indiscriminately charge the landing fields to Roads and Trails would
violate 31 U.S.C. § 1301(a). The Roads and Trails appropriation could
be used for only those landing fields that were directly connected with
and necessary to accomplishing the purposes of that appropriation.
Landing fields not directly connected with the purposes of the Roads
and Trails appropriation, for example, airstrips needed to assist in
firefighting in remote areas, had to be charged to the appropriation to
which they were related, such as Forest Protection and Utilization. The
mere mention of intent at the hearings was not sufficient to alter the
availability of the appropriations.
Later, in 53 Comp Gen. 328 (1973), the Comptroller General held that
the Forest Roads and Trails appropriation could not be charged with the
expense of closing roads or trails and returning them to their natural
state, such activity being neither "construction" nor "maintenance."
Again, in B-164497(3), Feb. 6, 1979, GAO decided that the Forest
Service could not use the Roads and Trails appropriation to maintain a
part of a federally constructed scenic highway on Forest Service land
in West Virginia, although the state was prevented from maintaining it
because the scenic highway was closed to commercial traffic. The Roads
and Trails account was improper to charge with the maintenance because
the term "forest road" was statutorily defined as a service or access
road "necessary for the protection, administration, and utilization of
the [national forest] system and the use and development of its
resources." The highway, a scenic parkway reserved exclusively for
recreational and passenger travel through a national forest, was not
the type of forest road the appropriation was available to maintain.
The decision further noted, however, that the Forest Protection and
Utilization appropriation was somewhat broader and could be used for
the contemplated maintenance.
A 1955 case illustrates a type of expenditure that could properly be
charged to the Roads and Trails account. Construction of a timber
access road on a national forest uncovered a site of old Indian ruins.
Since the road construction itself was properly chargeable to the Roads
and Trails appropriation, the Forest Service could use the same
appropriation to pay the cost of archaeological and exploratory work
necessary to obtain and preserve historical data from the ruins before
they were destroyed by the construction. (Rerouting was apparently not
possible.) B-125309, Dec. 6, 1955.[Footnote 214]
In any case, an appropriation serves as a limitation, or more
accurately, a series of limitations relating to time and amount in
addition to purpose. In some situations, an appropriation is
simultaneously a grant of authority. For example, 5 U.S.C. § 3109
authorizes agencies to procure the services of experts and consultants,
but only "[w]hen authorized by an appropriation or other statute." In
contrast with the statute authorizing services for credit unions noted
earlier, 5 U.S.C. § 3109 by itself does not authorize an agency to
spend general operating appropriations to hire consultants. Unless an
agency has received this authority somewhere in its permanent
legislation, the hiring of consultants under section 3109 is an
authorized purpose only if it is specified in the agency's
appropriation act.
3. New or Additional Duties:
Appropriation acts tend to be bunched at certain times of the year
while substantive legislation may be enacted any time. A frequently
recurring situation is where a statute is passed imposing new duties on
an agency but not providing any additional appropriations. The question
is whether implementation of the new statute must wait until additional
funds are appropriated, or whether the agency can use its existing
appropriations to carry out the new function, either pending receipt of
further funding through the normal budget process or in the absence of
additional appropriations (assuming in either case the absence of
contrary congressional intent).
The rule is that existing agency appropriations that generally cover
the type of expenditures involved are available to defray the expenses
of new or additional duties imposed by proper legal authority. The test
for availability is whether the duties imposed by the new law bear a
sufficient relationship to the purposes for which the previously
enacted appropriation was made so as to justify the use of that
appropriation for the new duties.
For example, in the earliest published decision cited for the rule, the
Comptroller General held that the Securities and Exchange Commission
could use its general operating appropriation for fiscal year 1936 to
perform additional duties imposed on it by the later enacted Public
Utility Holding Company Act of 1935 (49 Stat. 803 (Aug. 26, 1935)).
15 Comp. Gen. 167 (1935).
Similarly, the Interior Department could use its 1979 "Departmental
Management" appropriation to begin performing duties imposed by the
Public Utilities Regulatory Policies Act of 1978,[Footnote 215] and to
provide reimbursable support costs for the Endangered Species Committee
and Review Board created by the Endangered Species Act Amendments of
1978.[Footnote 216] Both statutes were enacted after the Interior
Department's 1979 appropriation. B-195007, July 15, 1980.
The rule has also been applied to additional duties imposed by
executive order. 32 Comp. Gen. 347 (1953); 30 Comp. Gen. 258 (1951).
Additional cases are 30 Comp. Gen. 205 (1950); B-290011, Mar. 25, 2002;
B-211306, June 6, 1983; B-153694, Oct. 23, 1964.
A variation occurred in 54 Comp. Gen. 1093 (1975). The unexpended
balance of a Commerce Department appropriation, which had been used to
administer a loan guarantee program and to make collateral protection
payments under the Trade Expansion Act of 1962, 19 U.S.C. §§ 1901-1920
(1970), was transferred to a similar but new program by the Trade Act
of 1974.[Footnote 217] The 1974 statute repealed the earlier
provisions. This meant that the transferred funds could no longer be
used for expenses under the 1962 act--including payments on guarantee
commitments--even though that was the purpose for which they were
originally appropriated, unless the expenditures could also be viewed
as relating to the Commerce Department's functions under the 1974 act.
Applying the rationale of the later-imposed duty cases, the Comptroller
General concluded that the purposes of the two programs were
sufficiently related so that the Commerce Department could continue to
use the transferred funds to make collateral protection payments and to
honor guarantees made under the 1962 act.
A related question is the extent to which an agency may use current
appropriations for preliminary administrative expenses in preparation
for implementing a new law, prior to the receipt of substantive
appropriations for the new program. Again, the appropriation is
available provided it is sufficiently broad to embrace expenditures of
the type contemplated. Thus, the National Science Foundation could use
its fiscal year 1967 appropriations for preliminary expenses of
implementing the National Sea Grant College and Program Act of
1966,[Footnote 218] enacted after the appropriation, since the purposes
of the new act were basically similar to the purposes of the
appropriation. 46 Comp. Gen. 604 (1967). The preliminary tasks in that
case included such things as development of policies and plans,
issuance of internal instructions, and the establishment of
organizational units to administer the new program.
Similarly, the Bureau of Land Management could use current
appropriations to determine fair market value and to initiate
negotiations with owners in connection with the acquisition of mineral
interests under the Cranberry Wilderness Act,[Footnote 219] even though
actual acquisitions could not be made until funding was provided in
appropriation acts. B-211306, June 6, 1983. See also B-153694, Oct. 23,
1964; B-153694, Sept. 2, 1964.
Where Congress has not made a specific appropriation available to fund
additional or new duties and an existing appropriation is used based
upon a determination that the new duties bear a sufficient relationship
to the purpose for which the existing appropriation was made, the
agency may not reimburse the existing appropriation that was used once
the new appropriation is available. 30 Comp. Gen. 258 (1951); B-290011,
supra. The shifting of money from one appropriation to another in the
absence of statutory authority is prohibited by 31 U.S.C.
§ 1532.[Footnote 220] Compare B-300673, July 3, 2003, where GAO
concluded that the Chief Administrative Officer (CAO) for the House of
Representatives was allowed to use the CAO fiscal year 2003 Salaries
and Expenses appropriation to reimburse the House of Representatives
Child Care Center revolving fund for certain payments incurred by the
Center at the beginning of fiscal year 2003 during a period covered by
a continuing resolution, before enactment of the fiscal year 2003
appropriation. In this case, CAO's fiscal year 2003 appropriation
expressly directed that it cover the Center director's salary and
employees' training costs for fiscal year 2003 and thereafter. Under
the plain meaning of the appropriation language, the CAO appropriation
was the proper one to charge for all expenses incurred in fiscal year
2003.
4. Termination of Program:
a. Termination Desired:
If Congress appropriates money to implement a program, can the agency
use that money to terminate the program? (Expenses of terminating a
program could include such things as contract termination costs and
personnel reduction-in-force expenses.) If implementation of the
program is mandatory, the answer is no. In 1973, for example, the
administration attempted to terminate certain programs funded by the
Office of Economic Opportunity (OEO), relying in part on the fact that
it had not requested any funds for OEO for 1974. The programs in
question were funded under a multiple year authorization that directed
that the programs be carried out during the fiscal years covered by the
authorization. The U.S. District Court for the District of Columbia
held that funds appropriated to carry out the programs could not be
used to terminate them. Local 2677, American Federation of Government
Employees v. Phillips, 358 F. Supp. 60 (D.D.C. 1973). The court cited
31 U.S.C. § 1301(a) as one basis for its holding. Id. at 76 n.17. See
also 63 Comp. Gen. 75, 78 (1983).
Where the program is nonmandatory, the agency has more discretion, but
there are still limits. In B-115398, Aug. 1, 1977, the Comptroller
General advised that the Air Force could terminate B-1 bomber
production, which had been funded under a lump-sum appropriation and
was not mandated by any statute. Later cases have stated the rule that
an agency may use funds appropriated for a program to terminate that
program where (1) the program is nonmandatory and (2) the termination
would not result in curtailment of the overall program to such an
extent that it would no longer be consistent with the scheme of
applicable program legislation. 61 Comp. Gen. 482 (1982) (Department of
Energy could use funds appropriated for fossil energy research and
development to terminate certain fossil energy programs); B-203074,
Aug. 6, 1981. Several years earlier, GAO had held that the closing of
all Public Health Service hospitals would exceed the Surgeon General's
discretionary authority because a major portion of the Public Health
Service Act would effectively be inoperable without the Public Health
Service hospital system. B-156510, Feb. 23, 1971; B-156510, June 7,
1965.
The concepts are further illustrated in a series of cases involving the
Clinch River Nuclear Breeder Reactor. In 1977, the administration
proposed using funds appropriated for the design, development,
construction, and operation of the reactor to terminate the project.
Construction of a breeder reactor had been authorized, but not
explicitly mandated, by statute. As contemplated by the program
legislation, the Energy Research and Development Administration, the
predecessor of the Department of Energy, had submitted program criteria
for congressional approval. GAO reviewed the statutory scheme, found
that the approved program criteria were "as much a part of [the
authorizing statute] as if they were explicitly stated in the statutory
language itself," and concluded that use of program funds for
termination was unauthorized. B-115398, June 23, 1977.[Footnote 221]
Two subsequent opinions reached the same conclusion, supported further
by a provision in a 1978 supplemental appropriation act that
specifically earmarked funds for the reactor. B-164105, Mar. 10, 1978;
B-164105, Dec. 5, 1977.
By 1983 the situation had changed. Congressional support for the
reactor had eroded considerably, no funds were designated for it for
fiscal year 1984, and it became apparent that further funding for the
project was unlikely. In light of these circumstances, GAO revisited
the termination question and concluded that the Department of Energy
now had a legal basis to use 1983 funds to terminate the project in
accordance with the project justification data that provided for
termination in the event of insufficient funds to permit effective
continuation. 63 Comp. Gen. 75 (1983).
b. Reauthorization Pending:
Another variation occurs when an entity's enabling legislation is set
to expire and Congress shows signs of extending or reauthorizing the
entity, but has not yet provided funds or authority to continue. For
example, the U.S. Advisory Commission on Intergovernmental Relations
(ACIR) was statutorily authorized to give continuing attention to
intergovernmental problems. In 1995, ACIR was statutorily terminated
effective September 30, 1996. About 2 months before ACIR was to
terminate, Congress enacted legislation giving ACIR a new
responsibility to provide research and a report under a contract with
the National Gambling Impact Study Commission. Although Congress
continued ACIR's existence beyond fiscal year 1996 for the limited
purpose of providing research for the Gambling Commission, Congress
appropriated no funds for fiscal year 1997. ACIR had separate statutory
authority, 42 U.S.C. § 4279, to receive and expend unrestricted
contributions made to ACIR from state governments. In B-274855,
Jan. 23, 1997, GAO held that this statute constituted an appropriation
(a permanent, indefinite appropriation[Footnote 222]) separate from
ACIR's annually enacted fiscal year appropriation, and that from
October 1, 1996, until such time as ACIR was awarded the research
contract, ACIR could use its unconditional state government
contributions.
Another situation may occur when an entity's authorizing legislation is
set to terminate and Congress provides an appropriation but does not
reauthorize the entity until months later. In 71 Comp. Gen. 378 (1992),
the U.S. Commission on Civil Rights was set to terminate by operation
of law on September 30, 1991. The Commission was not reauthorized until
November 26, 1991. However, during the interim and prior to the
expiration date, Congress provided the Commission with appropriations
for fiscal year 1992. Once a termination or sunset provision for an
entity becomes effective, the agency ceases to exist and no new
obligations may be incurred after the termination date.[Footnote 223]
However, when Congress desires to extend, amend, suspend, or repeal a
statute, it can accomplish its purpose by including the requisite
language in an appropriations or other act of Congress. After viewing
the legislative actions, in their entirety, on the Commission's
reauthorization and appropriation bills, GAO determined that Congress
clearly intended for the Commission to continue to operate after
September 30, 1991. GAO held that the specific appropriation provided
to the Commission served to suspend its termination until the
Commission was reauthorized.
B. The "Necessary Expense" Doctrine:
1. The Theory:
The preceding discussion establishes the primacy of 31 U.S.C. § 1301(a)
in any discussion of purpose availability. The next point to emphasize
is that 31 U.S.C. § 1301(a) does not require, nor would it be
reasonably possible, that every item of expenditure be specified in the
appropriation act. While the statute is strict, it is applied with
reason.
The spending agency has reasonable discretion in determining how to
carry out the objects of the appropriation. This concept, known as the
"necessary expense doctrine," has been around almost as long as the
statute itself. An early statement of the rule is contained in 6 Comp.
Gen. 619, 621 (1927):
"It is a well-settled rule of statutory construction that where an
appropriation is made for a particular object, by implication it
confers authority to incur expenses which are necessary or proper or
incident to the proper execution of the object, unless there is another
appropriation which makes more specific provision for such
expenditures, or unless they are prohibited by law, or unless it is
manifestly evident from various precedent appropriation acts that
Congress has specifically legislated for certain expenses of the
Government creating the implication that such expenditures should not
be incurred except by its express authority."
The necessary expense rule is really a combination of two slightly
different but closely related concepts:
1. An appropriation made for a specific object is available for
expenses necessarily incident to accomplishing that object unless
prohibited by law or otherwise provided for. For example, an
appropriation to erect a monument at the birthplace of George
Washington could be used to construct an iron fence around the monument
where administratively deemed necessary to protect the monument.
2 Comp. Dec. 492 (1896). Likewise, an appropriation to purchase bison
for consumption covers the slaughtering and processing of the bison as
well as the actual purchase. B-288658, Nov. 30, 2001.
2. Appropriations, even for broad categories such as salaries,
frequently use the term "necessary expenses." As used in this context,
the term refers to "current or running expenses of a miscellaneous
character arising out of and directly related to the agency's work."
38 Comp. Gen. 758, 762 (1959); 4 Comp. Gen. 1063, 1065 (1925).
Although the theory is identical in both situations, the difference is
that expenditures in the second category relate to somewhat broader
objects.
The Comptroller General has never established a precise formula for
determining the application of the necessary expense rule. In view of
the vast differences among agencies, any such formula would almost
certainly be unworkable. Rather, the determination must be made
essentially on a case-by-case basis.
In addition to recognizing the differences among agencies when applying
the necessary expense rule, we act to maintain a vigorous body of case
law responsive to the changing needs of government. In this regard, our
decisions indicate a willingness to consider changes in societal
expectations regarding what constitutes a necessary expense. This
flexibility is evident, for example, in our analysis of whether an
expenditure constitutes a personal or an official expense. As will be
discussed more fully later in the chapter, use of appropriations for
such an expenditure is determined by continually weighing the benefit
to the agency, such as the recruitment and retention of a dynamic
workforce and other considerations enabling efficient, effective, and
responsible government. We recognize, however, that these factors can
change over time. B-286026, June 12, 2001 (overruling GAO's earlier
decisions based on reassessment of the training opportunities afforded
by examination review courses); B-280759, Nov. 5, 1998 (overruling
GAO's earlier decisions on the purchase of business cards). See also
71 Comp. Gen. 527 (1992) (eldercare is not a typical employee benefit
provided to the nonfederal workforce and not one that the federal
workforce should expect); B-288266, Jan. 27, 2003 (GAO explained it
remained "willing to reexamine our case law" regarding light
refreshments if it is shown to frustrate efficient, effective, and
responsible government).
When applying the necessary expense rule, an expenditure can be
justified after meeting a three-part test:
1. The expenditure must bear a logical relationship to the
appropriation sought to be charged. In other words, it must make a
direct contribution to carrying out either a specific appropriation or
an authorized agency function for which more general appropriations are
available.
2. The expenditure must not be prohibited by law.
3. The expenditure must not be otherwise provided for, that is, it must
not be an item that falls within the scope of some other appropriation
or statutory funding scheme.
E.g., 63 Comp. Gen. 422, 427-28 (1984); B-240365.2, Mar. 14, 1996;
B-230304, Mar. 18, 1988.
a. Relationship to the Appropriation:
The first test--the relationship of the expenditure to the
appropriation--is the one that generates by far the lion's share of
questions. On the one hand, the rule does not require that a given
expenditure be "necessary" in the strict sense that the object of the
appropriation could not possibly be fulfilled without it. Thus, the
expenditure does not have to be the only way to accomplish a given
object, nor does it have to reflect GAO's perception of the best way to
do it. Yet on the other hand, it has to be more than merely desirable
or even important. E.g., 34 Comp. Gen. 599 (1955); B-42439, July 8,
1944. An expenditure cannot be justified merely because some agency
official thinks it is a good idea, nor can it be justified simply
because it is a practice engaged in by private business. See B-288266,
Jan. 27, 2003.
The important thing is not the significance of the proposed expenditure
itself or its value to the government or to some social purpose in
abstract terms, but the extent to which it will contribute to
accomplishing the purposes of the appropriation the agency wishes to
charge. For example, the Forest Service can use its appropriation for
"Forest Protection and Utilization" to buy plastic litterbags for use
in a national forest. 50 Comp. Gen. 534 (1971). See also 72 Comp.
Gen. 73 (1992) (the Environmental Protection Agency (EPA) can purchase
buttons promoting indoor air quality for its conference since the
message conveyed is related to EPA's mission); 71 Comp. Gen. 28 (1991)
(the Internal Revenue Service (IRS) can cover cost of its employees
filing electronic tax returns because it trains employees); B-257488,
Nov. 6, 1995 (the Food and Drug Administration is permitted to purchase
"No Red Tape" buttons to promote employee efficiency and effectiveness
and thereby the agency's purpose). However, operating appropriations of
the Equal Employment Opportunity Commission (EEOC) are not available to
pay IRS the taxes due on judgment proceeds recovered by EEOC in an
enforcement action. While the payment would further a purpose of the
IRS, it would not contribute to fulfilling the purposes of the EEOC
appropriation. 65 Comp. Gen. 800 (1986).[Footnote 224] See also 70
Comp. Gen. 248 (1991) (purchasing T-shirts for Combined Federal
Campaign (CFC) contributors is not permitted because T-shirts are not
essential to achieving the authorized purpose of CFC).
If the basic test is the relationship of the expenditure to the
appropriation sought to be charged, it should be apparent that the
"necessary expense" concept is a relative one. As stated in 65 Comp.
Gen. 738, 740 (1986):
"We have dealt with the concept of 'necessary expenses' in a vast
number of decisions over the decades. If one lesson emerges, it is that
the concept is a relative one: it is measured not by reference to an
expenditure in a vacuum, but by assessing the relationship of the
expenditure to the specific appropriation to be charged or, in the case
of several programs funded by a lump-sum appropriation, to the specific
program to be served. It should thus be apparent that an item that can
be justified under one program or appropriation might be entirely
inappropriate under another, depending on the circumstances and
statutory authorities involved."
The evident difficulty in stating a precise rule emphasizes the role
and importance of agency discretion. It is in the first instance up to
the administrative agency to determine that a given item is reasonably
necessary to accomplishing an authorized purpose. Once the agency makes
this determination, GAO will normally not substitute its own judgment
for that of the agency. In other words, the agency's administrative
determination of necessity will be given considerable deference.
Generally, the interpretation of a statute by the agency that Congress
has charged with the responsibility for administering it is entitled to
considerable weight. This discretion, however, is not without limits.
The agency's interpretation must be reasonable and must be based on a
permissible construction of the statute. United States v. Mead Corp.,
533 U.S. 218, 226-238 (2001); Chevron, Inc. v. Natural Resources
Defense Council, 467 U.S. 837 (1984). See also B-286661, Jan. 19, 2001
(expansive definition exceeds the bounds of the Privatization Act and
violates the requirement of 31 U.S.C. § 1301(a)).
The standard GAO uses in evaluating purpose availability is summarized
in the following passage from B-223608, Dec. 19, 1988:
"When we review an expenditure with reference to its availability for
the purpose at issue, the question is not whether we would have
exercised that discretion in the same manner. Rather, the question is
whether the expenditure falls within the agency's legitimate range of
discretion, or whether its relationship to an authorized purpose or
function is so attenuated as to take it beyond that range."
A decision on a "necessary expense" question therefore involves
(1) analyzing the agency's appropriations and other statutory authority
to determine whether the purpose is authorized and (2) evaluating the
adequacy of the administrative justification, to decide whether the
agency has properly exercised, or exceeded, its discretion.
The role of discretion in purpose availability is further complicated
by the fact that not all federal establishments have the same range of
discretion. For example, a government corporation with the authority to
determine the character and necessity of its expenditures has, by
virtue of its legal status, a broader measure of discretion than a
"regular" agency. But even this discretion is not unlimited and is
bound at least by considerations of sound public policy. See 14 Comp.
Gen. 755 (1935), aff'd upon reconsideration, A-60467, June 24, 1936.
Two decisions involving the Bonneville Power Administration (BPA) will
illustrate. In 1951, the Interior Department asked whether funds
appropriated to BPA could be used to enter into a contract to conduct a
survey to determine the feasibility of "artificial nucleation and cloud
modification" (artificial rainmaking in English) for a portion of the
Columbia River drainage basin. If the amount of rainfall during the dry
season could be significantly increased by this method, the amount of
marketable power for the region would be enhanced. Naturally, BPA did
not have an appropriation specifically available for rainmaking.
However, in view of BPA's statutory role in the sale and disposition of
electric power in the region, GAO concluded that the expenditure was
authorized. B-104463, July 23, 1951.
The Interior Department then asked whether, assuming the survey results
were favorable, BPA could contract with the rainmakers. GAO thought
this was going too far and questioned whether BPA's statutory authority
to encourage the widest possible use of electric energy really
contemplated artificial rainmaking. GAO emphasized that the expenditure
would be improper for a department or agency with the "ordinary
authority usually granted" to federal agencies. However, the
legislative history of BPA's enabling statute indicated that Congress
intended that it have a degree of freedom similar to public
corporations and that it be largely free from "the requirements and
restrictions ordinarily applicable to the conduct of Government
business." Therefore, while the Comptroller General expressly refused
to "approve" the rainmaking contract, he felt compelled to hold that
BPA's funds were legally available for it. B-105397, Sept. 21, 1951.
For the typical federal department or agency, the range of discretion
will be essentially the same, with variations in the kinds of things
justifiable under the necessary expense umbrella stemming from program
differences. For example, necessary expenses for an agency with law
enforcement responsibilities may include items directly related to that
authority, which would be inappropriate for agencies without law
enforcement functions. Thus, the Immigration and Naturalization Service
could use its Salaries and Expenses appropriation to purchase and
install lights, automatic warning devices, and observation towers along
the boundary between the United States and Mexico. 29 Comp. Gen. 419
(1950). See also 7 Comp. Dec. 712 (1901). Similarly, in B-204486,
Jan. 19, 1982, the Federal Bureau of Investigation could buy insurance
on an undercover business not so much to insure the property, but to
enhance the credibility of the operation.
The procurement of evidence is also authorized as a necessary expense
for an agency with law enforcement responsibilities. For example,
Forest Service appropriations could be used to pay towing and storage
charges for a truck seized as evidence of criminal activities in a
national forest. B-186365, Mar. 8, 1977. See also 27 Comp. Gen. 516
(1948); 26 Comp. Dec. 780, 783 (1920); B-56866, Apr. 22, 1946. Also,
the Customs Service could use its operating appropriations to cover the
cost of extending its psychological assessment and referral services to
its employees' family members adversely affected by work-related
incidents arising from law enforcement activities involving death or
serious injury to its employee in the line of duty. B-270446, Feb. 11,
1997.
Cases involving fairs and expositions provide further illustration. For
the most part, when Congress desires federal participation in fairs or
expositions, it has been authorized by specific legislation. See, e.g.,
B-160493, Jan. 16, 1967 (legislation authorized federal participation
in HemisFair 1968 in San Antonio). For another example, United States
participation in the 1927 International Exposition in Seville, Spain,
was specifically authorized by statute. See 10 Comp. Gen. 563, 564
(1931).
However, specific statutory authority is not essential. If
participation is directly connected with and is in furtherance of the
purposes for which a particular appropriation has been made, and an
appropriate administrative determination is made to that effect, the
appropriation is available for the expenditure. B-290900, Mar. 18, 2003
(Bureau of Land Management (BLM) may use its appropriated funds to pay
its share of the cost to produce a brochure that educates the public
regarding lighthouse preservation because the brochure supports BLM in
meeting its responsibility under its lighthouse preservation program);
B-286457, Jan. 29, 2001 (demolition of old air traffic control tower
that would obstruct the view from the new one is directly connected
with and in furtherance of the construction of a new tower such that
the demolition expenses are covered by Federal Aviation Administrations
appropriation act for tower construction); B-280440, Feb. 26, 1999
(Immigration and Naturalization Service's (INS) Salaries and Expenses
appropriation is available to purchase medals to be worn by uniformed
employees of the Border Patrol division of INS to commemorate the
division's 75th anniversary). See also 16 Comp. Gen. 53 (1936);
10 Comp. Gen. 282 (1930); 7 Comp. Gen. 357 (1927); 4 Comp. Gen. 457
(1924).[Footnote 225] Authority to disseminate information will
generally provide adequate justification. E.g., 7 Comp. Gen. 357;
4 Comp. Gen. 457. In addition, an agency may use appropriated funds to
provide prizes to individuals to further the collection of information
necessary to accomplish the agency's statutory mandate.[Footnote 226]
See, e.g., 70 Comp. Gen. 720 (1991); B-286536, Nov. 17, 2000; B-230062,
Dec. 22, 1988.
In the absence of either statutory authority or an adequate
justification under the necessary expense doctrine, the expenditure,
like any other expenditure, is illegal. Thus, the Department of Housing
and Urban Development (HUD) had no authority to finance participation
at a trade exhibition in the Soviet Union where HUD's primary purpose
was to enhance business opportunities for American companies. 68 Comp.
Gen. 226 (1989); B-229732, Dec. 22, 1988. Regardless of whether it may
or may not have been a good idea, commercial trade promotion is not one
of the purposes for which Congress appropriates money to HUD.
No discussion would be complete without some mention of the "marauding
woodpecker" case. It appears that in 1951, marauding woodpeckers were
causing considerable damage to government-owned transmission lines and
the Southwestern Power Administration, Interior Department (Interior)
wanted to buy guns with which to shoot the woodpeckers. Interior first
went to the Army, but the Army advised that the types of guns and
ammunition desired were not available, so Interior next came to GAO.
The Comptroller General held that, if administratively determined to be
necessary to protect the transmission lines, Interior could buy the
guns and ammunition from the Southwestern Power Administration's
construction appropriation. The views of the woodpeckers were not
solicited. B-105977, Dec. 3, 1951. Actually, this was not a totally
novel issue. Several years earlier, GAO had approved the use of an
Interior Department "maintenance of range improvements" appropriation
for the control of coyotes, rodents, and other "predatory animals."
A-82570, Dec. 30, 1936. See also A-82570, B-120739, Aug. 21,
1957.[Footnote 227]
b. Expenditure Otherwise Prohibited:
The second test under the necessary expense doctrine is that the
expenditure must not be prohibited by law. As a general proposition,
neither a necessary expense rationale nor the "necessary expense"
language in an appropriation act can be used to overcome a statutory
prohibition. E.g., B-277905, Mar. 17, 1998 (expenditure for
installation and maintenance of water pipelines to support a military
base golf course not permissible because such expenditure is
specifically prohibited by 10 U.S.C. § 2246, which prohibit the use of
appropriated funds to "equip, operate, or maintain" a golf course);
B-247348, June 22, 1992 (detail of Government Printing Office employee
to Library of Congress not permissible because 44 U.S.C. § 316
prohibits details for "duties not pertaining to the work of public
printing and binding"). In 38 Comp. Gen. 758 (1959) and 4 Comp.
Gen. 1063 (1925), the Comptroller General held that the necessary
expense language did not overcome the prohibition in 41 U.S.C. § 12
against contracting for public buildings or public improvements in
excess of appropriations for the specific purpose. In large measure,
this is little more than an application of the rule against repeal by
implication discussed in Chapter 2, section C.2.h.
There are exceptions where applying the rule would make it impossible
to carry out a specific appropriation. A very small group of cases
stands for the proposition that, where a specific appropriation is made
for a specific purpose, an expenditure that is "absolutely essential"
to accomplishing the specific object may be incurred even though the
expenditure would otherwise be prohibited. In order for this exception
to apply, the expenditure must literally be absolutely essential in the
sense that the object of the appropriation could not be accomplished
without it. Also, the rule would not apply to the use of a more general
appropriation.
For example, in 2 Comp. Gen. 133 (1922), modifying 2 Comp. Gen. 14
(1922), an appropriation to provide airmail service between New York,
Chicago, and San Francisco was held available to construct hangars and
related facilities at a landing field in Chicago notwithstanding the
requirement for a specific appropriation in 41 U.S.C. § 12. The reason
was that it would have been impossible to provide the service, and
hence, to accomplish the purpose of the appropriation, without erecting
the facilities. See also 17 Comp. Gen. 636 (1938) and 22 Comp. Dec. 317
(1916). (The 1938 decision cites the rule but the decision itself is an
ordinary necessary expense case.)
An 1899 case, 6 Comp. Dec. 75, provides another good illustration of
the concept. The building housing the Department of Justice (Justice)
had become unsafe and overcrowded. Congress enacted legislation to
authorize and fund the construction of a new building. The statute
specifically provided that the new building be constructed on the site
of the old building, but did not address the question of how Justice
would function during the construction period. The obvious solution was
to rent another building until the new one was ready, but 40 U.S.C.
§ 34 prohibited the rental of space in the District of Columbia except
under an appropriation specifically available for that purpose, and
Justice had no such appropriation. On the grounds that any other result
would be absurd, the Comptroller of the Treasury held that Justice
could rent interim space notwithstanding the statutory prohibition.
While the decision was not couched in terms of the expenditure being
"absolutely essential," it said basically the same thing. Since Justice
could not cease to function during the construction period, the
appropriation for construction of the new building could not be
fulfilled without the expenditure for interim space.
c. Expenditure Otherwise Provided For:
The third test is that an expenditure cannot be authorized under a
necessary expense theory if it is otherwise provided for under a more
specific appropriation or statutory funding mechanism. It is well
settled that even an expenditure that may be reasonably related to a
general appropriation may not be paid out of that appropriation where
the expenditure falls specifically within the scope of another
appropriation. See, e.g., B-291241, Oct. 8, 2002; B-290005, July 1,
2002; B-289209, May 31, 2002.
The fact that the more specific appropriation may be exhausted is
immaterial. Thus, in B-139510, May 13, 1959, the Navy could not use its
shipbuilding appropriation to deepen a channel in the Singing River
near Pascagoula, Mississippi, to permit submarines then under
construction to move to deeper water. The reason was that this was a
function for which funds were traditionally appropriated to the Corps
of Engineers, not the Navy. The fact that appropriations had not been
made in this particular instance was irrelevant.
Similarly, the Navy could not use appropriations made for the
construction or procurement of vessels and aircraft to provide housing
for civilian employees engaged in defense production activities because
funds for that purpose were otherwise available. 20 Comp. Gen. 102
(1940).
In another case, Federal Prison Industries could use its revolving fund
to build industrial facilities incident to a federal prison, or to
build a residential camp for prisoners employed in federal public works
projects, but could not use that fund to construct other prison
facilities because such construction was statutorily provided for
elsewhere. B-230304, Mar. 18, 1988.
In these cases, the existence of a more specific source of funds, or a
more specific statutory mechanism for getting them, is the governing
factor and overrides the "necessary expense" considerations.
2. General Operating Expenses:
An illustration of how the necessary expense concept works common to
all agencies is the range of expenditures permissible under general
operating appropriations. All agencies, regardless of program
differences, have certain things in common. Specifically, they all have
employees, occupy space in buildings, and maintain an office
environment. To support these functions, they incur a variety of
administrative expenditures. Some are specifically authorized by
statute; others flow logically from the requirements of maintaining a
workforce.
All agencies receive general operating appropriations for these
administrative expenses. Depending largely on the size of the agency,
they may be separate lump-sum appropriations or may be combined with
program funds. The most common (but not the only) form of general
operating appropriation is entitled "Salaries and Expenses (S&E)."
Although an S&E appropriation may contain earmarks, for the most part
it does not specify the types of "expenses" for which it is available.
Employee salaries, together with related items such as agency
contributions to health insurance and retirement, of course, comprise
the bulk of an S&E appropriation. This section summarizes some of the
other items chargeable to S&E funds as necessary expenses of running
the agency that are not covered elsewhere in this chapter.
a. Training:
Training of government employees is governed by the Government
Employees Training Act, 5 U.S.C. chapter 41, aspects of which are
discussed in several places in this chapter. The authority of the
Government Employees Training Act is broad, but it is not unlimited.
For example, tryouts for the U.S. Olympic Shooting Team do not
constitute training under the Act. 68 Comp. Gen. 721 (1989). Nor do
routine meetings, however formally structured, qualify as training.
68 Comp. Gen. 606 (1989). See also 68 Comp. Gen. 604 (1989); B-272280,
May 29, 1997 (examination expenses that substitute for a college course
are covered where the skipped course is part of an approved training
program for which the agency would otherwise pay).
For an entity not covered by the definition of "agency" in the Act, the
authority to conduct training is limited. The particular training
program must be (1) necessary to carry out the purpose for which the
appropriation is made, (2) for a period of brief duration, and
(3) special in nature. 36 Comp. Gen. 621 (1957) (including extensive
citations to earlier decisions). See also 68 Comp. Gen. 127 (1988).
Training of nonfederal personnel, where necessary to the implementation
of a federal program, is a straightforward "necessary expense" question
under the relevant program appropriation. E.g., 18 Comp. Gen. 842
(1939).
In B-148826, July 23, 1962, the Comptroller General held that the
Defense Department could pay $1 each to students participating in a
civil defense training course as consideration for a release from
liability.
b. Travel:
Reimbursement for travel expenses incurred on official travel is now
authorized by statute. E.g., 5 U.S.C. § 5702. However, even before the
legislation was enacted, expenses incurred on authorized official
travel were reimbursable as a necessary expense. 4 Comp. Dec. 475
(1898).
Of course there are limits, and expenses are reimbursable only to the
extent authorized by statute and implementing regulations. Thus, in an
early case, expenses of a groom and valet incurred by an Army officer
in Belgium could not be regarded as necessary travel expenses and
therefore could not be reimbursed from Army appropriations. 21 Comp.
Dec. 627 (1915).
Senior-level officials frequently travel for political purposes. As the
Justice Department has pointed out, it is often impossible to neatly
categorize travel as either purely business or purely political. To the
extent it is possible to distinguish, appropriated funds should not be
used for political travel. 6 Op. Off. Legal Counsel 214 (1982). GAO has
conducted occasional reviews in this area, and has commented on the
lack of legally binding guidelines against which to evaluate particular
expenditures. E.g., U.S. General Accounting Office, Review of White
House and Executive Agency Expenditures for Selected Travel,
Entertainment, and Personnel Costs, AFMD-81-36 (Washington, D.C.:
Mar. 6, 1981); Review of the Propriety of White House and Executive
Agency Expenditures for Selected Travel, Entertainment, and Personnel
Costs, FGMSD-81-13 (Washington, D.C.: Oct. 20, 1980).
Finally, there are situations in which expenses of congressional travel
may be charged to the appropriations of other agencies. Under 31 U.S.C.
§ 1108(g):
"Amounts available under law are available for field examinations of
appropriation estimates. The use of the amounts is subject only to
regulations prescribed by the appropriate standing committees of
Congress."
Thus, travel expenses of congressional committee members and staff
incident to "field examinations" of appropriation requests may be
charged to the agency whose programs and budget are being examined.
B-214611, Apr. 17, 1984; B-129650, Jan. 2, 1957. Before the above
provision was enacted as permanent legislation, similar provisions had
appeared for many years in various appropriation acts. See 6 Comp.
Gen. 836 (1927); 23 Comp. Dec. 493 (1917).
Travel expenses of congressional spouses (Members and staff) may not be
paid from appropriated funds. B-204877, Nov. 27, 1981.
Federal employees may retain promotional travel benefits, including
frequent flyer miles or upgrades, when the benefits are earned as a
result of official travel and if the promotional item is obtained under
the same terms as those offered the general public and at no additional
cost to the government. Pub. L. No. 107-107, div. A, title XI, § 1116,
115 Stat. 1012, 1241 (Dec. 28, 2001).
c. Postage Expenses:
Agencies are required to reimburse the Postal Service for mail sent by
or to them as penalty mail.[Footnote 228] Reimbursement is to be made
"out of any appropriations or funds available to them." 39 U.S.C.
§ 3206(a). This statute amounts to an exception to the general purpose
statute, 31 U.S.C. § 1301(a), in that the expenditure may be charged to
any appropriation available to the agency. Penalty mail costs do not
have to be charged to the particular bureau or activity that generated
the cost. 33 Comp. Gen. 206 (1953). By virtue of this statutory
authority, the use of appropriations for one component of an agency to
pay penalty mail costs of another component funded under a separate
appropriation does not constitute an unauthorized transfer of
appropriations. 33 Comp. Gen. 216 (1953). The same principle applies to
reimbursement for registry fees. 36 Comp. Gen. 239 (1956).
d. Books and Periodicals:
Expenditures for books and periodicals are evaluated under the
necessary expense rule. Thus, the American Battle Monuments Commission
could use its Salaries and Expenses (S&E) appropriation to buy books on
military leaders to help it decide what people and events to
memorialize. 27 Comp. Gen. 746 (1948).[Footnote 229]
The National Science Foundation could subscribe to a publication called
"Supervisory Management" to be used as training material in a
supervisory training program under the Government Employees Training
Act. If determined necessary to the course, the subscription could be
paid from the Foundations S&E appropriation. 39 Comp. Gen. 320 (1959).
Similarly, the Interior Department's Mining Enforcement and Safety
Administration could subscribe to the "Federal Employees News Digest"
if determined to be necessary in carrying out the agency's statutory
functions. 55 Comp. Gen. 1076 (1976).
Subsequently, when the Federal Employees News Digest came under some
criticism, it became necessary to explain that a decision such as
55 Comp. Gen. 1076 is neither an endorsement of a particular
publication nor an exhortation for agencies to buy it. It is merely a
determination that the purchase is legally authorized. B-185591,
Feb. 7, 1985.
In B-171856, Mar. 3, 1971, the Interior Department was permitted to
purchase newspapers to send to a number of Inuit families in Alaska.
Members of the families had been transported to Washington state to
help in fighting a huge fire, and the newspapers were seen as necessary
to keep the families advised of the status of the operation and also as
a measure to encourage future volunteerism.
e. Miscellaneous Items Incident to the Federal Workplace:
We have viewed certain civic, charitable, and similar community support
activities involving limited use of agency resources and employee time
as permissible expenses. For instance, agencies may spend their
appropriations, within reason, to cooperate with government-sanctioned
charitable fund-raising campaigns, including such things as permitting
solicitation during working hours, preparing campaign instructions, and
distributing campaign materials. 67 Comp. Gen. 254 (1988) (Combined
Federal Campaign). See also B-155667, Jan. 21, 1965; B-154456, Aug. 11,
1964; B-119740, July 29, 1954. Similarly, some use of employee time and
agency equipment can occur to carry out limited National Guard and
Reserve functions or to assist with adopt-a-school programs. 71 Comp.
Gen. 469 (1992); B-277678, Jan. 4, 1999. This authority, however, does
not extend to giving T-shirts to Combined Federal Campaign
contributors. 70 Comp. Gen. 248 (1991).
An agency may use its general operating appropriations to fund limited
amounts of promotional material in support of the United States savings
bond campaign. B-225006, June 1, 1987.
Support that agencies are authorized by law to provide to federal
credit unions may, if administratively determined to be necessary,
include automatic teller machines. 66 Comp. Gen. 356 (1987). The
justification was adequate in that case because the facility in
question operated on three shifts 7 days a week and the credit union
could not remain open to accommodate workers on all shifts.
The Salaries and Expenses appropriation of the Internal Revenue Service
(IRS) could be used to procure credit bureau reports if
administratively determined to be necessary in connection with
investigating applicants for employment with IRS. B-117975, Dec. 29,
1953.
IRS was authorized to undertake employee counseling and referral
programs related to eldercare. The expenditure was justified under
5 U.S.C. § 7901, which authorized "preventative programs related to
health." 71 Comp. Gen. 527 (1992). Similar mental health referrals are
discussed at length in section C.13 of this chapter addressing personal
expenses.
Outplacement assistance to employees may be regarded as a legitimate
matter of agency personnel administration if the expenditures are found
to benefit the agency and are reasonable in amount. 68 Comp. Gen. 127
(1988); B-272040, Oct. 29, 1997. The Government Employees Training Act
authorizes training in preparation for placement in another federal
agency under conditions specified in the statute. 5 U.S.C. § 4103(b).
Otherwise unrestricted operating appropriations are available to
protect a government official who has been threatened or is otherwise
in danger, if the agency determines that the risk impairs the
official's ability to carry out his or her duties and hence adversely
affects the efficient functioning of the agency. For example, the U.S.
Customs Service may use appropriated funds to purchase home and
automobile security devices for agents stationed in Puerto Rico and the
U.S. Virgin Islands where they are needed as a result of the agent's
law enforcement activities. B-251710, July 7, 1993. See also 71 Comp.
Gen. 4 (1991). Also, certain officials, specified in 18 U.S.C.
§ 3056(a), are entitled to Secret Service protection. 54 Comp. Gen. 624
(1975), modified by 55 Comp. Gen. 578 (1975).
Payment of an honorarium to an invited guest speaker (other than a
government employee) is permissible under a necessary expense
rationale. See A-69906, Mar. 16, 1936 (payment of an honorarium by an
agency of the District of Columbia government was found to be an
allowable administrative expense). See also B-20517, Sept. 24, 1941.
Fees for the notarization of documents are properly payable from
appropriated funds where no government notary is available. B-33846,
Apr. 27, 1943.
An agency's appropriations are not available to reimburse the Civil
Service Retirement Fund for losses due to overpayments to a retired
employee resulting from the agency's erroneous processing of
information. 54 Comp. Gen. 205 (1974).
The Federal Reserve Board could not match employee contributions to an
employee savings plan established by the Board. B-174174, Sept. 24,
1971.
C. Specific Purpose Authorities and Limitations:
1. Introduction:
This section will explore a number of specific topics concerning
purpose availability. Sections C.2 through C.16 cover areas that have
generated considerable activity over the years and require a somewhat
detailed presentation. While our topic selection is designed to
highlight certain restrictions, our objective is to describe what is
authorized as well as what is unauthorized. Most of the topics are a
mixture of both.
Restrictions on the purposes for which appropriated funds may be spent
come from a variety of sources. Some may stem from the Constitution
itself. An example is the prohibition on paying certain state and local
taxes, discussed in section C.15. Others are found in permanent
legislation, such as the restrictions on residential and long distance
telephone service discussed in section C.16.
A common source of purpose restrictions is the appropriation act
itself. Restrictions are often included as provisos to the
appropriating language or as general provisions or "riders." For
example, B-202716, Oct. 29, 1981, construes an appropriation act
restriction prohibiting the use of Legal Services Corporation funds for
the representation of illegal aliens. Another example is the
restriction on "publicity and propaganda" expenditures found in some
appropriation acts, discussed in section C.11.
Finally, a number of restrictions have evolved from decisions of the
Comptroller General and his predecessor, the Comptroller of the
Treasury. An example is the government's policy on self-insurance,
section C.10. The restrictions that have evolved administratively
usually date back to the nineteenth century, are firmly embedded in
appropriations law, and for the most part have been recognized by
Congress at least implicitly by the practice of legislating the
occasional exception.
Purpose restrictions will commonly prohibit the use of funds for an
item except "under specific statutory authority," or except under "an
appropriation specifically available therefore," or similar language.
The "specific authority" needed to create an exception in these
situations need not be found in the appropriation act itself, but may
be contained in authorizing or enabling legislation as long as it is
clearly applicable to the appropriation sought to be charged. 23 Comp.
Gen. 859 (1944); 16 Comp. Gen. 773 (1937).
2. Attendance at Meetings and Conventions:
Meetings have become a way of life in contemporary American society and
the federal bureaucracy is no exception. It seems that there are
meetings on just about everything. Quite often they can be very useful.
They can also be expensive. It is no surprise that lots of meetings are
held in places like Honolulu and San Francisco. This section will
explore when appropriated funds may be used to send people, government
employees and others, to meetings. Congress has passed a number of
statutes in this area and the cases usually involve the interpretation
and application of the various statutory provisions. For purposes of
this discussion, the term "meeting" includes other designations such as
conference, congress, convention, seminar, symposium, and workshop;
what the particular gathering is called is irrelevant.
a. Government Employees:
(1) Statutory framework:
To understand the law in this area, it is necessary to understand the
interrelationship of several statutes. Listed in the order of their
enactment, they are: 5 U.S.C. § 5946, 31 U.S.C. § 1345, 5 U.S.C.
§ 4109, and 5 U.S.C. § 4110. This interrelationship is best seen by
outlining the statutory evolution.
The first piece of legislation was enacted in 1912. As relevant here,
section 8 of the Act of June 26, 1912 (Pub. L. No. 201, ch. 182,
37 Stat. 139, 184), prohibited the payment, without specific statutory
authority, of the expenses of attendance of an individual at meetings
or conventions of members of a society or association. With exceptions
to be noted below, this statute is now found at 5 U.S.C. § 5946. For
the most part, it has always been viewed as applying to attendance by
federal employees at nonfederally sponsored meetings. See, e.g.,
B-140912, Nov. 24, 1959.
There were many early cases under the 1912 statute. Since the
prohibition is directed at meetings of a "society or association,"
other types of meetings were not covered. Thus, the Federal Power
Commission could, if determined to be in the furtherance of authorized
activities, send a representative to the World Power Conference (in
Basle, Switzerland) since it was not a meeting of a "society or
association." 5 Comp. Gen. 834 (1926). Similarly, the statute did not
prohibit travel by U.S. Attorneys "to attend a conference of attorneys
not banded together into a society or association, but called together
for one meeting only for conference in a matter bearing directly on
their official duties." 1 Comp. Gen. 546 (1922).
However, if a given gathering was viewed as a meeting or convention of
a society or association, the expenses were consistently disallowed.
E.g., 16 Comp. Gen. 252 (1936); 5 Comp. Gen. 599 (1926), aff'd, 5 Comp.
Gen. 746 (1926); 3 Comp. Gen. 883 (1924). GAO often told agencies in
those days that if they thought attendance would be in the interest of
the government, they should present the matter to Congress. E.g.,
5 Comp. Gen. at 747. In fact Congress granted specific authority to a
number of agencies (for an example, see B-136324, Aug. 1, 1958), and
later, as will be seen below, enacted general legislation that renders
5 U.S.C. § 5946, as it relates to attendance at meetings, of very
limited applicability.
The next congressional venture in this field was Public Resolution No.
2, 74th Congress, ch. 4, 49 Stat. 19 (Feb. 2, 1935), aimed primarily at
restricting the use of appropriated funds to pay expenses of
nongovernment persons at conventions. This statute, now codified at
31 U.S.C. § 1345, provides in relevant part:
"Except as specifically provided by law, an appropriation may not be
used for travel, transportation, and subsistence expenses for a
meeting. This section does not prohibit--
"(1) an agency from paying the expenses of an officer or employee of
the United States Government carrying out an official duty;..."
Significantly, 31 U.S.C. § 1345 does not apply to government employees
in the discharge of official duties. Thus, as of 1935, attendance by
private parties at government expense was prohibited by 31 U.S.C.
§ 1345; attendance by government employees was prohibited by the 1912
statute for meetings of a society or association (regardless of the
relationship to official duties), and by 31 U.S.C. § 1345 for other
types of meetings unless attendance was in the discharge of official
duties.
The next relevant legislative action came in 1958 with two provisions
of the Government Employees Training Act, Pub. L. No. 85-507, 72 Stat.
327 (July 7, 1958). Section 10 of the Act, 5 U.S.C. § 4109, authorizes
payment of certain expenses in connection with authorized training.
Section 19(b) of the Act, 5 U.S.C. § 4110, makes travel appropriations
available for expenses of attendance at meetings, "which are concerned
with the functions or activities for which the appropriation is made or
which will contribute to improved conduct, supervision, or management
of the functions or activities." When Title 5 of the United States Code
was recodified in 1966, qualifying language was added to 5 U.S.C.
§ 5946 to make it clear that the requirement for specific statutory
authority no longer applied to the extent payment was authorized by
5 U.S.C. § 4109 or § 4110. See 38 Comp. Gen. 800 (1959).
With this statutory framework as background, it is now possible to
attempt to state some rules.
A government employee may attend a nongovernment-sponsored meeting at
government expense (1) if it is part of an authorized training program
under 5 U.S.C. § 4109 or (2) if it is related to agency functions or
management under 5 U.S.C. § 4110.
For example, the Labor Department could use its Salaries and Expenses
appropriation to pay the attendance fees of its Director of Personnel
at a conference of the American Society of Training Directors since the
meeting qualified under the broad authority of 5 U.S.C. § 4110.
38 Comp. Gen. 26 (1958). The expenses of attendance may not be paid if
the employing agency refuses to authorize attendance, even if
authorization would have been permissible under the statute. B-164372,
June 12, 1968. (This was sort of an odd case. An employee wanted to
attend a conference in Tokyo, Japan. The agency refused authorization
because the employee had announced his intention to resign after the
conference. The employee went anyway, and for some reason filed a claim
for his expenses. GAO said no.) Where attendance is authorized, the
fact that the sponsor is a profit-making organization is immaterial.
B-161777, July 11, 1967.
The express inclusion of "management" in 5 U.S.C. § 4110 is
significant. Before the Government Employees Training Act, GAO had
strictly construed grants of statutory authority for attendance at
meetings as excluding meetings concerning general problems such as
management that are common to all agencies. 37 Comp. Gen. 335 (1957).
This type of meeting is now expressly authorized.
If neither 5 U.S.C. § 4109 nor 5 U.S.C. § 4110 applies and the meeting
is a meeting of a "society or association," then it is subject to the
prohibition of 5 U.S.C. § 5946.
The continuing viability of 5 U.S.C. § 5946 requires further
elaboration. GAO held in 38 Comp. Gen. 800 (1959) that the Government
Employees Training Act repealed section 5946 by implication to the
extent that the two statutes were incompatible. While this is true,
some of the language in that decision has generated some confusion. The
decision stated that the restriction in section 5946 "is inapplicable
so far as agencies and personnel covered by the Government Employees
Training Act are concerned," and that those agencies no longer need to
obtain specific appropriation provisions to authorize attendance at
meetings. Of course this statement is based on the premise that an
agency is not likely to seek, nor is Congress likely to grant, specific
appropriation authority for an agency to send its employees to meetings
which have nothing to do with agency business. Thus, it is not accurate
to say that section 5946 simply no longer applies to civilian employees
of the government. It does apply, except that its scope is considerably
reduced by virtue of the broad authority of the Government Employees
Training Act. If attendance cannot be authorized under either of the
Acts provisions, 5 U.S.C. § 5946 still applies. This relationship is
correctly stated in 55 Comp. Gen. 1332, 1335-36 (1976). For cases where
expenses were disallowed because they could not be justified under
these standards, see B-202028, May 14, 1981; B-195045, Feb. 8, 1980;
and B-166560, May 27, 1969.
It is also possible for 31 U.S.C. § 1345 to apply to government
employees, although it would be the rare case. As noted above,
31 U.S.C. § 1345 does not apply to government employees in the
discharge of official duties. A number of earlier cases will be found
that cite the statute in passing for this proposition. E.g., 27 Comp.
Gen. 627 (1948); 26 Comp. Gen. 53 (1946); 22 Comp. Gen. 315 (1942);
B-117137, Sept. 25, 1953; B-87691, Aug. 2, 1949; B-80621, Oct. 8, 1948;
B-77404, June 29, 1948; B-77613, June 23, 1948; B-13888, Dec. 10,
1940.[Footnote 230]
Since the exception for government employees in 31 U.S.C. § 1345 is
limited to the discharge of official duties, the statutory prohibition
applies to government employees to the extent that a given meeting is
not part of the discharge of official duties. If a meeting is not part
of authorized training under 5 U.S.C. § 4109 and cannot qualify as
related to agency functions under 5 U.S.C. § 4110, it would certainly
not be within the exception in 31 U.S.C. § 1345 for the discharge of
official duties. If the meeting is a meeting of a "society or
association," it is, as noted above, subject to 5 U.S.C. § 5946. If the
meeting is not a meeting of a society or association and is not within
the exception for the discharge of official duties, 31 U.S.C. § 1345
would apply. An example of a situation in which this rationale might
apply is B-195045, Feb. 8, 1980, in which attendance expenses at an
executive board meeting of the Combined Federal Campaign were
disallowed. (The case was decided on the basis of regulations and prior
decisions.)
(2) Inability to attend:
If an employee is scheduled to participate in a meeting or conference
and is unable to attend, the government may be liable for attendance
fees in certain situations. Two cases will illustrate.
In B-159059, June 28, 1966, an Interior Department employee had been
accepted to attend an energy seminar. The seminar announcement provided
a cutoff date for cancellation of reservations but permitted
substitutions. Due to the press of other necessary work, the employee
did not attend the seminar, nor did he send a substitute or request
cancellation before the cutoff date. GAO found that the sponsors
acceptance of the employees application, which had been duly approved
(in this particular case, the applicant was also the approving
official), obligated the government to pay the seminar fee subject to
timely cancellation. Since the agency failed to give timely notice of
cancellation, it was liable for the seminar fee.
In another 1966 case, a Defense Department employee was scheduled to
attend a training seminar in New York but a severe snowstorm prevented
him from leaving Washington. (By Washington standards, this could have
been 2 inches.) Since the employee's nonattendance was in no way
attributable to the organization conducting the seminar, GAO concluded
(citing B-159059) that the seminar fee should be paid. GAO rejected a
contention that the government's obligation should be excused on the
grounds of impossibility (the employee's nonattendance resulted from
natural forces) since the arrangement permitted substitution of
personnel. B-159820, Sept. 30, 1966.
(3) Federally sponsored meetings:
Federally sponsored meetings for employees (intra-agency or
interagency), such as management or planning seminars, are not
prohibited by 5 U.S.C. § 5946 since they are not meetings of a "society
or association," nor are they prohibited by 31 U.S.C. § 1345 because
they concern the discharge of official duties. The authority for this
type of meeting is essentially a "necessary expense" question.
An increasingly common type of agency meeting is the "retreat type"
conference. In this situation, some agency official with authority to
do so determines that the participants should get away from their
normal work environment and its associated interruptions such as
telephones. Frequently, they need to get just far enough away to
justify the payment of per diem allowances. While this type of meeting
may be criticized as extravagant, it is within the agency's
administrative discretion under the necessary expense rule and
therefore not illegal. See B-193137, July 23, 1979.
Agency meetings at or near the participant's normal duty station may
present special problems with respect to reimbursement for meals. In
many cases, meals or snacks will be unauthorized even though there is
nothing improper about conducting the meeting itself. This area is
discussed in detail in this chapter, section C.5.
(4) Rental of space in District of Columbia:
Originally enacted in 1877 (Act of March 2, 1877, ch. 106, 19 Stat.
370), 40 U.S.C. § 8141 now provides:
"A contract shall not be made for the rent of a building, or part of a
building, to be used for the purposes of the Federal Government in the
District of Columbia until Congress enacts an appropriation for the
rent. This section is deemed to be notice to all contractors or lessors
of the building or a part of a building."
The statute does not prohibit the procurement of short-term conference
facilities if otherwise proper. 54 Comp. Gen. 1055 (1975). In rendering
this decision, which overruled several earlier cases, the Comptroller
General relied heavily on the Federal Property Management Regulations,
in which the General Services Administration construed the procurement
of short-term conference facilities as a service contract rather than a
rental contract.
However, the statute does prohibit the procurement of lodging
accommodations in the District of Columbia in connection with a meeting
or conference without specific statutory authority. 56 Comp. Gen. 572
(1977), modified and aff'd, B-159633, Sept. 10, 1974; 49 Comp. Gen. 305
(1969).[Footnote 231] In 56 Comp. Gen. 572, GAO approved payment to the
hotel of the difference between full per diem and the reduced per diem
actually paid to the participating employees. This is because the
agency could, without violating the statute, have paid full per diem to
the employees if they had made the arrangements themselves on an
individual basis. Thus, the difference represented a cost the agency
would have properly incurred had it not procured the accommodations
directly.
(5) Military personnel:
Attendance at meetings by military personnel is governed by 37 U.S.C.
§ 412:
"Appropriations of the Department of Defense that are available for
travel may not, without the approval of the Secretary concerned or his
designee, be used for expenses incident to attendance of a member of an
armed force under that department at a meeting of a technical,
scientific, professional, or similar organization."
This statute, designed to provide a broad exception for the Defense
Department from 5 U.S.C. § 5946, originated as an appropriation act
rider in the mid-1940s and was enacted as permanent legislation by
section 605 of the Department of Defense Appropriation Act for 1954,
67 Stat. 349 (Aug. 1, 1953).
The Government Employees Training Act, enacted in 1958 and discussed
above, applies to civilian employees of the military departments but
not to members of the uniformed services. 38 Comp. Gen. 312 (1958).
Accordingly, the Comptroller General held in 1959 that the
administrative approval specified in 37 U.S.C. § 412 was no longer
required for civilian employees covered by the Government Employees
Training Act. However, the requirement of 37 U.S.C. § 412 remains
applicable to members of the uniformed services. 38 Comp. Gen. 800
(1959). See also 55 Comp. Gen. 1332, 1335 (1976). The recodification of
Title 37 of the United States Code in 1962 recognized this distinction
and reworded the statute to its present form so it would apply only to
members of the armed forces.
The administrative approval required by the statute is a prerequisite
to the availability of the appropriation, and has the effect of
removing the appropriation from the prohibition of 5 U.S.C. § 5946 to
the extent of such approval. 34 Comp. Gen. 573, 575 (1955). Oral
approval, if satisfactorily established by the record, is sufficient to
meet the requirement of the statute. B-140082, Aug. 19, 1959. However,
where implementing departmental regulations establish more stringent
requirements, such as advance approval in writing, the regulations will
control. B-139173, June 2, 1959.
The administrative approval requirement of 37 U.S.C. § 412 does not
apply to meetings sponsored by a federal department or agency. 50 Comp.
Gen. 527 (1971).
b. Nongovernment Personnel:
(1) 31 U.S.C. § 1345:
Quoted previously, 31 U.S.C. § 1345 prohibits the payment of travel,
transportation, or subsistence expenses of private parties at meetings
without specific statutory authority.
The Comptroller General set the tone for GAO's approach to 31 U.S.C.
§ 1345 in two cases decided shortly after the statute was enacted. In
14 Comp. Gen. 638 (1935), the Comptroller held that the Federal Housing
Administration (FHA) could not pay the travel and lodging expenses for
attendance at meetings of private citizens who were cooperating with
the FHA in a campaign to encourage the repair and modernization of real
estate. GAO had no difficulty in finding that the statute barred
payment:
"There seems very little if any room for doubt as to the reasonable
meaning and legal effect of [31 U.S.C. § 1345]. Simply stated, it is
that no convention or other form of assemblage or gathering may be
lodged, fed, conveyed, or furnished transportation at Government
expense unless authority therefor is specifically granted by law."
Id. at 640 (explanatory language provided).
A few months later, relying on 14 Comp. Gen. 638, the Comptroller
General held similarly that 31 U.S.C. § 1345 prohibited the American
Battle Monuments Commission from providing transportation and
refreshments for private individuals at monument dedication ceremonies
in Europe. 14 Comp. Gen. 851 (1935). Other early decisions applying the
statutory prohibition are 15 Comp. Gen. 1081 (1936); B-53554, Nov. 6,
1945; B-27441, Aug. 25, 1942; and A-66869, Jan. 31, 1936.
Some more recent cases in which GAO found expenditures prohibited by
31 U.S.C. § 1345 are summarized below:
* The Environmental Protection Agency (EPA) could not pay the
transportation and lodging expenses of state officials attending a
National Solid Waste Management Association Convention. B-166506,
July 15, 1975, aff'd, 55 Comp. Gen. 750 (1976).
* The Mine Safety and Health Administration, Department of Labor, could
not pay travel and subsistence expenses of miners and mine operators
attending safety and health training seminars. B-193644, July 2, 1979.
* Maritime Administration could not pay transportation and subsistence
expenses of nonfederal participants in a 2-week seminar for general
publication maritime writers. B-168627, May 26, 1970.
* Navy could not pay for a dinner and cocktail party for nongovernment
minority group leaders. B-176806-O.M., Sept. 18, 1972.
* National Highway Traffic Safety Administration could not pay travel
and lodging expenses of state officials at a workshop on odometer
fraud. 62 Comp. Gen. 531 (1983).
GAO has not attempted to define precisely what types of gatherings are
within the scope of the statutory prohibition. The determination is
made on a case-by-case basis. The statutory language is broad and could
presumably be construed to cover any situation where two or more
persons are gathered together in one place. However, GAO has never
adopted such a rigid view. For example, in 45 Comp. Gen. 476 (1966), a
certifying officer of the Department of Agriculture asked whether he
could "properly certify for payment a voucher covering payment for
rental of a chartered bus for the transportation of female guests from
Albuquerque to Grants, New Mexico, and return, for purposes of
providing social and recreational services to Job Corps enrollees."
(This is what the case says. The editors are not making it up.) The
Comptroller General found that this was simply not the kind of
"meeting" 31 U.S.C. § 1345 was intended to prohibit. Further, there was
statutory authority for providing "recreational services" for the
enrollees. Therefore, the expenditure was not illegal. The decision
does not specify precisely what "social and recreational services" the
women were bused in to provide. See also 72 Comp. Gen. 229 (1993) (the
Department of Defense (DOD) may pay for travel expenses from the United
States to Germany for recruiters from public schools to attend job
fairs for teachers at DOD Dependent schools (DODDS) because job fairs
and one-on-one interviews between recruiters and DODDS teachers are not
the type of "meeting" covered by section 1345).
As noted, the prohibition of 31 U.S.C. § 1345 can be overcome by
specific statutory authority. An example of such authority is language
in an appropriation act making the appropriation available for
"expenses of attendance at meetings" or similar language.[Footnote 232]
See 72 Comp. Gen. 146 (1993); 34 Comp. Gen. 321 (1955); 24 Comp. Gen.
86 (1944); 17 Comp. Gen. 838 (1938); 16 Comp. Gen. 839 (1937);
B-117137, Sept. 25, 1953. (This is the same language used before
enactment of the Government Employees Training Act to grant exceptions
from 5 U.S.C. § 5946.)
In one case, less-than-specific authority was found adequate. In
35 Comp. Gen. 129 (1955), GAO considered a statute that (1) provided
for a "White House Conference on Education," (2) specified that the
conference be broadly representative of educators and other interested
persons from all parts of the United States, and (3) authorized
appropriations necessary for the "administration" of the act. The
decision held this sufficient to make the ensuing appropriations
available for the travel costs of the invitees. While the decision does
not mention 31 U.S.C. § 1345, the distinction is readily apparent.
Here, holding the conference was more than merely a legitimate means of
implementing the enabling statute; it was the very purpose of the
statute and hence the only means. See also 35 Comp. Gen. 198 (1955)
(discussing other funding issues under the same legislation). A more
recent case applying 35 Comp. Gen. 129 to a similar situation is
B-242880, Mar. 27, 1991 (Commission on Interstate Child Support could
pay lodging costs for core nonfederal invitees at a statutorily
mandated National Conference on Interstate Child Support where the core
invitees were essential to assist the Commission in its statutory
duties).
However, general statutory authority to disseminate information to the
public, or to promote or encourage cooperation with the private sector,
or to provide technical assistance or education to specified segments
of the private sector, is not sufficiently specific to overcome
31 U.S.C. § 1345. See 62 Comp. Gen. 531 (1983); B-193644, July 2, 1979;
B-166506, July 15, 1975; B-168627, May 26, 1970.
A distinction must be drawn between the authority to sponsor a meeting
and the authority to pay the types of expenses prohibited by 31 U.S.C.
§ 1345. An agency may be able to do the former but not the latter.
Thus, in B-166506, July 15, 1975, GAO pointed out that EPA could hold a
solid waste management convention as a legitimate means of implementing
its functions under the Solid Waste Disposal Act. What it could not do
without more specific statutory authority was pay the travel and
lodging expenses of the state participants. Sponsoring the meeting
itself is essentially a "necessary expense" question. See also 62 Comp.
Gen. 531 (1983); B-239856, Apr. 29, 1991. Cf. 45 Comp. Gen. 333 (1965);
B-147552, Nov. 29, 1961.
Thus, depending on the agency's statutory authority, it may be
authorized to incur such expenses as renting conference facilities,
financing the participation of its own employees, bringing in guest
speakers, both federal and nonfederal, and preparing and disseminating
literature. The prohibition of 31 U.S.C. § 1345 comes into play only
when the agency purports to pay the travel, transportation, or
subsistence expenses of nonfederal attendees.
Another thing the agency may be able to do is permit the use of
government facilities for the meeting. For example, in B-168627,
May 26, 1970, while the Maritime Administration could not pick up the
tab for the participation of nongovernment persons at a seminar, it
could permit the seminar to be held at the U.S. Merchant Marine
Academy. The rule, stated in that decision, is that an agency has
authority to grant to a private individual or business a "revocable
license" to use government property, subject to termination at any time
at the will of the government, provided that such use does not injure
the property in question and serves some purpose useful or beneficial
to the government.
(2) Invitational travel:
Another statute we should note is 5 U.S.C. § 5703, which provides:
"An employee serving intermittently in the Government service as an
expert or consultant …or serving without pay or at $1 a year, may be
allowed travel or transportation expenses, under this subchapter, while
away from his home or regular place of business and at the place of
employment or service."
This statute originated as an appropriation act rider in 1945 and was
enacted as permanent legislation the following year as section 5 of the
Administrative Expenses Act of 1946, Pub. L. No. 600, ch. 744, 60 Stat.
806 (Aug. 2, 1946). To the extent it authorizes payment in the so-
called "invitational travel" situation--a private party called upon by
the government to confer or advise on government business--it
represents a limited exception to 31 U.S.C. § 1345.
Even before 5 U.S.C. § 5703 was enacted, GAO had recognized that a
private individual "invited" by the government to confer on official
business was entitled to reimbursement of travel expenses if specified
in the request and justified as a necessary expense. 8 Comp. Gen. 465
(1929); 4 Comp. Gen. 281 (1924); A-41751, Apr. 15, 1932.
The enactment of 31 U.S.C. § 1345 in 1935 did not change this. Thus,
the Comptroller General recognized in 15 Comp. Gen. 91, 92 (1935) that
while the statute might prohibit the payment of expenses of private
individuals called together as a group, it would not apply to
"individuals called to Washington or elsewhere for consultation as
individuals." See also A-81080, Oct. 27, 1936. Viewed in this light,
the 1946 enactment of 5 U.S.C. § 5703 in large measure merely gave
express congressional sanction to a rule that had already developed in
the decisions.
Although GAO did not directly address the relationship between 5 U.S.C.
§ 5703 and 31 U.S.C. § 1345 until 1976 (55 Comp. Gen. 750 (1976),
discussed below), the relevant principles were established in several
earlier cases. In one of GAO's earliest decisions under 5 U.S.C.
§ 5703, the Comptroller General held that persons who are not
government officers or employees may, "when requested by a proper
officer to travel for the purpose of conferring upon official
Government matters," be regarded as persons serving without pay and
therefore entitled to travel expenses under 5 U.S.C. § 5703. 27 Comp.
Gen. 183, 184 (1947). See also 39 Comp. Gen. 55 (1959). Thus, the rule
of 8 Comp. Gen. 465 now had a statutory basis. A critical prerequisite
is this: in order to qualify under 5 U.S.C. § 5703, the individual must
be performing a direct service for the government. 37 Comp. Gen. 349
(1957).
Once the proposition of 27 Comp. Gen. 183 is accepted, it is but a
short step to recognizing that a private individual called upon to
advise on government business may be called upon to do so in the form
of making a presentation at a meeting or conference. See, for example,
B-111310, Sept. 4, 1952, and 33 Comp. Gen. 39 (1953), in which payment
under 5 U.S.C. § 5703 was authorized. The statute could not reasonably
be limited to "one-on-one" consultations. As stated in B-196088,
Nov. 1, 1979:
"It is not unusual for the Government to invite an individual with a
particular expertise to attend a meeting and to share the benefit of
his views without compensation other than by way of reimbursement for
his travel and transportation expenses."
Thus, travel expenses of private individuals "invited" to participate
in meetings sponsored by the National Center for Productivity and
Quality of Working Life were properly paid under 5 U.S.C. § 5703.
B-192734, Nov. 24, 1978. Similarly, the Internal Revenue Service could
invoke 5 U.S.C. § 5703 to buy lunches for guest speakers invited to
participate in a ceremony observing National Black History Month since
the ceremony was an authorized part of the agency's formal program to
advance equal opportunity objectives. 60 Comp. Gen. 303 (1981).
There is a limit to this rationale and a point at which 5 U.S.C. § 5703
collides head-on with 31 U.S.C. § 1345. This point was discussed in
55 Comp. Gen. 750, supra, and reiterated in B-193644, July 2, 1979. In
1976, 55 Comp. Gen. 750 affirmed B-166506, July 15, 1975, and held that
31 U.S.C. § 1345 prohibited the Environmental Protection Agency (EPA)
from paying travel and lodging expenses of state officials at a solid
waste management convention; B-193644 reached the same result for
safety and training seminars for miners and mine operators. In both
cases, the Comptroller General rejected the suggestion that the
expenses could somehow be authorized under the "invitational travel"
statute. In neither case were the attendees providing a direct service
for the government, even though in both cases the government may have
derived some incidental benefit in terms of enhancement of program
objectives. The following passage illustrates the "collision point":
"We thus do not believe that [5 U.S.C. § 5703] was ever intended to
establish the proposition that anyone may be deemed a person serving
without compensation merely because he or she is attending a meeting or
convention, the subject matter of which is related to the official
business of some Federal department or agency…. We believe that being
called upon to confer with agency staff on official business is
different from attending a meeting or convention in which a department
or agency is also interested."
55 Comp. Gen. at 752-53 (explanatory information provided). Thus,
5 U.S.C. § 5703 permits an agency to invite a private individual (or
more than one) to a meeting or conference at government expense, if
that individual is legitimately performing a direct service for the
government such as making a presentation or advising in an area of
expertise. Invitational travel also encompasses private individuals
whose travel is a necessary incident to the service that provides a
direct benefit to the government. B-259620, Feb. 29, 1996 (cross-
cultural training for spouses of Federal Aviation Administration
employees living abroad directly benefits the agency). See also
71 Comp. Gen. 9 (1991); 71 Comp. Gen. 6 (1991). However, 5 U.S.C.
§ 5703 is not a device for circumventing 31 U.S.C. § 1345. The "direct
service" test is not met merely because the agency is interested in the
subject matter of the conference or because the conference will enhance
the agency's program objectives. B-251921, Apr. 14, 1993 (EPA cannot
pay for participants who are not federal employees to attend a United
Nations-sponsored conference on women's contributions to solving
environmental problems because EPA does not benefit directly from their
attendance). In a somewhat unique set of circumstances, however, GAO
held that the invitational travel statute permits a private individual,
appointed by the government, to travel to participate in a state
conference at government expense if the information imparted by the
conference provides a direct service to the government. See B-260896,
Oct. 17, 1996 (DOD may pay for nongovernment school board members
appointed by DOD pursuant to 20 U.S.C. § 241(h) (authorizing assistance
for local education agencies in areas affected by federal agencies,
since repealed) to travel to participate in state school board
conferences and workshops because the knowledge and information derived
from participation provides a direct service for the government).
(3) Use of grant funds:
One of the principles of grant law is that, where a grant is made for
an authorized grant purpose, the grant funds in the hands of the
grantee are not subject generally to many of the restrictions
applicable to the direct expenditure of appropriations, unless there is
a special condition of the grant to the contrary. B-153417, Feb. 17,
1964. One of those restrictions, which does not apply to grant funds in
the hands of a grantee, is 31 U.S.C. § 1345.
For example, the American Law Institute could use funds provided by the
Environmental Protection Agency in the form of a statutorily authorized
training grant to defray transportation and subsistence expenses of law
students and practicing environmental lawyers at an environmental law
seminar. 55 Comp. Gen. 750 (1976). For this result to apply, the grant
must be made for an authorized grant purpose and there must be no
provision to the contrary in the grant agreement. Once these conditions
are met, the grantee's use of the funds is not impaired by 31 U.S.C.
§ 1345. However, an agency may not use the grant mechanism for the sole
purpose of circumventing 31 U.S.C. § 1345, that is, to do indirectly
that which it could not do directly. In other words, if an agency makes
a grant for an authorized purpose, and the grantee sponsors a meeting
or conference as a means of implementing that purpose, the grantee's
use of the funds will not be restrained by 31 U.S.C. § 1345. However,
unless otherwise authorized, the agency could not make the grant for
the purpose of sponsoring the conference and thereby permitting
payments it could not make by direct expenditure.
Depending on the precise statutory authority involved, there may be
situations in which sponsoring or helping to sponsor a conference is
itself an authorized grant purpose. One example is B-83261, Feb. 10,
1949 (grant to American Cancer Society under Public Health Service
Act).
The treatment of grant funds described above does not apply to
procurement contracts. 62 Comp. Gen. 531 (1983). See also B-262110,
Mar. 19, 1997.
3. Attorney's Fees:
a. Introduction:
Questions on the availability of appropriated funds to pay attorney's
fees arise in many contexts. Attorney's fees awarded by courts are
discussed in Chapter 14 (Volume III of the second edition of Principles
of Federal Appropriations Law). This section deals with administrative
payments.
Traditionally, the United States has followed what has come to be known
as the "American Rule," that each party in litigation or administrative
proceedings is personally responsible for his or her own attorney's
fees. In other words, in the absence of statutory authority to the
contrary, the losing party may not be forced to pay the winner's
attorney. E.g., Buckhannon Board & Care Home, Inc. v. West Virginia
Department Of Health & Human Resources, 532 U.S. 598, 602 (2001);
Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240 (1975).
One application of the American Rule is that a claimant who prosecutes
an administrative claim against the United States is not entitled to
reimbursement of legal fees unless authorized by statute. E.g.,
57 Comp. Gen. 554 (1978); 49 Comp. Gen. 44 (1969); 37 Comp. Gen. 485,
487 (1958); B-189045, Jan. 26, 1979. To illustrate, a vendor who
successfully filed a claim for the payment of goods sold and delivered
to a Navy vessel was not entitled to reimbursement of attorney's fees.
B-187877, Apr. 14, 1977. Similarly nonreimbursable were legal fees
incurred incident to prosecuting a claim for damages for breach of an
oral agreement. B-188607, July 19, 1977. "Fairness" and "decency,"
however appealing, do not compensate for the lack of statutory
authority. 67 Comp. Gen. 574, 576 (1988); 57 Comp. Gen. 856, 861
(1978).
Payments to attorneys also arise in a number of situations that are,
strictly speaking, not applications of the American Rule, that is,
which do not involve payment of fees to a "prevailing party." The
approach in these cases is to look first for statutory authority and if
express statutory authority does not exist, apply the various
principles discussed throughout this publication, such as the necessary
expense doctrine.
For example, a private attorney sought reimbursement for out-of-pocket
expenses he incurred incident to a "special proceeding" initiated by
the Nuclear Regulatory Commission (NRC) to investigate charges of
misconduct raised by the attorney against NRC staff members and by the
staff members against the attorney. There was no statutory authority to
reimburse the attorney, nor could the payment be justified as a
necessary expense since it was not reasonably necessary to carrying out
NRC functions. Therefore, payment was unauthorized. B-192784, Jan. 10,
1979. In another case, the Small Business Administration (SBA) could
not reimburse a bank for legal fees the bank incurred in protecting its
interest in an SBA-guaranteed loan since SBA neither contracted with
the attorney nor did it benefit from his services. B-187950, Apr. 26,
1977.
The Justice Department has held that legal fees incurred by a Cabinet
nominee in connection with Senate confirmation hearings, for services
rendered before the nominating administration took office, could be
paid either from Presidential Transition Act appropriations or from
private sources. 5 Op. Off. Legal Counsel 126 (1981).
The remainder of this section will discuss the situations that have
been most commonly addressed in decisions of the Comptroller General.
b. Hiring of Attorneys by Government Agencies:
During the first century of the Republic, government agencies who
needed lawyers either as counsellors or litigators simply went out and
hired them. Not only was this system expensive (payments from the
public treasury are not conducive to reduced fees), it resulted in
inconsistencies in the government's legal position. Congress remedied
the situation in 1870 by creating the Department of Justice, headed by
the Attorney General. Act of June 22, 1870, ch. 150, 16 Stat. 162.
To ensure that the objectives of the 1870 legislation would be
achieved, Congress included section 17, which (a) prohibited executive
agencies from employing attorneys at the expense of the United States
and (b) prohibited payments to attorneys, except those employed by the
Justice Department, unless the Attorney General certified that the
services could not be performed by the Justice Department. The two
parts of section 17 subsequently became Revised Statutes §§ 189 and
365.
As the federal government grew in size and complexity, it became
apparent that the need for centralization of legal services within the
Justice Department related primarily to the specialty of litigation.
Thus, with congressional approval, federal agencies regularly employed
attorneys to serve as legal advisers. (The term "Attorney-Adviser" is
still commonly used to designate staff attorneys in many government
agencies.) When Title 5 of the United States Code was recodified in
1966, the successors of R.S. §§ 189 and 365 were combined into the new
5 U.S.C. § 3106. This statute, reflecting the evolved state of the law,
prohibits agencies, unless otherwise authorized by law, from employing
attorneys "for the conduct of litigation in which the United States, an
agency, or employee thereof is a party, or is interested." The agencies
are required to refer such matters to the Justice Department.[Footnote
233] Thus, agencies routinely employ attorneys to provide legal
services other than litigation, but may not employ attorneys as
litigators unless they have statutory authority to conduct their own
litigation or unless that authority has been delegated to them by the
Attorney General.
Normally, in view of the existence of the Justice Department and the
agency's own staff attorneys, the need for a federal agency to retain
private counsel should rarely occur. Indeed, GAO has found it
unauthorized for an agency to retain private counsel to provide legal
opinions on matters within the Justice Department's jurisdiction under
statutes such as 28 U.S.C. §§ 511-514. 16 Comp. Gen. 1089 (1937). In
limited situations, the Comptroller General has held that the retention
of private attorneys as experts or consultants under 5 U.S.C. § 3109 is
authorized. For example, in B-192406, Oct. 12, 1978, GAO concluded that
the then Civil Service Commission could hire a private law firm under
5 U.S.C. § 3109 to serve as "special counsel" to the Chairman to
investigate alleged merit system abuses, since the matter was not
covered by 5 U.S.C. § 3106 nor otherwise under the jurisdiction of the
Justice Department. Similarly, the Navajo and Hopi Indian Relocation
Commission could retain a private attorney under 5 U.S.C. § 3109 as an
independent contractor to handle matters beyond the Justice
Department's jurisdiction, where the workload was insufficient to
justify hiring a full-time attorney. B-114868.18, Feb. 10, 1978.
For similar holdings, see Boyle v. United States, 309 F.2d 399 (Ct. Cl.
1962) (retired government patent lawyer retained on part-time basis);
61 Comp. Gen. 69 (1981) (United States Advisory Commission on Public
Diplomacy could hire law firm to provide legal analysis of its
authority and independence); B-210518, Jan. 18, 1984 (Environmental
Protection Agency could retain private counsel to provide independent
analysis of issues relating to congressional contempt citation of
Administrator). See also B133381, July 22, 1977; B-141529, July 15,
1963.
In B-289701, Feb. 27, 2002, GAO faced an unusual situation. A
presidential appointee to the Civil Rights Commission had been
prevented from taking his seat on the Commission when the appointee
whose position he was to assume refused to give up her seat, arguing
that her term had not expired. The Justice Department filed suit on
behalf of the new appointee. The Commission retained private legal
counsel to defend the previous appointee and argue her case before the
court. Justice, citing 28 U.S.C. § 516,[Footnote 234] challenged the
Commission's right to intervene in the litigation. Justice objected
that neither the Commission nor its officers in their official capacity
have a right to appear in litigation without the permission of the
Attorney General, which had not been granted. The district court
overrode those objections, and ruled in favor of the previous appointee
(and the Commission). At this point, after the district court had acted
but before the appeal was completed, GAO was asked whether appropriated
funds were available to pay for outside counsel. GAO agreed with
Justice--the Commission had no authority to use appropriated funds to
retain counsel in order to intervene in the court case in opposition to
Justice. In its decision, the appellate court overturned the district
court's order and held in favor of the new appointee. United States v.
Wilson, 290 F.3d 347 (D.C. Cir. 2002). However, the circuit court did
not address whether the Commission had authority to intervene. Id. at
352. The court explained: "As the United States has not raised this
issue on appeal, …we do not decide whether this intervention was
permissible." Id. The effect of this was to let stand the district
court's order granting Commission intervention.
Agencies may have specific authority to retain special counsel in
addition to the lawyers on the regular payroll. For example,
appropriations for the Federal Communications Commission have
traditionally included "special counsel fees." The Comptroller General
has construed this authority as permitting contractual arrangements
with former employees as retired annuitants to perform functions for
which they were uniquely qualified. Since the appropriation provision
constitutes independent authority, the contracts are not subject to the
salary limitations of 5 U.S.C. § 3109. 53 Comp. Gen. 702 (1974);
B-180708, Jan. 30, 1976. However, the authority is limited to services
of the legal profession and does not embrace "counsel" in a broader
sense. B-180708, July 22, 1975.
In B-290005, July 1, 2002, GAO reported that the Interior Department's
Fish and Wildlife Service (FWS) had contracted with outside lawyers to
obtain legal services in connection with various issues of personnel,
labor law, and discrimination allegations. By law, the Solicitor of the
Interior Department is solely responsible for the legal work of the
Interior Department, including the FWS. 43 U.S.C. § 1455. The Solicitor
receives a separate annual appropriation to fund that work. FWS had not
obtained the Solicitor's approval for the legal services contracts, and
the Solicitor had not exercised any supervisory control over them. GAO
concluded that (1) FWS had no authority to contract for legal services;
(2) FWS's use of its fiscal year 2001 resource management appropriation
for this purpose constituted a violation of the purpose statute,
31 U.S.C. § 1301(a); and (3) FWS had violated the Antideficiency Act,
31 U.S.C. § 1341(a).
c. Suits Against Government Officers and Employees:
At one time, government employees were considered largely immune from
being sued for actions they took while performing their official
duties. This is no longer true. For a variety of reasons, it is no
longer uncommon for a government employee to be sued in his individual
capacity for something he did (or failed to do) while performing his
job. For example, the Supreme Court held in 1978 that an executive
official has only a "qualified immunity" for so-called "constitutional
torts" (alleged violations of constitutional rights). Butz v. Economou,
438 U.S. 478 (1978). In any event, regardless of whether the employee
ultimately wins or loses, he has to defend the suit and therefore will
need professional legal representation.
As a general proposition, GAO considers the hiring of an attorney to be
a matter between the attorney and the client, and this is no less true
when the client is a government officer or employee. E.g., 55 Comp.
Gen. 1418, 1419 (1976); B-242891, Sept. 13, 1991. However, the
decisions have long recognized another principle as well: Where an
officer of the United States is sued because of some official act done
in the discharge of an official duty, the expense of defending the suit
should be borne by the United States. E.g., 70 Comp. Gen. 647, 649
(1991); 6 Comp. Gen. 214 (1926). This section will discuss when
appropriated funds may be used for attorney's fees to defend a
government officer or employee.
Generally, when a present or former employee is sued for actions
performed as part of his official duties, his defense is provided by
the Justice Department. In order for a given case to be eligible for
Justice Department representation, the Justice Department must
determine that the employee's action, which gave rise to the suit, was
performed within the scope of federal employment, and that providing
representation is in the interest of the United States.
The role of the Justice Department derives from a number of statutory
provisions: 28 U.S.C. §§ 515-519, 543, and 547. See also Exec. Order
No. 6166, § 5 (1933). These provisions establish the Justice Department
as the government's litigator,[Footnote 235] which for the most part
means representation by Justice Department attorneys.[Footnote 236] To
reinforce these provisions, 5 U.S.C. § 3106, previously noted,
prohibits executive or military agencies from employing attorneys for
the conduct of litigation in which the United States or one of its
agencies or employees is a party or is interested. The agencies must
refer such matters to the Justice Department. The Justice Department
has also issued implementing regulations, found at 28 C.F.R. §§ 50.15
and 50.16.[Footnote 237] This statutory and regulatory scheme is
designed to encourage employees to vigorously carry out their duties by
assuring them of an adequate defense at no cost if they should be sued
in the course of executing their responsibilities. Cf. Bontkowski v.
Smith, 305 F.3d 757, 760 (7th Cir. 2002) ("It would be absurd to
require law enforcement officers to defend at their own expense against
likely groundless spite suits by the people whom they have arrested or
investigated.").
However, the Attorney General's decision to provide or not provide
counsel to an individual employee sued for official actions is
discretionary and not subject to judicial review. E.g., Turner v.
Schultz, 187 F. Supp. 2d 1288, 1292-97 (D. Colo. 2002); Falkowski v.
Equal Employment Opportunity Commission, 783 F.2d 252 (D.C. Cir.),
cert. denied, 478 U.S. 1014 (1986). Cf. Hall v. Clinton, 143 F. Supp.
2d 1, 4 (D.D.C. 2001) (Justice Department decision to represent a
party--as opposed to withholding representation--might be reviewable).
The Attorney General may take into consideration "how blameworthy or
litigation-prone the employee seeking representation may be."
Falkowski, 783 F.2d at 254.
In addition, the Comptroller General has recognized that the statutes
cited above authorize the Justice Department to retain private counsel,
payable from Justice Department appropriations, if determined necessary
and in the interest of the United States. E.g., 56 Comp. Gen. 615, 623
(1977); B-22494, Jan. 10, 1942. For example, the Justice Department
generally will not provide representation if the employee is the target
of a criminal investigation,[Footnote 238] but may authorize private
counsel at Justice Department expense if a decision to seek an
indictment has not yet been made. The Justice Department may also
authorize private counsel if it perceives a conflict of interest
between the legal or factual positions of different government
defendants in the same case. 28 C.F.R. §§ 50.15 and 50.16. See 2 Op.
Off. Legal Counsel 66 (1978); 56 Comp. Gen. 615, 621-624 (1977);
[Footnote 239] B-150136, B-130441, May 19, 1978; B-130441, May 8, 1978;
B-130441, Apr. 12, 1978.
Thus, an employee who learns that he is being sued should first explore
the possibility of obtaining representation through the Justice
Department. Procedures for requesting representation are found in 28
C.F.R. § 50.15(a). The importance of this step must be emphasized. If
the employee fails to immediately seek Justice Department
representation, he may find, as discussed below, that he is stuck
footing the bill for his attorney's fees even in cases where the
expense might otherwise have been paid by the government.
If Justice Department representation is unavailable, there are limited
situations in which appropriations of the employing agency may be
available to retain private counsel. Generally, before an agency can
consider using its own funds, Justice Department representation must
first have been sought and must be appropriate but unavailable, and
representation must be in the interest of the United States. E.g.,
B-251141, supra. The employee's personal interest in the outcome does
not automatically preempt a legitimate government interest. The two may
exist side-by-side.
One case, 53 Comp. Gen. 301 (1973), dealt with suits against federal
judges and other judicial officers.[Footnote 240] The suits arise in a
variety of contexts, often involving collateral attacks on the judges
rulings in original actions. While many of the suits are frivolous,
some sort of defense, even if only a pro forma submission, is almost
always necessary. In many cases, such as actions where no personal
relief is sought against the judicial officer, or in potential conflict
of interest situations, the Justice Department has determined that it
cannot or will not provide representation. The Comptroller General held
that judiciary appropriations are available to pay the costs of
litigation, including "minimal fees" to private attorneys, if
determined to be in the best interest of the United States and
necessary to carry out the purposes of the appropriation. However, the
Comptroller General added that (1) the Justice Department must have
declined representation, although individual requests are not required
for cases falling within the Attorney General's stated policy; (2) the
determination of necessity cannot be made by the individual defendant
but must be made by the Administrative Office of the U.S. Courts; and
(3) the Administrative Office should make full disclosure to the
appropriate congressional committees. Under similar circumstances,
appropriations for the public defender service are available to defend
federal public defenders appointed under the Criminal Justice Act who
are sued for actions taken within the scope of their duties. Id. at
306.
Nine years after GAO's ruling in 53 Comp. Gen. 301, a statute was added
to Title 28 of the United States Code authorizing the Administrative
Office of the United States Courts to pay the costs (including attorney
fees) of defending a Chief Justice, justice, judge, officer, or
employee of any United States court who is "sued in his official
capacity, or is otherwise required to defend acts taken or omissions
made in his official capacity, and the services of an attorney for the
Government are not reasonably available pursuant to chapter 31 of this
title." Pub. L. No. 97-164, title I, § 116(a), 96 Stat. 25, 32 (Apr. 2,
1982), codified at 28 U.S.C. § 463. This statute was intended to
address those situations where the Justice Department declines to
provide representation to a judicial officer or employee on grounds of
conflict of interest or other ethical reasons. McBryde v. United
States, 299 F.3d 1357, 1362-63, 1366 (Fed. Cir. 2002) (quoting S. Rep.
No. 97-275, at 16). Generally speaking, this provision does not
authorize reimbursement where the judicial officer or employee was
engaged in "offensive" rather than "defensive" litigation. Id. at 1365-
1367. Regulations issued by the Administrative Office to implement
28 U.S.C. § 463 provide that the decision to reimburse expenses
associated with legal representation by private counsel "will be guided
by the opinion of the Comptroller General in 53 Comp. Gen. 301."
McBryde v. United States, 50 Fed. Cl. 261, 266 (2001), citing The Guide
to Judiciary Policies and Procedures, vol. I, ch. XI, pt. D, § 3C
(reissued April 2001).
In 55 Comp. Gen. 408 (1975), the U.S. Attorney had agreed to defend a
former Small Business Administration (SBA) employee who was sued for
acts performed within the scope of his employment. The U.S. Attorney
later withdrew from the case even though the government's interest in
defending the former employee continued. In order to protect his own
interests, the employee retained the services of a private attorney.
Since the Justice Department had determined that it was in the interest
of the United States to defend the employee and had undertaken to
provide him with legal representation, the Comptroller General held
that SBA could reimburse the employee for legal fees incurred as a
result of his obtaining private counsel when representation by the
United States subsequently became unavailable. See also B-251141, supra
("In limited circumstances, where Justice determines that
representation of a federal employee is appropriate but is unable to
provide representation, agency appropriations may be used to pay for
legal work that Justice determines to be in the government's
interest.").
While 53 Comp. Gen. 301 and 55 Comp. Gen. 408 are widely viewed as
establishing the concept that, in appropriate circumstances, agency
appropriations may be available to pay private attorney's fees to
defend an employee, several later cases established some of the limits
on the concept.
If the employee fails to request Justice Department representation in a
timely fashion, the employee may be forced to bear the expense of any
private legal fees incurred. In B-195314, June 23, 1980, an employee of
the Internal Revenue Service (IRS) was sued for improper disclosure of
confidential information. The employee requested Justice Department
representation, but not until after she had hired a private attorney to
file an answer in order to avoid a default judgment. The Justice
Department agreed to provide representation, but declined to pay the
private legal fees since the case was not within either of the
situations permitted under the Justice Department regulations. Since
the facts could not support a finding that Justice Department
representation was appropriate but unavailable, IRS appropriations
could not be used either. The need to take prompt action to avoid a
default judgment makes no difference since the regulations expressly
provide for provisional representation on the basis of telephone
contact.
If the actions giving rise to the suit are not within the scope of the
employee's official duties, even though related, there is no
entitlement to government representation and hence no legal basis to
reimburse attorney's fees. For example, in 57 Comp. Gen. 444 (1978), a
Department of Agriculture employee was sued for libel by his supervisor
because of allegations contained in letters the employee had written to
various public officials. At the employee's insistence, Agriculture
wrote to the Justice Department to request representation. However,
Agriculture concluded that, while some of the employee's actions had
been within the scope of his official duties, others--such as writing
letters to the President and to a Senator--were not. Before the Justice
Department reached its decision, the employee retained private counsel
and was successful in having the suit dismissed. Subsequently, the
Justice Department determined that the employee would not have been
eligible for representation since Agriculture had been unwilling to say
that all of the employee's actions were within the scope of his
official duties. On this basis, GAO found no entitlement to government
representation and disallowed the employee's claim for reimbursement of
his legal fees.
Similarly, GAO denied a claim for legal fees where an Army Reserve
member on inactive duty was arrested by the Federal Bureau of
Investigation (FBI), charged with larceny of government property, and
the charge was later dismissed. The government property involved
consisted of service weapons and ammunition. The member had been
authorized to retain weapons and ammunition in his personal possession,
although it is not clear from the decision how this authority justified
the possession of seven guns and over 100,000 rounds of ammunition,
which is what the FBI found. In any event, the member's actions did not
result from the performance of required official duties but were at
best permissible under existing regulations. Therefore, there was no
entitlement to either government-furnished or government-financed
representation. B-185612, Aug. 12, 1976.
A related situation is where an employee incurs legal fees defending
against a fine. In section C.6 of this chapter on Fines and Penalties,
a distinction is drawn between an action that is a necessary part of an
employee's official duties and an action which, although taken in the
course of performing official duties, is not a necessary part of them.
By logical application of this reasoning, where the fine itself is not
reimbursable, related legal fees are similarly nonreimbursable. Thus,
in 57 Comp. Gen. 270 (1978), the Comptroller General held that the
employing agency could not pay legal fees incurred by one of its
employees defending against a reckless driving charge, where the
Justice Department had declined to provide representation or to
authorize retention of private counsel. See also B-192880, Feb. 27,
1979 (nondecision letter); 15 Op. Off. Legal Counsel 57, 63 (1991).
In 70 Comp. Gen. 647, supra, the Smithsonian Institution used federal
funds to provide legal services to an Interior Department employee (on
detail at the Smithsonian) who became the subject of federal civil and
criminal investigations. After a big-game hunt in China, some hunters
and the Interior Department employee (whom the hunters had paid to
serve as their game advisor) were charged with violating the Endangered
Species Act. The Interior Department employee was also charged with
conflicts of interest in his financial arrangements. GAO held that the
Smithsonian lacked authority to use appropriated funds to pay the
employee's attorney. Id. at 652. GAO explained:
"Our cases do not support and were not intended to allow agencies to
pursue their own litigative policies. Instead, they recognize the
availability of agency appropriations, where otherwise proper and
necessary, for uses consistent with the litigative policies established
for the United States by the Attorney General…. To allow the use of
appropriated funds [to defend a government employee against a federal
criminal investigation and prosecution] would seriously undermine the
litigative posture of the Attorney General [and contradict] the clearly
expressed intent of the Congress to centralize control of government
litigation under the Attorney General, and to restrict the availability
of appropriations in order to reinforce that policy."
Id. at 650-651 (citation omitted).
Sometimes, agencies chafe under the maxim (noted above) that agency
appropriations are available, where otherwise proper and necessary, for
uses consistent with the litigative policies established for the United
States by the Attorney General. The decision in 73 Comp. Gen. 90 (1994)
offers a case in point. The United States Information Agency (USIA) was
caught up in a sex discrimination class action. The Justice Department
was defending the lawsuit, and required USIA to support its effort by
providing a secure suite of offices, office supplies and equipment, and
four to six attorneys, the same number of paralegal/document
specialists, along with other support staff, all on a full-time basis.
Normally, USIA's General Counsel staff included only eight attorneys.
For its part, the Justice Department dedicated two full-time attorneys
and one full-time paralegal to the task force. Justice refused to allow
USIA to contract-out for the additional staff, insisting instead that
USIA hire them under temporary appointments. Id. at 90-91.
USIA asked GAO to require Justice to reimburse USIA for its expenses,
which USIA estimated at $4.6 million over fiscal years 1992, 1993, and
1994. Since Justice gets annual appropriations to cover litigative
expenses, USIA argued, Justice's annual appropriations had been
improperly augmented. 73 Comp. Gen. at 91-92.
GAO replied, "[T]here is no legal or equitable requirement that
litigation support costs be shared equally, or even proportionately,
between Justice and its client agencies." Id. at 94. The expenses at
issue represented "no more than the cost to USIA of gathering and
presenting to Justice the facts and agency perspectives necessary to
allow Justice to represent USIA in court, a typical example of agency
support for Justice litigators." Id. GAO explained:
"The limitations on the use of agency appropriations to provide
litigative services originated as part of the provisions that created
the Justice Department and invested it with general responsibility to
act as the government's litigator…These provisions were intended to
reinforce Justice's control of the conduct of litigation involving the
United States, not to bar agencies from using their appropriations to
assist in the defense of litigation. Our cases 'recognize the
availability of agency appropriations, where otherwise proper and
necessary, for uses consistent with the litigative policies established
for the United States by the Attorney General.'"
Id. at 93-94, quoting 70 Comp. Gen. at 650-51 (citing 39 Comp. Gen. 643
at 646-47 (1960)).
Of course, every rule has its exceptions. In B-289288, July 3, 2002, a
Department of Defense Dependents Schools (DODDS) employee, who worked
at a DODDS school in Japan, had been arrested, charged, and eventually
convicted of criminal violations of Japanese law involving the
importation and possession of marijuana. Under 10 U.S.C. § 1037, local
counsel was retained to defend the employee in the Japanese courts.
Read together, the plain terms of section 1037 and the regulations
implementing it required DOD to provide legal services to persons
"employed by or accompanying [U.S.] armed forces in an area outside the
United States," even when the matter is unrelated to and wholly beyond
the scope of the employee's official duties. 10 U.S.C. § 1037(a).
Funding is to come from "[a]ppropriations available to the military
department concerned …for the pay of persons under its jurisdiction."
10 U.S.C. § 1037(c). The statute leaves no role for the Justice
Department in these matters.
Questions over reimbursement of legal fees also arise in a number of
nonjudicial contexts. In B-193712, May 24, 1979, GAO concluded that the
Central Intelligence Agency (CIA) could reimburse a staff psychiatrist,
who had been directed to prepare a psychological profile of Daniel
Ellsberg as part of his official duties, for the cost of legal
representation before congressional investigating committees and
professional organizations. While the Justice Department regulations
authorize representation at congressional proceedings on the same basis
as in lawsuits (28 C.F.R. § 50.15(a)), this is not an area within
Justice Department's exclusive representation authority. Therefore,
while it may be desirable to first request Justice Department
representation, failure to do so in this case did not preclude the use
of CIA appropriations, based on an administrative determination that
the psychiatrist's activities were necessary to carry out authorized
CIA functions. As in the judicial context, payment is generally
unauthorized where it is not in furtherance of an official agency
interest. See U.S. General Accounting Office, Postal Service: Board of
Governors Contract for Legal Services, GAO/GGD-87-12 (Washington, D.C.:
Feb. 10, 1987) (questioning propriety of payment of legal fees of Board
member incident to congressional investigation of prenomination
activities).
The Justice Department will not provide representation in
administrative disciplinary proceedings because of the potential
conflict in the event the employee later sues the government. In one
case, GAO concluded that the Nuclear Regulatory Commission (NRC) could
retain private counsel to represent two NRC staff members at a
disciplinary proceeding where the agency determined that the employees
had been acting within the scope of their authority. B-127945, Apr. 5,
1979. See also B-192784, Jan. 10, 1979.
In another case, however, 58 Comp. Gen. 613 (1979), the Securities and
Exchange Commission (SEC) could not reimburse the legal fees of an SEC
employee at a disciplinary hearing even though the proceeding was
ultimately resolved in the employee's favor. The distinction is that in
the NRC case, the misconduct charge had been raised and pursued by a
third party, whereas in the SEC case, while the charge was initially
raised by an outside party, it was pursued based on the SEC's
independent determination to investigate the allegation. The point of
this distinction is that, once the agency determines to investigate the
employee, its interests and those of the employee are no longer
"aligned." E.g., B-245648.2, July 24, 1992 (even though the
administrative investigation was precipitated by a congressional
subcommittee, since the IRS conducted it, IRS's interests were no
longer aligned with those of its employee, and the attorney fees
incurred by the employee as a result of the investigation could not be
reimbursed); B-245712.3, May 20, 1992 (Department of Agriculture
employee, subject to an Inspector General investigation instigated by a
third party, may not be reimbursed for the attorney fees he incurred
since the agency, having decided to investigate the employee, no longer
had a common interest with him). In other words, the interests of the
agency and employee have diverged and it is no longer possible to
justify providing representation to the employee as a necessary and
appropriate expense of the agency. Also, the determination to provide
legal representation must be made at the outset of the proceedings and
not at the end based on the outcome. GAO reached the same result in
70 Comp. Gen. 628 (1991) (Forest Service investigative report leading
to criminal trial ending in acquittal on all charges), and in B-212487,
Apr. 17, 1984 (Inspector General misconduct investigation).
An agency may use its appropriated funds to provide legal
representation for an employee brought before the Merit Systems
Protection Board (MSPB) on a complaint by the MSPB Special Counsel, if
the agency determines that the employee's conduct was in furtherance of
or incident to carrying out his or her official duties, and that
providing representation would be in the government's interest.
67 Comp. Gen. 37 (1987); 61 Comp. Gen. 515 (1982). Of course, this
principle is not limited to cases pending before MSPB. See, e.g.,
B-251141, supra (federal criminal investigation). If the agency makes
the required determinations, the expenditure is viewed as a "necessary
expense" of the agency or function. While the necessary expense theory
is the legal basis, the underlying policy is expressed in the following
excerpt:
"Surely federal employees must be answerable for illegal conduct. Yet
it can be in the interest of neither the government as a whole nor the
taxpayers we serve to have employees afraid to function out of fear of
being bankrupted by a lawsuit arising out of the good faith performance
of their jobs."
67 Comp. Gen. at 37-38. Similarly, see, for example, 15 Op. Off. Legal
Counsel, supra, at 62-63.
Appropriated funds may not be used to pay legal fees incurred by an
"alleged discriminating official" in a discrimination complaint.
61 Comp. Gen. 411 (1982); B-201183, Feb. 1, 1985.
Government-financed legal counsel was also held improper at a grievance
hearing where the legal liability of the employee was not an issue and
the purpose of the hearing was solely to develop facts. 55 Comp.
Gen. 1418.
Where reimbursement of legal fees under the above principles is
authorized, it is a discretionary payment and not a legal entitlement
of the employee. The agency's responsibilities and discretion are
summarized in the following paragraph from 67 Comp. Gen. at 38:
"[I]t should be understood that payment in this type of case is not a
legal liability on the part of the agency, but is essentially a
discretionary payment. As such, an agency is not required to pay the
entire amount of the fees actually charged in any given case. The
controlling concept under fee-shifting statutes is a 'reasonable'
attorney's fee, and there is a vast body of judicial precedent applying
this concept under statutes such as the Back Pay Act and Title VII of
the Civil Rights Act. This body of precedent is available to provide
guidance to agencies in evaluating the reasonableness of claims. Also,
since payment is discretionary, an agency is free to formulate
administrative policies with respect to treatment of claims of this
type. Of course, any such policies should be applied fairly and
consistently."
The preceding cases have all involved legal fees incurred for
representation of the employee. A different situation occurred in
59 Comp. Gen. 489 (1980). In 1969, local police raided a Chicago
apartment housing members of the Black Panther Party. The raid erupted
into violence and two of the occupants were killed. Subsequently, the
surviving occupants and the estates of the deceased sued state law
enforcement officials and several agents of the Federal Bureau of
Investigation (FBI), alleging violations of civil rights and the
Illinois wrongful death statute. The Justice Department represented the
federal defendants, who were being sued in their individual capacities.
As the litigation progressed, a possibility emerged that the court
might grant the plaintiffs an award of attorney's fees, in part against
the FBI agents. The Justice Department asked whether FBI appropriations
would be available to reimburse such an award. In the past, the
Comptroller General has at times declined to render decisions on
questions that are premature and essentially hypothetical. Here,
however, in view of the legal strategy proposed by the Justice
Department (the case also involved issues raising the potential
liability of the United States), it was important to know if the fees
could be reimbursed because if they could not, it might be necessary
for the defendants to retain private counsel to represent their
interests. The Comptroller General resolved the question by applying
the necessary expense doctrine. If the FBI made an administrative
determination, supported by substantial evidence, that the actions
giving rise to the award constituted officially authorized conduct and
were taken as a necessary part of the defendant's official duties, it
could reimburse the award from its Salaries and Expenses appropriation.
d. Suits Unrelated to Federal Employees:
Finally, the concept of using agency appropriations for legal fees when
Justice Department representation is unavailable has arisen in a couple
of contexts that are unrelated to suits against government employees.
Under 25 U.S.C. § 175, the U.S. Attorneys will generally represent
Indian tribes, and under 25 U.S.C. § 13, the Bureau of Indian Affairs
may spend money appropriated for the benefit of Indians for general and
incidental expenses relating to the administration of Indian affairs.
Construing these provisions, the Comptroller General has held that the
Bureau of Indian Affairs could use appropriated funds to pay legal fees
incurred by Indian tribes in judicial litigation, including
intervention actions and cases where the tribe is the plaintiff, when
conflict of interest makes Justice Department representation
unavailable. However, the Bureau must first give the Justice Department
the option of providing or declining to provide representation. The
Bureau may also use appropriated funds for legal fees of Indian tribes
in administrative proceedings in which the Justice Department does not
participate. 56 Comp. Gen. 123 (1976).
The courts have recognized that this authority carries with it
substantial discretion. For example, in Hopi Tribe v. United States, 55
Fed. Cl. 81 (2002), suit was brought to recover legal fees and expenses
incurred in litigation pursuant to the Navajo-Hopi Settlement Act of
1974. The court held that, under 25 U.S.C. §§ 13, 175, Justice and the
Bureau both have broad discretion in determining whether to provide
legal services or reimbursement for the costs of obtaining them
elsewhere. Among other things, the court explained that because
Congress appropriates lump sums to Justice and the Bureau for these
purposes, the question of how best to use those sums is committed to
agency discretion. Hopi Tribe, 55 Fed. Cl. at 97-98, quoting Lincoln v.
Vigil, 508 U.S. 182, 192-195 (1993), quoting both 55 Comp. Gen. 307,
319 (1975), and Principles of Federal:
Appropriations Law, at 6-159 (2nd Ed. 1992). See also discussion in
Chapter 6.[Footnote 241]
e. Claims by Federal Employees:
(1) Discrimination proceedings:
Title VII of the Civil Rights Act of 1964, made applicable to the
federal government by the Equal Employment Opportunity Amendments of
1972, broadly prohibits employment discrimination based on race, color,
religion, sex, or national origin. Two statutory provisions are
relevant to the awarding of attorney's fees. Judicial awards, covered
in Chapter 14 (Volume III of the second edition of the Principles of
Federal Appropriations Law), are governed by 42 U.S.C. § 2000e-5(k),
which authorizes courts to award reasonable attorney's fees to
nonfederal prevailing parties. In addition, 42 U.S.C. § 2000e-16(b)
directs the former Civil Service Commission to enforce Title VII in the
federal government "through appropriate remedies …as will effectuate
the policies of this section." The enforcement function was transferred
to the Equal Employment Opportunity Commission (EEOC) in 1978.
The concept of administrative fee awards developed largely as the
result of a series of court decisions. First, the courts held that a
court can award attorney's fees to include compensation for services
performed in related administrative proceedings as well as the lawsuit
itself. Parker v. Califano, 561 F.2d 320 (D.C. Cir. 1977); Johnson v.
United States, 554 F.2d 632 (4th Cir. 1977). Then, the District Court
for the District of Columbia held that Title VII authorized the
administrative awarding of attorney's fees. Patton v. Andrus, 459 F.
Supp. 1189 (D.D.C. 1978); Smith v. Califano, 446 F. Supp. 530 (D.D.C.
1978). However, this view was not unanimous. The court in Noble v.
Claytor, 448 F. Supp. 1242 (D.D.C. 1978), held that there was no
authority for administrative awards and that only the court could award
fees.
GAO was initially inclined toward the view expressed in the Noble
decision. See B-167015, Apr. 7, 1978. However, GAO reconsidered its
position and subsequently announced that it would not object to the
issuance of regulations by the EEOC to include the awarding of
attorney's fees at the administrative level. B-193144, Nov. 3, 1978;
B-167015, Sept. 12, 1978; B-167015, May 16, 1978 (all nondecision
letters).
EEOC issued interim regulations on April 9, 1980 (45 Fed. Reg. 24130),
and subsequently finalized them. The regulations, found at 29 C.F.R.
§ 1613.271, provide for awards of reasonable attorney's fees both by
EEOC and by the agencies themselves. With the issuance of these
regulations, federal agencies now have the requisite authority.
B-199291, June 19, 1981; B-195544, May 7, 1980 (nondecision letter).
Attorney's fees awarded under the EEOC regulations are payable from the
employing agency's operating appropriations and not from the permanent
judgment appropriation established by 31 U.S.C. § 1304.[Footnote 242]
64 Comp. Gen. 349, 354 (1985); B-199291, supra. Cf. B-257334, June 30,
1995 (except as specifically provided by law, the permanent judgment
appropriation is not available to pay administrative awards, including
administrative settlements for compensatory damages under Title VII).
GAO will not review awards of, nor consider claims for, attorney's fees
under Title VII. 69 Comp. Gen. 134 (1989); 61 Comp. Gen. 326 (1982);
B-259632, June 12, 1995.
Title VII is not the only statute prohibiting discrimination in federal
employment. Discrimination based on age or handicap is prohibited,
respectively, by the Age Discrimination in Employment Act, 29 U.S.C.
§§ 621 et seq., and the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et
seq. The EEOC has enforcement responsibility for federal employment
under these statutes as well as Title VII.[Footnote 243]
Initially, GAO had held that the EEOC could provide by regulation for
the awarding of attorney's fees at the administrative level under the
Age Discrimination in Employment Act and the Rehabilitation Act, just
as in the Title VII situation. 59 Comp. Gen. 728 (1980). Subsequently,
the courts held that the Age Discrimination in Employment Act did not
authorize fees at the administrative level, and GAO partially overruled
59 Comp. Gen. 728 in 64 Comp. Gen. 349 (1985). However, that portion of
59 Comp. Gen. 728 dealing with the Rehabilitation Act remains valid.
See also B-204156, Sept. 13, 1982. This treatment is consistent with
the EEOC regulations, which authorize administrative fee awards under
Title VII and the Rehabilitation Act, but not the Age Discrimination in
Employment Act. See 29 C.F.R. § 1614.501(e) (formerly codified at
§ 1613.271(d)).
