b'Review of 1988 Opinion Concerning the Applicability of Section\n504 of the Rehabilitation Act to Individuals Infected with HIV\nT h e 19 8 8 O ffice o f Legal C o u n se l o p in io n a c c u ra te ly d e sc rib e s the d u tie s im p o se d b y s e c tio n 5 0 4 o f the\nR e h a b ilita tio n A ct w ith re sp ec t to in d iv id u a ls in fe c te d w ith the H u m a n Im m u n o d e fic ie n c y V irus\nT h e s u b se q u e n t p a ssa g e o f th e A m e ric a n s w ith D isab ilitie s A ct d id n o t a lte r the a n aly sis o f c a se s a ris \xc2\xad\nin g u n d e r th e R eh a b ilitatio n A ct, a lth o u g h an a m e n d m e n t to s e c tio n 5 0 4 n o w re q u ire s re fe re n c e to\nsta n d a rd s set fo rth in th e A D A\nA p p lic a tio n o f th e s tan d a rd s s e t forth u n d e r sec tio n 5 0 4 in an y p a rtic u la r c ase re q u ire s c o n sid e ra tio n o f\ncu rre n t scie n tific u n d e rsta n d in g o f H IV in fe c tio n . A d v a n ce s in the s c ie n tific u n d e rs ta n d in g o f H IV\nin fe c tio n s in c e 1988 m a y u n d e rm in e so m e o f th e d is c u s s io n in the 1988 o p in io n a b o u t th e a p p lic a \xc2\xad\ntio n o f th e se s tan d a rd s to in d iv id u a l c ase s\n\nJuly 8, 1994\n\nM e m o r a n d u m O p in io n f o r t h e\nA s s is t a n t A t t o r n e y G e n e r a l f o r A d m in is t r a t io n\n\nYou have asked us whether an Office o f Legal Counsel M emorandum of Sep\xc2\xad\ntember 27, 1988, 12 Op. O.L.C. 209 (1988), entitled \xe2\x80\x9cA pplication of Section 504\nof the Rehabilitation Act to HIV-Infected Individuals,\xe2\x80\x9d (\xe2\x80\x9c 1988 O.L.C. M em oran\xc2\xad\ndum \xe2\x80\x9d) accurately reflects the state of the law on this issue. That memorandum\nconcluded that section 504 of the Rehabilitation Act, 29 U.S.C. \xc2\xa7 794, bars dis\xc2\xad\ncrimination against individuals infected with the Human Im munodeficiency Virus\n(\xe2\x80\x9cH IV \xe2\x80\x9d), whether or not the infection has resulted in illness. Cf. S ch ool Bd. o f\nN assau County v. Arline, 480 U.S. 273 (1987) (holding that section 504 bars dis\xc2\xad\ncrimination on the basis of infection with tuberculosis, but reserving the question\nwhether the Act applies to asymptomatic carriers of infectious diseases).\nW e have reviewed the 1988 O.L.C. M emorandum, and have concluded that it\naccurately describes the duties imposed by section 504 of the Rehabilitation Act\nwith respect to individuals infected with HIV. We do, however, have a few com\xc2\xad\nments to update the analysis o f that M emorandum.\nA. Im pact o f the A m erican s with D isa b ilities A c t o f 1990\nFirst of all, we note that section 504 of the Rehabilitation Act has been amended\nto indicate that\n[t]he standards used to determine whether this section has been\nviolated in a complaint alleging em ployment discrimination under\n141\n\n\x0cOpinions o f the O ffice o f L eg a l Counsel\n\nthis section shall be the standards applied under title I of the Ameri\xc2\xad\ncans with D isabilities Act o f 1990 (42 U.S.C. 12111 et seq.) and the\nprovisions o f sections 501 through 504, and 510, of the Americans\nwith D isabilities Act of 1990 (42 U.S.C. 12201-12204 and 12210),\nas such sections relate to employment.\n29 U.S.C. \xc2\xa7 7 94(d).1 Because the anti-discrim ination in employment provisions of\nthe Am ericans with Disabilities A ct (\xe2\x80\x9cA D A \xe2\x80\x9d) were in large part modeled on those\nestablished in the Rehabilitation Act, and because the legislative history of the\nADA reaches the sam e conclusions as to the reach of the Rehabilitation Act as did\nthe 1988 O.L.C. M emorandum and indicates an intent to codify those conclusions\nas the standards for evaluating cases brought under the ADA, this amendment to\nsection 504 o f the Rehabilitation A ct for the most part reinforces rather than sup\xc2\xad\nplants our earlier analysis.2 Furtherm ore, the ADA specifically states that,\n\xe2\x80\x9c[e]xcept as otherw ise provided in this chapter, nothing in this chapter shall be\nconstrued to apply a lesser standard than the standards applied under title V of the\nRehabilitation Act o f 1973 or the regulations issued by Federal agencies pursuant\nto such title.\xe2\x80\x9d 42 U.S.C. \xc2\xa7 12201 (citation om itted).3 As a general matter, there\xc2\xad\nfore, the passage o f the ADA requires reference to the standards set forth in that\nstatute in litigation involving the Rehabilitation Act, but it does not alter the analy\xc2\xad\nsis of cases arising under the Rehabilitation Act, and indeed indicates that the in\xc2\xad\nterpretation o f the Rehabilitation A ct set forth in the 1988 O.L.C. M emorandum\nwas correct.\nSpecifically, the text and legislative history of the ADA confirm that:\n1.\nHIV infection, w hether or not an individual has developed any overt symp\xc2\xad\ntoms as a result o f that infection, is a disability under the Rehabilitation Act and\nunder the A m ericans with Disabilities Act. See S. Rep. No. 101-1 16, at 22-24\n(listing \xe2\x80\x9cinfection with the Human Im m unodeficiency Virus\xe2\x80\x9d as a disability; citing\n\n1 In a d d itio n , the term \xe2\x80\x99\xe2\x80\x98d isab ility \xe2\x80\x9d has been su b stitu ted for the term \xe2\x80\x9chandicap\xe2\x80\x9d in section 504(a) of the\nR ehabilitatio n A ct, 29 U S.C \xc2\xa7 7 9 4 (a)\n2 See, e g , H R R ep N o 101-485, pt 2, at 5 2 -5 7 , 67-70, 76, 149 (1990), rep rin ted in 1990 U S.C C A N .\n303, 334-39, 34 9 -5 2 , 358, 4 3 2 , id. pt 3, at 29, 33 -3 5 , 40, 42, 4 5 -4 6, reprinted in 1990 U S C C A .N 451,\n455-57, 462, 4 6 4 , 4 6 8 -6 9 , S R ep N o 101-116, at 22, 25-26, 31, 36, 40 (1989) (all stating that the basic\nanti-d iscrim in atio n p ro v isio n s in title I o f the A D A are m odeled on those set forth in section 504, and m\nsom e instan ces e x p licitly en d o rsin g the interpretations o f section 504 set forth in A r h n e , 480 U S 273, and\nin the 1988 O .L C. M em o ran d u m ), se e also H .R . C onf. Rep. N o 101-596 (1990); Equal Em ploym ent O p\xc2\xad\nportunity for Individuals W ith D isabilities, 5 6 Fed R eg 35,7 2 6 (1991) (S upplem entary Inform ation to\nregulatio n s c o d ified at 29 C F R pt 1630) (\xe2\x80\x98\xe2\x80\x98T h e form at o f part 1630 reflects congressional m tent, as ex \xc2\xad\npressed in the leg islativ e histo ry , that the regulations im plem enting the em ploym ent provisions of the ADA\nbe m odeled on the reg u latio n s im plem enting sectio n 504 o f the R ehabilitation A ct o f 1973 *\xe2\x80\x99)\nT he leg islativ e history notes, fo r exam ple, th a t the provisions o f the ADA setting forth requirem ents for\nthe provision o f access to p u b lic accom m odations by providers w ho do not receive federal funding are less\nstrin g en t than the co rresp o n d in g provisions o f the R ehabilitation A ct addressing the provision of access to\nE .g . H R Rep. N o 101-485, pt 3, at 69-70, reprinted m 1990\npublicly funded a cco m m o d atio n s\nU S C C A N. at 4 9 2 -9 3 N o su ch explicit d ifferen ces ex ist with respect to the em ploym ent provisions o f the\ntw o Acts.\n\n142\n\n\x0cR eview oj 1988 Opinion Concerning the A pplicability o f Section 504 o f the\nR ehabilitation Act to Individuals Infected with H IV\n\nthe 1988 O.L.C. M emorandum for the proposition that those infected with HIV\nhave \xe2\x80\x9c [a] physical or mental impairment that substantially limits one or more of the\nmajor life activities of such individual\xe2\x80\x9d within the meaning of both Acts; and d e\xc2\xad\nscribing disability definition generally); H.R. Rep. No. 101-485, pt. 2, at 51-54\n(same), reprin ted in 1990 U.S.C.C.A.N. at 333-36; id. pt. 3, at 28-30 (same), r e \xc2\xad\nprin ted in 1990 U.S.C.C.A.N. at 450-52; see also 29 C.F.R. pt. 1630 app. at 403OS (1993) (Interpretive Guidance to \xc2\xa7 1630.2(j)) (stating that HIV infection is in\xc2\xad\nherently \xe2\x80\x9csubstantially limiting\xe2\x80\x9d within the meaning of both Acts). Indeed, the\nneed to protect those infected with HIV from discrimination in employment was\nfrequently cited by those supporting the bill. See, e.g., S. Rep. No. 101-116, at 8,\n19 (citing views of the President\xe2\x80\x99s Commission on the Human Im munodeficiency\nVirus Epidemic); 136 Cong. Rec. 10,872-73 (1990) (remarks of Rep. W eiss); id. at\n10,912-13 (remarks of Reps. McCloskey and W axman); id. at 17,292-93 (rem arks\nof Rep. W axman).4 Furthermore, both the ADA and the Rehabilitation Act include\nwithin the definition of an individual with a disability an individual who, even\nthough he or she has no actual physical or mental impairment or history of such\nimpairment, is regarded as having an impairment. 42 U.S.C. \xc2\xa7 12102(2)(C)\n(ADA); 29 U.S.C. \xc2\xa7 706(8)(B) (Rehabilitation Act). This definition often will\nprovide an additional basis for concluding that those infected with HIV are pro\xc2\xad\ntected by section 504.\n2. The definitions of \xe2\x80\x9cdiscrim ination\xe2\x80\x9d and of \xe2\x80\x9cqualified individual\xe2\x80\x9d under the\nADA are drawn from the definitions o f these terms set forth in the section 504\nregulations. See 42 U.S.C. \xc2\xa7\xc2\xa7 12111(8) (definition of \xe2\x80\x9cqualified individual with a\ndisability\xe2\x80\x9d) and 12112 (definition of \xe2\x80\x9cdiscrimination\xe2\x80\x9d); H.R. Rep. No. 101-485, pt.\n3, at 32-33 (\xe2\x80\x9cqualified individual\xe2\x80\x9d), reprinted in 1990 U.S.C.C.A.N. at 454-55; id.\nat 35 (\xe2\x80\x9cdiscrim ination\xe2\x80\x9d), reprin ted in 1990 U.S.C.C.A.N. at 457.\n3. The legislative history indicates that the use of the term \xe2\x80\x9cdirect threat\xe2\x80\x9d in the\nADA is designed to \xe2\x80\x9ccodify\xe2\x80\x9d the ruling of the A rline case discussed *in the 1988\nO.L.C. M em orandum .5 The ADA indicates that an employer may raise as a de\xc2\xad\n\n4 In addition, recent cases construing the R ehabilitation Act have held that HIV infection is a disability\nw ithin ihe m eaning o f the Act E.g , Buckingham v U nited S ta te s, 998 F 2 d 735 (9th C ir. 1993), C halk v\nU nited States D ist C ourt, 840 F 2 d 701 (9th C ir 1988), R oe v D istrict oj C olum bia, 842 F Supp 563\n(D .D C 1993), vacated a s m o o t, 25 F.3d 1115 (D C . C ir 1994); D oe v D istrict oj C olum bia, 796 F Supp\n559 (D .D C . 