b'Investment of Federal Trust Funds for Cheyenne River\nand Lower Brule Sioux\nCongress intended the term \xe2\x80\x9cinterest\xe2\x80\x9d in title VI of the Water Resources Development Act of 1999 to\nhave its usual and customary meaning: the coupon rate of the debt obligation.\nThe universe of \xe2\x80\x9cavailable obligations\xe2\x80\x9d under title VI of the Water Resources Development Act of\n1999 includes obligations of government corporations and government-sponsored entities whose\ncharter statutes provide that their obligations are lawful investments for federal trust funds.\nThe fiduciary duty owed pursuant to a federal trust fund is defined and limited by the terms of the\nstatute creating the trust.\n\nJanuary 19, 2001\n\nMEMORANDUM OPINION FOR THE GENERAL COUNSEL\nDEPARTMENT OF THE TREASURY\nYou have asked for our opinion concerning the Secretary of the Treasury\xe2\x80\x99s\ninvestment responsibilities for the Cheyenne River Sioux Tribe and Lower Brule\nSioux Tribe Terrestrial Wildlife Habitat Restoration Trust Funds (\xe2\x80\x9cthe Sioux\nTrusts\xe2\x80\x9d or \xe2\x80\x9cthe Trusts\xe2\x80\x9d) under section 604(c) of the Water Resources Development\nAct of 1999 (\xe2\x80\x9cthe Act\xe2\x80\x9d), in light of the federal government\xe2\x80\x99s trust responsibilities\nfor Indian tribes. Specifically, you have inquired whether section 604(c)(2) of the\nAct requires Treasury to invest the Trusts\xe2\x80\x99 monies in obligations bearing the\nhighest rate of interest, even when those obligations do not have the highest yields\nfor the Trusts. You have also asked whether the universe of \xe2\x80\x9cavailable obligations\xe2\x80\x9d\nunder section 604(c)(2) includes obligations of government corporations and\ngovernment-sponsored entities (\xe2\x80\x9cGSEs\xe2\x80\x9d) with provisions in their charter statutes\nmaking their securities lawful investments for all federal trust funds, notwithstanding the provision in section 604(c)(1) limiting the Secretary\xe2\x80\x99s investment of Trust\nmonies to interest-bearing obligations of the United States or obligations guaranteed by the United States as to both principal and interest.\nWe conclude that, even if the Act requires the Secretary to assume the strictest\nof fiduciary duties when making investment decisions for the Sioux Trusts\xe2\x80\x94a\nquestion we do not decide\xe2\x80\x94this duty is defined and limited by the terms of the\nSioux Trusts established in the Act itself. Under the Act, the Secretary must invest\nthe Trust monies in the obligations with the highest rate of interest, not the highest\nyield, among available obligations. Furthermore, the universe of available\nobligations under the Act includes obligations of government corporations and\nGSEs whose charter statutes provide that their obligations are lawful investments\nfor federal trust funds.\n\n66\n\n227-329 VOL_25_PROOF.pdf 76\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nI.\nTitle VI of the Water Resources Development Act of 1999, Pub. L. No. 106-53,\n113 Stat. 269, 385-97, designates the Department of the Treasury as the program\nagency for managing trust funds for two South Dakota Sioux Indian tribes. The\nfunds are to be used to finance the restoration of terrestrial wildlife habitat loss\nresulting from flooding related to certain federal water projects. Under the Act, the\nSecretary is required to transfer $5,000,000 from the general fund of the Treasury\nto the Sioux Trusts \xe2\x80\x9cfor the fiscal year during which this Act is enacted and each\nfiscal year thereafter\xe2\x80\x9d until the aggregate amount in the Trusts is equal to at least\n$57,400,000. Id. \xc2\xa7 604(b)(1). Of the total amount deposited, 74 percent must be\ndeposited in the Cheyenne River Trust Fund, and 26 percent must be deposited in\nthe Lower Brule Fund. Id. \xc2\xa7 604(b)(2).\nSection 604(c) of the Act governs the investment of the two Sioux Trusts. It\nprovides:\n(c) INVESTMENTS.\xe2\x80\x94\n(1) IN GENERAL.\xe2\x80\x94The Secretary of the Treasury shall invest\nthe amounts deposited under subsection (b) only in interestbearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.\n(2) INTEREST RATE.\xe2\x80\x94The Secretary of the Treasury shall\ninvest amounts in the Funds in obligations that carry the highest\nrate of interest among available obligations of the required\nmaturity.\nParagraph (1) is a relatively common description of permitted investments for\nfederal trust funds. 1 By contrast, paragraph (2)\xe2\x80\x99s direction that the Secretary invest\nthe Trust monies in the obligations with \xe2\x80\x9cthe highest rate of interest among\navailable obligations\xe2\x80\x9d is apparently unique among federal trust funds. We have\nbeen unable to identify a similar provision enacted by Congress, and your Office\nhas informed us that it has never encountered such a provision.\n\n1\nSee, e.g., 16 U.S.C. \xc2\xa7 1606a(c)(2)(A) (Reforestation Trust Fund); 42 U.S.C. \xc2\xa7 401(d) (Federal\nOld-Age and Survivors Insurance Trust Fund); 42 U.S.C. \xc2\xa7 1104(b) (Unemployment Trust Fund); 42\nU.S.C. \xc2\xa7 1395i(c) (Federal Hospital Insurance Trust Fund); 42 U.S.C. \xc2\xa7 1395t(c) (Federal Supplementary Medical Insurance Trust Fund).\n\n67\n\n227-329 VOL_25_PROOF.pdf 77\n\n10/22/12 11:10 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 25\n\nII.\nOur interpretation of the investment provision of the Trusts must be considered\nin the context of the federal government\xe2\x80\x99s unique relationship with the Indian\ntribes. The federal government\xe2\x80\x99s trust responsibility to the Indians is a concept that\nhas evolved over time. Although its origins can be found in an early Supreme\nCourt opinion describing a tribe\xe2\x80\x99s relationship to the federal government as that\n\xe2\x80\x9cof a ward to his guardian,\xe2\x80\x9d 2 it has subsequently been applied by courts to\nestablish and protect rights of Indian tribes and individuals in their dealings with\nthe government. See Felix S. Cohen, Handbook of Federal Indian Law 220-28\n(1982). The Supreme Court has on several occasions recognized what it has\ntermed a \xe2\x80\x9cgeneral trust relationship\xe2\x80\x9d between the United States and Indian tribes\nand people. See, e.g., United States v. Mitchell, 463 U.S. 206, 225 (1983) (noting\n\xe2\x80\x9cthe undisputed existence of a general trust relationship between the United States\nand the Indian people\xe2\x80\x9d independent of statutes and regulations); Seminole Nation\nv. United States, 316 U.S. 286, 296-97 (1942) (\xe2\x80\x9c[T]his Court has recognized the\ndistinctive obligation of trust incumbent upon the Government in its dealings with\nthese dependent and sometimes exploited people. . . . Under a humane and self\nimposed policy which has found expression in many acts of Congress and\nnumerous decisions of this Court, [the federal government] has charged itself with\nmoral obligations of the highest responsibility and trust.\xe2\x80\x9d). 3\nAs part of this responsibility to the Indians, Congress has established statutory\ntrusts serving a wide variety of purposes. While acknowledging the existence of a\ngeneral trust obligation between the government and the Indians, the Supreme\nCourt has held that only certain statutory trusts impose affirmative fiduciary\nobligations on the United States. In United States v. Mitchell, 445 U.S. 535 (1980)\n(\xe2\x80\x9cMitchell I\xe2\x80\x9d), the Supreme Court concluded that the language of the General\nAllotment Act, which required the United States to hold land \xe2\x80\x9cin trust for the sole\nuse and benefit of the [allottee],\xe2\x80\x9d did not impose any fiduciary management duties\non the United States or render it answerable for a breach of any such duties: \xe2\x80\x9cThe\n[General Allotment] Act does not unambiguously provide that the United States\nhas undertaken full fiduciary responsibilities as to the management of allotted\nlands.\xe2\x80\x9d Id. at 541, 542 (quotation marks and internal citations omitted). The Court\n2\nCherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831). This case involved a suit filed by the\ntribe in the Supreme Court to enjoin enforcement of state laws on lands guaranteed to the tribe by\nvarious treaties. In concluding that the Court lacked original jurisdiction over tribal matters, Justice\nMarshall characterized the tribes as \xe2\x80\x9cdomestic dependent nations\xe2\x80\x9d which \xe2\x80\x9clook to our government for\nprotection; rely upon its kindness and its power; and appeal to it for relief to their wants; and address\nthe President as their great father.\xe2\x80\x9d Id.\n3\nThis unique relationship is further demonstrated by a line of cases that hold that any ambiguities\nin statutes or treaties dealing with Indian tribes are to be interpreted in favor of the tribes. See\nDeCoteau v. Dist. County Ct., 420 U.S. 425, 444 (1975); McClanahan v. Arizona State Tax Comm\xe2\x80\x99n,\n411 U.S. 164, 174 (1973); Choctaw Nation v. Oklahoma, 397 U.S. 620, 631 (1970).\n\n68\n\n227-329 VOL_25_PROOF.pdf 78\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nfurther noted that Congress included the trust language \xe2\x80\x9cnot because it wished the\nGovernment to control use of the land and be subject to money damages for\nbreaches of fiduciary duty, but simply because it wished to prevent alienation of\nthe land and to ensure that allottees would be immune from state taxation.\xe2\x80\x9d Id. at\n544. In a second case, United States v. Mitchell, 463 U.S. 206 (1983) (\xe2\x80\x9cMitchell\nII\xe2\x80\x9d), the Court reconsidered and elaborated on whether the United States had\nassumed fiduciary obligations as trustee with regard to the management of timber\non tribal allotted lands. The Court concluded that the series of statutes and\nregulations governing the management of Indian lands was sufficient to create a\nfiduciary relationship where the Allotment Act by itself did not: \xe2\x80\x9cIn contrast to the\nbare trust created by the General Allotment Act, the statutes and regulations\n[managing timber resources] clearly give the Federal Government full responsibility to manage Indian resources and land for the benefit of the Indians. They\nthereby establish a fiduciary relationship and define the contours of the United\nStates\xe2\x80\x99 fiduciary responsibilities.\xe2\x80\x9d Id. at 224.\nLower courts have applied and elaborated upon the distinction between \xe2\x80\x9cbare\xe2\x80\x9d\ntrusts and trusts giving rise to full fiduciary responsibilities. For example, in\nBrown v. United States, 86 F.3d 1554 (Fed. Cir. 1996), the Federal Circuit held\nthat a statutory scheme asserting control by the Secretary of the Interior over\ncommercial leasing of allotted lands constituted more than a limited trust and\nthereby gave rise to enforceable fiduciary obligations under Mitchell II. The court\nreiterated the Mitchell II criteria for imposition of fiduciary duties and observed\nthat an express reference to a fiduciary duty was not necessary: \xe2\x80\x9c\xe2\x80\x98[W]here the\nFederal Government takes on or has control or supervision over tribal monies or\nproperties, the fiduciary relationship normally exists with respect to such monies\nor properties (unless Congress has provided otherwise) even though nothing is said\nexpressly in the authorizing or underlying statute (or other fundamental document)\nabout a trust fund, or a trust or fiduciary connection.