b'Constitutional Issues Raised by Inter-American\nConvention on International Commercial Arbitration\nP ro p o sed legislation g iv in g In te r-A m e ric a n C o m m ercial A rb itra tio n C om m ission\n( IA C A C ) p o w e r to am en d rules w h ic h h a v e been en acted by C o n g ress w o u ld result in\nan im p ro p e r d eleg atio n o f legislative p o w e r to a p riv a te o rg an izatio n , and any am en d ed\nru le co u ld not co n stitu tio n ally be ap p lied to ag re e m e n ts e n te re d in to a fter th e effe ctiv e\nd a te o f th e am en d m en ts.\nP ro v isio n in p ro p o sed legislation allo w in g o n e H ouse o f C o n g ress to d isa p p ro v e am e n d \xc2\xad\nm en ts to IA C A C rules, a lth o u g h n ot a v e to o f ex ecu tiv e actio n , n onetheless violates\nth e P resen tm en t C lauses.\nA n a lte rn a tiv e rev iew m ech anism w h e re b y th e S e c re ta ry o f S tate w o u ld be req u ire d to\na p p ro v e o r d isa p p ro v e am en d m en ts to th e IA C A C rules w o u ld be c o n stitu tio n a lly\naccep tab le, since th e am en d m en ts w o u ld not be binding on the g o v e rn m e n t but m erely\nad v iso ry.\n\nMarch 20, 1980\nMEMORANDUM OPINION FOR TH E ASSISTANT LEG AL\nADVISER FOR PRIV A TE IN TER N A TIO N A L LAW,\nD EPA R TM EN T O F STA TE\nThis responds to your request for the views of the Justice Depart\xc2\xad\nment on the congressional review mechanism in the proposed imple\xc2\xad\nmenting legislation for the Inter-American Convention on International\nCommercial Arbitration. You ask whether the review mechanism con\xc2\xad\nstitutes a \xe2\x80\x9clegislative veto.\xe2\x80\x9d Our analysis of the review mechanism in\nthe proposed legislation raises an additional question whether Congress\nmay delegate its legislative power to the Inter-American Commercial\nArbitration Commission (IACAC), a private organization. While the\nlaw is not clear in this area, we conclude that the delegation made in\nthe proposed legislation presents serious constitutional problems. We\nbelieve, however, that the constitutional problems could be ameliorated\nif IACAC\xe2\x80\x99s amendments to its rules were applicable only to agreements\nentered into after the effective date of the amendments. The review\nmechanism in the proposed legislation, although not a veto of executive\naction, is a legislative veto and is, therefore, unconstitutional. At your\nrequest, we suggest an alternative review mechanism.\n\n509\n\n\x0cI.\n\nThe Inter-American Convention on Internationa) Commercial Arbi\xc2\xad\ntration provides that, when parties of signatory nations have agreed to\nsubmit to arbitration any dispute that may arise out of a commercial\ntransaction, the arbitration shall be conducted in accordance with the\nrules of procedure of the IACAC unless the parties have expressly\nagreed otherwise. Articles 1 & 3. The proposed implementing legisla\xc2\xad\ntion for the Convention defines the rules referred to in Article 3 of the\nConvention to be those rules as promulgated by the Commission on\nJanuary 1, 1978. \xc2\xa7 306(a). If the IACAC modifies or amends its rules,\n\xc2\xa7 306(b) would require the Secretary of State to transmit to the House\nof Representatives and the Senate a document containing the rules as\nmodified or amended together with a report setting forth the reasons\nfor and the effect of such modifications or amendments. A majority of\neither the House or Senate may disapprove the rules as modified or\namended within 90 days of the transmission. If the rules are not disap\xc2\xad\nproved, the rules shall be published after 90 days have elapsed and shall\nbecome effective 120 days after publication. If the rules are disap\xc2\xad\nproved, the Secretary is required to use his best efforts to reconvene\nthe rulemaking body of IACAC to ensure that the rules applicable to\nthe signatory parties to the Convention are uniform.\nII.\nThe threshold question presented by the proposed implementing leg\xc2\xad\nislation is whether it involves an unconstitutional delegation of legisla\xc2\xad\ntive power to a private organization. The legislation would incorporate\nby reference and thereby enact the rules of procedure of the IACAC in\neffect as of January 1, 1978. Since it is assumed that Congress would\nreview and approve the rules in enacting the legislation, the incorpora\xc2\xad\ntion of those rules by reference does not involve a delegation of\nlegislative power to a private organization. C f United States v.\nSharpnack, 355 U.S. 286, 293 (1958). See also Liebmann, G.W., Delega\xc2\xad\ntion to Private Parties in American Constitutional Law, 50 Ind. L.J. 650,\n680 (1975). However, the proposed legislation implicitly gives the\nIACAC the power to amend those rules subject to one House\xe2\x80\x99s disap\xc2\xad\nproval of such amendments. In effect, the legislature would delegate to\na private organization the power to amend congressional legislation.\nWe believe that such a delegation raises serious constitutional problems.\nIn analyzing the delegation question, we are hampered by the fact\nthat \xe2\x80\x9c [t]he case law has not crystallized any consistent principles, either\nin the federal courts or in the state courts.