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Office of the General Counsel: 

United States General Accounting Office:

GAO:

January 2004:

Principles of Federal Appropriations Law: 

Third Edition: 

Volume I: 

GAO-04-261SP:

Foreword:

We are pleased to present the third edition of Volume I of Principles 
of Federal Appropriations Law, commonly known as the "Red Book." Our 
objective in this publication is to present a basic reference work 
covering those areas of law in which the Comptroller General renders 
decisions. This volume and all other volumes of Principles are 
available on GAO's Web site ([Hyperlink, www.gao.gov]) under "GAO 
Legal Products."

Our approach in Principles is to lay a foundation with text discussion, 
using specific legal authorities to illustrate the principles 
discussed, their application, and exceptions. These authorities include 
GAO decisions and opinions, judicial decisions, statutory provisions, 
and other relevant sources. We would encourage users to start with at 
least a brief review of Chapter 1, which provides a general framework 
and context for all that follows. Chapter 1 includes a note regarding 
citations to GAO case law and other relevant GAO material and an 
explanation of those other materials.

We have tried to be simultaneously basic and detailed--basic so that 
the publication will be useful as a "teaching manual" and guide for the 
novice or occasional user (lawyer and nonlawyer alike) and detailed so 
that it will assist those who require a more in-depth understanding. 
The purpose of Principles is to describe existing authorities; it 
should not be regarded as an independent source of legal authority. The 
material in this publication is, of course, subject to changes in 
statute or federal and Comptroller General case law. Also, it is 
manifestly impossible to cover in this publication every aspect and 
nuance of federal appropriations law. We have not attempted to include 
all relevant decisions, and we admit (albeit grudgingly) that errors 
and omissions probably are inevitable. Principles should therefore be 
used as a general guide and starting point, not as a substitute for 
original legal research.

It is also important to emphasize that we have focused our attention on 
issues and principles of governmentwide application. In various 
instances, agency-specific legislation may provide authority or 
restrictions somewhat different from the general rule. While we have 
noted many of these instances for purposes of illustration, a 
comprehensive cataloguing of such legislation is beyond the scope of 
this publication. Thus, failure to note agency-specific exceptions in a 
given context does not mean that they do not exist.

As with the second edition of Principles, we are publishing the third 
edition in a loose-leaf format. However, it will also be available 
electronically at [Hyperlink, www.gao.gov]. We plan four volumes with 
annual updates. Annual updates will only be published electronically. 
Users should retain copies of their five volumes of the second edition 
until each volume is revised. We will not update Volume III of the 
second edition, which was last revised in November 1994. It deals with 
functions that were transferred to the executive branch by the General 
Accounting Office Act of 1996 (Public Law 104-316), including claims 
against the United States, debt collection, and payment of judgments 
against the United States. Future editions and updates of Principles 
will not include these subjects.

Volume V, published in April 2002, is a comprehensive index and table 
of authorities covering the entire second edition of Principles. It 
will continue to apply to the second edition volumes until they are 
revised. As each volume of the third edition is issued, it will contain 
its own index. Once the third edition is complete, we will publish a 
new comprehensive index and table of authorities.

The response to Principles has been both gratifying and encouraging 
since the first edition was published in 1982. We express our 
appreciation to the many persons in all branches of the federal 
government, as well as nonfederal readers, who have offered comments 
and suggestions. Our goal now, as it was in 1982, is to present a 
document that will serve as a helpful reference for a wide range of 
users. To that end, we again invite comments and suggestions for 
improvement. We thank our readers for their support and hope that this 
publication continues to serve their needs.

Signed by: 

Anthony Gamboa: 

General Counsel:

January 2004:

[End of section]

Summary of Contents:

Volume I:

Chapter 1 - Introduction:

Chapter 2 - The Legal Framework:

Chapter 3 - Agency Regulations and Administrative Discretion:

Chapter 4 - Availability of Appropriations: Purpose:

Chapter 5 - Availability of Appropriations: Time:

Volume II:

Chapter 6 - Availability of Appropriations: Amount:

Chapter 7 - Obligation of Appropriations:

Chapter 8 - Continuing Resolutions:

Chapter 9 - Liability and Relief of Accountable Officers:

Chapter 10 - Federal Assistance: Grants and Cooperative Agreements:

Chapter 11 - Federal Assistance: Guaranteed and Insured Loans:

Volume III:

Chapter 12 - Acquisition and Provision of Goods and Services:

