Principles of Federal Appropriations Law: 2004 Update of the
Third Edition (01-MAR-05, GAO-05-354SP).
GAO published its update of 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
cumulative supplement to the published third edition text that
includes all relevant decisions from January 1 to December 31,
2004. Each year the annual update will be posted electronically
on GAO's Web site (www.gao.gov) under "GAO Legal Products."
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-354SP
ACCNO: A18937
TITLE: Principles of Federal Appropriations Law: 2004 Update of
the Third Edition
DATE: 03/01/2005
SUBJECT: Appropriated funds
Decision making
Federal law
Federal regulations
Statutory law
Appropriations
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GAO-05-354SP
Preface
We are pleased to present the first annual update of the third edition of
Volume I of Principles of Federal Appropriations Law. Our objective in
this publication is to present a cumulative supplement to the published
third edition text that includes all relevant decisions from January 1 to
December 31, 2004. After the third editions of the other volumes of
Principles are published, they will also be updated annually. Each year
the annual update will be posted electronically on GAO's Web site
(www.gao.gov) under "GAO Legal Products." These annual updates will not be
issued in hard copy and should be used as electronic supplements.
Therefore, users should retain hard copies of the third edition volumes
and refer to the cumulative updates for newer material. The page numbers
identified in the annual update as containing new material are the page
numbers in the hard copy of the third edition. New information appears as
bolded text.
ForwardChapter 1
Page i - Insert the following as footnote number 1 at the end of the first
paragraph (after "GAO Legal Products."1):
1 Recently, section 8 of the GAO Human Capital Reform Act of 2004, Pub. L.
No. 108-271, 118 Stat. 811, 814 (July 7, 2004), 31 U.S.C. S: 702 note,
changed GAO's name to the "Government Accountability Office." This change
was made to better reflect GAO's current mission. See S. Rep. No. 108-216,
at 8 (2003); H.R. Rep. No. 108-380, at 12 (2003). Therefore, any reference
in this volume to the "General Accounting Office" should be read to mean
"Government Accountability Office." The acronym "GAO" as used in the text
now refers to the Government Accountability Office.
IntroductionChapter1
B.The Congressional "Power of the Purse"
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6 Numerous similar statements exist. See, e.g., Knote v. United States,
95 U.S. 149, 154 (1877); Marathon Oil Co. v. United States, 374 F.3d 1123,
1133-34 (Fed. Cir. 2004); 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).
Page 1-9 - Replace the first paragraph with the following:
In Kansas v. United States, 214 F.3d 1196, 1201-1202, n.6 (10th Cir.
2000), the court noted that there were few decisions striking down federal
statutory spending conditions.9 However, there are two recent interesting
examples of situations in which courts invalidated a spending condition on
First Amendment grounds. In Legal Services Corp. v. Velasquez, 531 U.S.
533 (2001), 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.10 In American Civil Liberties Union v. Mineta,
319 F. Supp. 2d 69 (D.D.C. 2004), the court declared unconstitutional an
appropriation provision forbidding the use of federal mass transit grant
funds for any activity that promoted the legalization or medical use of
marijuana, for example, posting an advertisement on a bus. Relying on
Legal Services Corp. v. Velasquez, the court held that the provision
constituted "viewpoint discrimination" in violation of the First
Amendment. 319 F. Supp. 2d at 83-87.
Page 1-10 - Insert the following after the first partial paragraph:
There have been some recent court cases upholding congressional actions
attaching conditions to the use of federal funds that require states to
waive their sovereign immunity from lawsuits under the Eleventh Amendment.
In these cases, courts found the condition a legitimate exercise of
Congress's spending power. For example, the court in Barbour v. Washington
Metropolitan Transit Authority, 374 F.3d 1161 (D.C. Cir. 2004), upheld a
statutory provision known as the "Civil Rights Remedies Equalization Act,"
42 U.S.C. S: 2000d-7, which clearly conditioned a state's acceptance of
federal funds on its waiver of its Eleventh Amendment immunity to suits
under various federal antidiscrimination laws. Among other things, the
court rejected an argument based on South Dakota v. Dole, supra, that the
condition was not sufficiently related to federal spending. The opinion
observed that the Supreme Court has never overturned Spending Clause
legislation on "relatedness grounds." 374 F.3d at 1168.
Similarly, two courts rejected challenges to section 3 of the Religious
Land Use and Institutionalized Persons Act of 2000 (RLUIPA), 42 U.S.C.
S: 2000cc-1, which limits restrictions on the exercise of religion by
persons institutionalized in a program or activity that receives federal
financial assistance. Charles v. Verhagen, 348 F.3d 601 (7th Cir. 2003);
Williams v. Bitner, 285 F. Supp. 2d 593 (M.D. Pa. 2003). In Charles v.
Verhagen, the court held that RLUIPA "falls squarely within Congress'
pursuit of the general welfare under its Spending Clause authority."
348 F.3d at 607. The court also rejected the argument that the statute's
restrictions could not be related to a federal spending interest because
the state corrections program at issue received less than two percent of
its budget from federal funding: "Nothing within Spending Clause
jurisprudence, or RLUIPA for that matter, suggests that States are bound
by the conditional grant of federal money only if the State receives or
derives a certain percentage . . . of its budget from federal funds." Id.
at 609.
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For some additional recent cases upholding statutory funding conditions,
see Biodiversity Associates v. Cables, 357 F.3d 1152 (10th Cir.), cert.
denied, ___ U.S. ___, 125 S. Ct. 54 (2004) (upholding an appropriations
rider that explicitly superseded a settlement agreement the plaintiffs had
reached with the Forest Service in environmental litigation); 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); 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); and Armstrong v. Vance, 328 F.
Supp. 2d 50 (D.D.C. 2004) and Whatley v. District of Columbia, 328 F.
Supp. 2d 15 (D.D.C. 2004) (two related decisions upholding appropriations
provisions that imposed a cap on the District of Columbia's payment of
attorney fees awarded in litigation under the Individuals with
Disabilities Education Act, 20 U.S.C. S:S: 1400 et seq.). See also Richard
W. Garnett, The New Federalism, the Spending Power, and Federal Criminal
Law, 89 Cornell L. Rev. 1 (November 2003), an article that provides more
background on this general subject.
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following:
o Agencies may not spend, or commit themselves to spend, in advance of or
in excess of appropriations. 31 U.S.C. S: 1341 (Antideficiency Act). GAO
has said that because the Antideficiency Act (ADA) is central to
Congress's core constitutional power of the purse, GAO will not interpret
general language in another statute, such as the "notwithstanding any
other provision of law" clause, to imply a waiver of the ADA without some
affirmative expression of congressional intent to give the agency the
authority to obligate in advance or in excess of an appropriation.
B-303961, Dec. 6, 2004.