The situation may become more complicated where an employee alleges
discrimination on more than one ground. In 69 Comp. Gen. 469 (1990), an
agency settled a complaint in which the employee had alleged both age
and sex discrimination. Based on the agency's assertion that the result
would have been the same if the employee had pursued only the sex
discrimination charge, GAO concluded that the agency was not required
to "apportion" the attorney's fee claim between the two charges and
that the entire fee claim could be paid.
(2) Other employee claims:
Prior to October 1978, there was no authority to award attorney's fees
to federal employees in connection with claims, grievances, or
administrative proceedings involving back pay, adverse personnel
actions, or other personnel matters. During this time period, GAO
consistently denied claims for attorney's fees based on the general
rule barring the payment of legal fees in the absence of statutory
authority. E.g., 52 Comp. Gen. 859 (1973) (administrative grievance
proceeding); B-167461, Aug. 9, 1978 (unfair labor practice proceeding);
B-184200, Apr. 13, 1976 (reduction in grade); B-183038, May 9, 1975
(improper removal for disciplinary reasons).
In October 1978, the Civil Service Reform Act added two attorney's fee
provisions as part of its general overhaul of the system.
First, it authorized the Merit Systems Protection Board to require the
employing agency to pay reasonable attorney's fees if the employee is
the prevailing party and the Board determines that the fee award is
"warranted in the interest of justice." 5 U.S.C. § 7701(g). Fees
awarded under this provision are payable directly to the attorney, not
the party. Jensen v. Department of Transportation, 858 F.2d 721 (Fed.
Cir. 1988).[Footnote 244]
Second, it added an attorney's fee provision to the Back Pay Act,
5 U.S.C. § 5596. Now, if an employee, based on a timely appeal or an
administrative determination, including grievance or unfair labor
practice proceedings, is found by "appropriate authority"[Footnote 245]
to have suffered a loss or reduction of pay as a result of an
"unjustified or unwarranted personnel action," the employee is entitled
to recover reasonable attorney's fees in addition to back pay. Id.
§ 5596(b). See generally B-258290, June 26, 1995; B-231813, Aug. 22,
1989.
Regulations to implement the Back Pay Act are issued by the Office of
Personnel Management and are found at 5 C.F.R. pt. 550, subpt. H. Under
the regulations, fees may be awarded only if the "appropriate
authority" determines that payment is in the interest of justice,
applying standards established by the Merit Systems Protection Board
under 5 U.S.C. § 7701. 5 C.F.R. § 550.807(c)(1). The standards are set
forth in Allen v. United States Postal Service, 2 M.S.P.R. 420 (1980),
and discussed in Sterner v. Department of the Army, 711 F.2d 1563 (Fed.
Cir. 1983), and in 62 Comp. Gen. 464. For "[a] review of the case law,"
see Abramson v. United States, 45 Fed. Cl. 149, 151-152 (1999).
GAO will not review decisions awarding or declining to award, nor
consider claims for, fees under 5 U.S.C. § 7701. B-257593, Aug. 15,
1994 (GAO has no authority to review any MSPB decision, citing, among
others, 61 Comp. Gen. 578 (1982)--disavowing authority to review fee
awards under section 7701); 63 Comp. Gen. at 174; 61 Comp. Gen. 290
(1982). The Back Pay Act regulations provide for review of fee
determinations only "if provided for by statute or regulation." 5
C.F.R. § 550.8067(g) (formerly at 5 C.F.R. § 550.06(g)). Thus, absent
some statute or regulation to the contrary, GAO will similarly decline
to review fee determinations under 5 U.S.C. § 5596 where the
"appropriate authority" is someone other than the Comptroller General.
61 Comp. Gen. 290.
While GAO will not "review" such matters, it may provide its opinion on
them, when requested by the agency or the accountable officer. For
example, in B-253507, Jan. 11, 1994, the National Archives and Records
Administration (NARA) asked GAO if it could pay attorney fees as part
of an administrative settlement, even though NARA had not determined
that an unjustified or unwarranted personnel action had occurred. NARA
argued that because the employee could have appealed to the Merit
Systems Protection Board and possibly obtained attorney fees (as
discussed in the following paragraph), NARA had implied authority to
award attorney fees as part of its settlement. GAO disagreed. NARA had
no statutory authority to pay attorney fees under the facts and laws
applicable to the case. The fact that the employee could have appealed
and might have won did not authorize NARA and the employee to behave as
if the employee actually had appealed and won. Id. See also B-258290,
supra (advance decision, pursuant to 31 U.S.C. § 3529, disapproved
payment of attorney fees and other amounts arising from a grievance
hearing wherein the agency declined to find an unjustified or
unwarranted personnel action); B-257893, June 1, 1995 (certifying
officer granted relief from liability, pursuant to 31 U.S.C.
§ 3528(b)(1)(B), for the erroneous payment, which was the subject of
B-253507, supra).
Under a provision added in 1989, if an employee, former employee, or
applicant for employment is the prevailing party before the Merit
Systems Protection Board (MSPB), and MSPB's decision is based on a
finding of a "prohibited personnel practice" (defined in 5 U.S.C.
§ 2302), "the agency involved shall be liable" to the complainant for
reasonable attorney's fees. The same liability applies with respect to
appeals from the Board, regardless of the basis of the decision.
5 U.S.C. § 1221(g), added by the Whistleblower Protection Act of 1989,
Pub. L. No. 101-12, 103 Stat. 16, 30 (Apr. 10, 1989).
Employee claims outside the scope of the Back Pay Act or the MSPB
authority remain subject to the general rule prohibiting fee awards
except under specific statutory authority. Thus, administrative claims
for attorney's fees were denied in the following situations:
* Applicant for employment with Nuclear Regulatory Commission
successfully challenged adverse information in security investigation
file. B-194507, Aug. 20, 1979.
* Nuclear Regulatory Commission employee detailed in violation of the
Whistleblower Protection Act (WPA), supra, as retaliation for the
disclosure of government illegality, waste, and corruption. Although
WPA does provide for attorney fees in certain circumstances, employee
used agency grievance procedures not subject to WPA. 72 Comp. Gen. 289
(1993).
* Employee obtained continuance in divorce proceedings. Continuance was
necessitated by temporary duty assignment. B-197950, Sept. 30, 1980.
Cf. 70 Comp. Gen. 329 (1991) (legal fees incurred to search title,
prepare abstracts, conveyances and other documents required in the
chain of conveying property interest from seller to buyer that are
normally reimbursable under Federal Travel Regulations (FTR), ¶ 26.2c,
but may not be reimbursed here as original court order was part of a
divorce settlement; modification of divorce order constituted
continuation of a litigated matter; litigation costs may not be
reimbursed under the FTR); B-242154, Mar. 28, 1991 (FTR does not allow
reimbursement of litigation costs, even though employee "sustained a
loss that he would not have sustained had he not transferred in the
interest of the government").
* A military member's legal fees incident to custody proceedings, and
medical insurance expenses for his adopted children are not "qualifying
adoption expenses" under section 638 of the National Defense
Authorization Act for Fiscal Years 1988 and 1989, Pub. L. No. 100-180,
§ 638, 101 Stat. 1019, 1106-1108 (Dec. 4, 1987), as amended, and may
not be reimbursed (but legal fees incident to the actual petition and
order of adoption, as well as the amendment of birth certificates for
the member's adopted children are reimbursable from agency funds under
the Act). B-235606, Feb. 7, 1991.
* Former employee successfully prosecuted administrative patent
interference action against National Aeronautics and Space
Administration. B-193272, Aug. 21, 1981.
* Fees incurred incident to prosecution of claim for relocation
expenses. 68 Comp. Gen. 456 (1989); B-186763, Mar. 28, 1977.
* Employee, selling residence incident to transfer of duty station,
incurred legal fees in excess of customary range of charges for
services rendered. B-200207, Sept. 29, 1981 (legal fees within
customary range of charges are reimbursable; see cases cited).
Similarly, see B-252531, Aug. 13, 1993 (attorney fees claimed were
duplicative of attorney fees already paid as part of the services
provided by the relocation service company).
* Administrative grievance proceeding involving neither an appeal to
the Merit Systems Protection Board nor a reduction or denial of pay or
allowances. B-253507 n.5, supra; 68 Comp. Gen. 366 (1989); 61 Comp.
Gen. 411 (1982).
The same rule applies to expert witness expenses incurred by an
employee. They are reimbursable only under specific statutory
authority. In 67 Comp. Gen. 574 (1988), a Department of Energy employee
had requested an administrative hearing incident to a security
clearance. The agency, due to the sudden unavailability of its witness,
was forced to reschedule the hearing. The employee's witness, a
clinical psychologist, was unable to reschedule his patients to fill
the now freed-up time slot, and charged the employee for the 3 hours he
had set aside to testify. GAO found no authority to reimburse the
employee.
f. Criminal Justice Act:
The Criminal Justice Act (CJA), 18 U.S.C. § 3006A, was originally
enacted in 1964 and substantially amended on several subsequent
occasions. Reflecting a series of Supreme Court decisions on the right
of a criminal defendant to counsel, the CJA establishes a system of
government-financed counsel for indigent defendants in federal criminal
cases. In general, any person charged with a felony or misdemeanor,
including juvenile delinquency, and who is "financially unable to
obtain adequate representation" is eligible for counsel under the CJA.
Counsel is to be provided at every stage of the proceeding, from the
first appearance before a magistrate through appeal, including
appropriate ancillary matters. As the Supreme Court has expanded the
right to counsel to encompass every meaningful stage at which
significant rights may be affected (see, e.g., Miranda v. Arizona, 384
U.S. 436 (1966)), the right to counsel under the CJA has similarly
expanded.
The lawyers, who are court-appointed, may be private attorneys
appointed on an individual basis or members of a Federal Public
Defender Organization or Community Defender Organization established
and funded under the Act. The attorneys are paid at rates of
compensation specified in the statute. Appropriations are made to the
Judiciary to carry out the Act CJA and payments are supervised by the
Administrative Office of the United States Courts.
(1) Types of actions covered:
Originally, GAO had held that the Criminal Justice Act (CJA) did not
apply to probation revocation proceedings. 45 Comp. Gen. 780 (1966).
Subsequently, following the Supreme Court's holding in Mempa v. Rhay,
389 U.S. 128 (1967), GAO modified the 1966 decision to recognize the
applicability of the Act to probation proceedings coupled with deferred
sentencing. However, GAO continued to hold the Act inapplicable to a
"simple" probation revocation proceeding (one not involving deferred
sentencing). 50 Comp. Gen. 128 (1970). Two months after the issuance of
50 Comp. Gen. 128, Congress passed Public Law 91-447, substantially
amending the CJA. Pub. L. No. 91-447, 84 Stat. 916 (Oct. 14, 1970). One
of the changes made by these amendments was to expressly cover
probation proceedings. The legislative history of Public Law 91-447
indicates that it was intended to recognize Mempa v. Rhay. H.R. Rep.
No. 91-1546, at 7 (1970). GAO has not had occasion to issue any further
decisions on probation proceedings.
Another change made by the 1970 amendments was to add parole revocation
proceedings, with counsel to be provided at the discretion of the court
or magistrate. Subsequent legislation made appointment of counsel
mandatory, and the Comptroller General held that appropriations under
the CJA are available to provide counsel for indigents at parole
revocation and parole termination proceedings under the Parole
Commission and Reorganization Act. B-156932, June 16, 1977.
Representation may be provided, at the discretion of the court or
magistrate, to an indigent prosecuting a writ of habeas corpus
(28 U.S.C. §§ 2241, 2254, 2255). 18 U.S.C. § 3006A(a)(2). This
authority does not extend to civil rights actions brought by indigent
prisoners under 42 U.S.C. § 1983. 53 Comp. Gen. 638 (1974); B-139703,
June 19, 1975.
In 51 Comp. Gen. 769 (1972), GAO held that the CJA applied to
prosecutions brought in the name of the United States in the District
of Columbia Superior Court and Court of Appeals. In 1974, Congress
passed the District of Columbia Criminal Justice Act (Pub. L. No. 93-
412, 88 Stat. 1089 (Sept. 3, 1974)), which established a parallel
criminal justice system for the District of Columbia patterned after
18 U.S.C. § 3006A. With the enactment of this legislation, the CJA was
amended to remove the District of Columbia courts from its coverage.
GAO considered the D.C. statute in 61 Comp. Gen. 507 (1982) and
construed it to include sentencing. The result should apply equally to
the federal statute inasmuch as the language being construed is
virtually identical in both laws.
(2) Miscellaneous cases:
When a court appoints an attorney under the Criminal Justice Act (CJA),
the government's contractual obligation, and hence the obligation of
appropriations, occurs at the time of the appointment and not when the
court reviews the voucher for payment, even though the exact amount of
the obligation is not determinable until the voucher is approved. Where
fiscal year appropriations are involved, the Administrative Office of
the U.S. Courts must record the obligation based on an estimate, and
the payment is chargeable to the fiscal year in which the appointment
was made. 50 Comp. Gen. 589 (1971).
In B-283599, Sept. 15, 1999, the Executive Officer of the District of
Columbia Courts told GAO that he anticipated fiscal year 1999
appropriations for CJA claims would be exhausted on September 10, 1999.
How, he asked, should the courts respond to CJA claims received during
the remainder of fiscal year 1999? Should the courts suspend approving
CJA vouchers in order to avoid violating the Antideficiency Act? GAO
said, "No." CJA representation is a mandatory expense. An
overobligation entirely attributable to a mandatory spending program,
like CJA, would be an overobligation authorized by law and, therefore,
not a violation of the Antideficiency Act. See 31 U.S.C.
§§ 1341(a)(1)(A) and (B). However, this did not mean that the vouchers
could be paid immediately on approval. A legally available funding
source would still be required before any authorized overobligations
could be liquidated. Fortunately, GAO noted, a bill then pending in
Congress would provide funds for this purpose. B-283599, supra. See
also U.S. General Accounting Office, D.C. Courts: Planning and
Budgeting Difficulties During Fiscal Year 1998, GAO/AIMD/OGC-99-226, at
11-13 (Washington, D.C.: Sept. 16, 1999). (For a full discussion of the
law governing federal obligations, see Chapter 7.)
An attorney appointed and paid under the CJA does not thereby enter
into an employer-employee relationship with the United States for
purposes of the dual compensation laws. 44 Comp. Gen. 605 (1965). (This
decision predated the 1970 amendments to the CJA, which created the
Federal Public Defender Organizations, and would presumably not apply
to full-time salaried attorneys employed by such organizations.)
An attorney regularly employed by the federal government who is
appointed by a court to represent an indigent defendant, in either
federal or state cases, may not be excused from official duty without
loss of pay or charge to annual leave. 61 Comp. Gen. 652 (1982);
44 Comp. Gen. 643 (1965).
An attorney appointed under the CJA is expected to use his or her usual
secretarial resources. As a general proposition, secretarial and other
overhead expenses are reflected in the statutory fee and are not
separately reimbursable. However, there may be exceptional situations,
and if the attorney can demonstrate to the court that extraordinary
stenographic or other secretarial-type expenses are necessary, they may
be reimbursed from Criminal Justice Act appropriations. 53 Comp.
Gen. 638 (1974).
g. Equal Access to Justice Act:
A significant diminution of the American Rule occurred in 1980 with the
enactment of the Equal Access to Justice Act (EAJA), which authorizes
the awarding of attorney's fees and expenses in a number of
administrative and judicial situations where fee-shifting had not been
previously authorized. This section describes the authority for
administrative awards.
The administrative portion of the EAJA is found in 5 U.S.C. § 504.
There are four key elements to the statute:
1. The administrative proceeding generating the fee request must be an
"adversary adjudication," defined as an adjudication under the
Administrative Procedure Act in which the position of the United States
is represented by counsel or otherwise. 5 U.S.C. §§ 504(a)(1),
(b)(1)(C). The definition excludes adjudications to fix or establish a
rate or to grant or renew a license, but proceedings involving the
suspension, annulment, withdrawal, limitation, amendment,
modification, or conditioning of a license are covered if they
otherwise qualify.[Footnote 246] (Application in the context of
government procurement is discussed separately later.)
2. The party seeking fees must be a "prevailing party other than the
United States." 5 U.S.C. § 504(a)(1). The meaning of "prevailing party"
is to be determined by reference to case law under other fee-shifting
statutes.[Footnote 247] Of course before you can be a "prevailing
party" you must first be a "party," and the law prescribes financial
and other eligibility criteria. 5 U.S.C. § 504(b)(1)(B).
3. The law is not self-executing. The party must, within 30 days after
final disposition of the adversary adjudication, submit an application
to the agency showing that it is a prevailing party and meets the
eligibility criteria, documenting the amount sought, and alleging that
the position of the United States was not "substantially justified."
5 U.S.C. § 504(a)(2). If the United States appeals the underlying
merits, action on the application must be deferred until final
resolution of the appeal. Id.
4. If the above criteria are met, the fee award is mandatory unless the
agency adjudicative officer finds that "the position of the agency was
substantially justified or that special circumstances make an award
unjust." 5 U.S.C. § 504(a)(1).[Footnote 248] Substantial justification
or lack thereof is to be determined "on the basis of the administrative
record as a whole, which is made in the adversary adjudication." Id.
The "position of the agency" includes the agency's action or failure to
act which generated the adjudication as well as the agency's position
in the adjudication itself. 5 U.S.C. § 504(b)(1)(E). A party who
"unreasonably protracts" the proceedings risks reduction of the award.
5 U.S.C. § 504(a)(3).
The award includes "fees and other expenses." "Fees" means a reasonable
attorney's fee, generally capped at $125 per hour unless the agency
determines by regulation that cost-of-living increases or other special
factors justify a higher rate.[Footnote 249] "Other expenses" include
such items as expert witness expenses and the necessary cost of
studies, analyses, engineering reports, etc. 5 U.S.C. § 504(b)(1)(A).
The statute requires agencies to establish, by regulation, uniform
procedures for administering the statute, in consultation with the
Administrative Conference of the United States (ACUS). 5 U.S.C.
§ 504(c)(1). In 1986, ACUS has published a set of nonbinding model
rules., found at 51 Fed. Reg. 16659 (May 6, 1986) (formerly codified in
1 C.F.R. pt. 315). Among other things, the supplementary information
statement for those rules, found at 51 Fed. Reg. 16659 (May 6, 1986),
advised agencies that the statutory requirement to consult with ACUS
will be met by simply notifying ACUS of the publication of proposed
regulations, or by sending ACUS a pre-publication draft for review and
comment. Id. There's only one problem: ACUS was terminated in 1995 when
its annual appropriation stipulated that funds for it were "available
[only] for the purposes of [its] prompt and orderly termination."
Treasury, Postal Service, and General Government Appropriations Act,
1996, Pub. L. No. 104-52, title IV, 109 Stat. 468, 480 (Nov. 19, 1995),
codified at 5 U.S.C. § 591 (note preceding section). Although ACUS is
now history, someone forgot to fix the statute. Compare 5 U.S.C.
§ 504(c)(1) (requiring agencies to consult ACUS) and 5 U.S.C. § 593-595
(establishing ACUS).
Payment of administrative EAJA awards is addressed in 5 U.S.C.
§ 504(d):
"Fees and other expenses awarded under this subsection shall be paid by
any agency over which the party prevails from any funds made available
to the agency by appropriation or otherwise."[Footnote 250]
As with judicial awards under 28 U.S.C. § 2412(d), 5 U.S.C. § 504
awards are payable from agency operating appropriations with no need
for specific, line-item, or "earmarked" appropriations.[Footnote 251]
The obligation of the agency's appropriations occurs when the agency
issues its decision on the fee application. 62 Comp. Gen. 692, 699
(1983). This determines the fiscal year to be charged. Sometimes, the
logic of this rule eludes an agency that is otherwise striving to be
prudent and responsible in the management of its legal responsibilities
and fiscal obligations. In B-255772, Aug. 22, 1995, the Justice
Department and the National Endowment for the Arts (NEA) sought GAO's
guidance regarding whether the NEA could pay an EAJA attorney fee
settlement using unobligated NEA appropriations from previous fiscal
years. For several years, NEA had realized that a then pending case
would eventually require NEA to pay EAJA attorney fees from its
appropriations pursuant to 28 U.S.C. § 2412(d)(4). In anticipation of
this, NEA began setting aside a portion of its annual appropriations
across several fiscal years so that, when the time to pay finally
arrived, NEA would have funds adequate to meet its obligations without
adversely affecting other NEA operations. However, when the settlement
was finally completed, questions arose about whether the funds NEA set
aside could legally be used for this purpose. Of course, they could
not. As a general principle, "[a] court or administrative award creates
a new right in the successful claimant, giving rise to new government
liability." B-255772, quoting 63 Comp. Gen. 308, 310 (1984). NEA had no
obligation to pay the claims until the settlement agreement was final.
In the absence of appropriate statutory authority, the funds NEA had
set aside in previous fiscal years had expired, and were not legally
available to liquidate the obligation of a later fiscal year--the year
in which the settlement agreement became final. Id. See also B-257061,
July 19, 1995 (except as otherwise provided by law, (a) FAA must use
appropriations available at time of award to pay attorney fees from a
Title VII discrimination complaint, and (b) had FAA set aside
appropriations in a prior fiscal year, when the complaint was filed,
they would not have been available for this purpose).
Section 504 permits fee awards to intervenors who otherwise meet the
statutory criteria. 62 Comp. Gen. at 693. As noted in that decision,
the Administrative Conference expressed the same position in the
preamble to an earlier version of the model rules, although commenting
further that intervenors would rarely be in a position to actually
receive awards. Id. at 693-94. A specific appropriation act restriction
on compensating intervenors will override the more general authority of
5 U.S.C. § 504. 62 Comp. Gen. 692; Electrical District No. 1 v. Federal
Energy Regulatory Commission, 813 F.2d 1246 (D.C. Cir. 1987); Business
& Professional People for the Public Interest v. Nuclear Regulatory
Commission, 793 F.2d 1366 (D.C. Cir. 1986) (court agreed with result in
62 Comp. Gen. 692, implicitly accepting premise that EAJA itself could
apply to intervenors).
We previously reviewed statutory authorities for awarding attorney's
fees in a variety of matters involving federal employees. Initially,
the law in this area, especially with respect to EAJA, appeared
unsettled. The Court of Appeals for the Federal Circuit has held that
5 U.S.C. § 504 does not authorize the Merit Systems Protection Board
(MSPB) to award attorney's fees in cases involving employee selection
or tenure. Gavette v. Office of Personnel Management, 808 F.2d 1456
(Fed. Cir. 1986); Olsen v. Department of Commerce, Census Bureau,
735 F.2d 558 (Fed. Cir. 1984). This is was because the definition of
"adversary adjudication" in section 504 refers to 5 U.S.C. § 554 (part
of the Administrative Procedure Act), which expressly excludes "the
selection or tenure of an employee." This was consistent with an
earlier decision of the District of Columbia Circuit. Hoska v.
Department of the Army, 694 F.2d 270 (D.C. Cir. 1982). However, the
court in Miller v. United States, 753 F.2d 270 (3rd Cir. 1985), reached
a contrary result.
A review of the case law since Gavette suggests that it and its progeny
may have quietly assumed the prevailing position in the
circuits.[Footnote 252] Despite the passage of nearly two decades, the
conflict does not appear to have been expressly addressed by the
Supreme Court, and at least one commentator has concluded, "The Federal
Circuit's decision in Gavette resolve[d] the conflicts among the lower
courts." Nancy A. Streeff, Note, Gavette v. Office of Personnel
Management: The Right To Attorney Fees Under The Equal Access To
Justice Act, 36 Am. U. L. Rev. 1013, 1025 (1987).
Prior to Gavette, the MSPB had taken the position that the existence of
other fee-shifting statutes made EAJA inapplicable. Social Security
Administration v. Goodman, 28 M.S.P.R. 120, 126 (1985). However, in
view of the implication of Gavette that EAJA might apply in cases not
involving employee selection or tenure, the MSPB reopened the Goodman
appeal, found that fees could be awarded in that case under 5 U.S.C.
§ 7701, and declined to comment further on the applicability of EAJA.
Social Security Administration v. Goodman, 33 M.S.P.R. 325, 326-27 n.1
(1987). See also, e.g., NLRB v. Boyce, 51 M.S.P.R. 295, 300 n.4 (1991).
GAO held in 68 Comp. Gen. 366 (1989) that EAJA did not authorize a fee
award to an employee who prevailed in an agency grievance proceeding
that did not meet the standard of an "adversary adjudication." See also
72 Comp. Gen. 289 (1993) (attorney fee provision of the Whistleblower
Protection Act does not apply where employee uses informal agency
grievance procedure). (This being the case, it was irrelevant whether
or not the grievance involved selection or tenure.)
Where a MSPB decision is appealed to the courts, including a decision
involving selection or tenure, the majority view is that EAJA permits
the court to award fees for the judicial proceedings, the relevant
standard now being a "civil action" under 28 U.S.C. § 2412(d) rather
than an "adversary adjudication" under 5 U.S.C. § 504. See Maritime
Management, Inc. v. United States, 242 F.3d 1326, 1336 (11th Cir. 2001)
(fees disallowed for bid protest proceedings before GAO, but allowed in
associated civil action). See also Brewer v. American Battle Monuments
Commission, 814 F.2d 1564 (Fed. Cir. 1987); Gavette, 808 F.2d at 1462-
65; Miller, 753 F.2d at 274-75; Olsen, 735 F.2d at 561. Here, however,
the Hoska case is in disagreement.
To the extent EAJA is inapplicable either to the MSPB or to a court
reviewing a MSPB action, all is not necessarily lost to the fee
applicant because EAJA is not exclusive in these situations. The MSPB
and the courts both may award fees under the Back Pay Act in
appropriate cases, and the MSPB additionally has 5 U.S.C. § 7701. Thus,
for example, Hoska, while finding EAJA inapplicable, awarded fees under
the Back Pay Act.
h. Contract Matters:
(1) Bid protests:
Prior to 1984, attorney's fees incurred by a bidder for a government
contract in pursuing a bid protest with GAO were not compensable.
57 Comp. Gen. 125, 127 (1977); B-197174, Aug. 25, 1980; B-192910,
Apr. 11, 1979. The question arose again upon enactment of the Equal
Access to Justice Act (EAJA) in 1980. However, since a bid protest at
GAO is not an adversary adjudication governed by the Administrative
Procedure Act, EAJA was equally unavailing. Maritime Management,
Inc. v. United States, 242 F.3d 1326, 1336 (11th Cir. 2001) (fees
disallowed for bid protest proceedings before GAO). See also 63 Comp.
Gen. 541 (1984); 62 Comp. Gen. 86 (1982); B-251668, May 13, 1993;
B-211105.2, Jan. 19, 1984.
Under the Competition in Contracting Act of 1984, as amended, 31 U.S.C.
§ 3554(c)(1), GAO may recommend that a protester be reimbursed the
costs of filing and pursuing a protest, including reasonable attorney's
fees, where it finds that a solicitation or the award of a contract
does not comply with statute or regulation. This is to relieve parties
with valid claims of the burden of vindicating the public interests
that Congress seeks to promote. 68 Comp. Gen. 506, 508 (1989). The
costs and fees are payable from the contracting agency's procurement
appropriations. 31 U.S.C. § 3554(c)(2) (contracting agency "shall …pay
the costs promptly").
GAO's approach under 31 U.S.C. § 3554(c) is to recommend that the
contracting agency pay the protest costs and allow the protester and
agency to negotiate the appropriate amount. If the parties cannot
agree, GAO will determine the amount. 4 C.F.R. §§ 21.8(d), (e), and (f)
(formerly at 4 C.F.R. §§ 21.6(d) and (e)). A protester seeking to
recover the costs of pursuing its protest must submit sufficient
evidence to support its monetary claim; the amount claimed may be
recovered to the extent that the claim is adequately documented and is
shown to be reasonable. B-240327.3, Dec. 30, 1994. See, e.g., B-291657,
Feb. 11, 2003.
GAO's bid protest authority is not exclusive. A protester may also seek
resolution with the contracting agency, file a bid protest at the Court
of Federal Claims after having its protest denied at GAO, or go
directly to the Court of Federal Claims in lieu of filing a protest at
GAO. 31 U.S.C. § 3556. Once a case is in court, 31 U.S.C. § 3554(c) is
out of the picture, and the court may consider a fee application under
the judicial portion of EAJA. E.g., Essex Electro Engineers, Inc. v.
United States, 757 F.2d 247 (Fed. Cir. 1985); Laboratory Supply Corp.
of America v. United States, 5 Cl. Ct. 28 (1984).
Bid protest disputes often give rise to significant operational delays.
Sometimes, rather than litigate the bid protest and then correct the
flaws in its procurement, an agency will try to "buy off" a bid
protester with a monetary settlement. This practice is known as
"Fedmail." Typically, the payment is for bid protest preparation
expenses, including legal fees. In U.S. General Accounting Office, ADP
Bid Protests: Better Disclosure and Accountability of Settlements
Needed, GAO/GGD-90-13 (Washington, D.C.: Mar. 30, 1990), at 31, GAO
indicated that it would question the propriety of Fedmail payments, if
and when it came across them. 71 Comp. Gen. 340, 342 (1992). In
71 Comp. Gen. 340, a Fedmail arrangement went sour when the disbursing
officers of the Defense Supply Service-Washington refused to make
payment under the agreement. This was inopportune, to say the least, as
the parties had already secured dismissal of the protest from the
General Services Administration Board of Contract Appeals
(GSBCA)[Footnote 253] pursuant to their Fedmail agreement. The GSBCA
did not know about the Fedmail agreement when it ordered the dismissal.
Once it learned of it, GSBCA declined to modify its dismissal order.
Consequently, the agency asked GAO to issue an advance decision
authorizing the payment. However, as it had threatened in GAO/GGD-90-
13, GAO objected to the payment as improper and without legal
authority:
"We do not believe that in making appropriations available to an agency
for the procurement of goods and services, Congress intended those
funds to be available to allow the agency to obtain the withdrawal of a
meritorious protest without taking appropriate corrective action. In
addition, …[w]e are not aware of any statute that would permit the Army
to pay attorney fees in the circumstances of this case."
71 Comp. Gen. at 342.
(2) Contract disputes:
Under the original (1980) version of the Equal Access to Justice Act
(EAJA), the Court of Appeals for the Federal Circuit held that (1) a
court, reviewing a decision of an agency board of contract appeals,
could, under the judicial portion of EAJA, make a fee award covering
services before both the board and the court, but that (2) boards of
contract appeals were not authorized to independently make EAJA fee
awards. Fidelity Construction Co. v. United States, 700 F.2d 1379 (Fed.
Cir.), cert. denied, 464 U.S. 826 (1983).
The 1985 EAJA amendments legislatively overturned Fidelity to the
extent it held 5 U.S.C. § 504 inapplicable to boards of contract
appeals. E.g., Ardestani v. Immigration & Naturalization Service, 502
U.S. 129, 138 (1991); Dantran, Inc. v. Department of Labor, 246 F.3d
36, 45 (1st Cir. 2001); Texas Instruments, Inc. v. United States,
991 F.2d 760, 767 (Fed. Cir. 1993). Specifically, the law amended the
definition of "adversary adjudication" to expressly include appeals to
boards of contract appeals under the Contract Disputes Act. The 1985
amendments also added language to 28 U.S.C. § 2412(d) to make it clear
that fee awards are authorized when a contractor appeals a contracting
officers decision directly to a court instead of to a board of contract
appeals, as authorized by the Contract Disputes Act. (As noted in the
preceding paragraph, appeals to court from board decisions were already
covered.) The fees recovered under this authority are limited to
services provided after the contracting officers decision and do not
include services provided in order to argue the matter before the
contracting officer. See Levernier Construction, Inc. v. United States,
947 F.2d 497, 500-503 (Fed. Cir. 1991).
i. Public Participation in Administrative Proceedings: Funding of
Intervenors:
A number of regulatory agencies conduct administrative proceedings and
take actions that have a direct public impact. A prime example is
licensing. An important concern has been that the agency may not
receive a balanced presentation of viewpoints. The reason is that the
industries being regulated usually have adequate resources to ensure
representation of their interests, while lack of resources may preclude
participation by various nonindustry "public interest"
representatives.
The Comptroller General has considered questions of intervenor funding.
An "intervenor" in this context means someone who is not a direct party
to the proceedings. Stated briefly, the rule is that an agency may use
its appropriations to fund intervenor participation, including
attorney's fees, if--
1. intervenor participation is authorized, either expressly by statute
or by necessary implication derived from a regulatory or licensing
function;
2. the agency determines that the participation is reasonably necessary
to a full and fair determination of the issues before it; and:
3. the intervenor could not otherwise afford to participate.
This is essentially an application of the "necessary expense" doctrine
discussed previously in this chapter. Thus, intervenor funding does not
require express statutory authority, but it must relate to
accomplishing the objectives of the appropriation sought to be charged,
and of course must not be otherwise prohibited. The agency must have
authority to encourage or accept intervenor participation in connection
with an authorized function for which its appropriations are available.
In this sense, it may be said that intervenor funding must have a
statutory foundation.
Historically the concept of intervenor funding emerged in the early
1970s. In 1970, the Federal Trade Commission (FTC) held that an
indigent respondent in an FTC hearing was entitled to government-
furnished counsel. American Chinchilla Corp., 1970 Trade Reg. Rep. ¶
19059. Following the Chinchilla case, the FTC asked whether it could
pay certain related expenses for the indigent respondent, such as
transcript costs and attorney's expenses. It also asked whether it
could pay the same expenses when incurred by an indigent intervenor
rather than the respondent.
In the first of the intervenor cases, B-139703, July 24, 1972, GAO
answered "yes" to both questions. Noting that FTC had statutory
authority to grant intervention "upon good cause shown," the
Comptroller General responded to the intervenor question as follows:
"Thus, if the Commission determines it necessary to allow a person to
intervene in order to properly dispose of a matter before it, the
Commission has the authority to do so. As in the case of an indigent
respondent, and for the same reasons, appropriated funds of the
Commission would be available to assure proper case preparation."
A few years later, the Nuclear Regulatory Commission asked whether it
was authorized to provide financial assistance to participants in its
adjudicatory and rulemaking proceedings. Finding that NRC had statutory
authority to admit intervenors, the Comptroller General applied the
"necessary expense" rationale of B-139703, and answered "yes." B-92288,
Feb. 19, 1976.
In this decision, GAO explained why the "American rule" as set forth in
Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240
(1975),[Footnote 254] does not apply to bar the payment of attorney's
fees. The distinction is that the American rule limits the power of a
court or an agency to require an unwilling defendant to pay the
attorney's fees of a prevailing plaintiff or intervenor. In cases like
B-139703 and B-92288, an administrative body, exercising its rulemaking
function, is attempting to encourage public participation in its
proceedings. It does this by willingly assuming representation costs
for intervenors who would otherwise be financially unable to
participate, in order to obtain their input for a balanced rulemaking
effort. Only by obtaining a balanced view can the agency perform its
function of protecting the public interest.
Next, in a letter to the Chairman of the Oversight and Investigations
Subcommittee of the House Committee on Interstate and Foreign Commerce,
GAO advised that the rationale of B-92288, supra, applied equally to
nine agencies under the Subcommittees jurisdiction. The nine were:
Federal Communications Commission, Federal Trade Commission, Federal
Power Commission, Interstate Commerce Commission, Consumer Product
Safety Commission, Securities and Exchange Commission, Food and Drug
Administration, Environmental Protection Agency, and National Highway
Traffic Safety Administration. B-180224, May 10, 1976.
GAO pointed out in the same letter that there were several possible
ways of providing assistance to qualifying participants:
1. Provision of funds directly to participants.
2. Modification of agency procedural rules so as to ease the financial
burdens of public participation.
3. Provision of technical assistance by agency staff. (However, this
cannot include assigning staff members to participants to help them
with their advocacy positions.)
4. Provision of legal assistance by agency staff, but again not as
advocates.
5. Creation of an independent public counsel. (However, the public
counsel cannot be beyond the agency's jurisdiction and control.)
6. Creation of a consumer assistance office, as long as it remains
under the agency's jurisdiction and control and does not act as an
advocate.
In subsequent decisions and opinions, GAO examined aspects of the
programs of several specific agencies. In each case, GAO consistently
applied the rationale of the earlier decisions. The cases are:
* Environmental Protection Agency: 59 Comp. Gen. 424 (1980); B-180224,
Apr. 5, 1977;
* Federal Communications Commission: B-139703, Sept. 22, 1976;
* Food and Drug Administration: 56 Comp. Gen. 111 (1976);
* Nuclear Regulatory Commission: 59 Comp. Gen. 228 (1980); and:
* Economic Regulatory Administration (a component of the Department of
Energy): B-192213-O.M., Aug. 29, 1978; U.S. General Accounting Office,
Department of Energy's Procedures in Funding Intervenors in Proceedings
before the Economic Regulatory Administration, EMD-78-111 (Washington,
D.C.: Oct. 2, 1978).
While the decisions have consistently upheld the legality of intervenor
funding under the necessary expense theory, GAO has nevertheless
emphasized the desirability of an agency's seeking specific statutory
authority to embark on a public participation program. E.g., B-180224,
supra; B-92288, supra. Congress has acted in several instances,
authorizing intervenor funding in some cases and prohibiting it in
others.
For example, the Environmental Protection Agency has intervenor funding
authority under the Toxic Substances Control Act, 15 U.S.C. § 2605(c),
and the Consumer Product Safety Commission has such authority under the
Consumer Product Safety Act, 15 U.S.C. § 2056(c). Similarly, from 1975
until recently, the Federal Trade Commission was given specific
authority to fund intervenor participation in 1975 by the Magnuson-Moss
Warranty-Federal Trade Commission Improvement Act, formerly, 15 U.S.C.
§ 57a(h).[Footnote 255] Under this legislation, payments for legal
services could not exceed the costs actually incurred, even though the
participant used "house counsel" whose rate of pay was lower than
prevailing rates. 57 Comp. Gen. 610 (1978).
Restrictions in appropriation acts have prohibited intervenor funding
programs for several agencies. For example, a provision in the Nuclear
Regulatory Commissions (NRC) 1981 appropriation prohibited the use of
funds for the expenses of intervenors. The Comptroller General
construed this restriction as prohibiting the NRC from adopting a "cost
reduction program" of providing transcripts and other documents free to
intervenors. B-200585, Dec. 3, 1980. However, NRC could reduce the
number of copies of documents required to be filed. Id. Also, NRC could
decide to provide free transcripts to all parties, intervenors
included, without violating the restriction. B-200585, May 11, 1981.
Other cases construing the NRC restriction, or successor versions, are
Business & Professional People for the Public Interest v. Nuclear
Regulatory Commission, 793 F.2d 1366 (D.C. Cir. 1986); 67 Comp.
Gen. 553 (1988); and 62 Comp. Gen. 692 (1983).
Appropriation act restrictions have also prohibited intervenor funding
by the Economic Regulatory Administration and the Federal Energy
Regulatory Commission (FERC). A case involving the FERC prohibition is
Electrical District No. 1 v. Federal Energy Regulatory Commission,
813 F.2d 1246 (D.C. Cir. 1987). In addition, the conference committee
on the 1980 appropriation for the National Highway Traffic Safety
Administration and the former Civil Aeronautics Board directed that no
funds be allocated by these agencies for intervenor funding
programs.[Footnote 256]
A restriction contained solely in legislative history and not carried
into the statutory language itself is not legally binding on the
agency. The history of the NRC prohibition will illustrate this. For
fiscal year 1980, the prohibition was expressed in committee reports
but not in the appropriation act itself. Accordingly, GAO told NRC
that, while it would be well advised to postpone its program, the
restriction was not legally binding. 59 Comp. Gen. 228 (1980). For
fiscal year 1981, the prohibition was written into NRC's appropriation
act. Similarly, the restriction noted above for the transportation
agencies later "graduated" to a general provision in the
statute.[Footnote 257]
One court has disagreed with the GAO decisions. Greene County Planning
Board v. Federal Power Commission (Greene County IV), 559 F.2d 1227
(2nd Cir.), cert. denied, 434 U.S. 1086 (1976).[Footnote 258] There,
after several years of litigation, the plaintiff Board had finally
prevailed in its attempt to compel relocation of a proposed high
kilovolt power line through a scenic portion of the county. The only
question remaining was the ability of the Federal Power Commission
(FPC) to reimburse the plaintiff's attorney's fees. (Though not
"indigent," the counsel fees had drained a disproportionate amount of
the county's resources.) The FPC had denied reimbursement on the
grounds that the Board was protecting its own, not the public, interest
and because it thought it lacked authority to reimburse the fees. After
first concluding that the issue should be remanded to the FPC so that
it could determine the propriety of reimbursement in accordance with
the Comptroller General's decisions, the Second Circuit Court of
Appeals granted a rehearing en banc. On rehearing, the majority opinion
held that the FPC lacked authority to reimburse the attorney's fees.
Greene County IV, 559 F.2d at 1238.
Subsequently, both GAO and the Justice Departments Office of Legal
Counsel took the position that Greene County IV applied only to the
former FPC, and not to other federal agencies or even to the agencies
that succeeded to the FPC's responsibilities. 59 Comp. Gen. 228; 2 Op.
Off. Legal Counsel 60 (1978). In addition, the U.S. District Court for
the District of Columbia has likewise determined that Greene County IV
does not extend generally to all agencies. Chamber of Commerce v.
United States Department of Agriculture, 459 F. Supp. 216 (D.D.C.
1978), upholding the authority of the Department of Agriculture to fund
a consumer study on the impact of certain proposed rules.
Thus, to determine whether a given agency has intervenor funding
authority, it is necessary first to examine the legislation, including
appropriation acts, applicable to that agency, as well as pertinent
judicial decisions. In the absence of statutory direction one way or
the other, and if there are no judicial decisions on point, it is then
appropriate to apply the necessary expense rationale of the GAO
decisions.
The later decisions somewhat refined the standards expressed in the
earlier cases. For example, in order to constitute a "necessary
expense," the participation does not have to be absolutely
indispensable in the sense that the issues could not be decided without
it. It is sufficient for the agency to determine that a particular
expenditure for participation can reasonably be expected to contribute
substantially to a full and fair determination of the issues. 56 Comp.
Gen. 111. This is consistent with the application of the necessary
expense doctrine in other contexts as discussed throughout this
chapter. Assuming the requisite statutory basis for intervention
exists, the determination of necessity must be made by the
administering agency itself, not by GAO. Id. See also B-92288, supra.
The standard of the participant's financial status was discussed in
59 Comp. Gen. 424 (1980). While the participant need not be literally
indigent, the authority to fund intervenor participation extends only
to individuals and organizations which could not afford to participate
without the assistance. In making this determination, the agency should
consider the income and expense statements, as well as the net assets,
of an applicant. An applicant does not qualify for assistance merely
because it cannot afford to participate in all activities it desires.
The applicant is expected to choose those activities it considers most
significant and to allocate its resources accordingly.
Some of the earlier cases held that advance funding was prohibited by
31 U.S.C. § 3324. 56 Comp. Gen. 111; B-139703, Sept. 22, 1976. However,
in view of the Federal Grant and Cooperative Agreement Act of 1977, an
agency with statutory authority to extend financial assistance in the
form of grants may be able to utilize advance funding in its public
participation program. A 1980 decision, 59 Comp. Gen. 424, applied this
concept to the program of the Environmental Protection Agency.
The decisions have all dealt with participation in the agency's own
proceedings. There would generally be no authority to fund intervenor
participation in someone else's proceedings, for example, participation
by a state agency in a state utility ratemaking proceeding. B-178278,
Apr. 27, 1973 (nondecision letter).
Finally, the GAO decisions in no way imply that an agency is compelled
to fund intervenor participation. They hold merely that, if the various
standards are met, an agency has the authority to do so if it wishes.
See B-92288, supra.
A summary and discussion of intervenor funding through early 1981 may
be found in U.S. General Accounting Office, Review of Programs for
Reimbursement for Public Participation in Federal Rulemaking
Proceedings, PAD-81-30 (Washington, D.C.: Mar. 4, 1981). See also
Rollee H. Efros, "Payment of Intervenors Expenses in Agency Regulatory
Proceedings," Cases in Accountability: The Work of the GAO (Washington,
D.C.: Westview Press,1979), pp. 171-181.
4. Compensation Restrictions:
"If an officer is not satisfied with what the law gives him for his
services, he may resign."
Embry v. United States, 100 U.S. 680, 685 (1879), quoted in Lincoln v.
United States, 418 F. Supp. 1094, 1095 (N.D. Cal. 1976).
As a general proposition, restrictions on the compensation of federal
employees are regarded as matters of personnel law that are now under
the jurisdiction of the Office of Personnel Management.[Footnote 259]
However, compensation restrictions may also be viewed as limits on the
"purpose availability" of appropriations. We specifically treat three
compensation-related topics in this chapter--the restrictions on dual
compensation, the restrictions on employing aliens, and the statutes
concerning forfeiture of retirement annuities and retired pay--as
illustrations of the different ways in which Congress may exercise its
constitutional role of controlling the public purse by prescribing the
purposes for which appropriated funds may be used. The provision on
aliens is a restriction appearing in annual appropriation acts. The
dual compensation and forfeiture statutes are permanent provisions
found in the United States Code; while not phrased in terms of
appropriation restrictions, the effect is the same.
a. Dual Compensation:
Section 5536 of title 5 of the United States Code prohibits a civilian
employee or member of the uniformed services whose pay is fixed by
statute or regulation from receiving additional pay from public money
for any other service or duty, unless authorized by law.[Footnote 260]
This is a purpose restriction on how an agency may spend its
appropriation. For instance, GAO found that paying the actual cost of
personal cell phone use for government business is permitted but not at
a flat rate because an established fee per day is equivalent to an
allowance in addition to salary, and, therefore, is prohibited by
5 U.S.C. § 5536. B-287524, Oct. 22, 2001. GAO has also held in several
cases that the provision of free food while on duty violates the
prohibition against dual compensation. See, e.g., 42 Comp. Gen. 149,
151 (1962); B-272985, Dec. 30, 1996.
b. Employment of Aliens:
For many years, with minor variations from year to year, various
appropriation acts have included provisions restricting the federal
employment of aliens. The typical prohibition, with exceptions to be
noted below, bars the use of appropriated funds to pay compensation to
any officer or employee of the United States whose post of duty is in
the continental United States unless that person is a U.S. citizen. In
more recent years, the prohibition has appeared as a general provision
in the Treasury, Postal Service, and General Government appropriation
acts, applicable to funds contained "in this or any other
act."[Footnote 261] A recurring general provision in the Defense
Department appropriation act exempts Defense Department personnel from
the alien restriction.[Footnote 262]
The prohibition applies to all appropriated funds unless expressly
provided otherwise. Therefore, it applies to the special deposit
accounts established by statute for the Senate and House restaurants
since these accounts amount to permanent indefinite appropriations.
50 Comp. Gen. 323 (1970). It also applies to working capital funds.
B-161976, Aug. 10, 1967.[Footnote 263]
There are a number of statutory exceptions to the restriction on
compensating aliens. As noted, one significant exemption is for Defense
Department personnel. See B-188507, Dec. 16, 1977; B-110831, Aug. 4,
1952. Others are 42 U.S.C. § 2473(c)(10) (National Aeronautics and
Space Administration, permanent legislation); 2 U.S.C. § 169 (Library
of Congress, found in annual appropriation acts); 22 U.S.C.
§ 1474(1) (permanent authority for specific, activities within the
United States Information Agency); and 22 U.S.C. § 2672 (permanent
authority for specific activities within the State Department). Since
appropriation act exceptions may appear, disappear, or vary from time
to time, it is important to scrutinize the relevant appropriation act
for any given year. Absent an applicable exception, the general
prohibition will apply. For an illustration of the complexities that
may arise when the provisions vary from year to year, see 57 Comp.
Gen. 172 (1977). GAO has supported enactment of the general restriction
as permanent legislation. B-130733, Mar. 6, 1957.
In addition to the agencywide exemptions noted above, the alien
restriction itself contains a number of exceptions. Several of these
are summarized below.
Declaration of intention exception. The prohibition does not apply to a
person in the federal service on the date of enactment of the
appropriation act containing the prohibition who is actually residing
in the United States, is eligible for citizenship, and has filed a
declaration of intention to become a citizen. The employee must have
filed the declaration prior to the date of enactment. Subsequent filing
will not cure the disqualification. 17 Comp. Gen. 1104 (1938). A
declaration timely filed but which had become void by operation of law
due to lapse of time has also been held insufficient. B-138854, Apr. 1,
1959.
Specific country exceptions. The statute typically exempts nationals of
certain specified countries. The countries specified in any given
appropriation act change from time to time according to the political
climate. Dual citizenship will not negate the exception as long as one
of the countries is within the exception, even where the individual has
entered the United States from the nonexempt country. B-194929,
June 20, 1979.
Allied country exception. The prohibition does not apply to nationals
of "countries allied with the United States in the current defense
effort." GAO will not decide whether a country meets this test. The
determination is the responsibility of the employing agency, perhaps
with the assistance of the State Department. GAO will not question a
determination based on reasonable grounds. 35 Comp. Gen. 216 (1955);
B-151064, Mar. 25, 1963; B-146142, June 22, 1961; B-139667, June 22,
1959. The reason for GAO's position is that "it is not the
responsibility nor the proper province of the accounting officers to
initially determine political facts." B-107288, Feb. 14, 1952;
B-107579, Feb. 14, 1952.
Given the facts and circumstances at the time, GAO ventured an
assertion in the more obvious cases. For instance, GAO has said that
Britain meets the test. 73 Comp. Gen. 319 (1994). We have also opined
that Canada and Japan meet the test. B-188852, July 19, 1977; B-133877,
Oct. 16, 1957; B-113780, Mar. 4, 1953. Even in these cases, the
determination, strictly speaking, is up to the employing agency.
Allegiance exception. The prohibition does not apply to a person who
"owes allegiance to the United States." This means "absolute and
permanent allegiance" as distinguished from "qualified and temporary
allegiance." 17 Comp. Gen. 1047 (1938); B-119760, Apr. 27, 1954. The
exemption was apparently prompted by a concern for noncitizen
inhabitants of U.S. territorial possessions; for example, "Filipinos in
the service of the United States on March 28, 1938." 17 Comp. Gen. at
1048.
The allegiance exception includes a clause to the effect that a signed
affidavit will be regarded as prima facie evidence of allegiance. This
clause has been construed to apply to noncitizen nationals, that is,
noncitizen inhabitants of U.S. territorial possessions and not to
resident aliens. Yuen v. Internal Revenue Service, 497 F. Supp. 1023
(S.D.N.Y. 1980), aff'd, 649 F.2d 163 (2nd Cir. 1981). The district
court opinion includes an exhaustive review of legislative history.
Emergency exception. The prohibition does not apply to "temporary
employment in the field service …as a result of emergencies." The term
"emergency" in this context means "flood, fire, or other catastrophe."
B-146142, June 22, 1961. See also 73 Comp. Gen. 319 (1994).
An alien appointed in contravention of the statutory prohibition may
not retain compensation already paid. 35 Comp. Gen. 216 (1955);
18 Comp. Gen. 815 (1939). (The statute expressly gives the United
States the right to recover.) If there is no statutory bar--for
example, if the employment would have qualified under the "allied
country" exception but the agency failed to make the required
determination--the alien may be paid as a "de facto employee." Earlier
decisions distinguished between appointments "void ab initio" and those
that are merely "voidable." E.g., 37 Comp. Gen. 483 (1958); 35 Comp.
Gen. 216 (1955); B-188852, July 19, 1977; B-178882, Aug. 29, 1973. The
distinction proved confusing and GAO has moved away from it. The
current rule is stated in 58 Comp. Gen. 734 (1979).
As a final note, the Supreme Court in 1976 invalidated a Civil Service
Commission regulation requiring citizenship as a prerequisite to
federal employment. Hampton v. Mow Sun Wong, 426 U.S. 88 (1976). The
Court did not, however, invalidate the appropriation act restrictions.
See B-188507, Dec. 16, 1977. The Yuen litigation cited earlier
specifically upheld the restriction against a charge of violation of
the Equal Protection clause.
c. Forfeiture of Annuities and Retired Pay:
(1) General principles:
Under 5 U.S.C. § 8312 (the so-called "Hiss Act"), a civilian employee
of the United States or a member of the uniformed services who is
convicted of certain criminal offenses relating to the national
security will forfeit his or her retirement annuity or retired pay.
Further, the annuity or retired pay may not be paid to the convicted
employees survivors or beneficiaries. The offenses that will result in
forfeiture are specified in the statute. Examples are: gathering or
delivering defense information to aid a foreign government; gathering,
transmitting, or losing defense information; disclosure of classified
information; espionage; sabotage; treason; rebellion or insurrection;
seditious conspiracy; advocating the overthrow of the government;
enlistment to serve in an armed force against the United States; and
certain violations of the Atomic Energy Act. In addition, perjury by
falsely denying the commission of one of the specified offenses is
itself an offense for purposes of forfeiture.
An employee for purposes of 5 U.S.C. § 8312 includes a Member of
Congress and an individual employed by the government of the District
of Columbia. 5 U.S.C. § 8311(1). The specific types of retirement
annuities and retired pay subject to forfeiture are enumerated in
5 U.S.C. §§ 8311(2) and (3).
Since 5 U.S.C. § 8312 imposes a forfeiture, it is penal in nature.
Therefore, it must be strictly construed. GAO will not construe the
statute as applicable to situations that are not expressly covered by
its terms. 35 Comp. Gen. 302 (1955).
In the absence of an authoritative judicial decision to the contrary,
the effective date of a conviction for stoppage of retired pay should
be determined in a manner which will result in the least expenditure of
public funds. Thus, the date a guilty verdict is returned should be
considered the date of conviction rather than a later date when the
judgment is ordered executed, and retired pay should be stopped the
following day. 39 Comp. Gen. 741 (1960). Using the cited decision to
illustrate: the jury returned a guilty verdict on December 2, 1959;
judgment was entered on January 29, 1960; the date of conviction is
December 2, 1959, and retired pay should be stopped effective December
3.
In the absence of an authoritative judicial decision to the contrary, a
plea of "nolo contendere" should be regarded as a conviction for
purposes of 5 U.S.C. § 8312. 41 Comp. Gen. 62 (1961).
(2) The Alger Hiss case:
The event that, more than any other single incident, gave rise to the
original enactment of 5 U.S.C. § 8312, was the case of Alger Hiss. A
former State Department employee, Hiss was convicted in 1950 of perjury
stemming from testimony before a grand jury investigating alleged
espionage violations. When Hiss was released from prison after serving
his sentence, considerable public and congressional attention was
directed at the fact that he was still entitled to receive his
government pension. Given the political climate of the times, the
result was the enactment of 5 U.S.C. § 8312 in 1954 (Pub. L. No. 769,
ch. 1214, 68 Stat. 1142 (Sept. 1, 1954)).
Hiss applied for his pension in 1967 and the then Civil Service
Commission denied the application based on 5 U.S.C. § 8312. He
subsequently sued for restoration of his forfeited pension. In Hiss v.
Hampton, 338 F. Supp. 1141 (D.D.C. 1972), the court, finding that the
statute had been aimed more at punishing Alger Hiss than regulating the
federal service, held 5 U.S.C. § 8312 to be an ex post facto law and
therefore unconstitutional as it had been applied to Hiss for conduct
which occurred prior to the date of its enactment. Therefore, the court
ordered the Civil Service Commission to pay Hiss his annuity
retroactively with interest.
The Hiss case gave rise to two GAO decisions--52 Comp. Gen. 175 (1972),
aff'd, B-115505, Dec. 21, 1972--holding that the interest payable to
Hiss, as with the annuity itself, must be paid from the Civil Service
Retirement Fund rather than the permanent judgment appropriation,
31 U.S.C. § 1304. The court case and decisions are summarized in
B-115505, May 15, 1973.
(3) Types of offenses covered:
Under the original version of 5 U.S.C. § 8312, forfeiture was not
strictly limited to national security offenses. An employee could lose
his or her retirement annuity or retired pay simply by committing a
felony "in the exercise of his authority, influence, power, or
privileges as an officer or employee of the Government." There were
numerous examples of forfeitures for such infractions as falsifying a
travel voucher or using a government-owned vehicle for personal
purposes.[Footnote 264]
Recognizing that in many cases the punishment was too severe for the
offense, especially in cases where the offense occurred after many
years of government service, Congress amended the statute in 1961 (Pub.
L. No. 87-299, 75 Stat. 640 (Sept. 26, 1961)) to limit it to offenses
relating to national security and to "retroactively remove therefrom
those provisions of the statute which prohibited payment of annuities
and retired pay to persons who commit offenses, acts or omissions which
do not involve the security of the United States." 41 Comp. Gen. 399,
400 (1961). Thus, numerous offenses which would have caused forfeiture
before 1961 no longer do. See, e.g., B-155823, Sept. 15, 1965
(conspiracy to embezzle government funds); B-155558, Nov. 25, 1964
(false statement). Of course, to the extent that the pre-1961 decisions
establish principles apart from the specific offenses involved, such as
the general principles noted above, they remain valid.
The original 1954 enactment of 5 U.S.C. § 8312 did not expressly cover
offenses under the Uniform Code of Military Justice (UCMJ), and this
omission generated many GAO decisions prior to the 1961 amendment.
E.g., 40 Comp. Gen. 601 (1961); 38 Comp. Gen. 310 (1958); 35 Comp.
Gen. 302 (1955). The UCMJ decisions came to an abrupt halt with the
enactment of the 1961 amendment. The current version of 5 U.S.C. § 8312
expressly covers UCMJ offenses, again limited to national security
violations. Now, a conviction under the UCMJ will produce a forfeiture
if the offense involves certain UCMJ articles specified in the statute,
or if it involves any other article of the UCMJ where the charges and
specifications describe a violation of certain of the United States
Code offenses, and if the "executed sentence" includes death,
dishonorable discharge, or dismissal from the service.
(4) Related statutory provisions:
When a forfeiture is invoked under 5 U.S.C. § 8312, the individual is
entitled to a refund of his contribution toward the annuity less any
amounts already paid out or refunded. 5 U.S.C. § 8316.
Forfeiture may not be invoked where an individual is convicted of an
offense "as a result of proper compliance with orders issued, in a
confidential relationship, by an agency or other authority" of the
United States government or the District of Columbia government.
5 U.S.C. § 8320.
If a payment of annuity or retired pay is made in violation of 5 U.S.C.
§ 8312 "in due course and without fraud, collusion, or gross
negligence," the relevant accountable officer will not be held
responsible. 5 U.S.C. § 8321.
In addition to 5 U.S.C. § 8312, retirement annuities or retired pay may
be forfeited for willful absence from the United States to avoid
prosecution for a section 8312 offense (5 U.S.C. § 8313); refusal to
testify in national security matters (5 U.S.C. § 8314);[Footnote 265]
or knowingly falsifying certain national security-related aspects of a
federal or District of Columbia employment application (5 U.S.C.
§ 8315).
5. Entertainment--Recreation--Morale and Welfare:
a. Introduction:
The concept to be explored in this section is the rule that
appropriated funds may not be used for entertainment except when
specifically authorized by statute and also authorized or approved by
proper administrative officers. E.g., 69 Comp. Gen. 197 (1990);
43 Comp. Gen. 305 (1963). The basis for the rule is that entertainment
is essentially a personal expense even where it occurs in some
business-related context. Except where specifically appropriated for,
entertainment cannot normally be said to be necessary to carry out the
purposes of an appropriation.
The reader will readily note the sharp distinction between government
practice and corporate practice in this regard. "Entertainment" as a
business-related expense is an established practice in the corporate
sector. No one questions that it can be equally business-related for a
government agency. The difference--and the policy underlying the rule
for the government--is summarized in the following passage from
B-223678, June 5, 1989:
"The theory is not so much that these items can never be business-
related, because sometimes they clearly are. Rather, what the decisions
are really saying is that, because public confidence in the integrity
of those who spend the taxpayers' money is essential, certain items
which may appear frivolous or wasteful--however legitimate they may in
fact be in a specific context--should, if they are to be charged to
public funds, be authorized specifically by the Congress."
Another way of expressing this idea is found in the following passage
from B-288266, Jan. 27, 2003:
"[R]eference to 'common business practice' is not in itself an adequate
justification for spending public money on food or, for that matter,
other objects. An expenditure of public funds must be anchored in
existing law, not the practices and conventions of the private
sector."
(1) Application of the rule:
As a general proposition, the rule applies to all federal departments
and agencies operating with appropriated funds. For example, in 1977 it
was held applicable to the Alaska Railroad. B-124195-O.M., Aug. 8,
1977.
The question in B-170938, Oct. 30, 1972, was whether the entertainment
prohibition applied to the revolving fund of the National Credit Union
Administration. The fund is derived from fees collected from federal
credit unions and not from direct appropriations from the Treasury.
Nevertheless, the authority to retain and use the collections
constitutes a continuing appropriation since, but for that authority,
the fees would have to be deposited in the Treasury and Congress would
have to make annual appropriations for the agency's expenses.
Therefore, the revolving fund could not be used for entertainment.
There are three situations in which the rule has not been applied. The
first is certain government corporations. For example, the Corporation
for Public Broadcasting, since it was established as a private
nonprofit corporation and is not an agency or establishment of the U.S.
government (notwithstanding that it receives appropriations), could use
its funds to hold a reception in the Cannon House Office Building.
B-131935, July 16, 1975.
The rule has also been held not to apply to government corporations
that are classed as government agencies but which have statutory
authority to determine the character and necessity of their
expenditures. B-127949, May 18, 1956 (Saint Lawrence Seaway Development
Corporation); B-35062, July 28, 1943. There are limits, however. See,
e.g., B-45702, Nov. 22, 1944, disallowing the cost of a "luncheon
meeting" of government employees.
The second exception is donated funds where the recipient agency has
statutory authority to accept and retain the gift. The availability of
donated funds for entertainment is discussed further, with case
citations, in Chapter 6.
The third exception, infrequently applied, is for certain commissions
with statutory authority to procure supplies, services, or property,
and to make contracts, without regard to the laws and procedures
applicable to federal agencies, and to exercise those powers that are
necessary to enable the commission to carry out the purposes for which
it was established efficiently and in the public interest. B-138969,
Apr. 16, 1959 (Lincoln Sesquicentennial Commission); B-138925,
Apr. 15, 1959 (Civil War Centennial Commission); B-129102, Oct. 2, 1956
(Woodrow Wilson Foundation).
(2) What is entertainment?
The Comptroller General has not attempted a precise definition of the
term "entertainment." In one decision, GAO noted that one court had
defined the term as "a source or means of amusement, a diverting
performance, especially a public performance, as a concert, drama, or
the like." Another court said that entertainment "denotes that which
serves for amusement and amusement is defined as a pleasurable
occupation of the senses, or that which furnishes it, as dancing,
sports, or music." 58 Comp. Gen. 202, 205 (1979),[Footnote 266]
overruled on other grounds, 60 Comp. Gen. 303 (1981).
For purposes of this discussion, the term entertainment, as used in
decisions of the Comptroller General and Comptroller of the Treasury,
is an "umbrella" term that includes: food and drink, either as formal
meals or as snacks or refreshments; receptions, banquets, and the like;
music, live or recorded; live artistic performances; and recreational
facilities. Our treatment includes one other category that, even though
not entertainment as such, is closely related to the entertainment
cases: facilities for the welfare or morale of employees.
Earlier decisions from time to time had occasion to address the
components of entertainment. Can it include liquor? Responding to an
inquiry from the Navy, a Comptroller of the Treasury, obviously not a
teetotaler, said: "Entertainments …without wines, liquors or cigars,
would be like the play of Hamlet with the melancholy Dane entirely left
out of the lines." 14 Comp. Dec. 344, 346 (1907).[Footnote 267]
In a 1941 decision (B-20085, Sept. 10, 1941), the Coordinator of Inter-
American Affairs asked whether authorized entertainment could include
such items as cocktail parties, banquets and dinners, theater
attendance, and sightseeing parties. The Comptroller General,
recognizing that an appropriation for entertainment conferred
considerable discretion, replied, in effect, "all of the above."
That's entertainment.
b. Food for Government Employees:
It may be stated as a general rule that appropriated funds are not
available to pay subsistence or to provide free food to government
employees at their official duty stations ("at headquarters") unless
specifically authorized by statute. In addition to the obvious reason
that food is a personal expense and government salaries are presumed
adequate to enable employees to eat regularly,[Footnote 268] furnishing
free food might violate 5 U.S.C. § 5536, which prohibits an employee
from receiving compensation in addition to the pay and allowances fixed
by law. See, e.g., 68 Comp. Gen. 46, 48 (1988); 42 Comp. Gen. 149, 151
(1962); B-272985, Dec. 30, 1996; see also the dual compensation
discussion in this chapter, section C.4.a.
The "free food" rule applies to snacks and refreshments as well as
meals. For example, in 47 Comp. Gen. 657 (1968), the Comptroller
General held that Internal Revenue Service appropriations were not
available to serve coffee to either employees or private individuals at
meetings. Similarly prohibited was the purchase of coffeemakers and
cups. Although serving coffee or refreshments at meetings may be
desirable, it generally is not considered a "necessary expense" in the
context of appropriations availability. See also B-233807, Aug. 27,
1990; B-159633, May 20, 1974.
The question of food for government employees arises in many contexts
and there are certain well-defined exceptions. For example, the
government may pay for the meals of civilian and military personnel in
travel status because there is specific statutory authority to do
so.[Footnote 269] The rule and exception are illustrated by 65 Comp.
Gen. 16 (1985), in which the question was whether the National Oceanic
and Atmospheric Administration could provide in-flight meals, at
government expense, to persons on extended flights on government
aircraft engaged in weather research. The answer was yes for government
personnel in travel status, no for anyone else, including government
employees not in official travel status. See also B-256938, Sept. 21,
1995 (because the aircraft and its airbase were determined to be a U.S.
Customs aircraft pilot's permanent duty station, the pilot could be
reimbursed only for meals purchased incident to duties performed away
from the aircraft outside the limits of his official duty station).
While feeding employees may not be regarded as a "necessary expense" as
a general proposition, it may qualify when the agency is carrying out
some particular statutory function where the necessary relationship can
be established. Thus, in B-201186, Mar. 4, 1982, it was a permissible
implementation of a statutory accident prevention program for the
Marine Corps to set up rest stations on highways leading to a Marine
base to serve coffee and doughnuts to Marines returning from certain
holiday weekends. Another example is 65 Comp. Gen. 738 (1986)
(refreshments at awards ceremonies), discussed later in this section. A
related example is B-235163.11, Feb. 13, 1996, in which GAO determined
that appropriated funds could be used to pay for the dinner of a
nonfederal award recipient and her spouse at a National Science
Foundation awards ceremony because of the statutory nature of the
award. Exceptions of this type illustrate the relativity of the
necessary expense doctrine pointed out earlier in our general
discussion.
We turn now to a discussion of the rule and its exceptions in several
other contexts.
(1) Working at official duty station under unusual conditions:
The well-settled rule is that, except in extreme emergencies that are
explained below, the government may not furnish free food (the
decisions sometimes get technical and use terms like "per diem" or
"subsistence") to employees at their official duty station, even when
they are working under unusual circumstances.[Footnote 270]
An early illustration is 16 Comp. Gen. 158 (1936), in which the expense
of meals was denied to an Internal Revenue investigator who was
required to maintain a 24-hour surveillance. The reason payment was
denied is that the investigator would presumably have eaten (and
incurred the expense of) three meals a day even if he had not been
required to work the 24-hour shift. A similar example is B-272985,
Dec. 30, 1996, in which the expense of meals was denied to a Central
Intelligence Agency (CIA) security detail while providing 24-hour
security to the Director or Deputy Director of the CIA.
Payment was also denied in 42 Comp. Gen. 149 (1962), where a postal
official had bought carry-out restaurant food for postal employees
conducting an internal election who were required to remain on duty
beyond regular working hours.[Footnote 271]
Similarly, the general rule was applied to deny reimbursement for food
in the following situations:
* Federal mediators required to conduct mediation sessions after
regular hours. B-169235, Apr. 6, 1970; B-141142, Dec. 15, 1959.
* District of Columbia police officers involved in clean-up work after
a fire in a municipal building. B-118638.104, Feb. 5, 1979.
* Geological Survey inspectors at offshore oil rigs who had little
alternative than to buy lunch from private caterers at excessive
prices. B-194798, Jan. 23, 1980. See also B-202104, July 2, 1981
(Secret Service agents on 24-hour-a-day assignment required to buy
meals at high cost hotels).
* Law enforcement personnel retained at staging area for security
purposes prior to being dispatched to execute search warrants.
B-234813, Nov. 9, 1989.
* Air Force enlisted personnel assigned to a security detail at an off-
base social event. B-232112, Mar. 8, 1990.
An exception was permitted in 53 Comp. Gen. 71 (1973). In that case,
the unauthorized occupation of a building in which the Bureau of Indian
Affairs was located necessitated the assembling of a cadre of General
Services Administration special police, who unexpectedly spent the
whole night there in alert status until relieved the following morning.
Agency officials purchased and brought in sandwiches and coffee for the
cadre. GAO concluded that it would not question the agency's
determination that the expenditure was incidental to the protection of
government property during an extreme emergency involving danger to
human life and the destruction of federal property, and approved
reimbursement. The decision emphasized, however, that it was an
exception and that the rule still stands.
A similar exception was permitted in B-189003, July 5, 1977, where
agents of the Federal Bureau of Investigation (FBI) had been forced to
remain at their duty stations within the office during a severe
blizzard in Buffalo, New York. The area was in a state of emergency and
was later declared a national disaster area. GAO agreed with the
agency's determination that the situation presented a danger to human
life of Buffalo citizens and that it was imperative for FBI employees
to maintain the essential functions of the office during the emergency.
The rationale of 53 Comp. Gen. 71 and B-189003 was applied in B-232487,
Jan. 26, 1989, for government employees required to work continually
for a 24-hour period to evacuate and secure an area threatened by the
derailment of a train carrying toxic liquids.
The exception, however, is limited. The requirement to remain on duty
for a 24-hour period, standing alone, is not enough. In B-185159,
Dec. 10, 1975, for example, the cost of meals was denied to Treasury
Department agents required to work over 24 hours investigating a
bombing of federal offices. The Comptroller General pointed out that
dangerous conditions alone are not enough. Under the exception
established in 53 Comp. Gen. 71, it is necessary to find that the
situation involves imminent danger to human life or the destruction of
federal property. Also, in that case, the agents were only
investigating a dangerous situation that had already occurred and there
was no suggestion that any further bombings were imminent. A similar
case is B-217261, Apr. 1, 1985, involving a Customs Service official
required to remain in a motel room for several days on a surveillance
assignment. See also 16 Comp. Gen. 158 (1936); B-202104, July 2, 1981.
Short of the emergency situation described in B-189003, July 5, 1977,
inclement weather is not enough to support an exception. There are
numerous cases in which employees have spent the night in motels rather
than returning home in a snowstorm, in order to be able to get to work
the following day. Reimbursement for meals has consistently been
denied. 68 Comp. Gen. 46 (1988); 64 Comp. Gen. 70 (1984); B-226403,
May 19, 1987; B-200779, Aug. 12, 1981; B-188985, Aug. 23, 1977. It
makes no difference that the employee was directed by his or her
supervisor to rent the room (B-226403 and B-188985),[Footnote 272] or
that the federal government in Washington was shut down (68 Comp.
Gen. 46).[Footnote 273]
Naturally, statutory authority will overcome the prohibition. Thus,
where the Veterans Administration (VA) had statutory authority to
accept uncompensated services and to contract for related "necessary
services," the VA could, upon an administrative determination of
necessity, contract with local restaurants for meals to be furnished
without charge to uncompensated volunteer workers at VA outpatient
clinics when their scheduled assignment extended over a meal period.
B-145430, May 9, 1961. Similarly, in B-241708, Sept. 27, 1991, the
Comptroller General determined that because the Bureau of Indian
Affairs (BIA) hired emergency firefighters under special statutory
authority, 43 U.S.C. § 1469, BIA's practice of furnishing hot meals and
snack lunches for emergency firefighters was legally permissible. There
is also authority to make subsistence payments to law enforcement
officials and members of their immediate families when threats to their
lives force them to occupy temporary accommodations. 5 U.S.C.
§ 5706a.[Footnote 274]
(2) Government Employees Training Act:
The Government Employees Training Act (Training Act) authorizes
agencies to "pay …for all or a part of the necessary expenses of
training," 5 U.S.C. § 4109, and to pay "for expenses of attendance at
meetings which are concerned with the functions or activities for which
the appropriation is made," 5 U.S.C. § 4110, regardless of whether the
event is held within the employees' official duty station. The
Comptroller General has interpreted and applied the Training Act to
accommodate the day-to-day realities of governmental operations within
the limits imposed by the statutes and has determined that the Training
Act permits agencies to pay for the costs of meals and refreshments at
meetings and training events under specific circumstances, which are
outlined below. B-288266, Jan. 27, 2003; B-233807, Aug. 27, 1990.
(a) Attendance at meetings and conferences:
In section C.2 of this chapter, we discuss when appropriated funds may
be used to finance the attendance of government employees at meetings
and conferences. This section addresses when the government may pay for
meals at meetings and conferences when attendance is authorized under
the principles and statutes set forth in section C.2. As the reader
will discover from the discussion that follows, there are many
authorities available to planners of meetings and conferences for this
purpose, and planners should become familiar with them. For day-to-day
routine business meetings, our case law has consistently held that the
Training Act does not provide authority to use appropriations to supply
food items. As our case law demonstrates, agencies appear to struggle
with this rule. In this regard, our case law is not static nor
inflexible. As recent history demonstrates, GAO is willing to reexamine
its case law and to revise, to the extent permitted by law, rules that
agency officials believe frustrate efficient, effective, and
responsible government. B-288266, Jan. 27, 2003. Any revision, of
course, must be founded on sound legal reasoning, and must include
appropriate controls to prevent abuses and ensure public confidence in
the integrity of those who spend the taxpayers money.
For meetings sponsored by nongovernment organizations, the attendee
will commonly be charged a fee, usually but not necessarily called a
registration fee. If a single fee is charged covering both attendance
and meals and no separate charge is made for meals, the government may
pay the full fee, assuming of course that funds are otherwise available
for the cost of attendance. 38 Comp. Gen. 134 (1958); B-249351, May 11,
1993; B-233807, Aug. 27, 1990; B-66978, Aug. 25, 1947. The same is true
for an evening social event where the cost is a mandatory nonseparable
element of the registration fee. 66 Comp. Gen. 350 (1987).
If a separate charge is made for meals, the government may pay for the
meals if there is a showing that (1) the meals are incidental to the
meeting; (2) attendance of the employee at the meals is necessary to
full participation in the business of the conference; and (3) the
employee is not free to take the meals elsewhere without being absent
from essential formal discussions, lectures, or speeches concerning the
purpose of the conference. B-233807, Aug. 27, 1990; B-160579, Apr. 26,
1978; B-166560, Feb. 3, 1970. Absent such a showing, the government may
not pay for the meals. B-154912, Aug. 26, 1964; B-152924, Dec. 18,
1963; B-95413, June 7, 1950; B-88258, Sept. 19, 1949. As an examination
of the cited cases will reveal, these rules apply regardless of whether
the conference takes place within the employees duty station area or
someplace else.
Where the government is authorized to pay for meals under the above
principles, the employee normally cannot be reimbursed for purchasing
alternate meals. See B-193504, Aug. 9, 1979; B-186820, Feb. 23, 1978.
Personal taste is irrelevant. Thus, an employee who, for example,
loathes broccoli will either have to eat it anyway, pay for a
substitute meal from his or her own pocket, or go without. For an
employee on travel or temporary duty status, which is where this rule
usually manifests itself, per diem is reduced by the value of the meals
provided. E.g., 60 Comp. Gen. 181, 183-84 (1981). The rule will not
apply, however, where the employee is unable to eat the meal provided
(and cannot arrange for an acceptable substitute) because of bona fide
medical or religious reasons. B-231703, Oct. 31, 1989 (per diem not
required to be reduced where employee, an Orthodox Jew who could not
obtain kosher meals at conference, purchased substitute meals
elsewhere).
The above rules will not apply to day-to-day routine agency-sponsored
meetings. GAO has described "day-to-day" business meetings as meetings
that involve discussions of the internal procedures or operations of
the agency. See 68 Comp. Gen. 604, 605 (1989). Meetings or conferences
that are not routine involve topical matters of general interest that
might appeal to governmental and nongovernmental participants. Id.
Attendance at routine agency-sponsored meetings will generally be
subject to the prohibition on furnishing free food to employees at
their official duty stations. Thus the cost of meals could not be
provided at a conference of field examiners of the National Credit
Union Administration. B-180806, Aug. 21, 1974. Use of appropriated
funds was prohibited for coffee breaks at a management seminar,
B-159633, May 20, 1974; meals served during "working sessions" at
Department of Labor business meetings, B-168774, Jan. 23, 1970; and
meals at monthly luncheon meetings for officials of law enforcement
agencies, B-198882, Mar. 25, 1981. Appropriated funds also could not be
used for meals at quarterly managers meetings of the U.S. Army Corps of
Engineers, 72 Comp. Gen. 178 (1993), and meals and refreshments served
to government employees attending Federal Communication Commission
radio spectrum auctions. B-260692, Jan. 2, 1996. See also 47 Comp.
Gen. 657 (1968); B-45702, Nov. 22, 1944.
In B-137999, Dec. 16, 1958, the commissioners of the Outdoor Recreation
Resources Review Commission had statutory authority to be reimbursed
for actual subsistence expenses. This was held to include the cost of
lunches during meetings at a Washington hotel. However, the cost of
lunches for staff members of the Commission could not be paid.
Merely calling the cost of meals a "registration fee" will not avoid
the prohibition. In a 1975 case, the cost of meals was disallowed for
Army employees at an Army-sponsored "Operations and Maintenance
Seminar." The charge had been termed a registration fee but covered
only luncheons, dinner, and coffee breaks. B-182527, Feb. 12, 1975. See
also B-195045, Feb. 8, 1980.
In B-187150, Oct. 14, 1976, grant funds provided to the government of
the District of Columbia under the Social Security Act for personnel
training and administrative expenses could not be used to pay for a
luncheon at a 4-hour conference of officials of the D.C. Department of
Human Resources. The conference could not be reasonably characterized
as training and did not qualify as an allowable administrative cost
under the program regulations.
While 5 U.S.C. § 4110 does not apply to a routine business meeting, in
B-281063, Dec. 1, 1999, the Nuclear Regulatory Commission (NRC) could
pay an all-inclusive facility rental fee for a meeting to discuss
internal matters, even though the fee resulted in food being served to
NRC employees at their official duty stations. Because the fee would
have remained the same for NRC whether or not it accepted and its
employees ate the food, the harm that the general rule is meant to
prevent (i.e., expenditure of federal funds on personal items) was not
present.
In January 2000, the General Services Administration (GSA) published an
amendment to the Federal Travel Regulations to address "conference
planning." 41 C.F.R. pts. 301-11 and 301-74, 65 Fed. Reg. 1326
(Jan. 10, 2000). The amendment defined "conference" as "[a] meeting,
retreat, seminar, symposium or event that involves attendee travel."
The amendment included a provision permitting agencies to pay for light
refreshments for agency employees at conferences. 41 C.F.R. § 301-
74.11. In agency guidance explaining the regulation, GSA advised
agencies that they could use appropriated funds to pay for refreshments
for nontravelers at some conferences. In particular, GSA advised that
if the majority of the attendees were in travel status, the agency
could fund refreshments for all attendees.
In a 2003 decision, GAO explained that GSA's statutory basis for the
light refreshment provision is 5 U.S.C. § 5702, which addresses the
subsistence expenses of federal employees "when traveling on official
business away from the employees designated post of duty"; therefore,
while Congress has authorized GSA to prescribe regulations necessary
for the administration of travel and subsistence expenses, GSA's
authority does not extend to employees who are not in travel status.
B-288266, Jan. 27, 2003.[Footnote 275] Accordingly, GAO held that the
light refreshment provision of the travel regulation applies only to
federal employees who are in travel status. Id.[Footnote 276] The
decision also clarified that although section 4110 generally applies
only to meetings sponsored by nongovernmental organizations, the
Comptroller General extended section 4110 to a government-sponsored
meeting, regardless of whether an employee is in travel status or not,
as long as the meeting satisfies the same conditions as required for
nongovernment-sponsored meetings and the government-sponsored meeting
is not an internal day-to-day business meeting.
In response to this decision, GSA agreed that its authority extended
only to employees in travel status and in its guidance would refer
agencies to GAO decisions holding that section 4110 of the Training Act
authorizes agencies to provide light refreshments to nontravelers at a
government-sponsored meeting as long as the meeting meets the
requirements of section 4110 and is not a "day-to-day" or "routine"
business meeting. Letter from Raymond J. McNamara, General Counsel,
GSA, to Anthony H. Gamboa, General Counsel, GAO, undated, received by
GAO June 9, 2003.
In 1980, the President's Committee on Employment of the Handicapped
held its annual meeting in the Washington Hilton Hotel. The affair was
to last 3 days and included a luncheon and two banquets. There was no
registration fee for the meeting but there were charges for the meals.
GAO's Equal Employment Opportunity Office planned to send three
employees to the meeting and asked whether the agency could pick up the
tab for the meals. The three employees were to make a presentation at
the meeting and it seemed clear that attendance was authorized under
5 U.S.C. § 4110. Also, if a registration fee were involved, the prior
decisions noted above would presumably have answered the question. The
Comptroller General reviewed the precedents such as B-160579, Apr. 26,
1978, and B-166560, Feb. 3, 1970, and took the logical step of applying
them to the situation at hand. Thus, GAO could pay for the meals if
administrative determinations were made that (1) the meals were
incidental to the meeting; (2) attendance at the meals was necessary
for full participation at the meeting; and (3) the employees would miss
essential formal discussions, lectures, or speeches concerning the
purpose of the meeting if they took their meals elsewhere. B-198471,
May 1, 1980.[Footnote 277]
This decision, so it seems, became perceived as the loophole through
which the lunch wagon could be driven. So apparently compelling is the
quest for free food that it became necessary to issue several
additional decisions to clarify B-198471 and to explain precisely what
the rationale of that decision does and does not authorize.
In 64 Comp. Gen. 406 (1985), the Comptroller General held that the cost
of meals could not be reimbursed for employees attending monthly
meetings of the Federal Executive Association within their duty station
area. The meetings were essentially luncheon meetings at which
representatives of various government agencies could discuss matters of
mutual interest. The decision stated:
"What distinguishes [B-198471] …is that the President's annual meeting
was a 3-day affair with meals clearly incidental to the overall
meeting, while in [the cases in which reimbursement has been denied]
the only meetings which took place were the ones which took place
during a luncheon meal…. In order to meet the three-part test [of
B-198471], a meal must be part of a formal meeting or conference that
includes not only functions such as speeches or business carried out
during a seating at a meal but also includes substantial functions that
take place separate from the meal. [W]e are unwilling to conclude that
a meeting which lasts no longer than the meal during which it is
conducted qualifies for reimbursement."
Id. at 408 (explanatory information provided).
A similar case the following year, 65 Comp. Gen. 508 (1986), reiterated
that the above-quoted test of 64 Comp. Gen. 406 must precede the
application of the three-part test of B-198471. The three-part test,
and hence the authority to reimburse, relates to a meal that is
incident to a meeting, not a meeting that is incident to a meal.
65 Comp. Gen. at 510; 64 Comp. Gen. at 408. See also B-249249, Dec. 17,
1992.
Two 1989 decisions, 68 Comp. Gen. 604 and 68 Comp. Gen. 606, defined
the rules further, holding that 5 U.S.C. § 4110 and B-198471 do not
apply to purely internal business meetings or conferences sponsored by
government agencies. See also 72 Comp. Gen. 178 (1993); B-247563,
Dec. 11, 1996; B-270199, Aug. 6, 1996; and B-260692, Jan. 2, 1996.
Noting that this result is consistent with the legislative history of
5 U.S.C. § 4110 as summarized in prior decisions,[Footnote 278] both
decisions stated:
"We think …that there is a clear distinction between the payment of
meals incidental to formal conferences or meetings, typically
externally organized or sponsored, involving topical matters of general
interest to governmental and nongovernmental participants, and internal
business or informational meetings primarily involving the day-to-day
operations of government. With respect to the latter, 5 U.S.C. § 4110
has little bearing …."
68 Comp. Gen. at 605 and 608. One of the decisions went a step further
and commented that the claim in 65 Comp. Gen. 508 "should have been
summarily rejected based on the application of the general rule."
68 Comp. Gen. at 609. Naturally, if the meeting or conference does not
have the necessary connection with official agency business, the cost
of meals may not be paid regardless of who sponsors the meeting or
where it is held. Thus, a registration fee consisting primarily of the
cost of a luncheon was disallowed for three Community Services
Administration employees attending a Federal Executive Board meeting at
which Combined Federal Campaign (CFC) awards were to be presented.
B-195045, Feb. 8, 1980.[Footnote 279] Similarly, an employee of the
Department of Housing and Urban Development could not be reimbursed for
meals incident to meetings of a local business association. B-166560,
May 27, 1969.
In a 1981 case, the Internal Revenue Service bought tickets for several
of its agents to attend the Fourth Annual Awards and Scholarship Dinner
of the National Association of Black Accountants. The purposes of
attending the banquet were to establish contacts for recruitment
purposes and to demonstrate the commitment of the IRS to its equal
employment opportunity program. However, attendance could not be
authorized under either 5 U.S.C. § 4109 or 5 U.S.C. § 4110, and the
expenditure was therefore prohibited by 5 U.S.C. § 5946. B-202028,
May 14, 1981.
However, in B-249249, Dec. 17, 1992, the Comptroller General held that
the Federal Bureau of Investigation (FBI) could reimburse an FBI agent
for the cost of a retirement banquet. The agent represented the FBI at
the banquet honoring a local police chief and presented him with a
plaque and commendation letter from the FBI Director. "The agent's
attendance at the function was in furtherance of the agency's functions
or activities for which its appropriations were made and the meal was
incidental to the retirement ceremony." The Department of Justice,
Office of Legal Counsel, applying this decision, stated that "[w]e
believe that the Comptroller General's holding was correct and would be
applicable to an employee of a United States Attorney's Office
attending the same kind of event under like circumstances." 17 Op. Off.
Legal Counsel 70 (1993). The Office of Legal Counsel cautioned,
however, that the application of the ruling should be carefully limited
to where the nature of the ceremonial event "provides good reason to
believe that the official or employee's attendance advances the offices
authorized functions." Id.
Before we depart the topic of meals at meeting and conferences, two
cases involving a different twist--payment for meals not eaten--deserve
mention. In B-208729, May 24, 1983, the Army Missile Command sponsored
a luncheon to commemorate Dr. Martin Luther King, Jr., that was open to
both government employees and members of the local community. Attendees
were to be charged a fee for the lunch. In order to secure the
necessary services, the Army contracted with a caterer (in this case
the local Officers Club), guaranteeing a minimum revenue based on the
anticipated number of guests. Bad weather on the day of the luncheon
resulted in reduced attendance. Under the circumstances, GAO approved
payment of the guaranteed minimum as a program expense.
GAO similarly approved payment of a guaranteed minimum balance in
B-230382, Dec. 22, 1989, this time involving the Army's "World-Wide
Audio Visual Conference." As in B-208729, attendees were charged for
the meal but attendance was less than expected. This case had two
additional complications. First, the official who made the arrangements
lacked the authority to do so. Payment could therefore be authorized
only on a quantum meruit basis. Second, the arrangements also included
a buffet, open bar, and several coffee breaks. Payment for these items
could not be authorized, even under the quantum meruit concept, since
they would not have been authorized had proper procurement procedures
been followed.
(b) Training:
Under the Government Employees Training Act (Training Act), an agency
may pay, or reimburse an employee for, necessary expenses incident to
an authorized training program. 5 U.S.C. § 4109. This applies whether
the training is held through a nongovernment facility or by the federal
government itself. 5 U.S.C. § 4105; B-258442, Apr. 19, 1995; B-244473,
Jan. 13, 1992. The event, however, must comply with the Training Act's
definition of "training" in 5 U.S.C. § 4101(4). 72 Comp. Gen. 178
(1993). As with meetings, an agency may pay for the costs of meals and
refreshments when they are included as an incidental and nonseparable
portion of a training registration or attendance fee. 66 Comp.
Gen. 350, 1987; B-288266, Jan. 27, 2003. If the cost of the food is not
included in a registration or attendance fee, the Comptroller General
has held that the government can provide meals or refreshments under
this authority if the agency determines that providing meals or
refreshments is necessary to achieve the objectives of the training
program. 48 Comp. Gen. 185 (1968); 39 Comp. Gen. 119 (1959); B-247966,
June 16, 1993; B244473, Jan. 13, 1992; B-193955, Sept. 14, 1979. The
government may also furnish meals to nongovernment speakers as an
expense of conducting the training. 48 Comp. Gen. 185.
In 50 Comp. Gen. 610 (1971), the Training Act was held to authorize the
procurement of catering services for a Department of Agriculture
training conference where government facilities were deemed inadequate
in view of the nature of the program.
The fact that an agency characterizes its meeting as "training" is not
controlling. In other words, for purposes of authorizing the government
to feed participants, something does not become training simply because
it is called training. In B-168774, Sept. 2, 1970, headquarters
employees of the then Department of Health, Education, and Welfare met
with consultants in a nearby hotel at what the agency termed a
"research training conference." However, the conference consisted of
little more than "working sessions" and included no employee training
as defined in the Training Act. Therefore, the cost of meals could not
be paid. See also 72 Comp. Gen. 178 (1993); 68 Comp. Gen. 606 (1989);
B-247563, Dec. 11, 1996; B-208527, Sept. 20, 1983; B-187150, Oct. 14,
1976; B-140912, Nov. 24, 1959.
In 65 Comp. Gen. 143 (1985), GAO held that a Social Security
Administration employee who had been invited as a guest speaker at the
opening day luncheon of a legitimate agency training conference in the
vicinity of her duty station could be reimbursed for the cost of the
meal. The decision unfortunately confuses 5 U.S.C. §§ 4109 and 4110 by
analyzing the case under section 4110 yet concluding that reimbursement
is authorized "as a necessary training expense," which is the standard
under section 4109.
(3) Award ceremonies:
General operating appropriations may be used to provide refreshments at
award ceremonies under the Government Employees' Incentive Awards Act,
5 U.S.C. §§ 4501-4506. 65 Comp. Gen. 738 (1986); B-271551, Mar. 4,
1997. This Act authorizes an agency to use its operating appropriations
to cover the "necessary expense for the honorary recognition of" the
employee or employees receiving the awards. 5 U.S.C. § 4503. The Act
also directs the Office of Personnel Management to prescribe
regulations and instructions to govern agency awards programs. 5 U.S.C.
§ 4506.
In 65 Comp. Gen. 738, the Social Security Administration asked whether
it could use operating appropriations, apart from its limited
entertainment appropriation, to provide refreshments at its annual
awards ceremony. GAO observed that the Incentive Awards Act (5 U.S.C.
§ 4503) authorizes agencies to "pay a cash award to, and incur
necessary expense for the honorary recognition of" employees. The
decision reasoned that the concept of a necessary expense is, within
limits, a relative one based on the relationship of the expenditure to
the particular appropriation or program involved. Thus, while the
necessary relationship does not exist with respect to an agency's day-
to-day operations, the agency would be within its legitimate discretion
to determine that refreshments would materially enhance the
effectiveness of a ceremonial function, specifically in this case an
awards ceremony which is a valid component of the agency's statutorily
authorized awards program.
The decision essentially followed B-167835, Nov. 18, 1969, which had
concluded that the Incentive Awards Act authorized the National
Aeronautics and Space Administration to fund part of the cost of a
banquet at which the President was to present the Medal of Freedom to
the Apollo 11 astronauts. What made the fuller treatment in 65 Comp.
Gen. 738 necessary was that a 1974 decision, B-114827, Oct. 2, 1974,
had found the cost of refreshments at an awards ceremony under the
Incentive Awards Act payable only from specific entertainment
appropriations. The 1986 case partially modified B-114827 to the extent
it had held that an entertainment appropriation was the only available
funding source. Finally, 65 Comp. Gen. 738 distinguished 43 Comp.
Gen. 305 (1963), which had disallowed the cost of refreshments at an
awards ceremony for persons who were not federal employees (and
therefore not authorized under the Incentive Awards Act nor governed by
the "necessary expense" language of that statute).
GAO has emphasized that the purpose of awards ceremonies is to foster
public recognition of employees' meritorious performance and allow
other employees to honor and congratulate their colleagues. 65 Comp.
Gen. at 740. In B-247563, Dec. 11, 1996, the Comptroller General
determined that the Department of Veterans Affairs Medical Center's use
of appropriated funds for a breakfast at which the Medical Center
Director presented awards was improper because there was no public
recognition of the award recipients. The record indicated that (1) only
those employees specifically recognized and the Medical Center Director
participated in the event and (2) the employees' contributions were not
otherwise publicized within the Medical Center community.
In this same decision, however, the Comptroller General did not find
unauthorized the Medical Center's use of its appropriation to purchase
light refreshments for an annual picnic and Valentine's Day Dance, at
which the agency presented performance award certificates and years of
service awards. The Comptroller General found that the Medical Center
publicly recognized employees' accomplishments at both events but
cautioned that where an agency combines awards receptions with social
events, "the expenditures should be subject to greater scrutiny than
expenditures made in connection with more traditional awards
ceremonies." B-247563, supra.
Recent Comptroller General decisions have permitted appropriated funds
to be used to provide meals as well as refreshments at awards
ceremonies. For example, in B-270327, Mar. 12, 1997, the Defense
Reutilization and Marketing Service (DRMS) was permitted to pay
luncheon expenses not to exceed $20 per employee at worldwide DRMS
award ceremonies. The Comptroller General explained that Office of
Personnel Management (OPM) regulations purposely leave it up to the
agencies to design their award programs, and that "we must respect and
defer to OPM's regulatory decisions and the implicit delegation of
authority to agencies to make implementing decisions vis-à-vis their
incentive awards programs so long as such decisions are consistent with
the essential requirements of the Act." Id. The Comptroller General
found that the $20 per person maximum did not offend any OPM regulatory
guidance or express provisions of the Government Employees' Incentive
Awards Act. Id. See also B-288536, Nov. 19, 2001 (Bureau of Indian
Affairs was permitted to pay for the cost of a buffet luncheon at an
incentive awards ceremony).
The Government Employees' Incentive Awards Act does not apply to
members of the armed forces. However, the uniformed services have
similar authority, including the identical "necessary expense"
language, in 10 U.S.C. § 1124. Therefore, 65 Comp. Gen. 738 applies
equally to award ceremonies conducted under the authority of 10 U.S.C.
§ 1124. 65 Comp. Gen. at 739 n.2.
(4) Cafeterias and lunch facilities:
The government has no general responsibility to provide luncheon
facilities for its employees. 10 Comp. Gen. 140 (1930).[Footnote 280]
However, plans for the construction of a new government building may
include provision for a lunch room or cafeteria, in which event the
appropriation for construction of the building will be available for
the lunch facility. 9 Comp. Gen. 217 (1929).
An agency may subsidize the operation of an employees' cafeteria if the
expenditure is administratively determined to be necessary to the
efficiency of operations and a significant factor in the hiring and
retaining of employees and in promoting employee morale. B-216943,
Mar. 21, 1985; B-169141, Nov. 17, 1970; B169141, Mar. 23, 1970. See
also B-204214, Jan. 8, 1982 (temporarily providing paper napkins in new
government cafeteria); U.S. General Accounting Office, Benefits GSA
Provides by Operating Cafeterias in Washington, D.C., Federal
Buildings, LCD-78-316 (Washington, D.C.: May 5, 1978).
The purchase of equipment for use in other than an established
cafeteria may also be authorized in certain circumstances. In B-173149,
Aug. 10, 1971, GAO approved the purchase of a set of stainless steel
cooking utensils for use by air traffic controllers to prepare food at
a flight service station. There were no other readily accessible eating
facilities and the employees were required to remain at their post of
duty for a full 8-hour shift. Similar cases are:
* B-180272, July 23, 1974: purchase of a sink and refrigerator to
provide lunch facilities for the Occupational Safety and Health Review
Commission where there was no government cafeteria on the premises.
* B-210433, Apr. 15, 1983: purchase of microwave oven by Navy facility
to replace nonworking stove. Facility was in operation 7 days a week,
some employees had to remain at their duty stations for 24-hour shifts,
and there were no readily accessible eating facilities in the area
during nights and weekends.
* B-276601, June 26, 1997: purchase of a refrigerator for personal food
items of Central Intelligence Agency (CIA) employees. CIA headquarters
facility was relatively distant from private eating establishments, the
CIA did not permit delivery service to enter the facility due to
security concerns, and the cafeteria served only breakfast and lunch.
c. Entertainment for Government Employees Other Than Food:
(1) Miscellaneous cases:
There have been relatively few cases in this area, probably because
there are few situations in which entertainment for government
employees could conceivably be authorized.
An early decision held that 10 U.S.C. § 4302, which authorizes training
for Army enlisted personnel "to increase their military efficiency and
to enable them to return to civilian life better equipped for
industrial, commercial, and business occupations," did not include
sending faculty members and students of the Army Music School to grand
opera and symphony concerts. 4 Comp. Gen. 169 (1924). Another decision
found it improper to hire a boat and crew to send federal employees
stationed in the Middle East on a recreational trip to the Red Sea.
B-126374, Feb. 14, 1956.
A 1970 decision deserves brief mention although its application will be
extremely limited. Legislation in 1966 established the Wolf Trap Farm
Park in Fairfax County, Virginia, as a park for the performing arts and
directed the Interior Department to operate and maintain it. A
certifying officer of the National Park Service asked whether he could
certify a voucher for symphony, ballet, and theater tickets for Wolf
Trap's Artistic Director. The Comptroller General held that such
payments could be made if an appropriate Park Service official
determined that attendance was necessary for the performance of the
Artistic Directors official duties. The justification was that the
Artistic Director attended these functions not as personal
entertainment but so that he could review the performances to determine
which cultural and theatrical events were appropriate for booking at
Wolf Trap. B-168149, Feb. 3, 1970. As noted, this case would seem to
have little precedent value except for the Artistic Director at Wolf
Trap.
(2) Cultural awareness programs:
One area that has generated several decisions, and a change in GAO's
position, has been equal employment opportunity special emphasis or
cultural awareness programs. There are many areas in which the law
undergoes refinement from time to time but remains essentially
unchanged. There are other areas in which the law has changed to
reflect changes in American society. This is one of those latter areas.
The issue first arose in 58 Comp. Gen. 202 (1979). In that case, the
Bureau of Mines, Interior Department, in conjunction with the Equal
Employment Opportunity Commission, sponsored a program of live
entertainment for National Hispanic Heritage Week. The program
consisted of such items as a lecture and demonstration of South
American folk music, a concert, a slide presentation, and an exhibit of
Hispanic art and ceramics. The decision concluded that, while the
Bureau's Spanish-Speaking Program was a legitimate component of the
agency's overall Equal Employment Opportunity (EEO) program,
appropriated funds could not be used to procure entertainment. This
holding was followed in two more cases, B-194433, July 18, 1979, and
B-199387, Aug. 22, 1980.
In 1981, however, GAO reconsidered its position. The Internal Revenue
Service asked whether it could certify a voucher covering payments for
a performance by an African dance troupe and lunches for guest speakers
at a ceremony observing National Black History Month. The Comptroller
General held the expenditure proper in 60 Comp. Gen. 303 (1981). The
decision stated:
"[W]e now take the view that we will consider a live artistic
performance as an authorized part of an agency's EEO effort if, as in
this case, it is part of a formal program determined by the agency to
be intended to advance EEO objectives, and consists of a number of
different types of presentations designed to promote EEO training
objectives of making the audience aware of the culture or ethnic
history being celebrated."
Id. at 306. Further, the lunches for the guest speakers could be paid
under 5 U.S.C. § 5703 if they were in fact away from their homes or
regular places of business. The prior inconsistent decisions--58 Comp.
Gen. 202, B-194433, and B-199387--were overruled.
It should be emphasized that the prior decisions were overruled only to
the extent inconsistent with the new holding. Two specific elements of
58 Comp. Gen. 202 were not involved in the 1981 decision and remain
valid. First, use of appropriated funds to serve meals or refreshments
remains:
improper except under specific statutory authority. 58 Comp. Gen. at
206.[Footnote 281] Second, 58 Comp. Gen. 202 found the purchase of
commercial insurance on art objects improper. Id. at 207. This portion
also remains valid. The Comptroller General also determined that
transportation costs of an employee participating in a cultural program
are not authorized unless the employee is participating in the program
as a performer or making some other type of direct contribution to the
EEO event. B-243862, July 28, 1992.
The decision at 60 Comp. Gen. 303 was expanded in B-199387, Mar. 23,
1982, to include small "samples" of ethnic foods prepared and served
during a formal ethnic awareness program as part of the agency's equal
employment opportunity program. In the particular program being
considered, the attendees were to pay for their own lunches, with the
ethnic food samples of minimal proportion provided as a separate event.
Thus, the samples could be distinguished from meals or refreshments,
which remain unauthorized. (The decision did not specify how many
"samples" an individual might consume in order to develop a fuller
appreciation.)
In 1999, the Comptroller General clarified that 60 Comp. Gen. 303 does
not require that a program or event have specific advance written
approval in a formal agency issuance to be considered a formal Equal
Employment Opportunity program for which funds are available. "What is
required is that the agency through an authorized official determines
that the planned performance advances EEO objectives." B-278805,
July 21, 1999.
Although 60 Comp. Gen. 303 was not cast in precisely these terms, it is
another example of the "theory of relativity" in purpose availability
to which we have alluded in various places in this chapter. Equality in
all aspects of federal employment is now a legal mandate. An agency is
certainly within its discretion to determine that fostering racial and
ethnic awareness is a valid--perhaps indispensable--means of advancing
this objective. This being the case, it is not at all far-fetched to
conclude that certain expenditures that might be wholly inappropriate
in other contexts could reasonably relate to this purpose. Thus, hiring
an African dance troupe could not be justified to further an objective
of, for example, conducting a financial audit or constructing a
building or procuring a tank, but the relationship changes when the
objective is promoting cultural awareness.
Once the concept of the preceding paragraph is understood, it should be
apparent why, in 64 Comp. Gen. 802 (1985), GAO distinguished the
cultural awareness cases and concluded that the Army could not use
appropriated funds to provide free meals for handicapped employees
attending a luncheon in honor of National Employ the Handicapped Week.
This is not to say that an agency's EEO program should not embrace the
handicapped--on the contrary, it can, should, and is required to--but
merely that "[u]nlike ethnic and cultural minorities, handicapped
persons do not possess a common cultural heritage" within the intended
scope of the cultural awareness cases. Id. at 804 (quoting from the
request for decision).
d. Entertainment of Nongovernment Personnel:
Just as the entertainment of government personnel is generally
unauthorized, the entertainment of nongovernment personnel is equally
impermissible. The basic rule is the same regardless of who is being
fed or entertained: Appropriated funds are not available for
entertainment, including free food, except under specific statutory
authority.
Two of the most frequently cited decisions for this proposition are
5 Comp. Gen. 455 (1925) and 26 Comp. Gen. 281 (1946). In 5 Comp.
Gen. 455, expenditures by two Army officers for entertaining officials
of foreign governments while making arrangements for an around-the-
world flight were disallowed. In 26 Comp. Gen. 281, appropriations were
held unavailable for dinners and luncheons for "distinguished guests"
given by a commissioner of the Philippine War Damage Commission. Other
early decisions on point are: 5 Comp. Gen. 1018 (1926); B-85555, June
6, 1949; and A-10221, Oct. 8, 1925. A limited exception was recognized
in B-22307, Dec. 23, 1941, to permit entertainment of officials of
foreign governments incident to the gathering of intelligence for
national security.
As with the cases dealing with government employees, a large proportion
of the decisions tend to involve food. In 43 Comp. Gen. 305 (1963),
funds were not available to furnish food or refreshments at
"recognition ceremonies" for volunteers at Veterans Administration
field stations. The ceremonies had been designed as an inducement to
the volunteers to continue rendering service. Naturally, the situation
would be permissible under specific statutory authority. B-152331,
Nov. 19, 1975. Other examples are 26 Comp. Gen. 281, cited above;
B-236763, Jan. 10, 1990, disallowing costs for refreshments for college
students at recruiting functions, unless the costs were included in a
lump-sum bill with other room facility charges; and B-138081, Jan. 13,
1959, disallowing the cost of a breakfast meeting with Canadian
officials called at the initiative of the Chairman of the Securities
and Exchange Commission.
Several more recent decisions illustrate the continued application of
the rule and some of the exceptions permitted by statute. In 68 Comp.
Gen. 226 (1989), the Department of Housing and Urban Development (HUD)
used its research and technology appropriations for entertainment
expenses incident to a trade show it sponsored in the Soviet Union.
Since HUD had no authority to sponsor the show, the related
expenditures were improper. The decision further pointed out that, even
if the trade show itself had been authorized, the research and
technology appropriations still would not have been available for
entertainment, although HUD could then have used its "official
reception and representation" funds. See also 65 Comp. Gen. 16 (1985)
(free in-flight meals during weather research flight unauthorized for
nongovernment personnel).
In 57 Comp. Gen. 806 (1978), the Comptroller General held that
appropriations available to the judiciary for jury expenses could not
be used to buy coffee and refreshments for jurors during recesses in
trial proceedings. The situation was analogized to the cases
prohibiting the purchase of food from appropriated funds for employees
working under unusual conditions. The decision noted that statutory
authority existed to pay actual subsistence expenses for jurors under
sequestration, not an issue in the case at hand. The relevant
appropriation language was subsequently amended to provide for
refreshments, and the authority was made permanent in 1989.[Footnote
282]
In a 1979 decision, appropriations of the Equal Employment Opportunity
Commission were found not available to host a reception for Hispanic
leaders in conjunction with a planning conference. B-193661, Jan. 19,
1979. The case fell squarely within the general rule. So did B-205292,
June 2, 1982, involving a Fourth of July fireworks display by a Navy
station, justified as a community relations measure. While good
community relations may be desirable for all government agencies,
fireworks are not necessary to the operation and maintenance of the
Navy.
The propriety of using appropriated funds to furnish luncheons to
public school officials in conjunction with Marine Corps recruiting
programs was considered in B-162642, Aug. 9, 1976. A statute authorized
reimbursement of necessary expenses incurred by recruiters, and
applicable regulations permitted the reimbursement to include small
amounts spent for occasional lunches, snacks, or nonalcoholic
beverages. GAO, however, did not consider a planned luncheon involving
a formal presentation with a guest speaker as within the intended scope
of the statute or regulations. Since the statute and regulations were
broadly worded, payment in that case was authorized. The decision
cautioned, however, against incurring similar expenses in the future
unless the regulations were first revised to provide adequate
guidelines and limitations.
The National Park Service has authority to provide for "interpretive
demonstrations" at Park Service sites. 16 U.S.C. § 1a-2(g). GAO
reviewed this authority and its legislative history in 68 Comp.
Gen. 544 (1989), concluding that it could properly include some level
of entertainment, as long as it was sufficiently related to the
significance of the particular site. Thus, there was no objection to
the 1988 Railroaders Festival at the Golden Spike National Historic
Site, which included musical entertainment by a band specializing in
railroad and nineteenth century western American music. (Golden Spike
is the site of the completion of the first U.S. transcontinental
railroad in 1869.) Similarly within this authority was the decoration
of a historic ranch house at the Grant-Kohrs Ranch National Historic
Site to "interpret" how the ranch celebrated Christmas during the
frontier era. B-226781, Jan. 11, 1988. However, an "open house" with
refreshments and a visit by Santa Claus had "too indirect and
conjectural a bearing" on the Park Services mission and was therefore
unauthorized. Id.
GAO considered whether the National Science Foundation (NSF) could use
appropriated funds to pay for dinner-related expenses for a nonfederal
award recipient and her spouse pursuant to a statutorily established
award called the Alan T. Waterman Award in B-235163.11, Feb. 13, 1996.
GAO concluded that NSF could use appropriated funds for the dinner-
related expenses because the dinner at which the awards were presented
was the necessary vehicle to accomplish the statutory objectives of the
Waterman Award.
No discussion of entertainment would be complete without B-182357,
Dec. 9, 1975. The Foreign Assistance Act of 1961, as amended, 22 U.S.C.
§§ 2151 et seq. (1970), authorized funds for an informational program
to give foreign military trainees a greater exposure to American
culture. To implement the program, the Department of Defense set up a
program whereby officers would serve as escorts for foreign military
trainees to impart to them an active appreciation of American values
and ideals. The case involved a voucher submitted by a civilian
employee of the Navy for expenses incurred as escort officer for a
group of twelve senior foreign naval officers being trained in the
United States. The voucher included visits to a variety of restaurants,
night clubs, and bars. One of the items was a visit to the Boston
Playboy Club. The claimant justified the visit as "symbolic of the
United States" and "one of the most enjoyable experiences" the trainees
had during their stay in America. Apparently to get more symbolism, the
party returned for a second visit. In reviewing the case, the
Comptroller General noted that, under the statutory program, the funds
could have been given directly to the trainees to be spent as they
desired, and the agency would therefore have considerable discretion in
spending the money for the trainees. In addition, the regulations
provided "no guidance whatsoever" on the limits of the program.
Somewhat reluctantly, the Comptroller General was forced to conclude
that "the lack of adequate guidance to the escort officer leaves us no
alternative but to allow him credit for the expenses incurred."
e. Recreational and Welfare Facilities for Government Personnel:
(1) The rules: older cases and modern trends:
The basic rule for recreational facilities--which, as we shall see, has
become more flexible--was established in early decisions:
Appropriations are not available unless the expenditure is authorized
by express statutory provision or by necessary implication. Thus, in
18 Comp. Gen. 147 (1938), appropriations for a river and harbor project
on Midway Island were held not available to provide recreational
facilities such as athletic facilities and motion pictures for the
working force. Similarly, in 27 Comp. Gen. 679 (1948), the Comptroller
General advised that Navy appropriations were not available to hire
full-time or part-time employees to develop and supervise recreational
programs for civilian employees of the Navy. The reason in both cases
was that the expenditure would have at best only an indirect bearing on
the purposes for which the appropriations were made.
Other early decisions applying the general rule are B-49169, May 5,
1945 (rental of motion picture by Bonneville Power Administration);
B-37344, Oct. 14, 1943 (footballs and basketballs for employees in
Forest Service camps); and A-55035, May 19, 1934 (billiard tables for
Tennessee Valley Authority employees). In B-49169, the Comptroller
General pointed out that the Administrators authority to make such
expenditures as he "may find necessary" does not mean anything he may
approve, regardless of its nature, but the expenditures must bear a
direct relationship to the purposes to be accomplished under the
particular legislation.
It follows that, as a general proposition, appropriated funds may not
be used to underwrite travel to or participation in sports or
recreational events since this is not the performance of public
business. 42 Comp. Gen. 233 (1962). For example, in 73 Comp. Gen. 169
(1994), appropriated funds were not available to the Department of
Energy to pay the registration fees of employees participating in
competitive fitness promotion, team activities, and sporting events.
