Constitutionality of Legislation Establishing the

Cost Accounting Standards Board

If the C ost A ccounting S tandards Board (C A SB ) is view ed as an E xecutive B ranch 

entity, the statu to ry m echanism for appointing its m em bers is unconstitutional und er the 

A ppointm ents C lause; how ev er, it can be argued that the C A S B is a L egislative 

B ranch entity, and that its action in prom ulgating cost accounting standards is advisory 

w ith respect to executive agencies.

T h e D epartm ent o f Justice has a du ty to defend the constitutionality o f a statute except in 

exceptional circum stances, and it thus m ay be ap p ro p riate to bring to a c o u rt’s attention 

any plausible argum ent that w ould perm it the co u rt to uphold a statute.

June 19, 1980

MEMORANDUM OPINION FOR THE ASSISTANT ATTORNEY 

GENERAL, CIVIL DIVISION

This responds to your memorandum informing us of the position 

your Division plans to take in pending litigation regarding the constitutionality of the statute establishing the Cost Accounting Standards 

Board (CASB), Pub. L. No. 91-379, Title I, 84 Stat. 796, 50 U.S.C. 

App. § 2151 et seq. Since receiving your memorandum, we have kept in 

touch with the staff attorney in your Division handling the matter, and 

have learned that the constitutional issue has not yet been briefed. We 

believe that the position elaborated in your memorandum's persuasive. 

We essentially agree with your analysis that, insofar as the CASB is 

viewed as an Executive Branch entity whose members are to be 

appointed pursuant to the Appointments Clause of the Constitution, Art. II, § 2, cl. 2, the statute establishing the CASB is unconstitutional because the mechanism it creates for appointing members is not 

in conformity with that clause.1

Although you have not formally asked for our opinion on the constitutional issue, because of its importance we wish to take this opportunity to comment. We think that an additional, plausible argument could

1 T he CASB comprises the C om ptroller General and four others appointed by him. Although the 

Com ptroller G eneral—who is appointed by the President by and with the advice and consent o f the 

Senate, see 31 U.S.C. §4 2 —is appointed in conformity with the Appointm ents Clause, the other four 

members are not. For the C om ptroller General is properly viewed as a Legislative Branch official, and 

thus not as “head” o f a ’‘D epartm ent” for purposes o f the Appointm ents Clause. See Buckley v. Valeo.

424 U -S ,l, 127 (1976); 31 U.S.C. §43, 53, 65(d); Reorganization A ct o f 1949, 63 Stat. 205; R eorganization A ct of 1945, 59 Stat. 616; Corwin, Tenure o f Office and the Removal Power, 27 Colum. L. Rev. 

353, 396 (1927); W. W illoughby, The Legal Status and Functions o f the G eneral A ccounting Office of 

the National G overnm ent 12-16 (1927); c f H. Mansfield, T he C om ptroller General 74-92 (1939).

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be made that would permit a court to uphold the statute. Given the 

Department’s duty to defend the constitutionality of statutes except in 

exceptional circumstances, it may well be appropriate to bring this 

argument to the court’s attention.

At bottom, your analysis would appear to presume that the statute 

establishing the CASB and providing that its cost accounting standards 

“shall be used” by executive agencies creates an entity with the power 

to issue binding standards that must be followed by the Executive 

Branch. See 50 U.S.C. App. § 2168(g). This interpretation apparently 

accords with the relevant administrative practice, and is consistent with 

the facts of this case. However, it can be argued that the CASB is 

really a Legislative Branch entity, and that its action in promulgating 

cost accounting standards is appropriate to such an entity since it is, in 

the final analysis, advisory with respect to executive agencies. This 

approach, of course, avoids the Appointments Clause question.

The view that the CASB is a Legislative Branch entity rests on the 

statute establishing it as “an agent of the Congress,” which is to be 

“independent of the executive departments. ...” 50 U.S.C. App. 

§ 2168(a). The description of the CASB as an “agent of the Congress” 

recurs in the legislative history, see S. Rep. No. 91-890, reprinted 1970 

U.S. Code Cong. & Admin. News 3768, 3772. Congress cannot constitutionally delegate to a Legislative Branch entity the authority to impose 

binding substantive regulations on the Executive Branch, for that 

would violate basic separation of powers principles, as this Department 

has often noted in the context of so-called “legislative veto” devices. 

See, e.g.. Letter from Assistant Attorney General Parker to Chairman 

Ribicoff on S. 1945, April 21, 1980; opinion of the Attorney General to 

the Secretary of Education, June 5, 1980.*

On the other hand, a Legislative Branch entity can take action in aid 

of the legislative functions of Congress, such as gathering information 

or investigating executive agencies. See Buckley v. Valeo, supra, 424 

U.S. at 137-38. It could be argued here that, insofar as the cost accounting standards are advisory, their promulgation is justified as in aid 

of Congress’ oversight of government contracts, for it seems clear that 

Congress is served by receiving uniform information about the cost 

accounting practices of government contractors. Although the statute 

provides that the CASB’s standards “shall be used” by government 

agencies and contractors, it could be suggested that this language does 

not unequivocally purport to bind executive agencies. First, it is an 

accepted canon of statutory construction that courts will seek, if at all 

possible, to construe a statute to avoid a serious question of its constitu­

• N o t e : T he text of the A ttorney G eneral's opinion o f June S, 1980, appears in this volume at p. 21. 

supra. Ed.

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tionality.2 Second, in this case, a court might construe the direction 

that the CASB’s standards “shall be used” by executive agencies not to 

require that agencies follow such standards absolutely, but merely to 

require them to “use” the standards, which could include deciding 

whether to follow them in a given case.

This interpretation draws support from the ordinary meaning of the 

verb “to use,” which indicates “any putting to service of a thing, 

usu[ally] for an intended or fit purpose . . Webster’s Third New 

International Dictionary 2524 (1976), or employing a thing “for a certain end or purpose.” First Federal Savings & Loan Ass’n v. Williams, 91 

N.E. 2d 34, 36 (C.A. Ohio 1947); See. Yandle v. Hardware Mutual Ins.

Co., 314 F.2d 435, 437 (9th Cir. 1963). The meaning of the verb must be 

ascertained with reasonable regard for the context in which it is employed. See McJimsey v. City of Des Moines, 2 N.W. 2d 65, 68 (Iowa 

1942); In re Holmes' Estate, 289 N.W. 638, 640 (Wis. 1940). It would 

stretch the ordinary meaning of “to use” to say that, standing alone, it 

means that in every situation regardless of the fitness of a thing to a 

given case, the thing must be employed.

Accordingly, in the present context, it is possible to argue that the 

phrase “shall be used” should be construed to permit agencies, while 

being generally guided by the CASB’s cost accounting standards, not to 

follow given standards when the agency considers that they would 

impinge on the Executive Branch’s responsibility to execute the laws 

and thus would not be “fit” for a particular case. In particular, in 

putting the CASB’s standards into service “for a fit purpose,” an 

agency might choose not to follow a standard if it infringes on the 

agency’s responsibility of negotiating or administering public contracts.

This reading of the statutory language would appear to be consistent 

with the Department’s view of it when it was in the form of an 

enrolled bill. In a memorandum to the Director of the Office of Management and Budget, the Deputy Attorney General suggested that the 

creation of the CASB apart from the Executive Branch might be 

justified on the ground that the Legislative Branch, in performing its 

normal oversight functions, may reasonably expect, and certainly would 

be assisted by, consistency and uniformity in the information it receives 

about public contracts, such as would be fostered by adherence to cost 

accounting standards. Viewing the statutory language on its face, the 

Deputy Attorney General was unable to conclude that it would inevitably lead to conflicts of constitutional proportion between the CASB 

and the Executive Branch, for that “. . . would depend on the substance of the standards and regulations adopted by the Board.” Al2 See, e.g.. United States v. Rumeley, 345 U.S. 41, 45 (1953); Crowell v. Benson, 285 U.S. 22, 62 

(1932); Missouri Pacific R.R. Co. v, Boone, 270 U.S. 466, 471-72 (1926); United States v. Delaware &

Hudson Co., 213 U.S. 366, 407-08 (1909); see also Ashwander v. TV A, 297 U.S. 288, 348 (1936) 

(Brandeis, J., concurring).

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though the Deputy Attorney General feared that, as applied, the statute 

might eventually generate disputes between the Congress, with its interest in receiving information about public contracts, and the Executive 

Branch, with its interest in managing the negotiation and administration 

of public contracts, the Deputy’s memorandum apparently took for 

granted that the statute could be given a facially constitutional reading.

In sum, we are in substantial agreement with the analysis of your 

memorandum. But we offer for your consideration the further argument outlined above which, if accepted by the court, could prevent the 

statute from being held to be unconstitutional.

L e o n U l m a n

Deputy Assistant Attorney General

Office of Legal Counsel

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