E.The Role of the Accounting Officers: Legal Decisions
2.Decisions of the Comptroller General
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For example, as we discussed earlier in this chapter, effective June 30,
1996, Congress transferred claims settlement authority under 31 U.S.C.
S: 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-302996,
May 21, 2004 (GAO no longer has authority to settle a claim for severance
pay); B-278805, July 21, 1999 (the International Trade Commission was the
appropriate agency to resolve the subject claims request).
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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. S: 2672) or the Military Personnel and Civilian Employees'
Claims Act of 1964 (31 U.S.C. S: 3721). See, e.g., B-300829, Apr. 4, 2004
(regarding the Military Personnel and Civilian Employees' Claims Act).
Another example is a decision by the Secretary of Veterans Affairs on a
claim for veterans' benefits (38 U.S.C. S: 511). See 56 Comp. Gen. 587,
591 (1977); B-266193, Feb. 23, 1996; B-226599.2, Nov. 3, 1988 (nondecision
letter).
The Legal FrameworkChapter1
B.Some Basic Concepts
1.What Constitutes an Appropriation
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Subsequent to the Core Concepts and AINS decisions, the Third Circuit
Court of Appeals had occasion to weigh in on the issue of revolving funds
in a non-Tucker Act situation in American Federation of Government
Employees (AFGE) v. Federal Labor Relations Authority (FLRA), 388 F.3d 405
(3rd Cir. 2004). In that case, AFGE, representing Army depot employees,
had proposed an amendment to the employees' collective bargaining
agreement that would have required the Army to pay reimbursements of
personal expenses incurred by the depot employees as a result of cancelled
annual leave from a defense working capital fund. When the Army objected
that it had no authority to use the working capital fund for personal
expenses, AFGE appealed to FLRA. FLRA agreed with the Army and ruled that
the provision was "nonnegotiable." Citing FLRA decisions, Comptroller
General decisions, and federal court cases, FLRA concluded that the
working capital fund, a revolving fund, is treated as a continuing
appropriation and, as such, the fund was not available for reimbursement
of personal expenses.
The court agreed with FLRA that the defense working capital fund consists
of appropriated funds and is thus not available to pay the personal
expenses of Army employees. The court, however, rejected what it called
"FLRA's blanket generalization that revolving funds are always
appropriations." AFGE, 388 F.3d at 411. Instead, the court applied a
standard used by the Federal Circuit and the Court of Federal Claims when
addressing the threshold issue of Tucker Act jurisdiction, a "clear
expression" standard; that is, funds should be regarded as "appropriated"
absent a "clear expression by Congress that the agency was to be separated
from the general federal revenues." Id. at 410. The court observed in this
regard:
* * * * * * * * * *
Id. at 410-411. In applying this standard to the particular funding
arrangement at issue, the court determined that the defense working
capital fund was not a nonappropriated fund instrumentality and upheld the
FLRA decision. "What matters is how Congress wishes to treat government
revenues, not the source of the revenues." Id. at 413.
3.Transfer and Reprogramming
Page 2-24 - Replace footnote 40 with the following:
40 7 Comp. Gen. 524 (1928); 4 Comp. Gen. 848 (1925); 17 Comp. Dec. 174
(1910). Cases in which adequate statutory authority was found to exist are
B-302760, May 17, 2004 (the transfer of funds from the Library of Congress
to the Architect of the Capitol for construction of a loading dock at the
Library is authorized) and B-217093, Jan. 9, 1985 (the transfer from
Japan-United States Friendship Commission to Department of Education to
partially fund a study of Japanese education is authorized).
C.Relationship of Appropriations to Other Types of Legislation
2.Specific Problem Areas and the Resolution of Conflicts
Page 2-69 - Insert the following new paragraphs after the first full
paragraph:
Recently, two courts have interpreted appropriation restrictions to avoid
repeal by implication: City of Chicago v. Department of the Treasury, 384
F.3d 429 (7th Cir. 2004), and City of New York v. Beretta U.S.A. Corp.,
222 F.R.D. 51 (E.D. N.Y. 2004). In the first case, the City of Chicago had
sued the former Bureau of Alcohol, Tobacco, and Firearms under the Freedom
of Information Act (FOIA), 5 U.S.C. S: 552, to obtain access to certain
information from the agency's firearms databases. The Court of Appeals for
the Seventh Circuit held that the information was not exempt from
disclosure under FOIA. City of Chicago v. Department of the Treasury, 287
F.3d 628 (7th Cir. 2002). The agency then appealed to the Supreme Court.
While the appeal was pending, Congress enacted appropriations language for
fiscal years 2003 and 2004 providing that no funds shall be available or
used to take any action under FOIA or otherwise that would publicly
disclose the information. Pub. L. No. 108-7, div. J, title VI, S: 644, 117
Stat. 11, 473 (Feb. 20, 2003); Pub. L. No. 108-99, div. B, title I, 118
Stat. 3, 53 (Jan. 23, 2004). The Supreme Court remanded the case to the
Seventh Circuit to consider the impact, if any, of the appropriations
language. Department of Justice v. City of Chicago, 537 U.S. 1229 (2003).
In City of Chicago v. Department of the Treasury, 384 F.3d 429 (7th Cir.
2004), the court decided that the appropriations language had essentially
no impact on the case. Citing a number of cases on the rule disfavoring
implied repeals (particularly by appropriations act), the court held that
the appropriations rider did not repeal FOIA or otherwise affect the
agency's legal obligation to release the information in question. The
court concluded that "FOIA deals only peripherally with the allocation of
funds-its main focus is to ensure agency information is made available to
the public." Id. at 435. In this regard, the court repeatedly emphasized
the minimal costs entailed in complying with the access request and
concluded that "there is no `irreconcilable conflict' between prohibiting
the use of federal funds to process the request and granting the City
access to the databases." Id.
The second case, City of New York v. Beretta U.S.A. Corp., 222 F.R.D. 51
(E.D. N.Y. 2004), concerned access to firearms information that was
subject to the same appropriations language for fiscal year 2004 in Public
Law 108-199. In this case, the demand for access took the form of
subpoenas seeking discovery of the records in a tort suit by the City of
New York and others against firearms manufacturers and distributors. The
court in City of New York denied the agency's motion to quash the
subpoenas, which was based largely on the appropriations language. The
court held that the appropriations language, which prohibited public
disclosure, was inapplicable by its terms since discovery could be
accomplished under a protective order that would keep the records
confidential. 222 F.R.D. at 56-65.
D.Statutory Interpretation: Determining Congressional Intent
1.The "Plain Meaning" Rule
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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., BedRoc Limited, LLC v. United States, 541 U.S.
