b'Statute of Limitations and Settlement of Equal Credit\nOpportunity Act Discrimination Claims Against the\nDepartment of Agriculture\nT he A ttorney G eneral may not w aive the statute o f lim itations in the litigation or com prom ise of\npending claim s against the U nited States.\nA bsent a specific provision to the contrary, a statute o f lim itations on civil actions also should apply\nto adm inistrative settlem ents o f claim s arising under that statute pursuant to 31 U.S.C. \xc2\xa73702.\n31 U S.C. \xc2\xa7 3 7 0 2 does not authorize the D epartm ent o f A griculture to pay com pensatory dam ages\nin an adm inistrative settlem ent o f an ECO A claim if E C O A \xe2\x80\x99s two year statute o f lim itations has\nrun.\nFiling an adm inistrative claim with USDA does not toll E C O A \xe2\x80\x99s statute o f lim itations.\nA lthough E C O A \xe2\x80\x99s statute o f lim itations is, in appropriate circum stances, subject to the doctrines of\nequitable tolling and equitable estoppel, courts have rarely applied either doctrine against the United\nStates.\n\nJanuary 29, 1998\nM e m o r a n d u m O p in io n f o r t h e A s s o c ia t e A t t o r n e y G e n e r a l\n\nThis memorandum responds to your request for advice on whether the statute\nof limitations in the Equal Credit Opportunity Act, 15 U.S.C. \xc2\xa7\xc2\xa7 1691\xe2\x80\x94I691f (1994\n& Supp. I 1995) (\xe2\x80\x9c ECOA\xe2\x80\x9d ), applies to administrative settlements of ECOA\nclaims. You also have asked us whether the government may waive the statute\nof limitations, and under what circumstances the statute of limitations might be\ntolled.\nWe have concluded that ECOA\xe2\x80\x99s statute of limitations does apply to administra\xc2\xad\ntive settlements of ECOA claims and that the statute of limitations cannot be\nwaived by the United States, either in litigation or in the administrative process.\nAs for tolling of the statute of limitations, we have concluded that filing an\nadministrative complaint does not toll the limitations period for a civil action.\nWhile ECOA is, in relevant circumstances, subject to the doctrines of equitable\ntolling and equitable estoppel, courts infrequently apply these doctrines against\nthe United States.\n\nI. Background\nIn relevant part, ECOA prohibits any creditor from discriminating against any\napplicant, with respect to any aspect of a credit transaction, on the basis of race,\ncolor, religion, national origin, sex or marital status. 15 U.S.C. \xc2\xa7 1691(a). A \xe2\x80\x9c cred\xc2\xad\nitor\xe2\x80\x9d under the act includes any person who regularly extends, renews, or con\xc2\xad\ntinues credit. Id. \xc2\xa7 1691a(e). A \xe2\x80\x9c person\xe2\x80\x9d is \xe2\x80\x9c a natural person, a corporation,\n11\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 22\n\ngovernment or governmental subdivision or agency, trust, estate, partnership,\ncooperative, or association.\xe2\x80\x9d Id. \xc2\xa7 1691a(f).\nAdministrative enforcement of ECOA is divided among several federal agen\xc2\xad\ncies, each o f which has authority over certain categories of creditors. Id.\n\xc2\xa7 1691c(a). Enforcement responsibility not specifically committed to another fed\xc2\xad\neral agency is vested in the Federal Trade Commission (\xe2\x80\x9c FTC\xe2\x80\x9d ), which is to\nuse its powers under the Federal Trade Commission Act, 15 U.S.C.A. \xc2\xa7\xc2\xa741-58\n(West 1997), to enforce ECOA\xe2\x80\x99s requirements. 15 U.S.C. \xc2\xa7 1691c(c). The Depart\xc2\xad\nment of Agriculture\xe2\x80\x99s ( \xe2\x80\x9c USDA\xe2\x80\x99s\xe2\x80\x9d ) farm credit programs fall under the authority\nof the FTC. The FTC has authorized USDA to process ECOA claims arising from\nUSDA program s.1\nSection 1691e o f ECOA also provides for a private right of action against credi\xc2\xad\ntors who violate the discrimination prohibitions of the act. Under subsection (a),\nall creditors are liable for compensatory damages: \xe2\x80\x9c [a]ny creditor who fails to\ncomply with any requirement imposed under this subchapter shall be liable to\nthe aggrieved applicant for any actual damages sustained by such applicant acting\neither in an individual capacity or as a member of a class.\xe2\x80\x9d Id. \xc2\xa7 1691e(a). Sub\xc2\xad\nsection (d) authorizes the imposition of attorney\xe2\x80\x99s fees and costs in a successful\naction. Id. \xc2\xa7 1691e(d). No private action may be brought later than two years after\nthe occurrence of the violation, unless the Attorney General or the agency with\nadministrative enforcement responsibility commences an enforcement proceeding\nwithin two years. In that case, an applicant may bring a civil action within one\nyear of the commencement of the enforcement proceeding. Id. \xc2\xa7 1691e(f).\nIn a 1994 opinion, this Office opined that ECOA applies to federal agencies\nand that it waives the sovereign immunity of the United States for monetary relief.\nAccordingly, we advised USDA that the Secretary could provide monetary relief,\nattorney\xe2\x80\x99s fees, and costs in administrative settlements of ECOA discrimination\nclaims if a court could award such relief in an action by an aggrieved person.\nAuthority o f USDA to A w ard Monetary R elief fo r Discrimination, 18 Op. O.L.C.\n52 (1994) ( \xe2\x80\x9c USDA Opinion\xe2\x80\x9d ). USDA accepts and processes ECOA complaints\npursuant to its process for investigating any discrimination complaint in its pro\xc2\xad\ngrams, which is set forth at 7 C.F.R. \xc2\xa7 15.52 (1997). Those regulations permit\nany person to file a written complaint regarding discrimination in any program\nor facility directly administered by USDA. Id.\nIn October o f 1998, fourteen plaintiffs filed a class action suit against USDA\nalleging that USDA had discriminated against them, and other similarly situated\nindividuals, on the basis of their race in the administration of farm loans and\ncredit programs during the period o f January 1983 to January 1997. Pigford v.\nGlickman, 182 F.R.D. 341 (D.D.C. 1998). The court granted a stay of that action\nto allow the plaintiffs and the United States to explore options for settling the\n1 Letter for Robert Franco, Associate Director, O ffice of Advocacy and Enterprise, U.S. Department of Agriculture,\nfrom David M edine, Associate Director for Credit Practices, Federal Trade Commission (Nov. 3, 1992) ( \xe2\x80\x9c FTC\nLetter\xe2\x80\x9d )\n\n12\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nclaims of the named plaintiffs and the putative class members. As part of the\nDepartment\xe2\x80\x99s consideration of settlement options, the Office of the Associate\nAttorney General asked this Office for oral advice on the application of ECOA\xe2\x80\x99s\nstatute of limitations to claims in litigation and to claims in USDA\xe2\x80\x99s administrative\nsettlement process. Subsequently, you asked for a formal opinion on the following\nquestions: 1) can the United States waive the statute of limitations in an ECOA\ncivil action; 2) does ECOA\xe2\x80\x99s statute of limitations apply to the administrative\nsettlement of ECOA claims by USDA; 3) does the filing of an administrative\ncomplaint with USDA toll the statute of limitations; and 4) would the doctrines\nof equitable tolling or equitable estoppel apply to these cases?\nOur analysis proceeds as follows. In Part II, we conclude that the Attorney\nGeneral may not waive the statute of limitations in the litigation or compromise\nof these claims. In Part III, we conclude that because USDA may make adminis\xc2\xad\ntrative settlements of ECOA claims that include compensatory damages only\nwhere a court could award such relief, USDA may not waive the statute of limita\xc2\xad\ntions in administrative settlements. Part III also concludes that section 3702 of\ntitle 31 does not provide an independent basis of authority for the payment of\nadministrative claims filed after expiration of the ECOA statute of limitations.\nMoreover, even where an administrative claim is filed within the ECOA statute\nof limitations, USDA may not make payment on the claim without relevant appro\xc2\xad\npriations authority. We understand that USDA\xe2\x80\x99s appropriation authority, however,\nwould provide no basis for paying compensatory damages under ECOA where\nthe statute of limitations has expired and no timely claim was asserted in court.\nPart IV examines the circumstances in which ECOA\xe2\x80\x99s statute of limitations might\nbe tolled. That part concludes that filing an administrative claim does not toll\nthe statute of limitations on a civil action. It then concludes that although the\ndoctrines of equitable tolling and equitable estoppel would apply to ECOA in\nappropriate circumstances, courts infrequently apply these doctrines against the\nUnited States.\n\nII. Waiver in Litigation\nOrdinarily, a civil action for compensatory damages under ECOA must be filed\nno later than two years from the date of occurrence of the violation. 15 U.S.C.\n\xc2\xa7 1691e(f). However, when any agency responsible for administrative enforcement\nunder \xc2\xa7 1691c of ECOA commences an enforcement proceeding within two years\nfrom the date of the occurrence of the violation, or when the Attorney General\ncommences a civil action under this section within two years from the date of\nthe occurrence of the violation, \xe2\x80\x9c any applicant who has been a victim o f the\ndiscrimination which is the subject of such proceeding or civil action may bring\n13\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 22\n\nan action under this section not later than one year after the commencement of\nthat proceeding or action.\xe2\x80\x9d 15 U.S.C. \xc2\xa7 1691e(f).2\nThe federal courts and this Office have observed that the statute of limitations\nfor a cause of action against the United States constitutes a term of consent to\nthe waiver o f sovereign immunity. See Memorandum for James W. Moorman,\nAssistant Attorney General, Land & Natural Resources Division, from John M.\nHarmon, Assistant Attorney General, Office o f Legal Counsel, Re: Pueblo o f Taos\nv. Andrus at 2 n.l (Mar. 30, 1979) (citing cases). The doctrine of sovereign immu\xc2\xad\nnity precludes suit against the United States without the consent of Congress, and\nthe terms of its consent define the extent of a court\xe2\x80\x99s jurisdiction. See United\nStates v. M ottaz, 476 U.S. 834, 841 (1986). In particular, \xe2\x80\x9c \xe2\x80\x98[w]hen waiver legisla\xc2\xad\ntion contains a statute of limitations, the limitations provision constitutes a condi\xc2\xad\ntion on the waiver o f sovereign immunity.