1992); R ay v. S chool D ist., 666 F Supp 1524 ( M D Fla 1987); Thom as v A ta sc a d e ro U nified\nS chool D ist ,6 6 2 F Supp 376 (C D C al. 1987).\n5 In addressing the issue o f the effect o f the risk posed by an infectious disease on an in d iv id u a l\'s q u alifi\xc2\xad\ncations for a jo b , A rlin e indicated that "[a} person w ho poses a sig n ijicant risk o f com m unicating an in fe c \xc2\xad\ntious disease to others in the w orkplace will not be otherw ise qualified for his or her jo b if reasonable\naccom m odation will not elim inate that risk \xe2\x80\x9c 480 U S. at 287 n. 16 (em phasis added) T he C ourt stated that\nin m aking a ju d g m en t as to w hether a person is qualified for a jo b , the em ployer should take into account\n[findings of] facts, based on reasonable m edical ju d g m en ts given the state o f m edical know ledge,\nabout (a) the nature o f the risk (how the disease is transm itted), (b) the duration o f the risk (how\nlong is the carrier infectious); (c) the sev en ty o f the risk (w h at is the potential harm to third p a r\xc2\xad\nties) and (d) the probabilities the disease will be transm itted and will cause varying degrees of\nharm.\n\n143\n\n\x0cOpinions o f ih e O ffice o f L egal C ounsel\n\nfense to a claim o f discrimination under the Act the argument that the employee\nwas not otherw ise qualified for the jo b because he or she posed a \xe2\x80\x9cdirect threat to\nthe health or safety o f other individuals in the workplace.\xe2\x80\x9d 42 U.S.C. \xc2\xa7 12113(b).\nThe statute defines \xe2\x80\x9cdirect threat\xe2\x80\x9d as a \xe2\x80\x9csignificant risk to the health or safety of\nothers that cannot be eliminated by reasonable accom m odation,\xe2\x80\x9d 42 U.S.C.\n\xc2\xa7 12111(3), apparently drawing on the \xe2\x80\x9csignificant risk\xe2\x80\x9d language used by the A r\xc2\xad\nline Court. 480 U.S. at 287 n.16. A s noted above, the legislative history indicates\nthat this language is intended to \xe2\x80\x9ccodify\xe2\x80\x9d the standard set forth in Arline. H.R.\nRep. No. 101-485, pt. 3, at 34,45-46, reprin ted in 1990 U.S.C.C.A.N. at 456, 46869; see a lso id., pt. 2, at 56-57, 150, reprin ted in 1990 U.S.C.C.A.N. at 338-39,\n433; H.R. Conf. Rep. No. 101-596, at 60, reprin ted in 1990 U.S.C.C.A.N. at 568;\nS. Rep. No. 101-116, at 27-28, 40. In addition, the Equal Employment Opportu\xc2\xad\nnity Com m ission has issued regulations implementing the Act that use the test set\nforth in A rlin e for evaluating the risk posed by an employee with disabilities. 29\nC.F.R. \xc2\xa7 1630.2(r) (1993) (defining \xe2\x80\x9cdirect threat\xe2\x80\x9d and requiring that employer\nconsider \xe2\x80\x9c(1) [t]he duration of the risk; (2) [t]he nature and severity of the potential\nharm; (3) [t]he likelihood that the potential harm will occur; and (4) [t]he immi\xc2\xad\nnence of the potential harm\xe2\x80\x9d);6 29 C.F.R. pt. 1630 app. at 410-11 (Interpretive\nG uidance to 29 C.F.R. \xc2\xa7 1630.2(r)) (employer must consider \xe2\x80\x9cobjective, factual\nevidence,\xe2\x80\x9d rather than \xe2\x80\x9csubjective perceptions, irrational fears, patronizing atti\xc2\xad\ntudes, or stereotypes,\xe2\x80\x9d and must determ ine that there is a \xe2\x80\x9chigh probability o f sub\xc2\xad\nstantial harm ,\xe2\x80\x9d rather than merely a \xe2\x80\x9cspeculative or remote risk\xe2\x80\x9d). While the point\nis not free from doubt, the Interpretive Guidance also indicates that an employer\nmay consider whether the individual would pose a direct threat to his or her own\nsafety. Id.\n4.\nThe text and legislative history of the ADA indicate that the definition of\nreasonable accom m odation is to include the possibility of reassignment, a question\nthat was unsettled under the Rehabilitation Act before the recent amendment. 42\nU.S.C. \xc2\xa7 12111(9) (ADA definition of \xe2\x80\x9creasonable accom m odation\xe2\x80\x9d); S. Rep. No.\n101-116, at 31-32 (indicating that \xe2\x80\x9creasonable accom m odation\xe2\x80\x9d under the ADA\nincludes the possibility o f reassignment); see a lso Barbara A. Lee, Reasonable\nA ccom m odation U nder the Am ericans with D isabilities Act: The Lim itations o f\nR ehabilitation A ct P recedent, 14 Berkeley J. Empl. & Lab. L. 201, 206, 235-43\n\n(1993) (arguing that for this reason, case law interpreting the Rehabilitation Act\nthat indicates that em ployers need not consider reassignment to meet their duties to\nId at 288 (q u o tin g B rief fo r American M ed ical A ssociation as A m icus C u n ae 19, brackets in original).\nFurtherm o re, the C o u rt stated lhat \xe2\x80\x9c fi]n m ak in g these findings, courts norm ally should defer to the reason\xc2\xad\nable m edical ju d g m e n ts o f public health o fficials.\xe2\x80\x9d Id\n6 T h e reg u latio n fu rth er p rovides that the d eterm in atio n w h eth er an individual poses a direct threat\nsh all b e b ased on an individualized assessm en t o f the individual s present ability to safely p er\xc2\xad\nform the essential functions o f the job. T his assessm ent shall be based on a reasonable m edical\nju d g m e n t that relies on the most current m edical k n o w led g e and/or on the b est available o bjec\xc2\xad\ntive ev id en ce.\n29 C .F .R \xc2\xa7 1630.2(r).\n\n144\n\n\x0cR eview o f 1988 Opinion C oncerning the A pplicability o f Section 504 o f the\nRehabilitation A ct to Individuals Infected with H IV\n\nprovide reasonable accommodation should not be relied upon as precedent in suits\nbrought under the ADA). Because neither statute purports to list all conceivable\nreasonable accommodations, see 42 U.S.C. \xc2\xa7 12111(9) (ADA); 29 U.S.C. \xc2\xa7 794\n(Rehabilitation Act), and because the Rehabilitation Act indicates that the stan\xc2\xad\ndards of the ADA are to be used to determine whether the Rehabilitation Act has\nbeen violated, 29 U.S.C. \xc2\xa7 794(d), reassignment must be considered a possible\nreasonable accommodation under the Rehabilitation Act as well. See a lso Buck\xc2\xad\ningham v. U nited S tates , 998 F.2d 735 (9th Cir. 1993) (Postal Service must con\xc2\xad\nsider, as a possible accommodation, relocating HIV-infected employee to area of\ncountry with better health care services for those infected with the virus).\n5. The legislative history of the ADA clearly states that the term \xe2\x80\x9cundue hard\xc2\xad\nship\xe2\x80\x9d for purposes of the ADA, and by implication section 504, see 29 U.S.C. \xc2\xa7\n794(d), is not to be construed as referring to the standard set forth in Trans W orld\nAirlines, Inc. v. Hardison, 432 U.S. 63 (1977) (construing Title VII as requiring an\nemployer to accommodate religious beliefs only if it could be done with no more\nthan a \xe2\x80\x9cde minimis\xe2\x80\x9d cost to the em ployer).7 Rather, the ADA defines \xe2\x80\x9cundue hard\xc2\xad\nship\xe2\x80\x9d as \xe2\x80\x9can action requiring significant difficulty or expense.\xe2\x80\x9d 42 U.S.C.\n\xc2\xa7 12111(10)(A). Among the factors to be considered in determining whether the\ndifficulty or expense involved would be \xe2\x80\x9csignificant\xe2\x80\x9d are the \xe2\x80\x9coverall financial\nresources\xe2\x80\x9d o f the entity that must take the action. 42 U.S.C. \xc2\xa7 1211 l(10)(B )(ii)\nand (iii).\n\nB. Changes in Scientific Understanding\nFinally, we would note that advances in the scientific understanding of HIV in\xc2\xad\nfection since 1988 may undermine som e o f the discussion in our earlier opinion\nabout the application of these standards to individual cases. See, e.g., 12 Op.\nO.L.C. at 219-20, 229-30 (citing exam ples of situations in which it was thought\nthat an individual infected with HIV might pose a direct threat to the health or\nsafety of others).\nThus, for example, recent studies suggest that the risk of transmission from a\nhealth care worker to a patient is actually quite low. See, e.g., Centers for Disease\nControl and Prevention, Update: Investigations o f P ersons T reated b y HIVInfected Health Care Workers \xe2\x80\x94 U nited States, 41 Morb. & Mort. W kly. Rep. 329\n(1993) (No. 17); National Commission on AIDS, P reventing HIV Transm ission in\n\n7\nSee S. R ep No 101-116, at 36 (discussing H ardison)\', 29 U S.C \xc2\xa7 7 9 4 (d ) (slating that standards o f\nA D A apply in R ehabilitation Act cases), H R. Rep No 101-485, pt 2, at 87 (provision is derived from\nR ehabilitation Act and should be applied consistently with pro v isio ns construing that A ct), rep rin te d in 1990\nU S.C C A N. at 369; Lee, supra, at 206-07, R obert L B urgdorf, Jr., The A m erica n s w ith D isabilities A ctA na lvsts a n d Im plications oj a Second-G eneration C ivil R ig h ts Statute, 2 6 H arv C.R - C L L Rev. 413,\n462-63 (1991)\n\n145\n\n\x0cOpinions o f th e O ffice o f L eg a l C ounsel\n\nH ealth C are S ettings 7, 1 1-12, 15-18 (1992).8 The Centers for Disease Control\n\nhave suggested guidelines for control of transmission of the virus that reflect this\ninformation. Centers for Disease Control and Prevention, R ecom m endations f o r\nP reven tin g Transm ission o f Hitman Im m unodeficiency Virus an d H epatitis B Virus\nto P atients D uring Exposure-Prone In vasive P roced u res , 40 Morb. & Mori. Wkly.