176 (2004); Lamie v. United States Trustee, 540 U.S. 526 (2004); Hartford
Underwriters Insurance Co. v. Union Planters Bank,N.A., 530 U.S. 1 (2000);
Robinson v. Shell Oil Co. v. 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:
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):
3.The Limits of Literalism: Errors in Statutes and "Absurd Consequences"
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The Supreme Court's recent decision in Lamie v. United States Trustee, 540
U.S. 526 (2004), contained an interesting discussion of drafting errors
and what to do about them. For reasons that are described at length in the
opinion but need not be repeated here, the Court found an "apparent
legislative drafting error" in a 1994 statute. 540 U.S. at 530.
Nevertheless, the Court held that the amended language must be applied
according to its plain terms. While the Court in Lamie acknowledged that
the amended statute was awkward and ungrammatical, and that a literal
reading rendered some words superfluous and could produce harsh results,
none of these defects made the language ambiguous. Id. at 534-36. The
Court determined that these flaws did not "lead to absurd results
requiring us to treat the text as if it were ambiguous." Id. at 536. The
Court also drew a distinction between construing a statute in a way that,
in effect, added missing words as opposed to ignoring words that might
have been included by mistake. Id. at 538.
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Recent Supreme Court decisions likewise reinforce the need for caution
when it comes to departing from statutory language on the basis of its
apparent "absurd consequences." See Lamie v. United States Trustee, 540
U.S. 526, 537-38 (2004) ("harsh" consequences are not the equivalent of
absurd consequences); Barnhart v. Thomas, 540 U.S. 20, 28-29 (2003)
("undesirable" consequences are not the equivalent of absurd
consequences).
4.Statutory Aids to Construction
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Occasionally, the courts use the Dictionary Act to assist in resolving
questions of interpretation. E.g., Gonzalez v. Secretary for the
Department of Corrections, 366 F.3d 1253, 1263-64 (11th Cir. 2004)
(applying the Dictionary Act's general rule that "words importing the
singular include and apply to several persons, parties, or things," 1
U.S.C. S: 1); 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 United States v. Ekanem, 383 F.3d 40 (2nd Cir. 2004) ("victim"
as used in the Mandatory Victims Restitution Act (MRVA) is not limited by
the default definition of "person" in the Dictionary Act since that
definition does not apply where context of MVRA indicates otherwise);
Rowland v. California Men's Colony, 506 U.S. 194 (1993) (context refutes
application of the Title 1, United States Code, definition of "person").
5.Canons of Statutory Construction
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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"). See also Hibbs v. Winn, ___ U.S. ___, 124 S. Ct.
2276, 2285 (2004) (courts should construe a statute so that "effect is
given to all its provisions, so that no part will be inoperative or
superfluous, void or insignificant"); General Dynamics Land Systems, Inc.
v. Cline, 540 U.S. 581, 598 (2004) (courts should not ignore "the
cardinal rule that statutory language must be read in context since a
phrase gathers meaning from the words around it").
Page 2-87 - Add the following bullet to the first full paragraph and
revise the second bullet as follows:
o B-302335, Jan. 15, 2004: When read as a whole, the Emergency Steel Loan
Guarantee Act of 1999, 15 U.S.C. S: 1841 note, clearly appropriated loan
guarantee programs funds to the Loan Guarantee Board and not the
Department of Commerce.
o B-303961, Dec. 6, 2004: Despite use of the phrase "notwithstanding any
other provision of law" in a provision of an appropriation act, nothing in
the statute read as a whole or its legislative history suggested an
intended waiver of the Antideficiency Act. See also 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).
Page 2-88 - Add the following bullets to the first paragraph:
o Hibbs v. Winn, ___ U.S. ___, 124 S. Ct. 2276, 2285 (2004): "The rule
against superfluities complements the principle that courts are to
interpret the words of a statute in context."
o Alaska Department of Environmental Conservation v. EPA, 540 U.S. 461,
489 n.13 (2004): A statute should be construed so that, "if it can be
prevented, no clause, sentence, or word shall be superfluous, void, or
insignificant."
Page 2-88 - Replace the last paragraph as follows:
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):
Citing Chickasaw Nation, the Court also recently observed that the canon
of avoiding surplusage will not be invoked to create ambiguity in a
statute that has a plain meaning if the language in question is
disregarded. Lamie v. United States Trustee, 540 U.S. 526, 536 (2004).
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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., Engine Manufacturers Ass'n v. South Coast Air Quality
Management District, 541 U.S. 246 (2004); BedRoc Limited, LLC v. United
States, 541 U.S. 176 (2004); 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-302973, Oct.
6, 2004; B-261522, Sept. 29, 1995.
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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:
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:
Id. See also General Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581,
594-96 and fn. 8 (2004) (quoting the same law review passage, which it
notes "has become a staple of our opinions"). 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").
Page 2-93 - Replace the first full paragraph with the following:
Likewise, a statute's grammatical structure is useful but not conclusive.
Lamie v. United States Trustee, 540 U.S. 526, 534-35 (2004) (the mere fact
that a statute is awkwardly worded or even ungrammatical does not make it
ambiguous). Nevertheless, the Court sometimes gives significant weight to
the grammatical structure of a statute. For example, in Barnhart v.
Thomas, 540 U.S. 20, 26 (2003), the Court rejected the lower court's
construction of a statute in part because it violated the grammatical
"rule of the last antecedent." Also, 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."
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The same considerations apply to a statute's popular name and to the
headings, or titles, of particular sections of the statute. See Intel
Corp. v. Advanced Micro Devices, Inc., ___ U.S. ___, 124 S. Ct. 2466, 2470
(2004) ("A statute's caption . . . cannot undo or limit its text's plain
meaning"). See also 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. See
also McConnell v. Federal Election Commission, 540 U.S. 93, 180 (2003).
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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:
2A Sutherland, S: 47:04 at 221-22.80 For a recent example in which the
Court used statutory findings to inform its interpretation of
congressional intent, see General Dynamics Land Systems, Inc. v Cline, 540
U.S. 581, 589-91 (2004).
6.Legislative History
Page 2-102 - Replace the first full paragraph with the following:
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). However, they
are not controlling. General Dynamics Land Systems, Inc. v. Cline, 540
U.S. 581, 597-99 (2004); Chrysler Corp. v. Brown, 441 U.S. 281, 311
(1979).
Page 2-105 - Add the following to the third full paragraph:
o Doe v. Chao, 540 U.S. 614, 621-23 (2004): Congress deleted from the bill
language that would have provided for the type of damage award sought by
the petitioner.
See also F. Hoffman-La Roche Ltd v. Empagran S.A., ___ U.S. ___, 124 S.
Ct. 2359, 2365 (2004); Resolution Trust Corp. v. Gallagher, 10 F.3d 416
423 (7th Cir. 1993); Davis v. United States, 46 Fed. Cl. 421 (2000).
7.Presumptions and "Clear Statement" Rules
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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); Marathon Oil Co. v.