Chapter 13 - Real Property:

Chapter 14 - Miscellaneous Topics:

Volume IV:

Tables of Authorities Cited:

Index:

[End of section]

Detailed Table of Contents: 
Volume I: 
Chapters 1-5:

Chapter 1: Introduction:

A. Nature of Appropriations Law: 

B. The Congressional "Power of the Purse": 

C. Historical Perspective: 

1. Evolution of the Budget and Appropriations Process: 

2. GAO's Role in the Process: 

D. "Life Cycle" of an Appropriation: 

1. Executive Budget Formulation and Transmittal: 

2. Congressional Action: 

a. Summary of Congressional Process: 

b. Points of Order: 

3. Budget Execution and Control: 

a. In General: 

b. Impoundment: 

4. Audit and Review: 

a. Basic Responsibilities: 

b. GAO Recommendations and Matters for Consideration: 

5. Account Closing: 

E. The Role of the Accounting Officers: Legal Decisions: 

1. A Capsule History: 

a. Accounting Officers Prior to 1894: 

b. 1894-1921: Comptroller of the Treasury: 

c. 1921 to the Present Time: 

2. Decisions of the Comptroller General: 

a. General Information: 

b. Matters Not Considered: 

c. Research Aids: 

d. Note on Citations: 

3. Other Relevant Authorities: 

a. GAO Materials: 

b. Non-GAO Materials: 

c. Note on Title 31 Recodification: 

Chapter 2: The Legal Framework:

A. Appropriations and Related Terminology: 

1. Introduction: 

2. Concept and Types of Budget Authority: 

a. Appropriations: 

b. Contract Authority: 

c. Borrowing Authority: 

d. Monetary Credits: 

e. Offsetting Receipts: 

f. Loan and Loan Guarantee Authority: 

3. Some Related Concepts: 

a. Spending Authority: 

b. Entitlement Authority: 

4. Types of Appropriations: 

a. Classification Based on Duration: 

b. Classification Based on Presence or Absence of Monetary Limit: 

c. Classification Based on Permanency: 

d. Classification Based on Availability for New Obligations: 

e. Reappropriation: 

B. Some Basic Concepts: 

1. What Constitutes an Appropriation: 

2. Specific versus General Appropriations: 

a. General Rule: 

b. Two Appropriations Available for Same Purpose: 

3. Transfer and Reprogramming: 

a. Transfer: 

b. Reprogramming: 

4. General Provisions: When Construed as Permanent Legislation: 

C. Relationship of Appropriations to Other Types of Legislation: 

1. Distinction between Authorization and Appropriation: 

2. Specific Problem Areas and the Resolution of Conflicts: 

a. Introduction: 

b. Variations in Amount: 

(1) Appropriation exceeds authorization: 

(2) Appropriation less than authorization: 

(3) Earmarks in authorization act: 

c. Variations in Purpose: 

d. Period of Availability: 

e. Authorization Enacted After Appropriation: 

f. Two Statutes Enacted on Same Day: 

g. Ratification by Appropriation: 

h. Repeal by Implication: 

i. Lack of Authorization: 

D. Statutory Interpretation: Determining Congressional Intent: 

1. The Goal of Statutory Construction: 

2. The "Plain Meaning" Rule: 

a. In General: 

b. The Plain Meaning Rule versus Legislative History: 

3. The Limits of Literalism: Errors in Statutes and "Absurd 
Consequences": 

a. Errors in Statutes: 

(1) Drafting errors: 

(2) Error in amount appropriated: 

b. Avoiding "Absurd Consequences": 

4. Statutory Aids to Construction: 

a. Definitions, Effective Dates, and Severability Clauses: 

b. The Dictionary Act: 

c. Effect of Codification: 

5. Canons of Statutory Construction: 

a. Construe the Statute as a Whole: 

b. Give Effect to All the Language: No "Surplusage": 

c. Apply the Common Meaning of Words: 

d. Give a Common Construction to the Same or Similar Words: 

e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not 
Controlling: 

f. Avoid Constructions That Pose Constitutional Problems: 

6. Legislative History: 

a. Uses and Limitations: 

b. Components and Their Relative Weight: 

(1) Committee reports: 

(2) Floor debates: 

(3) Hearings: 

c. Post-enactment Statements: 

d. Development of the Statutory Language: 