GAO concluded that these activities were not an essential part of a
statutorily authorized physical fitness program and therefore were
"generally personal, rather than official," with costs to be "borne by
the participating employees, not by the taxpayers." Id. at 170. See
also B-247563.3, Apr. 5, 1996 (Department of Veterans Affairs
appropriations not available for registration fees for athletic contest
"virtually indistinguishable" from contest in 73 Comp. Gen. 169).
Similarly, in B-262008, Oct. 23, 1996, GAO found that the Army Corps of
Engineers could not use appropriated funds to pay an entrance fee for
Corps employees in a "Corporate Cup Run" sponsored by the American Lung
Association. The fact that the employees were to participate as an
agency-sponsored team, rather than as individuals, did not change the
result. GAO cited the "absence of any justification to show that
participation of employees in the run--a competitive athletic event--in
any way supports the mission of the Corps."
Of course, the particular circumstances may warrant an exception. Thus,
appropriations for "student athletic and related activities" at the
Federal Law Enforcement Training Center may be used to provide limited
off-site busing to shopping centers, recreational facilities, and
places of worship in the nearest town several miles away. The students-
-government employees in travel status--must live at the Center for
several weeks, most do not have cars, and there is no public
transportation to the nearest town. B-214638, Aug. 13, 1984.
One area in which recreational and welfare expenditures have been
permitted with some regularity is where employees are located at a
remote site, where such facilities would not otherwise be available.
Expenditures were permitted in the following cases:
* Purchase of ping pong paddles and balls by the Corps of Engineers to
equip a recreation room on a seagoing dredge. B-61076, Feb. 25, 1947.
* Transportation of musical instruments, billiard and ping pong tables,
and baseball equipment, obtained from surplus military stock, to
isolated Weather Bureau installations in the Arctic. B-144237, Nov. 7,
1960.
* Purchase of playground equipment for children of employees living in
a government-owned housing facility in connection with the operation of
a dam on the Rio Grande River in an isolated area. 41 Comp. Gen. 264
(1961). The agency in that case had statutory authority to provide
recreational facilities for employees and the question was whether that
authority extended to employees families as well. It did.
* Use of an appropriation of the Federal Aviation Administration (FAA)
for construction of "quarters and related accommodations" to provide
tennis courts and playground facilities in an isolated sector of the
Panama Canal Zone. B-173009, July 20, 1971.
* Purchase of a television set and antenna for use by the crew on a
ship owned by the Environmental Protection Agency. The ship was used to
gather and evaluate water samples from the Great Lakes, and cruises
lasted for up to 15 days. The alternative would have been to extend the
length of the cruises to permit more frequent docking. 54 Comp.
Gen. 1075 (1975).
* Provision of television services for National Weather Service
employees on a remote island in the Bering Sea. The agency was
authorized to furnish recreational facilities by the Fur Seal Act of
1966, but the statute also required that the employees be charged a
reasonable fee. B-186798, Sept. 16, 1976.
* Use of government vehicles to transport FAA employees on temporary
duty at a remote duty location permissible under applicable Federal
Travel Regulations, subject to "reasonable limitations and safeguards."
B-254296, Nov. 23, 1993. The employees were on temporary duty
assignments at a remote Alaskan station.
In recent decades, the role of certain "employee welfare" activities in
employee morale and productivity has been increasingly recognized. See
71 Comp. Gen. 527, 529 (1992) (GAO has "accepted the retention of
employees and promotion of employee morale, generally, as a
justification for paying some expenses that, in many circumstances,
would be viewed as personal in nature..."). In some instances, the
recognition has been accompanied by statutory authority. For example,
the Defense Department has specific authority to use appropriated funds
for welfare and recreation. This authority originated in general
provisions contained in annual appropriation acts, was made permanent
in 1983,[Footnote 283] and is now codified at 10 U.S.C. § 2241. See
also 10 U.S.C. § 2494 (Department of Defense funds available for
morale, welfare, and recreation programs under certain circumstances
"may be treated as nonappropriated funds and expended in accordance
with laws applicable to the expenditure of nonappropriated
funds.").[Footnote 284] On the other hand, there are limits to
congressional support for recreational funding. Congress has found it
necessary to enact a specific statutory prohibition on the use of
Defense appropriated funds to "equip, operate, or maintain" a golf
course that is neither outside the United States nor at a "remote and
isolated location" within the United States. 10 U.S.C. § 2246. (Note
that this statute does not restrict the use of nonappropriated funds
for golf courses.) GAO interpreted section 2246 in B-277905, Mar. 17,
1998, involving installation of irrigation pipelines for a golf course
at Fort Sam Houston, Texas. GAO concluded that the explicit statutory
prohibition of 10 U.S.C. § 2246 was not overcome by other statutes
encouraging agency cooperation with state and local water conservation
efforts, finding that "a statute that is clear and unambiguous on its
face should be construed to mean what it says."
The civilian agencies generally do not have statutory authority
comparable to that of the Department of Defense, and decisions must be
made, for the most part, under 31 U.S.C. § 1301(a) and the necessary
expense doctrine. Even here, however, the rather strict rule of the
early decisions has undergone some liberalization, even in nonremote
locations. While the general rule expressed in 18 Comp. Gen. 147 and
27 Comp. Gen. 679 remains as a bar to indiscriminate expenditures, it
may now be said that an agency has reasonable discretion to spend its
money for employee welfare purposes if the expenditure can be said to
enhance employee morale and to be a significant factor in hiring and
retention. The test remains one of necessity, but it is evaluated in
terms of the agency's legitimate interest in the welfare, morale, and
productivity of its employees. Determinations must be made on a case-
by-case basis.
A good illustration of this evolution is the treatment of programmed
"incentive music" (sometimes called "Muzak"[Footnote 285] or, by its
detractors, "elevator music"). When GAO first visited the issue, it
concluded that an agency could not, within its legitimate range of
discretion, find this to be a necessary expense. B-86148, Nov. 8, 1950.
The issue arose again 20 years later when the Bureau of the Public
Debt, Treasury Department, asked if it could use its Salaries and
Expenses appropriation to provide programmed incentive music for its
employees. The system had been installed by a previous tenant and the
speakers were located in central work areas rather than in private
offices. The Bureau pointed out that private concerns had found that
such music enhanced employee morale by "creating a pleasantly
stimulating and efficient atmosphere during the workday" and helped to
minimize employee boredom. GAO had rejected similar arguments in the
1950 decision. This time, GAO concurred, accepting the Bureau's
justification that the expenditure would improve employee morale and
increase productivity. 51 Comp. Gen. 797 (1972), overruling B-86148. In
terms of the legal principle involved, whether GAO agreed with the
justification or not was irrelevant; all that matters is that the
determination is now viewed as a proper exercise of agency discretion.
Another example of a permissible expenditure in this area is the
subsidization of employee cafeterias, previously discussed. Still
another is parking facilities, discussed later in the section on
personal expenses. Two items covered in the section on health and
medical care--physical fitness activities and smoking cessation
programs--further illustrate evolving trends in the area of employee
welfare and morale. A final example is our next topic, child care.
(2) Child care[Footnote 286]
Like the cultural awareness programs previously discussed, child care
is another example of evolution in the law to accommodate a changing
society. Prior to 1985, there was no express statutory authority for
using appropriated funds to support child care services in federal
buildings for federal employees.
Times have changed and the federal government, as an employer, is not
immune from the changes. The number of single-parent families in
America has increased dramatically, as has the number of two-parent
families in which both parents work, out of either economic necessity,
personal choice, or some combination of factors. The inevitable result
is a heightened awareness of the need for child care.[Footnote 287]
GAO's first written discussion of the authority to spend appropriated
funds to provide child care services for government employees, B-39772-
O.M., July 30, 1976, was not a decision to another agency but an
internal memorandum from the General Counsel analyzing GAO's own
authority. GAO was considering establishing a day care center in its
own building, to be funded and operated by employees. GAO's
administrative officials wanted to know what kinds of support the
agency could or could not provide without statutory authority, which,
at the time, did not exist.
The General Counsel analyzed the questions from the perspective of
purpose availability, and concluded that the Comptroller General could
allocate space in the GAO building for a day care center, could use
GAO's appropriations to renovate the space and buy equipment, and could
assume part or all of the rent payable to the General Services
Administration for the space.
However, before any of these things could be done, the Comptroller
General, as the agency head, would first have to determine that the
expenditure would materially contribute to recruiting or retaining
staff or maintaining employee morale and hence efficiency and
productivity. Because of the lack of statutory authority, the
memorandum cautioned that GAO should disclose any substantial capital
expenditures for renovation in its budget presentation and to the
Appropriations Committees if it chose to take such action. See also
B-205342, Dec. 8, 1981 (nondecision letter), reiterating the general
conclusion of the 1976 memorandum. As it turned out, GAO did not
establish a day care center until after the enactment of 40 U.S.C.
§ 590 (formerly 40 U.S.C. § 490b), discussed below.
Prior to the enactment of more general legislation in 1985, some
agencies had authority to provide day care facilities under agency-
specific legislation. For example, legislation authorized the then
Department of Health, Education, and Welfare to donate space for day
care centers.[Footnote 288] In 57 Comp. Gen. 357 (1978), the
Comptroller General held that the use of the term "donate" gave the
agency discretion to provide the space without charge, or to lease
space in other buildings for that purpose if suitable space was not
available in buildings the agency already occupied. Also, as we have
seen, the Defense Department has specific authority to use operation
and maintenance appropriations for welfare expenditures.
In 1985, Congress enacted former 40 U.S.C. § 490b, now recodified at
40 U.S.C. § 590, which authorizes, but does not require, federal
agencies to provide space and services for child care centers. The term
"services" is defined as including "lighting, heating, cooling,
electricity, office furniture, office machines and equipment, classroom
furnishings and equipment, kitchen appliances, playground equipment,
telephone service (including installation of lines and equipment . .
.), and security systems …." Id. § 590(c)(1).[Footnote 289] The space
and services may be provided with or without charge.
The Comptroller General's first construction of this statute came in
response to an arbitration panel award that included a union day care
proposal for the children of civilian employees. Council 214, American
Federation of Government Employees, AFL-CIO, 15 F.L.R.A. 151 (1984),
aff'd sub nom. Department of Air Force v. Federal Labor Relations
Authority, 775 F.2d 727 (6th Cir. 1985). The Federal Labor Relations
Authority directed the Air Force to incorporate the award in its
collective bargaining agreement,[Footnote 290] and the Air Force in
turn asked GAO whether, under former 40 U.S.C. § 490b, it had authority
to use its appropriations to implement the award. The resulting
decision, 67 Comp. Gen. 443 (1988), reached the following conclusions:
* The Air Force can, either with or without charge, allot space in
government buildings under its control for child care facilities for
civilian employees, and can provide the services outlined in the
statute.
* The Air Force can use its appropriations to renovate, modify, or
expand the space allotted to make it suitable for use as a child care
facility.
* The Air Force can expand existing child care facilities for military
personnel to accommodate the children of civilian employees.
The decision also concluded that any reimbursements received from a
child care center (which, as noted, are optional) must be deposited in
the Treasury as miscellaneous receipts.
In 70 Comp. Gen. 210 (1991), GAO concluded that former 40 U.S.C. § 490b
did not preclude the General Services Administration from leasing space
or constructing buildings for child care facilities if there is
insufficient space available in existing federal buildings. The
authority in section 490b to use existing space was not exclusive. (The
1988 decision to the Air Force, 67 Comp. Gen. 443, had expressed a
contrary view and was overruled to that extent.) In 73 Comp. Gen. 336
(1994), GAO approved the use of appropriated funds by the Forest
Service to pay a consultant for services rendered to a Forest Service-
supported child care center on Forest Service premises. Citing former
section 490b and a recurring appropriation act provision that permitted
payment of expenses (predecessor to 40 U.S.C. § 590(d)(2), discussed
below), GAO concluded that Forest Service funds were available to pay
"start-up/support costs" for the day care facility, including
consultant services.
In 1998, Congress made permanent a recurring appropriation act
provision authorizing reimbursement of "travel, transportation, and
subsistence expenses incurred for training classes, conferences, or
other meetings" in connection with the provision of child care
services. Pub. L. No. 105-277, div. A, § 101(h) (title VI, § 603),
112 Stat. 2681-480, 2681-513 (Oct. 21, 1998). This statute is now
codified at 40 U.S.C. § 590(d)(2).
Similarly, in 2001, Congress made permanent another recurring provision
that made appropriated funds available "to improve the affordability of
child care for lower income Federal employees." Pub. L. No. 107-67,
§ 630, 115 Stat. 514, 552-53 (Nov. 12, 2001). This statute is now
codified at 40 U.S.C. § 590(g). Office of Personnel Management
regulations governing agency use of appropriated funds for child care
costs for lower income employees are at 5 C.F.R. pt. 792, subpt. B, 68
Fed. Reg. 14127, 14129 (Mar. 24, 2003) (Interim Rule).
In late 1989, Congress enacted new child care legislation for the armed
forces, including the authority to use fees collected from parents.
Military Child Care Act of 1989, title XV of the National Defense
Authorization Act for Fiscal Years 1990 and 1991, Pub. L. No. 101-189,
103 Stat. 1352, 1589 (Nov. 29, 1989), formerly codified at 10 U.S.C.
§ 103 note. This provision was revised and recodified by Pub. L.
No. 104-106, § 568, 110 Stat. 186, 329-336 (Feb. 10, 1996), which added
new legislation governing Department of Defense child care programs.
10 U.S.C. § 1791 et seq.[Footnote 291] Section 1791 expresses the
policy of Congress that:
"[T]he amount of appropriated funds available during a fiscal year for
operating expenses for military child development centers and programs
shall be not less than the amount of child care fee receipts that are
estimated to be received by the Department of Defense during that
fiscal year."[Footnote 292]
In 71 Comp. Gen. 527 (1992), GAO addressed the analogous issue of the
use of appropriated funds to provide "eldercare" facilities for adult
relatives of federal employees, as well as related counseling services.
In response to a request for a decision from the Internal Revenue
Service (IRS), GAO concluded that eldercare was not a necessary expense
for which IRS's appropriations were available. GAO pointed out that
Congress had provided specific authority for child care in former
40 U.S.C. § 490b and, since eldercare was not a "typical benefit
offered the American workforce," similar benefits were available to
federal workers only pursuant to specific legislation. It was "for the
Congress to decide whether agency appropriations [could] be used to
support eldercare centers." IRS's appropriations, therefore, were not
available for costs associated with eldercare facilities. IRS's
appropriated funds were available, however, "to implement a resource
and referral service on eldercare issues" under the authority of
5 U.S.C. § 7901, which authorizes "preventive programs related to
health." Id. at 530.
f. Reception and Representation Funds:
Implicit in all of our discussion of entertainment is the point that
otherwise improper expenditures may be authorized under specific
statutory authority. Congress has long recognized that many agencies
have a legitimate need for items that otherwise would be prohibited as
entertainment, and has responded by making limited amounts available
for official entertainment to those agencies that can justify the need.
Entertainment appropriations originated from the need to permit
officials of agencies whose activities involve substantial contact with
foreign officials to reciprocate for courtesies extended to them by
foreign officials. For example, the State Department would find it
difficult to accomplish its mission if it could not spend any money
entertaining foreign officials. In fact, some of the early
entertainment appropriations were limited to entertaining non-U.S.
citizens, and some could only be spent overseas. An example of the
latter type is discussed in B-46169, Dec. 21, 1944. Restrictions of
this nature have become increasingly uncommon.
Entertainment appropriations may take various forms. Some agencies have
their own well-established structures that may include permanent
legislation. For example, the State Department has permanent
authorization to pay for official entertainment. 22 U.S.C. § 4085. See
also 22 U.S.C. § 2671, which authorizes expenditures for "unforeseen
emergencies" that may include official entertainment in certain
contexts. The authority of 22 U.S.C. § 4085 is implemented by means of
annual appropriations under the heading "Representation
Allowances."[Footnote 293] State Department representation allowances
have been found available for rental of formal evening wear by embassy
officials accompanying the Ambassador to the United Kingdom in
presenting his credentials to the Queen, 68 Comp. Gen. 638 (1989);
hiring extra waiters and busboys to serve at official functions at
foreign posts, 64 Comp. Gen. 138 (1984); meals for certain embassy
officials at Rotary Club meetings in Tanzania, if approved by the local
Chief of Mission, B-232165, June 14, 1989; and reimbursement of
Ambassador and Deputy Chief of Mission for cost of renting formal
morning dress required by protocol for official occasions, B-256936,
June 22, 1995. A fact sheet reviewing expenditures at selected overseas
posts is U.S. General Accounting Office, Representational Funds: State
Department Expenditures at Selected Posts, GAO/NSIAD-87-73FS
(Washington, D.C.: Feb. 3, 1987).
The Defense Department also has its own structure. Under 10 U.S.C.
§ 127, the Secretary of Defense, or of a military department, within
the limitations of appropriations made for that purpose, may use funds
to "provide for any emergency or extraordinary expense which cannot be
anticipated or classified." See Official Representation Funds, DOD
Directive 7250.13 (Sept. 10, 2002). When so provided in an
appropriation, the official may spend the funds "for any purpose he
determines to be proper." 10 U.S.C. § 127(a). See 72 Comp. Gen. 279
(1993) (certifying officer processing voucher under 10 U.S.C. § 127 is
responsible only for errors made in his own processing of the voucher,
and not for the Defense Attache's prior certification as to the
propriety of the payment). Annual Operation and Maintenance
appropriations include amounts for "emergencies and extraordinary
expenses."[Footnote 294] Although the title is not particularly
revealing, it has long been understood that official representation
expenses are charged to this account. See U.S. General Accounting
Office, Internal Controls: Defenses Use of Emergency and Extraordinary
Funds, GAO/AFMD-86-44 (Washington, D.C.: June 4, 1986); DOD Use of
Official Representation Funds to Entertain Foreign Dignitaries, GAO/ID-
83-7 (Washington, D.C.: Dec. 29, 1982); 69 Comp. Gen. 242 (1990)
(reception for newly assigned commander at U.S. Army School of the
Americas).
With these two major exceptions, most agencies follow a similar pattern
and receive their entertainment funds, if they receive them at all,
simply as part of their annual appropriations. The appropriation may
specify that it will be available for "entertainment." See, e.g.,
B-20085, Sept. 10, 1941. Far more commonly, however, the term used in
the appropriation is "official reception and representation (R&R)."
This has come to be the technical "appropriations language" for
entertainment.
While we cannot guarantee that one does not exist somewhere, we have
not found a congressional definition of the term "official R&R." Absent
a definition, we found it instructive to review agency justifications
to see what sort of authority Congress thought it was conferring. The
term seems to have originated--or at least became more widespread--in
the early 1960s. We identified the first appearance of the term for a
number of agencies, and selected two, the Departments of Agriculture
and Interior, as illustrative. Both agencies first received "official
R&R" funds in their appropriations for fiscal year 1963.[Footnote 295]
The Agriculture Department explained that the Secretary frequently
finds it necessary to provide a luncheon or similar courtesy to various
individuals and small groups in the conduct of official business, to
promote effective working relationships with farm, trade, industry, and
other groups that are directly related to accomplishing the Agriculture
Departments work. Such official courtesies benefit the government, and
the Secretary and Under Secretary of Agriculture should not be required
to bear these expenses from their own personal funds as was then the
case. In conclusion, the justification observed that "[i]t is unseemly
that the hospitality should always be left to the visitor." [Footnote
296] Similarly, the Interior Department explained that its request for
"not to exceed $2,000 for official reception and representation
expenses" was intended to provide authority to use appropriated funds
for expenses incurred by the Interior Secretary "in fulfilling the
courtesy and social responsibilities directly associated with his
official duties," in situations much like those the Agriculture
Department had noted. Such official expenses, the justification
asserted, "rightly should be borne by the Government rather than be
financed from personal funds."[Footnote 297]
One point that is clear from these excerpts is that an R&R
appropriation, whatever its origins may have been, is not limited to
the entertainment of foreign nationals, unless of course the
appropriation language so provides. The experience of the former
Department of Health, Education, and Welfare (HEW) provides further
evidence that, absent some indication to the contrary, Congress does
not intend that an "official R&R" appropriation be limited to
entertaining foreign nationals. The Secretary of HEW first received an
entertainment appropriation in HEW's fiscal year 1960 appropriation
act, but it was limited to certain foreign visitors.[Footnote 298] The
language was changed to "official reception and representation" in
HEW's fiscal year 1964 appropriation.[Footnote 299] The conference
report on the 1964 appropriation explained that the change was intended
to expand the scope of the appropriation to include U.S. citizens as
well as foreign visitors.[Footnote 300]
It is clear that R&R appropriations have traditionally been sought,
justified, and granted in the context of an agency's need to interact
with various nongovernment individuals or organizations. Precisely who
these individuals or organizations might be will vary with the agency.
Of course, the fact that the thrust of the appropriation is the
entertainment of nongovernment persons does not mean that government
persons are precluded. For example, it has long been recognized that
persons from other agencies (and by necessary implication members of
the host agency as well) may be included incident to an authorized
entertainment function for nongovernment persons. E.g., B-84184,
Mar. 17, 1949.
An agency has wide discretion in the use of its R&R appropriation.
61 Comp. Gen. 260, 266 (1982); B-212634, Oct. 12, 1983. As a general
proposition, "official agency events, typically characterized by a
mixed ceremonial, social and/or business purpose, and hosted in a
formal sense by high level agency officials" and relating to a function
of the agency will not be questioned. B-223678, June 5, 1989.
Accordingly, R&R funds have been found available for the following:
* Holiday party for government officials and their spouses or guests,
held by Secretary of the Interior at the Custis-Lee Mansion. 61 Comp.
Gen. 260 (1982), aff'd upon reconsideration, B-206173(2), Aug. 3, 1982.
* Party for various government officials and their families or guests
held on July 4 by Secretary of Interior to celebrate Independence Day.
B-212634, Oct. 12, 1983.
* Luncheon incident to "graduation ceremony" for Latin American
students being trained by the Bureau of Labor Statistics. B-84184,
Mar. 17, 1949.
* Entertainment of British war workers visiting various American cities
as guests of the British Ministry of Information. B-46169, Aug. 18,
1945.[Footnote 301]
* Cost of food and entertainment provided by General Services
Administration at grand opening of a government cafeteria "to the
extent that the grand opening otherwise qualifies as an official
reception." B-250450, May 3, 1993.
* Cost of meals at "representational" interagency briefings for
executive branch employees personally hosted by Director of the Trade
and Development Program of the United States Agency for International
Development. 72 Comp. Gen. 310 (1993).
In a case previously noted in our coverage of award ceremonies, the
Veterans Administration could not use its general appropriations to
provide refreshments at an awards ceremony for volunteers, but it could
use its R&R appropriation. 43 Comp. Gen. 305 (1963). An agency may also
use its R&R funds, although it is not required to, for refreshments at
award ceremonies under the Government Employees' Incentive Awards Act,
5 U.S.C. §§ 4501-4506. 65 Comp. Gen. 738, 741 n.5 (1986).
A case relied on in B-223678 was B-122515, Feb. 23, 1955, in which the
Comptroller General held that a "representation allowance" similar to
the State Department appropriation discussed above could be used to
purchase printed invitation cards and envelopes in connection with an
official function at an overseas mission. In 42 Comp. Gen. 19 (1962)
and in B-131611, May 24, 1957, however, a similar appropriation to the
Foreign Agricultural Service was not available for printed invitations
because an executive order provided that the Foreign Agricultural
Service was to be governed by State Department regulations, and the
applicable State Department regulations prohibited the use of
representation allowances for printing cards.
Notwithstanding the discretion it confers, an R&R appropriation is not
intended to permit government officials to feed themselves and one
another incident to the normal day-to-day performance of their jobs.
Thus, GAO has held that R&R funds may not be used to provide food or
refreshments at intra-government work sessions or routine business
meetings, even if held outside of normal working hours. B-223678, June
5, 1989. See also B-250884, Mar. 18, 1993 (the cost of meals provided
to government employees during interagency working meetings improperly
charged to R&R funds).
A final but significant limitation on the use of representation funds
stems from the appropriation language itself--R&R appropriations are
made for the expenses of official reception and representation
activities. There must be some connection with official agency
business. Thus, it would be improper to use representation funds for a
social function hosted and attended by private parties, such as a
breakfast for Cabinet wives. 61 Comp. Gen. 260 (1982), aff'd upon
reconsideration, B-206173(2), Aug. 3, 1982. Similarly, R&R funds may
not be used for entertainment incident to an activity which is itself
unauthorized. 68 Comp. Gen. 226 (1989) (entertainment incident to trade
show in Soviet Union which agency had no authority to sponsor). The
impropriety of the underlying activity necessarily "taints" the
entertainment expenditures.
6. Fines and Penalties:
As a general proposition, no authority exists for the federal
government to use appropriated funds to pay fines or penalties incurred
as a result of its activities or those of its employees.
In the most common situation, a fine is assessed against an individual
employee for some action he or she took in the course of performing
official duties. The cases frequently involve traffic violations. The
rule is that appropriated funds are not available to pay the fine or
reimburse the employee. The theory is that, while an employee may have
certain discretion as to precisely how to perform a given task, the
range of permissible discretion does not include violating the law. If
the employee chooses to violate the law, he is acting beyond the scope
of his authority and must bear any resulting liability as his personal
responsibility.
The earliest case stating the rule appears to be B-58378, July 31,
1946. Holding that a government employee ticketed for parking a
government vehicle in a "no parking" zone could not be reimbursed, the
Comptroller General stated:
"[T]here is not known to this office any authority to use appropriated
moneys for payment of the amount of a fine imposed by a court on a
Government employee for an offense committed by him while in the
performance of, but not as a part of, his official duty. Such fine is
imposed on the employee personally and payment thereof is his personal
responsibility."
The rule applies to forfeitures of collateral as well as fines.
B-102829, May 8, 1951.
The first published decision stating the rule, and the case most often
cited, is 31 Comp. Gen. 246 (1952). A government employee double-parked
a government vehicle to make a delivery. While the employee was inside
the building, the inner vehicle drove away, leaving the government
vehicle unattended in the middle of the street, whereupon it was
ticketed. Citing B-58378 and B-102829, the Comptroller General held
that the employee could not be reimbursed from appropriated funds for
the amount of the fine.[Footnote 302]
GAO has applied the rule even in a case where the employee could
establish that the speedometer on the government vehicle was
inaccurate. B-173660, Nov. 18, 1971. While at first glance this might
seem like a harsh and unfair result, it in fact was not, at least in
that particular case. In that case, the employee was ticketed for
driving at 85 m.p.h. The speedometer at the time read a mere 73 m.p.h.
Conceding the established inaccuracy of the speedometer, the employee
nevertheless, by observing other vehicles on the road and applying
common sense, should have suspected that he was driving at an excessive
rate of speed.
Further, in a case involving a possessory interest tax, a tax on the
rental interest in government owned property, B-251228, July 20, 1993,
the Forest Service was not permitted to pay penalties and interest
assessed against an employee for a delay in payment of the tax due
while the employee occupied government-owned quarters. The penalties
and interest were considered to be personal liabilities of the employee
and not the federal government.
The very statement of the rule as quoted above from B-58378 suggests
that there may be situations in which reimbursement is permissible. The
exception occurred in 44 Comp. Gen. 312 (1964). In connection with the
case of Sam Giancana v. J. Edgar Hoover, 322 F.2d 789 (7th Cir. 1963),
an agent of the Federal Bureau of Investigation (FBI) was ordered by
the court to answer certain questions. Based on Justice Department
regulations and specific instructions from the Attorney General, the
FBI agent refused to testify and was fined for contempt of court. The
contempt order was upheld in Sam Giancana v. Marlin W. Johnson,
335 F.2d 372 (7th Cir. 1964). Finding that the employee had incurred
the fine by reason of his compliance with Department regulations and
instructions and that he was without fault or negligence, GAO held that
the FBI could reimburse the agent from its Salaries and Expenses
appropriation under the "necessary expense" doctrine.[Footnote 303]
Subsequently, some people thought that 31 Comp. Gen. 246 and 44 Comp.
Gen. 312 appeared inconsistent, and GAO has discussed the two lines of
reasoning in several later decisions. The distinction is this: in
31 Comp. Gen. 246, the offense was committed while performing official
duties but it was not a necessary part of those duties. The employee
could have made the delivery without parking illegally. The fine in
44 Comp. Gen. 312 was "necessarily incurred" in the sense that the
employee was following his agency's regulations and the instructions of
his agency head. Thus, the actions that gave rise to the contempt fine
could be viewed as a necessary part of the employee's official duties,
although certainly not in the sense that it would have been physically
impossible for the employee to have done anything else.
Applying these concepts, the Comptroller General held in B-205438,
Nov. 12, 1981, that the Federal Mediation and Conciliation Service
could reimburse a former employee for a contempt fine levied against
him for refusal to testify, pursuant to agency regulations and
instructions, on matters discussed at a mediation session at which he
was present while employed by the agency.
Reimbursement was denied, however, in B-186680, Oct. 4, 1976. There, a
Justice Department attorney was fined for contempt for missing a court-
imposed deadline. The attorney had been working under a number of tight
deadlines and argued that it was impossible to meet them all. However,
he had not been acting in compliance with regulations or instructions,
had exercised his own judgment in missing the deadline in question, and
the record did not support a determination that he was without fault or
negligence in the matter. Therefore, the case was governed by 31 Comp.
Gen. 246 rather than 44 Comp. Gen. 312.
Reading all of these cases together, it seems fair to state that the
mere fact of compliance with instructions will not by itself be
sufficient to authorize reimbursement. There must be some legitimate
government interest to protect. Thus, it would not be sufficient to
instruct an employee to refuse to testify where the purpose is to avoid
embarrassment or to avoid the disclosure of government wrongdoing.
Similarly, it would follow that the prohibition against reimbursement
of traffic fines could not be circumvented merely because some
supervisor instructed a subordinate to park illegally.
The two lines of cases were discussed in the specific context of
traffic violations in B-107081, Jan. 22, 1980, a response to a Member
of Congress. Summarizing the rules discussed above, the Comptroller
General pointed out that they applied equally to law enforcement
personnel. However, the Comptroller General alluded to one situation in
which reimbursement might be authorized--a parking fine incurred by a
law enforcement official as a necessary part of an official
investigation. An example might be parking an unmarked undercover
vehicle during a surveillance where there was no other feasible
alternative. Compare 38 Comp. Gen. 258 (1958) concerning the
reimbursement of parking meter fees.
Another situation in which a fine was held reimbursable is illustrated
in 57 Comp. Gen. 476 (1978). Forest Service employees had loaded logs
on a truck to transport them from Virginia to West Virginia. In
Virginia, the driver was fined for improper loading (overweight on rear
axle). The employees had loaded the logs in a forest and there was no
way for them to have checked the weight. The fine did not result from
any negligent or intentional act on the part of the driver. Under these
circumstances, the Comptroller General found that the fine was not for
any personal wrongdoing by the employee but was, in effect, a citation
against the United States. Therefore, Forest Service appropriations
were available to reimburse the fine. This situation is distinguishable
from the case of an overweight fine levied against a commercial
carrier, which is not reimbursable. 35 Comp. Gen. 317 (1955).
Similar reasoning applies with respect to penalties in the form of
liquidated damages assessed against a government employee who fails to
either use or cancel airline reservations in accordance with the
carrier's applicable tariff. If the charges are unavoidable in the
conduct of official travel or are incurred for reasons beyond the
traveler's control and acceptable to the agency concerned, they may be
reimbursed from the agency's travel appropriations. However, if the
charges are not unavoidable in the performance of official business nor
incurred for reasons beyond the employee's control and acceptable to
the agency, they are personal to the employee and may not be
reimbursed. 41 Comp. Gen. 806 (1962).
In 70 Comp. Gen. 153 (1990), GAO recognized that the government may
reimburse an employee for the payment of a fine or penalty where the
government has agreed to do so by contract. In this case, the Selective
Service System had leased vehicles under a contract with a commercial
vendor in the District of Columbia. The government had agreed to "hold
[the] lessor harmless" for any fine or penalty imposed on the vehicles.
One of the vehicles received a ticket for failure to have a current
safety inspection sticker. Although the lessor was arguably responsible
for the ticket, the government employee had paid the ticket and was
seeking reimbursement. GAO therein stated that:
"[T]he government's immunity from state or municipal fines is
inapplicable when the legal incidence of the fine is not imposed
directly on the government but, instead, is imposed on the lessor, and
the fine is merely a measure of damages for the government's failure to
comply with the terms of its agreement and against which the government
has agreed to indemnify the lessor."
The case was returned to the Selective Service System to make a
determination as to whether, under D.C. law, the lessor was liable for
the ticket. For further discussion of the concept of "legal incidence"
and the government's immunity, see section C.7.c in this chapter.
The cases discussed so far have all involved fines levied against
individual employees. Questions may also arise over the liability of a
federal agency for a fine or civil penalty. The question is essentially
one of sovereign immunity. In order for a federal agency to be liable
for a fine or penalty, there must be an express statutory waiver of
sovereign immunity. E.g., United States Department of Energy v. Ohio,
503 U.S. 607 (1992).
For example, the Clean Air Act provides for the administrative
imposition of civil penalties for violation of state or local air
quality standards. The statute directs the federal government to comply
with these standards and makes government agencies liable for the civil
penalties to the same extent as nongovernmental entities. In view of
this express waiver of sovereign immunity, the Comptroller General held
that agency operating appropriations are available, under the
"necessary expense" theory, to pay administratively imposed civil
penalties under the Clean Air Act. B-191747, June 6, 1978. If the
penalty is imposed by court action, it may be paid from the permanent
judgment appropriation, 31 U.S.C. § 1304. However, if there is no
legitimate dispute over the basis for liability or the amount of the
penalty, an agency may not avoid use of its own appropriations by the
simple device of refusing to pay and forcing the state or local
authority to sue. 58 Comp. Gen. 667 (1979).
Absent the requisite statutory waiver of sovereign immunity, the
agency's appropriations would not be available to pay a fine or
penalty. For example, in 65 Comp. Gen. 61 (1985), appropriated funds
were not available to pay a "fee," which was clearly in the nature of a
penalty, imposed by a city of Boston ordinance for equipment
malfunctions resulting in the transmission of false fire alarms. See
also B-227388, Sept. 3, 1987 (no authority to pay false alarm fines
imposed by municipality).
What about a penalty assessed by one federal agency against another? In
B-161457, May 9, 1978, the Comptroller General held that, absent a
statute specifically so providing, an agency's appropriations are not
available to pay penalties assessed by the Internal Revenue Service for
late filing or underpayment of employment taxes. The reason is that
this would constitute a use of the funds for a purpose other than that
for which they were appropriated. Also, in B-260532, May 9, 1995, the
Comptroller General held that there was no authority for the Government
Printing Office to directly charge other federal agencies interest for
payments that the Government Printing Office considered to be "late."
7. Firefighting and Other Municipal Services:
a. Firefighting Services: Availability of Appropriations:
A frequent subject of inquiry has been the authority of the federal
government to voluntarily contract, or to pay involuntary assessments,
for firefighting services rendered by local governments to federal
property and buildings. The general rule is: If the political
subdivision rendering the service is required by law to extinguish
fires within its boundaries, then the United States cannot make
additional payments in any form to underwrite that legal
responsibility. The earliest published decision containing a detailed
discussion of the rule and its rationale is 24 Comp. Gen. 599 (1945).
The rule proceeds from the premise that firefighting is a governmental
rather than a proprietary or business function. Where a local
firefighting organization (city or county fire department, fire
protection district, etc.) is required by local law to cover a
particular territorial area and to respond to fires without direct
charge to the property owners, this duty extends to federal as well as
nonfederal property within that territorial area. A charge to
appropriated funds under these circumstances would amount to a tax or a
payment in lieu of taxes and would, absent specific statutory
authority, violate the government's constitutional immunity from
taxation. B-243004, Sept. 5, 1991. It follows that the government may
not contract for firefighting services that it would be legally
entitled to receive in any event,[Footnote 304] nor may it reimburse a
political subdivision for the additional costs incurred in fighting a
federal fire.[Footnote 305] See 53 Comp. Gen. 410 (1973) and cases
cited therein. In addition to the taxation problem, use of appropriated
funds for this purpose would violate the purpose statute at 31 U.S.C.
§ 1301(a). 32 Comp. Gen. 91 (1952).
Limited reimbursement authority now exists by virtue of the Federal
Fire Prevention and Control Act of 1974, codified at 15 U.S.C. § 2210,
discussed later in this section. The present discussion concerns the
availability of appropriations apart from that limited authority.
In applying the rule, it is irrelevant that a city cannot regulate
building and fire codes for structures on a military establishment
within the city limits. 24 Comp. Gen. 599 (1945). Also, the rule
applies equally when the fire protection is provided by a volunteer
fire department performing the mandatory governmental function for a
political subdivision. The fact that the firefighters are unpaid does
not affect the local government unit's legal duty to render the
service. 26 Comp. Gen. 382 (1946); B-47142, Apr. 3, 1970.
In 53 Comp. Gen. 410 (1973), GAO denied a claim by the St. Louis
Community Fire Protection District (CFPD) and several surrounding fire
districts and departments for equipment losses and supplemental payroll
expenses incurred in fighting a massive fire at the St. Louis Federal
Records Center. The St. Louis CFPD could not be reimbursed because the
Records Center was within its territorial responsibility. The
surrounding fire districts were also under a duty to respond to the
alarm because they had entered into mutual aid agreements with the St.
Louis CFPD that had the effect of extending their own areas of
responsibility.
In some rural areas, firefighting services may be unavailable or very
limited. In such areas, the government may have to provide its own fire
protection. The Comptroller General had stated, in 32 Comp. Gen. 91
(1952), that an agency could not enter into "mutual aid agreements" to
extend that service to the general community beyond the boundaries of
government property, even where the local inhabitants were
predominantly government employees and where the additional protection
could be accomplished without additional expense. Later, Congress
enacted legislation specifically authorizing reciprocal agreements for
mutual aid. 42 U.S.C. §§ 1856-1856d. This statutory authority is
limited to mutual aid agreements and does not authorize an agency to
enter into an agreement to reimburse a political subdivision for
services unilaterally provided to the government. 35 Comp. Gen. 311,
313 (1955); B-243004, Sept. 5, 1991; B-126228, Jan. 6, 1956; B-40387-
O.M., June 24, 1966. An agency participating in a mutual aid agreement
under this authority may contribute, on a basis comparable to other
participants, to a common fund to be used for training and equipment
incident to responding to fires and related emergencies such as
hazardous waste accidents. B-222821, Apr. 6, 1987.
If the government may not contract for or reimburse fire protection
services which a local entity is legally required to provide, it
follows that the government may not pay a "service charge" for fire
protection provided by a municipality with respect to federal property
within the city limits, at least where the assessment for fire
protection is normally included in the city's property tax. In 49 Comp.
Gen. 284 (1969), the city of New London, Connecticut, sought to charge
the government on a direct cost-related basis for fire protection
afforded the United States Coast Guard Academy. Fire protection was
included in the city's real estate tax and the service charge was to
apply only to tax-exempt property. In view of the city's duty to
provide fire protection to the Academy, the Comptroller General found
the proposed charge to be an unconstitutional tax on the government.
See also B-160936, Mar. 13, 1967. However, a flat-fee service charge
levied by a utility district for extinguishing a fire in a postal
vehicle was held permissible where the utility district was under no
legal obligation to provide the service. B-123294, May 2, 1955.
In B-168024, Dec. 13, 1973, a city was required to provide fire
protection to all property within its boundaries, but was given the
option under state law of financing the fire protection by service
charges rather than from general tax revenues. In these circumstances,
it was held that the United States could pay a valid service charge,
although the charge in that particular case was held to be a tax and
therefore invalid because it was based on the value of the property
rather than the quantum of services provided. The decision contains a
useful discussion of the distinction between a service charge and a
tax.[Footnote 306]
Similarly, in B-243004, Sept. 5, 1991, a service charge was imposed on
the Bureau of Reclamation for fire protection on federal property where
the city was not required to provide such services. If the charge for
firefighting services bears a reasonable relationship to the quantum of
services provided and is charged proportionately against all who use
the services, it need not be considered a tax but a fee for services
that the United States may pay. In this case, however, the method used
to compute the charge was found not to bear any particular relationship
to the services rendered, and hence, was not payable.
Because the rule is predicated on the existence of state laws requiring
political subdivisions to provide firefighting services, it would not
apply in instances where there is no entitlement to service. Thus,
reimbursement was allowed in 3 Comp. Gen. 979 (1924) where a fire unit
had no legal duty to respond to an emergency call outside its district.
It was further noted that there was no violation of the prohibition on
accepting voluntary services now found in 31 U.S.C. § 1342 (part of the
Antideficiency Act). Similarly, a contractual agreement for fire
protection with the nearest fire district may be proper where the
federal property in question is not served by any fire district.
35 Comp. Gen. 311 (1955). Under the same theory, the Comptroller
General held that the Bureau of Indian Affairs could make a financial
contribution to the "Community Fire Truck," a volunteer firefighting
organization which otherwise would have been under no obligation to
respond to fires at an Indian school outside the limits of the city
served by the organization. 34 Comp. Gen. 195 (1954). See also
B-163089, Feb. 8, 1968; B-123294, May 2, 1955. However, there is no
authority to pay for fire services rendered without a preexisting legal
obligation if such services were necessary to protect adjoining state
or privately owned property as to which such a legal duty existed.
30 Comp. Gen. 376 (1951).
A variation occurred in B-116333-O.M., Oct. 15, 1953, in which it was
held permissible to reimburse a private firefighting enterprise for
repair and maintenance service to hydrants and fire alarm boxes on a
government-owned and -operated housing facility, irrespective of the
duty of the municipality.
In the analysis of legal duty to provide protection, it is irrelevant
that the government may have engaged in an activity causing the fire.
32 Comp. Gen. 401 (1953); B-167709, Sept. 9, 1969; B-147731, Dec. 28,
1961; B-6400, Aug. 28, 1940.[Footnote 307] Similarly, there is no
estoppel created by the fact that the United States operated its own
fire protection at a given installation for a period of time. If the
legal duty to provide protection exists, the United States is entitled
to claim protection at any time its own service becomes obsolete,
undesirable, or uneconomical. B-129013, Sept. 20, 1956; B-126228,
Jan. 6, 1956.
An exception to the general rule may exist in the case of a "federal
enclave." This term usually describes large tracts of land held under
exclusive federal jurisdiction. In 45 Comp. Gen. 1 (1965), the
Comptroller General held that, despite locally available protection, a
federal enclave could provide its own fire protection on a contract
basis. Further, adjacent land under federal control but not part of the
federal enclave could be protected under the same contractual
arrangement. However, an additional factor in 45 Comp. Gen. 1 was that
legitimate doubt existed as to whether the fire district was under a
legal obligation under state law to provide services to the federal
property involved, and the district had petitioned the state government
to redraw its boundaries to exclude the federal property. The effect of
this factor is unclear, and since that time, no case has been decided
in which a federal enclave was involved. Note that the threatened
exclusion of the federal property was based on a legitimate doubt as to
whether protection was required by state law. If protection is
required, exclusion would be improper. See B-129013, Sept. 20, 1956.
Cf. B-192641, May 2, 1979 (nondecision letter) (questioning a
redistricting to exclude federal property that was not a federal
enclave).
A 1981 decision addressed the authority of the Bureau of Land
Management to contract with rural fire districts in Oregon and
Washington for fire protection and firefighting services for federally
owned timberlands in those states. The Comptroller General reviewed the
principles and precedents established over the years and concluded
that, since the fire districts were legally required to protect the
federal tracts, the Bureau could not enter into the desired contracts
without specific statutory authority. However, Bureau installations
with a federally maintained firefighting capacity could enter into
mutual aid agreements under 42 U.S.C. § 1856, discussed above. 60 Comp.
Gen. 637 (1981).
b. Federal Fire Prevention and Control Act of 1974:
In light of the huge losses suffered by local fire districts in the
1973 St. Louis Records Center fire, the need for some legislative
action became apparent. The result was section 11 of the Federal Fire
Prevention and Control Act of 1974, Pub. L. No. 93-498, 88 Stat. 1535,
1543 (Oct. 29, 1974), codified at 15 U.S.C. § 2210. This provision
allows a fire service fighting a fire on federal property to file a
claim for the direct expenses and direct losses incurred. The claim is
filed with the United States Fire Administration, Federal Emergency
Management Agency (FEMA).[Footnote 308] The amount allowable is the
amount by which the additional firefighting costs, over and above the
claimant's normal operating costs, exceed the total of any payments
made by the United States to the claimant or its parent jurisdiction
for the support of fire services on the property in question, including
taxes and payments in lieu of taxes.
FEMA, upon determining the amount allowable, must forward it to the
Treasury Department for payment. The Comptroller General has determined
that section 11 constitutes a permanent indefinite appropriation for
the payment of these claims. B-160998, Apr. 13, 1978. Disputes under
section 11 may be adjudicated in the United States Claims Court. FEMA
has issued implementing regulations at 44 C.F.R. pt. 151.[Footnote 309]
Notwithstanding this authority, the decisions discussed previously in
this section remain significant for several reasons. First, they define
the extent to which an agency may use its own appropriations apart from
section 11. Second, they define the extent to which an agency may
contract for fire protection services. Finally, section 11 provides
that payment shall be subject to reimbursement by the federal agency
under whose jurisdiction the fire occurred, "from any appropriations
which may be available or which may be made available for the purpose."
Although no decision has been rendered on this point, it would seem
that the existing body of decisions provides a starting point in
determining the extent to which an agency's operating appropriations
"may be available" to make this reimbursement.
c. Other Municipal Services:
The principles involved in the firefighting cases are relevant to other
municipal services as well.
The closest analogy is police protection. Like fire protection, police
protection is a mandatory governmental function. Thus a municipality
may not levy direct charges against the United States for ordinary
police protective services provided within its area of jurisdiction.
49 Comp. Gen. 284, 286-87 (1969); B-187733, Oct. 27, 1977. However, the
United States may pay on a quantum meruit basis for police services
over and above the ordinary level, where the city is not required to
provide such extraordinary services and where the same charge would be
imposed on nonfederal users in like circumstances. Examples are: extra
police for special events such as football games at the Coast Guard
Academy (49 Comp. Gen. at 287) and special police details at
Bicentennial ceremonies (B-187733, Oct. 27, 1977).
The same principles have been applied to emergency ambulance services
required to be furnished by a municipality. 49 Comp. Gen. at 286.
However, contracts with state or local governments or private entities
for ambulance services have been held permissible where there was no
requirement for the political subdivision involved to provide ambulance
services without direct charge. 51 Comp. Gen. 444 (1972), modifying
B-172945, June 22, 1971; B-198032, June 3, 1981. Another example is the
maintenance of public highways. See B-199205, Apr. 27, 1981.
A charge for services rendered by a state or local government to the
United States is to be distinguished from a tax; the former may be paid
while the latter may not. E.g., 20 Comp. Gen. 748 (1941). While this
distinction does not apply to mandatory governmental functions such as
police and fire protection, it has frequently been cited in connection
with such things as water and sewer services. As a general proposition,
a charge for water and/or sewer services is a permissible service
charge rather than a tax if it is based on the quantum of direct
services actually furnished. A federal agency may generally pay service
charges such as those for municipal sewer service, so long as the
charges represent the fair and reasonable value received by the United
States for the services. GAO has also held that, in the context of
utility services, where rates are established by a legislative body,
such rates are controlling unless they are manifestly unjust,
unreasonable, or discriminatory. 73 Comp. Gen. 1 (1993). (In that 1993
case, GAO questioned discounts built into the city's fee structure that
were not afforded to the federal agency, and held that the sewer charge
may be paid only to the extent that the city makes and documents a
nondiscriminatory assessment for the reasonable value of sewer services
rendered.) See 31 Comp. Gen. 405 (1952) (assessment for water/sewer
services levied on citywide basis rather than quantum of service
rendered held a tax); 29 Comp. Gen. 120 (1949) (sewer service charge
held payable on quantum meruit basis); 20 Comp. Gen. 206 (1940) (water
charge held to be a tax where it was levied as a flat charge rather
than on the basis of actual water consumption). See also 49 Comp.
Gen. 284 (1969); B-243004, Sept. 5, 1991; B-168024, Dec. 13, 1973;
B-105117, Mar. 16, 1953.
Also, in 70 Comp. Gen. 687 (1991), GAO held that the Forest Service may
pay county landfill user fees as a reasonable service charge, analogous
to other utility services provided the government, since the charge was
based on levels of service provided and appeared nondiscriminatory.
A reasonable charge based on the quantum of direct services actually
furnished need not be considered a tax even though the services in
question are provided to the taxpayers of the political subdivision
without a direct charge, provided of course that the political
subdivision is not required by law to furnish the service without
direct charge. Such a charge may be paid if it is applied equally to
all tax-exempt property, but not if it applies only to federal tax-
exempt property. 50 Comp. Gen. 343 (1970).
A sewer service charge which is otherwise proper may be paid in advance
if required by local law, notwithstanding 31 U.S.C. § 3324. 73 Comp.
Gen. 1 (1993). The government's liability would also include late
payment penalties to the extent required by local law. 39 Comp.
Gen. 285 (1959).
GAO has applied the same principles to charges for 9-1-1 emergency
services. In a series of cases, GAO examined 9-1-1 charges in several
states and found that they amounted to a tax and therefore could not be
assessed against the United States or its agencies. 66 Comp. Gen. 385
(1987) (Florida); 65 Comp. Gen. 879 (1986) (Maryland); 64 Comp.
Gen. 655 (1985) (Texas); B-300737, June 27, 2003 (Alabama); B-230691,
May 12, 1988 (Tennessee); B-239608, Dec. 14, 1990 (nondecision letter)
(Rhode Island). One decision stated:
"In our view, telephone access to police, fire and other municipal
services, is intrinsically connected to the services themselves. The
fact that 9-1-1 service is more technologically sophisticated than
normal telephone access does not change its essential character."
66 Comp. Gen. at 386. In each case, the charges were included in
telephone bills, with the telephone company acting as collection agent
for the relevant governmental authority. As noted in 66 Comp. Gen. 385,
387, a 9-1-1 fee might be properly payable if a telephone company
installed and operated the system itself and, as with directory
assistance for example, offered the service as a component of its
regular communications services. However, in none of the situations
examined was this the case.
Several characteristics of the systems support the conclusion of
nonliability: the service is provided by a local government or quasi-
governmental unit; public funding of the service requires legal
authority such as an ordinance or referendum; and the charge is not
related to actual levels of service but is based on a flat rate per
telephone line. 65 Comp. Gen. at 881. It is irrelevant that the 9-1-1
charge is called a "service charge" (B-230691) or a "service fee"
(64 Comp. Gen. 655), or that state law provides that the charge shall
not be construed as a tax (B-230691), or that the local government has
threatened to cut off access (66 Comp. Gen. 385). The same analysis
produced the same result in B-227388, Sept. 3, 1987, in which a
municipality tried to charge a federal agency a registration fee for
9-1-1 services.
The distinction between "vendor taxes" and "vendee taxes" discussed
later in this chapter, that is, the applicability or nonapplicability
to the government depending on the "legal incidence" of the tax,
applies as well to 9-1-1 charges. When the legal incidence of a tax
falls directly on the federal government as the "vendee," the tax is
not payable unless expressly authorized by Congress. 64 Comp. Gen. 655,
656-57 (1985). On the other hand, if the legal incidence of the tax
falls directly on a business enterprise (the "vendor"), which is
supplying the federal government as a customer with goods or services,
immunity does not apply. 61 Comp. Gen. 257 (1982). Thus, in B-238410,
Sept. 7, 1990, GAO considered the Arizona 9-1-1 statute, found that it
was a vendor tax and, distinguishing the prior 9-1-1 decisions,
concluded that it could be assessed against the federal government.
A final group of cases involves the installation of traffic signals. At
one point, GAO took the position, subsequently modified, that
appropriated funds could not be used to pay for or contribute to the
installation of traffic signals on public roads or highways, regardless
of the resulting benefit to the government. Traffic control, so the
reasoning went, is a municipal service financed by tax revenues the
same as police or firefighting services, for which payment by a federal
agency is not permissible. 51 Comp. Gen. 135 (1971); 36 Comp. Gen. 286
(1956).
A different situation was presented in 55 Comp. Gen. 1437 (1976).
There, a state highway bisected an Army installation and the Army
wanted to install a traffic light to regulate traffic at the
intersection of the state highway and a road on the Army facility.
Local authorities had agreed to repair and maintain the light if the
Army would purchase and install it. Since the light would be located on
federal property and would be for the primary benefit of the federal
facility, even though it would regulate traffic on the state highway as
well, GAO distinguished the prior cases and concluded that the Army
could use its appropriations for the proposed expenditure.
In 1982, GAO modified the prior decisions and held that traffic signals
at or near a federal facility, where the federal facility is the
primary beneficiary and benefit to the general public is incidental,
should be governed by the same tests applicable to other municipal
services. If the state or local government is legally required to
provide the service to all residents free of charge, the federal agency
may not pay. If, however, the service is not legally required and the
charge does not discriminate against the United States--that is, any
other resident would be subject to a similar charge--then the
appropriations of the benefiting agency may be used. 61 Comp. Gen. 501
(1982).
Does the primary benefit shift where the federal agency is leasing the
property from a private owner? GAO said no in 65 Comp. Gen. 847 (1986),
but the lease in that case was to continue for at least another 6
years. Compare 71 Comp. Gen. 4 (1991). The answer would presumably be
different if the agency was about to vacate, but the decision does not
purport to address precisely where the line should be drawn.
8. Gifts and Awards:
a. Gifts:
An agency frequently wants to use gifts to attract attention to the
agency or to specific programs. For example, gifts can be used as
recruiting tools, to commemorate an event, or to inform the public or
agency employees about the agency. Appropriated funds may not be used
for personal gifts, unless, of course, there is specific statutory
authority. 68 Comp. Gen. 226 (1989). To state the rule in this manner
is to make it appear rather obvious. If, for example, a General Counsel
decided it would be a nice gesture and improve employee morale to give
each lawyer in the agency a Thanksgiving turkey, few would argue that
the expense should be borne by the agency's appropriations.
Appropriated funds could not be used because the appropriation was not
made for this purpose (assuming, of course, that the agency has not
received an appropriation for Thanksgiving turkeys) and because giving
turkeys to lawyers is not reasonably necessary to carry out the mission
at least of any agency that now exists. Most cases, however, are not
quite this obvious or simple.
The cases generally involve the application of the necessary expense
doctrine, and, as with any necessary expense analysis, the result turns
on whether the item will directly further the agency's mission.
Occasionally, an item that would typically be viewed as a personal gift
may, in other circumstances, help advance an agency's mission. In
making the analysis, it makes no difference whether the "gift items"
are given to federal employees or to others. The connection is either
there or, far more commonly, it is not. In each of the cases in which
funds have been found unavailable, there was a certain logic to the
agency's justification, and the amount of the expenditure in many cases
was small. The problem is that, in most cases, were the justification
put forward by the agency deemed sufficient, there would be no stopping
point. If a free ashtray might generate positive feelings about an
agency or program or enhance motivation, so would a new car or an
infusion of cash into the bank account. The rule prohibiting the use of
appropriated funds for personal gifts reflects the clear potential for
abuse. Because a necessary expense analysis is, of course, case
specific, it is impossible to draw a rational line identifying those
gift items that are acceptable and those that are not. That certainly
is evident from the discussion that follows. It is important that
anyone confronting a "gift" issue scrutinize the case law carefully to
appreciate distinctions that may not be apparent at first read.
In 53 Comp. Gen. 770 (1974), a certifying officer for the Small
Business Administration (SBA) asked GAO to rule on the propriety of an
expenditure for decorative ashtrays that were distributed to federal
employee participants of a conference sponsored by that agency. By
passing out ashtrays, the agency intended that they would generate
conversation concerning the conference and thereby further SBA's
objectives by serving as a reminder of the purposes of the conference.
The decision held that the justification given by the agency was not
sufficient because the recipients of the ashtrays were federal
officials who were already charged by law to cooperate with the
objectives of SBA. Thus, there was no necessity that ashtrays be given
away. The ashtrays were properly designated as personal gifts.
Contrast the SBA decision, however, with a 1993 Veterans Affairs
decision. In B-247563.2, May 12, 1993, GAO approved the distribution by
the Department of Veterans Affairs (VA) of imprinted book matches and
imprinted jar grip openers at the Oklahoma State Fair for recruiting
purposes and to provide veterans with a number to call to obtain
information. VA's appropriation explicitly authorized it to create
exhibits and other material to accomplish its mission. This case stated
the general rule regarding the use of appropriated funds to purchase
gifts:
"Under the 'necessary expense rule,' an agency may not purchase items
in the nature of gifts or souvenirs unless there is a direct link
between the items and the purpose of the appropriation charged. Stated
differently, in order to justify purchasing novelty items or personal
gifts with appropriated funds, an agency must demonstrate that the
items will directly further its mission."
Applying this rule to the VA's matches and jar openers, GAO concluded
that it was "entirely appropriate for the [VA] to attempt to attract
the attention of those attending the event," and that the means chosen
were "appropriate for the objective to be accomplished."
In this section, we provide a short discussion of decisions in which we
concluded that the item at issue was a gift. We follow that with a
discussion of decisions in which we found that items ordinarily
considered to be gifts were connected to carrying out the agency's
mission. The discussion, of course, does not identify all of our gift
decisions and, while we provide our holdings, the discussion does not
substitute for a full analysis of these decisions. We encourage the
reader to use the discussion as a tool for honing his or her research.
In 54 Comp. Gen. 976 (1975), specially made key chains, which were
distributed to educators who attended seminars sponsored by the Forest
Service, were determined to be personal gifts despite the Department of
Agricultures claim that their distribution would generate future
responses from participants. That decision stated:
"The appropriation …proposed to be charged with payment for the items
in question is available for '…expenses necessary for forest protection
and utilization….' Since the appropriation is not specifically
available for giving key chains to individuals, in order to qualify as
a legitimate expenditure it must be demonstrated that the acquisition
and distribution of such items constituted a necessary expense of the
Forest Service."
The decision concluded that the key chains were not necessary to
implement the appropriation and were, therefore, improper expenditures.
This line of reasoning was also used in 57 Comp. Gen. 385 (1978). There
it was held that novelty plastic garbage cans containing candy in the
shape of solid waste, which were distributed by the Environmental
Protection Agency to attendees at an exposition, were personal gifts.
The agency's argument that the candy was used to attract people to its
exhibit on the Resource Conservation and Recovery Act and therefore to
promote solid waste management was not sufficient to justify the
expenditure.
In B-195247, Aug. 29, 1979, the Comptroller General held that an
expenditure of appropriated funds for the cost of jackets and sweaters
as holiday gifts to corpsmen at a Job Corps Center with the intent of
increasing morale and enhancing program support was unauthorized. It
was determined that these were not a necessary and proper use of
appropriated funds and therefore were personal gifts.
The following cases are additional illustrations of expenditures that
were found to be in the nature of personal gifts and therefore
improper:
* T-shirts stamped with Combined Federal Campaign logo to be given to
employees contributing a certain amount. 70 Comp. Gen. 248 (1991).
* Winter caps purchased by National Oceanographic and Atmospheric
Administration to be given to volunteer participants in weather
observation program to create "esprit de corps" and enhance motivation.
B-201488, Feb. 25, 1981.
* Photographs taken at the dedication of the Klondike Gold Rush Visitor
Center to be sent by the National Park Service as "mementos" to persons
attending the ceremony. B-195896, Oct. 22, 1979.
* "Sun Day" buttons procured by the General Services Administration
(GSA) and given out to members of the public to show GSA's support of
certain energy policies. B-192423, Aug. 21, 1978.
* Agricultural products developed in Department of Agriculture research
programs (gift boxes of convenience foods, leather products,
paperweights of flowers imbedded in plastic) to be given to foreign
visitors and other official dignitaries. B-151668, June 30, 1970.
* Cuff links and bracelets to be given to foreign visitors by the
Commerce Department to promote tourism to the United States. B-151668,
Dec. 5, 1963; B-151668, June 28, 1963 (same case).
* Baseball caps purchased by the Department of Energy to be given to
nonemployees for personnel recruitment purposes. B-260260, Dec. 28,
1995.
* Pens, scissors, and shoe laces purchased by the then Veterans
Administration (VA) to be given to potential employees for recruiting
purposes, which were nothing more than "favorable reminders of VA" and
did not facilitate VA's acquisition of information necessary to its
recruiting efforts. B-247563.3, Apr. 5, 1996.
* Gift certificates to local restaurants and silk plants distributed by
the then Veterans Administration in celebration of women's Equality
Week, where there was no evidence of how these items advanced the
agency's celebration. Id.
In these cases, while we gave considerable weight to the agency's
administrative determination of necessity, it was not controlling. See,
e.g., B-151668, Dec. 5, 1963.
What follows is a discussion of some expenditures that resemble
personal gifts, but which we approved because they were found necessary
to carry out the purposes of the agency's appropriation. For example,
in B-193769, Jan. 24, 1979, it was held that the purchase and
distribution of pieces of lava rocks to visitors of the Capulin
Mountain National Monument was a necessary and proper use of the
Interior Department's appropriated funds. The appropriation in question
was for "expenses necessary for the management, operation, and
maintenance of areas and facilities administered by the National Park
Service …." The distribution of the rocks furthered the objectives of
the appropriation because it was effective in preserving the Monument
by discouraging visitors from removing lava rock elsewhere in the
Monument. Thus, the rocks were not considered to be personal gifts.
Similarly, GAO concluded in B-230062, Dec. 22, 1988, that the Army
could use its appropriations to give away framed recruiting posters as
"prizes" in drawings at national conventions of student organizations.
The students had to fill out cards to enter the drawings, and the cards
would provide leads for potential recruits. Also, the Army is
authorized to advertise its recruitment program, and posters are a
legitimate form of advertising.
Another case in which GAO found adequate justification is 68 Comp.
Gen. 583 (1989), concluding that the U.S. Mint may give complimentary
specimens of commemorative coins and medals to customers whose orders
have been mishandled. Since customers who do not receive what they paid
for may be disinclined to place further orders, the goodwill gesture of
giving complimentary copies to these customers would directly
contribute to the success of the Mint's commemorative sales program.
In another case involving buttons, 72 Comp. Gen. 73 (1992), GAO
responded to a request from the Comptroller of the Environmental
Protection Agency for an opinion on the availability of appropriated
funds to acquire buttons and magnets inscribed with messages related to
indoor air quality, concluding that appropriated funds were available
for such items. GAO discussed and distinguished cases such as 53 Comp.
Gen. 770 (SBA decorative ashtrays) and 54 Comp. Gen. 976 (key chains
for participants at Forest Service seminars), above, noting that the
buttons and magnets, "unlike a container of candy, a key chain, or an
ice scraper," had "no real use other than to convey a message."
72 Comp. Gen. at 74. Also key was the "direct link between the items
and an authorized agency function," which involved conveying a message
to increase public awareness of indoor air quality. Id.
In yet another "button" case, B-257488, Nov. 6, 1995, GAO concluded
that the Food and Drug Administration could use appropriated funds to
purchase "No Red Tape" buttons for employees to wear at work. GAO noted
that the buttons had "no intrinsic value" to the recipients and served
solely to assist the achievement of agency objectives. The agency had
demonstrated "the requisite nexus between its appropriation's purpose
and the 'No Red Tape' buttons. The message [was] clearly informational
and directed at the promotion of an internal agency management
objective."
In B-280440, Feb. 26, 1999, GAO approved a plan by the Immigration and
Naturalization Service to purchase medals to be worn by uniformed
employees of the Border Patrol to commemorate the Border Patrol's 75th
anniversary. Citing the FDA "No Red Tape" button case, B-257488, above,
GAO noted first that the medals would not be gifts, but rather part of
a Border Patrol agent's uniform. Additionally, GAO observed that, "The
medals convey as well as serve an institutional purpose--i.e.,
reminding the public and agency staff of the Border Patrol's …history
and mission and promoting the stability and longevity of the agency."
In a case involving GAO's own appropriations, GAO cited several of the
above cases in support of GAO's distribution of GAO-logo coffee mugs to
new employees and highlighter pens and post-it notes to potential
recruits. B-287241, Aug. 21, 2001 (nondecision letter). The mugs, pens,
and note pads had all been imprinted with a new GAO logo,
"Accountability, Integrity and Reliability," and had already been
supplied to current GAO staff as part of a larger campaign to instill
GAO's priorities. Some items were provided to new employees as part of
an orientation package to educate them in GAO's priorities. The pens
and pads, along with other materials about GAO, were provided to
potential recruits to inform them of GAO's priorities. Id.
b. Contests:
(1) Entry fees:
The Comptroller General has held that payment of an entry fee to enter
agency publications in a contest sponsored by a private organization is
improper and cannot be justified as a necessary expense, at least where
the prize is a monetary award to be given to the editors of the winning
publications. B-164467, June 14, 1968.
However, payment of a contest entry fee may be permissible where the
prize is awarded to the agency and not to the individuals and where
there is sufficient justification that the expense will further the
objects of the appropriation. B-172556, Dec. 29, 1971. The Comptroller
General pointed out in that decision that whether appropriated funds
may be used to enter a contest will depend on the nature of the
contest, the nature of the prizes and to whom they are awarded, and the
sufficiency of the administrative justification.
Thus, the Bureau of Mines could use its appropriations to enter an
educational film it produced in an industrial film festival where entry
was made in the Bureau's name, awards would be made to the Bureau and
not to any individuals, and there was adequate justification that entry
would further the Bureau's function of promoting mine safety. B-164467,
Aug. 9, 1971.
In recent years, the issue of the use of appropriated funds to pay
contest entry fees has come up in the context of athletic contests. See
section C.5.e of this chapter, "Recreational and Welfare Facilities for
Government Personnel." In each case, funds were found not to be
available for the entry fee in question. See, e.g., 73 Comp. Gen. 169
(1994) (Department of Energy employees participating in competitive
fitness promotion, team activities, and sporting events); B-247563.3,
Apr. 5, 1996 (Department of Veterans Affairs payment of "sponsor fee"
at a local "Corporate Challenge" in which employees participated);
B-262008, Oct. 23, 1996 (Army Corps of Engineers employees
participating in a "Corporate Cup Run" sponsored by the American Lung
Association).
(2) Government-sponsored contests:
In an early case, the Navy wanted to use its appropriation for naval
aviation to sponsor a competition for the design of amphibious landing
gear for Navy aircraft. Cash prizes would be awarded for the two most
successful designs. The Comptroller General ruled, however, that the
proposed expenditure was unauthorized because the prizes were not
related to the reasonable value of the services of the successful
contestants and because the appropriation contemplated that the design
and development work would be performed by Navy personnel. 5 Comp.
Gen. 640 (1926). See also B-247563.3, Apr. 5, 1996 (Department of
Veterans Affairs purchase of restaurant gift certificates and a silk
plant "for distribution as prizes during women's Equality Week" not
permissible).
While 5 Comp. Gen. 640 may be said to express a general rule, later
decisions have permitted agencies to, in effect, sponsor contests and
competitions where artistic design was involved. Thus, in A-13559, Apr.
5, 1926, the Arlington Memorial Bridge Commission wanted to invite
several firms to submit designs for a portion of the Arlington Memorial
Bridge. Each design accepted by the Commission would be purchased for
$2,000, estimated to approximate the reasonable cost of preparing a
design. Since the $2,000 was reasonably related to the cost of
producing a design, GAO viewed the proposal as amounting to a direct
purchase of the satisfactory designs and distinguished 5 Comp. Gen. 640
on that basis. A significant factor was that the bridge was intended
not merely as a functional device to cross the river but "as a memorial
in which artistic features are a major, if not the primary,
consideration."
This decision was followed in 9 Comp. Gen. 63 (1929), holding that the
Marine Corps could offer a set sum of $1,000 for an acceptable original
design for a service medal. The Comptroller General stated:
"Competition in the purchase of supplies or articles for Government use
in its most common form is for the purpose of securing specified
supplies or articles at the lowest possible price. Where, however, the
purpose is the selection of the most suitable and artistic design …,
the primary value of the subject being in its design, the ordinary
procedure may be reversed and the amount to be expended fixed in
advance at a sum considered to be the reasonable value of the services
solicited and the bidders requested to submit the best design which
they can furnish for that sum."
Id. at 65.
The concept of A-13559 was followed and applied in several later
decisions. See 19 Comp. Gen. 287, 288 (1939) (design of advertising
literature for savings bonds); 18 Comp. Gen. 862 (1939) (plaster models
for Thomas Jefferson Memorial); 14 Comp. Gen. 852 (1935) (bronze
tablets and memorials for Boulder Dam); A-37686, Aug. 1, 1931 (monument
at Harrodsburg, Kentucky, as first permanent settlement west of the
Allegheny Mountains); A-35929, Apr. 3, 1931 (ornamental sculptured
granite columns for the Arlington Memorial Bridge).
Thus, a prize competition per se is generally unauthorized in
accordance with 5 Comp. Gen. 640. However, the procedure in A-13559 and
its progeny is permissible where artistic features are the major
consideration, and the amount awarded is related to the reasonable cost
of producing the design.
Apart from the artistic design line of cases, an agency may be
authorized to sponsor a contest under the necessary expense theory, if
the expenditure bears a reasonable relationship to carrying out some
authorized activity. For example, in B-158831, June 8, 1966, prizes
were awarded to enrollees at a Job Corps Conservation Center in a
contest to suggest a name for the Center newspaper. GAO held the
expenditure permissible because the enabling legislation authorized the
providing of "recreational services" for the enrollees, and the contest
was viewed as a permissible exercise of administrative discretion in
implementing the statutory objective.
In another case, the National Park Service sponsored a cross-country
ski race in a national park and awarded trophies to the winners. The
cost of the trophies could not be charged to appropriations for
management, operation, and maintenance of the national park system.
However, the Park Service also received appropriations for recreational
programs in national parks, and the trophies could properly have been
charged to that account. B-214833, Aug. 22, 1984. See also B-230062,
Dec. 22, 1988.
GAO concluded in 70 Comp. Gen. 720 (1991) that the National Oceanic and
Atmospheric Administration (NOAA) could pay cash prizes to certain
fortunate fisherman returning "fish tags" to the government. The
National Marine Fisheries Service issued such "fish tags," displaying
questions about the circumstances under which the fish in question was
caught, a return address, and the word "reward." When returned by
fishermen, the fish tags provided information on the history and
migration rates of the tagged fish. The fishermen were paid a reward of
$5.00 for the return of each fish tag. GAO concluded that the agency
was "statutorily required to conduct research supporting fishery
management" and therefore was required to "obtain information from the
public." Since the fish tag awards facilitated acquisition of the
needed information, the cost of the awards was reasonably necessary to
the agency's accomplishment of an authorized purpose. Id. at 722. In
this decision, GAO also considered an NOAA proposal to expand its
reward program to include the alternative of participating in an annual
drawing for a limited number of large cash prizes. This alternative was
also approved. Id. at 723.
In B-286536, Nov. 17, 2000, GAO considered a proposal by the General
Services Administration's Public Buildings Service (PBS) to use
appropriated funds to pay for prizes in a drawing held in connection
with customer satisfaction surveys. In order to develop customer
satisfaction information, PBS distributed such customer surveys to
employees of tenant-agencies in buildings it managed. PBS proposed the
use of the Federal Buildings Fund to provide prizes to survey
recipients whose names PBS chose in a drawing. Citing 70 Comp. Gen. 720
and B-230062, above, GAO observed that it had concluded in several
instances that "agencies may use appropriated funds to provide prizes
to individuals to further the collection of information necessary to
the accomplishment of the agency's statutory mandate." This case
differed in that PBS proposed to make awards to federal employees,
rather than to the general public as in the cited cases. This was not
determinative, however, since the federal employees would not be
receiving prizes for what they already were required to do, and
therefore they were "akin to the general public." There was "a direct
connection between the purpose of the Fund and the use of prizes to
increase the response rate to customer satisfaction surveys."
Therefore, GAO had no objection to PBS's use of the Federal Buildings
Fund for this purpose.
c. Awards:
A number of early decisions established the proposition that, absent
specific statutory authority, appropriations could not be used to
purchase such items as medals, trophies, or insignia for the purpose of
making awards. The rationale follows that of the gift cases. The
prohibition was applied in 5 Comp. Gen. 344 (1925) (medals for winners
of athletic events) and 15 Comp. Gen. 278 (1935) (annual trophies for
Naval Reserve bases for efficiency). In 10 Comp. Gen. 453 (1931), the
Comptroller General held that a general appropriation could be used to
design and procure medals of honor for air mail flyers where the
awarding of the medals had been authorized in virtually concurrent
legislation. The general appropriation was viewed as available to carry
out the specifically expressed intent of Congress and the express
authorization obviated any need for a more specific appropriation.
The rule was restated in 45 Comp. Gen. 199 (1965) and viewed as
prohibiting the purchase of a plaque to present to a state to recognize
50 years of achievement in forestry. While the voucher in that case was
paid because the plaque had already been presented, the decision stated
that payment was for that instance only and that congressional
authority should be sought if similar awards were considered desirable
in the future. A more recent case applying the prohibition is B-223447,
Oct. 10, 1986.
As with the gift cases, an occasional exception will be found based on
an adequate justification under the necessary expense doctrine. One
example, prompted perhaps by wartime considerations, is B-31094,
Jan. 11, 1943, approving the purchase of medals or other inexpensive
insignia (but not cash payments) to be awarded to civil defense
volunteers for heroism or distinguished service.
Similarly, the Comptroller General held in 17 Comp. Gen. 674 (1938)
that an appropriation, one of whose purposes was "accident prevention,"
was available to purchase medals and insignia (but not to make monetary
awards) to recognize mail truck drivers with safe driving records.
There was sufficient discretion under the appropriation to determine
the forms "accident prevention" should take. However, the discretion in
recognizing safe job performance does not extend to distributing
"awards" of merchandise selected from a catalogue. B-223608, Dec. 19,
1988.[Footnote 310] The same decision disapproved the distribution of
ice scrapers imprinted with a safety message, based on the lack of
adequate justification.
The prohibition does not apply to a government corporation with the
authority to determine the character and necessity of its expenditures.
64 Comp. Gen. 124 (1984). (The expenditure in the case cited was to be
made from donated funds.)
Several statutes now authorize the making of awards in various
contexts. Perhaps the most important is the Government Employees'
Incentive:
Awards Act, enacted in 1954 [Footnote 311]and now found at 5 U.S.C.
§§ 4501-4506. The Act authorizes an agency to pay a cash award to an
employee who by his or her "suggestion, invention, superior
accomplishment, or other personal effort contributes to the efficiency,
economy, or other improvement of Government operations or achieves a
significant reduction in paper work" or performs a special act or
service in the public interest related to his or her official
employment. 5 U.S.C. § 4503. The agency may also incur "necessary
expenses" in connection with an incentive award. Id. Awards and related
expenses under the Act are paid from appropriations available to the
activity or activities benefited. The Office of Personnel Management is
authorized to prescribe implementing regulations. 5 U.S.C. § 4506.
OPM's regulations are found in 5 C.F.R. pt. 451. See also Awards,
Department of Defense Civilian Personnel Manual, DOD 1400.25-M,
subchapter 451 (Dec. 1996). A provision added in 1990, 5 U.S.C.
§ 4505a, authorizes cash awards for employees with fully successful
performance ratings.[Footnote 312]
The Incentive Awards Act applies to civilian agencies, civilian
employees of the various armed services, the District of Columbia
government, and specified legislative branch agencies. 5 U.S.C. § 4501.
Within the judicial branch, it applies to the United States Sentencing
Commission. Id.[Footnote 313] While it does not apply to members of the
armed forces, the Defense Department has very similar authority for
military personnel in 10 U.S.C. § 1124.
GAO has issued a number of decisions interpreting the Government
Employees' Incentive Awards Act. Thus, where an award is based on a
suggestion resulting in monetary savings, the savings must be to
government rather than nongovernment funds. 36 Comp. Gen. 822 (1957).
Applying this principle, GAO found that a suggestion for changes in
procedures that would decrease administrative expenses of state
employment security offices would effect a savings to an appropriation
for unemployment service administration grants to the states.
Therefore, the appropriation was available to make an award to the
employee who made the suggestion. 38 Comp. Gen. 815 (1959). An agency
may make an award to an employee on detail from another agency.
33 Comp. Gen. 577 (1954). An agency may also make an award to one of
its employees for service to a Federal Executive Board. B-240316,
Mar. 15, 1991. See also 70 Comp. Gen. 16 (1990).
An interesting situation occurred in B-192334, Sept. 28, 1978. There,
an employee made a suggestion that resulted in monetary savings to his
own agency, but the savings would be offset by increased costs to other
agencies. The decision concluded that, if the agency wanted to make an
award on the basis of tangible benefits, it must measure tangible
benefits to the government, that is, it must deduct the increased costs
to other agencies from its own savings. However, the agency could view
the suggestion as a contribution to efficiency or improved operations
and make a monetary award based on intangible benefits.
As noted, the Act authorizes an agency to incur "necessary expenses"
incident to its awards program. Thus, an agency may pay travel and
miscellaneous expenses to bring recipients to Washington D.C. to
participate in award ceremonies. 70 Comp. Gen. 440 (1991). These
expenses are not chargeable against the statutory award ceiling.
32 Comp. Gen. 134 (1952). The agency may also pay travel expenses for
the recipients spouse. 69 Comp. Gen. 38 (1989), overruling 54 Comp.
Gen. 1054 (1975); B-235163.11, Feb. 13, 1996. Travel and miscellaneous
expenses may also be paid to a surviving spouse to receive an award on
behalf of a deceased recipient. B-111642, May 31, 1957. Where a
recipient has a disability and cannot travel unattended, the travel and
miscellaneous expenses of an attendant, whether or not a family member,
may be paid. 55 Comp. Gen. 800 (1976).
The Act does not authorize "necessary expenses" incident to the receipt
of an award from a nonfederal organization. 40 Comp. Gen. 706 (1961).
See, e.g., B-258216, July 27, 1995 (agency's payment for airline
tickets for mother and brother of a deceased employee to attend
nongovernmental awards ceremony honoring deceased employee not
authorized). However, in limited situations where an award from a
nonfederal organization is closely related to the recipients official
duties, it may be possible to pay certain related expenses on other
grounds. See 55 Comp. Gen. 1332 (1976).
As previously discussed in our section on entertainment, the
Comptroller General has held that the "necessary expense" language of
the Government Employees' Incentive Awards Act may include refreshments
at an agency's awards ceremony. 65 Comp. Gen. 738 (1986). See also
B-167835, Nov. 18, 1969. A 1990 decision applied the rationale of
65 Comp. Gen. 738 and held that an agency could pay a fee, which
included a luncheon, for attendance at a Federal Executive Board
regional award ceremony by agency employees who had been selected for
awards and their supervisors. 70 Comp. Gen. 16 (1990). See also
B-288536, Nov. 19, 2001 (buffet-style luncheon provided Bureau of
Indian Affairs (BIA) employees attending awards ceremony); B-270199,
Aug. 6, 1996 (cake at a Pension Benefit Guaranty Corporation awards
ceremony); B-235163.11, Feb. 13, 1996 (National Science Foundation
annual awards dinner).
In B-247563.4, Dec. 11, 1996, however, the Comptroller General ruled
that the Government Employees' Incentive Awards Act does not authorize
refreshments "in connection with an event or function designed to
achieve other objectives simply because the agency distributes awards
as part of the event or function." The purpose of authorized
refreshments is to "facilitate public recognition of awards recipients"
and this purpose would not be served where, as in this case, the awards
recipients and the donor were the only participants in the event.
GAO explored the range of agency discretion in providing refreshments
in connection with awards ceremonies in B-270327, Mar. 12, 1997. This
case arose when the Defense Reutilization and Marketing Service (DRMS),
in recognition of excellent agency performance, designated a worldwide
"celebration day," on which it hosted luncheons for all DRMS employees
and provided each employee a specially designed "Bucks Bunny" and "Reut
Rabbit" T-shirt, as well as 4 hours of administrative leave. DRMS
guidance authorized each DRMS location to spend up to $20 per person
for accommodations and "incidental refreshments" in connection with the
awards ceremonies. GAO considered the DRMS awards program in light of
OPM's regulations implementing the Incentive Awards Act at 5 C.F.R.
pt. 451, which, the decision concluded, "purposely leave it up to the
agencies to design their award programs and make their own award
decisions." GAO concluded that it was required to "respect and defer"
to OPM's regulatory decisions and implicit delegation of authority to
agencies to make implementing decisions so long as such decisions were
consistent with essential requirements of the Act. Although GAO
observed that the coverage of the "celebration day" was "broader than
[it had] typically encountered in … prior decisions," it concluded that
"unless arbitrary and capricious, differences in degree do not
invalidate the decisions made." The submitted vouchers were approved.
See also B-288536, supra (BIA buffet).
Awards under the Act may take forms other than cash. Thus, in 55 Comp.
Gen. 346 (1975), the Comptroller General held that the Army Criminal
Investigation Command could award marble paperweights and walnut
plaques to Command employees, including those who had died in the line
of duty, if the awards conformed to the Act and applicable regulations.
In situations not covered by the statute (e.g., presentations to
nongovernment persons to recognize cooperation and enhance community
relations), however, such awards would be personal gifts and therefore
improper. Similarly authorized as "honorary" awards are desk medallions
(B-184306, Aug. 27, 1980); telephones of nominal value (67 Comp.
Gen. 349 (1988)); $50 jackets bearing agency insignia (B-243025, May 2,
1991); coffee mugs and pens (B-257488, Nov. 6, 1995); tickets to local
sporting events or amusement parks (B-256399, June 27, 1994); and meals
or gift certificates for meals (B-271511, Mar. 4, 1997). Administrative
leave can also be awarded if and to the extent authorized in Office of
Personnel Managements (OPM) implementing regulations. 5 U.S.C.
§ 4502(e)(2).[Footnote 314] See also B-208766, Dec. 7, 1982. Whether
the award is monetary or nonmonetary, the act or service prompting it
must be related to official employment. 70 Comp. Gen. 248 (1991) (the
Government Employees' Incentive Awards Act does not authorize giving T-
shirts to Combined Federal Campaign contributors). See also 71 Comp.
Gen. 145 (1992) (contractor in 70 Comp. Gen. 248 not entitled to
payment for shirts provided to government).
The Act does not authorize cash awards based merely on length of
service or upon retirement. However, honorary noncash awards are
permissible. For example, the Department of Agriculture wanted to
present to retiring members of its Office of Inspector General engraved
plastic holders containing their credentials. GAO found this authorized
by the Act. 46 Comp. Gen. 662 (1967). The use of incentive awards for
good sick leave records is inappropriate. 67 Comp. Gen. 349 (1988),
cited in National Association of Government Employees Local R1-109,
53 F.L.R.A. 271, Aug. 15, 1997.
The making of an award--and therefore the refusal to make an award--
under the Government Employees' Incentive Awards Act is discretionary.
Rosano v. United States, 9 Cl. Ct. 137, 144-45 (1985), aff'd, 800 F.2d
1126 (Fed. Cir. 1986), cert. denied, 480 U.S. 907 (1987). As such, it
is reviewable only for abuse of discretion. E.g., Shaller v. United
States, 202 Ct. Cl. 571, cert. denied, 414 U.S. 1092 (1973). A labor
relations arbitrator may order an agency to prepare and submit an award
recommendation, but cannot order the agency to actually make the award.
56 Comp. Gen. 57 (1976).
In B-202039, Apr. 3, 1981, aff'd upon reconsideration, B-202039, May 7,
1982, two employees filed a claim where their agency had given them a
cash award several years after implementing their suggestion. They
claimed interest on the award, lost imputed investment earnings, an
inflation adjustment, and compensation for higher income taxes paid as
a result of the delay. The claim was denied. In the May 1982 decision,
GAO pointed out that an agency's own regulations can have the effect of
limiting the discretion it would otherwise have under the statute. See
also Griffin v. United States, 215 Ct. Cl. 710 (1978). Thus, agency
regulations can commit the agency to making an award if it adopts a
suggestion. However, this does not create an entitlement to interest.
Finally, the Government Employees' Incentive Awards Act is limited to
government employees. Since no similar authority exists for persons
other than government employees, an award may not be made to a
nongovernment employee who submits a suggestion resulting in savings to
the government. B-160419, July 28, 1967. The limitation to government
employees is also noted in two internal GAO memoranda. B-224071-O.M.,
Aug. 3, 1987 (GAO appropriations not available for cash awards to
contract security guards); B-176600-O.M., Aug. 18, 1978
(appropriations of agencies funding the Joint Financial Management
Improvement Program not available to make cash awards to other than
federal employees).
In addition to the Government Employees' Incentive Awards Act, several
other statutes authorize various types of awards. Some examples are:
* 5 U.S.C. § 5384: authorizes lump-sum cash performance awards to
members of the Senior Executive Service. Some representative decisions
are 68 Comp. Gen. 337 (1989), 64 Comp. Gen. 114 (1984), and 62 Comp.
Gen. 675 (1983).
* 10 U.S.C. § 1125 and 14 U.S.C. § 503: authorize the Defense
Department and the Coast Guard, respectively, to award trophies and
badges for certain accomplishments. See 71 Comp. Gen. 346 (1992) (Air
Force purchase of belt buckles as awards for participants in
"Peacekeeper Challenge" competition permissible under 10 U.S.C.
§ 1125). The Coast Guard statute includes cash prizes. The statutes
have been narrowly construed as limited essentially to proficiency in
arms and related skills. 68 Comp. Gen. 343 (1989) (Coast Guard);
27 Comp. Gen. 637 (1948) (discussing predecessor of 10 U.S.C. § 1125).
* 5 U.S.C. §§ 4511-4513: Inspector General of an agency may make cash
awards to employees whose disclosure of fraud, waste, or mismanagement
results in cost savings for the agency. For an agency without an
Inspector General, the agency head is to designate an official to make
the awards. The President may make the awards where the cost savings
accrue to the government as a whole. GAO reviews under this legislation
indicate that the authority has been used sparingly, but that actual or
projected cost savings appear reasonable in those cases where awards
have been made.[Footnote 315]
9. Guard Services: Anti-Pinkerton Act:
a. Evolution of the Law Prior to 57 Comp. Gen. 524:
On July 6, 1892, in Homestead, Pennsylvania, a riot occurred between
striking employees of the Carnegie, Phipps & Company steel mill and
approximately 200 Pinkerton guards. The company had brought in the
Pinkerton force ostensibly to protect company property. As the
Pinkertons were being transported down the Monongahela River, the
strikers sighted them and began firing on them. The strikers were
heavily armed, and even had a cannon on the riverbank. The violence
escalated to the point where the strikers spread oil on the water and
ignited it. Several of the Pinkerton men were killed and several of the
strikers were indicted for murder. The riot received national
attention.
The then-common practice of employing armed Pinkerton guards as
strikebreakers in labor disputes became an emotionally charged issue.
The Homestead riot, together with other similar although less dramatic
incidents, made it clear that the use of these guards provoked
violence. Although Congress was reluctant to legislate against their
use in the private sector, some congressional action became inevitable.
The result was the law that came to be known as the Anti-Pinkerton Act.
Originally enacted as part of the Sundry Civil Appropriation Act of
August 5, 1892, 27 Stat. 368, it was made permanent the following year
by the Act of March 3, 1893, ch. 208, 27 Stat. 591. Now found at
5 U.S.C. § 3108, the Act provides:
"An individual employed by the Pinkerton Detective Agency, or similar
organization, may not be employed by the Government of the United
States or the Government of the District of Columbia."
As we will see, the statute has little impact today. Nevertheless, it
remains on the books and could become relevant, albeit only in unusual
circumstances. Therefore, it may be useful to briefly record the
administrative interpretations of the law.
Although the Anti-Pinkerton Act was never the subject of any judicial
decisions until the late 1970s, it was the subject of numerous
decisions of the Comptroller General and the Comptroller of the
Treasury. Several principles evolved through the decisions.
1. The Act applies to contracts with "detective agencies" as firms or
corporations as well as to contracts with or appointments of individual
employees of such agencies. 8 Comp. Gen. 89 (1928); A-12194, Feb. 23,
1926.
2. The Act prohibits the employment of a detective agency or its
employees, regardless of the character of the services to be performed.
The fact that such services are not to be of a "detective" nature is
immaterial. Thus, detectives or detective agencies within the scope of
the Act may not be employed in any capacity. 51 Comp. Gen. 494 (1972);
26 Comp. Gen. 303 (1946).
3. The statutory prohibition applies only to direct employment. It does
not extend to subcontracts entered into with independent contractors of
the United States. 26 Comp. Gen. 303. The legislative history of the
original 1892 statute made it clear that Congress did not intend to
reach subcontracts. However, the Act does apply to a contract under the
Small Business Administration (SBA) set-aside program since the
contract is a prime contract vis-à-vis SBA even though it may be a
subcontract vis-à-vis the actual employing agency. 55 Comp. Gen. 1472
(1976).
4. Although the Comptroller General never defined "detective agency"
for purposes of the Anti-Pinkerton Act, the decisions drew a
distinction between detective agencies and protective agencies and held
that the Act did not forbid contracts with the latter. 38 Comp.
Gen. 881 (1959); 26 Comp. Gen. 303 (1946); B-32894, Mar. 29, 1943.
Thus, the government could employ a protective agency, but could not
employ a detective agency to do protective work. An important test
became whether the organization was empowered to do general
investigative work.
5. In determining whether a given firm is within the statutory
prohibition, GAO considers the nature of the functions it may perform
as well as the functions it in fact performs. Two factors are relevant
here--the firm's authority under its corporate charter and its powers
under licensing arrangements in the states in which it does business.
If a firm is chartered as a detective agency and licensed as a
detective agency, then the fact that it does not actually engage in
detective work will not permit it to escape the statutory prohibition.
Since virtually every corporation inserts in its charter an "omnibus"
clause ("engage in any lawful act or activity for which corporations
may be organized in this state" or similar language), an omnibus clause
alone will not make a company a detective agency. Rather, specific
charter authorization is needed. 41 Comp. Gen. 819 (1962); B-146293,
July 14, 1961.
6. The government may employ a wholly owned subsidiary of a detective
agency if the subsidiary itself is not a detective agency, even if the
subsidiary was organized primarily or solely to avoid the Anti-
Pinkerton Act. As long as there is prima facie separation of corporate
affairs, the Act does not compel the government to "pierce the
corporate veil." 44 Comp. Gen. 564 (1965); 41 Comp. Gen. 819 (1962);
B-167723, Sept. 12, 1969.
7. A telephone listing alone is not sufficient evidence that a given
firm is a "detective agency" for purposes of 5 U.S.C. § 3108, although
the fact of such a listing should prompt further inquiry by the
procuring agency. 55 Comp. Gen. 1472 (1976); B-181684, Mar. 17, 1975;
B-176307(1), Mar. 21, 1973; B-177137, Feb. 12, 1973.
8. Corrections to charters and licenses may be made prior to contract
award to avoid Anti-Pinkerton Act violations. Post-award corrections,
while perhaps relevant to future procurements, do not, absent
compelling circumstances, retroactively expunge ineligibility existing
at the time of the award. 56 Comp. Gen. 225 (1977); B-172587, June 21,
1971; B-161770, Nov. 21, 1967; B-160538, Nov. 15, 1967; B-156424,
July 22, 1965.
These principles were discussed and applied in many decisions over the
years. For example, a contract for guard services was found to violate
the Act where the contractor was expressly chartered and licensed as a
detective agency. 55 Comp. Gen. 1472, aff'd upon reconsideration,
56 Comp. Gen. 225. Similarly, a contract with a sole proprietorship was
invalid where the owner was also the president of a corporation
chartered and licensed as a detective agency. B-186347, B-185495,
Oct. 14, 1976, aff'd upon reconsideration, B-186347, B-185495, Mar. 7,
1977.
By the 1970s, the Anti-Pinkerton Act had become a hindrance to the
government's guard service contracting activities. The federal
government is a major consumer of guard services, and it was the rare
solicitation that did not generate a squabble over who was or was not
subject to the Act. Many companies, including Pinkerton itself, were
forced to form subsidiaries in order to compete for government
business.
b. 57 Comp. Gen. 524 and the Present State of the Law:
The first reported judicial decision dealing with the Anti-Pinkerton
Act was United States ex rel. Weinberger v. Equifax, 557 F.2d 456 (5th
Cir. 1977), cert. denied, 434 U.S. 1035 (1978). The issue in that case
was whether the Act applied to a credit reporting company. The
Comptroller General, in B-139965, Jan. 10, 1975, had already held that
it did not. The court reached the same result, although on different
reasoning. Relying heavily on the Act's legislative history, the court
held:
"In light of the purpose of the Act and its legislative history, we
conclude that an organization is not 'similar' to the (quondam)
Pinkerton Detective Agency unless it offers quasi-military armed forces
for hire."
557 F.2d at 463.
In a June 1978 circular letter to department and agency heads,
published at 57 Comp. Gen. 524 (1978), the Comptroller General
announced that GAO would follow the Equifax interpretation in the
future. Therefore, the statutory prohibition will now be applied only
if an organization can be said to offer quasi-military armed forces for
hire. The Comptroller General declined, as did the Fifth Circuit, to
attempt a definition of a quasi-military armed force but noted that,
whatever it might mean, "it seems clear that a company which provides
guard or protective services does not thereby become a 'quasi-military
armed force,' even if the individual guards are armed." 57 Comp. Gen.
at 525. It follows that whether that company also provides
investigative or detective services is no longer relevant. The first
decision applying this new standard was 57 Comp. Gen. 480 (1978).
Prior to the Equifax decision, GAO had gone on record as favoring
repeal of the Anti-Pinkerton Act. See, e.g., 56 Comp. Gen. 225, 230
(1977). In light of the Equifax case and 57 Comp. Gen. 524, the case
for repeal is considerably lessened. The statute is no longer a major
impediment to legitimate guard service contracting, and certainly most
would agree that the government should not deal with an organization
that offers quasi-military armed forces for hire.
With the issuance of 57 Comp. Gen. 524 and 57 Comp. Gen. 480, GAO
reviewed the prior decisions under the Anti-Pinkerton Act and
designated them as either overruled or modified. If the result in the
earlier case would have remained the same under the new standard, the
decision was only "modified." If the new standard would have produced a
different result, the earlier decision was "overruled." This is
important because 57 Comp. Gen. 524 did not simply throw out all of the
old rules. What it did is eliminate the "protective versus
investigative" distinction and adopt the Equifax standard as the
definition of a proscribed entity. Thus, an organization will no longer
violate the Act by providing general investigative services; it will
violate the Act only if it "offers quasi-military armed forces for
hire." 57 Comp. Gen. at 525. If a given organization were found to
offer quasi-military armed forces for hire--an event that is viewed as
unlikely although not impossible--the rules in the earlier decisions
would still be applicable even though the decisions themselves have
been technically overruled or modified. Thus, the pre-1978 principles
set forth previously in this discussion remain applicable, but the
focal point is now whether the organization in question offers quasi-
military armed forces for hire, not merely whether it provides general
detective or investigative services. For purposes of guard service
contracting, the burden of proof rests with the party alleging the
violation. E.g., B-216534, Jan. 22, 1985.
10. Insurance:
a. The Self-Insurance Rule:
One frequently hears that the government is a self-insurer. This is not
completely true. There are many situations in which the government buys
or pays for insurance. Among the more well-known examples are the
Federal Employees' Health Benefits Program and Federal Employees' Group
Life Insurance. As another example, the federal government is required
by statute to pay half of the costs incurred by "qualified employees"
for professional liability insurance. See Pub. L. No. 106-58, title VI,
§ 642(a), 113 Stat. 430, 477 (Sept. 29, 1999), and discussion later in
this chapter in section C.13.j; B-300866, May 30, 2003. Also, the
government frequently pays for insurance indirectly through contracts,
grants, and leases. E.g., B-72120, Jan. 14, 1948 (lease). A
comprehensive treatment may be found in a report of the Comptroller
General. U.S. General Accounting Office, Survey of the Application of
the Government's Policy on Self-Insurance, B-168106 (Washington, D.C.:
June 14, 1972). Another useful report, although more limited in scope,
is U.S. General Accounting Office, Extending the Government's Policy of
Self-Insurance in Certain Instances Could Result in Great Savings,
PSAD-75-105 (Washington, D.C.: Aug. 26, 1975).
However, the government is essentially a self-insurer in certain
important areas, primarily loss or damage to government property and
the liability of government employees insofar as the government is
legally responsible or would ultimately bear the loss. The rule to be
discussed in this section may be stated thus: In the absence of express
statutory authority to the contrary, appropriated funds are not
available for the purchase of insurance to cover loss or damage to
government property or the liability of government employees.
The rationale for the rule is aptly summarized in the following two
passages from early decisions:
"The basic principle of fire, tornado, or other similar insurance is
the lessening of the burden of individual losses by wider distribution
thereof, and it is difficult to conceive of a person, corporation, or
legal entity better prepared to carry insurance or sustain a loss than
the United States Government."
19 Comp. Gen. 798, 800 (1940).
"The magnitude of [the government's] resources obviously makes it more
advantageous for the Government to carry its own risks than to shift
them to private insurers at rates sufficient to cover all losses, to
pay their operating expenses, including agency or broker's commissions,
and to leave such insurers a profit."
19 Comp. Gen. 211, 214 (1939).
The rule and its evolution are also summarized in B-158766, Feb. 3,
1977.
The "self-insurance rule" dates back to the nineteenth century and has
been stated and applied in numerous decisions of the Comptroller
General and the Comptroller of the Treasury. In one early decision,
13 Comp. Dec. 779 (1907), the question was whether an appropriation for
the education of natives in Alaska could be used to buy insurance to
cover desks en route to Alaska which had been purchased from that
appropriation. The Comptroller of the Treasury held that the insurance
could not be considered a necessary expense incident to accomplishing
the purpose of the appropriation unless it somehow operated either to
preserve and maintain the property for use or to preserve the
appropriation that was used to buy it. It did not do the first because
insurance does not provide any added means to actually protect the
property (life insurance does not keep you alive) but merely transfers
the risk of loss. Neither could it "preserve the appropriation" because
any recoveries would have to be deposited into the general fund
(miscellaneous receipts) of the Treasury. Therefore the appropriation
was not available to purchase the insurance.
The following year, the Comptroller held that appropriations for the
construction and maintenance of target ranges for the National Guard
(then called "organized militias") could not be used to insure
buildings acquired for use in target practice. 14 Comp. Dec. 836
(1908). The decision closely followed the reasoning of 13 Comp.
Dec. 779--the insurance would not actually protect the property from
loss nor would it preserve the appropriation because any proceeds could
not be retained by the agency but would have to be paid into the
Treasury. Thus, the object of the appropriation "can be as readily
accomplished without insurance as with it." 14 Comp. Dec. at 840.
Citing these and several other decisions, the Comptroller held
similarly in 23 Comp. Dec. 269 (1916) that an appropriation for the
construction and operation of a railroad in Alaska was not available to
pay premiums for insurance on buildings constructed as part of the
project.
A slightly different situation was presented in 24 Comp. Dec. 569
(1918). The Lincoln Farm Association had donated to the United States a
memorial hall enclosing the log cabin in which Abraham Lincoln was
born, together with a $50,000 endowment fund to preserve and maintain
the property. The question was whether the fund could be used to buy
fire insurance on the property. The Comptroller noted that the funds
were not appropriated funds in the strict sense, but were nevertheless
"government funds" in that legal title was in the United States.
Therefore, the self-insurance rule applied. Recalling the reasoning of
the earlier decisions, the Comptroller apparently could not resist
commenting "[i]t should be remembered that fire insurance does not tend
to protect or preserve a building from fire." Id. at 570.
The Comptroller General continued to apply the rule. In a 1927 case, a
contracting officer attempted to agree to indemnify a contractor
against loss or damage by casualty on buildings under construction.
Since the appropriation would not have been available to insure the
buildings directly, the contracting officer could not agree to do so by
contract. The stipulation to indemnify was held to exceed the
contracting officer's authority and therefore imposed no legal
liability against the appropriation. 7 Comp. Gen. 105 (1927). Boiler
inspection insurance was found improper in 11 Comp. Gen. 59 (1931).
A more recent decision applying the self-insurance rule is 55 Comp.
Gen. 1196 (1976). There, the National Aeronautics and Space
Administration (NASA) loaned certain property associated with the
Apollo Moon Mission to the Air Force for exhibition. As a condition of
the loan, NASA required the Air Force to purchase commercial insurance
against loss or damage to its property. The Comptroller General found
that the self-insurance rule applied to the loan of property from one
federal agency to another, and that commercial coverage should not have
been procured. Since the insurance had already been purchased and had
apparently been procured and issued in good faith, the voucher could be
paid. However, the decision cautioned against similar purchases in the
future. See also B-237654, Feb. 21, 1991.
As noted at the outset, the self-insurance rule applies to tort
liability as well as property damage. This was established in a 1940
decision to the Federal Housing Administration, 19 Comp. Gen. 798. In
holding that insurance could not be procured against possible tort
liability, the Comptroller General noted that the self-insurance rule
"relates to the risk and not to the nature of the risk." Id. at 800.
Since the 1946 enactment of the Federal Tort Claims Act, now codified
at 28 U.S.C. §§ 2671 et seq., the issue has become largely moot.
However, questions still arise concerning the operation of motor
vehicles, and these are discussed later in this section. Conceptually
related is 65 Comp. Gen. 790 (1986), holding that an agency may not use
its appropriations to insure against loss or damage to employee-owned
hand tools. If the agency wishes to afford a measure of protection to
employees who use their own tools, it may consider loss or damage
claims under the Military Personnel and Civilian Employees' Claims Act
of 1964, 31 U.S.C. § 3721. (This provision was amended in 1994 to
permit agencies to pay for losses sustained by government personnel
forced to evacuate a foreign country. Pub. L. No. 103-236, § 172,
108 Stat. 382 (Apr. 30, 1994).)
Another type of insurance which may not be paid for from appropriated
funds is flight insurance. If a federal employee traveling by air on
official business wishes to buy flight insurance, it is considered a
personal expense and not reimbursable. 47 Comp. Gen. 319 (1967);
40 Comp. Gen. 11 (1960). Similarly nonreimbursable is trip cancellation
insurance. 58 Comp. Gen. 710 (1979).
Insurance on household goods placed in storage incident to a permanent
change of duty station may not be reimbursed to the employee unless the
insurance is required by the storage company as a condition of
accepting the goods for storage or is otherwise required by law.
28 Comp. Gen. 679 (1949).
Many of the decisions in this area include a statement to the effect
that the government's practice of self-insurance "is one of policy and
not of positive law." E.g., 21 Comp. Gen. 928, 931 (1942). While the
statement is true, as it has been carried from decision to decision the
word "positive" has occasionally been omitted and this has caused some
confusion. All the statement means is that the rule is not mandated by
statute, but has evolved administratively from the policy
considerations summarized above. See also 71 Comp. Gen. 4 (1991)
(policy against using appropriated funds to make permanent improvements
to private property).
b. Exceptions to the Rule:
(1) Departments and agencies generally:
Exceptions to the self-insurance rule may of course be authorized by
statute. The absence of an express prohibition on insurance is not
enough to authorize it; rather, specific statutory authority is
required. 19 Comp. Gen. 798, 800 (1940); 14 Comp. Dec. 836, 839 (1908).
Although legislation in this area has been minimal, Congress has
occasionally authorized the procurement of insurance in some instances
and prohibited it in others. By this pattern, congressional recognition
of the rule may be inferred.
Also, the existence of statutory authority to buy insurance does not
necessarily mean it has to be exercised. In one case, the Comptroller
General recommended against the purchase of insurance although
recognizing that it was statutorily authorized in that instance.
19 Comp. Gen. 211 (1939).
Moreover, because the rule is not mandated by statute but rather has
evolved administratively from policy considerations, there are
nonstatutory exceptions in the limited number of cases where the
underlying policy considerations do not apply. The standards for
exception were summarized in B-151876, Apr. 24, 1964, as follows:
1. where the economy sought by self-insurance would be defeated;
2. where sound business practice indicates that a savings can be
effected; or:
3. where services or benefits not otherwise available can be obtained
by purchasing insurance.
See also B-290162, Oct. 22, 2002; B-244473.2, May 13, 1993.
Two World War II cases provide early illustrations of this approach. In
B-35379, July 17, 1943, the procurement of airplane hull insurance by
the Civil Aeronautics Administration was approved. It was determined
that the Administration did not have in its employ, and was unable at
the time to recruit, the number of qualified personnel that would be
required to appraise damage and arrange for and supervise immediate
repairs in connection with the War Training Service and that commercial
insurance coverage could provide such services. Also, in B-59941, Oct.
8, 1946, the purchase of pressure vessel insurance including essential
inspection services from commercial sources was permissible because of
the necessity and economy brought on by wartime conditions.
In 37 Comp. Gen. 511 (1958), GAO considered a provision in a
shipbuilding contract, which required the contractor to procure
builder's risk insurance, including war risk insurance that was
obtainable mainly from the government. Under the contract, title vested
in the United States to the extent work was completed, but the risk of
loss remained in the shipbuilder until the completed vessel was
delivered to and accepted by the government. The government would end
up paying part of the premiums because their cost was included in the
bid price. GAO approved the arrangement, finding that it did not
improperly transfer the contractors risk to the government.
A more recent example is provided in B-290162, Oct. 22, 2002. The
Architect of the Capitol asked whether appropriated funds could be used
for the purchase of "wrap-up" insurance for the construction of the
Capitol Visitor Center. Wrap-up insurance would cover both the
government's risk and the risks of contractors, designers, and
consultants in constructing the Visitor Center. GAO held that wrap-up
insurance could be purchased if it were shown that purchasing wrap-up
insurance (1) is reasonably necessary or incident to the construction
of the Visitor Center and (2) would otherwise satisfy the standards for
exception (discussed above), that is, the use of wrap-up insurance
would result in a savings or that a benefit, not otherwise obtainable,
would be gained through the use of wrap-up insurance.
Exceptions may be based on the funding arrangement of a particular
agency or program. For example, the rule prohibiting the purchase of
insurance did not apply to the Panama Canal Commission because the
Commission operated on a self-sustaining basis, deriving its operating
funds from outside sources. The vast resources available to the
government, upon which the self-insurance rule is founded, were not
intended to be available to the Commission. B-217769, July 6, 1987
(holding that the Commission could purchase "full scope" catastrophic
insurance coverage if administratively determined to be necessary).
Similarly, GAO held in B-287209, June 3, 2002, that the rule
prohibiting the purchase of insurance to cover loss of property or tort
claims does not apply to the District of Columbia, since the United
States resources are not available to cover such loss sustained by the
District. The fact that an agency's initial appropriation was placed in
an interest-earning trust fund was found not sufficient to warrant an
exception where the government's resources were nevertheless available
to it. B-236022, Jan. 29, 1991 (John C. Stennis Center for Public
Service Training and Development).
The Comptroller General has held that the self-insurance rule does not
apply to privately owned property temporarily entrusted to the
government. 17 Comp. Gen. 55 (1937) (historical items loaned to the
government for exhibition purposes); 8 Comp. Gen. 19 (1928) (corporate
books and records produced by subpoena for a federal grand jury);
B-126535-O.M., Feb. 1, 1956 (airplane models loaned by manufacturer).
Compare 25 Comp. Dec. 358 (1918), disallowing a claim for insurance
premiums by West Publishing Company for law books loaned to a federal
employee, where correspondence from the claimant made it clear that it
was loaning the books to the employee personally and not to the
government.
However, insurance may be purchased on loaned private property only
where the owner requires insurance coverage as part of the transaction.
If the owner does not require insurance, private insurance is not a
necessary expense and the government should self-insure. 63 Comp.
Gen. 110 (1983) (works of art temporarily loaned by the Corcoran
Gallery to the President's Commission on Executive Exchange); 42 Comp.
Gen. 392 (1963) (school classrooms used for civil service
examinations).
Foreign art treasures are frequently loaned to the United States for
exhibition purposes. While insurance may be purchased by virtue of
17 Comp. Gen. 55, its extremely high cost has been a disincentive. To
remedy this situation, in 1975 Congress passed the Arts and Artifacts
Indemnity Act, 20 U.S.C. §§ 971-977. This statute authorizes the
Federal Council on the Arts and Humanities to enter into agreements to
indemnify against loss or damage to works of art and other materials
while on exhibition under specified circumstances and within specified
limits. Claims under the Act require specific appropriations for
payment, but the agreements are backed by the full faith and credit of
the United States. The Act constitutes authority to incur obligations
in advance of appropriations and the agreements would therefore not
violate the Antideficiency Act. See B-115398.01, Apr. 19, 1977
(nondecision letter).
Since nonappropriated fund activities are by definition not financed
from public funds, they are not governed by the self-insurance rule.
Whether the rule should or should not be followed would generally be
within the discretion of the activity or its parent agency. Thus, it is
within the discretion of the Department of Defense to establish the
rule by regulation for its nonappropriated fund activities. B-137896,
Dec. 4, 1958.
Finally, it is important to keep in mind that the self-insurance rule
is aimed at insurance whose purpose is to protect the United States
from risk of financial loss. Applying the rule from this perspective,
GAO found that it would not preclude the Federal Bureau of
Investigation (FBI) from purchasing insurance in connection with
certain of its undercover operations. The objective in these instances
was not to protect the government against risk of loss, but to maintain
the security of the operation itself, for example, by creating the
appearance of normality for FBI-run undercover proprietary
corporations. Thus, the FBI could treat the expenditure purely as a
"necessary expense" question. B-204486, Jan. 19, 1982. For additional
exceptions, see 59 Comp. Gen. 369 (1980) and B-197583, Jan. 19, 1981.
(2) Government corporations:
In an early case, the Comptroller of the Treasury indicated that the
self-insurance rule would not apply to a wholly owned government
corporation and suggested that it would generally take an act of
Congress to apply the prohibition to a corporations funds. 23 Comp.
Dec. 297 (1916).
The Comptroller General followed this approach in 21 Comp. Gen. 928
(1942), noting that the rule "has not been observed strictly in cases
involving insurance of property of government corporations." Id. at
931. The decision held that, while the funds of the Virgin Islands
Company were subject to various statutory restrictions on the use of
public funds, they could be used to insure the Company's property.
The Federal Housing Administration is treated as a corporation for many
purposes although it is not chartered as one. See 53 Comp. Gen. 337
(1973). In 16 Comp. Gen. 453 (1936), the Comptroller General held that
the Administration could purchase hazard insurance on acquired property
based on a determination of necessity, but in 19 Comp. Gen. 798 (1940),
declined to extend that ruling to cover insurance against possible tort
liability. See also 55 Comp. Gen. 1321 (1976) (former Federal Home Loan
Bank Board, although technically not a corporation, could nevertheless
insure its new office building since the Board's authority to cover
losses by assessments against member banks made the rationale of self-
insurance rule inapplicable).
c. Specific Areas of Concern:
(1) Property owned by government contractors:
The cases previously discussed in which insurance was prohibited
involved property to which the government held legal title. Questions
also arise concerning property to which the government holds less than
legal title, and property owned by government contractors.
