Application of the Government Corporation Control Act 

and the Miscellaneous Receipts Act to the Canadian 

Softwood Lumber Settlement Agreement

An aspect of the proposed agreement between the United States and Canada settling various disputes 

regarding trade in softwood lumber products, in which duties now held by the United States would 

be distributed by a private foundation to “meritorious initiatives” related to, among other things, 

timber-reliant communities, would not violate the Government Corporation Control Act or the 

Miscellaneous Receipts Act.

August 22, 2006

MEMORANDUM OPINION FOR THE GENERAL COUNSEL

UNITED STATES TRADE REPRESENTATIVE

The United States and Canada have negotiated an agreement settling various 

disputes regarding trade in softwood lumber products. You have asked whether 

one aspect of the proposed settlement, in which duties now held by the United 

States would be distributed by a private foundation to “meritorious initiatives” 

related to, among other things, timber-reliant communities, would violate the 

Government Corporation Control Act, 31 U.S.C. § 9102 (2000), or the Miscellaneous Receipts Act, id. § 3302(b). We conclude that this aspect of the settlement 

would not violate either statute. We express no opinion on other features of the 

settlement agreement. 

I. 

One of the disputes regarding trade in softwood lumber products involves the 

“Byrd Amendment” to title VII of the Tariff Act of 1930. See Continued Dumping 

and Subsidy Offset Act of 2000, Pub. L. No. 106-387, § 1003, 114 Stat. 1549, 

1549A-73 (2000) (codified at 19 U.S.C. § 1675c (2000)). That Amendment 

requires the Commissioner of the United States Bureau of Customs and Border 

Protection (“Customs”) to deposit into “special accounts” in the United States 

Treasury “all antidumping and countervailing duties (including interest earned on 

such duties) that are assessed after the effective date [of the statute]” under 

antidumping or countervailing duty orders entered by the Commissioner. Id. 

§ 1675c(e). Customs must annually distribute the duties in these special accounts 

to “affected domestic producers” as a “continued dumping and subsidy offset.” Id. 

§ 1675c(a).1

1 Congress repealed the Byrd Amendment in the Deficit Reduction Act of 2005 but provided that 

“[a]ll duties on entries of goods made and filed before October 1, 2007, that would, but for [the repeal,] 

be distributed under [the Byrd Amendment] shall be distributed as if [the Byrd Amendment] had not 

been repealed.” Pub. L. No. 109-171, § 7601(b), 120 Stat. 4, 154 (2006).

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Opinions of the Office of Legal Counsel in Volume 30 

Several producers and exporters of softwood lumber products (“Canadian 

Producers”) have challenged in the United States Court of International Trade the 

application of the Byrd Amendment to goods imported into the United States from 

Canada. The Canadian Producers have argued that such application violates a clear

statement requirement of the North American Free Trade Agreement (“NAFTA”) 

Implementation Act under which any amendment to title VII of the Tariff Act 

“shall apply to goods from a NAFTA country only to the extent specified in the 

amendment.” 19 U.S.C. § 3438 (2000). In April 2006, the court held that “Customs has violated U.S. law, specifically a provision of the NAFTA Implementation Act in applying the Byrd Amendment to antidumping and countervailing 

duties on goods from Canada and Mexico, 19 U.S.C. § 3438.” Canadian Lumber 

Trade Alliance v. United States, 425 F. Supp. 2d 1321, 1326 (Ct. Int’l Trade 

2006).2 We understand that the Canadian Producers also have challenged before a 

NAFTA arbitration panel the authority of the United States to collect the antidumping and countervailing duties to which the Byrd Amendment applies.

The settlement that the United States, through the Trade Representative 

(“USTR”), has negotiated with Canada would, among other things, terminate 

numerous suits in various forums regarding trade in softwood lumber products.

