24 [91 Op. Att’y

BUDGETARY ADMINISTRATION 

TRANSFER OF MONEYS BETWEEN TWO SPECIAL FUNDS

A D M IN I STE RED BY THE M A R Y L A N D E N E RGY

ADMINISTRATION

January 25, 2006

Mr. Frederick G. Davis

Director

Maryland Energy Administration

At the suggestion of the Legislative Auditor, your predecessor

requested our opinion concerning the propriety of certain transfers

of funds between special funds administered by the Maryland

Energy Administration (“MEA”). Specifically, he asked whether it

was permissible for the Director of MEA to transfer funds from the

Community Energy Loan Program (“CELP”) Fund to the State

Agency Loan Program (“SALP”) account of the Energy Overcharge

Restitution Fund (“Restitution Fund”). The CELP Fund was

originally capitalized with moneys from the Restitution Fund. Both

the CELP Fund and Restitution Fund are administered by MEA.

In our opinion, moneys in the CELP Fund may only be spent

in accordance within the statute creating that fund; a transfer of

funds to the SALP account is not currently authorized by that statute.

Excess or unestimated receipts in the CELP Fund may be transferred

to another fund by an approved budget amendment. Thus, funds

may be transferred from the CELP Fund to the SALP account only

if the General Assembly passes a law authorizing such a transfer or

expanding the purposes of the CELP Fund or if an appropriate

budget amendment is approved in accordance with State law. 

I

Background 

A. Energy Overcharge Restitution Fund

The Energy Overcharge Restitution Fund (“Restitution Fund”)

is a special fund created in 1989 primarily to hold the State’s share
Gen. 24] 25

The Restitution Fund is the successor of the Energy Overcharge 1

Restitution Trust Fund, which was originally created in 1984 for the same

purposes. Chapter 759, Laws of Maryland 1984. The history of energy

overcharge litigation and the creation of a special fund to hold the

proceeds of the restitution orders are recounted in 71 Opinions of the

Attorney General 226 (1986). 

 Annotated Code of Maryland, Article 41, §6-401 et seq. 2

of restitution paid by various companies in settlements of actions

brought by the federal Department of Energy for violations of

federal oil price controls during the period between January 1975

and the end of those controls in January 1981. Chapter 526, Laws

of Maryland 1989, codified in Annotated Code of Maryland, State

Finance & Procurement Article (“SFP”), §7-315. The Restitution 1

Fund is also to receive any gifts expressly given to the State for

energy assistance or weatherization for individuals. SFP §7-

315(b)(2)(ii).

The statute specifically authorizes the use of money in the

Restitution Fund for various energy assistance, conservation, and

weatherization programs. SFP §7-315(f)(2). They include:

! assistance to households under the State Energy

Assistance and Information Act. SFP §7-315(f)(2)(i)- 2

(ii).

! energy assistance and weatherization programs provided

through the MEA and the Community Development

Administration of the Department of Housing and

Community Development. SFP §7-315(f)(2)(iii).

! energy extension service and low income home energy

programs under 42 U.S.C. §§7001 et seq., 8621 et seq.

SFP §7-315(f)(2)(iv).

! other energy assistance or weatherization programs

satisfying federal guidelines for the use of overcharge

restitution funds. SFP §7-315(f)(2)(v).
26 [91 Op. Att’y

 Those laws include Pub.L. 97-377, 96 Stat. 1830, §155 (1982), and 3

the State Energy Programs Improvements Act of 1990, Pub.L. 101-440,

104 Stat. 1006 (1990). 

 Annotated Code of Maryland, State Government Article, §9-20A- 4

01 et seq.

 Although the statute requires that any budget amendment be 5

submitted to and approved by the Legislative Policy Committee prior to

the expenditure or obligation of funds, this Office has previously advised

that the requirement of legislative “approval” of an administrative budget

amendment could be held to be an unconstitutional legislative veto. See

Letter of Attorney General J. Joseph Curran, Jr. to Governor Robert L.

