b'Authority of Military Exchanges to Lease General Purpose\nOffice Space\nT he Navy E xchange Service Com m and, a nonappropriated fund instrum entality, and sim ilar m ilitary\nexchange units constitute integral com ponents o f the D epartm ent o f Defense, and their leasing\nauthority, like that o f other D oD com ponents, is subject to the provisions o f R eorganization Plan\nNo. 18 o f 1950, notw ithstanding their status as NAFIs. A ccordingly, they are not authorized to\nlease general purpose urban office space unless such authority is delegated to them by the G eneral\nServices Adm inistration.\n\nAugust 1, 1997\nM e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l s\no f the\nand the\n\nD epa r tm en t o f D efen se\n\nG e n e r a l S e r v ic e s A d m in is t r a t io n\n\nThis responds to your request for the Attorney General to resolve a disagreement\nbetween the Department of Defense (\xe2\x80\x9c DoD\xe2\x80\x9d ) and the General Services Adminis\xc2\xad\ntration (\xe2\x80\x9c GSA\xe2\x80\x9d ) which has been submitted to her for resolution1 pursuant to\nExecutive Order No. 12146.2 The Attorney General has delegated her authority\nto resolve such disputes to this Office pursuant to 28 C.F.R. \xc2\xa7 0.25(a) (1996).\nThe disagreement centers on whether the Navy Exchange Service Command\n( \xe2\x80\x9c NEXCOM\xe2\x80\x9d ), a nonappropriated fund instrumentality (\xe2\x80\x9c NAFI\xe2\x80\x9d ) within DoD,\nhas legal authority to lease general purpose office space in urban centers in the\nabsence of a delegation of authority to do so from GSA. DoD asserts that\nNEXCOM has such authority, while GSA takes the contrary position.\nWe conclude that NEXCOM and similar military exchange units constitute\nintegral components of DoD and that their leasing authority, like that of other\nDoD components, is subject to the provisions of Reorganization Plan No. 18 of\n1950, notwithstanding their status as NAFIs. Accordingly, NEXCOM is not\nauthorized to lease general purpose urban office space for itself unless such\nauthority is delegated to it by GSA.\n1 Letter for Janet Reno, Attorney General, from Judith A Miller, General Counsel, Department of Defense (Sept.\n13, 1996) DoD\xe2\x80\x99s views on the issue in question are set forth in Memorandum for the General Counsel, Department\nof the Navy, from Robert S Taylor, Deputy General Counsel, Department of Defense, Re: Authority o f a NonAppropriated Fund Instrumentality (NAFI) to Enter Into a Lease Without Delegation from GSA (Aug. 30, 1996)\n( \xe2\x80\x9c DoD Memo\xe2\x80\x9d ). The G SA \xe2\x80\x99s views are set forth in a letter to Robert S. Taylor, Deputy General Counsel, Department\no f Defense, from Emily C. Hewitt, General Counsel, General Services Administration (Aug. 23, 1996) ( \xe2\x80\x9c GSA\nLetter\xe2\x80\x9d )\n2 Executive Order No 12146 is reprinted as a note following 28 U .S C \xc2\xa7509 (1994) and provides in section\n1-402 thereof.\nW henever two or more Executive agencies whose heads serve at the pleasure of the President are unable\nto resolve .\na legal dispute, the agencies shall submit the dispute to the Attorney General prior to\nproceeding in any court, except where there is a specific statutory vesting of responsibility for resolution\nelsewhere\n\n123\n\n\x0cO pinions o f the O ffice o f L egal Counsel in Volum e 21\n\nI. BACKGROUND\nA.\nExcept insofar as delegated to the head of an executive branch agency pursuant\nto 40 U.S.C. \xc2\xa7 486(d) (1994) or section 3(b) of Reorganization Plan No. 18 of\n1950 (\xe2\x80\x9c Reorg. Plan\xe2\x80\x9d ),3 GSA is the sole authority for leasing general purpose\nurban office space in the United States for any governmental entity that is covered\nby the Reorganization Plan.\nReorganization Plan No. 18 was promulgated pursuant to the provisions of the\nReorganization Act of 1949, Pub. L. No. 81-109, 63 Stat. 203 (\xe2\x80\x9c Reorg. Act\xe2\x80\x9d ).\nIt provided that all functions regarding the Government\xe2\x80\x99s acquisition and disposi\xc2\xad\ntion of building space by lease, with certain enumerated exceptions, were to be\ntransferred from the \xe2\x80\x9c respective agencies\xe2\x80\x9d in which such functions were pre\xc2\xad\nviously vested to the Administrator of General Services. Reorg. Plan \xc2\xa7 1. Nothing\nin the text of Reorganization Plan No. 18 indicates that NAFIs in general, or\nmilitary exchanges in particular, were to be excluded from its coverage. On the\nother hand, the Reorganization Plan did enumerate specific categories of govern\xc2\xad\nment property that were excluded from its provisions: space in buildings located\nin foreign countries or on military bases; space in hospitals, laboratories, factories,\nand other .\xe2\x80\x9c special purpose\xe2\x80\x9d buildings; and all leasing of the Post Office Depart\xc2\xad\nment. Reorg. Plan \xc2\xa7 l(a)-(d).\nThe Federal Property and Administrative Services Act (\xe2\x80\x9c Property Act\xe2\x80\x9d ) sepa\xc2\xad\nrately authorizes GSA to enter into lease agreements covering periods of not more\nthan twenty years \xe2\x80\x9c for the accommodation of Federal agencies.\xe2\x80\x9d 40 U.S.C.\n\xc2\xa7 490(h)(1) (1994). This leasing authority provision was not part of the original\nProperty Act (which was enacted in 1949, see Pub. L. No. 81-152, 63 Stat. 377),\nbut was added by amendment in 1958. See Pub. L. No. 85-493, 72 Stat. 294\n(1958). At the time the 1958 amendment was enacted, leasing authority for federal\nagencies and departments had already been transferred to GSA on July 1, 1950,\npursuant to Reorganization Plan No. 18. Thus, the effect of the 1958 amendment\nenacting \xc2\xa7 490(h)(1) was to expand the GSA\xe2\x80\x99s existing leasing authority to\nincrease the permissible duration of authorized leases from five years to ten years\n(subsequently increased to 20 years). See Pub. L. No. 85-493, 72 Stat. at 294;\nH.R. Rep. No. 85-1814, at 2-3 (1958), reprinted in 1958 U.S.C.C.A.N. 2877,\n2879.\n3 Section 3(b) o f the Plan providesWhen authorized by the Administrator of G eneral Services, any function transferred to him by the provi\xc2\xad\nsions o f this reorganization plan may be performed by the head of any agency of the executive branch\no f the G overnment or, subject to the direction and control o f any such agency head, by such officers,\nemployees, and organizational units under the jurisdiction o f such agency head as such agency head may\ndesignate\nReorg Plan No 18 o f 1950, \xc2\xa73(b), 15 Fed Reg. 3177, reprinted in 40 U S C \xc2\xa7490 note (1994), and in 64 Stat\n1270(1950)\n\n124\n\n\x0cA u thority o f M ilitary Exchanges to Lease G eneral Purpose Office Space\n\nB.\nNEXCOM is a nonappropriated fund instrumentality established under the\nauthority of 10 U.S.C. \xc2\xa7136 (1994),4 10 U.S.C. \xc2\xa7 3013(b)(9) (1994) (Secretary\nof the Navy\xe2\x80\x99s responsibility to provide for the morale and welfare of Navy per\xc2\xad\nsonnel), and DoD Directive 1015.1 (\xe2\x80\x9c Establishment, Management, and Control\nof Nonappropriated Fund Instrumentalities\xe2\x80\x9d ) (Aug. 19, 1981). DoD Directive\n1015.1 defines a military exchange NAFI as follows:\nAn integral DoD organizational entity that performs an essential\ngovernment function. It acts in its own name to provide or to assist\nother DoD organizations in providing [morale, welfare, and recre\xc2\xad\nation] programs for military personnel and authorized civilians. It\nis established and maintained individually or jointly by the Heads\nof DoD Components. As a fiscal entity, it maintains custody of\nand control over its [nonappropriated funds]. It is also responsible\nfor the exercise of reasonable care to administer, safeguard, pre\xc2\xad\nserve, and maintain prudently those appropriated fund resources\nmade available to carry out its function. It contributes, with its\n[nonappropriated funds] to the [morale, welfare, and recreation]\nprograms of other authorized organizational entities, when so\nauthorized. It is not incorporated under the laws of any state or\nthe District of Columbia and it enjoys the legal status of an\ninstrumentality of the United States.\nId., Encl. 2.\n\nWe are advised that military exchange NAFIs are presently established under\nthe authority of the Assistant Secretary of Defense for Force Management Policy\nor one of the Service Secretaries (or their respective designees). DoD Memo at\n4\xe2\x80\x945 and n.2. Employees of a military exchange NAFI are classified as federal\nemployees within the Department of Defense. See Honeycutt v. Long, 861 F.2d\n1346, 1349 n.3 (5th Cir. 1988). The House Armed Services Committee has\ndescribed the military exchange NAFIs as follows:\nNonappropriated fund activities of the Department of Defense\noccupy a unique position. They render a service vital to the morale\nof military personnel and their dependents. Nonappropriated funds\nare instrumentalities of the Federal Government and are entitled to\nthe sovereign immunities and privileges of the United States as pro\xc2\xad\n4 That section provides (hat the Under Secretary o f Defense for Personnel and Readiness, \xe2\x80\x9c [sjubject to the\nauthority, direction, and control o f the Secretary of Defense, . shall perform such duties and exercise such powers\nas the Secretary o f Defense may prescribe in the areas of . . exchange, commissary, and nonappropnated fund\nactivities.\xe2\x80\x9d Id\n\n125\n\n\x0cO pinions o f the O ffice o f L egal C ounsel in Volum e 21\n\nvided in the Constitution, statutes, treaties, and agreements with for\xc2\xad\neign governments.\nSpecial Subcomm. on Nonappropriated Fund Activities Within the Department\nof Defense of House Comm, on Armed Services, 92d Cong., Review o f Non\xc2\xad\nappropriated Fund and Other Resale Activities Within the Department of Defense\n\n16615 (Comm. Print 1972).\nThe nature and status of the military exchanges (sometimes called \xe2\x80\x9c post\nexchanges\xe2\x80\x9d ) was further described as follows by the U.S. Court of Appeals for\nthe Fifth Circuit (there with particular reference to the Army and Air Force\nExchange Service (\xe2\x80\x9c AAFES\xe2\x80\x9d ), the Army/Air Force equivalent of NEXCOM):\nThe AAFES is created by federal statute, 10 U.S.C. \xc2\xa7\xc2\xa7 4779(c),\n9779(c), and is under the military\xe2\x80\x99s control. See Standard Oil Co.\no fC a l. v. Johnson, 316 U.S. 481, 484, 62 S. Ct. 1168, 86 L.Ed.\n1611 (1942) ( \xe2\x80\x9c post exchanges . . . are arms of the govern\xc2\xad\nment. . . . They are integral parts of the war department . . . and\npartake o f whatever immunities it may have under the Constitution\nand federal statutes.\xe2\x80\x9d ). Moreover, Congress controls the types of\n\ngoods and services that can be provided, establishes price ceilings,\nand limits those who may use an AAFES. The purpose of the\nAAFES is to provide low cost merchandise and services to military\npersonnel of the United States. The United States uses profits and\ndividends from the AAFES to fund military welfare plans. It is thus\nwell established by the statutes and cases that the United States\ncontemplates and manifests supervision and control over the\nAAFES and its property.\nUnited States v. Sanders, 793 F.2d 107, 108-09 (5th Cir. 1986) (emphasis added;\ncitations omitted).\nDoD acknowledges that NAFIs such as NEXCOM derive their powers and\nauthorities from regulations promulgated by DoD or the Service Departments and\n\xe2\x80\x9c cannot be given authority by the Secretary or the Secretaries of the Military\nDepartments . . . that they [i.e., the DoD and Service Secretaries] do not have.\xe2\x80\x9d\nDoD Memo at 5. Further, as noted in DoD\xe2\x80\x99s legal memorandum on this issue,\nmilitary exchange NAFIs may not enter into lease agreements for the use of \xe2\x80\x9c nonDoD\xe2\x80\x9d lands or buildings \xe2\x80\x9c except upon specific approval by the head of the DoD\nComponent concerned.