7. Presumptions and "Clear Statement" Rules: 

a. Presumption in Favor of Judicial Review: 

b. Presumption against Retroactivity: 

c. Federalism Presumptions: 

d. Presumption against Waiver of Sovereign Immunity: 

Chapter 3: Agency Regulations and Administrative Discretion:

A. Agency Regulations: 

1. The Administrative Procedure Act: 

a. The Informal Rulemaking Process: 

b. Informal Rulemaking: When Required: 

c. Additional Requirements for Rulemaking: 

2. Regulations May Not Exceed Statutory Authority: 

3. "Force and Effect of Law": 

4. Waiver of Regulations: 

5. Amendment of Regulations: 

6. Retroactivity: 

B. Agency Administrative Interpretations: 

1. Interpretation of Statutes: 

2. Interpretation of Agency's Own Regulations: 

C. Administrative Discretion: 

1. Introduction: 

2. Discretion Is Not Unlimited: 

3. Failure or Refusal to Exercise Discretion: 

4. Regulations May Limit Discretion: 

5. Insufficient Funds: 

Chapter 4: Availability of Appropriations: Purpose:

A. General Principles: 

1. Introduction: 31 U.S.C. § 1301(a): 

2. Determining Authorized Purposes: 

a. Statement of Purpose: 

b. Specific Purpose Stated in Appropriation Act: 

3. New or Additional Duties: 

4. Termination of Program: 

a. Termination Desired: 

b. Reauthorization Pending: 

B. The "Necessary Expense" Doctrine: 

1. The Theory: 

a. Relationship to the Appropriation: 

b. Expenditure Otherwise Prohibited: 

c. Expenditure Otherwise Provided For: 

2. General Operating Expenses: 

a. Training: 

b. Travel: 

c. Postage Expenses: 

d. Books and Periodicals: 

e. Miscellaneous Items Incident to the Federal Workplace: 

C. Specific Purpose Authorities and Limitations: 

1. Introduction: 

2. Attendance at Meetings and Conventions: 

a. Government Employees: 

(1) Statutory framework: 

(2) Inability to attend: 

(3) Federally sponsored meetings: 

(4) Rental of space in District of Columbia: 

(5) Military personnel: 

b. Nongovernment Personnel: 

(1) 31 U.S.C. § 1345: 

(2) Invitational travel: 

(3) Use of grant funds: 

3. Attorney's Fees: 

a. Introduction: 

b. Hiring of Attorneys by Government Agencies: 

c. Suits Against Government Officers and Employees: 

d. Suits Unrelated to Federal Employees: 

e. Claims by Federal Employees: 

(1) Discrimination proceedings: 

(2) Other employee claims: 

f. Criminal Justice Act: 

(1) Types of actions covered: 

(2) Miscellaneous cases: 

g. Equal Access to Justice Act: 

h. Contract Matters: 

(1) Bid protests: 

(2) Contract disputes: 

i. Public Participation in Administrative Proceedings: Funding of 
Intervenors: 

4. Compensation Restrictions: 

a. Dual Compensation: 

b. Employment of Aliens: 

c. Forfeiture of Annuities and Retired Pay: 

(1) General principles: 

(2) The Alger Hiss case: 

(3) Types of offenses covered: 

(4) Related statutory provisions: 

5. Entertainment--Recreation--Morale and Welfare: 

a. Introduction: 

(1) Application of the rule: 

(2) What is entertainment? 

b. Food for Government Employees: 

(1) Working at official duty station under unusual conditions: 

(2) Government Employees Training Act: 

(3) Award ceremonies: 

(4) Cafeterias and lunch facilities: 

c. Entertainment for Government Employees Other Than Food: 

(1) Miscellaneous cases: 

(2) Cultural awareness programs: 

d. Entertainment of Nongovernment Personnel: 

e. Recreational and Welfare Facilities for Government Personnel: 

(1) The rules: older cases and modern trends: 

(2) Child care: 

f. Reception and Representation Funds: 

6. Fines and Penalties: 

7. Firefighting and Other Municipal Services: 

a. Firefighting Services: Availability of Appropriations: 

b. Federal Fire Prevention and Control Act of 1974: 

c. Other Municipal Services: 

8. Gifts and Awards: 

a. Gifts: 

b. Contests: 

(1) Entry fees: 

(2) Government-sponsored contests: 

c. Awards: 

9. Guard Services: Anti-Pinkerton Act: 

a. Evolution of the Law Prior to 57 Comp. Gen. 524: 

b. 57 Comp. Gen. 524 and the Present State of the Law: 