Ehrlich, Jr. concerning House Bill 147 (May 19, 2005) at pp. 6-7. 

! “energy conservation programs” encompassed by

specified federal laws. SFP §7-315(f)(2)(vi).

3

! the State Energy Efficiency and Economic Development

Loan Program. SFP §7-315(f)(2)(vii). 4

! the Community Energy Loan Program. SFP §7-

315(f)(2)(viii). 

! “any other purpose required as a condition of ...

acceptance [of the funds].” SFP §7-315(f)(2)(ix).

The Legislature has charged the Director of MEA with the task of

assessing needs and making recommendations to the Governor for

the use of the Restitution Fund. SFP §7-315(e). 

 Expenditures are to be made from the Restitution Fund in

accordance with the State budget or an approved budget amendment.

SFP §7-315(d). Disbursements from the Restitution Fund are to 5

supplement rather than supplant funds that are otherwise available

for energy assistance programs under State or federal law. SFP §7-

315(f)(4). 

In connection with the Restitution Fund, the Treasurer

maintains seven revenue accounts corresponding to settlements of

seven cases providing for restitution to consumers through the
Gen. 24] 27

 The cases are generally referred to by the following names: Exxon, 6

National Helium, Diamond Shamrock, Kansas Stripper Well, Amoco II,

Amoco Belridge, and Cities Service.

 The federal Department of Energy approved the use of restitution 7

proceeds for CELP in a letter dated June 18, 1989.

 CELP was originally created in 1989 as a program of the 8

Department of Housing and Community Development. Chapter 421,

Laws of Maryland 1989, codified at Article 83B, §4-901 et seq. It was

recodified and transferred to MEA in 1991. Chapter 468, Laws of

Maryland 1991.

states. Each settlement contains somewhat different restrictions on 6

the use of funds. An eighth account is dedicated to the SALP. Your

predecessor advised that, while these accounts have not been

codified as special funds by statute, the Treasurer has treated the

accounts as though they were separate funds, as opposed to a single

Restitution Fund with separate sub-accounts. The Legislature has

also created a second special fund for moneys appropriated from the

Restitution Fund for one of its purposes – i.e., the Community

Energy Loan Program Fund (“CELP Fund”).

The State’s annual budget bill typically makes appropriations

for both CELP and SALP under the MEA portion of the budget;

each is designated as a “capital appropriation - special fund

appropriation.” See, e.g., Chapter 443, Laws of Maryland 2005 at

pp. 2096-97. Those appropriations are made, respectively, from the

CELP Fund and the SALP account of the Restitution Fund. 

B. Community Energy Loan Program

As indicated above, CELP is specifically identified in the

statute governing the Restitution Fund as a permissible use of

moneys in the Restitution Fund. SFP §7-315(f)(2)(viii). CELP 7

itself is currently codified at Annotated Code of Maryland, State

Government Article (“SG”), §9-2101 et seq. ; see also COMAR 8

14.26.01. Under CELP, MEA makes low-interest loans available to

promote energy efficiency and conservation in buildings owned by

local governments or nonprofit organizations, including hospitals

and schools. SG §9-2103. MEA indicates that CELP funds

approximately $1.5 million in new projects each fiscal year. See

<www.energy.state.md.us/programs/government/community

energyloan.htm>.
28 [91 Op. Att’y

 The State received approval from the federal Department of Energy 9

to use funds from the Stripper Well settlement for SALP. Department of

Energy response to State’s Eighth Proposal for Use of Stripper Well Funds

(April 12, 1990).

As a repository for funds devoted to CELP, the Legislature

created the CELP Fund; it consists of moneys appropriated from the

Restitution Fund, moneys received from other public or private

sources for CELP, interest on the CELP Fund’s earnings, and

repayments of loans. SG §9-2107(a). The MEA is to use the CELP

Fund to make loans and pay the expenses of CELP. SG §9-2107(c).