A contractor will normally procure a variety of insurance as a matter
of sound business practice. This may include hazard insurance on its
property, liability insurance, and workers' compensation insurance. The
premiums are part of the contractors' overhead and will be reflected in
its bid price. When this is done, the government is paying at least a
part of the insurance cost indirectly. Since the risks covered are not
the risks of the government, there is no objection to this "indirect
payment" nor, if administratively determined to be necessary, to the
inclusion of an insurance stipulation in the contract. 39 Comp.
Gen. 793 (1960); 18 Comp. Gen. 285, 298 (1938).
Similarly differentiating between the government's risk and the
contractor's risk, the Comptroller General has applied the self-
insurance rule where the government holds "equitable title" under a
lease-purchase agreement. 35 Comp. Gen. 393 (1956); 35 Comp. Gen. 391
(1956). In both decisions, the Comptroller General held that, although
the government could reimburse the lessor for the cost of insuring
against its own (the lessors) risk, it could not require the lessor to
carry insurance for the benefit of the government.
(2) Use of motor vehicles:
As noted previously, the self-insurance rule applies to tort liability
as well as property damage. 19 Comp. Gen. 798 (1940). At present, the
Federal Tort Claims Act, 28 U.S.C. §§ 2671 et seq., provides the
exclusive remedy for claims against the United States resulting from
the negligent operation of motor vehicles by government employees
within the scope of their employment. Thus, insurance questions have
become largely moot. Nevertheless, the self-insurance rule has been
involved in several situations involving the operation of motor
vehicles.
A 1966 decision, 45 Comp. Gen. 542, involved Internal Revenue Service
(IRS) employees classified as "high mileage drivers." They were
assigned government-owned cars for official use and, when warranted,
could drive the cars home at the close of the workday so that they
could proceed directly to an assignment from home the next morning. The
Treasury Department asked whether IRS appropriations were available to
reimburse the employees for having their commercial liability insurance
extended to cover the government vehicles. Applying the self-insurance
rule, and noting further that the travel would most likely be
considered within the scope of employment for purposes of the Federal
Tort Claims Act, the Comptroller General concluded that the funds could
not be so used. GAO similarly denied the claims of six Navy members for
reimbursement of extra collision insurance they purchased on rented
trucks. They were authorized to rent trucks to perform their official
duties and were even directed to obtain extra collision insurance.
Nonetheless, GAO denied reimbursement because the insurance had been
purchased in violation of the Joint Federal Travel Regulation, vol. I,
para. U3415C2a, which prohibits the purchase of optional extra
collision insurance. B-256669, Aug. 31, 1994. See also B-261141,
Nov. 9, 1995. Collision damage waiver coverage on commercial rental
vehicles is discussed in the section entitled "Damage to Commercial
Rental Vehicles" in Chapter 12 (Volume III of the second edition of
Principles of Federal Appropriations Law).
In B-127343, Dec. 15, 1976, the Comptroller General concluded that the
Federal Tort Claims Act applied to Senate employees operating Senate-
owned vehicles within the scope of their employment. Therefore, the
purchase of commercial insurance would be neither necessary nor
desirable.
In 1972, the Veterans Administration (VA) asked whether it could use
its appropriations to provide liability insurance coverage for disabled
veteran patients being given VA-conducted driver training. Since the
trainees were not government employees, they would not be covered by
the Federal Tort Claims Act. Since the risk was not that of the
government, the self-insurance rule was not applicable. Therefore, VA
could procure the liability insurance upon administrative
determinations that (1) the driver training was a necessary part of a
given patient's medical rehabilitation and (2) that the insurance
coverage was necessary to its success. B-175086, May 16, 1972.
The Federal Tort Claims Act does not apply to claims arising in foreign
countries and the rules are a bit different for driving overseas.
Originally, notwithstanding the nonavailability of the Federal Tort
Claims Act, the Comptroller General had prohibited the purchase of
insurance for government-owned vehicles operated in foreign countries.
39 Comp. Gen. 145 (1959). Instances of specific statutory authority for
the State Department and the Foreign Agricultural Service were viewed
as precluding insurance in other situations without similar legislative
sanction.
However, GAO reviewed and revised its position in 1976. In 55 Comp.
Gen. 1343 (1976), the Comptroller General held that the General
Services Administration (GSA) could provide by regulation for the
purchase of liability insurance on government-owned vehicles operated
regularly or intermittently in foreign countries, where required by
local law or necessitated by legal procedures that could pose extreme
difficulties in case of an accident (such as arrest of the driver and/
or impoundment of the vehicle). The decision also concluded that GSA
could amend its regulations to permit reimbursement of federal
employees for the cost of "trip insurance" on both government-owned and
privately owned vehicles in foreign countries where liability insurance
is a legal or practical necessity. The decision was extended in
55 Comp. Gen. 1397 (1976) to cover the cost of required insurance on
vehicles leased commercially in foreign countries on a long-term basis.
Some confusion may result from the statement in 55 Comp. Gen. 1343,
1347, that "39 Comp. Gen. 145 (1959), 19 Comp. Gen. 798 (1940), and
similar decisions" are overruled "to the extent that they are
inconsistent with this decision." Since 39 Comp. Gen. 145 prohibited
insurance on government-owned vehicles in foreign countries, it is
properly viewed as overruled by 55 Comp. Gen. 1343. However, 19 Comp.
Gen. 798 and "similar decisions" remain valid insofar as they assert
the general applicability of the self-insurance rule to tort liability
and to motor vehicle usage in the United States. They should be viewed
as modified to the extent that they no longer preclude purchase of
insurance in the foreign country situations dealt with in 55 Comp.
Gen. 1343 and 55 Comp. Gen. 1397.
(3) Losses in shipment:
Early decisions had applied the self-insurance rule to the risk of
damage or loss of valuable government property while in shipment. Thus,
marine insurance could not be purchased for shipment of a box of
silverware. 4 Comp. Gen. 690 (1925). Nor could it be purchased to cover
shipment of $5,000 in silver dollars from San Francisco to Samoa.
22 Comp. Dec. 674 (1916), aff'd upon reconsideration, 23 Comp. Dec. 297
(1916).
In 1937, Congress enacted the Government Losses in Shipment Act,
40 U.S.C. §§ 721-729. The Act provides a fund for the payment of claims
resulting from the loss or damage in shipment of government-owned
"valuables" as defined in the Act. The Act also prohibits the purchase
of insurance except as specifically authorized by the Secretary of the
Treasury. The Secretary may give such an authorization when he finds
the risk of loss in shipment cannot adequately be guarded against by
the facilities of the United States or adequate replacement cannot be
provided for. See S. Rep. No. 75-738, at 5 (1937). If a given risk is
beyond the scope of the Act, for example, if the items in question are
not within the definition of "valuables" or if the particular movement
does not qualify as "shipment," then the self-insurance rule and its
exceptions would still apply. See, e.g., 17 Comp. Gen. 419 (1937);
B-244473.2, May 13, 1993.
(4) Bonding of government personnel:
Prior to 1972, the federal government frequently required the surety
bonding of officers and employees who handled money or other valuables.
In 1972, Congress enacted legislation, now found at 31 U.S.C. § 9302,
to expressly prohibit the government from requiring or obtaining surety
bonds for its civilian employees or military personnel in connection
with the performance of their official duties. The reasons for this
legislation parallel the policy considerations behind the self-
insurance rule. Indeed, the objective of the legislation was to
substitute the principle of self-insurance for the practice of
obtaining surety bonds on federal employees where the risk insured
against is a loss of government funds or property in which the United
States is the insured.[Footnote 316] 56 Comp. Gen. 788, 790 (1977).
Although 31 U.S.C. § 9302 does not define "officer" or "employee," the
definitions in Title 5 of the United States Code are available for
guidance. B-236022, Jan. 29, 1991.
Under the former system, the surety bonds were for the protection of
the government, not the bonded employee. If a loss occurred and the
government collected on the bond, the surety could attempt to recover
against the individual employee. Thus, the elimination of bonding in no
way affects the personal liability of federal employees, and 31 U.S.C.
§ 9302 specifies this. This principle has been noted several times in
connection with the liability of accountable officers and the cases are
cited in Chapter 9.
In 56 Comp. Gen. 788 (1977), the Comptroller General held that, by
virtue of 31 U.S.C. § 9302, the United States became a self-insurer of
restitution, reparation, and support moneys collected by probation
officers under court order. The decision noted that the same result
applied to litigation funds paid into the registry of the court (funds
paid into the registry by a litigant pending distribution by the court
to the successful party).
However, if an agency requires an employee to serve as a notary public
and state law requires bonding of notaries, the employee's expense in
obtaining the surety bond may be reimbursed notwithstanding 31 U.S.C.
§ 9302. The bond in such a situation is neither required by nor
obtained by the federal government. It is required by the state and
obtained by the employee. Also, the risk involved is not one in which
the United States is the insured. B-185909, June 16, 1976.
Similarly, if a federal court designates a state court employee to
perform certain functions in connection with the arrest and detention
of federal offenders, 31 U.S.C. § 9302 does not preclude the
Administrative Office of the United States Courts from requiring that
the state employee be bonded since the statute applies only to federal
employees. 52 Comp. Gen. 549 (1973).
11. Lobbying and Related Matters:
a. Introduction:
Lobbying--attempting to influence legislators--is nothing new. The term
itself derives from the practice of advocates of a particular measure
lying in wait in the corridors or "lobby" of the Capitol Building,
there to collar passing members of Congress.
Generally speaking, there are two types of lobbying. "Direct lobbying,"
as the term implies, means direct contact with the legislators, either
in person or by various means of written or oral communication.
"Indirect" or "grassroots" lobbying is different. There, the lobbyist
contacts third parties, either members of special interest groups or
the general public, and urges them to contact their legislators to
support or oppose something. Of course, the term "lobbying" can also
refer to attempts to influence decision makers other than legislators.
There is nothing inherently evil about lobbying. A House select
committee investigating lobbying in 1950 put it this way:
"Every democratic society worthy of the name must have some lawful
means by which individuals and groups can lay their needs before
government. One of the central purposes of government is that people
should be able to reach it; the central purpose of what we call
'lobbying' is that they should be able to reach it with maximum impact
and possibility of success. This is, fundamentally, what lobbying is
about."[Footnote 317]
Nevertheless, because of the obvious potential for abuse, there are
legal restrictions on lobbying. This section will explore some of them.
Because the focus of this publication is on the use of appropriated
funds, coverage is limited for the most part to lobbying by government
officials and does not include lobbying by private organizations.
Restrictions on lobbying by government officials derive from two
sources: penal statutes and provisions in appropriation acts.
b. Penal Statutes:
Originally enacted in 1919, 18 U.S.C. § 1913 provided for criminal
sanctions. In late 2002, however, the statute was amended to omit the
criminal sanctions and significantly expand the scope of the lobbying
restriction.[Footnote 318] The statute, commonly referred to as the
Anti-Lobbying Act, now provides:
"No part of the money appropriated by any enactment of Congress shall,
in the absence of express authorization by Congress, be used directly
or indirectly to pay for any personal service, advertisement, telegram,
telephone, letter, printed or written matter, or other device, intended
or designed to influence in any manner a Member of Congress, a
jurisdiction, or an official of any government, to favor, adopt, or
oppose, by vote or otherwise, any legislation, law, ratification,
policy, or appropriation, whether before or after the introduction of
any bill, measure, or resolution proposing such legislation, law,
ratification, policy, or appropriation; but this shall not prevent
officers or employees of the United States or of its departments or
agencies from communicating to any such Member or official, at his
request, or to Congress or such official, through the proper official
channels, requests for any legislation, law, ratification, policy, or
appropriations which they deem necessary for the efficient conduct of
the public business, or from making any communication whose prohibition
by this section might, in the opinion of the Attorney General, violate
the Constitution or interfere with the conduct of foreign policy,
counter-intelligence, intelligence, or national security activities."
The statute is now punishable by civil penalties ranging between
$10,000 and $100,000 per expenditure. Section 1913 actually
incorporates the civil penalties contained in another lobbying statute,
31 U.S.C. § 1352. Section 1352(a) prohibits recipients of federal
contracts, grants, or loans from using such funds to lobby in
connection with the awarding of such contracts, grants, or loans. A
thorough discussion of 31 U.S.C. § 1352, also known as the Byrd
Amendment, is found in the subsequent section on lobbying with grant
funds in this chapter, section C.11.d.
Prior to the 2002 amendment, 18 U.S.C. § 1913 only prohibited the use
of appropriated funds for lobbying aimed at the most basic legislative
activities of Congress. The amended statute expands the prohibition to
a broader scope of legislative activities conducted at all levels of
government, not just the federal level.
To date there has been no case law interpreting the expanded and
decriminalized 18 U.S.C. § 1913. The following discussion of the
statute, while based upon section 1913 before it was amended in 2002,
nevertheless provides a solid foundation for interpreting the statute
as the basic framework of the lobbying restriction was not altered.
The context in which the original section 1913 was enacted is reflected
in the following passage from the floor debate on the 1919 legislation:
"The bill also contains a provision which …will prohibit a practice
that has been indulged in so often, without regard to what
administration is in power--the practice of a bureau chief or the head
of a department writing letters throughout the country, sending
telegrams throughout the country, for this organization, for this man,
for that company to write his Congressman, to wire his Congressman, in
behalf of this or that legislation. [Applause.] The gentleman from
Kentucky …during the closing days of the last Congress was greatly
worried because he had on his desk thousands upon thousands of
telegrams that had been started right here in Washington by some
official wiring out for people to wire Congressman Sherley …Now, it was
never the intention of Congress to appropriate money for this purpose,
and [§ 1913] will absolutely put a stop to that sort of thing.
[Applause.]" [Footnote 319]
Since 18 U.S.C. § 1913 was a criminal statute, its enforcement was the
responsibility of the Justice Department and the courts. Although the
statute no longer contains criminal sanctions, the Justice Department
continues to have enforcement responsibilities. The enforcement
mechanism for 18 U.S.C. § 1913 is derived from 31 U.S.C. § 1352(c),
which provides that violations are to be handled in accordance with the
administrative process for adjudicating civil liability for false
claims. Under this process, provided for under the Program Fraud Civil
Remedies Act of 1986, 31 U.S.C. § 3801-3812, no alleged violation is
subject to adjudication unless approved by the Justice Department.
31 U.S.C. § 3803(b)(2). The Justice Department is also responsible for
the judicial enforcement of any civil penalty imposed. 31 U.S.C.
§ 3806.
Where GAO has determined that appropriated funds were used, it would
refer those matters to the Justice Department in appropriate cases.
E.g., B-192658, Sept. 1, 1978; B-164497(5), Mar. 10, 1977. Generally,
GAO would refer matters to the Justice Department if asked to do so by
a Member of Congress or where available information provided reasonable
cause to suspect that a violation may have occurred. B-145883, Apr. 27,
1962.
In addition, since a violation of section 1913 is by definition an
improper use of appropriated funds, such a violation could form the
basis of a GAO exception or disallowance.[Footnote 320]As a practical
matter, however, this option is often not viable. GAO's real
"enforcement" tool is to report any unlawful activities to Congress in
furtherance of Congress's oversight of executive branch
activities.[Footnote 321]
The Justice Department has construed section 1913 as applying to large-
scale "grassroots" lobbying campaigns of telegrams, letters, and other
forms of communication designed to generate citizen contacts with
Congress on behalf of an administration position with respect to
pending legislation, but not to direct communications between executive
branch officials and Congress. More recently, the Justice Department
emphasized that section 1913 does not apply to (1) public speeches,
appearances, or writings, so that officials are free to publicly
advance administration positions, even to the point of calling on the
public to encourage Members of Congress to support such positions, or
(2) the lobbying activities of the President, his aides and assistants
within the Executive Office of the President, the Vice President,
cabinet members, and other Senate-confirmed officials appointed by the
President. See Memorandum for the Attorney General and the Deputy
Attorney General from Walter Dellinger, Assistant Attorney General,
Department of Justice, Office of Legal Counsel, Apr. 14, 1995; 13 Op.
Off. Legal Counsel 300 (1989).
In evaluating particular fact situations to determine possible
violations of section 1913, GAO has applied the Justice Department's
interpretation of that statute. Thus, GAO found that referral to the
Justice Department was not warranted in the following situations:
* Various judicial branch activities including direct contacts with
legislators by federal judges, legislative liaison activities by the
Judicial Conference of the United States, and some grassroots lobbying
that did not involve the use of federal funds. 63 Comp. Gen. 624
(1984).
* Providing to a private lobbying group a copy of congressional
testimony by the Secretary of State supporting the administration's
Central American policies. 66 Comp. Gen. 707 (1987). The answer would
have been different if the State Department had used appropriated funds
to develop material for the lobbying group rather than simply providing
existing and readily available material. Id. at 712. See also
"Providing assistance to private lobbying groups" later in this
chapter, section C.11.c, and B-229069.2, Aug. 1, 1988.
* Contacts with congressional staff members and a briefing for the
House Foreign Affairs Committee by State Department officials designed
to generate opposition for a legislative measure perceived as
inconsistent with administration nuclear nonproliferation policy.
B-217896, July 25, 1985.
* Speeches and written materials by the Chairman of the Federal Trade
Commission expressing opposition to the Postal Service's "monopoly"
status for letter class mail. None of the materials exhorted members of
the public to contact their legislators. B-229257, June 10,
1988.[Footnote 322]
* Written materials prepared and disseminated by the Small Business
Administration (SBA), none of which included grassroots lobbying,
designed to support an administration proposal to transfer SBA to the
Commerce Department. B-223098, B-223098.2, Oct. 10, 1986.
* Transmission of information by the Consumer Product Safety Commission
to a private company advising of scheduled congressional hearings on
legislation relevant to a problem the company was facing. B-229275-
O.M., Nov. 17, 1987. The memorandum stated:
"We believe it is within the statutory authority of a regulatory agency
to advise a regulated company that a remedy it seeks can only be
obtained through legislation and that such legislative remedy may be
initiated by a particular Congressional Committee."
* Congressional briefings by Department of Energy officials designed to
influence views on nuclear weapons testing legislation. A planned media
campaign to further that objective would have been more questionable,
but it was not carried out. U.S. General Accounting Office, Nuclear
Test Lobbying: DOE Regulations for Contractors Need Reevaluation, GAO/
RCED-88-25BR (Washington, D.C.: Oct. 9, 1987).
* Memorandum written by Commissioner of Commodity Futures Trading
Commission, urging individuals and organizations to "make [their]
position known to the co-sponsors of this [b]ill," constituted
grassroots lobbying. However, no referral was made since the
Commissioner was a presidential appointee confirmed by the Senate and
the amount spent on the memorandum was not substantial. B-270875, July
5, 1996.
* Letter sent by Deputy Secretary of Energy to thousands of individuals
and organizations addressing the administration's energy policies and
legislative proposals was not grassroots lobbying as recipients were
encouraged to contact the Deputy Secretary, not their elected
representatives. Moreover, the Deputy Secretary's activities were not
restricted by section 1913 since he was a Senate-confirmed presidential
appointee. B-270875, July 5, 1996.
* Environmental Protection Agency distribution of fact sheets to
various organizations setting forth the adverse effects of pending
legislation on the environment, was not grassroots lobbying as none of
the material contained direct appeals for people to contact Members of
Congress. B-270875, July 5, 1996.
Numerous additional examples may be found in our discussion of "pending
legislation" appropriation restrictions later in this chapter, in
section C.11.c.
GAO found the following situations sufficiently questionable to warrant
referral to Justice:[Footnote 323]
* An article written by a Commerce Department official and published in
Business America, a Commerce Department publication, explicitly urging
readers to contact their elected representatives in Congress to support
certain amendments to the Export Administration Act. B-212235(1),
Nov. 17, 1983. Under the Justice Department's more recent
interpretations of section 1913, this case would not have warranted
referral since officials are free to publicly advance administration
positions.
* Campaign by Air Force and Defense Department to use contractors'
lobbyists and subcontractor network to lobby Congress in support of
C-5B aircraft procurement. U.S. General Accounting Office, Improper
Lobbying Activities by the Department of Defense on the Proposed
Procurement of the C-5B Aircraft, GAO/AFMD-82-123 (Washington, D.C.:
Sept. 29, 1982).
As of early 1995, the Justice Department reported that there had been
no prosecutions under section 1913.[Footnote 324] See Memorandum for
the Attorney General and the Deputy Attorney General from Walter
Dellinger, Assistant Attorney General, Department of Justice, Office of
Legal Counsel, Apr. 14, 1995. To our knowledge, Justice initiated no
prosecutions between 1995 and 2002 when section 1913 was amended.
As noted earlier, there has been no judicial activity under the amended
version of 18 U.S.C. § 1913. The only judicial activity addressing the
pre-amendment version was the issue of whether the statute created a
private right of action. The answer was no. National Treasury Employees
Union v. Campbell, 482 F. Supp. 1122 (D.D.C. 1980), aff'd, 654 F.2d 784
(D.C. Cir. 1981), overruling National Association for Community
Development v. Hodgson, 356 F. Supp. 1399 (D.D.C. 1973); Grassley v.
Legal Services Corp., 535 F. Supp. 818 (S.D. Iowa 1982); American
Trucking Assn's, Inc. v. Department of Transportation, 492 F. Supp. 566
(D.D.C. 1980).
One other statute with penal sanctions deserves brief mention--the
Lobbying Disclosure Act of 1995, Pub. L. No. 104-65, 109 Stat. 691
(Dec. 19, 1995), codified largely at 2 U.S.C. § 1601-1612. This statute
does not apply to the legislative activities of government agencies,
but rather to organizations that lobby certain federal officials in the
legislative and executive branches. These organizations are required to
register with the Secretary of the Senate and the Clerk of the House of
Representatives and to semiannually report expenditures and certain
other information related to their lobbying efforts. 2 U.S.C. § 1603(a)
and § 1604.[Footnote 325] This statute repealed the 1946 Federal
Regulation of Lobbying Act, which GAO criticized for resulting in
comparatively few lobbyists registering with Congress. See U.S. General
Accounting Office, Federal Lobbying: Comments on the Adequacy of
Federal Lobbying Laws, GAO/T-GGD-93-49 (Washington, D.C.: Sept. 30,
1993).
c. Appropriation Act Restrictions:
(1) Origin and general considerations:
In 1949, a House Resolution created a Select Committee on Lobbying
Activities to review the operation of the Federal Regulation of
Lobbying Act and to investigate all lobbying activities both by the
private sector and by federal agencies. The Committee held extensive
hearings and issued several reports. In its final report, the Committee
had this to say about lobbying by government agencies:
"The existing law in this field, unlike the law governing lobbying by
private interests, is not directed toward obtaining information of such
activities, but is prohibitory in concept and character. It forbids the
use of appropriated funds for certain types of lobbying activities and
is specifically a part of the Criminal Code. Enacted in 1919, it is not
a recent or in any sense a novel piece of legislation. Its validity has
never been challenged and we consider it sound law….
"It is our conclusion that the long-established criminal statute
referred to above should be retained intact and that Congress, through
the proper exercise of its powers to appropriate funds and to
investigate conditions and practices of the executive branch, as well
as through its financial watch dog, the General Accounting Office, can
and should remain vigilant against any improper use of appropriated
funds and any invasion of the legislative prerogatives and
responsibilities of the Congress."[Footnote 326]
When the Select Committee referred to the "proper exercise" of the
congressional power to appropriate funds, it of course had in mind the
use of that power to restrict the use of funds for activities
considered undesirable. While the use of appropriation act restrictions
to control lobbying had some earlier precedent, the practice began in
earnest shortly after the issuance of the Select Committee's final
report with some fiscal year 1952 appropriations, and has continued
ever since.
The most common form of appropriation act restriction prohibits the use
of funds for "publicity or propaganda." There are several variations of
the provision, with varying degrees of specificity. As of 2003, in
addition to two governmentwide publicity or propaganda restrictions,
approximately half of the regular annual appropriation acts include
some version. The simplest version of the statute, and the most
general, is this:
"No part of any appropriation contained in this Act shall be used for
publicity or propaganda purposes not authorized by the
Congress."[Footnote 327]
It prohibits expenditures for all unauthorized publicity or propaganda.
Unfortunately, as with most of the publicity and propaganda statutes
over the years, there is no definition of either term. Thus, the
statutes have been applied through administrative interpretation.
In construing and applying a publicity or propaganda provision, it is
necessary to achieve a delicate balance between competing interests. On
the one hand, every agency has a legitimate interest in communicating
with the public and with the Congress regarding its functions,
policies, and activities. The Select Committee recognized this, quoting
in its Interim Report from the report of the Hoover Commission:
"Apart from his responsibility as spokesman, the department head has
another obligation in a democracy: to keep the public informed about
the activities of his agency. How far to go and what media to use in
this effort present touchy issues of personal and administrative
integrity. But of the basic obligation there can be little
doubt."[Footnote 328]
In addition, the courts have indicated that it is not illegal for
government agencies to spend money to advocate their positions, even on
controversial issues. See Joyner v. Whiting, 477 F.2d 456, 461
(4th Cir. 1973); Donaggio v. Arlington County, Virginia, 880 F. Supp.
446, 454-56 (E.D. Va. 1995); Arrington v. Taylor, 380 F. Supp. 1348,
1364 (M.D. N.C. 1974).[Footnote 329]
Yet on the other hand, the statute has to mean something. As the court
said in National Association for Community Development v. Hodgson,
356 F. Supp. 1399 (D.D.C. 1973) in reference to 18 U.S.C. § 1913,
"[o]bviously, Congress intended to remedy some problem or further some
cause, otherwise they would not have bothered enacting the statute."
Id. at 1403. As long as the law exists, there has to be a point beyond
which government action violates it. Testifying before the Select
Committee on March 30, 1950, former Assistant Comptroller General Frank
Weitzel made the following remarks:
"[I]f you set up an organization in the executive branch for the
benefit of the three blind mice they would come up here with a budget
program and prospectus which would convince any Member of Congress that
that was one of the most important organizations in the executive
branch….
"And no doubt by that time there would also be some private
organizations with branches which would parallel your Federal agency,
which would be devoted to the propagation and dissemination of
information about the three blind mice…."[Footnote 330]
In evaluating whether a given action violates a publicity or propaganda
provision, GAO will rely heavily on the agency's administrative
justification. In other words, the agency gets the benefit of any
legitimate doubt. GAO will not accept the agency's justification where
it is clear that the action falls into one of a very few specific
categories. Before discussing what those categories are, two threshold
issues must be noted.
First, it must be determined whether the agency in question is subject
to a publicity or propaganda restriction. The existence and precise
terms of the restriction can change over time. Therefore, it is always
necessary to check the relevant appropriation acts for the year in
which the questioned obligation or expenditure was made in order to
determine what, if any, agency-specific or governmentwide restrictions
exist.
Second, a violation must be predicated on the use of public funds
(either direct appropriations or funds which, although not direct
appropriations, are treated as appropriated funds). If appropriated
funds are not involved, there is no violation no matter how blatant the
conduct may be. 56 Comp. Gen. 889 (1977) (involving a newsletter
concerning the Clinch River Breeder Reactor Project containing material
that would have been illegal had it been financed in any way with
appropriated funds).
(2) Self-aggrandizement:
As noted above, the broadest form of the publicity and propaganda
restriction prohibits the use of appropriated funds "for publicity or
propaganda purposes not authorized by the Congress." A fiscal year 2003
governmentwide variation limits the restriction to activities "within
the United States."[Footnote 331]
The Comptroller General first had occasion to construe this provision
in 31 Comp. Gen. 311 (1952). The National Labor Relations Board asked
whether the activities of its Division of Information amounted to a
violation. Reviewing the statute's scant legislative history, the
Comptroller General concluded that it was intended "to prevent
publicity of a nature tending to emphasize the importance of the agency
or activity in question." Id. at 313. Therefore, the prohibition would
not apply to the "dissemination to the general public, or to particular
inquirers, of information reasonably necessary to the proper
administration of the laws" for which an agency is responsible. Id. at
314. Based on this interpretation, GAO concluded that the activities of
the Board's Division of Information were not improper. The only thing
GAO found that might be questionable, the decision noted, were certain
press releases reporting speeches of members of the Board.
Thus, 31 Comp. Gen. 311 established the important proposition that the
statute does not prohibit an agency's legitimate informational
activities. See also B-284226.2, Aug. 17, 2000; B-223098, B-223098.2,
Oct. 10, 1986; B-177704, Feb. 7, 1973; U.S. General Accounting Office,
Military Activities: Display of Equipment at the Former Philadelphia
Naval Base in July 2000, GAO-01-77R (Washington, D.C.: Oct. 18, 2000);
U.S. Attorneys: Laws, Rules, and Policies Governing Political
Activities, GAO/GGD-00-171 (Washington, D.C.: July 24, 2000). It is
geared at activities whose obvious purpose is "self-aggrandizement" or
"puffery."
GAO's approach to this statute is basically the same as its approach to
the other appropriation act lobbying restrictions to be discussed in
detail later. The statute does not provide adequate guidelines to
distinguish the legitimate from the proscribed. Thus, without further
clarification from Congress or the courts, GAO is reluctant to find a
violation where the agency can provide a reasonable justification for
its activities.
In a 1973 case, B-178528, July 27, 1973, the Republican National
Committee financed a mass mailing of copies of editorials from British
newspapers in praise of the President. The editorials were transmitted
with a letter prepared by a member of the White House staff, on State
Department letterhead stationery, and signed by the Ambassador to Great
Britain. GAO again noted the extreme difficulty in distinguishing
between disseminating information to explain or defend administration
policies, which is permissible, and similar activities designed for
purely political or partisan purposes. (See also B-194776, June 4,
1979.) In addition, a legitimate function of a foreign legation is to
communicate information on press reaction in the host country to
policies of the United States. Thus, GAO was unable to conclude that
there was any violation of the publicity and propaganda law. In any
event, the use of appropriated funds was limited to the cost of one
piece of paper and the time it took the Ambassador to think about it
and sign his name.
Other cases in which GAO found no violation are B-284226.2, supra
(Housing and Urban Development report "Losing Ground" and accompanying
letter providing information to agency constituents about the impact of
program reductions being proposed in Congress); B-212069, Oct. 6, 1983
(press release by Director of Office of Personnel Management
excoriating certain Members of Congress who wanted to delay a civil
service measure the administration supported); and B-161686, June 30,
1967 (State Department publications on Vietnam War). In none of these
cases were the documents designed to glorify the issuing agency or
official.
Similarly, GAO concluded that the Census Bureau did not violate this
restriction when its employees participated in a symposium. The
symposium was to attract thousands of African-Americans, a population
the Bureau characterized as "hard-to-count" and therefore targeted in
its outreach activities. The Bureau's participation in the symposium
was limited to responding to questions about the census and giving away
promotional items and was therefore legitimate informational activity,
not puffery or self-aggrandizement. See U.S. General Accounting Office,
Census Bureau Participation in Los Angeles Symposium, August 2000, GAO-
01-124R (Washington, D.C.: Oct. 24, 2000).
GAO did find a violation in B-136762, Aug. 18, 1958. The Deputy
Assistant Secretary of Defense for Military Assistance Programs
attended a meeting of the Aircraft Industries Association and made a
speech "clearly designed to enlist the aid of the Aircraft Industries
Association in publicizing and selling the Mutual Security program to
the American public through the various media available to the
Association." Reviewing the text of the speech, GAO found that it went
far beyond any legitimate purpose of informing the public and that it
therefore violated the publicity and propaganda restriction. However,
the officer had been authorized to attend the meeting as related to the
performance of official duty and would have been entitled to per diem
for the full day even if he had not made the speech. Therefore, since
the government incurred no additional expense by virtue of the speech,
GAO declined to seek recovery either from the officer himself or from
the accountable officers who had made the payment.
Some agencies have authority to disseminate material that is
promotional rather than purely informational. For example, the Commerce
Department is charged with promoting commerce. In so doing, it entered
into a contract with the Advertising Council to undertake a national
multimedia campaign to enhance public understanding of the American
economic system. Finding that this was a reasonable means of
implementing its function and that the campaign did not "aggrandize"
the Commerce Department, GAO found nothing illegal. B-184648, Dec. 3,
1975.
If an agency does not have promotional authority, the scope of its
permissible activities is correspondingly more restricted. For example,
GAO found the publicity and propaganda law violated when a presidential
advisory committee, whose sole function was to advise the President and
which had no promotional role, set up and implemented a public affairs
program that included the hiring of a "publicity expert." B-222758,
June 25, 1986.
See section C.11.f of this chapter for further discussion of agency
promotional authorities and the employment of publicity experts.
(3) Covert propaganda:
Another type of activity that GAO has construed as prohibited by the
"publicity or propaganda not authorized by Congress" statute is "covert
propaganda," defined as "materials such as editorials or other articles
prepared by an agency or its contractors at the behest of the agency
and circulated as the ostensible position of parties outside the
agency." B-229257, June 10, 1988. A critical element of the violation
is concealment of the agency's role in sponsoring the material. Id.
In a 1986 case, the Small Business Administration (SBA) prepared
"suggested editorials" and distributed them to newspapers. The
editorials urged support of an administration proposal to merge SBA
with the Department of Commerce. The editorials were clearly
"propaganda." This, however, was not enough to violate the law. The
problem was that they were misleading as to their origin. The plan
presumably was for a newspaper to print the editorial as its own
without identifying it as an SBA document. This, the Comptroller
General concluded, went beyond the range of acceptable public
information activities and therefore violated the publicity and
propaganda law. B-223098, B-223098.2, Oct. 10, 1986.
A similar holding is 66 Comp. Gen. 707 (1987), involving newspaper
articles and editorials in support of Central American policy. The
materials were prepared by paid consultants at government request, and
published as the work of nongovernmental parties. The decision also
found that media visits by Nicaraguan opposition leaders, arranged by
government officials but with that fact concealed, constituted another
form of "covert propaganda." See also B-129874, Sept. 11, 1978 ("canned
editorials" and sample letters to the editor in support of Consumer
Protection Agency legislation, had they been prepared, would have
violated the law).
In B-229257, supra, the Federal Trade Commission (FTC) prepared a
variety of materials critical of the Postal Services "monopoly" on
letter class mail, for distribution at a National Press Club breakfast
that the Postmaster General was to attend. While the material was
unquestionably propaganda, it did not violate the law because it
identified the FTC as the source.
(4) Pending legislation: overview:
The version of the appropriations act restriction that the Comptroller
General has had the most frequent occasion to apply is the version
prohibiting publicity and propaganda designed to influence pending
legislation.
For over 30 years, from the early 1950s to fiscal year 1984, the
following provision was enacted every year:
"No part of any appropriation contained in this or any other Act …shall
be used for publicity or propaganda purposes designed to support or
defeat legislation pending before Congress."[Footnote 332]
As long as this version was in effect, it applied, by virtue of the
"this or any other act" language, to all government agencies regardless
of which appropriation act provided their funds. For fiscal year 1984,
the "this or any other act" provision fell victim to a point of order
and was dropped. See 64 Comp. Gen. 281 (1985). For some time after
that, no governmentwide provision existed. However, another change in
course occurred and since fiscal year 1997,[Footnote 333] the following
governmentwide "pending legislation" provision has been in place:
"No part of any funds appropriated in this or any other Act shall be
used by an agency of the executive branch, other than for normal and
recognized executive-legislative relationships, for publicity or
propaganda purposes, and for the preparation, distribution or use of
any kit, pamphlet, booklet, publication, radio, television or film
presentation designed to support or defeat legislation pending before
the Congress, except in presentation to the Congress itself."[Footnote
334]
Although the governmentwide provision currently in place is more
detailed than the prior governmentwide restriction, we have concluded
that the language currently used has the same legal effect. See
B-270875, supra.
During the time when there was no governmentwide restriction,
restrictions aimed at curtailing the influencing of pending legislation
appeared in individual appropriation acts in various forms. Many of
these continue to appear in individual appropriation acts along with
the governmentwide restriction.[Footnote 335] A sampling of fiscal year
2003 appropriation acts provisions provided below reveals a variety of
versions, many of which do not include the terms publicity and
propaganda:
* "None of the funds made available by this Act shall be used in any
way, directly or indirectly, to influence congressional action on any
legislation or appropriation matters pending before the
Congress."[Footnote 336]
* " …[No] part of this appropriation shall be used for publicity or
propaganda purposes or implementation of any policy including boycott
designed to support or defeat legislation pending before Congress or
any State legislature."[Footnote 337]
* "None of the funds in this Act shall …be used …to pay for any
personal service, advertisement, telegraph …or other device, intended
or designed to influence in any manner a Member of Congress or of a
State legislature to favor or oppose by vote or otherwise, any
legislation or appropriation by Congress or a State legislature after
the introduction of any bill or resolution in Congress proposing such
legislation or appropriation, or after the introduction of any bill or
resolution in a State legislature proposing such legislation or
appropriation."[Footnote 338]
* "No part of any appropriation contained in this Act shall be used,
other than for normal and recognized executive-legislative
relationships, for publicity or propaganda purposes, for the
preparation, distribution, or use of any kit, pamphlet, booklet,
publication, radio, television, or video presentation designed to
support or defeat legislation pending before the Congress or any State
legislature, except in presentation to the Congress or any State
legislature itself."[Footnote 339]
If a given policy or activity is affected by pending or proposed
legislation, any discussion of that policy or activity by officials
will necessarily refer to such legislation, either explicitly or by
implication, and will presumably be either in support of or in
opposition to it. Thus, an interpretation of a pending legislation
statute that strictly prohibited expenditures of public funds for
dissemination of views on pending legislation would preclude virtually
any comment by officials on agency or administration policy or
activities. Absent a compelling indication of congressional intent, GAO
has been unwilling to adopt this approach. See, e.g., B-270875, supra;
U.S. General Accounting Office, Department Of Education: Compliance
with the Federal Advisory Committee Act and Lobbying Restrictions, GAO/
GGD/OGC-00-18 (Washington, D.C.: Dec. 30, 1999).
The Comptroller General has construed the "pending legislation"
provisions as applying primarily to indirect or "grassroots" lobbying
and not to direct contact with Members of Congress. In other words, the
statute prohibits appeals to members of the public suggesting that they
in turn contact their elected representatives to indicate support of or
opposition to pending legislation, thereby expressly or implicitly
urging the legislators to vote in a particular manner. GAO and the
Justice Department have interpreted the traditional prohibition
("publicity or propaganda purposes designed to support or defeat
pending legislation") to require an overt appeal to the public.
B-270875, July 5, 1996.
GAO concluded in a 1984 study that further statutory restraints on
executive branch lobbying did not appear necessary. GAO did recommend,
however, that the restriction on "grassroots" lobbying be enacted into
permanent law. See U.S. General Accounting Office, No Strong Indication
That Restrictions on Executive Branch Lobbying Should Be Expanded, GAO/
GGD-84-46 (Washington, D.C.: Mar. 20, 1984). See also U.S. General
Accounting Office, H.R. 3078, The Federal Agency Anti-Lobbying Act,
GAO/T-OGC-96-18 (Washington, D.C.: May 15, 1996); B-206391, B-217896,
Oct. 30, 1985; B-206391, July 2, 1982. (Each of these documents
comments on proposed legislation that was not enacted.)
Before proceeding to the specific cases, certain threshold concerns
should be noted. As noted earlier in the discussion of the simple
publicity and propaganda restriction, the discussion that follows
interprets the pending legislation provisions in existence at that
time. The particular agencies involved may or may not still be subject
to the same restriction. Or a different version of the restriction may
apply that could produce different results. As we have noted,
governmentwide restrictions have gone in and out of congressional
favor. Therefore, it is critical to check the current appropriations
acts to determine what restrictions are applicable.
The appropriation act restrictions, unless specified to the contrary,
require pending legislation. Of course, this would include
appropriation acts and proposed presidential budgets. B-178648,
Sept. 21, 1973.
Finally, unless a particular provision specifically includes lobbying
at the state level, the legislation must be pending before the U.S.
Congress, not a state legislature. E.g., B-193545, Mar. 13, 1979;
B-193545, Jan. 25, 1979. See also U.S. General Accounting Office,
Highway Safety: NHTSA's Activities Concerning State Motorcycle Helmet
Laws, GAO/RCED-97-185R (Washington, D.C.: June 25, 1997).[Footnote 340]
(5) Cases involving "grassroots" lobbying violations:
A bill was introduced in the 86th Congress to prohibit the Post Office
Department from transporting first class mail by aircraft on a space-
available basis. The Post Office Department opposed the bill and
embarked on a campaign to defeat it. Among the tactics used were
letters to postal patrons and "canned" editorials asking the public to
contact Members of Congress to urge opposition to the bill. GAO found
that this activity violated the anti-lobbying statute. B-116331,
May 29, 1961.
Another violation resulted from the use of a kit entitled "Battle of
the Budget 1973." The White House at the time was opposed to 15 bills
then pending in Congress that it felt would exceed the administration's
1974 budget. White House staff writers assembled a package of materials
that were distributed to executive branch officials in an effort to
defeat the bills. The kit included statements that people should be
urged to write their representatives in Congress to support the
administration's opposition to the 15 bills. This, the Comptroller
General held, violated the publicity and propaganda statute. B-178448,
Apr. 30, 1973.
Administration budget battles with Congress produced another violation
in B-178648, Sept. 21, 1973. This case involved prerecorded news
releases provided to radio stations by executive branch agencies. GAO
reviewed over 1,000 of these releases and while most were proper, GAO
found several that violated the law. Examples of the violations are as
follows:
* "If the President's position of resisting higher taxes resulting from
big spending is to be upheld, the people need to be heard. The voice of
America can reach Capitol Hill and can be a positive persuader."
* "If we are going to have economic stability and fiscal
responsibility, we must all support the President's budget program--and
let Congress know we support it."
The next two examples illustrate important points:
* "If we don't slow down Federal spending …we face a 15-percent
increase in income taxes and more inflation. I don't think any American
wants this. But, in the final analysis the responsibility rests with
the voters and the taxpayers. They must let the Congress know how they
feel on this critical issue."
Here, the listener is urged merely to make his or her "views" known to
Congress. This is nevertheless a violation if the context makes it
clear, as in the example, what those "views" are supposed to be.
* "All those unneeded new bills headed for the Presidents desk from
Congress--all the unworthy Federal programs and projects--are guns
pointed at the heads of American taxpayers…. Right now, Congress is
getting all kinds of letters from special interest groups. Those groups
are pleading their own selfish causes. I think Congress should hear
from all Americans on what the President is trying to do whatever their
views may be. And I say that regardless of whether those who contact
their Congressmen happen to be in agreement with me."
The purported disclaimer in the last sentence does not cure the obvious
violation.
But see B-239856, Apr. 29, 1991, discussed further below, where the
official's disclaimer statement factored into our finding that the
statements made did not constitute prohibited lobbying. Despite the
fact that the official's statement on its face was an exhortation for
her audience to contact Members of Congress, we concluded that her
comment was a good faith response to an audience members question and
was more of a "civics lesson." Furthermore, audience members recalled
that the official made explicit "disclaimers" to the effect that she
could not advise audience members to take particular actions in support
of her agency.
A clear violation occurred in B-128938, July 12, 1976. The
Environmental Protection Agency, as part of an authorized public
information program, contracted with a nonprofit organization to
publish a newsletter in California entitled "Water Quality Awareness."
One of the articles discussed a pending bill that environmentalists
opposed. The article went on to name the California representatives on
the House committee that was considering the bill and exhorted readers
to "[c]ontact your representatives and make sure they are aware of your
feelings concerning this important legislation." As with some of the
violations in B-178648, the context of the article left no doubt what
those "feelings" were supposed to be. The fact that EPA did not publish
the article directly did not matter since an agency has a duty to
insure that its appropriations are not used to violate a statutory
prohibition. See also B-202975(1), Nov. 3, 1981; U.S. General
Accounting Office, Alleged Lobbying Activities: Office for Substance
Abuse Prevention, GAO/Hrd-93-100 (Washington, D.C.: May 4, 1993)
(grantee violated statutory restriction by using grant funds to
encourage grassroots lobbying).[Footnote 341]
In B-285298, May 22, 2000, the White House engaged in extensive
outreach efforts to business, labor, environmental, and other groups in
order to achieve enactment of legislation establishing permanent normal
trade relations for China. After reviewing hundreds of documents we
identified one e-mail communication that constituted grassroots
lobbying. The e-mail, sent by an Agriculture employee serving on the
interagency working group established by the White House, went to two
major farmers' organizations. The e-mail forwarded an attached message
from a Commerce employee (also serving on the working group) reporting
that a certain Member of the House of Representatives had not heard
from any of the farmers in his district on the issue of trade with
China. The forwarding e-mail stated: "We need to work on this ASAP.
[The Member] needs to hear from the farmers in his district." The fact
that the House Member was already planning on supporting the
legislation did not impact our conclusion that the e-mail on its face
directly appealed to large farm organizations to contact a Member of
Congress to support the legislation.
Two other cases in which violations were found are B-212235(1),
Nov. 17, 1983, and U.S. General Accounting Office, Improper Lobbying
Activities by the Department of Defense on the Proposed Procurement of
the C-5B Aircraft, GAO/AFMD-82-123 (Washington, D.C.: Sept. 29, 1982),
both of which are summarized in our previous discussion of 18 U.S.C.
§ 1913.
It is not necessary for a statement to explicitly refer to the
particular piece of pending legislation. Thus, a lobbying campaign
using appropriated funds urging the public to write to Members of
Congress to support a strong merchant marine at a time when cargo
preference legislation is pending violates the law. B-192746-O.M.,
Mar. 7, 1979. The fact that an article did not refer to specific
pending legislation was, however, a factor in our determination that
the agency did not engage in prohibited grass roots lobbying. GAO/HRD-
93-100.
(6) Pending legislation: cases in which no violation was found:
As indicated above, GAO has consistently taken the position that the
pending legislation statute does not prohibit direct communication,
solicited or unsolicited, between agency officials and Members of
Congress. This is true even where the contact is an obvious attempt to
influence legislation. Thus, GAO concluded that the pending legislation
statute was not violated in the following cases:
* Contacts with Members of Congress by federal judges and legislative
liaison activities by the Judicial Conference of the United States.
63 Comp. Gen. 624 (1984).
* Visits to Members of Congress by National War College students as
part of a seminar on the legislative process. B-209584, Jan. 11, 1983.
* Director of the Office of Management and Budget's letter to all
Members of the House of Representatives urging opposition to a
disapproval resolution on a Presidential Reorganization Plan. B-192658,
Sept. 1, 1978.
See also B-200250, Nov. 18, 1980 (agency sent position paper to Members
of Congress opposing particular piece of pending legislation);
B-164497(5), Mar. 10, 1977 (entertainment in form of dinners for
Members of Congress); B-114823, Dec. 23, 1974 (personal visits to
Capitol Hill by agency officials during floor debate on authorizing
legislation, at request of congressional proponents of the
legislation); B-164786, Nov. 4, 1969 (cruises with Members of Congress
on presidential yacht, paid for from entertainment appropriation);
B-145883, Oct. 10, 1967 (unsolicited letter to Members of Congress from
agency head urging support for continuation of agency programs);
B-93353, Sept. 28, 1962 (telegram sent by agency head to all Members of
Congress).
A government contractor lobbying with its own corporate (i.e.,
nonfederal) funds would generally not violate the appropriation act
restriction. However, applicable contract cost principles may restrict
or prohibit reimbursement. See, e.g., Federal Acquisition Regulation,
48 C.F.R. § 31.205-22; B-218952, Aug. 21, 1985; U.S. General Accounting
Office, Nuclear Test Lobbying: DOE Regulations for Contractors Need
Reevaluation, GAO/RCED-88-25BR (Washington, D.C.: Oct. 9, 1987). In
addition, there may be legislation applicable to contractor
lobbying.[Footnote 342]
Also as indicated above, an agency will not violate the pending
legislation statute by disseminating material to the public that is
essentially expository in nature. Even if the material is promotional,
there is no violation, at least of the pending legislation statute, as
long as it is not a clear appeal to members of the public to contact
their elected representatives.[Footnote 343] Again, several cases will
illustrate.
For example, the Department of Transportation (Transportation) set up
displays on U.S. Capitol grounds of passenger cars equipped with
passive restraint systems (airbags). Transportation employees at the
displays distributed brochures, explained the devices, and answered
questions from Members of Congress and the public. All this was done
while legislation was pending to prohibit mandatory enforcement of the
airbag standard. Considering the timing and location of the displays,
one would have to be pretty stupid not to see this as an obvious
lobbying ploy, that did not make it illegal since there was no evidence
that Transportation urged members of the public to contact their
elected representatives. Thus, since it was not illegal for
Transportation to advocate the use of airbags or to communicate with
Congress directly, there was no violation. B-139052, Apr. 29, 1980. The
apparent intent alone is not enough; it must be translated into action.
The Office for Substance Abuse Prevention (OSAP) published "Prevention
Pipeline" as part of its statutory duties to act as a clearinghouse for
drug and alcohol abuse material and to educate the public. OSAP
included in the publication items submitted to it with the following
disclaimer: "Publication of information and products does not imply
endorsement by OSAP or the Federal Government." One item that was
submitted to and published by OSAP informed readers of an "activist's
guide" for communities developed by an organization that lobbied for
legislation requiring warning labels on alcoholic beverages. While the
item went on to describe the guide as helping people with writing to
U.S. Senators to urge support of legislation, it did not make any
reference to the specific legislation that was pending before Congress
at the time, nor did it expressly endorse the idea of writing to
Members of Congress in support of legislation. U.S. General Accounting
Office, Alleged Lobbying Activities: Office for Substance Abuse
Prevention, GAO/HRD-93-100 (Washington, D.C.: May 4, 1993).
Similarly, the statute was not violated by the following actions:
* Speech by Secretary of the Air Force urging defense contractors to
direct their advertising toward convincing the public of the need for a
strong defense rather than promoting particular weapon systems
manufactured by their companies. Speech did not refer to legislation
nor urge anyone to contact Congress. B-216239, Jan. 22, 1985.
* Bumper stickers purchased by the Department of Transportation and
affixed to government vehicles urging compliance with 55 mph speed
limit. B-212252, July 15, 1983.
* Various trips by the District of Columbia Police Chief during which
he made speeches supporting the administration's law enforcement
policy. B-118638, Aug. 2, 1974.
* Statements by cabinet members, distributed to news media, which
discussed pending legislation but were limited to an exposition of the
administration's views. B-178648, Dec. 27, 1973.
* Mailings by the National Credit Union Administration to federally
chartered credit unions consisting of reprints from the Congressional
Record giving only one side of a controversial legislative issue.
B-139458, Jan. 26, 1972.
* Statements by Deputy Assistant Secretary for the Mining Safety and
Health Administration (MSHA) before mining industry executives
concerning agency's opposition to legislative proposal to merge MSHA
with OSHA did not include urging anyone to contact Members of Congress.
U.S. General Accounting Office, MSHA Lobbying, GAO/HEHS-96-9R
(Washington, D.C.: Oct. 19, 1995).
* Remarks made by Secretary of Education in meetings with members of
education organizations and presidents of education associations
included factual presentation of budget proposals relating to education
but not requests for lobbying assistance. U.S. General Accounting
Office, Department Of Education: Compliance With the Federal Advisory
Committee Act and Lobbying Restrictions, GAO/GGD/OGC-00-18
(Washington, D.C.: Dec. 23, 1999).
* Housing and Urban Development report and the letter transmitting
report to agency constituencies criticized proposed budget cuts as
having "devastating impact on families and communities nationwide" but
did not contain any express appeals that members of the public contact
their congressional representatives. B-284226.2, Aug. 17, 2000.
See also B-270875, July 5, 1996 (Labor Department publications entitled
"America's Job Fax," supporting President's employment legislation);
B-147578, Nov. 8, 1962 (White House Regional Conferences); B-150038,
Nov. 2, 1962 (Department of Agriculture press release); B-148206,
Mar. 20, 1962 (radio and television announcements by Commerce
Department supporting foreign trade legislation).
(7) Pending legislation: Providing assistance to private lobbying
groups:
Another type of "lobbying" activity GAO has found improper is the use
of appropriated funds to provide assistance to private lobbying groups.
This is largely an outgrowth of the concept that an agency should not
be able to do indirectly that which it cannot do directly.
In 1977, the Office of the Special Assistant to the President for
Consumer Affairs and the Office of Consumer Affairs within the then
Department of Health, Education and Welfare (HEW) mounted an active
campaign to obtain passage of legislation to establish a Consumer
Protection Agency. As part of the campaign, the Special Assistant had
instructed the Office of Consumer Affairs to informally clear its
efforts with certain "public interest lobby members." In addition, two
of the consumer lobby groups asked HEW to provide material illustrating
situations where a Consumer Protection Agency could have had an impact
had it been in existence. Before implementing the campaign, however,
the Office of Consumer Affairs sought advice from the HEW General
Counsel, who advised against certain elements of the plan, including
the two items mentioned.
Since, pursuant to the HEW General Counsel's advice, the more egregious
elements of the plan were not carried out, the Comptroller General
concluded that no laws were violated. However, the Comptroller General
pointed out that the publicity and propaganda statute would prohibit
the use of appropriated funds to develop propaganda material to be
given to private lobbying organizations to be used in their efforts to
lobby Congress. An important distinction must be made. There would be
nothing wrong with servicing requests for information from outside
groups, lobbyists included, by providing such items as stock education
materials or position papers from agency files, since this material
would presumably be available in any event under the Freedom of
Information Act. The improper use of appropriated funds arises when an
agency assigns personnel or otherwise provides administrative support
to prepare material not otherwise in existence to be given to a private
lobbying organization. B-129874, Sept. 11, 1978. See also 66 Comp.
Gen. 707, 712 (1987), drawing the same distinction in the context of
18 U.S.C. § 1913.
In another example, the Maritime Administration ("MarAd") had become
intimately involved with the National Maritime Council, a trade
association of ship operators and builders. MarAd staff performed the
administrative functions of the Council at MarAd headquarters and
regional offices. In 1977, at a time when cargo preference legislation
was pending in Congress, the Council, with MarAd's active assistance,
undertook an extensive advertising campaign in national magazines and
on television advocating a strong U.S. merchant marine. Some of the
advertisements encouraged members of the public to contact their
elected representatives to urge them to support a strong merchant
fleet. Reviewing the situation, GAO concluded that MarAd had violated
the publicity and propaganda statute by expending appropriated funds to
provide administrative support to the Council in the form of staff
time, supplies, and facilities, when it knew the Council was attempting
to influence legislation pending before Congress. See B-192746O.M.,
Mar. 7, 1979; U.S. General Accounting Office, The Maritime
Administration And The National Maritime Council--Was Their
Relationship Appropriate? CED-79-91 (Washington, D.C.: May 18, 1979).
In B-133332, Mar. 28, 1977, the Smithsonian Institution had prepared an
exhibit entitled "The Tallgrass Prairie: An American Landscape" and
displayed it at a premiere showing for the benefit of the Tallgrass
Prairie Foundation, a nonprofit organization. While appropriated funds
were used to prepare the exhibit, none were used for the premiere
showing itself since, under the Smithsonian's traveling exhibit
program, administrative costs are paid by the host organization. The
problem arose because the Tallgrass Prairie Foundation shared a large
part of its membership with a lobbying organization known as "Save the
Tallgrass Prairie, Inc." (There is no cause that does not have its
lobbyists.) In addition, a leading member of both organizations had
actually created the exhibit under contract with the Smithsonian.
However, the exhibit itself was noncontroversial and the Foundation had
an independent legal existence. Thus, since no lobbying took place at
the premiere showing, and since any lobbying by "Save the Tallgrass" or
by the exhibits creator could not be imputed to the Foundation or to
the Smithsonian, GAO concluded that the Smithsonian had not used its
appropriations for any improper indirect lobbying.[Footnote 344]
(8) Promotion of legislative proposals: Prohibited activity short of
grass roots lobbying:
Since 1977, the following restriction has been included in every
Interior Department appropriations act:
"No part of any appropriation contained in this Act shall be available
for any activity or the publication or distribution of literature that
in any way tends to promote public support or opposition to any
legislative proposal on which congressional action is not
complete."[Footnote 345]
The Committee report accompanying what ultimately became the Interior
restriction explained the Committee's concern over "certain public
information activities being promoted by [some agencies] that tend to
promote pending legislative proposals to set aside certain areas in
Alaska for national parks, wildlife refuges, national forest and other
withdrawals." The Committee referred to the colorful brochures printed
and actively distributed by these agencies, extolling the benefits of
such proposals, which as a result tended to promote certain legislative
goals of these agencies. The Committee considered these activities to
be, at a minimum, violations of the intent of 18 U.S.C. § 1913. At the
same time the Committee cautioned that the language "should not be
construed as an impediment on the agencies ability to respond to public
information inquiries."[Footnote 346]
The Interior restriction has been interpreted to prohibit both
grassroots lobbying activity, proscribed by both 18 U.S.C. § 1913 and
the pending legislation restriction, and activity that falls short of
such activity. In describing the prohibited activity as that which "in
any way tends to promote public support or opposition (emphasis added)"
to legislation, the restriction is designed to cover particularly
egregious examples of lobbying even though the material or activity
stops short of explicitly soliciting a member of the public to contact
his or her member of Congress in support or opposition of pending
legislation. See 59 Comp. Gen. 115 (1979); B-284226.2, Aug. 17, 2000.
We have found a number of instances where agencies covered by the
Interior provision avoided grassroots lobbying but went beyond
appropriate information dissemination and violated the Interior
restriction:
* A mass mailing by the National Endowment for the Arts (NEA) of an
information package supporting the Livable Cities Program implicitly
advocated support of the appropriation for that NEA program. Although
the literature did not directly exhort readers to lobby Congress, its
tenor was clearly designed to promote public support for the program
and the mailing was timed to reach the public just before House
reconsideration of a prior refusal to fund the program. 59 Comp.
Gen. 115 (1979).
* Remarks made by a Fish and Wildlife Service employee at a press
conference called to generate opposition to a pending amendment to the
Clean Water Act and timed to coincide with the congressional
committee's active consideration, tended to promote public opposition
to the legislative proposal. While the official did not urge members of
the public to contact their Members of Congress, he stated, "we cannot
afford to roll back protection" for wetlands, which he believed the
legislation would do. B-262234, Dec. 21, 1995.
* Forest Service officials waged an aggressive campaign to promote
public support for a budget proposal seeking to change the way certain
Forest Service payments to states are calculated. Briefing packages,
used by officials in talking to local public officials likely to be
concerned about funding, were highly supportive of the proposal,
emphasizing the benefits of re-forming Forest Service payments to
states. Based on the response of some local officials, who indicated
they would contact their congressional representatives, the briefing
efforts were clearly:
* successful at promoting support for the payment proposal. B-281637,
May 14, 1999.[Footnote 347]
In analyzing whether a violation has occurred, a variety of factors
must be considered, including the timing, setting, audience, content,
and the reasonably anticipated effect of the questioned activity. See
U.S. General Accounting Office, H.R. 3078, The Federal Agency Anti-
Lobbying Act, GAO/T-OGC-96-18 (May 15, 1996).[Footnote 348]
Intent can also be an important factor to consider when presented with
a particularly close case. As we have noted, "there is a very thin line
between the provision of legitimate information in response to public
inquiries and the provision of information in response to the same
requests which tends to promote public support or opposition to pending
legislative proposals." 59 Comp. Gen. 115 (1979). Navigating this thin
line may be difficult for agencies, which cannot always prevent or even
anticipate public response.
In B-239856, Apr. 29, 1991, GAO relied on the demonstrated intent of
the National Endowment for the Arts (NEA) officials engaging in the
questioned activities, in concluding that the agency had not violated
the Interior restriction. One aspect of this decision involved an NEA
official's remarks at an arts conference. In response to a question
from the audience concerning what the audience could do to support NEA,
the official responded that they could contact their congressional
representatives. GAO's investigation concluded that there was no intent
to promote. The official's response was incidental to her presentation
and not part of any plan to generate action on the part of her
audience. The official's answer was viewed as more of a civics lesson,
informational in nature, rather than an exhortation to contact
Congress.
(9) Dissemination of political or misleading information:
Generally speaking, funds appropriated to carry out a particular
program would not be available for political purposes, that is, for a
propaganda effort designed to aid a political party or candidate. See
B-147578, Nov. 8, 1962. If for no other reason, such an expenditure
would be improper as a use of funds for other than their intended
purpose in violation of 31 U.S.C. § 1301(a). However, the publicity and
propaganda statute does not provide adequate guidelines to distinguish
between legitimate and purely political activities and is therefore
applicable to "political" activities only to the extent that the
activities would otherwise constitute a violation. See B-130961,
Oct. 26, 1972.
In more general terms, it is always difficult to find that conduct is
so purely political as to constitute a purpose violation. As stated in
B-144323, Nov. 4, 1960:
"[The question is] whether in any particular case a speech or a release
by a cabinet officer can be said to be so completely devoid of any
connection with official functions or so political in nature that it is
not in furtherance of the purpose for which Government funds were
appropriated, thereby making the use of such funds …unauthorized. This
is extremely difficult to determine in most cases as the lines
separating the nonpolitical from the political cannot be precisely
drawn.
"…As a practical matter, even if we were to conclude that the use of
appropriated funds for any given speech or its release was
unauthorized, the amount involved would be small, and difficult to
ascertain; and the results of any corrective action might well be more
technical than real."
Apart from considerations of whether any particular law has been
violated, GAO has taken the position that the government should not
disseminate misleading information. On occasion, the Comptroller
General has characterized publications as propaganda and attacked them
from an audit perspective.
In 1976, the former Energy Research and Development Administration
(ERDA) published a pamphlet entitled "Shedding Light On Facts About
Nuclear Energy." Ostensibly created as part of an employee motivational
program, ERDA printed copies of the pamphlet far in excess of any
legitimate program needs, and inundated the state of California with
them in the months preceding a nuclear safeguards initiative vote in
that state. The pamphlet had a strong pro-nuclear bias and urged the
reader to "Let your voice be heard." On the legal side, the pamphlet
did not violate any anti-lobbying statute because applicable
restrictions did not extend to lobbying at the state level. B-130961-
O.M., Sept. 10, 1976. However, GAO's review of the pamphlet found it to
be oversimplified and misleading. GAO characterized it as propaganda
not suitable for distribution to anyone, employees or otherwise, and
recommended that ERDA cease further distribution and recover and
destroy any undistributed copies. See U.S. General Accounting Office,
Evaluation Of the Publication and Distribution Of "Shedding Light On
Facts About Nuclear Energy," EMD-76-12 (Washington, D.C.: Sept. 30,
1976).
In a later report, GAO reviewed a number of publications related to the
Clinch River Breeder Reactor Project, a cooperative government/industry
demonstration project, and found several of them to be oversimplified
and distorted propaganda, and as such questionable for distribution to
the public. However, the publications were produced by the private
sector components of the Project and paid for with utility industry
contributions and not with federal funds. While GAO was thus powerless
to recommend termination of the offending publications, it nevertheless
recommended that the Department of Energy work with the private sector
components in an effort to eliminate this kind of material, or at the
very least insure that such publications include a prominently
displayed disclaimer statement making it clear that the material was
not government approved. U.S. General Accounting Office, Problems With
Publications Related To The Clinch River Breeder Reactor Project, EMD-
77-74 (Washington, D.C.: Jan. 6, 1978).
d. Lobbying with Grant Funds:
The use of grant funds by a federal grantee for lobbying presents
somewhat more complicated issues. On the one hand, there is the
principle, noted in various contexts throughout this publication, that
an agency should not be able to do indirectly what it cannot do
directly. Thus, if an agency cannot make a direct expenditure of
appropriated funds for certain types of lobbying, it should not be able
to circumvent this restriction by the simple device of passing the
funds through to a grantee. Yet on the other hand, there is the
seemingly countervailing rule that where a grant is made for an
authorized grant purpose, grant funds in the hands of the grantee
largely lose their identity as federal funds and are no longer subject
to many of the restrictions on the direct expenditure of
appropriations. See B-289801, Dec. 30, 2002 (holding that when the
Department of Education makes grant awards during the period of
availability of the funds to be used, Education's grant awards are in
compliance with the bona fide needs rule even when appropriations
available for only one fiscal year are used to fund multiyear grants).
In some instances, Congress has dealt with the problem by legislation.
For example, legislation, commonly known as the Byrd Amendment and
codified at 31 U.S.C. § 1352, imposes limited governmentwide
restrictions. Subsection 1352(a)(1) provides:
"None of the funds appropriated by any Act may be expended by the
recipient of a Federal contract, grant, loan, or cooperative agreement
to pay any person for influencing or attempting to influence an officer
or employee of any agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress in connection with
any Federal action described in paragraph (2) of this subsection."
The actions identified in paragraph (2) are the awarding of any federal
contract; the making of any federal grant or loan; the entering into of
any cooperative agreement; and the extension, continuation, renewal,
amendment, or modification of any federal contract, grant, loan, or
cooperative agreement. The law includes detailed disclosure
requirements and civil penalties. Subsection (d)(1)(C) stresses that
section 1352 should not be construed as permitting any expenditure
prohibited by any other provision of law. Thus, section 1352
supplements other anti-lobbying statutes; it does not supersede them.
Subsection (b)(6) of 31 U.S.C. § 1352 directs the Office of Management
and Budget (OMB) to issue guidance for agency implementation. OMB
published interim final guidance entitled "Governmentwide Guidance for
New Restrictions on Lobbying" on December 20, 1989 (54 Fed. Reg.
52306), supplemented on June 15, 1990 (55 Fed. Reg. 24540), and amended
on January 15, 1992 (57 Fed. Reg. 1772) and January 19, 1996 (61 Fed.
Reg. 1412). An interim final rule for grants was issued jointly by OMB
and 29 grantor agencies as a common rule on February 26, 1990 (55 Fed.
Reg. 6736). For contracts, see subpart 3.8 of the Federal Acquisition
Regulations.
GAO has addressed the application of the Byrd Amendment to federal
contractors in the context of bid protests but has not had occasion to
apply it to federal grant recipients. See 71 Comp. Gen. 281 (1992)
(communication between bidder's "regularly employed" employee and
government engineer was not an attempt to influence procuring agency in
connection with a federal contract and therefore did not violate the
Byrd Amendment); 71 Comp. Gen. 81 (1991) (Byrd Amendment does not
require disclosure of reasonable compensation to regularly employed
employees); 69 Comp. Gen. 604 (1990) (contractor lobbying activity was
not directed at award of current contract and therefore was not
required to be disclosed under the Byrd Amendment); B-246304.8 and
B-246304.9, May 4, 1993 (bidder's lobbying to have legislation changed,
regardless of how funded, did not violate the Byrd Amendment).
More recently, the Lobbying Disclosure Act of 1995,[Footnote 349] as
amended, 2 U.S.C. §§ 1601 et seq., provides that organizations
described in section 501(c)(4) of the Internal Revenue Code[Footnote
350] which engage in lobbying activities are not eligible to receive
federal grants. 2 U.S.C. § 1611. The Act, at 2 U.S.C. § 1602(7),
defines "lobbying activities" to mean:
"[L]obbying contacts and efforts in support of such contacts, including
preparation and planning activities, research and other background work
that is intended, at the time it is performed, for use in contacts, and
coordination with the lobbying activities of others."
The Act, at 2 U.S.C. § 1602(8), further defines "lobbying contact" to
mean communications with covered federal officials. As such, the Act
does not prevent "grassroots" lobbying activities by federal grants
recipients as that term is discussed earlier in this chapter in section
C.11.c.[Footnote 351]
Another example is the legislation governing the Legal Services
Corporation. Under the Legal Services Corporation Act, recipients of
funds, both contractors and grantees, may not use the funds directly or
indirectly to attempt to influence the passage or defeat of
legislation. The prohibition covers legislation at the state and local
level as well as federal legislation. The statute permits three
exceptions: (1) recipients may testify before and otherwise communicate
with legislative bodies upon request, (2) they may initiate contact
with legislative bodies to express the views of the Corporation on
legislation directly affecting the Corporation, and (3) they may engage
in certain otherwise prohibited lobbying activities when necessary to
the proper representation of an eligible client. 42 U.S.C.
§ 2996f(a)(5).[Footnote 352] For a general discussion of these
provisions, see B-129874-O.M., Oct. 30, 1978. See also B-202569,
Apr. 27, 1981; Regional Management Corp. v. Legal Services Corp.,
186 F.3d 457 (4th Cir. 1999) (generally discussing 42 U.S.C.
§ 2996f(a)(5) as part of finding that there is no private right of
action to challenge the Legal Services Corporation's decision that its
grantee did not violate anti-lobbying provision).
Three 1981 cases illustrate the application of the Legal Services
Corporation statute. In one case, the Board of Aldermen for the City of
Nashua, New Hampshire, was considering a resolution to authorize a
"food stamp workfare" demonstration project. An attorney employed by
the New Hampshire Legal Assistance group, a Legal Services Corporation
grantee, wrote to members of the Board urging them to reject the
resolution. Since the letter was not related to the representation of
any specific client or group of clients but rather had been self-
initiated by the attorney, the use of federal funds to prepare and
distribute the letter was illegal. B-201928, Mar. 5, 1981.
In the second case, 60 Comp. Gen. 423 (1981), the Corporation and its
grantees conducted a lobbying campaign to drum up support for the
Corporation's reauthorization and appropriation legislation. The
Corporation argued that the actions were permissible under the
exception authorizing contact with legislative bodies on legislation
directly affecting the Corporation. While recognizing that the statute
permitted direct self-initiated contact in these circumstances, GAO
reviewed the legislative history and concluded that the exception did
not permit grassroots lobbying either by the Corporation itself or by
its grantees.
In the third case, the Managing Attorney of a Legal Services
Corporation (LSC) grantee made a mass mailing of a form letter to local
attorneys. The letter solicited their support for continuation of the
LSC program and urged them to contact a local Congressman opposed to
reauthorization of the LSC to try to persuade him to change his vote.
This too constituted impermissible grassroots lobbying. B-202787,
Dec. 29, 1981.[Footnote 353]
GAO also found the statute was violated when a grantee used LSC grant
funds to oppose the confirmation of Judge Robert Bork to the United
States Supreme Court. The finding was based largely on LSC regulations
that broadly define "legislation" to include action on appointments.
B-230743, June 29, 1990.
Another provision in the LSC enabling legislation prohibits both the
Corporation and its grantees from contributing or making available
"corporate funds or program personnel or equipment for use in
advocating or opposing any ballot measures, initiatives, or
referendums." 42 U.S.C. § 2996e(d)(4). The Corporation and one of its
grantees violated this one by providing funds and personnel for a
campaign to defeat a ballot measure in California. 62 Comp. Gen. 654
(1983).
In addition to the LSC's enabling legislation, appropriation acts
providing funds for the Corporation also include restrictions.
Beginning in 1978, the Corporation's appropriations contained a
restriction that prohibited the use of Corporation funds for publicity
or propaganda designed to support or defeat legislation pending before
Congress or any state legislature. While serving largely to reemphasize
the prohibitions contained in the Corporation's enabling legislation,
the restriction made it clear that the exception for the proper
representation of eligible clients did not extend to grass roots
lobbying. See 60 Comp. Gen. 423 (1981); B-163762, Nov. 24, 1980.
Since 1996 the LSC's appropriations have gone beyond restricting
grantee use of federal funds for lobbying activities to a broader
prohibition of the Corporation's providing funds to any grantee "that
attempts to influence the passage or defeat of any legislation,
constitutional amendment, referendum, initiative, or any similar
procedure of the Congress or a State or local legislative body."
[Footnote 354]
In 2001, the Supreme Court struck down a restriction contained in the
Corporation's 1996 appropriation on the use of the Corporation's funds
for lobbying purposes. Legal Services Corp. v. Velazquez, 531 U.S. 533
(2001). The Court found that provisions, which sought to restrict
efforts toward welfare reform, were unconstitutional. See also Legal
Aid Society of Hawaii v. Legal Services Corp., 145 F.3d 1017 (9th
Cir.), cert. denied, 525 U.S. 1015 (1998) for additional background on
appropriation act restrictions.
Still another example of legislation expressly applicable to grantees
is discussed in B-202787(1), (May 1, 1981). The appropriation act
providing funds for the Community Services Administration (CSA)
contained a provision which prohibited the use of funds "to pay the
salary or expenses of any grant or contract recipient …to engage in any
activity designed to influence legislation or appropriations pending
before the Congress." GAO found this provision violated when a local
community action agency used grant funds for a mass mailing of a letter
to members of the public urging them to write to their Congressmen to
oppose abolition of the agency. In addition, CSA had issued a
regulation purporting to exempt CSA grantees from the appropriation act
restriction. Finding that CSA had exceeded its authority, the
Comptroller General recommended that CSA rescind its ruling. The
Justice Department also found the CSA regulations invalid, construing
the statute as constituting "an unqualified prohibition against
lobbying by federal grantees" and not merely a restriction on
grassroots lobbying. 5 Op. Off. Legal Counsel 180 (1981).
The provision discussed in the preceding paragraph was also violated
when a university, using grant funds received from the Department of
Education, encouraged students to write to Members of Congress to urge
their opposition to proposed cuts in student financial aid programs.
U.S. General Accounting Office, Improper Use of Federal Student Aid
Funds for Lobbying Activities, GAO/HRD-82-108 (Washington, D.C.:
Aug. 13, 1982).
An almost identical, subsequent provision was violated when a grantee
of the Office of Substance Abuse Prevention used grant funds to host a
conference used as a forum for grassroots lobbying. Another grantee did
not violate the provision, however, because its lobbying efforts
related to a state legislature matter. U.S. General Accounting Office,
Alleged Lobbying Activities: Office for Substance Abuse Prevention,
GAO/HRD-93-100 (Washington, D.C.: May 4, 1993). The fiscal year 2003
Labor, Health and Human Services, and Education, and Related Agencies
appropriation act contains a version of this restriction, which has
been expanded to prohibit such lobbying activities at the state level.
Pub. L. No. 108-7, § 503(b), 117 Stat. 11, 343 (Feb. 20, 2003).
The question of lobbying with grant funds becomes more difficult when
the situation is not covered by statute and applicable appropriation
act restrictions do not expressly cover grantees. Until late in 1981,
the question of whether appropriation act restrictions, silent as to
grantees, applied to grantee expenditures had not been definitively
addressed in a decision of the Comptroller General. An early case held
that telegrams to Members of Congress by state agencies funded by Labor
Department grants constituted an improper use of federal funds where
they were clearly designed to influence pending legislation. B-76695,
June 8, 1948. This case pre-dated appropriation act restrictions and
was decided under 18 U.S.C. § 1913.[Footnote 355] The concept of
applying the prohibition to grantee expenditures would arguably be the
same under the appropriation act restrictions. In a 1977 letter, GAO
noted the principle that funds in the hands of a grantee largely lose
their identity as federal funds and said that the applicability of the
publicity and propaganda statute was therefore "questionable."
B-158371, Nov. 11, 1977 (nondecision letter). A 1978 letter to a Member
of the Senate said that the issue should be addressed on a case-by-case
basis. B-129874, Aug. 15, 1978.
In B-128938, July 12, 1976, GAO said that an agency has a
responsibility to insure that its appropriations are not used to
violate the anti-lobbying statute. While the case involved expenditures
by a contractor, the principle would seemingly apply as well to a
grantee.
Finally, in B-202975(1), Nov. 3, 1981, the Comptroller General resolved
the uncertainty, applied the concept of B-128938, and concluded that:
"Federal agencies and departments are responsible for insuring that
Federal funds made available to grantees are not used contrary to [the
publicity and propaganda] restriction."
The case involved the Los Angeles Downtown People Mover Authority, a
grantee of the Urban Mass Transportation Administration (UMTA),
Department of Transportation. Fearing that its funding was in jeopardy,
the Authority prepared and distributed a newsletter urging readers to
write to their elected representatives in Congress to support continued
funding for the People Mover project. The Comptroller General found
that this newsletter, to the extent it involved UMTA grant funds,
violated the anti-lobbying statute.
Similarly, in 1996, GAO determined that the state of Nevada improperly
used grant funds in violation of a broad provision found in the annual
Energy and Water Development appropriation acts prohibiting the use of
federal funds to influence legislation and other lobbying
activities.[Footnote 356] See U.S. General Accounting Office, Nuclear
Waste: Nevada's Use of Nuclear Waste Grant Funds, GAO/RCED-96-72
(Washington, D.C.: Mar. 20, 1996). GAO concluded that the production of
a videotape advancing the state's opposition to a nuclear waste
repository at Yucca Mountain was an indirect attempt to influence a
matter pending before Congress.
In our preceding discussion of lobbying by government agencies, we
noted that appropriation act restrictions may be limited to lobbying
the United States Congress or may also apply to lobbying at the state
and local level where expressly provided. The same principle applies
with respect to lobbying with grant funds. B-214455, Oct. 24, 1984;
B-206466, Sept. 13, 1982.
e. Informational Activities:
As we have noted previously, a government agency has a legitimate
interest in informing the public about its programs and activities.
Just how far it can go depends on the nature of its statutory
authority. Certainly there is no need for statutory authority for an
agency to issue a press release describing a recent speech by the
agency head, or for the agency head or some other official to
participate in a radio, television, or magazine interview. Activities
of this type are limited only by applicable restrictions on the use of
public funds such as the anti-lobbying statutes previously discussed.
A 1983 decision illustrates another form of information dissemination
that is permissible without the need for specific statutory support.
Military chaplains are required to hold religious services for the
commands to which they are assigned. 10 U.S.C. § 3547. Publicizing such
information as the schedule of services and the names and telephone
numbers of installation chaplains is an appropriate extension of this
duty. Thus, GAO advised the Army that it could procure and distribute
calendars on which this information was printed. 62 Comp. Gen. 566
(1983). Applying a similar rationale, the decision also held that
information on the Community Services program, which provides various
social services for military personnel and their families, could be
included. See also B-290900, Mar. 18, 2003 (approving the Bureau of
Land Management's use of appropriated funds to pay its share of the
costs of disseminating information under a cooperative agreement);
B-280440, Feb. 26, 1999 (allowing the Border Patrol's use of
appropriated funds to purchase uniform medals that, in part, served to
advance "knowledge and appreciation for the agency's history and
mission").
Some agencies have specific authority to disseminate information. Such
authority will permit a broader range of activities and gives the
agency discretion to choose the appropriate means, the selection being
governed by the necessary expense doctrine.
The agency may use common devices such as buttons or magnets (e.g.,
72 Comp. Gen. 73 (1992)), newsletters (e.g., B-128938, July 12, 1976)
or conferences or seminars (e.g., B-166506, July 15, 1975). In one
case, the Comptroller General approved a much less conventional means.
Shortly after World War II, the Labor Department wanted to publicize
its employment services for veterans. It did this by discharging
balloons from a float in a parade. Attached to the balloons were
mimeographed messages asking employers to list their available jobs.
Since the Department was charged by statute with publishing information
on the program, the cost of the balloons was permissible. B-62501,
Jan. 7, 1947. Other pertinent cases are 32 Comp. Gen. 487 (1953)
(publication of Public Health Service research reports in scientific
journals); 32 Comp. Gen. 360 (1953) (the recording of Office of Price
Stabilization forum discussions to be used at similar meetings in other
regions); B-89294, Aug. 6, 1963 (use of motion picture by United States
Information Agency); B-15278, May 15, 1942 (photographs); A-82749,
Jan. 7, 1937 (radio broadcasts).
Conversely, in 18 Comp. Gen. 978 (1939), radio broadcasts by the
Veterans Administration were held to violate 31 U.S.C. § 1301(a)
because the agency did not have statutory authority to disseminate
information about its activities. However, in 1958, Congress gave the
then-named Veterans Administration the authority to "provide for the
preparation, shipment, installation, and display of exhibits,
photographic displays, moving pictures, and other visual educational
information and descriptive material."[Footnote 357] The Comptroller
General found that this authority, now codified in 38 U.S.C. § 703(d),
permitted the Department of Veterans Affairs to use its medical care
appropriation for the rental of booth space at the Oklahoma State Fair
and for the purchase of imprinted book matches and imprinted jar grip
openers to be distributed at the fair for recruiting purposes and to
provide veterans with a number to call to obtain information.
B-247563.2, May 12, 1993. The Bureau of Printing and Engraving also
needed statutory authority to publish a 100-year history to commemorate
its centennial because the Bureau is essentially an "industrial and
service" establishment and lacked authority to disseminate information.
43 Comp. Gen. 564 (1964).
f. Advertising and the Employment of Publicity Experts:
(1) Commercial advertising:
Suppose you opened this publication and found on the inside front cover
a full-page advertisement for somebody's soap or underwear or aluminum
siding or the local pool parlor. We assume most readers would find this
offensive. There is in fact a long-standing policy against involving
the government in commercial advertising. In the case of government
publications, the policy is codified in section 13 of the Government
Printing and Binding Regulations issued by the Joint Committee on
Printing (1990 reprint):
"No Government publication or other Government printed matter, prepared
or produced with either appropriated or nonappropriated funds or
identified with an activity of the Government, shall contain any
advertisement inserted by or for any private individual, firm, or
corporation; or contain material which implies in any manner that the
Government endorses or favors any specific commercial product,
commodity, or service."
S. Pub. No. 101-9 at 13 (1990). An explanatory paragraph included in
the regulations summarizes many of the reasons for this prohibition.
Advertising would be unfair to competitors in that it would, regardless
of intent, unavoidably create the impression of government endorsement.
It would also be unfair to nongovernment publications that compete for
advertising dollars and need those dollars to stay in business.
Acceptance of advertising could also pose ethical, if not legal,
problems. (Imagine, for example, lobbyists scrambling to purchase
advertising space in the Congressional Record.)
A different situation was presented in 67 Comp. Gen. 90 (1987). The
United States Information Agency (USIA) was authorized to accept
donations of radio programs from private syndicators for broadcast over
the Voice of America. Some donations were conditioned on the inclusion
of commercial advertising. GAO noted that, in the case of public
broadcast stations (which are supported by the Corporation for Public
Broadcasting), commercial advertising is expressly prohibited by
47 U.S.C. § 399b(b). However, there was no comparable statute
applicable to USIA. Therefore, the conditional donations were not
subject to any legal prohibition. In view of the traditional policy
against commercial advertising, GAO suggested that USIA first consult
the appropriate congressional committees.
(2) Advertising of government programs, products, or services:
Even the casual viewer of commercial television will note that the
government is heavily "into" advertising. From the ever-present
"Smokey:
Bear" reminding us that only we can prevent wildfires[Footnote 358] to
Vince and Larry, the Crash Test Dummies, and the recruitment efforts of
the U.S. Army and its message "An Army of One," the government has
sponsored a variety of campaigns designed to either encourage or
discourage various behaviors. Whether an agency's appropriations are
available for advertising, like any other expenditure, depends on the
agency's statutory authority.
Whether to advertise and, if so, how far to go with it[Footnote 359]
are determined by the precise terms of the agency's program authority
in conjunction with the necessary expense doctrine and general
restrictions on the use of public funds such as the various anti-
lobbying statutes. See B-251887, July 22, 1993 (Forest Service may pay
for newspaper advertisements informing the public of activities in the
national forests because these activities are within the Service's
statutory authority and the advertisements are reasonable ways of
disseminating information related to the purposes of the Service's
appropriation); B-229732, Dec. 22, 1988 (Department of Housing and
Urban Development had no authority to incur promotional expenses at a
trade show in the Soviet Union when the purpose of the show was to
enhance the potential for sale of American products and services in the
Soviet Union, a purpose unrelated to HUD's mission).
As noted previously, some agencies have express promotional authority.
For example, the Department of Energy may promote energy conservation.
See B-139965, Apr. 16, 1979 (nondecision letter). Similarly, the United
States Postal Service has statutory authority to advertise its
philatelic services to encourage stamp collecting. B-114874.30, Mar. 3,
1976 (nondecision letter).
As with the dissemination of information, where promotional authority
exists, agencies have reasonable discretion, subject to "necessary
expense" considerations, in selecting appropriate means. Thus, the Navy
could exercise its statutory authorization to promote safety and
accident prevention by procuring book matches with safety slogans
printed on the covers and distributing them without charge at naval
installations. B-104443, Aug. 31, 1951. Another example is B-184648,
Dec. 3, 1975.
Activities of the United States Mint furnish additional illustrations.
In B-206273, Sept. 2, 1983, GAO considered the Mint's promotional
authority under legislation authorizing coins to commemorate the 1984
Los Angeles Summer Olympics. GAO concluded that the Mint could stage
media events and receptions, and could give away occasional sample
coins at these events, if (1) the expenditures were deemed necessary to
further the statutory objectives, (2) a reasonable relationship were
found to exist between a given expenditure and a marketing benefit for
the program, and (3) promotional expenses were recouped from sales
proceeds. In 68 Comp. Gen. 583 (1989), GAO applied the same standards
to the commemorative coin program generally.[Footnote 360] Subsequent
Mint legislation expressly authorizes marketing, promotion, and
advertising. See, e.g., 31 U.S.C. § 5136.
The line between promotion and information dissemination is
occasionally thin, but the concepts are nevertheless different. Thus,
an agency may be authorized to disseminate information but not to
promote. If so, its "advertising" must be tailored accordingly. For
example, the Federal Housing Administration could disseminate authentic
information on available benefits or related procedures under a loan
insurance program, but could not use its funds for an advertising
campaign to create demand. 14 Comp. Gen. 638 (1935). Similarly, when
the United States Metric Board was first created, it could provide
information, assistance, and coordination for voluntary conversion to
metrics but could not advocate metric conversion. See U.S. General
Accounting Office, Getting A Better Understanding of the Metric System-
-Implications If Adopted by the United States, CED-78-128 (Washington,
D.C.: Oct. 20, 1978); B-140339, June 19, 1979.
(3) Publicity experts:
A statute originally enacted in 1913, now found at 5 U.S.C. § 3107,
provides:
"Appropriated funds may not be used to pay a publicity expert unless
specifically appropriated for that purpose."
GAO has had little occasion to interpret or apply 5 U.S.C. § 3107 and,
from the earliest cases, has consistently noted certain difficulties in
enforcing the statute. In GAO's first substantive discussion of
5 U.S.C. § 3107, the Comptroller General stated "[i]n its present form,
the statute is ineffective." A-61553, May 10, 1935. The early
cases[Footnote 361] identified three problem areas, summarized in
B-181254(2), Feb. 28, 1975.
First, the prohibition is against compensating any "publicity expert,"
but the statute does not define the term "publicity expert" nor does it
provide criteria for determining who is one. Traditionally, persons
employed for or engaged in so-called publicity work have not been
appointed as "publicity experts" but under some other designation, and
often have other duties as well. Everyone who prepares a press release
is not a "publicity expert." Testifying before the House Select
Committee on Lobbying Activities in 1950, Assistant Comptroller General
Weitzel said:
"I might mention one of the great difficulties in enforcing that
language is it is very, very rare, if ever, the case that a man is on
the pay roll as publicity experts [sic]. He can be called almost
anything else, and usually and frequently will have other duties, so
that that in itself, is a very difficult statute to enforce."[Footnote
362]
Second, employees engaged in so-called publicity work are normally
assigned to their duties by their supervisors. It would be harsh, in
the absence of much more definitive legislative or judicial guidance,
to withhold the compensation of an employee who is merely doing his or
her assigned job. Some thought was given in the 1930s and early 1940s
to amending the statute to cure this problem, but the legislation was
not enacted. See B-181254(2), supra; B-26689, May 4, 1943; A-82332,
Dec. 15, 1936.
Third, the effective implementation of the duties of some agencies
requires the acquisition and dissemination of information, although
agencies normally do not receive specific appropriations for the
required personnel.
Based on these considerations, GAO does not view 5 U.S.C. § 3107 as
prohibiting an agency's legitimate informational functions or
legitimate promotional functions where authorized by law. The apparent
intent of the statute is to prohibit publicity activity "for the
purpose of reflecting credit upon an activity, or upon the officials
charged with its administration, rather than for the purpose of
furthering the work which the law has imposed upon it." A-82332,
Dec. 15, 1936. See also B-181254(2), supra. In this sense, 5 U.S.C.
§ 3107 is closely related to the prohibition on self-aggrandizement
previously discussed, although the focus is different in that, to
violate 5 U.S.C. § 3107, the activity must be performed by a "publicity
expert."
In the only two cases in the 1970s with any substantial discussion of
5 U.S.C. § 3107, GAO considered a mass media campaign by the Federal
Energy Administration (FEA), now part of the Department of Energy, to
educate the American public on the need for and means of energy
conservation. Based on the considerations discussed above and on the
FEA's statutory authority to disseminate information and to promote
energy conservation, GAO found no basis on which to assess a violation
of 5 U.S.C. § 3107. B-181254(2), supra; B-139965, Apr. 16, 1979
(nondecision letter). In both cases GAO stressed its view that the
statute is not intended to interfere with the dissemination of
information that an agency is required or authorized by statute to
disseminate, or with promotional activities authorized by law.
The only case in the 1980s to apply 5 U.S.C. § 3107 is B-222758,
June 25, 1986. The Chemical Warfare Review Commission, a presidential
advisory committee, hired a public affairs consultant. The Commission's
functions were solely advisory; it had no authority to engage in
promotional activities or to maintain a public affairs program. In view
of the consultant's duties, job title, and reputation, GAO found that
he was a "publicity expert." As such, and given the nature of the
Commission's functions and its lack of statutory authority, the hiring
was held to violate 5 U.S.C. § 3107.
12. Membership Fees:
a. 5 U.S.C. § 5946:
Appropriated funds may not be used to pay membership fees of an
employee of the United States or the District of Columbia in a society
or association. 5 U.S.C. § 5946. The prohibition does not apply if an
appropriation is expressly available for that purpose, or if the fee is
authorized under the Government Employees Training Act. Under the
Training Act, membership fees may be paid if the fee is a necessary
cost directly related to the training or a condition precedent to
undergoing the training. 5 U.S.C. § 4109(b).
The rule that has evolved under 5 U.S.C. § 5946 is that membership fees
for individuals may not be paid, regardless of the resulting benefit to
the agency. An agency may, however, purchase a membership in its own
name upon an administrative determination that the expenditure would
further the authorized activities of the agency, and this determination
is not affected by any incidental benefits that may accrue to
individual employees.[Footnote 363]
In 24 Comp. Gen. 814 (1945), the Veterans Administration (VA) asked
whether it could pay membership fees for VA facilities in the American
Hospital Association. Facility membership would enable individual
employees to apply for personal membership at reduced rates. The
Comptroller General responded that the facility memberships were
permissible if administratively determined necessary to accomplish the
objectives of the appropriation to be charged. The indirect benefit to
individual officials would not operate to invalidate the agency
membership. However, the expenditure would be improper if its purpose
was merely to enable the officials to obtain the reduced rates for
personal memberships. VA could not, of course, pay for the individual
memberships.
Similarly, GAO advised the Environmental Protection Agency (EPA) that
it could not pay the membership fees for its employees in professional
organizations (such as the National Environment Research Center and the
National Solid Waste Management Association), notwithstanding the
allegation that the benefits of membership would accrue more to the
agency than to the individuals. EPA could, however, purchase a
membership in its own name if it justified the expenditure as being of
direct benefit to the agency and sufficiently related to carrying out
the purposes of its appropriation. 53 Comp. Gen. 429 (1973).[Footnote
364]
In another 1973 decision, the Comptroller General held that the Justice
Department could not reimburse an electronics engineer employed by the
Bureau of Narcotics and Dangerous Drugs for membership in the Institute
of Electrical and Electronic Engineers. The Justice Department had
argued that the government benefited from the membership by virtue of
reduced subscription rates to Institute publications and because the
membership contributed to employee development. These factors were not
sufficient to overcome the prohibition of 5 U.S.C. § 5946. Once again,
GAO pointed out that the Bureau could become a member of the Institute
in its own name if membership was administratively determined to be
necessary. 52 Comp. Gen. 495 (1973). To the same effect is B-205768,
Mar. 2, 1982 (Federal Mediation and Conciliation Service can purchase
agency membership in Association of Labor Related Agencies upon making
appropriate administrative determinations).
In another case, the Comptroller General held that the National Oceanic
and Atmospheric Administration could not pay the membership fee of one
of its employees in Federally Employed Women, Inc., notwithstanding the
employee's designation as the agency's regional representative. The
mere fact that membership may be job-related does not overcome the
statutory prohibition. B-198720, June 23, 1980. See also 19 Comp.
Dec. 650 (1913) (Army could not pay for Adjutant General's membership
in International Association of Chiefs of Police). Similarly, the fact
that membership may result in savings to the government, such as
reduced travel rates for members, does not overcome the prohibition
against individual memberships. 3 Comp. Gen. 963 (1924).
As noted, an agency may purchase membership in its own name in a
society or association since 5 U.S.C. § 5946 prohibits only memberships
for individual employees. The distinction, however, is not a
distinction in name only. An expenditure for an agency membership must
be justified on a "necessary expense" theory. To do this, the
membership must provide benefits to the agency itself. For example, in
31 Comp. Gen. 398 (1952), the Economic Stabilization Agency was
permitted to become a member of a credit association because members
could purchase credit reports at reduced cost and the procurement of
credit reports was determined to be necessary to the enforcement of the
Defense Production Act. In 33 Comp. Gen. 126 (1953), the Office of
Technical Services, Commerce Department, was permitted to purchase
membership in the American Management Association. The appropriation
involved was an appropriation under the Mutual Security Act to conduct
programs including technical assistance to Europe, and the membership
benefit to the agency was the procurement of Association publications
for foreign trainees and foreign productivity centers. See also
70 Comp. Gen. 190 (1991) (prohibition in 5 U.S.C. § 5946 does not
prohibit an agency from using appropriated funds to purchase access for
its employees to a private fitness center's exercise facilities as part
of the agency's health service program as authorized by 5 U.S.C.
§ 7901); B-241706, June 19, 1991 (Public Health Service may reimburse
physicians for annual medical staff dues since hospital privileges are
essential to the performance of the agency's business); B-236763,
Jan. 10, 1990 (GAO may pay fees for agency membership in certain
professional organizations and designate appropriate GAO employees to
attend functions for recruitment purposes).
Citing 31 Comp. Gen. 398 and 33 Comp. Gen. 126, the Comptroller General
held in 57 Comp. Gen. 526 (1978), that the Department of Housing and
Urban Development could purchase, in the name of the Department, air
travel club memberships to obtain discount air fares to Hawaii.
Similarly, the General Services Administration could join a shippers
association to obtain the benefit of volume transportation rates.
B-159783, May 4, 1972.
GAO has also approved membership by the Federal Law Enforcement Center
in the local Chamber of Commerce, B-213535, July 26, 1984, and by a
naval installation in the local Rotary Club, 61 Comp. Gen. 542 (1982).
In the latter decision, however, GAO cautioned that the result was
based on the specific justification presented, and that the decision
should not be taken to mean that "every military installation or
regional Government office can use appropriated funds to join the
Rotary, Kiwanis, Lions, and similar organizations." Id. at 544.
The acquisition of needed publications for the agency is sufficient
benefit to justify purchase of an agency membership. 20 Comp. Gen. 497
(1941) (membership of Naval Academy in American Council on Education);
A-30185, Feb. 5, 1930 (membership of Phoenix Indian School in National
Education Association). See also 33 Comp. Gen. 126 (1953). Compare
52 Comp. Gen. 495 (1973), holding that acquisition of publications is
not sufficient to justify an individual, as opposed to agency,
membership.
A variation occurred in 19 Comp. Gen. 937 (1940). The Cleveland office
of the Securities and Exchange Commission (SEC) desired access to a law
library maintained by the Cleveland Law Library Association. Access was
available only to persons who were stockholders in the Association. The
alternative to the SEC would have been the purchase of its own library
at a much greater cost. Under the circumstances, GAO advised that
5 U.S.C. § 5946 did not prohibit the stock purchases or the payment of
stockholders assessments. GAO further noted, however, that a preferable
alternative would be a contract with the Association for a flat-rate
service charge.
Where there is no demonstrable benefit to the agency, the membership
expense is improper. Thus, in 32 Comp. Gen. 15 (1952), the cost of
membership fees for the New York Ordnance District of the Army in the
Society for Advancement of Management was disallowed. The membership
was in actuality four separate memberships for four individuals and the
primary purpose was to enhance the knowledge of those individuals.
Since the benefit to the agency must be in terms of furthering the
purposes for which its appropriation was made, a benefit to the United
States as a whole rather than the individual agency may not be
sufficient. In 5 Comp. Gen. 645 (1926), the former Veterans Bureau
owned herds of livestock and wanted to have them registered. Reduced
registration costs could be obtained by joining certain livestock
associations. The benefit of registration would be a higher price if
the agency sold the livestock. However, sales proceeds would have to be
deposited in the Treasury as miscellaneous receipts and would thus not
benefit the agency's appropriations. Membership was therefore improper.
(The agency's appropriation language was subsequently changed and the
membership was approved in A-38236, Mar. 30, 1932.)
Several of the decisions have pointed out that an agency may accept a
gratuitous membership without violating the Antideficiency Act.
31 Comp. Gen. 398, 399 (1952); A-38236, Mar. 30, 1932, quoted in
24 Comp. Gen. 814, 815 (1945).
In addition, payment of a membership fee at the beginning of the period
of membership does not violate the prohibition on advance payments
found in 31 U.S.C. § 3324. For example, in B-221569, June 2, 1986, the
Coast Guard could properly use its funds to pay the membership fees in
certain unspecified private organizations (not physical fitness
facilities) at the beginning of the membership period. The advance
payment prohibition was not applicable since the agency got the benefit
of what it purchased upon payment. What was being purchased was a
"membership," and the membership was received upon payment. Compare
B-288013, Dec. 11, 2001, holding that agency payments of membership
fees to a private fitness center at the beginning of each option year,
under a contract for providing fitness facilities and services for
government employees, before it is known how many and when agency
employees use the contractor's facilities and services, would violate
the advance payment provision in 31 U.S.C. § 3324. There is a fuller
discussion of the advance payment provision in Chapter 5, section C.
The evolution of the statutory law on membership fees produced a
somewhat anomalous result in some of the early cases. Section 5946 of
Title 5 of the United States Code originally prohibited--and still
prohibits--not only membership fees but also the expenses of attending
meetings. In the early decades of the statute, some agencies received
specific authority to pay the expenses of attendance at meetings, but
many did not. Thus, as the individual versus agency membership
distinction developed, some of the decisions were forced to conclude
that an agency could purchase a membership in an association but that
nobody could attend the meetings since attending meetings could not be
done by "the agency" but only through an individual. See, e.g.,
24 Comp. Gen. 814, 815 (1945); A-30185, Feb. 5, 1930. Two provisions of
the Government Employees Training Act, 5 U.S.C. §§ 4109 and 4110, now
permit attendance at meetings and conferences in certain situations.
Thus, as a general proposition, if an organization is closely enough
related to an agency's official functions to justify agency membership,
it is presumably closely enough related to justify sending a
representative to its meetings. See also section C.2 of this chapter,
entitled "Attendance at Meetings and Conventions."
As noted above, the prohibition in 5 U.S.C. § 5946 against individual
memberships does not apply if the fee is authorized by the Government
Employees Training Act. An illustration is 61 Comp. Gen. 162 (1981),
holding that the Defense Department could pay the licensing fees of
Methods Time Measurement instructors for the Army Management
Engineering Training Agency. The instructors had to be trained and
certified--hence the fee--before they could train others. Further, the
fee was not a matter of "personal qualification" since the
certifications would be restricted to the training of Defense
Department personnel and would be of no personal use to the instructors
apart from their Defense Department jobs. For more on the issue of
personal qualification see section C.13.e of this chapter.
Compare that case with the decision in B-286026, June 12, 2001, in
which the Pension Benefit Guaranty Corporation (PBGC) asked whether it
could use appropriated funds to pay, as training costs, fees for
actuary accreditation. PBGC employs a number of actuaries to calculate
pension benefits. Although actuaries do not need a professional license
for employment, as part of a collective bargaining agreement PBGC
proposed to use training funds to send actuaries to the examination
review courses, provide on-the-job study time, and pay for the
accreditation examinations. PBGC determined that this course of study
and testing would enhance the ability of the PBGC actuaries to carry
out their assignments. PBGC has the discretion under the Government
Employees Training Act to determine that the review courses constitute
appropriate training for its actuaries. Accordingly, GAO agreed that
PBGC has authority, under 5 U.S.C. § 4109(a), to use appropriated funds
for review courses and on-the-job study time. However, there was no
authority to pay the cost of the accreditation examination itself,
since a licensing accreditation examination does not fall within the
Government Employees Training Act's definition of training. In the
absence of statutory authority, an agency may not pay the costs of its
employees taking licensing examinations since professional
accreditation is personal to the employee and should be paid with
personal funds. Here, the actuarial accreditation belongs to the
employee personally and would remain so irrespective of whether the
employee remains with the federal government. This case predated
enactment of 5 U.S.C. § 5757, which gave agencies the discretionary
authority to reimburse employees for expenses incurred in obtaining
professional credentials, including the costs of examinations. This
authority is discussed in more detail in this chapter in the next
section on attorneys' expenses related to admission to the bar, and in
section C.13.e of this chapter on professional qualification expenses.
Another example of the inapplicability of 5 U.S.C. § 5946 when the
membership fee is authorized under the Government Employees Training
Act is B-223447, Oct. 10, 1986, approving certain individual
memberships for employees of the U.S. Army Corps of Engineers in the
Toastmasters International organization as a source of public speaking
training. The organization required membership in order to obtain the
training. Because the Government Employees Training Act does not apply
to active duty members of the uniformed services (68 Comp. Gen. 127
(1988)), the Act's exception to 5 U.S.C. § 5946, and cases applying the
Act or the exception, apply to civilian employees of the military
departments but not to uniformed personnel.
b. Attorneys:
Over the years a number of cases have dealt with the expenses of
admission to the bar and related items for attorneys employed by the
government. Generally these expenses have been viewed as personal
qualification expenses to be paid by the attorney. Recent legislation
codified at 5 U.S.C. § 5757 provides authority for agencies, at their
discretion, to pay some or all of these expenses. See the discussion at
the end of this section.
The question first came up in 22 Comp. Gen. 460 (1942), when the
Federal Trade Commission asked if it could reimburse one of its
attorneys the fee he paid to be admitted to the bar of the Tenth
Circuit Court of Appeals. The attorney had paid the fee in order to
make an appearance to represent the agency in a suit filed against it.
The Comptroller General said no, stating the rule as follows:
"It has been the consistent holding of the accounting officers of the
United States that an officer or employee of the Government has upon
his own shoulders the duty of qualifying himself for the performance of
his official duties and that if a personal license is necessary to
render him competent therefor, he must procure it at his own expense."
Id. at 461.
In 1967, the National Labor Relations Board asked GAO to reconsider the
rule in a fact situation similar to that in 22 Comp. Gen. 460. GAO
reviewed the basis for the prior decision in light of the Government
Employees Training Act, but found no reason to change it. Pointing out
that "the privilege to practice before a particular court is personal
to the individual and is his for life unless disbarred regardless of
whether he remains in the Government service," the Comptroller General
again held that the bar admission fee was personal to the attorney and
could not be paid from appropriated funds. 47 Comp. Gen. 116 (1967).
The same result was reached in B-161952, June 12, 1978, again to the
National Labor Relations Board. The fact that an attorney might require
admission to several courts rather than just one in the performance of
official duties was found immaterial and GAO rejected the suggestion
that the court admission would be of very limited value to the attorney
after leaving the government.
Questions have also arisen over the requirement for a government
attorney to remain a member in good standing of the bar of some state
or the District of Columbia. In a jurisdiction with a "unified" or
"integrated" bar, the attorney must pay an annual fee to remain a
member in good standing, and membership in the state's bar association
goes along with the fee. (Some states require annual fees to remain on
the active rolls but do not include bar association membership.) In
B-171667, Mar. 2, 1971, the annual fee for an Internal Revenue Service
attorney to remain in good standing in the California bar, an
integrated bar jurisdiction, was held not reimbursable from
appropriated funds. The fee remains a matter of personal qualification
and the principle is the same whether applied to a one-time fee or to
dues or fees charged on a recurring basis. The decision cited 5 U.S.C.
§ 5946 as an additional reason. GAO reached the same result in 51 Comp.
Gen. 701 (1972), concerning a Patent Office attorney's membership in
the unified bar of the District of Columbia; again in B-204213,
Sept. 9, 1981, concerning mandatory dues for continued membership in
the North Carolina bar; and still again in B-204215, Dec. 28, 1981,
concerning the membership of an Internal Revenue Service estate tax
attorney in the New Jersey bar.
Another case applying the prohibition is B-187525, Oct. 15, 1976. The
decision further pointed out that an agency may not pay the costs
incurred by one of its attorneys in taking a bar examination since the
examination is part of the employee's personal qualification process.
See also 55 Comp. Gen. 759 (1976) concerning examinations in general.
In 61 Comp. Gen. 357 (1982), GAO held that the Merit Systems Protection
Board could not pay the bar membership fees of its appeals officers. It
made no difference that the requirement for appeals officers to be bar-
admitted attorneys was a new one the Board had imposed on incumbent
employees. In addition, the Board could not pay bar review course fees.
(The decision distinguished B-187525, cited above, which had permitted
bar review course fees in a very limited situation.)
In 2001, section 1112 of the National Defense Authorization Act for
Fiscal Year 2002, Pub. L. No. 107-107, 115 Stat. 1238 (Dec. 28, 2001)
amended Title 5, United States Code, by adding a new section 5757.
Under 5 U.S.C. § 5757(a), agencies may, at their discretion, use
appropriated funds to pay expenses incurred by employees to obtain
professional credentials, state-imposed and professional licenses,
professional accreditations, and professional certifications,
including the costs of examinations to obtain such credentials. This
authority is not available to pay such fees for employees in or seeking
to be hired into positions excepted from the competitive service
because of the confidential, policy-determining, policy-making, or
policy-advocating character of the position. 5 U.S.C. § 5757(b).
Nothing in the statute or its legislative history defines or limits the
terms "professional credentials," "professional accreditation," or
"professional certification." Agencies have the discretion to determine
whether resources permit payment of credentials, and what types of
professional expenses will be paid under the statute. Thus, if an
agency determines that the fees its attorneys must pay for admission to
practice before federal courts are in the nature of professional
credentials or certifications, the agency may exercise its discretion
under 5 U.S.C. § 5757 and pay those fees out of appropriated funds.
B-289219, Oct. 29, 2002.
13. Personal Expenses and Furnishings:
a. Introduction:
Items that are classified as personal expenses or personal furnishings
may not be purchased with appropriated funds without specific statutory
authority. Most of the cases tend to involve government employees, the
theory being simply that there are certain things an employee is
expected to provide for him(her)self. A prime example is food, covered
in detail previously in this chapter.
The rule on personal expenses and furnishings was stated as follows in
3 Comp. Gen. 433 (1924):
"[P]ersonal furnishings are not authorized to be purchased under
appropriations in the absence of specific provision therefor contained
in such appropriations or other acts, if such furnishings are for the
personal convenience, comfort, or protection of such employees, or are
such as to be reasonably required as a part of the usual and necessary
equipment for the work on which they are engaged or for which they are
employed."
This decision is still cited frequently and the rule is applied in many
contexts. Of course, over the years, exceptions have evolved, both
statutory and nonstatutory. The remainder of this section explores
several categories of personal expenses.
b. Business or Calling Cards:
Business cards or calling cards are commonly used in the commercial
world. (We use the terms synonymously here even though there may be
technical distinctions.) Until 1998, we considered them inherently
personal in nature, and therefore, a personal expense that was not
payable from appropriated funds, absent specific statutory authority.
See B-246616, July 17, 1992. In 1998, however, we agreed that an
agency, applying a necessary expense analysis, may reasonably determine
that its appropriations are available to obtain business cards for
employees who regularly deal with the public or organizations outside
their immediate office. B-280759, Nov. 5, 1998.
The previous rule had its origins in decisions of the Comptroller of
the Treasury. For example, in 20 Comp. Dec. 248 (1913), the Comptroller
of the Treasury considered the argument that was usually presented in
every case--that the cards were to be used for official business
purposes. Nonetheless, business or calling cards were considered more a
matter of personal convenience than necessity. Therefore, the
Comptroller advised federal agencies that the cost of business cards is
a personal expense and, therefore, is not chargeable to public
funds.[Footnote 365]
In more recent years, the Comptroller General applied the long-standing
prohibition of the use of appropriated funds for: reimbursement of an
employee of the National Highway Traffic Safety Administration who had
purchased business cards at his own expense (B-195036, July 11, 1979);
purchase of a Forest Service public affairs officer's "identification
cards," since the cards were to be used for the same purposes as
traditional business cards (68 Comp. Gen. 467 (1989)); and payment for
"cards of introduction" (B-149151, July 20, 1962).
In 1998, GAO re-examined the prohibition. In B-280759, Nov. 5, 1998,
GAO did not object to the use of Operation and Maintenance (O&M) funds
for the purchase of business cards for use by civilian personnel
specialists of the Army Civilian Personnel Advisory Center. The
Advisory Center acts as a liaison between Army employing units and
their employees, and provides advice and assistance to employers and
employees. The specialists would use the business cards to provide the
Center's customers with accurate information on how to contact the
specialist assigned to a customer's case. Applying a necessary expense
analysis, we concluded that business cards would advance the Center's
mission, and that use of the Army's O&M appropriation (which funds the
Center's activities) to purchase business cards for the specialists was
proper. See also Memorandum from Richard L. Shiffrin, Deputy Assistant
Attorney General, Office of Legal Counsel, Department of Justice, to
Emily C. Hewitt, General Counsel, General Services Administration,
Aug. 11, 1997.
We have considered the cost of business or calling cards for Members of
Congress and their staff who require them a necessary and justifiable
expense, given the nature of Members' constituent responsibilities. See
B-198419, Nov. 25, 1980; B-198419, July 8, 1980.
Also, we have considered reception and representation (or comparable
forms of "entertainment") appropriations to be available to purchase
business cards for employees whose jobs included representation.
B-223678, June 5, 1989 (noting that business cards are a "legitimate
and accepted" representation device, so the expenditure is subject to
the limitation of that appropriation). See also 72 Comp. Gen. 146
(1993); 68 Comp. Gen. 467, 468 n.1 (1989); B-246616, July 17, 1992).
We considered a variation on business cards in B-173239, June 15, 1978.
The Board for International Broadcasting wanted to use what it termed
"transmittal slips" to accompany the distribution of its annual report.
The transmittal slip resembled a business card and contained the words
"With the compliments of (name and title), Board for International
Broadcasting." It was not necessary to decide whether the "slips" were
business cards or not, because 44 U.S.C. § 1106 expressly provides that
documents distributed by an executive department or independent
establishment may not contain or include a notice that they are being
sent with "the compliments" of a government official. Use of the
transmittal slips was therefore unauthorized.
Also, "name tags" to be worn on the person were not considered the same
as business cards and could be provided from appropriated funds.
B-236763, Jan. 10, 1990. A name tag is more closely analogous to a
government identification card, which is clearly not a personal
expense. 2 Comp. Gen. 429 (1923). See also 11 Comp. Gen. 247 (1931)
(identification insignia to be worn on caps).
c. Health, Medical Care and Treatment:
(1) Medical care:
The rule for medical care is that, except for illness directly
resulting from the nature of the employment, medical care and treatment
are personal to the employee and payment may not be made from
appropriated funds unless provided for in a contract of employment or
by statute or valid regulation. 57 Comp. Gen. 62 (1977); 53 Comp.
Gen. 230 (1973). The case most frequently cited for this rule is
22 Comp. Gen. 32 (1942), which contains citations to many of the
earlier decisions.[Footnote 366]
Exceptions have been recognized where a particular item could be
justified as being primarily for the benefit of the government rather
than the employees. The exceptions involve primarily physical
examinations and inoculation. For example, appropriated funds were held
available in the following cases:
* 41 Comp. Gen. 387 (1961) (desensitization treatment for a Department
of Agriculture horticulturist with a known history of severe reaction
to bee and wasp stings).
