Funding an Agency’s Functions from Its Working Capital Fund

T he Secretary of Com m erce m ay designate certain agency functions now funded out of his D epartm ent’s G eneral Adm inistration (GA) appropriation as “central services” and transfer responsibility for their funding to the w orking capital fund, 15 U .S.C . § 1521, so that they will 

henceforth be paid for with funds appropriated to the various component bureaus of the D epartm ent of Com m erce. T he Secretary m ay thereby avoid exhaustion of the GA account, the likely 

consequence of a ruling of the Com ptroller General disallowing direct reim bursem ent of the GA 

by the bureaus on grounds that it w ould unlawfully augment the GA appropriation.

T he authority for a w orking capital fund in 15 U .S.C . § 1521 constitutes an exception to the 

C om ptroller G eneral’s rule prohibiting an agency from switching responsibility for funding a 

particular service from one appropriation account to another.

June 16, 1982

MEMORANDUM OPINION FOR THE GENERAL COUNSEL, 

DEPARTMENT OF COMMERCE

This responds to your request for an opinion on whether any of the services 

now paid out of the Department of Commerce’s General Administration (GA) 

appropriation1 may be transferred to its working capital fund, 15 U.S.C. § 1521, 

where they will be paid for out of the appropriations of the various components of 

the Department. The issue has arisen because of a recent Comptroller General’s 

opinion, B-206669 (Mar. 15, 1982), disallowing direct reimbursement of three 

services by the components to the GA account.2 Failure to reimburse the GA 

account will result in its rapid exhaustion, necessitating the furlough of a 

substantial number of employees for the remainder of the fiscal year. We believe 

that the problem can be resolved by the application of a statute that the Comptroller General did not consider— 15 U.S.C. § 1521.

I. Background

Commerce’s divisions are funded by several lump sum appropriations covering the Office of the Secretary and the various components, such as the Bureau of

1 General Administration

Salaries and Expenses

Bor expenses necessary for the general administration of the Department of Commerce, including 

not to exceed $2,000 for official entertainment, $28,407,000.

H .R 4169, 97th Cong , 1st Sess. at 2 (1981).

2 The C om ptroller G eneral, reviewing Commerce's proposal, held that the budgetary transfers suggested were an 

unlawful augmentation of the GA appropriation. 31 U.S C §§ 628,628-1 (1976) He argued that the funds for the 

GA account constitute a "specific” appropriation for general, department-wide administration, slip op. at 2, which, 

once exhausted, cannot be supplemented by transfers from other appropriations Id at 4 The three services 

proposed for reim bursem ent were (1) the cost of Assistant Secretaries and their immediate staffs, (2) the Office of 

Personnel Policy, and (3) Special Projects. You have indicated that you will be choosing from a much wider variety 

of services, totaling over $18,000,000, for transfer under 15 U S.C § 1521

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the Census. The present continuing appropriation for fiscal year 1982, H.R.J. 

Res. 370,97th Cong., 1st Sess., Pub. L. No. 97-92, 95 Stat. 1183, 1190(1981), 

appropriated funds “at the rate provided in H.R. 4169,” which was passed by the 

House of Representatives last fall. In H.R. 4169, 97th Cong., 1st Sess. (1981), 

the GA account received $28,407,000, a reduction of $5,618,000 from fiscal 

year 1981, and $7,315,000 below the budget request submitted by the President.

H.R. Rep. No. 180, 97th Cong., 1st Sess. 8(1981). Because of this reduction in 

funding, it was decided to charge to the bureaus’ appropriations certain activities 

formerly charged to the central GA.

The appropriations for the GA, see n .l , and the various bureaus are broadly 

worded,3 and would appear to fall into the category known as lump sum 

appropriations. As a general rule, money in a lump sum appropriation can be 

spent on anything within the purview of an appropriations act, regardless of the 

congressional intent indicated in reports, debates, or hearings. In re Newport

News Shipbuilding & Dry Dock Co., 55 Comp. Gen. 812, 819-20 (1976); In re

LTV Aerospace Corp., 55 Comp. Gen. 307, 319 (1975).4 Congress can and does 

place restrictions on an agency’s funds when it wants to remove that discretion. 

Id. at 318-19. Resort to legislative intent is only used to discover whether a 

particular item is within an appropriation’s general language—i.e., whether 

certain kinds of planes fall within the meaning of an appropriation for “military 

aircraft.” Id. at 325.

II. Discussion

The issue in this discussion is whether the bureaus’ appropriations may be used 

to pay for services that have heretofore been paid from the GA account. We 

believe that they may.