\xe2\x80\x99 \xe2\x80\x9d Id. (quoting Block v. North Dakota,\n461 U.S. 273, 287 (1983)). Because the terms of consent are established by Con\xc2\xad\ngress, see id., modifying the terms of consent requires legislative action. See, e.g.,\nUnited S tates v. G arbutt Oil Co., 302 U.S. 528, 534-35 (1938) (discussing Tucker\nv. Alexander, 275 U.S. 228 (1927) (\xe2\x80\x9c no officer of the government has power\nto waive the statute o f limitations\xe2\x80\x9d )); Overhauser v. United States, 45 F.3d 1085,\n1088 (7th Cir. 1995) (government officers have no general power to waive statutes\nof limitations in tax cases and are limited to specific statutory authorizations for\nsuch waivers). Thus the Attorney General cannot waive the statute of limitations\nin the litigation or in the compromise of these pending claims.3\n2 For simplicity, this opinion will refer to EC O A \xe2\x80\x99s limitation penod as a two-year restriction\n3 In Irwin v. D epartment o f Veterans Affairs, 4 9 8 U.S. 89 (1990), the Supreme Court ruled that a statute o f limita\xc2\xad\ntions in suits against the federal government is presumptively subject to equitable tolling Some have suggested\nthat the C ourt\xe2\x80\x99s decision to allow equitable tolling implies that it is now possible for the government itself to waive\na legislatively imposed statute o f limitations. T here may be cases where, m the context of a specific statutory scheme,\nthe courts would have the authority to hold that the government had waived the applicable statute of limitations,\nsuch as by failing to assert the defense in a responsive pleading. See Johnson v. Sullivan, 922 F.2d 346 (7th Cir.\n1990) (en banc) (statutory requirement that plaintiff seek judicial review o f denial of benefits within 60 days of\nreceiving a final agency determination, or within such further tim e as the Secretary may allow, waived if not raised\nin a responsive pleading as an affirmative defense). The general rule, however, still remains that the limitations\nperiod is a condition o f the w aiver o f sovereign immunity. See Irwin, 498 U.S. at 94; Henderson v United States,\n517 U.S. 654, 678 n.3 (1996) (Thomas, J., dissenting) ("Irw in did mark a departure from our earlier, and stricter,\ntreatment o f statutes o f limitations in the sovereign immunity context, but our decision in United States v. Williams,\n514 U.S. 527 (1995), makes clear that statutes o f limitations in suits brought against the United States are no less\njurisdictional prerequisites than they were before Irw in.") (citations omitted); see also Lawyers Title Ins. Co v\nD earborn Title Corp., 118 F.3d 1157, 1166 (7th Cir. 1997) (unlike statutes o f limitations in actions between private\nparties, lim itations in suits against the United States are jurisdictional and not subject to waiver).\nAs a general matter, it seems clear that Irwin held that the doctrine of equitable tolling was implicitly included\nwithin the w aiver o f sovereign immunity granted by Congress as part of the statute. Irwin, 498 U.S. at 95-96\nIrwin did not alteT the well-established precedent that statutes o f limitations reflect a condition on Congress\xe2\x80\x99s waiver\no f sovereign immunity. See id. at 94. The C ourt has repeatedly affirmed that principle. See, e g .. United States\nv. Williams, 514 U.S. 527, 534 (1995); see also Richmond. Fredericksburg <\xc2\xa3 Potomac R.R. Co. v. United States,\n945 F.2d 765, 769 (4th Cir. 1991), cert, denied, 503 U.S. 984 (1992); Dillard v. Runyon, 928 F. Supp. 1316, 1324\n(S.D.N.Y. 1996), a ff\'d , 108 F 3 d 1369 (2d Cir. 1997); cf. Calhoun County v. United States, 132 F.3d 1100 (5th\nCir. 1998) (Irwin reinterpreted the intent behind congressional waivers o f sovereign immunity, but did not necessarily\nalter the nature o f the conditions on that waiver). Indeed, the Court reaffirmed this principle just months before\nissuing its decision in Irwin, see United Suites v. Dalm, 494 U.S. 596, 608 (1990), and Irwin nowhere rejects Dalm\nor the cases cited therein. W e therefore do not read Irwin to imply that the statute of limitations in a suit against\nthe U nited States is w aivable, either as an affirmative defense or at the discretion of an executive officer. See Bath\n\n14\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nIII. Administrative Settlements\nA. Authority fo r Administrative Settlements\nECOA does not expressly address the administrative settlement o f ECOA claims\nagainst federal agency creditors. This Office has previously opined that the Sec\xc2\xad\nretary of Agriculture may award monetary relief, attorney\xe2\x80\x99s fees, and costs in\nadministrative settlements of ECOA discrimination claims if a court could award\nsuch relief in an action by an aggrieved person. USDA Opinion at 2. That opinion\nconsidered the applicability of 31 U.S.C. \xc2\xa7 1301(a) (1994), which states that fed\xc2\xad\neral agencies may spend funds only on the objects for which they were appro\xc2\xad\npriated. USDA Opinion at 2. \xe2\x80\x9c Consistent with this requirement, appropriations\nlaw provides that agencies have authority to provide for monetary relief in a vol\xc2\xad\nuntary settlement of a discrimination claim only if the agency would be subject\nto such relief in a court action regarding such discrimination brought by the\naggrieved person.\xe2\x80\x9d Id. (footnote omitted). The Comptroller General has applied\nthe same principle in evaluating agency authority to settle claims under Title VII\nof the Civil Rights Act of 1964, 42 U.S.C. \xc2\xa7\xc2\xa72000e to 2000e-17 (1994 & Supp.\nI 1995), and the Age Discrimination in Employment Act of 1967, 29 U.S.C.A.\n\xc2\xa7\xc2\xa7621-634 (West 1985 & Supp. Ill 1997). The Comptroller General ruled that\nan agency may provide back pay or attorney\xe2\x80\x99s fees only where such monetary\nrelief would be available in a court proceeding on the claim. See USDA Opinion\nat 2 (discussing 62 Comp. Gen. 239 (1983); 64 Comp. Gen. 349 (1985)). Because\nECOA waives sovereign immunity with respect to compensatory damages, id. at\n17-19, agencies may provide compensatory damages in their voluntary settlement\nof discrimination claims if the conduct complained of violates ECOA. See id.\nat 20.\nThe Credit Practices Bureau of the FTC also has advised USDA that it may\ninvestigate and provide appropriate remedies for ECOA claims filed against\nUSDA. The FTC authorized USDA to investigate ECOA complaints regarding\nUSDA lending programs in a letter of understanding, see FTC Letter, and told\nus that it orally advised USDA that USDA may provide appropriate remedies\nfor valid claims prior to litigation.\nB. Waiver o f Statute o f Limitations\nThe same prohibition that applies to waiving the statute of limitations in litiga\xc2\xad\ntion would apply to waiving the statute in any pre-litigation, administrative settle\xc2\xad\nment o f an ECOA claim at USDA. As our 1994 opinion explained, USDA\xe2\x80\x99s\nauthority to use existing appropriations to pay administrative ECOA claims\nIron Works Corp v United Stales, 20 F 3d 1567, 1572 n 2 (Fed C ir 1994) ( \xe2\x80\x9c Tolling is not the same as waiving\nPresumably, therefore, Irwin merely holds that those time limits, while jurisdictional, can be equitably tolled in\ncertain circumstances \xe2\x80\x9d )\n\n15\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume\n\n22\n\ndepends upon the existence of a viable civil action that could be brought by the\naggrieved claimant. See USDA Opinion at 1-2. A court can award damages\nagainst the United States only where there has been a waiver of sovereign immu\xc2\xad\nnity. ECOA\xe2\x80\x99s waiver of sovereign immunity is valid only where a claim is filed\nbefore the expiration o f the limitations period. Thus, if the statute of limitations\nhas expired, a court cannot award damages on that claim, and the agency cannot\nrely on the existence of a viable ECOA claim as a basis for expending appro\xc2\xad\npriated funds to pay compensatory damages as part of an administrative settlement.\nC. A pplicability o f 31 U.S.C. \xc2\xa7 3 7 0 2\nYou have asked us to consider how the provisions of 31 U.S.C. \xc2\xa73702, which\ngoverns the settlement of claims against the United States, apply to the settlement\nof ECOA claims. Prior to 1996, \xc2\xa7 3702 authorized the General Accounting Office\n(\xe2\x80\x9c GA O \xe2\x80\x9d ) to settle all claims against the United States \xe2\x80\x9c except as provided in\n. . . another law.\xe2\x80\x9d 31 U.S.C. \xc2\xa73702 (1994 & Supp. Ill 1997).4 A 1996 amend\xc2\xad\nment to \xc2\xa7 3702 transferred the settlement authority to various executive agencies,\nincluding the Office of Personnel Management, the Secretary of Defense, and the\nOffice of Management and Budget. See 31 U.S.C.A. \xc2\xa7 3702(a) (West 1983 &\nSupp. Ill 1997).\nThe term \xe2\x80\x9c settle\xe2\x80\x9d in \xc2\xa73702 does not mean \xe2\x80\x9c compromise,\xe2\x80\x9d but rather refers\nto an administrative determination o f the amount of money (if any) due a claimant.\nSee 3 Principles of Federal Appropriations Law 12-9 (2d ed. 1992) (citing Illinois\nSurety Co. v. U nited States ex rel. Peeler , 240 U.S. 214, 219-21 (1916)); State\nv. Bowsher, 734 F. Supp. 525, 530 n.4 (D.D.C. 1990). Claims presented for settle\xc2\xad\nment under \xc2\xa7 3702 must be received within six years from the date on which\nthe claim arose, \xe2\x80\x9c except as provided in this chapter or another law.\xe2\x80\x9d 31 U.S.C.\n\xc2\xa7 3702(b)(1)(A).\nYou have asked us to consider in particular whether \xc2\xa7 3702(b) would allow\nUSDA to include compensatory damages in settlements of ECOA claims filed\nwithin six years of the accrual of the claim, even if ECOA\xe2\x80\x99s statute of limitations\nhad run and a court could no longer award such damages. We have concluded,\nfirst, that \xc2\xa7 3702 would apply only to those ECOA claims filed with USDA within\nthe two-year statute o f limitations in ECOA. Second, we have concluded that\n\xc2\xa73702 provides no authority to pay a claim if funds have not otherwise been\nappropriated. USDA has informed us that it does not have appropriations authority\nto pay compensatory damages other than the authority that exists when a court\ncould award such damages in a civil action. Thus, even if the appropriate statute\n4 As previously noted, ECOA vests the FTC w ith administrative enforcement responsibility not specifically com\xc2\xad\nmitted to another federal agency, see 15 U.SC \xc2\xa7 1691c(c), but does not expressly address the administrative settle\xc2\xad\nment o f ECOA claims against federal agency creditors. For the purposes of this opinion, we assume without deciding\nthat neither ECOA nor the Federal Trade Commission Act provides for the settlement of claims against federal\nagency creditors within the meaning o f \xc2\xa7 3702(a), and that the provisions of \xc2\xa73702 would apply to administrative\nsettlements o f these claims.