\xe2\x80\x9d Id. at 1 n.l (quoting DoD Directive 1015.6, Encl. 3\n( \xe2\x80\x9c Funding of Morale, Welfare, and Recreation Programs\xe2\x80\x9d ) (Aug. 3, 1984))\n( \xe2\x80\x9c DoD Directive 1015.6\xe2\x80\x9d ).\nIt is our understanding that NEXCOM has not been delegated authority from\nGSA to enter into leases for general purpose office space in urban centers. The\n126\n\n\x0cA u thority o f M ilitary E xchanges to Lease G eneral P urpose Office Space\n\nquestion presented is whether, in the absence of such a delegation, NEXCOM\nhas legal authority to enter into such leases on its own.\nD. ANALYSIS\n\nIn contending that NEXCOM has leasing authority independent of any delega\xc2\xad\ntion from GSA, DoD asserts three main arguments: (1) because military exchange\nNAFIs do not in themselves constitute \xe2\x80\x9c federal agencies\xe2\x80\x9d as defined in the Prop\xc2\xad\nerty Act, their leasing activities are not subject to GSA\xe2\x80\x99s authority under that\nact, DoD Memo at 2-4; (2) a federal statute\xe2\x80\x99s applicability to NAFIs may not\nbe inferred from language encompassing federal entities in general, and neither\nthe Property Act nor Reorganization Plan No. 18 contain special provisions explic\xc2\xad\nitly stating that they apply to NAFIs, id. at 2-3; and (3) NEXCOM retains a\nresidual leasing authority, derived through DoD, that is independent of both the\n* Property Act and Reorganization Plan No. 18, id. at 4\xe2\x80\x948. The thrust of this latter\nargument appears to be that, because NAFIs are not themselves \xe2\x80\x9c federal agen\xc2\xad\ncies\xe2\x80\x9d under the Property Act, DoD\xe2\x80\x99s authority over their leases was never trans\xc2\xad\nferred to GSA under the Property Act or pursuant to Reorganization Plan No.\n18, and such authority is therefore still retained by DoD or by the military\nexchanges.5\nIn contrast, GSA contends that (1) whether or not NEXCOM satisfies the Prop\xc2\xad\nerty Act\xe2\x80\x99s definition of a \xe2\x80\x9c federal agency\xe2\x80\x9d in its own right, it constitutes an\nintegral component of DoD and the Department of the Navy, and (2) inasmuch\nas the leasing authority of DoD and the Department of the Navy was indisputably\ntransferred to GSA under the provisions of Reorganization Plan No. 18, so was\nthat of NEXCOM. GSA Letter at 1-2.\nB.\nReorganization Plan No. 18 provides that \xe2\x80\x9c [a]ll functions with respect to\nacquiring space in buildings by lease . . . are hereby transferred from the respec\xc2\xad\ntive agencies in which such functions are now vested to the Administrator of Gen\xc2\xad\neral Services,\xe2\x80\x9d exclusive of certain enumerated exceptions. Reorg. Plan \xc2\xa71\n(emphasis added). The specified exceptions from GSA\xe2\x80\x99s comprehensive assump\xc2\xad\ntion of federal government leasing authority included space in buildings located\nin foreign countries or on military bases, certain \xe2\x80\x9c special purpose\xe2\x80\x9d properties\n5 DoD also contends that certain other statutory restrictions on government acquisition of real property (including\nleases) cited by GSA are not applicable to the leasing authority at issue here. DoD Memo at 9-12. Because we\nconclude that authority over NAFI leasing is vested in GSA under Reorganization Plan No. 18, we need not address\nthese alternative sources of leasing restrictions. We do note that, whether or not the statutes cited by GSA are\napplicable in this context, leases undertaken by NEXCOM pursuant to a valid delegation from GSA would be\n\xe2\x80\x9c authorized by law\xe2\x80\x9d within the meaning of such statutes. See, e.g., 10 U.S.C. \xc2\xa7 2676(a) (1994).\n\n127\n\n\x0cO pinions o f the O ffic e o f Legal C ounsel m Volum e 21\n\n(such as hospitals and prisons), and space occupied by the Post Office Department.\nPresident Truman described Reorganization Plan No. 18 as follows:\nThe plan transfers to the Administrator of General Services the\nfunctions of the various Federal agencies with respect to leasing\nand assigning general-purpose space in buildings and the operation,\nmaintenance, and custody o f office buildings.\n\nThis plan concentrates in the General Service Administration the\nresponsibility for the leasing and assignment of what is termed gen\xc2\xad\neral purpose building space; that is, space which is suitable for the\nuses of a number of Federal agencies. It specifically excludes space\nin buildings at military posts, arsenals, navy yards, and similar\ndefense installations and space in hospitals, laboratories, factories,\nand other special purpose buildings.\nPub. Papers of Harry S. Truman 217\xe2\x80\x9418 (1950).\nIt is not disputed that DoD\xe2\x80\x99s leasing authority was transferred to GSA under\nthe Reorganization Plan. Moreover, DoD acknowledges that \xe2\x80\x9c the divestiture of\n[federal agency] leasing authority contained in Reorganization Plan No. 18 was\nof all functions, as opposed to just those functions being exercised on behalf of\nan agency,\xe2\x80\x9d DoD Memo at 7. Nonetheless, DoD argues that the leasing authority\nof the military exchanges was implicitly excluded from the Reorganization Plan\xe2\x80\x99s\nwholesale divestiture of DoD leasing authority.\nAs in its contentions concerning the Property Act (see Part II.C, infra), DoD\nprimarily argues that NAFIs fall outside the coverage of the Reorganization Plan\nbecause the Plan, and certain related official statements referring to it, used the\nterm \xe2\x80\x9c agencies\xe2\x80\x9d or \xe2\x80\x9c federal agencies\xe2\x80\x9d in referring to the entities affected by\nit. DOD Memo at 6-7. Because NAFIs are \xe2\x80\x9c instrumentalities\xe2\x80\x9d that are not \xe2\x80\x9c fed\xc2\xad\neral agencies,\xe2\x80\x9d the argument continues, authority over their leases was not trans\xc2\xad\nferred under the Reorganization Plan. Id. at 8.6\nWe do not find this line of argument persuasive. The Reorganization Plan con\xc2\xad\ntains no definition of \xe2\x80\x9c agency\xe2\x80\x9d or \xe2\x80\x9c federal agency,\xe2\x80\x9d and it does not incorporate\nthe definitions of the Property Act by reference or otherwise.7 There is no sugges\xc2\xad\n6 DoD supplem ents this argument with the related contention that \xe2\x80\x9c any intent to circumscribe the authority of\nthe NAFIs must be clearly evidenced \xe2\x80\x9d DoD Memo at 8 We address this contention in Part II D, infra.\n\xe2\x80\x99 Because the Reorganization Plan was enacted pursuant to the Reorganization Act of 1949, that act\xe2\x80\x99s definition\no f \xe2\x80\x9c agency\xe2\x80\x9d could be considered relevant to the scope of that term as used in the Reorganization Plan. That defmiuon\nprovides in relevant part.\nWhen used in this Act, the term \xe2\x80\x9c agency\xe2\x80\x9d m eans any executive department, commission, council, inde\xc2\xad\npendent establishment. G overnment corporation, board, bureau, division, service, office, officer authority,\nadministration, or other establishment, in the executive branch o f the G overnm ent. .\n\n128\n\n\x0cA uthority o f M ilitary E xchanges to Lease G eneral P urpose Office Space\n\ntion in the Reorganization Plan or related materials that its reference to \xe2\x80\x9c the\nrespective agencies,\xe2\x80\x9d Reorg. Plan \xc2\xa7 1, was intended to exclude from coverage\nthose components or sub-units of an agency that do not themselves satisfy some\nunspecified definition of the term \xe2\x80\x9c agency\xe2\x80\x9d or \xe2\x80\x9c federal agency.\xe2\x80\x9d On the con\xc2\xad\ntrary, the text of the Reorganization Plan and the accompanying Presidential state\xc2\xad\nment confirm that, apart from those discrete government programs and activities\nthat were specifically excepted, the Plan\xe2\x80\x99s transfer of leasing functions was\nintended to extend throughout the Federal Government.8\nWe believe that DoD\xe2\x80\x99s argument that the leasing authority of the military\nexchanges was implicitly excluded from the comprehensive sweep of Reorganiza\xc2\xad\ntion Plan No. 18 is incompatible with the exchanges\xe2\x80\x99 status as integral components\nof DoD. That status is well-established and long-recognized. In Standard Oil Co.\nv. Johnson, for example, the Supreme Court concluded that the military post\nexchanges \xe2\x80\x9c are arms of Government. . . essential for the performance of govern\xc2\xad\nmental functions\xe2\x80\x9d and constitute an \xe2\x80\x9c integral part[] of the War Department [now\nDoD] . . . and partake of whatever immunities it may have under the Constitution\nand federal statutes.\xe2\x80\x9d 316 U.S. at 485. Numerous other cases have similarly\nacknowledged the status of the military exchanges as integral components of DoD.\nSee, e.g., Honeycutt v. Long, 861 F.2d 1346, 1349 (5th Cir. 1988) (holding that\nthe Secretary of Defense or the Service Secretaries are proper named defendants\nin an employment discrimination suit brought by a NAFI employee, the court\nstated, \xe2\x80\x9c The AAFES is a part of the Department of Defense.\xe2\x80\x9d ); Ellsworth Bottling\nCo. v. United States, 408 F. Supp. 280, 284 (W.D. Okla. 1975) (statutory exclusion\nof DoD from procurement provisions of Property Act applies to AAFES as well\nbecause it \xe2\x80\x9c is an integral part of the Department of Defense\xe2\x80\x9d ). As observed by\nthe Seventh Circuit in Champaign-Urbana News Agency, Inc. v. J. L. Cummins\nNews Co., 632 F.2d 680 (7th Cir. 1980) (holding that NAFI post exchanges are\nentitled to governmental immunity under the Robinson-Patman Act), \xe2\x80\x9c [t]o try to\nseparate [a military exchange] from our military forces is to wholly ignore all\nits unique features distinguishing it from private enterprise and to ignore the long\nestablished views of both the Congress and the Executive Branch.\xe2\x80\x9d Id. at 692.9\nReorg Act \xc2\xa77, 63 Stat at 205 This definition is comprehensive and would appear to readily encompass military\nexchange organizations such as NEXCOM.\n8 W e note, for example, that section 3(b) o f the Reorganization Plan provides that the GSA Administrator may\nauthorize the head o f any executive branch agency to designate \xe2\x80\x9c organizational units\xe2\x80\x9d under the jurisdiction of\nsuch agency to perform the leasing and other functions covered by the Reorganization Plan. W e believe this provision\ndemonstrates that Reorganization Plan No. 18 applies not only to the \xe2\x80\x9c respective agencies\xe2\x80\x9d referred to therein but\nalso to the organizational units and components comprising such agencies. In this regard, DoD\xe2\x80\x99s ow n regulations\nrecognize that a military exchange NAFI is \xe2\x80\x9c la]n integral DoD organizational entity.\xe2\x80\x9d DoD Directive 1015 1, Enel\n2.\n\n9 A NAFI\xe2\x80\x99s status as an integral component o f its \xe2\x80\x9c host\xe2\x80\x9d department has also been recognized by Congress.\nAs stated in the House Report accompanying Pub. L No. 91-350, 84 Stat 449 (authorizing Tucker Act jurisdiction\nover claims against nonappropnated fund agencies), \xe2\x80\x9c la] nonappropnated fund instrumentality may not be sued\nbecause it has a privileged status as an integral part o f a department or agency o f the United States and is not\nsubject to suit unless consent thereto has been granted by Congress \xe2\x80\x9d Letter for Emanuel Cellar, Chairman, House\nContinued\n\n129\n\n\x0cO pinions o f the O ffice o f L egal C ounsel in Volume 21\n\nDoD itself acknowledges that \xe2\x80\x9c when we talk about the authority of the NAFIs\nwe are always talking about the authority of the [Service] Secretaries acting\nthrough the NAFIs.\xe2\x80\x9d DoD Memo at 8 n.6.\'\xc2\xb0 The NAFIs\xe2\x80\x99 status as subordinate\nDoD components extends to their leasing authority as well as to other functions.\nThus, their leases of non-DoD land or buildings are subject to \xe2\x80\x9c specific approval\nby the head of the DoD Component concerned.\xe2\x80\x9d DoD Directive 1015.6, quoted\nin DoD Memo at 1 n. 1.