MEA is to reserve a portion of the CELP Fund specifically for loans

to schools and hospitals. SG §9-2107(b); COMAR 14.26.01.08.

The statute does not authorize the expenditure of moneys from the

CELP Fund for the SALP or any of the other purposes of the

Restitution Fund.

C. State Agency Loan Program

SALP was created in 1991 as a revolving loan account within

the Restitution Fund to make loans to State agencies for costeffective energy efficiency improvements in State facilities. SALP

was developed by MEA, then known as the Maryland Energy Office

and part of the Department of Housing and Community

Development, to enhance energy savings in State agencies. The

SALP account was capitalized with funds from one of the restitution

accounts within the Restitution Fund. According to MEA, loans 9

from the Restitution Fund totaling approximately $1 million are

appropriated each year for SALP. While an agency pays no interest

on a loan, it does pay a 1% administrative fee to the Restitution

Fund. As noted above, unlike CELP, SALP is not codified in statute

and does not have its own special fund created by statute.

D. Legislative Audit

During a recent audit of MEA, the Legislative Auditor

questioned two transfers of money from the CELP Fund to the SALP

account. In December 2001 the MEA transferred $500,000 from the

CELP Fund to the SALP account. A similar transfer of $400,000

was effected in November 2004. The transfers were apparently done

to fund additional loans to State agencies through SALP. Your

predecessor indicated that the purpose of the transfers was to ensure

that the SALP account would remain solvent while awaiting

repayment of loans. 
Gen. 24] 29

 Appropriations to fund some of the State’s capital projects appear 10

in the annual operating budget. 

MEA management believed that the Director of MEA had

authority to make the transfers in connection with the annual budget

process. We understand that both transfers were included in MEA’s

submissions to the Department of Budget and Management

(“DBM”) as part of DBM’s coordination of the State’s capital

project program under SFP §3-601 et seq. Apparently, the transfers

were included in materials submitted to DBM in revenue

spreadsheets for CELP and SALP that detailed the projected revenue

for both programs, but were not identified as budget amendment

requests. As we understand it, the transfers were not reflected in any

appropriation in the operating budget or capital budget bills.10

The Auditor questioned the legality of the transfers and

recommended that MEA obtain an opinion from the Attorney

General on the issue. 

II

Analysis

The issue raised by the Auditor concerns the transfer of

moneys from one special fund – the CELP Fund – to an account in

another special fund – the SALP account in the Restitution Fund. 

Moneys appropriated to a special fund may only be expended

in accordance with the law governing that fund. See 89 Opinions of

the Attorney General 172, 177-78 (2004). Unspent moneys

appropriated to a special fund remain in that fund and do not revert

to the general fund. SFP §7-304. Thus, the moneys appropriated to

the CELP Fund in the various budgets since the inception of that

fund are to be expended for the purposes set forth in the law creating

the CELP Fund. Unless the Legislature enacts a law that transfers

those funds to another fund or authorizes their use for other

purposes, the MEA has no authority to devote them to any other

purpose – e.g., transfer them to the SALP account or otherwise

return them to the Restitution Fund.
30 [91 Op. Att’y

When the General Assembly establishes a special fund dedicated 11

to specific purposes, the annual budget bill may only appropriate money

from that fund for the statutorily-identified purposes. See 89 Opinions of

the Attorney General 172, 177-78 (2004); 71 Opinions of the Attorney

General 3, 4 n.2 (1986); 20 Opinions of the Attorney General 201, 203-4

(1935). This is based on the principle that the Legislature ordinarily may

not “legislate in the budget.” 89 Opinions of the Attorney General at 177-

78. “A budget bill is not a means by which the General Assembly may

enlarge the scope of a statute.” 81 Opinions of the Attorney General 269,

275 (1996).