\n\n16\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nof limitations for an administrative claim under \xc2\xa7 3702 were six years instead of\ntwo years, USDA could not pay compensatory damages as part of an administra\xc2\xad\ntive settlement if the two-year statute of limitations had run.\n1. Length o f Limitations Period\nWe start with the determination of the appropriate time limitation for ECOA\nclaims. While the GAO has not issued any opinions regarding the settlement of\nECOA claims, it has considered the interaction of \xc2\xa7 3702(b) and other limitations\nperiods on civil causes of action.5 For many years, GAO\xe2\x80\x99s position was that stat\xc2\xad\nutes setting limitations on \xe2\x80\x9c causes of action\xe2\x80\x9d or \xe2\x80\x9c civil actions\xe2\x80\x9d applied only\nto judicial proceedings, and therefore claims filed with an agency rather than a\ncourt were subject to the six-year limitation of \xc2\xa7 3702(b). See, e.g., 51 Comp.\nGen. 20, 22 (1971) (GAO will settle claims for communications services filed\nwithin six years notwithstanding shorter limitation on \xe2\x80\x9c actions at law\xe2\x80\x9d in the\nInterstate Commerce Act and the Communications Act); 57 Comp. Gen. 441, 443\n(1978) (claims for overtime compensation may be filed up to six years after the\nclaim first accrued notwithstanding the two or three-year limitation period in the\nFair Labor Standards Act).\nIn a 1994 decision, GAO reconsidered and reversed this position. 73 Comp.\nGen. 157 (1994). The relevant decision arose under the Fair Labor Standards Act,\n29 U.S.C. \xc2\xa7\xc2\xa7201-219 (1994) (\xe2\x80\x9c FLSA\xe2\x80\x9d ). A claim for unpaid minimum wages,\nunpaid overtime compensation and liquidated damages under FLSA must be filed\nwithin two years of the time it first accrues, or three years if it arises out of\na willful violation. 29 U.S.C. \xc2\xa7255 (1994). The claimant sought overtime com\xc2\xad\npensation for the six-year period that preceded his claim. The Air Force, the claim\xc2\xad\nant\xe2\x80\x99s employer, and the Office of Personnel Management ( \xe2\x80\x9c OPM\xe2\x80\x9d ) argued that\nFLSA\xe2\x80\x99s two or three-year limitations period, rather than the six-year period in\n\xc2\xa7 3702(b), should govern the claim. 73 Comp. Gen. at 160. In ruling against the\nclaimant, GAO cited cases holding that when a statute creates a right that did\nnot exist at common law and limits the time to enforce it, the lapse of time not\nonly bars the remedy but extinguishes the underlying rights and liabilities of the\nparties. See William Danzer Co. v. G ulf R.R., 268 U.S. 633, 635-36 (1925);\nKalmich v. Bruno, 553 F.2d 549, 553 (7th Cir.), cert, denied, 434 U.S. 940 (1977)\n(cited in 73 Comp. Gen. at 161).6 \xe2\x80\x9c Accordingly, a time limitation imposed on\na statutorily created judicial cause of action will apply to administrative pro\xc2\xad\nceedings to adjudicate the same claims absent a specific provision to the con\xc2\xad\n5 Although the opinions and legal interpretation of the GAO and the Comptroller General often provide helpful\nguidance on appropriations matters and related issues, they are not binding upon departments, agencies, or officers\nof the executive branch See Bowsher v. Synar, 478 U.S 714, 727-32 (1986).\n6 OPM. which now has the authonty to settle claims involving leave and compensation of federal civilian employees\nunder \xc2\xa7 3702(a)(2), informed us that it has continued to apply the FLSA statute of limitations to FLSA claims filed\nagainst federal agencies.\n\n17\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 22\n\ntrary.\xe2\x80\x9d 73 Comp. Gen. at 161. Because FLSA contained no provision indicating\nthat a different limitations period should apply to administrative claims, GAO\ndetermined that the two or three-year statute of limitations in FLSA applies to\nthe administrative settlement of FLSA claims under \xc2\xa7 3702. Id.\nWe need not resolve here whether GAO\xe2\x80\x99s reversal o f its long-standing position\nwas warranted because we believe that, in light of subsequent congressional\naction, GAO\xe2\x80\x99s 1994 interpretation should now govern.7 Following the GAO deci\xc2\xad\nsion announcing that it would apply the two or three-year limitations period to\nFLSA claims, Congress enacted a grandfather provision to except those FLSA\nclaimants who might have relied on the earlier GAO interpretation, but Congress\ndid not amend the statute to alter the prospective application o f the two or threeyear limitations period. Under section 640 of the 1995 Treasury, Postal Service\nand General Government Appropriations Act, Congress directed GAO to apply\na six-year statute of limitations to all FLSA claims filed before June 30, 1994;\nsignificantly, it did not alter the effect of the GAO decision as to claims filed\nafter that date. See Pub. L. No. 103-329, \xc2\xa7640, 108 Stat. 2382, 2432 (1994).\nIn addition, Congress revisited the settlement of claims under \xc2\xa73702 on three\nother occasions. In 1995, it amended section 640 by excluding from its coverage\nclaims in which an employee received any compensation for overtime hours\nworked during the period covered by the claim, or claims for compensation for\ntime spent commuting between an employee\xe2\x80\x99s residence and duty station.\nTreasury, Postal Service, and General Government Appropriations Act, 1996, Pub.\nL. No. 104-52, 109 Stat. 468, 468\xe2\x80\x9469 (1995). Congress also transferred GAO\xe2\x80\x99s\nfunctions under several statutes, including \xc2\xa7 3702, to the Office of Management\nand Budget, contingent upon the transfer o f such personnel, budget authority,\nrecords and property as deemed necessary. See Legislative Branch Appropriations\nAct, 1996, Pub. L. No. 104-53, \xc2\xa7211, 109 Stat. 514, 535 (1995). Finally, in 1996,\nCongress amended the text of \xc2\xa7 3702 itself, transferring the responsibility for set\xc2\xad\ntling claims to various executive branch agencies, including the Department of\nDefense and OPM. General Accounting Office Act o f 1996, Pub. L. No. 104316, \xc2\xa7202(n), 110 Stat. 3826, 3843\xe2\x80\x9444. In none of these amendments did Con\xc2\xad\ngress alter the GAO\xe2\x80\x99s interpretation of the statute of limitations provision for\nFLSA claims filed after June 30, 1994.\nThus, in interpreting \xc2\xa7 3702, we must consider that Congress has made specific\nadjustments to the statutory scheme in light of the GAO interpretation and left\nthe agency\xe2\x80\x99s interpretation undisturbed. See generally CFTC v. Schor, 478 U.S.\n833, 846 (1986). The legislative record is not limited to instances in which Con\xc2\xad\ngress revisited the statute and abstained from overturning the administrative\nconstruction. Although such action provides relevant, albeit uncertain, evidence\n7 W e note that one district court has held that the tw o or three-year limitation in FLSA applies to both administra\xc2\xad\ntive and judicial claims The court further stated th at while it was aware that G A O had applied a six-year limitation\nto FLSA claims for many years, \xe2\x80\x9c G A O was w rong to do so\xe2\x80\x9d and had no such authority. Adams v Bowsher, 946\nF. Supp 37, 42 (D.D.C. 1996).\n\n18\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nof legislative intent, see generally United States v. Wells, 519 U.S. 482, 494 (1997)\n(finding legislative silence inconclusive because Congress has not spoken directly\nto the interpretive issue in question), here, Congress has done more than merely\n\xe2\x80\x9c kept its silence.\xe2\x80\x9d Schor, 478 U.S. at 846. Rather, Congress has spoken directly\nto the interpretive issue in question by enacting legislation specifically related\nand responsive to the GAO interpretation. See id.; Bell v. New Jersey , 461 U.S.\n773, 785 n.12 (1983); Red Lion Broad. Co. v. FCC , 395 U.S. 367, 381-82 (1969);\nZemel v. Rusk, 381 U.S. 1, 11 (1965); cf. Wells, 519 U.S. at 494. While at one\ntime, \xc2\xa7 3702 may have been reasonably subject to conflicting interpretations, the\nstatute cannot be divorced from the subsequent\xe2\x80\x94 and directly relevant\xe2\x80\x94 congres\xc2\xad\nsional action, which now forms a strong basis of support for the GAO interpreta\xc2\xad\ntion.8 Accordingly, absent a specific provision to the contrary, ECOA\xe2\x80\x99s limitation\non civil actions also should apply to administrative settlements of ECOA claims.\nAs noted earlier, ECOA does not expressly address administrative claims against\nfederal agency creditors, and its limitation provision does not specifically except\nadministrative claims. Section 1691e establishes civil liability for any actual dam\xc2\xad\nages sustained by an applicant. 15 U.S.C. \xc2\xa7 1691e(a). That section then provides\nthat \xe2\x80\x9c [a]ny action under [\xc2\xa7 169le] may be brought in the appropriate United States\ndistrict court without regard to the amount in controversy, or in any other court\nof competent jurisdiction.\xe2\x80\x9d Id. \xc2\xa7 1691e(f).\nThe language of ECOA\xe2\x80\x99s limitation provision is not as broad as that of the\nlimitations provision in FLSA. The heading of \xc2\xa7 1691e(f) is \xe2\x80\x9c Jurisdiction of\ncourts; time for maintenance of action; exceptions,\xe2\x80\x9d and the first sentence o f sub\xc2\xad\nsection (f) authorizes bringing actions in an appropriate court. Id. The word\n\xe2\x80\x9c court\xe2\x80\x9d does not appear in FLSA\xe2\x80\x99s limitation provision. See 29 U.S.C. \xc2\xa7255\n(\xe2\x80\x9c Any action commenced on or after May 14, 1947, to enforce any cause of\naction . . . if the cause of action accrues on or after May 14, 1947[,] may be\ncommenced within two years after the cause of action accrued, and every such\naction shall be forever barred unless commenced within two years after the cause\nof action accrued . . . .\xe2\x80\x9d ).