\nGiven these factors, we are not persuaded that leasing authority for DoD NAFIs\nis independent and apart from DoD\xe2\x80\x99s overall leasing authority. Accordingly, in\nthe absence of any provision or evidence to the contrary, the leasing authority\nof the military exchanges would have been transferred to GSA along with that\nof other DoD components under the terms of Reorganization Plan No. 18.\nWe find nothing in the text of the Reorganization Plan indicating that military\nexchange facilities were to be excluded from its provisions.11 Although the\nReorganization Plan explicitly enumerates those particular functions and facilities\nthat were to be exempted \xe2\x80\x94 including facilities located on military bases \xe2\x80\x94 the\nlist makes no reference to NAFIs or military exchanges.12 Under the interpretative\ncanon expressio unius est exclusio alterius, the NAFIs\xe2\x80\x99 absence from the Reorga\xc2\xad\nnization Plan\xe2\x80\x99s enumeration of excluded entities makes it difficult to conclude\nthat they were somehow implicitly excluded from its coverage. See TVA v. Hill,\n437 U. S. 153, 188 (1978) (expressio unius canon applied to support Court\xe2\x80\x99s\nconclusion that the similarly enumerated exceptions to the Endangered Species\nAct were exclusive).13\n\nJudiciary Committee, from Spencer J Schedler, Assistant Secretary o f Che Air Force (Sept 24, 1969), reprinted\nin H.R Rep No. 91-933, at 10 (1970), and in 1970 U.S C C-A N 3477, 3486 (emphasis added)\n10 The N A FIs\xe2\x80\x99 status as integral and subordinate components o f DoD is further confirmed and reinforced by the\nprovisions o f 10 U.S C \xc2\xa7 2783 (1994), enacted in 1992, which directs the Secretary of Defense to \xe2\x80\x9c prescribe regula\xc2\xad\ntions governing \xe2\x80\x94 (1) the purposes for which nonappropriated funds o f a nonappropnated fund instrumentality of\nthe U nited States within the Department of Defense may be expended; and (2) the financial management of such\nfunds to prevent waste, loss, or unauthorized use \xe2\x80\x99\xe2\x80\x99\n" T h e A cting Assistant Solicitor General provided an assessment o f Reorganization Plan No. 18 for the Attorney\nG eneral\xe2\x80\x99s consideration pn o r to its adoption Memorandum for the A ttorney General from Abraham J Harris, Acting\nAssistant Solicitor General, Re: Reorganization Plan No 18 o f 1950 and Message o f the President transmitting\nthe plan to the Congress (Mar 9, 1950) This memorandum noted the particular categories of property that were\nto be excluded from the Plan\xe2\x80\x99s coverage, but gave no indication that the leases or properties of NAFIs or military\nexchanges were to be excluded On the contrary, the memorandum described the Plan\xe2\x80\x99s coverage in comprehensive\nterms, noting that it gave GSA leasing authonty over \xe2\x80\x9c government-owned or government-leased general purpose\nbuildings \xe2\x80\x99 \xe2\x80\x99 Id. at 1\n12 M ilitary exchanges are excepted from the Reorganization Plan\xe2\x80\x99s provisions only insofar as they are located\nin foreign countries or on military bases, Reorg Plan \xc2\xa7 l(a)-(b), but the leasing authonty of such military exchanges\nis not in issue here.\n13 As one U.S. Court o f Appeals stated in considenng an antitrust suit against the Army and Air Force Exchange\nService ( \xe2\x80\x9c A A FES\xe2\x80\x9d ), \xe2\x80\x9c when the Congress desires to modify the usual rule or to make special provision applicable\nto AAFES operations it knows how to do it \xe2\x80\x9d Champaign-Urbana N ew s Agency, Inc v J L. Cummins News Co.,\n632 F 2d 680, 692 (7th C ir 1980). We believe this applies generally to military exchange NAFIs\n\n130\n\n\x0cA uthority o f M ilitary Exchanges to Lease G eneral P urpose Office Space\n\nc.\nDoD\xe2\x80\x99s argument initially focused on whether military exchange NAFIs\nindependently conform to the definition of a \xe2\x80\x9c federal agency\xe2\x80\x9d under the Property\nAct (DoD Memo at 1-4). The appropriate focus, however, is on the Reorganiza\xc2\xad\ntion Plan. Although the Property Act authorizes GSA to enter into lease agree\xc2\xad\nments \xe2\x80\x9c necessary for the accommodation of Federal agencies,\xe2\x80\x9d 40 U.S.C.\n\xc2\xa7 490(h)(1) (1994), that section did not give GSA exclusive federal government\nleasing authority or transfer previously existing agency leasing authority from the\nagencies to GSA. Rather, the wholesale transfer of federal government leasing\nauthority from the federal departments and agencies to GSA was accomplished\nby Reorganization Plan No. 18 in 1950, not by the Property Act in 1949. Had\nthe Property Act already transferred the departments\xe2\x80\x99 and agencies\xe2\x80\x99 leasing\nauthority to GSA when it was enacted in 1949, the Reorganization Plan\xe2\x80\x99s transfer\nof agency leasing functions in 1950 would have been redundant and unnecessary.\nIn this regard, it is significant to note that Reorganization Plan No. 18 was\npromulgated pursuant to the Reorganization Act of 1949, not the Property Act.\nMoreover, the particular GSA leasing provision contained in subsection 490(h)(1)\nand relied upon by DoD was not added to the Property Act until 1958 \xe2\x80\x94 eight\nyears after the general transfer of agency leasing authority to GSA under the\nReorganization Plan. See Pub. L. No. 85-493, 72 Stat. 294 (1958). Because\nReorganization Plan No. 18, not the Property Act, is the source of GSA\xe2\x80\x99s exclu\xc2\xad\nsive leasing authority over DoD and its components, NEXCOM\xe2\x80\x99s failure to con\xc2\xad\nform to the Property Act\xe2\x80\x99s definition of a \xe2\x80\x9c federal agency\xe2\x80\x9d in its own right (i.e.,\napart from DoD) does not remove it from the transfer of leasing authority effec\xc2\xad\ntuated by Reorganization Plan No. 18. An entity\xe2\x80\x99s status as a \xe2\x80\x9c federal agency\xe2\x80\x9d\nunder the Property Act was simply not a precondition to coverage under the\nReorganization Plan.14\nEven if the Property Act (as opposed to the Reorganization Plan) were the\nsource of GSA\xe2\x80\x99s exclusive government-wide leasing authority, DoD\xe2\x80\x99s argument\nthat satisfying the Act\xe2\x80\x99s definition of \xe2\x80\x9c federal agency\xe2\x80\x9d is critical to an organiza\xc2\xad\ntion\xe2\x80\x99s coverage under the Act proves too much. Insofar as relevant here, the Prop\xc2\xad\nerty Act defines \xe2\x80\x9c federal agency\xe2\x80\x9d as \xe2\x80\x9c any executive agency,\xe2\x80\x9d which includes\n14 For ihe same reasons, DoD\xe2\x80\x99s reliance on the Comptroller General\xe2\x80\x99s opinion in M atter o f LDDS Worldcom ,\nNo B-270109, 1996 WL 45162 (C.G Feb 6, 1996), is unavailing That opinion concluded that NEXCOM\xe2\x80\x99s contracts\nare not subject to the Comptroller General\xe2\x80\x99s bid protest jurisdiction under the Competition in Contracting Act\n( \xe2\x80\x9c CJCA\xe2\x80\x9d ) because NEXCOM did not independently meet C ICA \xe2\x80\x99s definition of \xe2\x80\x9c federal agency,\xe2\x80\x9d as adopted from\nthe Property Act\xe2\x80\x99s definition o f that same term Initially, we note that the Comptroller General\xe2\x80\x99s rulings are not\nbinding on this Office or the executive branch in general, although they are generally informative sources on matters\nwithin the Comptroller General\xe2\x80\x99s authonty See Bowsher v Synar, 478 U.S. 714, 728-32 (1986); Implementation\no f the Bid Protest Provisions o f the Competition in Contracting Act, 8 Op O.L.C. 236, 246 (1984). Although we\nhave serious questions regarding the reasoning o f the opinion in LDDS Worldcom \xe2\x80\x94 l e., its reliance on whether\nNAFIs independently meet the definition o f a \xe2\x80\x9c federal agency\xe2\x80\x9d rather than whether they constitute integral compo\xc2\xad\nnents of a federal agency for purposes o f coverage under the Property Act \xe2\x80\x94 the resolution of that issue is not\ncntical here in light o f our conclusion that NEXCOM\xe2\x80\x99s leasing authority was transferred to GSA pursuant to Reorga\xc2\xad\nnization Plan No. 18.\n\n131\n\n\x0cO pinions o f the O ffice o f L eg a l C ounsel m Volume 21\n\n\xe2\x80\x9c any executive department or independent establishment in the executive branch\nof the Government, including any wholly owned Government corporation.\xe2\x80\x9d 40\nU.S.C. \xc2\xa7 472(a), (b) (1994). We agree that NEXCOM does not independently sat\xc2\xad\nisfy that definition. Neither, however, do various other DoD components that are\nindisputably covered by the Property A ct15 and the Reorganization Plan. The\nDepartment of the Navy, for example, does not constitute an \xe2\x80\x9c executive depart\xc2\xad\nment\xe2\x80\x9d or an \xe2\x80\x9c independent establishment,\xe2\x80\x9d see 5 U.S.C. \xc2\xa7\xc2\xa7 101, 104 (1994), but,\nrather, constitutes a \xe2\x80\x9c military department,\xe2\x80\x9d id. \xc2\xa7 102. Yet it can hardly be main\xc2\xad\ntained that the Navy Department falls outside the coverage of the Property Act\nbecause it does not meet the Act\xe2\x80\x99s technical definition of \xe2\x80\x9c federal agency.\xe2\x80\x9d The\nNavy Department is covered under the Property Act not because it independently\nsatisfies the Act\xe2\x80\x99s definition of \xe2\x80\x9c federal agency,\xe2\x80\x9d but because it is an integral\ncomponent of a larger federal agency, i.e., DoD. Because the military exchanges\nare likewise integral components of DoD (discussed further, infra), see Standard\nOil Co. v. Johnson, 316 U.S. 481, 485 (1942), the same holds true for NEXCOM.\nWe recognize that in Ellsworth Bottling Co. v. United States, 408 F. Supp. at\n284, a U.S. District Court held that the Army and Air Force Exchange Service\n( \xe2\x80\x9c AAFES\xe2\x80\x9d ), a NAFI, was not subject to the requirements of the Property Act\ngoverning the procurement of goods and services, see 41 U.S.C. \xc2\xa7\xc2\xa7252, 253\n(1994).16 The court reached this conclusion in part because it determined that\nthe AAFES did not constitute an \xe2\x80\x9c executive agency\xe2\x80\x9d for purposes of 41 U.S.C.\n\xc2\xa7 252(a), as defined in 40 U.S.C. \xc2\xa7472 (1994). Id. at 283-84. Significantly, how\xc2\xad\never, that conclusion rested upon the court\xe2\x80\x99s determination that AAFES did not\nsatisfy the \xe2\x80\x9c independent establishment\xe2\x80\x9d prong of the \xe2\x80\x9c executive agency\xe2\x80\x9d defini\xc2\xad\ntion because it \xe2\x80\x9c is a part of the Department o f Defense\xe2\x80\x9d and therefore cannot\nbe an independent establishment. Id. at 284 (emphasis added). The court further\nconcluded that, because DoD was explicitly excluded from the procurement provi\xc2\xad\nsions of the Property Act in question under 41 U.S.C. \xc2\xa7 252(a)(1), AAFES was\nalso excluded as \xe2\x80\x9c an integral part of the Department of Defense.\xe2\x80\x9d 408 F. Supp.\nat 284\xe2\x80\x9485. Thus, Ellsworth Bottling is consistent with the view that a NAFI\xe2\x80\x99s\ncoverage under federal statutes like the Property Act is a function of its status\nas an integral part of DoD rather than its status as an independent entity.\n\nl5O ur discussion o f the Property A ct\xe2\x80\x99s coverage o f DoD and its components in this memorandum refers only\nto those portions o f the Property Act codified m C hapter 10 o f title 40, United States Code ( \xe2\x80\x9c Management and\nDisposal o f Government Property\xe2\x80\x99\xe2\x80\x99). W e recognize that DoD and its components are explicitly exempted from the\nseparate provisions o f the Property Act governing the procurement o f goods and services which are codified in\nSubchapter IV ( \xe2\x80\x9c Procurement Provisions\xe2\x80\x99\xe2\x80\x99), Chapter 4, of title 41, United Slates Code See 41 U S C \xc2\xa7252(a)(l)\n(1994)\ni6See also M C I Telecommunications Corp v A rm y and Air Force Exch Serv , No Civ.A 95-0607 RMU, 1995\nW L 317435, al *6 (D.D C May 9, 1995) (holding in accord with Ellsworth Bottling)\n\n132\n\n\x0cA uthority o f M ilitary E xchanges to Lease G eneral P urpose Office Space\n\nD.