* 23 Comp. Gen. 888 (1944) (purchase of drugs and their administration
by private doctor to employees exposed to spinal meningitis in line of
duty; otherwise, agency would have risked having to quarantine the
employees and close the facility).
* B-108693, Apr. 8, 1952 (X-rays for Weather Bureau personnel being
assigned to Alaska, presumably necessitated by a high incidence of
tuberculosis among Eskimos).
By virtue of legislation enacted in 1946 and now found at 5 U.S.C.
§ 7901, each agency is authorized to establish a health service program
to promote and maintain the physical and mental fitness of employees
under its jurisdiction. The statute expressly limits authorized health
service programs to (1) treatment of on-the-job illness and dental
conditions requiring emergency attention; (2) pre-employment and other
examinations; (3) referral of employees to private physicians and
dentists; and (4) preventive programs relating to health.
Under this legislative authority, the Comptroller General advised, for
example, that an agency could, upon determining that it will be in the
government's interest to do so, provide immunization against specific
diseases without charge to employees. 47 Comp. Gen. 54 (1967).
In 57 Comp. Gen. 62 (1977), the Comptroller General held that the
Environmental Protection Agency was authorized by 5 U.S.C. § 7901 to
procure diagnostic and preventive psychological counseling services for
its employees. The service could encompass problem identification,
referral for treatment or rehabilitation to an appropriate service or
resource, and follow-up to help an employee readjust to the job during
and after treatment, but could not include the actual treatment and
rehabilitation. Actual treatment and rehabilitation remain the
employee's responsibility.
In B-270446, Feb. 11, 1997, provision of psychological assessment and
referral services for Customs Service employees' family members was
determined to be for the benefit of the government and, therefore,
permitted under 5 U.S.C. § 7901. The Service's Employee Assistance
Program may render these services for family members adversely affected
by work-related activities of, or traumatic incidents involving death
or serious injury to, an employee in the line of duty carrying out the
agency's law enforcement activities. Cf. 71 Comp. Gen. 527 (1992) (a
federal agency may not use appropriated funds to provide space for
eldercare facilities for the adult relatives of agency employees, but
may provide employee referral and counseling programs).
In B-198804, Dec. 31, 1980, GAO refused to expand the holding in
57 Comp. Gen. 62 to permit an agency to pay the expenses of alcoholism
treatment and rehabilitation for one of its employees. Treatment and
rehabilitation, as stressed in 57 Comp. Gen. 62, are the employee's
responsibility. It made no difference that the employee had been
erroneously advised that the expenses would be covered by her health
insurance and had already incurred the expenses, since the government
cannot be bound by the unauthorized acts or representations of its
agents.
Federal agencies are authorized under 5 U.S.C. § 7901 to establish
smoking cessation programs for their employees, and may use their
operating appropriations to pay the costs. 68 Comp. Gen. 222 (1989). In
light of the body of evidence of the health hazards of smoking, the
decision reasoned, programs to help employees quit smoking are clearly
"preventive programs relating to health" for purposes of the
statute.[Footnote 367]
Physical fitness programs may qualify as preventive health programs
under 5 U.S.C. § 7901 to the extent permissible under applicable
regulations such as Office of Management and Budget Circulars, the
Federal Personnel Manual, and regulations of the General Services
Administration. In addition, it may be possible to justify some
programs under the necessary expense concept without the need to invoke
the statute. For example, in 63 Comp. Gen. 296 (1984), GAO applied the
necessary expense doctrine to conclude that Bureau of Reclamation funds
were available for physical exercise equipment to be used in a
mandatory physical fitness program for firefighters.
In 64 Comp. Gen. 835 (1985), GAO considered the scope of a permissible
fitness program under section 7901, concluding that a program could
include comprehensive physical fitness evaluations and laboratory blood
tests. Based on the statute alone, it could also include physical
exercise. However, regulations then in effect precluded use of
appropriated funds for physical exercise as part of a health service
program. The decision further noted, as 63 Comp. Gen. 296 had held,
that physical exercise costs incident to a mandatory program
necessitated by the demands of designated positions could be paid as a
necessary expense without the need to rely on 5 U.S.C. § 7901. See also
B-216852-O.M., Mar. 6, 1985 (discussing GAO's own authority to
establish a fitness program); B-216852, Dec. 17, 1984 (nondecision
letter).
Subsequent to 64 Comp. Gen. 835, the Office of Personnel Management
revised its regulations to include physical fitness programs and
facilities as permissible preventive health services. Based on the
revised regulations, an agency may now use appropriated funds to
provide access to a private fitness center's exercise facilities,
although both GAO and OPM caution that expenditures of this type should
be carefully monitored and should be undertaken only where all other
resources have been considered and rejected. 70 Comp. Gen. 190 (1991).
However, appropriated funds are not authorized for payment of:
(1) employees' membership fees to a contracted private fitness center
in advance of employees' use of facilities (B-288013, Dec. 11, 2001);
or (2) registration fees for employee members of an agency's on-site
fitness center to participate in local competitive fitness or sports
activities. Participation in such events is generally a personal
activity, not an essential part of a government-sponsored preventive
health program. 73 Comp. Gen. 169 (1994).
Medical treatment not within the scope of 5 U.S.C. § 7901 remains
subject to the general rule expressed in cases such as 22 Comp.
Gen. 32. Thus, the cost of an ambulance called by an agency medical
officer to take an employee to a hospital could not be paid from
appropriated funds. B-160272, Nov. 14, 1966. (This is the kind of
expense that can be covered by employee health insurance plans.) In
another case, GAO rejected the contention that medical expenses are
automatically "necessary expenses," and concluded that Internal Revenue
Service (IRS) appropriations were not available to reimburse the State
Department for medical services provided to IRS overseas employees and
their dependents under the Foreign Service Act of 1946. 53 Comp.
Gen. 230 (1973). The decision noted that several other agencies had
received specific statutory authority to participate in the program.
A review of the decisions involving medical examinations will further
illustrate the relationship of 5 U.S.C. § 7901 to the decisional rules.
Prior to the enactment of section 7901, a pre-employment physical
examination, the purpose of which was to determine an applicant's
eligibility for a federal job, was the applicant's responsibility and
was not chargeable to appropriated funds. 22 Comp. Gen. 243 (1942).
Applying the "primary benefit of the government" standard, however, the
Comptroller General found post-employment examinations permissible in
certain situations. Thus, in 22 Comp. Gen. 32 (1942), GAO told the Army
that it could use its appropriations to provide periodic physical
examinations to detect arsenic poisoning in civilian workers in a
chemical warfare laboratory. The decision noted that instances of
arsenic poisoning:
"might have a depressing effect on the morale of fellow
workers"[Footnote 368] and might make it more difficult to find
qualified people to do the work.[Footnote 369] In another case, a
civilian employee joined the Army during World War II. He received a
medical discharge, and thereafter applied for reinstatement to his
former civilian job. GAO advised that the agency could pay for a
physical examination which it required prior to reinstatement. 23 Comp.
Gen. 746 (1944).
In 1946, 5 U.S.C. § 7901 was enacted. Now, agencies have specific
authority to include medical examinations, including pre-employment
examinations, without charge to applicants, in the health programs they
are authorized to establish. 30 Comp. Gen. 493 (1951). While the
statute authorizes establishment of government programs, it does not
authorize the reimbursement of privately incurred expenses. Thus, an
applicant who declines to use an available government doctor for a pre-
employment examination and instead chooses to have it performed by a
private doctor may not be reimbursed. 31 Comp. Gen. 465 (1952).
In situations not covered by the statute, the "primary benefit of the
government" test continues to apply. Thus, based on the earlier
precedents, the cost of medical examinations by private physicians was
approved in the following cases:
* 30 Comp. Gen. 387 (1951) (physical examinations of Department of
Agriculture employees engaged in testing repellents and insecticides
for use by the armed forces; no government medical facilities
available).
* 41 Comp. Gen. 531 (1962) (annual physical examinations for Saint
Lawrence Seaway Development Corporation employees engaged in strenuous
physical work, often under severe weather conditions; no public health
facilities in area).
The examinations in both of the above cases could have been included in
an authorized health service program. As noted, however, facilities
were not available in either case. Thus, since the examinations were
for the primary benefit of the government, appropriated funds were
available to have them performed by private physicians. See also
73 Comp. Gen. 219 (1994) (National Transportation Safety Board could
reimburse air safety investigators for the costs of physical exams
required to obtain a Federal Aviation Administration (FAA) medical
certificate if the agency's public health facility has no FAA-certified
physician); B-286137, Feb. 21, 2001 (U.S. Geological Survey could pay
for eye examinations for employees whose work requires visual acuity,
but may not pay for their prescription eyeglasses, which are personal
and useful to employees who need them inside, as well as outside, the
workplace).
In 65 Comp. Gen. 677 (1986), the Navy could pay for a medical
examination required for a private individual joining a government
research exercise under invitational travel orders. Although government
medical facilities were presumably available, there was no need to note
this fact in the decision. Since the individual was neither a
government employee nor an applicant for a government job, she could
not be required to use the government facility and, since the Navy
wanted her participation, it could not very well expect her to bear the
expense.
Conversely, in B-253159, Nov. 22, 1993, the costs of medical
examinations performed by private physicians for two Centers for
Disease Control and Prevention employees and their dependents were not
reimbursable because the examinations were neither required by the
agency nor for the benefit of the government. The two employees and
their dependents obtained the examinations in preparation for their
relocation to assignments outside the United States. See also A.
Carter, Jr., GSBCA No. 15435, 01-1 B.C.A. ¶ 31,404 (Apr. 9, 2001)
(Department of Defense should reimburse its civilian employee for
dependents' immunizations, and may reimburse him for dependents'
physical examinations (both required to obtain return visas to the
United States), if the Navy determines that the examinations were
primarily for the benefit of the government).
(2) Purchase of health-related items[Footnote 370]
The purchase of health-related items, while conceptually related to the
medical care cases, is also an application of the "personal expense"
rule set forth in 3 Comp. Gen. 433, cited at the beginning of this
section, that personal equipment needed to qualify an employee to
perform the regular duties of his or her position may not be paid from
appropriated funds. The rule is illustrated in B-187246, June 15, 1977.
There, a Community Services Administration employee's doctor had placed
him under certain restrictions because of a back injury. Specifically,
he was to use a "sacro-ease positioner" for his office chair and could
drive cars only with a minimum 116-inch wheel base, bucket seats, and
full power. While the equipment may have been necessary for that
particular individual to perform his duties, it was not essential to
the transaction of official business from the government's standpoint.
Therefore, the items could not be provided from appropriated funds.
In B-166411, Sept. 3, 1975, an employee who, as a result of a back
injury, needed a bedboard while traveling could not be reimbursed
beyond the normal per diem. The bedboard was a personal expense.
Similarly, gratuities for wheelchair services while traveling were held
nonreimbursable in B-151701, July 3, 1963.
A different type of situation arose in B-215640, Jan. 14, 1985. An
agency asked whether it could purchase a heavy-duty office chair for an
employee who needed extra physical support because he weighed over 300
pounds and had broken 15 regular chairs. While the particular type of
chair in question was necessitated by the employee's physical
condition, it is nevertheless the case that an office chair is not
"personal equipment" but is an item the government is normally expected
to provide for its employees. The purchase was therefore authorized.
Another exception occurred in 23 Comp. Gen. 831 (1944). There, GAO
approved the rental of an amplifying device to be attached to an
official telephone for use by an employee with a hearing handicap. The
device was seen as a means of obtaining the best results from available
personnel. The precedent value of this decision is somewhat
speculative. On the one hand, the device would not become the property
of the individual. Yet on the other hand, the decision seems to have
been based largely on the difficulty of hiring "qualified" employees in
view of the wartime draft situation. (Whether consideration was given
to hiring women is not mentioned.)
Generally, however, exceptions stem from some statutory basis. Thus, in
56 Comp. Gen. 398 (1977), the Comptroller General approved the purchase
of a motorized wheelchair for use by a Social Security Administration
employee. The decision emphasized that a wheelchair is normally the
employee's personal expense. In this case, however, the employee had
his own nonpowered wheelchair and needed a motorized wheelchair only
because the agency had not complied with the Architectural Barriers Act
of 1968. The wheelchair would, of course, become the property of the
government and was approved only as a temporary expedient pending
compliance with the statute.
One important statute in this regard is the Rehabilitation Act of 1973,
29 U.S.C. § 791. Pursuant to the Rehabilitation Act, federal agencies
are required to make "reasonable accommodations" for the known physical
or mental limitations of qualified employees with disabilities. See 29
C.F.R. §§ 1614.203(b), 1630.9(a). We discuss the Rehabilitation Act in
the next section.
Health-related items may also be authorized as "special protective
equipment" under 5 U.S.C. § 7903, discussed later in this chapter in
section C.13.i. Thus, prescription ground safety glasses may be
purchased for employees engaged in hazardous duties. The glasses become
and remain the property of the government. The government can also pay
the cost of related eye refraction examinations in limited
circumstances. 51 Comp. Gen. 775 (1972).
Relying on 3 Comp. Gen. 433 rather than 5 U.S.C. § 7903, GAO, in
45 Comp. Gen. 215 (1965), approved the purchase of special prescription
filter spectacles and clinical eye examinations necessary to obtain the
proper prescription for employees operating stereoscopic map plotting
instruments. Employees who did not use special glasses frequently lost
the required visual skills before reaching the normal retirement age.
Also, the special glasses would be of no personal use to the employees
except during working hours and would remain the property of the
government. However, the purchase of eyeglasses for employees who work
at video display terminals is not authorized. There is no applicable
safety standard in the Occupational Safety and Health Act, 29 U.S.C.
§§ 651-678, the work is not (or at least has not yet been found to be)
hazardous to the eyes if proper care is used, and not all employees who
work at terminals need eyeglasses. 63 Comp. Gen. 278 (1984). See also
B-286137, Feb. 21, 2001 (U.S. Geological Survey may use appropriated
funds to provide eye examinations for certain employees for the benefit
of the government, but it may not provide these employees with
prescription eyeglasses that would not be for exclusive use at work).
The 1980s saw a veritable flood of cases involving the purchase of air
purifiers ("smokeeaters") as the campaign against smoking became a
cause celebre. The rules, distilled from several decisions,[Footnote
371] are as follows:
* Appropriated funds are not available to purchase air purifiers for
the private office of an employee who objects to tobacco smoke unless
the employee's hypersensitivity to smoke qualifies him or her as
handicapped under the Rehabilitation Act of 1973.
* Air purifiers may be purchased for "common areas" such as reading
rooms.
* Air purifiers may be placed on the desks of employees who smoke if
they will provide a general benefit to all employees working in the
area.
In 2002, consistent with Executive Order No. 13058, Protecting Federal
Employees and the Public From Exposure to Tobacco Smoke in the Federal
Workplace, 62 Fed. Reg. 43,451 (Aug. 9, 1997), the General Services
Administration prohibited the smoking of tobacco products in all
interior space owned, rented, or leased by the executive branch, and in
any outdoor areas under executive branch control in front of air intake
ducts. 41 C.F.R. § 102-74.315.
Another related line of decisions addresses the purchase of bottled
drinking water for use in federal work facilities where the safety of
municipal or locally provided water is at issue. Generally,
appropriated funds are not available to pay for bottled water for the
personal use of employees. GAO has made an exception where a building's
water supply is unhealthy or unpotable. See, for example, B-247871,
Apr. 10, 1992, where a problem with the water supply system in a
building caused lead content to exceed the maximum contaminant level
and justified the purchase of bottled water for employees until the
problems with the system could be resolved.
(3) The Rehabilitation Act:
The Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 701-797,
establishes a federal policy in support of nondiscriminatory employment
of individuals with a disability. Consistent with that policy, the
federal government, its contractors, and federally funded entities are
prohibited from discriminating against employees who have physical or
mental impairments that substantially limit one or more major life
activities but who can perform the essential functions of the position
they hold (or apply for), with or without reasonable accommodation.
29 U.S.C. § 791; 29 C.F.R. §§ 1614.203, 1630(2). The Rehabilitation Act
requires federal agencies to assume an affirmative leadership role in
promoting the employment of qualified handicapped individuals.
29 U.S.C. § 791(b); see also 29 U.S.C. § 701(b)(2).
The Rehabilitation Act is related to the probably better known
Americans With Disabilities Act (ADA) of 1990, Pub. L. No. 101-336,
title I, § 101, 104 Stat. 330 (July 26, 1990), codified at 42 U.S.C.
§§ 12101 et seq. Although the ADA does not apply to federal employers
[42 U.S.C. § 12111(5)(B)(i); 29 C.F.R. § 1630.2(e)(2)(i)], the ADA's
standards are used to determine whether agencies are in compliance with
the Rehabilitation Act's requirements for employment of qualified
individuals with disabilities. 29 U.S.C. § 791(g).[Footnote 372] Under
Equal Employment Opportunity regulations, federal agencies are required
to make "reasonable accommodations" for the known physical or mental
limitations of qualified employees with disabilities, unless the
accommodation(s) would impose an undue hardship on the agency's
program. 29 C.F.R. §§ 1630.9(a), 1614.203(b). See B-291208, Apr. 9,
2003; B-243300, Sept. 17, 1991.
While GAO has no jurisdiction over substantive claims brought against
federal agencies under the Rehabilitation Act, we have responded to
agency inquiries concerning the propriety of using appropriated funds
for expenditures or informal settlement awards under the Act. See
72 Comp. Gen. 111 (1993); 69 Comp. Gen. 470 (1990). Questions
occasionally arise concerning whether an agency's provision of a
proposed, or requested, accommodation complies with federal
appropriations principles (see, e.g., B-240271, Oct. 15, 1990); whether
an expense claimed by an employee is reimbursable or must be borne by
the employee (see, e.g., 68 Comp. Gen. 242 (1989)); or whether an item
or service may appropriately be provided under the Rehabilitation Act
as a reasonable accommodation, even though not initially viewed as such
(see, e.g., B-291208, Apr. 9, 2003). We discuss these three decisions,
and others, below.
In addressing these questions, we recognize that agencies may expend
appropriated funds to accomplish the purposes of the Rehabilitation Act
when acting under the Act's authority and the regulatory standards that
govern its application. B-240271, Oct. 15, 1990. An expenditure that
might be viewed as personal in nature but for the Rehabilitation Act is
a proper use of an agency's appropriation when incurred in satisfaction
of the Act's requirements.
Thus, in B-240271, supra, GAO advised that the purchase of a motorized
wheelchair for a quadriplegic employee who spent half of his time on
official travel could be regarded as a "reasonable accommodation" under
29 C.F.R. § 1630.9, on condition that the wheelchair remain the
property of the government. Similarly, in B-243300, Sept. 17, 1991, GAO
determined that an agency could pay for wheelchair van transportation
as a reasonable accommodation under the Rehabilitation Act for an
employee severely handicapped by cerebral palsy. The employee needed
the service for assistance in returning home when her disability
affected her at work in a manner that temporarily rendered her unable
to walk. Since this condition occurred only about three times a year,
the cost to the agency for the service would be minimal.
The employment of reading assistants for blind employees and
interpreting assistants for deaf employees is covered. Cf. 72 Comp.
Gen. 305 (1993) (the Department of Education may pay for personal
assistants for handicapped grant and compliance reviewers who are not
federal employees as a cost of acquiring the personal services of these
reviewers).
The Rehabilitation Act has also been held applicable to parking
expenses. As a general matter, parking incident to an employee's
commute between his residence and permanent duty station is a personal
expense (see section C.13.k). However, if severely disabled employees
must pay parking costs higher than those paid by nondisabled employees
working at the same facility,[Footnote 373] the agency can subsidize
the difference. 63 Comp. Gen. 270 (1984); (see also B-291208, Apr. 9,
2003, discussed in detail in this chapter, section C.13.j).
Other types of personal expenses that have been recognized as
reasonable accommodations under the Rehabilitation Act for employees
with disabilities include--
* Baggage handling fees, to the extent they were incurred as the result
of the employee's disability and exceeded similar expenses a non-
disabled person would incur in a similar situation (68 Comp. Gen. 242
(1989));
* Additional subsistence expenses incurred by an employee who, with
supervisory approval, began a required temporary duty assignment 3 days
early, driving from Denver through mountainous terrain to San
Francisco, and delayed the return trip by 2 days because of a severe
snowstorm. Under the circumstances the employee exercised good judgment
and prudence by extending his travel time in view of his disability
(64 Comp. Gen. 310 (1985));
* Shipment of an employee's specially equipped vehicle in connection
with a permanent change of duty station from California to Washington,
D.C., which the agency clearly justified as a cost beneficial,
reasonable accommodation under the circumstances (64 Comp. Gen. 30
(1984)); and:
* Travel expenses and per diem for an attendant accompanying an
employee who was required to travel to an unfamiliar area in connection
with a permanent change of duty station. The attendant's travel expense
and per diem constituted a necessary expense under the circumstances.
59 Comp. Gen. 461 (1980).
The costs of structural changes to an employee's home were not
considered a reasonable accommodation under the Rehabilitation Act. The
employee had argued that the changes were required as a result of his
assignment to a new permanent duty station. Even though the
modifications were necessary to facilitate his mobility, they were made
to his privately owned property, and therefore, did not constitute a
"reasonable accommodation" under the statute or regulations. B-266286,
Oct. 11, 1996.
d. Office Furnishings (Decorative Items):
An agency's appropriations are available without question to furnish
the space it occupies with such necessary items as desks, filing
cabinets, and other ordinary office equipment. Questions occasionally
arise when the item to be procured is decorative rather than
utilitarian.
The availability of appropriations for certain decorative items has
long been recognized. In 7 Comp. Dec. 1 (1900), the Comptroller of the
Treasury advised the Secretary of the Treasury that "paintings suitable
for the decoration of rooms" were within the meaning of the term
"furniture." Therefore, an appropriation for the furnishing of public
buildings was available to purchase cases and glass coverings for
paintings of deceased judges. The paintings had been donated to the
government for display in a courtroom.
The Comptroller followed this decision in 9 Comp. Dec. 807 (1903),
holding that Treasury appropriations were available to buy portraits as
furniture for the Ellis Island immigration station if administratively
determined "necessary for the public service."
Citing both of these decisions, the Comptroller General held in
B-178225, Apr. 11, 1973, that the appropriation for Salaries and
Expenses of the Tax Court was available for portraits of the Chief
Judges of the Tax Court, to be hung (the portraits, not the judges) in
the main courtroom. Similarly, the Tax Court could purchase artwork and
other decorative items for judges' individual offices. 64 Comp.
Gen. 796 (1985).
Other decisions approving the use of appropriated funds for decorative
items are B-143886, Sept. 14, 1960 (oil painting of agency head for
"historical purposes" and public display); B-121909, Dec. 9, 1954
("solid walnut desk mount attached to a name plate"); B-114692, May 13,
1953 (framing of Presidential Certificates of Appointment for display
in the appointee's office).
Purchase of decorative items for federal buildings is now covered in
the Federal Property Management Regulations, 41 C.F.R. § 101.26.103-2
(2003). The regulations authorize expenditures for pictures, objects of
art, plants, flowers (both artificial and real), and other similar
items. However, such items may not be purchased solely for the personal
convenience or to satisfy the personal desire of an official or
employee.
The regulation was discussed and the rule restated in 60 Comp. Gen. 580
(1981). Decorative items may be purchased if the purchase is consistent
with work-related objectives and the items to be purchased are not
"personal convenience" items.[Footnote 374] The determination of
"necessity" is within the agency's discretion, subject to the
regulations. The regulations apply equally to space leased by an agency
in a privately owned building. See also 64 Comp. Gen. 796 (1985);
63 Comp. Gen. 110, 113 (1983).
As noted, one type of permissible decorative item is plants. A
restriction in a 1980 appropriation act prohibited the use of funds for
plant maintenance contracts. The Comptroller General construed this
provision to apply to office space to which particular federal
employees were actually assigned. The provisions legislative history
suggested that it was not intended to apply to outdoor plants or to
plants in common areas that were not the assigned work space of any
particular employee or group of employees. 59 Comp. Gen. 428 (1980).
e. Personal Qualification Expenses:
Generally, expenses necessary to qualify a government employee to do
his or her job are personal expenses and not chargeable to appropriated
funds. As stated in an early decision:
"That which is required of a person to become invested with an office
must be done at his own expense unless specific provision is made by
law for payment by the Government."
2 Comp. Dec. 262, 263 (1895). Somewhat coldly, the Comptroller added,
"if he does not desire the office, he need not accept it." Id. See also
United States v. Van Duzee, 140 U.S. 169, 171 (1891) ("it is the duty
of persons receiving appointments from the government …to qualify
themselves for the office").
In a 1994 decision, GAO recognized that federal law has subjected the
federal government to state regulation in some areas, particularly in
the area of environmental regulation, and concluded that where federal
employees are required by federal law to comply with state and local
licensing regulations, the employee's agency can use appropriations to
cover the cost of obtaining the license necessary to perform the
regulated activity. 73 Comp. Gen. 171 (1994) (asbestos abatement
license required by South Carolina; water treatment foreman's license
required by Texas; pesticide and herbicide application license required
by North Carolina). In that decision, GAO noted that federal law
required that Air Force activities in these areas conform to the
regulatory requirements of the states.
"While the license or permit is often obtained in the name of the [Air
Force] member, the primary interest in obtaining the license lies with
the Air Force …Any personal benefit that Air Force members receive from
the acquisition of the licenses is nominal and incidental to the
performance of their official duties."
Id. at 173. GAO distinguished such licenses from the licensing
requirements of professional personnel such as teachers, accountants,
engineers, lawyers, doctors, and nurses.
"These individuals are fully aware of the licensing requirements of
their professions from the time they begin their professional
education, and of the fact that society expects them to fully qualify
themselves for the performance of their chosen professions. In that
sense, the licensing requirements are considered to be more for the
personal benefit of the individuals than for their employers."
Id. GAO noted, also, that driver's licenses are considered for the
personal benefit of the employee. Id.
In 2001, Congress enacted legislation permitting agencies to use
appropriations for "expenses for employees to obtain professional
credentials, including expenses for professional accreditation, State-
imposed and professional licenses, and professional certification; and
examinations to obtain such credentials." Pub. L. No. 107-107,
§ 1112(a), 115 Stat. 1238 (Apr. 12, 2001), codified at 5 U.S.C.
§ 5757.[Footnote 375] The statutory language does not create an
entitlement; instead, it authorizes agencies to consider such expenses
as payable from agency appropriations if the agency chooses to cover
them.
Neither the statute nor its legislative history defines the terms
"professional credentials," "professional accreditation," and
"professional certification." GAO has not had occasion to interpret and
apply the statute. Nevertheless, the statute and the 1994 decision
together appear to cover many, if not most, qualification expenses that
GAO previously found to be personal to the employee, including
actuarial accreditation (B-286026, June 12, 2001), licenses to practice
medicine (B-277033, June 27, 1997), a Certified Government Financial
Manager designation (B-260771, Oct. 11, 1995), and professional
engineering certificates (B-248955, July 24, 1992). See also section
C.12.b of this chapter for a discussion of attorneys' bar membership
fees.
It is not clear whether the statute covers driver's licenses.
Historically, with a few exceptions, a driver's license was considered
a personal expense. 21 Comp. Gen. 769, 772 (1942); 6 Comp. Gen. 432
(1926); 23 Comp. Dec. 386 (1917). An exception was recognized in
B-115463, Sept. 18, 1953, for Army civilian employees on temporary duty
(TDY) of at least 6 months' duration in foreign countries, where the
employees did not already possess drivers licenses, operating a motor
vehicle was not part of the job for which the employees were hired, but
the Army wanted to include driving as part of their TDY duties as a
less expensive alternative to hiring additional personnel, and the
license was required by the host country. See also B-257895, Oct. 28,
1994 (National Security Agency may pay for commercial licenses where
the license benefited the Agency and was not a personal qualification
for the employee's position); B-87138-O.M., July 19, 1949 (Virgin
Islands). As noted above, in 73 Comp. Gen. 171, which concluded that
agencies may pay for licenses required by certain state and local
regulations, GAO expressly excluded driver's licenses. 73 Comp. Gen.
at 173 ("the cost of driver's licenses are considered for the personal
benefit of federal employees"). To the extent that an agency refers to
the 2001 statute as authority to pay the cost of an employee's driver's
license, the agency will have to find that the license is a
professional credential, professional accreditation, State-imposed and
professional license, or professional certification.
Another statute, 5 U.S.C. § 5945, specifically covers notary publics.
It permits agencies to reimburse an employee whose job includes serving
as a notary public the expense required to obtain the commission.
5 U.S.C. § 5945. The expense is reimbursable even though the employee
uses the notarial power for private as well as government business.
36 Comp. Gen. 465 (1956).
f. Photographs:
General rule: The cost of photographs of individual government
employees is a personal expense not chargeable to appropriated funds in
the absence of specific statutory authority. 31 Comp. Gen. 452 (1952).
Thus, the dissemination to the press of photographs of a new agency
official upon his appointment was held to be an improper expenditure in
B-111336, Sept. 16, 1952.
The rule is intended to prevent the use of public funds for the
personal publicity of a particular individual. Exceptions have
accordingly been recognized where there is adequate justification that
the expenditure is necessary to accomplish some purpose for which the
appropriation was made. For example, the distribution of photographs of
an area director of the Equal Employment Opportunity Commission (EEOC)
was held permissible in 47 Comp. Gen. 321 (1967) where the purpose was
to increase cooperation with the EEOC by publicizing its activities and
functions. The decision further pointed out that the expense was
chargeable to the fiscal year in which the photographs were taken
rather than the year in which they were actually used.
Another acceptable justification is illustrated in B-123613, June 1,
1955, involving photographs of the Under Secretary of the Interior. One
of the Under Secretary's functions is to represent the Secretary in
various parts of the country. The photographs were obtained in order to
respond to requests by organizations in preparing programs or by the
press, in connection with this official travel. Similar justifications
were found sufficient in B-114344, May 19, 1953, and B-47547, Feb. 15,
1945.
Photographs for use on identification cards or badges are permissible
when administratively determined necessary to protect government
property or for security reasons. 23 Comp. Gen. 494 (1944); 20 Comp.
Gen. 566 (1941); 20 Comp. Gen. 447 (1941); 2 Comp. Gen. 429 (1923).
At one time, travel regulations did not provide for the reimbursement
of passport photographs, and they were held to be nonreimbursable
personal expenses unless and until the regulations should be amended.
9 Comp. Gen. 311 (1930). The regulations were subsequently amended and
passport photographs are now reimbursable under 41 C.F.R. § 301-12.1
(2003). See 52 Comp. Gen. 177 (1972).
While earlier decisions state the rule in terms of photographs of
individual employees, it applies to other photographs as well. The
expense will be permitted where it clearly constitutes a means of
effecting a proper agency function and disallowed where adequate
justification does not exist.
For example, distribution of photographs of a department store display
was viewed as a proper means of carrying out a statutory function of
encouraging public cooperation toward economic stabilization.
B-113464, Jan. 29, 1953. Similar types of justification were found
sufficient in B-175434, Apr. 11, 1972; B-113026, Jan. 19, 1953; and
B-15278, May 15, 1942. However, inadequate justification was found in
B-149493, Dec. 28, 1977, in which a group photograph of interagency
participants in a training symposium, sent free to participants, was
held a personal, rather than a necessary, expense. Similarly,
photographs taken at the dedication of the Klondike Gold Rush Visitor
Center to be sent by the National Park Service as "mementos" to persons
attending the ceremony were disallowed as a personal gift in B-195896,
Oct. 22, 1979.
g. Seasonal Greeting Cards and Decorations:
(1) Greeting cards:
The cost of seasonal greeting cards is a personal expense to be borne
by the officer who ordered and sent them, and may not be charged to
public funds.
In a 1957 case, an agency with overseas posts wanted to send Christmas
cards to "important individuals" in the countries where the posts were
located. The agency tried to justify the expense as a means of
disseminating information and thereby to promote mutual understanding.
The Comptroller General ruled, however, that the expense was a personal
one and could not be paid from the agency's appropriations. 37 Comp.
Gen. 360 (1957). As to the purported justification, the Comptroller
General said "it seems to us that very little, if any, information in
that regard is contained on the ordinary Christmas greeting card." Id.
at 361. See also 7 Comp. Gen. 481 (1928); B-247563.4, Dec. 11, 1996;
B-115132, June 17, 1953.
It is immaterial that the card is "nonpersonal," that is, sent by the
agency and not containing the names of any individuals. The expenditure
is still improper. 47 Comp. Gen. 314 (1967); B-156724, July 7, 1965.
In 47 Comp. Gen. 314, it was also held immaterial that the expenditure
had been charged to a trust fund in which donations, which the agency
was statutorily authorized to accept, had been deposited.
Transmitting the greetings in the form of a letter rather than a card
does not legitimize the expenditure. In 64 Comp. Gen. 382 (1985), an
agency head sent out a letter stating that the entire staff of the
agency "joins me in wishing you a joyous holiday. We look forward to
working with you and your staff throughout the coming year." A Member
of Congress questioned the propriety of sending these letters in
penalty mail envelopes. GAO noted that the letter "transacts no
official business" and "is the essence of a Christmas card." Id. at
384. Therefore, the costs should not have been charged to appropriated
funds.
While all of the above cases deal with Christmas greetings, the rule
would presumably apply equally to other holiday or seasonal cards. It
would also apply to "greetings" not tied in to any particular holiday.
B-149151, July 20, 1962 ("thank you for hospitality" cards). The point
is that while sending greetings may be a nice gesture, it is not the
sort of thing that should be charged to the taxpayers.
(2) Seasonal decorations:
Prior to 1987, based in part on the reasoning that seasonal decorations
are significantly different from ordinary office furnishings designed
for permanent use, it had been GAO's position that Christmas
decorations (trees, lights, ornaments, etc.) were not a proper charge
to appropriated funds. 52 Comp. Gen. 504 (1973); B-163764, Feb. 25,
1977 (nondecision letter).
In 1987, GAO overruled 52 Comp. Gen. 504, concluding that the rules for
office decorations should be the same whether the decorations are
seasonal or permanent. 67 Comp. Gen. 87 (1987). Thus, seasonal
decorations are now permissible "where the purchase is consistent with
work-related objectives [such as enhancement of morale], agency or
other applicable regulations, and the agency mission, and is not
primarily for the personal convenience or satisfaction of a government
employee." Id. at 88. See also B-226781, Jan. 11, 1988. In implementing
this decision, agencies should be appropriately sensitive (whatever
that means) with respect to the display of religious symbols. 67 Comp.
Gen. at 89.
The rationale of 67 Comp. Gen. 87 does not apply to Christmas cards,
which remain "basically individual good will gestures and are not part
of a general effort to improve the work environment." Id. See also
B-247563.4, Dec. 11, 1996.
h. Traditional Ceremonies:
Expenditures that might otherwise be prohibited as personal may be
permissible when they are incurred incident to certain traditional
ceremonies. Groundbreaking ceremonies and dedication ceremonies for the
laying of cornerstones in public buildings are the most common examples
of such traditional ceremonies.
For example, in B-158831, June 8, 1966, the cost of flowers used as
centerpieces at a dedication ceremony was held to be a proper
expenditure. See also B-247563.4, Dec. 11, 1996 (floral centerpiece for
use at awards ceremony). Similarly, the cost of engraving and chrome-
plating a ceremonial shovel used in a groundbreaking ceremony was
viewed as a necessary expense of the ceremony. 53 Comp. Gen. 119
(1973). In the cited decision, however, the voucher could not be paid
because there was no evidence as to who authorized the work, where the
shovel originated, the subsequent use to be made of the shovel, and why
there was a year's delay between the ceremony and the engraving.
Expenses necessarily incident to a groundbreaking or cornerstone
ceremony are chargeable to the appropriation for the construction of
the building. B-158831, June 8, 1966; B-11884, Aug. 26, 1940 (cost of
printing programs and invitations to cornerstone ceremony); A-88307,
Aug. 21, 1937 (recording of presidential speech and group photograph at
cornerstone ceremony); B-107165-O.M., Apr. 3, 1952 (cost of dedication
ceremony). But see B-250450, May 3, 1993 (grand opening of a new
cafeteria located inside an existing federal building does not fall
within the "traditional ceremony" exception. Costs of food and
entertainment provided for this event are not payable from
appropriations for operating expenses, but may be chargeable to
reception and representation funds then available).
In 56 Comp. Gen. 81 (1976), the rationale of these cases was extended
to Armed Forces change of command ceremonies. The decision held that
the cost of printing invitations to a change of command ceremony for a
Coast Guard vessel could be paid from the Coast Guard's appropriations
for operating expenses. In view of the traditional role of change of
command ceremonies in the military, the Comptroller General concluded
that the invitations were not inherently personal. (The case was
therefore distinguishable from the decisions previously discussed
prohibiting the use of public funds for business cards and greeting
cards.) However, since expenditure of operating funds had not been
approved for the costs of a reception following the change of command
ceremony as required by Army regulations, those costs were determined
to be payable from official reception and representation funds (for
which the agency required no prior approval) because these activities
met the prerequisites for an "official reception for an incoming
commander." 69 Comp. Gen. 242 (1990). (See section C.5 of this chapter
for a more general discussion of related subject matter.)
The "traditional ceremony" concept has also been applied to a vessel
"christening" ceremony at a Navy Yard (A-74436, May 19, 1936), a
Uniformed Services University of the Health Sciences annual graduation
ceremony (B-211700, Mar. 16, 1984), and a Federal Law Enforcement
Training Center's graduation ceremony (B-240365.2, Mar. 14, 1996).
i. Wearing Apparel:
The starting point is the principle that "every employee of the
Government is required to present himself for duty properly attired
according to the requirements of his position." 63 Comp. Gen. 245, 246
(1984), quoting from B-123223, June 22, 1955. In other words, the
government will not clothe the naked, at least where the naked are
receiving government salaries.
Nevertheless, there are certain out-of-the-ordinary items, required by
the nature of the job, which the government should furnish. The test
was described in 3 Comp. Gen. 433 (1924), and that discussion is still
relevant today:
"In the absence of specific statutory authority for the purchase of
personal equipment, particularly wearing apparel or parts thereof, the
first question for consideration in connection with a proposed purchase
of such equipment is whether the object for which the appropriation
involved was made can be accomplished as expeditiously and
satisfactorily from the Government's standpoint, without such
equipment. If it be determined that use of the equipment is necessary
in the accomplishment of the purposes of the appropriation, the next
question to be considered is whether the equipment is such as the
employee reasonably could be required to furnish as part of the
personal equipment necessary to enable him to perform the regular
duties of the position to which he was appointed or for which his
services were engaged. Unless the answer to both of these questions is
in the negative, public funds can not be used for the purchase. In
determining the first of these questions there is for consideration
whether the Government or the employee receives the principal benefit
resulting from use of the equipment and whether an employee reasonably
could be required to perform the service without the equipment. In
connection with the second question the points ordinarily involved are
whether the equipment is to be used by the employee in connection with
his regular duties or only in emergencies or at infrequent intervals
and whether such equipment is assigned to an employee for individual
use or is intended for and actually to be used by different
employees."
Id. at 433-34. Under the rule set forth in 3 Comp. Gen. 433, most items
of apparel were held to be the personal responsibility of the employee.
E.g., 5 Comp. Gen. 318 (1925) (rubber boots and coats for custodial
employees in a flood-prone area); 2 Comp. Gen. 258 (1922) (coats and
gloves for government drivers). But there were limited exceptions.
Thus, caps and gowns for staff workers at Saint Elizabeth's Hospital in
Washington were viewed as for the protection of the patients rather
than the employees and could therefore be provided from appropriated
funds as part of the hospital equipment. 2 Comp. Gen. 652 (1923). See
also 5 Comp. Gen. 517 (1926). Similarly, aprons for general laboratory
use were held permissible in 2 Comp. Gen. 382 (1922). Another exception
was wading trousers for Geological Survey engineers as long as the
trousers remained the property of the government and were not for the
regular use of any particular employee. 4 Comp. Gen. 103 (1924). One
category of apparel not permissible under the early decision was
uniforms. Uniforms were viewed as personal furnishings to be procured
at the expense of the wearer. 24 Comp. Dec. 44 (1917).
There are now three general statutory provisions that permit the
purchase of items of apparel from appropriated funds in certain
circumstances.
The first is 5 U.S.C. § 7903, enacted as part of the Administrative
Expenses Act of 1946. It provides:
"Appropriations available for the procurement of supplies and material
or equipment are available for the purchase and maintenance of special
clothing and equipment for the protection of personnel in the
performance of their assigned tasks. For the purpose of this section,
'appropriations' includes funds made available by statute [to wholly
owned government corporations]."
Id. (explanatory information provided). In order for an item to be
authorized by 5 U.S.C. § 7903, three tests must be met: (1) the item
must be "special" and not part of the ordinary and usual furnishings an
employee may reasonably be expected to provide for himself; (2) the
item must be for the benefit of the government, that is, essential to
the safe and successful accomplishment of the work, and not solely for
the protection of the employee, and (3) the employee must be engaged in
hazardous duty. See 32 Comp. Gen. 229 (1952); B-193104, Jan. 9, 1979.
Thus, this provision is but a slight liberalization of the rule in
3 Comp. Gen. 433.
Applying 5 U.S.C. § 7903, the Comptroller General has held that
raincoats and umbrellas for employees who must frequently go out in the
rain are not special equipment but are personal items that the employee
must furnish. B-193104, Jan. 9, 1979; B-122484, Feb. 15, 1955.
Similarly unauthorized are coveralls for mechanics (B-123223, June 22,
1955) and running shoes for Department of Energy nuclear materials
couriers (B-234091, July 7, 1989). Nor does 5 U.S.C. § 7903 authorize
reimbursement for ordinary clothing and toiletry items purchased by
narcotics agents on a "moving" surveillance. B-179057, May 14, 1974.
An illustration of the type of apparel authorized by 5 U.S.C. § 7903 is
found in 51 Comp. Gen. 446 (1972). There, the Comptroller General
advised the Department of Agriculture that snowmobile suits, mittens,
boots, and crash helmets for personnel required to operate snowmobiles
over rough and remote forest terrain were clearly authorized by the
statute. Similarly authorized are down-filled parkas for Office of
Surface Mining employees temporarily assigned to Alaska or the high
country of the western states. 63 Comp. Gen. 245 (1984).[Footnote 376]
Conversely, the purchase of insulated coveralls by the U.S. Army Corps
of Engineers for the use of employees working outdoors in near-freezing
temperatures would be an improper use of appropriated funds, absent the
agency's determination that such cold weather clothing is necessary to
satisfy Occupational Safety and Health Act standards, discussed in more
detail below. B-289683, Oct. 7, 2002; B-288828, Oct. 3, 2002.
Items other than wearing apparel may be furnished under 5 U.S.C. § 7903
if the tests set forth above have been met. See, e.g., 28 Comp.
Gen. 236 (1948) (mosquito repellent for certain Forest Service
employees).
Continuing the old rule, however, the Comptroller General held that
5 U.S.C. § 7903 does not constitute general authority for the purchase
of uniforms. 32 Comp. Gen. 229 (1952).
Congress addressed the uniform problem with the second general
statutory provision under consideration, 5 U.S.C. § 5901, the so-called
Federal Employees Uniform Act, most recently amended by section 202 of
the Federal Employees Pay Comparability Act of 1990, contained in
section 529 of the fiscal year 1991 Treasury, Postal Service, and
General Government Appropriation Act, Pub. L. No. 101-509, 104 Stat.
1389, 1456 (Nov. 5, 1990). This provision authorizes annual
appropriations to each agency, on a showing of necessity or
desirability, to provide a uniform allowance of up to $400 a year (or
more if authorized under Office of Personnel Management regulations) to
each employee who wears a uniform in the performance of official
duties. The agency may pay a cash allowance or may furnish the uniform.
Note that 5 U.S.C. § 5901 is merely an authorization of appropriations.
An appropriation is still required in order for payments to be made or
obligations incurred. 35 Comp. Gen. 306 (1955). While the decision
stated that specific appropriation language is preferable, it
recognized that the inclusion of an item for uniforms in an agency's
budget request that is then incorporated into a lump-sum appropriation
is legally sufficient.
An example of an item that could properly be required under 5 U.S.C.
§ 5901 is frocks for Department of Agriculture meat grader employees.
57 Comp. Gen. 379, 383 (1978). Another example is robes for
administrative law judges of the Occupational Safety and Health Review
Commission. B-199492, Sept. 18, 1980. (The decision concluded merely
that the expenditure would be legal, not that it was an especially good
idea, pointing out that federal judges pay for their own robes.)
In 48 Comp. Gen. 678 (1969), a National Park Service employee was given
a uniform allowance but, in less than a year, was promoted to a higher
position that required substantially different uniforms. The
Comptroller General held that the employee could receive the uniform
allowance of his new position even though the sum of the two allowances
would exceed the statutory annual ceiling. To hold otherwise would have
been inconsistent with the statutory purpose.
While the uniform allowance under 5 U.S.C. § 5901 may be in cash or in
kind, there is no similar option for "special clothing or equipment"
under 5 U.S.C. § 7903. The latter statute authorizes the furnishing of
covered items in kind only. 46 Comp. Gen. 170 (1966).
The third piece of legislation that may permit the purchase of items of
apparel from appropriated funds is the Occupational Safety and Health
Act of 1970 (OSHA). Section 19 of OSHA, 29 U.S.C. § 668, requires each
federal agency to establish an occupational safety and health program
and to acquire necessary safety and protective equipment. Thus,
protective clothing may be furnished by the government if the agency
head determines that it is necessary under OSHA and its implementing
regulations.
Under the OSHA authority, the following items have been held
permissible:
* Snowmobile suits, mittens, boots, and crash helmets for Department of
Agriculture employees required to operate snowmobiles over rough and
remote terrain. 51 Comp. Gen. 446 (1972). (This decision has already
been noted in the discussion of 5 U.S.C. § 7903 above. The decision
held that the items were justifiable on either basis.)
* Down-filled parkas for Interior Department employees temporarily
assigned to Alaska or the high country of the western states during the
winter months. 63 Comp. Gen. 245 (1984). (This decision is also noted
under 5 U.S.C. § 7903. As with 51 Comp. Gen. 446, the items could be
justified under either statute.)
* Protective footwear for Drug Enforcement Administration agents
assigned to temporary duty in jungle environments. The footwear remains
the property of the United States and must be disposed of in accordance
with the Federal Property Management Regulations. B-187507, Dec. 23,
1976.
* Cooler coats and gloves for Department of Agriculture meat grader
employees. 57 Comp. Gen. 379 (1978).
* Ski boots for Forest Service snow rangers, where determined to be
necessary protective equipment in a job-hazard analysis. B-191594,
Dec. 20, 1978.
* Steel-toe safety shoes for an Internal Revenue Service supply clerk
whose work includes moving heavy objects. 67 Comp. Gen. 104 (1987).
This item also could have been justified under 5 U.S.C. § 7903. Id.
If an item is authorized under OSHA, it is unnecessary to determine
whether it meets the tests under 5 U.S.C. § 7903. E.g., B-187507,
supra. As noted in the above listing, however, several of the decisions
have discussed both statutes. If an item does not qualify under OSHA,
it is still necessary to examine the other possibilities. E.g.,
B-234091, July 7, 1989 (running shoes unauthorized under either
statute).
Thus, three statutes under which purchase of wearing apparel may be
authorized are 5 U.S.C. § 7903 (special clothing for hazardous
occupations), 5 U.S.C. § 5901 (uniform allowances), and 29 U.S.C. § 668
(protective clothing under OSHA). Two decisions summarizing all three
statutes are 63 Comp. Gen. 245 (1984) and B-289683, Oct. 7, 2002. Some
agencies also have specific authority to provide uniforms or clothing
allowances to their employees. See, e.g., 10 U.S.C. §§ 775 and 1593;
22 U.S.C. §§ 1474(14), 2396(a)(12), and 2669(e); and 37 U.S.C. §§ 415-
419. However, if neither general nor specific authorities apply, then
the rule of 3 Comp. Gen. 433 continues to govern. For example, in
B-251189, Apr. 8, 1993, GAO held that the costs of business suits worn
by Agency for International Development chauffeurs may not be
reimbursed. Such suits are not uniforms under section 636(a)(12) of the
Foreign Service Act of 1961 (22 U.S.C. § 2396(a)(12)) since they are
worn as a part of customary business attire and provide no distinctive
identification of the employees as a group. As such, the suits are a
personal expense of the employees.
Another illustration of the continued applicability of the decisional
rules is the rental of formal evening wear, a situation which, thus far
at least, no one has suggested fits under any of the three statutes.
In a 1955 case, an employee on travel status in England rented a dinner
jacket to attend a dinner related to the purposes of the trip. Based on
the rule of 3 Comp. Gen. 433, the Comptroller General denied
reimbursement for the cost of renting the jacket. 35 Comp. Gen. 361
(1955). "The claimant's failure to take with him necessary clothing to
meet reasonably anticipated personal necessities is not considered
sufficient to shift the burden of the cost of procuring such clothing
from personal to official business." Id. at 362. This decision was
followed in a similar situation involving the rental of a tuxedo in
45 Comp. Gen. 272 (1965), and again in 64 Comp. Gen. 6 (1984). But see
B-256936, June 22, 1995 (the Department of State may use its
representation appropriation funds to reimburse rental costs for formal
morning attire required by Ambassador and Deputy Chief of Mission in
representing the United States on occasions of State in Great Britain).
A different situation was presented in 48 Comp. Gen. 48 (1968), in
which it was held that the Secret Service could pay the rental charges
on formal dress attire required to be used by special agents when
attending formal functions incident to their furnishing protective
services to persons whom they are assigned to protect. In this
situation, the purpose of the formal attire is not merely to be
"socially acceptable," but is necessary for security purposes, to make
the agents less readily identifiable as such. See also 71 Comp.
Gen. 447 (1992).
Similarly, in the not-too-distant past, attorneys arguing before the
Supreme Court were required to wear formal cutaway coats and striped
pants. In B-164811, July 28, 1969, GAO approved reimbursement for the
rental of these items by Justice Department attorneys who were only
occasionally required to appear before the Supreme Court. A more recent
case restating the rules is 67 Comp. Gen. 592 (1988) (advising agency
to resolve certain conflicting information and pay or deny the claim
accordingly).
Finally, the rules we have been discussing for wearing apparel apply to
government employees. Questions may arise with respect to nongovernment
employees, in which event the answer is a pure application of the
necessary expense doctrine, in light of whatever statutory authority
may exist. For example, in B-62281, Dec. 27, 1946, the State Department
was administering a training program for citizens of the Philippines to
assist in post-war rehabilitation. The decision held that the
government could provide "special purpose" clothing required for the
training, such as uniforms, overalls, or work aprons. However, this
could not include the furnishing of complete wardrobes adaptable to the
cooler climate of the United States; this was a personal expense. See
also 29 Comp. Gen. 507 (1950) (clothing for indigent narcotic patients
upon release from Public Health Service Hospitals, as therapeutic
measure to aid rehabilitation).
j. Miscellaneous Personal Expenses:
Several personal expense matters are dealt with elsewhere in this
chapter, for example, the sections on entertainment and membership
fees. Apart from those topics specifically covered elsewhere, the
preceding portions of this section cover the situations that have
generated the largest number of cases. There are, however, other
frequently encountered situations.
(1) Commuting and parking:
One personal expense everyone is familiar with is commuting to and from
work (more precisely, between permanent residence and permanent duty
location). The employee is expected to be at work; how the employee
chooses to get there is entirely his or her own business. 27 Comp.
Gen. 1 (1947); 16 Comp. Gen. 64 (1936).
Along with commuting goes parking. It is equally clear that parking
incident to ordinary commuting is also a personal expense. 63 Comp.
Gen. 270 (1984); 43 Comp. Gen. 131 (1963); B-162021, July 6, 1977.
These cases stand for the proposition that the government may not be
required to provide parking facilities for its employees. However, an
agency may provide employee parking facilities if it determines that
the lack of parking facilities will significantly impair the operating
efficiency of the agency and will be detrimental to the hiring and
retention of personnel. 72 Comp. Gen. 139 (1993); 49 Comp. Gen. 476
(1970); B-168946, Feb. 26, 1970; B-155372-O.M., Nov. 6, 1964. If
severely disabled employees are forced to pay parking costs higher than
those paid by nondisabled employees working at the same
facility,[Footnote 377] the agency can subsidize the difference.
63 Comp. Gen. 270 (1984). For further information, see the
Rehabilitation Act discussion in this chapter, section C.13.c.
As several of the cases cited in the preceding paragraph discuss,
agencies must generally obtain parking accommodations through the
General Services Administration (GSA) under the Federal Property and
Administrative Services Act of 1949, as amended (ch. 288, 63 Stat. 377
(June 30, 1949)), unless they have independent statutory authority or a
delegation from GSA. See generally 40 U.S.C. §§ 581 et seq. GSA regards
a delegation of authority to lease parking facilities as a delegation
of authority to enter into a service contract, which can be approved at
the regional level, rather than a delegation of leasing authority. 41
C.F.R. § 102-73.235 (2003). If an agency has independent statutory or
delegated authority to procure space and facilities and has made the
requisite morale and efficiency determinations, it may provide for
employee parking in a collective bargaining agreement. See 55 Comp.
Gen. 1197 (1976).
A governmentwide provision in the fiscal year 1991 Treasury, Postal
Service, and General Government Appropriation Act authorizes federal
agencies to participate in state or local government programs designed
to encourage employees to use public transportation. Pub. L. No. 101-
509, § 629, 104 Stat. 1389, 1478 (Nov. 5, 1990). Thus, an agency could
use its general operating appropriations to subsidize the use of
discounted transit passes by its employees. The "subsidy" is not
additional pay for purposes of the prohibition in 5 U.S.C. § 5536. Id.
See also B-243677, B-243674, May 13, 1991. The legislation had a sunset
date of December 31, 1993. In 1993, 5 U.S.C. § 7905 was enacted, which
authorizes each agency head to establish a program to encourage
employees to use means other than single occupancy motor vehicles to
commute to and from work.
The purposes of this authority are to improve air quality and reduce
traffic congestion. 5 U.S.C. § 7905 note. Programs established under
section 7905 may include such options as: transit passes or cash
reimbursements for transit passes; furnishing space, facilities, or
services to bicyclists; and nonmonetary incentives. 5 U.S.C.
§ 7905(b)(2). On April 21, 2000, the President issued Executive Order
No. 13150, set out at 5 U.S.C. § 7905 note, requiring federal agencies
to implement a transportation fringe benefit program under the
authority of section 7905 no later than October 1, 2000.
In B-291208, Apr. 9, 2003, the Commission on Civil Rights asked whether
parking benefits for employees with disabilities, who commute to work
in privately owned vehicles rather than by mass transit or in vanpools,
may be included in the federal government's transportation fringe
benefit program. In this case, the parking fees could not be paid under
the program authorized by 5 U.S.C. § 7905 and Executive Order No.
13150, since payment would encourage employees to use privately owned
vehicles for commuting contrary to the stated purposes of the program.
However, GAO noted that, if the Commission employees with disabilities
pay substantially more to park closer to the building than employees
without disabilities, the differential portion may be paid under our
holding in 63 Comp. Gen. 270 (1984).
(2) Flexiplace:
An emerging issue for the federal government is "flexiplace." Employees
on flexiplace schedules, also called telecommuting or telework,
typically work at home but can work at other agency-approved locations.
Over the past several years, both the President and Congress have
increasingly sought to encourage more widespread use of flexiplace. In
1994, then President Clinton directed the head of each executive
department or agency to establish a program to encourage and support
the expansion of flexible family-friendly work arrangements, including
telecommuting and satellite locations. Memorandum, Expanding Family-
Friendly Work Arrangements in the Executive Branch, 30 Weekly Comp.
Pres. Doc. 1468, 59 Fed. Reg. 36017 (July 11, 1994). In section 260 of
the Treasury, Postal Service and General Government Appropriations Act
for Fiscal Year 1996, Congress enacted permanent authority for federal
agencies to spend money for the installation of telephone lines and
related equipment in an employees residence and pay monthly fees for an
employee authorized to work at home. Pub. L. No. 104-52, § 620,
106 Stat. 468, 501 (Nov. 19, 1995) (31 U.S.C. § 1348 note). Federal
telework centers were authorized in 40 U.S.C. § 587, and executive
agencies are required to make at least $50,000 available annually for
expenses necessary to carry out a flexiplace work program. 40 U.S.C.
§ 587(d)(2). More recently, section 359 of the 2001 Department of
Transportation Appropriations Act required all executive agencies to
establish a policy under which eligible employees may participate in
telecommuting. The law also directed the Office of Personnel Management
to ensure that this requirement was applied to 25 percent of the
federal workforce by April 2001 and to an additional 25 percent each
year thereafter. Pub. L. No. 106-346, § 101(a) [title III, § 359],
114 Stat. 1356, 1356A-36 (Oct. 23, 2000).
While telephone lines and related equipment may be provided by the
agency, increased utility expenses (heating, air conditioning,
lighting, etc.) incurred by the employee by virtue of working at home
are personal expenses and may not be reimbursed in the absence of
statutory authority. 68 Comp. Gen. 502 (1989). As the decision points
out, along with the increased utility costs, the employee also incurs
savings from reduced commuting, child care, meal, and/or clothing
expenses. "How the balance should be struck, if at all, …is a
legislative judgment." Id. at 506. The fact that the employee is
participating in a mandatory work-at-home program, as opposed to
voluntary, does not matter. The incremental costs of utilities
associated with the residential workplace may not be reimbursed.
70 Comp. Gen. 631 (1991).
(3) Miscellaneous employee expenses:
Personal expense questions may occur in contexts that arise
infrequently and for which there is little precedent. The rationale of
the decisions cited and discussed throughout this section should
provide the approach necessary to analyze the problem.
For example, the Forest Service requested a lodge owner to furnish
lodging and meals to a group of summer employees on temporary duty on a
forest project in Maine. While the Forest Service made the request on
behalf of the employees, it did not contract directly with the lodge
owner. The individual employees received a per diem allowance and were
expected to settle their own accounts with the lodge. One of the
employees left at the end of the summer without paying his bill and the
lodge owner filed a claim against the government. Under these
circumstances, the unpaid bill was nothing more than a personal debt of
the individual and there was therefore no basis for government
liability. B-191110, Sept. 25, 1978. (Had the government contracted
directly with the lodge, the result might have been different. See
section on canceled hotel reservations in Chapter 12 (Volume III of the
second edition of Principles of Federal Appropriations Law).)
In another case, the Navy asked whether it could use appropriated funds
to buy luggage for use by members of the Navy's Recruit Mobile Training
Team. Normally, luggage is a personal expense. The employee who travels
on government business is generally expected to provide his or her own
luggage. In this case, however, the members of the team traveled an
average of 26 weeks a year. The Comptroller General applied the test
set forth in 3 Comp. Gen. 433 (1924), discussed at various points
throughout this section, and accepted the Navy's judgment that it would
be unreasonable to require the team members to furnish their own
luggage in view of this excessive amount of travel. Therefore, Navy
could buy the luggage, but only on the conditions that it would become
Navy property and be stored in Navy facilities. In other words, the
members could not use the luggage for any personal business. B-200154,
Feb. 12, 1981. The Comptroller General declined to state a precise rule
as to how much travel is enough to justify government purchase of
luggage, and emphasized that the purchase would be permitted only in
highly unusual circumstances.
The payment of a federal employee's union dues is the employee's
personal obligation even though payment by payroll withholding is
authorized. If an agency wrongfully fails to withhold the dues, it may
use appropriated funds to reimburse the labor union, but must then
recover the payment from the employee unless the debt can be waived.
60 Comp. Gen. 93 (1980); B-235386, Nov. 16, 1989.
Another personal expense issue concerns payments for professional
liability insurance. As discussed in section C.3.c of this chapter,
concerning lawsuits against employees, certain federal employees may be
vulnerable to civil tort suits by plaintiffs alleging that they have
been injured by the actions of the employees. Where liability is
established, plaintiffs may be awarded compensatory damages, and in
appropriate cases punitive damages, which the federal employee-
defendants would be required to pay. Consequently, government employees
whose jobs place them in positions where they risk being sued may
purchase liability insurance as a protection against such suits. See
B-211883-O.M., Dec. 14, 1983.
In 1996, Congress enacted legislation authorizing the reimbursement of
"qualified employees" of the executive and legislative branches for up
to one-half the costs incurred by such employees for professional
liability insurance. Pub. L. No. 104-208, title VI, § 636, 110 Stat.
3009-363 to 3009-364 (Sept. 30, 1996). A qualified employee is an
agency employee whose position is that of a law enforcement officer or
a supervisor or management official. These reimbursements were to be
paid from amounts appropriated for Salaries and Expenses.
In 1998, Congress amended the law to include as qualified employees
justices, judges, judicial officers, supervisors, and managers within
the judicial branch. Pub. L. No. 105-277, title VI, § 644, 112 Stat.
2681, 2681-526 (Oct. 21, 1998). Then, in 1999, Congress once again
amended the law to make the reimbursement mandatory as of October 1,
1999. Pub. L. No. 106-58, title VI, § 642(a), 113 Stat. 430, 477
(Sept. 29, 1999). These provisions were not enacted in the form of an
amendment or addition to Title 5 of the United States Code, although
their text is set out as an uncodified note under subchapter IV,
"Miscellaneous Expenses," preceding 5 U.S.C. § 5941. See generally
B-300866, May 30, 2003.
14. Rewards:
This section discusses when appropriated funds may be used to offer and
pay rewards. As a general proposition, statutory authority is needed.
Exactly how explicit this statutory authority has to be depends
somewhat on the nature of the information or services for which the
reward is contemplated and its relationship to the authority of the
paying agency.
a. Rewards to Informers:
(1) Reward as "necessary expense":
One group of decisions deals with rewards for the furnishing of
information regarding violations of civil and criminal laws. The rule
is that, if the information is "essential or necessary" to the
effective administration and enforcement of the laws, a reward may be
offered if it can be tied in to a particular appropriation under the
"necessary expense" theory.[Footnote 378] In that situation, the
statutory authority does not have to expressly provide for the payment
of rewards. If, however, the information is merely "helpful or
desirable," then more explicit statutory authority is needed. Since
the distinction is difficult to administer as a practical matter,
statutory authority has been granted in many situations.[Footnote 379]
The Comptroller General addressed the issue in 8 Comp. Gen. 613, 614
(1929), stating:
"An appropriation general in terms is available to do the things
essential to the accomplishment of the work authorized by the
appropriation to be done. As to whether such an appropriation may
properly be held available to pay a reward for the furnishing of
information, not essential but probably helpful to the accomplishment
of the authorized work, the decisions of the accounting officers have
not been uniform. The doubt arises generally because such rewards are
not necessarily in keeping with the value of the information furnished
and possess elements of a gratuity or gift made in appreciation of
helpful assistance rendered."
While the reward in that particular case was permitted, the decision
announced that specific legislative authority would be required in the
future. See also 9 Comp. Gen. 309 (1930); A-26777, May 22, 1929.
Whether a reward to an informer is necessary or merely helpful depends
largely on the nature of the agency's organic authority and its
appropriations language. For example, the Forest Service is responsible
for protecting the national forests "against destruction by fire and
depredations." 16 U.S.C. § 551. It receives appropriations for expenses
necessary for "forest protection and utilization." Under this
authority, the Comptroller General held that information relating to
violations (such as deliberately set forest fires, theft of timber,
unauthorized occupancy, and vandalism) could be considered necessary
rather than just helpful, and the Forest Service could therefore offer
rewards to informers without more specific statutory authority.
B-172259, Apr. 29, 1971. See also 5 Comp. Dec. 118 (1898). The ruling
was extended in B-172259, Aug. 2, 1972, to cover "endorsements" (the
"endorsement" by an informant of an undercover agent to help him gain
acceptance with the suspects).
Similarly, the Commerce Department could pay rewards to informers as a
necessary expense under a provision of the Export Control Act of 1949,
ch. 11, § 6, 63 Stat. 7 (Feb. 26, 1949), which authorized the obtaining
of confidential information incident to enforcement of the act.
B-117628, Jan. 21, 1954.
The rule was also applied in B-106230, Nov. 30, 1951, in which GAO
advised the Treasury Department that rewards to informers for
information or evidence on violations of the revenue, customs, or
narcotics laws could be offered under an appropriation for the
necessary expenses of law enforcement. As long as the information was
necessary and not just helpful, more specific appropriations language
was not needed. The result would be different if the agency did not
have specific law enforcement authority. A.D. 6669, May 15, 1922.
(2) Payments to informers: Internal Revenue Service:
One reward to informers most people are familiar with is the reward
offered by the Internal Revenue Service (IRS) for the detection of tax
cheats. While the pertinent Internal Revenue Code provision does not
use the term "reward," it authorizes the payment of sums deemed
necessary "for detecting and bringing to trial and punishment persons
guilty of violating the internal revenue laws." 26 U.S.C. § 7623. Where
information leads to an actual recovery of back taxes or penalties, IRS
may pay the informer a reward based on a percentage of the amount
recovered, up to a 10 percent maximum set by regulation. GAO approved
this scheme as within the statutory authority in 3 Comp. Gen. 499
(1924). The determinations of whether to pay a reward and, if so, its
amount are discretionary and, short of a showing of no rational basis,
are not reviewable by the courts or by GAO. Saracena v. United States,
508 F.2d 1333 (Ct. Cl. 1975); Krug v. United States, 168 F.3d 1307
(Fed. Cir. 1999) aff'g 41 Fed. Cl. 96 (1998); Informant v. United
States, 46 Fed. Cl. 1 (2000); B-131689, June 7, 1957; B-10761, June 29,
1940; B-5768, Sept. 18, 1939; A-96942, Aug. 23, 1938. The same statute
has been held to authorize rewards for information on violations where
no tax or fine is collected. 24 Comp. Dec. 430 (1918).
The IRS statute has been held to constitute an "indefinite reward
offer." The informant responds by his conduct, and an "enforceable
contract" arises when the parties fix the amount of the reward.
Merrick v. United States, 846 F.2d 725 (Fed. Cir. 1988). The plaintiff
in that case provided information on an illegal tax shelter in which
1,585 persons had invested, resulting in the recovery of over $10
million. The court upheld the position of the IRS that the taxpayers
were "related taxpayers" in a single tax avoidance scheme, thereby
limiting the reward to $50,000 for the aggregate recovery rather than
$50,000 per person as the plaintiff had sought. Merrick v. United
States, 18 Cl. Ct. 718 (1989). See also Lewis v. United States, 70 F.3d
597, 601 (Fed. Cir. 1995) (applying a "similar statute" that authorized
Customs Service awards).
The issue in B-137762.32, July 11, 1977 was whether IRS could contract
with an attorney representing an unnamed informant (i.e., a "partially
disclosed principal"). The decision discussed the general prohibition
against contracting with a partially disclosed principal, but approved
the proposed agreement, noting that the reasons for the rule in the
ordinary procurement context did not apply to the IRS reward situation.
See also B-117628, Jan. 21, 1954. However, Treasury regulations
required that the informant's identity be disclosed before any claim
could actually be paid. Therefore, disclosure would be necessary if and
when a reward became payable but not before then.
An additional issue in B137762.32 was when an obligation has to be
recorded under 31 U.S.C. § 1501(a). No contractual liability to make
payment exists until IRS has evaluated the worth of the information and
has assessed and collected any underpaid taxes and penalties. This is
when the appropriate IRS official determines that a reward should be
paid and its amount, and it is at this point that a recordable
obligation arises. This is consistent with the Federal Circuit's
holding in Merrick.
The Internal Revenue Service may also make "support and maintenance"
payments to informers under its general investigation and enforcement
authority. In B-183922, Aug. 5, 1975, the Comptroller General held that
IRS could not make payments to an informer who was simultaneously being
paid by the Justice Department under its Witness Protection Program.
However, IRS could make the payments if administratively determined to
be necessary after the informer had been disenrolled from the Justice
Departments program.
(3) Payments to informers: Customs Service:
The Customs Service also has statutory authority to pay rewards. Under
19 U.S.C. § 1619, a person (other than a government employee) who
detects and seizes any vessel, vehicle, aircraft, merchandise, or
baggage subject to seizure and forfeiture under the customs or
navigation laws, or who furnishes original information, leading to a
monetary recovery, may be paid a reward of 25 percent of the amount
recovered, not to exceed $250,000 in any case. Rewards are payable from
"appropriations available for the collection of the customs revenue."
Id. § 1619(d).
This reward is in the nature of compensation for services rendered
rather than a personal gratuity. 5 Comp. Gen. 665 (1926). The statute
has been deemed mandatory in the sense that an informant who complies
with its terms has a legal and judicially enforceable claim for the
reward. Doe v. United States, 100 F.3d 1576, 1582 (Fed. Cir. 1996);
Wilson v. United States, 135 F.2d 1005 (3rd Cir. 1943); Rickard v.
United States, 11 Cl. Ct. 874 (1987); B-217636, Mar. 4, 1985
(nondecision letter).
The information furnished must be "original" information, that is, the
first information the Customs Service has concerning the particular
fraud or violation. Lacy v. United States, 607 F.2d 951, 953 (Ct. Cl.
1979); Cornman v. United States, 409 F.2d 230, 234 (Ct. Cl.), cert.
denied, 396 U.S. 960 (1969); Tyson v. United States, 32 F. Supp. 135,
136 (Ct. Cl. 1940).
In cases where the furnishing of information leads to recoveries from
multiple parties, the monetary ceiling on the reward "for any case"
applies to the information furnished, not to the number of recoveries
it produces. Cornman v. United States, supra, citing and following
24 Comp. Dec. 17 (1917).
Liquidated damages assessed under customs bonds are "recoveries" for
purposes of 19 U.S.C. § 1619. 34 Comp. Gen. 70 (1954). So are
recoveries under bail bonds. 19 U.S.C. § 1619(e). Moneys received by
customs officers as bribes, however, are not recoveries for purposes of
the reward. 11 Comp. Gen. 486 (1932).
The statute applies to recoveries under the "customs laws or the
navigation laws." See 16 Comp. Gen. 1051 (1937). Recoveries under other
laws generally do not qualify. Thus, in 32 Comp. Gen. 405 (1953), a
reward could not be paid where recovery was made under several laws and
the amount attributable to the customs laws or navigation laws could
not be ascertained. Similarly, a violation of the Anti-Dumping Act is
not a violation of the customs laws for purposes of 19 U.S.C. § 1619.
Fraters Valve & Fitting Co. v. United States, 347 F.2d 990 (Ct. Cl.
1965). Nor is a violation of the internal revenue laws. Wilson v.
United States, supra. But see Doe v. United States, 47 Fed. Cl. 367
(2000).
The reward is authorized, based on appraised value, if the item
forfeited is destroyed or "delivered to any governmental agency for
official use" rather than sold. Under this provision, seized
merchandise donated to state governmental agencies under General
Services Administration (GSA) regulations qualifies for the reward
since the statutory language is not limited to federal agencies.
B-146223, Nov. 27, 1961. Similarly, where forfeited distilled spirits,
wines, or beer, which are required by statute to be delivered to GSA
for disposal, are subsequently given to "eleemosynary institutions" for
medicinal purposes, the reward is payable because the initial delivery
to GSA counts as delivery to a "governmental agency for official use"
under 19 U.S.C. § 1619. B-146223, Feb. 2, 1962.
b. Missing Government Employees:
The only decisions that exist on rewards for locating missing
government employees concern military deserters. No decision has been
found discussing whether a reward could be offered for the apprehension
of a military deserter in the absence of statutory authority, although
one early case stated that "[t]here is no reward for the apprehension
or delivery of a deserter by operation of law." 20 Comp. Dec. 767
(1914). The reason the issue has not been discussed is probably that
the authority has existed by statute for a long time. For many years, a
provision in the annual Defense Department appropriation acts
authorized payment of expenses of the apprehension and delivery of
deserters, including a small reward. In 1984, the provision was made
permanent and is now found at 10 U.S.C. § 956(1). The Coast Guard also
has permanent authority to offer rewards for the apprehension of
deserters. 14 U.S.C. § 644.
Thus, the decisions that do exist concern mainly questions of
interpretation under the statutory language and implementing
regulations. For example, the term "apprehension" was construed to
permit payment of the reward where an Army deserter voluntarily
surrendered to a civil officer. 6 Comp. Gen. 479 (1927).
The statute and implementing regulations limit the amount payable as
expenses, but this limitation applies only to the period before the
deserter is returned to military control. Expenses incurred after
return to military control, for example, continued civil detention at
the request of military authorities, are not subject to the limitation
and may be paid. B-179920, July 18, 1974; B-147496-O.M., Jan. 4, 1962.
Three early decisions permitted payment of expenses incurred in
apprehending a deserter in excess of the statutory limit where the
deserter was also wanted for other criminal offenses (such as forgery
or embezzlement). 16 Comp. Dec. 132 (1909); 11 Comp. Dec. 124 (1904);
B-3591, May 27, 1939.[Footnote 380]
c. Lost or Missing Government Property:
It has long been established that no payment may be made to one who
finds lost government property unless a reward has been offered prior
to the return of the property. 11 Comp. Dec. 741 (1905); 5 Comp.
Dec. 37 (1898); A-23019, May 24, 1928; B-117297-O.M., Feb. 12, 1954. To
offer a reward for the recovery of lost or missing property, an agency
needs some statutory basis. Examples are 10 U.S.C. § 2252 (Defense,
military departments) and 14 U.S.C. § 643 (Coast Guard). While the
degree of explicitness required has not been definitively addressed,
the rules appear to be the same as in the case of rewards for
information discussed above.
Two early decisions permitted the use of military "contingent expense"
appropriations. In 6 Comp. Gen. 774 (1927), GAO told the Army that it
could offer a reward from its contingent expense appropriation for the
recovery of stolen platinum. In B-33518, Apr. 23, 1943, prior to the
enactment of 10 U.S.C. § 2252, the Navy wanted to use a general
appropriation to offer rewards for locating lost aircraft. The
Comptroller General advised that the general appropriation could not be
used since the reward was not essential to carrying out its purposes,
but, relying on 6 Comp. Gen. 774, the Navy could use its contingent
expense appropriation.
In 41 Comp. Gen. 410 (1961), the Treasury Department asked if the Coast
Guard had any general authority beyond 14 U.S.C. § 643 to make
reasonable payments to persons who found lost property. The Comptroller
General replied that he knew of none. Based on these decisions, it
appears that a general operating appropriation is not available to
offer or pay rewards for the recovery of lost property.
In B-79173, Oct. 18, 1948, the Civil Aeronautics Administration had an
appropriation for the temporary relief of distressed persons. The
question presented was whether the appropriation was available to pay a
reward to someone who had found a lost airplane 4 months after it
disappeared. The Comptroller General said no, because the passengers
could all be presumed dead after 4 months, but expressly declined to
decide whether the appropriation would have been available if the
airplane had been found "with such promptness as to afford reasonable
hope that survivors might be found and given relief." The reasoning is
similar to that in the information cases--the reward might have been
considered necessary to carrying out the relief appropriation if there
was a reasonable chance of survivors, but after the passage of several
months it would be at best helpful. As with the necessary expense
theory in general, "necessary" relates not to the importance of the
object itself but to carrying out the purposes of the particular
appropriation.
Stolen property was involved in 53 Comp. Gen. 707 (1974). The Air Force
asked if it could pay a reward, pursuant to local custom, to two Thai
police officers whose services had been instrumental in recovering a
stolen road grader. Based on 6 Comp. Gen. 774, the Comptroller General
held that the Air Force could pay the reward from its appropriation for
emergencies and extraordinary expenses, successor to the old contingent
expense appropriation. However, apart from that particular
appropriation, the decision held that there was no authority for the
reward. This part of the decision was based on 8 Comp. Gen. 613 (1929),
once again implying that the rules in the information cases would apply
to missing property as well. (This case would now be covered by
10 U.S.C. § 2252.)
d. Contractual Basis:
The basis of the right to a reward is contractual; that is, there must
be an offer and an acceptance. The rationale is that "no person by his
voluntary act can constitute himself a creditor of the Government."
20 Comp. Dec. 767, 769 (1914).
Where a reward is based on the "necessary expense" theory rather than
on explicit statutory authority, the decisions hold that there must be
an offer of reward before a reward can be claimed. Performance of the
service constitutes the acceptance. See, e.g., 26 Comp. Gen. 605
(1947); 3 Comp. Gen. 734 (1924). See also 70 Comp. Gen. 720 (1991). The
offer may be in the form of a "standing offer" promulgated by
regulation. See, e.g., B-131689, June 7, 1957, in which a Treasury
Decision constituted the offer for an Internal Revenue Service (IRS)
reward. Another example is 28 C.F.R. pt. 7, a standing offer by the
Attorney General for rewards for the capture, or information leading to
the capture, of escaped federal prisoners.
Consistent with contract theory in general, it is also possible for an
offer to be implied from practice or course of conduct. For example, a
reward was held payable to an informer under the prohibition laws
without a specific offer in 4 Comp. Gen. 255 (1924). The informer was a
member of a "gang of whiskey thieves" and the Comptroller General noted
that "[u]nder such conditions no specific agreement for compensation is
generally made, but with a man of such character there is, and
practically must be, to obtain the information, an understanding that
there will be compensation." Id. at 256. The course of conduct and
standing offer concepts were combined in A-23019, May 24, 1928,
involving a reward for finding a lost Navy torpedo. In view of the
prevailing understanding in the area and past practice, the Navy's
regulations were viewed as "implicitly" making a standing offer.
Similarly, where a reward is based on express statutory authority and
the statute either is discretionary or authorizes the agency to "offer
and pay" a reward, there must be an offer before payment can be made.
41 Comp. Gen. 410 (1961) (14 U.S.C. § 643); 20 Comp. Dec. 767 (1914)
(apprehension of a deserter). On the other hand, if a statute provides
for a reward as a matter of entitlement, the reasons for requiring an
offer are less compelling; the terms of the statute and any
implementing regulations will determine precisely how and when the
"contract" comes into existence. E.g., Merrick v. United States,
846 F.2d 725 (Fed. Cir. 1988), discussed above in section C.14.a in
connection with the Internal Revenue Service statute.
As to whether the claimant must have knowledge of the offer, the
decisions are not entirely consistent. Cases involving the apprehension
of deserters have held that performance of the service gives rise to an
obligation on the part of the government to pay the offered reward
notwithstanding the claimant's lack of knowledge of the offer when he
performed the service. 27 Comp. Dec. 47 (1920); 20 Comp. Dec. 767
(1914); B-41659, May 26, 1944. On the other hand, cases involving the
finding of lost property have held that knowledge is required. Thus, in
26 Comp. Gen. 605 (1947), a reward the Navy had offered for the
discovery of a lost airplane was denied where the person discovering
the airplane had no knowledge of the offer at the time he performed the
service. This ruling was followed in 41 Comp. Gen. 410 (1961), holding
that the Coast Guard could not pay a reward under 14 U.S.C. § 643 to
one who had no knowledge of the published offer. See also A-35247,
Apr. 1, 1931 (escaped prisoner). The latter group of decisions purports
to be based on the "great weight of authority." 26 Comp. Gen. at 606.
Since reward payments for information furnished to the government are
in the nature of compensation for services rendered rather than
personal gratuities, the right to file a claim for the reward vests at
the time the compensation is earned (i.e., the services performed).
Consequently, that right is not defeated where the informant dies prior
to filing a claim or receiving the reward. The issue was discussed in
5 Comp. Gen. 665 (1926), in which GAO approved the payment of a reward
to the legal representative of an informant's estate for information
furnished under the predecessor of 19 U.S.C. § 1619, even though the
informant had not filed a claim prior to his death. See also 2 Comp.
Dec. 514 (1896) (customs); B-131689, June 7, 1957 (internal revenue);
B-129886-O.M., Dec. 28, 1956 (internal revenue).
e. Rewards to Government Employees:
A reward may not be paid to a government employee for services rendered
within the scope of his or her official duties. For example, in 4 Comp.
Gen. 687 (1925), a Deputy United States Marshal claimed a reward for
apprehending a military deserter. The Comptroller General held that the
reward could not be paid since the Marshal had been acting in his
official capacity (i.e., doing his job) rather than his personal
capacity. See also 7 Comp. Gen. 307 (1927); A-35247, Apr. 1, 1931;
A-17808, Mar. 30, 1927. Under the Defense Department's statutory
authority to pay expenses plus a small reward, a federal employee may
be reimbursed actual expenses incurred, but may not be paid the reward.
32 Comp. Gen. 219 (1952). In addition, some statutes, 19 U.S.C. § 1619
for one example, expressly exclude government employees from
eligibility.
However, if an employee performs services beyond the scope of his
official duties for which a reward has been offered, the reward may be
paid since the employee was acting in his capacity as a private
citizen. Thus, a reward was held payable to a patrol inspector for the
Immigration Service who had apprehended a military deserter since the
action was outside the scope of his official duties. 5 Comp. Gen. 447
(1925). See also A-17066, Mar. 2, 1927.
The prohibition against an employee's receiving a reward for services
performed in the course of his official duties applies as well to
rewards offered by nongovernment sources. The principle is illustrated
in 49 Comp. Gen. 819 (1970). An Air Force major, flying a low-level
training mission in the Republic of Colombia, spotted a cargo plane
unloading in a suspicious location. He notified the Colombian
authorities, who seized what turned out to be a load of contraband.
Under Colombian law, the informant was entitled to a reward of
25 percent of the total value of the contraband. However, any earnings
of an employee in excess of his regular compensation, earned in the
course of performing his official duties, belong to the government.
Therefore, the major could not keep the reward but had to turn it in
for deposit in the Treasury. Another reason the major could not keep
the reward is the prohibition in the United States Constitution
(art. I, § 9, cl. 8) against the acceptance by a government officer or
employee of gifts or emoluments from a foreign government without the
consent of Congress.
15. State and Local Taxes:
a. Introduction:
The doctrine of sovereign immunity and the Supremacy Clause of the
Constitution (U.S. Const. art. VI, cl. 2) prohibit states from taxing
the federal government or its activities. McCulloch v. Maryland,
17 U.S. (4 Wheat.) 316 (1819). The Supreme Court's early interpretation
was aimed at the preservation of the federal system, which includes
Chief Justice Marshall's famous dictum in McCulloch that "the power to
tax involves the power to destroy." 17 U.S. at 431.
Since Chief Justice Marshall's time, federal activity and state taxing
schemes have grown in complexity and sophistication. Today, while the
basic rule of federal immunity from state and local taxation is easy to
state, it is far less easy to apply. In the words of the Supreme Court,
federal immunity from state and local taxation is a "much litigated and
often confused field." United States v. City of Detroit, 355 U.S. 466,
473 (1958). It "has been marked from the beginning by inconsistent
decisions and excessively delicate distinctions" (United States v. New
Mexico, 455 U.S. 720, 730 (1982)), with the line between taxability and
immunity "drawn by an unsteady hand" (United States v. Allegheny
County, 322 U.S. 174, 176 (1944)).
In the simplest situation, federal tax immunity applies to attempts to
tax directly the property or activities of a federal department or
agency. More difficult problems arise when the entity being taxed is
not a typical federal agency. The test enunciated by the Supreme Court
on whether federal immunity from taxation applies is whether the entity
is "so closely connected to the [federal] Government that the two
cannot realistically be viewed as separate entities, at least insofar
as the activity being taxed is concerned." United States v. New Mexico,
455 U.S. at 735. The most common situation calling for the application
of this test--the taxation of government contractors--will be discussed
later.
The government's constitutional immunity from state taxation has been
held to extend to federal credit unions. United States v. Michigan,
851 F.2d 803 (6th Cir. 1988). However, a municipal sales tax imposed on
a "village corporation" established under the Alaska Native Claims
Settlement Act and funded in part by federal funds is not a tax on the
United States since the village corporation is not a federal agency and
the funds, once distributed to the corporation, are essentially private
funds. B-205150, Jan. 27, 1982. Similarly, funds paid over to a grantee
under a federal grant program may be used to pay a nondiscriminatory
state sales tax on purchases made with grant funds. 37 Comp. Gen. 85
(1957). The reason is that the funds, once paid to the grantee, are no
longer federal funds subject to many of the restrictions on the direct
expenditure of appropriations. Id. at 86-87. See also 62 Comp.
Gen. 531, 533 (1983) (grant funds become funds of grantees subject only
to grant terms and applicable regulations).[Footnote 381]
In 46 Comp. Gen. 363 (1966), the Comptroller General considered a
program where the United States was to share the cost of materials and
services procured by farmers to carry out a conservation program. The
Department of Agriculture had proposed a procedure whereby the United
States would make its cost-sharing payments directly to the vendors.
Since the materials purchased would not become the property of the
United States, the procedure was viewed as essentially a "credit
device" provided to the farmers, and the Comptroller General concluded
that the payments could include state sales taxes.
Evidence of tax-exempt status because of the federal government's
immunity may take various forms, depending on the circumstances. For
example, use of a government credit card or purchase order identifies
the purchaser as an agent, agency, or instrumentality of the United
States.[Footnote 382] Other forms are listed in the Federal Acquisition
Regulation (FAR), 48 C.F.R. § 29.305. When other evidence is not
available or is inapplicable, immunity is often established by use of a
"tax exemption certificate" such as Standard Form 1094, which is
usually processed individually. It is prescribed by and illustrated in
the FAR. 48 C.F.R. §§ 29.302(b), 53.229, 53.301-1094.[Footnote 383]
In some jurisdictions, tax exemption can be established by reciting a
"tax-exempt number" obtained from the taxing authority. Where this
procedure exists, it is governed by state regulation. Where available,
this can be a simple and cost-effective way of invoking the
government's tax immunity in situations where the amounts involved do
not justify obtaining a tax exemption certificate See B-206804, Feb. 7,
1983.
State taxation problems center on two distinct types of taxing schemes:
taxes linked to business transactions involving the federal government,
typically sales and use taxes, and property-oriented taxes linked to
ownership or use of various types of real and personal property located
within a state's geographical boundaries. In addition, federal
government employees frequently incur various types of state and local
taxes while performing government business. These three broad
categories form the framework of our discussion.
b. Tax on Business Transactions Where the Federal Government Is a
Party:
(1) General principles:
The key question in determining whether the federal government may pay
a sales or other tax imposed on its purchase of goods or services
within a state depends, according to the Supreme Court in Alabama v.
King & Boozer, 314 U.S. 1 (1941), on where the legal incidence of the
tax falls. There, a construction contractor building a federal project
objected to the state's imposition of sales tax on its purchase of
building materials used in construction. It argued that such purchases
should be exempt from state taxation, as the costs would ultimately be
borne by the federal government and thereby violate federal immunity
from state taxation. The Supreme Court disagreed, drawing a distinction
between the economic burden imposed on the United States when it must
pay more for goods and services because of sales taxes levied against
the seller of goods, and the constitutionally impermissible burden
occurring when the government, as a purchaser of goods, is directly
liable to the state for taxes imposed on a transaction. In other words,
if the "legal incidence" of a tax falls on the vendor-seller and the
seller alone is obligated to pay, the government may reimburse the
seller for the total cost, including any tax.[Footnote 384] But if the
vendee-buyer is in any way legally responsible for the payment of the
tax, the federal government as a buyer cannot be required to pay. Id.
at 12-14. See James v. Dravo Contracting Co., 302 U.S. 134 (1937)
(state gross receipts tax imposed on a government contractor).[Footnote
385]
The rule that the government is constitutionally immune from a "vendee
tax" but may pay a valid "vendor tax"--even if the government
ultimately bears its economic burden--has been recognized and applied
in numerous Comptroller General decisions. E.g., 46 Comp. Gen. 363
(1966); 24 Comp. Gen. 150 (1944); 23 Comp. Gen. 957 (1944); 21 Comp.
Gen. 1119 (1942); 21 Comp. Gen. 733 (1942). The same rule applies to
state tax levies on rental fees. See 49 Comp. Gen. 204 (1969);
B-168593, Jan. 13, 1971; B-170899, Nov. 16, 1970.
Determining whether the legal incidence of a particular tax is on the
vendor or the vendee is a question of federal law, e.g., United
States v. Nevada Tax Commission, 439 F.2d 435, 439 (9th Cir. 1971), and
GAO will follow federal judicial precedent where available. If there
are no federal judicial decisions on point, GAO will follow the
determination of the states highest court. 21 Comp. Gen. 843 (1942);
B-211093, May 10, 1983.
Nowhere is the vendor/vendee concept more clearly illustrated than in
the many cases considered by GAO on the payment of state gasoline
taxes. In 57 Comp. Gen. 59 (1977), the Comptroller General held that
the Vermont tax on gasoline distributors, which was required by law to
be passed along to dealers and in turn to consumers, was a legal
obligation on consumers to pay the tax. Since this tax collection
mechanism constituted a vendee tax, the federal government was
constitutionally immune from its payment as a purchaser. In 1979,
Vermont amended its tax law to delete the requirement for pass-through
to dealers and consumers. With this amendment, the tax became a vendor
tax and the federal government's immunity no longer applied. 63 Comp.
Gen. 49 (1983). It remains immaterial that, as a practical matter, the
tax will be reflected in the retail price of the fuel. While the
economic incidence still fell on the federal government as purchaser,
the legal incidence no longer did.
Another example of a vendee tax for which the United States was immune
was the California state gasoline tax, which the dealer was required to
collect from a consumer "insofar as it can be done." 55 Comp. Gen. 1358
(1976). GAO's finding that this was a vendee tax drew support from
Diamond National Corp. v. State Board of Equalization, 425 U.S. 268
(1976), where the Supreme Court concluded that an identically worded
sales tax requirement was imposed on the vendee.
In 55 Comp. Gen. 1358, GAO also considered gasoline taxes in
Pennsylvania, Hawaii, and New Mexico. Pennsylvania's tax was an excise
tax on dealer-users (meaning retail service station operators). The
statute did not provide any mechanism for the dealer-user to seek
reimbursement from the consumer and therefore it was assumed that the
tax levied against the dealer-user would become a part of that
retailer's operating expenses. Accordingly, the federal government
could pay, as a part of the purchase price, the amount of tax on the
retailer who was statutorily required to assume that tax as a cost of
doing business. In Hawaii the tax was in the form of a license fee paid
by retail distributors of gasoline. This license fee was imposed
directly on the distributors with no direct recourse against the
consumers of gasoline, although the amount of the license fee was
undoubtedly considered in setting the basic cost of fuel sold by those
retailers. For this reason the federal government was authorized to pay
the full retail price, including any amount attributable to the
tax.[Footnote 386] The New Mexico gasoline tax, however, was a tax on
the users of state highways, collected by the retail dealer of
gasoline. The tax was added at the pump to the per-gallon cost of
gasoline. Since the incidence of this tax was on the vendee, when the
United States purchased fuel in New Mexico, it was exempt from the
tax.[Footnote 387]
A type of vendor tax that the federal government must nearly always pay
is a business privilege or gross receipts tax, a personal tax on
domestic and foreign concerns for the privilege of doing business in
the state commonly measured as a percentage of gross receipts. An
example of this kind of tax is the Illinois Retailers' Occupational Tax
discussed in 43 Comp. Gen. 721 (1964), 42 Comp. Gen. 517 (1963), and
B-162452, Oct. 6, 1967. Similar taxes have been held to be payable in
the states of Arizona (27 Comp. Gen. 767 (1948) and B-167150, Feb. 17,
1970); Hawaii (49 Comp. Gen. 204 (1969) and 37 Comp. Gen. 772 (1958));
New Mexico (B-147615, Dec. 14, 1961); and South Dakota (B211093,
May 10, 1983). A "business privilege" tax on motor fuel sellers imposed
by Kansas City, Missouri, was held payable in 32 Comp. Gen. 423 (1953).
The imposition of state taxes--sales, use, gross receipts, etc.--on
federal government contractors has produced more than its share of
litigation. Questions arise, for example, because the tax may be based
on the value of property in the contractor's possession but owned by
the federal government, or purchased for use in performing the
contract. For the most part, the taxes will be upheld. The most
comprehensive discussion by the Supreme Court is United States v. New
Mexico, 455 U.S. 720 (1982). The Court reviewed prior cases and
concluded:
"[T]ax immunity is appropriate in only one circumstance: when the levy
falls on the United States itself, or on an agency or instrumentality
so closely connected to the Government that the two cannot
realistically be viewed as separate entities, at least insofar as the
activity being taxed is concerned."
Id. at 735. Government contractors will generally be unable to meet
this test except in very limited circumstances. Thus, a contractor can
claim constitutional immunity from tax where there is an agency
relationship between the United States and a contractor such that the
contractor is acting solely as the government's purchasing agent and
title to goods purchased never vests in the contractor. Kern-
Limerick v. Scurlock, 347 U.S. 110, 120-23 (1954); United States v.
Lohman, 74 F.3d 863, 867 (8th Cir.), cert. denied, 518 U.S. 1018
(1996); B-177215, Nov. 30, 1972. See also United States v. Kabeiseman,
970 F.2d 739 (10th Cir. 1992) (United States and not contractor was the
real purchaser of diesel fuel, so state tax levied on the diesel fuel
purchasers could not be enforced against the United States). However,
the "contractor as agent" has limited application. For example, in
United States v. New Mexico, 455 U.S. 720, 742 (1982), the Court
sustained use and gross receipts taxes imposed on government
contractors which, in that case, operated under an "advance funding"
system whereby the contractors met their obligations by using Treasury
funds that had been placed in a special bank account. Id. at 725-
26.[Footnote 388]
In imposing taxes on government contractors, a state may not
discriminate against the federal government (South Carolina v. Baker,
485 U.S. 505, 523 (1988); see, e.g., B-156561, June 22, 1965), or
substantially interfere with its activities. New Mexico, 455 U.S. at
735 n.11; Phillips Chemical Co. v. Dumas Independent School District,
361 U.S. 376, 387 (1960); City of Detroit v. Murray Corp., 355 U.S.
489, 495 (1958); United States v. City of Manassas, 830 F.2d 530, 533
(4th Cir. 1987), aff'd mem., 485 U.S. 1017 (1988). This does not
prevent states from taxing private parties who use federal property,
even when the private parties are providing goods to the United States.
United States v. Nye County, 178 F.3d 1080, 1084 (9th Cir. 1999).
The United States can be required to pay a state tax obligation imposed
on its contractor when the federal government assumes responsibility
for the tax by contract. United States v. Department of Revenue of
State of Illinois, 202 F. Supp. 757, 760 (N.D. Ill.), aff'd per curiam,
371 U.S. 21 (1962). The typical language in government contracts for
the purchase of goods or services recites that the offered price
includes all applicable state and local taxes. (See the Federal
Acquisition Regulation (FAR) provisions on state and local taxes at
48 C.F.R. subpt. 29.3, and its prescribed contract clauses at 48 C.F.R.
§ 52.229.) Shifting the burden of determining which taxes apply to the
contractor is premised on the belief that contractors are in a better
position to know what taxes are applicable. B-251628, Apr. 2, 1993;
B-242303, Mar. 21, 1991; B-209430, Jan. 25, 1983. Unless otherwise
specified in the contract, the government cannot be required to pay any
additional amount for taxes (B162667, Dec. 19, 1967; B-134347, Mar. 1,
1966), even when the taxes were first imposed during contract
performance. B-160129, Dec. 7, 1966. In such circumstances it is
irrelevant that the tax involved is a valid vendor tax from which the
United States is not immune; there can be no liability unless the
contract so provides. 45 Comp. Gen. 192 (1965); 23 Comp. Gen. 957
(1944). Note however, that a contract can include a contingency clause
for after-imposed state and local taxes. The failure to include such a
clause is regarded as the contractors business decision so that the
government will not be liable for any additional taxes. Cannon
Structures, Inc., ICBA No. 3968-98, 99-1 B.C.A. ¶ 30,236 (1999); Midcon
of New Mexico, Inc., ASBCA No. 37249, 90-1 B.C.A. ¶ 22,621 (1990).
Other contract language, of course, may dictate different results. A
contract that provides for the payment of "the actual direct costs"
includes reimbursement of state taxes paid by a contractor. 72 Comp.
Gen. 107 (1993). Similarly, a contract for the "actual costs" justifies
reimbursement to a contractor of back taxes and interest assessed
against him when a court found that the contractor was not exempt from
taxation. B-147316-O.M., Jan. 9, 1962. The same result would apply in
the case of a contract for a cost plus fixed fee, such as the contract
in Alabama v. King & Boozer, supra. 35 Comp. Gen. 378 (1955). Likewise,
a contract to pay 50 percent of any new tax imposed by a state would
include the obligation to pay half of the business privilege tax
assessed against a corporate contractor. B-152325, Dec. 12, 1963.
A contractor may be entitled to equitable relief in certain limited
circumstances where both the contractor and the government are mistaken
as to the applicability of a state tax to a particular contract and
where the contractor reasonably relies on an innocent representation of
a government agent that no tax applies. In such cases, the contract may
be reformed and the price increased to include the applicable state
tax. Cases reaching this result in various fact situations include
64 Comp. Gen. 718 (1985); B-186949, Oct. 20, 1976; B-180071, Feb. 25,
1974; B-169959, Aug. 3, 1970; B-159064, May 11, 1966; and B-153472,
Dec. 2, 1965. The underlying legal principle is to avoid unjust
enrichment so that a party making a misrepresentation, however
innocently, should not benefit at the expense of a party who reasonably
relies on that misrepresentation. Mutual mistake is an essential
element of recovery in these cases. If the contractor cannot establish
mutual mistake, the contract is payable as written and the contractor
must absorb the additional expense. E.g., Hugh S. Ferguson Co., PSBCA
No. 2178, 89-1 B.C.A. ¶ 21,294 (1988) (distinguishing 64 Comp.
Gen. 718); see Foley Co. v. United States, 36 Fed. Cl. 788, 792 (1996)
(agency employee's misrepresentation about tax-exempt status is not a
mutual mistake of fact requiring contract reformation); see also Cannon
Structures, Inc., supra at 99-1 B.C.A. ¶ 30,236 (FAR prohibits post-
contractual relief for after-imposed state taxes).
If a contractor entitled under the contract to be reimbursed for state
taxes pays a state tax that is later judicially determined to be
invalid, the contractor is nevertheless entitled to reimbursement
(43 Comp. Gen. 721 (1964)), unless the contractor paid the tax without
being required to do so (38 Comp. Gen. 624 (1959)).
Throughout the preceding discussion, the government has been the buyer.
Tax problems may also arise where the government is the seller,
although there have been few decisions in this area. In one case, the
Texas use tax statute required sellers to obtain a permit, collect the
tax, and remit collections to the State Comptroller. The Comptroller
General held that the state could not impose these requirements on the
disposal of surplus federal property by the General Services
Administration under the Federal Property and Administrative Services
Act of 1949. 41 Comp. Gen. 668 (1962). The theory is that a state may
not infringe on the right of the federal government to conduct its
official activities free from state control or regulation. See Mayo v.
United States, 319 U.S. 441, 447 (1943) (ruling that imposition of
state "inspection fees" on federal property interfered with federal
functions in violation of the Supremacy Clause, U.S. Const. art. VI,
cl. 2).
(2) Public utilities:
As with any other occupant of a building, the federal government is a
consumer of services from public utilities. A utility bill may include
various elements in addition to the basic charge for services used.
Some of these elements may be taxes the federal government may properly
pay; others may be taxes from which the government is immune; still
others may not be taxes at all.
In determining whether appropriated funds may be used to pay taxes
appearing on or included in utility bills, the principles described
above apply--such as the distinction between a vendor and vendee tax--
with one additional feature based on the nature of the rate-fixing
process. Utility rates are usually set by the state legislature or by a
public service commission. Rates established through this process apply
to federal and nonfederal users alike. Unless they are unreasonable or
discriminatory, federal agencies are expected to pay them. E.g.,
67 Comp. Gen. 220 (1988); 27 Comp. Gen. 580 (1948). See also B-300538,
Mar. 24, 2003 (appropriated funds may be used to pay the costs of
relocating public utility facilities on federal lands when the
government--acting as a customer--requests that the facility be moved).
For example, state sales taxes that qualify as vendor taxes and that
have been factored into the utility rates through the applicable rate-
setting process are payable by the government. 45 Comp. Gen. 192
(1965); B-300538, supra; B-134602, Dec. 26, 1957; B-123206, June 30,
1955. The same result applies with respect to a vendor sales tax on the
utility billed separately to the agency. B-211093, May 10, 1983.
Business privilege or gross receipts taxes are frequently imposed on
public utilities by law. The utility companies are permitted to treat
these taxes as operating expenses and to incorporate them into their
basic billing rates, thereby creating a constitutionally permissible
vendor tax. B-300538, supra; B-144504, June 9, 1967; B-148667, May 15,
1962. This is true even where a state utility regulatory authority
requires the pass-through, if the tax itself is a vendor tax. See
61 Comp. Gen. 257 (1982) (Veterans Administration medical centers were
liable for that portion of their electric bills which were
attributable to a rate increase reflecting the states public utility
license tax).[Footnote 389]
Where the business privilege tax is a valid vendor tax, it can be paid
even if it is attributed as a tax and stated on the utility bill as a
separate item. 32 Comp. Gen. 577 (1953); B-300538, supra; B-260063,
June 30, 1995; B-171756, Feb. 22, 1971; B-144504, June 30, 1970;
B-225123, May 1, 1987 (nondecision letter).[Footnote 390] The theory is
that the "tax," even though separately stated, is, in effect, an
authorized rate increase designed to recover the revenue necessary to
permit the utility to maintain the allowed rate of return on its
investment. See B-167999, Dec. 31, 1969. See also B-288161, Apr. 8,
2002 (vendees do not bear the legal incidence of a utility tax even
when a utility increases its rates to pass the tax on to the vendee).
However, payment may not be approved where the tax is collected only
from the federal government or where the collection of the tax would
have a discriminatory effect on federal activities. B-159685, Apr. 7,
1967.
Another charge occasionally encountered is a "lifeline" surcharge. This
is a surcharge designed to subsidize the providing of reduced cost
utility service to low-income or elderly customers. GAO regards a
lifeline surcharge not as a tax, but merely part of the authorized rate
properly payable by federal users. 67 Comp. Gen. 220 (1988); B-189149,
Sept. 7, 1977.
c. Property-Related Taxes:
Federal land located within state borders is also exempt from state
property taxes on the same constitutional theory discussed above. E.g.,
Clallam County v. United States, 263 U.S. 341, 343-44 (1923); Van
Brocklin v. Tennessee, 117 U.S. 151, 180 (1886). However, as with the
contractor cases previously discussed, the immunity is generally
limited to attempts to levy the tax directly against the federal
government. Thus, the Supreme Court has sustained a state property tax
on federally owned land leased to a private party for the conduct of
for-profit activities (United States v. City of Detroit, 355 U.S. 466,
469 (1958)), and on the "possessory interest" of Forest Service
employees living in government-owned housing:
(United States v. County of Fresno, 429 U.S. 452 (1977)).[Footnote 391]
Similarly, the court of federal claims in Wright Runstad Properties
Ltd. Partnership v. United States, 40 Fed. Cl. 820, 824 (1998), ruled
that a landlord to the federal government had to pay a special
assessment levied against the property, observing that the government's
tax immunity was not implicated because the government was not being
taxed.
Just as states and their political subdivisions are barred from levying
general property taxes against federal property, they are likewise
prevented from making assessments against federal land for local
improvements, even if the improvements would be made to federally owned
property. B-157435, Oct. 6, 1965. Such assessments are typically made
for paving or repairing streets or sidewalks, installing sewers, and
similar local governmental services. An assessment for local
improvements is an involuntary exaction in the nature of a tax.
Hagar v. Reclamation District No. 108, 111 U.S. 701, 707 (1884); City
of Cincinnati v. United States, 39 Fed. Cl. 271, 275 (1997), aff'd,
153 F.3d 1375 (Fed. Cir. 1998). As such, the decisions have uniformly
held that the United States is not required to pay. E.g., United
States v. City of Huntington, 999 F.2d 71 (4th Cir. 1993), cert.
denied, 510 U.S. 1109 (1994); National Railroad Passenger Corp. v.
Pennsylvania Public Utility Commission, 665 F. Supp. 402 (E.D. Pa.
1987), aff'd, 848 F.2d 436 (3rd Cir.), cert. denied, 488 U.S. 893
(1988);[Footnote 392] United States v. Harford County, 572 F. Supp. 239
(D. Md. 1983); 27 Comp. Gen. 20 (1947); 18 Comp. Gen. 562 (1938);
B-243004, Sept. 5, 1991; B-226503, Sept. 24, 1987; B-184146, Aug. 20,
1975; B-160936, Mar. 13, 1967; B-155274, Oct. 7, 1964; B-150207, Nov.
8, 1962. Any assessment based on a fixed dollar amount multiplied by
the number of front feet of the government's property, or computed on a
square footage basis, is a tax and not payable by the government. E.g.,
Harford County, supra; B-168287, Feb. 12, 1970; B-159084, May 11, 1966.
Naturally, the determination of whether a particular assessment can be
paid does not depend on the taxing authority's characterization of the
assessment. Thus, payment has been denied where the assessment was
termed a "benefit assessment" (B-168287, Nov. 9, 1970), a "systems
development charge" (B-183094, May 27, 1975), or an "invoice for
services" (49 Comp. Gen. 72 (1969)). Regardless of the designation, if
the charge is computed on a footage basis or in the same manner as the
taxes levied against other property owners, it cannot be paid.
However, even though an assessment may not be paid as a tax, a state or
municipality may be compensated on a quantum meruit basis for the fair
and reasonable value of the services actually received by the United
States. Harford County, supra; 49 Comp. Gen. 72 (1969); 18 Comp.
Gen. 562 (1938); B-226503, Sept. 24, 1987; B-168287, Nov. 9, 1970; see
70 Comp. Gen. 687 (1991) (federal government may pay reasonable user
fees to a county for use of its landfill). To be paid on a quantum
meruit basis, it must be clear that the government could have acquired
the services it received in a normal procurement, that the federal
government received and accepted the benefit of the services provided,
the persons seeking payment acted in good faith, and the amount claimed
represents the reasonable value of the benefit received. 64 Comp.
Gen. 727, 728 (1985). Not surprisingly, most of GAO's decisions in this
area involve an evaluation of the reasonableness of the claim.
The method for computing the assessment is the primary means of
determining whether the charge represents the fair value of services
received. Quantum meruit claimants must show how they arrived at the
amount claimed: An unsupported statement that the sum represents the
fair and reasonable value of the services rendered is insufficient.
Although the claim need not be presented on a strict "quantity of use"
basis, only when it is clearly shown that the specified method of
computation is based purely upon the value of the particular services
rendered to the government may any payment be made. B-177325, Nov. 27,
1972; B-168287-O.M., July 28, 1972; B-168287-O.M., Mar. 29, 1971.
However, where a precise determination of the benefit received by the
government cannot reasonably be made, payment has been allowed where
the method of computation used did not appear unreasonable under the
circumstances. B-168287O.M., supra.
Applying the above principles, the Comptroller General concluded in one
case that a special assessment based on the federal property's ratable
share of the cost of necessary repairs and improvements to a septic
sewage system could be paid on a quantum meruit basis. B-177325,
Nov. 27, 1972. However, in B-179618, Nov. 13, 1973, an assessment
against an Air Force base for maintenance of a drainage ditch based on
the "benefit" to the land could not be paid since there was no
indication of how the amount of the benefit had been computed and no
showing that the assessment represented the fair and reasonable value
of the services rendered to the government. Similarly, a municipal
assessment based on such factors as land area, structure value, and
size was found to be a tax and therefore not payable in B-183094,
May 27, 1975.
Using the same analysis, GAO advised the Air Force in B-207695,
June 13, 1983, that it was not required to pay fees for well
registration and withdrawal of groundwater, which a state had attempted
to impose on the Air Force's right to draw water from wells on federal
property. There was no showing that the fees bore any relationship to
any services provided to the government. Similarly, an assessment
levied against a federal facility for sewer charges unrelated to actual
sewer usage could not be paid as a tax. B-226503, Sept. 24, 1987.
However, fees for permits or certificates for the right to use state-
owned water represent charges for services rendered rather than taxes
and may therefore be paid. 5 Comp. Gen. 413 (1925); 1 Comp. Gen. 560
(1922). And one-time connection fees for hooking up federal facilities
to local sewer systems, whether new construction or improvements, are
payable as authorized service charges. 39 Comp. Gen. 363 (1959);
9 Comp. Gen. 41 (1929). Where the hook-up is incident to new
construction, the fee is chargeable to the construction appropriation.
19 Comp. Gen. 778 (1940).
The principle that a state or municipality may be paid on a quantum
meruit basis for services actually rendered provides a justification
for the payment of a "service charge" for services rendered, as
distinguished from a tax. E.g., 70 Comp. Gen. 687 (1991); 49 Comp.
Gen. 72 (1969). However, a local government cannot collect a service
charge for services that the governmental unit is required by law to
provide, such as police or firefighting services. E.g., B-243004,
Sept. 5, 1991 (special assessment to finance new city fire truck in
support of municipal duty to provide fire protection is a tax not
payable by the United States). See also section C.7 of this chapter.
[Footnote 393]
Where a local government finances major improvements, such as sewers,
by means of issuing revenue bonds, and then levies a surcharge on its
service charge to liquidate the bonded indebtedness, a federal user of
the sewer service who is under a contractual obligation to pay the
service charge may also pay the surcharge. 42 Comp. Gen. 653 (1963).
However, GAO has questioned the payment of bond interest where that
interest was attributable to the municipality's share of initial
construction costs. B-180221-O.M., Mar. 19, 1974.
The United States' exemption from property-related taxes has an obvious
effect on some state and local jurisdictions. Congress may choose to
compensate local taxing authorities for the loss of income attributable
to federal holdings of real property within a particular jurisdiction
by payments in lieu of taxes. See B-149803, May 15, 1972.[Footnote 394]
Payments may also be made pursuant to specific legislation establishing
a new federal enclave. See B-145801, Sept. 20, 1961.
The assessments we have been discussing thus far are assessments levied
by governmental entities. Tax immunity would not apply to assessments
levied by private entities, where the federal government's liability is
determined by application of traditional concepts of contract and
property law, subject to any applicable federal statutory provisions.
For example, in B-210361, Aug. 30, 1983, GAO advised that the Forest
Service was liable for assessments levied by a private homeowners'
association on a parcel the Forest Service had acquired by donation.
The obligation to pay the assessments amounted to a covenant running
with the land, and the United States became contractually bound by
accepting the deed with notice of the covenant.
The principles we have discussed in the context of real property also
apply to personal property. E.g., 27 Comp. Gen. 273 (1947) (no legal
basis to pay state registration fee on government-owned outboard
motors). Several earlier decisions applied the federal government's
immunity against state motor vehicle license plate and title
registration fees. 21 Comp. Gen. 769 (1942); 4 Comp. Gen. 412 (1924);
1 Comp. Gen. 150 (1921); 15 Comp. Dec. 231 (1908). (Most federal
government-owned vehicles today would have federal government plates.)
A final type of property-related state tax we may mention briefly are
the so-called "death taxes." Death taxes are of two types, estate taxes
and inheritance taxes. An estate tax is based on the value of the
taxable estate in its entirety; an inheritance tax is based on the
value of taxable property passing to a particular beneficiary. Property
given to the United States by testamentary disposition may be subject
to a state inheritance tax. The Supreme Court has held that a state may
impose an inheritance tax on property bequeathed to the United States,
and indeed may completely prohibit testamentary gifts to the United
States by its domiciliaries. United States v. Burnison, 339 U.S. 87, 93
(1950). Death taxes on gifts to the United States do not involve
federal immunity because the taxes are imposed before the property
reaches the hands of the beneficiary. (See also Chapter 6, section E on
donations to the federal government, which includes citations to the
leading cases.)