 The phrase “capital budget bill” is normally used to refer to a 12

supplementary appropriation bill that contains various appropriations for

various capital projects. It is enabling legislation for the creation of State

debt through the issuance of State of Maryland general obligation bonds,

the proceeds of which are used to fund various capital projects. As a

supplementary appropriation bill, it must be limited to “some single work,

object or purpose.” Article III, §52(8). The Court of Appeals has held

that even though a capital budget bill may embrace a variety of projects,

its single work or object is the “obtention of funds for State purposes from

lenders” – i.e., the creation of a State debt. See City of Baltimore v. State,

281 Md. 217, 227, 378 A.2d 1326 (1977); Panitz v. Comptroller, 247 Md.

501, 513-14, 232 A.2d 891 (1967). This Office has cautioned against the

inclusion of provisions in the capital budget bill that are not items of

appropriation or related to the administration of the State debt program.

See Bill Review Letter concerning House Bill 340 - Capital Budget (May

19, 2005). Thus, it is doubtful whether the capital budget bill could

lawfully include a transfer of funds between the CELP Fund and the

Restitution Fund, as they do not relate to State debt.

Your predecessor indicated that information concerning the

2001 and 2004 transfers was provided to DBM as part of the “capital

budget process.” However, we understand that transfers were not

part of any appropriation in either the operating budget or capital

budget bill. Even if they had been, neither the operating budget bill11

nor capital budget bill could ordinarily authorize such a transfer. 12

Unless the transfers were authorized in laws passed by the

Legislature or in an approved budget amendment, the transfers

would not be valid. In any event, it appears that neither the annual

budget bills nor the capital budget bills for the pertinent fiscal years

purport to authorize such transfers. Moreover, we are unable to

locate any provision specifically authorizing the transfers in any bills

enacted by the Legislature during the relevant time period.
Gen. 24] 31

In sum, MEA lacked legal authority to transfer funds from the

CELP Fund to the SALP account. However, it is perhaps not

surprising that there might be some confusion on the MEA’s

authority to transfer funds from the CELP Fund to other authorized

purposes of the Restitution Fund. Our answer to your question

results from the fact that the Legislature has established the CELP

Fund as a special fund by statute and not just as an account within

the Restitution Fund. Had the moneys designated for CELP simply

been part of an account within the Restitution Fund, they could have

been transferred to any of the other accounts within that Fund

without special action by the Legislature. Appropriation of the funds

to that purpose as part of the budget process or in an authorized

budget amendment would have been sufficient. 

Finally, we discuss the extent to which moneys in the CELP

Fund might be transferred to the SALP account in the Restitution

Fund by means of a budget amendment. In 71 Opinions of the

Attorney General 3, Attorney General Sachs concluded that

unestimated and excess receipts could be transferred from one

special fund to anotherspecial fund under the laws governing budget

amendments if the law governing special fund that was the source of

the transfer did not prohibit the transfer. See also 89 Opinions of the

Attorney General 172, 181 (2004) (transfer by budget amendment

not permitted when statute governing the special fund prohibited

transfer). The statute governing the CELP Fund does not prohibit a

transfer of excess or unestimated receipts to the Restitution Fund. 

Thus, in our view, funds could be transferred from the CELP Fund

back to the Restitution Fund by an approved budget amendment.

However, as we understand it, the transfers in question were not

effected by budget amendment.

III

Conclusion

In our opinion, moneys in the CELP Fund may only be spent

in accordance within the statute creating that fund; expenditure for

purposes of the SALP is not currently authorized by that statute.

Excess or unestimated receipts in the CELP Fund may be transferred

to another fund by an approved budget amendment. Thus, funds

may be transferred from the CELP Fund to the SALP account only

if the General Assembly passes a law authorizing such a transfer or
32 [91 Op. Att’y

expanding the purposes of the CELP Fund or if a budget amendment

is approved in accordance with State law. 

J. Joseph Curran, Jr.

Attorney General

Robert N. McDonald

Chief Counsel

 Opinions and Advice