\nCiting a number of statutes where Congress has included specific provision for\nthe coverage of NAFIs, or expressly provided for distinct treatment of NAFIs,\nDoD makes the additional contention that \xe2\x80\x9c it is clear as a matter of statutory\ninterpretation that coverage of NAFIs is not to be inferred from language encom\xc2\xad\npassing Federal entities in general.\xe2\x80\x9d DoD Memo at 2-3. By this reasoning, statutes\ngenerally applicable to federal departments and agencies (like the Property Act\nand Reorganization Plan No. 18) would not apply to NAFIs unless they make\nexplicit provision for such application. We think this argument proves too much.\nAs noted above, Reorganization Plan No. 18 went to considerable lengths in\nenumerating the particular types of organizations and facilities whose leasing\nauthority was excluded from the Plan\xe2\x80\x99s otherwise comprehensive coverage. Reorg.\nPlan \xc2\xa7 l(a)-(d). Particularly detailed provision was made for exempting various\ncategories of military facilities and organizations from the transfer of leasing func\xc2\xad\ntions to GSA. Id. \xc2\xa7 1(b). It is therefore apparent that careful consideration was\ngiven to identifying those categories of government and military leasing activity\nthat were unsuitable for transfer to GSA, yet military exchanges were not listed\namong the exempted activities. Thus, although a specific provision for NAFIs\nmay arguably be required to support their coverage in some statutory contexts,\nthe carefully wrought provisions of Reorganization Plan No. 18 obviate the need\nfor following that approach here.\nWe recognize that special statutory provisions have sometimes been considered\nnecessary to support the Government\xe2\x80\x99s assumption of a NAFI\xe2\x80\x99s contractual liabil\xc2\xad\nities or financial obligations, such as the provision for the Tucker Act\xe2\x80\x99s application\nto military exchange contracts. See 28 U.S.C. \xc2\xa7 1491(a)(1) (1994). As the Supreme\nCourt stated in United States v. Hopkins, A ll U.S. 123, 127 (1976):\nThe nonappropriated-fund status of the exchanges places them in\na position whereby the Federal Government, absent special legisla\xc2\xad\ntion, does not assume the obligations of those exchanges in the\nmanner that contracts entered into by appropriated fund agencies\nare assumed.\nAlthough that observation explains why a specific amendment was considered nec\xc2\xad\nessary to extend the Government\xe2\x80\x99s liability for breach of contract under the Tucker\nAct to military exchange NAFIs, its reasoning does not extend to the leasing provi\xc2\xad\nsions of Reorganization Plan No. 18.\nUnder the Reorganization Plan and the Property Act, GSA assumes the NAFIs\xe2\x80\x99\nleasing functions, not its ultimate financial liabilities as a lessee. Reorg. Plan \xc2\xa7 1;\n40 U.S.C. \xc2\xa7 490(h)(1). NEXCOM is required to reimburse GSA for space leased\nby GSA and furnished to NEXCOM. 40 U.S.C. \xc2\xa7490(j) (1994) (GSA directed\nto charge those entities for whom it furnishes space at rates approximating\n133\n\n\x0cO pinions o f the O ffice o f Legal C ounsel in Volum e 21\n\ncommercial charges for comparable space); 41 C.F.R. \xc2\xa7 101-21.6 (1996) (pro\xc2\xad\nviding billing procedures for rent charges to agencies occupying space furnished\nunder the leasing responsibilities of GSA).17 Thus, GSA\xe2\x80\x99s assumption of\nNEXCOM\xe2\x80\x99s leasing functions would not require GSA to subsidize the leases of\nthe military exchanges with appropriated funds. Viewed from a functional stand\xc2\xad\npoint, GSA would be acting in the manner of a sub-lessor to NEXCOM \xe2\x80\x94 i.e.,\nentering into lease agreements for NEXCOM\xe2\x80\x99s \xe2\x80\x9c accommodation,\xe2\x80\x9d see 40 U.S.C.\n\xc2\xa7 490(h)(1) \xe2\x80\x94 rather than assuming lease liabilities undertaken by NEXCOM.\nAccordingly, the concerns regarding the Government\xe2\x80\x99s assumption of NAFI finan\xc2\xad\ncial obligations that may justify a requirement for specific provision to make a\nlaw applicable to NAFIs in other contexts are not applicable here.\nConclusion\nIn the absence of a delegation from GSA pursuant to section 3(b) of Reorganiza\xc2\xad\ntion Plan No. 18, we conclude that NEXCOM and other military exchange NAFIs\nlack independent authority to lease general purpose office space in urban centers.\nDAWN E. JOHNSEN\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n17 We recognize that GSA is authorized to exempt agencies from lease reimbursement requirements if it \xe2\x80\x9c deter\xc2\xad\nmines that such charges would be infeasible or impractical \xe2\x80\x9c 40 U S C \xc2\xa7490(j) However, we do not believe that\nthis limited, contingent provision authorizes the kind of liability assumption that might require Congress to make\nspecific provision in order tor it to apply to NAFIs\n\n134\n\n\x0c'


b"February 15, 1977\n\n77-7\n\nMEMORANDUM OPINION FOR THE\nCOUNSEL TO THE PRESIDENT\nPower of a State Legislature to Rescind its\nRatification of a Constitutional Amendment\n\nIn connection with the consideration by the States of the Equal\nRight's Amendment, the question arises whether a State has the power\nto rescind its prior ratification of a constitutional amendment. The same\nquestion was presented in 1868 in connection with the adoption of the\nFourteenth Amendment. Congress decided at that time that the States\nlacked that power. The historical development, however, was such that\nthe Amendment would have been adopted even without that legislative\ndecision.\nIn 1868, the year the Fourteenth Amendment was pending for ratifi\xc2\xad\ncation by the States, there were 37 States. Twenty-eight were required\nto constitute the majority of three-quarters required by Article V of the\nConstitution. By July 1868, 29 of the States had ratified the Amend\xc2\xad\nment. In two of them, however, Ohio and New Jersey, the legislatures\nhad passed resolutions withdrawing their consent to the Amendment.\nOn July 20, 1868, Secretary of State Seward issued a proclamation to\nthe effect that the Amendment had been ratified by the required\nnumber o f States, and had become valid as a part of the Constitution of\nthe United States on the condition that there be a determination that\n\xe2\x80\x9cthe resolutions of the legislatures of Ohio and New Jersey ratify\xc2\xad\ning the aforesaid amendment are to be deemed as remaining of full\nforce and effect, notwithstanding the subsequent resolutions of the\nlegislatures of those States, which purport to withdraw the consent\nof said States from such ratification.\xe2\x80\x9d 15 Stat. 706-707.\n\n13\n\n\x0cOn the following day, July 21, 1868, Congress adopted a concurrent\nresolution 1 to the effect that the Fourteenth Amendment had been\nadopted by the legislatures o f three-quarters of the States and that the\nAmendment was \xe2\x80\x9chereby declared to be a part o f the Constitution of\nthe United States.\xe2\x80\x9d Cong. Globe, 40th Cong., 2d Sess. 4266, 4295-4296\n(1868). The resolution enumerates 29 States, including New Jersey and\nOhio, as having ratified the Amendment.\nThe same day, Georgia ratified the Amendment. 15 Stat. 708. Unoffi\xc2\xad\ncial news of that action reached the House of Representatives during its\ndeliberations on the concurrent resolution. The House, however, did\nnot include Georgia among the ratifying States.\nOn July 28, 1868, Secretary Seward, in compliance with the concur\xc2\xad\nrent resolution, issued a proclamation declaring the Amendment to\nhave been adopted. He listed Georgia, New Jersey, and Ohio among\nthe 30 ratifying States. 15 Stat. 708-711.\nAs the result of the ratification of the Amendment by Georgia, it had\nbeen approved by 28, Le., the requisite number o f States, even if New\nJersey and Ohio were disregarded. To that extent the issue as to\nwhether a State may withdraw its ratification became moot. The ques\xc2\xad\ntion, however, was still alive when Congress made its determination.\nThere is substantial authority to the effect the power of Congress to\ncontrol the submission of constitutional amendments to the States and\nto determine whether they have been validly adopted is exclusive.\nColeman v. Miller, 307 U.S. 433, 449-450 (opinion of the Court), 457458 (concurring opinion) (1939), approved in, Baker v. Carr, 369 U.S.\n186, 214 (1962).\nIf the issue should arise in connection with the Equal Rights Amend\xc2\xad\nment, it seems virtually certain that the question will be put to Con\xc2\xad\ngress again. The functions o f the Secretary of State with respect to\nconstitutional amendments have been statutorily conferred on the A d\xc2\xad\nministrator of General Services. 1 U.S.C. \xc2\xa7\xc2\xa7 106b, 112. However, the\nvery fact that this function is vested in the GSA Administrator is\nindicative of its ministerial nature. The Constitution of the United\nStates, Analysis and Interpretation, S. Doc. No. 82, 92d Cong., 2d Sess.\n860 (1973), would either have to follow the precedent established by\nCongress in 1868, Le., that a State cannot withdraw its ratification, or\nsubmit the issue to Congress.\nVarious commentators have agreed with the 1868 congressional\nruling. Cooley, General Principles of Constitutional Law 257 (4th ed.)\nand Watson, The Constitution of the United States 1317-1318 (1st ed.\n1910), support the ruling on the basis o f precedents in the fields of\nmunicipal bond elections or votes on special assessments where it has\n1 T h e subm ission o f a constitutional am endm ent to the States need not be presented to\nthe President. See. Hollingsworth v. Virginia, 3 Dali. 378 (1798). It therefore w ould appear\nth a t a congressional determ ination as to w hether an am endm ent has been adopted by the\nrequisite num ber o f States can be passed as a con cu rren t resolution that is not presented\nto th e President.\n\n14\n\n\x0cbeen held that an affirmative vote is final and conclusive. Jameson, A\nTreatise on Constitutional Conventions 632 (4th ed. 1972), suggests an\nelement of promissory estoppal, namely, that when a State ratifies an\namendment, it induces like action by other States. It also suggests on\nthe basis of certain historical precedents that ratifications of a constitu\xc2\xad\ntional nature are absolute and unconditional. Jameson, at 629-630. See\nalso Watson, supra, at 1315-1317.\nWhile Cooley\xe2\x80\x99s General Principles of Constitutional Law, supra, sup\xc2\xad\nports the action taken by Congress, Judge Cooley\xe2\x80\x99s note on the F our\xc2\xad\nteenth Amendment in Story, II Commentaries on the Constitution of\nthe United States, 677, 680 n. 1 (5th ed. 1891), questions its correctness\nand doubts whether a State should be held to its affirmative vote on an\namendment to the Constitution if there should be total change of\ncircumstances long after that vote was taken. The answer to that\nargument seems to be that the Equal Rights Amendment must be\napproved within 7 years after its submission to the States. The commit\xc2\xad\nment of a State to its affirmative vote or an amendment during that\nperiod does not appear to involve any undue hardship.\nJohn M . H\n\narmon\n\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n15\n\n\x0c"