There may be situations, although they should be uncommon, when it may
be desirable to pay a state death tax from appropriated funds. In an
early case, the Comptroller of the Treasury advised the Smithsonian
Institution that it could use its appropriation for "preservation of
collections" to pay a state inheritance tax on a legacy bequeathed to
the Smithsonian. 26 Comp. Dec. 480 (1919). This type of situation could
arise, for example, if a decedent bequeathed specific real or personal
property to the United States and the estate contained insufficient
assets to pay an applicable death tax without liquidating the property.
d. Taxes Paid by Federal Employees:
Another way the federal government sometimes pays a state or local tax
is by the reimbursement to a federal employee who incurred the tax
during the performance of official business or other activities. For
example, a member of the Armed Services was entitled to reimbursement
under a government-supported health insurance plan for the full amount
of a doctor's bill, including the amount that was attributable to the
New Mexico gross receipts tax, a valid vendor tax. B-130520, Nov. 30,
1970. See also 36 Comp. Gen. 681 (1957) (state gasoline tax); B-203151,
Sept. 8, 1981 (local sales tax on rental vehicle); B-160040, July 13,
1976 (certain intangible property taxes reimbursable as relocation
expenses incident to transfer). Some other commonly encountered
situations are described below.
(1) Parking taxes:
Questions here arise in two contexts: parking meter fees and municipal
taxes on parking in parking lots or garages.
The rule for parking meters on public streets is: Unless and until
there is a contrary judicial determination, appropriated funds may be
used to reimburse a federal employee for street parking meter fees
incurred while driving a government-owned vehicle on official business,
except (1) where the fee would impose an impermissible burden on the
performance of a federal function or (2) where the particular fee has
been held by a court to be a tax or a revenue raising measure (as
opposed to a traffic regulation device). 46 Comp. Gen. 624
(1967).[Footnote 395]
To the extent a parking meter fee may be held to be a tax under the
above rule, it cannot be imposed against the federal government or
against the employee-driver as the government's agent. 41 Comp.
Gen. 328 (1961). However, even where the fee is a tax, if the car is
unmarked and being used in investigative work, the fee can be
reimbursed as a necessary cost of the investigation. 38 Comp. Gen. 258
(1958).
The two preceding paragraphs apply to government-owned vehicles. A
statute expressly authorizes employee reimbursement of parking fees
when using a privately owned vehicle on official business. 5 U.S.C.
§ 5704; 41 Comp. Gen. 328.
Parking meter fees in a municipally owned, off-street parking lot are
not viewed as taxes for purposes of the rule stated in 46 Comp.
Gen. 624. These fees may therefore be reimbursed whether the employee
is driving a government-owned or privately owned vehicle. 44 Comp.
Gen. 578 (1965).[Footnote 396]
A local tax on parking in a parking lot or garage cannot be imposed on
a government-owned vehicle on official business. 51 Comp. Gen. 367
(1971). However, if the amount of the tax is so small as not to justify
issuance of a tax exemption certificate, the employee may be reimbursed
notwithstanding the government's immunity. 52 Comp. Gen. 83 (1972). The
rationale is that the administrative cost of asserting the immunity by
using the certificate would be prohibitive for very small amounts. As
with the parking meter fees, an employee using a privately owned
vehicle on official business may be reimbursed under 5 U.S.C. § 5704
for local taxes levied on parking in lots or garages. 51 Comp. Gen. 367
(1971).
To sum up the rules on parking taxes and fees:
1. Privately owned vehicles on official business. Employee may be
reimbursed for meter fees either on a street or in a municipal lot, and
for taxes on parking in a lot or garage.
2. Government-owned vehicle, metered parking. Employee may be
reimbursed for meter fees on a public street unless one of the
exceptions in 46 Comp. Gen. 624 applies, and for meter fees in a
municipal lot.
3. Government-owned vehicle, unmetered parking. Employee may be
reimbursed for local taxes on parking in a lot or garage if the amount
is too small for the issuance of a tax exemption certificate, at least
where the taxing entity requires the certificate as evidence of tax-
exempt status.
(2) Hotel and meal taxes:
State and local governments frequently add one or more taxes to the
cost of a stay at a hotel or motel. When a federal employee rents a
room directly from the proprietor, even when on official business, the
federal employee becomes personally liable for the amount of the
rental, including associated taxes.[Footnote 397] Since the United
States is not a party to the transaction, the Comptroller General
reasoned that the tax was not levied on the federal government.
Accordingly, the employee must pay the tax and cannot assert the
government's immunity from local taxes.[Footnote 398] That the
government may reimburse the employee for the full rental price,
including the tax, does not transform the tax into a tax on the federal
government. 55 Comp. Gen. 1278 (1976); B-172621-O.M., Aug. 10,
1976.[Footnote 399] If local law exempts federal employees from the
tax, the employees should use tax exemption certificates to claim the
exemption.
However, if the government rents the rooms directly, that is, if there
is a direct contractual relationship between the United States and a
hotel or motel for the rental of rooms to federal employees or others,
then the government is entitled to assert its immunity from local
taxes. 55 Comp. Gen. 1278. The Department of Justice reached the same
result in 5 Op. Off. Legal Counsel 348 (1981), opining that the Office
of the Vice President was not required to pay local hotel taxes when
reserving a block of rooms for an official trip.[Footnote 400]
Similar results would occur where a tax was imposed on commercial
rental of a vehicle or any other travel-related activity such as meals
or other transportation. B-167150, Apr. 3, 1972. On the theory that the
contract defines the limits of liability, however, a meal ticket good
for the purchase of food up to a maximum dollar amount may include
amounts attributable to a valid vendor tax up to the specified dollar
limit. In the event the dollar limit was exceeded, however, the
remainder of the expense would be personal, including the extra amounts
for tax. 41 Comp. Gen. 719 (1962).
(3) Tolls:
State and local authorities frequently charge tolls for the use of
state-owned highways, bridges, or tunnels. "A tax is a demand of
sovereignty; a toll, a demand of proprietorship." In re State Freight
Tax, 82 U.S. (15 Wall.) 232, 278 (1872). Thus, it has long been
established that a toll is not a tax, but is a charge for the use of
the road, bridge, or tunnel. Sands v. Manistee River Improvement Co.,
123 U.S. 288, 294 (1887). Because tolls do not raise questions of
federal tax immunity, they are properly payable where necessarily
incurred in the performance of official business. 9 Comp. Gen. 41, 42
(1929); 4 Comp. Gen. 366 (1924); 24 Comp. Dec. 45 (1917). Statutory
authority now exists for the reimbursement of tolls incurred by
government employees on official travel. 5 U.S.C. § 5704(d); 35 Comp.
Gen. 92 (1955).
GAO has also held that appropriated funds may be used to purchase
annual toll road permits where justified by anticipated usage.[Footnote
401] Similarly, if an employee who frequently uses a toll road on
official business purchases an annual permit for his or her own
automobile, the agency may reimburse the toll charges that would
otherwise have been incurred, on a per trip basis, not to exceed the
cost of the annual permit. 34 Comp. Gen. 556 (1955).
Some of the early decisions held that a toll could not be paid if the
particular highway, bridge, or tunnel was constructed with the aid of
federal funds. 9 Comp. Gen. at 42; 24 Comp. Dec. at 48. The statement
in 24 Comp. Dec. was based on legislation that authorized federal
financial assistance but also prohibited the charging of "tolls of all
kinds." Id. at 47. The Federal-Aid Highway Act includes an almost
identical prohibition (23 U.S.C. § 301), but also authorizes tolls in
certain circumstances (23 U.S.C. § 129). The editors have found no
discussion of this issue under the modern legislation, nor have we
found any guidance as to how, apart from the interstate highway system,
a federal employee would know which roads were constructed with aid.
Regardless, it would seem prudent to apply the concept of 52 Comp.
Gen. 83 (1972), discussed above under parking taxes, in conjunction
with the reimbursement authority of 5 U.S.C. § 5704.
(4) State and local income withholding taxes:
In the absence of statutory authority, state or local withholding
requirements would not apply to the federal government because a state
may not "regulate" the governmental activities of the United States.
28 Comp. Gen. 101 (1948); 27 Comp. Gen. 372 (1948). The requisite
statutory authority now exists. For the District of Columbia and any
other state, city, or county that provides for the collection of income
tax by withholding, the Secretary of the Treasury must enter into an
agreement with the applicable jurisdiction to withhold the tax from
federal employees. 5 U.S.C. §§ 5516, 5517, 5520.
(5) Possessory interest taxes:
A possessory interest tax is a tax on the exclusive right to the
beneficial use of real property or its improvements held by a tax-
exempt public agency. See United States v. County of San Diego,
965 F.2d 691 (9th Cir. 1992) (interpreting California law). The Supreme
Court upheld the validity of a possessory interest tax on federal
employees required to live in housing owned by the Forest Service. The
Court found that the tax was nondiscriminatory and that its legal
incidence fell upon the employees and not the United States. United
States v. County of Fresno, 429 U.S. 452 (1977); see also B-251228,
July 20, 1993; B-191232, June 20, 1978. Similarly, a tax on a federal
contractor who had the beneficial use of a government-owned
experimental fusion device was held lawful and payable by the
contractor. County of San Diego, 965 F.2d at 691. The device, which
weighed between 400 and 500 tons, was deemed a "fixture" annexed to the
property by gravity. United States v. County of San Diego, 53 F.3d 965,
968 (9th Cir.), cert. denied, 516 U.S. 867 (1995).
Where the government provides quarters for employees and collects rent
under 5 U.S.C. § 5911, the rental rate may be adjusted to discount an
applicable possessory interest tax, but the adjustment must be approved
by the Office of Management and Budget and may not be retroactive.
B-194420, Oct. 15, 1981.
(6) Occupational license fees:
Occupational license fees or employment taxes are fees imposed by a
state or local jurisdiction, usually on members of a particular
occupation or profession, such as doctors, attorneys, and accountants,
as a prerequisite to being able to work or practice in that
jurisdiction. Apart from the question of a state's authority to impose
such fees on federal employees performing federal functions, GAO had
consistently ruled that absent specific statutory authority, agencies
could not use appropriated funds to pay these fees. E.g., 47 Comp.
Gen. 116 (1967). GAO reasoned that federal employees have the burden of
qualifying themselves for the performance of official duties and,
therefore, federal employees had to pay any expense associated with
becoming qualified. 22 Comp. Gen. 460 (1942). Thanks to a statutory
change, however, agencies now have the discretion to use available
funds to pay the expenses of an employee to obtain professional
credentials, including state-imposed professional licenses,
certifications, and for the examinations required to obtain these
credentials. 5 U.S.C. § 5757. For further discussion and case
citations, see sections C.13.e (Personal Qualification Expenses) and
C.12.b (Membership Fees--Attorneys) of this chapter.
e. Refund and Recovery of Tax Improperly Paid:
GAO has held that improperly paid taxes may be recovered by setoff
against other moneys payable to a state. B-150228, Aug. 5, 1973; see
United States v. Munsey Trust Co., 332 U.S. 234, 239-40 (1947) (United
States as a creditor is entitled to set off amounts it is owed from
amounts otherwise payable). Setoff may be asserted against any money
payable to any other agency of the state, whether or not related to the
source of the erroneous payments. B-154778, Aug. 6, 1964; B-154113,
June 24, 1964; B-150228, Aug. 5, 1963.[Footnote 402]
Some states provide for refunds of certain taxes paid by the United
States. In evaluating these refund provisions, it is important to
determine whether the tax subject to refund is a vendor tax or a vendee
tax. If the tax is a vendor tax, the United States is not
constitutionally immune from payment. Thus, any right to a refund of a
vendor tax is purely a creature of state law and the United States must
comply with any conditions and limitations imposed by state law.
B-100300, June 28, 1965.[Footnote 403] If, however, the tax is a vendee
tax, the government's right to a refund is based on the Constitution
and is wholly independent of state law. Therefore, in claiming a refund
in this situation, the United States is not bound by restrictions in
state law, such as state statutes of limitations. United States v.
Michigan, 851 F.2d 803, 809-10 (6th Cir. 1988); B-154778, Aug. 6, 1964;
B-100300, Feb. 10, 1956.
Using an established refund mechanism is the preferred method of
recovering improperly paid taxes. 42 Comp. Gen. 593 (1963). Thus, upon
the request of a state, and as long as the interests of the United
States will be protected, setoff may be deferred pending the filing of
a formal claim with the appropriate state agency. B-151095, Jan. 2,
1964. However, if the state refuses a refund to which the United States
is entitled, setoff is again the proper remedy if legally available.
39 Comp. Gen. 816 (1960); B-162005, Apr. 8, 1968.
Where a sales tax has been improperly paid, the vendor is little more
than a collection agent for the state and the state is the ultimate
beneficiary of the improper payment. Therefore, collection action
should proceed against the state rather than by setoff against the
vendor. 42 Comp. Gen. 179 (1962).
In the course of resolving problems over the liability of the United
States to pay a particular tax, the government has entered into various
arrangements with states pending the outcome of litigation. In one
case, the government agreed with a state taxing authority to file tax
forms without remitting any money, and to make the actual payments upon
a final judicial determination in a pending test case that the tax was
valid. B-160920, May 10, 1967. (The decision, after the Supreme Court
upheld the validity of the tax, held that the back taxes should be paid
notwithstanding expiration of the state statute of limitations.) In
another case, the government negotiated an agreement with contractors
whose contracts were being subjected to a questionable state sales tax,
under which the General Services Administration agreed to pay the tax
and the contractors promised to refund the amounts paid if it was
ultimately determined that the government's immunity applied. B-170899,
Nov. 16, 1970. See also 50 Comp. Gen. 343 (1970).
16. Telephone Services:
a. Telephone Service to Private Residences:
(1) The statutory prohibition and its major exception:
A problem that existed during the early years of the twentieth century
was an apparent tendency on the part of government officials to have
telephones installed in their homes at government expense. See 53 Comp.
Gen. 195, 197 (1973); 19 Comp. Dec. 350, 352 (1912). It must be
remembered that telephones were much more of a novelty in those days;
we were still decades from the point where almost every American home
has a private home telephone, not to mention a mobile or cellular
phone. In any event, Congress enacted legislation in 1912 to prevent
the use of public funds for private telephone service for government
officials. The portion of the statute we are concerned with here,
31 U.S.C. § 1348(a)(1), provides:
"Except as provided in this section, appropriations are not available
to install telephones in private residences or for tolls or other
charges for telephone service from private residences."
Over time statutory exceptions have been passed, however, eroding the
once almost blanket prohibition against the payment for telephones in
residences. For example, in 1995, with the advent of telecommuting and
the flexible workplace, Congress passed a major exception to the latter
prohibition. Agencies are expressly authorized to use appropriated
funds:
"to install telephone lines, and necessary equipment, and to pay
monthly charges, in any private residence or private apartment of an
employee who has been authorized to work at home in accordance with
guidelines issued by the Office of Personnel Management: Provided, That
the head of the department, division, bureau, or office certifies that
adequate safeguards against private misuse exist, and that the service
is necessary for direct support of the agency's mission."
Pub. L. No. 104-52, title VI, § 620, 109 Stat. 468, 501 (Nov. 19,
1995). So in the case of employees authorized to work at home under
OPM's telework/telecommuting guidelines, (see [Hyperlink,
http://www.telework.gov]), once the agency certifies that adequate
safeguards against private misuse exist, agencies may pay for the very
same charges that 31 U.S.C. § 1348(a)(1) otherwise would have
prohibited.
However, barring application of the 1995 statutory provision allowing
payment for residential telephone expenses in a telework situation (and
several other situation-specific statutory exceptions to be discussed
later), the decisions under 31 U.S.C. § 1348(a)(1) are still
applicable.
The decisions are fond of saying that the statute, for the most part,
has been strictly applied. Indeed, the earlier decisions are packed
with the "reflex" observations that the language of the statute is
"plain and comprehensive," the "prohibition is mandatory," and the
statute "leaves no room for the exercise of discretion on the part of
the accounting officers of the Government." E.g., 21 Comp. Gen. 997,
999 (1942). As late as 1996 one decision stated that:
"The statute is plain on its face and although in today's era of
instant communications the statute may appear outdated, we may not
rewrite the statute to fit a fashionable view of what the norm should
be. Certainly if the statute is to retain any meaning, we may not,
under the guise of being essential, routinely grant exceptions of
convenience, however beneficial the result may appear."
B-262013, Apr. 8, 1996.
Thus, the rule remains that charges for residential telephones
(installation, connection, monthly equipment rental, and basic service
charges) may not be paid from appropriated funds unless one of the
statutory exceptions applies. As we shall see at the end of this
section, technological advances have also created end runs around the
statutory prohibition.
(2) Funds to which the statute applies:
The statute is a direct restriction on the use of appropriated funds.
As such, it applies not only to direct appropriations from the Treasury
but also to funds that constitute appropriated funds by operation of
law. Thus, the statute applies to expenditures from the revolving fund
established by the Federal Credit Union Act since the authority to
maintain a revolving fund constitutes a continuing appropriation.
35 Comp. Gen. 615, 618 (1956).[Footnote 404]
Along these same lines, the Comptroller General held in 4 Comp. Gen. 19
(1924) that the Alaska Railroad could not designate residential
telephones as "operating expenses" and pay for them from revenues
derived from operating the railroad. The Comptroller General pointed
out in that case that the authority to do "all necessary things" to
accomplish a statutory purpose confers legal discretion, not unlimited
discretion, and the authority is therefore subject to statutory
limitations such as 31 U.S.C. § 1348. Id. at 20. The same point was
made in 35 Comp. Gen. at 618, and in B-130288, Feb. 27, 1957.
(3) What is a private residence?
Simply stated, a private residence is where you live as opposed to
where you work, assuming the two can be distinguished. Cases where the
two cannot be distinguished are discussed later. For purposes of
31 U.S.C. § 1348, it makes no difference that the residence is
government-owned or on public land. 35 Comp. Gen. 28 (1955); 7 Comp.
Gen. 651 (1928); 19 Comp. Dec. 198 (1912). The statute therefore fully
applies to permanent residential quarters on a military installation.
21 Comp. Gen. 997 (1942); B-61938, Sept. 8, 1950; A-99355, Jan. 11,
1939. It does not apply, however, to tents or other temporary
structures on a military post, which are not available for family
occupancy, notwithstanding that military personnel may use them as
temporary sleeping quarters. 21 Comp. Gen. 905 (1942).
In 41 Comp. Gen. 190 (1961), the statutory prohibition was held not
applicable to the installation of telephones in hotel rooms occupied by
officials on temporary duty where necessitated by the demands of the
mission. (One would have thought that all hotel rooms were already
equipped with telephones by 1961.)
An early decision stated that "private" means set apart for the
exclusive personal use of any one person or family. 19 Comp. Dec. at
199. In this light, the Comptroller General held that appropriated
funds could be used to install and operate local-service telephones in
Army barracks occupied by large numbers of enlisted personnel. 53 Comp.
Gen. 195 (1973). An earlier decision, 35 Comp. Gen. 28, applied the
prohibition to several government-owned residences, one of which was
used to house a number of employees. While these two cases may appear
inconsistent at first glance in that the telephones in both instances
would be available for the personal use of the residents, the apparent
distinction is that Army appropriations are available for the welfare
and recreation of military personnel so that the "personal use" aspect
in the Army barracks case was not necessarily dispositive.
Since the statute uses only the term "residence," it has been held not
to prohibit service charges for a dedicated telephone line, on which a
Navy-supplied fax machine was installed for official use, in the
private business office of a Naval Reserve officer. B-236232, Oct. 25,
1990.
Note that although the principles in the above cases still are
pertinent where 31 U.S.C. § 1348(a) applies, 31 U.S.C. § 1348(c)
authorizes the Department of Defense to "install, repair, and maintain
telephone wiring in residences owned or leased by the United States
Government and, if necessary for national defense purposes, in other
private residences."
The location of the installation of the telephone service is
determinative even though it facilitates an employees receipt of phone
messages at her residence. In this connection, the Commodity Futures
Trading Commission was allowed to install call forwarding service in
the government office of an employee who was permitted to work part
time from her home for 6 months in order to care for her newly born
child so as to facilitate her conducting business with Commission staff
and persons having business with the Commission. Since the employee
would not be paid for charges for calls or other services originating
from the employee's residence, but rather the government was being
billed for forwarding calls from the employee's government office to
her residence, 31 U.S.C. § 1348(a)(1) did not bar payment. Moreover,
the call forwarding was not designed to improve the employee's personal
telephone service or facilitate her receipt of private or personal
messages. 73 Comp. Gen. 44 (1993).
(4) Application of the general rule:
A large number of decisions have established that the prohibition
applies even though the telephones are to be extensively used in the
transaction of public business and even though they may be desirable or
necessary from an official standpoint. 59 Comp. Gen. 723, 724 (1980)
and cases cited therein. In this respect, there is no discretion
involved. A rather stark application of this rule can be found in the
1996 decision quoted above, which held that the Centers for Disease
Control and Prevention could not use appropriated funds to install
telephone lines in the private residence of its Director. The agency
tried to justify the telephone lines by arguing that the Director might
need to respond quickly to emerging health crises around the world, but
the agency had not explained its role in responding to emergent or
urgent health crises and the consequences for public health and safety
if it were to fail to respond immediately upon learning of the
problems. B-262013, Apr. 8, 1996.
Relevant factors are whether the telephone will be freely available for
the employee's personal use and whether facilities other than the
employee's residence exist for the transaction of official business.
The employee's personal desires are irrelevant. Thus, it makes no
difference that the employee doesn't want the telephone and has asked
to have it removed. 33 Comp. Gen. 530 (1954); A-99355, Jan. 11, 1939.
The fact that a telephone is unlisted is also immaterial. 15 Comp.
Gen. 885 (1936).
The rule is well illustrated in a 1980 decision in which the District
Commander of the Seventh Coast Guard District sought to be reimbursed
for a telephone installed in his residence. The Commander was in charge
of the Cuban Refugee Freedom Flotilla in the Florida Straits. He was in
daily contact with the various federal, state, and local agencies
involved and was required to be available 24 hours a day. Since this
situation placed a burden on the Commander's immediate family by
restricting their personal use of the home telephone, he had another
telephone installed for official business. In view of the statutory
prohibition, and since the Commander was already provided with an
office by the Coast Guard, reimbursement could not be allowed. 59 Comp.
Gen. 723, supra. For an earlier decision applying the prohibition
notwithstanding the need for employees to be available on a 24-hour
basis, see 11 Comp. Gen. 87 (1931).
A somewhat similar situation was presented in B-130288, Feb. 27, 1957.
There, the Federal Mediation and Conciliation Service sought authority
to pay for telephones in the homes of mediators stationed in cities
where office accommodations were not provided. The mediators had to
work out of their homes and were required to be available 24 hours a
day. Applying the statutory prohibition, the Comptroller General
concluded that the agency could not pay for the telephones, nor could
it pay for an answering service. However, there was no reason a
mediator couldn't list his private telephone number under the agency's
name, and the government could pay for this listing. By doing this, the
government would not be paying for personal use of the telephone.
In B-175732, May 19, 1976, it was proposed to install a telephone in
the "galley" (kitchen) of the Coast Guard Commandant's home, for use by
a "subsistence specialist" who worked there and presumably had no
access to other telephones. The argument was that while the galley may
have been part of the Commandant's private residence, it was the
subsistence specialist's duty station and since he had no other office,
he had to conduct government business from the galley. GAO found the
proposal prohibited by 31 U.S.C. § 1348(a)(1). Although the duties of
the subsistence specialist--the procurement of food, supplies, and
services--were official to him, they nevertheless accrued largely if
not exclusively to the personal benefit of the Commandant and were not
sufficient to justify an exception.
(5) Exceptions:
As we have seen above, although the statute has been strictly applied,
there are exceptions.
First, there are statutory exceptions.
* One example is 31 U.S.C. § 1348(a)(2), for residences owned or leased
by the United States in foreign countries for use of the Foreign
Service.
* Another statutory exception is 31 U.S.C. § 1348(b), enacted in 1922,
covering telephones deemed necessary in connection with the
construction and operation of locks and dams for navigation, flood
control, and related water uses, under regulations of the Secretary of
the Army.
* A further and broader exception enacted in 1984 provides that under
regulations prescribed by the Secretary of Defense, Department of
Defense appropriations are available to install, repair, and maintain
telephone wiring in residences owned and leased by the United States
government and, if necessary for national defense purposes, in other
private residences. 31 U.S.C. § 1348(c).
* Yet another statutory exception is provided in 10 U.S.C.
§ 1588(f)(1) which allows the Secretary concerned to install telephone
lines and any necessary telecommunications equipment in the private
residences of persons, designated in accordance with the regulations,
to provide voluntary services for programs providing services to
members of the armed forces and their families.
* Still another is 16 U.S.C. § 580f, for telephones necessary for the
protection of national forests.
Next, there are some nonstatutory exceptions. They fall generally into
two categories. The first, dictated by common sense, involves
situations where private residence and official duty station are one
and the same. If the government has made available office facilities
elsewhere, it is clear that a residential telephone cannot be charged
to appropriated funds no matter how badly it is needed for official
business purposes. E.g., 59 Comp. Gen. 723 (1980); 22 Comp. Dec. 602
(1916). However, exceptions have been recognized where a government-
owned private residence was the only location available under the
circumstances for the conduct of official business. E.g., 4 Comp.
Gen. 891 (1925) (isolated lighthouse keeper); 19 Comp. Dec. 350 (1912)
(lock tender); 19 Comp. Dec. 212 (1912) (national park superintendent).
Note that in all of these cases the combined residence/duty station was
government-owned. The exception has not been extended to privately
owned residences that are also used for the conduct of official
business. 26 Comp. Gen. 668 (1947); B-130288, Feb. 27, 1957; B-219084-
O.M., June 10, 1985. The theory seems to be that, in a privately owned
residence, the degree of personal use as opposed to likely official
need is considered so great as to warrant a stricter prohibition since
there would be no other practical way to control abuse, whereas some
flexibility is afforded for government-owned residences where
sufficient official use for telephones exists. 53 Comp. Gen. 195, 197-
98 (1973). Note that, as stated, the express prohibition in 31 U.S.C.
§ 1348(a)(1) applies to residences and does not apply when telephone
services are provided in a private business office. B-236232, Oct. 25,
1990.
It should also be noted that isolation alone is not sufficient to
justify an exception. In 35 Comp. Gen. 28 (1955), 31 U.S.C.
§ 1348(a)(1) was held to prohibit payment for telephones in government-
owned residences of Department of Agriculture employees at a sheep
experiment station. The employees claimed a need for the telephones
because they frequently received calls outside of normal office hours
from Washington or to notify them of unexpected visitors and shipments
of perishable goods, and because they were sometimes stranded in their
residences by severe blizzards. Here 4 Comp. Gen. 891 was distinguished
because the telephone in that case was installed in a room equipped and
used only as an office and was not readily available for personal use.
The second category of nonstatutory exceptions stems from the
recognition that the "evil" that 31 U.S.C. § 1348(a)(1) is intended to
address is not the physical existence of a telephone, but the potential
for charging the government for personal use. Thus, a series of cases
has approved exceptions where (1) there is an adequate justification of
necessity for a telephone in a private residence and (2) there are
adequate safeguards to prevent abuse.
This category seems to have first developed in the context of "military
necessity" and national security justifications. For example, an
exception was made to permit the installation in the residence of the
Pearl Harbor Fire Marshal (a civilian employee) of a telephone
extension that was mechanically limited to emergency fire calls.
32 Comp. Gen. 431 (1953), modifying 32 Comp. Gen. 271 (1952). See also
21 Comp. Gen. 905 (1942). In B-128144(3), June 29, 1956, GAO approved a
proposal to install direct telephone lines from an Air Force Command
Post switchboard to the private residences of certain high-level
civilian and military officials to ensure communications in the event
of a national emergency. Air Force regulations prohibited the use of
these lines for anything but urgent official business in the event of a
national emergency and authorized the recording of conversations as a
safeguard against abuse.
However, a "necessity" that is little more than a matter of convenience
is not enough to overcome the prohibition. For example, in A-99355,
Jan. 11, 1939, a telephone could not be maintained at government
expense in the private quarters of the Officer-in-Charge on a Navy
installation because several telephones were available in established
offices on the station. This decision was followed in 21 Comp. Gen. 997
(1942) and 33 Comp. Gen. 530 (1954). The prohibition applies equally to
an intra-base system not connected to outside commercial trunk lines.
B-61938, Sept. 8, 1950.[Footnote 405]
Relying largely on B128144(3), GAO approved a General Services
Administration proposal to install Federal Secure Telephone Service
telephones in the residences of certain high-level civilian and
military officials certified by their agency heads as having national
security responsibilities. 61 Comp. Gen. 214 (1982). The system was
designed to provide a secure communications capability to permit the
discussion of classified material that could not be discussed over
private telephones. As in B-128144(3), the proposal included a number
of safeguards against abuse, which GAO deemed adequate.
The concept established in the military necessity/national security
cases would subsequently be applied in other contexts as well. Thus,
GAO approved exceptions in the following cases:
* Installation of dedicated Integrated Services Digital Network (ISDN)
lines to transmit data from computers in the private residences of the
commissioners of the Federal Communications Commission to the agency's
local area network as it permitted data encryption necessary to secure
confidential communications and the Commission had imposed adequate
safeguards to prevent private use of the separate ISDN lines. In this
decision it was also noted that, although section 620 of Pub. L.
No. 104-52, 109 Stat. 468, 501 (Nov. 19, 1995), permitting installation
of phone lines for employees permitted to work at home, did not by its
terms address presidentially appointed officers such as the
Commissioners, "it would be anomalous for us to overlook the public
policy established in section 620 and apply the section
1348(a)(1) prohibition in a manner to preclude government officials who
are on duty 24 hours from the same conveniences as other government
employees." B-280698, Jan. 12, 1999. Compare B-262013, Apr. 8, 1996, a
decision that was issued less than 3 years earlier, in which the GAO
held that the Centers for Disease Control and Prevention could not
install telephone lines in the private residence of its Director, in
part because the agency had not demonstrated that adequate safeguards
to prevent misuse of the telephone lines would be in place.
* Installation of telephone equipment by the Internal Revenue Service
in the homes of customer "assistors" who were intermittent, part-time
employees. The phones to be installed had no outcall capability and
could receive calls only from IRS switching equipment. Separate lines
were essential because the employee's personal phones could not be used
with the IRS equipment. B-220148, June 6, 1986. See also B-247857,
Aug. 25, 1992, in which GAO held when telephone service installation in
a private residence is of restricted use or when there are numerous
safeguards and the service is deemed essential, the prohibition is
inapplicable. The National Mediation Board had demonstrated the
essential nature of the computer data transmission service and would
prevent private misuse by installing dedicated telephone lines.
* Installation of telephones in the homes of Internal Revenue Service
criminal investigators who were authorized to work from their homes, to
be used for portable computer data transmission. GAO found the agency's
justification adequate and approved the expenditure, contingent upon
the establishment of adequate safeguards, such as those in 61 Comp.
Gen. 214, to prevent personal use. 65 Comp. Gen. 835 (1986).
* Installation of separate telephone lines in the homes of IRS data
transcribers authorized to work at home under a "flexiplace" program,
again subject to the establishment of adequate safeguards. 68 Comp.
Gen. 502 (1989).
* Installation of telephones in the homes of certain high level Nuclear
Regulatory Commission (NRC) officials to ensure immediate communication
capability in the event of a nuclear accident. The phones would be
capable of dialing only internal NRC numbers, with any other calls to
be placed through the NRC operator. B-223837, Jan. 23, 1987.
Some of the cases noted earlier in which the prohibition was applied,
such as 59 Comp. Gen. 723 and B-262013, also presented strong
justifications. The primary feature distinguishing these cases from the
exceptions described above is the existence in the latter group of
adequate safeguards against abuse.
Finally, a couple of cases have dealt with payment for telephone
services during periods of nonoccupancy. In order to ensure continuous
service, the government secures telephone service for the residence of
the Air Deputy for the Allied Forces Northern Europe in Norway by long-
term lease with the Norwegian Telephone Company. Normally, the Air
Deputy pays the charges. The question presented in 60 Comp. Gen. 490
(1981) was who should pay the charges accruing during a vacancy in the
position. The Comptroller General held that since the quarters were not
the private residence of either the outgoing or the incoming Air Deputy
during the period of vacancy, no public official received the benefit
of the service during that period. Therefore, payment from appropriated
funds would not thwart the statutory purpose.
The decision distinguished an earlier case, 11 Comp. Gen. 365 (1932),
denying payment for telephone service to the residence of the U.S.
Ambassador to Mexico during a period when the position was vacant. In
the 1932 case, the service had been retained during the interim period
mainly through inadvertence. In 60 Comp. Gen. 490, on the other hand,
retention of the service was necessary to avoid delays in
reinstallation when the new Air Deputy moved in. The decision did note,
however, that except in limited situations of public necessity such as
the one involved, telephone service should ordinarily be canceled
during periods of nonoccupancy.
b. Long-distance Calls:
The long-distance telephone call certification requirement which
existed at former 31 U.S.C. § 1348(b), has been repealed by
section 1721 of Pub. L. No. 104-201, div. A, title XVII, subtitle B,
110 Stat. 2422, 2758 (Sept. 23, 1996). Note also that agencies have
adopted policies to allow limited personal use of office equipment,
including telephones. See, e.g., 28 C.F.R. § 45.4(2) in which the
Department of Justice allows limited personal telephone/fax calls to
locations within the office's commuting area, or that are charged to
nongovernment accounts; and GAO Order No. 0645.1, Limited Personal Use
of Government-Provided Office and IT Equipment, Including Internet,
Jan. 16, 2001, at 6(a)(3), which allows employees to make occasional
brief domestic telephone calls.
c. Mobile or Cellular Phones:
Just as significant statutory exceptions have eroded the once almost
blanket prohibition against the payment for telephones in residences,
likewise, technological advancements are eroding the application of
31 U.S.C. § 1348(a) in a more practical manner as mobile or cellular
phones become ubiquitous.
In a 1988 case, B-229406, Dec. 9, 1988, an agency official used his own
funds to purchase a cellular telephone and have it installed in his
personal automobile. GAO stated with respect to 31 U.S.C. § 1348(a)
that the statute addresses residences, not automobiles. Concluding that
"section 1348 does not apply to cellular phones located in private
automobiles," GAO advised that the agency could reimburse business
calls as long as there were adequate safeguards to prevent abuse. The
safeguards existed in this case because all calls were individually
itemized on a monthly basis. The decision cautioned, however, that
"agency heads should strictly scrutinize automobile telephone calls
before certifying them for reimbursement," to ensure that the most
economical means of communication are being used.
Subsequent decisions have approved agencies' reimbursement, on an
actual expense basis, for access to and use of an employee's personal
cell phone. B-291076, Mar. 6, 2003; B-287524, Oct. 22, 2001. However
the decisions have held that reimbursement may not be made on a flat
rate basis. In B-287524 GAO found that flat rate reimbursement was
prohibited by 5 U.S.C. § 5536 as a flat rate plan raises the risk of
improperly reimbursing employees for personal use--setting a flat fee
tends to result in either a gain or a loss to the reimbursed employee.
In B-291076 GAO stated that an agency may reimburse its employees for
the actual costs of maintaining personal cell phone services that meet
the agency's minimum needs and the additional costs that may arise from
any official calls actually made or received on the employee's cell
phone. Safeguards included in the agency proposal (requiring monthly,
itemized service provider invoices, limiting claims to the expenses the
agency would otherwise pay for such services, and adjusting claims to
exclude hidden costs of "free" services included in the service
provider's plan) provided adequate assurance that the reimbursements
will be limited to government-related calls.
GAO's most recent decisions have assumed that an agency has the
authority to purchase and issue government-owned cellular phones, along
with accessories, to its employees so that the employees may conduct
government business. B-291076 and B-287524, supra.
Prior to the latter decisions GAO had considered the purchase of
cellular telephones for use by Members of the Senate and concluded that
the expenditure was authorized from the Senate's contingent fund.
B-227763, Sept. 17, 1987; B-186877, Aug. 12, 1976. The 1976 opinion had
taken a negative view of the question from the policy perspective and
suggested that more specific legislative authority would be
appropriate. This was done and there is now express statutory authority
to use the contingent fund of the Senate to provide telecommunications
services and equipment. 2 U.S.C. §§ 58(a)(1) and 58a.
However, as the later decisions, B-291076 and B-287524, demonstrate,
GAO did not require the agencies requesting those decisions to show
express statutory authority for the purchase and issuance of cellular
phones to their employees. GAO did not object to the agencies
purchasing cellular phones and issuing them to their employees for the
conduct of government business. (In B-229406, supra, the purchase price
of a cellular phone could not be reimbursed but it was clear in that
case that the official intended the phone to be his own property.)
[End of section]
Chapter 5: Availability of Appropriations: Time:
A. General Principles--Duration of Appropriations:
1. Introduction:
2. Types of Appropriations:
a. Annual Appropriations:
b. Multiple Year Appropriations:
c. No-Year Appropriations:
3. Obligation or Expenditure Prior to Start of Fiscal Year:
B. The Bona Fide Needs Rule:
1. Background:
a. Introduction:
b. The Concept:
2. Future Years' Needs:
3. Prior Years' Needs:
4. Delivery of Materials beyond the Fiscal Year:
5. Services Rendered beyond the Fiscal Year:
6. Replacement Contracts:
7. Contract Modifications and Amendments Affecting Price:
8. Multiyear Contracts:
a. Introduction:
b. Multiple Year and No-Year Appropriations:
c. Fiscal Year Appropriations:
d. Contracts with No Financial Obligation:
9. Specific Statutes Providing for Multiyear and Other Contracting
Authorities:
a. Severable Services Contracts:
b. 5-year Contract Authority:
(1) 10 U.S.C. §§ 2306b, 2306c:
(2) 41 U.S.C. § 254c:
c. Examples of Agency-Specific Multiyear Contracting Authorities:
10. Grants and Cooperative Agreements:
C. Advance Payments:
1. The Statutory Prohibition:
2. Government Procurement Contracts:
a. Background:
b. Contract Financing:
c. Payment:
3. Lease and Rental Agreements:
4. Publications:
5. Other Governmental Entities:
D. Disposition of Appropriation Balances:
1. Terminology:
2. Evolution of the Law:
3. Expired Appropriation Accounts:
4. Closed Appropriation Accounts:
5. Exemptions from the Account Closing Procedures:
6. No-Year Appropriations:
7. Repayments and Deobligations:
a. Repayments:
b. Deobligations:
E. Effect of Litigation on Period of Availability:
Chapter 5: Availability of Appropriations: Time:
A. General Principles--Duration of Appropriations:
1. Introduction:
As we have emphasized in several places in this publication, the
concept of the "legal availability" of appropriations is defined in
terms of three elements--purpose, time, and amount. Chapter 4 focused
on purpose; this chapter addresses the second element, time.
The two basic authorities conferred by an appropriation law are the
authority to incur obligations and the authority to make expenditures.
An obligation results from some action that creates a liability or
definite commitment on the part of the government to make an
expenditure. (The concept of "obligation" and the criteria for charging
obligations against appropriations are discussed in detail in Chapter
7.) The expenditure is the disbursement of funds to pay the obligation.
While an obligation and expenditure may occur simultaneously,
ordinarily the obligation precedes the expenditure in time. This
chapter discusses the limitations on the use of appropriations relating
to time--when they may be obligated and when they may be expended. Many
of the rules are statutory and will be found in the provisions of Title
31, United States Code, cited throughout this chapter.
Our starting point is the firmly established proposition that--
"Congress has the right to limit its appropriations to particular times
as well as to particular objects, and when it has clearly done so, its
will expressed in the law should be implicitly followed."
13 Op. Att'y Gen. 288, 292 (1870). The placing of time limits on the
availability of appropriations is one of the primary means of
congressional control. By imposing a time limit, Congress reserves to
itself the prerogative of periodically reviewing a given program or
agency's activities.
When an appropriation is by its terms made available for a fixed period
of time or until a specified date, the general rule is that the
availability relates to the authority to obligate the appropriation,
and does not necessarily prohibit payments after the expiration date
for obligations previously incurred, unless the payment is otherwise
expressly prohibited by statute. 37 Comp. Gen. 861, 863 (1958);
23 Comp. Gen. 862 (1944); 18 Comp. Gen. 969 (1939); 16 Comp. Gen. 205
(1936). Thus, a time-limited appropriation is available to incur an
obligation only during the period for which it is made. However, it
remains available beyond that period, within limits, to make
adjustments to the amount of such obligations and to make payments to
liquidate such obligations. In this connection, 31 U.S.C. § 1502(a)
provides:
"The balance of an appropriation or fund limited for obligation to a
definite period is available only for payment of expenses properly
incurred during the period of availability or to complete contracts
properly made within that period of availability and obligated
consistent with section 1501 of this title. However, the appropriation
or fund is not available for expenditure for a period beyond the period
otherwise authorized by law."
In addition, there are situations in which appropriations may be "held
over" by statute and by judicial decree for obligation beyond their
expiration date. The concepts summarized in this paragraph will be
explored in depth elsewhere in this chapter.
2. Types of Appropriations:
Classified on the basis of duration, appropriations are of three types:
annual, multiple year, and no-year appropriations.
a. Annual Appropriations:
Annual appropriations (also called fiscal year or 1-year
appropriations) are made for a specified fiscal year and are available
for obligation only during the fiscal year for which made. The federal
government's fiscal year begins on October 1 and ends on September 30
of the following year. 31 U.S.C. § 1102. For example, fiscal year 2005
begins on October 1, 2004, and ends on September 30, 2005.
All appropriations are presumed to be annual appropriations unless the
appropriation act expressly provides otherwise. There are several
reasons for this. First, as required by 1 U.S.C. § 105, the title and
enacting clause of all regular and supplemental appropriation acts
specify the making of appropriations "for the fiscal year ending
September 30, (here insert the calendar year)." Thus, everything in an
appropriation act is presumed to be applicable only to the fiscal year
covered unless specified to the contrary. Second, 31 U.S.C. § 1301(c)
provides that, with specified exceptions:
"An appropriation in a regular, annual appropriation law may be
construed to be permanent or available continuously only if the
appropriation--
"(2) expressly provides that it is available after the fiscal year
covered by the law in which it appears."
Third, appropriation acts commonly include a general provision similar
to the following:
"No part of any appropriation contained in this Act shall remain
available for obligation beyond the current fiscal year unless
expressly so provided herein."[Footnote 406]
Under the plain terms of this provision, the origin of which has
previously been discussed in Chapter 2, section C.2.d, the availability
of an appropriation to incur a new obligation may not be extended
beyond the fiscal year for which it is made absent express indication
in the appropriation act itself. 71 Comp. Gen. 39 (1991); 58 Comp.
Gen. 321 (1979); B-118638, Nov. 4, 1974.
A limitation item included in an appropriation (for example, a lump-sum
appropriation with a proviso that not to exceed a specified sum shall
be available for a particular object) is subject to the same fiscal
year limitation attaching to the parent appropriation unless the
limitation is specifically exempted from it in the appropriation act.
37 Comp. Gen. 246, 248 (1957); B-274576, Jan. 13, 1997.
Annual appropriations are available only to meet bona fide needs of the
fiscal year for which they were appropriated. The so-called "bona fide
needs rule" is covered in detail in this chapter in section B.
If an agency fails to obligate its annual funds by the end of the
fiscal year for which they were appropriated, they cease to be
available for incurring and recording new obligations and are said to
have "expired." This rule--that time-limited budget authority ceases to
be available for incurring new obligations after the last day of the
specified time period--has been termed an "elementary principle" of
federal fiscal law. City of Houston, Texas v. Department of Housing &
Urban Development, 24 F.3d 1421, 1426 (D.C. Cir. 1994); West Virginia
Ass'n of Community Health Centers, Inc. v. Heckler, 734 F.2d 1570, 1576
(D.C. Cir. 1984). See also 18 Comp. Gen. 969, 971 (1939). Annual
appropriations remain available for an additional five fiscal years
beyond expiration, however, to adjust and make payments to liquidate
liabilities arising from obligations made within the fiscal year for
which the funds were appropriated. 31 U.S.C. § 1553(a), as amended by
Pub. L. No. 101-510, § 1405(a), 104 Stat. 1676 (Nov. 5, 1990). The
principles summarized in this paragraph are discussed in this chapter
in section D.
The above principles are illustrated in 56 Comp. Gen. 351 (1977). In
that case, the Interior Department proposed to obtain and exercise
options on certain land, obligate the full purchase price, and take
immediate title to and possession of the property. Payment of the
purchase price, however, would be disbursed over a period of up to
4 years. The reason being that, in view of the capital gains tax, the
seller would have insisted on a higher purchase price if payment was to
be made in a lump sum. The Comptroller General concluded that the
proposal was not legally objectionable, provided that (a) a bona fide
need for the property existed in the fiscal year in which the option
was to be exercised and (b) the full purchase price was obligated
against appropriations for the fiscal year in which the option was
exercised. As long as these conditions were met--obligation within the
period of availability for a legitimate need existing within that
period--the timing of actual disbursements over a 4-year period was
irrelevant.
Just as Congress can by statute expand the obligational availability of
an appropriation beyond a fiscal year, it can also reduce the
availability to a fixed period less than a full fiscal year. To
illustrate, a fiscal year 1980 appropriation for the now defunct
Community Services Administration included funds for emergency energy
assistance grants. Since the program was intended to provide assistance
for increased heating fuel costs, and Congress did not want the funds
to be used to buy air conditioners, the appropriation specified that
awards could not be made after June 30, 1980.[Footnote 407]
Appropriations available for obligation for less than a full fiscal
year are, however, uncommon.
Finally, Congress may pass a law to rescind the unobligated balance of
a fixed (annual or multiple year) appropriation at any time prior to
the accounts closing.[Footnote 408] The law may be passed at the
initiation of the President pursuant to the impoundment procedures (see
discussion in Chapter 1, section D.3) or by Congress as part of its
regular legislative process.
b. Multiple Year Appropriations:
Multiple year appropriations are available for obligation for a
definite period in excess of one fiscal year. 37 Comp. Gen. 861, 863
(1958). For example, if a fiscal year 2005 appropriation act includes
an appropriation account that specifies that it shall remain available
until September 30, 2006, it is a 2-year appropriation. As a more
specific illustration, the appropriation accounts for military
construction are typically 5-year appropriations.[Footnote 409]
Apart from the extended period of availability, multiple year
appropriations are subject to the same principles applicable to annual
appropriations and do not present any special problems.
c. No-Year Appropriations:
A no-year appropriation is available for obligation without fiscal year
limitation. For an appropriation to be considered a no-year
appropriation, the appropriating language must expressly so provide.
31 U.S.C. § 1301(c). The standard language used to make a no-year
appropriation is "to remain available until expended." 40 Comp.
Gen. 694, 696 (1961); 3 Comp. Dec. 623, 628 (1897); B-279886, Apr. 28,
1998; B-271607, June 3, 1996. However, other language will suffice as
long as its meaning is unmistakable, such as "without fiscal year
limitation." 57 Comp. Gen. 865, 869 (1978).
Unless canceled in accordance with 31 U.S.C. § 1555 or rescinded by
another law, there are no time limits as to when no-year funds may be
obligated and expended and the funds remain available for their
original purposes until expended. 43 Comp. Gen. 657 (1964); 40 Comp.
Gen. 694 (1961). This includes earmarks applicable to the use of no-
year funds since they are coextensive with, and inseparable from, the
period of availability of the no-year appropriation to which they
relate. B-274576, Jan. 13, 1997.
A small group of decisions involves the effect of subsequent
congressional action on the availability of a prior years no-year
appropriation. In one case, Congress had made a no-year appropriation
to the Federal Aviation Administration for the purchase of aircraft. A
question arose as to the continued availability of the appropriation
because, in the following year, Congress explicitly denied a budget
request for the same purpose. The Comptroller General held that the
subsequent denial did not restrict the use of the unexpended balance of
the prior no-year appropriation. The availability of the prior
appropriation could not be changed by a later act "except in such
respects and to such extent as is expressly stated or clearly implied
by such act." 40 Comp. Gen. 694, 696 (1961). See also Atlantic Fish
Spotters Ass'n v. Evans, 321 F.3d 220 (1st Cir. 2003); B-200519,
Nov. 28, 1980.
In another case, a no-year appropriation for the National Capital Park
and Planning Commission included a monetary ceiling on noncontract
services during the fiscal year. Based on the apparent intent of the
ceiling, GAO concluded that the specific restriction had the effect of
suspending the "available until expended" provision of prior
unrestricted no-year appropriations as far as personal services were
concerned, for any fiscal year in which the restriction was included.
Thus, unobligated balances of prior unrestricted no-year appropriations
could not be used to augment the ceiling. 30 Comp. Gen. 500 (1951). A
similar issue was considered in 62 Comp. Gen. 692 (1983). The Nuclear
Regulatory Commission received a no-year appropriation that included a
prohibition on compensating intervenors. The decision held that the
unobligated balance of a prior unrestricted no-year appropriation could
be used to pay an Equal Access to Justice Act award to an intervenor
made in a restricted year, where part of the proceeding giving rise to
the award was funded by an unrestricted appropriation. Unlike the
situation in 30 Comp. Gen. 500, the restriction in the 1983 case was
expressly limited to "proceedings funded in this Act," and thus could
have no effect on the availability of prior appropriations.
Similar issues were considered in the context of multiple year
appropriations in 31 Comp. Gen. 368 (1952) and 31 Comp. Gen. 543
(1952), overruling 31 Comp. Gen. 275 (1952). In both of these cases,
based on a determination of congressional intent, it was held that the
current restriction had no effect on the availability of unobligated
balances of prior unrestricted appropriations.
No-year appropriations have advantages and disadvantages. The
advantages to the spending agency are obvious. From the legislative
perspective, a key disadvantage is a loss of congressional control over
actual program levels from year to year. GAO has expressed the position
that no-year appropriations should not be made in the absence of
compelling programmatic or budgetary reasons. See U.S. General
Accounting Office, No-Year Appropriations in the Department of
Agriculture, PAD-78-74 (Washington, D.C.: Sept. 19, 1978).
3. Obligation or Expenditure Prior to Start of Fiscal Year:
In considering what may and may not be done before the start of a
fiscal year, it is necessary to keep in mind the Antideficiency Act,
which prohibits obligations or expenditures in advance of
appropriations, 31 U.S.C. § 1341(a), and apportionments, 31 U.S.C.
§ 1517(a).[Footnote 410] By virtue of this law, certainly no
obligations may be incurred before the appropriation act is enacted and
amounts apportioned to the agency, unless specifically authorized by
law.[Footnote 411]
There are some decisions that stand for the proposition that if the
appropriation act is passed by both houses of Congress and signed by
the President prior to the start of the fiscal year for which the
appropriation is being made, contracts may be entered into upon
enactment and before the start of the fiscal year, provided that no
payments or expenditures may be made under them until the start of the
fiscal year. Any such contract should make this limitation clear.
20 Comp. Gen. 868 (1941); 16 Comp. Gen. 1007 (1937); 4 Comp. Gen. 887
(1925); 2 Comp. Gen. 739 (1923); 11 Comp. Dec. 186 (1904); 4 Lawrence,
First Comp. Dec. 132 (1883); B-20670, Oct. 18, 1941; A-19524, Aug. 26,
1927. GAO did not view the contract as an obligation in violation of
the Antideficiency Act since, even though the time period covered by
the appropriation to be charged had not yet started, the appropriation
had already been enacted into law. These decisions addressed these
contracts from an Antideficiency Act perspective, and did not address
the bona fide needs rule.
In other decisions, the Comptroller General has expressed the opinion
that, in the absence of any other statutory authority, the awarding of
a "conditional contract" prior to the enactment of the appropriation
act to be charged with the obligation does not raise Antideficiency Act
or bona fide needs issues when the government's liability is contingent
upon the future availability of appropriations. The contract must
expressly provide:
1. that no legal liability on the part of the government arises until
the appropriation is made available within the agency to fund the
obligation and:
2. that notice is to be given by the agency to the contractor before
the contractor may proceed.
See B-171798(1), Aug. 18, 1971, at 11-12.[Footnote 412] Such express
provisions are necessary to make explicit what is meant by the term
"contingent upon the future availability of appropriations" in order to
avoid Antideficiency Act problems,[Footnote 413] and to permit the
agency to maintain effective internal controls over the obligating of
appropriations.
Of course, Congress may by statute authorize the actual expenditure of
appropriations prior to the beginning of the fiscal year, in which
event the above rule does not apply. 4 Comp. Gen. 918 (1925). This
result may also follow if an appropriation is made to carry out the
provisions of another law that clearly by its terms requires immediate
action. E.g., 1 Comp. Dec. 329 (1895).
B. The Bona Fide Needs Rule:
1. Background:
a. Introduction:
Over a century ago, the Comptroller of the Treasury stated, "An
appropriation should not be used for the purchase of an article not
necessary for the use of a fiscal year in which ordered merely in order
to use up such an appropriation." 8 Comp. Dec. 346, 348 (1901). The
bona fide needs rule is one of the fundamental principles of
appropriations law: A fiscal year appropriation may be obligated only
to meet a legitimate, or bona fide, need arising in, or in some cases
arising prior to but continuing to exist in, the fiscal year for which
the appropriation was made. Citations to this principle are numerous.
See, e.g., 33 Comp. Gen. 57, 61 (1953); 16 Comp. Gen. 37 (1936);
B-289801, Dec. 30, 2002; B-282601, Sept. 27, 1999; B-235678, July 30,
1990.
Does the quotation above, from the Comptroller of the Treasury, mean
that an agency's obligation of an annual appropriation on the last day
of the fiscal year can never constitute a bona fide need of that fiscal
year? While it certainly should raise a question, the answer is, "it
depends." An agency may have perfectly valid reasons for year-end
spending. For example, some programs have predictable 4th quarter
surges due to cyclical or seasonal requirements. When using time-
limited funding, an agency must dissect its ongoing business into
discrete units of time in order to determine whether a particular
transaction may be obligated against, or charged to, a specific
appropriation. The bona fide needs rule provides an analytical
framework for analyzing an agency's financial transactions to determine
the period of time to which a transaction relates.
Bona fide needs questions arise in many forms. Historically, as the
discussion that follows will show, bona fide needs issues have arisen
most frequently in the context of the acquisition of goods or services.
An agency may enter into a contract in one fiscal year, but the
contractor does not complete performance until the next fiscal year.
Which fiscal year should be charged? Or, an agency may modify a
contract in the year following the fiscal year in which it originally
entered into the contract. Sometimes, as a result of an audit, the
question may be whether an obligation already recorded was a proper
charge against that fiscal year's appropriation. Or, an agency may have
taken certain actions that it should have recorded as an obligation but
did not; when the time for payment arrives, the question again is which
fiscal year to charge. These are all facets of the same basic question-
-whether an obligation bears a sufficient relationship to the
legitimate needs of the time period of availability of the
appropriation charged or sought to be charged.
Although the bona fide needs rule remains one of the bedrock principles
of appropriations law, its application has changed over the years as
Congress enacted statutes redefining in some instances what constitutes
a bona fide need of a fiscal year appropriation. During a period of
ever increasing budget constraints in the 1990s, Congress enacted laws
providing civilian agencies more flexibility in their use of fiscal
year appropriations, and expanded already existing authorities of
defense agencies. Today, there is general authority permitting agencies
to use fiscal year funds to acquire goods and services via multiyear
acquisitions, and to enter into 1-year contracts for severable services
that cross fiscal years. These laws have provided agencies with
substantial flexibility to allocate the cost of goods and services
across fiscal years, or to allocate the costs to the first fiscal year
of the contract even though the goods or services may be delivered in
future fiscal years.
Notwithstanding the increased flexibilities agencies now have, the bona
fide needs rule remains an important and often complex consideration
for an agency as it executes its budget. In this section, we discuss
the basic concept underlying the rule. We then discuss the traditional
application of the rule in sections B.2 through B.7, followed by a
discussion of the recent statutory developments in the acquisition of
goods and services area in sections B.8 and B.9. It is important to
know both the traditional application as well as recently enacted
flexibilities in order to understand the contracting options now
available to agencies as they decide how to use their appropriations.
We discuss the application of the rule in the grants and cooperative
agreements context in section B.10.
b. The Concept:
The bona fide needs rule has a statutory basis. As noted in Chapter 1,
the first general appropriation act in 1789 made appropriations "for
the service of the present year," and this concept continues to this
time. This "one-year" concept is also reflected in 31 U.S.C. § 1502(a),
sometimes called the "bona fide needs statute." Originally enacted in
1870 (16 Stat. 251 (July12, 1870)), section 1502(a) provides that the
balance of a fixed-term appropriation "is available only for payment of
expenses properly incurred during the period of availability or to
complete contracts properly made within that period…." The key word
here is "properly"--expenses "properly incurred" or contracts "properly
made" within the period of availability. See, e.g., 37 Comp. Gen. 155,
158 (1957). Additional statutory support for the rule is found in the
Antideficiency Act, 31 U.S.C. § 1341(a), and the so-called Adequacy of
Appropriations Act, 41 U.S.C. § 11. (Bona fide needs questions may
involve other statutory restrictions as well. It also should be
apparent that they are closely related to the subject matter covered in
Chapter 7 on obligations.) For an early but still relevant and useful
discussion, see 6 Comp. Dec. 815 (1900).
While the rule itself is universally applicable, determination of what
constitutes a bona fide need of a particular fiscal year depends
largely on the facts and circumstances of the particular case. 70 Comp.
Gen. 469, 470 (1991); 44 Comp. Gen. 399, 401 (1965); 37 Comp. Gen. at
159.
In its most elementary form--where the entire transaction (contract or
purchase, delivery or other performance, and payment) takes place
during the same fiscal year--the rule means simply that the
appropriation is available only for the needs of the current year. A
common application of the rule in this context is that an appropriation
is not available for the needs of a future year. For example, suppose
that, as the end of a fiscal year approaches, an agency purchases a
truckload of pencils when it is clear that, based on current usage, it
already has in stock enough pencils to last several years into the
future. It would seem apparent that the agency was merely trying to use
up its appropriation before it expired, and the purchase would violate
the bona fide needs rule.
We do not mean to suggest that an agency may purchase only those
supplies that it will actually use during the fiscal year. Agencies
normally maintain inventories of common use items. The bona fide needs
rule does not prevent maintaining a legitimate inventory at reasonable
and historical levels, the "need" being to maintain the inventory level
so as to avoid disruption of operations. The problem arises when the
inventory crosses the line from reasonable to excessive. Future years'
needs and year-end spending are covered further in section B.2 of this
chapter. Prior years' needs are covered in section B.3 of this chapter.
Bona fide needs questions also frequently involve transactions that
cover more than one fiscal year. In the typical situation, a contract
is made (or attempted to be made) in one fiscal year, with performance
and payment to extend at least in part into the following fiscal year.
The question is which fiscal year should be charged with the
obligation. In this context, the rule is that, in order to obligate a
fiscal year appropriation for payments to be made in a succeeding
fiscal year, the contract imposing the obligation must have been made
within the fiscal year sought to be charged, and the contract must have
been made to meet a bona fide need of the fiscal year to be charged.
E.g., 70 Comp. Gen. 664, 667 (1991); 64 Comp. Gen. 359, 362 (1985);
35 Comp. Gen. 692 (1956); 20 Comp. Gen. 436 (1941); 16 Comp. Gen. 37
(1936); 21 Comp. Dec. 822 (1915); 4 Comp. Dec. 553 (1898); B-289801,
Dec. 30, 2002; B-257977, Nov. 15, 1995.
The principle that payment is chargeable to the fiscal year in which
the obligation is incurred as long as the need arose, or continued to
exist in, that year applies even though the funds are not to be
disbursed and the exact amount owed by the government cannot be
determined until the subsequent fiscal year. E.g., 71 Comp. Gen. 502
(1992); 21 Comp. Gen. 574 (1941). Thus, in a case where the United
States entered into an agreement with a state to provide assistance for
the procurement of civil defense items for the state and to pay a
specified percentage of the cost, the Comptroller General found that
the need arose in the year the agreement with the state was made.
Therefore, appropriations current at that time were to be charged with
the cost, notwithstanding the fact that the states or the United States
may not have negotiated and executed the actual procurement contracts
with suppliers, including the exact price, until a subsequent fiscal
year. 31 Comp. Gen. 608 (1952).
Several sections of this chapter, starting with B.4, explore the
application of the bona fide needs rule in various aspects of
government contracting in which transactions cover more than one fiscal
year. We have structured these sections in large measure on a
comprehensive and well-documented article by Capt. Dale Gallimore
entitled Legal Aspects of Funding Department of the Army Procurements,
67 Mil. L. Rev. 85 (1975).
The bona fide needs rule applies to multiple year as well as fiscal
year appropriations. 55 Comp. Gen. 768, 773-74 (1976); B-235678,
July 30, 1990. See also 64 Comp. Gen. 163, 166 (1984). In other words,
an agency may use a multiple year appropriation for needs arising at
any time during the period of availability.
An argument can be made, not wholly without logic, that a multiple year
appropriation can be obligated at any time during its availability, but
only to meet a bona fide need of the year in which the funds were
appropriated. Suppose, for example, that an agency receives a 2-year
appropriation every year. For fiscal year 1989, it receives an
appropriation available through fiscal year 1990; for fiscal year 1990,
it receives an appropriation available through fiscal year 1991, and so
on. It is possible to apply the bona fide needs rule to require that
the fiscal year 1990 appropriation be used only for needs arising in
fiscal year 1990, although obligation may occur any time prior to the
end of fiscal year 1991. The Comptroller General specifically rejected
this approach in 68 Comp. Gen. 170 (1989), holding that the Defense
Logistics Agency could use its fiscal year 1987 2-year Research and
Development appropriation for a need arising in fiscal year 1988.
"There is no requirement that 2-year funds be used only for the needs
of the first year of their availability." Id. at 172.
It follows that the bona fide needs rule does not apply to no-year
funds. 43 Comp. Gen. 657, 661 (1964). See also B-279886, Apr. 28, 1998.
Without a prescribed period of availability, there is no fixed period
during which the bona fide need must arise, and thus no fixed period in
which the funds must be obligated and expended.
2. Future Years' Needs:
An appropriation may not be used for the needs of some time period
subsequent to the expiration of its period of availability. With
respect to annual appropriations, a more common statement of the rule
is that an appropriation for a given fiscal year is not available for
the needs of a future fiscal year.[Footnote 414] Determining the year
to which a need relates is not always easy. Some illustrative cases are
listed below:
* The balance of an appropriation for salaries remaining unexpended at
the end of one fiscal year could not be used to pay salaries for
services rendered in the following fiscal year. 18 Op. Att'y Gen. 412
(1886).
* The Department of Housing and Urban Development recorded certain
obligations for public housing subsidies on an estimated basis. At the
end of the fiscal year, obligations were found to be in excess of
actual needs. It was held improper to send excess funds to the state
agency's operating reserve to offset the subsidy for the following
year, since this amounted to using the funds for the needs of a
subsequent year. The proper course of action was to deobligate the
excess. 64 Comp. Gen. 410 (1985).
* Rent on property leased by the National Park Service from the
National Park Foundation could be paid in advance, but the lease could
not cross fiscal year lines. The proposal was for the lease to run from
May 1 through April 30 and for the full annual rent to be paid in
advance on May 1. However, appropriations available as of May 1 could
not be used for the period from October 1 through April 30 since rent
for these months constituted a need of the following fiscal year.
B-207215, Mar. 1, 1983.
Any discussion of obligating for future years' needs inevitably leads
to the question of year-end spending. Federal agencies as a fiscal year
draws to a close are often likened to sharks on a feeding frenzy,
furiously thrashing about to gobble up every appropriated dollar in
sight before the ability to obligate those dollars is lost. The
Comptroller of the Treasury stated the legal principle very simply in
an early decision:
"An appropriation should not be used for the purchase of an article not
necessary for the use of a fiscal year in which ordered merely in order
to use up such appropriation. This would be a plain violation of the
law."
8 Comp. Dec. 346, 348 (1901).
Thus, where an obligation is made toward the end of a fiscal year and
it is clear from the facts and circumstances that the need relates to
the following fiscal year, the bona fide needs rule has been violated.
The obligation is not a proper charge against the earlier
appropriation, but must be charged against the following year's funds.
This was the result, for example, in 1 Comp. Gen. 115 (1921), in which
an order for gasoline had been placed 3 days before the end of fiscal
year 1921, with the gasoline to be delivered in monthly installments in
fiscal year 1922. The Comptroller General stated:
"It is not difficult to understand how the need for an article of
equipment, such as a typewriter, might arise during the fiscal year
1921 and its purchase be delayed until the latter part of June [the end
of the fiscal year in 1921], but as to supplies that are consumed as
used, such as gasoline, it can not be held that they were purchased to
supply a need of the fiscal year 1921 when the contract is made late in
the month of June and expressly precludes the possibility of delivery
before July 1, 1921."
Id. at 118 (explanatory information provided). See also 4 Comp.
Dec. 553 (1898) (cement ordered late in one fiscal year to be delivered
several months into the following fiscal year).[Footnote 415]
Yet, this is only one side of the coin. The other side is illustrated
in another passage from 8 Comp. Dec. at 348:
"An appropriation is just as much available to supply the needs of the
[last day] of a particular year as any other day or time in the year."
Thus, a year-end obligation perhaps raises the possibility that the
agency is trying to "dump" its remaining funds and warrants a further
look, but the timing of the obligation does not, in and of itself,
establish anything improper. 38 Comp. Gen. 628, 630 (1959); 6 Comp.
Dec. 815, 818 (1900).
GAO has conducted several studies of year-end spending and has
consistently reported that year-end spending is not inherently more or
less wasteful than spending at any other time of the year. In one
report, GAO suggested that year-end spending surges are really
symptomatic of a larger problem--inadequate management of budget
execution--and that the apportionment process could be more effectively
used to provide the desired management. U.S. General Accounting Office,
Federal Year-End Spending: Symptom of a Larger Problem, GAO/PAD-81-18
(Oct. 23, 1980), pp. 7-9.[Footnote 416]
GAO also noted in its October 1980 report that there are several
reasons for year-end spending, some of which are perfectly valid. For
example, some programs have predictable 4thquarter surges due to
cyclical or seasonal fund requirements. If, for example, you are
administering a fire suppression program, you should expect a
4tthuarter surge because the 4ththarter of the federal fiscal year is
the major fire season in many states. GAO/PAD-81-18 at 3. In other
situations, it may be desirable to delay obligations to have funds
available for emergencies that may arise during the year. Id. at 4.
In evaluating a year-end obligation, it is important to determine
exactly what the need is from the agency's perspective. In one case,
for example, the Small Business Administration (SBA) awarded
cooperative agreements to certain Small Business Development Centers on
the last day of a fiscal year. The Centers then provided management and
technical assistance to small businesses, all of which would obviously
be done in the following year. GAO found no bona fide needs violation
because the need, from the perspective of implementing SBA's
appropriation, was merely to provide assistance to the Centers, and
there was no reason this could not be done on the last day of the year.
B-229873, Nov. 29, 1988. See also B-289801, Dec. 30, 2002; section B.5
of this chapter.
One device Congress has employed to control year-end spending surges is
legislation limiting the amount of obligations that may be incurred in
the last month or 2-month period or quarter of the fiscal year. For
example, the Defense Department's 1990 appropriation contained a
provision limiting obligations during the last 2 months of the fiscal
year to not more than 20 percent of the total fiscal year
appropriations.[Footnote 417] In comments on legislative proposals of
this type, GAO has pointed out that they are difficult to administer,
but has supported them as temporary measures pending more fundamental
improvements in budget execution management and procurement
planning.[Footnote 418] In addition, there is the risk that limitations
of this type may have the effect of simply moving the spending surges
back a few months, accomplishing nothing.
3. Prior Years' Needs:
There are situations in which it is not only proper but mandatory to
use currently available appropriations to satisfy a need that arose in
a prior year.[Footnote 419] We refer to this as the "continuing need."
If a need arises during a particular fiscal year and the agency chooses
not to satisfy it during that year, perhaps because of insufficient
funds or higher priority needs, and the need continues to exist in the
following year, the obligation to satisfy that need is properly
chargeable to the later years funds. "An unfulfilled need of one period
may well be carried forward to the next as a continuing need with the
next periods appropriation being available for funding." B-197274,
Sept. 23, 1983. Thus, an important corollary to the bona fide needs
rule is that a continuing need is chargeable to funds current for the
year in which the obligation is made, regardless of the fact that the
need may have originated in a prior year.
An illustration is B-207433, Sept. 16, 1983. The Army contracted for a
specific quantity of thermal viewers. The contract provided for a
downward adjustment in the contract price in the case of an "underrun,"
that is, if the contractor was able to perform at less than the
contract price. After the appropriation charged with the contract had
expired, the contractor incurred an underrun and proposed to use the
excess funds to supply an additional quantity of viewers. It was
undisputed that the need for additional viewers could be attributed to
the year in which the contract was entered into, and that the need
continued to exist. GAO agreed with the Army that the proper course of
action was to deobligate the excess funds and, if the Army still wished
to procure them, to charge the obligation for the additional quantity
to current years appropriations. The fact that the need arose in a
prior year was immaterial. The decision, at pages 4-5, offered the
following explanation:
"Certainly the Army could have used underrun funds to procure
additional viewers at any time during the period those funds remained
available for obligation. Also, we are of course aware that an unmet
need does not somehow evaporate merely because the period of
availability has expired. However, nothing in the bona fide needs rule
suggests that expired appropriations may be used for an item for which
a valid obligation was not incurred prior to expiration merely because
there was a need for that item during that period …Once the
obligational period has expired, the procurement of an increased
quantity must be charged to new money, and this is not affected by the
fact that the need for that increased quantity may in effect be a
'continuing need' that arose during the prior period."
Another illustration is B-226198, July 21, 1987. In late fiscal year
1986, the U.S. Geological Survey ordered certain microcomputer
equipment, to be delivered in early fiscal year 1987, charging the
purchase to fiscal year 1986 funds. The equipment was delivered and
accepted, but was stolen before reaching the ordering office. The
decision held that a reorder, placed in fiscal year 1987, had to be
charged to fiscal year 1987 funds. As with the thermal viewers in
B-207433, the fact that the need for the equipment arose in 1986 was
immaterial. See also B-286929, Apr. 25, 2001; B-257617, Apr. 18, 1995.
In another case, cost overruns caused the Army to delete certain items
from a fiscal year 1979 procurement. The Army repurchased the canceled
items in 1981, charging 1981 appropriations. GAO agreed that the
repurchase was properly chargeable to 1981, rather than 1979 funds.
B-206283-O.M., Feb. 17, 1983.
The essential requirements of the "continuing need" corollary are that
(1) the need, unmet in the year in which it arose, must continue to
exist in the subsequent obligational period; (2) the incurring of an
obligation must have been discretionary with the agency to begin with;
and (3) no obligation was in fact incurred during the prior year.
If the agency has no discretion as to the timing of an obligation (for
example, in situations where the obligation arises by operation of
law), or, even in discretionary situations, if the agency has actually
incurred a valid obligation in the prior year (whether recorded or
unrecorded), then the "continuing need" concept has no application and
the obligation must be charged to the prior year. Absent statutory
authority, current appropriations are not available to fund an
obligation or liability (as opposed to an unmet and unobligated-for
need) of a prior obligational period. If insufficient funds remain in
the prior years' appropriation, the agency must seek a supplemental or
deficiency appropriation and must further consider the possibility that
the Antideficiency Act, 31 U.S.C. § 1341(a), has been violated.
In an early case, for example, an agency had contracted for repairs to
a building toward the end of fiscal year 1904. Since it was clear that
the repairs were needed at the time they were ordered, they were
chargeable to fiscal year 1904 appropriations, and the exhaustion of
the 1904 appropriation did not permit use of 1905 funds. 11 Comp.
Dec. 454 (1905). See also 21 Comp. Dec. 822 (1915).
In B-226801, Mar. 2, 1988, GAO considered various entitlement programs
administered by the Department of Veterans Affairs (VA). Under these
programs, the obligation arises when VA determines eligibility through
its adjudication process and must be recorded at that time. If the
obligations would exceed available funds, it is not proper to defer the
recording and charge the following year's appropriation. Since the
obligations are required by law, overobligation would not violate the
Antideficiency Act, but they must still be recognized and recorded when
they arise. Congress subsequently began including an administrative
provision in VA's appropriation act permitting the use of
appropriations for these programs to pay obligations required to be
recorded in the last quarter of the preceding fiscal year.[Footnote
420] See also B-287619, July 5, 2001.
For additional cases, see 55 Comp. Gen. 768, 773-74 (1976) (current
year's appropriations not available to fund prior year's Antideficiency
Act violation); 54 Comp. Gen. 393, 395 (1974) (deficiency appropriation
necessary to pay claims against exhausted appropriation); B-133001,
Mar. 9, 1979 (fiscal year refugee assistance appropriation not
available to pay for services performed in prior year); B-14331,
Jan. 24, 1941; A-76081, June 8, 1936 (appropriations not available for
past obligations unless clearly indicated by language and intent of
appropriation act); B-221204-O.M., Jan. 31, 1986 (meals under child
nutrition program served in September of one fiscal year may not be
charged to subsequent year's appropriation). Congressional denial of a
request for a deficiency appropriation does not make current
appropriations available to satisfy the prior year's obligation.
B-114874, Sept. 16, 1975 (postage charges under 39 U.S.C. § 3206).
4. Delivery of Materials beyond the Fiscal Year:
When the government purchases goods or materials in one fiscal year and
delivery occurs in whole or in part in a subsequent fiscal year, the
question is whether the contract meets a bona fide need of the fiscal
year in which it was made. This was the central legal issue in our
discussion of year-end spending in section B.2 of this chapter, but the
issue exists regardless of when in the fiscal year the contract is
made. In this section we will explore those contracts where the agency
intends to meet the needs of the fiscal year in which it entered into
the contract. We will discuss multiyear contracts, where an agency
intends to meet its needs for more than one fiscal year, in sections
B.8 and B.9.
An agency may not obligate funds when it is apparent from the outset
that there will be no requirement until the following fiscal year. For
example, it was found that annual appropriations obligated to fund an
agreement between the General Services Administration (GSA) and the
Federal Power Commission (FPC), whereby GSA agreed to renovate space in
a federal building incident to relocation of FPC personnel, were not
available since the relocation was not required to, and would not, take
place by the end of the fiscal year, and because the space in question
would not be made "tenantable" until the following fiscal year.
B-95136-O.M., Aug. 11, 1972.
If deliveries are scheduled only for a subsequent fiscal year, or if
contract timing effectively precludes delivery until the following
fiscal year, one could question whether the contract was made in the
earlier fiscal year only to obligate funds from an expiring
appropriation and that the goods or materials were not intended to meet
a bona fide need of that year. See 38 Comp. Gen. 628, 630 (1959);
35 Comp. Gen. 692 (1956); 33 Comp. Gen. 57, 60-61 (1953); 21 Comp.
Gen. 1159 (1941); 1 Comp. Gen. 115 (1921); 27 Comp. Dec. 640 (1921).
However, the timing of delivery, while obviously a relevant factor, is
not conclusive. There are perfectly legitimate situations in which an
obligation may be incurred in one fiscal year with delivery to occur in
a subsequent year. Thus, where materials cannot be obtained in the same
fiscal year in which they are needed and contracted for, provisions for
delivery in the subsequent fiscal year do not violate the bona fide
needs rule as long as the time intervening between contracting and
delivery is not excessive and the procurement is not for standard
commercial items readily available from other sources. 38 Comp. Gen. at
630.
Similarly, an agency may contract in one fiscal year for delivery in a
subsequent year if the material contracted for will not be obtainable
on the open market at the time needed for use, provided the intervening
period is necessary for production or fabrication of the material.
37 Comp. Gen. 155, 159 (1957).
If an obligation is proper when made, unforeseen delays that cause
delivery or performance to extend into the following fiscal year will
not invalidate the obligation. In one case, for example, although work
under a construction contract was performed during the fiscal year
following its execution, the Comptroller General approved payment to
the contractor under the original obligation since the agency had
awarded the contract as expeditiously as possible and had made
provision for the work to begin within the current fiscal year, but
experienced a delay in obtaining certain materials the government had
agreed to provide. 1 Comp. Gen. 708 (1922). See also 23 Comp. Gen. 82
(1943); 20 Comp. Gen. 436 (1941).
An order or contract for the replacement of stock is viewed as meeting
a bona fide need of the year in which the contract is made as long as
it is intended to replace stock used in that year, even though the
replacement items will not be used until the following year. See
44 Comp. Gen. 695 (1965). "Stock" in this context refers to "readily
available common-use standard items." Id. at 697. See also 73 Comp.
Gen. 259 (1994); 32 Comp. Gen. 436 (1953). Generally, scheduling
delivery for the following year would seem irrelevant. There are
limits, however. GAO has questioned the propriety, from the bona fide
needs perspective, of purchases of materials carried in stock for more
than a year prior to issuance for use. B-134277, Dec. 18, 1957.
5. Services Rendered beyond the Fiscal Year:
Services procured by contract are generally viewed as chargeable to the
appropriation current at the time the services are rendered.[Footnote
421] 38 Comp. Gen. 316 (1958). However, a need may arise in one fiscal
year for services that, by their nature, cannot be separated for
performance in separate fiscal years. The Comptroller General has held
that the question of whether to charge the appropriation current on the
date the contract is made, or to charge funds current at the time the
services are rendered, depends upon whether the services are
"severable" or "entire":
"The fact that the contract covers a part of two fiscal years does not
necessarily mean that payments thereunder are for splitting between the
two fiscal years involved upon the basis of services actually performed
during each fiscal year. In fact, the general rule is that the fiscal
year appropriation current at the time the contract is made is
chargeable with payments under the contract, although performance
thereunder may extend into the ensuing fiscal year."
23 Comp. Gen. 370, 371 (1943). A contract that is viewed as "entire" is
chargeable to the fiscal year in which it was made, notwithstanding
that performance may have extended into the following fiscal year. The
determining factor for whether services are severable or entire is
whether they represent a single undertaking. Thus, in 23 Comp.
Gen. 370, a contract for the cultivation and protection of a tract of
rubber-bearing plants, payable on completion of the services, was
chargeable against fiscal year funds for the year in which the contract
was made. Because the services necessarily covered the entire growing
period, which extended into the following fiscal year, the Comptroller
General characterized them as a single undertaking, which "although
extending over a part of two fiscal years, nevertheless was
determinable both as to the services needed and the price to be paid
therefor at the time the contract was entered into." Id. at 371.
The rationale of 23 Comp. Gen. 370 was applied in 59 Comp. Gen. 386
(1980) (requisition for printing accompanied by manuscript sufficient
for Government Printing Office to proceed with job). See, e.g.,
65 Comp. Gen. 741 (1986) (contract for study and final report on
psychological problems among Vietnam veterans); B-257977, Nov. 15, 1995
(contract for 2-year intern training program since interns are required
to complete entire training program to be eligible for noncompetitive
Presidential Management Intern appointment). See also 73 Comp. Gen. 77
(1994) (subsequent modifications to Fish and Wildlife Service research
work orders should be charged to the fiscal year current when the work
orders were issued since the purpose of the research is to provide a
final research report and the services under the contract are
nonseverable). The last opinion is noteworthy because it pointed out
that a limitation of funds clause does not affect the application of
the bona fide needs rule and the severable test. 73 Comp. Gen. at 80.
However, where the services are continuing and recurring in nature, the
contract is severable. Service contracts that are "severable" may not
cross fiscal year lines unless authorized by statute. 71 Comp. Gen. 428
(1992); 58 Comp. Gen. 321, 324 (1979); B-192518, Aug. 9, 1979;
B-133001, Mar. 9, 1979; B-187881, Oct. 3, 1977. See also B-287619, July
5, 2001 (TRICARE contractors provide on-going services such as
enrolling beneficiaries, adjudicating claims, etc., that are severable
into components that independently provide value). Most federal
agencies have authority to enter into a 1-year severable service
contract, beginning at any time during the fiscal year and extending
into the next fiscal year, and to obligate the total amount of the
contract to the appropriation current at the time the agency entered
into the contract.[Footnote 422] 10 U.S.C. § 2410a (defense agencies);
41 U.S.C. § 253l (civilian agencies); 41 U.S.C. § 253l-1 (Comptroller
General); 41 U.S.C. § 253l-2 (Library of Congress); 41 U.S.C. § 253l-3
(Chief Administrative Officer of the House of Representatives);
41 U.S.C. § 253l-4 (Congressional Budget Office). See also B-259274,
May 22, 1996. Otherwise, the services must be charged to the fiscal
year(s) in which they are rendered. 65 Comp. Gen. at 743; 33 Comp.
Gen. 90 (1953) (trucking services); 10 Comp. Dec. 284 (1903) (contract
for services of various categories of skilled laborers in such
quantities and at such times as may be deemed necessary is severable).
As stated in 33 Comp. Gen. at 92:
"The need for current services, such as those covered by the contract
here under consideration, arises only from day to day, or month to
month, and the Government cannot, in the absence of specific
legislative authorization, be obligated for such services by any
contract running beyond the fiscal year."
See also 35 Comp. Gen. 319 (1955), amplified by B-125444, Feb. 16, 1956
(gardening and window cleaning services).
In addition to the recurring nature of the services, another factor
identified in some of the decisions is whether the contracted-for
services are viewed as personal or nonpersonal. Personal services are
presumptively severable by their nature and are properly chargeable to
the fiscal year in which the services are rendered. B-174226, Mar. 13,
1972 (performance on an evaluation team). Legal services have been
viewed as either personal or nonpersonal, depending on the nature of
the work to be done. B-122596, Feb. 18, 1955; B-122228, Dec. 23, 1954.
The distinction appears to have derived from the distinction inherent
in 5 U.S.C. § 3109, which authorizes agencies to procure services of
experts or consultants by employment (personal) or contract
(nonpersonal). B-174226, supra. In the context of applying the bona
fide needs rule, however, the distinction is not particularly useful
since it is still necessary to look at the nature of the services
involved in the particular case. In other words, characterizing
services as personal or nonpersonal does not provide you with an
automatic answer. In fact, some of the more recent cases have merely
considered the nature of the work without characterizing it as personal
or nonpersonal, which would have added nothing to the analysis. E.g.,
50 Comp. Gen. 589 (1971) (fees of attorneys contracted for under
Criminal Justice Act chargeable to appropriations current at time of
appointment); B-224702, Aug. 5, 1987 (contract for legal support
services held severable since it consisted primarily of clerical tasks
and required no final report or end product).
A 1981 decision applied the above principles to agreements made by the
Small Business Administration (SBA) with private organizations to
provide technical and management assistance to businesses eligible for
assistance under the Small Business Act. The typical agreement covered
one calendar year and crossed fiscal year lines. Under the agreement,
payment was to be made only for completed tasks and SBA was under no
obligation to place any orders, or to place all orders with any given
contractor. The question was whether the "contract" was chargeable to
the fiscal year in which it was executed. The Comptroller General found
that the services involved were clearly severable and that the
agreement was not really a contract since it lacked mutuality of
obligation. Accordingly, SBA created a contract obligation only when it
placed a definite order, and could charge each fiscal year only with
obligations incurred during that fiscal year. 60 Comp. Gen. 219 (1981).
The principles were reiterated in 61 Comp. Gen. 184 (1981).
In another 1981 case, GAO considered the District of Columbia's
recording of obligations for social security disability medical
examinations. A person seeking to establish eligibility for disability
benefits is given an appointment for a medical examination and a
purchase order is issued at that time. However, for a number of reasons
beyond the District's control, the examination may not take place until
the following fiscal year (for example, a person makes an application
at end of fiscal year or does not show up for initial appointment).
Nevertheless, the need for the examination arises when the applicant
presents his or her claim for disability benefits. The decision
concluded that the obligation occurs when the purchase order is issued
and is chargeable to that fiscal year. 60 Comp. Gen. 452 (1981).
Training tends to be nonseverable. Thus, where a training obligation is
incurred in one fiscal year, the entire cost is chargeable to that
year, regardless of the fact that performance may extend into the
following year. B-233243, Aug. 3, 1989; B-213141-O.M., Mar. 29, 1984.
In 70 Comp. Gen. 296 (1991), training that began on the first day of
fiscal year 1990 was held chargeable to 1989 appropriations where the
training had been identified as a need for 1989, scheduling was beyond
the agency's control, and the time between procurement and performance
was not excessive. If some particular training were severable (it is
not entirely clear when this might be the case), the contract could not
cross fiscal year lines and payment would have to be apportioned
between the fiscal years in which the training is actually conducted.
See 34 Comp. Gen. 432 (1955).
After a confusing start, we have determined that the type of contract
does not affect the severable versus nonseverable distinction. For
example, "level-of-effort" contracts may be severable or nonseverable.
A level-of-effort contract is a type of cost-reimbursement contract in
which the scope of work is defined in general terms, with the
contractor being obligated to provide a specified level of effort
(e.g., a specified number of person-hours) for a stated time period.
Federal Acquisition Regulation, 48 C.F.R. § 16.306(d)(2). The bona fide
needs determination is based not on the contract type but on the nature
of the work being performed and is, in the first instance, the
responsibility of the contracting agency. B-235678, July 30, 1990. A
1985 case, 65 Comp. Gen. 154, had implied that all level-of-effort
contracts were severable by definition (id. at 156), and to that extent
was modified by B-235678. See also B-277165, Jan. 10, 2000 (cost-plus-
fixed-fee contracts are presumptively severable unless the actual
nature of the work warrants a different conclusion).
The Comptroller General has noted that to some degree an agency can
control whether services are severable or nonseverable by selecting the
type of contract and crafting the statement of work. B-277165, supra
("one might reasonably conclude that the initial agency determination
whether the contract is for funding purposes severable or nonseverable
takes place roughly contemporaneously with agency selection of contract
type").
As a final thought, there is a fairly simple test that is often helpful
in determining whether a given service is severable or nonseverable.
Suppose that a service contract is to be performed half in one fiscal
year and half in the next. Suppose further that the contract is
terminated at the end of the first fiscal year and is not renewed. What
do you have? In the case of a window-cleaning contract, you have half
of your windows clean, a benefit that is not diminished by the fact
that the other half is still dirty. What you paid for the first half
has not been wasted. These services are clearly severable. Now consider
a contract to conduct a study and prepare a final report, as in
65 Comp. Gen. 741 (1986). If this contract is terminated halfway
through, you essentially have nothing. The partial results of an
incomplete study, while perhaps beneficial in some ethereal sense, do
not do you very much good when what you needed was the complete study
and report. Or suppose the contract is to repair a broken
frammis.[Footnote 423] If the repairs are not completed, certainly some
work has been done but you still don't have an operational frammis. The
latter two examples are nonseverable.
6. Replacement Contracts:
In an early decision, the Comptroller of the Treasury was asked whether
fiscal year 1902 funds, originally obligated under a contract but
unexpended because of contractor default, could be used in the
following year to continue the original object of the contract. The
Comptroller stated:
"A contract was properly made within the fiscal year 1902, and it would
seem that any part of the consideration of that contract which failed
of use owing to the default of the contractor could still be used in
carrying out the object of the original contract within the meaning of
[31 U.S.C. § 1502(a)]. Appropriations are made to be used and not to be
defeated in their use, and it would be a narrow construction to hold
that a default on a properly made contract would prevent the use of the
appropriation for the object for which it was made and for carrying out
which the contract was executed."
9 Comp. Dec. 10, 11 (1902). This marked the beginning of the
replacement contract theory.
In its traditional form, the rule is well settled that, where it
becomes necessary to terminate a contract because of the contractor's
default, the funds obligated under the original contract are available,
beyond their original period of obligational availability, for the
purpose of engaging another contractor to complete the unfinished work.
60 Comp. Gen. 591 (1981); 55 Comp. Gen. 1351 (1976); 44 Comp. Gen. 623
(1965); 40 Comp. Gen. 590 (1961); 32 Comp. Gen. 565 (1953); 2 Comp.
Gen. 130 (1922); 21 Comp. Dec. 107 (1914); B-160834, Apr. 7, 1967;
B-105555, Sept. 26, 1951; A-22134, Apr. 12, 1928.
Implicit in the rule is the premise that the original contract validly
obligated then current funds. See 34 Comp. Gen. 239 (1954). In
addition, the rule is based on the notion that the default termination
does not eliminate the bona fide need of the fiscal year in which the
original contract was executed. 44 Comp. Gen. 399, 401 (1965). In
accordance with 31 U.S.C. § 1502, amounts from the appropriation
available at the time the original contract was entered would remain
available to fund costs properly chargeable to that appropriation. See
B-242274, Aug. 27, 1991. Accordingly, the replacement contract seeks
only to meet the agency's preexisting and continuing need relying on
the budget authority obligated by the original contract.
In order for funds to remain available beyond expiration for a
replacement contract, three conditions must be met:
* A bona fide need for the work, supplies, or services must have
existed when the original contract was executed, and it must continue
to exist up to the award of the replacement contract. E.g., 55 Comp.
Gen. 1351, 1353 (1976); 34 Comp. Gen. 239, 240 (1954). If a terminated
contract is found to have been improperly made to fulfill a need of a
fiscal year other than the year against which the obligation was
recorded, it would also be improper to charge that same appropriation
for obligations incident to a replacement contract. 35 Comp. Gen. 692
(1956). In addition, if contracts made in a subsequent fiscal year do
not satisfy a continuing need for the goods and/or services provided
under the original contract from a prior fiscal year, then the
subsequent fiscal year contracts are not replacements and those
contracts are not chargeable to the prior fiscal year appropriation.
See B-242274, Aug. 27, 1991.
* The replacement contract must not exceed the scope of the original
contract. If it does, it is a new obligation and must be charged to
funds currently available for obligation at the time the replacement
contract is entered into. E.g., 44 Comp. Gen. 399 (1965); B-181176-
O.M., June 26, 1974.
* The replacement contract must be awarded within a reasonable time
after termination of the original contract. E.g., 60 Comp. Gen. at 593.
Excessive delay raises the presumption that the original contract was
not intended to meet a then existing bona fide need. The same result
may follow if there is unwarranted delay in terminating the original
contract. 32 Comp. Gen. 565 (1953).
At one time, the replacement contract rule was mostly (but not
exclusively) limited to the default situation. E.g., 24 Comp. Gen. 555
(1945), overruled by 55 Comp. Gen. 1351. It has, however, been
expanded. In 34 Comp. Gen. 239 (1954), a default termination was found
to be erroneous and was converted to a termination for convenience by
agreement of the parties to permit settlement of the contractor's claim
for damages. The decision held that, in view of the original
termination, the funds originally obligated were available for the
timely execution of a new contract for the performance of the
unfinished work.[Footnote 424] A further question in that case was
whether the replacement contract rule was affected by the newly enacted
31 U.S.C. § 1501(a), which requires that contractual obligations be
supported by a binding agreement in writing executed prior to
expiration of the appropriations availability. The decision held that
the original contract met these requirements. 34 Comp. Gen. at 241.
In a later case, a contract for flooring repairs was awarded in fiscal
year 1975, obligating fiscal year 1975 funds, conditioned upon a
determination from the Small Business Administration (SBA) that the
contractor qualified as a small business. SBA found the contractor not
to be a small business. Concluding that the original award was
sufficient to support an obligation under 31 U.S.C. § 1501(a), the
Comptroller General applied the replacement contract rule and held that
the funds obligated for the contract in fiscal year 1975 could be used
to resolicit in fiscal year 1976. 55 Comp. Gen. 1351 (1976).
In 66 Comp. Gen. 625 (1987), however, the Comptroller General declined
to extend the rule in a situation involving a voluntary modification
that reduced the scope of a contract. The Navy had contracted for the
construction of 12 ships. The contractor encountered financial
difficulties and filed for reorganization under Chapter 11 of the
Bankruptcy Act under which the contractor could, with court approval,
reject the contract. See 11 U.S.C. §§ 365(a) and (d)(2). To avert this
possibility, the Navy agreed to a contract modification that, among
other things, reduced the number of ships to be provided from 12 to 10.
The question was whether the funds originally obligated for the 2 ships
deleted by the modification were available after expiration to fund a
reprocurement. GAO concluded that they were not because there had been
no default, nor was there an actual rejection under the Bankruptcy
Code. "[T]he modification was an essentially voluntary act on the part
of the Navy, and as such is beyond the scope of the replacement
contract rule." Id. at 627. Therefore, any replacement contract for the
2 deleted ships would have to be charged to appropriations current at
the time it was made.
Cases involving the termination of erroneously or improperly awarded
contracts have been less than consistent, although a clear direction
now appears evident. The earliest decisions applied the replacement
contract rule. Thus, 17 Comp. Gen. 1098 (1938) held, without much
discussion, that funds obligated by an award to a bidder subsequently
determined not to have been the low bidder could be used for an award
to the otherwise low bidder in the following fiscal year. In a 1953
case, a contract had to be partially canceled because the contractor's
bid had not conformed to the advertised specifications. GAO noted that
"the obligating instrument was legally defective in such a way as to
render the contract voidable at the election of the Government," but
nevertheless applied the replacement contract rule. B-116131, Oct. 19,
1953. See also B-89019, May 31, 1950.
GAO's position seemed to change with the enactment of 31 U.S.C.
§ 1501(a) in 1954, on the theory that a contract award found to be
invalid did not constitute a binding agreement so as to support a
recordable obligation. 38 Comp. Gen. 190 (1958); B-118428, Sept. 21,
1954, overruling B-116131 and B-89019. However, B-116131 was at least
arguably "reinstated" by B-152033, May 27, 1964, which followed both
the "voidable at the election of the government" rationale and the
result of B-116131, without citing either it or the case that
presumably overruled it. See also B-173244(2), Aug. 10, 1972; B-158261,
Mar. 9, 1966. This latter group of cases was in turn cited with
approval in 55 Comp. Gen. 1351, 1353 (1976).
The apparent direction indicated by 55 Comp. Gen. 1351 (1976) and the
cases it cited was called into question by statements in 60 Comp.
Gen. 591 (1981) to the effect that the replacement contract rule does
not apply to terminations for the convenience of the government,
whether initiated by the contracting agency or on recommendation of
some other body such as GAO. Of course, the typical situation in which
a replacement contract is needed following a termination for
convenience is where the original contract is found to have been
improperly awarded. An important clarification occurred in 68 Comp.
Gen. 158 (1988), which modified 60 Comp. Gen. 591 and held the
replacement contract rule applicable where a contract must be
terminated for convenience, without a prior default termination,
pursuant to a determination by competent administrative or judicial
authority (court, board of contract appeals, GAO) that the contract
award was improper. As noted previously, the bona fide need of the
original contract must continue, and the replacement contract must be
made without undue delay after the original contract is terminated and
must be awarded on the same basis as, and be substantially similar in
scope and size to, the original contract.
Logically and inevitably, the next question would be why the rule
should not be the same regardless of whether the defect leading to
termination is determined by an external reviewing body or by the
contracting agency itself. It should make no difference, GAO concluded
in 70 Comp. Gen. 230 (1991). The essence of the problem--a legal
impropriety in the procurement process requiring corrective action--is
no different. Thus, the replacement contract rule, with its attendant
conditions, applies where the contracting agency determines that a
contract award was improper and terminates the contract for the
convenience of the government, provided there is clear evidence that
the award was erroneous and the agency documents its determination with
appropriate findings of fact and law. Id.
It is worth noting that with regard to agencies that terminate their
contracts based on improper awards, the 1991 GAO decision added a
fourth condition to the three articulated earlier in this section that
determine whether funds remain available in a subsequent fiscal year
for replacement contracts. In addition to the existence of a continuing
bona fide need, a replacement contract of the same size and scope as
the original, and the execution of the replacement without undue delay,
the decision added that the original contract had to be made in "good
faith" before an agency could use prior year appropriations to fund a
replacement contract after terminating the original for convenience due
to an improper award. 70 Comp. Gen. at 232; 70 Comp. Gen. 287, 289
(1991).
The issue of whether an agency is required to avail itself of the
replacement contract rule arose in a protest submitted to GAO alleging
the improper award of a contract. GAO found that the agency properly
awarded the contract and that, even when available, the replacement
contract rule is not mandatory on an agency. B-270723, Apr. 15, 1996.
The 1996 decision stated that since the replacement contract rule
"provides a mechanism to allow agencies to administer their contract
effectively when there is a reason to terminate a contract, its use is
solely at the government's discretion." Id. At least one federal
district court has adopted the position that the availability of funds
for a replacement contract does not require the agency to procure a
replacement contract. LeBoeuf, Lamb, Greene & MacRae, L.L.P. v.
Abraham, 215 F. Supp. 2d 73, 81 (D.D.C. 2002). See, e.g., B-276334.2,
Oct. 27, 1997.
7. Contract Modifications and Amendments Affecting Price:
Contract performance may extend over several years. During this time,
the contract may be modified or amended for a variety of reasons at the
instigation of either party. An amendment within the general scope of
the contract that does not increase the contract price remains an
obligation of the year in which the contract was executed. B-68707,
Aug. 19, 1947. If the modification results in an increase in contract
price, the question from the bona fide needs perspective is which
fiscal year to charge with the modification.
If the modification exceeds the general scope of the original contract,
for example, by increasing the quantity of items to be delivered, the
modification amounts to a new obligation and is chargeable to funds
current at the time the modification is made. 37 Comp. Gen. 861 (1958);
B-207433, Sept. 16, 1983. When the Internal Revenue Service (IRS)
benefited from a contractual provision that allowed its contractor to
pass along cost savings to the agency in a fiscal year subsequent to
when it entered the contract, IRS could not use those cost savings to
increase the quantity of items that the contract required the
contractor to deliver. B-257617, Apr. 18, 1995. Although there was a
bona fide need for an increased quantity of items that had continued
from the fiscal year that IRS entered the contract, it was not within
the scope of the contract to increase the quantity of items delivered.
If the contractual provision had stated that a cost savings would be
passed on to IRS in the form of an increased quantity of items
delivered, then increasing the quantity would not have constituted a
contract modification creating a new obligation. Id.
In the case of a contract for severable services, a modification
providing for increased services must be charged to the fiscal year or
years in which the services are rendered, applying the principles
discussed in this chapter in section B.5.[Footnote 425] 61 Comp.
Gen. 184 (1981), aff'd upon reconsideration, B-202222, Aug. 2, 1983;
B-224702, Aug. 5, 1987. See also B-235086, Apr. 24, 1991. In 61 Comp.
Gen. 184, for example, a contract to provide facilities and staff to
operate a project camp was modified in the last month of fiscal year
1980. The modification called for work to be performed in fiscal year
1981. Regardless of whether the contract was viewed as a service
contract or a contract to provide facilities, the modification did not
meet a bona fide need of fiscal year 1980. The modification amounted to
a separate contract and could be charged only to fiscal year 1981
funds, notwithstanding that it purported to modify a contract properly
chargeable to fiscal year 1980 funds.
For modifications within the general scope of the original contract,
the situation is a bit more complicated. Most government contracts
contain provisions which, under certain conditions, render the
government liable to make equitable adjustments in the contract price.
Such liability may arise due to changes in specifications, government-
caused delay, changed conditions, increased overhead rates, etc. These
conditions are set out in standard contract clauses such as the
"Changes" clause, "Government Property" clause, or "Negotiated Overhead
Rates" clause.
Because there is no way to know whether the government will actually
incur liability under these provisions, and if so, the amount of such
liability, until the occurrence of the specified conditions (cf.
50 Comp. Gen. 589, 591 (1971)), the appropriations charged with the
cost of the contract are not firmly obligated to cover future price
increases, which arise due to the operation of these clauses.
Nevertheless, as noted, government contracts frequently contemplate
that performance will extend into subsequent fiscal years. When an
upward price adjustment is necessitated in a subsequent year, the
general approach is to ask whether the adjustment is attributable to an
"antecedent liability"--that is, whether the government's liability
arises and is enforceable under a provision in the original contract.
If the answer to this question is yes, then a within-scope price
adjustment, which is requested and approved in a subsequent fiscal
year, for example, under the "Changes" clause, will--with one important
qualification to be noted later--be charged against the appropriation
current at the time the contract was originally executed. Cases
supporting this proposition in various contexts are 59 Comp. Gen. 518
(1980); 23 Comp. Gen. 943 (1944); 21 Comp. Gen. 574 (1941); 18 Comp.
Gen. 363 (1938); A-15225, Sept. 24, 1926; B-146285-O.M., Sept. 28,
1976.[Footnote 426] See also B-197344, Aug. 21, 1980, where
supplemental work was done without issuance of a formal contract
modification. This principle is occasionally referred to as the
doctrine of "relation back." E.g., 37 Comp. Gen. 861, 863 (1958).
The reasoning is that a change order does not give rise to a new
liability, but instead only renders fixed and certain the amount of the
government's preexisting liability to adjust the contract price. Since
that liability arises at the time the original contract is executed,
the subsequent price adjustment is viewed as reflecting a bona fide
need of the same year in which funds were obligated for payment of the
original contract price. The concept was stated as follows in 23 Comp.
Gen. 943, 945 (1944) (explanatory information provided):
"It is true that at the time the contract was executed it was not known
that there would, in fact, be any changes ordered …for which the
contractor would be entitled to be paid an amount in addition to
amounts otherwise payable under the contract. Also, it is true that
[the Changes clause] contemplates the execution of amendments to the
contract from time to time covering such changes. However, the fact
remains that the obligations and liabilities of the parties respecting
such changes are fixed by the terms of the original contract, and the
various amendments merely render definite and liquidated the extent of
the Government's liability in connection with such changes."
In order to avoid overobligating the original appropriation, the
contracting officer must estimate the expected net additional
obligations to insure that available appropriations are not committed
to other purposes. E.g., 61 Comp. Gen. 609, 612 (1982); B-192036,
Sept. 11, 1978. It is also true, however, that estimated liabilities of
this type require constant review to ensure that appropriations do not
remain encumbered in excess of the amounts that will actually be needed
to meet the total liability under the contract.
For contracts spanning lengthy periods of time, funding of within scope
modifications involves the use of expired appropriations. As discussed
later in this chapter, the balances in expired accounts prior to
closing are available without further congressional action.
Not all price adjustments arising from contract modifications or
amendments represent a bona fide need of the year in which the
agreement was made. If, as noted above, the change or amendment exceeds
the general scope of the contract, or is not made pursuant to a
provision in the original contract, then it is not based on any
antecedent liability, in which event it may obligate only
appropriations current at the time it is issued. 56 Comp. Gen. 414
(1977). See also 25 Comp. Gen. 332 (1945) (purported change order
issued after completion of contract, covering work the contractor was
not legally bound to do under the original contract, amounted to a new
contract).
As noted above, there is an important exception or qualification to the
antecedent liability rule. In cost reimbursement contracts,
discretionary cost increases (i.e., increases that are not enforceable
by the contractor), which exceed funding ceilings established by the
contract, may be charged to funds currently available when the
discretionary increase is granted by the contracting officer. 61 Comp.
Gen. 609 (1982). It would be unreasonable, the decision pointed out, to
require the contracting officer to reserve funds in anticipation of
increases beyond the contract's ceiling. Id. at 612. Changes that do
not exceed the stipulated ceiling continue to be chargeable to funds
available when the contract was originally made (id. at 611), as do
amounts for final overhead in excess of the ceiling where the
contractor has an enforceable right to those amounts (id. at 612).
Since prior decisions such as 59 Comp. Gen. 518 had not drawn the
below-ceiling/above-ceiling distinction, 61 Comp. Gen. 609 modified
them to that extent. A more recent case applying 61 Comp. Gen. 609 is
65 Comp. Gen. 741 (1986).
Once an appropriation account has closed (generally five fiscal years
after the expiration of obligational availability), questions of
antecedent liability or relation back are no longer relevant for
purposes of determining the availability of amounts in the closed
accounts since, at that time, appropriation balances cease to be
available for expenditure. However, questions of antecedent liability
or relation back are used to determine the extent to which current
funds are available since, once an appropriation closes, only current
funds may be used, up to specified limits, for such obligations.
31 U.S.C. §§ 1552 and 1553.
8. Multiyear Contracts:
a. Introduction:
Any discussion of multiyear contracting must inevitably combine the
bona fide needs rule with material from Chapter 6 on the Antideficiency
Act and from Chapter 7 on obligations.
The term "multiyear contract" has been used in a variety of situations
to describe a variety of contracts touching more than one fiscal year.
To prevent confusion, we think it is important to start by establishing
a working definition. A multiyear contract, as we use the term in this
discussion, is a contract covering the requirements, or needs, of more
than one fiscal year.[Footnote 427] A contract for the needs of the
current year, even though performance may extend over several years, is
not a multiyear contract. We discuss contracts such as these, where
performance may extend beyond the end of the fiscal year, in sections
B.4 and B.5 of this chapter. Thus, a contract to construct a ship that
will take 3 years to complete is not a multiyear contract; a contract
to construct one ship a year for the next 3 years is.
Multiyear contracting, like most things in life, has advantages and
disadvantages. Some of the potential benefits are:[Footnote 428]
* Multiyear contracting can reduce costs by permitting the contractor
to amortize nonrecurring "start up" costs over the life of the
contract. Without multiyear authority, the contractor may insist on
recovering these costs under the 1-year contract (since there is no
guarantee of getting future contracts), thus resulting in increased
unit prices.
* Multiyear contracting may enhance quality by reducing the uncertainty
of continued government business and enabling the contractor to
maintain a stable workforce.
* Multiyear contracting may increase competition by enabling small
businesses to compete in situations where nonrecurring start-up costs
would otherwise limit competition to larger concerns.
However, the situation is not one-sided. Multiyear contracting
authority also has potential disadvantages:[Footnote 429]
* Competition may decrease because there will be fewer opportunities to
bid.
* A contractor who is able to amortize start-up costs in a multiyear
contract has, in effect, a government-funded competitive price
advantage over new contractors in subsequent solicitations. This could
evolve into a sole-source posture.
* Being locked into a contract for several years is not always
desirable, particularly where the alternative is to incur cancellation
charges that could offset initial savings.
An agency may engage in multiyear contracting only if it has (1) no-
year funds or multiple year funds covering the entire term of the
contract or (2) specific statutory authority. Cray Research, Inc. v.
United States, 44 Fed. Cl. 327, 332 (1999); 67 Comp. Gen. 190, 192
(1988); B-171277, Apr. 2, 1971 (multiyear contract permissible under
no-year trust fund). An agency may enter into a multiyear contract with
fiscal year appropriations (or for a term exceeding the period of
availability of a multiple year appropriation) only if it has specific
statutory authority to do so. See 71 Comp. Gen. 428, 430 (1992);
B-259274, May 22, 1996. Most agencies now have some form of multiyear
contracting authority, as we will describe in the next section.
b. Multiple Year and No-Year Appropriations:
If an agency does not have specific multiyear contracting authority but
enters into a multiyear contract solely under authority of a multiple
year or no-year appropriation, the full contract amount must be
obligated at the time of contract award.[Footnote 430] B-195260,
July 11, 1979. This is also true for revolving funds, which authorize
expenditures without fiscal year limitation. Revolving funds must have
sufficient budget authority against which to record the entire amount
of long-term contracts at the time of the obligation. 72 Comp. Gen. 59,
61 (1992). A revolving fund may not count anticipated receipts from
future customer orders as budget authority. B-288142, Sept. 6, 2001.
See also U.S. General Accounting Office, The Air Force Has Incurred
Numerous Overobligations In Its Industrial Fund, AFMD-81-53
(Washington, D.C.: Aug. 14, 1981).
However, there have been some circumstances under which GAO approved
the incremental funding of a multiyear contract using no-year funds.
For example, 43 Comp. Gen. 657 (1964) involved a scheme in which funds
would be made available, and obligated, on a year-by-year basis,
together with a "commitment" to cover maximum cancellation costs. The
cancellation costs represented amortized start-up costs, which would be
adjusted downward each year. Thus, funds would be available to cover
the government's maximum potential liability in each year. See also
62 Comp. Gen. 143 (1983) (similar approach for long-term vessel
charters under the Navy Industrial Fund); 51 Comp. Gen. 598, 604 (1972)
(same); 48 Comp. Gen. 497, 502 (1969) (either obligational approach
acceptable under revolving fund).[Footnote 431] (As we will see later,
this type of arrangement under a fiscal year appropriation presents
problems.)
If an agency has neither multiple year or no-year funds, nor uses
multiyear contracting authority, a multiyear contract violates
statutory funding restrictions, including the Antideficiency Act
(prohibiting obligations in advance of an appropriation for that fiscal
year, 31 U.S.C. § 1341(a))[Footnote 432] and the bona fide needs
statute (prohibiting the obligation of an appropriation in advance of
need, 31 U.S.C. § 1502(a)). See Cray Research, Inc. v. United States,
44 Fed. Cl. 327,332 (1999). E.g., 67 Comp. Gen. 190 (1988); 66 Comp.
Gen. 556 (1987); 64 Comp. Gen. 359 (1985); 48 Comp. Gen. 497 (1969);
42 Comp. Gen. 272 (1962); 27 Op. Att'y Gen. 584 (1909). Multiyear
commitments were found illegal in various contexts in each of these
cases, although each case does not necessarily discuss each funding
statute.
In 42 Comp. Gen. 272, for example, the Air Force, using fiscal year
appropriations, awarded a 3-year contract for aircraft maintenance,
troop billeting, and base management services on Wake Island. Because
an agency typically incurs an obligation at the time it enters into a
contract, and must charge that obligation to an appropriation current
at that time,[Footnote 433] the Air Force contract raised two issues:
(1) whether the services to be provided in the second and third years
of the contract constituted a bona fide need of the Air Force's fiscal
year appropriation, and (2) if not, whether the Air Force had incurred
an obligation in the first fiscal year for the needs of the second and
third years in advance of appropriations for those 2 years. The Air
Force contended that no funds were obligated at time of contract award;
instead, the Air Force argued that it had a "requirements" contract,
and that it incurred no obligation unless and until it issued
requisitions, thereby exempting the contract from the statutory funding
restrictions. However, the Comptroller General refused to adopt this
characterization of the contract. Although the contractor had expressly
agreed to perform only services for which he had received the
contracting officer's order, GAO found that there was no need for an
administrative determination that requirements existed since the
contract services were "automatic incidents of the use of the air
field." Id. at 277. Only a decision to close the base would eliminate
the requirements. Consequently, the contract was found to be an
unauthorized multiyear contract--the Air Force, using fiscal year
appropriations, had entered into a contract for its needs of subsequent
fiscal years in advance of appropriations for those years.
c. Fiscal Year Appropriations:
If an agency is contracting with fiscal year appropriations and does
not have multiyear contracting authority, the only authorized course of
action, apart from a series of separate fiscal year contracts, is a
fiscal year contract with renewal options, with each renewal option
(1) contingent on the availability of future appropriations and (2) to
be exercised only by affirmative action on the part of the government
(as opposed to automatic renewal unless the government refuses).