See generally Draft Softwood Lumber Agreement Between the Government of 

Canada and the Government of the United States of America (Aug. 1, 2006) 

(“Settlement Agreement” or “Agreement”). The Settlement Agreement would 

enter into force only if the parties to the disputes identified in the Agreement 

execute a “Termination of Litigation Agreement,” which is “a full and complete 

settlement of the issues raised by all of the parties.” Settlement Agreement art. II; 

id. annex 2A. In addition, although the Canadian Lumber suit would not be 

terminated, the Settlement Agreement would terminate the application of the Byrd 

Amendment to duties involving softwood lumber products from Canada, by 

having the United States agree to revoke the applicable antidumping and countervailing duty orders. The United States would refund to certain “Importers of 

Record” (the vast majority of whom are Canadian Producers) or to their designees 

the funds concerning such products held in special accounts (approximately $5 

billion). Id. art. III. According to the Agreement, most of the Importers of Record 

are expected to enter into escrow arrangements with the Government of Canada or 

its agent to sell their rights to the refunds and accrued interest to Canada in 

exchange for an immediate lump sum payment from Canada equal to approximately 80% of the deposits and interest. An additional $1 billion (approximately equal 

to the remaining 20% of the refunds) would be distributed, via the Government of 

Canada or its agent, to three escrow accounts identified by the United States, 

“whose beneficiaries are respectively”: (1) “members of the Coalition for Fair 

Lumber Imports,” (2) “a binational industry council” whose creation Canada and 

2 The court also dismissed for lack of standing the Government of Canada, which had joined the 

Canadian Producers as a plaintiff. See Canadian Lumber, 425 F. Supp. 2d at 1349–52.

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Canadian Softwood Lumber Settlement Agreement

the United States would encourage, and (3) “meritorious initiatives in the United 

States identified by the United States in consultation with Canada as described in 

Article XIII(A).” From that $1 billion, Canada would “distribute . . . $US 450 

million for the meritorious initiatives account.” Id. annex 2C; see also id. art. XIII 

(discussing the council and the meritorious initiatives) & annex 13.

Your question involves this “meritorious initiatives account.” The Settlement 

Agreement generally describes as follows the uses to which the $450 million shall 

be put:

The funds shall support meritorious initiatives in the United States

related to:

(a) educational and charitable causes in timber-reliant communities; 

(b) low-income housing and disaster relief; or

(c) educational and public-interest projects addressing: (i) forest 

management issues that affect timber-reliant communities; or (ii) 

the sustainability of forests as sources of building materials, wildlife habitat, bio-energy, recreation, and other values.

Id. art. XIII(A)(2). Article XIII further provides that “[b]y September 1, 2006, the 

United States, in consultation with Canada, shall identify the meritorious initiatives to receive the funds that are to be set aside for that purpose under Annex 2C.” 

Id.; see also id. annex 2C (“meritorious initiatives in the United States” are to be 

“identified by the United States in consultation with Canada as described in 

Article XIII(A)”).

Your office has explained that the “beneficiary” of the third escrow account is 

not precisely “meritorious initiatives” themselves but rather a foundation that will 

control the “meritorious initiatives account” receiving the $450 million. The 

foundation will distribute these funds consistent with the three categories listed in 

Article XIII(A)(2).

The Settlement Agreement is silent on how the United States will identify this 

foundation, except to state the date—September 1—by which it should be done.

Even if a later date is used in the final version of the Agreement, you expect that 

the deadline for identifying the foundation will predate the effective date of the 

Agreement, although identification of the foundation is not a condition for the 

Agreement to enter into force. See Settlement Agreement art. II. Beyond that, your 

office has explained to us as follows how the United States plans to proceed:

Th[e] foundation will be established in accordance with the terms of 

the settlement agreement by a board of directors of non-government 

employees (which will include two non-voting Canadian board 

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Opinions of the Office of Legal Counsel in Volume 30 

members). Those directors will also control the foundation once it is 

established.

The directors will be chosen by a bi-partisan group of non-government employees who are identified by USTR after consultation with 

the Presidential Personnel Office and with interested members of 

Congress. Neither the bi-partisan group nor the board members selected by this bi-partisan group will receive government appointments. Neither will they be subject to direction and control by any 

federal official. Although the bi-partisan group will be vetted by the 

Presidential Personnel Office, the board members selected by this bipartisan group will not . . . themselves be vetted by the White House 

or by . . . any government agency.