United States, 374 F.3d 1123, 1127 (Fed. Cir. 2004); 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:
503 U.S. at 37.
Agency Regulations and Administrative DiscretionChapter1
A.Agency Regulations
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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. S: 3011, 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); B-302582, Sept. 30, 2004; 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, 1278-84
(Fed. Cir. 2002), cert. denied, 539 U.S. 910 (2003).
1.The Administrative Procedure Act
Page 3-6 - Replace the cite after the quoted language carried over from
page 3-5 with the following paragraph:
Richard J. Pierce, Jr., Administrative Law Treatise, S: 7.4 at 442 (4th
ed. 2000) (citations omitted). Two recent decisions make clear that the
courts will insist upon at least some ascertainable and coherent
rationale: Northeast Maryland Waste Disposal Authority v. EPA, 358 F.3d
936, 948 (D.C. Cir. 2004) (the court remanded a rule to the agency because
it was "frankly, stunned to find" that the agency had provided "not one
word in the proposed or final rule" (emphasis in original) to explain a
key aspect of its rule), and International Union, United Mine Workers of
America v. Department of Labor, 358 F.3d 40, 45 (D.C. Cir. 2004) (finding
that the agency's stated rationale to withdraw a proposed rule was
disjointed and conclusory, the court returned the matter to the agency "so
that it may either proceed with the . . . rulemaking or give a reasoned
account of its decision not to do so").
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As a starting point, anything that falls within the definition of a "rule"
in 5 U.S.C. S: 551(4) and for which formal rulemaking is not required, is
subject to the informal rulemaking procedures of 5 U.S.C. S: 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." Jifry v. Federal Aviation Administration, 370
F.3d 1174, 1179 (D.C. Cir. 2004); 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, 396-97 (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).8 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. S: 553(a)(2).
Page 3-9 - Replace footnote 8 with the following:
8 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. The decision in Jifry provides an example of a
case upholding an agency's use of the good cause exemption based on
emergency conditions involving potential security threats. Jifry v.
Federal Aviation Administration, 370 F.3d at 1179.
4.Waiver of Regulations
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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 BDPCS,
Inc. v. FCC, 351 F.3d 1177 (D.C. Cir. 2003); 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).
B.Agency Administrative Interpretations
1.Interpretation of Statutes
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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. A recent example is General
Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581 (2004), in which the
Court declined to give Chevron deference, or any lesser degree of
deference, to an agency interpretation that it found to be "clearly wrong"
as a matter of statutory construction, since the agency interpretation was
contrary to the act's text, structure, purpose, history, and relationship
to other federal statutes.
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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.30 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, e.g., Household Credit Services, Inc. v.
Pfennig, 541 U.S. 232 (2004); Barnhart v. Thomas, 540 U.S. 20 (2003);
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).
Page 3-32 - Replace the third bulleted paragraph with the following:
o 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. Interestingly, in Coke v.
Long Island Care At Home, Ltd., 376 F.3d 118 (2nd Cir. 2004), the court
acknowledged the potential relevance of congressional acquiescence to a
30-year-old regulation, noting that Congress had amended the applicable
statute seven times over the life of the regulation without expressing any
disapproval of it. However, the court ultimately rejected the
congressional acquiescence argument-according to the court,
"affectionately known as the `dog didn't bark canon'"-and held the
regulation invalid. Id. at 130 and n.5.
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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:
Id. at 222.33 See also General Dynamics Land Systems, Inc. v. Cline,
540 U.S. 581 (2004); Edelman v. Lynchburg College, 535 U.S. 106, 114
(2002). Two additional decisions are instructive in terms of the limits of
Chevron. In both cases the Court found that the issuances containing
agency statutory interpretations were entitled to some weight, but not
Chevron deference. Raymond B. Yates, M.D., P.C., Profit Sharing Plan v.
Hendon, 541 U.S. 1 (agency advisory opinion); Alaska Department of
Environmental Conservation v. EPA, 540 U.S. 461 (2004) (internal agency
guidance memoranda).
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Circuit court decisions have added to the confusion. See Coke v. Long
Island Care at Home, Ltd., 376 F.3d 118 (2nd Cir. 2004) (the court found
that a regulation was not entitled to Chevron deference, despite
congressional acquiescence and even though the statute was ambiguous and
the regulation was issued through notice and comment rulemaking, because
evidence showed the agency intended the regulation to be only an
"interpretive" as opposed to a "legislative" rule); Doe v. United States,
372 F.3d 1347, 1357-59 (Fed. Cir. 2004) (court applied Chevron deference
to an Office of Personnel Management regulation issued under general
rulemaking authority); 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:
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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). In "split-jurisdiction" situations, where multiple agencies share
specific statutory responsibility, courts have determined that Chevron
deference is due to the primary executive branch enforcer and the agency
accountable for overall administration of the statutory scheme. See Martin
v. Occupational Safety and Health Review Commission, 499 U.S. 144 (1991);
Collins v. National Transportation Safety Board, 351 F.3d 1246 (D.C. Cir.
2003).
2.Interpretation of Agency's Own Regulations
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of the page:
Recent cases according Seminole Rock deference to agency interpretations
of their regulations include: Entergy Services, Inc. v. Federal Energy
Regulatory Commission, 375 F.3d 1204, 1209 (D.C. Cir. 2004); Castlewood
Products, L.L.C. v. Norton, 365 F.3d 1076, 1079 (D.C. Cir. 2004); In re
Sullivan, 362 F.3d 1324, 1328 (Fed. Cir. 2004). In WHX Corp. v. SEC, 362
F.3d 854, 860 (D.C. Cir. 2004), the court did not defer to an agency
interpretation because the interpretation rested entirely on staff advice
and there was no formal agency precedent or official interpretative
guideline on point.
C.Administrative Discretion
1.Introduction
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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.
S: 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.37 See Raymond Proffitt Foundation v.
Corps of Engineers, 343 F.3d 199, 207 (3rd Cir. 2003); 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).
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37 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). See also Ohio Public Interest Research Group, Inc. v.
Whitman, 386 F.3d 792 (6th Cir. 2004); Godwin v. Secretary of Housing and
Urban Development, 356 F.3d 310 (D.C. Cir. 2004).
Page 3-42 - Insert the following new paragraphs after the last bulleted
paragraph:
Even where the APA does not flatly preclude judicial review, the courts
will entertain a lawsuit under the Act only if it involves an "agency
action" that is subject to redress under the Act. In Norton v. Southern
Utah Wilderness Alliance, ___ U.S. ___, 124 S. Ct. 2373 (2004), the Court
rejected a suit under the APA to compel the Interior Department to
regulate the use of off-road vehicles on certain federal wilderness lands.
The Court concluded that there was no legal mandate requiring the agency
to take such action. The Court described the jurisdictional parameters of
the APA as follows:
124 S. Ct. at 2378. Thus, the Court held that in order to be viable, an
APA claim seeking to compel an agency to act must point to "a discrete
agency action that it is required to take." Id. at 2379 (emphasis in
original). This standard precludes "broad programmatic attack[s]." Id. at
2379-80. The Court added:
Id. at 2381.