\xe2\x80\x9d Davis, Administrative Law\nTreatise \xc2\xa72.14 at 138 (1958). Nevertheless, a survey of the relevant\nSupreme Court cases provides some guidance. In 1908, the Supreme\nCourt rejected a claim that a statute permitting the American Railway\n510\n\n\x0cAssociation to set the uniform height for drawbars on freight cars\nconstituted an invalid delegation, St. Louis, Iron Mountain & Southern\nRailway Co. v. Taylor, 210 U.S. 281 (1908). Three years earlier, it had\nupheld a delegation to miners to make regulations governing the re\xc2\xad\ncording of mining claims and the amount of work necessary to establish\npossession of a mining claim. Butte City Water Co. v. Baker, 196 U.S.\n119 (1905).\nHowever, more recently the Court found invalid a delegation to\nproducers of two-thirds of coal to fix for producers selling coal to\ngovernment contractors the minimum wages and maximum hours of\ntheir workers. Carter v. Carter Coal Co., 298 U.S. 238, 310 (1936).\nHolding that the delegation violated the Due Process Clause of the\nFifth Amendment, the Court stated:\nThe power conferred upon the majority is, in effect, the\npower to regulate the affairs of an unwilling minority.\nThis is legislative delegation in its most obnoxious form;\nfor it is not even delegation to an official or an official\nbody, presumptively disinterested, but to private persons\nwhose interests may be and often are adverse to the\ninterests of others in the same business.\nId. at 311. In A.L.A. Schechter Poultry Corp. v. United States, 295 U.S.\n495 (1935), the Court, addressing the argument that a delegation to the\nPresident to approve codes of fair competition proposed by trade asso\xc2\xad\nciations was proper because a delegation to the trade associations alone\nwould be constitutional, stated:\nBut would it be seriously contended that Congress could\ndelegate its legislative authority to trade or industrial\nassociations or groups so as to empower them to enact the\nlaws they deem to be wise and beneficent for the rehabili\xc2\xad\ntation and expansion of their trade or industries? Could\ntrade or industrial associations or groups be constituted\nlegislative bodies for that purpose because such associa\xc2\xad\ntions or groups are familiar with the problems of their\nenterprises? . . . Such a delegation of legislative power is\nunknown to our law and is utterly inconsistent with the\nconstitutional prerogatives and duties of Congress.\nId. at 537. The Court in Schechter distinguished St. Louis, Iron Mountain\n& Southern Railway Co., as involving a matter of a technical nature and\nButte City Water Co. as a recognition of local customs and of the rules\nof miners concerning mining claims. 295 U.S. at 537.\nAdopting this distinction, it could be argued that the IACAC rules\nare not substantive regulations capable of imposing anti-competitive or\nunfair restrictions but are merely \xe2\x80\x9ctechnical\xe2\x80\x9d rules promulgated by a\n511\n\n\x0cpresumably disinterested body with a recognized expertise in arbitration\nprocedure. Cf. Liebmann, supra at 680-719.\nHowever, because the rules may affect substantive rights,1 we are\nreluctant to conclude on the basis of this distinction that the delegation\nto the IACAC is clearly constitutional, especially in light of the scar\xc2\xad\ncity and age of federal case law approving delegation to private\nbodies.2\nOur concern about the effect such amendments might have on sub\xc2\xad\nstantive rights would be significantly reduced if the amendments would\napply only to agreements entered into after the effective date of the\namendments. This approach would eliminate any potential for unfair\xc2\xad\nness because a party entering an arbitration agreement would have the\nopportunity to examine the amendments to the IACAC rules and, if he\nregarded the amendments as unfair, could either decline to agree to\narbitration or negotiate with the other party to the agreement the\napplication of other rules or modifications to the amendments.3\nWhether you decide to apply the amended rules to all agreements in\nthe interest of uniformity or only to agreements entered into after the\neffective -date of amendments will determine whether governmental\nreview is required. If the former approach is adopted, we believe that,\nin order to minimize the possibility of a challenge to amended IACAC\nrules, the rules should be subject to governmental review and adoption\nby legislation.\nIII.\nThe proposed legislative veto mechanism, although it does provide\nsome governmental review of IACAC amendments, presents other con\xc2\xad\nstitutional problems. As you point out in your memorandum, this\nreview mechanism is unlike the classic \xe2\x80\x9clegislative veto\xe2\x80\x9d provision\n1 For instance, the rules govern the place of arbitration, the choice o f law, the appointment of\narbitrators, and the right to an oral hearing. It is conceivable that the rules could be amended in such\na manner that American citizens could be disadvantaged in arbitration proceedings, e.g., a country\ndistant from the United States could be designated as the place of arbitration.