b'Secretary of Education Review of Administrative\nLaw Judge Decisions\nS ectio n 2 2 o f th e D rug-F ree Schools and C om m unities Act A m endm ents o f 1989 provides that a\nd ecisio n o f an adm inistrative law judge review ing the term ination o f federal assistance to\ned u catio n al in stitu tio n s or agencies \xe2\x80\x9cshall be considered to be a final agency action.\xe2\x80\x9d T his\np ro v isio n d o es n ot preclude the Secretary o f E ducation from review ing such adm inistrative\nlaw ju d g e d ecisions.\nB e cau se sectio n 22 m akes an adm inistrative law ju d g e decision a final agency action for pu r\xc2\xad\np o se s o f ju d icial review, it d ep riv es the S ecretary o f the pow er to require exhaustion o f\nsecre ta rial review procedures b e fo re an aggrieved party m ay seek ju d icial review.\n\nJanuary 31, 1991\nM e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l\nD e p a r t m e n t o f E d u c a t io n\n\nThis memorandum is in response to your request for our opinion whether\nsection 22 of the Drug-Free Schools and Communities Act Amendments of\n1989 precludes the Secretary of Education from reviewing decisions of ad\xc2\xad\nministrative law judges concerning the termination of federal assistance to\neducational institutions or agencies. You have also requested that, if section\n22 does not forbid such review, we further consider whether exhaustion of\nthe procedures for secretarial review may be made a prerequisite for seeking\njudicial review.\nWe conclude that the Drug-Free Schools and Communities Act Amend\xc2\xad\nments do not preclude the Secretary of Education from reviewing decisions\nof administrative law judges under section 22. Our conclusion is supported\nnot only by the text and structure of the Act, but also by familiar principles\no f administrative law. We further conclude that the Secretary may not re\xc2\xad\nquire litigants to exhaust the procedures for secretarial review before seeking\njudicial review.\n\nI.\nSection 22 of the Drug-Free Schools and Communities Act Amendments\no f 1989, Pub. L. No. 101-226, 103 Stat. 1928, 1938 (codified at 20 U.S.C.\n\n8\n\n\x0c\xc2\xa7\xc2\xa7 1145g, 3224a) (\xe2\x80\x9cthe Act\xe2\x80\x9d), permits institutions of higher education and\nlocal education agencies to appeal to an administrative law judge (\xe2\x80\x9cALJ\xe2\x80\x9d)\nwhen the Secretary of Education (\xe2\x80\x9cthe Secretary\xe2\x80\x9d) decides to terminate fi\xc2\xad\nnancial assistance because of a failure to comply with the Higher Education\nAct of 1965, 20 U.S.C. \xc2\xa7\xc2\xa7 1001-1146a, or the Drug-Free Schools and Com\xc2\xad\nmunities Act of 1986, 20 U.S.C. \xc2\xa7\xc2\xa7 3171-3227. Section 22 states that \xe2\x80\x9c[t]he\ndecision of the [administrative law] judge with respect to such termination\nshall be considered to be a final agency action.\xe2\x80\x9d\nOn April 24, 1990, the Secretary published proposed regulations under the\nAct. 55 Fed. Reg. 17,384. Under the proposed regulations, the decision\nof an ALJ in an appeal under section 22 would be \xe2\x80\x9cthe final decision of\nthe agency unless the Secretary on his or her own initiative or on request\nby either party reviews the decision.\xe2\x80\x9d 1 Id. at 17,393 (proposed 34 C.F.R.\n\xc2\xa7 86.410(b)(1)). The proposed regulations would further provide that the\nALJ\xe2\x80\x99s decision would not take effect until the Secretary completed any re\xc2\xad\nview. Id. (proposed 34 C.F.R. \xc2\xa7 86.410(d)).\nIn response to the notice of the proposed rulemaking, three Members of\nCongress submitted joint comments disputing the Secretary\xe2\x80\x99s authority to\nreview the decisions of ALJs under section 22. Letter from Congressmen\nAugustus F. Hawkins, William F. Goodling, and William D. Ford, to the\nOffice of the Secretary, U.S. Department of Education (June 8, 1990). Cit\xc2\xad\ning the section 22 directive that \xe2\x80\x9c[t]he decision of the judge with respect to\nsuch termination shall be considered to be a final agency action,\xe2\x80\x9d id. at 1,\nand an analysis by the Congressional Research Service, the Congressmen main\xc2\xad\ntained that the Act precluded the Secretary from reviewing ALJ decisions.\nOn August 16, 1990, the Secretary published the regulations in final form.\n55 Fed. Reg. 33,580. The Secretary rejected the contention that section 22\nprecluded secretarial review of ALJ decisions. Such a conclusion, he stated,\n\xe2\x80\x9cw ould produce a result that is not only unprecedented w ithin the\nDepartment\xe2\x80\x99s experience and inconsistent with the organic statutes that gov\xc2\xad\nern the operations of the Department, but would also be subject to serious\nconstitutional question under the Appointments Clause.\xe2\x80\x9d Id. at 33,600. The\nSecretary did, however, make one \xe2\x80\x9cclarifying change\xe2\x80\x9d to the regulations\nrelating to secretarial review so that they would \xe2\x80\x9cconform more closely to\nthe language of the statute.\xe2\x80\x9d Id. The final version of 34 C.F.R. \xc2\xa7 86.410(b)(1)\nthus provides:\nThe ALJ\xe2\x80\x99s decision is the final decision of the agency. How\xc2\xad\never, the Secretary reviews the decision on request of either party,\nand may review the decision on his or her own initiative.\n\n\' T h e p arties w o u ld be the local ed u catio n agency o r institution o f h ig her education and a \xe2\x80\x9cdesig n ated\nD epartm en t o fficial,\xe2\x80\x9d to w hom the S ecretary w ould delegate his authority to m ake the initial decisio n to\nterm inate assistan ce. 55 Fed Reg. at 17,392 (proposed 34 C.F.R . \xc2\xa7 86.402(a)).\n\n9\n\n\x0c55 Fed. Reg. at 33,586. The question presented here is whether this regula\xc2\xad\ntion is a lawful implementation of section 22.\n\nII.\nSection 22 provides that the ALJ\xe2\x80\x99s decision \xe2\x80\x9cshall be considered to be a\nfinal agency action.\xe2\x80\x9d 20 U.S.C. \xc2\xa7\xc2\xa7 1145g(d), 3224a(e) (emphasis added).\nThis phraseology on its face suggests that Congress intended the ALJ\xe2\x80\x99s deci\xc2\xad\nsion to be final agency action in some particularized sense, not that it be\nfinal in the general sense that no further review would be possible. Con\xc2\xad\ngress did not provide that the ALJ\xe2\x80\x99s decision \xe2\x80\x9cshall be\xe2\x80\x9d final agency action;\nit provided that it \xe2\x80\x9cshall be considered to be\xe2\x80\x9d final agency action.2 It did not\nprovide that the ALJ\xe2\x80\x99s decision shall be considered to be the final agency\naction; it provided merely that the ALJ\xe2\x80\x99s decision shall be considered to be a\nfinal agency action. Had Congress intended ALJ decisions to be final in the\nsense that no further agency review would be available, it would have at\nleast provided so expressly.3\nCongress\xe2\x80\x99 deliberate decision to have the ALJ\xe2\x80\x99s decision \xe2\x80\x9cconsidered to\nbe a final agency action\xe2\x80\x9d we believe represents a conscious effort to harmo\xc2\xad\nnize section 22 with the general body of administrative law authorities \xe2\x80\x94\nparticularly the judicial review procedures of the Administrative Procedure\nAct (\xe2\x80\x9cAPA\xe2\x80\x9d) \xe2\x80\x94 which refer to \xe2\x80\x9cfinal agency action\xe2\x80\x9d as that action after\nwhich judicial review is available. Thus, when Congress chose the some\xc2\xad\nwhat unusual language that it did, we believe it intended that the ALJ\xe2\x80\x99s\ndecisions be final only in the sense that judicial review would thereafter be\navailable.\nUnder the APA, \xe2\x80\x9cfinal agency action\xe2\x80\x9d is generally understood to mean\nthat action which is necessary and sufficient for judicial review. Title 5,\nsection 704, for example, provides that, \xe2\x80\x9cfinal agency action for which there\nis no other adequate remedy in a court [is] subject to judicial review.\xe2\x80\x9d (Em\xc2\xad\nphasis added.) There is an extensive body of precedent on the question\nwhether an agency action is final and, therefore, reviewable under the APA.\nSee, e.g., FTC v. Standard O il Co. o f California, 449 U.S. 232 (1980); C arter/\nM ondale Presidential Comm., Inc. v. FEC, 711 F.2d 279 (D.C. Cir. 1983).\nUnder these authorities, an agency\xe2\x80\x99s decision need not be its last word on a\nsubject to be considered \xe2\x80\x9cfinal agency action.\xe2\x80\x9d Indeed, the APA expressly\nprovides that an agency action can be \xe2\x80\x9cfinal\xe2\x80\x9d for purposes of the APA, and\n\n2 B ec a u se \xe2\x80\x9c final agency action\xe2\x80\x9d is a te rm o f art, th ere is, in fact, no substantive difference betw een these\ntw o lo c u tio n s T h e lo c u tio n chosen, how ever, p la in ly teleg raphs th a t the term \xe2\x80\x9cfinal agency action"\nw h ic h fo llo w s is to be understood to h a v e sp ecialized m eaning\n3 U n e q u iv o ca l lan g u ag e that the A L J \xe2\x80\x99s decision \xe2\x80\x9c shall be the final agency a ction\xe2\x80\x9d w ould, at a m ini\xc2\xad\nm u m , p re se n t a q u e stio n as to w h eth er C ongress in ten d ed for the A L J decision to be final in the sense\nth at n o fu rth e r a g en cy review is a v ailab le , alth o u g h it is unlikely that we w ould construe even this\nla n g u a g e to e x p re ss an in te n t to fo rec lo se secretarial review , absent affirm ative evidence that C ongress\nso in te n d e d . See d isc u ssio n infra.\n\n10\n\n\x0cthus for purposes of judicial review, even though it is subject to reconsidera\xc2\xad\ntion or appeal to a higher authority within the agency.4 \xe2\x80\x9cFinal agency action\xe2\x80\x9d\ntherefore is a familiar and well-developed term of administrative law refer\xc2\xad\nring to the action after which judicial review may be available.\nWhere Congress employs a term of art with a well-established meaning,\nit is generally presumed in the absence of evidence to the contrary to have\nintended that meaning to apply. See Moskal v. United States , 498 U.S. 103,\n114 (1990). See also id. at 121 (Scalia, J., dissenting) (\xe2\x80\x9cwhen a statute\nemploys a term with a specialized legal meaning relevant to the matter at\nhand, that meaning governs\xe2\x80\x9d) (citing M orissette v. United States, 342 U.S.\n246, 263 (1952)).3 Section 22 therefore is most naturally read as a signal to\nthe respective parties and a direction to the courts that an ALJ\xe2\x80\x99s decision\nshall be considered to be a final agency action for purposes of determining\nthe availability of judicial review under 5 U.S.C. \xc2\xa7 704. As under the APA,\nsection 22 should not be read to preclude further review of an A LJ\xe2\x80\x99s deci\xc2\xad\nsion within the agency, and particularly by the Secretary. Indeed, we are not\naware of any statute in which Congress, in an effort to foreclose further\nagency review, directed that an inferior employee\xe2\x80\x99s decision shall be final.\nNothing in the legislative history of this particular Act suggests an inten\xc2\xad\ntion on the part of Congress to depart from the accepted meaning of the\nterm \xe2\x80\x9cfinal agency action\xe2\x80\x9d as it is generally used in administrative law.\nThere is neither a House nor a Senate committee report on the Act. There is\nno comment upon the relevant portions of the Act in the Conference Report,\nH.R. Rep. No. 384, 101st Cong., 1st Sess. (1989), or in the floor debates.\nWe would be especially hesitant to infer from such silence a congressional\nintent to depart from the well-settled understanding of \xe2\x80\x9cfinal agency action.\xe2\x80\x9d\nSee M orissette , 342 U.S. at 263 (\xe2\x80\x9cIn such case, absence of contrary direction\n[by Congress] may be taken as satisfaction with widely accepted definitions,\nnot as a departure from them.\xe2\x80\x9d).\nThe conclusion that Congress did not intend section 22 to foreclose sec\xc2\xad\nretarial review is further supported by the structure of the Act. The Act\nexplicitly provides for an \xe2\x80\x9cappeal\xe2\x80\x9d of the Secretary\xe2\x80\x99s decision to an ALJ,\n\n4 The APA states that:\nE xcept as otherwise expressly required by statute, agency action otherwise final is final for\nthe purposes o f this section whether or not there has been presented or determined an applica\xc2\xad\ntion for a declaratory order, for any form of reconsideration, or, unless the agency otherwise\nrequires by rule and provides that the action meanwhile is inoperative, for an appeal to supe\xc2\xad\nrior agency authority.\n5 U.S.C. \xc2\xa7 704.