E-mail for C. Kevin Marshall, Deputy Assistant Attorney General, Office of Legal 

Counsel, from David Apol, Office of the General Counsel, United States Trade 

Representative (July 28, 2006). You have since informed us that the White House 

Council on Environmental Quality (“CEQ”) has been working with USTR in 

choosing the bipartisan group. Apart from the requirements quoted above—that 

the directors be “non-government employees,” receive no “government appointments,” and not be “subject to direction and control by any federal official”; and 

that the choice of directors not be vetted by any government agency, including the 

White House—there will be no restrictions on whom the bipartisan group may 

select as directors. You have asked whether the establishment of this foundation, 

and the foundation’s using its portion of the settlement funds to support “meritorious initiatives,” are consistent with the Government Corporation Control Act and 

the Miscellaneous Receipts Act. We address each statute in turn.

II. 

The Government Corporation Control Act (“GCCA”) provides in relevant part 

that “[a]n agency may establish or acquire a corporation to act as an agency only 

by or under a law of the United States specifically authorizing the action.” 31 

U.S.C. § 9102. We assume that the foundation will be “a corporation.” But based 

on the facts described above, we conclude that it will almost certainly not be 

“establish[ed] or acquire[d]” by an agency; and that, even it if were, the foundation 

clearly will not “act as an agency.” Accordingly, the GCCA does not require a 

specific authorizing law.3

3 Neither the “bi-partisan group of non-government employees . . . identified by USTR” to choose 

the foundation’s board of directors nor the directors themselves would be subject to the conflict of

interest restrictions applicable to officers and employees in the Executive Branch. In a 2002 opinion, 

we summarized those laws and rules and explained that, to be subject to them, a person must be 

“required by law to be appointed in the civil service by [the President, a court of the United States, the 

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In answering this question, we rely on our extensive analysis of the GCCA in a 

published opinion in 2000, which in turn followed earlier, unpublished analyses 

from 1995 and 1990. See Applicability of Government Corporation Control Act to 

“Gain Sharing Benefit” Agreement, 24 Op. O.L.C. 212 (2000) (“NASA Opinion”); see also id. at 214 n.1 (discussing earlier opinions). With regard to the 

phrase “establish or acquire,” we there explained that “an agency probably cannot 

be said, within the meaning of the [GCCA], to have established or acquired a 

corporation to act as an agency unless the government holds an ownership interest 

or exercises legal control.” Id. at 215 (emphasis added; internal quotation marks 

omitted). We treated this rule as conclusive for the question of “acquir[ing]” a 

corporation, but recognized that the term “establish” was somewhat ambiguous, 

particularly given that, prior to a recodification, the statute had referred to 

establishing, creating, or organizing a corporation. Id. at 216 n.2. We therefore 

further advised that, “even where there is no such ownership or control[,] an 

agency should avoid excessive government involvement in the formation or 

operation of a corporation in the absence of a law authorizing the agency to do 

so.” Id. at 215 (emphasis added). An agency could “encourage private parties to 

form a corporation” and “make suggestions about the substance of the corporate 

charter or by-laws,” id. (emphases added), but should leave the corporation “free 

to adopt and change its charter and by-laws to the same extent as any other nongovernment corporation,” id. (internal quotation marks omitted). 

Applying these standards, we concluded that the National Aeronautics and 

Space Administration had not “acquired” a particular corporation because it “does 

not own stock or any other equity interest and, to our knowledge, has no representative on the corporation’s Board of Directors.” A mere “contractual right” of 

NASA “to cash payments that are determined by reference to the value of the 

corporation’s stock”—the gain-sharing benefit in question—did not create 

ownership or legal control. With regard to “establish,” we concluded that NASA 

was not “excessively” involved in the formation and operation of the corporation 

because the corporation was “created by private investors who have no direct or 

head of an Executive agency, or the Secretary of a military department] acting in an official capacity” 

or “appointed in the civil service by one of [a larger category of officials] acting in an official 

capacity”; (2) “engaged in the performance of a Federal function under authority of law or an 

Executive act”; and (3) “subject to the supervision” of a federal official. Application of Conflict of

Interest Rules to Appointees Who Have Not Begun Service, 26 Op. O.L.C. 32, 33 (2002). The bipartisan 

group would, at least, probably not satisfy the first element, and would certainly not satisfy the third.

