U.S. Department of Agriculture—Applicability of the Congressional Review Act to Documents Implementing Four Financial Assistance Programs

Decision

Matter of: U.S. Department of Agriculture—Applicability of the Congressional Review Act to Documents Implementing Four Financial Assistance Programs

File: B-334146

Date: June 5, 2023

CRA adopts the definition of “rule” under the Administrative Procedure Act (APA) but excludes certain categories of rules from coverage. CRA requires that before a rule can take effect, an agency must submit the rule to both the House of Representatives and the Senate, as well as to the Comptroller General, and provides procedures for congressional review where Congress may disapprove of rules. We conclude that all four implementing documents meet the definition of a rule under the CRA and no exception applies. Therefore, the implementing documents are subject to the reporting requirements.

An agency violates the Antideficiency Act if it obligates or expends funds in excess of or in advance of any appropriation, apportionment, or allotment. If Congress statutorily prohibits a particular use of appropriated funds, any obligation for that purpose is in excess of the amount available. The availability of USDA’s CCC borrowing authority is not contingent on compliance with the requirements of the CRA. As such, USDA’s failure to submit the relevant rules to Congress and the Comptroller General would not implicate the Antideficiency Act.

In September 2021, the United States Department of Agriculture (USDA) announced four financial assistance programs established by USDA and financed using the Commodity Credit Corporation’s (CCC) borrowing authority.[1] For each program, USDA issued a notice of funding, application request, or policy memorandum implementing the program. We received a request for a decision on whether USDA complied with the reporting requirements of the Congressional Review Act (CRA) with respect to these programs.[2] The requester also asks whether USDA violated the Antideficiency Act if it failed to comply with the CRA’s reporting requirements.[3]

For the reasons described below, we conclude that the implementing document for each program meets the definition of a rule under the CRA and no exception applies. Therefore, USDA is required to submit each implementing document to Congress and the Comptroller General. USDA’s failure, however, to submit the implementing documents as rules to Congress and the Comptroller General in accordance with the CRA does not implicate the Antideficiency Act.

In accordance with our regular practice, we contacted USDA to seek factual information and its legal views on this matter.[4] USDA responded with its explanation of the pertinent facts and legal analysis.[5]

BACKGROUND

Pursuant to the CCC Charter Act, USDA established four new financial assistance programs between September 2021 and May 2022: Partnerships for Climate-Smart Commodities, the Commodity Container Assistance Program, the Local Food for Schools Cooperative Agreement Program, and Supply Chain Assistance Funds.[6]

Financial Assistance Program #1: Partnerships for Climate-Smart Commodities (PCSC)

USDA established PCSC in February 2022 to provide grants supporting the production and marketing of “climate‑smart” commodities, which USDA defines as an agricultural commodity that is produced using agricultural (farming, ranching, or forestry) practices that reduce greenhouse gas emissions or sequester carbon.[7] USDA established the program using CCC funds under section 5(e) of the CCC Charter Act, which authorizes CCC to use its general powers to “[i]ncrease the domestic consumption of agricultural commodities (other than tobacco) by expanding or aiding in the expansion of domestic markets or by developing or aiding in the development of new and additional markets, marketing facilities, and uses for such commodities.”[8] To implement the program, USDA’s Natural Resources Conservation Service (NRCS) posted a notice of funding opportunity (PCSC NOFO) on Grants.gov[9] on February 7, 2022.[10] The PCSC NOFO prescribes the eligibility requirements for the program, application requirements, and the range of grant amounts to be awarded.[11]

The PCSC NOFO states that USDA will provide grants to “partners” to support certain pilot projects.[12] The PCSC NOFO describes two funding rounds, the first for large-scale proposals ranging from $5 million to $100 million, and the second for smaller proposals under $5 million.[13]

Financial Assistance Program #2: Commodity Container Assistance Program (CCAP)

USDA launched CCAP to provide funds to agricultural commodity owners to partially offset the additional logistical expenses associated with supply chain disruptions.[14] USDA established the program using CCC funds under section 5(b) of the CCC Charter Act, which authorizes CCC to use its general powers to “[m]ake available materials and facilities required in connection with the production and marketing of agricultural commodities (other than tobacco).”[15] To implement the program, USDA’s Farm Service Agency (FSA) published a notice of funds availability (CCAP NOFA) in the Federal Register on May 27, 2022.[16] The CCAP NOFA prescribes the eligibility requirements for the program, application requirements, and how payments will be calculated.[17]