\nBased on these differences in text, the argument that \xc2\xa7 1691e(f) of ECOA should\nbe limited to judicial causes of action is stronger than that regarding \xc2\xa7 255 of\nFLSA. There is nothing in ECOA\xe2\x80\x99s legislative history, however, to suggest that\nCongress intended to grant applicants with claims against federal agency creditors\na different and longer limitations period than that available to applicants of private\ncreditors. Moreover, ECOA\xe2\x80\x99s limitation provision is included in the same section\nas the provision that establishes the right to compensatory damages, and the limita\xc2\xad\n8A 1951 opinion o f the Attorney General concluded that a statute of limitations for suits brought against the\nCommodity Credit Corporation did not bar administrative payment of claims filed with the agency after the expiration\nof that limitations period. Commodity Credit Corporation, Payment o f Claims Barred by Statute o f Limitations, 41\nOp A tt\xe2\x80\x99y Gen. 80 (1951) The 1951 opinion predates G A O \xe2\x80\x99s announcement of its revised interpretation o f \xc2\xa73702,\nand, more importantly, Congress\xe2\x80\x99s response to that revised interpretation The 1951 opinion therefore does not con\xc2\xad\nstitute precedent that counsels a different result in this matter\n\n19\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 22\n\ntion provision does not specifically except administrative claims from its provi\xc2\xad\nsions. See 15 U.S.C. \xc2\xa7 1691e(a), (f). Accordingly, we conclude that ECOA\xe2\x80\x99s\nstatute of limitations also applies to administrative settlements of ECOA claims.\n2. A ppropriations Authorized to Pay D am ages\nW e next examine whether \xc2\xa73702 provides an independent basis of authority\nto expend appropriations to pay claims in the absence of an ECOA claim that\ncould be filed in court, so long as the claims are filed with the relevant agency\nwithin the appropriate statutory tim e period. Although \xc2\xa7 3702 provides an inde\xc2\xad\npendent administrative claims handling procedure, the statute does not provide\nan independent basis of authority for paying such claims. Rather, in order for\npayment o f the claim to be lawful, there must be independent appropriations\nauthority to pay the claim. Under \xc2\xa7 3702(d), claims that may merit relief, but\nthat cannot be \xe2\x80\x9c adjusted . . . using an existing appropriation,\xe2\x80\x9d are to be referred\nto Congress for possible legislative action. 31 U.S.C. \xc2\xa7 3702(d). A claim that is\nadjusted under \xc2\xa73702 \xe2\x80\x9c using an existing appropriation\xe2\x80\x9d must be paid from either\na pre-existing appropriations account for the year in which the claim accrued or,\nif such an account is not available, an account for the current year for the same\nobject and purpose. See id. \xc2\xa7 3702(d); 31 U.S.C. \xc2\xa7\xc2\xa71552, 1553 ( 1 9 9 4 ) 9 Thus,\nit is evident from the text of \xc2\xa7 3702 that it provides no basis for paying any claims\nfor which there is no independent appropriations authority, which would include\nECOA claims involving compensatory damages or other relief that is not author\xc2\xad\nized by USDA\xe2\x80\x99s other operating and program authority.\nOPM has informed us that it deems claims under FLSA to be timely if they\nare filed with OPM or the relevant agency within the statute of limitations, regard\xc2\xad\nless o f when or whether such claim is filed with a court. If this practice properly\napplied to ECOA claims, USDA could settle and pay any claims that were filed\nwith USDA within the applicable two-year statute of limitations. However, OPM\nhas informed us that the claims that it settles under \xc2\xa7 3702 are claims for which\nthere is an existing appropriation, such as claims relating to back pay, Uving\nexpenses, overtime or holiday pay, or cost o f living adjustments. While \xc2\xa7 3702\nprovides the authority for OPM or an agency to examine and settle those claims,\nthe authority to pay out funds to claimants arises from the underlying appropria\xc2\xad\ntion for overtime or living expenses. If benefits are due, OPM has explained to\nus, it directs the relevant agency to pay the claimant the administrative benefits\nto which he or she would have been entitled. There is no award of compensatory\n9 U nder \xc2\xa7 1552 o f title 31, agencies are required to keep accounts open on fixed appropriations for five years\nIn settling a claim under \xc2\xa73702 that accrued w ithin five years, OPM explained that \xc2\xbbt would direct the relevant\nagency to pay the claim from the money remaining in its account for the relevant appropriation for the relevant\nyear. If no funds remained in the account, or the claim accrued more than five years earlier (and the appropriations\naccount has been closed), 31 U .S C . \xc2\xa7 1553 provides that any obligation that would have been properly charged\nto the closed appropriation account \xe2\x80\x9c may be charged to any current appropriation account of the agency available\nfor the sam e purpose \xe2\x80\x9d Id. \xc2\xa7 1553(b)(1).\n\n20\n\n\x0cStature o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\ndamages. The authority to pay compensatory damages for an ECOA claim, in\ncontrast, derives from the waiver of sovereign immunity in ECOA and is\ndependent upon the fact that a court could award such damages in a civil action.\nSee USDA Opinion at 2, 20.\nAccordingly, \xc2\xa73702 does not provide an independent basis for USDA to pay\ncompensatory damages for an ECOA claim. The requirement that claims settled\npursuant to \xc2\xa7 3702 be charged to the specific appropriation for the year in which\nthe claim arose or to a current appropriation for the same purpose is in accord\nwith our earlier conclusion that compensatory damages may only be paid out \xe2\x80\x9c if\nthe agency would be subject to such relief in a court action.\xe2\x80\x9d USDA Opinion\nat 2.\n\nIV. Tolling of the Statute of Limitations\nWe next consider in what circumstances ECOA\xe2\x80\x99s statute of limitations might\nbe tolled. First, we address whether filing an administrative claim tolls the statute\nof limitations. Second, we consider whether the statute of limitations is subject\nto equitable tolling. Finally, we consider whether a court might hold the United\nStates estopped from raising the statute of limitations as a defense to all or a\nportion of a claim.\nA. Filing an Administrative Complaint\nAs a general matter, courts do not toll a statute of limitations simply because\nthe plaintiff is pursuing an alternative means of obtaining relief that is not a condi\xc2\xad\ntion precedent to bringing suit under the relevant statute. See D elaware State Col\xc2\xad\nlege v. Ricks, 449 U.S. 250, 261 (1980) (Title VII\xe2\x80\x99s statute of limitations not\ntolled during employer\xe2\x80\x99s consideration of grievance); Electrical Workers v. Rob\xc2\xad\nbins & Myers, Inc., 429 U.S. 229, 236-37 (1976) (no tolling of period for filing\nEEOC claim during grievance-arbitration proceedings; collective bargaining rights\nare independent of those conferred by Title VII); Johnson v. Railway Express\nAgency, 421 U.S. 454 (1975) (statute of limitations for claims brought under 42\nU.S.C. \xc2\xa7 1981 not tolled during processing of complaint under Title VII; \xc2\xa7 1981\noffers independent avenue of relief). While pursuit of mandatory administrative\nremedies can delay the start or running of a statute of limitations, pursuit of rem\xc2\xad\nedies that are merely permissive does not toll a limitations period. Spannaus v.\nU.S. D e p \xe2\x80\x99t o f Justice, 824 F.2d 52, 56-57, 60-61 (D.C. Cir. 1987); Conley v.\nInternational Brotherhood o f Electrical Workers, Local 639, 810 F.2d 913 (9th\nCir. 1987) (filing of unfair labor practice charge with National Labor Relations\nBoard does not toll limitations period applicable to lawsuit against union based\non the charge; NLRB action was merely optional, though parallel, avenue of\nrelief). An administrative procedure is \xe2\x80\x9c permissive\xe2\x80\x9d if its pursuit is not a pre\xc2\xad\n21\n\n\x0cOpinions of the Office o f Legal Counsel in Volume 22\n\ncondition to pursuit o f a lawsuit. Spannaus, 824 F.2d at 58. Accordingly, if filing\nan ECOA complaint with USDA is a voluntary, permissive administrative remedy,\nfiling an administrative claim would not toll the ECOA limitations period\napplicable to this lawsuit.\nIt appears that USDA\xe2\x80\x99s administrative process is a parallel, voluntary procedure.\nECOA does not require an aggrieved applicant to file an administrative complaint\nagainst a government creditor before filing suit in court. Nor has the FTC, which\nhas administrative enforcement responsibility for claims against the USDA,\nindicated in its regulations that exhaustion of an administrative process is required.\nUSDA has suggested that 7 U.S.C. \xc2\xa7 6912(e) (1994) may require an ECOA\nclaimant to exhaust administrative procedures before filing suit against the Sec\xc2\xad\nretary or the Department of Agriculture, and, accordingly, that the statute of limita\xc2\xad\ntions should be tolled pending resolution of the administrative process. Enacted\nin 1994, \xc2\xa7 6912(e) states:\nNotwithstanding any other provision o f law, a person shall exhaust\nall administrative appeal procedures established by the Secretary\nor required by law before the person may bring an action in a court\no f competent jurisdiction against\xe2\x80\x94\n(1) the Secretary;\n(2) the Department; or\n(3) an agency, office, officer, or employee o f the Depart\xc2\xad\nment.\nId .10 USDA has promulgated regulations prohibiting discrimination in the adminis\xc2\xad\n\ntration of USDA programs and facilities. 7 C.F.R. pt. 15, subpt. B (1997). Under\n\xc2\xa7 15.52(b) o f those regulations, a person \xe2\x80\x9c may\xe2\x80\x9d file a written complaint of\ndiscrimination with the Office o f Advocacy and Enterprise. 7 C.F.R. \xc2\xa7 15.52(b).\nThe complaint procedure in \xc2\xa7 15.52 is not required by law, but it was established\nby the Secretary. Thus USDA has suggested that \xc2\xa7 6912(e) requires that an ECOA\nclaimant exhaust the administrative procedure in \xc2\xa7 15.52 before bringing a civil\naction.\nWe do not think that the process for pursuing an ECOA claim under \xc2\xa7 15.52\nis an \xe2\x80\x9c administrative appeal procedure\xe2\x80\x9d within the meaning of \xc2\xa7 6912(e). An\nECOA claim under \xc2\xa7 15.52 is not an \xe2\x80\x9c appeal\xe2\x80\x9d of a USDA program action. It\nis a separate determination of a complaint regarding discrimination in USDA\xe2\x80\x99s\nadministration of its programs. The premise of an ECOA claim is that there has\nbeen a final agency determination on the underlying decision regarding the loan\nor benefit. Significantly, the decisions applying \xc2\xa7 6912(e) to date all have involved\n10 Because this provision was not enacted until October 1994, it provides no grounds for tolling the statute of\nlimitations on claim s that accrued before October o f 1992.