\xe2\x80\x99\xe2\x80\x9d Id. at 1560 (quoting\nMitchell II, 463 U.S. at 225). In an application of Mitchell I, the District of\nColumbia Circuit held that the establishment of an explicit trust as a mere funding\nmechanism and without significant governmental management duties would not\nimpose any fiduciary responsibilities to those who may benefit from the trust.\nNat\xe2\x80\x99l Ass\xe2\x80\x99n of Counties v. Baker, 842 F.2d 369 (D.C. Cir. 1988). There, the court\nconsidered the State and Local Government Fiscal Assistance Trust Fund, created\nunder the Revenue Sharing Act to provide \xe2\x80\x9cnoncategorical financial assistance to\nlocal governmental units in the form of annual entitlements.\xe2\x80\x9d Id. at 372. Associations of local governments brought suit asserting that the Act created a federal\nfiduciary responsibility under Mitchell II to the local governments that were\nbeneficiaries of the trust. The court held, however, that the trust was only a\nfunding mechanism and did not include the type of control or management scheme\nthat gives rise to fiduciary obligations:\n\n69\n\n227-329 VOL_25_PROOF.pdf 79\n\n10/22/12 11:10 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 25\n\nWhile it is true that the Revenue Sharing Act establishes a Trust\nFund and names the Secretary as the trustee, we believe the Act creates only a limited trust relationship similar to the trust discussed in\n[Mitchell I]. . . . We do not think that when Congress created this\nTrust Fund and made the Secretary trustee Congress did so with the\nintent that the trustee would be subject to money damages for\nbreaches of fiduciary duties. Rather, Congress created the Trust Fund\nin order to ensure constant funding for the Revenue Sharing Programs. . . . By creating the Trust Fund Congress was able to appropriate funds in advance, for the life of the program, thus enabling the\nlocal governments to budget their programs in advance.\nId. at 375, 376.\nThe Sioux Trusts at issue here have qualities of both the Mitchell I and the\nMitchell II trusts. On the one hand, the Trusts can be viewed as a funding mechanism for money appropriated by Congress\xe2\x80\x94money that will ultimately be\ndisbursed after capitalization to the tribes for their use in wildlife habitat restoration. Thus, one might conclude that the Trusts do not constitute federal \xe2\x80\x9ccontrol or\nsupervision over tribal monies or properties\xe2\x80\x9d in the sense contemplated by\nMitchell II, but rather are bare trusts or appropriation tools akin to those discussed\nin Mitchell I or Baker. On the other hand, the statutory scheme is intended to\ncompensate the tribes for losses incurred to their lands as a result of flooding\nrelated to a federal water project, and the Act contains very specific federal\ncontrols and limitations on the tribes\xe2\x80\x99 spending of the monies transferred for their\nuse. See Pub. L. No. 106-53, \xc2\xa7 604(d)(3), 113 Stat. at 390.\nEven assuming, however, that the Act requires the federal government to\nassume the strictest of fiduciary obligations to the tribes, that responsibility is still\ndefined by the terms of the statute itself. Indeed, in Mitchell II, the Court concluded that the statutes and regulations giving the federal government responsibility to\nmanage Indian resources and land for the benefit of the Indians both \xe2\x80\x9cestablish a\nfiduciary relationship and define the contours of the United States\xe2\x80\x99 fiduciary\nresponsibilities.\xe2\x80\x9d 463 U.S. at 224 (emphasis added). Courts that have found a\nfiduciary obligation akin to that in Mitchell II have similarly held that the statutory\nscheme creating a government trust both defines and limits the nature of the\ngovernment\xe2\x80\x99s duties. See Brown, 86 F.3d at 1563 (quoting Mitchell II and holding\nthat the validity of a tribe\xe2\x80\x99s breach of trust claim must be measured against the\nterms of the statute creating the trust and its accompanying regulations); Short v.\nUnited States, 50 F.3d 994, 998-99 (Fed. Cir. 1995) (statute dictating interest rate\nfor Indian Money, Proceeds for Labor trust accounts controls payment of interest\non trust funds held by the United States for the benefit of Indians); CheyenneArapaho Tribes of Indians of Oklahoma v. United States, 512 F.2d 1390, 1393 (Ct.\nCl. 1975) (holding that tribes\xe2\x80\x99 suit for breach of fiduciary duty based on the United\n\n70\n\n227-329 VOL_25_PROOF.pdf 80\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nStates\xe2\x80\x99 breach of its duties as trustee to tribes would be determined by reference to\nthe statutory scheme governing Indian trust funds deposited in the Treasury).\nThus, even assuming that the United States owes the Sioux tribes the strictest of\nfiduciary obligations in administering the Trusts (in addition to its general\nobligations of good faith and fair dealing with the Indian tribes), the specifics of\nthat obligation are found in the statute creating the trust: \xe2\x80\x9cWhatever the scope of\nthe government\xe2\x80\x99s legal duties under the [Indian] trust, the source is statutory law.\nThe extent of a trustee\xe2\x80\x99s duties and powers is determined by the trust instrument\nand the rules of the law which are applicable. Accordingly, even though the trust is\na trust as that term is used in Mitchell II, plaintiffs must point to rights granted by\nstatute if they are to be enforced against the government.\xe2\x80\x9d Cobell v. Babbit, 91\nF. Supp. 2d 1, 30 (D.D.C. 1999) (citations and internal quotation marks omitted).\nIII.\nWith this principle in mind, we turn to the specific questions of statutory interpretation. First, we consider whether section 604(c)(2), which directs the Secretary\nto invest the Sioux Trusts in obligations \xe2\x80\x9cthat carry the highest rate of interest\namong available obligations of the required maturity,\xe2\x80\x9d requires the Secretary to\ninvest the trust funds in obligations with the highest coupon rate, or those obligations with the highest yield. We understand that this distinction has significant\ninvestment consequences. The coupon rate of a security is the stated annual rate of\ninterest on the face value of a debt security. Barron\xe2\x80\x99s Financial Guides, Dictionary\nof Financial and Investment Terms 116 (4th ed. 1995). For instance, one might\npurchase a $1000 bond with a 10 percent coupon rate, earning $100 per year. In\ncontrast, the \xe2\x80\x9cyield\xe2\x80\x9d of a security is a way of describing an investor\xe2\x80\x99s percentage\nreturn on his investment. Id. at 663-64. A $1000 bond with a 10 percent coupon\nrate that is purchased for $1000 offers a 10 percent current yield or \xe2\x80\x9ceffective\nrate.\xe2\x80\x9d Id.at 159. Yet that same $1000 bond with a 10 percent coupon rate, but\npurchased for $500, would offer an investor a 20 percent yield. When the price of\na bond falls, its yield rises, and vice versa.\nIn Old Colony Railroad Co. v. Comm\xe2\x80\x99r, 284 U.S. 552 (1932), the Supreme\nCourt considered a tax statute that permitted companies to deduct from their\nincome \xe2\x80\x9call interest paid or accrued within the taxable year\xe2\x80\x9d to holders of its\nbonds. Id. at 554. Old Colony sold its bonds at a premium and sought to deduct the\namount of the interest payments (the coupon rate) on those bonds from its gross\nincome. The government argued that Old Colony could not do so because the\nstatute that authorized the deduction of \xe2\x80\x9call interest paid or accrued\xe2\x80\x9d actually\nreferred to the effective rate (or the yield) of the bond, not the coupon rate.\nBecause Old Colony sold its bonds at a premium, the government argued that it\ncould only deduct the lower effective rate, not the rate on the face of the coupon.\nThe Supreme Court disagreed and held that when Congress uses the word\n\n71\n\n227-329 VOL_25_PROOF.pdf 81\n\n10/22/12 11:10 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 25\n\n\xe2\x80\x9cinterest\xe2\x80\x9d without further explanation, it intends the usual meaning of the word,\nwhich is the coupon rate:\n[A]s respects \xe2\x80\x9cinterest,\xe2\x80\x9d the usual import of the term is the amount\nwhich one has contracted to pay for the use of borrowed money. He\nwho pays and he who receives payment of stipulated amount conceives that the whole is interest. In the ordinary affairs of life no one\nstops for refined analysis of the nature of a premium, or considers\nthat the periodic payment universally called \xe2\x80\x9cinterest\xe2\x80\x9d is in part\nsomething wholly distinct\xe2\x80\x94that is, a return of borrowed capital. . . .\nWe cannot believe that Congress used the word having in mind any\nconcept other than the usual, ordinary and everyday meaning of the\nterm, or that it was acquainted with the accountants\xe2\x80\x99 phrase \xe2\x80\x9ceffective rate\xe2\x80\x9d of interest and intended that as the measure of the permitted deduction.\nId. at 560-61. 4\nIn an opinion interpreting the Second Liberty Bond Act, the Attorney General\nlikewise concluded that the term \xe2\x80\x9cinterest\xe2\x80\x9d was unambiguous. See Second Liberty\nBond Act, As Amended\xe2\x80\x94Bonds Issued at Discount\xe2\x80\x94Effective Rate of Interest or\nCost to Treasury, 42 Op. Att\xe2\x80\x99y Gen. 27 (1961). There, the Attorney General\nconsidered whether the Secretary of the Treasury could sell discounted bonds at a\ncoupon rate of 4\xc2\xbc percent, thereby resulting in a greater yield or effective rate,\nwhere the Bond Act limited the \xe2\x80\x9crate or rates of interest\xe2\x80\x9d on United States bonds to\n4\xc2\xbc percent. Id. at 29. Citing Old Colony, the Attorney General concluded that the\nlimitation on interest rate referred to the coupon rate, and could not be read as a\nlimit on the effective rate or yield of the bond: \xe2\x80\x9c[W]hen Congress uses the term\n\xe2\x80\x98interest\xe2\x80\x99 in connection with bonds without further explanation, it refers to the\ncoupon or stated rate, the usual meaning of that term, and not to the accountants\xe2\x80\x99\nconcept of effective rate.\xe2\x80\x9d Id.\nWe recognize, of course, that any ambiguities in statutes dealing with Indian\ntribes are to be construed in favor of the tribes. See supra note 3 (citing cases).\nBut, like the Supreme Court in Old Colony and the Attorney General in his 1961\nopinion construing the terms of the Second Liberty Bond Act, we conclude that\nthe term \xe2\x80\x9cinterest\xe2\x80\x9d is unambiguous. As the Court and the Attorney General\nexplained, the term \xe2\x80\x9cinterest\xe2\x80\x9d in the Water Resources Development Act has its\nusual and customary meaning\xe2\x80\x94i.e., the coupon rate of the obligation. The\n\n4\nThe Court noted that, \xe2\x80\x9c[i]f there were doubt as to the connotation of the term, and another meaning might be adopted, the fact of its use in a tax statute would incline the scale to the construction most\nfavorable to the taxpayer.