Regarding the third, we have explained that “a person . . . hired to conduct a study using his own 

judgment and resources and then turn over the end product to the agency . . . would probably be 

regarded as an independent contractor” rather than an employee. Conflict of Interest—Status of an 

Informal Presidential Advisor as a “Special Government Employee,” 1 Op. O.L.C. 20, 21 (1977). The 

bipartisan group, even if it might be understood to be “turn[ing] over” to USTR its “end product” of a 

board of directors (a debatable proposition), would be using its own judgment and resources. Similarly, 

the directors themselves would, at least, not meet the first and third elements of the test set out in the 

2002 opinion. 

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indirect association with NASA”; it “was formed without any support or encouragement from NASA”; it “adopted its by-laws and charter without any input from 

NASA”; and it “remains free to make its own business decisions and to change its 

by-laws and charter as appropriate without interference or approval by NASA.” 

There was no “evidence of any government involvement in the company’s 

formation or operation,” even though NASA and the corporation had collaborated 

since the corporation’s formation and the corporation depended on that collaboration. We specifically reaffirmed the permissibility of “joint activities with private 

corporations” by agencies, “so long as the agency acts exclusively in the interest 

of the United States.” Id. at 216.

A similar analysis applies here and should lead to the same conclusions, even 

though the federal government will have some role in the foundation’s formation.

As you have explained the process, neither USTR nor any other entity of the 

federal government will hold an ownership interest in or exercise legal control 

over the foundation. No governmental entity or official will own any stock or 

equity interest in the foundation. Nor is the involvement of the United States in the 

foundation’s formation “excessive.” Although USTR (and CEQ) are arguably 

more involved initially in the foundation’s creation than NASA was with the 

corporation in our NASA Opinion, their role is limited to choosing the bipartisan 

group that will in turn select the foundation’s board of directors. They will have no 

control over whom the bipartisan group selects and no control over the directors 

once the group has selected them; the bipartisan group even would be free to select 

themselves as the initial directors so long as the group in fact made this decision 

independently of any governmental direction (whether from USTR, CEQ, or 

others)—such that the United States could not be said to have named the directors 

and thereby itself organized the foundation. Finally, under our NASA Opinion

governmental involvement in not only the “formation” but also the “operation” of 

a corporation is relevant, and here the directors in operating the foundation would 

remain free to adopt and change the foundation’s charter and by-laws (including 

revising the board itself) to the same extent as any other non-government corporation and to make its own business decisions. Based on these facts, USTR’s 

involvement should be understood as encouraging the formation of the corporation 

through selection of the bipartisan group. As indicated in the NASA Opinion, we 

have approved at least this much involvement. The role of the Presidential 

Personnel Office in consulting on the selection of the bipartisan group is even 

more distant and does not raise any additional issue.

Although we thus think that the better view is that no agency will “establish or 

acquire” the contemplated foundation, we need not answer that question definitively here, because the foundation clearly will not “act as an agency.” This is a 

separate, additional requirement (albeit one that is related and somewhat overlapping analytically) for the GCCA to apply, and it is not met here. Again we follow 

our NASA Opinion, as well as a subsequent analysis that reaffirmed this aspect of 

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the NASA Opinion. See Status of National Veterans Business Development 

Corporation, 28 Op. O.L.C. 70, 76–78 (2004) (“NVBDC Opinion”).

