b'Recovery of Interest on Advance Payments\nto State Grantees and Subgrantees\nSection 203 of the Intergovernm ental Cooperation Act exem pts both the states and their subgrantees\nfrom accountability for interest earned on federal grant funds pending their disbursem ent, and\nsuch interest may thus not be recovered by the federal governm ent.\n\nFebruary 5, 1982\nM EM ORANDUM OPINION FOR THE COUNSEL TO THE DIRECTOR,\nOFFICE OF MANAGEMENT AND BUDGET\nThis memorandum responds to your request that this Office advise you\nwhether the federal government may recover interest actually accrued by state\ngrantees and subgrantees on advance payments of grant funds. Section 203 o f the\nIntergovernmental Cooperation Act of 1968,42 U .S.C . \xc2\xa7 4213 (1976), provides\nthat \xe2\x80\x9c [s]tates shall not be held accountable for interest earned on grant-in-aid\nfunds, pending their disbursement for program purposes.\xe2\x80\x9d On the basis of this\nprovision, prior opinions of the Office of Legal Counsel, and three recent\ndecisions of the Com ptroller General interpreting that provision, we conclude\nthat the federal government may not recover interest earned by state grantees and\nsubgrantees on advances of federal grant-in-aid funds.\nI.\nSection 203 of the Intergovernmental Cooperation Act of 1968, 42 U .S .C .\n\xc2\xa7 4213, which directs the scheduling of transfers of federal grant-in-aid funds to\nstates, provides that transfers of grant funds be made as near as possible to the\ntime of disbursem ent by the states, and exempts states1 from accountability for\ninterest earned on these funds pending their disbursement. Section 203 provides:\nScheduling of Federal transfers to the States\nHeads of Federal departments and agencies responsible for ad\xc2\xad\nministering grant-in-aid programs shall schedule the transfer of\ngrant-in-aid funds consistent with program purposes and applica-\n\n1 D ecisions of the C om ptroller G eneral have in the past required recipients o f federal g rants to return to the\nTreasury any interest earned on such grants prior to their use, unless C ongress has specifically precluded su ch a\nrequirem ent. See 42 Com p. G en 289 (1962) and cases cited therein.\n\n127\n\n\x0cble Treasury regulations, so as to m inim ize the time elapsing\nbetween the transfer of such funds from the United States Treas\xc2\xad\nury and the disbursement thereof by a State, whether such dis\xc2\xad\nbursem ent occurs prior to or subsequent to such transfer of funds.\n. . . States shall not be held accountable for interest earned on\ng ra n t-in -a id funds, p en din g their disbursem ent fo r program\npurposes.\n42 U .S .C . \xc2\xa7 4213 (emphasis added).\nYou have questioned the applicability of the exemption contained in \xc2\xa7 203 to\ninterest actually earned by state grantees in view of the A ct\xe2\x80\x99s mandate that federal\ngrant-in-aid funds not be transferred from the Treasury until such funds are ready\nfor use by the state grantees, the effect of which would minimize the amount of\ninterest accrued by the states. In addition, it is your position that even if \xc2\xa7 203\ndoes provide an exemption for interest earned by state grantees, the exemption\ndoes not extend to local governmental units which are secondary recipients of\nfederal grant funds funnelled through the states.\nN otw ithstanding the Act\xe2\x80\x99s purpose to discourage the transfer of federal grant\nfunds to states in advance of the grantees\xe2\x80\x99 program needs, we cannot ignore the\nclear language o f the A ct which exempts states from accountability for interest in\nthe event that interest is earned prior to states\xe2\x80\x99 disbursement of funds. Dec.\nComp. G en. B - l 96794 (Feb. 2 4 ,1 9 8 1 ); 5 9 Comp. Gen. 218 (1980); Dec. Comp.\nGen. B -171019 (Oct. 16, 1973); Rehnquist, Office of Legal Counsel, \xe2\x80\x9c Recov\xc2\xad\nery o f Interest on Excessive C ash Balances of LEAA Funds Held by States and\nCities\xe2\x80\x9d (Nov. 15, 1971 ).2 Moreover, while the question can be raised whether\n2 In his 1971 o p in io n , then Assistant A ttorney G eneral R ehnquist gave a clear and concise account o f the\nexem ption provision co n tain ed in \xc2\xa7 203 o f th e Act:\nO u r reading o f the legislative h isto ry concerning \xc2\xa7 203 and the bro ad er objectives o f the\nIntergovernm ental Cooperation Act o f 1968 as w ell, leads us to [conclude] that Congress exem pted\nth e States from the burden o f accounting for interest on g rant funds to facilitate the new authorities for\nco m m ingling F ederal funds in the g en e ra l accounts of th e States and the new Treasury techniques\nsuch as the letter o f cred it and sight d ra ft procedures w h ich im plem ented the A ct. We do not read\n\nthese, however, as support for the view that Congress intended to impose penalties on those States\nwhich accum ulated interest on deposited or invested funds and to require a forfeiture o f that interest\nO n the contrary, the [S enate and H ouse] reports em phasize the expectation that very little interest\naccum ulation is expected. It is clear to u s that this is because an im portant objective o f the legislation\nis to require the Federal G overnm ent to im pose such oversight controls as w ill result in a scheduling\no f funds to the S tates and so prevent a n y long periods o f d isu se of funds w ith resulting buildups and\naccum ulation o f w indfalls.\nAn overall legislative objective is clearly assistance to the States from the Federal Government. In\nits very title the A ct is described as a m easure to \xe2\x80\x9c achieve the fullest cooperation * * * to im prove the\nadm inistration o f grants-in-aid to the States \xe2\x80\x9d For these purposes, am ong others, the States were\nrelieved o f a n u m b e r o f the duties w hich theretofore had b u rden ed the adm inistration o f the grant-inaid pro g ram s, such as the requirem ents for m aintaining funds in separate banks and the requirem ent\no f accounting for any interest earned o n deposits or investm ents\nWe w ould agree . . . that Congress never intended to p erm it a State \xe2\x80\x9c to abuse agency and Treasury\nregulations by draw ing excessive am o u n ts o f cash for investm ent p ending disbursem ent and still be\nrelieved o f having to account for th e interest earned on th e in v estm en t.\'\xe2\x80\x99 T he legislative history\nindicates that C ongress d id not intend that to happen because the Federal G overnm ent was expected\nto prevent it from happening by sp acin g the disbursem ent funds on the basis o f need.\n\nPerhaps the most persuasive argument against a plan to hold a State accountable fo r interest\nearned is the categorical provision in \xc2\xa7 203 stating \xe2\x80\x9cStates shall not be held accountable fo r interest\nearned on grant-in-aid funds, pending their disbursement fo r program purposes .\xe2\x80\x9d We do not fin d a\nC ontinued\n\n128\n\n\x0cthis exemption applies to local governmental units which are subgrantees of the\nstates, both this Office and the Com ptroller General have examined this issue,\nand neither has read \xc2\xa7 203 to permit the federal government to recover interest\nearned by local governmental units receiving federal funds as subgrants from the\nstates. See Dec. Comp. G en. B-196794 (Feb. 24, 1981); 59 Comp. Gen. 218\n(1980); Dec. Comp. Gen. B\xe2\x80\x94171019 (Oct. 16, 1973); Ulman, Office of Legal\nCounsel, \xe2\x80\x9c Issue Raised by Conflicting Opinions Concerning Interest Earned on\nGrant Funds by Local Governments\xe2\x80\x9d (Mar. 12, 1974); Office of Legal Counsel,\nInternal Action M emorandum (Feb. 19, 1974). But see Rehnquist, Office of\nLegal Counsel (Nov. 15, 1971), supra.\n\nII.\nThis Office first considered the applicability of the \xc2\xa7 203 exemption to\nsubgrantees of states receiving federal grant-in-aid funds in a 1971 opinion\nissued by Assistant Attorney General Rehnquist to the Administrator of the Law\nEnforcement Assistance Administration (LEAA). See Rehnquist, Office of Legal\nCounsel (Nov. 15, 1971), supra. In that opinion Assistant Attorney General\nRehnquist noted that \xc2\xa7 203 of the Act speaks only of relief to \xe2\x80\x9c States,\xe2\x80\x9d a term\nwhich is defined in Section 102 of the Act as\nany of the several States of the United States, the District of\nColum bia, Puerto Rico, any territory or possession of the United\nStates, or any agency or instrumentality of a State, but does not\ninclude the governments of the political subdivisions c f the State.\n42 U .S.C . \xc2\xa7 4201(2) (emphasis added). Because local governmental units are\nnot encom passed by this definition, he concluded that local governmental units\nreceiving federal funds as subgrantees of the states were not exempt from the\ngeneral requirement that interest earned on federal funds be returned to the\nUnited States Treasury:\n[D]espite the Congressional intention to discontinue \xe2\x80\x9c future ap\xc2\xad\nplication\xe2\x80\x9d of the interest accountability \xe2\x80\x9c principle\xe2\x80\x9d (H. Rept.\nNo. 1845, 90th C ong., Aug. 2, 1968) the specific mention of the\nStates in \xc2\xa7 203 without any express legislative relief to the cities\nand other local units leaves unchanged the general rule calling for\ncontinued accountability by the latter, whether funds are received\ndirectly or by subgrant from a State. Although we are not aware of\nany reason for the distinction in \xc2\xa7 203 between \xe2\x80\x9c States\xe2\x80\x9d and\n\xe2\x80\x9c political subdivisions,\xe2\x80\x9d it nevertheless exists, and accordingly\ncontradiction to that clear statement in the Act nor in its legislative history\nR ehnquist opinion at 5 - 6 (em phasis added) Because this Office has continued to m aintain the view s expressed in\nA ssistant A ttorney G eneral R ehnquist\'s 1971 opin io n , w hich are also consistent w ith subsequent decisions b y the\nC o m p troller G eneral, we do not find it necessary to re-analyze in this opinion the applicability o f \xc2\xa7 203 to state\ngrantees\n\n129\n\n\x0cwe thin k that as a m atter of law the distinction must be\nm aintained.\nRehnquist opinion at 7.\nIn strictly construing the term \xe2\x80\x9c State\xe2\x80\x9d in the Act without reference to the A ct\xe2\x80\x99s\nlegislative history, the Rehnquist opinion failed to distinguish local governmental\nunits which receive grant-in-aid funds directly from the federal government from\nthose which are secondary recipients of federal grant funds, receiving federal\nfunds as subgrantees of the states. In view o f the A ct\xe2\x80\x99s purpose to assist the states\nby facilitating the transfers o f federal grant funds, as well as by relieving the\nstates of various administrative and accounting duties, we believe that this\ndistinction is critical to the A ct\xe2\x80\x99s implementation. As subsequent decisions of this\nOffice3 and the Comptroller G eneral have m ade clear, a requirement that local\ngovernm ental units receiving federal grant funds as subgrantees of the states be\nheld accountable for interest earned on these funds would necessarily require\nstate grantees, in contravention of \xc2\xa7 203, to be responsible for ascertaining and\nsecuring the interest earned by their local subgrantees. In the case of direct\nfederal grants to local governmental units, however, state grant administrative\nm achinery is in no way implicated\xe2\x80\x94 in these cases, o f course, local grantees are\ndirectly accountable to the federal government for interest earned on federal\ngrant funds prior to their use. S ee Dec. Comp. Gen. B-196794 (Feb. 24, 1981);\n59 Comp. G en. 218 (Jan. 17, 1980); U lm an, Office of Legal Counsel, \xe2\x80\x9c Issue\nR aised by Conflicting Opinions Concerning Interest Earned on Grant Funds by\nLocal G overnm ents\xe2\x80\x9d (Mar. 12, 1974); Dec. Comp. Gen. B -171019 (Oct. 16,\n1973).\nIn 1973, the Com ptroller G eneral considered the issue of interest accountabil\xc2\xad\nity by subgrantees o f the states and concluded that \xe2\x80\x9c political subdivisions\nreceiving Federal grants-in-aid through State governments are entitled to retain\nmoneys received as interest earned on such Federal funds.\xe2\x80\x9d Dec. Comp. Gen.