\nRep. 1 (1991) (No. RR-8); see a ls o National Commission on AIDS, supra\n\n(discussing CD C G uidelines and other publications addressing techniques for pre\xc2\xad\nventing transm ission o f HIV in health care settings).9\nW e do not attem pt to review the scientific data here, but we would emphasize\nthat a determ ination under the ADA, and thus by implication under section 504,\nthat an individual poses a \xe2\x80\x9cdirect threat to the health or safety of other individuals\nin the w orkplace,\xe2\x80\x9d 42 U.S.C. \xc2\xa7 12113(b), which is to say \xe2\x80\x9ca significant risk to the\nhealth or safety o f others that cannot be eliminated by reasonable accommodation,\xe2\x80\x9d\n42 U.S.C. \xc2\xa7 12111(3) (emphasis added), must be made on an individualized basis,\nusing the four-prong test set forth in A rlin e , 480 U.S. at 287-88, and adopted by the\nstatute and regulations. See 42 U.S.C. \xc2\xa7 12111(3); 29 C.F.R. \xc2\xa7 1630.2(r) (restating\n\n8 Indeed, the C en ters fo r D isease Control h a v e indicated that the only docum ented cases o f transm ission\nfrom a h ealth care w o rk er lo a p atien t are those involving a Florida d e ntist w ho infected six o f his patients\nthrough u n know n m eans 41 M orb & Mort W kly. Rep. at 331, see also N ational C om m ission o n AIDS,\nsupra, at 7 As o f 1993, the C en ters for D isease C ontrol had review ed the cases o f 19,036 patients treated by\n57 H IV -in fected h ealth care w orkers 41 M orb. & Mort W kly. Rep at 329\n9 W hile co u rts typically h ave upheld restrictions on health care w orkers, see, e g , B radley v U niversity o f\nT ex M .D . A n d e rso n C a n cer C tr , 3 F.3d 922 (5 th Cir. 1993), cert denied, 510 U S 1119 (1994), L eckelt v\nB oa rd o f C o m m \'r s o f H osp. D ist N o /, 909 F 2d 820 (5ih C ir 1990); D oe v W ashington U niv., 780 F\nSupp. 628 (E .D . M o 1991), ihe reasoning o f these cases o ften appears to be based on outdated medical\ninform atio n o r w eak scientific analysis that g re a tly ov erstates the risks posed by such w orkers and thus may\nnot app ly the statu te app ro p riately C f In re W estch ester C o u n tv M ed. C tr , D epartm ent of Health & Human\nS ervices, D ep artm en tal A pp eals B oard, D ocket N o 91-504-2, D ecision No. 191 (A pr 20, 1992) (restrictions\non d u tie s o f H IV -p o sitiv e p h arm acist violated R eh ab ilitatio n A ct; federal funding to hospital term inated).\nW e w o u ld e m p h asize that the standards set forth in 29 C F R. \xc2\xa7 1630 2(r) for determ ining w hether an\nindividual p o ses a d irect th re a t m u st be applied to health care w orkers as well as to w orkers in other fields\nA ccordingly, c u rren t m edical inform ation and con sid eratio n o f the risks posed by the essential functions of\nthe jo b m ust form ihe basis fo r a decision In light o f the cu rren t view s o f the C enters for D isease Control\nthat the risks p o sed by H IV -in fected health c a re w orkers are, in m ost health care settings, rem ote or nonex\xc2\xad\nistent, w e th in k that p ro p er application o f 29 C .F R. \xc2\xa7 1630 2(r) frequently will result in a finding that the\nw orker does n o t pose a d ire c t threat.\nFor m ore g en eral d iscu ssio n o f the risks p o sed by H IV infection in o th e r settings, see C halk v. U nited\nS tates D ist C o u rt, 840 F 2d 701, 710 (9th C ir. 1988) (g ran tin g prelim inary injunction reinstating HIVm fected ju n io r high school, teach er to classro o m duties, reaso n ing that C halk had \xe2\x80\x9cstrong probability of\nsuccess on the m erits" o f his R ehabilitation A c t claim b ecau se there w as no evidence to support a risk o f\ntran sm issio n ), G lo v er v E a stern Nebraska C o m m u n ity O ffice o f R etardation, 6 86 F Supp 243 (D Neb\n1988) (m an d ato ry hepatitis B V irus 0 \xe2\x80\x98HBV\xe2\x80\x9d ) and HIV testing o f em ployees o f agency assisting mentally\nretarded c lie n ts not ju stifie d ; there was in su fficien t ev id en ce that infection w ould pose a danger to others),\na ff\'d , 867 F 2d 461 (8th C i r ), cert, denied, 4 9 3 U S. 932 (1989).\nFor d iscu ssio n o f the risk in public safety p rofessions, see R oe v. D istrict o j C olum bia, 842 F. S upp 563\n(D D .C 1993) (lim itatio n s on activities o f firefig h ter infected w ith HBV unjustified, as firefighter w ould not\npose dire c t th re a t w hen perfo rm in g m outh-to-m outh re su scitatio n ; in reaching this conclusion, the court\nnoted that h o sp itals g en erally do not bar H B V -infected em p lo y ees from perform ing C PR ), vacated as m oot,\n25 F 3d 1115 (D .C C ir 1994); D o e v D istrict o f C olum bia, 7 9 6 F Supp 559 (D .D .C . 1992) (refusal to hire\nH IV -in fecied ap p lican t violates R ehabilitation Act, as ind iv id u al does not pose direct threat), cf. A nonym ous\nFirem an v. C ity o f W illoughby, 779 F S u p p 402 (N .D O h io 1991) (firefighter and param edics may be\ntested fo r H IV in lig h t o f risk)\n\n146\n\n\x0cR eview o f 1988 O pinion C oncerning the A pplicability o f Section 504 o f the\nR ehabilitation A ct to Individuals Infected with H IV\n\ndefinition of \xe2\x80\x9cdirect threat\xe2\x80\x9d set forth in Arline)\', H.R. Conf. Rep. No. 101-596, at\n60 (Section 12111(3) is intended to codify the test set forth in A rline), reprin ted in\n1990 U.S.C.C.A.N. at 568; S. Rep. No. 101-116, at 27-28 (same). Furthermore, a\ndetermination that an individual poses a direct threat must be based on information\nabout the essential functions of the particular jo b at stake and on current scientific\ninformation about the nature of the risks involved; speculative concerns, including\nunfounded and exaggerated fears of transmission risks, may not be relied upon to\ndefend a conclusion that an individual poses a direct threat. See, e.g., 29 C.F.R. pt.\n1630 app. at 410-11 (Interpretive Guidance to 29 C.F.R. \xc2\xa7 1630.2(r)).\nSimilarly, while the 1988 O.L.C. M emorandum, 12 Op. O.L.C. at 220, sug\xc2\xad\ngested that persons infected with HIV are subject to \xe2\x80\x9cdementia attack\xe2\x80\x9d and there\xc2\xad\nfore may be unqualified for jobs in which a sudden loss of mental faculties could\npose a safety risk, this discussion may be subject to misinterpretation. The discus\xc2\xad\nsion of hypothetical HIV-related problems in the 1988 O.L.C. M emorandum was\nnot intended to be relied upon for litigation purposes, and the reference to dem en\xc2\xad\ntia attacks was intended to refer only to the risk that an individual suffering from\nHIV-related dementia might occasionally be particularly severely affected. It is\ncertainly true that an individual with symptoms o f dementia, whether related to\nHIV or not, may not be \xe2\x80\x9cotherwise qualified\xe2\x80\x9d for certain jobs. However, neither\nthe 1988 O.L.C. Memorandum nor any other source of which we are aware indi\xc2\xad\ncates that HIV-induced dementia occurs suddenly and thus would pose certain of\nthe risks described in that memorandum. Furthermore, unpublished data com piled\nby the Centers for Disease Control and Prevention on June 30, 1993 indicated that\nless than 6% of adults known to the CDC to have AIDS were also known to have\nHIV-related encephalopathy, the most common cause of HIV-related neurological\nsymptoms. See Centers for Disease Control and Prevention, A du lt Fem ale AIDS\nC ases by D isease: C D C AIDS D ata as o f June 30, 1993 (indicating that 5.1077%\nwere affected); and Centers for Disease Control and Prevention, A dult M ale AIDS\nCases by D isease: C D C AIDS D ata as o f June 30, 1993 (indicating that 5.5688%\nwere affected). Other sources indicate that neurological problems are most com\xc2\xad\nmon in individuals with advanced HIV disease. E.g., Richard W. Price, et. al., The\nBrain in AIDS: Central N ervous System HIV-1 Infection an d AIDS D em entia\nComplex, 239 Science 586 (Feb. 5, 1988). Accordingly, we would caution readers\n\nthat an argument that an individual is not otherwise qualified for a job because of\nthe risk of dementia, like arguments based on the risk of transmission, must be\ngrounded in scientific evidence that such a risk exists with respect to that individ\xc2\xad\nual, and is relevant to the determination whether the individual is otherwise quali\xc2\xad\nfied for the job.\nDAW N E. JOHNSEN\nD eputy A ssistan t Attorney G eneral\nOffice o f L egal Counsel\n\n147\n\n\x0c'


b'Administrative Settlement of Disputes\nConcerning Determinations of Mineral\nRoyalties Due the Government\nThe Department of the Interior is authorized, before the completion of an administrative appeal, to\nsettle disputed determinations of mineral royalties due the government exceeding $100,000 made by\nthe Minerals Management Service without obtaining the approval of the Justice Department under\nthe Federal Claims Collection Act.\n\nJuly 28, 1998\n\nMEMORANDUM OPINION FOR THE ASSISTANT ATTORNEY GENERAL\nENVIRONMENT AND NATURAL RESOURCES DIVISION\nAND THE SOLICITOR\nDEPARTMENT OF THE INTERIOR\nThis responds to your joint letter of September 3, 1997, requesting our opinion\nconcerning the authority of the Department of the Interior (\xe2\x80\x9cDOI\xe2\x80\x9d or \xe2\x80\x9cInterior\xe2\x80\x9d)\nand its Minerals Management Service (\xe2\x80\x9cMMS\xe2\x80\x9d) to settle\xe2\x80\x94during the process of\nadministrative review within Interior\xe2\x80\x94disputed mineral royalty payments owed\nby lessees operating on federal or Indian lands or the offshore Outer Continental\nShelf. The specific issue presented is whether DOI is authorized to settle administratively MMS determinations of royalties due exceeding $100,000 (including\nroyalties not governed by the provisions of Public Law 104-1851) without\nobtaining the approval of the Justice Department in accordance with the provisions\nof 31 U.S.C. \xc2\xa7 3711(a)(2) (Supp. III 1997). For reasons explained below, we\nconclude that DOI does possess such authority.2\n\n1\n\nAs discussed below, Public Law No. 104-185 made explicit the Secretary of the Interior\xe2\x80\x99s authority to settle administratively disputed royalty obligations with respect to oil and gas produced after\nSeptember 1, 1996. See Federal Oil and Gas Royalty Simplification Act of 1996, Pub. L. No. 104-185,\n\xc2\xa7 6(f)(1), 110 Stat. 1700, 1717 (codified at 30 U.S.C. \xc2\xa7 1724(i) (Supp. III 1997)) (\xe2\x80\x9cFairness Act\xe2\x80\x9d). That\nlaw, however, does not apply to Indian leases or to minerals other than oil and gas, such as coal. We\nare advised by the Department of the Interior, moreover, that unresolved royalty disputes remain\npending with respect to oil and gas produced prior to September 1, 1996, and such disputes are not\ngoverned by the provisions of Public Law No. 104-185. Resolution of the question presented will\ntherefore affect future actions of the Department of the Interior and, consequently, is appropriate for\nresolution by this Office.\n2\nOur view that the Department of the Interior has the authority to settle administratively royalty\ndisputes that are still pending in the departmental appeals process does not imply that DOI has assumed\nauthority to evaluate the costs of potential court litigation or the risks that might attend such litigation.