\xe2\x80\x9d Id. at 561 (emphases added). The opinion makes clear, however, that the\nCourt did not believe the term \xe2\x80\x9cinterest\xe2\x80\x9d was ambiguous.\n\n72\n\n227-329 VOL_25_PROOF.pdf 82\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nconclusion that Congress intended this ordinary meaning when it used the term in\nconnection with the Sioux Trusts is buttressed by the rule that \xe2\x80\x9cCongress is\npresumed to be aware of an administrative or judicial interpretation of a statute,\xe2\x80\x9d\nand to adopt that interpretation when it \xe2\x80\x9cadopts a new law incorporating sections\nof a prior law.\xe2\x80\x9d Lorillard v. Pons, 434 U.S. 575, 580, 581 (1978). Here, Congress\nhas employed a term with a long-established judicial and administrative interpretation, and there is nothing in the legislative history of the Act indicating that\nCongress intended the term to have a different meaning in section 604(c)(2).\nAccordingly, under the Act, the Secretary is required to invest the Sioux Trust\nfund monies in the obligations carrying the highest coupon rate, regardless of\nwhether such investments offer the highest yield. To the extent that the Secretary\nhas a fiduciary obligation to the Sioux tribes by virtue of the trust fund mechanism, this duty is defined by, and thus requires compliance with, the investment\ncriteria set forth explicitly in the Act. Although investing in securities offering the\nhighest yield might maximize the amount of income to the Funds, it is not what\nCongress instructed the Secretary to do. Cf. Pawnee v. United States, 830 F.2d\n187, 191 (Ct. Cl. 1987) (no valid claim for breach of a fiduciary duty is stated\nwhere \xe2\x80\x9cthe claim is simply that the Interior Department is compelled to go\ncontrary to and beyond the [controlling] regulations and the leases in order to\nfulfill its alleged fiduciary obligation\xe2\x80\x9d).\nIV.\nYour second question is whether the universe of \xe2\x80\x9cavailable obligations\xe2\x80\x9d that\nmust be considered in determining the obligations \xe2\x80\x9ccarry[ing] the highest rate of\ninterest\xe2\x80\x9d under section 604(c)(2) includes securities of government corporations\nand government-sponsored entities (\xe2\x80\x9cGSEs\xe2\x80\x9d) that have provisions in their charter\nstatutes making their securities lawful investments for all federal trust funds,\nnotwithstanding the provision in section 604(c)(1) of the Act limiting Sioux Trust\ninvestments to interest-bearing obligations of the United States or obligations\nguaranteed as to both principal and interest by the United States.\nThe charter statutes of various government corporations and GSEs whose obligations are explicitly not guaranteed by the United States as to principal and\ninterest include a provision similar or identical to the following:\nObligations issued . . . shall be lawful investments and may be\naccepted as security for all fiduciary, trust, and public funds, the\n\n73\n\n227-329 VOL_25_PROOF.pdf 83\n\n10/22/12 11:10 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 25\n\ninvestment or deposit of which shall be under the authority or control\nof any officer or agency of the Government of the United States. 5\nIn accordance with several opinions of the Department of Justice, federal case law,\nand a Comptroller General opinion, we conclude that securities issued by entities\nwhose charters include such \xe2\x80\x9ctrust fund eligibility\xe2\x80\x9d language are appropriate\ninvestments for federal trust funds, even where those trust fund statutes specifically limit the investment of funds to federal government obligations or obligations\nguaranteed by the United States.\nIn 1996, our Office considered whether the Secretary of the Treasury could\ninvest Civil Service Retirement and Disability Fund (\xe2\x80\x9cCSRDF\xe2\x80\x9d) monies in debt\nobligations issued by the United States Postal Service (\xe2\x80\x9cUSPS\xe2\x80\x9d) and the Tennessee\nValley Authority (\xe2\x80\x9cTVA\xe2\x80\x9d). Transactions Between the Federal Financing Bank\nand the Department of the Treasury, 20 Op. O.L.C. 64 (1996) (\xe2\x80\x9c1996 Opinion\xe2\x80\x9d).\nThe relevant statutes of the CSRDF trust fund and the GSEs were virtually\nidentical to those at issue here. In what the 1996 Opinion termed \xe2\x80\x9cboilerplate\xe2\x80\x9d\nlanguage governing the investment of government-managed trust funds, id. at 68,\nthe CSRDF statute authorized the Secretary to invest in \xe2\x80\x9cinterest-bearing obligations of the United States, or obligations guaranteed as to both principal and\ninterest by the United States.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8348(e). 6 The USPS and TVA statutes\nindicated, as they do now, that their debt obligations were not guaranteed by the\nUnited States as to principal and interest, see 39 U.S.C. \xc2\xa7 2005(d)(5); 16 U.S.C.\n\xc2\xa7 831n-4(b), yet they were lawful for trust fund investments under the authority or\ncontrol of any United States officer or agency, see 39 U.S.C. \xc2\xa7 2005(d)(3); 16\nU.S.C. \xc2\xa7 831n-4(d). Ultimately, we relied upon federal case law, \xe2\x80\x9cthe longstanding\npractice and understanding of the Treasury and Justice Departments,\xe2\x80\x9d and a 1985\nComptroller General opinion in determining the relationship between the boilerplate trust investment instructions and the trust fund eligibility language of the\ngovernment corporations and GSEs. 1996 Opinion, 20 Op. O.L.C. at 69. We\nconcluded that the CSRDF monies could be invested in the USPS and TVA\nobligations. Id. at 68.\n\n5\n39 U.S.C. \xc2\xa7 2005(d)(3) (investment eligibility provision for United States Postal Service obligations). See also 16 U.S.C. \xc2\xa7 831n-4(d) (investment eligibility provision for Tennessee Valley Authority\nbonds); 12 U.S.C. \xc2\xa7 1452(g) (investment eligibility provision for Federal Home Loan Mortgage\nCorporation).\n6\nThe relevant portion of the CSRDF statute states that the Secretary shall \xe2\x80\x9cinvest in interest bearing\nsecurities of the United States such currently available portions of the Fund as are not immediately\nrequired for payments from the Fund.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8348(c). It further directs that the Secretary purchase\n\xe2\x80\x9cpublic-debt obligations\xe2\x80\x9d with certain maturities, id. \xc2\xa7 8348(d), and specifies that the Secretary \xe2\x80\x9cmay\npurchase other interest-bearing obligations of the United States, or obligations guaranteed as to both\nprincipal and interest by the United States . . . if he determines that the purchases are in the public\ninterest,\xe2\x80\x9d id. \xc2\xa7 8348(e).\n\n74\n\n227-329 VOL_25_PROOF.pdf 84\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nIn the 1996 Opinion, we relied upon Manchester Band of Pomo Indians, Inc. v.\nUnited States, 363 F. Supp. 1238, 1244-45 (N.D. Cal. 1973), a federal district\ncourt opinion concluding that the TVA trust fund eligibility language, as well as\nthe language in several other GSE charter statutes, rendered TVA obligations\neligible for Indian trust fund investments, notwithstanding language in the\nparticular Indian trust fund statute, 25 U.S.C. \xc2\xa7 162(a), limiting investments to\nUnited States public debt obligations and other obligations guaranteed as to\nprincipal and interest by the United States. The court specifically noted that its\nconclusion regarding the effect of the broad trust fund eligibility language was \xe2\x80\x9cin\naccord with the intent of Congress.\xe2\x80\x9d 363 F. Supp. at 1245. The 1996 Opinion also\ncited two prior instances where the Department opined that trust fund eligibility\nlanguage authorized investment in obligations of government corporations or\nGSEs where the specific trust fund statute at issue did not expressly authorize it.\nFirst, in a 1966 opinion concerning the obligations of federal land banks and banks\nfor cooperatives which considered trust fund eligibility language different from\nthat discussed here, our Office noted in passing that language identical to the TVA\ntrust fund eligibility provision 7 \xe2\x80\x9cpresents no problems of construction and plainly\npermits investments of the various Government trust funds in the affected\nsecurities whether or not the statutes creating the trust themselves do so.\xe2\x80\x9d Letter\nfor Fred B. Smith, General Counsel, Department of the Treasury, from Frank M.\nWozencraft, Assistant Attorney General, Office of Legal Counsel at 2 (Oct. 7,\n1966). Second, in a 1934 opinion by Attorney General Homer Cummings, the\nDepartment advised that government-managed postal savings funds could be\ninvested in bonds issued under the Federal Farm Mortgage Corporation Act\nbecause of the Act\xe2\x80\x99s trust fund eligibility language, even though the Postal Savings\nAct creating the trust fund only specified authority to invest in \xe2\x80\x9cbonds or other\nsecurities of the United States.\xe2\x80\x9d Investment of Postal Savings Funds in Bonds of\nFederal Farm Mortgage Corporation, 37 Op. Att\xe2\x80\x99y Gen. 479, 480 (1934). In\naddition to these prior statements by the Department of Justice, the 1996 Opinion\ncited \xe2\x80\x9cTreasury\xe2\x80\x99s longstanding practice to invest monies contained in governmentmanaged trust funds . . . in public debt obligations or other obligations that have\nbeen authorized by Congress as legal investments for all government-managed\ntrust funds,\xe2\x80\x9d 20 Op. O.L.C. at 70, as well as a 1985 Comptroller General opinion\nsupporting the investment of CSRDF trust funds in Federal Financing Bank\nobligations which were not public debt obligations, but were eligible for federal\ntrust fund investment pursuant to the Federal Financing Bank statute. 8\n7\nAccording to the 1996 Opinion, the language of the statute at issue provided: \xe2\x80\x9c\xe2\x80\x98[Obligations\nissued] shall be lawful investments and may be accepted as security, for all fiduciary, trust, and public\nfunds the investment or deposit of which shall be under the authority or control of the United States or\nany officer or officers thereof.\xe2\x80\x99\xe2\x80\x9d 20 Op. O.L.C. at 69 n.9 (quoting statute).\n8\nMemorandum for the Honorable John J. LaFalce, Chairman, Subcommittee on Economic Stabilization, House Committee on Banking, Finance, and Urban Affairs, from the Comptroller General of the\n\n75\n\n227-329 VOL_25_PROOF.pdf 85\n\n10/22/12 11:10 AM\n\n\x0cOpinions of the Office of Legal Counsel in Volume 25\n\nFinally, in addition to relying upon the foregoing authority, the 1996 Opinion\napplied the principle of statutory construction dictating that statutes on the same\nsubject should be read in harmony with one another, 2B Norman J. Singer,\nSutherland on Statutes and Statutory Construction \xc2\xa7 51.02, at 121-22 (5th ed.\n1992). Thus, the opinion concluded that\n[b]ecause the CSRDF statute\xe2\x80\x99s investment provisions do not purport\nto supersede other statutes establishing that obligations issued thereunder are eligible investments for government-managed trust funds\nand the relevant USPS and TVA statutes demonstrate Congress\xe2\x80\x99s\nintention that obligations issued thereunder be eligible investments\nfor all government-managed trust funds, the better interpretation is\nthat the relevant USPS and TVA statutes have the effect of expanding the universe of authorized CSRDF investments.