The term “agency” for purposes of title 31, of which the GCCA is a part, is 

defined as “a department, agency, or instrumentality of the United States Government.” 31 U.S.C. § 101 (2000). In our NASA Opinion, we explained: “In common 

usage, an instrumentality is a thing through which a person or entity acts. The term 

implies both [1] that the thing is controlled by another actor and [2] that the thing 

is or may be deliberately used to accomplish the actor’s objectives.” 24 Op. O.L.C. 

at 218–19 (emphases added; internal quotation marks omitted). Based on this 

understanding, as well as the usage of the term “instrumentality” in other legal 

contexts, we have used a four-factor test “in deciding whether a corporation is a 

government instrumentality”: (1) “whether the entity was created by the government”; (2) “the extent of government control over its operations”; (3) “the 

purposes for which it was created and the functions it performs”; and (4) “the 

source of the entity’s funding.” Id. at 219. The final factor “is more important here 

than it might be in other contexts,” because “the purpose of the [GCCA] was to 

assert greater federal dominion over the financial affairs of entities controlling 

federal funds.” Id. at 219 n.4 (internal quotation marks omitted). See also NVBDC 

Opinion, 28 Op. O.L.C. at 76–77 (reiterating and applying four-factor test to the 

first use of the term “agency” in the GCCA).

In the NASA Opinion, we concluded that the corporation in question did not 

“act as an agency” because (1) it was “created by private individuals who are not 

associated with NASA”; (2) “NASA owns no part of [the corporation] and 

exercises no control over its operations”; (3) the corporation “was not formed for 

NASA’s exclusive benefit, nor to carry out any statutory function delegated to the 

agency by Congress”; and (4) the corporation “is funded by private sources, not 

funds drawn from the federal Treasury or other federal assets.” 24 Op. O.L.C. at 

220–21. By contrast, in our NVBDC Opinion, we determined that the National 

Veterans Business Development Corporation was an “agency,” and thus subject to 

the GCCA, because it (1) was “created by the government” (namely, by statute); 

(2) was subject to “a considerable degree of control” by the government (the 

voting members of its board being appointed by the President and the non-voting 

members being Executive Branch officers); (3) was established “to perform 

functions on behalf and for the benefit of the United States” (providing various 

statutorily mandated services to veterans); and (4) “receives federal appropriations, 

even as it seeks to develop private sources of funds.” 28 Op. O.L.C. at 77–78

(quotations omitted). 

Under that analysis, it is clear that the foundation will not “act as an agency” 

within the meaning of the GCCA. First, largely for the reasons given above with 

regard to the question of acquiring or establishing a corporation, the foundation is 

not going to be “created by the government.” Unlike with the NVBD Corporation, 

the foundation is not being created by statute (or even by the Settlement Agree117 
Opinions of the Office of Legal Counsel in Volume 30 

ment). In the NASA Opinion, we found the first factor not satisfied because the 

corporation “was created by private individuals who are not associated with 

NASA,” even though it was “formed in response to NASA’s published notice of 

its intent to enter collaborative . . . commercial agreements with private business 

partners.” 24 Op. O.L.C. at 220. Similarly, here, as described above in Part I, the 

bipartisan group that selects the foundation’s directors will be “non-government 

employees”; neither the group nor the directors “will receive government appointments”; “neither will they be subject to direction and control by any federal 

official”; and the choice of directors will not be vetted by any federal entity. You 

have not expressly stated that the directors too will be non-government employees, 

but that is implicit in their receiving no government appointments, not being 

subject to federal direction or control, and not being vetted. Although, much as 

with the corporation at issue in the NASA Opinion, the foundation would not be 

formed but for some governmental action, and the government could prevent its 

creation by not proceeding with the settlement (as could Canada and others), “but 

for” governmental involvement does not equal creation by the government.

Second, for the reasons discussed above with regard to ownership, legal control, and involvement in operations, the extent of any governmental control over 

the foundation’s operations after its establishment appears negligible at most. 