\nDOI has not claimed that it has authority to take such factors into account when it settles claims\nadministratively, and our opinion therefore does not address this question.\n\n1\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nI. Background\nA. Interior\xe2\x80\x99s Royalty Management and Collection Authority\nThe Department of the Interior approves and administers leases for oil, gas,\ncoal, and other minerals on federal lands (\xe2\x80\x9conshore\xe2\x80\x9d leases), the offshore Outer\nContinental Shelf (\xe2\x80\x9cOCS\xe2\x80\x9d), and Indian tribal lands. Lessees are required to pay a\nmonthly royalty as a percentage (usually 12.5% or 16.67%) of the amount or value\nof the minerals removed or sold from the lease. See 30 U.S.C. \xc2\xa7 226(b)(1)(A)\n(1994). The state in which a federal onshore lease is located receives 50% of the\nroyalties (except for Alaska, which receives 90%). See 30 U.S.C. \xc2\xa7 191(a) (1994).\nIn 1983, Congress enacted the Federal Oil and Gas Royalty Management Act,\n30 U.S.C. \xc2\xa7\xc2\xa7 1701\xe2\x80\x931757 (1994 & Supp. III 1997) (\xe2\x80\x9cRoyalty Act\xe2\x80\x9d) to address\ndeficiencies in the federal royalty management system which, according to the\nGeneral Accounting Office, had cost the federal government up to $500 million\nannually. To remedy these deficiencies, the Royalty Act was designed to strengthen the ability of the Secretary of Interior to collect oil and gas royalties. See H.R.\nRep. No. 97-859, at 15 (1982), reprinted in 1982 U.S.C.C.A.N. 4268 (\xe2\x80\x9cHouse\nReport\xe2\x80\x9d).\nUnder the Royalty Act, the Secretary is vested with broad responsibility for the\ndetermination, management, and collection of these royalties. See generally Santa\nFe Energy Prods. Co. v. McCutcheon, 90 F.3d 409, 411 (10th Cir. 1996). The Act\nrequires \xe2\x80\x9cthe development of enforcement practices that ensure the prompt and\nproper collection and disbursement of oil and gas revenues owed to the United\nStates and Indian lessors.\xe2\x80\x9d 30 U.S.C. \xc2\xa7 1701(b)(3) (1994). Towards that end, the\nAct directs the Secretary to establish \xe2\x80\x9ca comprehensive inspection, collection and\nfiscal and production accounting and auditing system to provide the capability to\naccurately determine oil and gas royalties, interest, fines, penalties, fees, deposits,\nand other payments owed, and to collect and account for such amounts in a timely\nmanner.\xe2\x80\x9d Id. \xc2\xa7 1711(a). The Royalty Act further provides that the Secretary \xe2\x80\x9cshall\naudit and reconcile, to the extent practicable, all current and past lease accounts\nfor leases of oil or gas and take appropriate actions to make additional collections\nor refunds as warranted.\xe2\x80\x9d Id. \xc2\xa7 1711(c)(1). The Secretary has delegated responsibility for enforcing royalty payment obligations to the Director and Associate\nDirector of the MMS. See Santa Fe Energy, 90 F.3d at 411; 30 C.F.R. \xc2\xa7\xc2\xa7 201.100\n& 218 (1997).\nThe Secretary\xe2\x80\x99s broad authority under the Royalty Act in determining the\namount of royalties due is further reflected in the language contained in standard\nfederal oil and gas leases, which provides:\nIt is expressly agreed that the Secretary [of the DOI] may establish\nreasonable minimum values for purposes of computing royalty on\nproducts obtained from this lease, due consideration being given to\n\n2\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\nthe highest price paid for a part or for a majority of production of\nlike quality in the same field, or area, to the price received by the\nlessee, to posted prices, and to other relevant matters. Each such determination shall be made only after due notice to the lessee and a\nreasonable opportunity has been afforded the lessee to be heard.3\nIn 1996, Congress enacted the Fairness Act. The purpose of the Fairness Act\nwas to improve DOI\xe2\x80\x99s management of oil and gas royalties by establishing \xe2\x80\x9cclear\nand equitable provisions for the effective and efficient administration of leases by\nthe Secretary of the Interior.\xe2\x80\x9d H.R. Rep. No. 104-667, at 13 (1996), reprinted in\n1996 U.S.C.C.A.N. 1442. Another major purpose of this legislation was to\nincrease the involvement of the States in the Federal royalty management program. Id. at 14, 1996 U.S.C.C.A.N. at 1444. The Fairness Act added a new\nsubsection 115(I) to the Royalty Act, providing as follows:\n(i) Collections of disputed amounts due\nTo expedite collections relating to disputed obligations due within\nthe seven-year period beginning on the date the obligation became\ndue, the parties shall hold not less than one settlement consultation\nand the Secretary and the State concerned may take such action as is\nappropriate to compromise and settle a disputed obligation, including waiving or reducing interest and allowing offsetting of obligations among leases.\n30 U.S.C. \xc2\xa7 1724(i) (Supp. III 1997) (emphasis added). The Fairness Act applies\nonly to oil and gas produced after the first day of the month following the Act\xe2\x80\x99s\ndate of enactment\xe2\x80\x94i.e., to oil and gas produced after September 1, 1996.4 It does\nnot apply to other minerals, such as coal, or to oil and gas found on Indian lands.\nB. Interior\xe2\x80\x99s Audit, Settlement, and Appeal Procedures\nUnder the Royalty Act, the Secretary has established a system for the reporting,\npayment, auditing, and further adjustment or reconciliation of mineral royalties\nowed by federal lessees. Lessees operating wells and mines on federal or Indian\nlands report their production and sales and then compute and pay the royalties they\nowe, on a monthly basis. MMS in turn conducts regular audits and reviews of\nlessees\xe2\x80\x99 reports and royalty payments. Given the vast number of regulated federal\n\n3\nDiamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159, 1163 (5th Cir. 1988) (quoting\nstandard federal oil and gas lease (\xe2\x80\x9cStandard Lease\xe2\x80\x9d)) (emphasis added).\n4\nThe date of enactment of the Fairness Act was August 13, 1996. Pub. L. No. 104-85, \xc2\xa7 11, 110\nStat. at 1717, codified at 30 U.S.C. \xc2\xa7 1701 note.\n\n3\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nleases (some 27,000), however, it is impracticable for MMS to audit and pursue\nadditional royalties due with respect to all lessee reports and payments. The\nRoyalty Act therefore requires the Secretary to audit and reconcile federal lease\naccounts only \xe2\x80\x9cto the extent practicable.\xe2\x80\x9d 30 U.S.C. \xc2\xa7 1711(c).5\nAfter assessing a lessee\xe2\x80\x99s production and sales, MMS auditors may make an\ninitial determination that additional royalties are owed and issue an administrative\norder calling for the payment of such royalties or the recalculation and payment of\nrecalculated royalties. See Analysis of MMS Administrative Settlements of Royalty\nDisputes at 2 (undated legal memorandum submitted by the Department of the\nInterior) (\xe2\x80\x9cMMS Analysis\xe2\x80\x9d). MMS also uses automated systems that review\nlessees\xe2\x80\x99 monthly reports and issue royalty bills automatically. Id.\nLessees are entitled to appeal an initial administrative royalty order to the MMS\nDirector. See 30 C.F.R. pt. 290 (1997). During the pendency of such an appeal, or\nany subsequent administrative appeal, the requirement to pay the additional\nroyalties is generally suspended, and the additional royalties may not be collected.\nSee 30 C.F.R. \xc2\xa7\xc2\xa7 243.2(a), (d)(1) (1997); 43 C.F.R. \xc2\xa7 4.21 (1996). A lessee may\nfurther appeal an adverse decision by the MMS Director to the Interior Board of\nLand Appeals (\xe2\x80\x9cIBLA\xe2\x80\x9d) under 30 C.F.R. \xc2\xa7 290.7 and 43 C.F.R. pt. 4, unless the\nAssistant Secretary has previously reviewed and concurred in the Director\xe2\x80\x99s\ndecision. Appeals to both the Director and the IBLA receive de novo review.\nRoyalty determinations by both the IBLA and the Assistant Secretary are deemed\nfinal agency action subject to judicial review under the Administrative Procedure\nAct. See 5 U.S.C. \xc2\xa7 704 (1994); 30 C.F.R. \xc2\xa7 243.3; 43 C.F.R. \xc2\xa7 4.21(d).\nPrior to the conclusion of an appeal to the MMS Director or the IBLA, MMS\nofficials sometimes settle the disputed amount of additional royalties due through\na stipulation or agreement with the lessee. It is DOI\xe2\x80\x99s authority to undertake this\nform of settlement that is in issue here.\nC. The Federal Claims Collection Act\nThe Federal Claims Collection Act (\xe2\x80\x9cFCCA\xe2\x80\x9d) was enacted in 1966 in order to\nremedy the inadequacies of most federal agencies in recovering on claims of the\nUnited States arising out of their respective activities. Pub. L. No. 89-508, 80 Stat.\n308 (1966) (codified as amended at 31 U.S.C. \xc2\xa7 3711); S. Rep. No. 89-1331, at 2\n(1966), reprinted in 1966 U.S.C.C.A.N. 2532, 2533. In 1982, the FCCA was\namended by the Debt Collection Act of 1982 (\xe2\x80\x9cDCA\xe2\x80\x9d), Pub. L. No. 97-365, secs.\n5\nMMS regulations do not specify the frequency of required audits of oil and gas leases. See 30\nC.F.R. \xc2\xa7 217.50 (1997). With respect to coal and other solid mineral leases, audits may be required\nannually or at other times as directed by the appropriate agency official. Id. \xc2\xa7\xc2\xa7 217.200 & 217.250. The\nRoyalty Act does provide that \xe2\x80\x9c[t]he Secretary shall give priority to auditing the lease accounts\nidentified by a State or Indian Tribe as having significant potential for underpayment.\xe2\x80\x9d 30 U.S.C.\n\xc2\xa7 1711(c)(1).\n\n4\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\n10, 11, \xc2\xa7\xc2\xa7 952, 954, 96 Stat. 1749, 1754\xe2\x80\x9356. Under the FCCA, as amended, a\nfederal agency is authorized to compromise or settle a government \xe2\x80\x9cclaim\xe2\x80\x9d of not\nmore than $100,000 without the participation or approval of the Justice Department. Covered claims exceeding $100,000, on the other hand, must receive\nDepartment of Justice approval. 