First, the appropriations for most of Commerce’s bureaus are lump sum 

appropriations, see, e.g., n.2, whose monies may be expended on anything 

within the scope of the appropriation.5 We believe that you may properly

3 For example, the appropriation for the F^tent and Trademark Office states: “For necessary expenses of the Ritent 

and Trademark Office, including defense of suits instituted against the Commissioner of Patents and Trademarks, 

$118,961,000, to remain available until expended " H R 4169, 97th C ong., 1st Sess , al 8 (1981). Other 

Commerce units include the Economic Development Administration, the International Trade Administration, the 

M inority Business Development Agency, the United States Travel and Tourism Administration, the National 

Oceanic and Atmospheric Administration, the National Bureau of Standards, the National Technical Information 

Service, and the National Telecommunications and Information Administration

4 “The realities of the annual appropriations process, as well as nonstatutory arrangements such as reprogramming, provide safeguards against abuse " 55 Com p Gen. at 820.

5 The absence of specific limitations or prohibitions in the terms of an appropriations statute implies that Congress 

did not intend to impose restraints upon an agency's flexibility in shifting funds within a particular lump sum account 

among otherwise authorized activities or programs— unless of course Congress has in some other law specified that 

funds from the appropriation in question should be spent (or not, as the case may be) in a particular manner By the 

same token, an agency’s legal authority to fund an authorized program from its general operating funds does not 

depend upon its being able to point to some references to that program in its budget justification or elsewhere in the 

appropriations process This is because the lawfulness of an expenditure is tested by the terms of the appropriations 

statute and any other relevant law, and not with reference to legislative history Thus, inclusion of an activity or 

function in the “class of objects” for which an agency’s general funds may be spent does not depend upon C ongress’ 

affirmative acknowledgement in the appropriations process that the activity or function will be funded or even its 

being explicitly so informed by the agency. If the activity or function is one which Congress has elsewhere given the 

agency authority to perform, its funding does not depend upon its being singled out for specific mention each year in 

the appropriation process.

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determine that there are services listed in your submission that are covered by the 

language of the bureaus’ appropriations.

Second, Commerce’s working capital fund provides a statutory mechanism for 

the transfer of funds. 15 U.S.C. § 1521.6 The Secretary may charge services to 

the fund which he determines, and the Office of Management and Budget agrees, 

“may be performed more advantageously as central services.” The fund is kept 

whole through reimbursement from the relevant bureaus which pay in funds for 

their proportion of the services.7

Discretion in determining what is a “central” service lies with the Secretary,8 

and he may designate as “central” any service that he believes will be performed 

more advantageously on a department-wide rather than a bureau basis. The 

bureaus may then use their general appropriations to pay for those services 

pursuant to 15 U.S.C. § 1521.9

Since soon after its passage, 15 U.S.C. § 1521 has been used to transfer 

functions from the Office of the Secretary, where they were paid out of the GA 

account, to the working capital fund, where they were paid out of the bureaus’ 

appropriations. For example, in 1947 the Secretary asked that the departmental 

stockroom be transferred to the working capital fund.10 “The original purchases 

for stock are made from the appropriation ‘Salaries and Expenses, Office of the 

Secretary, Department of Commerce’ [the GA account], with the appropriation

6 Section 1521 provides as follows (emphasis added)*

There is established a working capital fu n d of $100,000, without fiscal year limitation, fo r the

paym ent c f salaries and other expenses necessary to the maintenance and operation c f (1) central 

duplicating, photographic, drafting, and photostating services and (2) such other services as the

Secretary, with the approval c f the Director o f the Office o f Management andBudget, determines may

be perform ed more advantageously as central services; said fund to be reimbursed from applicable 

funds of bureaus, offices, and agencies fo r which services are performed on the basis of rates which 

shall include estimated or actual charges for personal services, materials, equipment (including 

m aintenance, repairs, and depreciation) and other expenses* Provided, That such central services 

shall, to the fullest extent practicable, be used to make unnecessary the maintenance of separate like 

services in the bureaus, offices, and agencies of the Department Provided further. That a separate 

schedule of expenditures and reimbursements, and a statement of the current assets and liabilities of 

the working capital fund as of the close of the last completed fiscal year, shall be included in the 

annual Budget.

