Court Opinion

ID: 6103811
Source: CourtListenerOpinion
Date Created: 2022-01-14 20:12:12.841368+00
Date Added: 2024-06-11T08:53:40.541841
License: Public Domain

Effect of Spending Prohibition on HUD’s Satisfaction
              of Contractual Obligations to ACORN
Section 163 of division B (“Continuing Appropriations Resolution, 2010”) of Public Law
   111-68 does not direct or authorize the Department of Housing and Urban Develop-
   ment to breach a pre-existing binding contractual obligation to make payments to the
   Association of Community Organizations for Reform Now or its affiliates, subsidiar-
   ies, or allied organizations where doing so would give rise to contractual liability.

                                                                      October 23, 2009

     MEMORANDUM OPINION FOR THE DEPUTY GENERAL COUNSEL
       DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

   You have asked whether section 163 of division B (“Continuing Ap-
propriations Resolution, 2010”) of Public Law 111-68, 123 Stat. 2023,
2053, approved by the President on October 1, 2009, prohibits the De-
partment of Housing and Urban Development (“HUD”) from making a
payment to the Association of Community Organizations for Reform Now
(“ACORN”) or its affiliates, subsidiaries, or allied organizations to satisfy
an existing contractual obligation that arose prior to the enactment of that
measure. We conclude, in agreement with the views we solicited and
received, that the language of section 163 is not clear with respect to
whether its prohibition applies in cases where pre-existing law apart from
section 163, including the contract itself, compels such a payment and
where, accordingly, failure to make such a payment would subject the
federal government to contractual liability. In accord with established
interpretive principles for resolving such lack of clarity, we conclude that
section 163 does not direct or authorize HUD to refuse payment on bind-
ing contractual obligations that predate the Continuing Appropriations
Resolution. 1

                                           I.

  Section 163 states: “None of the funds made available by this joint res-
olution or any prior Act may be provided to the Association of Commu-

   1 This opinion addresses only pre-existing contracts that create binding obligations

requiring payment and not those that excuse payment in the relevant circumstances.

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                          33 Op. O.L.C. 339 (2009)

nity Organizations for Reform Now (ACORN), or any of its affiliates,
subsidiaries, or allied organizations.” The term “provided to” has no
established meaning in appropriations law. As explained by the GAO
Redbook, “[t]he two basic authorities conferred by an appropriation law
are the authority to incur obligations and the authority to make expen-
ditures. An obligation results from some action that creates a liability or
definite commitment on the part of the government to make an expendi-
ture. . . . The expenditure is the disbursement of funds to pay the obliga-
tion.” 1 General Accounting Office, Principles of Federal Appropriations
Law 5-3 (3d ed. 2004) (“GAO Redbook”). Thus, “obligate” and “expend”
are terms of art that generally describe the commitment and payment of
funds. See, e.g., 31 U.S.C. § 1341(a)(1) (2006) (Anti-Deficiency Act)
(providing that no federal officer or employee may “make or authorize an
expenditure or obligation exceeding an amount available in an appropria-
tion or fund for the expenditure or obligation”). The term “expenditure,”
in particular, is broadly defined as “[t]he actual spending of money; an
outlay.” Government Accountability Office, A Glossary of Terms Used
in the Federal Budget Process 48 (2005) (“GAO Glossary”); see also
1 GAO Redbook at 5-3 (“The expenditure is the disbursement of funds to
pay the obligation.”). And an opinion by the Comptroller General sug-
gests that the word “expenditure” in the Anti-Deficiency Act prohibits an
agency from making a payment to satisfy a contractual obligation if a
statutory or regulatory funding limitation would thereby be exceeded. See
In re Currency Exchange Rate Fluctuations, 58 Comp. Gen. 46 (1978).
   By contrast, as we have noted, the term Congress elected to employ in
section 163, “provided to,” has no clearly defined meaning in appropria-
tions law. See, e.g., GAO Glossary (containing no definition of “provi-
sion” or “provide”). Moreover, appropriations case law and reference
materials we have consulted, including the GAO Redbook, do not shed
light on whether “provided to” in section 163 should be understood to
prohibit a federal agency from making payments to satisfy pre-existing
contractual obligations.
   To be sure, some common definitions of “provide,” such as “supply” or
“furnish,” American Heritage Dictionary 1411 (4th ed. 2006), would
appear to describe any transfer of funds, presumably including a transfer
in satisfaction of an existing obligation. Other definitions, however,
connote a discretionary action. For instance, “provide” may mean “con-