\nB -1 7 1 0 1 9 at 1 (O ct. 16, 1973). In reaching this conclusion, the Comptroller\nG eneral noted that neither the language nor the legislative history of \xc2\xa7 203 of the\nIntergovernm ental Cooperation A ct differentiates between grants which the\nstates will disburse themselves and grants involving funds which the states will\nsubgrant to local governm ents.4 The Com ptroller General stated:\n1\nSee U lm a n , O ffice of Legal Counsel, \xe2\x80\x9c Is su e Raised by C onflicting O p inions C oncerning Interest E arned on\nG ran t R inds by L ocal G o v ern m en ts\xe2\x80\x99\' (Mar 12, 1974) O n Mar. 12, 1974, A cting A ssistant A ttorney G eneral U lm an\nresponded to a request by LEA A to resolve th e differences betw een the 1971 R ehnquist opinion an d a 1973 decision\nby th e C o m p tro lle r G eneral w hich concluded that local governm ental u nits receiving federal grant funds as\nsub g ran ts from th e states w ere perm itted to re ta in the interest ea rn e d on those funds. In his letter, U lman deferred to\nthe ju d g m e n t o f th e C o m p tro lle r G eneral reg ard in g the proper interpretation o f \xc2\xa7 203, noting that " th e m atter .\ninvolve[d] th e disp o sitio n o f funds in the settlem ent o f a public accoun t, a m atter w ithin [the C o m ptroller G en eral\xe2\x80\x99s]\nofficial ju risd ic tio n .\n\xe2\x80\x9d U lm a n , Office of L e g al C ounsel, supra at 3 See also Office o f Legal C o unsel. Internal\nA ction M em o ra n d u m (F eb 19. 1974) (discussing issues to be addressed in the Mar. 12, 1974, letter to LE A A )\n4 T h e C o m p tro lle r G eneral referred to a F eb . 19, 1969, m em orandum from the A ssistant G eneral C ounsel for\nE d ucation, D ep artm en t o f H ealth , Education a n d W elfare (H E W ) to the A ssistant C om m issioner for A dm inistra\xc2\xad\ntio n . H EW , w hich also co n c lu d ed that the interpretation of \xc2\xa7 203 that is m ost co n sisten t w ith the Intergovernm ental\nC o o p era tio n A c t\xe2\x80\x99s p urposes and legislative h isto ry requires that all federal g rant funds transferred to states be\nex em p t from in terest accountability, without reg ard to w hether the funds are further subgranted by the states:\n(T he la nguage o f \xc2\xa7 203] quite literally instructs us not to hold a S tate agency accountable for\ninterest earn ed on g ran t funds pending their disbursement. T h ere is n o exception to this instruction\nC ontinued\n\n130\n\n\x0cThus, it seems clear to us that States are not to be held accountable\nfor interest earned on any grant-in-aid funds pending their dis\xc2\xad\nbursem ent, whether or not the States intend, or are required by the\nterms of the grant, to subgrant these funds. To hold otherwise\nwould, of course, require the States to assume the burden of\naccounting for the presumably relatively small amounts of inter\xc2\xad\nest which would be earned on these funds in contravention of the\nlegislative intent behind the last sentence in section 203.\nId. at 8.\nThis analysis of \xc2\xa7 203 was reaffirmed by the Comptroller General in 1980,\nwith respect to /ton-governmental subgrantees of state recipients of federal\ngrants. See 59 Comp. Gen. 218 (Jan. 17, 1980). The Com ptroller General\nconcluded that \xe2\x80\x9c the same rationale that justifies exempting governmental sub\xc2\xad\ngrantees from rem itting to the Federal grantor agency interest earned on Federal\ngrant funds received from the States, applies equally to non-governmental sub\xc2\xad\ngrantees.\xe2\x80\x9d Id.\nAgain in 1981, the Comptroller General reiterated his interpretation of \xc2\xa7 203\nas permitting subgrantees of federal grants to retain the interest earned on funds\nreceived by them through the states. See Dec. Comp. Gen. B -196794 (Feb. 24,\n1981). The Com ptroller G eneral\xe2\x80\x99s 1981 decision was prompted by a request from\nthe Office of M anagement and Budget (OMB) to reconsider the current reading\nof \xc2\xa7 203 in light of the difficulties that it poses for sound cash management by the\nvarious federal grantor agencies. OMB was, and continues to be, concerned that\n\xc2\xa7 203 provides an incentive to states and their subgrantees to draw on their grant\nfunds prematurely to accrue \xe2\x80\x9c free\xe2\x80\x9d interest, and thereby frustrate the mandate of\nTreasury C ircular 10755 against excessive cash withdrawals. While the Com p\xc2\xad\nfor funds that ea rn interest pending their disbursem ent by a local educational agency, o r any o ther\nagency\nTo depart from this plain reading o f \xc2\xa7 203 w ould require som e clear indication o f a d ifferent\nlegislative intent in its enactm ent. N o such indication is apparent. O n the contrary, as th e floor\nm anager o f the H ouse bill, M r R euss, pointed out\xe2\x80\x94\nT he first substantive title\xe2\x80\x94 title II\xe2\x80\x94 calls for im proved adm inistration o f grants-in-aid to\nthe States * * * In addition it w ould relieve the States from u nnecessary and outm oded\naccounting procedures now in effect and the m aintenance o f separate bank accounts w hile\nprotecting the n g h t of the executive branch and the C om ptroller G eneral to audit those\naccounts\nR elief from \xe2\x80\x9c unnecessary * * * accounting procedures\xe2\x80\x9d is consistent w ith suspension o f the rule\nrequiring the S tates to account for interest earned on grant funds, regardless o f w hat agency o f the\nState may be in possession of those funds at the tim e that such interest accrues. The effect c f excluding\npolitical subdivisions from the term \'State\' must be understood merely to withhold interest fo r -\n\ngiveness in programs in which a local educational agency is directly accountable to the Federal\nGovernment.\nD ec C om p G en B -1 7 1 0 1 9 (O ct. 16, 1973) (em phasis added)\n5 Treasury C ircular 1075 requires th a t1\nCash advances to a recipient organization shall be lim ited to the m inim um am ounts needed and shall\nbe tim ed to be in accord only w ith the actual, im m ediate cash requirem ents o f the recipient\norganization in carry in g out the purpose of the approved program or project T h e tim ing an d am ount\no f cash advances shall be as close as is adm inistratively feasible to the actual disbursem ents by the\nrecipient organization for direct program costs and the proportionate share o f any allow able indirect\ncosts\n3 1 C .F R \xc2\xa7 205 4 ( 1 9 7 8 ) See also S. R ep N o 29, 96th C ong , 2d S ess (1980) o n the S upplem ental A p p ro p n aC o n n n u ed\n\n131\n\n\x0ctroller G eneral was sympathetic to the concerns expressed by OMB and indicated\nthat \xc2\xa7 203 is being reassessed in light of administrative changes that have taken\nplace since the legislation was passed in 1968, he nevertheless concluded that\n[a]s long as section 203 rem ains in e f f e c t. . . we see no basis for\nchanging our ruling even if this is an obstacle to better cash\nm anagem ent. However, we should point out that our decision\ndoes not preclude agencies from com plying with the three steps\nm entioned by the Senate Com m ittee on Appropriations, includ\xc2\xad\ning \xe2\x80\x9c [in itiatin g immediate recovery action whenever recipients\nare found to have drawn excess cash, in violation of Treasury\nC ircular 1075.\xe2\x80\x9d S. Rep. No. 9 6 -8 2 9 , 96th C ong., 2d Sess. 14\n(1980). T hus, the agencies should monitor their grantees draw of\ncash and recover any excess.\nId. at 2.\nO ur own reading of \xc2\xa7 203 of the Intergovernmental Cooperation Act o f 1968,\nin light o f its legislative history, supports the foregoing analyses of the Comp\xc2\xad\ntroller G eneral. W hile we are m indful of the position taken by this Office in the\n1971 Rehnquist opinion, we believe that the A ct\xe2\x80\x99s legislative history, and the\naccom panying statem ents of the A ct\xe2\x80\x99s purposes, cannot support the narrow\ninterpretation of \xe2\x80\x9c State\xe2\x80\x9d accorded \xc2\xa7 203 by that opinion. To exempt state\ngrantees from the interest accountability requirement while requiring that they\nm onitor and collect interest accrued by their .jwbgrantees would reimpose the\nvery adm inistrative and accounting burdens of which the Act was intended to\nrelieve the states.6 Although the Rehnquist opinion did not appear to contemplate\nsuch a result, it nevertheless seem ed com pelled by its narrow reading of \xe2\x80\x9c States\xe2\x80\x9d\nto distinguish federal grant funds which are disbursed by the states for state\nprogram m ing needs from those funds which are disbursed by the states to their\npolitical subdivisions for local program m ing needs. In view of the A ct\xe2\x80\x99s overall\nlegislative objective of assisting the states by improving the administration of\ngrants-in-aid\xe2\x80\x94 including the facilitation of grant fund transfers, and relieving\nstates o f the burdens of maintaining grant funds in separate bank accounts and\naccounting for interest earned o n deposits or investments\xe2\x80\x94 it would make little\nsense to im pose upon states th e far m ore difficult task of accounting for the\ntions and R escission B ill, 1980, directing all federal agencies to \xe2\x80\x9c take im m ediate steps to assure com pliance w ith\nTreasury C ircu lar 1075\xe2\x80\x9c b y\n(1) Review ing th e p erio d ic reports filed by recipients to ascertain w hether they are draw ing and\nholding cash in ex cess o f their cu rren t needs,\n(2) A uditing a sufficient number of recip ien t accounts to determ ine w h eth er they are filing accurate\nreports on cash m han d ; and\n(3) Initiating immediate recovery action whenever recipients arefo u n d to have drawn excess cash, in\n\nviolation o f Treasury Circular 1075.\nS. R ep N o. 829 at 14 (em phasis added).\n6 O f co u rse, th is burden w ould not be im p o se d on the states in cases w h ere federal grant funds are transferred\ndirectly from the federal g ran to r agencies to lo c al governm ental units, w ith o u t being funnelled through the states.\nA ll prior o p inions of th e C o m p tro lle r G eneral an d the Office of Legal C o u n sel, including the R ehnquist op in io n , are\nin agreem ent that in such ca ses, the local g ra n t recipients are responsible d irectly to the federal grantor agency, and\nare not ex em p t from in terest accountability b y operation o f \xc2\xa7 203.\n\n132\n\n\x0cinterest earnings of their subgrantees when the states themselves are exempt from\naccountability for their own earnings. Thus, we believe that, consistent with the\npurposes of the Act, \xc2\xa7 203 is properly interpreted to exempt interest accountabil\xc2\xad\nity on all federal grant-in-aid funds that are transferred to the states, regardless of\nwhether such funds are disbursed by the states for their own programming needs\nor subgranted to local governmental units.\nWhile we are sympathetic to the cash management concerns expressed by\nOMB, we believe that the Act clearly places the responsibility for implementing\nsound fiscal policies with respect to federal grant funds with the federal grantor\nagencies. Section 203 requires the heads of federal departments and agencies\nwho are responsible for administering grant-in-aid funds to schedule the fund\ntransfers in a m anner that is \xe2\x80\x9c consistent with program purposes and applicable\nTreasury regulations, so as to minimize the tim e elapsing between the transfer of\nsuch funds from the United States Treasury and the disbursement thereof by a\nState. . . .\xe2\x80\x9d 42 U .S .C . \xc2\xa7 4213.\nT h e o d o r e B. O l s o n\nAssistant Attorney General\nOffice of Legal Counsel\n\n133\n\n\x0c'