The CCAP NOFA states that USDA will provide two types of payments to partially offset the costs of using shipping containers to export U.S. agricultural products from March 1, 2022, through December 31, 2022: (1) payments for each empty container picked up from a temporary terminal set up at the Port of Oakland in California; and (2) payments for each filled dry or refrigerated container delivered to designated temporary storage terminals at the Port of Oakland or the member ports of the Northwest Seaport Alliance.[18]

Financial Assistance Program #3: Local Food for Schools Cooperative Agreement Program (LFS)

USDA established LFS to provide funds to states to increase purchasing of domestic, local foods for distribution to schools.[19] USDA established the program using CCC funds under section 5(c) of the CCC Charter Act, which authorizes CCC to use its general powers to “[p]rocure agricultural commodities (other than tobacco) for sale to other [g]overnment agencies, foreign governments, and domestic, foreign, or international relief or rehabilitation agencies, and to meet domestic requirements.”[20] To implement the program, USDA’s Agricultural Marketing Service (AMS) posted a request for applications (LFS Request for Applications) on Grants.gov on March 17, 2022.[21] The LFS Request for Applications prescribes eligibility requirements for state applicants and beneficiaries, application requirements, the estimated allocation of funding to the various states, limitations on how the funds may be used, and reporting requirements.[22]

As described in the LFS Request for Applications, USDA will establish cooperative agreements with state governments for the purpose of supporting local, regional, small, and socially disadvantaged farmers/producers through food purchases.[23]

Financial Assistance Program #4: Supply Chain Assistance Funds (SCA Funds)

USDA allocated SCA Funds to enhance local school districts’ ability to purchase foods for school meals in response to challenges in purchasing and receiving food through their normal distribution channels.[24] According to USDA, the funds are made available through CCC and authorized under section 5(c) of the CCC Charter Act.[25] To implement the program, USDA’s Food and Nutrition Service (FNS) issued a policy memo (SCA Funds Policy Memo) regarding the program on December 17, 2021.[26] The SCA Funds Policy Memo prescribes eligibility requirements for state agencies and local school districts, the estimated allocation of funding to the various states, how and when states should claim the funds, how those funds are to be allocated to school districts, limitations on how the funds may be used, and reporting requirements.[27]

The SCA Funds Policy Memo states that USDA will allocate SCA Funds to the various states, which will then distribute the funds to school districts to purchase unprocessed or minimally processed domestic food products.[28] Distribution to individual school districts will be made according to a predetermined formula, though states have discretion to limit distribution of funds to those school districts with the highest need and to retain a portion of the funds for state-centralized procurement and distribution of unprocessed or minimally processed local foods.[29]

Congressional Review Act (CRA)

The CRA, enacted in 1996 to strengthen congressional oversight of agency rulemaking, requires federal agencies to submit a report on each new rule to both houses of Congress and the Comptroller General for review before the rule can take effect.[30] The report must contain a copy of the rule, “a concise general statement relating to the rule,” and the rule’s proposed effective date.[31] If an agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, the rule will then take effect at a time the agency determines.[32] Each house of Congress is to provide the report on the rule to the chair and ranking member of each standing committee with jurisdiction.[33] The CRA allows Congress to review and disapprove rules issued by federal agencies for a period of 60 days using special procedures.[34] If a resolution of disapproval is enacted, then the new rule has no force or effect.[35]

The CRA adopts the definition of “rule” under the APA, which states that a rule is “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.”[36] The CRA excludes three categories of rules from coverage: (1) rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non‑agency parties.[37]

USDA did not submit CRA reports to Congress or the Comptroller General on the PCSC NOFO, CCAP NOFA, LFS Request for Applications, or SCA Funds Policy Memo.[38] In its response, USDA states that the relevant programs did not involve rules as defined in the APA or the CRA.[39]

DISCUSSION

At issue here is whether USDA’s four implementing documents meet the definition of a rule under CRA. As explained below, we conclude that they do.

To determine whether each of the four implementing documents is a rule subject to review under the CRA, we first address whether each document meets the APA definition of a rule. If the document meets the APA definition, we next determine whether the document falls into one of the categories of rules excepted from the CRA’s requirements. We address each implementing document separately.

Financial Assistance Program #1: PCSC NOFO

The PCSC NOFO meets the APA definition of a rule. First, the PCSC NOFO is an agency statement as it is an official document issued by USDA and posted on Grants.gov.[40] Second, the PCSC NOFO is of future effect, as its provisions apply to PCSC applications submitted after its issuance and before future specified deadlines.[41] Finally, the PCSC NOFO prescribes or implements law or policy and describes agency procedures as it establishes a new grant program under the authority of the CCC Charter Act, including the eligibility requirements for the program, application requirements, criteria used to select proposals for funding, and funding level ranges.[42]

Next we consider whether the PCSC NOFO falls within one of the three categories of rules not subject to the CRA.