\n2 Other problems could also be present here. First, a problem could arise out of the concept that, in\na representative government, governmental powers should be vested in elected or disinterested public\nofficials. In this manner, governmental decisions \xe2\x80\x98and processes are subject to the checks of a variety of\nlegal controls such as the oath of office, the conflict of interest laws, the control over appropriations,\nthe powers of appointment, confirmation, or removal, and ultimately the electoral process. Another\nproblem arises from the nature of the power vested in the private body. It could be argued that rule\xc2\xad\nmaking power may be constitutionally vested only in \xe2\x80\x9cOfficers of the United States\xe2\x80\x9d appointed\npursuant to the Appointments Clause, Article II, \xc2\xa7 2, clause 2. See Buckley v. Valeo. 424 U.S. 1, 113-41\n(1976). Finally, if it is constitutional to delegate legislative power to private organizations, such a\ndelegation should be subject to standards restricting the exercise of that power. C f A.L.A. Schechter\nPoultry Corp. v. United States, 295 U.S. 495 (1935). Although the courts\xe2\x80\x99 attitude toward delegation of\nlegislative power to executive agencies without specific standards has relaxed considerably, see gener\xc2\xad\nally K.C. Davis, Administrative Law Treatise, \xc2\xa7\xc2\xa72.05, 2.06 and 2.15 (1958), the lack of the checks\nmentioned above on a private organization\xe2\x80\x99s exercise of that power would suggest that standards\nimposed upon the exercise of legislative power by private organizations should be more stringent than\nthe standards imposed on public bodies.\n3 Article 3 of the Inter-American Convention on International Commercial Arbitration applies the\nIACAC rules only when parties to an arbitration agreement have not expressly agreed otherwise.\n\n512\n\n\x0cwhich purports to vest one House of Congress with the power to veto\nExecutive action. Instead, the provision would allow one House of\nCongress to veto \xe2\x80\x9cprivate\xe2\x80\x9d action. Assuming, arguendo, that Congress\ncould delegate to the IACAC the power to amend rules that had been\nenacted by Congress, the question is whether the Constitution author\xc2\xad\nizes a procedure whereby one House may control the exercise of\ndiscretion vested in the IACAC.\nArticle I, \xc2\xa7 1 of the Constitution vests all legislative powers in a\nCongress, consisting of a Senate and House of Representatives. Further\xc2\xad\nmore, those powers cannot be exercised absent participation by the\nPresident. Article I, \xc2\xa7 7, clause 2 requires \xe2\x80\x9c[e]very Bill . . . be pre\xc2\xad\nsented to the President of the United States\xe2\x80\x9d for his approval or\ndisapproval before it can become a law. Article I, \xc2\xa7 7, clause 3 provides\nthat \xe2\x80\x9c[e]very Order, Resolution, or Vote\xe2\x80\x9d to which concurrence of\nboth Houses is necessary shall be presented to the President for his\napproval or veto.4\nThe Presentment Clauses thus provide two primary checks on the\nexercise of legislative power\xe2\x80\x94the principle of bicameralism and the\nExecutive veto. The veto provision in the proposed implementing legis\xc2\xad\nlation would not respect these constitutional checks. The proposed\nlegislation would allow one House of Congress to disapprove amend\xc2\xad\nments to the IACAC rules, but that legislative decision would not be\npresented to the President for his approval or veto. Nor would the\nPresident be given the opportunity to veto any \xe2\x80\x9capproval\xe2\x80\x9d of the\namendments because the approval would be expressed by congressional\ninaction. Further, exercise by one House of the veto power would\npurport to place on the Secretary of State a legal duty to take steps to\nreconvene the rulemaking body of the IACAC. In our view, legal\nduties may not be imposed on the Executive by the exercise of some\xc2\xad\nthing less than the full legislative process. Finally, if Congress could\nconstitutionally delegate to the IACAC its legislative power to amend\nthe rules, that power may be revoked only by affirmative legislative\naction by both Houses of Congress and the President, not by one House\nof Congress disapproving the exercise of that power.\nIV.\nIf you decide that the IACAC rules amended should, as a matter of\npolicy, apply to all arbitration agreements, you may wish to consider an\n4 Giving the President this integral role in the legislative process was believed necessary by the\nFramers in order to limit congressional power. As James Madison put it: \xe2\x80\x9c(I]t is against the enterpris\xc2\xad\ning ambition of this [legislative] department that the people ought to indulge all their jealousy and\nexhaust all their precautions." The Federalist No. 48, at 309 (New American Library Ed. 1961).\nAlexander Hamilton viewed the veto power of the President as necessary to prevent legislative and\nExecutive powers from becoming blended in the same hands. Id., No. 73, at 442. For more extensive\ndiscussion of the constitutionality of legislative vetoes, see 37 Op. A tt\xe2\x80\x99y Gen. 56 (1933); 41 Op. A tt\xe2\x80\x99y\nGen! 230 (1955); 41 Op. A tt\'y Gen. 300 (1957).