b'Obligation of Revolving Funds Requiring\nReimbursement from Time-Limited\nFunds Under the Anti-Deficiency Act\nThe Anti-Deficiency Act prohibits an agency from awarding a severable services contract\nthat lasts longer than one year and obligates revolving funds that must be reimbursed\nwith time-limited funds.\nThe Anti-Deficiency Act violation caused by awarding such a contract is not undone by\nsubsequently modifying the contract\xe2\x80\x99s term so as not to exceed one year.\nOctober 21, 2013\n\nMEMORANDUM OPINION FOR THE GENERAL COUNSEL\nGENERAL SERVICES ADMINISTRATION *\nThe Anti-Deficiency Act prohibits \xe2\x80\x9cofficer[s] or employee[s] of the\nUnited States Government\xe2\x80\x9d from \xe2\x80\x9cinvolv[ing] . . . [the] government in a\ncontract or obligation for the payment of money before an appropriation\nis made unless authorized by law.\xe2\x80\x9d 31 U.S.C. \xc2\xa7 1341 (2006). You have\nasked whether an agency violates the Anti-Deficiency Act (codified at\n31 U.S.C. \xc2\xa7\xc2\xa7 1341\xe2\x80\x931342, 1349\xe2\x80\x931351, 1511\xe2\x80\x931519) (\xe2\x80\x9cADA\xe2\x80\x9d or \xe2\x80\x9cAct\xe2\x80\x9d)\nwhen it awards a severable services contract with a performance period\nthat exceeds one year and the contract obligates revolving funds that an\nagency has a legal obligation to reimburse with time-limited funds. 1 If\nwe conclude that such an action violates the ADA, you have also asked\nwhether an agency can cure the violation by modifying the contract so\nthat the performance period lasts only one year.\nIn federal appropriations law, services are considered \xe2\x80\x9cseverable\xe2\x80\x9d if\nthey are continuing and confer a benefit each time they are rendered.\nSection 3902(a) of title 41 of the U.S. Code allows a contract for severa* Editor\xe2\x80\x99s Note: This is a revised version of an opinion issued on July 8, 2013. See\ninfra note 7.\n1 See Letter for Virginia A. Seitz, Assistant Attorney General, Office of Legal Counsel,\nfrom Kris E. Durmer, General Counsel, General Services Administration (Aug. 29, 2012)\n(\xe2\x80\x9cGSA Letter\xe2\x80\x9d). In preparing this opinion, we also considered views provided by the\nDepartment of Homeland Security. See Letter for Virginia A. Seitz, Assistant Attorney\nGeneral, Office of Legal Counsel, from Audrey J. Anderson, Deputy General Counsel,\nDepartment of Homeland Security (Nov. 29, 2012) (\xe2\x80\x9cDHS Letter\xe2\x80\x9d).\n\n78\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\nble services that obligates time-limited funds to extend beyond the period\nof availability of those funds, provided that the total length of the contract\nfor such services does not exceed one year. 41 U.S.C. \xc2\xa7 3902(a) (2006 &\nSupp. V 2012). By contrast, a contract that obligates only revolving funds\nwould not generally be subject to this one-year limit. 31 U.S.C. \xc2\xa7 1502(a).\nThus, to resolve your first question, we must consider whether the statutory rule that contracts for severable services be limited to one year applies\nto contracts that obligate revolving funds in circumstances where an\nagency must reimburse those revolving funds with time-limited funds that\nare unavailable for obligation beyond a one-year period. In our view, it\ndoes. In such a case, the contract has the effect of obligating those timelimited funds for reimbursement in advance of an appropriation and thus\nviolates the Anti-Deficiency Act. Id. \xc2\xa7 1341.\nWe also conclude that an agency cannot cure an ADA violation of this\ntype by subsequently shortening the contract\xe2\x80\x99s performance period. We\nrecognize that an agency can cure the type of ADA violation that occurs\nwhen an expenditure is charged to the wrong account, so long as funds\nwere legally available at the time of obligation. In the example you have\ndescribed, however, no funds were legally available at the time of obligation to reimburse payments on a greater-than-one-year contract. In circumstances such as these, the violation can be limited but not cured.\nI.\nWe begin by noting that the practice of this Office is to address only\ngeneral legal questions having prospective application. We thus set forth\nand analyze the following information, such as the agreement between the\nDepartment of Homeland Security (\xe2\x80\x9cDHS\xe2\x80\x9d) and the General Services\nAdministration (\xe2\x80\x9cGSA\xe2\x80\x9d) and the subsequent contractual arrangements and\nfindings of GSA\xe2\x80\x99s Office of the Inspector General, solely for illustrative\npurposes and to provide relevant context. We describe these contractual\narrangements as they have been presented to us and do not make any\nfactual findings or determinations regarding these specific contracts.\nGSA entered into a series of contractual arrangements that have led to\nyour questions. In the American Recovery and Reinvestment Act of\n2009 (\xe2\x80\x9cRecovery Act\xe2\x80\x9d), Congress designated $200 million for DHS to\nuse in \xe2\x80\x9cplanning, design, construction costs, site security, information\ntechnology infrastructure, fixtures, and related costs to consolidate the\n79\n\n\x0c37 Op. O.L.C. 78 (2013)\n\nDepartment of Homeland Security headquarters.\xe2\x80\x9d Pub. L. No. 111-5,\ndiv. A, tit. VI, 123 Stat. 115, 162 (2009). To implement DHS\xe2\x80\x99s plan for\na new, consolidated headquarters, DHS and GSA\xe2\x80\x99s Northern Capital\nRegion Public Buildings Service (\xe2\x80\x9cGSA-PBS\xe2\x80\x9d) entered into an agreement \xe2\x80\x9cprovid[ing] GSA access to $198.9 million\xe2\x80\x9d of DHS\xe2\x80\x99s Recovery\nAct funds to pay for various elements of the consolidation project (hereinafter \xe2\x80\x9cDHS-GSA Agreement\xe2\x80\x9d). See GSA Letter att. 1, at 2. 2 The Recovery Act provided that DHS\xe2\x80\x99s funds were time-limited; after September 30, 2010, they would expire and no longer be available for obligation. See id. at 1; see also Recovery Act div. A, \xc2\xa7 1603, 123 Stat. at 302.\nAs part of the consolidation project, GSA-PBS sought to secure two\ncontracts for severable services, which would ultimately be funded with\nthe time-limited Recovery Act funds that GSA-PBS had authority to\nobligate. GSA Letter at 1\xe2\x80\x932. As noted, severable services are services that\nare continuing in nature, and from which a benefit is received each time\nthe service is rendered, such as the maintenance of landscaping or repair\nwork. 3 Severable services contracts funded with time-limited funds are in\ncertain respects governed by rules different from those applicable to other\ntypes of contractual arrangements.\nFor example, government contracts are generally governed by the \xe2\x80\x9cbona fide needs rule,\xe2\x80\x9d but there is a limited exception to that rule for severable services contracts. The bona fide needs rule provides that an agency\ngenerally may obligate appropriations that Congress makes available for a\nlimited period of time only to pay for \xe2\x80\x9cbona fide needs\xe2\x80\x9d incurred during\nthat period of availability. See 31 U.S.C. \xc2\xa7 1502(a); 1 General Accounting\nOffice, Principles of Federal Appropriations Law 5-11 (3d ed. 2004)\n(\xe2\x80\x9cFederal Appropriations Law\xe2\x80\x9d). For a service such as routine landscapThe DHS-GSA Agreement indicated that GSA would use the money to obtain nonseverable services, GSA Letter att. 1, at 1, but all agree that GSA ultimately entered into\ncontracts to obtain severable services under the Agreement. We have not considered and\ndo not address whether the DHS-GSA Agreement\xe2\x80\x99s original characterization of the money\nas restricted to contracts for nonseverable services was erroneous or what the consequences of any such error would be.\n3 In contrast, nonseverable, or entire, services are those for which the entire benefit\nis received at the time the service is completed, such as building construction or other\nprojects that yield a final product. All agree that the relevant contracts here (between\nGSA\xe2\x80\x99s agent\xe2\x80\x94the Federal Acquisition Services component of GSA\xe2\x80\x99s Northern Capital\nRegion\xe2\x80\x94and the third party contractors) were for severable services.\n2\n\n80\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\ning work, for example, the need arises when grass needs to be cut or\nhedges need to be trimmed; thus, an agency ordinarily could not enter into\na contract for cutting or trimming that would occur after current funds\ncease to be available. Under a statutory exception, however, agencies may\nobligate time-limited appropriations for \xe2\x80\x9ccontract[s] for the procurement\nof severable services for a period that begins in one fiscal year and ends in\nthe next fiscal year if (without regard to any option to extend the period of\nthe contract) the contract period does not exceed one year.\xe2\x80\x9d 41 U.S.C.\n\xc2\xa7 3902. In other words, an agency could use Fiscal Year (\xe2\x80\x9cFY\xe2\x80\x9d) 2013\nfunds, available for obligation only during FY 2013, to enter into a landscaping contract that lasted into FY 2014, so long as the total contractual\nperiod did not exceed one year.\nTo obtain the severable services contracts, GSA-PBS entered into an\nagreement with the Federal Acquisition Services component of GSA\xe2\x80\x99s\nNorthern Capital Region (\xe2\x80\x9cGSA-FAS\xe2\x80\x9d). GSA Letter att. 2. The agreement specified that GSA-FAS, acting on behalf of GSA-PBS, would\nacquire technology services from a contractor. Id. \xc2\xa7\xc2\xa7 B.2, B.6. GSA-FAS\nwould pay the contractor\xe2\x80\x99s charges upfront with money from the Acquisition Services Fund, a fund established by statute that GSA uses to procure services on behalf of other federal agencies. Id. \xc2\xa7\xc2\xa7 A.7, B.8, B.13;\nsee 40 U.S.C. \xc2\xa7 321(c). The Acquisition Services Fund is a revolving\nfund, meaning that it is both a receipt account and an expenditure account,\nsuch that collected receipts are available for expenditure without the need\nfor further appropriations from Congress and without fiscal year limitation. 3 Federal Appropriations Law at 12-87, 12-88 (3d ed. 2008). The\nstatute governing the use of the Acquisition Services Fund requires agencies for which GSA expends money from the fund either to pay into the\nfund in advance or to \xe2\x80\x9cprompt[ly] reimburse\xe2\x80\x9d the fund for expenditures\nmade on their behalf. 40 U.S.C. \xc2\xa7 321(d)(3). Consistent with this statutory\nrequirement, the agreement between GSA-PBS and GSA-FAS provided\nthat GSA-FAS would pay the contractor\xe2\x80\x99s charges from the Acquisition\nServices Fund, and then GSA-PBS would reimburse GSA-FAS from the\nRecovery Act funds DHS had set aside for GSA-PBS\xe2\x80\x99s use. GSA Letter\natt. 2, \xc2\xa7\xc2\xa7 B.8, B.12. The agreement made GSA-PBS \xe2\x80\x9cresponsible for\nprompt payment of all billings\xe2\x80\x9d for reimbursement, set forth criteria for\ndetermining when billings would become delinquent, and established\nthat delinquency in reimbursement could result in certain consequences\n81\n\n\x0c37 Op. O.L.C. 78 (2013)\n\nfor GSA-PBS. Id. \xc2\xa7 A.7. The agreement also stated that \xe2\x80\x9c[GSA-FAS\xe2\x80\x99s]\nacceptance of this document creates an obligation on the part of [GSAPBS].\xe2\x80\x9d Id. \xc2\xa7 B.18.\nUnder the authority of its agreement with GSA-PBS, GSA-FAS awarded two task orders for severable services on September 30, 2010, the last\nday that Recovery Act funds were available for obligation. See GSA\nLetter at 2. At least one of the task orders indicated that the performance\nperiod would extend from September 30, 2010 to November 2011, longer\nthan the one-year period permitted by the statute that allows agencies to\nuse time-limited funds for severable services contracts crossing fiscal\nyears. 4 Id. Midway through the contract, in the summer of 2011, GSAFAS modified the task orders so that the performance periods of both task\norders ended on September 29, 2011, within a year after they began. Id.\nGSA\xe2\x80\x99s Office of the Inspector General conducted a limited scope audit\nof both task orders and concluded, among other things, that the initial task\norders violated both the bona fide needs rule and the Anti-Deficiency\nAct. 5 The Inspector General concluded that the revolving fund money\nGSA-FAS obligated by entering into the task orders had \xe2\x80\x9cthe same purpose and time limitations\xe2\x80\x9d as the time-limited Recovery Act funds designated to reimburse the revolving fund. OIG Reports at 3. Because GSAPBS could not use Recovery Act funds to reimburse GSA-FAS for any\ncharges incurred beyond the first twelve months of the contract, the Inspector General concluded that GSA-FAS had obligated money in advance of an appropriation and thereby violated the Anti-Deficiency Act.