First, the PCSC NOFO is not a rule of particular applicability. A rule of particular applicability is addressed to a specific, identified person or entity and addresses actions that may or may not be taken, in light of the facts and circumstances.[43] The PCSC NOFO applies to a wide array of entities (including local and state governments, small and large businesses, and nonprofit entities) seeking funding for pilot projects related to climate-smart commodities[44] and is therefore a rule of general, not particular, applicability.

Second, the PCSC NOFO is not a rule relating to agency management or personnel. A rule relates to agency management or personnel if it applies to agency employees and not to outside parties.[45] In contrast, the PCSC NOFO establishes a grant program for a wide array of non-federal entities.[46]

Finally, the PCSC NOFO substantially affects the rights or obligations of non-agency parties, and therefore does not fall within the third excluded category of rules.[47] We have previously concluded that certain agency rules amending or clarifying the requirements of financial assistance programs for non-agency parties substantially affected those parties’ rights and obligations. For example, we recently concluded that USDA’s 2021 Thrifty Food Plan substantially affected non‑agency parties because it increased the maximum benefit allotments for qualifying families under the Supplemental Nutrition Assistance Program.[48] And, in an earlier decision, we concluded that a 2007 letter from the Centers for Medicare & Medicaid Services clarifying certain statutory and regulatory requirements for state plans under the State Children’s Health Insurance Program (and identifying particular measures states should adopt) substantially affected those states.[49]

The PCSC NOFO goes even beyond revising or clarifying the requirements of an existing financial assistance program. Instead, it implements an entirely new program for a wide array of non-federal entities and prescribes the program’s eligibility requirements, application requirements, selection criteria, and funding ranges.[50] These provisions directly determine whether and in what amount an entity may receive funding under the program. Accordingly, we conclude that the PCSC NOFO substantially affects the rights or obligations of those non-agency parties.

Based on the foregoing, we conclude that the PCSC NOFO is a rule under the CRA and no exception applies. It is, therefore, subject to the CRA’s reporting requirement.

Financial Assistance Program #2: CCAP NOFA

The CCAP NOFA meets the APA definition of a rule. First, the CCAP NOFA is an agency statement as it is an official document issued by USDA and published in the Federal Register.[51] Second, the CCAP NOFA is of future effect, as its provisions apply to CCAP applications submitted after its issuance, from May 31, 2022, through January 31, 2023.[52] Finally, the CCAP NOFA prescribes or implements law or policy and describes agency procedures as it establishes a new financial assistance program under the authority of the CCC Charter Act, including the eligibility requirements for the program, application requirements, and how payments will be calculated.[53]

In addition, the CCAP NOFA does not fall within any of the three categories of rules that are not subject to the CRA. The CCAP NOFA is not a rule of particular applicability because it is not directed to specific, identified persons or entities and instead applies to all eligible owners of U.S. agricultural commodities (or their designated marketing agents) seeking to apply for payments under the program.[54] The CCAP NOFA is likewise not a rule relating to agency management or personnel because it applies to outside parties rather than agency employees.[55] Finally, the CCAP NOFA substantially affects the rights or obligations of these non-agency parties by establishing eligibility requirements, application requirements, and payment amounts for those seeking funding under the program; it therefore does not fall within the third excluded category of rules.[56]

Based on the foregoing, we conclude that the CCAP NOFA is a rule under the CRA and no exception applies. It is, therefore, subject to the CRA’s reporting requirement.

Financial Assistance Program #3: LFS Request for Applications

The LFS Request for Applications meets the APA definition of a rule. First, the LFS Request for Applications is an agency statement as it is an official document issued by USDA and posted on its website and Grants.gov.[57] Second, the LFS Request for Applications is of future effect, as its provisions apply to LFS applications submitted after its issuance and before a future specified deadline.[58] Finally, the LFS Request for Applications prescribes or implements law or policy and describes agency procedures as it establishes a new financial assistance program for states under the authority of the CCC Charter Act, including the eligibility requirements for LFS applicants and beneficiaries, application requirements, the estimated allocation of funding to the various states, limitations on how the funds may be used, and reporting requirements.[59]

In addition, the LFS Request for Applications does not fall within any of the three categories of rules not subject to the CRA. First, the LFS Request for Applications is not a rule of particular applicability because it is not directed to specific, identified persons or entities and instead applies to eligible state agencies in all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.[60] The LFS Request for Applications is likewise not a rule relating to agency management or personnel because it applies to outside parties rather than agency employees.[61] Finally, the LFS Request for Applications substantially affects the rights or obligations of these non-agency parties by prescribing eligibility requirements for states and beneficiaries, application requirements, limitations on the use of funds, and reporting requirements; it therefore does not fall within the third excluded category of rules.[62]

Based on the foregoing, we conclude that the LFS Request for Applications is a rule under the CRA and no exception applies. It is, therefore, subject to the CRA’s reporting requirement.