\n\n22\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nappeals of USDA decisions under statutes and programs administered by the\nUSDA. See Bastek v. Federal Crop Ins. Corp., 975 F. Supp. 534 (S.D.N.Y. 1997)\n(farmers must appeal deduction of salvage value and market price calculation in\nindemnity to Risk Management Agency); In re Cottrell, 213 B.R. 33 (M.D. Ala.\n1997) (exhaustion applies to Rural Housing Services procedures, which are cov\xc2\xad\nered by National Appeals Division); Calhoun v. USDA Farm Serv. Agency , 920\nF. Supp. 696 (N.D. Miss. 1996) (exhaustion applies to failure to give former owner\npreference in foreclosure sale where he could have appealed to National Appeals\nDivision); Gleichman v. USDA, 896 F. Supp. 42 (D. Me. 1995) (plaintiffs must\nappeal suspension of participation in Rural Housing Service programs to Adminis\xc2\xad\ntrative Law Judge as provided in 7 C.F.R. \xc2\xa73017.515 (1995)). W e have found\nno decision that does not involve implementation of a USDA program.\nWe note that if \xc2\xa7 6912(e) were found to apply to complaints under \xc2\xa7 15.52,\nit would bar any plaintiff who has filed an administrative complaint from bringing\nsuit under ECOA in the district court until USDA takes final action on the com\xc2\xad\nplaint. Because \xc2\xa7 6912(e) places no time limits on the procedures established by\nthe Secretary, moreover, plaintiffs could be barred from court for an indeterminate\nperiod of time. While we have found nothing in the legislative history of \xc2\xa7 6 9 12(e)\nthat elaborates on its intended purpose, it seems unlikely that Congress intended\nsuch a result. The better interpretation, we believe, is that \xc2\xa7 6 9 12(e) applies to\nadministrative procedures related to statutes or programs administered by USDA.\nAccordingly, \xc2\xa7 15.52 is a permissive procedure, and filing an administrative com\xc2\xad\nplaint would not toll the statute of limitations.\nB. Equitable Tolling & Equitable Estoppel\nWe next consider the application of equitable principles to these claims. Courts\nhave attempted to distinguish the doctrine of equitable tolling from that o f equi\xc2\xad\ntable estoppel by noting that equitable tolling principally \xe2\x80\x9c focuses on the plain\xc2\xad\ntiffs excusable ignorance of the limitations period\xe2\x80\x9d and the \xe2\x80\x9c lack of prejudice\nto the defendant\xe2\x80\x9d while equitable estoppel \xe2\x80\x9c usually focuses on the guilty actions\nof the defendant.\xe2\x80\x9d See Supermail Cargo, Inc. v. United States, 68 F.3d 1204,\n1207 (9th Cir. 1995) (quoting Naton v. Bank o f California, 649 F.2d 691, 696\n(9th Cir. 1981)).\n1. Equitable Tolling\nIn Irwin v. Department o f Veterans Affairs, 498 U.S. 89 (1990), the Supreme\nCourt held that \xe2\x80\x9c the same rebuttable presumption of equitable tolling applicable\nto suits against private defendants . . . applfies] to suits against the United\nStates.\xe2\x80\x9d Id. at 95-96. However, \xe2\x80\x9c [f]ederal courts have typically extended equi\xc2\xad\ntable relief only sparingly\xe2\x80\x9d in suits against private parties, and \xe2\x80\x9c it is evident that\n23\n\n\x0cOpinions of the Office o f Legal Counsel in Volume 22\n\nno more favorable tolling doctrine may be employed against the Government than\nis employed in suits between private litigants.\xe2\x80\x9d Id. at 96. In Irwin, the Court\nobserved that equitable tolling has been found where \xe2\x80\x9c the claimant has actively\npursued his judicial remedies by filing a defective pleading during the statutory\nperiod, or where the complainant has been induced or tricked by his adversary\xe2\x80\x99s\nmisconduct into allowing the filing deadline to pass.\xe2\x80\x9d Id. (footnotes omitted).\nCourts have been less forgiving o f \xe2\x80\x9c late filings where the claimant failed to exer\xc2\xad\ncise due diligence in preserving his legal rights.\xe2\x80\x9d Id.\na. Is ECOA Subject to Equitable Tolling ?\nW e thus begin with the presumption that equitable tolling applies to ECOA\xe2\x80\x99s\nstatute of limitations, and consider whether there is \xe2\x80\x9c good reason to believe that\nCongress did not want the equitable tolling doctrine to apply in a suit against\nthe Government.\xe2\x80\x9d United States v. Brockamp, 519 U.S. 347, 347 (1997). In\nBroclcamp, the Court concluded that Congress did not intend for equitable tolling\nto apply to the time and related amount limitations for filing tax refund claims.\nThe Court noted that \xe2\x80\x9c [ojrdinarily limitations statutes use fairly simple language,\nwhich one can often plausibly read as containing an implied \xe2\x80\x99equitable tolling\xe2\x80\x99\nexception.\xe2\x80\x9d Id. at 350. The limitations provision at issue in Brockamp, 26 U.S.C.\n\xc2\xa76511 was quite different. It set forth its time limitations \xe2\x80\x9c in a highly detailed\ntechnical m anner\xe2\x80\x9d and imposed substantive limits on the amount recovered that\nwere related to the time limitations. Id. In addition, the statute contained excep\xc2\xad\ntions with special time limit rules for six types o f claims, none of which addressed\nequitable tolling. Reading an implied equitable tolling provision into that statute,\nthe Court observed, would work \xe2\x80\x9c linguistic havoc.\xe2\x80\x9d Id. at 352. Moreover, tax\nlaw is not \xe2\x80\x9c normally characterized by case-specific exceptions reflecting individ\xc2\xad\nualized equities.\xe2\x80\x9d Id.\nIn contrast, ECOA\xe2\x80\x99s statute of limitations is relatively straightforward:\nNo such action shall be brought later than two years from the date\no f the occurrence of the violation, except that\xe2\x80\x94\n(1) whenever any agency having responsibility for adminis\xc2\xad\ntrative enforcement under section 1691c of this title com\xc2\xad\nmences an enforcement proceeding within two years from\nthe date of the occurrence of the violation,\n(2) whenever the Attorney General commences a civil action\nunder this section within two years from the date of the\noccurrence of the violation,\nthen any applicant who has been a victim of the discrimination\nwhich is the subject of such proceeding or civil action may bring\n24\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nan action under this section not later than one year after the\ncommencement of that proceeding or action.\n15 U.S.C. \xc2\xa7 1691e(f). The structure of \xc2\xa7 1691e(f) is more similar to the limitation\nprovision in Title VII, to which the Court found equitable tolling applied in Irwin ,\nthan it is to the statute at issue in Brockamp. Like Title VII, moreover, ECOA\nis a remedial statute amenable to exceptions for individualized equities. Section\n1691e(f) does contain explicit exceptions to the limitation period. But the excep\xc2\xad\ntions in ECOA are not as numerous or as intricate as those in the provision in\nBrockamp\'. In addition, the exceptions in ECOA extend the limitations period to\nallow a plaintiff who becomes aware of discrimination after the government com\xc2\xad\nmences enforcement proceedings to bring an action. This purpose is not incon\xc2\xad\nsistent with applying equitable tolling to the limitation period. We therefore con\xc2\xad\nclude that ECOA\xe2\x80\x99s statute of limitations is, in appropriate circumstances, subject\nto the doctrine of equitable tolling.\nb. Is Equitable Tolling Warranted fo r these Claims?\nThe application of the equitable tolling doctrine depends on the facts of each\ncase. \xe2\x80\x9c The Supreme Court has suggested in Baldwin County Welcome Ctr. v.\nBrown , 466 U.S. 147 (1984) (per curiam), that courts may properly allow tolling\nwhere \xe2\x80\x98a claimant has received inadequate notice, . . . where a motion for\nappointment of counsel is pending and equity would justify tolling the statutory\nperiod until the motion is acted upon, . . . where the court has led the plaintiff\nto believe that she had done everything required of h e r,. . . [or] where affirmative\nmisconduct on the part of a defendant lulled the plaintiff into inaction.\xe2\x80\x99 \xe2\x80\x9d Mondy\nv. Secretary o f the Army, 845 F.2d 1051, 1057 (D.C. Cir. 1988) (quoting Baldwin,\n466 U.S. at 151 (citations omitted)). Courts .have found notice inadequate, where\nan agency fails to provide a claimant with notice required by statute. See Coles\nv. Penny, 531 F.2d 609, 614-17 (D.C. Cir. 1976) (statute of limitations tolled\nwhere EEOC failed to provide notice of right to sue as required by statute) (inter\xc2\xad\npreting Gates v. Georgia-Pacific Corpr, 492 F.2d 292 (9th Cir. 1974) (tolling\nstatute of limitations where EEOC failed to provide notice of right to sue required\nby its regulations)). In addition, failure to meet a statutory deadline \xe2\x80\x9c \xe2\x80\x98may be\nexcused if it is the result of justifiable reliance on the advice of a government\nofficer.\xe2\x80\x99 \xe2\x80\x9d Bull S.A. v. Comer, 55 F.3d 678, 681 (D.C. Cir. 1995) (quoting Jarrell\nv. United States Postal Serv., 753 F.2d 1088, 1092 (D.C. Cir. 1985)). A final\nfactor that.courts have considered is whether the plaintiff was represented by an\nattorney. Courts are less likely to find equitable tolling if the plaintiff has legal\nrepresentation. See, e.g., Kelley v. NLRB, 79 F.3d 1238 (1st Cir. 1996) (no tolling\nwhere NLRB employee erroneously informed attorney that NLRB would serve\n25\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 22\n\ndefendant with charges because represented plaintiffs generally deemed to have\nconstructive knowledge of regulatory requirements).\nUSDA has suggested, in particular, that the D.C. Circuit\xe2\x80\x99s decision in Bull S.A.\nmight support an equitable tolling argument for the ECOA claimants. In Bull S.A.,\nthe court held that a corporation justifiably relied on a sealed Certificate of\nRenewal for its trademark which stated that the renewal\' would last twenty years\nfrom May 15, 1972. In fact, the renewal should have run from May 15, 1971.\nThe corporation missed the 1991 renewal deadline but applied within the proper\ntime had the renewal in fact expired in 1992. Bull S.A., 55 F.3d at 682. In finding\nthat the period of renewal on B ull\xe2\x80\x99s trademark should be equitably tolled, the\ncourt stated that \xe2\x80\x9c Bull received an official government document, published under\nthe signature and Seal of the Commissioner, that certified a renewal lasting until\nMay 15, 1992. Once in receipt of this document, and, . . . absent any cir\xc2\xad\ncumstances that would alert Bull to the error, Bull was entitled to rely on its\nvalidity.\xe2\x80\x9d Id.