\nThe Inspector General further concluded that GSA-FAS could not cure\nthe violation by modifying the task orders\xe2\x80\x99 performance periods so that\nthey did not exceed one year.\n\nWe understand that GSA believes that the performance period for the other task order\nnever clearly extended beyond one year. GSA Letter at 2. We do not resolve that issue.\n5 See Office of Inspector General, General Services Administration, Report No.\nA110024/Q/A/P12006, Limited Scope Audit of Task Order NP4700101050 Funded by\nthe American Recovery and Reinvestment Act of 2009 (May 2, 2012); see also Office of\nInspector General, General Services Administration, Report No. A110024/Q/A/P12007,\nLimited Scope Audit of Task Order NP4700101051 Funded by the American Recovery\nand Reinvestment Act of 2009 (May 2, 2012) (collectively, \xe2\x80\x9cOIG Reports\xe2\x80\x9d). Because the\nrelevant content of the two reports is identical, citations to \xe2\x80\x9cOIG Reports\xe2\x80\x9d should be\nunderstood as citations to the specified pages in both reports.\n4\n\n82\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\nII.\nAs stated above, the Anti-Deficiency Act prohibits \xe2\x80\x9cofficer[s] or employee[s] of the United States Government\xe2\x80\x9d from \xe2\x80\x9cinvolv[ing] . . . [the]\ngovernment in a contract or obligation for the payment of money before\nan appropriation is made unless authorized by law.\xe2\x80\x9d 6 31 U.S.C. \xc2\xa7 1341.\nGSA agrees that an ADA violation occurs when an agency obligates\ntime-limited funds by entering into a severable services contract that\nexceeds one year. See 1 Federal Appropriations Law at 5-40 (violation of\nbona fide needs rule can also violate the ADA). Because there is a statutory prohibition on obligating time-limited funds beyond their period of\navailability for greater-than-one-year severable services contracts, an\nagency entering into such a contract would have no funds legally available at the time of obligation to pay for the services it would receive\nbeyond the one-year mark. So, for example, if a landscaping contract\nobligated FY 2013 funds for a period of time lasting into FY 2014, the\nFY 2013 funds would be legally available for the first twelve months of\nthat contract. But at the end of that twelve months, FY 2013 funds would\nno longer be available. If the contract continued beyond that point, it\nwould therefore have effectively obligated FY 2014 funds \xe2\x80\x9cbefore an\nappropriation is made.\xe2\x80\x9d 31 U.S.C. \xc2\xa7 1341.\nThe difference between this hypothetical landscaping contract and a\ncontract like the one GSA describes is that, under the latter, the agency\ndoes not obligate time-limited funds outright; instead, it obligates revolving funds that will later be reimbursed by time-limited funds. As GSA\nsees it, this arrangement does not violate the ADA. GSA reasons that an\nagency generally may obligate revolving funds to pay for severable services for any period of time, so long as money in the revolving fund\nremains available for obligation. GSA argues that, even though a contract\nmay indicate that particular time-limited funds will reimburse the revolving fund, the reimbursing agency could defer repayment until new timelimited funds become available. 7\n\nThe Anti-Deficiency Act applies not only to contracts between a government agency\nand a private party, but also to contracts between one government agency and another.\nSee, e.g., Public Printer\xe2\x80\x94Four-Year Contract for Purchase of Paper for Postal Cards,\n27 Op. Att\xe2\x80\x99y Gen. 584 (1909).\n7 After we issued the initial version of this opinion, GSA requested that we reconsider\nour conclusion. See Letter for Virginia A. Seitz, Assistant Attorney General, Office of\n6\n\n83\n\n\x0c37 Op. O.L.C. 78 (2013)\n\nGSA correctly notes that the one-year limit on severable services\ncontracts does not generally apply to revolving funds. But we do not\nbelieve that general rule applies when an agency obligates money from\na revolving fund under an arrangement in which the fund must be\nreimbursed with time-limited funds. In our view, money from a revolving fund like the Acquisition Services Fund, which agencies are legally\nrequired to reimburse, can be obligated only to the extent that the relevant appropriations are legally available for the expenditures made by\nthe fund. 8 See Memorandum for the Files from Stephen J. Wilkinson,\nOffice of Legal Counsel, Re: Federal Register Publication on November 23, 1981 (Dec. 4, 1981). Restrictions on the availability or use of\nthe designated reimbursement funds limit an agency\xe2\x80\x99s ability to obliLegal Counsel, from Kris E. Durmer, General Counsel, General Services Administration\n(Aug. 28, 2013) (\xe2\x80\x9cReconsideration Request\xe2\x80\x9d). The Reconsideration Request argues that,\nat least with respect to one of the task orders, any contractual obligation exceeding the\ntwelve-month period for which Recovery Act funds were available for reimbursement\nwas, on the particular facts, not an impermissible obligation of Recovery Act funds, but\nsolely an obligation of the revolving funds in the Acquisition Services Fund. Id. at 2. On\nthat view, no Anti-Deficiency Act violation occurred because GSA-PBS would have had\nno obligation to reimburse the Acquisition Services Fund for services that GSA-FAS\ncontracted for on GSA-PBS\xe2\x80\x99s behalf that extended beyond the twelve-month period.\nWe are not in a position to evaluate the particular facts that GSA identified in its Reconsideration Request, including whether the particular contracts at issue obligated GSAPBS to reimburse the revolving fund for expenses beyond the twelve-month period, in\nlight of our practice to address only general legal questions that have prospective application. We accordingly reach no conclusion as to how GSA should apply our opinion to\neach of its past contractual arrangements. Our opinion is confined to those circumstances\nin which one government entity obligates revolving funds that another government entity\nis legally obligated to reimburse with time-limited funds. We defer to GSA\xe2\x80\x99s determination of whether those circumstances arose in its past contracts.\n8 GSA points out that the statute requires the Administrator of GSA to establish rates\nfor services it provides customer agencies and to set those rates \xe2\x80\x9cat levels sufficient to\nrecover . . . so far as practicable\xe2\x80\x9d certain costs, 40 U.S.C. \xc2\xa7 321(d)(2). See GSA Letter\nat 5 n.9. We understand the \xe2\x80\x9cso far as practicable\xe2\x80\x9d language as an accommodation to the\nreality that GSA may not always be able to quantify precisely the costs associated with\n\xe2\x80\x9cinventory losses,\xe2\x80\x9d \xe2\x80\x9camortization . . . of equipment,\xe2\x80\x9d \xe2\x80\x9ctransportation cost,\xe2\x80\x9d and the other\ncosts listed in section 321(d)(2). We do not read this language to suggest that customer\nagencies must only reimburse GSA to the extent that they have funds available, or that\nGSA may obligate money from the Acquisition Services Fund that it does not expect to\nrecoup. The phrase \xe2\x80\x9cso far as practicable\xe2\x80\x9d qualifies the requirement that the GSA Administrator establish prices, not the requirement that agencies reimburse the GSA for obligations GSA undertakes on their behalf.\n\n84\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\ngate the revolving funds; otherwise, the restrictions on the use of funds\ncould be circumvented simply by channeling their expenditure through\na revolving fund. The one-year limit on the obligation of funds for\npurchase of severable services thus continues to apply when those funds\nare used to fulfill a legal obligation to reimburse a revolving fund for\npayment for severable services.\nThis conclusion is consistent with prior advice of our Office. In November 1981, Executive Branch entities experienced a lapse in appropriations when the President vetoed a continuing resolution. Id. at 1. The\nOffice of the Federal Register, an Executive Branch entity, asked\nwhether, notwithstanding the lapse in appropriations, it could request\nthat the Government Printing Office (\xe2\x80\x9cGPO\xe2\x80\x9d), a Legislative Branch\nentity, print the Federal Register the following day. Id. It explained that\nGPO charges the cost of printing the Federal Register to a revolving\nfund, which agencies must, by statute, reimburse. Id. We reasoned that\n\xe2\x80\x9c[b]ecause the agencies are required to reimburse the revolving fund\nfrom their own appropriations, at some point in the process the printing\nof the Federal Register creates an obligation within the meaning of . . .\nthe Antideficiency Act.\xe2\x80\x9d Id. We advised the Office of the Federal Register that printing the Federal Register would violate the Act if doing so\n\xe2\x80\x9ccalled for the obligation created by the printing process to be charged\nto appropriations not yet enacted.\xe2\x80\x9d Id. at 2.\nThe Comptroller General has taken a similar view. 9 See Chemical\nSafety and Hazard Investigation Board\xe2\x80\x94Interagency Agreement with the\nGeneral Services Administration, B-318425, 2009 WL 5184705 (Comp.\nGen. Dec. 8, 2009) (\xe2\x80\x9cChemical Safety Board \xe2\x80\x9d). In Chemical Safety\nBoard, the Comptroller General rejected a proposed interagency agreement in which GSA would have used the Acquisition Services Fund to\npay for an open-ended severable services contract, which the Chemical\nSafety Board would later reimburse through some combination of FY\n2009 funds and future funds. Id. at *1, *4. The Comptroller General\nreasoned that pledging future-year appropriations to reimburse GSA for\nthe obligations it incurred under the interagency agreement would \xe2\x80\x9cobliThe Comptroller General\xe2\x80\x99s views often provide helpful guidance on appropriations\nmatters and related issues, although they do not bind the Executive Branch. See Use of\nAppropriated Funds to Provide Light Refreshments to Non-Federal Participants at EPA\nConferences, 31 Op. O.L.C. 54, 55 n.1 (2007).\n9\n\n85\n\n\x0c37 Op. O.L.C. 78 (2013)\n\ngate [the Chemical Safety Board] to pay for severable services to be\nperformed in future fiscal years\xe2\x80\x9d and thereby violate the Anti-Deficiency\nAct. Id. at *4. That GSA would use a revolving fund to pay expenses at\nthe outset made no difference, for \xe2\x80\x9c[a]n interagency agreement . . . that\nis funded through an intragovernmental revolving fund, is akin to a\ncontract and the obligational consequences are the same as if it were a\ncontract.\xe2\x80\x9d Id. at *1 n.6.\nOur analysis would not change even if the contracting agency did not\nactually spend revolving-fund money when reimbursement funds were\nunavailable, but only entered into a contract to do so. The Anti-Deficiency\nAct prohibits \xe2\x80\x9cinvolv[ing] . . . [the] government in a contract or obligation\nfor the payment of money before an appropriation is made,\xe2\x80\x9d meaning that\nthe violation occurs when the agency enters into the contract, even if it\nnever spends the money it obligated. See Public Printer\xe2\x80\x94Four-Year\nContract for Purchase of Paper for Postal Cards, 27 Op. Att\xe2\x80\x99y Gen. 584,\n587 (1909) (advising that it would violate a predecessor version of the\nAnti-Deficiency Act to enter into a four-year paper contract, even though\n\xe2\x80\x9c[t]he four-year contract proposed would . . . not require any expenditure\nin excess of the appropriation\xe2\x80\x9d for the current fiscal year, because \xe2\x80\x9cthere\nis no appropriation\xe2\x80\x9d for any \xe2\x80\x9cpaper contracted to be furnished after\xe2\x80\x9d the\ndate that current-year funds expire); see also Online Terms of Service\nAgreements with Open-Ended Indemnification Clauses Under the AntiDeficiency Act, 36 Op. O.L.C. 112, 125 (2012) (acknowledging that\ncommitments made in violation of the ADA cannot be legally enforced,\nbut advising that \xe2\x80\x9c[t]he mere fact that commitments made in violation of\nthe ADA are not legally enforceable does not somehow erase the ADA\nviolation\xe2\x80\x9d).