\n5 In M orissette, Justice Jackson explained:\n[WJhere Congress borrows terms of art in which are accumulated the legal tradition and\nm eaning o f centuries of practice, it presumably knows and adopts the cluster o f ideas that\nwere attached to each borrowed word in the body of learning from which it was taken and the\nm eaning its use will convey to the judicial mind unless otherwise instructed. In such case,\nabsence of contrary direction may be taken as satisfaction with widely accepted definitions,\nnot as a departure from them.\n342 U.S. at 263.\n\n11\n\n\x0cwho is an employee, or subordinate officer, of the Department of Education.6\nSee 20 U.S.C. \xc2\xa7 1234(c) (\xe2\x80\x98T h e [administrative law] judges shall be officers\n\nor employees o f the Department.\xe2\x80\x9d). If an ALJ\xe2\x80\x99s decisions were \xe2\x80\x9cfinal\xe2\x80\x9d in the\nsense that they were not subject to review by the Secretary, a decision by the\nhead o f a department could be reversed by his subordinate.7 According\nfinality as a matter of law to a subordinate\xe2\x80\x99s decision would conflict with\nthe statutory commands that the \xe2\x80\x9cDepartment [of Education] shall be admin\xc2\xad\nistered . . . under the supervision and direction of a Secretary of Education,\xe2\x80\x9d\n20 U.S.C. \xc2\xa7 3411, and that \xe2\x80\x9c[t]he Secretary shall be responsible for the\nadministration o f the programs authorized\xe2\x80\x9d by the Act. Id. \xc2\xa7 3222(a).8 As\nthe preamble to the Secretary\xe2\x80\x99s proposed rule stated, insulation of ALJ deci\xc2\xad\nsions from secretarial review would mean that \xe2\x80\x9cthe Secretary could not ensure\nconsistent interpretation of the law, or even correct manifestly erroneous\ninterpretations.\xe2\x80\x9d 55 Fed. Reg. at 17,387. An intent to divest the Secretary of\nsuch authority seems especially improbable as to decisions with the clear\npotential to strain federal-state relations, such as those surrounding the ter\xc2\xad\nm ination o f federal funds for a local education agency.9\nInterpreting section 22 so as to permit secretarial review of ALJ decisions\nalso conforms proceedings under section 22 with the general administrative\nprocedures under the APA. Under that statute, an \xe2\x80\x9cagency\xe2\x80\x9d may itself pre\xc2\xad\nside over a trial-type hearing, or it may assign the case for a hearing before\na \xe2\x80\x9cpresiding employee[].\xe2\x80\x9d 5 U.S.C. \xc2\xa7 556(b). Unless otherwise provided by\nstatute, the \xe2\x80\x9cpresiding employee[s]\xe2\x80\x9d to which the APA refers are ALJs. 5\nU.S.C. \xc2\xa7\xc2\xa7 556(b)(3), 3105.\nUnder the APA, \xe2\x80\x9c [w]hen the presiding em\xc2\xad\nployee [at a trial-type hearing] makes an initial decision, that decision then\nbecomes the decision of the agency without further proceedings unless there\n\n6 A lthough the statute refers to an initial \xe2\x80\x9cdetermination by the Secretary,\xe2\x80\x9d 20 U.S.C. \xc2\xa7\xc2\xa7 1145g(d),\n3224a(e), the first determination to en d financial assistance would be made not by the Secretary but by\na \xe2\x80\x9cdesignated D epartm ent official\xe2\x80\x9d 55 Fed Reg. at 33,585 (to be codified at 34 C.F.R. \xc2\xa7\xc2\xa7 86.304(a),\n86.400(a)). The regulations set out \xe2\x80\x9cprocedures governing appeals o f decisions by [that] designated\nD epartm ent official." Id. \xc2\xa7 86.400(a).\n\xe2\x80\x99 We do not believe it is anomalous under our interpretation that the statute permits the Secretary to\nreview an appeal from a decision that in theory was itself an appeal from \xe2\x80\x9cthe Secretary\xe2\x80\x99s\xe2\x80\x9d decision.\nBecause the initial decision is made n ot by the Secretary, but rather by his designee, the Secretary will\nlikely be considering the matter for the first time in reviewing the A L J\xe2\x80\x99s decision. We would not think\nit odd even if the same individual w ere both to make the initial determination and review the ALJ\xe2\x80\x99s\ndecision. It would not be unreasonable to create a system under which an official is perm itted to\nreconsider his initial determination w ith the benefit o f a record generated during trial-type proceedings\nbefore an ALJ\n\xe2\x80\xa2 T he analysis appended to the final rule observes that such insulation would be \xe2\x80\x9cinconsistent with the\norganic statutes that govern the operations o f the Department.\xe2\x80\x9d 55 Fed. Reg. at 33,600.\n9 We find unpersuasive the assertion in the Congressional Research Service (\xe2\x80\x9cCRS\xe2\x80\x9d) analysis that the\nabsence of an explicit right in the Secretary to review an ALJ\xe2\x80\x99s decisions, see, e.g., 20 U.S.C. \xc2\xa7 1234a\n(explicitly providing for secretarial review of ALJ decisions), im plies an intent not to confer such au\xc2\xad\nthority here. M em orandum to House Com mittee on Education and Labor, from Kevin B. Greely, Con\xc2\xad\ngressional Research Service, at 5 (June 4, 1990). Both 20 U.S.C. \xc2\xa7 1234a and a sim ilar statute not cited\nby C R S, 20 U.S.C. \xc2\xa7 1234d, unlike section 22, appear in the context o f elaborate statutorily-mandated\nreview procedures where specification o f the Secretary\xe2\x80\x99s power o f review might be expected. Because\no f the vastly different context in which section 22 appears, any inference based upon the existence in 20\nU.S.C. \xc2\xa7 1234, but not in section 22, o f an explicit right o f secretarial review would be unwarranted.\n\n12\n\n\x0cis an appeal to, or review on motion of, the agency within time provided by\nrule.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 557(b). The APA further states that \xe2\x80\x9c[o]n appeal from or\nreview of the initial decision [of the presiding employee], the agency has all\nthe powers which it would have in making the initial decision except as it\nmay limit the issues on notice or by rule.\xe2\x80\x9d Id. The APA therefore contem\xc2\xad\nplates that decisions by ALJs will be reviewable in precisely the manner\nallowed by the Secretary\xe2\x80\x99s regulations here. Decisions will be final unless\nthe parties or the \xe2\x80\x9cagency\xe2\x80\x9d seeks review, but if there is further review the\nagency may exercise all of its powers as if the agency had itself presided\nover the hearing.10\nAccordingly, we conclude on the strength of the textual, structural and\nhistorical evidence that Congress, in mandating that ALJ decisions under\nsection 22 \xe2\x80\x9cshall be considered to be a final agency action,\xe2\x80\x9d did not intend\nto preclude further review of an ALJ\xe2\x80\x99s decision by the head of the agency in\nwhich the ALJ is employed, but rather intended only that the A LJ\xe2\x80\x99s decision\nbe considered a final agency action for purposes of judicial review.\n\nIII.\nThe conclusion that the Act does not preclude review by the Secretary is\nreinforced by the fact that the contrary conclusion would render the Act\nconstitutionally infirm. It is an elementary canon of construction that stat\xc2\xad\nutes should be interpreted to avoid constitutional difficulties, provided the\nadopted interpretation is reasonable. Gomez v. United States, 490 U.S. 858,\n864 (1989); Commodity Futures. Trading Comm\'n v. Schor, 478 U.S. 833,\n841 (1986). If the Act were construed to forbid the Secretary\xe2\x80\x99s review of an\nALJ decision, there would be presented serious constitutional questions re\xc2\xad\nlating to the ALJ\xe2\x80\x99s appointments and the lack of presidential control over\ntheir activities.\nUnder the Appointments Clause, the President\nshall nominate, and by and with the Advice and Consent of\nthe Senate, shall appoint . . . Officers of the United States . . .\n10 For purposes of this opinion, we view 5 U.S.C. \xc2\xa7 557(b) as providing a model for adm inistrative\nadjudication; however, we do not address whether that section actually governs hearings under the Act.\nWe need not reach that question, given our conclusion that decisions o f ALJs under section 22 are\nreviewable whether or not 5 U.S.C. \xc2\xa7 557(b) applies to hearings under the Act.\nIt is reasonable to look for guidance to sections 556 and 557 of the APA, even though m ost trial-type\nhearings are not conducted pursuant to those provisions because the governing statutes under which\nagencies make their determinations do not require that decisions be made \xe2\x80\x9con the record after opportu\xc2\xad\nnity for an agency hearing." See, e.g.. United Slates v. Florida East Coast Ry. Co., 410 U.S. 224, 23438 (1973). Where a trial-type hearing before an A U is available under regulations rather than under\nthe command o f the APA, agencies typically provide for review by higher authority. See, e.g., 18 C.F.R.\n\xc2\xa7 385.711 (Federal Energy Regulatory Commission); 47 C.F.R. \xc2\xa7 1.276 (Federal Communications C om \xc2\xad\nmission); 49 C.F.R. \xc2\xa7 1115.2 (Interstate Commerce Commission); 40 C.F.R. \xc2\xa7 124.91 (certain proceed\xc2\xad\nings of the Environmental Protection Agency).\n\n13\n\n\x0cbut the Congress may by Law vest the Appointment of such\ninferior Officers, as they think proper, in the President alone,\nin the Courts of Law, or in the Heads of Departments.\nU.S. Const, art. II, \xc2\xa7 2, cl. 2. Because the Secretary, who is the head of the,\nDepartment, appoints the Department\xe2\x80\x99s ALJs, 5 U.S.C. \xc2\xa7 3105; 20 U.S.C. \xc2\xa7\n1234(b), (who are not confirmed by the Senate), they are properly appointed\nonly if they serve as \xe2\x80\x9cinferior officers.\xe2\x80\x9d\nAn ALJ whose decision could not be reviewed by the Secretary, however,\nwould appear to be acting as a principal officer o f the United States. He\nwould be an \xe2\x80\x9cOfficer of the United States\xe2\x80\x9d because he would be exercising\n\xe2\x80\x9csignificant authority pursuant to the laws of the United States,\xe2\x80\x9d including\n\xe2\x80\x9cdeterminations of eligibility for funds.\xe2\x80\x9d Buckley v. Valeo, 424 U.S. 1, 126,\n141 (1976). And applying the criteria enumerated in Morrison v. Olson, 487\nU.S. 654 (1988), he most likely would be a principal, not an \xe2\x80\x9cinferior,\xe2\x80\x9d\nofficer. Unlike the independent counsel at issue in Morrison, whose juris\xc2\xad\ndiction was limited to a single case, an ALJ has jurisdiction under the Act\nover various proceedings in a whole category of cases relating to the termi\xc2\xad\nnation of funds. Id. at 672. An ALJ\xe2\x80\x99s tenure, unlike that of the independent\ncounsel, is not limited in duration. Id." And although both an ALJ and an\nindependent counsel are bound to follow agency regulations, id., the ALJ\nwould have a much greater opportunity than the independent counsel to\neffectively \xe2\x80\x9cformulate\xe2\x80\x9d policy. By deciding a series of cases, the ALJ pre\xc2\xad\nsumably would develop interpretations of the statute and regulations and fill\nstatutory and regulatory interstices comprehensively with his own policy\njudgm ents. Given these characteristics of the office, and that the ALJs are\nappointed not by the President but by the department head, interpretation of\nsection 22 to insulate ALJ decisions from review by the Secretary would\nraise serious questions under the Appointments Clause.\nThe foreclosure of secretarial review would also be constitutionally sus\xc2\xad\npect under Article II because all executive power (other than purely ministerial\nauthority)12 must ultimately be subject to Presidential control. Article II\nprovides that the executive power \xe2\x80\x9cshall be vested in a President of the\nUnited States of America,\xe2\x80\x9d U.S. Const, art. II, \xc2\xa7 1, cl. 1, who alone is\nresponsible to \xe2\x80\x9ctake Care that the Laws be faithfully executed.\xe2\x80\x9d U.S. Const,\nart. II, \xc2\xa7 3, cl. 4 .13 These constitutional provisions generally require that the\n" Like the independent counsel, an A LJ is removable by another official in the executive branch, 487\nU.S. at 671, but, unlike the independent counsel, an ALJ has the additional tenure protection of a pre\xc2\xad\nrem oval hearing. 5 U.S.C. \xc2\xa7 7521.\n12 See, e.g., K endall v. United States ex rel. Stokes. 37 U.S. (12 Pet.) 524, 610-11 (1838); M arbury v.