10. Insurance: 

a. The Self-Insurance Rule: 

b. Exceptions to the Rule: 

(1) Departments and agencies generally: 

(2) Government corporations: 

c. Specific Areas of Concern: 

(1) Property owned by government contractors: 

(2) Use of motor vehicles: 

(3) Losses in shipment: 

(4) Bonding of government personnel: 

11. Lobbying and Related Matters: 

a. Introduction: 

b. Penal Statutes: 

c. Appropriation Act Restrictions: 

(1) Origin and general considerations: 

(2) Self-aggrandizement: 

(3) Covert propaganda: 

(4) Pending legislation: overview: 

(5) Cases involving "grassroots" lobbying violations: 

(6) Pending legislation: cases in which no violation was found: 

(7) Pending legislation: Providing assistance to private lobbying 
groups: 

(8) Promotion of legislative proposals: Prohibited activity short of 
grass roots lobbying: 

(9) Dissemination of political or misleading information: 

d. Lobbying with Grant Funds: 

e. Informational Activities: 

f. Advertising and the Employment of Publicity Experts: 

(1) Commercial advertising: 

(2) Advertising of government programs, products, or services: 

(3) Publicity experts: 

12. Membership Fees: 

a. 5 U.S.C. § 5946: 

b. Attorneys: 

13. Personal Expenses and Furnishings: 

a. Introduction: 

b. Business or Calling Cards: 

c. Health, Medical Care and Treatment: 

(1) Medical care: 

(2) Purchase of health-related items: 

(3) The Rehabilitation Act: 

d. Office Furnishings (Decorative Items): 

e. Personal Qualification Expenses: 

f. Photographs: 

g. Seasonal Greeting Cards and Decorations: 

(1) Greeting cards: 

(2) Seasonal decorations: 

h. Traditional Ceremonies: 

i. Wearing Apparel: 

j. Miscellaneous Personal Expenses: 

(1) Commuting and parking: 

(2) Flexiplace: 

(3) Miscellaneous employee expenses: 

14. Rewards: 

a. Rewards to Informers: 

(1) Reward as "necessary expense": 

(2) Payments to informers: Internal Revenue Service: 

(3) Payments to informers: Customs Service: 

b. Missing Government Employees: 

c. Lost or Missing Government Property: 

d. Contractual Basis: 

e. Rewards to Government Employees: 

15. State and Local Taxes: 

a. Introduction: 

b. Tax on Business Transactions Where the Federal Government Is a 
Party:

(1) General principles: 

(2) Public utilities: 

c. Property-Related Taxes: 

d. Taxes Paid by Federal Employees: 

(1) Parking taxes: 

(2) Hotel and meal taxes: 

(3) Tolls: 

(4) State and local income withholding taxes: 

(5) Possessory interest taxes: 

(6) Occupational license fees: 

e. Refund and Recovery of Tax Improperly Paid: 

16. Telephone Services: 

a. Telephone Service to Private Residences: 

(1) The statutory prohibition and its major exception: 

(2) Funds to which the statute applies: 

(3) What is a private residence? 

(4) Application of the general rule: 

(5) Exceptions: 

b. Long-distance Calls: 

c. Mobile or Cellular Phones: 

Chapter 5: Availability of Appropriations: Time:

A. General Principles--Duration of Appropriations: 

1. Introduction: 

2. Types of Appropriations: 

a. Annual Appropriations: 

b. Multiple Year Appropriations: 

c. No-Year Appropriations: 

3. Obligation or Expenditure Prior to Start of Fiscal Year: 

B. The Bona Fide Needs Rule: 

1. Background: 

a. Introduction: 

b. The Concept: 

2. Future Years' Needs: 

3. Prior Years' Needs: 

4. Delivery of Materials beyond the Fiscal Year: 

5. Services Rendered beyond the Fiscal Year: 

6. Replacement Contracts: 

7. Contract Modifications and Amendments Affecting Price: 

8. Multiyear Contracts: 

a. Introduction: 

b. Multiple Year and No-Year Appropriations: 

c. Fiscal Year Appropriations: 

d. Contracts with No Financial Obligation: 

9. Specific Statutes Providing for Multiyear and Other Contracting 
Authorities: 

a. Severable Services Contracts: 

b. 5-year Contract Authority: 

(1) 10 U.S.C. §§ 2306b, 2306c: 