Third, the purpose of the foundation is not to perform functions on behalf of 

and for the benefit of the United States. In contrast with the NVBD Corporation, 

here no statutory mandate or purpose is at issue. In the NASA Opinion, even 

though NASA would benefit from the collaborative agreement with the corporation, we found this factor not satisfied because the corporation was “not formed 

for NASA’s exclusive benefit, nor to carry out any statutory function delegated to 

the agency by Congress.” 24 Op. O.L.C. at 221. Similarly here, the foundation’s 

purpose is to receive funds over which the United States disclaims any ownership 

interest (because of the Byrd Amendment) and to disburse these funds for the 

benefit of private entities. The United States may indirectly benefit only because 

the foundation’s establishment provides one of the many pieces of a comprehensive settlement in which it has an interest, but this incidental benefit—which also 

accrues to Canada and all of the other entities who settle their suits as part of the 

Agreement—does not amount to a governmental function or purpose.

Finally, although the proper way to characterize the source of the foundation’s 

funding is not beyond dispute—the ownership of those funds is one of the matters 

to be resolved—for purposes here it is best characterized as funding from private 

entities, not the United States. The United States has never asserted a claim to the 

$450 million held in the special accounts that will eventually reach the foundation, 

and the immediate source from which the foundation will receive those funds will 

not be the United States but rather the Government of Canada, as explained above 

in Part I. In addition, and in contrast to the NVBD Corporation, the foundation will 

receive no appropriated funds. The one countervailing fact is the decision of the 

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Court of International Trade in Canadian Lumber, which could lead to the duties 

held pursuant to the Byrd Amendment reverting to the General Fund of the 

Treasury. Thus, one could say that, in some sense, the United States has a claim on 

the money that will fund the foundation. But the United States disagrees with this 

view, and thus disclaims any interest in the funds; in addition, pursuant to the 

NAFTA arbitration noted above in Part I, there also is a question whether the 

United States had authority even to collect the duties, and we understand that the 

United States foresees a low probability of success in that forum. In nearly every 

respect, the strongest claims to the money in the special accounts are those of 

private parties—either the Canadian exporters or the domestic producers. Under 

those facts, there is little if any basis for considering the $450 million to be 

“federal funds,” see NASA Opinion, 24 Op. O.L.C. at 219–20 & n.4, for purposes 

of the GCCA. 

Thus, not only is the foundation not being acquired or established by the federal 

government, but it also will not be acting as an agency of the federal government.

For both of these reasons, the foundation is not subject to the GCCA.

III. 

The Miscellaneous Receipts Act (“MRA”) requires that “an official or agent of 

the Government receiving money for the Government from any source shall 

deposit the money in the Treasury as soon as practicable without deduction for any 

charge or claim.” 31 U.S.C. § 3302(b). This provision constrains the government’s 

ability to enter into settlements involving payments not made into the General 

Fund of the Treasury. In 1980, we said that it would violate the MRA for the 

United States to settle a suit it had brought against a polluter by requiring the 

polluter to donate money to an environmental organization designated by the 

government, rather than pay a penalty. Under the MRA, “[t]he fact that no cash 

actually touches the palm of a federal official is irrelevant . . . if a federal agency 

[1] could have accepted possession and [2] retains discretion to direct the use of 

the money.” Effect of 31 U.S.C. § 484 on the Settlement Authority of the Attorney 

General, 4B Op. O.L.C. 684, 688 (1980).

To avoid the government’s constructively “receiving money for the Government” through a settlement, we have consistently advised that (1) the settlement be

executed before an admission or finding of liability in favor of the United States; 

and (2) the United States not retain post-settlement control over the disposition or 

management of the funds or any projects carried out under the settlement, except 

for ensuring that the parties comply with the settlement. See, e.g., Memorandum 

for the Files, from Rebecca Arbogast, Attorney-Adviser, Office of Legal Counsel, 

Miscellaneous Receipts Act and Criminal Settlements (Nov. 18, 1996) (advice 

transmitted to U.S. Attorneys’ offices). If these two criteria are met, then the 

governmental control over settlement funds is so attenuated that the government 

cannot be said to be “receiving money for the Government.” In our 1980 opinion, 

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Opinions of the Office of Legal Counsel in Volume 30 

for example, we recommended a restructured settlement “that attributes the entire 

sum of money received to our co-plaintiff, the Commonwealth of Virginia,” which 

had “an independent claim to these damages” and an independent right to compensation for oil spills. “If the damages are received and directed to a charity by the 

state plaintiff, [the MRA] would not be implicated.” 4B Op. O.L.C. at 688–89.