\nOur conclusion is not at odds with the Comptroller General\xe2\x80\x99s statement\nthat \xe2\x80\x9ca naked contractual obligation that carries with it no financial exposure to the government does not violate the Antideficiency Act.\xe2\x80\x9d See DHS\nLetter at 3 (quoting Funding of Maintenance Contract Extending Beyond\nFiscal Year, B-259274, 1996 WL 276377, at *4 (Comp. Gen. May 22,\n1996) (\xe2\x80\x9cMaintenance Contract \xe2\x80\x9d)). In Maintenance Contract, the Comptroller General concluded that an agency did not violate the ADA by\nleaving eight months of a twelve-month severable services contract unfunded at the time of the award where that contract included a clause\nmaking the government\xe2\x80\x99s obligation for the unfunded months \xe2\x80\x9ccontingent\n86\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\nupon the contracting officer notifying the contractor in writing that funds\nwere available for continued performance and that the contractor continue\nwork.\xe2\x80\x9d 1996 WL 276377, at *1. Because the agency had made the continuation of the contract contingent on the availability of funds, it had not\ninvolved the government in an obligation for which funds were not yet\navailable; it had merely given the government the option to continue the\ncontract should funds become available. When no such contractual contingency exists, an agency violates the Anti-Deficiency Act when it enters\ninto a contract that obligates the government to make payments beyond\nthe period in which funds are available to reimburse those expenditures.\nIII.\nGSA, joined by DHS, urges that, even if entering into a greater-thanone-year severable services contract would violate the ADA, an agency\ncan cure, if not altogether avoid, the violation by modifying the contract\nso that the performance period does not exceed one year.10 While shortening a severable services contract\xe2\x80\x99s period of performance may terminate\nan ongoing ADA violation, it would not undo the violation that occurred\nwhen the contracting agency obligated revolving funds in advance of an\nappropriation for reimbursement funds.\nThe Comptroller General has long taken the view that an ADA violation can be cured under certain circumstances. See 2 Federal Appropriations Law at 6-80 to 6-82 (3d ed. 2006). If an agency charges an obligation to the wrong appropriation account, and funds are available in the\ncorrect account, the agency may adjust its accounts by charging the obligation to the correct one. Id. As long as sufficient appropriated funds\nwere available when the obligation occurred and remain available in the\n\nFor the purposes of this opinion, we use the word \xe2\x80\x9ccure\xe2\x80\x9d to mean taking some action after an ADA violation has occurred that retroactively eliminates the violation and\nmakes a report to Congress unnecessary. We use the word \xe2\x80\x9cavoid\xe2\x80\x9d to mean preventing\nthe violation from occurring in the first place. And we use the word \xe2\x80\x9cterminate\xe2\x80\x9d to mean\ntaking some post-violation action that stops an ongoing ADA violation but does not\neliminate the original violation and accordingly does not discharge the violating agency\nfrom its responsibility to report to Congress. We do not suggest that these words are\nterms of art in appropriations law, but rather define them to make sure our analysis here\nis clear.\n10\n\n87\n\n\x0c37 Op. O.L.C. 78 (2013)\n\ncorrect account at the time of the adjustment, the agency does not have\nto report its initial improper obligation as a violation of the ADA. Id.\nA critical feature of a curable ADA violation, however, is the existence of legally available funds to cover the expenditure when the obligation occurs. If funds are not legally available, the agency cannot simply\nadjust its accounts and thereby correct the improper obligation, because\nthe agency lacked authority to enter into the obligation at the outset.\nThus, for example, when an agency charges an appropriation account for\na purpose other than that specified in the appropriation, and no existing\naccount is legally available for the charged purpose, the agency violates\nthe ADA in a way that it cannot cure. Id. at 6-82. Similarly, when an\nagency violates the ADA by entering into a contract with an impermissible indemnification provision that exposes the government to unlimited financial liability, the agency cannot cure that violation, because it\ndid not have funds legally available for the obligation when it was\nincurred. See Department of the Army\xe2\x80\x94Escrow Accounts and the Miscellaneous Receipts Statute, B-321387, 2011 WL 1178327 (Comp. Gen.\nMar. 30, 2011) (\xe2\x80\x9cEscrow Accounts\xe2\x80\x9d). In the latter situation, a contractual\nmodification that removes the impermissible provision may terminate an\nongoing ADA violation, but it does not undo the violation that occurred\nwhen the agency involved the government in a contract for which appropriations were unavailable. See id. at *9.\nThus, in assessing whether the ADA violations resulting from a contractual arrangement in which one federal entity obligates revolving funds\nthat another entity legally must reimburse with time-limited funds, we\nwould examine whether funds were legally available to cover the obligation to reimburse when the contractual obligation arose. In our judgment,\ncontractual arrangements in which time-limited funds are obligated for\nreimbursement beyond the twelve-month period permitted by 31 U.S.C.\n\xc2\xa7 1502(a) resemble contracts with impermissible indemnification clauses:\nNo funds are legally available to cover the pertinent obligation at the time\nit is incurred. The statute governing obligations of the revolving fund\nrequires that the revolving fund be reimbursed, and the contract providing\nfor reimbursement of the fund specifies the use of time-limited funds that\ncould not be obligated for any part of a contract that extended beyond one\nyear.\nThe Comptroller General decisions that GSA and DHS identify as support for their arguments do not conflict with our view. In one of the deci88\n\n\x0cObligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds\n\nsions, the Comptroller General concluded that a three-year requirements\ncontract violated \xe2\x80\x9cthe statutory prohibitions against obligating the government in advance of appropriations,\xe2\x80\x9d with no indication that the agency\ncould cure the violation. See Appropriations\xe2\x80\x94Availability\xe2\x80\x94Contracts\xe2\x80\x94\nFuture Needs, 42 Comp. Gen. 272, 272 (1962) (\xe2\x80\x9c1962 Decision\xe2\x80\x9d); see\nalso Contracts\xe2\x80\x94Federal Supply Schedule\xe2\x80\x94Multi-Year Procurement, 48\nComp. Gen. 497, 499 (1969) (explaining that the 1962 Decision concluded that a violation of the ADA had occurred). The Comptroller General\nallowed the contracting agency to complete the contract \xe2\x80\x9cin view of the\ncircumstances of the award,\xe2\x80\x9d which appeared to include the fact that the\ncontract provided services to a military base on a remote island, but he did\nnot suggest that a contractual modification could cure the violation. 1962\nDecision, 42 Comp. Gen. at 278. The Maintenance Contract decision,\ndiscussed above, does not address whether an agency can cure a violation;\nrather, it concludes that a contractual arrangement that does not result in\nany financial exposure for the government does not violate the ADA.\nMaintenance Contract, 1996 WL 276377, at *4.\nThe remaining three decisions address situations in which no ADA\nviolation occurred or any ADA violation could be cured, but none involves a contractual arrangement similar to the one that we have described. In one decision, the Comptroller General concluded that entering\ninto a lease without legal authority to do so did not result in an ADA\nviolation (though it violated other laws) because appropriations were\navailable to pay for leases at the time of the obligation, and the agency\nrecorded the obligation in the correct account. See Interagency Agreements\xe2\x80\x94Use of an Interagency Agreement between the Counterintelligence Field Activity, Department of Defense, and GovWorks to Obtain\nOffice Space, B-309181, 2007 WL 2389756 (Comp. Gen. Aug. 17,\n2007). In another, the Comptroller General concluded that an agency\ncould cure an improper obligation of expired funds if it had sufficient\ncurrent-year funds at the time of obligation to cover the obligation.\nExpired Funds and Interagency Agreements between GovWorks and the\nDepartment of Defense, B-308944, 2007 WL 2120292 (Comp. Gen.\nJuly 17, 2007). In the final decision, the agency improperly divided\npayments under a nonseverable services contract over the course of two\nyears, and the Comptroller General concluded that the agency could\ncure an ADA violation if it could adjust accounts so that it recorded the\n89\n\n\x0c37 Op. O.L.C. 78 (2013)\n\nentire contract as an obligation for the first fiscal year, and had sufficient\nfunds available to do so. Financial Crimes Enforcement Network\xe2\x80\x94\nObligations under a Cost-Reimbursement, Nonseverable Services Contract, B-317139, 2009 WL 1621304 (Comp. Gen. June 1, 2009). In each\ndecision, the agency\xe2\x80\x99s ability either to avoid or to cure an ADA violation\nturned on whether sufficient funds were legally available at the time the\nobligation occurred. When funds are not legally available at the time of\nobligation so that the agency could correct the violation through an\nadjustment of accounts, the ADA violation cannot be cured.\nWe appreciate that modifying an impermissible contract term may prevent an ADA violation from continuing and may prevent the government\nfrom actually spending the funds that it obligated in advance of an appropriation. But a contractual modification that prevents improper spending\ndoes not by itself cure an initial improper obligation. See Escrow Accounts, 2011 WL 1178327, at *9. For that reason, and those explained\nabove, we conclude that an agency cannot cure an ADA violation that\noccurs when it enters into a greater-than-one-year severable services\ncontract by modifying the contract\xe2\x80\x99s performance period.\nVIRGINIA A. SEITZ\nAssistant Attorney General\nOffice of Legal Counsel\n\n90\n\n\x0c'


b'June 28, 1979\n\n79-46\n\nMEMORANDUM OPINION FOR THE ACTING\nCOMMISSIONER, IMMIGRATION AND\nNATURALIZATION SERVICE\nDue Process\xe2\x80\x94United States (as Creditor)\xe2\x80\x94\nWithholding Wages of Federal Employee (as\nDebtor) in Satisfaction of Debt Allegedly Owed the\nGovernment\n\nThis responds to your request for our guidance whether the Immigra\xc2\xad\ntion and Naturalization Service (INS) must accord its employees a full\nevidentiary hearing before INS withholds, pursuant to 5 U.S.C.\n\xc2\xa7 5512(a),1 the wages of such employees in satisfaction of a debt allegedly\nowed the United States. In a conversation with your Office we were in\xc2\xad\nformed that more precisely the question is what kind of due process hear\xc2\xad\ning is required. Before we prooeed with our legalanalysis and discussion it\nwould be useful to delineate briefly the relevant factual situation. The INS\nbelieved that one of its employees was obligated to reimburse the Govern\xc2\xad\nment for the loss of certain funds for which INS deemed her accountable.\nBased upon an investigation, INS decided that the employee was account\xc2\xad\nable for $2,175.00, funds found to be missing from a district office. Of\nthat amount, $655.00 was recovered, thus leaving the amount un\xc2\xad\naccounted for at $1,520.00. The investigation concluded that the employee\nfailed to follow adequate procedures to safeguard the funds.\nThe Federal Bureau of Investigation, by way of a separate investigation,\nconcluded that the evidence was inconclusive and thus recommended\nagainst criminal prosecution. The INS, however, decided to recover the\nmissing $1,520.00 by withholding from the employee\xe2\x80\x99s pay a designated\nsum each pay period. We understand that it so advised the employee\n\n1 T hat provision reads as follows:\nThe pay o f an individual in arrears to the United States shall be withheld until he has ac\xc2\xad\ncounted for and paid into the Treasury o f the United States all sums for which he is liable.