\n20 Op. O.L.C. at 69 n.7. 9\nThe weight of this authority leads us to conclude that the obligations available\nfor investment under the Water Resources Development Act must include\nobligations of those government corporations and GSEs whose charter statutes\ninclude the federal trust fund eligibility language. Federal case law, OLC opinions,\nand a Comptroller General opinion, as well as past practice, all indicate that the\ntrust fund eligibility language found in GSE charter statutes is best read as\nexpanding the universe of available obligations set forth in the \xe2\x80\x9cboilerplate\xe2\x80\x9d\nprovisions of the statutes governing the investments of government-managed trust\nfunds. Congress enacted the Sioux Trust provisions against this backdrop of\nfederal law and governmental practice and, accordingly, we conclude that\nCongress intended to make government corporation and GSE obligations available\nfor investment by the Secretary for these trusts. See Lorillard, 434 U.S. at 581\n(noting that it may be appropriate to presume Congress to be \xe2\x80\x9caware of an\nadministrative or judicial interpretation of a statute\xe2\x80\x9d when it \xe2\x80\x9cadopts a new law\nincorporating sections of a prior law\xe2\x80\x9d).\n\nUnited States (Oct. 30, 1985), reprinted in The Federal Financing Bank and the Debt Ceiling, Hearing\nBefore the Subcomm. on Economic Stabilization of the House Comm. on Banking, Finance and Urban\nAffairs, 99th Cong. 31, 32 (1985). The opinions and legal interpretations of the General Accounting\nOffice and the Comptroller General often provide helpful guidance on appropriations matters and\nrelated issues. However, they are not binding upon departments, agencies, or officers of the Executive\nBranch. See Bowsher v. Synar, 478 U.S. 714, 727-32 (1986).\n9\nWhile our 1996 Opinion mentions that the TVA and USPS statutes with the trust fund eligibility\nlanguage were enacted several years after the CSRDF trust fund statute, 20 Op. O.L.C. at 67, that fact\nis neither mentioned nor relied upon by Manchester Band or the Department of Justice or Comptroller\nGeneral authority discussed herein. Accordingly, we do not believe the temporal relationship between\nthe two statutory schemes to be essential to our prior conclusion, and we interpret the reference in the\n1996 Opinion to be an additional point reinforcing the outcome.\n\n76\n\n227-329 VOL_25_PROOF.pdf 86\n\n10/22/12 11:10 AM\n\n\x0cInvestment of Federal Trust Funds for Cheyenne River and Lower Brule Sioux\n\nFor the reasons set forth above, we conclude that the Secretary, in fulfilling the\ngovernment\xe2\x80\x99s responsibilities to the Sioux tribes under the Act, must consider\nobligations of government corporations and GSEs whose charter statutes include\ntrust fund eligibility language when determining which obligations carry the\nhighest coupon rate of interest.\nJOSEPH R. GUERRA\nDeputy Assistant Attorney General\nOffice of Legal Counsel\n\n77\n\n227-329 VOL_25_PROOF.pdf 87\n\n10/22/12 11:10 AM\n\n\x0c'


b"Application of the Brady A ct\xe2\x80\x99s Criminal Penalties to State or\nLocal Law Enforcement Officers\nThe crim inal penalties contained in the Brady Handgun V iolence Protection Act do not apply to state\no r local law enfo rcem ent officers in the perform ance o f their duties under the Brady Act A ccord\xc2\xad\ningly, the U nited Stales lacks the authority to prosecute state or local officials for violations o f the\nB rady Act.\n\nMarch 16, 1994\nM e m o r a n d u m O p in io n f o r t h e A t t o r n e y G e n e r a l\n\nThis m em orandum presents our analysis o f the application o f the criminal pen\xc2\xad\nalties contained in the recently enacted Brady Handgun Violence Prevention Act,\nPub. L. No. 103-159, 107 Stat. 1536 (1993) (\xe2\x80\x9cthe Act\xe2\x80\x9d). Specifically, we address\nthe question whether the A ct\xe2\x80\x99s crim inal penalties apply to state or local law en\xc2\xad\nforcem ent officers. W e conclude that the A ct\xe2\x80\x99s criminal penalties do not apply to\nsuch officials in perform ance of their duties under the Act.\nSection 102(c) of the Act amends 18 U.S.C. \xc2\xa7 924(a) in relevant part by adding\nthe follow ing new paragraph:\n(5) W hoever knowingly violates subsection (s) or (t) of section\n922 [the A ct\xe2\x80\x99s interim and perm anent systems for background\nchecks] shall be fined not m ore than $1,000, imprisoned for not\nmore than 1 year, or both.\n107 Stat. at 1541.\nThree provisions of the Act could be interpreted as placing obligations on a\n\xe2\x80\x9cchief law enforcem ent officer\xe2\x80\x9d (\xe2\x80\x9cC L E O \xe2\x80\x9d):1 18 U.S.C. \xc2\xa7 922(s)(2), which pro\xc2\xad\nvides that CLEO s \xe2\x80\x9cshall make a reasonable effort to ascertain within 5 business\ndays\xe2\x80\x9d w hether a handgun transfer would be illegal; 18 U.S.C. \xc2\xa7 922(s)(6)(B),\nwhich provides that C LEO s shall destroy information received pursuant to the Act;\nand 18 U.S.C. \xc2\xa7 922(s)(6)(C), which provides that if a CLEO determines that a\ntransfer would be illegal, he or she shall provide reasons for such determination\nwithin 20 days.\nThe Act specifically exempts C LEO s from liability for damages in 18 U.S.C.\n\xc2\xa7 922(s)(7), which provides that\n\n1\n18 U .S .C . \xc2\xa7 922(s)(8) p ro v id es that, ' \xe2\x80\x98|f]o r purposes o f this subsection, the term \xe2\x80\x98c h ie f law enforcem ent\no fficer' m eans the c h ie f o f p olice, the sheriff, o r an equivalent o fficer or the designee o f any such individual.''\n\xe2\x80\x99 E d ito r's N ote: In P r in ti v U nited Slates, 521 U S. 898, 933-34 (1997), the Suprem e C ourt struck down\n18 U .S C \xc2\xa7 9 2 2 (s)(2 ), to g eth er w ith 18 U S C. \xc2\xa7 922(s)( 1)(A )(i)(III) & (IV ), as unconstitutional\n\n30\n\n\x0cA pplication o f the B rady A c t\xe2\x80\x99s C rim inal P enalties to State or L ocal Law E nforcem ent O fficers\n\nA chief law enforcem ent officer or other person responsible for\nproviding criminal history background information pursuant to this\nsubsection shall not be liable in an action at law for damages\xe2\x80\x94\n(A) for failure to prevent the sale or transfer of a handgun to a\nperson whose receipt or possession o f the handgun is unlawful un\xc2\xad\nder this section; or\n(B) for preventing such a sale or transfer to a person who may\nlawfully receive or possess a handgun.\nThe Act does not, however, specifically exempt CLEOs from the criminal pen\xc2\xad\nalties of 18 U.S.C. \xc2\xa7 924(a)(5). Consequently, the question arises whether a\nCLEO \xe2\x80\x99s failure to comply with the Act would subject him or her to the criminal\npenalties o f 18 U.S.C. \xc2\xa7 924(a)(5).\nThe history of the Act indicates that Congress did not envision its criminal\nsanctions applying to CLEOs. The 1991 version o f the Brady . Bill, which was\npassed by the House but never enacted into law, contained the criminal penalty\nprovision from the public law quoted above but did not include the principal obli\xc2\xad\ngation now imposed on CLEOs \xe2\x80\x94 that CLEOs shall make a reasonable effort to\nascertain within five days whether a transfer would be illegal. W hen the bill\xe2\x80\x99s pro\xc2\xad\nponents added the \xe2\x80\x9creasonable effort\xe2\x80\x9d language of 18 U.S.C. \xc2\xa7 922(s)(2) in 1992,\nno m ember o f Congress even intimated that the modification to \xc2\xa7 922(s)(2) would\nenlarge, or in any way affect, the application of the bill\xe2\x80\x99s criminal sanctions. In\nfact, there was never any suggestion that the criminal sanction applied to CLEOs.\nSuch congressional silence strongly supports the conclusion that Congress did not\nintend to apply 18 U.S.C. \xc2\xa7 924(a)(5) to CLEOs.\nThis reasoning is reinforced by the great solicitude paid to law enforcement of\xc2\xad\nficials in other provisions of the Act. It would be incongruous to insulate the\nCLEO against liability for damages and even for attorneys\xe2\x80\x99 fees for providing er\xc2\xad\nroneous information that prevents a sale and then turn around and subject him or\nher to criminal fine or imprisonment for failure to perform ministerial acts. Our\nconclusion is further supported by the impracticality, if not impossibility, o f prose\xc2\xad\ncuting a chief law enforcement officer for failing to make \xe2\x80\x9ca reasonable effort.\xe2\x80\x9d\nThe use of the term \xe2\x80\x9creasonable effort\xe2\x80\x9d reflects Congress\xe2\x80\x99 apparent intent to vest\ndiscretion in CLEOs by providing a flexible statutory requirement. This elasticity,\nthough common in civil statutes, is unusual in criminal laws because it does not\nclearly define a punishable act. It would be difficult to prosecute a CLEO for fail\xc2\xad\ning to make \xe2\x80\x9ca reasonable effort,\xe2\x80\x9d and such prosecution could be subject to a Fifth\nAmendment due process challenge. In light o f the fact that applying criminal pen\xc2\xad\nalties to the \xe2\x80\x9creasonable effort\xe2\x80\x9d requirem ent would be both unusual and arguably\nunconstitutional, we find it difficult to believe that Congress intended the\n\xe2\x80\x9creasonable effort\xe2\x80\x9d standard to be criminally enforceable.\n\n31\n\n\x0cOpinions o f th e O ffice o f L eg a l Counsel\n\nEstablished principles of statutory construction further support our conclusion\nthat the criminal penalty provision does not extend to law enforcement officials,\nbut only to gun dealers and other nongovernm ental persons. The Supreme Court\nhas repeatedly cautioned that courts should not lightly construe federal statutes as\nintended to intrude into state governmental processes or to change the traditional\nrelationship between federal and state institutions. Where a statute arguably\nwould upset the usual constitutional balance of federal and state\npow ers . . . it is incumbent upon the federal courts to be certain of\nC ongress\xe2\x80\x99 intent before finding that federal law overrides this bal\xc2\xad\nance. W e explained recently: [I]f Congress intends to alter the\nusual constitutional balance between the States and the Federal\nG overnm ent, it m ust make its intention to do so unmistakably clear\nin the language of the statute.\nG reg o ry v. A sh croft , 501 U.S. 452, 460 (1991) (citations and internal quotation\n\nmarks om itted). A federal statute im posing criminal penalties on a state law en\xc2\xad\nforcem ent official because, for exam ple, he or she destroyed a weapons pur\xc2\xad\nchaser\xe2\x80\x99s statem ent a few days late or failed to \xe2\x80\x9cmake a reasonable effort\xe2\x80\x9d to\nresearch the inform ation available on a potential purchaser certainly alters \xe2\x80\x9cthe\nusual constitutional balance between\xe2\x80\x9d the states and the federal government. We\nare unaw are o f any other instance w here Congress has assigned specific tasks to\nstate or local officials and then deem ed a failure to perform those tasks to be a\ncrime. M oreover it would have the effect of placing the operational and record\xc2\xad\nkeeping activities o f state and local law enforcement agencies under the supervi\xc2\xad\nsion and control o f federal prosecutors and the federal criminal law. Because there\nis no explicit reference to chief law enforcem ent officers in the penalty provision, it\ndoes not contain the \xe2\x80\x9cunmistakably clear\xe2\x80\x9d language that would be necessary for a\ncourt properly to construe the provision to have such a purpose.\nTo include chief law enforcement officers within the am bit of the criminal pen\xc2\xad\nalty provision would be contrary to C ongress\xe2\x80\x99 intent as determined according to\nrules o f statutory construction and the relevant legislative history. Furthermore, the\nabsence of a definitive standard inherent in the term \xe2\x80\x9ca reasonable effort\xe2\x80\x9d would\nvery likely pose an insurmountable hurdle to successful prosecution or raise a\nsubstantial due process question.\nA ccordingly, we conclude that 18 U.S.C.\n\xc2\xa7 924(a)(5) does not apply to state officials and that the United States therefore\nlacks the authority to prosecute such officials for violations of the Act.\n\nW ALTER DELLINGER\nA ssista n t A ttorn ey G eneral\nO ffice o f L eg a l Counsel\n32\n\n\x0c"