31 U.S.C. \xc2\xa7 3711(a)(2).6\nRegulations establishing the standards for settlements under the FCCA, known\nas the Federal Claims Collection Standards (\xe2\x80\x9cCollection Standards\xe2\x80\x9d), have been\njointly promulgated by the Attorney General and the Comptroller General.\n4 C.F.R. pts. 101\xe2\x80\x93105 (1997). Those regulations provide:\nNothing contained in this chapter is intended to preclude agency disposition of any claim under statutes and implementing regulations\nother than [the FCCA] and these Standards, providing for the collection, compromise, termination of collection action, or waiver in\nwhole or in part of such a claim. . . . In such cases, the laws and regulations which are specifically applicable to claims collection activities of a particular agency take precedence over this chapter.\nId. \xc2\xa7 101.4.\nD. Questions Raised Concerning DOI Authority\nThe issues considered here have been precipitated by questions raised by Representative Carolyn B. Maloney concerning DOI\xe2\x80\x99s authority to settle royalty\ndisputes, in general, and certain disputes with Exxon Company U.S.A. and\nChevron U.S.A., Inc., in particular. In a series of letters sent to the Departments of\nJustice and Interior, Representative Maloney has questioned DOI\xe2\x80\x99s authority to\nresolve royalty disputes involving more than $100,000 without the approval of the\nJustice Department.\nIn response to a separate inquiry from Representative Maloney, the Congressional Research Service (\xe2\x80\x9cCRS\xe2\x80\x9d) of the Library of Congress provided a memorandum concerning MMS\xe2\x80\x99s authority to settle government claims for mineral royalty\npayments. Memorandum for Carolyn Maloney from American Law Division,\nCongressional Research Service, Re: Settlement Authority of the Minerals\nManagement Service of the Department of Interior (June 26, 1997) (\xe2\x80\x9cCRS\n6\nAs originally enacted, the FCCA specified: \xe2\x80\x9cNothing in this Act shall increase or diminish the\nexisting authority of the head of an agency to litigate claims, or diminish his existing authority to settle,\ncompromise, or close claims.\xe2\x80\x9d Id. \xc2\xa7 4, 80 Stat. at 351. It therefore did not reduce or diminish the\nseparate statutory authority possessed by some federal agencies to settle or compromise claims. The\ncurrent language of the FCCA, as amended by the DCA, similarly recognizes the independent\nsettlement authority possessed by some agencies. It provides: \xe2\x80\x9cExcept as provided in this chapter or\nanother law, all claims of or against the United States shall be settled [as provided in the FCCA].\xe2\x80\x9d 31\nU.S.C. \xc2\xa7 3702(a) (Supp. III 1997) (emphasis added).\n\n5\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nMemorandum\xe2\x80\x9d). The CRS Memorandum opined that the Royalty Act did not\nprovide DOI with independent authority to settle disputed MMS royalty determinations without compliance with the FCCA. The CRS Memorandum also\ndiscussed whether disputed MMS determinations of royalty underpayments would\nconstitute \xe2\x80\x9cclaims\xe2\x80\x9d of the United States, the compromise of which would be\nsubject to the provisions of the FCCA and the Claims Collection Standards.\nNoting that a \xe2\x80\x9cclaim\xe2\x80\x9d generally does not arise until a determination is made \xe2\x80\x9cby an\nappropriate official of the Federal Government,\xe2\x80\x9d see 31 U.S.C. \xc2\xa7 3701(b)(1)\n(Supp. III 1997); 4 C.F.R. \xc2\xa7 101.2(a) (1997), CRS stated that \xe2\x80\x9cit appears Congress\nleft the actual designation of the \xe2\x80\x98appropriate official\xe2\x80\x99 to be defined by the\nagency.\xe2\x80\x9d CRS Memorandum at 5. The CRS Memorandum did not, however, assert\na definitive conclusion as to whether MMS\xe2\x80\x99s non-final administrative determinations of royalties due constitute a \xe2\x80\x9cclaim\xe2\x80\x9d or \xe2\x80\x9cdebt\xe2\x80\x9d for purposes of triggering\ncoverage under the FCCA.\nIn response to another inquiry from Representative Maloney, the General Accounting Office (\xe2\x80\x9cGAO\xe2\x80\x9d) issued an opinion on September 30, 1997, concerning\nthe agreements entered into by DOI resolving major royalty disputes with Exxon\nand Chevron in 1993 and 1994.7 Representative Maloney had questioned whether\nDOI was legally authorized to enter into those agreements without the approval of\nthe Justice Department. GAO opined that DOI lacked independent authority under\nthe Royalty Act to \xe2\x80\x9ccompromise\xe2\x80\x9d disputed MMS royalty determinations on the\ngrounds that DOI\xe2\x80\x99s claimed authority to settle administrative claims does not\npermit it to accept \xe2\x80\x9cless than the full amount owed in full satisfaction of the\nclaim.\xe2\x80\x9d GAO Letter at 7. GAO further opined that the Associate Director of the\nMMS constitutes an \xe2\x80\x9cappropriate agency official\xe2\x80\x9d whose royalty determinations\ngive rise to a \xe2\x80\x9cclaim\xe2\x80\x9d or \xe2\x80\x9cdebt\xe2\x80\x9d that is subject to the FCCA and the DOJ/GAO\nCollection Standards under the governing definitions. Id. at 6. GAO therefore\nindicated that DOI could not compromise a demand for additional royalties\nexceeding $100,000 that was based on a determination made by the MMS\nAssociate Director (or, presumably, a superior MMS or DOI official authorized to\nmake such determinations) without first obtaining Department of Justice approval\nin accordance with the FCCA. Id. at 6\xe2\x80\x937. GAO also determined that the Department of Justice had been a party to the 1994 Chevron settlement and that settlement, therefore, was in compliance with FCCA requirements. However, GAO\nfurther opined: \xe2\x80\x9cTo the extent the 1993 MMS settlement agreement with Exxon\n\n7\nLetter for Carolyn B. Maloney, House of Representatives, from Robert Murphy, General Counsel,\nGeneral Accounting Office (Sept. 30, 1997) (\xe2\x80\x9cGAO Letter\xe2\x80\x9d). Although the opinions and legal\ninterpretations of the GAO and the Comptroller General often provide helpful guidance on appropriations matters and related issues, they are not binding upon departments, agencies, or officers of the\nexecutive branch. See Bowsher v. Synar, 478 U.S. 714, 727\xe2\x80\x9332 (1986).\n\n6\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\nCompany U.S.A. compromised claims exceeding $100,000, that agreement should\nhave been referred to the Department of Justice for approval.\xe2\x80\x9d Id. at 8.\nYou have sought our legal opinion concerning DOI\xe2\x80\x99s authority (including its\nauthority as to oil and gas produced before the effective date of the Fairness Act)\nto settle royalty disputes exceeding $100,000 with federal lessees, following an\nMMS determination of the amount due, without the approval of the Justice\nDepartment pursuant to the FCCA.\nII. Analysis\nA. Authority of the Secretary to Determine and Collect Royalties\nYour inquiry concerns the relationship between the Secretary of the Interior\xe2\x80\x99s\nroyalty collection and management authority under the Royalty Act and the\nrequirements governing the settlement of claims by the United States that are\nsubject to the FCCA. Because it is important to our analysis, we first examine the\nnature of the Secretary\xe2\x80\x99s authority to determine and collect additional royalties\nowed the United States by federal lessees.\nDOI contends that the \xe2\x80\x9c[a]uthority to administratively settle disputed royalty\nmatters inheres in the responsibilities that the mineral leasing laws . . . impose on\nthe Secretary of the Interior.\xe2\x80\x9d8 In order to discharge his statutory responsibility to\naudit, collect, and reconcile royalties due the United States, DOI asserts, \xe2\x80\x9cthe\nSecretary necessarily must be able to resolve disputed issues with lessees during\nthe administrative process\xe2\x80\x9d in a manner he determines to be in the Government\xe2\x80\x99s\ninterest. MMS Analysis at 2. In this connection, DOI particularly relies on the\nprovisions of section 101(c)(1) of the Royalty Act, 30 U.S.C. \xc2\xa7 1711(c)(1), which\ndirects the Secretary to \xe2\x80\x9caudit and reconcile\xe2\x80\x9d lease accounts \xe2\x80\x9cto the extent\npracticable,\xe2\x80\x9d and to \xe2\x80\x9ctake appropriate actions to make additional collections or\nrefunds as warranted.\xe2\x80\x9d\nAlthough the Royalty Act did not grant the Secretary the authority to \xe2\x80\x9ccompromise\xe2\x80\x9d or \xe2\x80\x9csettle\xe2\x80\x9d disputed royalty payments in explicit terms prior to the 1996\namendments,9 we believe that section 101(c) authorizes him to collect additional\nroyalties in amounts less than those initially assessed by MMS when he finds that\nsuch action is warranted under the Royalty Act. The broad royalty collection and\nmanagement authority granted the Secretary under the Act as a whole reinforces\n8\n\nSee MMS Analysis at 5.\nIt is clear that DOI and the relevant state concerned have authority under the Royalty Act to settle\nthose royalty disputes now covered by the provisions of the Fairness Act, which authorized \xe2\x80\x9cthe\nSecretary and the State concerned [to] take such action as is appropriate to compromise and settle a\ndisputed obligation\xe2\x80\x9d with respect to oil and gas produced subsequent to September 1, 1996. 30 U.S.C.\n\xc2\xa7 1724(i). We do not undertake in this memorandum to address the relative settlement responsibilities\nof the Secretary and the state concerned under this provision.\n9\n\n7\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nour conclusion on this point. Cf. Dale M. Madden Constr., Inc. v. Hodgson, 502\nF.2d 278, 279\xe2\x80\x9380 (9th Cir. 1974) (adopting a broad interpretation of the Secretary\nof Labor\xe2\x80\x99s authority to settle penalties under the Occupational Safety and Health\nAct \xe2\x80\x9cas a natural incident to his enforcement powers\xe2\x80\x9d).\nThe Royalty Act charges the Secretary with responsibility for \xe2\x80\x9cthe development\nof enforcement practices that ensure the prompt and proper collection\xe2\x80\x9d of federal\noil and gas revenues. 