\n\n513\n\n\x0calternative governmental review mechanism which would vest the Sec\xc2\xad\nretary of State with the power and duty to approve or disapprove\namendments to the IACAC rules. This approach would cure the pro\xc2\xad\nposed legislation of both constitutional infirmities. IACAC\xe2\x80\x99s action in\namending the rules would not be an exercise of legislative power\nbecause the amendments would not be binding on the government but\nwould be merely advisory. The courts have held similar schemes not to\nbe an unconstitutional delegation of legislative power. Sun-Shine An\xc2\xad\nthracite Coal Co. v. Atkins, 310 U.S. 381 (1940); Todd & Co., Inc. v.\nSEC, 557 F.2d 1008, 1012-13 (3d Cir. 1977); R.H. Johnson & Co. v.\nSEC, 198 F.2d 690, 695 (2d Cir. 1952).\nA model for this approach may be found in the Maloney Act, 15\nU.S.C. \xc2\xa7 78o-3, authorizing Securities and Exchange Commission\n(SEC) registration of approved associations of securities dealers. Both\nthe Second and Third Circuits have upheld the Maloney Act against a\nchallenge that it unconstitutionally delegates legislative power to pri\xc2\xad\nvate parties. Todd & Co., Inc. v. SEC, 557 F.2d 1008, and R.H. Johnson\n& Co. v. SEC, 198 F.2d 690. Membership in a registered association, as\na practical matter, is essential to doing business in over-the-counter\nsecurities.5 The Maloney Act authorizes these associations to adopt\nsubstantive as well as procedural rules, to conduct disciplinary proceed\xc2\xad\nings and to enforce sanctions, including expulsion. The associations are\nrequired to submit any changes in or additions to their rules to the SEC\nfor review. 15 U.S.C. \xc2\xa7 78o-3(j). The rules as amended become effec\xc2\xad\ntive if within 20 days the SEC has not disapproved the amendments.\nThe SEC is required to disapprove the amendments if they are not\nconsistent with the Act.\nThe Maloney Act resembles the proposed implementing legislation in\nthat amendments to the rules become effective unless disapproved. A\ncritical difference, however, is that the Act requires the SEC to disap\xc2\xad\nprove amendments if they are inconsistent with the Act. The Act,\ntherefore, places an affirmative obligation on the SEC to consider\namendments, determine whether they are inconsistent with the Act and\ndisapprove them if they are.\nThe Secretary of State\xe2\x80\x99s review of IACAC\xe2\x80\x99s amendments, however,\nwould have to be conducted in accordance with the rule-making re\xc2\xad\nquirements of the Administrative Procedure Act, 5 U.S.C. \xc2\xa7 553,\xc2\xae\nunless the Secretary\xe2\x80\x99s review and adoption of IACAC rules could be\nconsidered a foreign affairs function so as to trigger the foreign affairs\nexemption, 5 U.S.C. \xc2\xa7 553(a)(1), or unless an exception were otherwise\nprovided. We understand that your Department interprets that exemp\xc2\xad\n8 An association may require its members to charge nonmember brokers the commissions charged\nto the general public rather than the lower commissions charged to members. IS U.S.C. \xc2\xa778o-3(e).\n6 See SEC regulations governing its review of amendments of registered association\'s rules. 17\nC.F.R. 240.19b-4.\n\n514\n\n\x0ction broadly. Bonfield, Military and Foreign Affairs Function RuleMaking under the APA, 71 Mich. L. Rev. 221, 258-62 (1972). We\nexpress no opinion on the applicability of this exemption. We would be\nhappy, however, to consider your views on this question and advise\nyou on the exemption\xe2\x80\x99s applicability.\nIf you decide to apply the amended rules only to agreements entered\ninto after the effective date of the amendments, the amendments, be\xc2\xad\ncause they would be presumed to have been agreed to by the parties to\nan arbitration agreement, would not have to be approved by the Secre\xc2\xad\ntary of State. If you feel that the implementing legislation should, as a\nmatter of policy, provide for some opportunity for governmental\nreview of amendments, you may want to consider a \xe2\x80\x9creport and wait\xe2\x80\x9d\nprovision. A model for this approach may be found in 28 U.S.C. \xc2\xa7 2072\nwhich delays the effective date of procedural rules promulgated by the\nSupreme Court until 90 days after the rules have been reported to\nCongress. Within that 90-day period, Congress may through the legisla\xc2\xad\ntive process revoke all or some of the rules.\nL a r r y L . S im m s\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n515\n\n\x0c'