Financial Assistance Program #4: SCA Funds Policy Memo

The SCA Funds Policy Memo meets the APA definition of a rule. First, the SCA Funds Policy Memo is an agency statement as it is an official document issued by senior FNS leadership to regional agency staff and state officials describing the allocation of specific funds.[63] Second, the SCA Funds Policy Memo is of future effect as it applies to funds to be allocated after its issuance.[64] Finally, the SCA Funds Policy Memo prescribes and implements law or policy and describes agency procedures as it establishes a new type of financial assistance for states under the authority of the CCC Charter Act, including the eligibility requirements for state agencies and local school districts, the estimated allocation of funding to the various states, how and when states should claim the funds, how those funds are to be allocated to school districts, limitations on how the funds may be used, and reporting requirements.[65]

In addition, the SCA Funds Policy Memo does not fall within any of the three categories of rules not subject to the CRA. First, the SCA Funds Policy Memo is not a rule of particular applicability because it is not directed to specific, identified persons or entities and instead applies to eligible state agencies in all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.[66] The SCA Funds Policy Memo is likewise not a rule relating to agency management or personnel because it applies to outside parties rather than agency employees.[67] Finally, the SCA Funds Policy Memo substantially affects the rights or obligations of these non‑agency parties by prescribing eligibility requirements for state agencies and local school districts, the estimated allocation of funding to the various states, how to claim the funds, how those funds are to be allocated to school districts, limitations on how the funds may be used, and reporting requirements; it therefore does not fall within the third excluded category of rules.[68]

Based on the foregoing, we conclude that the SCA Funds Policy Memo is a rule under the CRA and no exception applies. It is, therefore, subject to the CRA’s reporting requirement.

USDA Response

USDA contends that none of the programs involved rules under the APA or CRA because they were not designed to implement, interpret, or prescribe law or policy, but USDA does not explain the basis for this determination.[69] USDA goes on to state that it has been consistent USDA practice not to consider “programs of this type” as rules under the APA and therefore USDA has not submitted program documents such as these to Congress under the CRA.[70] USDA asserts that Congress has never suggested that that this practice violates the APA or CRA.[71]

In describing its policy, USDA does not explain what it means when it refers to “programs of this type,” in other words, those which it does not consider to involve rules. As explained above, we conclude based on the nature of the four documents, as well as relevant caselaw and GAO decisions, that these documents implement, interpret, or prescribe law or policy. USDA used these documents to establish new financial assistance programs under the authority of the CCC Charter Act and prescribe the scope and requirements of each program. As discussed above, although some of the documents reference generally applicable financial assistance requirements, each also includes program-specific requirements and procedures.

Antideficiency Act

The Antideficiency Act prohibits agencies from obligating or expending funds in excess of or in advance of amounts available under an appropriation, apportionment, or allotment.[72] If Congress statutorily prohibits a particular use of appropriated funds, any obligation for that purpose is in excess of the amount available.[73]

The Antideficiency Act requires agencies to report violations of the Act to the President and Congress.[74] The Antideficiency Act does not, however, require agencies to report violations of other laws, nor does it require agencies to report improper practices that do not result in violations of the Antideficiency Act.[75]

USDA stated that neither CCC’s authority to borrow funds nor USDA’s ability to obligate appropriations is contingent on compliance with the requirements of the CRA,[76] nor have we identified any such restriction. Agencies must determine whether a particular action constitutes a rule within the meaning of the CRA; however, the use of an appropriation is not restricted to a specific outcome in applying the CRA. Here, USDA made a determination to not submit these documents under the CRA; however, available appropriations did not restrict USDA from reaching this conclusion under the CRA. In the absence of such a restriction, USDA’s failure to submit the implementing documents as rules to Congress and the Comptroller General in accordance with the CRA does not implicate the Antideficiency Act.[77]

CONCLUSION

The PCSC NOFO, CCAP NOFA, LFS Request for Applications, and SCA Funds Policy Memo are rules for purposes of the CRA because they meet the APA definition of a rule and no CRA exception applies. All four implementing documents are subject to the CRA requirement that they be submitted to Congress and the Comptroller General before they can take effect. USDA’s failure to submit the implementing documents as rules to Congress and the Comptroller General in accordance with the CRA does not implicate the Antideficiency Act.

Edda Emmanuelli Perez
General Counsel

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