\nSee 26 O p. A tt\xe2\x80\x99y. G en. 77 (1906).\n\n269\n\n\x0cwho responded by filing a Federal civil action seeking to enjoin INS from\nwithholding any part of the pay. The U.S. Attorney handling the case ad\xc2\xad\nvised INS that he believed case law requires a \xe2\x80\x9c due process\xe2\x80\x9d hearing prior\nto administrative wage-withholding. Thereafter the Government and the\nemployee stipulated that the case should be dismissed without prejudice\nand that INS, which had not yet withheld any pay, would accord the\nemployee a fulll evidentiary hearing through its grievance procedures.\nWhile this stipulation moots your questions as to this particular case, you\nstate that you seek guidance for future cases.\nThe Supreme Court in recent years has considered in a variety of cir\xc2\xad\ncumstances what due process requirements apply where deprivation of\nproperty interests are involved. The case that is most relevant here is\nSniadach v. Family Finance Corp., 395 U.S. 337 (1969). That case dealt\nwith hearing requirements involving garnishment of wages. The court con\xc2\xad\nsidered a Wisconsin law allowing a garnishment to be instituted by the\ncreditor\xe2\x80\x99s lawyer by requesting the clerk of the state court to issue a sum\xc2\xad\nmons. Service of the summons upon the garnishee (the employer) effec\xc2\xad\ntively froze the employee\xe2\x80\x99s (the alleged debtor\xe2\x80\x99s) wages.\nThe Court stated:\n[The wages] may, it is true, be unfrozen if the trial of the main\nsuit is ever had and the wage earner wins on the merits. But in the\ninterim the wage earner is deprived of his enjoyment of earned\nwages without any opportunity to be heard and to tender any\ndefense he may have, whether it be fraud or otherwise. [395 U.S.\nat 339.]\nThe Court noted that there may be extraordinary circumstances justifying\na summary procedure, e.g., in order to protect the creditor against perma\xc2\xad\nnent loss. However, it found no such circumstances in the case.2 In ana\xc2\xad\nlyzing the requirements of due process with respect to attachments and\nother like processes, the Court stressed the unique nature of wages\xe2\x80\x94\xe2\x80\x9c a\nspecialized type of property presenting distinct problems in our economic\nsystem.\xe2\x80\x9d Id. at 340. The Court stated:\n[A] prejudgment garnishment of the Wisconsin type may as a\npractical matter drive a wage-earning family to the wall. Where\nthe taking of one\xe2\x80\x99s property is so obvious, it needs no extended\nargument to conclude that absent notice and a prior hear\xc2\xad\ning * * * this prejudgment garnishment procedure violates the\nfundamental principles of due process. [Id. at 341-342.]\nHence what the Government seeks is essentially a recoupment or a\nsetoff. However, this does not distinguish it from garnishment since both\nmay \xe2\x80\x9c as a practical matter drive a wage-earning family to the wall.\xe2\x80\x9d\n\n1 In the usual case there probably would be no extraordinary circumstances warranting\nsuch a summary procedure because the persons from whom the withholdings are to be made\nare G overnm ent employees who have a substantial interest in their jobs and are unlikely to\nabscond to avoid repaym ent.\n\n270\n\n\x0cThe Court\xe2\x80\x99s evident concern was that wages should not be withheld\nwithout a due process hearing. This is because wages, in most cases, sus\xc2\xad\ntain the wage earner and his family from week to week and any depriva\xc2\xad\ntion thereof could have potentially severe consequences.3\nIt may be noted that 5 U.S.C. \xc2\xa7 5512, the provision authorizing the\nwithholding here, does not expressly provide for a hearing of any kind.\nThe section speaks of an \xe2\x80\x9c individual in arrears to the United States,\xe2\x80\x9d not\nof one suspected of being in arrears. But it does not deal with the due proc\xc2\xad\ness requirement governing the determination of the individual\xe2\x80\x99s liability.\nAccordingly, the process involved in the determination of liability must be\nconsidered apart from \xc2\xa7 5512. Further, the Sniadach rule is constitution\xc2\xad\nally based and cannot be undermined by statute. It is well established\nthat if at all possible a statute will be construed to avoid constitutional\ndifficulties. Thus, where a provision entails depriving individuals of\nproperty rights but fails to expressly provide for notice and a hearing,\nit must be read as embodying the procedural rights implicit in the due\nprocess clause. Pan American World Airways, Inc. v. Marshall, 439 F.\nSupp. 487 (S.D.N.Y. 1977). By reading \xc2\xa7 5512 as consistent with the due\nprocess clause it becomes clear that notice and a hearing are necessary\nbefore administrative withholding o f a Federal employee\xe2\x80\x99s pay can be\neffected.\nYour precise question, as noted above, is whether a \xe2\x80\x9c full evidentiary\nhearing\xe2\x80\x9d is required. Although Sniadach did not discuss in detail the hear\xc2\xad\ning requirements needed for a wage-withholding, the Court did hold that\nan \xe2\x80\x9c opportunity to be heard and to tender any defense\xe2\x80\x9d were required. Id.\nat 339. It is our opinion that a hearing similar to that required in Goldberg\nv. Kelly, 397 U.S. 254 (1970) (termination of welfare benefits) is necessary\nhere, that is, a hearing closely approximating a judicial trial. The\nGoldberg hearing procedure was summarized in Mathews v. Eldridge, 424\nU.S. 319, 325 n. 5 (1976) as follows:\n(1) \xe2\x80\x9c timely and adequate notice detailing the reasons for a pro\xc2\xad\nposed [Government action]\xe2\x80\x9d ; (2) \xe2\x80\x9c an effective oppor\xc2\xad\ntunity * * * to defend by confronting any adverse witnesses\nand by presenting his own arguments and evidence orally\xe2\x80\x9d ;\n(3) retained counsel, if desired; (4) an \xe2\x80\x9c impartial\xe2\x80\x9d decision\xc2\xad\nmaker; (5) a decision resting \xe2\x80\x9c solely on the legal rules and\nevidence adduced at the hearing\xe2\x80\x9d ; (6) a statement of reasons for\nthe decision and the evidence relied on. 397 U.S., at 266-271.\n\n1 U nder the Wisconsin procedure, up to one-half o f a d ebtor\xe2\x80\x99s wages could be frozen\nunder the garnishment procedure. T hus, an argument can be made that freezing or\nwithholding a significantly lesser portion o f a person\xe2\x80\x99s wages would not require the same\nlevel o f due process protection. However, we believe that the better view is to consider any\ndeprivation o f wages as substantial. Indeed, the C ourt in Sniadach did not appear to consider\nthe potential severity o f the deprivation with respect to individual debtors. Rather, the focus\nwas on the importance o f wages as a general m atter.\n\n271\n\n\x0cThe Court in Mathews stated that the dictates of due process generally\nrequire consideration of three distinct factors:\nFirst, the private interest that will be affected by the official ac\xc2\xad\ntion; second, the risk o f an erroneous deprivation of such interest\nthrough the procedures used, and the probable value, if any, of\nadditional or substitute procedural safeguards; and finally, the\nGovernment\xe2\x80\x99s interest, including the function involved and the\nfiscal and administrative burdens that the additional or substi\xc2\xad\ntute procedural requirement would entail. [Id. at 355.]\nThe private interest that may be adversely affected here by your agency\xe2\x80\x99s\naction is potentially substantial. This is because wages are \xe2\x80\x9c a specialized\ntype of property presenting distinct problems in our economic system.\xe2\x80\x9d\nSniadach, at 340.\nMoreover, as we understand it, the proposed wage-withholding in\xc2\xad\nvolved here would constitute the final agency action. Thus, unless the\nemployee sought judicial review and prevailed, the administrative depriva\xc2\xad\ntion will deprive the employee of the withheld wages. This is unlike\nGoldberg v. Kelly and Mathews v. Eldridge, in that the official action in\nthose cases was temporary and subject to further administrative review\nwhich afforded the claimant an evidentiary hearing much like that ordered\nin Goldberg.* Accordingly, the deprivation would be final insofar as\nagency action was concerned so that heightened solicitude for the private\ninterest is required. See, North Georgia Finishing, Inc. v. Di-Chem, Inc.,\n419 U.S. 601, 606 (1975), where the Court noted that \xe2\x80\x9c the length or sever\xc2\xad\nity of a deprivation of use or possession [of property] would be another\nfactor to weigh in determining the appropriate form of hearing * *\nConcerning the second factor in Mathews, i.e., the value of additional\nprocedural safeguards, it would seem that a wage-withholding hearing\nmight frequently involve disputed factual issues and questions of credibil\xc2\xad\nity. Thus, the hearing must be structured so as to provide for their resolu\xc2\xad\ntion. Mathews at 343-345. We do not know, of course, whether such\nissues will arise in a particular case.\nFinally, the cost to the Government of a Goldberg-type evidentiary\nhearing probably would not result in a significant burden on the Govern\xc2\xad\nment. The Court in Mathews noted that the cost to the Government of\nproviding statutory benefits to ineligible recipients pending decision would\nnot be insubstantial. 424 U.S. at 347. This concern would be inapplicable\nin wage-withholding actions because the employee is otherwise clearly en\xc2\xad\ntitled to his or her wages. Further, it seems unlikely that the costs of the\nhearings themselves would impose a significant burden on the Government.\n\n4 While the welfare recipient in Goldberg was entitled to an evidentiary hearing, the\nprimary issue was whether the hearing was required before the term ination o f benefits or\nwhether term ination could be m ade subject to a subsequent evidentiary hearing. 397 U .S. at\n259-260.\n\n272\n\n\x0cFor these reasons, w e believe that a Goldberg v. Kelly-type hearing is re\xc2\xad\nquired in adm inistrative wage w ithholdings.\nLeon U lm an\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n273\n\n\x0c'


b"June 27, 1979\n\n79-45\n\nMEMORANDUM OPINION FOR COUNSEL TO\nTHE PRESIDENT\nAdvisory Committees\xe2\x80\x94Application of the Russell\nAmendment (31 U.S.C. \xc2\xa7 696)\n\nThis responds to your request for an informal opinion on a legal ques\xc2\xad\ntion that had arisen in connection with a proposed Executive order\nreconstituting the National Advisory Committee for Women. That order\nredesignated the committee and removed its nonadvisory functions. Your\nquestion is whether this Office concurred in the general view taken by the\nOffice of Management and Budget (OMB) that the so-called \xe2\x80\x9c Russell\namendment\xe2\x80\x9d (31 U.S.C. \xc2\xa7 6%) does not limit the use of Government\nfunds to pay the expenses of an advisory committee if (1) the funds are\notherwise available for use in the procurement of advice of the kind that\nthe committee provides and (2) the committee has no nonadvisory func\xc2\xad\ntions. We advised you informally that we concurred in OMB\xe2\x80\x99s view. This\nmemorandum is a brief statement of the reasons for our opinion.\nThe Russell amendment provides that no funds may be used to pay the\nexpenses of any \xe2\x80\x9c agency or instrumentality\xe2\x80\x9d if (1) the agency or in\xc2\xad\nstrumentality has been in existence for more than 1 year and (2) Congress\nhas not appropriated \xe2\x80\x9c any money specifically for such agency or in\xc2\xad\nstrumentality or specifically authorized the expenditure of funds by it.\xe2\x80\x9d 31\nU.S.C. \xc2\xa7 696.\nEnacted in 1944 as a rider to an appropriation bill, the Russell amend\xc2\xad\nment had an interesting preenactment history. It represented an attempt to\nuse the power of the purse to curtail the activities of certain nonstatutory\nexecutive \xe2\x80\x9c agencies\xe2\x80\x9d that had been created by Executive order. In point of\nfact, it was directed at a particular agency\xe2\x80\x94the Committee on Fair\nEmployment Practices. That committee had no clear statutory basis; but it\nexercised a number of substantive powers, and it had taken vigorous ac\xc2\xad\ntion to diminish racially discriminatory practices in employment. These\nactions were obnoxious to Senator Russell and others who opposed the\nearly civil rights movement. Moreover, with regard to that committee and\nothers, there was doubt in some quarters that substantive actions taken\n263\n\n\x0cby nonstatutory agencies were lawful in the absence of actual statutory\nauthority.