b"Funding of State Department Settlements of Foreign Tort\nClaims\nB ecause 22 U S.C. \xc2\xa7 2669(f) expressly authorizes the Secretary o f State to pay settlem ents o f foreign\nto rt claim s from funds appropriated fo r the activities included in the S tate D epartm ent Basic\nA uth o rities A ct o r from funds \xe2\x80\x9c otherw ise available,\xe2\x80\x9d the paym ent o f such settlem ents is \xe2\x80\x9c other\xc2\xad\nw ise provided fo r\xe2\x80\x9d w ithin the m eaning o f 31 U.S.C. \xc2\xa7 1304(a), and therefore the Judgm ent Fund\nis not av ailab le fo r the paym ent of such settlem ents.\n\nJune 18, 1997\nM\n\nem o ran d u m\n\nO p in io n\n\nfo r th e\n\nC\n\niv i l\n\nA s s is t a n t A t t o r n e y G e n e r a l\n\nD i v is io n\n\nYou have asked whether the Judgment Fund, 31 U.S.C. \xc2\xa7 1304 (1994 & Supp.\nII 1996), is available to pay for settlements of tort claims arising in foreign coun\xc2\xad\ntries pursuant to 22 U.S.C. \xc2\xa7 2669(f) (1994). The Torts Branch of the Civil Divi\xc2\xad\nsion has concluded that such settlements are payable from the State Department\xe2\x80\x99s\nagency appropriation and that the Judgment Fund is therefore not available.1 The\nState Department, relying on a 1980 opinion of the Comptroller General, con\xc2\xad\ncludes that its agency funds are not available for the payment of such settlements\nand that the Judgment Fund is available.2 Because \xc2\xa7 2669 expressly authorizes\nthe Secretary of State to pay settlements of foreign tort claims from funds appro\xc2\xad\npriated for the activities included in the State Department Basic Authorities Act,\nch. 841, \xc2\xa72, 70 Stat. 890 (1956), or from funds \xe2\x80\x9c otherwise available,\xe2\x80\x9d we have\nconcluded that the Judgment Fund is not available for the payment of such settle\xc2\xad\nments.\nI. B ackground\nA. The Judgment Fund\nIn 1956, Congress established a permanent and indefinite appropriation to pay\ncertain final judgments, compromise settlements, and interest and costs. Supple\xc2\xad\nmental Appropriation Act, ch. 748, \xc2\xa7 1302, 70 Stat. 678, 694 (1956). This \xe2\x80\x9c Judg\xc2\xad\nment Fund\xe2\x80\x9d is the proper source o f payment for a particular judgment or settle\xc2\xad\nment under three conditions. First, the payment may not be \xe2\x80\x9c otherwise provided\nfor,\xe2\x80\x9d i.e., there must be no other appropriation that lawfully can be used for pay\xc2\xad\nment. Second, the payment must be certified by the Director of the Office of\n1Memorandum for Dawn Johnsen, Acting Assistant Attorney General, Office of Legal Counsel, from Frank W.\nHunger, Assistant Attorney General, Civil Division, Re Funding o f Stale Department Settlements o f Foreign Tort\nClaims (Jan 16, 1997)\n2See Letter for Frank W Hunger, Assistant Attorney General, Civil Division, from Michael J Matheson, Acting\nLegal Adviser, Department of State, Enclosure 2 at 4 ( \xe2\x80\x9c State Analysis\xe2\x80\x9d )\n\n102\n\n\x0cF unding o f State D epartm ent Settlem ents o f Foreign Tort C laim s\n\nManagement and Budget (\xe2\x80\x9c OMB\xe2\x80\x9d ).3 Finally, the judgment or settlement must\nbe payable under one of several listed statutes or under a decision of a board\nof contract appeals. 31 U.S.C. \xc2\xa7 1304(a)(3) (1994).4\nAgency operating appropriations are not generally available to pay judgments\nand compromise settlements. Thus, prior to the creation of the Judgment Fund,\nmost agencies had to seek a specific appropriation from Congress to pay any judg\xc2\xad\nment imposed on them. This cumbersome process led to undue delay in payment,\nresulting in excess charges for interest. The Judgment Fund was designed to\naddress this problem by eliminating the need for Congress to pass specific appro\xc2\xad\npriations bills for the payment of judgments that were not \xe2\x80\x9c otherwise provided\nfor.\xe2\x80\x9d 5 When an agency has specific and express statutory authority to pay judg\xc2\xad\nments and settlements out of its own revenues, however, judgments continue to\nbe payable out of those funds rather than the Judgment Fund.\nB. State Department Authority to Pay Settlements Under \xc2\xa7 2669(f)\nThe Federal Tort Claims Act ( \xe2\x80\x9c FTCA\xe2\x80\x9d ) authorizes the head of each federal\nagency to adjust, compromise or settle any tort claim for money damages against\nthe United States caused by the negligence of its employees while acting within\nthe scope of their office or employment. 28 U.S.C. \xc2\xa72672 (1994). Settlements\nof less than $2500 are paid by the head of the agency from available agency\nappropriations. Awards of more than $2500 are paid \xe2\x80\x9c in a manner similar to judg\xc2\xad\nments and compromises in like causes.\xe2\x80\x9d Id. Thus to determine the proper source\nof payment for the settlement of a claim of more than $2500, one must determine\nthe proper source of payment for a judgment arising from a similar claim. If a\njudgment for a similar tort claim would be payable from the Judgment Fund,\nthe settlement of the claim also will be payable from the Judgment Fund. If, how\xc2\xad\never, a judgment for a similar claim would be payable from agency funds, the\nagency must use its available funds to pay the settlement.