b'May 10, 1978\n\n78-24\n\nMEMORANDUM OPINION FOR THE\nASSISTANT ATTORNEY GENERAL,\nOFFICE OF LEGISLATIVE AFFAIRS\nBureau of Prisons\xe2\x80\x94 Inmates\xe2\x80\x94 Administrative\nSegregation\xe2\x80\x94 Due Process\n\nWe understand that the Department is formulating standards to guide the\noperation of Federal penal institutions. In connection with this effort, you have\nrequested our opinion on what procedural protections, if any, are constitution\xc2\xad\nally required in transferring inmates from the general prison population to\n\xe2\x80\x9c administrative\xe2\x80\x9d segregation.1 You also asked whether procedural require\xc2\xad\nments of such transfers are dependent upon the existence o f a statutory or any\nother legally recognized right to remain in the general population. Finally, you\nasked whether such requirements would differ if the transfer were made in the\ncontext of a \xe2\x80\x9c classification\xe2\x80\x9d procedure,2 rather than a disciplinary procedure.\nWe conclude that the Constitution requires, except in exigent circumstances,\ncertain due process procedures prior to transferring a Federal inmate, against\nhis or her will, from the general prison population to administrative segrega\xc2\xad\ntion. In emergency cases, where time does not permit prior review, these\nprocedures must be followed within a reasonable time after transfer. Further,\nwe believe the same procedure applies whether the transfer is based upon\nadministrative or disciplinary reasons.\nThe Bureau o f Prisons has adopted Policy Statement No. 7400.5D, July 7,\n1975, on inmate discipline that defines the term \xe2\x80\x9c administrative detention\xe2\x80\x9d as\n. . . the status of confinement which results in a loss of some\nprivileges which the inmate would have if assigned to the general\npopulation. Administrative detention is to be used only where the\n\n\'W e u n d e rstan d th at y o u use the term " a d m in is tra tiv e s e g re g a tio n \xe2\x80\x9d in te rc h a n g ea b ly w ith the\nterm "a d m in is tra tiv e d e te n tio n ,\xe2\x80\x9d a s th a t la tte r te rm is u sed b y the B u re au o f P riso n s. See. infra.\npp. 2-3.\nT h e B ureau o f P riso n s a d v ise d th is O ffice that ad m in istra tiv e d e te n tio n is c o m p a ra b le , in term s\no f ph y sical re stric tio n s, to d isc ip lin a ry seg reg a tio n .\n2By \xe2\x80\x9c c la ss ific a tio n \xe2\x80\x9d p ro c e d u re , w e u n d e rstan d you to m ean a p ro c e d u re , re su ltin g in\nseg reg a tio n , w h ich is not in stitu te d fo r d iscip lin ary reaso n s.\n\n99\n\n\x0ccontinued presence of the inmate in the general population poses a\nserious threat to life, property, him self, other inmates, staff members\nor the security of the institution.\nAn inmate may be placed in administrative detention only if he\n\xe2\x80\xa2 poses the kind o f threat described above, and when he:\na. Is pending a hearing for a violation of institution rules or\nregulations;\nb. Is pending an investigation o f a violation of institution rules or\nregulations;\nc. Is pending investigation or trial for a criminal act;\nd. Requests admission to adm inistrative detention for his own\nprotection or the staff determines that admission to or continuation\nin administrative detention is necessary for the inm ate\xe2\x80\x99s own\nprotection;\ne. Is pending transfer or is in holdover status during transfer; or\nf. Is pending classification. [Id., p. 16]\nFurther, when an inmate is placed in administrative detention the policy\nstatement requires that\n. . . [a] m emorandum detailing the reason for placing an inmate in\nadministrative detention will be prepared and given to members of\nthe inm ate\xe2\x80\x99s unit or team , with a copy to the Operations Supervisor of\nthe administrative detention unit. A copy o f this memorandum will\nalso be given to the inmate provided institutional security is not\nthereby com prom ised. [Id.]\nFinally, involuntary adm inistrative detention is to be used only for short periods\nof time. Id., at 17.\nIn determining whether one is entitled to procedural protections against\narbitrary governmental action, the threshold question is whether a property or\nliberty interest protected by the Constitution is at stake. Wright v. Enomoto,\n462 F. Supp. 397 (N .D . Cal. 1976) (three-judge court), a ffd , 434 U.S. 1052,\n1978; Board o f Regents v. Roth, 408 U .S. 564 (1962); M orrissey v. Brewer,\n408 U .S. 471, 481, 482 (1972). The inquiry is whether a prison inmate has a\nconstitutionally cognizable liberty interest in remaining in the general prison\npopulation. If the answer is in the affirmative, the inmate may be stripped of\nthat interest only if there is com pliance with due process requirements\ncommensurate with the nature of the interest involved. C f., Cafeteria and\nRestaurant Union Workers v. M cElroy, 367 U.S. 886, 894-95 (1961).\nThe three-judge district court in Enom oto held (p. 402):\nWhen a prisoner is transferred from the general prison population to\nthe grossly more onerous conditions o f maximum security, be it for\ndisciplinary or for adm inistrative reasons, there is severe impairment\nof the residuum of liberty which he retains as a prisoner\xe2\x80\x94 an\nimpairment which triggers the requirement for due process safe\xc2\xad\nguards. Cluchette v. Procunier, [497 F .\'(2 d ) 809 (9th Cir. 1974),\n100\n\n\x0cmodified, 510 F. (2d) 613 (1975), rev\xe2\x80\x99d in part on other grounds,\n425 U .S. 308]; United States ex rel. M iller v. Twooney, 479 F. (2d)\n701 (7th Cir. 1973), cert, denied, 414 U.S. 1146 (1974); Allen v.\nNelson, 354 F. Supp. 505 (N .D . Cal. 1973), a ffd , 484 F. (2d) 960\n(9th Cir. 1973). [Id., p. 13]\nIn Enomoto, California claimed that the foregoing proposition was no longer\nviable after the Supreme C ourt\xe2\x80\x99s recent decisions in Meachum v. Fano, 427\nU.S. 215 (1976), and M ontanye v. Haymes, 427 U.S. 236(1976). These cases\nhold that a prisoner has no constitutionally protected interest against being\ntransferred from one institution to another even if the receiving institution has\nmore onerous living conditions than the sending institution, unless State law or\npractice conditions the transfer upon serious misconduct or the occurrence of\nsome other specified event.3\nIn rejecting the contention that these cases have undermined the notion that\ndue process requirements apply where a prisoner is transferred to \xe2\x80\x9c grossly\nmore onerous conditions,\xe2\x80\x9d the court stated (p. 402):\nMeachum and M ontanye hold only that some discretionary decisions\nof prison officials, such as the decision to transfer a prisoner to\nanother institution, do not result in such a substantial invasion of a\nprisoner\xe2\x80\x99s liberty interest as to trigger the need for due process\nprotections. The Supreme Court explicitly stated that the transfer\ndecisions did not result in confinement in maximum security segrega\xc2\xad\ntion. M eachum v. Fano, supra, 427 U.S. 219; M ontanye v. Haymes,\nid., 427 U .S. 236. Contrary to defendants\xe2\x80\x99 contention, these opinions\ndo not hold that a prisoner may be confined in maximum security\nsegregation \xe2\x80\x9c for whatever reason or for no reason at a ll,\xe2\x80\x9d regardless\nof the extent of the deprivation caused by such segregation.\n. . . [Imposition of \xe2\x80\x9c solitary\xe2\x80\x9d confinement] represents a major change\nin the conditions o f confinement and is normally imposed only when\nit is claimed and proved that there has been a major act of misconduct.\nHere . . . there should be minimum procedural safeguards as a hedge\nagainst arbitrary determination o f the factual predicate for imposition\nof the sanction. [W olff v. M cDonnell, supra, 418 U .S. at 571-72,\nn. 19.]\nThe Court went on to state that Meachum and M ontanye hold that if the State\n\xe2\x80\x9c imposes limits on its discretion by conditioning decisions such as prison\ntransfers on a specific standard being met, the state creates a liberty interest\nwhich is protected by due process.\xe2\x80\x9d Ibid. The court further found that\n\n3O n A pril 2 4 , 1978, th e S u p rem e C o u rt h eard o ral a rg u m e n t in Vitek v. Miller, 4 37 F. S upp.\n5 6 9 , a c ase ra isin g th e q u e stio n w h e th e r d u e p ro c e ss re q u ire m e n ts ap p ly w here p riso n e rs are\ntra n sfe rre d fro m a S tate c o rre c tio n a l in stitu tio n to a S tate m en tal h o sp ita l. T h e C o u rt v a ca te d the\nju d g m e n t an d re m a n d e d the c ase fo r c o n sid e ra tio n o f th e q u e stio n o f m o o tn e ss. Vitek v. Jones, 4 3 6\nU .S . 407 (1 9 7 8 ).\n\n101\n\n\x0cCalifornia had created such a liberty interest by virtue of the following\n\xe2\x80\xa2 regulation:\n\xc2\xa7 3330. General Policy, (a) Inmates must be segregated from others\nwhen it is reasonably believed that they are a menace to themselves\nand others or a threat to the security o f the institution. Inmates may be\nsegregated for medical, psychiatric, disciplinary, or administrative\nreasons. The reason for ordering segregated housing must be clearly\ndocumented by the official ordering the action at the time the action is\ntaken.4\nIt therefore held that the State had, with this regulation, created a liberty\ninterest which could only be withdrawn consistent with due process guarantees.\nThe Supreme Court affirm ed, without opinion, the three-judge court ruling in\nFebruary 1978 (over the dissents o f the C hief Justice and Justice Rehnquist).\nPolicy Statement No. 7400.5D closely parallels this regulation in that it\nprovides for administrative segregation o f prisoners where they pose a threat to\nthemselves, others, or the security of the institution. The policy statement also\nrequires documented reasons for placing an inmate in administrative detention.\nTherefore, following the analysis o f Enomoto, the Federal Government has\ncreated a liberty interest not subject to withdrawal without due process\nprotections.5\nFederal prisoners are entitled to due process safeguards before they are\ntransferred to administrative detention unless exigent circumstances require\nimmediate transfer. In these latter situations the hearing should be held at the\nearliest possible time thereafter. The procedures should be followed whether\nthe transfer is for disciplinary or administrative reasons. Enomoto, supra, at 13.