In the ordinary settlement implicating the MRA, the United States has brought 

a claim against a private party for funds in the form of damages or penalties. Here 

the reverse is the case. Although the same general principles under the MRA apply 

notwithstanding this difference, we find no violation in the planned arrangement 

for the foundation.

Initially, it is doubtful that the United States, even though having physical 

custody of the special accounts under the Byrd Amendment, “could . . . accept[] 

possession” of those funds “for the Government,” such that the MRA would create

an issue. As explained above in Part II, the United States disclaims any interest in 

the funds, and the strongest claims are those of private parties. The real issue in 

dispute is to whom the United States should give the funds—to private American 

parties pursuant to the Byrd Amendment, or to the Canadian Producers as a refund 

pursuant to federal law, see, e.g., 19 U.S.C. § 1673f (2000) (permitting the 

“refund[s]” of duties that were improperly assessed). Just as there is little if any 

basis for considering the $450 million to be federal funds for purposes of the 

GCCA, so also here, and by analogy to our 1980 opinion, there is little basis for 

attributing any of the $450 million to the United States. Nevertheless, because it is 

conceivable—if the Court of International Trade decision is not appealed or is 

affirmed, and the United States wins the NAFTA arbitration—that the special 

account funds could become United States funds, it is prudent, as you have 

recognized, to analyze under the MRA’s requirements the provisions for the $450 

million pursuant to the Agreement.

Here, the arrangement for the foundation and the transfer of the $450 million 

would easily satisfy both of the MRA’s requirements. First, we understand that the 

Settlement Agreement would be executed before any party admits liability—and 

certainly before the United States claims or is conceded any right to the funds.

Second, no governmental agency will exercise any control of the funds after the 

settlement has been executed, because the foundation and any further detail 

regarding “meritorious initiatives” will be “identified” by the United States prior 

to execution, as we explained above in Part I (in light of the MRA, you should 

ensure that this occurs); the foundation’s directors will control the foundation; and 

the directors will not be subject to direction and control by any federal official.

A separate but related question is the relevance of decisions of the Comptroller 

General determining that agencies did not have authority to require violators 

owing penalties to the Government to fund research projects in lieu of paying the 

penalties into the Treasury. See Letter for John D. Dingell, Chairman, Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, House 

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of Representatives, B-247155.2, 1993 WL 798227 (Comp. Gen. Mar. 1); Letter for 

John D. Dingell, Chairman, Subcommittee on Oversight and Investigations, 

Committee on Energy and Commerce, House of Representatives, B-247155, 1992 

WL 726317 (Comp. Gen. Jul. 7); Nuclear Regulatory Commission’s Authority to 

Mitigate Civil Penalties, 70 Comp. Gen. 17 (1990) (“NRC Opinion”). In those 

decisions, the Comptroller General read the agency’s statutory authority to 

“compromise” or “mitigate” monetary penalties owed to a governmental agency as 

“not empower[ing] [the agency] to impose punishments unrelated to prosecutorial 

objectives,” such as “contribut[ing] funds to an institution that . . . has no relationship to the violation and has suffered no injury from the violation.” E.g., NRC 

Opinion, 70 Comp. Gen. at 19. A broader interpretation, he explained, would 

permit the agencies to augment their appropriations by funding pet projects, and 

would therefore “require us to infer that the Congress intended to allow [the 

agencies] to circumvent 31 U.S.C. § 3302 and the general rule against augmentation of appropriations.” Id.

These decisions are inapposite here. First, given the posture of the suits to be 

settled—involving the atypical scenario of the United States being a defendant and 

acting pursuant to longstanding refund authority regarding customs duties—there 

is no issue here of the scope of the authority of the United States to “compromise” 

or “mitigate” civil penalties. Second, the MRA does not apply here, for the reasons 

given above. There is thus no issue of a possible statutory exception to the MRA.

C. KEVIN MARSHALL

Deputy Assistant Attorney General

Office of Legal Counsel

121