30 U.S.C. \xc2\xa7 1701(b)(3). As emphasized in the House Report\naccompanying the Royalty Act: \xe2\x80\x9cThe Committee intended that the Secretary have\nbroad enforcement authority relating to his royalty and lease management\nfunctions.\xe2\x80\x9d H.R. Rep. No. 97-859, at 37, reprinted in 1982 U.S.C.C.A.N. at 4286.\nThe Act\xe2\x80\x99s legislative history is replete with additional affirmations of the Secretary\xe2\x80\x99s broad authority in the area of royalty management and collection.10\nThe most pertinent provision of the Royalty Act with regard to the Secretary\xe2\x80\x99s\nauthority to assess and collect additional oil and gas royalties is section 101(c)(1),\nwhich provides: \xe2\x80\x9cThe Secretary shall audit and reconcile, to the extent practicable,\nall current and past lease accounts for leases of oil or gas and take appropriate\nactions to make additional collections or refunds as warranted.\xe2\x80\x9d 30 U.S.C.\n\xc2\xa7 1711(c)(1) (emphasis added). This provision allows the Secretary considerable\nflexibility in making \xe2\x80\x9cadditional collections\xe2\x80\x9d of royalties beyond those recorded\nand paid by lessees themselves prior to audit and demand by MMS.\nIn this regard, we note that the Secretary initially has discretion in determining\nhow many (and which) accounts to audit and reconcile at all. See 30 U.S.C.\n\xc2\xa7 1711(c)(1) (Secretary required to audit and reconcile leases only \xe2\x80\x9cto the extent\npracticable\xe2\x80\x9d). As noted above, the large number of regulated federal leases renders\nit impracticable for MMS to audit all of their royalty reports and payments.11 The\nvery magnitude and complexity of the royalty collection process thus necessitates\nthe element of enforcement flexibility that Congress has entrusted to the Secretary\nunder the Royalty Act.\nSignificantly, the Secretary\xe2\x80\x99s statutory obligation to pursue additional royalty\ncollections is expressly limited to those measures that are \xe2\x80\x9cappropriate\xe2\x80\x9d and\n\xe2\x80\x9cwarranted.\xe2\x80\x9d Such discretionary language is difficult to reconcile with the view\nthat the Secretary\xe2\x80\x99s range of authority is rigidly limited to either (1) collecting all\n10\nAs emphasized in the House Report: \xe2\x80\x9cThe Committee intended to provide the Secretary with all\nauthority necessary to carry out the provisions of the bill.\xe2\x80\x9d H.R. Rep. No. 97-859, at 39, reprinted in\n1982 U.S.C.C.A.N. at 4293. The Report further states: \xe2\x80\x9cIt is the responsibility of the Secretary of the\nInterior to establish a comprehensive system to accurately determine, collect, and account for on a\ntimely basis oil and gas royalties, interest, fines, penalty fees, deposits, and other payments.\xe2\x80\x9d Id. at 28,\nreprinted in 1982 U.S.C.C.A.N. at 4282.\n11\nAs recognized by one court construing the Royalty Act, \xe2\x80\x9cthat an OCS lease account will be\naudited at all is guaranteed only \xe2\x80\x98to the extent (it is) practicable\xe2\x80\x99 for the Secretary to conduct the audit.\xe2\x80\x9d\nPhillips Petroleum Co. v. Kelly, 1992 WL 387236, *6 (N.D. Tex. 1992) (quoting 30 U.S.C.A.\n\xc2\xa7 1711(c)(1) (West 1986)).\n\n8\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\nadditional royalties assessed under a disputed and non-final administrative\ndetermination or (2) requiring the completion of a formal administrative appeal of\nsuch a disputed determination before it can be adjusted downward. In some\ncircumstances, the Secretary may reasonably conclude, before the complete\nadjudication of a formal appeal, that collection of the amount initially determined\nto be due by the MMS auditing officer or MMS Director may not be \xe2\x80\x9cwarranted\xe2\x80\x9d\nand that collection of a lesser amount may be \xe2\x80\x9cappropriate.\xe2\x80\x9d That might be the\ncase, for example, where the factual or legal basis of the disputed MMS demand\nfor the full additional amount is uncertain. In such cases, we think that the flexible\nprovisions of section 101(c)(1), coupled with other provisions of the Royalty Act,\nforcefully imply that the Secretary has authority to determine that a lesser amount\nis due.\nB. Applicability of the Federal Claims Collection Act\nThe applicability of the FCCA depends initially upon whether the amount of\nadditional royalties sought by the government constitutes a \xe2\x80\x9cclaim\xe2\x80\x9d or \xe2\x80\x9cdebt\xe2\x80\x9d\nwithin the meaning of 31 U.S.C. \xc2\xa7 3701(b)(1). As stated by the Court of Appeals\nfor the Federal Circuit, \xe2\x80\x9cin order for the [Debt Collection Act] to be applicable in a\ngiven situation, the government must have a \xe2\x80\x98claim\xe2\x80\x99 against a \xe2\x80\x98debtor\xe2\x80\x99 as a result\nof a \xe2\x80\x98debt\xe2\x80\x99 owed the United States.\xe2\x80\x9d King v. MSPB, 105 F.3d 635, 640 (Fed. Cir.\n1997). A \xe2\x80\x9cclaim\xe2\x80\x9d is defined under the DOJ/GAO Collection standards as follows:\nFor the purposes of these standards, the terms \xe2\x80\x9cclaim\xe2\x80\x9d and \xe2\x80\x9cdebt\xe2\x80\x9d are\ndeemed synonymous and interchangeable. They refer to an amount\nof money or property which has been determined by an appropriate\nagency official to be owed to the United States from any person, organization, or entity, except another Federal agency.\n4 C.F.R. \xc2\xa7 101.2(a) (emphasis added).12\n\n12\nThe current statutory definition of a \xe2\x80\x9cclaim\xe2\x80\x9d under the FCCA was added in 1996 by the Debt\nCollection Improvement Act of 1996, Pub. L. No. 104-134, tit. III, \xc2\xa7 31001(z)(1), 110 Stat. 1321,\n1321-378 (codified at 31 U.S.C. \xc2\xa7 3701(b)(1) (Supp. III 1997)), and provides in relevant part:\n\n[T]he term \xe2\x80\x98claim\xe2\x80\x99 or \xe2\x80\x98debt\xe2\x80\x99 means any amount of funds or property that has been determined by an appropriate official of the Federal Government to be owed to the United States by a person, organization, or entity other than another Federal agency.\nPrior to the 1996 amendments, the FCCA provided:\nIn subchapter II of this chapter [governing \xe2\x80\x9cClaims of the United States Government\xe2\x80\x9d], \xe2\x80\x9cclaim\xe2\x80\x9d includes amounts owing on account of loans insured or guaranteed by\nthe Government and other amounts due the Government.\n31 U.S.C. \xc2\xa7 3701(b) (1994). The definition used in the DOJ/GAO Collection Standards (quoted in the\ntext) was promulgated in 1984, see 49 Fed. Reg. 8889, 8896 (1984), and reflects the Department\xe2\x80\x99s\n\n9\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nDOI contends that its disputed assertions that additional royalty payments are\ndue do not become \xe2\x80\x9cclaims\xe2\x80\x9d for purposes of the FCCA until a final administrative\ndetermination has been made by either the IBLA or the Assistant Secretary. See 30\nC.F.R. \xc2\xa7 243.3. It is the decisions by those officials, DOI asserts, that constitute\nthe \xe2\x80\x9c\xe2\x80\x98determin[ation] by an appropriate agency official\xe2\x80\x99\xe2\x80\x9d which alone gives rise to\na \xe2\x80\x9cclaim\xe2\x80\x9d covered by the FCCA and the Collection Standards. MMS Analysis at\n7\xe2\x80\x938 (quoting 4 C.F.R. \xc2\xa7 101.2(a)).\nInitially, we recognize that the accurate determination of the value of production upon which royalties are based is a complex task, which may entail substantial disagreement between reasonable and informed evaluators. See MMS Analysis\nat 3\xe2\x80\x934; see generally Diamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159\n(5th Cir. 1988) (resolving directly conflicting district court opinions concerning\nthe application of royalty requirements to \xe2\x80\x9ctake-or-pay\xe2\x80\x9d clause in gas sales\ncontract). Consequently, MMS royalty determinations made in the early stages of\nthe administrative process are not necessarily regarded as conclusive and may be\nsubject to significant revision as they move through the various levels of administrative appeal. In this respect, DOI\xe2\x80\x99s carefully layered process of administrative\nreview appears consistent with the Secretary\xe2\x80\x99s mandate to develop enforcement\npractices that ensure the \xe2\x80\x9cproper collection\xe2\x80\x9d of royalties owed to the United States.\nSee 30 U.S.C. \xc2\xa7 1701(b)(3).\nThe significance of this consideration is also reflected in the terms of the leases\ngoverning the drilling and removal of oil and gas from federal or Indian lands or\nthe OCS. The leases typically provide that the Secretary\xe2\x80\x99s authority to establish\n\xe2\x80\x9creasonable minimum values for purposes of computing royalty\xe2\x80\x9d is subject to the\nlessee\xe2\x80\x99s right to notice and \xe2\x80\x9ca reasonable opportunity to be heard.\xe2\x80\x9d See Standard\nLease (quoted in text accompanying note 3, supra). We are advised that, under\nDOI practice, the \xe2\x80\x9copportunity to be heard\xe2\x80\x9d referred to in the leases encompasses\nthe MMS/DOI administrative appeal process. Consequently, the Secretary has not\nmade a conclusive determination of the contested royalties due until administrative\nappeals have been exhausted or bypassed.\nSignificantly, MMS orders to pay additional royalties are generally suspended\nand unenforceable during the pendency of all administrative appeals. See 30\nC.F.R. \xc2\xa7 243.2; Mobil Exploration & Producing U.S., Inc. v. Babbitt, 913 F. Supp.\n5, 9 (D.D.C. 1995).13 Thus, until the Assistant Secretary or the IBLA has made a\n\ninterpretation of claims or debts covered by the FCCA prior to the 1996 amendments, but it is also\nconsistent with, and virtually identical to, the definition currently codified at 31 U.S.C. \xc2\xa7 3701(b)(1).