\nHaving concluded that the transfers in question implicate a liberty interest to\nwhich due process guarantees attach, we now turn to the question o f what\nprocess is due. W olff v. M cD onnell, 418 U .S. 539 (1974), held that in a prison\nproceeding the following procedures must be observed: (1) The inmate must be\ngiven written notice o f the charges against him and a reasonable time after\nreceiving notice, no less than 24 hours, to respond. (2) There must be a written\nstatement by the prison authorities as to the evidence relied on and the reasons\nfor the action taken. (3) W hen it would not be unduly hazardous to institutional\nsafety or correctional goals, the inmate should be allowed to call witnesses and\npresent documentary evidence in his defense. (4) Finally, where an illiterate\ninmate is involved or the issue is so com plex, making it unlikely that the inmate\nwill be able to marshal and present the necessary evidence for his case, he\nshould be allowed to solicit the aid of a fellow inmate or have the prison\ndesignate someone to assist him.\n\n4C h a p te r 4 , A rtic le 6 , o f th e R u le s an d R eg u latio n s o f th e C alifo rn ia D ire c to r o f C o rre c tio n s.\n5See also 18 U .S .C . \xc2\xa7 4 0 8 1 , p ro v id in g , inter alia, th at p en al an d c o rre c tio n a l institu tio n s sh ould\na ssu re p ro p e r c la ssific a tio n an d seg re g a tio n o f p riso n e rs a cc o rd in g to the n atu re o f the o ffe n s e , the\np ris o n e r\'s c h a ra c te r a n d m e n ta l c o n d itio n , an d su ch o th e r fa c to rs as sh o u ld be c o n sid e re d in\np ro v id in g an in d iv id u a liz e d sy ste m o f d is c ip lin e , c a re , an d tre a tm e n t o f p e rso n s c o m m itte d to such\nin stitu tio n s.\n\n102\n\n\x0cThe court in Enomoto fashioned its judgm ent using the W olff decision as a\npattern and established procedures to govern cases in which inmates were\n\xe2\x80\x9c involuntarily confined for administrative reasons.\xe2\x80\x9d W hile neither W olff nor\nEnomoto should be read as imposing inflexible requirements under all\ncircumstances, those cases should be regarded as the necessary starting point in\ndrafting appropriate departmental standards.\nLarry A. H am m ond\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n103\n\n\x0c'


b'Statutory Authority for Commodity Credit Corporation\nExport Credit Guarantee Programs\nCertain program s o f the C om m odity Credit C orporation, guaranteeing export credit sales of Amer\xc2\xad\nican agricultural exports, are authorized by the C orporation\xe2\x80\x99s charter act\n\nMarch 26, 1982\nMEMORANDUM FOR THE GENERAL COUNSEL,\nDEPARTMENT OF AGRICULTURE\nThis memorandum responds to your request for our opinion regarding the\nstatutory authority for the Commodity Credit Corporation\xe2\x80\x99s (CCC) Noncommer\xc2\xad\ncial Risk Assurance Program (GSM-101) and Export Credit Guarantee Program\n(GSM -102).1 The question of statutory authority has arisen in the course of a\ndetermination by your Office whether guarantees issued pursuant to these pro\xc2\xad\ngrams are supported by the full faith and credit of the United States.2 We find\nample, clear statutory authority for these export guarantee programs. Your\ndetermination regarding full faith and credit may properly rely on this finding.\n\n\xe2\x80\x98 T h e D e p a r tm e n t o f A g r ic u ltu r e \xe2\x80\x99s re g u la tio n s g o v e rn in g th e s e tw o p ro g ra m s a p p e a r at 7 C . F R\n\xc2\xa7\xc2\xa7 1487-1487 15 and 7 C .F R \xc2\xa7\xc2\xa7 1 4 9 3 -I4 9 3 .1 5 -(1 9 8 1 ), respectively.\n2 Since 1973, it has been the policy o f the D epartm ent o f Justice to decline to issue formal op in io n s as to \xe2\x80\x9c full\nfaith and c re d it\xe2\x80\x9d m atters unless there is draw n into question a serious issue o f law See EUiot L R ichardson,\nA ttorney G eneral, M em orandum for H eads o f the Executive D epartm ents and C ounsel to the P resident (O ct 10,\n1973) It has long been the position o f the A ttorney G eneral, however, that:\n[T]here is no o rd er o f solem nity o f valid general obligations o f the U nited States and\n. n o legal\npriority is afforded general obligations contracted pursuant to an express pledge of faith o r cred it over\nthose not so accom panied. It is enough to create an obligation of the U nited States if an ag en cy or\nofficer is validly authorized to incur such an obligation on its b eh a lf and validly exercises that pow er\n41 O p A tt\'y G en. 40 3 , 405 (1959). S e e a tso A l O p A tt\xe2\x80\x99y G e n 417 (1969); 42 O p A tt\xe2\x80\x99y G en. 3 41, 344 (1967); 42\nOp. A tt\xe2\x80\x99y G en. 323 (1966); 42 Op. A tt\xe2\x80\x99y G en. 305, 308 (1965), 42 O p. A tt\xe2\x80\x99y G en. 2 1 , 23\xe2\x80\x944 (1961). See generally\nPerry v. Uniled Stales, 294 U S 330, 3*53-54 (1935); Lynch v United Slates, 292 U .S . 571, 5 8 0 (1934)\nIn an opinion h olding that the Sm all B usiness A dm inistration had authority to guarantee the sale o f certain\ndebentures ow ned by it, the A ttorney G eneral stated.\n[T]he threshold question concerning the effect o f the proposed SB A g uaranties is not w h eth er the\nstatutory language expressly alludes to the \xe2\x80\x9c faith\xe2\x80\x9d o r \xe2\x80\x9c cred it\xe2\x80\x9d of the U nited S tates, but w h eth er the\nstatutory schem e authorizes the guaranties here proposed I f there is statutory authority fo r the\nguaranties, ab sen t specific language to the contrary such guaranties w ould constitute o bligations of\nthe U nited S tates as fully backed by its faith and cred it as w ould be the case were those term s actually\nused\nLetter from John N M itchell. A ttorney G eneral, to T hom as S. K leppe, A dm inistrator, Sm all B usiness A dm inistra\xc2\xad\ntio n , at 3 - 4 (A pr 1 4 ,1 9 7 1 ) Sim ilarly, in this case, a guarantee by the C C C w ill be backed by the full faith and cred it\no f the U nited States if, and only if, the guarantee was issued pursuant to statutory authority.\n\n233\n\n\x0cI. The GSM\xe2\x80\x941011 and GSM-102 Programs3\nThe purpose of the GSM-101 and GSM -102 programs is to promote United\nStates exports of agricultural commodities and products by shifting some of the\nrisks usually associated with export transactions from the American exporter to\nthe CCC. These risks, which include embargoes on imports, freezing of foreign\nexchange, and similar acts o f state, as well as revolutions, wars, economic\ncollapse, and other noncommercial incidents, all operate as a barrier to United\nStates agricultural exports.\nThe GSM -101 and GSM-102 programs are similar in structure and operation.\nBoth programs seek to encourage U.S. agricultural exports at levels above those\nwhich would exist without the guarantees.4 Under the programs, CCC promises\nto reimburse the exporter, or the financing institution that is the exporter\xe2\x80\x99s\nassignee, for a portion of the exporter\xe2\x80\x99s accounts receivable in the event of\nnonpayment by the importer\xe2\x80\x99s bank that issued the irrevocable letter of credit\npertaining to the export sale. In return, the exporter or assignee must assign to\nCCC all rights in the defaulted payment.5 The total amount that CCC will\nguarantee, and the portion o f the accounts receivable for which CCC will\nreimburse the exporter or assignee, is determined by CCC in advance for each\ncountry. Typically, the Corporation guarantees 98 percent of the principal amount\nand 8 percent per annum interest.\nII. Statutory Authority for the Programs*\n15 U .S.C . \xc2\xa7 714b7 sets out the general powers of the CCC. These include the\npower to \xe2\x80\x9c determine the character of and the necessity for its obligations and\nexpenditures and the manner in which they shall be incurred, allowed, and paid.\xe2\x80\x9d\n3 T h e fo llo w in g d escrip tio n o f these p ro g ram s is based on discussio n s w ith m em bers o f yo u r O ffice, and upon a\nm em o ran d u m attached to y o u r letter to m e dated N ovem ber 2 0 , 1981.\n4 T h e m a jo r diffe re n ce betw een the tw o program s is that G S M -1 0 1 is lim ited to protecting o n ly against\nn o n co m m ercial n s k s , w h ile G S M -102 c o v e rs all risks. Compare 1 C .F .R . \xc2\xa7\xc2\xa7 1 4 8 7 .2 0 0 and 1 487.4(a), with 7\nC .F .R . \xc2\xa7 1493.4(a). U n d er the G SM -102 p ro g ra m , CC C relieves expo rters o r assignees o f com m ercial risk s w hich\nm ay b e difficult for the ex p o rter or assignee to assess because o f lack o f fam iliarity w ith foreign leg al system s o r\nb an k in g p ractice s, o r a lack o f adequate inform ation. C C C now relies exclusively on the G S M -1 0 2 p ro g ram and has\nc e ase d issu in g new G S M -1 0 1 risk assurance agreem ents.\n5 See 7 C .F .R . \xc2\xa7\xc2\xa7 1 4 8 7 .2 -4 ; 1487.9(d); 1493.2; 1493.4; 1493.8(b)(3)(iv).\n6 A q u e stio n related to th is o n e was prev io u sly addressed in a letter and m em orandum from this O ffice to Claude\nC o ffm a n , D ep u ty G en eral C ounsel, D ep artm en t of A griculture (D ec. 3 , 1973). In th at co rresp o n d en ce, Leon\nU lm a n , D e p u ty A ssista n t A ttorney General, expressed do u b t regarding C C C \xe2\x80\x99s authority to sell \xe2\x80\x9c tim e d rafts\xe2\x80\x9d which\nit in ten d ed to draw ag a in st ce rta in bank ob lig atio n s it po ssessed . T he ban k obligations w ere obtained u n d er a C C C\nex p o rt cre d it sales p ro g ram . Mr. Ulman s tated that \xe2\x80\x9c although we w ant to co operate, w e are not yet persuaded that\nC C C h as th e req u isite au thority [to sell its drafts].\xe2\x80\x9d T h e m em oran d u m em phasized that C C C lack ed specific\nstatu to ry au thority to sell secu rities or assets, and opined th a t th e \xe2\x80\x9c n ecessary and ap p ro p riate" pow ers clause found\nin its c h a rte r m ay not be used as authority to s e ll securities an d pledge the full faith and cred it o f the U nited States. Cf.\n15 U .S .C . \xc2\xa7 714b(m ).\nT h e p resen t qu estio n relates to programs m a terially d iffe re n t from the A griculture D ep artm en t\'s p roposal in 1973\nto sell \xe2\x80\x9c tim e d ra fts.\xe2\x80\x9d T h e m o st decisive d iffe re n ce is that th e program s at issu e in the cu rren t m atter d o n ot involve\nan y sale o f assets o w n ed b y C C C , or any g u aran tees fo r su ch sale. T h e re is, in o ther w ords, n o issue regarding\nau thority to se ll g o v ern m en t obligations b a c k e d by the full faith and cred it o f the N ation. Rathei; the qu estion here\nco n c e rn s C C C au thority to guarantee e x p o rt cred it sales o f A m erican agricultural exports.\n7 It h as b ee n h eld that \xc2\xa7 7 1 4 b \xe2\x80\x94 among o th e r grants o f authority to th e C C C \xe2\x80\x94 m u st b e broadly in terpreted. See\nHiatt Grain & Feed, Inc. v. Bergland. 44 6 F. Supp. 4 5 7 , 4 7 2 -7 3 (D . K an . 1978), affd. 602 F.2d 9 2 9 (10th Cir.\n1979), cert, denied, 4 4 4 U .S . 