(2) 41 U.S.C. § 254c: 

c. Examples of Agency-Specific Multiyear Contracting Authorities: 

10. Grants and Cooperative Agreements: 

C. Advance Payments: 

1. The Statutory Prohibition: 

2. Government Procurement Contracts: 

a. Background: 

b. Contract Financing: 

c. Payment: 

3. Lease and Rental Agreements: 

4. Publications: 

5. Other Governmental Entities: 

D. Disposition of Appropriation Balances: 

1. Terminology: 

2. Evolution of the Law: 

3. Expired Appropriation Accounts: 

4. Closed Appropriation Accounts: 

5. Exemptions from the Account Closing Procedures: 

6. No-Year Appropriations: 

7. Repayments and Deobligations: 

a. Repayments: 

b. Deobligations: 

E. Effect of Litigation on Period of Availability: 

Introduction:

A. Nature of Appropriations Law: 

B. The Congressional "Power of the Purse": 

C. Historical Perspective: 

1. Evolution of the Budget and Appropriations Process: 

2. GAO's Role in the Process: 

D. "Life Cycle" of an Appropriation: 

1. Executive Budget Formulation and Transmittal: 

2. Congressional Action: 

a. Summary of Congressional Process: 

b. Points of Order: 

3. Budget Execution and Control: 

a. In General: 

b. Impoundment: 

4. Audit and Review: 

a. Basic Responsibilities: 

b. GAO Recommendations and Matters for Consideration: 

5. Account Closing: 

E. The Role of the Accounting Officers: Legal Decisions: 

1. A Capsule History: 

a. Accounting Officers Prior to 1894: 

b. 1894-1921: Comptroller of the Treasury: 

c. 1921 to the Present Time: 

2. Decisions of the Comptroller General: 

a. General Information: 

b. Matters Not Considered: 

c. Research Aids: 

d. Note on Citations: 

3. Other Relevant Authorities: 

a. GAO Materials: 

b. Non-GAO Materials: 

c. Note on Title 31 Recodification: 

[End of section]

Chapter 1: Introduction:

"[T]he protection of the public fisc is a matter that is of interest to 
every citizen…"

Brock v. Pierce County, 476 U.S. 253, 262 (1986).

A. Nature of Appropriations Law:

A federal agency is a creature of law and can function only to the 
extent authorized by law.[Footnote 1] The Supreme Court has expressed 
what is perhaps the quintessential axiom of "appropriations law" as 
follows:

"The established rule is that the expenditure of public funds is proper 
only when authorized by Congress, not that public funds may be expended 
unless prohibited by Congress."

United States v. MacCollom, 426 U.S. 317, 321 (1976). See also 
B-288266, Jan. 27, 2003. Thus, the concept of "legal authority" is 
central to the spending of federal money. When we use the term "federal 
appropriations law" or "federal fiscal law," we mean that body of law 
that governs the availability and use of federal funds.

Federal funds are made available for obligation and expenditure by 
means of appropriation acts (or occasionally by other legislation) and 
the subsequent administrative actions that release appropriations to 
the spending agencies. The use or "availability" of appropriations once 
enacted and released (that is, the rules governing the purpose, 
amounts, manner, and timing of obligations and expenditures) is 
controlled by various authorities: the terms of the appropriation act 
itself; legislation, if any, authorizing the appropriation; the 
"organic" or "enabling" legislation, which prescribes a function or 
creates a program that the appropriation funds; general statutory 
provisions that allow or prohibit certain uses of appropriated funds; 
and general rules that have been developed largely through decisions of 
the Comptroller General and the courts. These sources, together with 
certain provisions of the Constitution of the United States, form the 
basis of "appropriations law"--an area where questions may arise in as 
many contexts as there are federal actions that involve spending money.

Although this publication incorporates some other relevant authorities, 
its primary focus is on the decisions and opinions of the "accounting 
officers of the government"--the Comptroller General of the United 
States and his predecessors.[Footnote 2]

B. The Congressional "Power of the Purse":

The congressional "power of the purse" refers to the power of Congress 
to appropriate funds and to prescribe the conditions governing the use 
of those funds.[Footnote 3] The power derives from specific provisions 
of the Constitution of the United States. First, article I, section 8 
empowers Congress to "pay the Debts and provide for the common Defence 
and general Welfare of the United States," and to--

"make all Laws which shall be necessary and proper for carrying into 
Execution the foregoing Powers [listed in art. I, § 8], and all other 
Powers vested by this Constitution in the Government of the United 
States, or in any Department or Officer thereof."