Availability of Appropriations: PurposeChapter1
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A.General Principles
1.Introduction: 31 U.S.C. S: 1301(a)
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Simple, concise, and direct, this statute was originally enacted in 1809
(ch. 28, S: 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,
S: 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. S: 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. See, e.g.,
B-302973, Oct. 6, 2004 (agency could not charge authorized activities such
as cost comparison studies to an appropriation that specifically prohibits
its use for such studies). 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).
2.Determining Authorized Purposes
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Once the purposes have been determined by examining the various pieces of
legislation, 31 U.S.C. S: 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. S: 1770 to authorize federal agencies to provide various
services, including telephone service, to employee credit unions. Pub. L.
No. 97-320, S: 515, 96 Stat. 1469, 1530 (Oct. 15, 1982). Prior to this
legislation, an agency would have violated 31 U.S.C. S: 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. S: 5757(a); B-289219, Oct. 29, 2002.
See also B-302548, Aug. 20, 2004 (section 5757(a) does not authorize the
agency to pay for an employee's membership in a professional association
unless membership is a prerequisite to obtaining the professional license
or certification). 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.
S:S: 3901-3907) and administrative settlements less than $2,500 under the
Federal Tort Claims Act (28 U.S.C. S:S: 2671 et seq.).
B.The "Necessary Expense" Doctrine
1.The Theory
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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 productivity, safety, 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-302993, June 25, 2004 (modifying earlier decisions to
reflect determination that purchase of kitchen appliances for use by
agency employees in an agency facility is reasonably related to the
efficient performance of agency activities, provides other benefits such
as assurance of a safe workplace, and primarily benefits the agency, even
though employees enjoy a collateral benefit); 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).
2.General Operating Expenses
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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. S: 4103(b). Similarly,
employee retirement education and retirement counseling, including
individual financial planning for retirement, fall within the legitimate
range of an agency's discretion to administer its personnel system and
therefore are legitimate agency expenses. B-301721, Jan. 16, 2004.
C.Specific Purpose Authorities and Limitations
5.Entertainment - Recreation - Morale and Welfare
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The purchase of equipment for use in other than an established cafeteria
may also be authorized when the agency determines that the primary benefit
of its use accrues to the agency by serving a valid operational purpose,
such as providing for an efficient working environment or meeting health
needs of employees, notwithstanding a collateral benefit to the employees.
In B-302993, June 25, 2004, GAO approved the purchase of kitchen
appliances, ordinarily considered to be personal in nature, for common use
by employees in an agency facility. The appliances included refrigerators,
microwaves, and commercial coffee makers. The agency demonstrated that
equipping the workplace with these appliances was reasonably related to
the efficient performance of agency activities and provided other benefits
to the agency, including the assurance of a safe workplace. GAO also
advised the agency that it should establish policies for uniform
procurement and use of such equipment. In developing a policy, the agency
should address the ongoing need for specific equipment throughout the
building, the amount of the agency's appropriation budgeted for this
purpose, price limitations placed on the equipment purchases, and whether
the equipment should be purchased centrally or by individual units within
headquarters. It is important that the policy ensure that appropriations
are not used to provide any equipment for the sole use of an individual,
and that the agency locate refrigerators, microwaves, and coffee makers
acquired with appropriated funds only in common areas where they are
available for use by all personnel. It should also be clear that
appropriated funds will not be used to furnish goods, such as the coffee
itself or microwaveable frozen foods, to be used in the kitchen area.
These remain costs each employee is expected to bear.
The decision in B-302993, June 25, 2004, represented a departure from
earlier cases which permitted such purchases under more restrictive
circumstances where the agency could identify a specific need:
o B-173149, Aug. 10, 1971: purchase of a set of stainless steel cooking
utensils for use by air traffic controllers to prepare food at a flight
service station where 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.
o 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.
o 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.
o 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.
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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.)
Compare that situation to the facts in B-301184, Jan. 15, 2004, where GAO
found that the U.S. Army Corps of Engineers' appropriation was not
available to pay for the costs of food offered at the Corps' North
Atlantic Division's February 2003 Black History Month program. The
evidence in the record, including the time of the program, the food items
served, and the amounts available, indicated that a meal, not a sampling
of food, was offered.
Page 4-123 - Insert the following after the first full paragraph:
Similarly, GAO advised that serving refreshments purchased with
appropriated funds to local children as part of the Forest Service's
"Kid's Fishing Day" did not promote cultural awareness. While it may have
been important that children learn to fish and appreciate the outdoors,
such a goal did not advance federal EEO objectives. B-302745, July 19,
2004.
7.Firefighting and Other Municipal Services
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In B-302230, Dec. 30, 2003, GAO found the District of Columbia's 9-1-1
emergency telephone system surcharge as originally enacted to be an
impermissible tax on the federal government because the legal incidence of
the tax fell on the federal government. Subsequently, the District of
Columbia amended its law such that the legal incidence of the tax falls on
the providers of telephone service, not the users of telephone service.
Thus, federal agencies could pay bills that itemize the surcharge that the
vendors must pay. Id.
8.Gifts and Awards
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The Incentive Awards Act applies to civilian agencies, civilian employees
of the various armed services and specified legislative branch agencies.
5 U.S.C. S: 4501. Within the judicial branch, it applies to the United
States Sentencing Commission. Id.103 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. S: 1124.
Page 4-166 - Replace footnote number 103 with the following:
103 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, S: 5(f), 104 Stat. 1100 (Oct. 30, 1990). The District
of Columbia is also no longer covered. When the District of Columbia Home
Rule Act was enacted into law, Pub. L. No. 93-198, 87 Stat. 777 (Dec. 24,
1973), the Act provided for the continuation of federal laws applicable to
the District of Columbia government and its employees (that for the most
part were in title 5 of the United States Code) until such time as the
District enacted its own laws covering such matters. The District has
adopted a number of laws exempting its employees from various provisions
of title 5, and sections 4501 through 4506 are specifically superseded.
See D.C. Official Code, 2001 ed. S:1-632.02.
11.Lobbying and Related Matters
Page 4-188 - Replace the title of section 11 with the following:
11. Lobbying, Publicity or Propaganda, and Related Matters
Page 4-189 - Insert the following after the first full paragraph:
In addition to restrictions on lobbying, this section will explore
restrictions on publicity or propaganda. Since 1951, appropriation acts
have included provisions precluding the use of the appropriations for
"publicity or propaganda." While Congress has never defined the meaning of
publicity or propaganda, GAO has recognized three types of activities that
violate the publicity or propaganda prohibitions: self-aggrandizement,
covert propaganda, and materials that are purely partisan in nature.