1073 (1980).\n\n234\n\n\x0c15U.S.C. \xc2\xa7 714b(j). In addition, the CCC is vested with \xe2\x80\x9c such powers as may be\nnecessary or appropriate for the exercise of the powers specifically vested in the\nCorporation, and all such incidental powers as are customary in corporations\ngenerally[.]\xe2\x80\x9d 15 U.S.C. \xc2\xa7 714b(m). Finally, 15 U.S.C. \xc2\xa7 714c provides:\nthe Corporation is authorized to use its general powers only to\xe2\x80\x94\n*\n\n*\n\n*\n\n*\n\n*\n\n(f) Export or cause to be exported, or aid in the development of\nforeign markets for, agricultural commodities.\nCommenting upon \xc2\xa7 714c, the Senate Report on the CCC charter act states:\nIt is believed that there should be available to American agri\xc2\xad\nculture an agency with the flexible authority vested in the Corpo\xc2\xad\nration by this section. . . .\n*\n*\n*\n*\n*\nSubsection (f) authorizes the Corporation to export or cause to\nbe exported, or aid in the development of foreign markets for,\nagricultural commodities. It is essential to the agricultural econo\xc2\xad\nmy of the United States that it maintain and expand its markets\nabroad for agricultural commodities. This subsection empowers\nthe Corporation to carry out operations to this end\nS. Rep. No. 1022, 80th Cong., 2d Sess. 12-13, reprinted in 1948 U.S. Code\nCong. Serv. 2138, 2151.\nThe Department of Agriculture interprets these statutes as providing sound\nauthority for the GSM\xe2\x80\x94101 and GSM-102 programs. See 43 Fed. Reg. 4033\n(1978); 45 Fed. Reg. 64898 (1980). An agency\xe2\x80\x99s interpretation of a statute it is\ncharged with implementing is entitled to substantial deference. See generally\nRed Lion Broadcasting Co. v. FCC, 395 U.S. 367,381 (1969); Udall v. Tollman,\n380 U.S. 1, 16 (1965); Lenkin v. D istrict c f Columbia, 461 F.2d 1215, 1227\n(D.C. Cir. 1972).\nRegardless of any deference due the Agriculture Department\xe2\x80\x99s interpretation,\nthere is no doubt that the GSM-101 and GSM -102 programs are a valid exercise\nof the CCC\xe2\x80\x99s general power to \xe2\x80\x9c determine the character of and the necessity for\nits obligations . . . and the mannerin which they shall be incurred[.]\xe2\x80\x9d 15U.S.C.\n\xc2\xa7 7 14b(j)- That general power has been exercised in this instance for the purpose\nof promoting exports of United States agricultural commodities. See 7 C.F.R.\n\xc2\xa7\xc2\xa7 1487.1(a), 1493.1(a). This purpose is explicitly authorized by 15 U.S.C.\n\xc2\xa7 714c(f). We therefore find support for these programs in the plain meaning of\nthese provisions. Furthermore, the broad language of the CCC charter act and its\nlegislative history both indicate that a variety of programs may\xe2\x80\x94indeed should\xe2\x80\x94\nbe developed by the CCC to assist in promoting American agricultural exports.\nGSM-101 and GSM -102 are just such programs, and therefore are within the\nambit of authority provided the CCC in \xc2\xa7 714.\nT h eo d o r e B . O lson\n\nAssistant Attorney General\nOffice c f Legal Counsel\n\n235\n\n\x0c'


b'Constitutionality of Proposed Budget Process\nReform Legislation\nProposed legislation that would assign the Congressional Budget Office the duty to determine\nwhether a spending bill would exceed current spending limits, thereby requiring a supermajority\n(tw o-thirds) vote in each House o f Congress for passage, is constitutional. Such a delegation\nwould not raise problems under INS v. Chadha, because Congress may by rule require a\nsuperm ajority m ajority vote in each House for passage of certain legislation under Art. I, \xc2\xa7 S,\ncl. 2.\nThe proposed legislation may also subject spending bills passed in this manner to rescission by\nthe President. W ith respect to entitlem ents, however, Congress must enact legislation specifi\xc2\xad\ncally m aking the expenditure o f a certain percentage o f the appropriated funds non-mandatory\nbefore such rescission authority m ay be exercised.\n\nMay 26, 1987\nM\n\nem orandum\n\nO p in io n\n\nfor th e\n\nC o un sel\n\nto the\n\nP r e s id e n t\n\nAt the request of your staff, this Office has considered the constitutionality\nof draft legislation, prepared by the White House Working Group on Budget\nReform, entitled the \xe2\x80\x9cBudget Process Reform Act of 1987.\xe2\x80\x9d We are satisfied\nthat the basic process that the bill would establish would be constitutional. The\nfollowing comments suggest ways certain specific provisions of the bill might\nbe changed in order to avoid or minimize possible constitutional issues.\nI. Determinations by the Congressional Budget Office\nA central feature of the draft bill is the assignment (in \xc2\xa7 21) to the Congres\xc2\xad\nsional Budget Office (CBO) of the duty to determine, with respect to each\nspending bill, whether passage of the bill would cause the budget category\nwithin which the bill falls to exceed the spending ceiling established by the\n\xe2\x80\x9cbudget law\xe2\x80\x9d enacted earlier in the year (or the previous year\xe2\x80\x99s spending level,\nif no budget law is enacted). This determination has two important conse\xc2\xad\nquences under the draft bill: (1) under \xc2\xa7 7, a supermajority (two-thirds) vote in\neach House of Congress would be required for passage of the spending bill if\nCBO determines it would exceed its spending ceiling (or previous year\xe2\x80\x99s\nspending level); and (2) under \xc2\xa7 25, any bill that would thus be subject to a\nsupermajority vote requirement would also be subject to the rescission author\xc2\xad\nity that would be granted to the President under that section.\n\n44\n\n\x0cThis delegation to CBO of authority to make a determination that has such\nsignificant consequences gives rise to a possible constitutional question of\nwhether that determination constitutes legislative action, and if it does, whether\nthe constitutional requirements for legislative action would be satisfied. The\nSupreme Court has made it clear that any legislative action \xe2\x80\x94 i.e., any congres\xc2\xad\nsional action that has binding legal effect outside the Legislative Branch \xe2\x80\x94\nmust comply with the constitutional requirements of bicameral passage and\npresentment to the President. INS v. Chadha, 462 U.S. 919, 952 (1983).\nIt seems clear that the first consequence of a positive CBO determination \xe2\x80\x94\nrequirement of a supermajority vote in each House of Congress \xe2\x80\x94 does not run\nafoul of these requirements. Its effect would only be on the internal legislative\npractices of each House of Congress, and would thus be limited to the Legisla\xc2\xad\ntive Branch. It would therefore not constitute legislative action within the\nmeaning of Chadha. Moreover, because \xe2\x80\x9c[e]ach House may determine the\nRules of its Proceedings,\xe2\x80\x9d U.S. Const, art. I, \xc2\xa7 5, cl. 2, it is within Congress\xe2\x80\x99\nconstitutional authority to adopt legislative procedures of this kind.\nWe note in passing that, unlike a constitutional amendment, the draft legisla\xc2\xad\ntion would not have a truly binding effect on Congress. Clearly, Congress\ncannot by legislation prevent itself from enacting future legislation pursuant to\nwhatever procedures it chooses to follow at that future time. A future Congress\ncan always legislatively change what a previous Congress has done. In a\nlegally enforceable sense, therefore, such future lawmaking would be regulated\nonly by the requirements of the Constitution. Thus, notwithstanding the provi\xc2\xad\nsions of the draft bill, a future Congress could follow whatever procedures it\nchooses to apply with respect to a particular appropriations bill, including\npassage by less than a supermajority. Or it could choose simply to disregard the\nCBO determination. Although strong political pressures would certainly oper\xc2\xad\nate against defiance of the budget process requirements, and the President\ncould surely cite noncompliance as a basis for a veto decision, a subsequent\nappropriations law passed in compliance with constitutional requirements would\nbe valid, notwithstanding any noncompliance with the procedures of this bill.\nWe also believe that the second consequence of a positive CBO determina\xc2\xad\ntion \xe2\x80\x94 identification of appropriations that would be subject to Presidential\nrescission \xe2\x80\x94 does not violate the bicameral action and presentment require\xc2\xad\nments, but we base this conclusion on different grounds from those applicable\nto the first consequence. The practical effect in this regard of the CBO determi\xc2\xad\nnation would indeed be to bind parties outside the Legislative Branch, because\nthe President\xe2\x80\x99s authority to rescind appropriations would extend only to appro\xc2\xad\npriations based on bills that are enacted under the supermajority requirement,\nwhich in turn is based on the CBO determination. Legislative action would thus\nbe involved, but in our view the actual legislative action would be the enact\xc2\xad\nment of the spending bill subsequent to the CBO determination and prior to the\nrescission authorization to the President becoming effective. The essential\npoint is that the scope of the President\xe2\x80\x99s rescission authority would be defined\nnot by the CBO determination itself, but rather by the subsequent congressional\n45\n\n\x0cenactment of the spending bill. That enactment would satisfy the bicameral\naction and presentment requirements.1\nWe stress that under the draft legislation the ultimate decisionmaker on\ndefining the scope of the President\xe2\x80\x99s rescission authority would not be an arm\nof the Congress, but rather would be Congress itself acting in compliance with\nthe constitutional requirements for legislative action. The budget process role\nthat is contemplated for CBO under this bill thus differs in a critical respect\nfrom the role the General Accounting Office (GAO) was given under the\nGramm-Rudman-Hollings Act. See Bowsher v. Synar, 478 U.S. 714 (1986).\nUnder Gramm-Rudman-Hollings, GAO was authorized to present binding\nbudget reduction calculations directly to the President. In contrast, under the\ndraft bill, CBO\xe2\x80\x99s implicit instructions to the President concerning what pro\xc2\xad\ngrams are subject to his rescission authority are presented through the Con\xc2\xad\ngress, pursuant to procedures that satisfy constitutional requirements.2\nAlthough, for the reasons stated above, we believe that a strong argument\ncan be made to sustain the role of CBO in defining the scope of the President\xe2\x80\x99s\nrescission authority, that argument turns principally on whether the subsequent\nenactment of the spending bill may properly be viewed as congressional action\nthat itself has the effect of defining that scope. Under the draft bill, it would\nappear that any such congressional action would have to be viewed as implied.