\nAs a general matter, USDA has suggested that claimants may be able to argue\nthat they justifiably relied on the conduct of USDA officials to conclude that filing\nan administrative complaint tolls ECOA\xe2\x80\x99s statute of limitations. The conduct in\nquestion includes failing to alert claimants o f their right to pursue immediate relief\nunder ECOA; inviting claimants to submit claims for compensatory damages upon\na finding of discrimination; and engaging in settlement negotiations regarding\ndamages. Because there is no legal requirement that the government provide\npotential ECOA plaintiffs with notice of the right to file a civil action, ECOA\nclaimants will have difficulty asserting inadequate notice as a grounds for equi\xc2\xad\ntable tolling. Compare Coles, 531 F.2d at 614-17. Absent a more specific govern\xc2\xad\nment statement that the filing of an administrative complaint tolled the limitations\nperiod on an ECOA civil action, it is unlikely that a court would find such conduct\nsufficient to apply equitable tolling. However, the application of the doctrine to\na particular case will depend on the facts present in that case.\n2. Equitable E stoppel\n\xe2\x80\x9c The doctrine of equitable estoppel is not, in itself, either a claim or a defense.\nRather, it is a means of precluding a litigant from asserting an otherwise available\nclaim or defense against a party who has detrimentally relied on that litigant\xe2\x80\x99s\nconduct.\xe2\x80\x9d A TC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (D.C. Cir. 1988).\nWhile the Supreme Court has not foreclosed the possibility that equitable estoppel\nmay lie against the United States, \xe2\x80\x9c it is well settled that the Government may\nnot be estopped on the same terms as any other litigant.\xe2\x80\x9d Heckler v. Community\nHealth Servs., 467 U.S. 51, 60 (1984) (footnote omitted). In fact, the Supreme\nCourt has reversed every finding o f equitable estoppel requiring the payment of\nmoney by the United States that it has reviewed. See OPM v. Richmond, 496\n26\n\n\x0cStatute o f Limitations and Settlement o f Equal Credit Opportunity Act Discrimination Claims Against\nthe Department o f Agriculture\n\nU.S. 414, 427 (1990); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947).\nThus, \xe2\x80\x9c despite the doctrine\xe2\x80\x99s flexibility in disputes between private parties, its\napplication to the government must be rigid and sparing.\xe2\x80\x9d ATC, 860 F.2d at 1111.\nA party seeking to assert estoppel against the government must do more than\nestablish the traditional private law elements of the doctrine, which are \xe2\x80\x9c \xe2\x80\x98false\nrepresentation, a purpose to invite action by the party to whom the representation\nwas made, ignorance of the true facts by that party, and reliance.\xe2\x80\x99 \xe2\x80\x9d See id. The\nlitigant must also demonstrate that the government engaged in some sort of\n\xe2\x80\x9c affirmative misconduct,\xe2\x80\x9d OPM, 496 U.S. at 421, and that there will be no\n\xe2\x80\x9c undue damage\xe2\x80\x9d to the public interest. ATC, 860 F.2d at 1111-12. Accordingly,\nreliance on a government official\xe2\x80\x99s misstatement is not sufficient to estop the\nUnited States. Because \xe2\x80\x9c parties dealing with the government \xe2\x80\x98are expected to\nknow the law and may not rely on the conduct of Government agents contrary\nto law,\xe2\x80\x99 \xe2\x80\x9d id. at 1111 (quoting Heckler, 467 U.S. at 63), \xe2\x80\x9c there is no grave injus\xc2\xad\ntice in holding parties to a reasonable knowledge of the law.\xe2\x80\x9d Id. at 1112.\nCourts require special rigor in examining claims that would estop the govern\xc2\xad\nment so as to entitle claimants to monetary payments not otherwise permitted\nby law. This concern is grounded in the principle of separation of powers. For\n\xe2\x80\x9c [i]f agents of the Executive were able, by their unauthorized oral or written\nstatements to citizens, to obligate the Treasury for the payment of funds, the con\xc2\xad\ntrol over public funds that the [Appropriations] Clause reposes in Congress in\neffect could be transferred to the Executive.\xe2\x80\x9d OPM, 496 U.S. at 428. Moreover,\n\xe2\x80\x9c Congress has always reserved to itself the power to address claims of the very\ntype presented by [a claimant arguing estoppel], those founded not on any statu\xc2\xad\ntory authority, but upon the claim that \xe2\x80\x98the equities and circumstances of a case\ncreate a moral obligation on the part of the Government to extend relief to an\nindividual.\xe2\x80\x99 \xe2\x80\x9d Id. at 431 (referring to congressional reference cases and private\nlegislation procedures).\nA plaintiff seeking to estop the government from asserting the statute of limita\xc2\xad\ntions in these cases might make two arguments. First, claimants might argue that\nUSDA\xe2\x80\x99s actions led them to believe its administrative process tolled the running\nof the statute of limitations on a civil action. Second, plaintiffs might argue that\nUSDA told them that it would settle their claims in an administrative process,\nor led them to believe that relief would be available in the administrative process\neven if the statute of limitations ran on a judicial action. This belief, in turn,\nmay have lulled claimants into believing that they would be compensated by\nUSDA and that it therefore was unnecessary to seek relief in court.\nNeither of these arguments is likely to succeed in the absence of affirmative\nmisconduct by the government. To qualify as affirmative misconduct, a govern\xc2\xad\nment official\xe2\x80\x99s conduct must amount to \xe2\x80\x9c more than mere negligence, delay, inac\xc2\xad\ntion, or failure to follow an internal agency guideline.\xe2\x80\x9d Ingalls Shipbuilding, Inc.\nv. Department o f Labor, 976 F.2d 934, 938 (5th Cir. 1992) (quoting Mangaroo\n27\n\n\x0cOpinions of the Office o f Legal Counsel in Volume 22\n\nv. N elson , 864 F.2d 1202, 1204\xe2\x80\x9405 (5th Cir. 1989)). Courts look for evidence\nthat an official\xe2\x80\x99s misstatement was made with \xe2\x80\x9c knowledge of its falsity or with\nintent to mislead.\xe2\x80\x9d United States v. Marine Shale Processors, 81 F.3d 1329, 1350\n(5th Cir. 1996). We are unaware o f any allegation that any USDA official know\xc2\xad\ningly misled these claimants. At most, it appears that any statements or impres\xc2\xad\nsions were based on the official\xe2\x80\x99s mistaken interpretation of the law. Courts have\nbeen unwilling to estop the government in circumstances where individuals relied\non advice provided by government officials who would have been expected to\nhave the relevant knowledge and authority. See OPM, 496 U.S. at 420 (employee\xe2\x80\x99s\nerroneous advice that income will not cause reduction in benefits does not estop\ngovernment from reducing benefits); M errill, 332 U.S. at 385-86 (government\nagent\xe2\x80\x99s erroneous advice that farm er\xe2\x80\x99s entire crop was insured does not estop\ngovernment from denying benefits on crops excluded from coverage by statute);\nIngalls, 976 F.2d at 937 (government cannot be estopped from assessing penalties\nfor a delay in payment even though a deputy commissioner sent plaintiff a letter\nexcusing any delay in payment); ATP, 860 F.2d at 1111-12 (SBA\xe2\x80\x99s assurance\nthat it would guarantee payments of section 8(a) borrower was unauthorized and\ntherefore cannot estop government). To our knowledge, the alleged government\nconduct at issue here is similar to that deemed insufficient to establish estoppel\nin these cases. However, the application of equitable estoppel to a specific case\nwill depend on the facts present in that case.\n\nV. Conclusion\nECOA\xe2\x80\x99s statute of limitations applies to both administrative and litigative settle\xc2\xad\nments of ECOA claims, and it may not be waived by the executive branch.\nBecause USDA\xe2\x80\x99s authority to pay compensatory damages is derived from the fact\nthat a court could award such damages, USDA may not settle administrative\nclaims after the statute of limitations has run. Section 3702 of title 31 does not\nprovide an independent basis of authority for the payment of administrative claims\nfiled after expiration of the ECOA statute of limitations. As for tolling, filing\nan administrative claim does not toll the statute of limitations on a civil action.\nWhile ECOA is subject to claims of equitable tolling or equitable estoppel in\nappropriate circumstances, courts have rarely applied either doctrine against the\nUnited States.\nDAWN JOHNSEN\nActing Assistant Attorney General\nOffice o f Legal Counsel\n\n28\n\n\x0c'


b"The Pocket Veto: Historical Practice and Judicial Precedent\n\nn.\nNovember 15, 1982\n\nM EM O R A N D U M OPINION FO R TH E COUNSEL TO THE PRESIDENT\nThis m em orandum supplements our m em orandum of February 10, 1982, to\nyou, w hich discussed generally the President\xe2\x80\x99s power to pocket veto legislation.\nThat m em orandum also addressed the propriety of President Reagan\xe2\x80\x99s pocket\nveto o f H .R . 4353 during the intersession recess of the 97th C ongress.' Since that\nm em orandum was prepared several matters have come to our attention. While\nnone of them casts doubt on the conclusions articulated in our earlier memoran\xc2\xad\ndum , we believe that they should be brought to the attention of those who might\nrely on o u r February 10, 1982, mem orandum in making decisions about the\nadvisability o f future pocket v etoes.2\nIn our February 10 memorandum we discussed the 1974 D .C . Circuit decision\nin Kennedy v. Sampson, 511 F.2d 430 (D .C . Cir. 1974). We did not discuss the\nsubsequent district court decision in Kennedy v. Jones, 412F. Supp. 353(D .D .C .