\nAs to the present question, there is no clear indication either in the\nlanguage of the statute or in its legislative history that the Congress in\xc2\xad\ntended to do anything other than prevent the expenditure of funds for\nagencies such as the Committee on Fair Employment Practices\xe2\x80\x94agencies\nthat Senator Russell would later call \xe2\x80\x9c action agencies.\xe2\x80\x9d 1 In particular,\nthere is no clear indication that the Russell amendment was intended to\nprevent constitutional or statutory officers from using funds to procure\nadvice on matters within their jurisdictions, if the funds were otherwise\navailable for that purpose. Prior to enactment of the Federal Advisory\nCommittee Act, 5 U.S.C. App. \xc2\xa7 1 et seq., the Comptroller General and\nrepresentatives of the Bureau of the Budget suggested that the statute\ncould be interpreted broadly in this context, but we know of no judicial\ndecision that settles the point.\nIn 1972 Congress enacted comprehensive legislation that addressed\nmany of the administrative and legal questions that arise in connection\nwith the longstanding practice of procuring advice from ad hoc \xe2\x80\x9c advisory\ncommittees.\xe2\x80\x9d The Federal Advisory Committee Act did a number of im\xc2\xad\nportant things. First, it expressly sanctioned the creation of advisory com\xc2\xad\nmittees by Executive order. 5 U.S.C. App. \xc2\xa7 2 e( seq. Second, in con\xc2\xad\ntemplation that advisory committees would indeed expend agency funds\nfrom time to time, it created a system of agency reporting and record\xc2\xad\nkeeping that was designed to subject advisory committees to tighter ad\xc2\xad\nministrative and legislative control in fiscal matters, 5 U.S.C. App.\n\xc2\xa7 12(a); and it affirmatively required agencies to provide support services\nfor advisory committees in certain circumstances. 5 U.S.C. App. \xc2\xa7 12(b).\nThird, it provided generally that in the absence of some specific authoriza\xc2\xad\ntion, advisory committees should be purely advisory in nature. 5 U.S.C.\nApp. \xc2\xa7\xc2\xa7 2(b)(6), 9(b). Fourth, it provided that advisory committees should\ngenerally have a life of 2 years. 5 U.SC. App. \xc2\xa7 14(a). Finally, it gave the\nOffice of Management and Budget general responsibility for \xe2\x80\x9c all matters\nrelating to advisory committees.\xe2\x80\x9d 5 U.S.C. App. \xc2\xa7 7. In that connection,\nit required the Director of OMB to review advisory committees annually,\nto make appropriate administrative and legislative recommendations con\xc2\xad\ncerning them, and to include in his annual budget recommendations a\nsummary of the amounts he \xe2\x80\x9c deems necessary\xe2\x80\x9d for the expenses of ad\xc2\xad\nvisory committees. 5 U.S.C. App. \xc2\xa7 7(e).\nBecause of OMB\xe2\x80\x99s unique statutory responsibilities for \xe2\x80\x9c all matters\nrelating to advisory committees,\xe2\x80\x9d OMB\xe2\x80\x99s opinion on questions arising in\nthe administration of the relevant statutes is entitled to substantial weight.\nWe should defer to it unless there are compelling indications that it is\nwrong. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381 (1969); see,\n\n' See 90 C o n g r e s s i o n a l\n\nRecord\n\n6022-21 (1944).\n\n264\n\n\x0cZemel v. Rusk, 381 U.S. 1, 11-12 (1965); Udall v. Tollman, 380 U.S. 1,\n16-18 (1965). We have reviewed all of the relevant materials and find no\ncompelling reason to question OMB\xe2\x80\x99s conclusion that the Russell amend\xc2\xad\nment does not limit the availability of Government funds for payment of\nthe expenses of purely advisory committees.\nThere are two views of this question that are consistent with the view\ntaken by OMB. The first gives controlling weight to the.original legislative\nintention. The Russell amendment was intended to prevent nonstatutory\nagencies or instrumentalities from exercising actual governmental power\nwithout statutory authority. It was never intended to prevent statutory or\nconstitutional officers from using Government money to obtain advice\nconcerning their own duties, provided they are otherwise authorized to do\nso. Mere advisers are not \xe2\x80\x9c agencies\xe2\x80\x9d or \xe2\x80\x9c instrumentalities\xe2\x80\x9d of Govern\xc2\xad\nment for purposes of the Russell amendment. They do not become \xe2\x80\x9c agen\xc2\xad\ncies\xe2\x80\x9d or \xe2\x80\x9c instrumentalities\xe2\x80\x9d merely because they meet and advise collec\xc2\xad\ntively. They become \xe2\x80\x9c agencies\xe2\x80\x9d or \xe2\x80\x9c instrumentalities\xe2\x80\x9d for Russell\namendment purposes only if the officer to whom they report seeks to in\xc2\xad\nvest them with actual authority to take substantive action on his or the\nGovernment\xe2\x80\x99s behalf.\nThis interpretation of the Russell amendment is entirely consistent with\nthe views that Senator Russell expressed when he first proposed the\nmeasure. We take the liberty of quoting his remarks at length:\nMr. President, the purpose of the committee amendment, which\nis apparent from a reading thereof, is to retain in the Congress\nthe power of legislating and creating bureaus and departments of\nthe Government, and of giving to Congress the right to know\nwhat the bureaus and departments of the Government which\nhave been created by Executive order are doing.\n* * * I realize, Mr. President, that in time of war, emergencies\nmay arise which might dictate that the executive branch of the\nGovernment should immediately create some agency to deal with\nan immediate difficulty, but certainly there is no excuse for the\ncontinuance of an agency which has been in existence for longer\nthan 12 months for which the Congress has not appropriated, or\nfor which the Congress has not had any opportunity to appro\xc2\xad\npriate.\nSecondly, Mr. President, no agency which has power to issue\norders affecting the lives and business o f the American people\nshould stay in existence fo r more than 12 months unless the Con\xc2\xad\ngress has passed upon an appropriation fo r such agency. I have\nmade an effort to ascertain the number of agencies which would\nbe affected by this provision. According to a report which was\nfiled by the Bureau of the Budget in response to a request which I\nmade of the director of that agency, about 13 agencies would be\naffected.\n*******\n265\n\n\x0cI do not believe, Mr. President, that any lengthy discussion of\nthis amendment is necessary. Its purpose is clear. Certainly those\nwho have been complaining about bureaucrats and bureaucracy\nin this country, and who have heretofore complained because the\nCongress had not created or passed upon such agencies, should\nsupport this amendment and thereby give Congress the right at\nleast to keep advised as to what all the different agencies of the\nGovernment are doing.\n* * * * * * *\n\nO f course, everyone has his pet agencies, everyone has depart\xc2\xad\nments which he wants preserved, and if we start action like that\nproposed, if we are to say that the President of the United States\ncan legislate by Executive order when we favor the objective\nwhich he is seeking, we should say that we favor the President of\nthe United States taking to himself the power that is vested by the\nConstitution in the Congress of the United States, and legislating\nand creating departments of government which issue orders that\nbring the people of the United States before them, and pass\norders which direct people how they shall proceed in their daily\nbusiness. [90 C o n g r e s s io n a l R e c o r d 3059-3061 (1944) (em\xc2\xad\nphasis added.)]\nTurning from the legislative history to the statutory text itself, we note\nthat the language Senator Russell chose to adopt in framing his proposal is\npeculiarly apt if we accept the view that he had \xe2\x80\x9c action agencies\xe2\x80\x9d in mind.\nThe language is less appropriate if we assume that there was a larger pur\xc2\xad\npose behind it. In common legal parlance an \xe2\x80\x9c agency\xe2\x80\x9d or \xe2\x80\x9c instrumental\xc2\xad\nity\xe2\x80\x9d is an entity or means through which a principal acts or exerts power.\nAn individual or group that advises the Government but does not act on\nthe Government\xe2\x80\x99s behalf or exert governmental power is not an \xe2\x80\x9c agency\xe2\x80\x9d\nor \xe2\x80\x9c instrumentality\xe2\x80\x9d o f Government in that limited sense. To be sure,\nthese words can be read more expansively. The text could be construed to\nrefer to any entity established by the Government for a governmental\npurpose\xe2\x80\x94any \xe2\x80\x9c establishment\xe2\x80\x9d or division within the Government,\nwhether or not it acts on behalf of the Government or exerts any govern\xc2\xad\nmental power. But when a statutory text is open to more than one con\xc2\xad\nstruction, we should consult other materials to determine what was in\xc2\xad\ntended; and, as we have said, when one consults the legislative history of\nthe Russell amendment, one finds a very substantial basis for the conclu\xc2\xad\nsion that Senator Russell was concerned, not with advisory dr other an\xc2\xad\ncillary processes, but with the unauthorized exercise of actual governmen\xc2\xad\ntal power by agencies not created or authorized by Congress. That history\nsupports a technical and limited construction of the critical language.\nThis brings us to the second argument that supports the position taken\nby OMB. Whether or not one assumes that the Russell amendment was\noriginally intended to apply to nonstatutory advisers or advisory groups,\nthe Federal Advisory Committee Act has intervened. It has specifically\n266\n\n\x0cauthorized the creation of purely advisory committees; it has provided\nthat they may have a 2-year life; and it has contemplated, and made provi\xc2\xad\nsion for, the practice of using agency funds to support advisory commit\xc2\xad\ntees. Accordingly, if indeed agency funds may otherwise be lawfully ex\xc2\xad\npended for such a purpose, there is no longer any reason, under the\nRussell amendment, to bar an expenditure of funds in support of an ad\xc2\xad\nvisory committee merely because the committee has been in existence for\nmore than 1 year. To that extent, either the Federal Advisory Committee\nAct has superseded the Russell amendment in its application to purely ad\xc2\xad\nvisory committees, or the Act has brought advisory committees within that\nclass of entities to which Senator Russell had no objection: entities that ex\xc2\xad\nist by virtue of statutory authority.\nIt would be possible to construe these statutes in another way. Implied\nrepeals are disfavored. Standing alone and strictly construed, the Russell\namendment applies to any agency or instrumentality, whether or not the\nexistence of the agency or instrumentality is authorized by statute; and so\nconstrued, the Russell amendment could be interpreted as imposing an\nacross-the-board requirement for additional, \xe2\x80\x9c specific\xe2\x80\x9d authorization for\nany expenditure of money by or for any agency or instrumentality\nwhenever the agency or instrumentality has been in existence for 1 year.\nWe doubt, however, that such a broad construction would be true to the\nunderlying legislative purpose. Given that purpose, if (1) an agency or in\xc2\xad\nstrumentality performs functions that are indeed authorized by statute and\n(2) a law or appropriation makes funds available for the support of such\nfunctions, the Russell amendment should not be interpreted as imposing\nadditional, \xe2\x80\x9c specific\xe2\x80\x9d authorization requirements merely because the\nagency or instrumentality has been in existence for 1 year. If the function\nis authorized, the only real question is the one that is always present, no\nmatter how old or young the agency may be: are the funds in question ac\xc2\xad\ntually available for support of that function?