\nM adison, 5 U.S. (1 Cranch) 137 (1803).\n13 A unitary executive branch was the considered and deliberate choice of the Framers of the Constitu\xc2\xad\ntion. T his is evident in contemporaneous exposition of the Constitution during the ratification period,\ne.g.. T he Federalist No. 70, at 354-61 (A. Hamilton) (G. W ills ed. 1982); 2 Elliot\xe2\x80\x99s Debates 480 (2d ed.\n1836) (statem ent o f Jam es Wilson at P ennsylvania ratifying convention), in the contrast between Article\nII and A rticle III, in which the judicial power is vested \xe2\x80\x9c in one Suprem e Court, and in such inferior\nCourts a s the Congress may from time to time ordain and establish,\xe2\x80\x9d U.S. Const, art. Ill, \xc2\xa7 1 (emphasis\nadded), and in the contrast between A rticle II and the A rticle I legislative bicameralism.\n\n14\n\n\x0cPresident, either personally or indirectly through other executive officers, be\nable to direct and countermand actions of subordinate executive officials\nthat entail the exercise of significant executive power. M yers v. United\nStates, 272 U.S. 52, 163-64 (1926); cf. Bowsher v. Synar, 478 U.S. 714, 72134 (1986); see generally Morrison v. Olson, 487 U.S. 654, 691-93 (1988).\nThe duties of ALJs under section 22 are generally executive in nature,\nbecause the ALJs determine, on a case-by-case basis, the policy of an execu\xc2\xad\ntive branch agency for the administration of a federal program. See Bowsher\nv. Synar, 478 U.S. 714, 732-33 (1986); Buckley v. Valeo, 424 U.S. 1, 138\n(1976); M urray\xe2\x80\x99s Lessee v. Hoboken Land and Improvement Co., 59 U.S. (18\nHow.) 272, 279, 284-85 (1855); cf. Heckler v. Chaney, 470 U.S. 821 (1985).14\nIf section 22 were construed so that these decisions were the conclusive\ndeterminations of an executive branch department, serious constitutional ques\xc2\xad\ntions would be presented, given the restrictions on ALJ removal. ALJs can\nbe removed by their agencies only after the Merit Systems Protection Board\nholds a hearing and finds cause for removal. 5 U.S.C. \xc2\xa7 7521. See gener\xc2\xad\nally 5 C.F.R. \xc2\xa7\xc2\xa7 930.201-930.216. The members of the Merit Systems\nProtection Board are in turn protected by removal restrictions during their\nseven-year terms. 5 U.S.C. \xc2\xa7 1202(a), (d). ALJs are thus doubly insulated\nfrom meaningful executive control. C f Bowsher, 478 U.S. at 726. A con\xc2\xad\nclusion that their exercise of executive power is not subject to review by any\nother executive branch official would therefore clearly be problematic under\nArticle II.15\nAlthough the Supreme Court upheld the statute at issue in M orrison v.\nOlson, which granted significant executive authority to an executive branch\nofficial protected by a \xe2\x80\x9cfor cause\xe2\x80\x9d removal restriction, we do not believe that\nthe existence of \xe2\x80\x9cfor cause\xe2\x80\x9d removal authority over ALJs granted unreviewable discretion would be sufficient to save the statute from constitutional\ninfirmity. In Morrison, the Court embraced the principle that the President\xe2\x80\x99s\nconstitutional duty to take care that the laws be faithfully executed requires\nsome power to control or supervise subordinates, generally including the\npower to remove them from their posts. 487 U.S. at 689-93, 696. The Court\nsimply reasoned that this general principle was not violated by a \xe2\x80\x9cfor cause\xe2\x80\x9d\n\n14 T he fu n ctio n s o f A L Js under section 22 can also be un d ersto o d as \xe2\x80\x9c q u asi-ju d icial\xe2\x80\x9d in n ature. Cf.\nWiener v. United States, 357 U .S. 349 (1958); Humphrey\'s Executor v. United States, 295 U .S. 602\n(1935). B ut as Morrison m akes clear, the m ere ch aracterizatio n o f a pow er e xercised by ex ecu tiv e\nbran ch o fficials as \xe2\x80\x9cq u asi-ju d icial\xe2\x80\x9d does not affect the prim ary issue o f w hether rem oval restrictio n s\nin terfere w ith the P resid en t\xe2\x80\x99s discharge o f his c o n stitu tio n al duly to take care that the law s be faith fu lly\nex ec u te d 487 U S at 689-90.\n15 Butterworth v. United States ex rel. Hoe, 112 U .S 50 (1884), is not to the contrary. In Butterworth,\ncerta in decisio n s o f the C o m m issio n er o f Patents w ere held not to be review able by the S e c re ta ry o f the\nInterior. H ow ever, the C o m m issio n er o f Patents w as, as a p ractical m atter, the head o f a sep a ra te\ne x ecu tiv e d ep artm en t, w ith the Secretary o f In terio r m erely p erform ing a "m in iste ria l\xe2\x80\x9d act in sig n in g\np a tent reg istratio n s. T hus, Butterworth does not address squarely the question o f the P re s id e n t\xe2\x80\x99s c o n sti\xc2\xad\ntutio n al po w ers o v er su b o rd in ate ex ecu tiv e officers. T h ere is, m oreover, no suggestion in Butterworth\nth a t the C o m m issio n er o f Patents w as not subject to p resid en tial control through rem oval.\n\n15\n\n\x0cremoval restriction in the highly unusual circumstances of the \xe2\x80\x9cindependent\ncounsel,\xe2\x80\x9d where Congress perceived an inherent conflict between an unlim\xc2\xad\nited power of removal and the independence necessary for the counsel to\ninvestigate and prosecute high executive branch officials.\nId. at 692-93.\nThere simply is no similar conflict between an ALJ\xe2\x80\x99s discharge of his par\xc2\xad\nticular responsibilities and the existence of an \xe2\x80\x9cat will\xe2\x80\x9d removal authority.\nTwo factors relied on by the Court in M orrison to sustain the \xe2\x80\x9cindepen\xc2\xad\ndent counsel\xe2\x80\x9d statute suggest that section 22, if interpreted to prevent review\nof ALJ determinations by higher executive officers, might well unconstitu\xc2\xad\ntionally intrude upon executive power. First, the Court in Morrison emphasized\nthat the Attorney General\xe2\x80\x99s initial decision whether to apply for the appoint\xc2\xad\nment of an independent counsel was committed to his unreviewable discretion,\nthus \xe2\x80\x9cgiv[ing] the Executive a degree of control over the power to initiate an\ninvestigation by the independent counsel.\xe2\x80\x9d Id. at 696. Here, by contrast,\nALJs are assigned to section 22 cases by operation of statute, at the behest of\nlocal education agencies or institutions of higher education aggrieved by the\nSecretary\xe2\x80\x99s decision, and not by the Secretary.16\nSecond, the Court in Morrison emphasized both the limited tenure of an\nindependent counsel, whose appointment ends with the completion of the\nparticular investigation for which he is appointed, and the statutory require\xc2\xad\nm ent that an independent counsel generally follow policy guidelines\nestablished by the Department of Justice. 487 U.S. at 671-72. In contrast to\nan independent counsel, ALJs are civil service employees who may continue\nin their posts indefinitely, unless removed for cause. Furthermore, if ALJ\ndecisions with respect to section 22 claims are unreviewable, the aggregate\no f those decisions over time effectively will establish the policy of the De\xc2\xad\npartment. The combined effect of tenure protection and the unreviewability\no f decisions substantially deprives the President of control over a particular\nset o f policy decisions made by an executive branch Department, and thereby\nimpairs his ability to perform his constitutional duty to take care that the laws\nbe faithfully executed. Cf. Morrison, 487 U.S. at 691 (noting that independent\ncounsel \xe2\x80\x9clack[s] policymaking or significant administrative authority\xe2\x80\x9d).\nIn sum, even if Congress\xe2\x80\x99 intent were less clear than it is from the statu\xc2\xad\ntory text, we would likely still adopt the interpretation of section 22 that we\ndo because of the two quite serious constitutional questions that would at\xc2\xad\ntend the contrary interpretation of the section.\n\n16 O fficers o f \xe2\x80\x9cindependent agencies\xe2\x80\x9d m ay also be distinguished from ALJs empowered to make unre\xc2\xad\nview able decisions, on the basis of the degree of control possessed by the President at the appointment\nstage. A ction by an independent agency official may be reviewed by the head o f the agency or by\ncom m issioners acting collectively as the head of the agency, who, although they may possess tenure\nprotections, are appointed by the President with the advice and consent of the Senate. The appointment\npow er thus gives the President a measure o f control over the actions o f independent agencies.\n\n16\n\n\x0cIV.\nIt follows from the conclusion that ALJ decisions are final under section\n22 only for purposes of judicial review that an aggrieved party can seek\njudicial review upon receipt of the ALJ\xe2\x80\x99s decision, whether or not there are\nfurther proceedings before the Secretary. Indeed, the fairest inference to be\ndrawn given the well-understood practice under the APA \xe2\x80\x94 where the exist\xc2\xad\nence of \xe2\x80\x9cfinal agency action\xe2\x80\x9d permits immediate judicial review \xe2\x80\x94 is that\nCongress intended precisely this result when it mandated that decisions of\nthe ALJs \xe2\x80\x9cshall be considered to be a final agency action.\xe2\x80\x9d Thus, section 22\nconstitutes the express exception contemplated in 5 U.S.C. \xc2\xa7 704 to the\ngeneral permissibility of a requirement of exhaustion of administrative rem\xc2\xad\nedies. See supra note 4.\nThis reading gives meaning to the relevant language of section 22. It also\nfurthers an apparent purpose of the Act to assure speedy resolutions by the\nagency, a purpose reflected, for example, in the requirement that a hearing\nbe held within 45 days of the filing of the appeal, unless the ALJ extends the\ntime on motion of the local education agency or institution of higher educa\xc2\xad\ntion. 20 U.S.C. \xc2\xa7\xc2\xa7 1145g(d), 3224a(e). The aggrieved party may proceed\nimmediately into court upon issuance of the ALJ\xe2\x80\x99s decision even if the Sec\xc2\xad\nretary intends to review the ALJ\xe2\x80\x99s decision.\n\nCONCLUSION\nWe conclude for the reasons stated that section 22 does not preclude the\nSecretary from reviewing decisions by ALJs. The clear import of the lan\xc2\xad\nguage in section 22 that an ALJ\xe2\x80\x99s decision \xe2\x80\x9cshall be considered to be a final\nagency action,\xe2\x80\x9d given the consistent practice under the APA, is that the ALJ\xe2\x80\x99s\ndecision is final for the purposes of permitting judicial review. We further\nconclude that section 22 deprives the Secretary of power to require exhaus\xc2\xad\ntion of the secretarial review procedures before an aggrieved party may seek\njudicial review.\nJ. MICHAEL LUTTIG\nAssistant Attorney General\nOffice o f Legal Counsel\n\n17\n\n\x0c'