\n1976). In Kennedy v. Jones, the government entered into a consent judgm ent with\nthe plaintiff in a case challenging the validity of two pocket vetoes: one, an\nintersession pocket veto; the other an intrasession pocket veto during an election\nrecess of 31 days. On the same day that judgm ent was entered, President Ford\nannounced publicly that he w ould not invoke his pocket veto power during\nintrasession o r intersession recesses if the originating House of Congress had\nspecifically authorized an officer or other agent to receive return vetoes during\nsuch periods. Department of Justice Press Release, Apr. 13, 1976.3 That an\xc2\xad\n1 T h e co n stitu tio n ality o f President R ea g an 's pocket veto o f H R 4 3 5 3 may be litigated in the Lifetim e\nC o m m u n ities, I n c ., New York bankruptcy p ro cee d in g now p ending in the S eco n d C ircuit, Lifetime Communities,\nInc. v. The Admin. Office o f the U S Courts {In re Fidelity M ortgage Investors), No. 8 2 -5 0 0 5 The A dm inistrative\nO ffice o f the U .S C o u rts, represented by th e D epartm ent o f Ju stice , filed a response on Septem ber 2 7 , 1982, to\nap p e llan ts' m otion for leave to supplement its petition for rehearing to include a challenge to the pocket veto. In that\nresp o n se, appellee ag ree d that appellants\xe2\x80\x99 n ew ly raised ch a llen g e to P resident R eagan's pocket veto o f H .R 4353\nshould be reh ea rd o n the m erits by the S eco n d C ircuit panel. T h e pocket veto o f H R 4353 was, o f co u rse, an\nin /ersessio n p o ck e t veto H owever, the ratio n ale supporting the availability o f intersession pocket vetoes w ould\nseem eq u ally ap p licab le to pocket vetoes d u rin g extended intrasession recesses. The Lifetime Communities case\nm ay affo rd a m ore favorable factual setting th a n the tw o Kennedy cases, as w ell as a different forum , for litigating the\npocket veto issues it presents [The pocket v e to issue was not decided by the court o f ap p eals, see 690 F 2 d 35 (2d\nC ir 1982), and certiorari w as denied by th e Suprem e C ourt 462 U S 1106 (1983) ]\n2 W ith resp ect to the discu ssio n in that m em o ran d u m regarding the im plications of the p ocket veto ca ses for the\nP resid en t's recess app o in tm en t power, see o u r F eb 10, 1982, m em orandum to you at pp [134]. We refer you to ou r\nO c to b e r 2 5 , 1982, m em orandum to Counsel to the President F red F Fielding for a discussion o f recent develop\xc2\xad\nm ents in th e rece ss a p p o in tm e n ts area\n3 T h u s, the im m ediate occasion for the 1976 Ford announcem en t was the 1976 Kennedy v. Jones consent\nju d g m e n t. T h a t an n o u n c em en t w as not m ad e, as erroneously suggested in o u r previous m em orandum , in response\no n ly to th e 1974 Kennedy v Sampson case.\n\n150\n\n\x0cnouncement addressed only President Ford\xe2\x80\x99s intended use of the pocket veto\npower, and did not purport to bind, nor could it have bound, future Presidents.\nPresident Reagan has made no sim ilar statement, nor did President Carter during\nhis Presidency.\nPresident Ford\xe2\x80\x99s statement confines its application to those situations in which\nthe House of origin has specifically authorized an agent to receive messages dur\xc2\xad\ning the adjournment in question, as had been done in the case of the intrasession\npocket veto challenged in Kennedy v. Jones. See S. Con. Res. 120, \xc2\xa7 3, 120\nCong. Rec. 36038 (1974) (intrasession election adjournment of the 2d Session of\nthe 93d Congress). Specific authorizations of an agent to receive messages from\nthe President becam e custom ary for intrasession and intersession recesses in both\nthe Senate and the H ouse,4 and apparently still are in the Senate.5 At the\nbeginning of the 97th Congress, however, the House amended its Rules to add\nnew Rule of the House III-5 , which authorizes the Clerk to receive messages \xe2\x80\x9c at\nany time that the House is not in session.\xe2\x80\x9d 6 The House Parliamentarian\xe2\x80\x99s com \xc2\xad\nments on new Rule III\xe2\x80\x945 state that this language is an effort to prevent intrases\xc2\xad\nsion pocket vetoes, citing Kennedy v. Sampson. Those comments make no\nmention of /n/ersession pocket vetoes or of Kennedy v. Jones. The legislative\nhistory of new Rule III\xe2\x80\x945 supports this interpretation. Congressman Michel\nentered an analysis of the January 1981 Rules changes into the Congressional\nRecord prior to their adoption. 127 Cong. Rec. 100-03 (1981). His explanation\nof proposed new Rule III-5 states that it applies only to \xe2\x80\x9c non sine die adjourn\xc2\xad\nments.\xe2\x80\x9d Id. at 100.\nWith respect to President R eagan\xe2\x80\x99s pocket veto of H .R. 4353 during the\nintersession recess of the 97th Congress, to which our February 10, 1982,\nmemorandum was addressed, several observations should be made. First, it was\nan intersession veto, and thus fell outside the scope of the D .C. Circuit\xe2\x80\x99s decision\nin Kennedy v. Sampson. Second, there was no specific resolution adopted by the\nHouse authorizing its agent to receive presidential messages during the interses\xc2\xad\nsion recess of the 97th Congress, nor was there unanimous consent to do so, as we\nnoted in that memorandum. Third, although the broad language of new House\nRule III-5, quoted above, arguably covers intersession pocket vetoes, its com \xc2\xad\nmentary and legislative history indicate that it was aimed specifically at intrases\xc2\xad\nsion pocket vetoes. Thus, we believe that the pocket veto of H .R . 4353 would\nprobably have been considered appropriate even under President Ford\xe2\x80\x99s selfimposed limitations on the exercise of his pocket veto power.\nMore importantly, however, we do not believe that subsequent Presidents\nshould consider themselves bound by President Ford\xe2\x80\x99s self-imposed restrictions\non his use of the pocket veto power. Our February 10, 1982, memorandum and\nthe Supreme Court cases which it analyzes set forth the rationale supporting the\n4 S e e , e g . , S C on. Res 120, \xc2\xa7 3, 120 C ong Rec 36038 (1974), H .R . C on Res 5 18, \xc2\xa7 3 , 121 C ong R ec.\n41973 (1975), H R C on Res 44 2 , \xc2\xa7 2 , 123 C ong. Rec 39132 (1977).\n5\n127 C ong. Rec. S 1^5632 (daily ed. Dec 16, 1981); 128 C ong Rec S13262 (daily ed. O ct 1, 1982).\n6 5 e ^ H R Res 5 , 1 2 7 C ong Rec 9 8 -1 1 3 (1981) The Senate R ules have not been sim ilarly am ended See\nSenate M anual 1981 (S D oc. N o. I, 97th C o n g ., 1st Sess. (1981)).\n\n151\n\n\x0cuse of pocket vetoes during both intersession and extended intrasession recesses.\nWhile we strongly believe that the pocket veto power should be interpreted in\naccordance with the principles set forth in our February 10,1982, memorandum,\nthe cases discussed there, as well as the subsequent developments mentioned\nhere, suggest caution in exercising that power during at least intrasession recesses\nuntil m ore favorable court decisions have been obtained. The consequence of an\nunfavorable court ruling on a pocket veto is that the legislation becomes law. If a\nreturn veto is utilized, of course, the veto must be overridden in order for the bill\nto becom e law. W ith respect to the present extended (October 2-N ovem ber 29)\nintrasession adjournm ent, the broad statem ent of the holding by the court in\nKennedy v. Sampson counsels against use of a pocket veto,7 at least with regard to\nim portant legislation. The adjournm ent sine die of the 2d Session of the 97th\nCongress will presum ably terminate that Congress, and bills presented within ten\ndays o f that final adjournment would be subject to pocket vetoes. As noted in our\nFebruary 10 mem orandum, the propriety of a pocket veto after a final adjourn\xc2\xad\nment (as opposed to an intrasession o r intersession adjournment) remains un\xc2\xad\nquestioned, \xe2\x80\x9c since such an adjournm ent terminates the legislative existence of\nthe Congress and makes it im possible to return the bill to either House.\xe2\x80\x9d The\nPocket Veto Case, 279 U.S. 655, 681 (1929).\nT\n\nheodore\n\nB. O\n\nlson\n\nAssistant Attorney General\nOffice of Legal Counsel\n\n7 Even though the case itself involved an intrasession pocket veto during an adjournment of only six days\xe2\x80\x99\nduration.\n152\n\n\x0c"


b'Compensation of Standing Trustees Under\nthe Bankruptcy Reform Act\nThe com pensation schem e m ade applicable to court-appointed chapter 13 standing trustees by the\nBankruptcy Reform Act of 1978 is designed to encourage m axim um econom ic efficiency in\nadm inistering plans, and it would be contrary to congressional intent to perm it a subsequent year\xe2\x80\x99s\nsurplus to be applied to a prior y e a r\xe2\x80\x99s deficit so as to increase the trustee\xe2\x80\x99s com pensation-far that\nprior year. However, a subsequent surplus may be applied to offset out-of-pocket losses suffered by\nthe trustee in a prior year so as to perm it the trustee to break even for that year.\n\nFebruary 26, 1982\nMEMORANDUM OPINION FOR THE DIRECTOR,\nEXECUTIVE OFFICE FOR UNITED STATES TRUSTEES\nYour predecessor requested the opinion of this Office on two questions relating\nto the accounts of those chapter 13 standing trustees who are under the admin\xc2\xad\nistration of the United States Trustees. These are: (1) whether such standing\ntrustees may, in a particular year, establish or add to a reserve fund to cover\nanticipated expenses of subsequent years; and, (2) whether such standing trust\xc2\xad\nees may carry operating deficits from one year forward to the next, to be repaid\nfrom subsequent surpluses. The answers to these questions are dependent upon\nthe meaning of 28 U.S.C. \xc2\xa7 586(e) (Supp. II 1978).\nSection 586(e) provides:\n(e)(1) The Attorney General, after consultation with a Unit\xc2\xad\ned States trustee that has appointed an individual under subsection\n(b) of this section to serve as standing trustee in cases under\nchapter 13 of title I I , shall fix\xe2\x80\x94\n(A) a maximum annual compensation for such individ\xc2\xad\nual, not to exceed the lowest annual rate of basic pay in effect\nfor grade G S-16 of the General Schedule prescribed under\nsection 5332 of title 5; and\n(B) a percentage fee, not to exceed ten percent, based\non such maximum annual compensation and the actual,\nnecessary expenses incurred by such individual as standing\ntrustee.\n(2)\nSuch individual shall collect such percentage fee from all\npayments under plans in the cases under chapter 13 of title 11 for\n167\n\n\x0cwhich such individual serves as standing trustee. Such individual\nshall pay to the United States trustee, and the United States trustee\nshall pay to the Treasury\xe2\x80\x94\n(A) any amount by which the actual compensation of\nsuch individual exceeds five percent upon all payments\nunder plans in cases under chapter 13 of title 11 for which\nsuch individual serves as standing trustee; and\n(B) any amount by which the percentage for all such\ncases exceeds\xe2\x80\x94\n(i) such individual actual compensation for such\ncases, as adjusted under subparagraph (A) of this para\xc2\xad\ngraph; plus\n(ii) the actual, necessary expenses incurred by such\nindividual as standing trustee in such cases.\nSection 586(e) was added to Title 28 by the Bankruptcy Reform Act of 1978,\nPub. L. No. 95-598 92 Stat. 2663. A companion section of that Act added 11\nU.S.C. \xc2\xa7 1302(e) which, with the exception noted below, contains identical\nprovisions applicable to the compensation and reimbursement for fees and\nexpenses of court-appointed standing trustees under chapter 13.