\nWhile tort claims arising in a foreign country generally are excluded from the\nprovisions of the FTCA, 28 U.S.C. \xc2\xa7 2680(k) (1994), Congress has granted certain\nagencies the authority to settle such claims. Section 2 of the State Department\nBasic Authorities Act of 1956, 70 Stat. 890, as amended, authorizes the Secretary\n3 Section 1304(a) provides for certification by the Comptroller General. As of June 30, 1996, however, this function\nwas transferred to the Director o f OMB. Legislative Branch Appropriations Act, 1996, Pub L No 104-53, \xc2\xa7211,\n109 Stat 514, 535 (1995) (codified at 31 U S C \xc2\xa7501 note (1994)) *\n* Editor\xe2\x80\x99s Note* On October 19, 1996, \xc2\xa7 1304(a) was amended again, this time to provide for certification by\nthe Secretary of the Treasury. See General Accounting Office Act of 1996, Pub L No 104-316, tit II, \xc2\xa7202(m),\n110 Stat 3826, 3843 (codified at 31 U .SC . \xc2\xa7 1304(a) (Supp II 1996))\n4The statutes include \xc2\xa7\xc2\xa72414, 2517, 2672, and 2677 o f title 28, 31 U S C . \xc2\xa73723, and certain other specified\nacts\n5 See Availability o f the Judgment Fund fo r the Payment o f Judgments or Settlements in Suits Brought Against\nthe Commodity Credit Corporation Under the Federal Tort Claims Act, 13 Op O L C 362, 363 (1989), 3 Office\nof the General Counsel, United Slates General Accounting Office, Principles o f Federal Appropriations Law 1424 to 14-26 (2d ed. 1994) ( \xe2\x80\x9c GAO Principles\xe2\x80\x9d )\n\n103\n\n\x0cO pinions o f the O ffice o f Legal C ounsel in Volum e 21\n\nof State to \xe2\x80\x9c use funds appropriated or otherwise available to the Secretary\xe2\x80\x9d for\nseveral functions, including to\npay tort claims, in the manner authorized in the first paragraph of\nsection 2672, as amended, of title 28, when such claims arise in\nforeign countries in connection with Department of State operations\nabroad.\n22 U.S.C. \xc2\xa7 2669(f).6 In 1996, Congress appropriated $1.7 billion \xe2\x80\x9c [f]or necessary\nexpenses of the Department of State and the Foreign Service not otherwise pro\xc2\xad\nvided for, including expenses authorized by the State Department Basic Authori\xc2\xad\nties Act of 1956, as amended.\xe2\x80\x9d Department of State and Related Agencies Appro\xc2\xad\npriations Act, 1997, Pub. L. No. 104-208, 110 Stat. 3009, 3009^6 (1996).\nC. Source o f Funds fo r Settlements Made Pursuant to \xc2\xa7 2669(f)\nThe Torts Branch maintains that under the plain language of \xc2\xa7 2669, an appro\xc2\xad\npriation for that section is available to pay settlements of foreign tort claims under\nparagraph (f). If that agency appropriation is available, the settlements are \xe2\x80\x9c other\xc2\xad\nwise provided for\xe2\x80\x9d within the meaning of 31 U.S.C. \xc2\xa7 1304, and the Judgment\nFund is therefore not available.\nThe State Department contends that the Civil Division\xe2\x80\x99s analysis does not con\xc2\xad\nsider the full text of \xc2\xa7 2669(f) and the legislative history of \xc2\xa7 2672 of the FTCA,\nwhich is specifically referenced in paragraph (f). The State Department points\nto a 1980 opinion of the Comptroller General that considered whether settlements\nof foreign tort claims over $2500 under paragraph (f) were, like settlements for\nthe same amount under the FTCA, payable from the Judgment Fund. See State\nAnalysis at 2-5 (discussing Administrative Settlements of Tort Claims Arising\nin Foreign Countries, B-199449.0M, 1980 WL 16177 (C.G. Aug. 7, 1980)\n(\xe2\x80\x9c GAO Opinion\xe2\x80\x9d )). That opinion concluded that when Congress enacted para\xc2\xad\ngraph (f) and authorized the Secretary to pay settlements of foreign tort claims,\nCongress intended for those settlements to be paid in the same manner as domestic\nclaims settled under \xc2\xa7 2672 of the FTCA rather than paid in the manner of the\nother activities listed in \xc2\xa7 2669, GAO Opinion at *3. Because FTCA claims over\n$2500 presently are payable from the Judgment Fund, the State Department con\xc2\xad\ncludes that settlements of more than $2500 made pursuant to \xc2\xa7 2669(f) are payable\nfrom the Judgment Fund rather than from its operating appropriation. See State\nAnalysis at 9-10.\nWithout expressing a view on the correctness of the GAO\xe2\x80\x99s interpretation of\nthe law as it existed in 1980, the Torts Branch rejects the State Department\xe2\x80\x99s\n6 Section 2669 also authorizes the Secretary to provide for printing and binding outside of the United States;\nto settle claims o f less than $15,(MX) presented by foreign governments; to obtain contract services abroad, to provide\nfor official functions and courtesies, and to procure goods for use at Foreign Service posts. 22 U.S C \xc2\xa7 2669\n\n104\n\n\x0cFunding o f State D epartm ent Settlem ents o f Foreign Tort Claims\n\npresent reliance on the 1980 GAO opinion because \xc2\xa72669 has since been\namended.7 In 1980, \xc2\xa72669 provided that \xe2\x80\x9c [t]he Secretary of State, when funds\nare appropriated therefor, may . . . (f) pay tort claims, in the manner authorized\nin the first paragraph of section 2672, as amended, of title 28, when such claims\narise in foreign countries in connection with Department of State operations\nabroad.\xe2\x80\x9d 22 U.S.C. \xc2\xa72669 (1976) (emphasis added). The authorization for the\nactivities in \xc2\xa7 2669 was thus conditioned on Congress making a specific appropria\xc2\xad\ntion.\nIn 1985, however, Congress replaced the conditional authorization with a perma\xc2\xad\nnent authorization, and made available additional funds to cover \xc2\xa7 2669 activities.\nSee Foreign Relations Authorization Act, Fiscal Years 1986 and 1987, Pub. L.