Leiter v. United States, 271 U.S. 204 (1926); 66 Comp. Gen. 556 (1987);
36 Comp. Gen. 683 (1957); 33 Comp. Gen. 90 (1953); 29 Comp. Gen. 91
(1949); 28 Comp. Gen. 553 (1949); B-88974, Nov. 10, 1949. The inclusion
of a renewal option is key; with a renewal option, the government
incurs a financial obligation only for the fiscal year, and incurs no
financial obligation for subsequent years unless and until it exercises
its right to renew. The government records the amount of its obligation
for the first fiscal year against the appropriation current at the time
it awards the contract. The government also records amounts of
obligations for future fiscal years against appropriations current at
the time it exercises its renewal options. The mere inclusion of a
contract provision conditioning the government's obligation on future
appropriations without also subjecting the multiyear contract to the
government's renewal option each year would be insufficient. Cray
Research, Inc. v. United States, 44 Fed. Cl. 327, 332 (1999). Thus, in
42 Comp. Gen. 272 (1962), the Comptroller General, while advising the
Air Force that under the circumstances it could complete that
particular contract, also advised that the proper course of action
would be either to use an annual contract with renewal options or to
obtain specific multiyear authority from Congress. Id. at 278.
In a 1-year contract with renewal options, the contractor can never be
sure whether the renewal options will be exercised, thereby preventing
the contractor from amortizing initial investment costs. To protect
against this possibility, contractors occasionally seek a contract
termination penalty equal to the unamortized balance of initial
investment costs if the government fails to renew the contract for any
fiscal year. However, the Comptroller General has held that these
provisions contravene the bona fide needs rule:
"The theory behind such obligations (covering amortized facility costs
unrecovered at time of termination) has been that a need existed during
the fiscal year the contracts were made for the productive plant
capacity represented by the new facilities which were to be built by
the contractor to enable him to furnish the supplies called for by the
contracts. After thorough consideration of the matter, we believe that
such obligations cannot be justified on the theory of a present need
for productive capacity.
" …The real effect of the termination liability is to obligate the
Commission to purchase a certain quantity of magnesium during each of
five successive years or to pay damages for its failure to do so. In
other words, the termination charges represent a part of the price of
future, as distinguished from current, deliveries and needs under the
contract, and for that reason such charges are not based on a current
fiscal year need."
36 Comp. Gen. 683, 685 (1957). See also 37 Comp. Gen. 155 (1957).
Attempts to impose penalty charges for early termination (sometimes
called "separate charges") have occurred in a number of cases involving
automated data processing (ADP) procurements. In one case, a competitor
for a contract to acquire use of an ADP system for a 65-month period
proposed to include a provision under which the government would be
assessed a penalty if it failed to exercise its annual renewal options.
The Comptroller General noted that the penalty was clearly intended to
recapitalize the contractor for its investment based on the full life
of the system in the event the government did not continue using the
equipment. Accordingly, the Comptroller General concluded that the
penalty did not reasonably relate to the value of the equipment's use
during the fiscal year in which it would be levied. The penalty charges
would, therefore, not be based on a bona fide need of the current
fiscal year and their payment would violate statutory funding
restrictions. 56 Comp. Gen. 142 (1976), aff'd in part, 56 Comp.
Gen. 505 (1977). See also 56 Comp. Gen. 167 (1976); B-190659, Oct. 23,
1978.
One scheme, however, has been found to be legally sufficient to permit
the government to realize the cost savings that may accrue through
multiyear contracting. The plan approved by the Comptroller General in
48 Comp. Gen. 497, 501-02 (1969) provided for a 1-year rental contract
with an option to renew each subsequent year. If the government
completed the full rental period by continuing the contract on a year-
by-year basis, it would be entitled to have monthly rental credits
applied during the final months of the rental period. The Comptroller
General noted that:
"Under this arrangement the Government would not be obligated to
continue the rental beyond the fiscal year in which made, or beyond any
succeeding fiscal year, unless or until a purchase order is issued
expressly continuing such rental during the following fiscal year. In
effect, the company is proposing a 1 year rental contract with option
to renew. Also, under this proposal rental for any contract year would
not exceed the lowest rental otherwise obtainable from [the contractor]
for one fiscal year. We have no legal objection to this type of rental
plan for ADP equipment."
d. Contracts with No Financial Obligation:
Multiyear arrangements may be permissible, even without specific
statutory authority, if they are structured in such a way that the
agency, at time of contract award, incurs no financial obligation.
Without a financial obligation, the agency does not violate the
Antideficiency Act or the bona fide needs rule. In 63 Comp. Gen. 129
(1983), the Comptroller General considered the General Services
Administration proposal to use 3-year "Multiple Award Schedule" (MAS)
contracts for Federal Supply Schedule items. There was no commitment to
order any specific quantity of items. Rather, the commitment was for an
agency with a requirement for a scheduled item to order it from the
contractor if the contractor has offered the lowest price. If an agency
found the item elsewhere for less than the contract price, it was free
to procure the item from that other source without violating the
contract. Since entering into the MAS contracts did not require the
obligation of funds, there was no violation of statutory funding
restrictions. Obligations would occur only when agencies placed
specific orders, presumably using funds currently available to them at
the time. Another example is a 1935 decision, A-60589, July 12, 1935,
which concerned a requirements contract for supplies in which no
definite quantity was required to be purchased and under which no
financial obligation would be imposed on the government until an order
was placed. In order to retain the availability of the vendor and a
fixed price, the government agreed not to purchase the items elsewhere.
See also B-259274, May 22, 1996.
Also, contracts that do not require the expenditure of appropriated
funds are not subject to the same fiscal year strictures. E.g.,
10 Comp. Gen. 407 (1931) (no legal objection to multiyear leases or
contracts for the operation of concessions on federal property).
9. Specific Statutes Providing for Multiyear and Other Contracting
Authorities:
As we noted at the beginning of our discussion of the bona fide needs
rule, a fixed-term appropriation is available only "to complete
contracts properly made within that period of availability." See
31 U.S.C. § 1502(a). For multiyear contracts, "properly made" means
that the bona fide needs rule is satisfied if an agency has statutory
authority to obligate its fiscal year funds for a contract that crosses
fiscal years or is for multiple years. While these statutes are
sometimes referred to as exceptions to the bona fide needs statute, it
is clear that by using the phrase "contracts properly made," the bona
fide needs statute anticipates that Congress may authorize agencies to
obligate funds across fiscal years, either generally or for a
particular agency or program. In so doing, Congress defines the bona
fide need in the particular statute.
a. Severable Services Contracts:
There are several general authorities to contract across a fiscal year
or to enter into multiyear contracts. For example, 41 U.S.C. § 253l
authorizes the heads of executive agencies to enter into procurement
contracts for severable services for periods beginning in one fiscal
year and ending in the next fiscal year as long as the contracts do not
exceed 1 year. It permits agencies to obligate the total amount of the
contract to appropriations of the first fiscal year. Without specific
statutory authority such as this, such action would violate the bona
fide needs rule (see section B.5 of this chapter). Section 253l, in
effect, redefines for an agency that elects to contract under authority
of section 253l its bona fide need for the severable services for which
it is contracting. Related statutes extend this authority to various
legislative branch entities.[Footnote 434] Similarly, 10 U.S.C.
§ 2410a authorizes the military departments to use current fiscal year
appropriations to finance severable service contracts into the next
fiscal year for a total period not to exceed 1 year. GAO states in
B-259274, May 22, 1996, that "[t]he purpose of 10 U.S.C. § 2410a is to
overcome the bona fide needs rule," which is another way of saying that
Congress has provided the military departments with authority to
properly enter into a contract not to exceed 1 year that crosses fiscal
years. The statute specifically authorizes the departments to obligate
"[f]unds made available for a fiscal year …for the total amount of a
contract entered into" under section 2410a(a).
In B-259274, May 22, 1996, the Air Force took full advantage of this
authority to maximize efficient use of fiscal year appropriations. The
Air Force had intended to award a 12-month severable services contract
for vehicle maintenance beginning on September 1, 1994 (fiscal year
1994), and running until August 31, 1995 (fiscal year 1995). Using
10 U.S.C. § 2410a, the Air Force had planned to obligate the contract
against its fiscal year 1994 appropriation, until it learned that it
did not have sufficient unobligated amounts to cover the contract. To
avoid Antideficiency Act problems, but taking advantage of
section 2410a, the Air Force entered into a 4-month contract, beginning
September 1, 1994, and running until December 31, 1994, and included an
option to renew the contract at that time. The option, as in the Leiter
decision we discussed in section B.8, could be exercised only by the
Air Force, not the contractor, by affirmative written notification to
the contractor. GAO concluded that the Air Force's obligation was only
for 4 months, and under authority of section 2410a, it constituted a
bona fide need of fiscal year 1994 and was properly chargeable to
fiscal year 1994. Also, GAO found no Antideficiency Act violation. GAO
said that with the option to renew for 8 months, the Air Force had
incurred "a naked contractual obligation that carries with it no
financial exposure to the government."
b. 5-year Contract Authority:
(1) 10 U.S.C. §§ 2306b, 2306c:
In addition to the severable services contracting authority, Congress
has provided executive, legislative, and judicial entities substantial
authority for multiyear contracting for goods and services using annual
funds. The military departments are authorized by 10 U.S.C. §§ 2306b
and 2306c to enter into multiyear contracts for goods and services,
respectively, for periods of not more than 5 years if certain
administrative determinations are made. Section 2306b applies not only
to routine supplies, but also to the military departments acquisition
of weapon systems and items and services associated with such systems.
Section 2306c, enacted in response to the Wake Island decision (see
67 Comp. Gen. 190, 193 (1988)), applies to such services as
installation maintenance and support, maintenance or modification of
aircraft and other complex military equipment, specialized training,
and base services. Sections 2306b and 2306c permit the military
departments to obligate the entire amount of the 5-year contract to the
fiscal year appropriation current at the time of contract award, even
though the goods or services procured for the final 4 years of the
contract do not constitute needs of that fiscal year. Alternatively,
sections 2306b and 2306c permit the military departments to obligate
the amount for each of the 5 years against appropriations enacted for
each of those years. If funds are not made available for continuation
in a subsequent fiscal year, cancellation or termination costs may be
paid from appropriations originally available for the contract,
appropriations currently available for the same general purpose, or
appropriations made specifically for those payments. 10 U.S.C.
§§ 2306b(f) and 2306c(e). The authority contained in sections 2306b and
2306c is also available to the Coast Guard and the National Aeronautics
and Space Administration. 10 U.S.C. § 2303.
A multiyear contract entered into under authority of 10 U.S.C. §§ 2306b
or 2306c is binding on both parties for the full term of the contract
unless terminated as provided in the statute. See Beta Systems, Inc. v.
United States, 838 F.2d 1179, 1183 n.2 (Fed. Cir. 1988); Beta Systems,
Division of Velcon Filters, Inc.v. United States, 16 Cl. Ct. 219, 228
(1989).
A contract under sections 2306b or 2306c must relate to the bona fide
needs of the contract period as opposed to the need only of the first
fiscal year of the contract period. The statute does not authorize the
advance procurement of materials not needed during the 5-year term of
the contract. See 64 Comp. Gen. 163 (1984); B-215825-O.M., Nov. 7,
1984. See also 35 Comp. Gen. 220 (1955).
(2) 41 U.S.C. § 254c:
The Federal Acquisition Streamlining Act of 1994 (FASA) and related
statutes extended multiyear contracting authority with annual funds to
nonmilitary departments.[Footnote 435] FASA authorizes an executive
agency to enter into a multiyear contract for the acquisition of
property or services for more than 1, but not more than 5 years, if the
agency makes certain administrative determinations. 41 U.S.C. § 254c.
Related laws extend this authority to various legislative branch
agencies.[Footnote 436] Through FASA and the related laws, Congress has
relaxed the constraints of the bona fide needs rule by giving agencies
the flexibility to structure contracts to fund the obligations up
front, incrementally, or by using the standard bona fide needs rule
approach. B-277165, Jan. 10, 2000. To the extent an agency elects to
obligate a 5-year contract incrementally, it must also obligate
termination costs.
The enactment of FASA satisfied the GAO recommendation for the
enactment of legislation to authorize all federal agencies to engage in
limited multiyear procurement. See U.S. General Accounting Office,
Federal Agencies Should Be Given General Multiyear Contracting
Authority For Supplies and Services, PSAD-78-54 (Washington, D.C.:
Jan. 10, 1978). See also B-214545, Aug. 7, 1985 (comments on proposed
legislation).
c. Examples of Agency-Specific Multiyear Contracting Authorities:
An example of a specific authority is 41 U.S.C. § 11a, which authorizes
the Secretary of the Army "to incur obligations for fuel in sufficient
quantities to meet the requirements for one year without regard to the
current fiscal year," and to pay from appropriations either for the
fiscal year in which the obligation is incurred or for the ensuing
fiscal year. See 28 Comp. Gen. 614 (1949) (construing the term "fuel"
in that statute to include gasoline and other petroleum fuel products).
Another example is 31 U.S.C. § 1308, which permits charges for
telephone and other utility services for a time period beginning in one
fiscal year and ending in another to be charged against appropriations
current at the end of the covered time period. In addition, 42 U.S.C.
§ 2459a authorizes the National Aeronautics and Space Administration to
enter into contracts for certain "services provided during the fiscal
year following the fiscal year in which funds are appropriated."
A further example of statutory authority for multiyear contracting is
40 U.S.C. § 481(a)(3), which authorizes contracts for public utility
services for periods not exceeding 10 years. The purpose of the statute
is to enable the government to take advantage of discounts offered
under long-term contracts. 62 Comp. Gen. 569, 572 (1983); 35 Comp.
Gen. 220, 222-3 (1955). For purposes of applying this statute, the
nature of the product or service and not the nature of the provider is
the governing factor. 70 Comp. Gen. 44, 49 (1990). Thus, the statute
applies to obtaining utility services from other than a "traditional"
form of public utility. 62 Comp. Gen. 569. When entering into a
contract under 40 U.S.C. § 481(a)(3), the contracting agency needs to
have sufficient budget authority only to obligate the first years
costs. 62 Comp. Gen. at 572; 44 Comp. Gen. 683, 687-88 (1965).
Other examples of specific multiyear authority are 40 U.S.C. § 490(h),
which authorizes the General Services Administration (GSA) to enter
into leases for periods of up to 20 years; 40 U.S.C. § 757(c), which
authorizes GSA to use the Information Technology Fund for contracts up
to 5 years for information technology hardware, software, or services;
and 10 U.S.C. § 2828(d), under which the military departments may lease
family housing united in foreign countries for periods up to 10 years,
to be paid from annual appropriations.
10. Grants and Cooperative Agreements:
The bona fide needs rule applies to all federal government activities
carried out with appropriated funds, not just contracts, including
grants and cooperative agreements. B-289801, Dec. 30, 2002; 73 Comp.
Gen. 77, 78-79 (1994). Because of the fundamentally different purposes
of contracts and grants, a bona fide needs analysis in the context of
grants and cooperative agreements is different from an analysis in a
contract context. The purpose of a contract is to acquire goods or
services; the purpose of a grant is to provide financial assistance. It
is for that reason that we do not import into a grant analysis the
contract concepts of supplies and services, particularly severable and
nonseverable services. In the world of contracts, the analysis focuses,
necessarily, on the agency's need for the goods or services for which
it has contracted. In that context, these concepts have particular
relevance. The agency's "need" in the grant context, however, is to
make a grant in furtherance of the goals Congress hoped to achieve when
it enacted the grant-making authority. In this context, the agency's
"need" is to make a grant, and the grantee's use of grant funds has no
relevance in the assessment of agency needs.
For that reason, a bona fide needs analysis in the grant context
focuses on whether the grant was made during the period of availability
of the appropriation charged and furthers the authorized purpose of
program legislation. B-289801, Dec. 30, 2002. Thus, where a statute
authorizes grants to be made for up to 5 years to support childhood
education, an award of a 5-year grant fulfills a bona fide need in the
year that the grant is awarded even though the 5-year grant is funded
with a fiscal year appropriation. Id. However, where the "School
Improvement Programs" appropriation for fiscal year 2002 authorizes
grants only for "academic year 2002-2003," only grants providing
funding for the 2002-03 academic year are a bona fide need of the
fiscal year 2002 appropriation, notwithstanding that the program
statute authorizes grants for up to 4 years. Id.
The application of contract concepts to grants has not been without
doubt. Prior to our 2002 decision, the application of the severability
concept to grants and cooperative agreements had evolved over the
years. In cases where agencies did not have explicit multiyear award
authority, GAO used to treat grants and cooperative agreements in much
the same way that it treated service contracts with regard to
severability. In 64 Comp. Gen. 359 (1985), GAO held that since the
National Institutes of Health (NIH) grant program did not contemplate a
required outcome or product but, instead, sought to stimulate research
that would be needed year after year, NIH was required to use
appropriations available in the year that services were rendered to
fund the grants.
However, GAO significantly departed from that reasoning in a 1988
decision involving Small Business Administration (SBA) grants. In that
decision, GAO stated that when reviewing grants or cooperative
agreements in the context of the bona fide needs rule, the principle of
severability is irrelevant. B-229873, Nov. 29, 1988. GAO held that SBA
did not violate the bona fide needs rule when it used its current
appropriation on September 30, the last day of the fiscal year, to
award cooperative agreements to Small Business Development Centers that
would use the money in the next fiscal year. GAO concluded that, unlike
a contract, a cooperative agreement satisfies the bona fide need of the
agency--to financially assist the awardee--at the time SBA makes the
award to the Small Business Development Centers. Id. Thus, the dates on
which the Centers actually used the financial assistance are irrelevant
for purposes of assessing SBA's bona fide need. Id.
Building on the SBA decision, GAO held that the Department of Education
could use 1-year appropriations to award multiyear grants where the
legislation creating the grant program explicitly stated that the
grants could last multiple years and even in instances where the
legislation did not address the duration of the grants. B-289801,
Dec. 30, 2002. The determining factor is that the grants, at the time
of award, further the objective of the grant legislation. Thus, GAO
held that Education could use its fiscal year appropriations to fund a
4-year grant when the statute directed the agency to award grants "for
periods of not more than 4 years." See 20 U.S.C. § 6651(e)(2)(B)(i).
Furthermore, GAO determined that Education could use its fiscal year
appropriation to provide 5-and 2-year grants even though the statutes
creating the grants were silent with regard to grant duration. See
20 U.S.C. §§ 1070a-21 et seq. and Pub. L. No. 106-554, app. A,
114 Stat. 2763A-33-34 (Dec. 21, 2000). GAO reasoned that, in addition
to authorizing awards, the grant statutes conferred broad discretion on
Education to help ensure the accomplishment of grant objectives; and it
was within that discretion for Education to determine whether the grant
objectives would best be accomplished through the use of multiyear
grant awards. B-289801, Dec. 30, 2002.
C. Advance Payments:
1. The Statutory Prohibition:
Advance payments in general are prohibited by 31 U.S.C. § 3324, which
provides in part:
"(a) Except as provided in this section, a payment under a contract to
provide a service or deliver an article for the United States
Government may not be more than the value of the service already
provided or the article already delivered.
"(b) An advance of public money may be made only if it is authorized
by--
"(1) a specific appropriation or other law …."
The quoted portion of 31 U.S.C. § 3324 is derived from legislation
originally enacted in 1823 (3 Stat. 723).
The primary purpose of 31 U.S.C. § 3324 is to protect the government
against the risk of nonperformance--"to preclude the possibility of
loss to the Government in the event a contractor--after receipt of
payment--should fail to perform his contract or refuse or fail to
refund moneys advanced." 25 Comp. Gen. 834, 835 (1946). See also
65 Comp. Gen. 806, 809 (1986); B-256692, June 22, 1995; B-249006,
Apr. 6, 1993; B-180713, Apr. 10, 1974. Thus, in its simplest terms, the
statute prohibits the government from paying for goods before they have
been received or for services before they have been rendered. The Floyd
Acceptances, 74 U.S. (7 Wall.) 666, 682 (1868); 10 Op. Att'y Gen. 288,
301 (1862). The statute has been described as "so plain that
construction of it is unnecessary." 27 Comp. Dec. 885, 886 (1921).
While that may be true if section 3324 is viewed in isolation, the
situation today is nowhere near that simple. Advance payments are now
permissible in a number of situations. What we now have is a basic
statutory prohibition with a network of exceptions, both statutory and
nonstatutory, some of which are of major importance.
Exceptions to the advance payment prohibition may be found in
appropriation acts or in "other law." Examples of specific exceptions
are: 10 U.S.C. § 2396 (for compliance with foreign laws, rent in
foreign countries, tuition, pay, and supplies of armed forces of
friendly countries); 31 U.S.C. §§ 3324(b)(2) and (d)(2) (pay and
allowances of members of the armed forces at distant stations and
publications); and 19 U.S.C. §§ 2076-2077 and 2080 (Customs Service
payments). Numerous other statutory exceptions exist in various
contexts. A major exception, discussed in this chapter, section C.2,
permits advance and progress payments under procurement contracts in
certain situations.
Payments to or on behalf of federal civilian employees and members of
the uniformed service constitute another area in which exceptions
exist. Advances of travel and transportation allowances for federal
civilian employees are authorized by, e.g., 5 U.S.C. §§ 5705 and
5724(f). In addition, advances of allowances for basic housing, travel,
and transportation, to members of the uniformed services (for
themselves and in specified situations their dependents) are authorized
by several statutes, e.g., 37 U.S.C. §§ 403(a), 404(b)(1)(A), 404a(b),
405(a), 405a(a), 406(a)(3), and 409(b).
Prior to late 1990, the advance payment of salary, as opposed to the
various allowances discussed in the preceding paragraph, remained
prohibited, with a limited exception in 5 U.S.C. § 5522 for certain
emergency or "national interest" evacuations. This situation caused
occasional hardship for new employees resulting from delay in receiving
their first regular paycheck. In 58 Comp. Gen. 646 (1979), GAO had
concurred in a proposal to minimize this hardship by using imprest
funds to make partial salary payments to new federal employees early in
the week following the first week of employment, but cautioned that, in
view of 31 U.S.C. § 3324, no payments could be made before the work had
been performed. Section 107 of the Federal Employees Pay Comparability
Act of 1990[Footnote 437] added a new 5 U.S.C. § 5524a, authorizing
agencies to make advance payments of up to two pay periods of basic pay
to new employees.[Footnote 438]
Advance payment of salary remains prohibited in situations not covered
by statutory exceptions. Thus, GAO has advised that partial or
emergency salary payments can be made if a salary check is lost in the
mail or an electronic deposit goes astray, but must be subject to
"advance payment" safeguards similar to those discussed in 58 Comp.
Gen. 646. B-193867.2, Jan. 12, 1990 (nondecision letter). Similarly,
GAO concluded that the Nuclear Regulatory Commission could reschedule
its commissioners' pay days that fall on weekends or holidays to the
preceding workday, provided that payments made prior to the end of a
pay period did not include salary applicable to days remaining in the
pay period. B-237963, June 28, 1990.
Tuition payments may be paid in advance. The Government Employees
Training Act, 5 U.S.C. § 4109, provides general authority for advance
tuition payments for civilian employees. Also, 10 U.S.C.
§ 2396(a)(3) authorizes advance tuition payments for military
personnel. Prior to the enactment of these provisions, the Comptroller
General held that certain tuition payments could be made in advance.
For example, legislation authorizing the Coast Guard to provide
training for its personnel at private or state colleges and
universities and to pay certain expenses, including tuition, was viewed
as authorization by "other law" within the meaning of 31 U.S.C. § 3324.
Tuition could therefore be paid at the time of enrollment if required
by the educational institution. 41 Comp. Gen. 626 (1962). See also
B-70395, Oct. 30, 1947 (tuition payments by Public Health Service in
connection with research fellowships); B-56585, May 1, 1946 (tuition
payments by the former Veterans Administration in connection with
schooling of veterans).
Exceptions to the advance payment prohibition may appear in
appropriation acts as well as other legislation. The extent of the
authority conferred and its duration will of course be determined in
accordance with rules applicable to construing appropriations language.
Some may be limited by duration and some may be limited to a particular
agency. Also, the bona fide needs rule applies. In one case, a fiscal
year 1955 appropriation for an Indian education program included
authority for the Bureau of Indian Affairs to make certain payments in
advance. The Comptroller General held that the funds could be obligated
only for the bona fide needs of the period for which appropriated.
Therefore, the advance payment authority was limited to the portion of
the program to be furnished during fiscal year 1955 and could not
operate to extend the period of availability of the appropriation, that
is, could not be used to pay for portions of the program extending into
fiscal year 1956. 34 Comp. Gen. 432 (1955).[Footnote 439] This
principle would be equally applicable to advance payment authority
contained in permanent legislation.
If a given situation does not fall within any existing exception, the
statutory prohibition will apply. E.g., 65 Comp. Gen. 806 (1986)
(advance payment for published advertisement); 64 Comp. Gen. 710 (1985)
(advance payments under contract for office equipment maintenance found
to violate statute notwithstanding Federal Supply Schedule contract
language to the contrary).
The statutory prohibition on the advance payment of public funds,
31 U.S.C. § 3324, does not apply to grants. Since assistance awards are
made to assist authorized recipients and are not primarily for the
purpose of obtaining goods or services for the government, the policy
behind the advance payment prohibition has less force in the case of
assistance awards than in the case of procurement contracts.
Accordingly, it has been held that 31 U.S.C. § 3324 does not preclude
advance funding in authorized grant relationships. Unless restricted by
the program legislation of the applicable appropriation, the authority
to make grants is sufficient to satisfy the requirements of 31 U.S.C.
§ 3324. 60 Comp. Gen. 208 (1981); 59 Comp. Gen. 424 (1980); 41 Comp.
Gen. 394 (1961). As stated in 60 Comp. Gen. 209, "[t]he policy of
payment upon receipt of goods or services is simply inconsistent with
assistance relationships where the government does not receive anything
in the usual sense." These concepts are further explored in Chapter
10.[Footnote 440]
In 70 Comp. Gen. 701 (1991), the Comptroller General held that payments
by the Bureau of Indian Affairs for McDonald's gift certificates and
movie tickets, which would be redeemed at a later date for their full
value, would not violate 31 U.S.C. § 3324, provided that adequate
administrative safeguards for the control of the certificates and
tickets were maintained, the purchase of the certificates was in the
government's interest, and the certificates and tickets were readily
redeemable for cash.
2. Government Procurement Contracts:
a. Background:
First, it is important to define a few terms. We take our definitions
from the Federal Acquisition Regulation (FAR), 48 C.F.R. § 32.102. In
the context of government contracting, "advance payments" are payments
to a prime contractor "before, in anticipation of, and for the purpose
of complete performance under one or more contracts." Advance payments
are not measured by performance. "Progress payments" are payments made
to the contractor as work progresses on the contract. They may be based
on costs incurred by the contractor or a percentage or stage of
completion. "Partial payments" are payments "for accepted supplies and
services that are only a part of the contract requirements." Advance
payments and progress payments based on costs incurred are regarded as
forms of "contract financing." Partial payments and progress payments
based on a percentage or stage of completion are viewed simply as
payment methods.
The extent to which various forms of contract financing are permissible
under the advance payment statute was the subject of many early
decisions. In one early case, the advance payment statute was applied
to a question regarding the legality of government partial (progress)
payments for materials that had not been delivered. The Comptroller
General held that the statute does not necessarily require withholding
of payment under a contract until it has been entirely completed and
all deliverables have been provided to the government. The statute "was
not intended to prevent a partial payment in any case in which the
amount of such payment had been actually earned by the contractor and
the United States had received an equivalent therefor." 1 Comp.
Gen. 143, 145 (1921). The partial payments proposed in that case were
not in excess of the amount actually expended by the contractor in
performance of the contract, and because the contract provided that
title to all property on which payment was made vested in the
government, the government would receive the corresponding benefit.
Partial payments in advance of complete delivery were therefore
permissible.
In 20 Comp. Gen. 917 (1941), the Comptroller General approved a
proposed contract amendment to provide for partial payment of the
contract price prior to delivery to the government on the condition
that title to the materials would pass to the government at the time of
payment.
From these and similar cases, a rule evolved, applied both by the
accounting officers and by the Attorney General, that partial payments
for equipment or land made in advance of their delivery into the actual
possession of the United States would not violate the advance payment
statute if title therein had vested in the government at the time of
payment, or if the equipment or land was impressed with a valid lien in
favor of the United States in an amount at least equal to the payment.
28 Comp. Gen. 468 (1949); 20 Comp. Gen. 917 (1941).[Footnote 441]
Applying this rule, GAO has approved the payment of "earnest money"
under a contract for the sale of real estate to the government. The
arrangement was found sufficient to protect the government's interests
because the contract (a) vested equitable title in the government prior
to the vesting of legal title, which remained in the seller only to
secure payment of the purchase price, and (b) obligated the seller to
deliver title insurance commitment. 34 Comp. Gen. 659 (1955).
b. Contract Financing:
"Contract financing payment" is defined by the Federal Acquisition
Regulation (FAR) as an authorized government disbursement of moneys to
a contractor prior to acceptance of supplies or services by the
government. Such payments include: advance payments; performance-based
payments; commercial advance and interim payments; certain cost-based
progress payments; certain percentage-or stage-of-completion-based
progress payments; and interim payments under certain cost
reimbursement contracts. 48 C.F.R. § 32.001. "Advance payments" are
payments made to a prime contractor before, in anticipation of, and for
the purpose of complete performance under one or more contracts. Such
payments are not measured by performance. 48 C.F.R. § 32.102(a).
"Progress payments based on costs" are made on the basis of costs
incurred by the contractor as work progresses under the contract.
48 C.F.R. § 32.102(b). Progress payments based on percentage or stage
of completion are to be made under agency procedures that ensure that
payments are commensurate with the work accomplished that meets the
quality standards established under the contract. 48 C.F.R.
§ 32.102(e).
The major laws governing acquisition by most agencies of the executive
branch of government have for over a half century included provisions
relating to agencies making advance and progress payments under
contracts for supplies or services. See 10 U.S.C. § 2307 (Department of
Defense) and 41 U.S.C. § 255 (most civilian agencies). Both provisions
permit agencies to make advance, partial, progress, or other payments
under contracts for property or services that do not exceed the unpaid
contract price. Within their discretion, the agencies may include in
bid solicitations a provision limiting advance or progress payments to
small business concerns. 10 U.S.C. § 2307(a)(c); 41 U.S.C.
§ 255(a)(c). The Comptroller General views the authority conferred by
both these provisions to apply to both advertised and negotiated
procurements. B-158487, Apr. 4, 1966.
Both provisions provide that whenever practicable, payments are to be
made based on (1) performance, using quantifiable methods such as
delivery of acceptable items, work measurement, or statistical process
controls; (2) accomplishment of events defined in a program management
plan; or (3) other quantifiable measures of results. 10 U.S.C.
§ 2307(b); 41 U.S.C. § 255(b). Both provisions establish conditions for
progress payments for work in process and limit such payments to 80
percent of the contract price for contracts over $25,000. 10 U.S.C.
§ 2307(e); 41 U.S.C. § 255(e).
Both provisions provide that advance payments may be made only upon
adequate security and a determination by the agency head that such
would be in the public interest. Such security interest may be in the
form of a lien in favor of the government on the property contracted
for, on the balance in an account in which such payments are deposited,
and such of the property acquired for performance of the contract as
agreed to by the parties. The lien is to be paramount to all other
liens and effective immediately upon the first advance of funds without
filing, notice, or any other action by the government. 10 U.S.C.
§ 2307(d); 41 U.S.C. § 255(d). Advance payments for commercial items
may not exceed 15 percent of the contract price in advance of any
performance of work under the contract. 10 U.S.C. § 2307(f)(2);
41 U.S.C. § 255(f)(2). Section 2307(h) provides that if a contract
calls for advance, partial, progress, or other payments and provides
for title to property to vest in the United States, the title vests in
accordance with the terms of the contract, regardless of any security
interest in the property that is asserted before or after entering into
the contract.
Section 2307(g) of title 10 of the United States Code contains special
provisions relating to Navy contracts, for example, that progress
payments under contracts for repair, maintenance, or overhaul of a
naval vessel may not be less than 95 percent for small businesses and
90 percent for any other business.
Generally speaking, the government's preference is that the contractor
be able to perform using private financing, that is, the contractor's
own resources or financing obtained in the private market. 48 C.F.R.
§ 32.106. The advance payment authority of 10 U.S.C. § 2307 and
41 U.S.C. § 255 is a financing tool to be used sparingly. It is
considered the least preferred method of contract financing. 48 C.F.R.
§§ 32.106 and 32.402(b); 57 Comp. Gen. 89, 94 (1977). However, the need
for government assistance in various situations has long been
recognized. In this context, government contracting, while primarily
intended to serve the government's needs, is also designed to foster a
variety of social and economic objectives.
The FAR prescribes policies and procedures for agencies to apply in
using contract financing. 48 C.F.R. pt. 32. For example, subparts 32.1
and 32.2 provide guidance on the use of such authority when purchasing
noncommercial and commercial items, respectively. Subpart 32.4 provides
guidance on the use of advance payment authority when contracting for
noncommercial items. Subpart 32.5 provides guidance on the use of
progress payments based on cost, and subpart 32.10 provides guidance on
the use of performance-based payments for noncommercial items. Various
provisions of the FAR elaborate further on the statutory requirements
with respect to adequate security for advance payments. See, e.g.,
48 C.F.R. §§ 32.202-4, 32.409-3. Application for advance payments under
contracts to acquire noncommercial items may be made before or after
the award of the contract under 48 C.F.R. § 32.408.[Footnote 442]
Security requirements may vary to fit the circumstances of the
particular case. 48 C.F.R. § 32.409-3(d). In B-214446, Oct. 29, 1984,
GAO considered a proposal to certify payment before the services were
rendered. The check would be held in escrow under the government's
control until contract obligations were met, at which time it would be
released to the contractor. This arrangement was deemed adequate for
purposes of 41 U.S.C. § 255. In an earlier case, GAO declined approval
of a "purchase order draft" procedure, which called for the government
to send a blank check to the supplier upon placing an order. The
supplier was to fill in the check for the actual amount due, not to
exceed a sum specified on the check, thereby effecting immediate
payment and eliminating the need for the supplier to bill the
government. GAO concluded that an agency head could not reasonably find
that this plan would provide adequate security for the government.
B-158873, Apr. 27, 1966. In B-288013, Dec. 11, 2001, a case involving
whether the Department of Defense could make payment of membership fees
to a private fitness center at the beginning of each option year, GAO
found that permitting membership transfers did not provide adequate
security to the government to justify an advance payment.
Advance payments are also authorized under Public Law 85-804,[Footnote
443] 50 U.S.C. §§ 1431-1435. This law permits agencies designated by
the President to enter into contracts, or to modify or amend existing
contracts, and to make advance payments on those contracts, "without
regard to other provisions of law relating to the making, performance,
amendment, or modification of contracts, whenever [the President] deems
that such action would facilitate the national defense." 50 U.S.C.
§ 1431. Agencies authorized to utilize Public Law 85-804 are listed in
Executive Order No. 10789, Nov. 14, 1958, as amended (reprinted as note
following 50 U.S.C. § 1431). The FAR subpart on advance payments
includes provisions addressing Public Law 85-804, which applies only
during a declared national emergency. 50 U.S.C. § 1435.[Footnote 444]
Progress payments, where authorized, are made periodically based on
costs incurred, with the total not to exceed 80 percent of the total
contract price. 48 C.F.R. §§ 32.5011 and 52.232-16 (required contract
clause for fixed-price contracts). In an incrementally funded fixed-
price contract, GAO has construed "total contract price" as the price
for complete performance rather than the amount already allotted to the
contract, provided that payment may not exceed the total amount
allotted. 59 Comp. Gen. 526 (1980). See also 48 C.F.R. § 32.5013.
A key condition where cost-based progress payments are authorized is
the vesting in the government of title to work in process and certain
other property allocable to the contract. 48 C.F.R. §§ 32.503-14 and
52.232-16. These title provisions are an outgrowth of the case law
noted earlier in this section.
The nature of the government's interest under this title-vesting
provision has produced disagreement among the courts. One view is that
title means full, absolute title, which cannot be defeated by
subsequent liens. In re Reynolds Manufacturing Co., 68 B.R. 219 (Bankr.
W.D. Penn. 1986); In re Denalco Corp., 51 B.R. 77 (Bankr. N.D. Ill.
1985); In re Economy Cab and Tool Co., 47 B.R. 708 (Bankr. D. Minn.
1985); In re American Pouch Foods, Inc., 30 B.R. 1015 (Bankr. N.D. Ill.
1983), aff'd, 769 F.2d 1190 (7th Cir.), cert. denied, 475 U.S. 1082
(1985); McDonnell Douglas Corp. v. Director of Revenue, 945 S.W.2d 437
(Mo. 1997). See also In re Wincom Corp., 76 B.R. 1 (Bankr. D. Mass.
1987), reaching the same result. Another view is that the title-vesting
provision gives the government a security interest in the form of a
lien relative to progress payments identified with specific property,
paramount to the liens of general creditors. United States v.
Dominicci, 899 F. Supp. 42 (D.P.R. 1995); United States v. Hartec
Enterprises, Inc., 967 F.2d 130 (5th Cir. 1992); Fairchild Industries,
Inc. v. United States, 71 F.3d 868 (Fed. Cir. 1995); Marine Midland
Bank v. United States, 687 F.2d 395 (Ct. Cl. 1982), cert. denied, 460
U.S. 1037 (1983); Welco Industries, Inc. v. United States, 8 Cl. Ct.
303 (1985), aff'd mem., 790 F.2d 90 (Fed. Cir. 1986).[Footnote 445] The
American Pouch and Marine Midland decisions, while reaching different
conclusions, contain detailed discussions of the evolution of contract
financing in relation to the advance payment statute.
c. Payment:
Under a strict interpretation of 31 U.S.C. § 3324 standing alone,
payment could not be made until property being acquired was actually
received and accepted by the government. Thus, in one early case, a
supply contract provided for payment "for articles delivered and
accepted" and for the contractor to retain responsibility for the
supplies or materials until they were actually in the possession of a
government representative at their destination. The Comptroller General
held that payments on the basis of vouchers or invoices supported by
evidence of shipment only, without evidence of arrival of the supplies
at the destination and without assurance of receipt or acceptance by
the government, would be unauthorized. 20 Comp. Gen. 230 (1940).
As with the forms of contract financing discussed above, the enactment
of 10 U.S.C. § 2307 and 41 U.S.C. § 255 permitted more latitude in
payment procedures. In view of this statutory authority, the
Comptroller General, in B-158487, Apr. 4, 1966, approved an advance
payment procedure under which the General Services Administration (GSA)
would make payments on direct delivery vouchers prior to the receipt of
"receiving reports" from the consignees. The proposal was designed to
effect savings to the government by enabling GSA to take advantage of
prompt payment discounts.[Footnote 446] GAO's approval was conditioned
on compliance with the conditions specified in 41 U.S.C. § 255 that
advance payment be in the public interest and that adequate security be
provided.
GAO has since approved similar accelerated payment or "fast pay"
procedures for other agencies in B-155253, Mar. 20, 1968 (Defense
Department) and B-155253, Aug. 20, 1969 (Federal Aviation
Administration), and reaffirmed them for GSA in 60 Comp. Gen. 602
(1981). See also B-279620, Mar. 31, 1998, for an extensive discussion
of the background of, and adequate controls required for, fast pay.
The Federal Acquisition Regulation provides guidance in using fast
payment procedures in 48 C.F.R. subpt. 13.4. An agency may pay for
supplies based on the contractor's submission of an invoice under,
among others, the following conditions:
* The individual order does not exceed $25,000. Agencies have
discretionary authority to set higher limits for specified items or
activities.
* Geographical separation and lack of adequate communications
facilities between receiving and disbursing activities make it
impractical to make timely payment based on evidence of acceptance.
* Title vests in the government upon delivery to a post office or
common carrier or, if shipment is by means other than Postal Service or
common carrier, upon receipt by the government.
* The contractor agrees to repair, replace, or otherwise correct any
items not received at destination, damaged in transit, or not
conforming to purchase requirements.
The invoice is the contractor's representation that the goods have been
delivered to a post office, common carrier, or point of first receipt
by the government.
Accelerated payment procedures should have adequate internal controls.
GAO's recommended controls are outlined in 60 Comp. Gen. 602 (1981) and
B-205868, June 14, 1982. Fast pay procedures should be subject to
monetary ceilings (now required by the FAR), limited to contractors
which have an ongoing relationship with the agency, and reviewed
periodically to ensure that benefits outweigh costs. The agency must
keep records adequate to determine that the agency is getting what it
pays for. The system should permit the timely discovery of
discrepancies and require prompt follow-up action. GAO has also
recommended that an agency test the procedure before agencywide
implementation. B-205868, supra at 3.
It has also been held that the use of imprest or petty cash funds to
purchase supplies under C.O.D. [cash on delivery] procedures does not
violate 31 U.S.C. § 3324, even where payment is made prior to
examination of the shipment. 32 Comp. Gen. 563 (1953).[Footnote 447]
Another fast pay issue was discussed in B-203993-O.M., July 12, 1982,
in which GAO's General Counsel advised the GAO finance office that it
could pay the invoice amount, without the need for further
verification, if goods are shipped "f.o.b. [freight on board] origin"
and the difference between the estimated price in the purchase order
and the amount shown on the invoice is based solely on transportation
costs. Any discrepancy regarding the transportation costs could be
determined and adjusted through post-audit procedures under 31 U.S.C.
§ 3726. This would not apply to goods shipped "f.o.b. destination"
because transportation charges are included as part of the purchase
price.
As a general proposition, since fast pay procedures permit the agency
to dispense with prepayment voucher audits, GAO's approval of fast pay
procedures has been based on the assumption that the agency would
conduct 100 percent post-payment audits. In 67 Comp. Gen. 194 (1988),
GAO approved in concept a GSA proposal to combine fast pay procedures
with the use of statistical sampling in post-audit for utility
invoices. "We see no reason why these two techniques cannot be combined
in appropriate circumstances if they result in economies and adequately
protect the interests of the government." Id. at 199. However, GAO
found that the specific proposal did not provide adequate controls. GSA
modified its proposal, and the Comptroller General approved it in
68 Comp. Gen. 618 (1989).
3. Lease and Rental Agreements:
The advance payment statute has been consistently construed as
applicable to lease or rental agreements as well as purchases, and
applies with respect to both real and personal property. 18 Comp.
Gen. 839 (1939); 3 Comp. Gen. 542 (1924); B-188166, June 3, 1977. Thus,
when the government acquires land by leasing, payments must be made "in
arrears" unless the applicable appropriation act or other law provides
an exemption from 31 U.S.C. § 3324. 19 Comp. Gen. 758, 760 (1940). The
Federal Acquisition Regulation advance payment provisions do not apply
to rent. 48 C.F.R. § 32.404(a)(1).
In 57 Comp. Gen. 89 (1977), the Comptroller General held that a leasing
arrangement of telephone equipment called "tier pricing," under which
the government would be obligated to pay the contractor's entire
capital cost at the outset of the lease, would violate 31 U.S.C.
§ 3324. See also 58 Comp. Gen. 29 (1978).
The advance payment of annual rent on property leased from the National
Park Foundation, a statutorily created charitable nonprofit
organization, was found permissible in B-207215, Mar. 1, 1983, based on
the "unique status" of the lessor.
Certain long-term lease/rental agreements may present more complicated
problems in that they may involve not only 31 U.S.C. § 3324 but also
the Antideficiency Act, 31 U.S.C. § 1341. Since appropriations are made
only for the bona fide needs of a particular fiscal year, and since a
lease purporting to bind the government for more than one fiscal year
would necessarily include the needs of future years, such a lease would
be contrary to the Antideficiency Act prohibition against contracting
for any purpose in advance of appropriations made for such purpose.
Thus, a lease agreement for the rental of nitrogen gas cylinders for a
25-year period, the full rental price to be paid in the first year,
would violate both statutes. 37 Comp. Gen. 60 (1957). A contractual
arrangement on an annual basis with an option in the government to
renew from year to year was seen as the only way to accomplish the
desired objective. Id. at 62. See also 19 Comp. Gen. 758 (1940).
4. Publications:
Advance payment is authorized for "charges for a publication printed or
recorded in any way for the auditory or visual use of the agency."
31 U.S.C. § 3324(d)(2).
The original exemption for publications was enacted in 1930 (46 Stat.
580 (June 12, 1930)) and amended in 1961 (Pub. L. No. 87-91, 75 Stat.
211 (July 20, 1961)). It authorized advance payments for "subscriptions
or other charges for newspapers, magazines, periodicals, and other
publications for official use." Prior to 1974, a seemingly endless
stream of cases arose over the meaning of the terms "publications" or
"other publications" as used either in the general exemption or in
specific appropriation acts.[Footnote 448] Based on judicial precedent,
GAO construed the terms to mean publications in the customary and
commonly understood sense of the word, that is, books, pamphlets,
newspapers, periodicals, or prints. B-125979, June 14, 1957. The
exemption was also held to include other types of "visual" material
such as microfilm products, (41 Comp. Gen. 211 (1961)); 35-millimeter
slides (48 Comp. Gen. 784 (1969)); CD-Rom technical databases, online
databases that include technical articles updated daily, and a
newsletter (B-256692, June 22, 1995). However, the term "publications"
was held not to include items made to be heard rather than read, such
as phonograph records (21 Comp. Gen. 524 (1941); B-125979, June 14,
1957) or tape-recorded material (46 Comp. Gen. 394 (1966); B-137516,
Oct. 28, 1958). In 35 Comp. Gen. 404 (1956), the use of advance
payments for the procurement of books through "book club" facilities
was held permissible.[Footnote 449]
In 1974, Congress resolved the problems over the interpretation of
"other publications" by enacting legislation to codify some of the GAO
decisions and modify others, by defining "other publications" as
including "any publication printed, microfilmed, photocopied, or
magnetically or otherwise recorded for auditory or visual usage" (Pub.
L. No. 93-534, 88 Stat. 1731 (Dec. 22, 1974)). This was condensed into
the present version of 31 U.S.C. § 3324(d)(2) when Title 31 was
recodified in 1982.
A 1978 decision considered the question of whether a microfilm library
could be acquired under a lease/rental arrangement or whether the
advance payments were authorized only where the government actually
purchased the library. The Comptroller General concluded that in the
absence of statutory language or evidence of legislative intent to the
contrary, there is no meaningful difference between the purchase and
rental of publications needed by the government, and that the rental or
leasing of a microfilm library for official government use fell within
the purview of the publications exemption. 57 Comp. Gen. 583 (1978).
However, advance payments for items of equipment necessary for use in
conjunction with a microfilm library are still prohibited. B-188166,
June 3, 1977. (The cited decision, although not clear from the text
itself, dealt with reader/printers.)
More recent decisions have construed the publications exemption found
in 31 U.S.C. § 3324(d)(2) as permitting advance payment for coupons to
be used for the purchase of articles from medical journals and
redeemable for cash if unused (67 Comp. Gen. 491 (1988)); verification
reports of physicians' board certifications (B-231673, Aug. 8, 1988);
and hospital evaluation reports based on data submitted by
participating government hospitals and including, as part of the
subscription price, a laboratory kit for use in obtaining the data
required for the reports, the kit being regarded as "a part of the
publication process" (B-210719, Dec. 23, 1983).
In B-256692, June 22, 1995, the Comptroller General held that the
Centers for Disease Control and Prevention (CDC) could not, under
31 U.S.C. § 3324(d)(2), make an advance payment for telephonic support
services offered as part of a technical support package for computer
software products. The telephonic support did not constitute a
publication under section 3324(d)(2), and because it had significant
value to the CDC independent of the package, it could not be classified
as so necessary to the other publications in the package that advance
payment authority would be available.
The Federal Acquisition Regulation advance payment provisions do not
apply to subscriptions to publications. 48 C.F.R. § 32.404(a)(6).
5. Other Governmental Entities:
The Comptroller General has not applied the advance payment prohibition
to payments to other federal agencies. As noted previously, the primary
purpose of the prohibition is to preclude the possibility of loss in
the event a contractor, after receipt of payment, should fail to
perform and fail or refuse to refund the money to the United States.
The danger of such a loss is minimized when the contractor is another
government agency. Thus, 31 U.S.C. § 3324 does not prohibit advance
payment of post office box rentals. 25 Comp. Gen. 834 (1946). Also, the
Economy Act, 31 U.S.C. § 1535, expressly authorizes advance payments
for transactions within its scope.
GAO has applied the same rationale to exempt state and local
governments from the advance payment prohibition. E.g., 57 Comp.
Gen. 399 (1978) (no objection to advance payment of rent under lease of
land from state of Idaho). This exception, however, applies only where
the state is furnishing noncommercial services reasonably available
only from the state. 39 Comp. Gen. 285 (1959); B-250935, Oct. 12, 1993
(sewer service charge); B-118846, Mar. 29, 1954 (expenses of state
water commissioner administering Indian irrigation project pursuant to
court order); B-109485, July 22, 1952 (repair, operation, and
maintenance of roads in conjunction with permanent transfer of federal
roads to county); B-65821, May 29, 1947, and B-34946, June 9, 1943
(state court fees and other items of expense required to litigate in
state courts in compliance with the requirements of state law);
B-36099, Aug. 14, 1943 (lease of state lands); B-35670, July 19, 1943
(state forest fire prevention and suppression services).
Conversely, where a state provides the federal government with services
that are freely and readily available in the commercial market, the
statutory advance payment restrictions applicable to private
contractors govern. 58 Comp. Gen. 29 (1978) (telephone services).
In B-207215, Mar. 1, 1983, GAO advised the National Park Service that
it could make advance payments of annual rent on property leased from
the National Park Foundation. The National Park Foundation is a
charitable nonprofit organization created by statute to accept and
administer gifts to the National Park Service, and its board of
directors includes the Secretary of the Interior and the Director of
the Park Service. GAO concluded that the Foundation's "unique status
virtually assures that there is no threat of loss to the Government."
Even though technically the Foundation is neither a state nor a federal
agency, it is, in effect, tantamount to one for advance payment
purposes.
The exception recognized in the case of state and local governments has
not been extended to public utilities. 42 Comp. Gen. 659 (1963)
(telephone services). See also 27 Comp. Dec. 885 (1921). Thus, a
government agency cannot use a utility "budget plan" which would
provide for level monthly payments in a predetermined amount throughout
the year. B-237127, Dec. 12, 1989 (nondecision letter). In subscribing
to a cable service, the National Park Service could only make payment
after the service has been rendered. B-254295, Nov. 24, 1993.
Similarly, monthly charges under a utility service contract for cable
television service to a Naval hospital may not be paid in advance.
B-237789, Dec. 10, 1990. The Federal Aviation Administration (FAA)
violated 31 U.S.C. § 3324 by making an advance payment to Pacific Gas
and Electric Company for connecting electrical utility service to a
remote FAA facility because it failed to obtain "adequate security" as
required by 41 U.S.C. § 255 or to follow Federal Acquisition Regulation
advance payment requirements. B-260063, June 30, 1995.
D. Disposition of Appropriation Balances[Footnote 450]
1. Terminology:
Annual appropriations that are unobligated at the end of the fiscal
year for which they were appropriated are said to "expire" for
obligational purposes.[Footnote 451] In other words, they cease to be
available for the purposes of incurring and recording new obligations.
The same principle applies to multiple year appropriations as of the
end of the last fiscal year for which they were provided. For purposes
of this discussion, annual and multiple year appropriations are
referred to cumulatively as "fixed appropriations." 31 U.S.C.
§ 1551(a)(3).
The portion of an appropriation that has not actually been spent at the
end of the fiscal year (or other definite period of availability) is
called the "unexpended balance."[Footnote 452] It consists of two
components--the obligated balance and the unobligated balance.
The obligated balance is defined as "the amount of unliquidated
obligations applicable to the appropriation less amounts collectible as
repayments to the appropriation." 31 U.S.C. § 551(a)(1). Restated,
obligated balance means the amount of undisbursed funds remaining in an
appropriation against which definite obligations have been recorded.
The unobligated balance is "the difference between the obligated
balance and the total unexpended balance." Id. at § 1551(a)(2). It
represents that portion of the unexpended balance unencumbered by
obligations recorded under 31 U.S.C. § 1501.
2. Evolution of the Law:
Congressional treatment of unexpended balances has changed a number of
times over the years, most recently in November 1990. Some knowledge of
the past is useful in understanding the pre-1991 decisions and in
determining which portions of them remain applicable.
Prior to 1949, unexpended balances of annual appropriations retained
their fiscal year identity for two full fiscal years following
expiration, after which time the remaining undisbursed balance had to
be covered into the surplus fund of the Treasury. The agency involved
no longer had access to the balance for any purpose, and subsequent
claims against the appropriation had to be settled by GAO. E.g.,
B-24565, Apr. 2, 1942; B-18740, July 23, 1941. The appropriation was
said to "lapse" when it was covered into the surplus fund of the
Treasury. See 24 Comp. Gen. 942, 945 (1945); 21 Comp. Gen. 46 (1941).
The problem with this arrangement was that, in view of article I,
section 9 of the United States Constitution, once the money was covered
into the Treasury, another appropriation was needed to get it back out.
E.g., 23 Comp. Gen. 689, 694 (1944). This was true even for simple,
undisputed claims. Congress tried various devices to pay claims against
lapsed appropriations--reappropriation of lapsed funds, definite and
indefinite appropriations for the payment of claims under $500, and
appropriations for specific claims--but none proved entirely
satisfactory.
In 1949, Congress enacted the Surplus Fund-Certified Claims Act (ch.
299, 63 Stat. 407 (July 6, 1949)), intended to permit payment of claims
against lapsed appropriations without the need for specific
appropriations or reappropriations. The statute provided for the
transfer of unexpended balances remaining after 2 years to a Treasury
account designated "Payment of Certified Claims." Funds in this account
remained available until expended for the payment of claims certified
by the Comptroller General to be lawfully due and chargeable to the
respective balances in the account. See B-61937, Sept. 17, 1952. Like
the pre-1949 system, this arrangement too proved unsatisfactory in that
all claims payable from the certified claims account, undisputed
invoices included, still had to come through GAO.
The system changed again in 1956 (Pub. L. No. 84-798, 70 Stat. 647
(July 25, 1956)), on the recommendation of the second Hoover
Commission.[Footnote 453] One of the significant changes made by the
1956 law was to pass the direct responsibility for making payments from
lapsed appropriations from GAO to the cognizant agencies. For the first
time, agencies could dispose of clearly valid claims against prior year
appropriations without the need for any action by either Congress or
GAO. The statutory evolution is discussed in more detail in B-179708,
Nov. 20, 1973.
The 1956 law, which was to remain in effect until late 1990, prescribed
different procedures for obligated and unobligated balances. The
obligated balance retained its fiscal year identity for two full fiscal
years following the expiration date, at which time any remaining
obligated but unexpended balance was transferred to a consolidated
successor account, where it was merged with the obligated balances of
all other appropriation accounts of that department or agency for the
same general purpose. These successor accounts were known as "M"
accounts. Funds in an "M" account were available indefinitely to
liquidate obligations properly incurred against any of the
appropriations from which the account was derived. Upon merger in the
"M" account, the obligated but unexpended balances of all annual and
multiple year appropriations of the agency lost their fiscal year
identity for expenditure purposes.
With fiscal year identity no longer a concern, there was no need to
relate a payment from the "M" account to the specific balance that had
been transferred from the particular year in which the obligation had
occurred. Thus, as a practical matter, once an appropriation balance
reached the "M" account, the potential for violations of the
Antideficiency Act became highly remote. B-179708, June 24, 1975. An
Antideficiency Act violation could occur only if identifiable
obligations exceeded the entire "M" account balance plus the aggregate
of all funds potentially restorable from withdrawn unobligated
balances.
The unobligated balances of fixed-year appropriations were "withdrawn"
upon expiration of the period of obligational availability and were
returned to the general fund of the Treasury. A withdrawn unobligated
balance retained its fiscal year identity on the books of the Treasury
for two fiscal years, during which time it was called "surplus
authority." At the end of the 2-year period, the balances were
transferred to "merged surplus" accounts, at which point they lost
their fiscal year identity.
Withdrawn unobligated balances could be restored to adjust previously
recorded obligations where the amount originally recorded proved to be
less than the actual obligation, or to liquidate obligations that arose
but were not formally recorded prior to the appropriations expiration,
provided that the obligations met one of the criteria specified in
31 U.S.C. § 1501(a) and were otherwise valid. Some cases discussing
this restoration authority are 68 Comp. Gen. 600 (1989); 63 Comp.
Gen. 525 (1984); B-236940, Oct. 17, 1989; B-232010, Mar. 23, 1989;
B-164031(3).150, Sept. 5, 1979.
From the perspective of congressional control, one weakness of the
system described above was that it permitted the accumulation of large
amounts in "M" accounts. While agencies were supposed to review their
"M" accounts annually and return any excess to the Treasury, this was
not always done. This situation, in conjunction with the previously
discussed rules on the funding of contract modifications, created the
potential for large transactions with minimal congressional oversight.
For example, a 1989 GAO report discussed an Air Force proposal,
completely legal under existing legislation, to use over $1 billion
from expired accounts to fund B-1B contract modifications. U.S. General
Accounting Office, Strategic Bombers: B-1B Programs Use of Expired
Appropriations, GAO/NSIAD-89-209 (Washington, D.C.: Oct. 5, 1989).
Congressional concern mounted during 1990, and the treatment of expired
appropriations was changed once again by section 1405 of the National
Defense Authorization Act for Fiscal Year 1991, Pub. L. No. 101-510,
104 Stat. 1485, 1675 (Nov. 5, 1990). Section 1405 applies to both
military and civilian agencies, and includes transition provisions that
dealt with the then-existing merged surplus and "M" accounts.
Unrestored merged surplus authority was canceled as of December 5,
1990, with no further restorations authorized after that date. The "M"
accounts were phased out over a 3-year period, with any remaining "M"
account balances canceled on September 30, 1993.
3. Expired Appropriation Accounts:
The current account closing procedures are set forth in 31 U.S.C.
§§ 1551-1558.[Footnote 454] Two of the key provisions provide:
"On September 30th of the 5th fiscal year after the period of
availability for obligation of a fixed appropriation account ends, the
account shall be closed and any remaining balance (whether obligated or
unobligated) in the account shall be canceled and thereafter shall not
be available for obligation or expenditure for any purpose."
31 U.S.C. § 1552(a).
"After the end of the period of availability for obligation of a fixed
appropriation account and before the closing of that account under
section 1552(a) of this title, the account shall retain its fiscal-year
identity and remain available for recording, adjusting, and liquidating
obligations properly chargeable to that account."
31 U.S.C. § 1553(a).
Just as under the prior system, a 1-year or multiple year appropriation
expires on the last day of its period of availability and is no longer
available to incur and record new obligations. However, the unobligated
balance no longer reverts immediately to the general fund of the
Treasury.
Upon expiration of a fixed appropriation, the obligated and unobligated
balances retain their fiscal year identity in an "expired account" for
that appropriation for an additional five fiscal years. As a practical
matter, agencies must maintain separate obligated and unobligated
balances within the expired account as part of their internal financial
management systems in order to insure compliance with the
Antideficiency Act. Also relevant in this connection is 31 U.S.C.
§1554(a), under which applicable audit requirements, limitations on
obligations, and reporting requirements remain applicable to the
expired account.
During the 5-year period, the expired account balance may be used to
liquidate obligations properly chargeable to the account prior to its
expiration.[Footnote 455] The expired account balance also remains
available to make legitimate obligation adjustments, that is, to record
previously unrecorded obligations and to make upward adjustments in
previously under recorded obligations. For example, Congress
appropriated funds to provide education benefits to veterans under the
so-called "GI bill," codified at 38 U.S.C. § 1662. Prior to the
expiration of the appropriation, the Veterans Administration (VA)
denied the benefits to certain Vietnam era veterans. The denial was
appealed to the courts. The court determined that certain veterans may
have been improperly denied benefits and ordered VA to entertain new
applications and reconsider the eligibility of veterans to benefits. VA
appealed the court order. Prior to a final resolution of the issue, the
appropriation expired. GAO determined that, consistent with 31 U.S.C.
§ 1502(b),[Footnote 456] the unobligated balance of VA's expired
appropriation was available to pay benefits to veterans who filed
applications prior to the expiration of the appropriation or who VA
determined were improperly denied education benefits. 70 Comp. Gen. 225
(1991). See also B-265901, Oct. 14, 1997.
Unobligated balances in the expired account cannot be used to satisfy
an obligation properly chargeable to current appropriations (50 Comp.
Gen. 863 (1971)), or to any other expired account.[Footnote 457] The
authority of 31 U.S.C. § 1553(a) is intended to permit agencies to
adjust their accounts to more accurately reflect obligations and
liabilities actually incurred during the period of availability.
63 Comp. Gen. 525, 528 (1984). However, arbitrary deobligation in
reliance upon the authority to make subsequent adjustments is not
consistent with the statutory purpose. B-179708, July 10, 1975.
During the 5-year period, the potential for an Antideficiency Act
violation exists if the amount of adjustments to obligations chargeable
to the expired account during a year exceeds the adjusted balance
available in the expired account against which to charge such
adjustments. Should this happen, the excess can be liquidated only
pursuant to a supplemental or deficiency appropriation or other
congressional action. 73 Comp. Gen. 338, 342 (1994); 71 Comp. Gen. 502
(1992).[Footnote 458]
4. Closed Appropriation Accounts:
At the end of the 5-year period, the account is closed. Any remaining
unexpended balances, both obligated and unobligated, are canceled,
returned to the general fund of the Treasury,[Footnote 459] and are
thereafter no longer available for any purpose.
Once an account has been closed:
"[O]bligations and adjustments to obligations that would have been
properly chargeable to that account, both as to purpose and in amount,
before closing and that are not otherwise chargeable to any current
appropriation account of the agency may be charged to any current
appropriation account of the agency available for the same purpose."
31 U.S.C. § 1553(b)(1).
This is a major exception to the rule previously discussed that current
appropriations are not available to satisfy obligations properly
chargeable to a prior year. For example, the Office of Surface Mining
(OSM) entered into an Economy Act agreement with the Department of
Energy (DOE) for services that DOE provided through a contractor. DOE
funded the service from no-year accounts. The final audit of the
contractor that was performed after the OSM account obligated by the
Economy Act agreement closed revealed that DOE owed the contractor an
additional amount for performing services for OSM. DOE asked whether
OSM was liable to reimburse it for the additional amount under the
Economy Act. GAO replied that the account closing law required OSM to
reimburse DOE the additional amounts using current appropriations
available for the same general purpose as the closed account. B-260993,
June 26, 1996. Compare B-257825, Mar. 15, 1995 (Treasury properly
refused to restore amount of canceled "M" account to Federal Aviation
Administration (FAA) appropriation in order for FAA to reimburse the
Federal Highway Administration (FHWA) for services provided that were
properly chargeable to the canceled account. This was true
notwithstanding the fact that FHWA inadvertently neglected to bill for
the services at the time they were rendered. GAO pointed out that the
law provided that FAA reimbursement to FHWA was chargeable to current
appropriations).
The authority to use current year appropriations to pay obligations
chargeable to closed accounts is not unlimited, however. The cumulative
total of old obligations payable from current appropriations may not
exceed the lesser of 1 percent of the current appropriation or the
remaining balance (whether obligated or unobligated) canceled when the
appropriation account is closed. 31 U.S.C. § 1553(b). In view of the
limitations on the amount of current appropriations that may be used to
pay obligations properly charged to closed accounts, agencies must
maintain records of the appropriation balances canceled beyond the end
of the 5-year period and adjust these balances as subsequently
presented obligations are liquidated. 73 Comp. Gen. 338, 341-342
(1994). Otherwise, there is no way for agencies to ensure that payments
do not exceed the original appropriation.
Because of the need to keep accurate records, agencies may, in limited
circumstances, adjust their records pertaining to closed appropriation
accounts. For example, if an agency determines that the balances
reflected in the records of a closed account are erroneous because of
reporting and clerical errors, it may adjust its records if it
discovers that a disbursement actually made before the appropriation
account closed and properly chargeable to an obligation incurred during
the appropriations period of availability was either not recorded at
all or was charged to the wrong appropriation.
Neither of these types of adjustments constitutes charging obligations
against or disbursing funds from closed appropriation accounts. They
represent corrections of the accounting records. Since the
appropriations, in effect, no longer exist, these adjustments affect
only the agency's records. They have no effect on the availability or
use of obligated or unobligated balances formerly contained in those
appropriation accounts. U.S. General Accounting Office, Canceled DOD
Appropriations: $615 Million of Illegal or Otherwise Improper
Adjustments, GAO-01-697 (Washington, D.C.: July 26, 2001) at 7.
However, adjustments may not be made to the records of the balances of
closed accounts when the initial disbursements:
1. occurred after the appropriation being charged has already been
closed,
2. occurred before the appropriation being charged was enacted, or:
3. were charged to the correct appropriation in the first place and no
adjustment is necessary.
Id. at 9-13.
5. Exemptions from the Account Closing Procedures:
Congress may, by specific legislation, exempt an appropriation from the
above rules and may otherwise fix the period of its availability for
expenditure. 31 U.S.C. §§ 1551(b), 1557. An agency should consider
seeking an exemption if it administers a program that by its nature
requires disbursements beyond the 5-year period. One form of exemption
simply preserves the availability for disbursement of obligated funds.
For example, section 511 of the Foreign Operations Appropriation Act,
2001, authorized that the 2-year appropriation made for "Assistance for
Eastern Europe and the Baltic States" would remain available until
expended if properly obligated before the appropriation would otherwise
have expired on September 30, 2002.[Footnote 460]
Section 1558(a) of Title 31 of the United States Code provides an
automatic stay to the closing of an appropriation account under section
1552 when a protest is filed against the solicitation for, proposed
award of, or award of a contract. The appropriation that would have
funded the contract remains available for obligation for 100 days after
a final ruling on the protest.
To the extent of its applicability, the statutory scheme found at
31 U.S.C. §§ 1551-1558 provides the exclusive method for the payment of
obligations chargeable to expired appropriations. B-101860, Dec. 5,
1963. Thus, there is generally no authority to transfer appropriations
to some form of trust fund or working fund for the purpose of
preserving their availability. Id. See also 31 U.S.C. §1532, which
prohibits the transfer of appropriations to a working fund without
statutory authority. In B-288142, Sept. 6, 2001, customer agencies made
advances from their fixed period appropriations to the Library of
Congress for deposit to the credit of the no-year FEDLINK revolving
fund. The advances were used by the Library of Congress to pay the cost
of service provided to the agencies by Library of Congress contractors.
Once the service was provided and the cost determined, the Library
discovered that some agencies had advanced amounts in excess of the
cost of the service ordered. We determined that the Library of Congress
lacked authority to apply the excess amount to pay for orders for
service placed after the expiration of the fixed period appropriation
charged with the advance.
The rules for certain legislative branch appropriations are a bit
different. The provisions of 31 U.S.C. §§ 1551-1558 do not apply to
appropriations to be disbursed by the Secretary of the Senate, the
Clerk of the House of Representatives, and the District of Columbia.
31 U.S.C. § 1551(c). For appropriations of the House and Senate,
unobligated balances more than 2 years old cannot be used short of an
act of Congress. Instead, obligations chargeable to appropriations that
have been expired for more than 2 years "shall be liquidated from any
appropriations for the same general purpose, which, at the time of
payment, are available for disbursement." 2 U.S.C. § 102a. See
B-213771.3, Sept. 17, 1986. There is no comparable account closing
procedure currently in effect for the appropriations made to the
District of Columbia from its local revenues.
6. No-Year Appropriations:
There is one important statutory restriction on the availability of no-
year funds. Under 31 U.S.C. § 1555, a no-year account is to be closed
if (a) the agency head or the President determines that the purposes
for which theappropriation was made have been fulfilled and (b) no
disbursement has been made against the appropriation for two
consecutive fiscal years.[Footnote 461] The purpose of section 1555 is
to permit the closing of inactive appropriations. 39 Comp. Gen. 244
(1959); B-271607, June 3, 1996; B-182101, Oct. 16, 1974.
Any attempt by an agency to close a no-year account that does not
satisfy the requirements of section 1555 is without legal effect and
the funds remain available for obligation. B-256765, Jan. 19, 1995. An
interesting example of a misplaced attempt to close a permanent
appropriation involved the check forgery insurance fund. The check
forgery insurance fund was established in 1941 to authorize the
Treasury to issue and pay a replacement check to payees whose original
check was lost or stolen through no fault of their own and paid on a
forged endorsement. 31 U.S.C. § 3343 (1994). In the absence of the
fund, the payee would have had to wait for the government to recover
the amount paid on the forged endorsement in order to issue a
replacement check to the payee. The fund was financed by appropriations
made to the fund and recoveries of amounts paid on forged endorsements
(reclamations). 31 U.S.C. §§ 3343(a) and (d) (1994). In 1992, the
Treasury's Financial Management Service (FMS) closed the fund asserting
that it was authorized to do so by 31 U.S.C. § 1555. FMS claimed that
the fund was inadequate and obsolete and had been impliedly repealed by
the Competitive Equality Banking Act.
In response to a request for an advance decision from the Department of
the Navy, GAO determined that Treasury lacked the authority to close
the fund. 72 Comp. Gen. 295 (1993). First, GAO determined that nothing
in the language of the Competitive Equality Banking Act or its
legislative history reflected the intent by Congress to eliminate the
fund. Next, GAO determined that the fund was the only appropriation
available to pay forged check claims. While the volume of forged check
claims may have become large and exceeded the amount recovered by
reclamation that was available to cover issuance of the replacement
check, the remedy was for Treasury to request increased funding, not to
cancel the only appropriation that was available to make such payments.
Finally, GAO determined that the purpose for which the fund was
established continued to exist and that Treasury lacked sufficient
justification to close the fund under 31 U.S.C. § 1555. Thus, GAO
determined that Treasury should restore the balance to the fund and
charge all check forgery claims to the fund. Once the fund balance was
restored GAO recommended that Treasury request sufficient
appropriations or a permanent indefinite appropriation to pay claims.
The law was amended in 1995 to make a permanent indefinite
appropriation to the fund of amounts necessary to issue and pay
replacement checks to payees whose original check was paid on a forged
endorsement. 31 U.S.C. § 3343(a).
As with fixed appropriations, obligations attributable to the canceled
balance of a no-year account may be paid from current appropriations
for the same purpose, and subject to the same 1 percent limitation.
31 U.S.C. § 1553(b).
Like a no-year appropriation, a permanent indefinite appropriation
(e.g., 31 U.S.C. §1304) is not subject to fiscal year limitations.
However, 31 U.S.C. § 1555 does not apply to permanent indefinite
appropriations since the "remaining balance" by definition is the
general fund of the Treasury. Cf. 11 Comp. Dec. 400 (1905) (applying a
prior version of the account closing law to a permanent indefinite
appropriation).
7. Repayments and Deobligations:
a. Repayments:
To prevent the overstatement of obligated balances, the term "obligated
balance" is defined in 31 U.S.C. § 1551(a)(1), for purposes of
31 U.S.C. §§ 1551-1557, as the amount of unliquidated obligations
applicable to the appropriation, "less amounts collectible as
repayments to the appropriation." Once an account has been closed
pursuant to either 31 U.S.C. § 1552(a) or 31 U.S.C. § 1555, collections
received after closing, which could have been credited to the
appropriation account if received prior to closing, must be deposited
in the Treasury as miscellaneous receipts. 31 U.S.C. § 1552(b).
The term "repayment" is a general term referring to moneys received by
a federal agency that are authorized to be credited to the receiving
agency's appropriation and are not required to be deposited in the
Treasury as miscellaneous receipts. Treasury Department-General
Accounting Office Joint Regulation No. 1, Sept. 22, 1950, reprinted at
30 Comp. Gen. 595 (1950). Section 2 of Joint Regulation No. 1 divides
repayments into two subcategories: (1) reimbursements for services or
items provided outside parties that the agency is authorized by
independent statutory authority to retain and disburse for an
authorized purpose[Footnote 462] and (2) refunds of overpayments and
erroneous payments that the agency is authorized to retain and use even
in the absence of independent statutory authority.[Footnote 463]
Generally, in the absence of some other authority, when the
appropriation to be credited has expired, reimbursements must be
credited to the expired account and not to the current account. For
example, reimbursements for items or services provided another agency
under the Economy Act[Footnote 464] are credited to the fiscal year
appropriation that earned them regardless of when the reimbursements
are collected. If the appropriation that earned the reimbursement
remains available for obligation at the time of collection, there is no
distinction between a credit to the year earned or to the year
collected. If, however, the appropriation that earned the reimbursement
has expired for obligation purposes at the time of collection, then
reimbursement can be credited only to the expired account. B-194711,
June 23, 1980; B-179708, Dec. 1, 1975. After closing, the reimbursement
would have to go to miscellaneous receipts.
The same treatment is accorded to refunds.[Footnote 465] For example,
recoveries of amounts paid under a fraudulent contract constitute
refunds that may be deposited to the credit of the appropriations
charged with the payments until the appropriation account is closed.
Once the account is closed, recoveries should be deposited to the
general fund of the Treasury to the credit of the appropriate receipt
account. B-257905, Dec. 26, 1995; B-217913.2, Feb. 19, 1993. Certain
exceptions to these rules have been recognized in the treatment of de
minimis amounts. For example, we did not object to an agency accepting
a credit of less than $100 from a vendor against the amount owed on a
current year obligation to offset an overpayment made to the vendor on
a prior year obligation without adjusting the accounts. 72 Comp.
Gen. 63 (1992). See also B-217913.3, June 24, 1994.
b. Deobligations:
The amount of an obligation that is recorded against appropriations in
excess of the amount necessary to pay the obligation is accounted for
as follows: If the agency deobligated the appropriation before the
expiration of the period of availability, the deobligated amount is
available to incur new obligations. If an agency deobligates the
appropriation after the expiration of the period of availability, the
deobligated amount is not available to incur a new obligation, but is
available to cover appropriate adjustments to obligations in the
expired account. B-286929, Apr. 25, 2001. See also 52 Comp. Gen. 179
(1972).
Deobligated no-year funds, as well as no-year funds recovered as a
result of cost reductions, are available for obligation on the same
basis as if they had never been obligated, subject to the restrictions
of 31 U.S.C. § 1555. 40 Comp. Gen. 694, 697 (1961); B-211323, Jan. 3,
1984; B-200519, Nov. 28, 1980. One early decision concerned the
disposition of liquidated damage penalties deducted from payments made
to a contractor. The Comptroller General concluded that, if the
contractor had not objected to the deduction within 2 years, the funds
could be treated as unobligated balances available for expenditure in
the same manner as other funds in the account, assuming the no-year
account contained a sufficient balance for the discharge of
unanticipated claims. 23 Comp. Gen. 365 (1943). There was nothing magic
about the suggested 2-year period. It was simply GAO's estimate of a
point beyond which the likelihood of a claim by the contractor would be
sufficiently remote. Id. at 367.
Legislation on rare occasion has authorized an agency to reobligate
amounts that are deobligated after the appropriation has expired. This
has been referred to as deobligation-reobligation ("deob-reob")
authority. We mention this only to emphasize that deob-reob authority
should not be confused with the general authority conferred on agencies
by the account closing law to use amounts freed up as a result of the
downward adjustment of obligations occurring prior to closing that are
now generally referred to as deobligated amounts.[Footnote 466]
E. Effect of Litigation on Period of Availability:
If the entitlement to unobligated funds is tied up in litigation, the
statutory expiration and closing procedures could come into conflict
with a claimants right to pursue a claim with the courts.
Suppose, for example, Congress made an appropriation directing the
Comptroller General to pay a huge bonus to the editors of this manual.
Suppose further that the agency refused to make payment because it
thought the idea economically unsound or just plain ridiculous. Maybe
the agency would rather use the money for other purposes or simply let
it revert to the Treasury. The editors of course could sue and would
presumably be entitled to pursue the suit through the appellate process
if necessary. But this could take years. If the obligational
availability of the appropriation were to expire at the end of the
fiscal year, the suit might very well have to be dismissed as moot.
See, e.g., Township of River Vale v. Harris, 444 F. Supp. 90, 93
(D.D.C. 1978). What, then, can be done to prevent what one court has
termed (presumably with tongue in judicial cheek) "the nightmare of
reversion to the federal treasury"?[Footnote 467]
The answer is two-fold: the equitable power of the federal judiciary
and a statute, 31 U.S.C. § 1502(b). While the cases discussed in this
section predate the 1990 revision of 31 U.S.C. §§ 1551-1557 and thus
use language that is in some respects obsolete, the concepts would
appear applicable either directly or by analogy to the new procedures.
For example, if a court could enjoin reversion to the Treasury under
the old law, it can presumably equally enjoin expiration under the new
law.
The cases establishing the equitable power of the courts involve two
distinct situations--the normal expiration of annual appropriations at
the end of the fiscal year and the expiration of budget authority in
accordance with the terms of the applicable authorizing legislation.
For purposes of the principles to be discussed, the distinction is not
material. See B-115398.48, Dec. 29, 1975 (nondecision letter). Thus, we
have generally not specified which of the two each case involves.
The concept of applying the courts' equity powers to stave off the
expiration of budget authority seems to have first arisen, at least to
any significant extent, in a group of impoundment cases in the early
1970s. A number of potential recipients under various grant and
entitlement programs filed suits to challenge the legality of executive
branch impoundments. The device the courts commonly used was a
preliminary injunction for the express purpose of preventing expiration
of the funds. For example, in National Council of Community Mental
Health Centers, Inc.v. Weinberger, 361 F. Supp. 897 (D.D.C. 1973),
plaintiffs challenged the impoundment of grant funds under the
Community Mental Health Centers Act. Pending the ultimate resolution on
the merits, the court issued a preliminary injunction to prevent
expiration of unobligated funds for the grant programs in question. Id.
at 900.
Other cases employing similar devices to preserve the availability of
funds are: Maine v. Fri, 486 F.2d 713 (1st Cir. 1973); Bennettv. Butz,
386 F. Supp. 1059 (D. Minn. 1974); Guadamuz v. Ash, 368 F. Supp. 1233
(D.D.C. 1973); Community Action Programs Executive Directors Ass'n of
New Jersey, Inc. v. Ash, 365 F. Supp. 1355 (D.N.J. 1973); Oklahoma v.
Weinberger, 360 F. Supp. 724 (W.D. Okla. 1973).
In several of the cases (e.g., National Council of Community Mental
Health Centers v. Weinberger, Community Action Programs Executive
Directors Ass'n v. Ash, Bennett v. Butz), the court not only enjoined
expiration of the funds but directed the agency to record an obligation
under 31 U.S.C. § 1501(a). One of these cases, Bennett v. Butz, spawned
a decision of the Comptroller General, 54 Comp. Gen. 962 (1975), in
which GAO confirmed that such an order would constitute a valid
obligation under 31 U.S.C. § 1501(a)(6), which says that no amount
shall be recorded as an obligation unless it is supported by
documentary evidence of a liability that may result from pending
litigation.
The concept has also been applied in nonimpoundment cases. An example
is City of Los Angeles v. Adams, 556 F.2d 40 (D.C. Cir. 1977). The
Airport and Airway Development Act of 1970 established a formula for
the apportionment of airport development grant funds. The statute also
established minimum aggregate amounts for the grants, but subsequent
appropriation acts imposed monetary ceilings lower than the authorized
amounts. The court held that the appropriation ceilings controlled, but
that the money still had to be apportioned in accordance with the
formula in the enabling legislation. To preserve the availability of
the additional grant funds the plaintiff was seeking, the district
court had ordered the Federal Aviation Administration to obligate the
amount in question prior to the statutory deadline, and the court of
appeals confirmed this as proper. Id. at 51.[Footnote 468]
Thus, what we may view as the "first wave" of cases firmly established
the proposition that a federal court can enjoin the statutory
expiration of budget authority. Inevitably, the next group of cases to
arise would involve the power of the courts to act after the funds have
expired for obligational purposes--in other words, the power of the
courts to "revive" expired budget authority.
The "leading case" in this area appears to be National Ass'n of
Regional Councils v. Costle, 564 F.2d 583 (D.C. Cir. 1977). The
plaintiff sued to force the Environmental Protection Agency to make
available unobligated contract authority under the Federal Water
Pollution Control Act Amendments of 1972. The court first noted that
contract authority is a form of budget authority, and when made
available for a definite period, terminates at the end of that period
the same as direct appropriations.[Footnote 469] The court then
reaffirmed the proposition that courts may "order that funds be held
available beyond their statutory lapse date if equity so requires." Id.
at 588. However, the court found the rule inapplicable because the suit
had not been filed prior to the relevant expiration date, and the court
therefore did not acquire jurisdiction of the case prior to expiration.
The essence of the Costle decision is the following excerpt:
"Decisions that a court may act to prevent the expiration of budget
authority which has not terminated at the time suit is filed are
completely consistent with the accepted principle that the equity
powers of the courts allow them to take action to preserve the status
quo of a dispute and to protect their ability to decide a case properly
before them. In such situations, the courts simply suspend the
operation of a lapse provision and extend the term of already existing
budget authority. If, however, budget authority has lapsed before suit
is brought, there is no underlying congressional authorization for the
court to preserve. It has vanished, and any order of the court to
obligate public money conflicts with the constitutional provision
vesting sole power to make such authorizations in the Congress.
[Footnote omitted.] Equity empowers the courts to prevent the
termination of budget authority which exists, but if it does not exist,
either because it was never provided or because it has terminated, the
Constitution prohibits the courts from creating it no matter how
compelling the equities."
Id. at 588-89.
Costle is also significant in that it explained and clarified several
prior cases that had purported to establish a similar, and in one
instance even broader, principle. Specifically:
* National Ass'n of Neighborhood Health Centers, Inc. v. Mathews,
551 F.2d 321 (D.C. Cir. 1976). This was a suit challenging the
administration of the Hill-Burton Act. The court found that certain
funds had been improperly used, and directed their recovery and
reallocation. The court further noted that the district court could
order that the funds be held available if necessary to prevent their
expiration upon recovery. However, the Costle court pointed out that
the funds in Mathews had already been obligated and thus had not
expired before suit was filed. Costle, 564 F.2d at 588.
* Jacksonville Port Authority v. Adams, 556 F.2d 52 (D.C. Cir. 1977).
The plaintiff, in a suit to obtain additional funds under the Airport
and Airway Development Program, had sought a temporary restraining
order (TRO) to prevent expiration of the funds, which the district
court denied. The court of appeals found denial of the TRO to be an
abuse of discretion and held that, in the words of the Costle court,
"relief was still available because it would have been available if the
district court had initially done what should have been done," that is,
grant the preservation remedy. Costle, 564 F.2d at 588. A similar case
is Wilson v. Watt, 703 F.2d 395 (9thCir. 1983) (reversing the district
court's denial of preliminary injunction and directing preservation of
funds as necessary).
* Pennsylvania v. Weinberger, 367 F. Supp. 1378 (D.D.C. 1973). This was
an impoundment suit involving the Elementary and Secondary Education
Act of 1965, Pub. L. No. 89-10, 79 Stat. 27 (Apr. 11, 1965). Noting the
then-existing authority of agencies to restore expired unobligated
balances, the court concluded that it had even broader equitable power
to order the restoration of expired appropriations. The Costle court
expressly rejected the broad view that "once it is shown that Congress
has authorized the restoration of lapsed authority under some
circumstances then the courts may order the restoration and obligation
of lapsed authority whenever they deem it appropriate." Costle,
564 F.2d at 589. The Pennsylvania decision was nevertheless correct,
however, in that a separate statutory provision had extended the
availability of the funds in question. Costle, 564 F.2d at 589 n.12. A
case similar to Pennsylvania is Louisiana v. Weinberger, 369 F. Supp.
856 (E.D. La. 1973). The analog under current legislation would be
obligation adjustments under 31 U.S.C. § 1553(a).
Thus, under Costle, the crucial test is not whether the court actually
acted before the budget authority expired, but whether it had
jurisdiction to act. As long as the suit is filed prior to the
expiration date, the court acquires the necessary jurisdiction and has
the equitable power to "revive" expired budget authority, even where
preservation is first directed at the appellate level.
The principles set forth in Costle have been followed and applied in
several later cases. Connecticut v. Schweiker, 684 F.2d 979 (D.C. Cir.
1982), cert. denied, 459 U.S. 1207 (1983); United States v. Michigan,
781 F. Supp. 492 (E.D. Mich. 1991); Burton v. Thornburgh, 541 F. Supp.
168 (E.D. Pa. 1982); Grueschow v. Harris, 492 F. Supp. 419 (D.S.D.),
aff'd, 633 F.2d 1264 (8thCir. 1980); Sodus Central School District v.
Kreps, 468 F. Supp. 884 (W.D. N.Y. 1978); Township of River Vale v.
Harris, 444 F. Supp. 90 (D.D.C. 1978). See also Dotson v. Department of
Housing& Urban Development, 731 F.2d 313, 317 n.2 (6tthir. 1984).
The application of the Costle doctrine "assumes that funds remain after
the statutory lapse date." West Virginia Ass'n of Community Health
Centers, Inc. v. Heckler, 734 F.2d 1570, 1577 (D.C. Cir. 1984). See
Heleba v. Allbee, 628 A.2d 1237, 1240 (Vt. 1992). Consequently, where
all funds have properly been disbursed (the key word here is
"properly"), the Costle doctrine no longer applies. Id. To an extent,
this gives agencies the potential to circumvent the Costle doctrine
simply by spending the money, as long as the obligations and
disbursements are "proper." Recognizing this, the West Virginia
Association court cautioned that "we do not mean to suggest our
approval, in every case, of government decisions to expend funds over
which a legal controversy exists." 734 F.2d at 1577 n.8. In addition,
to prevent this potential loophole from swallowing up the rule, there
is a logical corollary to the Costle doctrine to the effect that courts
may enjoin the obligation of funds or even the disbursement of funds
already obligated where disbursement would have the effect of
precluding effective relief and thereby rendering the case moot. See
City of Houston v. Department of Housing & Urban Development, 24 F.3d
1421, 1426-27 (D.C. Cir. 1994); Population Institute v. McPherson,
797 F.2d 1062 (D.C. Cir. 1986).[Footnote 470] Similarly, the district
court's injunction in Bennett v. Butz, quoted in 54 Comp. Gen. 962,
supra, included a provision mandating retention of the obligated
balances until further order of the court.
When Congress acts to rescind an appropriation, those amounts are no
longer available to the court for award. City of Houston, 24 F.3d at
1426. It does not matter that the court has issued a temporary
restraining order requiring the agency to set aside funds pending the
resolution of the plaintiff's timely filed claim. Rochester Pure Waters
District v. EPA, 960 F.2d 180, 183-84 (D.C. Cir. 1992). A temporary
restraining order is not binding on Congress, which has "absolute
control of the moneys of the United States." Id. at 185. See
Harrington v. Bush, 553 F.2d 190, 194 n.7 (D.C. Cir. 1977). Thus, after
Congress has rescinded an appropriation, a court may not order a
permanent injunction awarding the rescinded funds to the plaintiff, as
the court cannot order the obligation of funds for which there is no
appropriation. Rochester, 960 F.2d at 184.
In addition to the judicial authority in Costle and the cases that
follow, there is a statute that seems to point in the same direction,
31 U.S.C. § 1502(b), which provides:
"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."
The statute was enacted as part of a continuing resolution in 1973.
Pub. L. No. 93-52, § 111, 87 Stat. 134 (July 1, 1973). Its legislative
history, which is extremely scant, is found at 119 Cong. Rec. 22326
(June 29, 1973), and indicates that it was generated by certain
impoundment litigation then in process.
For the most part, the courts have relied on their equitable powers and
have made little use of 31 U.S.C. § 1502(b). Connecticut v. Schweiker
cited the statute in passing in a footnote. 684 F.2d 979, at 996 n.29.
The court in Township of River Vale v. Harris, 444 F. Supp. at 94,
noted the statute but found it inapplicable because the funds in that
case would have reverted to a revolving fund rather than to the general
fund of the Treasury. In Population Institute v. McPherson, 797 F.2d at
1081, and International Union, United Automobile, Aerospace &
Agricultural Implement Workers of America v. Donovan, 570 F. Supp.
210,220 (D.D.C. 1983), the court cited section 1502(b) essentially as
additional support for the rule that courts have the equitable power to
prevent the expiration of budget authority in appropriate cases.
Note that the statute uses the words "lawsuits or rights of action."
One court has relied on this language to reach a result perhaps one
step beyond Costle. In Missouri v. Heckler, 579 F. Supp. 1452 (W.D. Mo.
1984), the plaintiff state sued the Department of Health and Human
Services (HHS) for reimbursement of expenditures under the Medicaid
program. Based on Connecticut v. Schweiker, supra, the court concluded
that the plaintiff was clearly entitled to be paid. The court then
reviewed a provision of the Department's fiscal year 1983 continuing
resolution and directed that the claims be paid in fiscal years 1984
through 1986. Alternatively, the court applied 31 U.S.C. § 1502(b) and
held that the claims were payable from and to the extent of the
unobligated balance of fiscal year 1981 funds. Although Missouri had
not filed its lawsuit prior to the end of fiscal year 1981, it had
filed its claims for reimbursement with HHS before then. The court
found that "Missouri's right to reimbursement arose when it filed its
claims in a timely fashion …and otherwise complied with the law and
regulations then in effect. With this right to reimbursement came the
concomitant right of action to enforce the claim for reimbursement."
Missouri, 579 F. Supp. at 1456.
The Missouri court further noted that if section 1502(b) is to
meaningfully preserve the "status" of rights of action, it should also
be construed as preserving the availability of funds. Id. at 1456 n.4.
The Comptroller General followed a similar approach in 62 Comp.
Gen. 527 (1983). A labor union had filed an unfair labor practice
charge with the statutorily created Foreign Service Labor Relations
Board, based on a refusal by the United States Information Agency to
implement a decision of the Foreign Service Impasse Disputes Panel. The
dispute concerned fiscal year 1982 performance pay awards for members
of the Senior Foreign Service. The question presented to GAO was the
availability of fiscal year 1982 funds to pay the awards after the end
of the fiscal year. GAO first found 31 U.S.C. § 1501(a)(6) (which
provides that an obligation may be recorded when supported by
documentary evidence of a liability that may result from pending
litigation) inapplicable, then concluded that, by virtue of 31 U.S.C.
§ 1502(b), the unobligated balance of fiscal year 1982 funds remained
available for the awards. The unfair labor practice proceeding was a
"right of action," and the statute therefore operated to preserve the
availability of the funds.
Under 31 U.S.C. §§ 1551-1557, funds are "returned to the general fund
of the Treasury" only when the account is closed, raising the question
whether section 1502(b) continues to apply to expiration in addition to
closing. If section 1502(b) is to be construed in light of its purpose,
then the answer is that expired appropriations will continue to be
available to liquidate obligations that arise from injunctive relief
ordered by a court or agreed to by an agency in settlement of a legal
dispute. See 70 Comp. Gen. 225, 229-30 (1991). In general, section
1553(a) "provides that an expired account retains its fiscal year
identity and remains available for recording, adjusting, and
liquidating obligations properly chargeable to that account." (Emphasis
in original.) 71 Comp. Gen. 502, 505 (1992).
However, pursuant to section 1552(a), an appropriation may only be used
to pay properly chargeable obligations during the period of the
appropriation's availability and during the five fiscal years
immediately following the period of availability. After that, the
appropriation account is closed and the remaining balance is canceled.
73 Comp. Gen. 338, 342 (1994). If a valid obligation arises after the
appropriation account is closed, section 1553(b) authorizes payment of
the obligation from current appropriations if account records show that
sufficient funds remained available to cover the obligation when the
account was closed by operation of law. Id.; 71 Comp. Gen. at 505-506.
Similar problems exist in the case of bid protests. If a protest is
filed near the end of a fiscal year and the contract cannot be awarded
until the protest is resolved, the contracting agency risks expiration
of the funds.
Congress addressed this situation in late 1989 by enacting a new
31 U.S.C. § 1558(a),[Footnote 471] which currently reads as follows:
"(a) …[F]unds available to an agency for obligation for a contract at
the time a protest …is filed in connection with a solicitation for,
proposed award of, or award of such contract shall remain available for
obligation for 100 days after the date on which the final ruling is
made on the protest…. A ruling is considered final on the date on which
the time allowed for filing an appeal or request for reconsideration
has expired, or the date on which a decision is rendered on such an
appeal or request, whichever is later."
This provision applies to protests filed with GAO, the contracting
agency, or a court under 31 U.S.C. §§ 3552 and 3556, and to protests
filed with the General Services Board of Contract Appeals, the
contracting agency, or a court under 40 U.S.C. § 759(f). 31 U.S.C.
§ 1558(b).
FOOTNOTES
[1] See, e.g., Atlantic City Electric Co. v. Federal Energy Regulatory
Commission, 295 F.3d 1, 8 (D.C. Cir. 2002); B-288266, Jan. 27, 2003.
[2] Early decisions often referred to the "accounting officers of the
government." While this phrase has fallen into disuse, its purpose was
to distinguish those matters within the jurisdiction of the Comptroller
General and the General Accounting Office and their predecessors from
those matters within the jurisdiction of the "law officers of the
government"--the Attorney General and the Department of Justice.
[3] The phrase itself is well known, and there are an increasing number
of articles describing and analyzing the substantive aspects of the
power. See, e.g., Sen. Robert C. Byrd, The Control of the Purse and the
Line Item Veto Act, 35 Harv. J. on Legis. 297 (1998); Col. Richard D.
Rosen, Funding "Non-Traditional" Military Operations: The Alluring Myth
of a Presidential Power of the Purse, 155 Mil. L. Rev. 1 (1998);
Charles Tiefer, Controlling Federal Agencies by Claims on Their
Appropriations? The Takings Bill and the Power of the Purse, 13 Yale J.
on Reg. 501 (1996); Kate Stith, Congress' Power of the Purse, 97 Yale
L.J. 1343 (1988).
[4] Edward S. Corwin, The Constitution and What It Means Today, 134
(14th ed. 1978).
[5] Cf., e.g., Flick v. Liberty Mutual Fire Insurance Co., 205 F.3d
386, 395 (9th Cir. 2000), quoting Reeside, supra.
[6] Numerous similar statements exist. See, e.g., Knote v. United
States, 95 U.S. 149, 154 (1877); Gowland v. Aetna, 143 F.3d 951, 955
(5th Cir. 1998); Hart's Case, 16 Ct. Cl. 459, 484 (1880), aff'd,
Hart v. United States, 118 U.S. 62 (1886); Jamal v. Travelers Lloyds of
Texas Insurance Co., 131 F. Supp. 2d 910, 919 (S.D. Tex. 2001); Doe v.
Mathews, 420 F. Supp. 865, 870-71 (D. N.J. 1976).
[7] In Schism v. United States, 316 F.3d 1259, 1288 (Fed. Cir. 2002),
cert. denied, ___ U.S. ___, 123 S. Ct. 2246 (2003), retired military
personnel sued the government for breach of an implied-in-fact
contract, claiming that recruiters had promised free lifetime medical
care for them and their dependents, in exchange for 20 years of
service. The court rejected those claims, observing:
"As Commander-in-Chief, the President does not have the constitutional
authority to make promises about entitlements for life to military
personnel that bind the government because such powers would encroach
on Congress' constitutional prerogative to appropriate funding. Under
Article I, § 8, only Congress has the power of the purse. To say that
the Executive Branch could promise future funds for activities that
Congress itself had not authorized… would allow the Executive Branch to
commandeer the power of the Legislative Branch."
[8] We address the duration of provisions like this in Chapter 2.
[9] In United States v. Butler, 297 U.S. 1 (1936), the Supreme Court
struck down a funding condition based on a narrow view of Congress's
powers under the Commerce Clause--an approach to which the Court no
longer subscribes. See, e.g., Dole, 483 U.S. at 216-17 (O'Connor, J.,
dissenting). See also Laurence H. Tribe, American Constitutional Law
§ 5-b, at 836 (3rd ed. 2000) ("the Supreme Court has effectively
ignored Butler in judging the limits of congressional spending power").
Compare, in this regard, Commonwealth of Virginia v. Riley, 106 F.3d
559 (4th Cir. 1997) (en banc); West Virginia v. Department of Health &
Human Services, supra; and California v. United States, 104 F.3d 1086,
1092 (9th Cir. 1997), on how often and under what circumstances the
courts might be willing to invalidate spending conditions as coercive.
[10] Similar challenges have been raised against restrictive federal
regulations interpreting statutory spending conditions. E.g., Rust v.
Sullivan, 500 U.S. 173 (1991) (statute barred funding programs that
employ abortion as a method of family planning; court upheld
implementing regulations prohibiting doctors employed by federally
funded family planning clinics from discussing abortion options with
clinic patients).
[11] Cf., e.g., New York v. United States, 505 U.S. 144, 166 (1992)
("Our cases have identified a variety of methods, short of outright
coercion, by which Congress may urge a State to adopt a legislative
program consistent with federal interests.").
[12] United States v. Realty Co., 163 U.S. 427, 441 (1896).
[13] E.g., Dole, 483 U.S. at 207; National Endowment for the Arts v.
Finley, 524 U.S. at 588 ("So long as legislation does not infringe on
other constitutionally protected rights, Congress has wide latitude to
set spending priorities.").
[14] 19 Annals of Cong. 347 (1809) (remarks of Senator Hillhouse).
[15] Gary L. Hopkins & Robert M. Nutt, The Anti-Deficiency Act (Revised
Statutes 3679) and Funding Federal Contracts: An Analysis, 80 Mil. L.
Rev. 51, 57 n.7 (1978).
[16] Id. at 57.
[17] Thus, Congress has delegated authority to the Comptroller General
to prescribe, after consultation with the President and the Secretary
of the Treasury, accounting principles and standards for the federal
government. 31 U.S.C. § 3511. Since 1991, GAO has implemented this
responsibility largely through the Federal Accounting Standards
Advisory Board (FASAB)--a federal advisory committee jointly created by
the Comptroller General, the Secretary of the Treasury, and the
Director of the Office of Management and Budget. For more information
about FASAB, check out FASAB Facts, http://www.fasab.gov/pdf/
fasabf~2.pdf.
[18] See United States v. Weiss, 36 M.J. 224, 237-38 (C.M.A. 1992)
(discussing the rationale behind the 2-year limitation).
[19] For a detailed discussion of the history of the budget and
appropriations process, see Louis Fisher, The Authorization-
Appropriation Process in Congress: Formal Rules and Informal Practices,
29 Cath. U. L. Rev. 51, 53-59 (1979). For a more current overview of
the process, see Allen Schick and Felix LoStracco, The Federal Budget:
Politics, Policy, Process (The Brookings Institution Press, 2000).
[20] Prior to 1842, the government did not distinguish between fiscal
year and calendar year. From 1842 to 1976, the government's fiscal year
ran from July 1 to the following June 30. In 1974, Congress changed the
fiscal year to run, starting with fiscal year 1977, from October 1 to
September 30. 31 U.S.C. § 1102. The concept of a fiscal year has been
termed an "absolute necessity." Sweet v. United States, 34 Ct. Cl. 377,
386 (1899). See also Bachelor v. United States, 8 Ct. Cl. 235, 238
(1872) (reasons for fixing a fiscal year are "so obvious… that no one
can fail to see their importance").
[21] A summary of the changes brought about by the Budget and
Accounting Act, including a listing of amendments that have been made
to the Act, may be found in National Federation of Federal Employees v.
Cheney, 883 F.2d 1038, 1043-46 (D.C. Cir. 1989).
[22] Pub. L. No. 93-344, 88 Stat. 297 (July 12, 1974).
[23] The second and more immediate motive for passage of the
Congressional Budget Act was the dispute in the early 1970s related to
the impoundment by President Nixon of billions of dollars of funds
appropriated by Congress. See Committee on the Budget, United States
Senate, The Congressional Budget Process, An Explanation, S. Print No.
105-67 (1998); H.R. Rep. No. 93-1101, at 4 (1974); H.R. Rep. No. 93-
658, at 19 (1974).
[24] The term backdoor spending is a collective designation for
authority provided in legislation other than appropriation acts to
obligate the government to make payments. The most common forms of
backdoor spending are borrowing authority, contract authority, and
entitlement authority. See U.S. General Accounting Office, A Glossary
of Terms Used in the Federal Budget Process (Exposure Draft), GAO/AFMD-
2.1.1 (Washington, D.C.: Jan. 1993). From the perspective of the
appropriations committees, funding provided by these forms of authority
causes their funding control to "sneak out" legislative "back doors."
[25] Pub. L. No. 99-177, title II, 99 Stat. 1037, 1038 (Dec. 12, 1985).
[26] Pub. L. No. 101-508, title XIII, 104 Stat. at 1388-573.
[27] Pub. L. No. 105-178, 112 Stat. 107 (June 9, 1998).
[28] The conservation spending category includes the acquisition,
conservation, and maintenance of federal and nonfederal lands and
resources, and payments in lieu of taxes. 2 U.S.C. § 901.
[29] Pub. L. No. 106-291, 114 Stat. 922 (Oct. 11, 2000).
[30] This point of order, established in the Congressional Budget and
Impoundment Control Act of 1974, as amended, applies only to the
Senate.
[31] Pub. L. No. 67-13, 42 Stat. 20 (June 10, 1921).
[32] Budget and Accounting Act § 305, 31 U.S.C. § 3702(a).
[33] Pub. L. No. 104-53, 109 Stat. 514 (Nov. 19, 1995) and Pub. L. No.
104-316, 110 Stat. 3826 (Oct. 19, 1996), transferred the Comptroller
General's authority over claims and related functions to the Director
of the Office of Management and Budget, who in turn delegated specific
functions to the Departments of Defense and Treasury, the General
Services Administration, and the Office of Personnel Management. For
additional details, see B-275605, Mar. 17, 1997.
[34] 31 U.S.C. § 3526(a), also derived from § 305 of the Budget and
Accounting Act; 31 U.S.C. § 3529. As a result of this authority, the
Comptroller General and GAO were sometimes referred to as the
"accounting officers of the government" in early legal decisions. See
footnote 2 of this chapter.
[35] Budget and Accounting Act §§ 312(a) and (c), 31 U.S.C. §§ 712(1),
719(c).
[36] Budget and Accounting Act § 312(b), 31 U.S.C. §§ 712(4) and (5).
At about this same time, both the House and the Senate consolidated
jurisdiction over all appropriation bills in a single committee in each
body.
[37] 31 U.S.C. § 719(f), derived from Budget and Accounting Act
§ 312(e).
[38] Pub. L. No. 79-601, § 206, 60 Stat. 812, 837 (Aug. 2, 1946),
31 U.S.C. §§ 712(3), 719(e).
[39] With certain exceptions, the audit authority and responsibility of
the General Accounting Office extends to all activities, financial
transactions, and accounts of the federal government. However, certain
agencies and activities are not subject to audit by reason of specific
statutory prohibitions and the type of funds involved. For example,
prior to 1980, the Comptroller General did not have the authority to
audit expenditures approved without vouchers. Enactment of Pub. L.
No. 96-226, § 101, 94 Stat. 311 (Apr. 3, 1980) provided the authority
to the Comptroller General to audit these unvouchered transactions;
however, the Comptroller General may only release the results of the
audit to the President or head of the agency, or, if there is an
unresolved discrepancy, to the Senate Committee on Governmental
Affairs, the House Committee on Government Reform, and the committees
of Congress having legislative or appropriation oversight of the
expenditure. This law, however, does not provide GAO with the authority
to audit transactions of the Central Intelligence Agency or certain
other financial transactions involving specified sensitive matters
exempted by the President. 31 U.S.C. § 3524.
[40] Pub. L. No. 81-784, § 117(a), 31 U.S.C. § 3523(a).
[41] Id. § 112(a), 31 U.S.C. § 3511(a). For more information on
accounting standards, see footnote 17 of this chapter.
[42] Pub. L. No. 91-510, § 204, 84 Stat. 1140, 1168 (Oct. 26, 1970),
31 U.S.C. § 717.
[43] 31 U.S.C. §§ 1112(c) and (d), derived from the Congressional
Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344,
§ 801(a), 88 Stat. 297, 327 (July 12, 1974).
[44] 31 U.S.C. §§ 1113(b)-(e), also derived from Pub. L. No. 93-344,
§ 801(a). GAO is continually studying the budget process as part of its
overall mission. For an overview of GAO reform proposals, with
references to related GAO reports, see U.S. General Accounting Office,
Budget Issues: Budget Enforcement Compliance Report, GAO-02-794
(Washington, D.C.: June 14, 2002); Budget Process: Extending Budget
Controls, GAO-02-682T (Washington, D.C.: Apr. 25, 2002); Studies of the
Budget Deficit Include Long-Term Fiscal Challenges, GAO-02-467T
(Washington, D.C.: Feb. 27, 2002); and Long-Term Budget Issues: Moving
From Balancing the Budget to Balancing Fiscal Risk, GAO-01-385T
(Washington, D.C.: Feb. 26, 2001).
[45] Pub. L. No. 93-344, §§ 1014(b), 1015, 2 U.S.C. §§ 685(b), 686.
[46] Pub. L. No. 97-255, 96 Stat. 814 (Sept. 8, 1982), codified at
31 U.S.C. §§ 3512(c) and (d).
[47] See, e.g., The Chief Financial Officers Act of 1990, Pub. L. No.
101-576, 104 Stat. 2838 (Nov. 15, 1990); the Government Management
Reform Act of 1994, Pub. L. No. 103-356, 108 Stat. 3410 (Oct. 13,
1994); the Government Performance and Results Act of 1993, Pub. L.
No. 103-62, 107 Stat. 285 (Aug. 3, 1993); and the Federal Financial
Management Improvement Act of 1996, Pub. L. No. 104-208, title VIII,
110 Stat. 3009, 3009-389 (Sept. 30, 1996).
[48] Part 1 of Reorganization Plan No. 2 of 1970 (84 Stat. 2085),
designated the former Bureau of the Budget as OMB and transferred all
the authority vested in the Bureau and its director to the President.
By Executive Order No. 11541, July 1, 1970, the President in turn
delegated that authority to the Director of OMB. OMB's primary
functions include assistance to the President in the preparation of the
budget and the formulation of the fiscal program of the government,
supervision and control of the administration of the budget,
centralized direction in executive branch financial management, and
review of the organization and management of the executive branch.
[49] Section 1105(a) of title 31 of the United States Code states the
requirement for a presidential budget submission slightly different
than 2 U.S.C. § 631: "On or after the first Monday in January but not
later than the first Monday in February of each year, the President
shall submit a budget of the United States Government for the following
fiscal year."
[50] For a few years in the mid-1980s, very few regular appropriation
acts were passed, resulting in consolidated continuing resolutions for
those years.
[51] Some useful references discussing the congressional budget process
are: U.S. General Accounting Office, Budget Process: Evolution and
Challenges, GAO/T-AIMD-96-129 (July 11, 1996); Committee on the Budget,
United States Senate, The Congressional Budget Process, An Explanation,
S. Print No. 105-67 (revised Dec. 1998); and Library of Congress,
Congressional Research Service, No. RS20358, Overview of the
Congressional Budget Process (July 23, 2003).
[52] The Omnibus Budget Reconciliation Act of 1990 amended section
1105(a) of Title 31 of the United States Code to require the President
to submit a budget "[o]n or after the first Monday in January but not
later than the first Monday in February of each year."
[53] Citations to the Rules of the House are from the Rules of the
House of Representatives, 108th Congress, Jan. 7, 2003.
[54] Citations to the Senate rules are from the Standing Rules of the
Senate, S. Doc. No. 106-15, Nov. 19, 1999 (revised as of April 27,
2000).
[55] Whether a given item is general legislation or merely a condition
on the availability of an appropriation is frequently a difficult
question.
[56] The Comptroller General will not render an opinion on these
matters. E.g., B-173832, Aug. 1, 1975.
[57] Pub. L. No. 93-344, 88 Stat. 297 (July 12, 1974).
[58] Usually, a point of order may be waived by a simple majority vote.
See GAO/AFMD-2.1.1. However, in the Senate, waiver of some points of
order requires a three-fifths vote. See Congressional Research Service,
No. 97-865, supra. For example, waiver of the prohibition against
consideration of nongermane amendments to budget resolutions requires a
three-fifths vote of all members of the Senate. Pub. L. No. 93-344,
§ 305(b)(2).
[59] Note the distinction in terminology: Congress appropriates, OMB
apportions, and the receiving agency allots (or allocates) within the
apportionment.
[60] For a detailed discussion of impoundment before the 1974
legislation, see B-135564, July 26, 1973.
[61] These requirements are repeated in 31 U.S.C. § 1512(c), which
prescribes conditions for establishing reserves through the
apportionment process. The President's deferral authority under the
Impoundment Control Act thus mirrors his authority to establish
reserves under the Antideficiency Act. In other words, deferrals are
authorized only in those situations in which reserves are authorized
under the Antideficiency Act. U.S. General Accounting Office,
Impoundment Control: President's Third Special Impoundment Message for
FY 1990, GAO/OGC-90-4 (Washington, D.C.: Mar. 6, 1990). Deferrals for
policy reasons are not authorized. 2 U.S.C. § 684(b).
[62] Under the original 1974 legislation, a deferral could be
overturned by the passage of an impoundment resolution by either the
House or the Senate. This "legislative veto" provision was found
unconstitutional in City of New Haven v. United States, 809 F.2d 900
(D.C. Cir. 1987), and the statute was subsequently amended to remove
it. See Pub. L. No. 100-119, § 206, 101 Stat. 754 (Sept. 29, 1987),
codified at 2 U.S.C. § 684(b). Congress may, of course, enact
legislation disapproving a deferral and requiring that the deferred
funds be made available for obligation.
[63] In 1996, the Congress enacted the Line Item Veto Act, Pub. L.
No. 104-130, 110 Stat. 1200 (Apr. 9, 1996), which was codified at
2 U.S.C. §§ 691-692. The Line Item Veto Act (Veto Act) gave the
President the power to "cancel in whole" three types of provisions
already enacted into law: (1) any dollar amount of discretionary budget
authority, (2) any item of new direct spending, or (3) any limited tax
benefit. The Veto Act imposed procedures for the President to follow
whenever he exercised this cancellation authority. The Veto Act also
provided for expedited congressional consideration of bills introduced
to disapprove the cancellations. In Clinton v. City of New York,
524 U.S. 417 (1998), the Supreme Court held that because the Veto Act
established cancellation procedures that authorized the President, by
canceling already enacted provisions of law, "to create a different
law--one whose text was not voted on by either House of Congress or
presented to the President for signature," it violated the Presentment
Clause (U.S. Const. art. I, § 7) and thus was unconstitutional. Id. at
448.
[64] See section A of this chapter, footnote 2.
[65] Citations to these are rarely encountered, and we have observed no
consistent citation format, except that the First Comptroller's name is
always included to prevent confusion with the later Comptroller of the
Treasury series. Example: 5 Lawrence, First Comp. Dec. 408 (1884).
[66] Digests are numbered consecutively within each volume. Citations
should specify the digest number rather than the page number since
several digests appear on each page. Example: 4 Dig. Second Comp. Dec.
¶ 35 (1893). Without the text of the decisions themselves, the digests
are primarily of historical interest.
[67] These are cited by volume and page number, respectively, and the
year of the decision, using the abbreviation "Comp. Dec." Example:
19 Comp. Dec. 582 (1913). There is also a hefty (2,497 pages) volume,
published in 1920, of digests of decisions appearing in volumes 1-26.
[68] 31 U.S.C. § 3526(d) ("[o]n settling an account of the Government,
the balance certified by the Comptroller General is conclusive on the
executive branch of the Government"); see United States ex rel.