Page 4-196 - Insert the following as the first paragraph under "(1) Origin
and general considerations":
In addition to penal statutes imposing restrictions on lobbying, lobbying
restrictions are found in appropriations acts. Restrictions on publicity
or propaganda are found only in appropriations acts.
Page 4-197 - Replace the first paragraph and quotation with the following:
The publicity or propaganda prohibition made its first appearance in 1951.
Members of Congress expressed concern over a speaking campaign promoting a
national healthcare plan undertaken in the early 1950s by Oscar R. Ewing,
the Administrator of the Federal Security Agency, a predecessor to the
Department of Health and Human Services and the Social Security
Administration. In reaction to this activity, Representative Lawrence R.
Smith introduced the following provision, which was enacted in the
Labor-Federal Security appropriation for 1952, Pub. L. No. 134, ch. 373,
S: 702, 65 Stat. 209, 223 (Aug. 31, 1951):
Later versions of this provision prohibit activity throughout the
government:
Page 4-197 - Replace footnote number 117 with the following:
117 See, e.g., the Transportation, Treasury, and related agencies'
appropriations for 2005, Pub. L. No. 108-447, div. H, title VI, S: 624,
118 Stat. 2809, 3278 (Dec. 8, 2004) (emphasis added).
Page 4-198 - Insert the following after the quotation and before the
second full paragraph:
Although the publicity and propaganda prohibition has appeared in some
form in the annual appropriations acts since 1951, the prohibitions
themselves provide little definitional guidance as to what specific
activities are publicity or propaganda. GAO has identified three
activities that are prohibited by the publicity or propaganda
prohibition-self-aggrandizement, covert propaganda, and purely partisan
materials.
Page 4-198 - Replace the second full paragraph with the following:
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 these categories. Before
discussing these categories, two threshold issues must be noted.
Page 4-199 - Replace the first three paragraphs under "(2)
Self-aggrandizement" and move the heading as follows:
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 Congress." A fiscal year 2005
governmentwide variation limits these restrictions to activities "within
the United States."121
(2) Self-aggrandizement
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-302992, Sept. 10, 2004; B-302504, Mar. 10, 2004; B-284226.2,
Aug. 17, 2000; B-223098.2, Oct. 10, 1986. It also established that the
publicity or propaganda restriction prohibits "publicity of a nature
tending to emphasize the importance of the agency or activity in
question." 31 Comp. Gen. at 313. See also B-302504, Mar. 10, 2004;
B-212069, Oct. 6, 1983. Such activity has become known as
"self-aggrandizement."
Page 4-199 - Replace footnote number 121 with the following:
121 Pub. L. No. 108-447, div. H, title VI, S: 624, 118 Stat. 2809, 3278
(Dec. 8, 2004).
Page 4-200 - Replace the first full paragraph with the following:
In B-302504, Mar. 10, 2004, GAO considered a flyer and television and
print advertisements that the Department of Health and Human Services
(HHS) produced and distributed to inform Medicare beneficiaries of
recently enacted changes to the Medicare program. While the materials had
notable factual omissions and other weaknesses, GAO concluded that the
materials were not self-aggrandizement because they did not attribute the
enactment of new Medicare benefits to HHS or any of its agencies or
officials.
Page 4-200 - Replace the third full paragraph with the following:
Other cases, in which GAO specifically found no self-aggrandizement, are
B-284226.2, Aug. 17, 2000 (Department of Housing and Urban Development
report 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.
Page 4-202 - Replace the first paragraph under the heading "(3) Covert
propaganda" with the following:
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 from the target audience of the agency's role in sponsoring
the material. Id.; B-303495, Jan. 4, 2005; B-302710, May 19, 2004.
Page 4-202 - Insert the following after the second full paragraph:
In B-302710, May 19, 2004, GAO found that the Department of Health and
Human Services (HHS) violated the prohibition when it produced and
distributed prepackaged video news stories that did not identify the
agency as the source of the news stories. Prepackaged news stories,
ordinarily contained in video news releases, or "VNRs," have become a
popular tool in the public relations industry. The prepackaged news
stories may be accompanied by a suggested script, video clips known as
"B-roll" film which news organizations can use either to augment their
presentation of the prepackaged news story or to develop their own news
reports in place of the prepackaged story, and various other promotional
materials. These materials are produced in the same manner in which
television news organizations produce materials for their own news
segments, so they can be reproduced and presented as part of a newscast by
the news organizations. The HHS news stories were part of a media campaign
to inform Medicare recipients about new benefits available under the
recently enacted Medicare Prescription Drug, Improvement, and
Modernization Act of 2003. HHS designed its prepackaged video news stories
to be indistinguishable from video segments produced by private news
broadcasters, allowing broadcasters to incorporate them into their
broadcasts without alteration. The suggested anchor lead-in scripts
included in the package facilitated the unaltered use of the prepackaged
news stories, announcing the package as a news story by fictional news
reporters. HHS, however, did not include any statement in the news stories
to advise the television viewing audience, the target of the purported
news stories, that the agency wrote and produced the prepackaged news
stories, and the television viewing audiences did not know that the
stories they watched on television news programs about the government
were, in fact, prepared by the government. See also B-303495, Jan. 4, 2005
(prepackaged news stories produced by the Office of National Drug Control
Policy were covert propaganda in violation of the prohibition).
Page 4-202 - Insert the following after the last paragraph:
In B-302992, Sept. 10, 2004, the Forest Service produced video and print
materials to explain and defend its controversial land and resource
management plan for the Sierra Nevada Forest. Because the video and print
materials clearly identified the Forest Service and the Department of
Agriculture as the source of the materials, GAO concluded that they did
not constitute covert propaganda. See also B-301022, Mar. 10, 2004 (the
Office of National Drug Control Policy was clearly identified as the
source of materials sent to members of the National District Attorneys
Association concerning the debate over the legalization of marijuana).
(4)Purely partisan materials
A third category of materials identified in GAO case law as violating the
publicity or propaganda prohibition is purely partisan materials. To be
characterized as purely partisan in nature, the offending materials must
be found to have been "designed to aid a political party or candidate."
B-147578, Nov. 8, 1962. It is axiomatic that funds appropriated to carry
out a particular program would not be available for political purposes.
See B-147578, Nov. 8, 1962.
It is often difficult to determine whether materials are political or not
because "the lines separating the nonpolitical from the political cannot
be precisely drawn." Id.; B-144323, Nov. 4, 1960. See also B-130961, Oct.