Next, the so-called Appropriations Clause, the first part of article I, 
section 9, clause 7, provides that--

"No Money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law… ."

The Appropriations Clause has been described as "the most important 
single curb in the Constitution on Presidential power."[Footnote 4] It 
means that "no money can be paid out of the Treasury unless it has been 
appropriated by an act of Congress." Cincinnati Soap Co. v. United 
States, 301 U.S. 308, 321 (1937). See also B-300192, Nov. 13, 2002. 
Regardless of the nature of the payment--salaries, payments promised 
under a contract, payments ordered by a court, whatever--a federal 
agency may not make a payment from the United States Treasury unless 
Congress has made the funds available. As the Supreme Court stated well 
over a century more than 150 years ago:

"However much money may be in the Treasury at any one time, not a 
dollar of it can be used in the payment of any thing not… previously 
sanctioned [by a congressional appropriation]."

Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1850). This prescription 
remains as valid today as it was when it was written.[Footnote 5] In 
1990, citing both Cincinnati Soap and Reeside, the Supreme Court 
reiterated that any exercise of power by a government agency "is 
limited by a valid reservation of congressional control over funds in 
the Treasury." Office of Personnel Management v. Richmond, 496 U.S. 
414, 425, 110 S. Ct. 2465, 2472 (1990).[Footnote 6]

As these statements by the Supreme Court make clear, the congressional 
power of the purse reflects the fundamental proposition that a federal 
agency is dependent on Congress for its funding.[Footnote 7] At its 
most basic level, this means that it is up to Congress to decide 
whether or not to provide funds for a particular program or activity 
and to fix the level of that funding.

In exercising its appropriations power, however, Congress is not 
limited to these elementary functions. It is also well established that 
Congress can, within constitutional limits, determine the terms and 
conditions under which an appropriation may be used. See, e.g., New 
York v. United States, 505 U.S. 144, 167 (1992); Cincinnati Soap Co., 
301 U.S. at 321; Oklahoma v. Schweiker, 655 F.2d 401, 406 (D.C. Cir. 
1981) (citing numerous cases); Spaulding v. Douglas Aircraft Co., 60 F. 
Supp. 985, 988 (S.D. Cal. 1945), aff'd, 154 F.2d 419 (9th Cir. 1946). 
Thus, Congress can decree, either in the appropriation itself or by 
separate statutory provisions, what will be required to make the 
appropriation "legally available" for any expenditure. It can, for 
example, describe the purposes for which the funds may be used, the 
length of time the funds may remain available for these uses, and the 
maximum amount an agency may spend on particular elements of a program. 
In this manner, Congress may, and often does, use its appropriation 
power to accomplish policy objectives and to establish priorities among 
federal programs.

Congress can also use its appropriation power for other measures. It 
can, for example, include a provision in an appropriation act 
prohibiting the use of funds for a particular program. By doing this 
without amending the program legislation, Congress can effectively 
suspend operation of the program for budgetary or policy reasons, or 
perhaps simply defer further consideration of the merits of the 
program. The courts recognized the validity of this application of the 
appropriation power. See, e.g., United States v. Will, 449 U.S. 200, 
222 (1980); United States v. Dickerson, 310 U.S. 554 (1940). For a 
recent example of this, see Atlantic Fish Spotters Ass'n v. Evans, 
321 F.3d 220, 225, 229 (1st Cir. 2003), which considered an 
appropriation act provision banning the use of federal funds to grant 
permits to those fishermen who would use "spotter planes" to locate 
Atlantic bluefin tuna. At issue was whether the ban was temporary or 
permanent in nature. The court found the ban to be a temporary (i.e., 
annual) provision, based on the language used in it.[Footnote 8] The 
court commented:

"[We do not] consider it unreasonable for Congress to enact such a ban 
for one year only. The record lays out the competing public policy 
interests that the ban affects. The choice to balance such interests by 
temporizing--putting a ban in place for one year and requiring it to be 
reenacted the following year to remain in effect--is a valid exercise 
of legislative prerogative. Politics is, after all, the art of 
compromise."