Skinner & Eddy Corp. v. McCarl, 275 U.S. 1, 4 n.2 (1927); St. Louis,
Brownsville & Mexico Railway Co. v. United States, 268 U.S. 169, 174
(1925); United States v. Standard Oil Co. of California, 545 F.2d 624,
637-38 (9th Cir. 1976); Burkley v. United States, 185 F.2d 267, 272
(7th Cir. 1950); United States ex rel. Steacy-Schmidt Manufacturing
Co. v. Globe Indemnity Co., 66 F.2d 302, 303 (3rd Cir. 1933); United
States ex rel. Brookfield Construction Co. v. Stewart, 234 F. Supp. 94,
99-100 (D.D.C. 1964), aff'd 339 F.2d 753 (D.C. Cir. 1964); Pettit v.
United States, 488 F.2d 1026, 1031 (Ct. Cl. 1973); 54 Comp. Gen. 921
(1975); 45 Comp. Gen. 335, 337 (1965). Comptroller General decisions on
bid protests under the Competition in Contracting Act, 31 U.S.C.
§§ 3551-3556, are advisory only. See Ameron, Inc. v. Corps of
Engineers, 809 F.2d 979 (3rd Cir. 1986).
[69] 31 U.S.C. § 3526(b) ("A decision of the Comptroller General under
section 3529 of this title is conclusive on the Comptroller General
when settling the account containing the payment.").
[70] It is a general principle of administrative law that an agency or
administrative board rendering administrative decisions should follow
its own decisions or give a reasoned explanation for departure. See,
e.g., Hinson v. National Transportation Safety Board, 57 F.3d 1144
(D.C. Cir. 1995); Doubleday Broadcasting Co. v. FCC, 655 F.2d 417, 422-
23 (D.C. Cir. 1981).
[71] 48 Comp. Gen. 24, 27 (1968); 37 Comp. Gen. 776 (1958); 20 Comp.
Gen. 488 (1941); B-215651, Mar. 15, 1985.
[72] An example here is 18 U.S.C. § 1913, the anti-lobbying statute;
see B-284226.2, Aug. 17, 2000.
[73] 59 Comp. Gen. 761 (1980); 50 Comp. Gen. 648 (1971); 21 Comp.
Gen. 56, 57 (1941); B-284110, n. 8, Feb. 18, 2000; B-218279, B-218290,
Mar. 13, 1985; B-190983, Dec. 21, 1979; B-194584, Aug. 9, 1979.
[74] B-218996, June 4, 1985; B-165548, Jan. 3, 1969.
[75] B-147153, Nov. 21, 1961; B-173783.127, Feb. 7, 1975 (nondecision
letter). See also 26 U.S.C. § 6406.
[76] 58 Comp. Gen. 282, 286 (1979); B-240908, Sept. 11, 1990; B-218900,
July 9, 1986; B-217954, July 30, 1985; B-203737, July 14, 1981;
B-179473, Mar. 7, 1974; A-36314, Apr. 29, 1931. For examples of cases
where GAO's opinion was requested by a court, see 56 Comp. Gen. 768
(1977) and B-186494, July 22, 1976. Also, under 28 U.S.C. § 2507, the
United States Court of Federal Claims may issue a "call" upon GAO (or
any other agency) for comments on a particular issue or for other
information.
[77] B-215863, July 26, 1984; B-210922.1, June 27, 1983; B-114578,
Nov. 9, 1973; B-157984, Nov. 26, 1965; B-124985, Aug. 17, 1955;
A-23385, June 28, 1928; see also Youngstown Sheet & Tube Co. v. Sawyer,
343 U.S. 579, 587 (1952). Except for matters perceived as involving
conflicts between the prerogatives of the executive and legislative
branches, the Attorney General has expressed a similar policy. See,
e.g., 39 Op. Att'y Gen. 11 (1937); 20 Op. Off. Legal Counsel 214, 226
(1996). In B-300192, Nov. 13, 2002, Walter Dellinger, the United States
Assistant Attorney General is quoted as stating:
"When the President's obligation to execute laws enacted by Congress is
in tension with his responsibility to act in accordance with the
Constitution, questions arise that really go to the very heart of the
system. And the President can decline to comply with the law, in our
view, only where there is a judgment where the Supreme Court has
resolved the issue."
Id. at 6.
[78] Cases prior to 1924 were classified according to type into one of
four categories: advance decision (A.D. 1234), review decision (Review
No. 2345), division memorandum (D.M.) 3456, or appeal (Appeal No.
4567). In addition, some of the earliest decisions have no file
designation. These must be cited by reference to the "manuscript
volume" in which the decision appears. (These volumes are maintained by
GAO, containing the written products of the Office of General Counsel
for a given month in chronological sequence.) Example: unpublished
decision of September 1, 1921, 1 MS Comp. Gen. 712.
[79] The Office of Management and Budget adopted these definitions in
OMB Circular No. A-11, Preparation, Submission and Execution of the
Budget (July 25, 2003).
[80] Section 3(2) of the Congressional Budget and Impoundment Control
Act of 1974, 2 U.S.C. § 622(2) and note, as amended by the Omnibus
Budget Reconciliation Act of 1990, Pub. L. No. 101-508, §§ 13201(b) and
13211(a), 104 Stat. 1388, 1388-614 and 1388-620 (Nov. 5, 1990). Prior
to the Congressional Budget Act, the term "obligational authority" was
frequently used instead of budget authority.
[81] The Constitution does not specify precisely what assets comprise
the "Treasury" of the United States. An important statute in this
regard is 31 U.S.C. § 3302(b), discussed in detail in Chapter 6, which
requires that, unless otherwise provided, a government agency must
deposit any funds received from sources other than its appropriations
in the general fund of the Treasury, where they are then available to
be appropriated as Congress may see fit.
[82] Glossary at 21; Andrus v. Sierra Club, 442 U.S. 347, 359 n.18
(1979). See also 31 U.S.C. §§ 701(2) and 1101(2).
[83] Glossary at 22.
[84] If an agency cannot repay with external collections, it must
either extend its debt with new borrowings, seek appropriations to
repay the debt, or seek to have the debt forgiven by statute. Repayment
from external collections is the only alternative that reimburses the
Treasury in any meaningful sense. See GAO/AFMD-89-4 at 17, 20.
[85] These and other examples are noted in the report: U.S. General
Accounting Office, Budget Treatment of Monetary Credits, GAO/AFMD-85-21
(Washington, D.C.: Apr. 8, 1985). For more recent examples, see Mount
St. Helens National Volcanic Monument Completion Act, Pub. L. No. 105-
279, 112 Stat. 2690 (Oct. 23, 1998); Kentucky National Forest Land
Transfer Act of 2000, Pub. L. No. 106-429, app. A-1, 114 Stat. 1900,
1900A-71 (Nov. 6, 2000); and Pueblo of Acoma Land and Mineral
Consolidation, Pub. L. No. 107-138, 116 Stat. 6 (Feb. 6, 2002).
[86] See U.S. General Accounting Office, Farm Payments: Cost and Other
Information on USDA's Commodity Certificates, GAO/RCED-87-117BR
(Mar. 26, 1987).
[87] See Glossary at 22, 27-29.
[88] See U.S. General Accounting Office, Federal User Fees: Budgetary
Treatment, Status, and Emerging Management Issues, GAO/AIMD-98-11
(Dec. 19, 1997).
[89] This usually means a general fund receipt account (miscellaneous
receipts), but also includes amounts deposited in special or trust fund
accounts. See American Medical Ass'n v. Reno, 857 F. Supp. 80 (D.D.C.
1994); B-199216, July 21, 1980.
[90] H.R. Conf. Rep. No. 99-433, at 102 (1985). This is the conference
report on the Balanced Budget and Emergency Deficit Control Act of
1985.
[91] This was the intent of the 1985 legislation, as reflected in the
conference report, supra, although it had not been expressed in the
legislation itself.
[92] Glossary at 50-51.
[93] The statute does not further define the term "primary loan
guarantee."
[94] This is the same control device we have previously noted for
contract authority and borrowing authority. Although loan guarantee
authority was not viewed as budget authority in 1985, the apparent
rationale was that the control, if it is to be employed, must apply at
the authorization stage because the opportunity for control no longer
exists by the time liquidating budget authority becomes necessary. An
example of a statute including this language is discussed in B-230951,
Mar. 10, 1989.
[95] Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508,
§ 13201(a), 104 Stat. 1388, 1388-609 (Nov. 5, 1990).
[96] U.S. General Accounting Office, Budget Issues: The Use of Spending
Authority and Permanent Appropriations Is Widespread, GAO/AFMD-87-44
(Washington, D.C.: July 17, 1987).
[97] U.S. General Accounting Office, Budget Issues: Inventory of
Accounts With Spending Authority and Permanent Appropriations, 1987,
GAO/AFMD-87-44A (Washington, D.C.: July 17, 1987).
[98] U.S. General Accounting Office, Updated 1987 Inventory of Accounts
with Spending Authority and Permanent Appropriations, GAO/OGC-98-23
(Washington, D.C.: Jan. 19, 1998); Budget Issues: Inventory of Accounts
With Spending Authority and Permanent Appropriations, 1996, GAO/AIMD-
96-79 (Washington, D.C.: May 31, 1996).
[99] 2 U.S.C. § 622(9)(A); Glossary at 44.
[100] Supplemental and deficiency appropriations are discussed in
Chapter 6, section D; lump-sum and line-item appropriations in Chapter
6, section F; and continuing resolutions in Chapter 8.
[101] Glossary at 22-23.
[102] Glossary at 22.
[103] Glossary at 24.
[104] This is similar to a no-year appropriation except that a no-year
appropriation will be closed if there are no disbursements from the
appropriation for two consecutive fiscal years, and if the head of the
agency or the President determines that the purposes for which the
appropriation was made have been carried out. 31 U.S.C. § 1555. In
actual usage, the term "permanent appropriation" tends to be used more
in reference to appropriations contained in permanent legislation, such
as legislation establishing a revolving fund, while "no-year
appropriation" is used more to describe appropriations found in
appropriation acts.
[105] Glossary at 24. See also our discussion of the disposition of
appropriation balances in Chapter 5, section D.
[106] Glossary at 23. See also 31 U.S.C. § 1301(b) (reappropriation for
a different purpose is to be accounted for as a new appropriation).
[107] We discuss the concept of budget authority and define the term
appropriation in section A ("Appropriations and Related Terminology")
of this chapter.
[108] Pub. L. No. 93-498, 88 Stat. 1535, 1543 (Oct. 29, 1974).
[109] A few early cases will be found that appear inconsistent with the
proposition stated in the text. E.g., 6 Comp. Dec. 514, 516 (1899);
4 Comp. Dec. 325, 327 (1897). These cases predate the enactment on
July 1, 1902 (32 Stat. 552, 560) of what is now 31 U.S.C. § 1301(d) and
should be disregarded.
[110] U.S. Const. art. I, § 9, cl. 7, discussed in Chapter 1, section
B.
[111] GAO regulations exempt nonappropriated fund procurements. 4
C.F.R. § 21.5(g).
[112] But see MDB Communications, Inc. v. United States, 53 Fed. Cl.
245 (2002), and American Management Systems, Inc. v. United States, 53
Fed. Cl. 525 (2002), two other recent decisions that do apply GAO's
view that revolving funds are appropriations to support Tucker Act
jurisdiction.
[113] E.g., Furash & Co. v. United States, 252 F.3d 1336, 1342 (Fed.
Cir. 2001); Denkler v. United States, 782 F.2d 1003 (Fed. Cir. 1986);
Aaron v. United States, 51 Fed. Cl. 690 (2002); L'Enfant Plaza
Properties, Inc. v. United States, 668 F.2d 1211 (Ct. Cl. 1982);
Kyer v. United States, 369 F.2d 714, 718 (Ct. Cl. 1966), cert. denied,
387 U.S. 929 (1967).
[114] See, in this regard, Core Concepts, 327 F.3d at 1338, noting that
GAO's position and the authorities it cites on the status of revolving
funds "are not applicable to the non-appropriated funds doctrine
[governing Tucker Act jurisdiction] in the same sense that they are
applicable to federal appropriations law."
[115] See, e.g., B-272191, Nov. 4, 1997.
[116] A few are 64 Comp. Gen. 138 (1984); 36 Comp. Gen. 526 (1957);
17 Comp. Gen. 974 (1938); 5 Comp. Gen. 399 (1925); B-289209, May 31,
2002; B-290011, Mar. 25, 2002.
[117] U.S. General Accounting Office, A Glossary of Terms Used in the
Federal Budget Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington,
D.C.: Jan. 1993), at 80.
[118] 7 Comp. Gen. 524 (1928); 4 Comp. Gen. 848 (1925); 17 Comp.
Dec. 174 (1910). A case in which adequate statutory authority was found
to exist is B-217093, Jan. 9, 1985 (transfer from Japan-United States
Friendship Commission to Department of Education to partially fund a
study of Japanese education).
[119] 70 Comp. Gen. 592 (1991); 65 Comp. Gen. 881 (1986); 33 Comp.
Gen. 216 (1953); 33 Comp. Gen. 214 (1953); 17 Comp. Dec. 7 (1910);
B-286661, Jan. 19, 2001; B-206668, Mar. 15, 1982; B-178205.80, Apr. 13,
1976; B-164912-O.M., Dec. 21, 1977.
[120] 26 Comp. Gen. 545, 548 (1947); 19 Comp. Gen. 774 (1940); 6 Comp.
Gen. 748 (1927); 4 Comp. Gen. 703 (1925).
[121] Library of Congress Fiscal Operations Improvement Act of 2000,
Pub. L. No. 106-481, § 103, 114 Stat. 2187, 2189 (Nov. 9, 2000),
amended by the fiscal year 2002 Legislative Branch Appropriations, Pub.
L. No. 107-68, 115 Stat. 560, 588-89 (Nov. 12, 2001), codified at
2 U.S.C. § 182c.
[122] E.g., 31 Comp. Gen. 109, 114-15 (1951); 28 Comp. Gen. 365 (1948);
26 Comp. Gen. at 548; 18 Comp. Gen. 489; 17 Comp. Gen. 900 (1938);
17 Comp. Gen. 73 (1937); 16 Comp. Gen. 545 (1936); B-167034-O.M.,
Jan. 20, 1970. We discuss the Economy Act in detail in Chapter 12,
Volume III of the third edition of Principles of Federal Appropriations
Law.
[123] The agency must be careful that a transfer of administrative
allocations does not, under its own fund control regulations, produce a
violation of 31 U.S.C. § 1517(a), discussed further in Chapter 6.
[124] Reprogramming Action Within the Department of Defense: Hearing
Before the House Armed Services Committee (Sept. 30, 1985) (remarks
prepared for delivery by The Honorable William H. Taft IV, Deputy
Secretary of Defense, unprinted).
[125] U.S. General Accounting Office, A Glossary of Terms Used in the
Federal Budget Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington,
D.C.: Jan. 1993), at 74; B-164912-O.M., Dec. 21, 1977.
[126] Louis Fisher, Presidential Spending Power, 76-77 (1975). Fisher
also briefly traces the evolution of the concept.
[127] GAO reports in this area include: U.S. General Accounting Office,
Information on Reprogramming Authority and Trust Funds, AIMD-96-102R
(Washington, D.C.: June 7, 1996); Economic Assistance: Ways to Reduce
the Reprogramming Notification Burden and Improve Congressional
Oversight, GAO/NSIAD-89-202 (Washington, D.C.: Sept. 21, 1989)
(foreign assistance reprogramming); Budget Reprogramming:
Opportunities to Improve DOD's Reprogramming Process, GAO/NSIAD-89-138
(Washington, D.C.: July 24, 1989); Budget Reprogramming: Department of
Defense Process for Reprogramming Funds, GAO/NSIAD-86-164BR
(Washington, D.C.: July 16, 1986).
[128] See Department of Defense Financial Management Regulation
7000.14-R, vol. 3 ch. 6, Reprogramming of DoD Appropriated Funds
(Aug. 1, 2000).
[129] Department of Defense and Emergency Supplemental Appropriations
for Recovery from and Response to Terrorist Attacks on the United
States Act, 2002, Pub. L. No. 107-117, § 8005, 115 Stat. 2230, 2247-48
(Jan. 10, 2002).
[130] In recent decades, general provisions of governmentwide
applicability--the "this or any other act" provisions--have often been
consolidated in the annual Treasury and General Government
appropriation acts. E.g., Pub. L. No. 108-7, div. J, title I, § 104,
117 Stat. 11, 437 (Feb. 20, 2003) (fiscal year 2003). Beginning in
2004, these provisions are now part of what is called the
Transportation, Treasury, and Independent Agencies Appropriations Act.
See H.R. 2989, 108th Cong. (passed by the House on September 9, 2003,
and the Senate on October 23, 2003).
[131] The appropriation provision in Auburn Housing Authority was aimed
at countering another provision in the very same act. Thus, the court
reasoned that the presumption against repeal by implication was
particularly strong in this case. Id. at 146. The court also contrasted
the hereafter provision with another provision in the same act that was
more explicit as to permanence. The latter provision read in part:
"[T]his subsection shall apply to fiscal year 1999 and each fiscal year
thereafter." Id. at 146-47.
[132] One early case found the words "or any other act" sufficient
words of futurity. 26 Comp. Dec. 1066 (1920). A later decision,
B-37032, Oct. 5, 1943, regarded their effect as inconclusive. Both of
these cases must be regarded as implicitly modified by the consistent
position expressed in the more recent decisions.
[133] In Williams v. United States, 240 F.3d at 1026, the Court of
Appeals for the Federal Circuit held that the provision addressed in
these decisions was not permanent, referring to the "unmistakable
language of Public Law 97-92 … terminating the effect of Section 140 in
1982." The court did not address the consequence, if any, of Congress's
use of the word hereafter. The court did concede, however, that "even
if Section 140 did not expire as of September 30, 1982, the 1989 Act
falls well within the specific exception in that statute for an 'Act of
Congress hereafter enacted.'" Id. at 1027. The 1989 Act the court
referred to is the Ethics Reform Act, Pub. L. No. 101-194, 103 Stat.
1716 (Nov. 30, 1989), which entitled federal judges to cost-of-living
pay increases whenever federal employees received a cost-of-living
increase. The 1989 Act was enacted after the series of GAO decisions
was issued that addressed the fiscal year 1982 law.
[134] See also 67 Comp. Gen. 332 (1988); 37 Comp. Gen. 732 (1958);
26 Comp. Gen. 452 (1947); 15 Comp. Gen. 802 (1936); 4 Comp. Gen. 219
(1924); A-27765, July 8, 1929.
[135] Pub. L. No. 100-411, § 1(a)(1), 102 Stat. 1097 (Aug. 22, 1988).
[136] Pub. L. No. 98-532, 98 Stat. 2705 (Oct. 19, 1984), codified at
5 U.S.C. § 906 note.
[137] Authorization for Continuing Hostilities in Kosovo, unpublished
OLC opinion, Dec. 19, 2000.
[138] Less than 4 months after the Court's decision, Congress enacted
legislation exempting the Tellico project from the Endangered Species
Act. Endangered Species Act Amendments of 1978, Pub. L. No. 95-632,
§ 5, 92 Stat. 3751, 3761 (Nov. 10, 1978).
[139] Congressional practice also firmly supports this conclusion since
Congress appropriates huge sums each year to fund programs with expired
authorizations. According to the Congressional Budget Office (CBO),
appropriations for which specific authorizations had expired have
ranged between about $90 billion and about $120 billion in recent
fiscal years. Unauthorized Appropriations and Senate Resolution 173:
Hearing Before the Senate Committee on Rules and Administration,
108th Cong. 3 (July 9, 2003) (statement by CBO Director Douglas Holtz-
Eakin).
[140] There is a technical distinction between "interpretation"
(determining the meaning of words) and "construction" (application of
words to facts). 2A Sutherland, Statutes and Statutory Construction
§ 45.04 (6th ed. 2000). The distinction, as Sutherland points out, has
little practical value. We use the terms interchangeably, as does
Sutherland.
[141] "But if Congress has all the money of the United States under its
control, it also has the whole English language to give it away with…
." 9 Op. Att'y Gen. 57, 59 (1857).
[142] We will refer to the 6th edition, edited by Professor Norman J.
Singer and published in 2000.
[143] E.g., United States v. Trans-Missouri Freight Ass'n, 166 U.S.
290, 318 (1897): "Looking simply at the history of the bill from the
time it was introduced in the Senate until it was finally passed, it
would be impossible to say what were the views of a majority of the
members of each house in relation to the meaning of the act."
[144] "The government of the United States has been emphatically termed
a government of laws, and not of men." Marbury v. Madison, 5 U.S. (1
Cranch) 137, 163 (1803).
[145] See McNary v. Haitian Refugee Center, Inc., 498 U.S. 479, 496
(1991) ("It is presumable that Congress legislates with knowledge of
our basic rules of statutory construction."); Finley v. United States,
490 U.S. 545, 556 (1989) ("What is of paramount importance is that
Congress be able to legislate against a background of clear
interpretive rules, so that it may know the effect of the language it
adopts.").
[146] The federal circuits had likewise split on the plain meaning of
this statute prior to the Smith decision. See Smith, 508 U.S. at 227.
[147] See Eric S. Lasky, Perplexing Problems with Plain Meaning, 27
Hofstra L. Rev. 891 (1999); R. Randall Kelso, Statutory Interpretation
Doctrine on the Modern Supreme Court and Four Doctrinal Approaches to
Judicial Decision-Making, 25 Pepp. L. Rev. 37 (1997). Professor Kelso
describes Justice Scalia's approach as "new textualism."
[148] "[S]hortly before Justice Scalia's appointment, the Justices
consulted the legislative records in almost every case involving the
interpretation of a statute. Today, despite years of Justice Scalia's
advocation for the plain meaning rule, 'legislative history is [still]
used by at least one Justice in virtually every decision of the Supreme
Court in which the meaning of a federal statute is at issue.'" Lasky,
supra, at 896 (footnotes omitted).
[149] United States National Bank of Oregon is a particularly
interesting case, which concerned whether Congress had repealed a
provision of law originally enacted in 1918. The issue turned on the
effect, if any, to be given the placement of quotation marks in a later
statute that allegedly constituted the repeal. Upon detailed
examination of the overall statutory scheme and its evolution over many
decades, the Court concluded that the quotation marks were misplaced as
a result of a drafting error. Therefore, the 1918 provision had not
been repealed.
[150] Department of Justice Office of Legal Counsel Memorandum for
David W. Burke, Chairman, Broadcasting Board of Governors, Relocation
Deadline Provision Contained in the 1996 Omnibus Consolidated
Rescissions and Appropriations Act, May 21, 1996.
[151] The decision had nothing to do with equality of the sexes; the
"boys" were all off fighting World War I.
[152] If United States National Bank of Oregon v. Independent Insurance
Agents of America, Inc., 508 U.S. 439 (1993), discussed above, had
involved codified provisions of law, the Court's task would have been
much easier. In fact, the case probably would never have arisen.
[153] Background information about the nature and status of
codification efforts can be found on the Web site of the Office of the
Law Revision Counsel, U.S. House of Representatives: http://
uscode.house.gov.
[154] Karl N. Llewellyn, Remarks on the Theory of Appellate Decision
and the Rules or Canons About How Statutes Are To Be Construed, 3 Vand.
L. Rev. 395 (1950). The Supreme Court has recognized the contradictory
nature of canons. E.g., Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 115 (2001) ("Canons of construction need not be conclusive and are
often countered, of course, by some maxim pointing in a different
direction."); Landgraf v. USI Film Products, 511 U.S. 244, 263 (1994)
("It is not uncommon to find 'apparent tension' between different
canons of statutory construction. As Professor Llewellyn famously
illustrated, many of the traditional canons have equal opposites.").
[155] This decision held that, absent a specific appropriation, the
Railroad Retirement Board had no obligation to repay certain funds that
had been transferred to it from the Treasury. While the statute that
transferred the funds characterized them as a "loan," it also clearly
provided that repayment was required only if an appropriation was
enacted for that purpose.
[156] "A word is not a crystal, transparent and unchanged, it is the
skin of a living thought and may vary greatly in color and content
according to the circumstances and the time in which it is used."
Towne v. Eisner, 245 U.S. 418, 425 (1918) (Holmes, J.).
[157] The utility of this principle will, of course, depend on the
degree of specificity in the title. Its value has been considerably
diminished by the practice, found in many recent statutes such as the
Prompt Payment Act noted above, of adding on the words "and for other
purposes."
[158] An interesting use of a preamble arose in Association of American
Railroads v. Surface Transportation Board, 237 F.3d 676 (D.C. Cir.
2001). Recognizing that the preamble lacked operative effect, the court
nonetheless held that it was arbitrary and capricious for the agency to
construe the statute without at least considering the policy set out in
its preamble.
[159] The majority opinion in Association of American Physicians &
Surgeons placed heavy reliance on Public Citizen, noting that "[t]he
Court adopted, we think it is fair to say, an extremely strained
construction of the word 'utilized' in order to avoid the
constitutional question." 997 F.2d at 906. Both Public Citizen and
Association of American Physicians & Surgeons drew strongly worded
concurring opinions along the same lines. The concurrences maintained
that FACA clearly applied by its plain terms to the respective groups,
but that its application was unconstitutional as so applied.
[160] 128 Cong. Rec. 16918-19 (1982), quoted in Hirschey v. Federal
Energy Regulatory Commission, 777 F.2d 1, 7 n.1 (D.C. Cir. 1985)
(Scalia, J., concurring).
[161] "Here … we are faced not with a single, idle [Member] statement,
but rather a pattern of statements--and one that is consistent not only
with the Conference Committee Report's emphasis … but also the
statute's language itself." Id.
[162] The origin and use of this device were explained in a floor
statement by former Senator Morse on March 26, 1964. See 110 Cong. Rec.
6423 (1964).
[163] While this opinion stopped short of attempting "finally to
decide" the matter, it presented several powerful arguments against the
validity of signing statements as legislative history but no arguments
in favor of their use for this purpose.
[164] William N. Eskridge, Jr., and Philip P. Frickey, Quasi-
Constitutional Law: Clear Statement Rules As Constitutional Lawmaking,
45 Vand. L. Rev. 593 (1992).
[165] The "express statement" rule does not, however, extend to
judicial review of the constitutionality of presidential actions.
Dalton, 511 U.S. at 469, 473-474; Franklin, 505 U.S. at 801.
[166] One exception is the Constitution's prohibition against "ex post
facto" laws (U.S. Const. art. I, § 9, cl. 3), which precludes penal
statutes from operating retroactively. Another exception, based on
separation of powers considerations, prevents Congress from enacting
laws that have the effect of requiring federal courts to reopen final
judgments. Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995).
[167] Previously, the Court had acknowledged but left unresolved the
"apparent tension" between Bradley and Bowen. See Kaiser Aluminum &
Chemical Corp. v. Bonjorno, 494 U.S. 827, 837 (1990).
[168] Specifically, the Court held that a provision of the Civil Rights
Act of 1991 that created a new cause of action for certain civil rights
violations could not be added to a lawsuit pending at the time the 1991
Act was signed into law since the conduct involved in that lawsuit
occurred before the 1991 Act was enacted. On the other hand,
"procedural" changes, such as provisions for jury trials in certain
civil rights actions, ordinarily could apply to lawsuits pending at the
time of enactment. (In this case, however, the provision for jury trial
would not apply since it was limited to the newly created cause of
action.)
[169] The Supreme Court has since held that the ADEA does not validly
abrogate the states' sovereign immunity under the Eleventh Amendment.
Raygor v. Regents of the University of Minnesota, 534 U.S. 533 (2002);
Kimel v. Florida Board of Regents, 528 U.S. 62 (2000).
[170] "The head of an Executive department or military department may
prescribe regulations for the government of his department, the conduct
of its employees, the distribution and performance of its business, and
the custody, use, and preservation of its records, papers, and
property…."
[171] Legislative or statutory regulations of this type have
traditionally been called "statutory regulations," as distinguished
from "administrative regulations," such as those issued under 5 U.S.C.
§ 301. E.g., 21 Comp. Dec. 482 (1915). While the legislative/statutory
versus administrative terminology may be convenient shorthand in some
contexts, its significance has been largely superseded by the
Administrative Procedure Act.
[172] For an excellent summary of the APA, together with a useful
bibliography, see Federal Administrative Procedure Sourcebook (3rd ed.
2000), published by the American Bar Association's Section on
Administrative Law and Regulatory Practice. The Sourcebook is
particularly useful because it reprints in full the 1947 Attorney
General's Manual on the Administrative Procedure Act, which has been
called the government's "most authoritative interpretation of the APA."
Bowen v. Georgetown University Hospital, 488 U.S. 204, 218 (1988)
(Justice Scalia, concurring).
[173] Indispensable though it may be, the Federal Register has been
termed "voluminous and dull." Federal Crop Insurance Corp. v. Merrill,
332 U.S. 380, 387 (1947) (Justice Jackson, dissenting).
[174] Internet notice is not an acceptable substitute for publication
in the Federal Register. Utility Solid Waste Activities Group v. EPA,
236 F.3d 749, 763 (D.C. Cir. 2001).
[175] The "legislative history" analogy may be extended to unpublished
agency documents used in the preparation of a regulation, which may be
relevant in resolving ambiguities in the regulation. See Deluxe Check
Printers, Inc. v. United States, 5 Cl. Ct. 498, 500-01 (1984).
[176] Congress originally provided, in section 5 of Public Law 101-648,
for the Negotiated Rulemaking Act to expire 6 years after its date of
enactment. However, the Administrative Dispute Resolution Act of 1996,
Pub. L. No. 104-320, § 11, 110 Stat. 3870, 3873-3874 (Oct. 19, 1996),
repealed section 5 and made the Act permanent. Public Law 104-320 also
required the President to designate an agency or interagency committee
to encourage and facilitate negotiated rulemaking.
[177] In Utility Solid Waste Activities Group, the court held that the
"good cause" exemption in section 553(b) does not allow an agency to
forego notice and comment when correcting a technical error in a
regulation. 236 F.3d at 754-55. Likewise, the court held that agencies
have no "inherent power" to correct such technical errors outside of
the APA procedures. Id. at 752-54.
[178] An agency does not, however, waive the benefit of APA exemptions
simply by following an informal practice of voluntarily issuing
otherwise exempt regulations through APA notice and comment procedures.
Such a practice does not estop the agency from later invoking the
exemption. See, e.g., Malek-Marzban v. Immigration & Naturalization
Service, 653 F.2d 113 (4th Cir. 1981), discussed in section A.5 of this
chapter.
[179] The exemption may be unavailable to particular agencies or
programs, in whole or in part, by virtue of some other statute. For
example, Congress has required the Department of Energy to follow the
APA with respect to public property, loans, grants, or contracts,
although the Department of Energy may waive notice and comment upon
finding that strict compliance is likely to cause serious harm to the
public health, safety, or welfare. 42 U.S.C. §§ 7191(b)(3), (e).
[180] Originally, Judge Stephen F. Williams, author of the American
Mining Congress opinion, had included as an additional factor whether
the rule was published in the C.F.R. However, Professor Pierce notes
that Judge Williams greatly downplayed this factor in a subsequent
opinion, noting that publication in the C.F.R. provides only a "snippet
of evidence" that a rule is legislative. See Health Insurance
Association of America, Inc., 23 F.3d at 423. Professor Pierce likewise
discounts this factor since many interpretative rules are published in
the C.F.R. Pierce, Administrative Law Treatise, § 6.4 at 344-345.
[181] Three recent cases illustrate the considerations courts apply in
deciding what remedy is appropriate in the case of regulations found to
be defective: American Bioscience, Inc. v. Thompson, 269 F.3d 1077,
1086 (D.C. Cir. 2001) (rule vacated); National Organization of
Veterans' Advocates, Inc. v. Secretary of Veterans Affairs, 260 F.3d
1365, 1380-81 (Fed. Cir. 2001) (rule not vacated); Fox Television
Stations, Inc. v. FCC, 280 F.3d 1027, 1047-53 (D.C. Cir. 2002) (one
rule before the court vacated; another not vacated).
[182] There are, however, a number of so-called "hybrid rulemaking"
statutes that do directly affect the APA by imposing additional (or
different) substantive or procedural requirements for certain
regulations. Some of these statutes are listed in Pierce,
Administrative Law Treatise § 7.7 at 486. They include the Occupational
Safety and Health Act, the Consumer Product Safety Act, and the Toxic
Substances Control Act of 1977.
[183] The Act, originally enacted in 1980, was amended in 1996 to make
certain agency actions subject to judicial review. See 5 U.S.C. § 611.
[184] The CRA, 5 U.S.C. § 804(3), generally applies the broad APA
definition of rule in 5 U.S.C. § 551, and, therefore, is not limited to
regulations that are subject to rulemaking under the APA. However, the
CRA definition has its own exceptions, which are similar to some of the
exemptions from rulemaking under the APA. For illustrative opinions on
what agency issuances are or are not "rules" covered by the CRA, see
B-292045, May 19, 2003, and B-281575, Jan. 20, 1999. The CRA also
exempts from its coverage Federal Reserve System rules concerning
monetary policy. 5 U.S.C. § 807.
[185] The CRA's joint resolution disapproval mechanism, which requires
either the President's signature or enactment over a presidential veto,
has been used only once--to nullify, early in the George W. Bush
Administration, an ergonomics regulation that was promulgated during
the waning days of the Clinton Administration. See Pub. L. No. 107-5,
115 Stat. 7 (Mar. 20, 2001).
[186] This list includes several executive orders currently in effect
that apply to broad categories of agency regulations. Other executive
orders (and statutes) govern regulations in more discrete subject
areas.
[187] Obviously, this principle applies as well to agency issuances
that do not even rise to the level of legislative regulations. If
agency in-house publications are inconsistent with "governing statutes
and regulations of the highest or higher dignity, e.g., regulations
published in the Federal Register, they do not bind the government, and
persons relying on them do so at their peril." Fiorentino v. United
States, 607 F.2d 963, 968 (Ct. Cl. 1979), cert. denied, 444 U.S. 1083
(1980). It is equally obvious that publishing an agency manual in
accordance with the requirements of the APA cannot enhance the agency's
status so as to permit it to create substantive rights in violation of
a statute. Hamlet v. United States, 63 F.3d 1097, 1104-05 (Fed. Cir.
1995), cert. denied, 517 U.S. 1155 (1996).
[188] This of course is the same distinction discussed earlier with
respect to the applicability of informal rulemaking procedures under
the Administrative Procedure Act (APA). It has been pointed out that
the term "legislative" is preferable to "substantive" because the
latter can become confused with another distinction occasionally
encountered, substantive versus procedural, which has little value in
the present context. A legislative rule may be procedural, and an
interpretative rule may be substantive in the sense that it does not
deal with an issue of procedure. See Joseph v. United States Civil
Service Commission, 554 F.2d 1140, 1153 n.24 (D.C. Cir. 1977).
Whichever term is used, the terminology can be misleading, as pointed
out in Production Tool Corp. v. Employment & Training Administration,
688 F.2d 1161, 1166 (7th Cir. 1982). Indeed, any attempt to force fit
the wide range of agency issuances into neat categories by using such
labels appears problematic. See generally Richard J. Pierce, Jr.,
Administrative Law Treatise § 6.1 ("What is a Rule") (4th ed. 2000).
[189] See, for example, B-226499, Apr. 1, 1987, holding that an
unpublished notice purporting to amend a published regulation did not
have the force and effect of law.
[190] Of course, the government has "prosecutorial discretion" in
deciding whether and how to pursue enforcement actions. See section B.4
of this chapter. This is different from the point being made in the
text, which is that an agency cannot follow its regulation when it
feels like it and not follow it when it does not feel like it.
[191] American Farm Lines v. Black Ball Freight Service, 397 U.S. 532
(1970), is occasionally cited (and criticized) as an aberrant case in
which the Supreme Court permitted an agency to ignore a legislative
regulation. See Richard J. Pierce, Jr., Administrative Law Treatise,
§ 6.6 at 355 (4th ed. 2000). In American Farm Lines, the Court upheld
the Interstate Commerce Commission's grant of an application for
temporary operating authority notwithstanding that the application did
not include all the specific information items required by the agency's
regulations. However, it is not clear that the Court viewed the
regulations as legislative or substantive in nature. Rather, the Court
observed that the regulations were "not intended primarily to confer
important procedural benefits upon individuals," but were "mere aids to
the exercise of the agency's independent discretion." 397 U.S. at 538-
39. The Court added that "there is no reason to exempt this case from
the general principle that '[i]t is always within the discretion of a
court or an administrative agency to relax or modify its procedural
rules adopted for the orderly transaction of business before it when in
a given case the ends of justice require it.'" Id. at 539 (citations
omitted).
[192] See section C.4 of this chapter entitled "Regulations May Limit
Discretion."
[193] In this specific context, the answer to that question determines
only whether the pronouncement is binding on the agency. It does not
necessarily follow that something found to be a regulation should have
been published under APA procedures or that it has the force and effect
of law on parties outside the agency. These are separate (although
related) questions that have their own tests and standards.
[194] Cases such as Malek-Marzban are distinguishable from those
discussed previously in section A.1.b of this chapter. The
section A.1.b cases involve situations in which an agency formally
waived the benefit of APA exemptions for its regulations.
[195] See Chapter 2, section D.5 for a discussion of retroactivity with
respect to statutes.
[196] E.g., Iowa Power & Light Co. v. Burlington Northern, Inc.,
647 F.2d 796, 812 (8th Cir. 1981), cert. denied, 455 U.S. 907 (1982).
[197] E.g., Farmers Telephone Co. v. FCC, 184 F.3d 1241 (10th Cir.
1999); Caterpillar Tractor Co. v. United States, 589 F.2d 1040, 1043
(Ct. Cl. 1978); but see Health Insurance Ass'n of America v. Shalala,
23 F.3d 412 (D.C. Cir. 1994).
[198] GAO's desire for agency comments applies to audit reports as well
as legal decisions. However, in view of the fundamental differences
between the two products, the process differs. For GAO's policy for
audit reports, see U.S. General Accounting Office, GAO's Agency
Protocols, GAO-03-232SP (Washington, D.C.: Dec. 2, 2002). For a legal
decision, GAO's typical practice is to solicit the agency's position on
the legal issue(s) involved before a draft is ever written. A
"development letter" is used to document facts, refine legal issues,
and obtain the agency's perspective on the law and its implementation.
Accordingly, draft legal decisions are not submitted for comment.
[199] "When Congress has 'explicitly left a gap for the agency to fill,
there is an express delegation of authority to the agency to elucidate
a specific provision of the statute by regulation,' and any ensuing
regulation is binding in the courts unless procedurally defective,
arbitrary or capricious in substance, or manifestly contrary to the
statute." United States v. Mead Corp., 533 U.S. 218, 227 (2001),
quoting Chevron, 467 U.S. at 843-44.
[200] The basic premise that an agency interpretation is entitled to
some largely undefined degree of deference had consistently been
espoused by the Supreme Court for well over a century and a half. See,
e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 315 (1979); Batterton v.
Francis, 432 U.S. 416, 424-25 (1977); General Electric Co. v. Gilbert,
429 U.S. 125, 141 (1976) (referring to the quoted passage from
Skidmore, infra text, as the "most comprehensive statement of the role
of interpretative rulings"); United States v. Philbrick, 120 U.S. 52,
59 (1887); Hahn v. United States, 107 U.S. 402, 406 (1882); United
States v. Pugh, 99 U.S. 265, 269 (1878); United States v. Moore,
95 U.S. 760, 763 (1877); Edwards' Lessee v. Darby, 25 U.S. (12 Wheat.)
206, 210 (1827).
[201] Richard J. Pierce, Jr., Administrative Law Treatise, 10 (4th ed.
2003 Supp.).
[202] Justice Scalia, in his separate opinion in Barnhart, and other
commentators have criticized this statement as unnecessary and
indicated that this statement may pose a new but imprecise test for the
applicability of Chevron. See Barnhart, 535 U.S. at 226 (Scalia, J.,
concurring); Pierce, Administrative Law Treatise, at 8.
[203] Pierce, Administrative Law Treatise, at 6-7.
[204] 2 Administrative Law Treatise § 7:13 (2nd ed. 1979).
[205] While this determines the controlling interpretation, the
propriety of that interpretation does not automatically follow. As the
Court went on to caution in the very next sentence, "[t]he legality of
the result reached by this process, of course, is quite a different
matter." Bowles, 325 U.S. at 414.
[206] However, agency inaction in declining to initiate enforcement or
other regulatory action is subject to "a presumption of
unreviewability," although that presumption is rebuttable. Heckler v.
Chaney, 470 U.S. 821 (1985). Another obvious exception is if a statute
explicitly precludes judicial review. See Jordan Hospital, Inc. v.
Shalala, 276 F.3d 72 (1st Cir. 2002); National Coalition to Save Our
Mall v. Norton, 269 F.3d 1092 (D.C. Cir. 2001) (construction of World
War II memorial); Ismailov v. Reno, 263 F.3d 851 (8th Cir. 2001)
(refusal to extend deadline for asylum application).
[207] Richard J. Pierce, Jr., Administrative Law Treatise, 1269-70
(4th ed. Supp. 2003).
[208] See, e.g., L'Orange v. Medical Protective Co., 394 F.2d 57
(6th Cir. 1968) (court may invalidate an act as "contrary to public
policy" in the sense of being "injurious to the public," even where the
act may not be expressly prohibited by statute).
[209] Even under an entitlement program, an agency could presumably
meet a funding shortfall by such measures as making prorated payments,
but such actions would be only temporary pending receipt of sufficient
funds to honor the underlying obligation. The recipient would remain
legally entitled to the balance.
[210] A "mandatory program," as we use the term here, should not be
confused with the entitlement programs previously noted. A mandatory
program is simply one that Congress directs (rather than merely
authorizes) the agency to conduct, but within the limits of available
funding. Entitlement programs would take precedence over these
mandatory programs.
[211] The situation dealt with in B-97772 and B-104135, advances of
travel expenses to government employees serving as witnesses, is now
authorized by 5 U.S.C. § 5751.
[212] E.g., Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 2003, Pub. L.
No. 108-7, div. K, 117 Stat. 11, 474, 506 (Feb. 20, 2003).
[213] E.g., Department of the Interior and Related Agencies
Appropriations Act, 2003, Pub. L. No. 108-7, div. F, title I, 117 Stat.
11, 216, 218 (Feb. 20, 2003) ("For expenses necessary to implement the
Act of October 20, 1976..., $220,000,000, of which not to exceed
$400,000 shall be available for administrative expenses.").
[214] The protection of archaeological data is now provided by statute.
See 16 U.S.C.§ 469a-1 and the Archaeological Resources Protection Act
of 1979, 16 U.S.C. §§ 470aa et seq.
[215] Pub. L. No. 95-617, 92 Stat. 3117 (Nov. 9, 1978), codified at
43 U.S.C. §§ 2001 et seq.
[216] Pub. L. No. 95-632, 92 Stat. 3751 (Nov. 10, 1978), codified at
16 U.S.C. §§ 1536 et seq.
[217] Pub. L. No. 93-618, § 602(e), 88 Stat. 1978, 2072 (Jan. 3, 1975).
[218] Pub. L. No. 89-688, 80 Stat. 998 (Oct. 15, 1966).
[219] Pub. L. No. 97-466, 96 Stat. 2538 (Jan. 13, 1983).
[220] Section 1532 provides in pertinent part, "[a]n amount available
under law may be withdrawn from one appropriation account and credited
to another …only when authorized by law."
[221] GAO reached this conclusion prior to the Supreme Court's decision
in Immigration & Naturalization Service v. Chadha, 462 U.S. 919 (1983).
[222] See Chapter 2 for a discussion of permanent, indefinite
appropriations.
[223] 71 Comp. Gen. at 380 n.7, citing inter alia B-182081, Jan. 26,
1977, aff'd upon reconsideration, B-182081, Feb. 14, 1979.
[224] It should be noted, however, that settlement payments in
discrimination suits could be paid from an agency's general operating
funds when the suit and settlement are incident to the agency's
operation. B-257334, June 30, 1995.
[225] A few early cases purporting to require specific authority, such
as 2 Comp. Gen. 581 (1923), must be regarded as implicitly modified by
the later cases.
[226] GAO cases cautioned that when the award of prizes contained
elements of a lottery, which may be prohibited by certain federal
statutes, state laws, and regulations, the agency should consult with
the Department of Justice to ensure that its proposal is not a
prohibited lottery before spending any appropriated funds.
[227] Everyone loves a good animal case. Unfortunately, the animals in
most GAO decisions are dead or, as in the cases cited in the text, soon
to become dead. Readers interested more in amusement than precedent
might also check out 7 Comp. Gen. 304 (1927) (removal of a horse "found
dead lying on its back in a hole"); 18 Comp. Gen. 109 (1938) (another
dead horse); B-86211, July 26, 1949 (death of hogs allegedly caused by
being fed garbage purchased from Navy installation; it was pointed out
that other hogs had eaten the same government-furnished garbage and
managed to survive); B-47255, Feb. 6, 1945 (burial of three dead
bulls); B-37205, Oct. 19, 1943 (mule fell off cable swing bridge);
A-92649, Apr. 22, 1938 (still another dead horse); B-115434-O.M.,
June 19, 1953 (agency borrowed a bull from another agency for breeding
purposes, then had it slaughtered when it became vicious). These cases
are being memorialized here because they will probably never be cited
anywhere else. Insects do not escape either. See 34 Comp. Gen. 236
(1954) (grasshopper control in national forests). With the third
edition of this volume, GAO is pleased to report our first fish case.
See 70 Comp. Gen. 720 (1991) (rate of fish migration measured by
fisherman returning government fish tags from fish presumed dead or to
have at least had a very bad day).
[228] Penalty mail means official mail, other than franked mail, which
is authorized by law to be transmitted in the mail without prepayment
of postage. 32 U.S.C. § 3201(1).
[229] Decisions in this area prior to 1946 applying a stricter
standard, such as 21 Comp. Gen. 339 (1941) and 22 Comp. Dec. 317
(1916), should be disregarded as they reflected prohibitory legislation
enacted on March 15, 1898 (30 Stat. 316) and repealed in 1946.
[230] All of these cases also involve the pre-Government Employees
Training Act version of 5 U.S.C. § 5946 and may no longer be valid to
that extent. The editors have made no attempt to examine each of the
cases from this perspective. Thus, while the pre-1958 cases remain
valid to the limited extent that they involve 31 U.S.C. § 1345, the
results in those cases may no longer apply in view of the subsequent
enactment of 5 U.S.C. §§ 4109 and 4110.
[231] One of the decisions listed as overruled in 54 Comp. Gen. 1055
was 49 Comp. Gen. 305. However, the overruling action was later
recognized to be erroneous and 49 Comp. Gen. 305 was reinstated in
56 Comp. Gen. 572, 574.
[232] In some cases, the authority has been made permanent. An example
is 31 U.S.C. § 326(a) for the Treasury Department, construed in
37 Comp. Gen. 708 (1958). Another example is subsection (2) of
31 U.S.C. § 1345 concerning meetings of 4-H Clubs, noted in B-166506,
July 15, 1975.
[233] Many early decisions will be found dealing with R.S. §§ 189 and
365. E.g., 6 Comp. Gen. 517 (1927); 5 Comp. Gen. 382 (1925). For the
most part they may be disregarded as applying statutory provisions that
have since been significantly amended or repealed. However, decisions
under R.S. §§ 189 and 365 remain valid to the extent they concern the
elements of those statutes that survived into 5 U.S.C. § 3106. E.g.,
32 Comp. Gen. 118 (1952).
[234] "Except as otherwise authorized by law, the conduct of litigation
in which the United States, an agency, or officer thereof is a party
…is reserved to the officers of the Department of Justice, under the
direction of the Attorney General." 28 U.S.C. § 516.
[235] For a discussion of the historical evolution and current legal
basis of the Attorney General's role as "chief litigator," see 6 Op.
Off. Legal Counsel 47 (1982).
[236] In addition, an executive agency may call upon the Justice
Department for help in performing the legal investigation of any claim
pending in that agency. 28 U.S.C. § 514.
[237] For situations where the Federal Tort Claims Act is the exclusive
remedy, see 28 C.F.R. pt. 15.
[238] E.g., B-251141, May 3, 1993 (although no criminal charges or
disciplinary actions were taken and the matters at issue did concern
the performance of agency functions, Food and Drug Administration's
request to use its appropriations to reimburse private attorney fees
incurred by several employees incident to a federal criminal
investigation of possible insider trader activities should be referred
to Justice for consideration); B-242891, Sept. 13, 1991 (Army may not
use appropriated funds to reimburse private legal fees incurred by
civilian officers of the U.S. Army Chemical Research, Development and
Engineering Center convicted of multiple criminal environmental
protection violations committed in the course of pursuing their
otherwise official duties relating to the development of chemical
warfare systems), quoting United States v. Dee, 912 F.2d 741, 744 (4th
Cir. 1990), quoting United States v. Isaacs, 493 F.2d 1124, 1142-44
(7th Cir. 1974) ("Criminal conduct is not part of the necessary
functions performed by public officials.").
[239] The decision in 56 Comp. Gen. 615 dealt with civil actions
against employees under a prior version of section 7217 of the Internal
Revenue Code (26 U.S.C. § 7217) for improper disclosure of tax returns.
The prior version of section 7217 has since been repealed (and another
statute has been inserted in its place). The remedy is now a suit for
damages against the United States under 26 U.S.C. § 7431.
[240] Subject to the same kinds of exceptions applied to legal
representation of other federal employees, the Justice Department is
statutorily required to defend federal judges. E.g., Bryan v. Murphy,
243 F. Supp. 2d 1375, 1381 (N.D. Ga. 2003) (citing 28 U.S.C. § 516).
[241] The Office of Legal Counsel (OLC) has wrestled with a related
issue: whether the Justice Department may defend tribes or tribal
employees against suits for constitutional torts. OLC concluded that
the 1990 amendments to the Indian Self-Determination and Education
Assistance Act of 1975 cover only those torts for which the Federal
Tort Claims Act waives the sovereign immunity of the United States and
do not authorize or otherwise address representation of tribes or
tribal employees who are sued in their individual capacities for
constitutional torts. Opinion of the Office of Legal Counsel, for the
Assistant Attorney General Civil Division, Coverage Issues Under The
Indian Self-Determination Act, Apr. 22, 1998.
[242] As noted above, this chapter does not address the payment of
litigative awards, which is covered in Chapter 14. Accordingly, the
text here is speaking only about the payment of administrative awards.
We note in passing, however, that a recently enacted law has changed
the payment process for litigative attorney fees and other litigative
awards rendered against certain federal agencies (including "executive
agencies" as defined in 5 U.S.C. § 105) arising from claims of
discrimination or whistle-blowing retaliation against federal
employees, former federal employees, or applicants for federal
employment. Under the new law, known as the "Notification and Federal
Employee Antidiscrimination and Retaliation Act of 2002" (or "NoFEAR,"
for short), these litigative awards will now be paid initially from the
permanent, indefinite Judgment Fund appropriation. Within a reasonable
time thereafter, the federal agency involved must reimburse the
Judgment Fund from its operating appropriations. See Pub. L. No. 107-
174, § 1(a), 116 Stat. 566 (May 15, 2002), to be codified at 5 U.S.C.
§ 2301 note. As a result of this law, all awards against federal
agencies for discrimination or whistle-blowing retaliation against
federal employees, former federal employees, or applicants for federal
employment (including associated attorney fee awards)--whether
litigative or administrative--will ultimately be paid from agency
operating appropriations, which is one of the main goals Congress
intended the new law to accomplish. S. Rep. No. 107-143, at 1-3, 7-8
(2002).
[243] EEOC is not responsible for the entire Rehabilitation Act. The
Architectural and Transportation Barriers Compliance Board is
responsible for insuring compliance with the standards prescribed in
the Architectural Barriers Act of 1968. 29 U.S.C. § 792.
[244] Of course, different statutes often dictate different results
with respect to who should receive payment. Cf., e.g., Heston v.
Secretary of Health & Human Services, 41 Fed. Cl. 41, 45-46 (1998)
(distinguishing the result in Jensen, supra.)
[245] The term "appropriate authority" includes the head of the
employing agency, a court, the Office of Personnel Management, the
Merit Systems Protection Board (but not the MSPB Special Counsel,
59 Comp. Gen. 107 (1979)), the Comptroller General (see, e.g., 63 Comp.
Gen. 170 (1984) and 62 Comp. Gen. 464 (1983)), the Equal Employment
Opportunity Commission, the Federal Labor Relations Authority, plus a
few others. 5 C.F.R. § 550.803.
[246] S. Rep. No. 96-253, at 17 (1979) (report of the Senate Judiciary
Committee).
[247] S. Rep. No. 96-253, supra, at 7; H.R. Rep. No. 96-1418, at 11
(1980) (report of House Judiciary Committee).
[248] A position is "substantially justified" if it is "justified to a
degree that could satisfy a reasonable person." Pierce v. Underwood,
487 U.S. 552, 565 (1988). See also Immigration & Naturalization
Service v. Jean, 496 U.S. 154, 157 n.6 (1990); Dantran, Inc. v.
Department of Labor, 246 F.3d 36, 40-41 (1st Cir. 2001).
[249] Pierce v. Underwood, supra, identified a number of factors that
may not be used as "special factors" to justify exceeding the cap:
novelty and difficulty of issues; undesirability of the case; work and
ability of counsel (except for counsel with "distinctive knowledge or
specialized skill" relevant to the case); results obtained; customary
fees and awards in other cases; contingent nature of the fee. 487 U.S.
at 571-74. See also, e.g., Hyatt v. Barnhart, 315 F.3d 239, 249 (4th
Cir. 2002).
[250] This provision was added in 1985. The payment provision in the
original EAJA was complex and confusing. The amendment was designed to
preclude payment under 31 U.S.C. § 1304, the permanent judgment
appropriation.
[251] Authorities for this proposition are cited in Chapter 14
(Volume III of the second edition of Principles of Federal
Appropriations Law) in our discussion of the judicial portion of EAJA,
which has an identical payment provision.
[252] The First Circuit handed Gavette down later in time, and took
advantage of the opportunity to comment on Miller. 808 F.2d at 1462-63.
The Third Circuit has yet to reply, either with its analysis of
Gavette, or with a renewal or a repudiation of its support for Miller.
[253] At that time, GSBCA was authorized to hear bid protests involving
automatic data processing procurements under the so-called Brooks Act,
formerly codified at 40 U.S.C. § 759. The Brooks Act has since been
repealed, Pub. L. No. 104-106, § 5101, 110 Stat. 186, 680 (1996).
[254] The Supreme Court reiterated the "American Rule" recently in
Buckhannon Board & Care Home, Inc. v. West Virginia Department of
Health & Human Resources, 532 U.S. 598, 602 (2001).
[255] Authority repealed by Pub. L. No. 103-312, § 3, 108 Stat. 1691
(Aug. 26, 1994).
[256] H.R. Rep. No. 96-610, at 9, 14 (1979) (on H.R. 4440, 1980
appropriations bill for Department of Transportation and related
agencies).
[257] E.g., Department of Transportation and Related Agencies
Appropriations Act, 1990, Pub. L. No. 101-164, § 306, 103 Stat. 1069,
1092 (Nov. 21, 1989).
[258] The Greene County litigation produced several published
decisions: 455 F.2d 412 (2nd Cir. 1972), 490 F.2d 256 (2nd Cir. 1973),
528 F.2d 38 (2nd Cir. 1975), and the decision cited in the text, known
as "Greene County IV."
[259] The 104th Congress enacted two laws, the Legislative Branch
Appropriations Act of 1996, Pub. L. No. 104-53, § 211, 109 Stat. 514,
535 (Nov. 19, 1995), and the General Accounting Office Act of 1996,
Pub. L. No. 104-316, 110 Stat. 3826 (Oct. 19, 1996), that transferred
GAO's authority over the settlement of claims and related advance
decisions, waivers, and other functions (including judgment fund
payments and transportation carriers appeals) to the Executive Branch.
Federal employees' claims for compensation and leave, and settlement of
deceased employees' accounts were assigned to Office of Personnel
Management (OPM), Office of General Counsel, Claims Adjudication Unit.
In April 2000, this function was transferred to OPM's Office of Merit
Systems Oversight and Effectiveness.
[260] We note in passing that there are other laws limiting the
salaries paid to federal employees. E.g., 18 U.S.C. § 209 (salary of
government employees payable only by United States). However, this
discussion is limited to laws that constitute purpose restrictions on
an agency's use of appropriations to pay salaries.
[261] For example, the 2003 provision is found in Pub. L. No. 108-7,
div. J, title VI, § 605, 117 Stat. 11, 464 (Feb. 20, 2003) (codified at
5 U.S.C. § 3101 note).
[262] The 2003 provision is Pub. L. No. 107-248, title VIII, § 8002,
116 Stat. 1519, 1536 (Oct. 23, 2002) (codified at 10 U.S.C. § 1584
note).
[263] The cited decision refers to the Naval Industrial Fund
established under 10 U.S.C. § 2208. The decision makes no mention of
the statutory exemption for the Defense Department, which was in effect
in 1967. For purposes of this discussion, whether B-161976 could have
been disposed of more simply based on the Department's exemption is
irrelevant. The decision is cited here merely for the proposition noted
in the text.
[264] See, e.g., 41 Comp. Gen. 114 (1961); 40 Comp. Gen. 364 (1960);
40 Comp. Gen. 176 (1960).
[265] Construed by the Justice Department as applicable to proceedings
involving the individual's own loyalty or knowledge of activities or
plans that pose a serious threat to national security. 1 Op. Off. Legal
Counsel 252 (1977).
[266] Citing, respectively, People v. Klaw, 106 N.Y.S. 341, 351 (Ct.
Gen. Sess. 1907), and Young v. Board of Trustees of Broadwater County
High School, 90 Mont. 576, 4 P.2d 725, 726 (1931).
[267] The Comptroller of the Treasury's comments should not be confused
with the rule that alcoholic beverages are not reimbursable as
subsistence expenses. B-164366, Mar. 31, 1981; B-164366, Aug. 16, 1968;
B-157312, May 23, 1966. The exclusion applies even against a claim that
consumption of alcohol is required by religious beliefs. B-202124,
July 17, 1981.
[268] "Feeding oneself is a personal expense which a Government
employee is expected to bear from his or her salary." 65 Comp.
Gen. 738, 739 (1986); B-288536, Nov. 19, 2001.
[269] 5 U.S.C. § 5702 (civilian employees); 37 U.S.C. § 404 (military
personnel).
[270] The cases under this heading obviously do not involve
entertainment as most of us understand the term. The rule, however,
fits under the same conceptual umbrella.
[271] This and several other cases cited in the text also involve the
"voluntary creditor" rule, discussed in Chapter 12 (Volume III of the
second edition of Principles of Federal Appropriations Law).
[272] A supervisor has no authority to do so. As noted in B-226403,
such an erroneous exercise of authority does not bind the government.
[273] While the storm in 68 Comp. Gen. 46 was certainly more than
flurries, it nevertheless remains the case that the government in
Washington will be disrupted by storms that do not approach the
severity of the Buffalo blizzard in B-189003. There is also a practical
distinction. To feed and lodge a potentially large number of employees
every time it snows in Washington is simply not realistic.
[274] Federal employees may not accept donations of food, except where
the recipient agency has statutory authority to accept and retain the
donation. One example of such authority is found in the Legislative
Branch Appropriations Act for fiscal year 2002. The Act permits the
U.S. Capitol Police to "accept contributions of meals and refreshments"
during a period of emergency, as determined by the Capitol Police
Board. Pub. L. No. 107-68, § 121, 115 Stat. 560, 576 (Nov. 12, 2001),
codified at 2 U.S.C. § 1971. The use of donations and contributions is
discussed further in Chapter 6.
[275] A brief mention should be made of the status of snacks and
refreshments as subsistence. Over the years, applying GSA regulations,
GAO objected to agencies reimbursing travelers for the actual expenses
of various snacks or light refreshments consumed while in travel
status. See, e.g., B-167820, Oct. 7, 1969. GSA now interprets
subsistence to include the light refreshments identified in its
conference planning travel regulation. GAO endorses this
interpretation. B-288266, Jan. 27, 2003.
[276] When light refreshments are furnished at nominal or no cost by
the government, no deduction of per diem is required. 41 C.F.R. § 301-
74.21.
[277] This is a relatively rare instance of the Comptroller Generals
issuing a formal decision to a GAO requester. Although it does not
happen often, it will be done when the situation warrants it.
[278] E.g., 46 Comp. Gen. 135, 136-37 (1966); B-140912, Nov. 24, 1959.
[279] A later decision, 67 Comp. Gen. 254 (1988), held that agencies
may spend appropriated funds, within reason, to support efforts to
solicit contributions to the CFC from their employees. While 67 Comp.
Gen. 254 did not involve meals, it nevertheless raises the question of
whether this aspect of B-195045 (insufficient relationship for purposes
of 5 U.S.C. § 4110) would still be followed. Either way, the
disallowance in B-195045 was correct because the meeting was within the
"duty station area" and the fee was little more than a disguised charge
for the lunch.
[280] By way of contrast, it has long been conceded that drinking water
is a necessity. See 22 Comp. Dec. 31 (1915); 21 Comp. Dec. 739 (1915).
However, an agency may not use appropriated funds for bottled drinking
water for the use of employees where the public water supply of the
locality is safe for drinking purposes. 17 Comp. Gen. 698 (1938).
[281] Compare B-208729, May 24, 1983, in which an Army unit sponsored a
catered luncheon to commemorate Dr. Martin Luther King, Jr., but--
properly--charged attendees for the meal.
[282] Departments of Commerce, Justice, and State, the Judiciary, and
Related Agencies Appropriations Act, 1990, Pub. L. No. 101-162,
103 Stat. 988, 1012 (Nov. 21, 1989).
[283] Department of Defense Appropriation Act, 1984, Pub. L. No. 98-
212, § 735, 97 Stat. 1421, 1444 (Dec. 8, 1983).
[284] See Chapter 14, section C, "Nonappropriated Fund
Instrumentalities" (Volume III of the third edition of Principles of
Federal Appropriations Law).
[285] The name is derived from the MUZAK Company, one of the providers.
[286] The statutes and cases discussed in this section concern the use
of appropriated funds for federal child care facilities. They do not
concern child care expenses incurred by federal employees as travel
costs. See, e.g., B-246829, May 18, 1982 ("Our decisions have clearly
held that fees for child care are not reimbursable expenses in
connection with an employees travel or relocation since neither the
governing statutes nor the [Federal Travel Regulations] authorize such
an entitlement.").
[287] Some GAO reports on child care in the federal sector are: U.S.
General Accounting Office, Child Care: Employer Assistance for Private
Sector and Federal Employees, GAO/GGD-86-38 (Washington, D.C.: Feb. 11,
1986); Military Child Care Programs: Progress Made, More Needed, GAO/
FPCD-82-30 (Washington, D.C.: June 1, 1982); and Child Care:
Availability for Civilian Dependents at Selected DOD Installations,
GAO/HRD-88-115 (Washington, D.C.: Sept. 15, 1988).
[288] Education Amendments of 1976, Pub. L. No. 94-482, § 524, 90 Stat.
2081, 2240 (Oct. 12, 1976), codified at 20 U.S.C. § 2564.
[289] The definition was patterned generally after the statute
authorizing agencies to provide space to federal credit unions,
12 U.S.C. § 1770, discussed in 66 Comp. Gen. 356 (1987).
[290] The fact that day care is involved cannot be determined from
either opinion, both of which discuss procedural issues.
[291] Implementation of the DOD program is discussed in U.S. General
Accounting Office, Child Care: How Do Military and Civilian Center
Costs Compare? GAO/HEHS-00-7 (Washington, D.C.: Oct. 14, 1999).
[292] See also Child Development Programs, DOD Instruction 6060.2
(Jan. 19, 1993); School-Age Care Program, DOD Instruction 6060.3
(Dec. 19, 1996).
[293] E.g., Pub. L. No. 101-162, 103 Stat. 988, 1007 (Nov. 21, 1989)
(fiscal year 1990); Pub. L. No. 108-7, div. B, title IV, 117 Stat. 11,
87 (Feb. 20, 2003) (fiscal year 2003).
[294] E.g., Department of Defense Appropriations Act 2003, Pub. L.
No. 107-248, 116 Stat. 1519, 1521 (Army), 1522 (Navy, Air Force,
Defense-Wide), 1535 (Inspector General) (Oct. 23, 2002).
[295] Department of Agriculture and Related Agencies Appropriation Act,
1963, Pub. L. No. 87-879, 76 Stat. 1203, 1212 (Oct. 24, 1962);
Department of the Interior and Related Agencies Appropriation Act,
1963, Pub. L. No. 87-578, 76 Stat. 335, 345 (Aug. 9, 1962).
[296] Department of Agriculture Appropriations for 1963: Hearings
before the Subcomm. on Department of Agriculture and Related Agencies
Appropriations of the House Comm. on Appropriations, 87th Cong., 2d
Sess. pt. 4, at 2090-91 (1962).
[297] Interior Department and Related Agencies Appropriations for 1963:
Hearings on H.R. 10802 before a Subcomm. of the Senate Comm. on
Appropriations, 87th Cong., 2d Sess. 550 (1962).
[298] Pub. L. No. 86-158, § 209, 73 Stat. 339, 355 (Aug. 14, 1959).
[299] Pub. L. No. 88-136, § 905, 77 Stat. 224, 246 (Oct. 11, 1963).
[300] H.R. Conf. Rep. No. 88-774, at 11 (1963).
[301] The decision modified the result of an earlier decision, B-46169,
Dec. 21, 1944, based on a change in the relevant appropriation
language. The 1944 decision contains a fuller statement of the facts.
[302] For other cases involving motor vehicle violations, see 57 Comp.
Gen. 270 (1978); B-250880, Nov. 3, 1992; B-238612, Apr. 16, 1990;
B-147420, Apr. 18, 1968; B-168096-O.M., Aug. 31, 1976; B-147420,
July 27, 1977 (nondecision letter); B-173783.188, Mar. 24, 1976
(nondecision letter).
[303] B-239556, Oct. 12, 1990 and B-242786, Jan. 31, 1991,
substantially supported the rule stated in Giancana and explained the
rationale behind it drawing a distinction between criminal and civil
contempt and the punitive nature of the awards.
[304] In addition to the cases cited in the text, see B-131932,
Mar. 13, 1958; B-125617, Apr. 11, 1956; B-126228, Jan. 6, 1956;
B-105602, Dec. 17, 1951; B-40387-O.M., June 24, 1966.
[305] In addition to the cases cited in the text, see B-167709,
Sept. 9, 1969; B-153911, Dec. 6, 1968; B-147731, Jan. 22, 1962.
[306] For more on the distinction between a tax and a service charge,
see "Other Municipal Services" later in this section, and section C.15
of this chapter.
[307] A claim for expenses (as opposed to damages) incurred by a state
in suppressing a fire starting on federal property and allegedly caused
by the negligence of a federal employee is not a claim for injury or
loss of property under the Federal Tort Claims Act, 28 U.S.C. §§ 2671
et seq., and is therefore not cognizable under that Act. Oregon v.
United States, 308 F.2d 568 (9th Cir. 1962), cert. denied, 372 U.S. 941
(1963); California v. United States, 307 F.2d 941 (9th Cir. 1962),
cert. denied, 372 U.S. 941 (1963); B-163089, Oct. 19, 1970.
[308] FEMA was transferred to the Department of Homeland Security by
Pub. L. No. 107-296, § 503, 166 Stat. 2135, 2213 (Nov. 25, 2002).
[309] Section 2465 of Title 10 of the United States Code prohibits DOD
contracts for firefighting or security guard functions, although this
provision has been suspended during Operation Enduring Freedom by Pub.
L. No. 107-56, title X, § 1010, 115 Stat. 272, 395 (Oct. 26, 2001).
[310] Merchandise in that case was distributed to more than 80 percent
of the workforce at one project.
[311] 68 Stat. 1112. This was an expansion of similar but more limited
authority enacted in 1946 (60 Stat. 809). GAO reviewed the Acts
effectiveness in U.S. General Accounting Office, Federal Workforce:
Federal Suggestion Programs Could Be Enhanced, GAO/GGD-89-71
(Washington, D.C.: Aug. 1989).
[312] Section 207 of the Federal Employees Pay Comparability Act of
1990 (FEPCA), contained in section 529 of the fiscal year 1991
Treasury, Postal Service, and General Government Appropriation Act,
Pub. L. No. 101-509, 104 Stat. 1389, 1457 (Nov. 5, 1990). The authority
is effective only to the extent funds are provided in appropriation
acts. FEPCA § 301, 104 Stat. 1461.
[313] The Sentencing Commission had not been covered prior to a 1988
amendment to the statute. See 66 Comp. Gen. 650 (1987). The
Administrative Office of the United States Courts is no longer covered
by the statute. Pub. L. No. 101-474, § 5(f), 104 Stat. 1100 (Oct. 30,
1990).
[314] Added by FEPCA, supra, § 201, 104 Stat. at 1455.
[315] U.S. General Accounting Office, Federal Workforce: Low Activity
in Awards Program for Cost Savings Disclosures, GAO/GGD-88-22
(Washington, D.C.: Dec. 18, 1987); Executive Agencies Employee Cash
Awards Program for Disclosure of Fraud, Waste, or Mismanagement, GAO/
GGD-84-74 (Washington, D.C.: May 8, 1984).
[316] GAO had recommended the legislation. See U.S. General Accounting
Office, Review of Bonding Program for Employees of the Federal
Government, B-8201 (Washington, D.C.: Mar. 29, 1962); B-8201, B-59149,
Jan. 18, 1972 (bill comments).
[317] General Interim Report of the House Select Committee on Lobbying
Activities, H.R. Rep. No. 81-3138, at 1 (1950).
[318] 21st Century Department of Justice Appropriations Authorization
Act, Pub. L. No. 107-273, div. A, title II, § 205(b), 116 Stat. 1758,
1778 (Nov. 2, 2002).
[319] 58 Cong. Rec. 403 (1919) (remarks of Representative Good), quoted
in National Treasury Employees Union v. Campbell, 654 F.2d 784, 791
(D.C. Cir. 1981).
[320] In the past, GAO noted that it could take no action unless the
Justice Department or the courts first determined that there had been a
violation. B-164497(5), Mar. 10, 1977.
[321] See U.S. General Accounting Office, H.R. 3078, The Federal Agency
Anti-Lobbying Act, GAO/T-OGC-96-18 (Washington, D.C.: May 15, 1996).
[322] Although not noted in the decision, under the Department of
Justice's interpretation of section 1913 noted above, the lobbying
activities of the Chairman would not have been restricted in any case.
See, e.g., B-270875, July 5, 1996.
[323] A few early cases will be found in which GAO held expenditures
illegal under 18 U.S.C. § 1913. E.g., B-139134-O.M., June 17, 1959 (Air
Force paid registration fee for members to enter state rifle
association shooting match; portion of fee set aside for fund to fight
adverse gun legislation held to be an improper payment); B-76695, June
8, 1948.
[324] A conclusion by the Justice Department that section 1913 was
violated would not have automatically resulted in a prosecution. The
Attorney General has what is known as "prosecutorial discretion,"
wherein a great many factors influence the decision whether to
prosecute.
[325] See U.S. General Accounting Office, Federal Lobbying: Differences
in Lobbying Definitions and Their Impact, GAO/GGD-99-38 (Washington,
D.C.: Apr. 15, 1999).
[326] House Select Committee on Lobbying Activities, Report and
Recommendations on Federal Lobbying Act, H.R. Rep. No. 81-3239, at 36
(1951).
[327] E.g., Departments of Commerce, Justice, and State, the Judiciary,
and Related Agencies Appropriation Act, 2003, Pub. L. No. 108-7, div.
B, § 601, 117 Stat. 11, 99 (Feb. 20, 2003).
[328] H.R. Rep. No. 81-3138, at 53 (1950).
[329] Further useful discussion may be found in cases dealing with
different but conceptually related issues such as Glickman v. Wileman
Brothers & Elliott, Inc., 521 U.S. 457 (1997), citing United States v.
Frame, 885 F.2d 1119 (3rd Cir. 1989).
[330] The Role of Lobbying in Representative Self-Government: Hearings
before the House Select Committee on Lobbying Activities, 81st Cong.,
pt. 1, at 158 (1950).
[331] E.g., Treasury and General Government Appropriations Act, 2003,
Pub. L. No. 108-7, div. J, § 626, 117 Stat. 11, 470 (Feb. 20, 2003).
[332] E.g., Treasury, Postal Service, and General Government
Appropriations Act, 1980, Pub. L. No. 96-74, § 607(a), 93 Stat. 559,
575 (Sept. 29, 1979).
[333] In fiscal year 1996 GAO investigated whether or not the
activities of five agencies violated any anti-lobbying provisions and
concluded that there were no violations, in part, because only one of
the five agencies was covered by a restriction on influencing pending
legislation. B-270875, July 5, 1996. A governmentwide restriction
reappeared the next fiscal year.
[334] E.g., Treasury, Postal Service, and General Government
Appropriations Act, 1997, Pub. L. No. 104-208, title VI, § 631,
110 Stat. 3009, 3009-362 (Sept. 30, 1996).
[335] While it is understandable that individual agency situations may
require unique language, in some instances the restrictions included in
the individual appropriation acts are mere repetition. For example, in
2003 a restriction identical to the governmentwide restriction was also
contained in the Veterans Affairs appropriations act. See Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations, 2003, Pub. L. No. 108-7, div. K, title IV, § 414,
117 Stat. 11, 524 (Feb. 20, 2003).
[336] Department of Defense Appropriations Act, 2003, Pub. L. No. 107-
248, § 8012, 116 Stat. 1519, 1539 (Oct. 23, 2002).
[337] District of Columbia Appropriations Act, 2003, Pub. L. No. 108-7,
div. C, title III, § 107(a), 117 Stat. 11, 122 (Feb. 20, 2003).
[338] Department of Transportation and Related Agencies Appropriations,
2003, Pub. L. No. 108-7, div. I, title III, § 322, 117 Stat. 11, 411-
412 (Feb. 20, 2003).
[339] Departments of Labor, Health and Human Services, and Education,
and Related Agencies Appropriations Act, 2003, Pub. L. No. 108-7,
div. G, title V, § 503(a), 117 Stat. 11, 343 (Feb. 20, 2003).
[340] The report concluded that the National Highway Traffic Safety
Administration (NHTSA) did not violate any anti-lobbying restrictions
since the activities were directed at state governments, not Congress.
Within a year after this report, however, Congress passed permanent
legislation prohibiting the NHTSA from engaging in activity
"specifically designed to urge a State or local Legislator to favor or
oppose the adoption of any specific legislative proposal pending before
any State or local legislative body." See 49 U.S.C. § 30105(a). See
also Department of Transportation and Related Agencies Appropriations,
2003, Pub. L. No. 108-7, § 322, supra.
[341] For a detailed discussion of the prohibition against the use of
grant funds for lobbying activities, see section C.11.d of this
chapter.
[342] One of the previously cited pending legislation statutes--the
Labor-Health & Human Services provision--has an additional sentence,
not included in our quotation, barring the use of appropriated funds to
pay the salary or expenses of any grant or contract recipient, or agent
of such recipient, related to any activity designed to influence
pending legislation. In addition, 31 U.S.C. § 1352, enacted in October
1989 and summarized later in our discussion of lobbying with grant
funds, includes governmentwide restrictions on certain lobbying
activities by contractors.
[343] The fact patterns of some of the examples that follow may have
yielded violations of another restriction on legislative lobbying, had
the provision applied. The next section will discuss this restriction,
typically included in the Department of Interior appropriations act,
which prohibits activity that falls short of an overt appeal to the
public to contact Members of Congress.
[344] See also U.S. General Accounting Office, Department Of Education:
Compliance With the Federal Advisory Committee Act and Lobbying
Restrictions, GAO/GGD/OGC-00-18 (Washington, D.C.: Dec. 23, 1999), for
a discussion of another instance in which GAO found no evidence that an
agency was involved in providing improper assistance to lobbying
groups.
[345] Department of Interior and Related Agencies Appropriations, 2003,
Pub. L. No. 108-7, div. F, title III, § 302, 117 Stat. 11, 270
(Feb. 20, 2003). Originally the provision concluded with the phrase "in
accordance with the Act of June 25, 1948 (18 U.S.C. § 1913)." While
this language was eventually eliminated, GAO concluded that its
deletion had no effect on the interpretation of the restriction.
B-262234, Dec. 21, 1995.
[346] S. Rep. No. 95-276, at 4-5 (1977).
[347] See also U.S. General Accounting Office, Alleged Unauthorized Use
of Appropriated Moneys by Interior Employees, CED-80-128 (Washington,
D.C.: Aug. 13, 1980).
[348] This testimony concerned proposed governmentwide legislation
modeled on the Interior restriction. The proposed legislation did not
pass.
[349] Pub. L. No. 104-65, 109 Stat. 691 (Dec. 19, 1995).
[350] Certain civic leagues, social welfare organizations, and local
associations of employees. 26 U.S.C. § 501(c)(4).
[351] See also U.S. General Accounting Office, Federal Lobbying:
Differences in Lobbying Definitions and Their Impact, GAO/GGD-99-38
(Washington, D.C.: Apr. 15, 1999) for further discussion of the Act.
[352] Similar provisions, found in 42 U.S.C. § 2996e(c), apply to the
Corporation itself. An illustrative case is B-231210, June 7, 1988,
aff'd upon reconsideration, B-231210, June 4, 1990, holding that the
Corporation is not authorized to retain a private law firm to lobby
Congress on its behalf.
[353] Government lobbying has a tendency to adjust to changes in the
political climate. A 1988 case, B-231210, June 7, 1988, found the LSC
lobbying to reduce its appropriations.
[354] Ascertaining applicable lobbying restrictions often requires a
certain level of patience. The Corporation's 2003 appropriation refers
back to the restriction contained in its 1996 appropriation by
prohibiting the use of funds "for any purpose prohibited or limited by,
or contrary to any of the provisions of, sections 501, 502, 503, 504,
505, and 506 of Public Law 105-119..." Pub. L. No. 108-7,117 Stat.
11, 96, 97 (Feb. 20, 2003); Pub. L. No. 105-119, 111 Stat. 2440, 2510
(Nov. 26, 1997). Public Law 105-119 contains the Corporation's 1998
appropriation, which itself refers back to the Corporation's 1996
appropriation, contained in the Omnibus Consolidated Rescissions and
Appropriations Act of 1996, Pub. L. No. 104-134, § 504(a)(4), 110 Stat.
1321, 1321-53 (Apr. 26, 1996).
[355] While 18 U.S.C. § 1913 has been regarded as applicable only to
officers and employees of the federal government and not to contractors
or grant recipients, this interpretation has not been challenged since
the statute was amended in 2002 by Pub. L. No. 107-273, § 205(b),
116 Stat. 1758, 1778 (Nov. 2, 2002). See B-214455, Oct. 24, 1984
(citing a May 24, 1983, letter to GAO from the Justice Department's
Criminal Division).
[356] "[N]one of the funds herein appropriated may be used directly or
indirectly to influence legislative action on any matter pending before
Congress or a State legislature or for any lobbying activity as
provided in section 1913 of title 18, United States Code." Energy and
Water Development Appropriations Act, 1995, Pub. L. No. 103-316,
108 Stat. 1707, 1716 (Aug. 26, 1994).
[357] Pub. L. No. 85-857, § 233, 72 Stat. 1105, 1116 (Sept. 2, 1958).
[358] Smokey Bear and his famous warning, "Only You Can Prevent Forest
Fires" was introduced to Americans in 1944. In response to an outbreak
of wildfires in 2000, the campaign was changed to "Only You Can Prevent
Wildfires." Whatever his slogan, Smokey is recognized and protected by
act of Congress. See 16 U.S.C. § 580p. Mess with Smokey and you can go
to jail. 18 U.S.C. § 711.
[359] Even with specific authority to advertise, agencies still need to
be careful. See Federal Express Corp. v. United States Postal Service,
151 F.3d 536 (6th Cir. 1998) and Federal Express Corp. v. United States
Postal Service, 40 F. Supp. 2d 943 (W.D. Tenn. 1999) (involving claims
that the U.S. Postal Service engaged in false advertising).
[360] This case also held that the scope of legitimate promotional
activities could not include the printing of business cards for sales
representatives. Business cards are now approved expenditures where
they are a necessary expense of agency operations. B-280759, Nov. 5,
1998. There is a lengthy discussion of business cards in this chapter,
section C.13.b.
[361] There is no mention of the 1913 statute before the 1930s. A small
group of cases then arose. In addition to A-61553, cited in the text,
see B-26689, May 4, 1943; A-93988, Apr. 19, 1938; A-82332, Dec. 15,
1936; A-57297, Sept. 11, 1934. Another stretch of silence followed and
the statute did not arise again until B-181254(2), Feb. 28, 1975.
[362] The Role of Lobbying in Representative Self-Government, Hearings
before the House Select Committee on Lobbying Activities, 81st Cong.,
pt. 1, at 156 (1950).
[363] A few very early decisions will be found to the effect that
5 U.S.C. § 5946 prohibits agency memberships as well as individual
memberships. E.g., 19 Comp. Gen. 838 (1940); 24 Comp. Dec. 473 (1918).
While these decisions do not appear to have been explicitly overruled
or modified, they must be regarded as implicitly repudiated by the
subsequent body of case law to the extent they purport to prohibit
adequately justified agency memberships.
[364] The last sentence of the decision uses the term "essential." This
word is too strong. The necessary expense doctrine does not require
that an expenditure be essential.
[365] "[I]n official life it has been the practice for the official
himself to furnish his own cards, the salaries in most instances being
adequate for such expenditures," the Comptroller of the Treasury
chided. 20 Comp. Dec. at 250.
[366] Although not directly related to medical care, there is a very
early group of cases, on which the earlier medical care cases partly
relied, standing for the proposition that appropriated funds are not
available for the burial of a deceased civilian employee unless
necessary for the health and/or safety of other employees, in which
event the "reasonable expenses of a decent burial" are permissible.
3 Comp. Gen. 111 (1923); 11 Comp. Dec. 789 (1905); 6 Comp. Dec. 447
(1899); 2 Comp. Dec. 347 (1896).
[367] The 1989 decision modified 64 Comp. Gen. 789 (1985), which had
found smoking cessation programs unauthorized. The 1985 case had
correctly held that such programs were not a form of "medical care,"
but had failed to properly evaluate them as preventive programs.
[368] The morale of the poisoned workers would not be particularly
enhanced either.
[369] While this may sound heartless, the expenditure could be
justified only if it was determined to be necessary to carry out the
objects of the appropriation, and the appropriation in this instance
was for chemical warfare service, not for employee health.
[370] See also "Wearing Apparel" in section C.13.i for related cases.
[371] 64 Comp. Gen. 789 (1985), modified on other grounds, 68 Comp.
Gen. 222 (1989); 63 Comp. Gen. 115 (1983); 62 Comp. Gen. 653 (1983);
61 Comp. Gen. 634 (1982); B-213666, July 26, 1984; B-215108, July 23,
1984.
[372] We note that Congress enacted the Rehabilitation Act in 1973. It
modeled the now more familiar Americans With Disabilities Act on the
Rehabilitation Act, adopting the same definition of "disability" and
its interpretation by courts. 42 U.S.C. § 12201(a). See Toyota Motor
Manufacturing, Kentucky, Inc. v. Williams, 534 U.S. 184, 193 (2002).
[373] For example, the disabled employee may have to park closer to the
facility at higher rates.
[374] The decision also noted that the items must be for permanent
rather than "seasonal" use. 60 Comp. Gen. at 582. The rule prohibiting
use of appropriated funds for seasonal (e.g., holiday) decorations has
since been modified. See 67 Comp. Gen. 87 (1987), discussed in this
chapter, section C.13.g.
[375] The reader should note that in Pub. L. No. 107-273, § 207(a),
116 Stat. 1757, 1779-1780 (Nov. 2, 2002), Congress enacted another
section 5757 of Title 5 of the United States Code. There are now two
sections in the Code numbered 5757. They are not related.
[376] The distinction between this case and the "foul weather" cases
cited in the preceding paragraph is that an employee is expected to
provide his or her own clothing suitable for the climate in which the
employee normally works or resides. See B-230820, Apr. 25, 1988
(nondecision letter). For example, it is not reasonable to expect an
employee who normally lives and works in Florida to own clothing
suitable for Alaska in January.
[377] For example, the disabled employee may have to park closer to the
facility at higher rates.
[378] Some of the "contest" cases, discussed above, do not concern
payment of "rewards" to "informers," yet nonetheless use a "necessary
information" analysis. See, e.g., 70 Comp. Gen. 720 (1991) (National
Oceanic and Atmospheric Administration could pay cash prizes to certain
fortunate fisherman returning "fish tags" to the government); B-286536,
Nov. 17, 2000 (Public Buildings Service could use appropriated funds to
pay for prizes in a drawing held in connection with customer
satisfaction surveys, in order to develop customer satisfaction
information).
[379] In addition to the statutes discussed in the text, other examples
are: 16 U.S.C. § 668 (information on capturing, buying or selling of
bald eagles); 16 U.S.C. § 1540(d) (violations of Endangered Species
Act); 16 U.S.C. § 2409 (Antarctic Conservation Act of 1978); 18 U.S.C.
§ 1751(g) (information concerning presidential assassinations or
attempted assassinations); 18 U.S.C. § 3056 (rewards by the Secret
Service); 21 U.S.C. § 886 (Drug Abuse Act); 39 U.S.C. § 404(a)(8)
(violations of postal laws); 50 U.S.C. § 47a (illegal introduction,
manufacture, acquisition, or export of special nuclear material or
atomic weapons).
[380] The excess payment in each of these cases was authorized from the
Army's appropriation for "contingent expenses." While the "contingent
expense" language is no longer used, the military departments receive
similar appropriations for "emergencies and extraordinary expenses."
See 53 Comp. Gen. 707 (1974).
[381] The same result would apply to purchases by a contractor under a
contract with a grantee financed from federal grant funds (B-177215,
Nov. 30, 1972), and to state or local taxation of the income of a
grantee's employees (14 Comp. Gen. 869 (1935)). Note that
appropriations for National Guard operations, however, are not grants
to the states so that the federal government's immunity from taxation
applies. 42 Comp. Gen. 631 (1963).
[382] The use of a government travel or purchase card does not
necessarily demonstrate that the purchase was for the federal
government, however. See, e.g., U.S. General Accounting Office, Travel
Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse,
GAO-03-147 (Washington, D.C.: Dec. 23, 2002) (reporting government
travel card use for legalized brothels, gentlemen's clubs, cruise
lines, and other inappropriate transactions).
[383] The FAR also provides that when economically feasible agencies
should take maximum advantage of all exemptions from state and local
taxation. 48 C.F.R. § 29.302(b). This provision does not imply that
small taxes should automatically be paid without asserting the
government's immunity, but instead suggests that taxes in small amounts
should be paid regardless of the government's immunity where no other
evidence is available and where a tax exemption certificate would
otherwise be required to take advantage of the immunity. The use of
blanket and multiple exemption certificates is discussed in 41 Comp.
Gen. 560 (1962).
[384] Of course, "no matter on whom the tax nominally falls, the market
price (including the tax) and the quantity sold will be the same.
Accordingly, the economic incidence will be shared in the same way: if
the tax is nominally on the buyer, part of it will be passed back to
the seller in the form of reduced quantity demanded." United States v.
Delaware, 958 F.2d 555, 561 n.11 (3rd Cir. 1992). That the imposition
of a particular fee may ultimately burden the Unites States financially
is an insufficient ground to invalidate a tax. United States Postal
Service v. Town of Greenwich, 901 F. Supp. 500, 507 (D. Conn. 1995).
[385] In the context of sales taxes, the hallmark of a vendor tax is
that the law establishing the tax requires the seller to pay it
notwithstanding any inability or unwillingness on the part of the
seller to collect it from the purchaser. E.g., B-239608, Dec. 14, 1990
(nondecision letter); B-225123, May 1, 1987 (nondecision letter).
[386] In 28 Comp. Gen. 706 (1949), a Washington State tax on gasoline
distributors was similarly found to be a vendor tax and the United
States was therefore required to pay the amount added to the purchase
price of gasoline to represent the tax. See also B-154266, June 25,
1964, considering the same tax as applied to government-rented
commercial vehicles.
[387] In the 1960s, California law provided for a refund of the tax
paid on gasoline for vehicles operated entirely off state highways. The
state courts had found that the term "highway" did not encompass roads
running in and through national parks. Therefore, relying on the
state's interpretation of its own statute, GAO concluded that no tax
was payable on gasoline used in vehicles driven only on the grounds of
a national monument. 42 Comp. Gen. 593 (1963).
[388] Some additional Supreme Court cases sustaining the imposition of
state taxes on government contractors in various contexts include
Washington v. United States, 460 U.S. 536 (1983); United States v.
Boyd, 378 U.S. 39 (1964); City of Detroit v. Murray Corp., 355 U.S. 489
(1958); Alabama v. King & Boozer, 314 U.S. 1 (1941); James v. Dravo
Contracting Co., 302 U.S. 134 (1937). Dravo is regarded as starting the
current trend. New Mexico, 455 U.S. at 731-32.
[389] The Department of Justice considered the same situation with the
same result. 6 Op. Off. Legal Counsel 273 (1982).
[390] Another type of "tax" appearing on utility bills is a charge for
9-1-1 emergency service. See B-300737, June 27, 2003; B-253695,
July 28, 1993; and the discussion in section C.7.c of this chapter.
[391] A tax lien that attaches to property before title passes to the
government is not a tax on government property. The lien is a valid
encumbrance against the property, although it is unenforceable as long
as the government holds the property. United States v. Alabama,
313 U.S. 274 (1941). See United States v. Lewis County, 175 F.3d 671,
678 (9th Cir.), cert. denied, 528 U.S. 1018 (1999) (foreclosure against
federally owned property impossible without consent of the United
States). In a series of early decisions, however, GAO advised that the
acquiring agency could use its appropriations to extinguish the lien if
administratively determined to be in the best interests of the
government, for example, to clear title prior to disposition of the
property. B-40548, Jan. 26, 1945; B-41677, May 8, 1944; B-28443,
Dec. 9, 1943; B-21817, Feb. 12, 1942.
[392] Amtrak's status as an instrumentality of the United States for
this purpose was irrelevant because Amtrak's enabling legislation
specifically provides for tax immunity. E.g., Pennsylvania Public
Utility Commission, 665 F. Supp. at 411; 49 U.S.C. § 24301.
[393] State and local jurisdictions are also prohibited from imposing
"inspection fees" on the federal government, not because these fees are
"taxes," but because they are a prerequisite to the federal
government's execution of a government function, they interfere with
the United States and violate the Supremacy Clause, U.S. Const. art.
VI, cl. 2). Mayo v. United States, 319 U.S. 441, 447 (1943). The result
would be different if a federal statute established the obligation of a
federal agency to comply with state regulatory processes, however,
including the payment of permit fees. B-286951, Jan. 10, 2002.
[394] The most important statute in this area is the Payments in Lieu
of Taxes Act (PILT), 31 U.S.C. §§ 6901-6907, which authorizes the
Secretary of the Interior to make payments, pursuant to statutory
criteria, to units of local governments in which "entitlement land" is
located. GAO has issued a number of decisions and opinions construing
the PILT statute. See, e.g., 65 Comp. Gen. 849 (1986); 58 Comp. Gen. 19
(1978); B-212145, Oct. 2, 1984; B-214267, Aug. 28, 1984.
[395] Several earlier decisions were overruled by 46 Comp. Gen. 624 and
several others were modified. The text attempts to reflect those
elements of the modified decisions that remain valid.
[396] Note, however, that although federal employees may be reimbursed
for parking fees, they remain personally liable for fines incurred when
the employees fail to "feed" the meter, unless the employees had no
control over the situation. B-250880, Nov. 3, 1992.
[397] Federal employees are required to use credit cards issued by
government contractors for their temporary duty travel, 41 C.F.R.
§ 301-51.1, and are personally responsible for paying the credit card
bill according to the cardholder agreement. See id. § 301-52.24.
[398] 41 C.F.R. § 301-11.28.
[399] Note that 41 C.F.R. § 301-11.27 expressly permits reimbursement
of lodging taxes to federal employees as a miscellaneous travel
expense.
[400] The Department of Justice notes that even where an individual
employee is procuring the accommodation, the government could, if it
wanted to change existing practice, compel recognition of federal
immunity. 5 Op. Off. Legal Counsel at 349 n.2.
[401] These purchases do not violate the statutory prohibition on
advance payments because, GAO reasoned, the government did not make an
advance payment but rather purchased a present right to use the
thoroughfare in the future. 36 Comp. Gen. 829 (1957).
[402] As explored in Chapter 13 (Volume III of the second edition of
Principles of Federal Appropriations Law), the Debt Collection Act of
1982 permits using offset against state or local governments. Setoff
against advances under a federal grant program is discussed in Chapter
10 (Volume III of the second edition of Principles).
[403] That a state law permits refunds to the United States as the
ultimate bearer of the tax in certain situations does not transfer the
legal incidence of the tax to the vendee. B-152995, Jan. 30, 1964. See
also 27 Comp. Gen. 179 (1947).
[404] But see Core Concepts of Florida, Inc. v. United States, 327 F.3d
1331, 1337 (Fed. Cir. 2003) (holding that revenues from revolving funds
not deposited into the General Fund are not "appropriated funds" under
the Tucker Act, 28 U.S.C. § 1346). The Tucker Act provides for
jurisdiction of claims against the United States.
[405] The Navy now has statutory authority to use its appropriations to
pay for the installation and use (except for personal long-distance
calls) of extension telephones connecting public quarters occupied by
naval personnel (but not civilian employees) with station switchboards.
10 U.S.C. § 7576.
[406] See, e.g., the following fiscal year 2002 appropriation acts:
Pub. L. No. 107-76, § 706, 115 Stat. 704, 732 (Nov. 28, 2001)
(Agriculture); Pub. L. No. 107-77, § 602, 115 Stat. 748, 798 (Nov. 28,
2001) (Commerce, Justice, State); Pub. L. No. 107-117, § 8003,
115 Stat. 2230, 2247 (Jan. 10, 2002) (Defense); Pub. L. No. 107-96,
§ 104, 115 Stat. 923, 946 (Nov. 21, 2001) (District of Columbia); Pub.
L. No. 107-115, § 511, 115 Stat. 2118, 2141 (Jan. 10, 2002) (Foreign
Operations); Pub. L. No. 107-63, § 303, 115 Stat. 414, 465 (Nov. 5,
2001) (Interior); Pub. L. No.107-116, § 502, 115 Stat. 2177, 2217
(Jan. 10, 2002) (Labor, Health and Human Services, Education); Pub. L.
No. 107-68, § 302, 115 Stat. 560, 591 (Nov. 12, 2001) (Legislative);
Pub. L. No. 107-87, § 306, 115 Stat. 833, 855 (Dec. 18, 2001)
(Transportation); Pub. L. No. 107-67, § 501, 115 Stat. 514, 543
(Nov. 12, 2001) (Treasury).
[407] Department of the Interior and Related Agencies Appropriation
Act, 1980, Pub. L. No. 96-126, 93 Stat. 954, 978 (Nov. 27, 1979). Due
to a severe heat wave in the summer of 1980, the program was expanded
to include fans and the appropriation was subsequently extended to the
full fiscal year. Pub. L. No. 96-321, 94 Stat. 1001 (Aug. 4, 1980).
[408] E.g., Emergency Wartime Supplemental Appropriations Act, 2003,
Pub. L. No. 108-11, 117 Stat. 559, 571, 591-593 (Apr. 16, 2003);
Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7,
117 Stat. 11, 106, 107 (Feb. 20, 2003).
[409] See, e.g., the Military Construction Appropriations Act, 2002,
Pub. L. No. 107-64, 115 Stat. 474 (Nov. 5, 2001).
[410] See Chapter 6, section C for a discussion of the apportionment
process.
[411] See Chapter 5, section B.
[412] See also 39 Comp. Gen. 776 (1960); 39 Comp. Gen. 340 (1959);
21 Comp. Gen. 864 (1942); B-239435, Aug. 24, 1990. See also the
discussion in Chapter 6, section C.2.b.
[413] See Chapter 6, section C.2.b, "Multiyear or continuing
contracts," particularly the discussion of Leiter v. United States, 271
U.S. 204 (1925). See also Cray Research, Inc. v. United States, 44 Fed.
Cl. 327, 332-333 (1999) (discussing Leiter and the Antideficiency Act).
[414] The topic of obligating for needs of a future year arises in a
variety of contexts and is also involved in several later sections of
this chapter on delivery of materials and services beyond the fiscal
year (B.4 and B.5), multiyear contracts (B.8 and B.9), and grants and
cooperative agreements (B.10).
[415] "There is no authority in an appropriation made specifically for
the service of a particular fiscal year to enter into contracts for
supplies, etc., for the service of a subsequent fiscal year, and
therefore as to that appropriation such a contract is not properly made
within that year." 4 Comp. Dec. at 556.
[416] Other GAO reports in this area are: U.S. General Accounting
Office, Year-End Spending: Reforms Underway But Better Reporting and
Oversight Needed, GAO/AIMD-98-185 (Washington, D.C.: July 31, 1998);
Federal Year-End Spending Patterns for Fiscal Years 1982, 1983, and
1984, GAO/AFMD-85-75 (Washington, D.C.: Nov. 4, 1985); Limitations on
Fiscal Year 1981 Fourth Quarter Obligations in Certain Agencies, GAO/
PAD-82-43 (Washington, D.C.: July 16, 1982); Government Agencies Need
Effective Planning to Curb Unnecessary Year-End Spending, GAO/PSAD-80-
67 (Washington, D.C.: July 28, 1980).
[417] Pub. L. No. 101-165, § 9007, 103 Stat. 1112, 1130 (Nov. 21,
1989).
[418] E.g., B-198666, May 20, 1980.
[419] See also 31 U.S.C. §1553(b), which requires that obligations and
adjustments properly made to closed accounts may be charged to any
current appropriation, and section D.4 of this chapter.
[420] E.g., Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 1990, Pub. L.
No. 101-144, title I, 103 Stat. 839, 843-44 (Nov. 9, 1989); Departments
of Veterans Affairs and Housing and Urban Development, and Independent
Agencies Appropriations Act, 1997, Pub. L. No. 104-204, title I, § 105,
110 Stat. 2874, 2881 (Sept. 26, 1996); and Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 2002, Pub. L. No.107-73, title I, § 105, 115 Stat.
651, 657 (Nov. 26, 2001).
[421] This section does not discuss services rendered by an employee.
Services provided by employees are chargeable to the fiscal year in
which the services are rendered, regardless of whether the services are
severable or nonseverable. E.g., 38 Comp. Gen. 316 (1958) (salaries of
government employees).
[422] For a discussion of contracts for more than 1 year, see later
sections in this chapter on multiyear contracts (B.8) and specific
statutes providing for multiyear and other contracting authorities
(B.9).
[423] According to "Harvey the Pooka," the word "frammis" denotes
"something that, in reality, one hasn't a clue what it does or what it
is for …but one wants to give others the impression that he does." The
word was coined by The Three Stooges, and, to some, it is a more
literate form of the word "widget." (e-mail to "Newsgroups:
it.cultura.linguistica.inglese" dated January 28, 2003, found at http:/
/groups.google.com/groups?q=frammis+word&hl=en&lr
=&ie=UTF8&selm=TXrZ9.54710%24YG2.1568240%40twister1.libero.it&rnum=1).
[424] A 1981 case, 60 Comp. Gen. 591, drew a distinction based on
whether the awarding of the replacement contract preceded or followed
the conversion to a termination for convenience, suggesting that the
original obligation was extinguished when the replacement contract
followed the conversion to a termination for convenience, the precise
sequence involved in 34 Comp. Gen. 239. Although 60 Comp. Gen. 591
cites 34 Comp. Gen. 239 several times, it does not address this point.
In view of later decisions where GAO determined that an agency could
award a replacement contract following a termination for convenience
because of an improper award, the distinction regarding when the
replacement contract is awarded would not appear to be relevant. See
68 Comp. Gen. 158 (1988).
[425] Presumably, if an agency, acting under authority to charge a 12-
month severable services contract that crosses fiscal years to the
appropriation current in the first fiscal year, had charged the
original obligation to the first fiscal year, the agency should charge
the costs of the modification to that same appropriation. We discuss
this authority (41 U.S.C. § 253l for civilian agencies and 10 U.S.C.
§ 2410a for military departments) in section B.9.a of this chapter. We
found no case law addressing this point, however. See generally
B-259274, May 22, 1996 (discussing 10 U.S.C. § 2410a).
[426] Similarly, costs incurred under a termination for convenience are
chargeable to the appropriation originally obligated for the contract.
B-203074, Aug. 6, 1981.
[427] This is essentially the same as the definition in the Federal
Acquisition Regulation, "a contract for the purchase of supplies or
services for more than 1, but not more than 5, program years."
48 C.F.R. § 17.103.
[428] S. Rep. No. 98-417, at 4-8 (1984). This is a report by the Senate
Committee on Governmental Affairs on a bill (S. 2300) designed to
extend limited multiyear contracting authority to civilian agencies.
That legislation was not enacted. Ten years later, in 1994, Congress
enacted the Federal Acquisition Streamlining Act, permitting civilian
agencies to use fiscal year appropriations to enter into contracts for
as many as 5 years. Pub. L. No. 103-355, § 1072, 108 Stat. 3243, 3270
(Oct. 13, 1994), codified at 41 U.S.C. § 254c. We discuss the Federal
Acquisition Streamlining Act in section B.9.b of this chapter.
[429] H.R. Rep. No. 97-71, pt. 3, at 21 (1981) (report of the House
Committee on Government Operations on the 1982 Defense Department
authorization bill).
[430] When an agency uses multiyear or other contracting authorities,
such as the Federal Acquisition Streamlining Act, that authority may
permit the agency to obligate its appropriations differently. We
discuss the Federal Acquisition Streamlining Act and other examples of
multiyear contracting authorities in section B.9 of this chapter.
[431] While 43 Comp. Gen. 657 had used the somewhat cryptic term
"commitment," the three subsequent decisions require the actual
obligation of the cancellation costs.
[432] We discuss the Antideficiency Act in Chapter 6.
[433] We discuss the concept of obligations in Chapter 7.
[434] For example, the Comptroller General (41 U.S.C. § 253l-1),
Library of Congress (41 U.S.C. § 253l-2), Chief Administrative Officer
of the House of Representatives (41 U.S.C. § 253l-3), and Congressional
Budget Office (41 U.S.C. § 253l-4).
[435] Pub. L. No. 103-355, § 1072, 108 Stat. 3243, 3270 (Oct. 13,
1994).
[436] For example, the General Accounting Office (41 U.S.C. § 253l-1),
Library of Congress (41 U.S.C. § 253l-2), Chief Administrative Office
of the House of Representatives (41 U.S.C. § 253l-3, and Congressional
Budget Office (41 U.S.C. § 253l-4).
[437] The Act is contained in section 529 of the fiscal year 1991
Treasury, Postal Service, and General Government Appropriation Act,
Pub. L. No. 101-509, 104 Stat. 1427, 1449 (Nov. 5, 1990).
[438] Under the Congressional Budget Act of 1974, the authority is
effective only to the extent provided for in advance in appropriation
acts. See Pub. L. No. 101-509, § 301.
[439] This case is cited for the limited purpose of illustrating that
advance payment authority does not negate application of the bona fide
needs rule. It does not illustrate the general application of the bona
fide needs rule to training obligations. On the contrary, as noted
earlier in this chapter, most training tends to be nonseverable.
[440] Although grantees are not subject to the prohibition against
advance payments, under the Cash Management Improvement Act of 1990,
they may not draw money out of the treasury in advance of need. Pub. L.
No. 101-453, 104 Stat. 1058, (Oct. 24, 1990).
[441] Some other cases in this evolution are: 17 Comp. Dec. 894 (1911);
17 Comp. Dec. 231 (1910); 29 Op. Att'y Gen. 46 (1911); 20 Op. Att'y
Gen. 746 (1894); 18 Op. Att'y Gen. 105 (1885).
[442] Short of following these procedures, a bid conditioned on receipt
of advance payments at variance with the terms of the solicitation may
be rejected as nonresponsive. 57 Comp. Gen. 89 (1977); B-205088,
Oct. 28, 1981; B-197471.2, Aug. 14, 1981.
[443] Pub. L. No. 85-804, 72 Stat. 972 (Aug. 28, 1958).
[444] The National Emergencies Act, enacted in 1976, provided that
powers and authorities resulting from the existence of any national
emergency still in effect on September 14, 1976, were to terminate 2
years from that date. 50 U.S.C. § 1601. Specifically, the national
emergency declared by President Truman in 1950 for the Korean conflict
had never been revoked. However, 50 U.S.C. § 1651 makes the termination
inapplicable with respect to certain provisions of law, one of which is
Public Law 85-804. Thus, for purposes of Public Law 85-804, the Korean
War has never ended. This is discussed in more detail in B-193687,
Aug. 22, 1979.
[445] Under the lien theory, however, it has also been held that the
government's interest under the title-vesting provision will not be
paramount to perfected security interests of other creditors where the
government's progress payments have not been used to put value in the
specific property involved. First National Bank of Geneva v. United
States, 13 Cl. Ct. 385 (1987).
[446] For the method of determining the correct date of payment for
prompt payment discount purposes, see Foster Co. v. United States, 128
Ct. Cl. 291 (1954); 61 Comp. Gen. 166 (1981); B-214446, Oct. 29, 1984;
B-107826, July 29, 1954.
[447] The decision refers to something called "Joint Regulations for
Small Purchases Utilizing Imprest Funds." This was a regulation, issued
jointly by GAO, GSA, and the Treasury Department, and published at
31 Comp. Gen. 768 (1952). It was rescinded in 1959.
[448] The 1930 version of the exemption authorized advance payment only
for "newspapers, magazines, and other periodicals," although a few
agencies had broader authority under agency-specific legislation. For
agencies subject to the quoted language, the sole issue in several
decisions was whether a given publication could also be regarded as a
"periodical" and thus within the statute. E.g., 37 Comp. Gen. 720
(1958); 17 Comp. Gen. 455 (1937); A-90102, Sept. 3, 1938. The 1961
amendment expanded the authority to include "other publications,"
rendering these decisions obsolete. In addition, the 1974 legislation
discussed in the text further expanded the definition of "publication."
Thus, most pre-1974 decisions in this area are wholly or partly
obsolete; their continuing validity must be assessed in light of the
present statutory language.
[449] This decision originally applied only to the former Veterans
Administration, which had specific authority. It did not apply to
agencies subject to the then-existing version of the general exemption
since the books were not "periodicals." This part of the decision
should now be disregarded (see prior footnote), and the holding in
35 Comp. Gen. 404 would now apply to any agency which can justify the
need.
[450] While the discussion in this section includes the time period
preceding 1990, except as otherwise specified, references to 31 U.S.C.
§§ 1551 through 1558 are to the procedures first established in 1990 by
Pub. L. No. 101-510, 104 Stat. 1485, 1675 (Nov. 5, 1990), and include
any subsequent amendments thereto.
[451] The term "lapse" was sometimes mistakenly used in this context
although there was an important distinction. Generally, under prior law
an appropriation "lapsed" when it ceased to be available to the agency
to pay obligations that were in the first instance incurred and
properly charged against the appropriation prior to its lapse. Today we
refer to this as a "closed" appropriation account.
[452] Depending on the specific context in which the term is used,
"unexpended balance" may refer to the entire undisbursed balance or to
the unobligated balance only. 22 Comp. Gen. 59 (1942). We use it here
in the broader sense.
[453] Second Commission on Organization of the Executive Branch of the
Government, created by Pub. L. No. 83-108, ch. 184, 67 Stat. 142
(July 10, 1953).
[454] Guidance relating to account closing is also set forth in OMB
Cir. No. A-11, Preparation, Submission and Execution of the Budget,
§§ 20.4(c), 130.3-130.11 (July 25, 2003). See also 1 TFM 2-4200.
[455] This is similar to the treatment of the balances during the first
two post-expiration fiscal years under the 1956 legislation.
[456] 31 U.S.C. § 1502(b) provides that the expirations of a fixed
period appropriation does not "affect the status of lawsuits or rights
of action involving the right to an amount payable from the balance" of
such appropriation that are instituted prior to its expiration.
[457] This authority to make obligation adjustments is analogous to the
restoration authority of the law prior to 1990, with the exception that
there is no longer a point at which balances merge and lose their
fiscal year identity.
[458] Compare B-179708, June 24, 1975 (applying same principle during
first two post-expiration years under prior law).
[459] We commonly talk about "returning" appropriation balances to the
Treasury. In point of fact, for the most part, they never leave the
Treasury to begin with. An appropriation does not represent cash
actually set aside in the Treasury. Government obligations are
liquidated as needed through revenues and borrowing. Thus, the
reversion of funds to the Treasury is not a movement of actual cash,
but a bookkeeping adjustment that in the various ways discussed in the
text, affects the government's legal authority to incur obligations and
make expenditures.
[460] Pub. L. 106-429, app. A, 114 Stat. 1900A-3, 1900A-11 and 1900A-24
(Nov.6, 2001). See also Pub. L. No.107-115, § 511, 115 Stat. 2118, 2141
(Jan. 10, 2002). This type of exemption does not create new budget
authority. B-243744, Apr. 24, 1991. See also U.S. General Accounting
Office, Foreign Assistance: Funds Obligated Remain Unspent for Years,
GAO/NSIAD-91-123 (Washington, D.C.: Apr. 9, 1991), at 21.
[461] Prior to the 1990 amendment to section 1555, no-year
appropriations were closed when the head of the agency determined that
the purpose of the appropriation had been carried out or when no
disbursement had been made against the appropriation for two
consecutive fiscal years. Thus the law in effect prior to 1990
prevented no-year appropriations from remaining available indefinitely
in some circumstances even in the absence of a determination that the
purpose of the appropriation had been carried out. B-159687, Oct. 25,
1979.
[462] These are referred to as "offsetting collections." OMB Cir. No.
A-11, Preparation, Submission and Execution of the Budget, §§ 20.3,
20.7(c) (July 25, 2003).
[463] See Chapter 6, section E.
[464] 31 U.S.C. §§ 1535, 1536.
[465] OMB Cir. No. A-11, §§ 20.10, 20.12(c) provides additional
guidance on the availability of, and accounting for, refunds.
[466] See, e.g., B-218762, Sept. 18, 1985 and B-200519, Nov. 28, 1980,
for discussions of examples of "deob-reob" authority.
[467] Burton v. Thornburgh, 541 F. Supp. 168, 174 (E.D. Pa. 1982).
[468] The court also noted that the district court could "obtain
assistance from the Comptroller Generals expertise in matters of
expenditures, reductions by appropriations, and impoundments." City of
Los Angeles, 556 F.2d at 51.
[469] GAO had previously expressed the same view. 32 Comp. Gen. 29, 31
(1952), cited in Costle, 564 F.2d at 587 n.10.
[470] The premise underlying all of these cases is that any monetary
relief ultimately granted to the plaintiff is payable only from, and to
the extent of, the preserved balances. See Chapter 14 of Volume III of
the second edition of Principles of Federal Appropriations Law, section
entitled "Impoundment/Assistance Funds" for case citations.
[471] National Defense Authorization Act for Fiscal Years 1990 and
1991, Pub. L. No. 101-189, § 813, 103 Stat. 1352, 1494 (Nov. 29, 1989).
The provision applies governmentwide.
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Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800
U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C.
20548: