### APPLICABILITY OF SECTION 163 OF DIVISION B OF PUBLIC LAW
111-68 TO PAYMENTS IN SATISFACTION OF PRE-EXISTING
CONTRACTUAL OBLIGATIONS

Section 163 of Division B (“Continuing Appropriations Resolution, 2010”) of Public Law 111-68 does not direct or authorize the Department of Housing and Urban Development to breach a pre-existing binding contractual obligation to make payments to the Association of Community Organizations for Reform Now or its af filiates, subsidiaries, or allied organizations where doing so would give rise to contractual liability.

October 2 3, 2009

MEMORANDUM OPINION FOR THE DEPUTY GENERAL COUNSEL
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

You have asked whether secti on 163 of Division B (“Continuing Appropriations Resolution, 2010”) of Public Law 111-68, 123 Stat. 2023, 2053, approved by the President on October 1, 2009, prohibits the Department of Housing and Urban Development (“HUD”) from m aki ng a payment to the Association of Community Organizations for Reform Now (“ ACORN”) or its affiliates, subsidiaries, or allied organizations to satisfy an existi ng contractual obligation that arose prior to
the enactment of that measure. We c onclude, in agreement with the views we solicited and received, that th e language of section 163 is not clear with respect to whether its prohibition applies in cases where pre-existing law apar t from section 163, including the contract itself, compels such a payment and where, accordingly, failure to make such a payment would subject the federal Government to contractual liability. In accord with established interpre tive principles for resolving such lack of clarity, we conclude that section 163 does not direct or authorize HUD to refuse payment on binding contractual obliga tions that predate the Continuing Appropriations Resolution. 1

I.

Section 163 states, “None of the funds ma de available by this joint resolution or any prior Act may be provided to the A ssociation of Community Organizations for Reform Now (ACORN), or any of its affiliate s, subsidiaries, or allied organizations.” The term “provided to” has no established mean ing in appropriations law. As explained by the GAO Redbook, “[t]he two basic authorities conferred by an appropriation law are the authority to incur obligations and the auth ority to make expenditures. An obligation
results from some action that creates a liabil ity or definite commitment on the part of the government to make an expenditure. . . . The expenditure is the disbursement of funds to pay the obligation.” 1 General Accoun ting Office, Office of the General Counsel, Principles of Federal Appropriations La w 5-3 (3d ed. 2004) (“GAO Redbook”). Thus,

1 This opinion addresses only pre-existing cont racts that create binding obligations requiring payment and not those that excuse pa yment in the relevant circumstances.Opinions of the Office of Legal Counsel in Volume 33

“obligate” and “expend” are terms of art th at generally describe the commitment and payment of funds. See

, e.g. , 31 U.S.C. § 1341(a)(1) (2006) (“Anti-Deficiency Act”) (providing that no federal offi cer or employee may “make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation”). The term “expenditure,” in pa rticular, is broadly de fined as “[t]he actual spending of money; an outlay.” Government Accountability Office, A Glossary of Terms Used in the Federal Budget Pr ocess 48 (2005) (“GAO Glossary”); see also 1 GAO Redbook at 5-3 (“The expenditure is the disburse ment of funds to pa y the obligation.”). And an opinion by the Comptroller General sugg ests that the word “expenditure” in the Anti-Deficiency Act prohibits an agency from making a payment to satisfy a contractual obligation if a statutory or regulatory f unding limitation would thereby be exceeded. See In re Currency Exchange Rate Fluctuations , 58 Comp. Gen. 46 (1978).

By contrast, as we have noted, the term Congress elected to employ in section 163, “provided to,” has no clearly de fined m eaning in appropriations law. See, e.g.

, GAO Glossary (containing no definition of “provision” or “provide”). Moreover, appropriations case law and reference materi als we have consulted, including the GAO Redbook, do not shed light on whether “provided to” in section 163 should be understood to prohibit a federal agency from making paym ents to satisfy pre- existing contractual obligations.

To be sure, some common definitions of “provide,” such as “supply” or “furnish,” American Heritage Dictionary 1411 (4th ed. 2006), would appear to describe any transfer of funds, presumably including a transfer in satisfaction of an existing obligation. Other definitions, however, co nnote a discretionary action. For instance, “provide” may mean “contribute,” Webster’s New International Dictionary 1994 (2d ed. 1958), or “make available,” American Heritage Dictionary 1411 (4th ed. 2006), and “offer” is among its

synonyms, Roget’s II: The New Thesaurus 780 (3d ed. 1995). And in common parlance, the verb “provide” frequently describes disc retionary action taken to benefit another. Moreover, several of the word’s definiti ons incorporate a forward-looking aspect, see , e.g. , Webster’s New International Dictionary 1994 (2d ed. 1958) (“to look out for in advance”; “to prepare”); Black’s Law Dictionary 1224 (6th ed. 1990) (“[t]o make, procure, or furnish for future use, prepare”), consistent with the etymology of “provide,”
which derives from the Latin providere , meaning to see before, foresee, or be cautious,

12 Oxford English Dictionary 713 (2d ed. 1989). Definitions of the word “expend,” we note, do not carry a similarly discretionary or forward-looking connotation, in keeping with the etymology of that word, which comes from the Latin expendere , meaning simply to pay or weigh. 5 id. at 561.

Against this background, we find that the re levant text of section 163 is not clear with respect to the precise question before us. Congress had available to it—and yet did not use—appropriations language that had previously been co nstrued to prohibit

2Applicability of Section 163 to Payments in Satisfaction of Pre-Existing Contractual Obligations

payments even on pre-existi ng contractual obligations. 2 It instead used a term that could be read to suggest a bar only on payments that result from new discretionary decisions— including, in particular, payments made pursu ant to discretionary choices to incur new obligations. Accordingly, although one could read the phrase “None of the funds made available by this joint resolution or any prio r Act may be provided to [ACORN], or any of its affiliates, subsidiaries, or allied organizations” categorically to prohibit any outlay of money to the identified entities, incl uding pursuant to pre- existing contractual obligations, one could also read the phrase not to prohibit payments made pursuant to a prior binding contractual duty.

II.

In light of the term Congress chose, we turn to other interp retative tools to resolve the question before us. The recent Supreme Court case Cherokee Nation of Oklahoma v.

Leavitt , 543 U.S. 631 (2005), is instructive. Th ere, contracts between the Government and Indian tribes provided that the tribes would supply health serv ices normally furnished by the Government and that the Government would in turn pay the “contract support
costs” the tribes incurred. The Government subsequently refused to pay the full contract support costs because, it argued, Congress had no t appropriated sufficient funds. Part of the Government’s argument rested on a later-enacted statute that stated: “Notwithstanding any other provision of law [the] amounts appropriated to or earmarked in committee reports for the . . . Indian Health Service . . . for payments to tribes . . . for
contract support costs . . . are the total amounts available for fiscal years 1994 through 1998 for such purposes.” Id. at 645 (alterations in original) (emphasis omitted) (quoting section 314 of the Department of the Interior and Related Agenci es Appropriations Act, 1999, 112 Stat. 2681-288). The Court noted that, because committee reports in 1994 through 1997
had earmarked funds for contract support costs, and because thos e funds had “long since been spent,” this language was “open to the inte rpretation that it retroactively bars payment
of claims arising under 1994 through 1997 contracts.” Id . In the Court’s view, however, the statutory language was also ope n to a different interpretation that would simply forbid the “use of unspent funds appropriated in prior ye ars to pay unpaid ‘contr act support costs.’”
Id. at 646. Thus, the Court concluded:

On the basis of language alone we would find either interpretation
reasonable. But there are other cons iderations. The first interpretation would undo a binding governmental contra ctual promise. A statute that retroactively repudiates the Govern ment’s contractual obligation may
violate the Constitution. And such an interpretation is disfavored. This consideration tips the ba lance against the retr oactive interpretation.