\n13\nIn some circumstances, the MMS Director may provide that the royalty payment order will not\nbe suspended pending the administrative appeal. See 30 C.F.R. \xc2\xa7\xc2\xa7 243.2(a), (d)(1). We are advised by\nDOI that denial of suspension pending appeal is invoked only in unusual circumstances. In any event,\nthe denial of suspension pending administrative appeal is equated with final agency action, and satisfies\nthe lessees\xe2\x80\x99 obligation to exhaust administrative remedies as a prerequisite to judicial review, under\n\n10\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\nfinal administrative determination (or where the lessee has not appealed an earlier\norder or a determination by the MMS Director), a contested demand for additional\nroyalty payments has not been conclusively determined and it may not be referred\nto the Department of Justice for litigation or other collection action.14 We therefore\nconcur in DOI\xe2\x80\x99s assertion that contested royalty orders issued by MMS officers or\nthe MMS Director preceding determinations by the IBLA or the Assistant\nSecretary do not constitute determinations \xe2\x80\x9cby an appropriate agency official\xe2\x80\x9d that\ngive rise to a \xe2\x80\x9cclaim\xe2\x80\x9d within the meaning of the FCCA. 4 C.F.R. \xc2\xa7 101.2(a).15\nAs noted above, the GAO, in its letter of September 30, 1997, concluded that\nthe Associate Director of MMS was the \xe2\x80\x9cappropriate agency official\xe2\x80\x9d to establish\na debt or claim for the purposes of the Royalty Act. The GAO based this interpretation on DOI\xe2\x80\x99s assignment to the Associate Director of authority to make the\ninitial determination of the amount of royalties owed. GAO Letter at 6. The GAO\nletter does not, however, take into account that this initial determination is not\nfinal within Interior if a company files an administrative appeal. For the reasons\nwe have noted above, we disagree with GAO with respect to the meaning of\n\xe2\x80\x9cappropriate agency official\xe2\x80\x9d in cases where a company has filed an administrative\nappeal. The appropriate agency official is the person within the agency who is\ncharged with making the final decision on the amount owed. This may be the\nAssociate Director, if the initial determination is not appealed, but if that determination is appealed, it is the MMS Director, the Assistant Secretary, or the IBLA.\nThis Office has previously considered a similar issue concerning the FCCA\xe2\x80\x99s\napplicability to non-final administrative determinations by DOI. In 1975, GAO\nrequested our views concerning DOI\xe2\x80\x99s authority to settle the amount of certain\nadministrative penalties assessed against coal mine operators under section 109(a)\nof the Federal Coal Mine Health and Safety Act of 1969 (codified as amended at\n30 U.S.C. \xc2\xa7 820(a) (1994)). The specific issue was \xe2\x80\x9cwhether such a compromise is\nMMS regulations. See 30 C.F.R. \xc2\xa7 243.3. In those particular circumstances, we believe the demand for\nadditional royalties would ripen into a \xe2\x80\x9cclaim\xe2\x80\x9d that is subject to the requirements of the FCCA.\n14\nWe also note that intermediate determinations by the MMS Director, the Associate Director, or\nlesser MMS officials are not considered \xe2\x80\x9cfinal agency action\xe2\x80\x9d for purposes of satisfying the exhaustion\nof remedies requirements of the APA, 5 U.S.C. \xc2\xa7 704. See 30 C.F.R. \xc2\xa7 243.3; Mobil Exploration, 913\nF. Supp. at 9\xe2\x80\x9311. Cf. Independent. Petroleum Ass\xe2\x80\x99n of America v. Babbitt, 92 F.3d 1248 (D.C. Cir.\n1996), where, in concluding that a letter from the MMS Associate Director clarifying its treatment of\ncertain royalty issues did not constitute a rulemaking within the meaning of the APA, the court\napprovingly quoted the district court\xe2\x80\x99s finding that \xe2\x80\x9c\xe2\x80\x98[n]othing in DOI\xe2\x80\x99s procedures vests authority in\nthe Associate Director of MMS [the letter\xe2\x80\x99s author], or even the Director, to issue proclamations\nbinding on the agency.\xe2\x80\x99\xe2\x80\x9d Id. at 1256 (quoting Indep. Petroleum Ass\xe2\x80\x99n. of Am. v. Babbitt, 1995 WL\n431305, at *4 (D.D.C. June 14, 1995), rev\xe2\x80\x99d on other grounds, Indep. Petroleum, 92 F.3d 1248).\n15\nWe also concur in the CRS\xe2\x80\x99s conclusion that \xe2\x80\x9cit appears Congress left the actual designation of\nthe \xe2\x80\x98appropriate official\xe2\x80\x99 [for purposes of giving rise to a \xe2\x80\x9cclaim\xe2\x80\x9d under the FCCA] to be defined by the\nagency.\xe2\x80\x9d CRS Memorandum at 5. As the CRS Memorandum also correctly indicates, id. at 5 n.20,\nDOI\xe2\x80\x99s interpretation of that provision is entitled to substantial deference under the Chevron doctrine.\nSee Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842\xe2\x80\x9343 (1984).\n\n11\n\n\x0cSupplemental Opinions of the Office of Legal Counsel\n\nsubject to the Claims Collection Act and the standards promulgated by the\nComptroller General and the Attorney General.\xe2\x80\x9d Letter for Rollee Lowenstein,\nAssistant General Counsel, General Accounting Office, from Leon Ulman, Deputy\nAssistant Attorney General, Office of Legal Counsel at 2 (Oct. 21, 1975) (\xe2\x80\x9cUlman\nOpinion\xe2\x80\x9d). The particular administrative procedures at issue in that opinion were\ndescribed as follows:\nAfter review of a notice of violation of health or safety standards, the\nMining Enforcement and Safety Administration serves upon the\nmine operator a (recommended) order of assessment; the mine operator requests a hearing before Interior\xe2\x80\x99s Office of Hearings and\nAppeals; prior to the administrative hearing, a settlement is reached.\nThus, the effect of the settlement is to terminate the proceeding before there is a final administrative decision regarding violation and\nassessment of a penalty.\nId. at 2\xe2\x80\x933 (footnotes omitted).\nStressing the non-final nature of DOI\xe2\x80\x99s administrative determination, we concluded that a \xe2\x80\x9cclaim\xe2\x80\x9d had not arisen in those circumstances and that the FCCA did\nnot apply:\nIn these circumstances, it seems proper for Interior to maintain that\nthere is no \xe2\x80\x9cclaim\xe2\x80\x9d for purposes of the Claims Collection Act and to\nregard such settlements as an element in the exercise of the Secretary\xe2\x80\x99s authority to assess penalties. . . . It is reasonable to assume\nthat, at least in the present context, \xe2\x80\x9cclaim\xe2\x80\x9d connotes a degree of finality.\nId. at 3.\nWe believe that the reasoning we applied in the Ulman Opinion is directly\napplicable here, and we find no persuasive basis for abandoning that reasoning in\nthis context. Like the penalty settlements at issue there, the MMS royalty settlements considered here are undertaken \xe2\x80\x9cbefore there is a final administrative\ndecision.\xe2\x80\x9d Just as we concluded in the Ulman Opinion that the settlement authority\nin question was \xe2\x80\x9can element in the exercise of the Secretary\xe2\x80\x99s authority to assess\npenalties\xe2\x80\x9d under the Coal Mine Health and Safety Act, id. at 3, we find that the\nsettlement authority in question here is an element in the exercise of the Secretary\xe2\x80\x99s responsibility \xe2\x80\x9cto take appropriate actions to make additional collections . . .\nas warranted\xe2\x80\x9d under section 101(c)(1) of the Royalty Act. We therefore conclude\nthat appealed determinations of additional royalties due by the MMS Director and\nlesser MMS officials do not constitute \xe2\x80\x9cclaims\xe2\x80\x9d subject to the requirements of the\nFCCA until a final determination of the amount due has been made by the\nAssistant Secretary or the IBLA. As a result, the FCCA requirement for Justice\n\n12\n\n\x0cAdministrative Settlement of Disputes Concerning Mineral Royalties\n\nDepartment approval does not apply until this final determination is made and the\namount of the claim is established by the Department of the Interior.\nTODD DAVID PETERSON\nDeputy Assistant Attorney General\nOffice of Legal Counsel\n\n13\n\n\x0c'


b'Alternatives for the Imposition of Conditions on the\nCertification of Drug Transit and Producing Countries\nThe P resident m ay im pose certain conditions upon a drug producing o r transit country seeking certifi\xc2\xad\ncation under section 490(b) o f the Foreign A ssistance A ct o f 1961. If he chooses to certify a\ncountry under section 490(b)(1)(B ), he can withhold funds from the country to encourage com pli\xc2\xad\nance w ith a set o f specified conditions. A lternatively, the P resident can determ ine not to certify\na country in h is annual certification report but inform the country that it m ight be recertified outside\nthe annual cycle if it m eets certain conditions. T he first alternative offers g reater flexibility to\nthe President as, under the latter approach, the P resident is constrained in the exercise o f his discre\xc2\xad\ntion by specific statutory requirem ents and his determ ination is subject to congressional review.\n\nFebruary 12, 1996\nM e m o r a n d u m O p in io n f o r t h e A t t o r n e y G e n e r a l\n\nYou have asked us to examine the question whether and how the President\nmight impose certain conditions upon a drug producing or transit country seeking\ncertification under section 490(b) of the Foreign Assistance Act of 1961. This\nmemorandum evaluates two alternatives: (1) certification based upon \xe2\x80\x9c vital na\xc2\xad\ntional interests,\xe2\x80\x9d where the expenditure of foreign assistance funds is dependent\nupon the satisfaction of specified conditions; or (2) decertification and subsequent\nrecertification once specified conditions have been met.\nBackground\n\nSection 490(b) of the Foreign Assistance Act of 1961 (\xe2\x80\x9c FAA\xe2\x80\x9d ), 22 U.S.C.\n\xc2\xa7 2291j(b), describes requirements for the President\xe2\x80\x99s annual certification of major\nillicit drug producing or drug transit countries. Certification avoids the cutoff of\nmost forms of FAA assistance to such countries under section 490(e). 22 U.S.C.\n\xc2\xa72291j(e). Under section 490(b)(1)(A), the President may certify a drug producing\nor transit country if it has \xe2\x80\x9c cooperated fully\xe2\x80\x9d with the United States, or has taken\n\xe2\x80\x9c adequate steps\xe2\x80\x9d on its own to comply with the United Nations Convention\nAgainst Illicit Traffic in Narcotic Drugs and Psychotropic Substances, done Dec.\n20, 1988, S. Treaty Doc. No. 1 0 1 ^ (1989), 28 I.L.M. 493. 22 U.S.C.\n\xc2\xa72291j(b)(l)(A). Alternatively, under section 490(b)(1)(B), the President may cer\xc2\xad\ntify a country that would not otherwise qualify under subsection (b)(1)(A), if he\ndetermines that such certification is in the \xe2\x80\x9c vital national interests\xe2\x80\x9d of the United\nStates.1Id. \xc2\xa72291j(b)(l)(B).