321 F.3d at 225.

Congress also may use appropriation act provisions to impose 
preconditions on a program's use of the funds being appropriated. The 
preconditions on use often effectuate congressional oversight of the 
program. In American Telephone & Telegraph v. United States, 307 F.3d 
1374, 1376-79 (Fed. Cir. 2003), the court addressed just such a 
provision found in the Department of Defense Appropriation Act for 
Fiscal Year 1988. The provision specified that:

"[n]one of the funds provided… in this Act may be obligated or expended 
for fixed price-type contracts in excess of $10,000,000 for the 
development of a major system or subsystem unless the Under Secretary 
of Defense for Acquisition determines, in writing, that program risk 
has been reduced to the extent that realistic pricing can occur…: 
Provided further, That the Under Secretary report to the Committees on 
Appropriations of the Senate and House of Representatives in writing, 
on a quarterly basis, the contracts which have obligated funds under 
such a fixed price-type developmental contract."

Pub. L. No. 100-202, § 8118, 101 Stat. 1329, 1329-84 (1987). The Navy 
had entered into a $34.5 million fixed-price contract with American 
Telephone & Telegraph (AT&T) for technology to be included in an 
advanced submarine detecting sonar system. AT&T performed, but at a 
cost of $91 million. When Navy refused to pay the amount in excess of 
the contract's fixed price, AT&T sued. AT&T pointed out, and Navy 
conceded, that the Under Secretary for Acquisitions had not satisfied 
the appropriation act's preconditions on use of the appropriated funds; 
AT&T argued that the contract was, therefore, invalid and void ab 
initio. The court disagreed. The court said that the language of the 
Act "provides for legislative oversight and enforcement. The section 
does not create a cause of action inviting private parties to enforce 
the provision in courts." AT&T, 307 F.3d at 1379. The court emphasized 
the supervisory role of the legislative branch in ensuring compliance 
with policies imposed via appropriations act provisions, noting that 
such provisions permit "the appropriate legislative committees to 
monitor compliance and, presumably, guarantee enforcement in the form 
of future reductions in, or limitations on, appropriated funds." Id. 
at 1377.

While congressional power of the purse is a very broad power, courts 
have invalidated funding restrictions when the courts found that the 
restrictions violated some independent constitutional bar. For example, 
in United States v. Lovett, 328 U.S. 303 (1946), the Supreme Court held 
an appropriation act restriction unconstitutional as a bill of 
attainder. The rider in question was a prohibition on the payment of 
salary to certain named individuals rather than a condition on the 
receipt of funds. In another case, a provision in the 1989 District of 
Columbia appropriation act prohibited the use of any funds appropriated 
by the act unless the District adopted legislation spelled out in the 
rider. The provision was invalidated on first amendment grounds. 
Clarke v. United States, 705 F. Supp. 605 (D.D.C. 1988), aff'd, 
886 F.2d 404 (D.C. Cir. 1989), vacated en banc as moot, 915 F.2d 699 
(D.C. Cir. 1990).

The Supreme Court recognized the breadth of the power of the purse, and 
its limitations, in South Dakota v. Dole, 483 U.S. 203 (1987), a 
decision addressing Congress's use of its spending power to impose 
conditions on the use of federal grants. The court noted that--

"the power of Congress to authorize expenditure of public moneys for 
public purposes is not limited by the direct grants of legislative 
power found in the Constitution. Thus, objectives not thought to be 
within Article I's enumerated legislative fields,… may nevertheless be 
attained through the use of the spending power and the conditional 
grant of federal funds."

Id. at 207. See also National Endowment for the Arts v. Finley, 
524 U.S. 569, 588 (1998) ("So long as legislation does not infringe on 
other constitutionally protected rights, Congress has wide latitude to 
set spending priorities.").

On the other hand, as the Supreme Court also noted in Dole, "[t]he 
spending power is of course not unlimited." Id. The courts have 
identified a number of limitations on it. In Dole, the Supreme Court 
listed what it referred to as four "general restrictions" established 
in previous cases: First, the exercise of the spending power must be in 
pursuit of the general welfare. Second, conditions imposed on the use 
of federal funds must be reasonably related to the articulated goals. 
Third, the intent of Congress to impose conditions must be 
authoritative and unambiguous. Fourth, the action in question must not 
be prohibited by an independent constitutional bar. Id. at 207-208. See 
also, e.g., Nevada v. Skinner, 884 F.2d 445, 447-48 (9th Cir. 1989). 
After the Dole Court explained the application of the fourth 
restriction, it added, "Our decisions have [also] recognized that in 
some circumstances the financial inducement offered by Congress might 
be so coercive as to pass the point at which 'pressure turns into 
compulsion.'" Id. at 211, quoting Steward Machine Co. v. Davis, 
301 U.S. 548, 590 (1937). Some courts have understood this passage to 
constitute a "fifth" limitation on congressional spending power. E.g., 
A.W. v. Jersey City Public Schools, 341 F.3d 234, 241 (3rd Cir. 2003); 
Kansas v. United States, 214 F.3d 1196, 1201 (10th Cir. 2000); 
Litman v. George Mason University, 186 F.3d 544, 552-53 (4th Cir. 
1999). Others have simply seen it as an "additional" consideration. 
E.g., West Virginia v. Department of Health & Human Services, 289 F.3d 
281, 287 (4th Cir. 2002). See also James Island Public Service 
District v. City of Charleston, 249 F.3d 323, 327 (4th Cir. 2001).