\nIt is clear that the plain language of 28 U.S.C. \xc2\xa7 586(e) does not deal expressly\nwith the issues raised by your predecessor\xe2\x80\x99s questions and we have found no\nrelevant cases interpreting that section or 11 U.S.C. \xc2\xa7 1302(e). Nor does the\nlegislative history of those sections, in terms, fully resolve the questions posed.\nIn the main, the legislative history simply emphasizes what is apparent from the\nface of the sections: that Congress intended to establish a system for chapter 13\ncases in which a set percentage fee would be collected by standing trustees from\nall payments made under all plans administered by them to cover their compensa\xc2\xad\ntion and expenses; that their compensation would be limited, both in absolute\nterms and as a percentage of payments made under plans; and that any excess of\nfees collected over otherwise allowed compensation and expenses would be paid\nto the Treasury. See H.R. Rep. No. 595, 95th Cong., 1st Sess. 105-07, 440\n(1977).\' However, the House Report does contain one illuminating statement of\nintent, viz: \xe2\x80\x9c The fee system is designed to encourage the standing trustees to\nkeep costs low at the risk of reduced compensation.\xe2\x80\x9d Id. at 107.\nWhile the limitations, both absolute and percentage, placed by \xc2\xa7 586(e) on the\ncompensation of standing trustees were not innovations of the Bankruptcy\nReform A ct,2 the concept that this compensation and their expenses should be\ndefrayed from a set percentage fee was. Under the applicable section of Title 11\n1 S ection 586(e) and 11 U S C . \xc2\xa7 1302(e) w ere derived from the H ouse version o f the B ankruptcy Reform A ct o f\n1978. T h e S enate rep o rt is therefore unillum inating\n2 See 11 U S .C . \xc2\xa7 1059(3) (1976) (providing, in addition to reim bu rsem en t for actual and necessary costs and\nex p e n ses, fo r the paym ent o f com m issions to c h a p ter X III trustee o f \xe2\x80\x9c not m ore than 5 p er centum to be com puted\nupon an d payable out o f the paym ents actually m ade by o r for a d eb to r under the plan.\xe2\x80\x9d ) and H R. D oc. N o. 184,\n88th C o n g ., 1st S e s s., R eport o f th e Proceedings of the Judicial C onference of the U nited States, Sept 1 7 -1 8 ,1 9 6 3\nat 87 (approving the recom m endation that th e annual com pensation o f trustees in ch ap ter XTT1 cases not exceed the\nm axim um com pensation o f a full-tim e referee).\n\n168\n\n\x0cprior to the 1978 Act, the commissions paid chapter XIII trustees, including\nstanding trustees, and their actual and necessary costs and expenses were distinct\npriority payment items, payable from monies paid in by or for the debtor. See 11\nU.S.C. \xc2\xa7 1059(2) and (3) (1976); see also Bankruptcy Rule 13-209. Similarly,\nunder the Bankruptcy Reform Act, compensation and reimbursement for actual,\nnecessary expenses for chapter 13 trustees, other than standing trustees, remain\npayable, as distinct items, from monies otherwise available for payment to\ncreditors under the plan, i.e., from all monies paid in by or for the debtor. See 11\nU.S.C. \xc2\xa7\xc2\xa7 330(a), 503(b)(2), 507(a)(1) and 1326(a)(1) (Supp. II 1978). In light\nof the statement of intent in the House Report and the difference in treatment\nbetween chapter 13 standing trustees under the Bankruptcy Reform Act and other\nchapter 13 trustees under that Act as well as chapter XIII trustees under the\npredecessor act, it would seem that Congress clearly intended that, ultimately, the\namount of a standing trustee\xe2\x80\x99s compensation, payable as it is only from the same\nfinite source available to defray expenses, would depend, at least in part, on his\neconomic efficiency. That is, that it would depend on his ability to hold his\nexpenses to a minimum.\nThis intended result suggests a partial answer to one of the questions which\nyou have asked. It would be contrary to congressional intent to permit a\nsubsequent surplus3 to be applied to prior year\xe2\x80\x99s deficit in a manner that would\neffectively increase a standing trustee\xe2\x80\x99s compensation for that prior year.4 This\nmeans that a subsequent surplus may not be applied to raise a standing trustee\xe2\x80\x99s\nnet income from a prior year\xe2\x80\x99s percentage fees above the level of zero. In other\nwords, a subsequent surplus may not be applied to \xe2\x80\x9c reinstate\xe2\x80\x9d any part of the\ncompensation to which a standing trustee was entitled for the prior year under 28\nU.S.C. \xc2\xa7 586(e) but did not receive because his actual, necessary expenses\nincurred (and paid either from the percentage fee or out of pocket) effectively\nreduced his actual compensation from the percentage fee below the permissible\nlevel. A question remains, however, whether under 28 U.S.C. \xc2\xa7 586(e) a\nsubsequent surplus may be applied to offset out-of-pocket losses suffered when\nactual, necessary expenses in a prior year have exceeded the total dollar amount\ncollected in percentage fees; that is, whether a subsequent surplus may be used to\noffset negative compensation to raise it to the break-even point.\nTwo arguments can be advanced why such application of a subsequent surplus\nmay be impermissible under 28 U.S.C. \xc2\xa7 586(e). The first is that such a setoff\nwould be contrary, in a general way, to the principle of economic efficiency stated\nabove. The second is that it may be in derogation of the requirement of the statute\nthat surpluses be paid over to the Treasury.\nThe argument concerning economic efficiency is easily met. Whereas the\nlegislative history of \xc2\xa7 586(e) clearly indicates a congressional intent that the\nannual compensation of a standing trustee be dependent, in part, upon his ability\n3 By surplus we m ean the excess o f the percentage fee set under 28 U .S C \xc2\xa7 528(e)(1)(B ) and collected u n d er\n\xc2\xa7 5 2 8(e)(2) in a given y ea r over the m axim um perm issible com pensation of the standing trustee for that year and his\nactu al, necessary expenses incurred during that year\n4 U nder \xc2\xa7 586(e)(1)(A ) & (B), com pensation for standing trustees m ust be com puted on an annual basis\n\n169\n\n\x0cto keep expenses low during the year, there is no evidence that Congress either\ncontemplated or intended that a standing trustee be required to pay actual and\nnecessary expenses out of his own pocket, from monies not attributable to fees\ncollected in chapter 13 cases. It simply does not follow that because Congress\nbelieved that a more efficient standing trustee should receive greater annual\ncompensation than a less efficient one, it also intended that all standing trustees\nbe held to a standard of efficiency which would require them to accept negative\ncompensation (incurred by their payment of expenses defined as both \xe2\x80\x9c actual"\nand \xe2\x80\x9c necessary\xe2\x80\x9d ) if that result may be avoided without a clear violation of an\nessential element of \xc2\xa7 586(e). In short, we find no evidence on which to base the\nconclusion that some abstract \xe2\x80\x9c spirit\xe2\x80\x9d of \xc2\xa7 586(e) precludes the application of a\nsubsequent surplus to offset prior negative compensation.\nThe second argument raises issues not of spirit but of text\xe2\x80\x94 whether such setoff\nwould violate an essential element of \xc2\xa7 586(e). Section 586(e)(2) requires that a\nsurplus\xe2\x80\x94 that portion of the percentage fee which exceeds the total of a standing\ntrustee\xe2\x80\x99s maximum annual compensation (taking into account both the absolute\nand percentage caps) and his actual, necessary expenses\xe2\x80\x94be paid by the stand\xc2\xad\ning trustee to the United States Trustee for payment over to the Treasury. This\nprovision is intended to apply in those situations in which \xe2\x80\x9c the standing trustee\nserved in more cases with greater payments to creditors than anticipated at the\nbeginning of the year when the budget was prepared and the fee fixed.\xe2\x80\x9d House\nReport at 106. The intended effect is to make available to the Treasury, to\npartially defray the costs of the United States Trustee system, monies which, if\nretained by the standing trustees, would exceed their actual and necessary\nexpenses and the compensation to which they are limited. Id. at 107. The\nprovision ensures that standing trustees will not be unjustly enriched while\nparticipating in a system which is partially subsidized by the United States.\nUnlike its corresponding provision related to disposition of surpluses by standing\ntrustees not under the administration of United States Trustees, it does not\nspecifically require that excess fees be paid to the Treasury annually or on any\nother fixed schedule. Compare 11 U.S.C. \xc2\xa7 1302(e)(2).5\nWe see nothing in the language of \xc2\xa7 586(e)(2) or in the congressional intent\nbehind it which requires that provision to be read as mandating that a surplus of a\nstanding trustee in a particular calendar (or fiscal) year be turned over imme\xc2\xad\ndiately and in full to the United States Trustee for payment to the Treasury without\nconsideration of his prior out-of-pocket losses. We do not believe that application\nof a current surplus to pay for prior, unrecovered actual and necessary expenses\nwould violate the plain language of \xc2\xa7 586(e)(2), would cause the over\xc2\xad\ncompensation of standing trustees which Congress intended to prevent, or would\ndeprive the United States of monies which Congress intended it to have\xe2\x80\x94 i.e.,\nmonies which would otherwise be a windfall to the standing trustees.\n5 T h e le gislative histo ry gives n o clue as to w hy 11 U .S .C . \xc2\xa7 1302(e)(2) provides that excess fees co llected by\nc o u rt-ad m in istered standing trustees be paid to th e Treasury an n u ally w hile \xc2\xa7 586(e)(2) is silent on the sch ed u le for\np aym ent\n\n170\n\n\x0cWe have little to add in answer to the question whether, in a particular year, a\nstanding trustee may establish or add to a reserve fund to cover anticipated\nexpenses of subsequent years. We think that our conclusion that \xc2\xa7 586(e)(2) does\nnot require, as an absolute rule, that the full amount of a given year\xe2\x80\x99s surplus be\nturned over for payment into the Treasury in that same year, without regard to\nwhat has gone before, applies equally to what can reasonably be expected to\noccur in the future. So long as the establishment of a reserve fund is a reasonable\nbusiness practice for a standing trustee and that fund is used to pay actual and\nnecessary expenses (as opposed to supplementing compensation) of the trustee,\nwe see nothing in \xc2\xa7 586(e) to prohibit it.\nL a r r y L . S im m s\n\nDeputy Assistant Attorney General\nOffice cf Legal Counsel\n\n171\n\n\x0c'