Id. (citations omitted); see also Lynch v. United States , 292 U.S. 571, 580 (1934) (“Congress was without power to reduce expenditures by abrogating contractual

2 We do not address whether if Congress had used the phrase “may be expended” in section 163 that phrase would necessarily prohibit payment pursuan t to pre-existing legal obligations—a question that might depend at least in part on extratextual considerations.

3Opinions of the Office of Legal Counsel in Volume 33

obligations of the United States.”); United States v. Winstar Corp. , 518 U.S. 839, 876 (1996) (plurality opinion) (“[I]t is clear th at the National Government has some capacity to make agreements binding future Congre sses by creating vested rights, [although the] extent of that capacity, to be sure, remains somewhat obscure.” (citations omitted)); cf. Landgraf v. USI Film Prods. , 511 U.S. 244, 271 (1994) (“The largest category of cases in which we have applied the presumption agai nst statutory retroactivity has involved new provisions affecting contractua l or property rights, matters in which predictability and stability are of prime importance.”).

Reading section 163 to prohibit payments to ACORN or its affiliates, subsidiaries, or allied organizations to sa tisfy a binding contractual obligation undertaken before
enactment of section 163 would “undo a bi nding governme ntal contractual promise.”
Cherokee Nation , 543 U.S. at 646. In accord with Cherokee Nation , the better reading of the section is therefore that it does not prohib it such payments. This reading of “provided to” is especially appropriate here because, consistent with the canon of constitutional avoidance, see , e.g. , Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr.
Trades Council , 485 U.S. 568, 575 (1988)

, i t not only avoids abrogating binding governmental contractual promises but also avoids the partic ular constitutional concerns that may be presented by read ing the statute, which applies to specif ic named entities, to abrogate such contracts, including even in cases where performance has already been completed but payment has not been rendered. 3

3 See

, e.g. , United States v. Lovett , 328 U.S. 303, 315 (1946) (“[L]egislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial are bills of attainder prohibited by the Constitution.”); Selective Serv. Sys. v. Minn. Pub. Interest Research Group , 468 U.S. 841, 853 (1984) (stating that a particular provision imposed “none of the burdens historically associated with punishment”
because “‘the sanction is the mere denial of a noncontractual governmental benefit’”) (emphasis added) (quoting Flemming v. Nestor , 363 U.S. 603, 617 (1960)); Nixon v. Adm’r of Gen. Servs ., 433 U.S. 425, 475-76 (1977) (“[O]ur inquiry is not ended by the determination that the Act imposes no punishment traditionally judged to be prohibited by the Bill of Attainder Clause. Our treatment of the scope of the Clause has never precluded the possibility that new burdens and deprivations might be legislatively
fashioned that are inconsistent with the bill of attainde r guarantee. The Court, therefore, often has looked beyond mere historical experience and has applied a functional test of the existence of punishment, analyzing whether the law under challe nge, viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes.”); see also Consol. Edison Co. v. Pataki

, 292 F.3d 338, 346-49 (2d Cir. 2002) (applying the Bill of Attainder Clause to a bill that arguably singled out a corporation); cf. Kenneth R. Thomas, Congressional Research Service, The Proposed “Defund ACORN Act”: Is it a “Bill of Attainder?” 12 (2009) (considering an earlier bill that would have, inter alia

, pr ohib ited the award of federal contracts or the provision of federal funds to a “covered organization,” with “organization” expressly defined as including ACORN and its affiliates, and concluding that “a court may have a sufficient basis to overcome the presumption of constitutionality, and find that the proposed [bill] violates the prohibition against bills of attainder”).

4Applicability of Section 163 to Payments in Satisfaction of Pre-Existing Contractual Obligations

III.

In sum, section 163 should not be read as directing or authorizing HUD to breach a pre-existing binding contract ual obligation to make payments to ACORN or its affiliates, subsidia ries, or allied organizat ions where doing so would give rise to contractual liability.

/s/

DAVID J . BARRON Acting Assistant Attorney General

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