See D epartm ent c f Commerce Appropriation B ill fo r 1945. Hearings Before the Subcomm. c f the House Comm on

Appropriations, 78th C ong., 2d Sess. 33-35 (1944), H R. Rep. No. 1149, 78th Cong., 2d Sess. 19 (1944)

7 Approxim ately $30,000,000 in services are now funded annually through the working capital fund

8 It is essential, of course, that such services fall within the statutory intent of 15 U.S.C. § 1521, and that they 

offer truly departm ent-wide benefits. Pnor uses of the statute have included designation of fiscal, travel, audio 

visual, messenger, and laundry services as “central " Services that are of particular use only to a single bureau, or 

which properly fall only within the scopeof that bureau’s activities, do notfall within the intent of 15 U S C § 1521.

If a service does not fall within the intent of 15 U S C. § 1521, your Office can provide advice on alternative 

sources of funding, such as through the transfer o f personnel R eorg.PlanN o 5 o f l9 5 0 ,§ 4, reprinted in 5 U .S C , 

App.

9 We are aware that the Com ptroller General has articulated a general rule that where an agency has chosen to pay 

for an item out of one of two generally available appropriations, the agency must continue to use the first 

appropriation for the item and cannot decide at som e later date to use the second instead. See 59 Comp Gen. 518, 

520-21 (1980); 23 Comp. Gen 827,828(1944); 10 Comp Gen. 440,443 (1931); 15 Comp. Gen. 101,102(1908). 

B ut see 12 Comp. Gen 331, 333 (1932), 5 Comp. Gen. 479, 480 (1926). We need not examine the ramifications of 

the rule m this context— or, indeed, whether it can be reconciled with the flexibility the Comptroller General has 

given the agencies in the lump sum context— because we believe that 15 U S.C § 1521 provides a statutory 

exception to this general rule of construction. To the extent that this general rule is an interpretation of 31 U S.C 

§ 6 2 8 -1, which forbids a transfer o f funds from one appropriation to another except as specifically authorized, 15 

U .S .C . § 1521 provides the necessary authorization

10 Letter for H on. James E W ebb, Director, Bureau of the Budget, from A cting Secretary Foster, June 30, 1947.

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being reimbursed by the bureaus upon the receipt of a billing based on their 

respective withdrawals.” " The request was approved by the Bureau of the 

Budget.12 Likewise, in 1951, the Secretary asked permission to transfer the 

expenses of the Department’s health unit to the working capital fund.

For some years the Office of the Secretary has been purchasing 

supplies and providing funds for the necessary maintenance of the 

Health U nit.13

Approval was promptly granted.14 The same exchange of letters asked for and 

approved the transfer of payments for transcripts of Loyalty Board hearings, from 

the same GA account, which was being used as a “suspense account” until the 

bureaus paid their bills, to the working capital fund.15 In 1962, the Bureau of the 

Budget approved a request that Accounting Operations funded out of the GA 

account be transferred to the working capital fund, where the bureaus could be 

charged for its services.16 Therefore, we believe the Secretary can designate 

services as “central” and to be paid out of the working capital fund by the bureaus 

regardless of the appropriation out of which they have traditionally been paid.17

We do not believe that it is proper for this Office to outline what can or cannot 

be designated as a central service. The decision is for the Secretary, who is in the 

best position to determine what services may be performed more advantageously 

centrally, informed by prior administrative practice and subject to the approval of 

the Office of Management and Budget.

Since the Comptroller General did not consider use of 15 U.S.C. § 1521, we 

do not believe that his opinion should interfere with your implementation of any 

payments under it.

T h e o d o r e B . O l s o n

Assistant Attorney General

Office of Legal Counsel

" I d at I

12 Letter for Acting Secretary Foster from Assistant Director Bailey, Bureau of the Budget, Aug 21, 1947.

13 Letter for Hon Frederick J. Lawton, Director, Bureau of the Budget, from Assistant Secretary Osthagen, 

Department of Commerce, Aug. 24, 1951

14 Letter for Secretary Sawyer, Department of Commerce, from Direct or Lawton, Bureau of the Budget, Sept. 20, 

1951.

15 Letter, supra n. 13, at 1-2.

16 Letter for Hon David E. Bell, Director, Bureau of the B udget, from Assistant Secretary Koltz, Department of 

Commerce, Oct 25, 1962; Letter for Secretary Hodges, Department of Commerce, from Bell, Bureau of the 

Budget, Nov. 9, 1962

17 The bureaus’ payments for services heretofore paid for out of the GA do not constitute a transfer between 

appropriations in contravention of 3 1 U S C § 628-1, since the money goes into the working capital fund, not the 

GA account Services will be billed retroactively directly to the bureaus for the entire fiscal year

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