\nCertification under subsection (b)(1)(B) requires a description of the vital na\xc2\xad\ntional interests involved, along with a statement balancing the risk to those na\xc2\xad\ntional interests against the risks posed by the country\xe2\x80\x99s failure to cooperate with\n\xe2\x80\x98 Hereinafter, this memorandum will refer to certifications made under sections 490(b)(1)(A) and 490(b)(1)(B)\nas (b)(1)(A) and (b)(1)(B) certifications, respectively.\n\n53\n\n\x0cOpinions o f the Attorney General in Volume 20\n\nthe United States in narcotics matters. Id. \xc2\xa72291j(b)(3). Congress may disapprove\n(b)(1)(B) certifications by enacting a joint resolution within 30 days of the annual\ncertification reporting date. Id. \xc2\xa7 2291j(d).\nA country that is not certified \xe2\x80\x94 i.e. it is \xe2\x80\x9c decertified\xe2\x80\x9d \xe2\x80\x94 may subsequently be\n\xe2\x80\x9c recertified\xe2\x80\x9d under section 490(f). The President may \xe2\x80\x9c recertify\xe2\x80\x9d a country, mak\xc2\xad\ning it again eligible for foreign assistance, in one of two ways: He may either\ncertify the country under subsection (b)(1)(A) or (b)(1)(B) as part of his annual\ncertification report. Id. \xc2\xa72291j(f)(l). Or he may, at any other time, certify the\ncountry under subsection (b)(1)(B). Id. \xc2\xa7 2291j(f)(2). In other words, only\n(b)(1)(B) recertifications\xe2\x80\x94 those made pursuant to the assertion of a vital national\ninterest\xe2\x80\x94 may be made outside the annual certification cycle. Moreover, (b)(1)(B)\nrecertifications made outside the annual cycle are more onerous than other\n(b)(1)(B) certifications. Not only must the President satisfy all other conditions\nfor a (b)(1)(B) certification, but he must also certify either (1) that the country\nhas undergone a fundamental change in government, or (2) that there has been\na \xe2\x80\x9c fundamental change\xe2\x80\x9d in the conditions that were the basis for his prior deter\xc2\xad\nmination not to certify.2 See id. \xc2\xa7 2291j(f)(2)(A). Thus, in effect, a (b)(1)(B) recer\xc2\xad\ntification made outside the annual cycle must satisfy the requirements of both\nsubsections (b)(1)(A) and (b)(1)(B).3\nA lternatives\n\n1. C ertification U nder (b)(1)(B), E xpenditures Subject to Conditions\nUnder this alternative, the President would make a vital national interests certifi\xc2\xad\ncation under section 490(b)(1)(B) for a particular country, as part of his annual\ncertification report. At the same time, however, he would communicate to that\ncountry that its receipt of the foreign assistance available as a result of such certifi\xc2\xad\ncation would be contingent upon the satisfaction of certain conditions. If the coun\xc2\xad\ntry met these conditions, perhaps within some specified time frame, foreign assist\xc2\xad\nance funds would be released. If it did not, such funds would be withheld.\nIt should be noted that, under this approach, the country remains certified, even\nif it does not meet the specified conditions. The statute does not provide a mecha\xc2\xad\nnism by which a country can be \xe2\x80\x9c decertified\xe2\x80\x9d once it has been certified, other\nthan through the annual reporting process. Thus, the only way that the President\nmay decertify a country is by refusing to certify it the following year.\n2 The President need not m ake these additional certifications, if Congress enacts a joint resolution approving the\nPresident\xe2\x80\x99s decision to recertify under (b)(1)(B). See id. \xc2\xa72291j(0(2)(B ).\n3 It appears that such recertifications are also subject to congressional review. See id. \xc2\xa7\xc2\xa72291j(d), 2291j(g); 138\nCong. Rec. 28,545 (1992) (Report o f House Com m ittee on Foreign Affairs Task Force on International Narcotics\nControl, on International N arcotics Control A ct o f 1992 [subsequently enacted as Pub. L. No. 102-583, 106 Stat.\n4914]) ( 4,[S]ection 490(g) specifies congressional review procedures for recertification.\xe2\x80\x9d ).\n\n54\n\n\x0cA lternatives f o r the Im position o f C onditions on the C ertification o f D rug Transit a n d P roducing\nC ountries\n\nHowever, the President does have considerable discretion over the expenditure\nof foreign assistance funds to certified countries. This discretion derives in part\nfrom his broad power over foreign affairs. The Constitution has long been inter\xc2\xad\npreted to grant the President plenary authority to represent the interests of the\nUnited States in dealings with foreign States, subject only to limits specifically\nset forth in the Constitution or to such statutory limitations that the Constitution\npermits Congress to impose by exercise of its enumerated powers.4\nSection 490 of the FAA imposes no statutory limitations on the President\xe2\x80\x99s\ndiscretion to withhold foreign assistance funds. On the contrary, section 490(b)\nstates that, if the President certifies a country, foreign assistance to that country\n\xe2\x80\x9c may be obligated and expended.\xe2\x80\x9d 22 U.S.C. \xc2\xa72291j(b)(l) (emphasis added).\nThe use of the word \xe2\x80\x9c may\xe2\x80\x9d rather than \xe2\x80\x9c shall\xe2\x80\x9d implies some exercise of discre\xc2\xad\ntion by the President in the actual expenditure of such funds. Moreover, with\nrespect to Agency for International Development (\xe2\x80\x9c AID\xe2\x80\x9d ) funds, courts have rec\xc2\xad\nognized that the FAA imposes no impediment to the President\xe2\x80\x99s discretionary\nwithholding of such funds from statutorily eligible foreign recipients.5 See D K T\nM em\xe2\x80\x99l Fund Ltd. v. Agency fo r Int\xe2\x80\x99l D ev., 887 F.2d 275, 281 (D.C. Cir. 1989)\n(provision in AID statute granting President discretion to furnish assistance per\xc2\xad\nmits President to withhold AID funds from foreign nongovernmental organizations\n(\xe2\x80\x9c NGOs\xe2\x80\x9d ): \xe2\x80\x9c \xe2\x80\x98[A]bsent a specific limitation on the Executive\xe2\x80\x99s authority to condi\xc2\xad\ntion disb[u]rsal of United States funds to foreign NGOs, it must be assumed that\nthe Congress has left intact\xe2\x80\x99 presidential authority to place conditions or to refuse\nfunding to these organizations.\xe2\x80\x9d ) (quoting Planned Parenthood F ed\xe2\x80\x99n o f Am. v.\nAgency fo r Int\xe2\x80\x99l D ev., 670 F. Supp. 538, 544 (S.D.N.Y. 1987), a f f d in relevant\npart, 838 F.2d 649 (2d Cir. 1988), cert, denied, 500 U.S. 952 (1991)); Planned\nParenthood (same).\nBecause the President has the authority to withhold funds from countries cer\xc2\xad\ntified under (b)(1)(B), he can use that authority to encourage compliance with\na set of specified conditions. In effect, then, the President can impose upon a\ncountry that does not meet those conditions the same sanctions that decertification\nwould entail.\n4See, e.g., U.S. Const, art. II, \xc2\xa72, cl. 2 (President\xe2\x80\x99s power to \xe2\x80\x9c make Treaties\xe2\x80\x9d and to \xe2\x80\x9c appoint Ambassadors\n. . . and Consuls\xe2\x80\x9d ); id. art. II, \xc2\xa73 (President\xe2\x80\x99s power to \xe2\x80\x9c receive Ambassadors and other public M inisters\xe2\x80\x9d ); Depart\xc2\xad\nment o f Navy v. Egan, 484 U.S. 518, 529 (1988) ( \xe2\x80\x9c [The Supreme Court] has recognized \xe2\x80\x98the generally accepted\nview that foreign policy was the province and responsibility o f the Executive.\xe2\x80\x99 \xe2\x80\x9d (quoting Haig v. Agee, 453 U.S.\n280, 293-94 (1981))); Alfred Dunhill o f London Inc. v. Republic o f Cuba, 425 U.S. 682, 706 n.18 (1976) (plurality\nopinion) (\xe2\x80\x9c [T]he conduct o f [foreign policy] is committed primarily to the Executive Branch.\xe2\x80\x9d ); United States v.\nLouisiana, 363 U.S. 1, 35 (1960) (The President is \xe2\x80\x9c the constitutional representative of the United States in its\ndealings with foreign nations\xe2\x80\x9d ).\n3 W hether any o f the other statutory provisions covered by the defmition of \xe2\x80\x9c United States assistance,\xe2\x80\x9d see 22\nU.S.C. \xc2\xa7 2 2 9 1(e)(4), contain explicit prohibitions against the exercise o f executive discretion is a question we do\nnot answer here. It is unclear whether such a prohibition, if it existed, could be interpreted to lim it the President\xe2\x80\x99s\nlegitimate exercise o f his constitutional powers.\n\n55\n\n\x0cOpinions o f the Attorney General in Volume 20\n\n2. D ecertification a n d Recertification u n der (b)(1)(B )\nA second alternative is for the President not to certify a country in his annual\ncertification report, but to inform the country that it might be recertified outside\nthe annual cycle if it satisfies certain conditions. The principal difficulty with this\napproach, as we have already noted, is that recertification under section 490(f)\nis an onerous process that effectively requires a country to be able to satisfy the\nrequirements of both (b)(1)(A) and (b)(1)(B). Moreover, recertification is subject\nto congressional review.\nIf this alternative were pursued, we would recommend that the President, at\nthe time he submitted his annual certification report, cite the conditions for recer\xc2\xad\ntification as reasons for his determination not to certify a particular country. If\nthe country subsequently met those conditions, the President would thus have set\nthe stage to certify, under section 490(f)(2)(A)(ii), that \xe2\x80\x9c there has been a funda\xc2\xad\nmental change in the conditions\xe2\x80\x9d which led to the country\xe2\x80\x99s initial decertification.\n22 U.S.C. \xc2\xa7 2291j(f)(2)(A)(ii).\nConclusion\n\nOf the two alternatives outlined above, the first\xe2\x80\x94 certification with expenditures\nconditioned upon satisfaction of certain requirements\xe2\x80\x94 offers far greater flexi\xc2\xad\nbility for the President. Under the second alternative\xe2\x80\x94 decertification with recer\xc2\xad\ntification upon satisfaction of certain requirements \xe2\x80\x94 the President is constrained\nin the exercise of his discretion by specific statutory requirements, and his deter\xc2\xad\nmination is subject to congressional review.\nRICHARD L. SHIFFRIN\nD eputy Assistant Attorney General\nOffice o f Legal Counsel\n\n56\n\n\x0c'