\nNo. 99-93, \xc2\xa7 114, 99 Stat. 405, 411 (1985). The amended statute provides that\n\xe2\x80\x9c [t]he Secretary of State may use funds appropriated or otherwise available to\nthe Secretary to . . . (f) pay tort claims, in the manner authorized in the first\nparagraph of section 2672, as amended, of title 28, when such claims arise in\nforeign countries in connection with Department of State operations abroad.\xe2\x80\x9d 22\nU.S.C. \xc2\xa7 2669 (emphasis added). The Torts Branch contends that the statute now\npermits the Secretary to pay for settlements without a specific appropriation, and\nthat the Judgment Fund therefore is not available.\nII. Analysis\nWhether the Judgment Fund is available for payment of foreign tort claims\nunder \xc2\xa7 2669(f) turns on whether the payment of those claims is \xe2\x80\x98\xe2\x80\x98otherwise pro\xc2\xad\nvided for\xe2\x80\x9d within the meaning of 31 U.S.C. \xc2\xa7 1304. Whether a payment is other\xc2\xad\nwise provided for is a question of legal availability rather than actual funding\nstatus. GAO Principles at 14\xe2\x80\x9426. If any of the State Department\xe2\x80\x99s agency appro\xc2\xad\npriations are lawful sources of payment for settlements under paragraph (f), pay\xc2\xad\nment is \xe2\x80\x9c otherwise provided for\xe2\x80\x9d and the Judgment Fund is not available.\nWe begin with the text of \xc2\xa7 2669. That section states that funds appropriated\nfor the specific purposes listed in \xc2\xa72669 and funds \xe2\x80\x9c otherwise available to the\nSecretary\xe2\x80\x9d are available to pay settlements of foreign tort claims \xe2\x80\x9c in the manner\nauthorized in the first paragraph of section 2672, as amended, of title 28.\xe2\x80\x9d 22\nU.S.C. \xc2\xa7 2669(f). The first paragraph of \xc2\xa7 2672, in turn, requires the Secretary\nto obtain the approval of the Attorney General for settlements of more than\n$25,000 and authorizes the Secretary to use arbitration. 28 U.S.C. \xc2\xa72672.8 The\n7See Memorandum for Jeffrey Axelrad, Director, Torts Branch, Civil Division, from Tess Finnegan, Law Clerk,\nRe: Use o f State Department Funds to Settle Foreign Tort Claims, Reply M emorandum (Dec 1996)\n8 The first paragraph of \xc2\xa7 2672, in relevant part, states\nThe head of each Federal agency . . , in accordance with regulations prescribed by the Attorney General,\nmay consider, ascertain, adjust, determine, compromise, and settle any claim for money damages against\nthe United States for [torts committed by Federal employees]' Provided, That any award, compromise,\nor settlement in excess of $25,000 shall be effected only with the pnor written approval of the Attorney\nContinued\n105\n\n\x0cO pinions o f the O ffice o f L egal C ounsel in Volum e 21\n\ntext of the first paragraph of \xc2\xa7 2672 in no way Limits or excepts the authorization\nto use funds appropriated under \xc2\xa7 2669 to pay for settlements of foreign tort\nclaims. Because \xc2\xa7 2669 expressly makes those State Department appropriations\navailable to pay foreign tort claims, the settlements are \xe2\x80\x9c otherwise provided for\xe2\x80\x9d\nand the Judgment Fund is not available.\nWe have considered the State Department\xe2\x80\x99s argument that, notwithstanding\n\xc2\xa7 2669(f)\xe2\x80\x99s direction that the Secretary pay foreign tort claims \xe2\x80\x9c in the manner\nauthorized in the first paragraph o f section 2672 , as amended, of title 28,\xe2\x80\x9d 22\nU.S.C. \xc2\xa7 2669(f) (emphasis added), Congress intended to incorporate all of the\nparagraphs and all subsequent amendments to \xc2\xa72672 into \xc2\xa7 2669(f). See State\nAnalysis at 2-9 (citing GAO opinion). Because the third paragraph of \xc2\xa7 2672 has\nbeen amended and now permits agencies to pay certain domestic tort claim settle\xc2\xad\nments of more than $2500 from the Judgment Fund,9 the State Department main\xc2\xad\ntains that similar foreign tort settlements of this amount also are payable from\nthe Judgment Fund.\nWe do not find this argument persuasive. First, when interpreting a statute of\nspecific reference like \xc2\xa7 2669(f), \xe2\x80\x9c only the appropriate parts of the statute referred\nto are considered.\xe2\x80\x9d 2B Norman J. Singer, Sutherland Statutes and Statutory\nConstruction \xc2\xa751.08, at 192 (5th ed. 1992). By restricting the reference in para\xc2\xad\ngraph (f) to the first paragraph of \xc2\xa72672, Congress presumably intended to\nexclude the other paragraphs from application to payment of \xc2\xa7 2669(f) settlements.\nNor do we agree that because Congress had amended the third but not the first\nparagraph of 28 U.S.C. \xc2\xa72672 at the time it enacted \xc2\xa7 2669(f), Congress nec\xc2\xad\nessarily intended to incorporate the amendments to the third paragraph of \xc2\xa7 2672\ninto the payment of \xc2\xa7 2669(f) claims. There is another, more plausible explanation\nfor Congress\xe2\x80\x99s inclusion of the phrase \xe2\x80\x9c as amended\xe2\x80\x9d in \xc2\xa7 2669(f). A statute of\nspecific reference \xe2\x80\x9c incorporates the provisions referred to from the statute as of\nthe time of adoption without subsequent amendments, unless the legislature has\nexpressly or by strong implication shown its intention to incorporate subsequent\namendments with the statute.