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        Effect of Spending Prohibition on Contractual Obligations to ACORN

tribute,” Webster’s New International Dictionary 1994 (2d ed. 1958), or
“make available,” American Heritage Dictionary 1411 (4th ed. 2006), and
“offer” is among its synonyms, Roget’s II: The New Thesaurus 780 (3d
ed. 1995). And in common parlance, the verb “provide” frequently de-
scribes discretionary action taken to benefit another. Moreover, several of
the word’s definitions incorporate a forward-looking aspect, see, e.g.,
Webster’s New International Dictionary 1994 (2d ed. 1958) (“to look out
for in advance”; “to prepare”); Black’s Law Dictionary 1224 (6th ed.
1990) (“[t]o make, procure, or furnish for future use, prepare”), consistent
with the etymology of “provide,” which derives from the Latin providere,
meaning to see before, foresee, or be cautious, 12 Oxford English Dic-
tionary 713 (2d ed. 1989). Definitions of the word “expend,” we note, do
not carry a similarly discretionary or forward-looking connotation, in
keeping with the etymology of that word, which comes from the Latin
expendere, meaning simply to pay or weigh. 5 id. at 561.
   Against this background, we find that the relevant text of section 163
is not clear with respect to the precise question before us. Congress had
available to it—and yet did not use—appropriations language that had
previously been construed to prohibit payments even on pre-existing
contractual obligations. 2 It instead used a term that could be read to sug-
gest a bar only on payments that result from new discretionary deci-
sions—including, in particular, payments made pursuant to discretionary
choices to incur new obligations. Accordingly, although one could read
the phrase “None of the funds made available by this joint resolution or
any prior Act may be provided to [ACORN], or any of its affiliates,
subsidiaries, or allied organizations” categorically to prohibit any outlay
of money to the identified entities, including pursuant to pre-existing
contractual obligations, one could also read the phrase not to prohibit
payments made pursuant to a prior binding contractual duty.

                                           II.

   In light of the term Congress chose, we turn to other interpretative tools
to resolve the question before us. The recent Supreme Court case Chero-

   2 We do not address whether, if Congress had used the phrase “may be expended” in

section 163, that phrase would necessarily prohibit payment pursuant to pre-existing legal
obligations—a question that might depend at least in part on extratextual considerations.

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                          33 Op. O.L.C. 339 (2009)

kee Nation of Okla. v. Leavitt, 543 U.S. 631 (2005), is instructive. There,
contracts between the government and Indian tribes provided that the
tribes would supply health services normally furnished by the government
and that the government would in turn pay the “contract support costs” the
tribes incurred. The government subsequently refused to pay the full
contract support costs because, it argued, Congress had not appropriated
sufficient funds. Part of the government’s argument rested on a later-
enacted statute that stated: “Notwithstanding any other provision of law
[the] amounts appropriated to or earmarked in committee reports for the
. . . Indian Health Service . . . for payments to tribes . . . for contract
support costs . . . are the total amounts available for fiscal years 1994
through 1998 for such purposes.” Id. at 645 (quoting section 314 of the
Department of the Interior and Related Agencies Appropriations Act,
1999, Pub. L. No. 105-277, 112 Stat. 2681, 2682-232, 2681-288 (1998)).
The Court noted that, because committee reports in 1994 through 1997
had earmarked funds for contract support costs, and because those funds
had “long since been spent,” this language was “open to the interpretation
that it retroactively bars payment of claims arising under 1994 through
1997 contracts.” Id. In the Court’s view, however, the statutory language
was also open to a different interpretation that would simply forbid the
“use of unspent funds appropriated in prior years to pay unpaid ‘contract
support costs.’” Id. at 646. Thus, the Court concluded:
     On the basis of language alone we would find either interpretation
     reasonable. But there are other considerations. The first interpreta-
     tion would undo a binding governmental contractual promise. A
     statute that retroactively repudiates the Government’s contractual
     obligation may violate the Constitution. And such an interpretation
     is disfavored. This consideration tips the balance against the retroac-
     tive interpretation.
Id. (citations omitted); see also Lynch v. United States, 292 U.S. 571, 580
(1934) (“Congress was without power to reduce expenditures by abrogat-
ing contractual obligations of the United States.”); United States v. Win-
star Corp., 518 U.S. 839, 875–76 (1996) (plurality opinion) (“[I]t is clear
that the National Government has some capacity to make agreements
binding future Congresses by creating vested rights, [although the] extent
of that capacity, to be sure, remains somewhat obscure.”) (citations omit-