\nThis appears to be the approach that the Comptroller General has taken\nin matters involving issues of this kind,2 and it is a reasonable one. If\n\n2 For example, in his opinion on agency funding o f the National Commission on the\nObservance o f International W om en\xe2\x80\x99s Year (B-182398, January 13, 1977), the Com ptroller\nGeneral attributed no significance whatever to the fact that some o f the funds were used to\nsupport activities conducted during the first year o f the Commission\xe2\x80\x99s existence, while others\nwere used for activities in the second year. The legal question was the same in either case:\nwhether the agency in question was authorized to expend funds to support functions o f the\nkind that the commission perform ed. Thus, in the case o f the Departm ent o f State, the\nComptroller General found sufficient authority for an expenditure in support o f the commis\xc2\xad\nsion in the Departm ent o f State\xe2\x80\x99s general statutory duty to \xe2\x80\x9c provide for the participation by\nthe United States in international activities * \xe2\x80\xa2 * for which provision has not been made by\nthe terms o f any treaty, convention, or Special Act o f Congress * * \xe2\x80\xa2 [and] * * * pay the\nexpenses o f participation in [such] activities * \xe2\x80\xa2\n22 U.S.C. \xc2\xa7 2672. N othing more\n\xe2\x80\x9c specific\xe2\x80\x9d was required. In the case o f other agencies, the Com ptroller General found insuf\xc2\xad\nficient authority under the statutes the agencies administered.\n\n267\n\n\x0cfunction is authorized by statute, and there is authorization for the\nexpenditure of funds to support such a function, the Russell amendment\ndoes not require a more \xe2\x80\x9c specific\xe2\x80\x9d authorization merely because the\nagency or instrumentality may be more than 1 year old.\nM\n\nary\n\nC. Law\n\nton\n\nDeputy Assistant Attorney General\nOffice o f Legal Counsel\n\n268\n\n\x0c"


b'October 25, 1977\n\n78-88\n\nMEMORANDUM OPINION FOR THE COUNSEL\nTO THE PRESIDENT\nThe President\xe2\x80\x94 Constitutional Law (Article I, \xc2\xa7 7, cl.\n2)\xe2\x80\x94 Presentation of Enrolled Bills\xe2\x80\x94 Absence of the\nPresident\n\nIn light of the President\xe2\x80\x99s forthcoming trip abroad, we believe you should be\nalerted to some of the problems and procedures connected with the presentation\nand signing of bills during his absence, in the event the matter should arise.\nArticle I, \xc2\xa7 7, cl. 2, of the Constitution provides that all bills and resolutions\napproved by both Houses of the Congress are to be presented to the President,\nwho then has 10 days (Sundays excepted) within which to approve, veto, or\ntake no action on the bill. The 10-day period begins to run when an enrolled bill\nis \xe2\x80\x9c presented\xe2\x80\x9d to the President. When the President is in the United States,\npresentation does not require delivery to him personally; rather it is done by\ndelivery of the bill to one of the legislative clerks on the W hite House staff.\nSee, E ber Bros. Wine & L iquor Corp. v. U nited States, 167 Ct. Cl. 665, 674,\n690 (1964), cert, denied, 380 U.S. 950 (1964).\nThis procedure obviously will not work when the President is abroad.\nCommunication problems and preoccupation with the subject matter of his trip\n(cf., Eber B ros., supra, at 676) could then effectively curtail the period for his\nconsideration. In the P ocket Veto C ase, 279 U.S. 655, 678 (1929), the Court\nstressed the importance of the availability to the President of the full\nconstitutional period for consideration.\nThe simplest way of dealing with that situation is through an agreement\nbetween the President and the congressional leadership pursuant to which no\nenrolled bills will be presented during his absence. There have been several\nsuch arrangements. See, e .g ., Zinn, Charles J., The Veto P ow er o f the\nPresident, p. 16, U.S. Congress, House, Committee on the Judiciary,\nCommittee Print, W ashington, U.S. G .P .O . 1952; E ber B ros., supra, at 702,\n705, 708. We are attaching for your convenience copies o f a memorandum of\nPresident Franklin D. Roosevelt dated November 10, 1943; a letter from\nAttorney General Brownell to President Eisenhower dated July 5, 1955; a letter\nof President Lyndon B. Johnson dated October 14, 1966, and the reply o f the\nSpeaker of the House of Representatives dated October 14, 1966.\n383\n\n\x0cin the unlikely event that the President is unable to obtain such a commitment\nfrom Congress, including the contingency of urgent legislation that cannot\nawait the President\xe2\x80\x99s return, the President normally withdraws the legislative\nclerks\xe2\x80\x99 authority to accept enrolled bills on his behalf when he travels abroad\nand so advises the Congress. The bills are received by the White House staff\nnot for \xe2\x80\x9c presentation\xe2\x80\x9d to the President but for forwarding or transmission to\nthe President. Presentation is then effected either when the bills actually are\nreceived by him abroad or upon his return to W ashington. E ber B ros., supra, at\n676. While that case suggests that when the President is abroad, Congress has\nthe power to start the running of the 10-day period by making a personal\npresentation abroad, we are not aware of any actual precedent to that effect.\nWe should also refer to the considerable time differences between W ashing\xc2\xad\nton and some o f the places where the President will visit. There is a time\ndifference o f 10 1/2 hours between W ashington and New Delhi; midnight at\nNew Delhi is 1:30 p .m ., W ashington time. Hence if the President signed a bill\non Delhi time, he could lose almost half a day of the constitutional period.\nMoreover, confusion could arise regarding the computation o f the time within\nwhich to approve a bill where it is presented in one time zone but action on it is\ntaken in another zone.\nNormally acts are dated as o f local legal time. Thus, it was held in Sunday v.\nM adigan , 301 F.(2d) 871 (9th C ir., 1962), that the Uniform Code of Military\nJustice which was to become effective on May 15, 1951, became effective in\nKorea on May 15 Korean tim e, although it was still May 14 in the United\nStates. On the other hand, as we have pointed out above, it is important for the\nPresident to have the full constitutional period of 10 days for consideration of\nthe action he should take. Sim ilarly, there should be no ambiguity as to when\nthe 10-day period begins and ends. Accordingly, we recommend that if the\nPresident acts while abroad, notation of the time when a bill is presented to or\napproved by him be made according to the date and hour calculated as of\nW ashington time.\nJo h n M . H a rm o n\n\nA ssistan t A ttorney G eneral\nOffice o f L egal Counsel\nA ttachm ents\n\n384\n\n\x0c\xe2\x80\x98CO PY \xe2\x80\x9d\n\nNovember 10, 1943\n\nMEMORANDUM FOR\n\nTHE VICE PRESIDENT\nTHE SPEAKER\n\nAs I expect to be away from W ashington for some time in the near future, I\nhope that insofar as possible the transmission of completed legislation be\ndelayed until my return. The White House Office, however, in other cases of\nemergency has been authorized to forward to me any and all enrolled bills or\njoint resolutions. They will be forwarded at once by the quickest means. The\nWhite House Office will not receive bills or resolutions on behalf of the\nPresident but only for the purpose of forwarding them. As soon as received by\nthe President their presentation to the President will have been completed in\naccordance with the terms o f the Constitution. I suggest, therefore, that if any\nbill is fo rw a rd e d to the White H ouse, the entries on the H ouse an d Senate\nJournals show \xe2\x80\x9cdelivery to the White H ouse f o r forw ardin g to the P resid en t\xe2\x80\x99\xe2\x80\x99\n\nFor security reasons I hope that this can be kept confidential for as long as is\nnecessary.\n\nF.D .R .\n\n385\n\n\x0cOFFICE OF THE ATTORNEY GENERAL\nW ASHINGTON, D.C.\n\nJuly 5, 1955\n\nThe President,\nThe W hite House.\nMy dear Mr. President:\nIt is suggested that you confer with leaders in Congress so that arrangements\ncan be made under the law for enrolled bills or joint resolutions to be held in\nCongress until your return.\nIn this way, your attention to the important matters raised in Summit Talks\nwill not be diverted by consideration of bills which may safely await your\nreturn.\nIf Congressional leadership believes that the matter is serious enough to\nwarrant your immediate attention, it should be advised to forward the bill to the\nWhite House with this understanding:\n1. That the entries on the House and Senate Journals will carry the\nstatement: \xe2\x80\x9c Delivery to the W hite House for forwarding to the Presi\xc2\xad\nd en t.\xe2\x80\x9d\n2. That the White House Office will be advised that it will not receive bills\nor resolutions on behalf of the President but they will only be \xe2\x80\x9c received\nfor forwarding them to the President\xe2\x80\x9d .\n3. That where the President acts on an emergency measure his decision will\nbe communicated not only by carrier but also by cable.\nThis procedure would be used in order that in event of a veto the Congress\ncould receive as much notice as possible to permit it to act.\nRespectfully,\nIsl Herbert Brownell, Jr.\n\nAttorney General\n\n386\n\n\x0cTHE W HITE HOUSE\nWASHINGTON\nOctober 14, 1966\nDear Mr. President:\nThis will confirm arrangements made between you and members of my staff.\nI am leaving on M onday to attend the important conference in Manila and to\nvisit some o f our friends in the Pacific and Southeast Asia. I expect to return to\nWashington about November 2.\nIn view of the close scheduling and concentrated efforts required by this\nmission, I think it preferable to defer until my return Presidential consideration\nof all but the most urgent legislation completed by Congress prior to its\nadjournment, so that each bill may receive the careful attention which it\ndeserves.\nIn line with the patterns developed by previous Presidents under similar\ncircumstances, I have issued instructions that bills received at the White House\nwhile I am on this trip will be treated not as having been \xe2\x80\x9c presented\xe2\x80\x9d to the\nPresident in the Constitutional sense, but as having been received for\nforwarding or for presentation upon my return. The bills received and the\nreceipts customarily given to the Congressional messengers during this period\nwill be stamped \xe2\x80\x9c Received (date) The White House, for forwarding to the\nPresident or for presentation to him on his return from abroad.\xe2\x80\x9d\nUnder this arrangement the ten-day period for Presidential consideration\nprovided in Article I, Section 7 of the Constitution will begin either upon my\nreturn to the White House or when the bills are actually presented to me while I\nam away.\nMeanwhile, in order that every bill may receive full consideration at the earliest\npracticable date, the Bureau of the Budget and the Executive departments and\nagencies will proceed with their preparatory work on all bills as soon as such\nbills are received at the W hite House.\nThe Acting Attorney General has reviewed and approved these procedures.\nSincerely,\n/s/ Lyndon B. Johnson\nHonorable Hubert H. Humphrey\nPresident of the Senate\nWashington, D.C.\n387\n\n\x0cTHE SPEA K ER\xe2\x80\x99S ROOMS\nU .S. HOUSE OF REPRESENTATIVES\nW ASHINGTON, D.C.\n\nOctober 14, 1966\nThe President\nThe W hite House\nW ashington, D.C.\n\nDear Mr. President:\nI am in receipt o f your letter of October 14th in relation to the Bills that pass\nboth branches o f Congress and are received at the White House subsequent to\nyour leaving for your trip to the Philippines and other countries. So far as the\nHouse of Representatives is concerned, when receipts are received from the\nWhite House, similar entries to those stamped on the receipts will be made in\nthe House Journal and the Congressional Record.\nWith my very best wishes for a most successful and safe voyage abroad and\nreturn, and with kind personal regards, I am, as always,\nVery respectfully yours,\n\nIs/ John W. M cCormack\n\n388\n\n\x0c'