\xe2\x80\x9d 2B Norman J. Singer, Sutherland Statutes and\nStatutory Construction \xc2\xa751.08, at 192 (5th ed. 1992). By specifically referring\nto the first paragraph of \xc2\xa72672, \xe2\x80\x9c as amended ,\xe2\x80\x9d Congress provided that any\namendments to the first paragraph would be incorporated into \xc2\xa7 2669(f). Had Con\xc2\xad\nGeneral .\n. N otwithstanding the proviso contained in the preceding sentence, any award, compromise,\nor settlem ent may be effected without the p n o r written approval of the Attorney General . . . to the\nextent that the A ttorney General delegates to the head o f the agency the authority to make such award,\ncom prom ise, o r settlement. Such delegations m ay not exceed the authority delegated by the Attorney G en\xc2\xad\neral to the United States attorneys to settle claims for money damages against the United Slates Each\nFederal agency m ay use arbitration, or other [specified] alternative means of dispute resolution . . . to\nsettle any tort claim against the United States, to the extent o f the agency\xe2\x80\x99s authority to award, compromise,\nor settle such claim without the p nor written approval o f the Attorney G e n e ra l. . . .\n9The third paragraph o f \xc2\xa7 2672 states, in relevant part,\nPayment o f any award, compromise, or settlement in an amount in excess of $2,500 made pursuant\nto this section\n. shall be paid in a m anner similar to judgments and compromises in like causes and\nappropriations o r funds available for the paym ent of such judgments and compromises are hereby made\navailable for the payment o f awards, compromises, or settlements under this chapter.\n\n106\n\n\x0cFunding o f State D epartm ent Settlem ents o f F oreign Tort Claim s\n\ngress not included the phrase \xe2\x80\x9c as amended,\xe2\x80\x9d \xc2\xa7 2669(f) would have been inter\xc2\xad\npreted as incorporating the $1000 cap on agency settlement authority contained\nin the first paragraph of \xc2\xa72672 in 1956, rather than incorporating any subsequent\namendments to the dollar cap or the other payment provisions in paragraph one.\nFinally, we note that the GAO\xe2\x80\x99s interpretation of \xc2\xa7 2669(f) fails to give any\neffect to the words \xe2\x80\x9c first paragraph.\xe2\x80\x9d In the normal case, every word Congress\nuses in a statute should be given effect. See, e.g., Feist Publications, Inc. v. Rural\nTelephone Serv. Co., 499 U.S. 340, 358-59 (1991); United States v. Menasche,\n348 U.S. 528, 538-39 (1955). Congress had no reason to specify \xe2\x80\x9c the first para\xc2\xad\ngraph\xe2\x80\x9d of \xc2\xa72672 if it intended for all of the paragraphs of \xc2\xa72672 to apply to\npayments under \xc2\xa7 2669(f). We thus conclude that \xc2\xa7 2669(f) incorporates only the\nprovisions of the first paragraph of \xc2\xa72672, and that the provisions of the third\nparagraph authorizing payment from the Judgment Fund for certain settlements\ndo not apply to the State Department\xe2\x80\x99s settlement of foreign tort claims.\nThe State Department has advised us that because it has not budgeted funds\nto cover these settlements, it is likely that the Secretary of State will cease to\nsettle foreign tort claims. See Letter for Frank W. Hunger, Assistant Attorney\nGeneral, Civil Division, from Michael J. Matheson, Acting Legal Adviser, Depart\xc2\xad\nment of State at 1-2 (Jan. 6, 1997). The State Department is concerned that this\nwill be an irritant in the United States\xe2\x80\x99 relations with foreign countries, and will\nlikely result in an increase in the number of suits filed against the United States\nin foreign courts. Id.\nAlthough we are sensitive to these policy implications, we believe that, in light\nof the plain language of \xc2\xa7 2669, the concerns the State Department expresses must\nbe addressed to Congress.10 In this regard, the Department may wish to consider\nworking with the State Department to propose legislation that would make the\nJudgment Fund available for settlements of foreign tort claims under \xc2\xa7 2669(f).\nIII. Conclusion\nBecause funds appropriated to the State Department for the activities listed in\nsection 2 of the State Department Basic Authorities Act of 1956 and funds other\xc2\xad\nwise available to the Secretary are lawful sources of payment for settlements of\nforeign tort claims made pursuant to \xc2\xa7 2669(f), the Judgment Fund is not available.\nThe Secretary of State must comply with the first paragraph of 28 U.S.C. \xc2\xa7 2672\n\n10 We also note that our conclusion is not entirely inconsistent with past practice After reviewing its records,\nthe Office of the Legal Adviser informed us that the Secretary used agency appropriations to pay for two foreign\ntort settlements in the late 1970\xe2\x80\x99s\n\n107\n\n\x0cO pinions o f the O ffice o f L eg a l C ounsel in Volum e 21\n\nwhen settling such claims, but they are to be paid from State Department appro\xc2\xad\npriations.\nRICHARD L. SHIFFRIN\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n\x0c"