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         Effect of Spending Prohibition on Contractual Obligations to ACORN

ted); cf. Landgraf v. USI Film Prods., 511 U.S. 244, 271 (1994) (“The
largest category of cases in which we have applied the presumption
against statutory retroactivity has involved new provisions affecting
contractual or property rights, matters in which predictability and stability
are of prime importance.”).
   Reading section 163 to prohibit payments to ACORN or its affiliates,
subsidiaries, or allied organizations to satisfy a binding contractual obli-
gation undertaken before enactment of section 163 would “undo a binding
governmental contractual promise.” Cherokee Nation, 543 U.S. at 646. In
accord with Cherokee Nation, the better reading of the section is therefore
that it does not prohibit such payments. This reading of “provided to” is
especially appropriate here because, consistent with the canon of constitu-
tional avoidance, see, e.g., Edward J. DeBartolo Corp. v. Fla. Gulf Coast
Bldg. & Constr. Trades Council, 483 U.S. 568, 575 (1988), it not only
avoids abrogating binding governmental contractual promises but also
avoids the particular constitutional concerns that may be presented by
reading the statute, which applies to specific named entities, to abrogate
such contracts, including even in cases where performance has already
been completed but payment has not been rendered. 3

   3 See, e.g., United States v. Lovett, 328 U.S. 303, 315 (1946) (“[L]egislative acts, no
matter what their form, that apply either to named individuals or to easily ascertainable
members of a group in such a way as to inflict punishment on them without a judicial trial
are bills of attainder prohibited by the Constitution.”); Selective Serv. Sys. v. Minn. Pub.
Interest Research Group, 468 U.S. 841, 853 (1984) (stating that a particular provision
imposed “none of the burdens historically associated with punishment” because “‘the
sanction is the mere denial of a noncontractual governmental benefit’”) (emphasis added)
(quoting Flemming v. Nestor, 363 U.S. 603, 617 (1960)); Nixon v. Adm’r of Gen. Servs.,
433 U.S. 425, 475–76 (1977) (“[O]ur inquiry is not ended by the determination that the
Act imposes no punishment traditionally judged to be prohibited by the Bill of Attainder
Clause. Our treatment of the scope of the Clause has never precluded the possibility that
new burdens and deprivations might be legislatively fashioned that are inconsistent with
the bill of attainder guarantee. The Court, therefore, often has looked beyond mere
historical experience and has applied a functional test of the existence of punishment,
analyzing whether the law under challenge, viewed in terms of the type and severity of
burdens imposed, reasonably can be said to further nonpunitive legislative purposes.”);
see also Consol. Edison Co. v. Pataki, 292 F.3d 338, 346–49 (2d Cir. 2002) (applying the
Bill of Attainder Clause to a bill that arguably singled out a corporation); cf. Kenneth R.
Thomas, Cong. Research Serv., The Proposed “Defund ACORN Act”: Is it a “Bill of
Attainder?” (2009) (considering an earlier bill that would have, inter alia, prohibited the
award of federal contracts or the provision of federal funds to a “covered organization,”

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                                 33 Op. O.L.C. 339 (2009)

                                            III.

   In sum, section 163 should not be read as directing or authorizing HUD
to breach a pre-existing binding contractual obligation to make payments
to ACORN or its affiliates, subsidiaries, or allied organizations where
doing so would give rise to contractual liability.

                                             DAVID J. BARRON
                                       Acting Assistant Attorney General
                                            Office of Legal Counsel

with “organization” expressly defined as including ACORN and its affiliates, and con-
cluding that “a court may have a sufficient basis to overcome the presumption of constitu-
tionality, and find that the proposed [bill] violates the prohibition against bills of attain-
der”).

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