\nWe suggest, therefore, that consideration be given to requiring in the draft bill\nthat the congressional action be express. Under one possible version of such a\nrequirement, any spending bill enacted pursuant to a CBO determination would\nhave to include, most likely in introductory language (such as the \xe2\x80\x9cwhereas\xe2\x80\x9d\nsection), a statement that a two-thirds vote was required on the basis of the\nCBO determination that the bill would exceed the spending ceiling. An alterna\xc2\xad\ntive approach would be to require that each such spending bill state that\nappropriations authorized under the bill would be subject to the President\xe2\x80\x99s\nrescission authority.\nII. Rescission of Enittitlemeinit Appropriations\nSection 25 of the draft bill would add a new \xc2\xa7 689 to Title 2, United States\nCode. Under that section, the President would be authorized to rescind any\nspending appropriations that are authorized by legislation enacted pursuant to\nthe supermajority voting requirement. Thus, under the regime established by\n1 A n alternative w ay to analyze this second consequence o f the CBO determ ination is to take the view that\nthe subsequent appropriations law \xe2\x80\x94 w hich is passed pursuant to a superm ajority vote triggered by the CBO\ndeterm ination \xe2\x80\x94 w ould am ount to an im plied congressional ratification or adoption o f the CBO determ ina\xc2\xad\ntion. W e p refer the analysis taken in the text, because in o ur view it is based on a more accurate description of\nthe process contem plated under the d ra ft legislation. U nder either analysis, however, the critical fact is that\nintervening betw een the C B O determ ination and the establishm ent o f the President\xe2\x80\x99s rescission authority is a\nlegislative actiun effected in com pliance with constitutional requirem ents.\n2 A n additional d istinction \xe2\x80\x94 although o f less significance for this analysis \xe2\x80\x94 is that G ramm-RudmanH ollings involved a d elegation to G A O o f an executive function (determ ining how to im plem ent spending\nreductions), w hile the draft b ill involves a delegation to C B O o f a legislative function (defining the program s\nw ith respect to w hich the President is b ein g delegated rescission authority).\n\n46\n\n\x0cthe draft bill, any such appropriations law would by clear implication provide\nthat all appropriations are non-mandatory.\nCongress certainly may make expenditure of a particular appropriation non\xc2\xad\nmandatory. See Train v. City o f New York, 420 U.S. 35 (1975). A fortiori,\nCongress may expressly grant the President the authority to rescind any appro\xc2\xad\npriation pursuant to a congressionally established procedure. In contrast to the\nnon-mandatory appropriation situation, however, a Presidential rescission of a\nmandatory appropriation would amount to an unconstitutional unilateral amend\xc2\xad\nment of the appropriations law. Congress may not authorize the President to\ncircumvent the constitutionally required process for amending previously en\xc2\xad\nacted laws any more than it may authorize itself to do so. C f INS v. Chadha, supra.\nApplication of the draft bill\xe2\x80\x99s Presidential rescission authority to entitlement\nappropriations presents a special situation. Unlike spending based on the usual\nappropriations bill, entitlement payments are generally made on the basis of\ntwo separate statutory enactments. The first statute establishes the entitlement\nand generally fixes a specified amount to which each person meeting the\nstatutory requirements is entitled. The second statute is an appropriations bill\nthat authorizes the expenditure of funds up to a given amount.3 Thus, if the\nPresident utilized the rescission authority granted by the draft bill to reduce\nentitlement payments below the statutorily prescribed level, he would, in\neffect, be amending unilaterally the previously adopted entitlement statute.\nHowever, entitlement statutes may be changed only by other duly adopted statutes;\nCongress may not delegate to the President unilateral power to do so himself.\nThis conclusion does not mean, however, that it would be impossible for\nCongress to delegate to the President power to control expenditures under\nentitlement programs. To the contrary, the statute could be drafted so as to\nprovide such authority. First, it is clear that Congress itself has the power to\namend or reduce entitlements that it has previously granted. For example, the\nSupreme Court has held with respect to Social Security that \xe2\x80\x9ca person covered\nby the Act has not such a right in benefit payments as would make every\ndefeasance of \xe2\x80\x98accrued\xe2\x80\x99 interests violative of the Due Process Clause of the Fifth\nAmendment.\xe2\x80\x9d Flemming v. Nestor, 363 U.S. 603, 611 (1960). The Court has\nalso held that the \xe2\x80\x9cfact that social security benefits are financed in part by taxes\non an employee\xe2\x80\x99s wages does not in itself limit the power of Congress to fix the\nlevels of benefits under the Act or the conditions upon which they may be paid.\nNor does an expectation of public benefits confer a contractual right to receive\nthe expected amounts.\xe2\x80\x9d Richardson v. Belcher, 404 U.S. 78, 80 (1971).\nCongress could utilize this power to effect a general cross-cutting amend\xc2\xad\nment to all entitlement statutes that would make a certain percentage of the\nentitlement amounts subject to limitation or complete withdrawal either by\nCongress through the appropriations process, or by the President through the\nrescission process proposed by the draft bill. Thus, the draft bill could include a\n3 In many cases, such appropriations bills set no absolute lim its on entitlem ent expenditures, but rather state\nthat the Executive may expend an amount sufficient to pay all individuals who qualify under the provisions o f\nthe relevant entitlem ent statute.\n\n47\n\n\x0cprovision explicitly amending all entitlement acts so as to permit some Presi\xc2\xad\ndential control over entitlement expenditures in the same way as the draft bill\nwould permit control over expenditures pursuant to appropriations bills. A\ncross-cutting provision would thus avoid the constitutional problem by making\nthe expenditure of a certain percentage of appropriated funds non-mandatory.4\nHII. Limiting the Reasons on which the President Can Rely\nWlhen Exercising the Rescission Aratiooty\nProposed 2 U.S.C. \xc2\xa7 689(b) (see \xc2\xa7 25 of the draft bill) would permit the\nPresident to rescind \xe2\x80\x9cexcess budget authority\xe2\x80\x9d only for \xe2\x80\x9creasons of economy,\nefficiency, or fiscal management of the Government.\xe2\x80\x9d The apparent purpose of\nthis provision would be to indicate that the President\xe2\x80\x99s authority is not intended\nto extend to situations in which the President\xe2\x80\x99s primary reason for desiring to\nrescind budget authority is disagreement with congressional programmatic\nobjectives. Although the provision does not give rise to an issue of constitu\xc2\xad\ntional law, you may wish to consider its separation of powers policy implications.\nThe distinction that \xc2\xa7 689(b) would draw might turn out to be illusory and\nunenforceable. It would be very difficult to separate motives of economy from\npolicy judgments concerning the efficacy of a particular program. Moreover,\nalthough we believe that disputes arising under this section between Presidents\nand Congress would almost always involve only \xe2\x80\x9cpolitical questions\xe2\x80\x9d that\nshould not be resolved by the courts,5 the litigation potential created by such a\nprovision should be recognized. Giving the courts an additional excuse to\nattempt to second-guess or inquire into the motives of the President could\npotentially give the courts an opportunity to seek to exercise significant \xe2\x80\x9cpoliti\xc2\xad\ncal\xe2\x80\x9d power, a role that is not contemplated under the Constitution and that they\nare institutionally ill-suited to exercise.\nIV. Technical Language Change to Avoid\nAmtlnoiriizimg Legislative Veto\nProposed 2 U.S.C. \xc2\xa7 689(d)(1) (see \xc2\xa7 25 of the draft bill) is clearly intended\nto provide for congressional disapproval of a Presidential rescission by the\nconstitutionally permissible means of a bill that is enacted in compliance with\n4 W e note that C ongress has already effected such an am endm ent to a specific entitlem ent statute in the\ncontext o f the food stam p program. The so-called L ugar A m endm ent authorized the Secretary o f Agriculture\nto reduce the otherw ise required food stam p allotm ents if insufficient funds w ere appropriated to fund the\nprogram at its full level, and additionally authorized the Secretary to change the allocation form ula if such a\nredu ctio n w ere necessary. 7 U.S.C. \xc2\xa7 2027(b)-<d).\n5 See Goldwater v. Carter, 444 U.S. 9 9 6 , 1002-06 (1979) (R ehnquist, J., concurring); Barnes v. Kline , 759\nF.2d 21, 57 (D .C. C ir. 1985) (Bork, J ., dissenting) (\xe2\x80\x9c [I]t is absolutely inconceivable that Fram ers who\nintended the federal courts to arbitrate directly d isputes between the President and C ongress should have\nfailed to m ention that function or to h a v e mentioned ju d icial review at all. The statesmen who carefully\nspelled out the functions o f Congress a n d the President and the details o f how the executive and legislative\nb ran ch es m ight check each other could hardly have failed even to m ention the judicial linchpin o f the\ncon stitu tio n al system they w ere creating \xe2\x80\x94 not if they had even the rem otest idea that the judiciary was to\nplay such a central and dominant role \xe2\x80\x9d), vacated on other grounds sub nom. Burke v. Barnes, 479 U.S. 361 (1987).\n\n48\n\n\x0cthe bicameral action and presentment requirements of the Constitution. As\nwritten, however, the provision technically provides instead for a two-house\nlegislative veto: a rescission would take effect unless within 45 legislative\ndays of Congress\xe2\x80\x99 receipt of the President\xe2\x80\x99s rescission statement, \xe2\x80\x9cCongress\nshall have completed action on and sent to the President fo r his approvaP\xe2\x80\x99 a bill\ndisapproving the rescission. Id. (emphasis added). Thus, the disapproval would\ntechnically take effect upon presentment to the President, and the constitutional\nrequirement that the President have an opportunity to veto the disapproval bill\nwould be circumvented. See INS v. Chadha , supra.\nTo accomplish the purpose that we assume is intended, we suggest that the\nabove-quoted language be deleted and the phrase \xe2\x80\x9cis enacted into law\xe2\x80\x9d be\nadded at the end of the sentence. Thus, under the draft bill as revised, a\nrescission would take effect \xe2\x80\x9cunless within 45 legislative days of the receipt of\nthe President\xe2\x80\x99s rescission message, a bill dealing solely with such rescission\nthat restores all or part of such excess budget authority is enacted into law.\xe2\x80\x9d If\nyou believe that 45 days would not be enough time to allow for a congressional\nattempt to override a Presidential veto,6 you might consider allowing instead\nfor some longer period, such as 60 days.\nC harles\n\nJ.\n\nC ooper\n\nAssistant Attorney General\nOffice o f Legal Counsel\n\n6 A veto would be alm ost a certainty. B ecause the joint resolution w ould be a rejection o f the President\xe2\x80\x99s\nrescission, a veto would constitute a sim ple reassertion o f the rescission.\n\n49\n\n\x0c'