16, 1972. An agency has a legitimate right to explain and defend its
policies and respond to attacks on that policy. B-302504, Mar. 10, 2004. A
standard GAO applies is that the use of appropriated funds is improper
only if the activity is "completely devoid of any connection with official
functions." B-147578, Nov. 8, 1962. As stated in B-144323, Nov. 4, 1960:
While GAO has reviewed materials to determine whether they are partisan in
nature, to date there are no opinions or decisions of the Comptroller
General concluding that an agency's informational materials were so purely
partisan as to constitute impermissible publicity or propaganda. In 2000,
GAO concluded that an information campaign by the Department of Housing
and Urban Development (HUD) using a widely disseminated publication,
entitled Losing Ground: The Impact of Proposed HUD Budget Cuts on
America's Communities, had not violated the prohibition. B-284226.2, Aug.
17, 2000. In the publication, HUD criticized what it called "deep cuts" in
appropriations that were proposed by the House Appropriations Committee
for particular HUD programs. The publications stated that, if enacted, the
"cuts would have a devastating impact on families and communities
nationwide." GAO found that this publication was a legitimate exercise of
HUD's duty to inform the public of government policies, and that HUD had a
right to justify its policies to the public and rebut attacks against
those policies.
In B-302504, Mar. 10, 2004, GAO examined a flyer and print and television
advertisements about changes to Medicare enacted by the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L.
No. 108-173, 117 Stat. 2066 (Dec. 8, 2003). The flyer contained
information about new prescription drug benefits and price discount cards.
GAO noted that while the materials contained opinion and notable factual
omissions, the materials did not constitute impermissible publicity or
propaganda. GAO explained:
Id. at 10.
In B-302992, Sept. 10, 2004, GAO upheld the Forest Service's right to
produce and distribute a brochure and video materials regarding its
controversial policy on managing wildfire in the Sierra Nevada Forest.
Because the materials sought to explain hundreds of pages of scientific
data, official opinions, and documents of the Forest Service, they were
not comprehensive and did not explain all the positive and negative
aspects of the thinning policies adopted in its regional forest plan. GAO
concluded that the Forest Service had the authority to disseminate
information about its programs and policies and to defend those policies.
Apart from considerations of whether any particular law has been violated,
GAO has taken the position in two audit reports that the government should
not disseminate misleading information. 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. While the pamphlet had a strong pro-nuclear
bias and urged the reader to "Let your voice be heard," 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 GAO, 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. GAO 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 ensure that such publications
include a prominently displayed disclaimer statement making it clear that
the material was not government approved. GAO, Problems With Publications
Related To The Clinch River Breeder Reactor Project, EMD-77-74
(Washington, D.C.: Jan. 6, 1978).
Page 4-203 - Renumber section (4) as follows:
(5)Pending legislation: Overview
Page 4-207 - Renumber section (5) as follows:
(6)Cases involving "grassroots" lobbying violations
Page 4-210 - Renumber section (6) as follows:
(7)Pending legislation: Cases in which no violation was found
Page 4-213 - Renumber section (7) as follows:
(8)Pending legislation: Providing assistance to private lobbying groups
Page 4-215 - Renumber section (8) as follows:
(9)Promotion of legislative proposals: Prohibited activity short of grass
roots lobbying
Pages 4-218 to 4-219 - Delete the entire section (9) entitled
"Dissemination of political or misleading information"; the information
contained therein has been integrated into the new section "(4) Purely
partisan materials," above.
Page 4-219 - Insert the following after the third paragraph as a new
section 11.c.(10):
(10)Federal employees' communications with Congress
Since 1998, annual appropriations acts each year have contained a
governmentwide prohibition on the use of appropriated funds to pay the
salary of any federal official who prohibits or prevents another federal
employee from communicating with Congress. See Pub. L. No. 105-61, S: 640,
111 Stat. 1272, 1318 (1997). Specifically, this provision states:
Pub. L. No. 108-199, div. F, title VI, S: 618, 188 Stat. 3, 354 (Jan. 23,
2004); Pub. L. No. 108-7, div. J, title VI, S: 620, 117 Stat. 11, 468
(Feb. 20, 2003). This provision has its antecedents in several older
pieces of legislation, including section 6 of the Lloyd-La Follette Act of
1912, Pub. L. No. 336, ch. 389, 66 Stat. 539, 540 (Aug. 24, 1912), which
stated:
Congress enacted section 6 in response to concern over executive orders by
Presidents Theodore Roosevelt and Howard Taft that prohibited federal
employees from contacting Congress except through the head of their
agency. The legislative history of this provision indicates that Congress
intended to advance two goals: to preserve the First Amendment rights of
federal employees regarding their working conditions and to ensure that
Congress had access to programmatic information from frontline federal
employees. See H.R. Rep. No. 62-388, at 7 (1912); 48 Cong. Rec. 5634,
10673 (1912).
In B-302911, Sept. 7, 2004, GAO concluded that the Department of Health
and Human Services violated this provision by paying the salary of the
Director of the Centers for Medicare & Medicaid Services (CMS) who
prohibited the CMS Chief Actuary from providing certain cost estimates of
Medicare legislation to Congress. The Director specifically instructed the
Chief Actuary not to respond to any requests for information and advised
that there would be adverse consequences if he released any information to
Congress. GAO recognized that certain applications of the provision could
raise constitutional separation of powers concerns; however, there was no
controlling judicial opinion declaring the provision unconstitutional. GAO
found that the provision, as applied to the facts in this case, precluded
the payment of the CMS Director's salary because he specifically prevented
another employee from communicating with Congress, particularly in light
of the narrow, technical nature of the information requested by Congress
and Congress's need for the information in carrying out its constitutional
legislative duties.
Page 4-227 - Replace the third full paragraph with the following:
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. S: 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-301367,
Oct. 23, 2003 (affixing decals of the major units assigned to an Air Force
base onto a nearby utility company water tower to inform the public of
military activity in the area is a permissible use of appropriated funds);
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").
Page 4-232 - Replace the first full paragraph with the following:
A statute originally enacted in 1913, now found at 5 U.S.C. S: 3107,
provides:
This provision applies to all appropriated funds. GAO has consistently
noted certain difficulties in enforcing the statute. In GAO's first
substantive discussion of 5 U.S.C. S: 3107, the Comptroller General stated
"[i]n its present form, the statute is ineffective." A-61553, May 10,
1935. The early cases151 identified three problem areas, summarized in
B-181254(2), Feb. 28, 1975.
Page 4-233 - Insert the following after the second paragraph:
The legislative history of section 3107 provides some illumination. While
it is not clear what was meant by "publicity expert," there are
indications that the provision would prohibit the use of press agents "to
extol or to advertise" the agency or individuals within the agency. See,
e.g., 50 Cong. Rec. 4410 (1913) (comments of Representative Fitzgerald,
chairman of the committee that reported the bill)). There are also
indications that the provision should not interfere with legitimate
information dissemination regarding agency work or services. When some
members expressed concern that the provision may affect the hiring of
experts to "mak[e] our farm bulletins more readable to the public and more
practical in their make-up," supporters indicated that such activities
would not be restricted by passage of the provision. Id. at 4410
(colloquy between Representatives Lever and Fitzgerald).