b"Application of Establishment Clause\nto School \xe2\x80\x9cVoucher\xe2\x80\x9d Program\nA draft bill proposing issuance o f compensatory education certificates to parents of eligible\nschool children would not on its face violate the Establishm ent Clause even if the certificates\nw ould be redeem able at religious private schools.\n\nFebruary 2, 1987\nM\n\nem orandum\n\nO p in io n\n\nfor\n\nO f f ic e\n\nof\n\nA s s is t a n t A t t o r n e y G e n e r a l ,\nL e g a l P o l ic y\n\nThis memorandum records our comments on the draft Education Consolida\xc2\xad\ntion and Improvement Act o f 1987. We focus on the Establishment Clause\nconcerns raised by the \xe2\x80\x9ccompensatory education certificates\xe2\x80\x9d program which\nwould be created under \xc2\xa7 106 of the bill. For the reasons set forth below, we\nbelieve that the program is facially constitutional. We caution, however, that\nthe bill, as drafted, may be vulnerable to \xe2\x80\x9cas-applied\xe2\x80\x9d challenges under certain\ncircumstances.\nI\n\nSection 106 of the bill would amend Chapter 1 of the Education Consolida\xc2\xad\ntion and Improvement Act o f 1981 (the Act) by adding a new \xc2\xa7 560. That\nsection would authorize a local educational agency (\xe2\x80\x9cLEA\xe2\x80\x9d) receiving Chapter\n1 assistance to provide \xe2\x80\x9ccompensatory education certificates\xe2\x80\x9d directly to the\nparents of eligible children,1 in either of two circumstances. First, the LEA\ncould provide such certificates if it determined that to do so \xe2\x80\x9cwould be more\neffective . . . than direct service provided by the agency in meeting the needs of\n[eligible] children.\xe2\x80\x9d Section 560(a)(1) (emphasis added). Second, the LEA\ncould issue such certificates if it determined that they were \xe2\x80\x9cneeded to provide\nequitable services to either public or private school children.\xe2\x80\x9d Section 560(a)(2).2\nSection 560(b) provides that an LEA shall make such determinations about the\nneed for certificates \xe2\x80\x9cwith respect to individual children, grades, schools,\n1 Section 560(h) defines \xe2\x80\x9celigible c h ild \xe2\x80\x9d as \xe2\x80\x9can educationally deprived child selected to participate in a\nlocal educational agency\xe2\x80\x99s Chapter 1 p ro g ram \xe2\x80\x9d in accordance with \xc2\xa7\xc2\xa7 556(b)(1),(2) and 557 o f the Act\n(cod ified at 20 U .S.C . \xc2\xa7\xc2\xa7 3805(b)(1), (2 ), 3806).\n2 T hese tw o criteria, e ffective and equitable adm inistration, are already required o f C hapter 1 programs. See\n2 0 U .S.C . \xc2\xa7\xc2\xa7 3805(b)(4), (5), 3806\n\n14\n\n\x0cattendance areas, or any combination thereof, or may make such certificates\navailable on a district-wide basis.\xe2\x80\x9d Section 560(b) further requires an LEA to\n\xe2\x80\x9capply the same criteria to public and private school children in determining\nthe extent to which it .will provide . .. certificates.\xe2\x80\x9d\nSection 560(d)(1) states that certificates may be redeemed by parents only\nfor \xe2\x80\x9cpurchase [of] compensatory education services that meet the identified\neducational needs of [an] eligible child.\xe2\x80\x9d3 Subsection (d)(2) provides that these\nservices may be purchased \xe2\x80\x9cfrom any public or private school, wherever\nlocated, that the local education agency determines is able to provide appropri\xc2\xad\nate and effective compensatory educational services to the child.\xe2\x80\x9d4\nIn sum, when an LEA, applying established and neutral criteria, determines\nthat its Chapter 1 program is functioning ineffectively and/or inequitably with\nrespect to any individual child or any group of eligible children, the LEA may\nprovide compensatory education certificates directly to the parents of such\nchildren. The parents may then redeem the certificates for compensatory ser\xc2\xad\nvices at the public or private school of their choice.\nII\nThe term \xe2\x80\x9cprivate school,\xe2\x80\x9d as used in the draft bill, clearly encompasses both\nreligious and non-religious private schools. Thus, it must be measured against\nthe Supreme Court\xe2\x80\x99s Establishment Clause precedents dealing with aid to\nreligious schools. This is an extraordinarily tangled area of the law, and many\nof the Court\xe2\x80\x99s decisions, when read together, are all but unintelligible. Never\xc2\xad\ntheless, the draft bill is sufficiently close to the programs upheld in Witters v.\nWashington Department o f Services fo r the Blind, 474 U.S. 481 (1986), and\nMueller v. Allen, 463 U.S. 388 (1983), that we believe that it survives facial\nconstitutional scrutiny.\nIn Witters, the Court held that the Establishment Clause did not require a\nstate to deny vocational assistance to a blind student merely because the\nstudent chose to apply the aid to religious training at a Bible college. Justice\nMarshall, writing for the Court, found that \xe2\x80\x9cany aid .. . that ultimately flows to\nreligious institutions does so only as a result of the genuinely independent and\nprivate choices of aid recipients.\xe2\x80\x9d 474 U.S. at 488 (footnote omitted). Conse\xc2\xad\nquently, the Court found that the aid program did not have the primary effect of\nadvancing or inhibiting religion, and thus passed the second prong of the threepart test announced in Lemon v. Kurtzman, 403 U.S. 602, 612-613 (1971). The\n3 The draft bill w ould establish some safeguards on the redem ption o f the certificates. Section 560(c)(1)\nw ould require that the amount for which such certificates may be redeem ed m ust be one \xe2\x80\x9cthat is equitable to\nall children selected to participate\xe2\x80\x9d in the LE A \xe2\x80\x99s overall C hapter 1 program. Subsection (c)(2) would further\nprovide that the am ount that an individual parent may receive by redeem ing his or her certificate \xe2\x80\x9cshall not\nexceed the cost o f com pensatory services incurred by the parent.\xe2\x80\x9d Section 560(g)(3) w ould require LEAs\napplying for C hapter 1 funds to provide assurances that it w ill exercise due diligence to ensure that paym ents\nmade to parents are used only for authorized purposes, and to recover any m isused funds.\n4 Under \xc2\xa7 560(e), an LEA w ould be perm itted to use C hapter 1 funds to provide transportation to children\nw hose parents choose to purchase com pensatory services from schools outside the children\xe2\x80\x99s attendance area.\nThat section w ould define such transportation expense to be \xe2\x80\x9can adm inistrative cost.\xe2\x80\x9d\n\n15\n\n\x0cCourt noted that the parties had conceded the first prong of the test, a secular\npurpose. 474 U.S. at 485-86. It declined to apply the entanglement prong until\nafter the lower court had an opportunity to do so itself on remand. Id. at 753 n.5.5\nIn Mueller, the Court voted 5-4 to uphold a state tax deduction for educa\xc2\xad\ntional expenses, despite the fact that over 90 percent of the tax benefits under\nthe statute flowed to religious school students. The Court readily found that the\nstatute had a secular purpose: \xe2\x80\x9ca State\xe2\x80\x99s decision to defray the cost of educa\xc2\xad\ntional expenses incurred by parents \xe2\x80\x94 regardless of the type of schools their\nchildren attend \xe2\x80\x94 evidences a purpose that is both secular and understand\xc2\xad\nable.\xe2\x80\x9d 463 U.S. at 395. Turning to the effects prong of the test, the Court again\nemphasized the facial neutrality of the statute, together with the fact that\n\xe2\x80\x9cpublic funds become available [to religious schools] only as a result of\nnumerous private choices of individual parents of school-age children.\xe2\x80\x9d 463\nU.S. at 399.6 The Court found no excessive entanglement, despite the fact that\nstate officials were charged with disallowing deductions for materials used in\nteaching religion. The Court stated simply that that type of decision did not\ndiffer substantially from other types of decisions previously upheld, such as\nthose involved in textbook loan programs. 463 U.S. at 403.\nLike the programs upheld in Witters and Mueller, the draft bill has a clear\nsecular purpose. Moreover, it would dispense aid directly to parents pursuant to\na facially-neutral standard. As a consequence, whatever aid might flow to\nreligious schools (and, as a practical matter, it may resemble the proportions\npresent in M ueller) would do so only as a result of the individual choices of\nparents. Thus, under Witters and Mueller, it would not have the impermissible\n\xe2\x80\x9cprimary effect\xe2\x80\x9d of advancing religion. Finally, whatever \xe2\x80\x9centanglement\xe2\x80\x9d might\nresult from an LEA\xe2\x80\x99s duty to approve programs and monitor funds would\napproximate that sanctioned in Mueller. In sum, we think that the program\nproposed in the draft bill would fit within the holdings of Witters and Mueller,\nand hence be facially constitutional.\nHowever, neither Witters nor Mueller involved a state officer in the determi\xc2\xad\nnation of eligibility. Therefore, we wish to caution that if an LEA distributes\ncertificates predominantly to religious school students \xe2\x80\x94 and especially if it\n5 Ju stice M arsh a ll's opinion also referred to the fact that only a small portion o f the state aid would in fact\nend up in the hands o f religious schools. See 474 U.S. a t 488. However, this portion o f his analysis was\neffectiv ely disavow ed by five Justices w ritin g separately. Justice Powell, join ed by C h ief Justice B urger and\nJustice R ehnquist, stated that \xe2\x80\x9c state program s that are w holly neutral in offering educational assistance to a\nclass defined w ithout reference to religion d o not violate the second part o f the Lemon . . . test, because any\naid to relig io n results from the private c h o ices o f individual beneficiaries.** Id. at 491 (Powe)l, J., concurring)\n(footnote om itted). T his w as true, he said, regardless o f the percentage o f \xe2\x80\x9cprivate choices\xe2\x80\x9d which ultim ately\nbenefited religious institutions. See id. at 491 n.3. Justice O 'C o n n o r also d id not join the relevant portion of\nJustice M arsh a ll's opinion. See id. at 493 (O \xe2\x80\x99Connor, J., concurring in the judgm ent and concurring in part).\nFinally, Ju stice W hite reiterated his long-standing view that the \xe2\x80\x9cthe C ourt\xe2\x80\x99s decisions finding constitutional\nviolatio n s w here a state provides aid to private schools o r their students m isconstrue the Establishm ent\nC lause and d isserv e the public interest.\xe2\x80\x9d Id. a t 490 (W hite, J., concurring). See also Mueller v. Allen, 463 U.S.\n3 8 8 ,4 0 1 (1983) (\xe2\x80\x9c W e w ould be loath to a d o p t a rule grounding the constitutionality o f a facially neutral law\non annual reports reciting the extent to which various classes o f private citizens claimed benefits under the law.\xe2\x80\x9d).\n6 T he C ourt also cited several \xe2\x80\x9ccharacteristics\xe2\x80\x9d o f the program , most notably the fact that the benefit was\navailable fo r all parents. See 463 U.S. at 3 9 6 -3 9 9 .\n\n16\n\n\x0cdoes so on a school-wide basis, then it risks an as-applied challenge. Justice\nPowell\xe2\x80\x99s opinion in Witters emphasized that, in his view, a program must be\n\xe2\x80\x9cwholly neutral.\xe2\x80\x9d 474 U.S. at 490-91 (Powell, J., concurring) (emphasis added).\nLikewise, in her separate opinion, Justice O\xe2\x80\x99Connor stressed her own \xe2\x80\x9creason\xc2\xad\nable person\xe2\x80\x9d version of the Lemon test: \xe2\x80\x9cno reasonable observer is likely to\ndraw from the facts before us an inference that the state itself is endorsing a\nreligious practice or belief.\xe2\x80\x9d Id. at 493 (O\xe2\x80\x99Connor, J., concurring in the judg\xc2\xad\nment and concurring in part); cf. Lynch v. Donnelly , 465 U.S. 668, 690 (1984)\n(O\xe2\x80\x99Connor, J., concurring). As a practical matter, a facially neutral program\nlike this one that nevertheless accords substantial discretion to state officials to\ndetermine the availability of certificates (and which may then result in certifi\xc2\xad\ncates being issued predominantly to religious school students by virtue of such\nstate rather than private decisions) might be insufficiently neutral in applica\xc2\xad\ntion and run afoul of the considerations outlined by Justices Powell or O\xe2\x80\x99Connor,\nor both.\nThe chances of an as-applied challenge would diminish considerably, in our\njudgment, if the discretion of the LEA was more limited, thereby lessening the\ninvolvement of the state in the determination of the availability of certificates.\nIn this regard, \xc2\xa7 560 could provide that once the LEA determined that when a\ngiven percentage of eligible students were not being effectively or equitably\nserved, certificates would be available on an area-wide or district-wide bases.\nThis change would preclude any argument that an LEA administrator had\nfavored religious schools by a determination under the effectiveness and\nequitability standards that predominantly resulted in the parents of children\nenrolled in religious schools being eligible for certificates.\nD o u g l a s W . K m ie c\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n17\n\n\x0c"