Page 4-234 - Insert the following after the first partial paragraph:
GAO recently revisited the statute in B-302992, Sept. 10, 2004. The Forest
Service had hired a public relations firm to help produce and distribute
materials regarding its controversial land and resource management plan in
the Sierra Nevada Forest, a plan consisting of hundreds of pages of
scientific data and opinion. The Forest Service had hired the public
relations firm to help make the plan's scientific content more
understandable to the public and media. GAO concluded that the Forest
Service had not violated section 3107. GAO said that section 3107 was not
intended to impede legitimate informational functions of agencies, and
does not prohibit agencies from paying press agents and public affairs
officers to facilitate and manage dissemination of agency information. GAO
stated:
B-302992, Sept. 10, 2004.
12.Membership Fees
Page 4-234 - Replace the first full paragraph with the following and
insert new footnote number 152a as follows:
Appropriated funds may not be used to pay membership fees of an employee
of the United States in a society or association. 5 U.S.C. S: 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. S: 4109(b).152a
Page 4-234 - Insert the following for new footnote number 152a:
152a The District of Columbia has specifically exempted its employees from
the provisions of 5 U.S.C. S: 5946 as well as the Government Employees
Training Act, 5 U.S.C. S:S: 4101 et seq. See D.C. Official Code, 2001 ed.
S:1-632.02.
Page 4-239 - Replace the second paragraph with the following:
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.
S: 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.
The PBGC decision, B-286026, June 12, 2001, predated enactment of 5 U.S.C.
S: 5757, which gave agencies the discretionary authority to reimburse
employees for expenses incurred in obtaining professional credentials,
including the costs of examinations. In B-302548, Aug. 20, 2004, GAO
determined that under 5 U.S.C. S: 5757, an agency may pay only the
expenses required to obtain the license or official certification needed
to practice a particular profession. In that case, an employee who was a
certified public accountant (CPA) asked her agency to pay for her
membership in the California Society of Certified Public Accountants,
which is voluntary and not a prerequisite for obtaining a CPA license in
California. GAO held that payment for voluntary memberships in
organizations of already credentialed professionals is prohibited under 5
U.S.C. S: 5946, and section 5757 does not provide any authority to pay
such fees where the membership in the organization is not a prerequisite
to obtaining the professional credential. Section 5757 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 on professional
qualification expenses.
Page 4-242 - Replace the first paragraph with the following:
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.
S: 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,
policymaking, or policy-advocating character of the position. 5 U.S.C.
S: 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. S:
5757 and pay those fees out of appropriated funds. B-289219, Oct. 29,
2002. Also, GAO has stated that under 5 U.S.C. S: 5757 an agency may pay
the expenses of employees' memberships in state bar associations when
membership is required to maintain their licenses to practice law. See
B-302548, Aug. 20, 2004 (note that this decision concerned membership in a
certified public accountants' (CPA) professional organization that was not
required as a condition of the CPA license).
13.Personal Expenses and Furnishings
Page 4-260 - Replace the first paragraph with the following:
Neither the statute nor its legislative history defines the terms
"professional credentials," "professional accreditation," and
"professional certification." 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 B-302548, Aug. 20, 2004
(certified public accountant fees) and section C.12.b of this chapter for
a discussion of attorneys' bar membership fees.
15.State and Local Taxes
Page 4-289 - Replace the second paragraph with the following:
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., B-302230, Dec. 30, 2003; B-288161,
Apr. 8, 2002; 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.
Availability of Appropriations: TimeChapter1
B.The Bona Fide Needs Rule
8.Multiyear Contracts
Page 5-41 - Replace the first full paragraph with the following:
If an agency is contracting with fiscal year appropriations and does not
have multiyear contracting authority, one 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.
Page 5-43 - Insert the following after the quoted language in the first
partial paragraph:
Another course of action for an agency with fiscal year money to cover
possible needs beyond that fiscal year is an indefinite-
delivery/indefinite-quantity (IDIQ) contract. An IDIQ contract is a form
of an indefinite-quantity contract, which provides for an indefinite
quantity of supplies or services, within stated limits, during a fixed
period. 48 C.F.R. S: 16.504(a). Under an IDIQ contract, actual quantities
and delivery dates remain undefined until the agency places a task or
delivery order under the contract. When an agency executes an
indefinite-quantity contract such as an IDIQ contract, the agency must
record an obligation in the amount of the required minimum purchase. At
the time of award, the government commits itself to purchase only a
minimum amount of supplies or services and has a fixed liability for the
amount to which it committed itself. See 48 C.F.R. S:S: 16.501-2(b)(3) and
16.504(a)(1). The agency has no liability beyond its minimum commitment
unless and until it places additional orders. An agency is required to
record an obligation at the time it incurs a legal liability. 65 Comp.
Gen. 4, 6 (1985); B-242974.6, Nov. 26, 1991. Therefore, for an IDIQ
contract, an agency must record an obligation for the minimum amount at
the time of contract execution. In B-302358, Dec. 27, 2004, GAO determined
that the Bureau of Customs and Border Protections' (Customs) Automated
Commercial Environment contract was an IDIQ contract. As such, Customs
incurred a legal liability of $25 million for its minimum contractual
commitment at the time of contract award. However, Customs failed to
record its $25 million obligation until 5 months after contract award. GAO
determined that to be consistent with the recording statute, 31 U.S.C.
S: 1501(a)(1), Customs should have recorded an obligation for the contract
minimum of $25 million against a currently available appropriation for the
authorized purpose at the time the IDIQ contract was awarded.
9.Specific Statutes Providing for Multiyear and Other Contracting
Authorities
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The Federal Acquisition Streamlining Act of 1994 (FASA) and related
statutes extended multiyear contracting authority with annual funds to
nonmilitary departments.30 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. S: 254c. Related laws extend this
authority to various legislative branch agencies.31 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. Cf. B-302358, Dec. 27, 2004 (since the contract at
issue was an indefinite-delivery/indefinite-quantity contract, it was not
subject to the requirements of 41 U.S.C. S: 254c and the agency did not
need to obligate estimated termination costs at the time of contract
award).
D.Disposition of Appropriation Balances
3.Expired Appropriations Accounts
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During the 5-year period, the expired account balance may be used to
liquidate obligations properly chargeable to the account prior to its
expiration.50 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. S: 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. S: 1502(b),51 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). For a further discussion of the availability of funds between
expiration and closing of an account, see B-301561, June 14, 2004 and
B-265901, Oct. 14, 1997.
4.Closed Appropriation Accounts
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Once an account has been closed:
31 U.S.C. S: 1553(b)(1). See also B-301561, June 14, 2004.
Office of the General Counsel
March 2005
PRINCIPLES OF FEDERAL APPROPRIATIONS LAW
2004 Update of the Third Edition
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