While the existence of this list might suggest otherwise, there have 
actually been few decisions striking down federal statutory spending 
conditions.[Footnote 9] Kansas v. United States, 214 F.3d 1196, 1201-
1202, n.6 (10th Cir. 2000). A recent example can be seen in Legal 
Services Corp. v. Velazquez, 531 U.S. 533 (2001), wherein a conditional 
provision (contained in the annual appropriations for the Legal Service 
Corporation (LSC) since 1996) was struck down as inconsistent with the 
First Amendment. This provision prohibited LSC grantees from 
representing clients in efforts to amend or otherwise challenge 
existing welfare law. The Supreme Court found this provision interfered 
with the free speech rights of clients represented by LSC-funded 
attorneys.[Footnote 10]

In addition to imposing restrictions in appropriation acts, Congress 
also exercises its spending power by imposing conditions in the 
legislation creating or modifying a program.[Footnote 11] An example of 
a statutorily imposed spending condition can be seen in the provisions 
of the Children's Internet Protection Act (CIPA), Pub. L. No. 106-554, 
114 Stat. 2763, 2763A-335 (Dec. 21, 2000). CIPA barred public libraries 
from receiving federal assistance to provide computer access to the 
Internet unless they installed software to block obscenity and child 
pornography and prevent minors from obtaining access to material 
harmful to them. CIPA, § 1711. In United States v. American Library 
Ass'n, Inc., ___U.S.___, 123 S. Ct. 2297 (2003), the Supreme Court 
upheld CIPA's condition as a legitimate exercise of congressional 
spending power. Among the challenges brought against the CIPA condition 
was the claim that it constituted an impermissible coercion. The Court 
rejected that claim, explaining that CIPA did not penalize libraries 
that chose not to install the software. Rather, it simply precluded the 
use of taxpayer funds to subsidize those libraries that chose not to 
install such software. Id. at 2307-08. The Court also rejected claims 
that the condition infringed upon protected First Amendment rights, 
noting that CIPA expressly permitted libraries to customize or even 
disable the operation of the software for research and other lawful 
purposes--at the request of an adult user or, under certain 
circumstances, even at the request of a minor user. Id. at 2306-07. 
Citing Dole, supra, the Court noted again that, so long as Congress 
does not "induce" funding recipients to engage in activities that would 
themselves be unconstitutional, "Congress has wide latitude to attach 
conditions to the receipt of federal assistance in order to further its 
policy objectives." Id. at 2303.

For some additional recent cases upholding statutory funding 
conditions, see for example, Kansas v. United States, 214 F.3d 1196 
(10th Cir. 2000) (upholding the statutory requirement conditioning 
receipt of federal block grants used to provide cash assistance and 
other supportive services to low-income families on a state's 
participation in and compliance with a federal child support 
enforcement program); Litman v. George Mason University, supra (state 
university's receipt of federal funds was validly conditioned upon 
waiver of the state's Eleventh Amendment immunity from federal 
antidiscrimination lawsuits); and California v. United States, 
104 F.3d 1086, 1092 (9th Cir. 1997) (acknowledging that although it 
originally agreed to the condition for receipt of federal Medicaid 
funds on state provision of emergency medical services to illegal 
aliens, California now viewed that condition as coerced because 
substantial increases in illegal immigration left California with no 
choice but to remain in the program to prevent collapse of its medical 
system; the complaint was dismissed for failure to state a claim upon 
which relief could be granted).

It would appear safe to say that Congress can, as long as it does not 
violate the Constitution, appropriate money for any purpose it chooses, 
from paying the valid obligations of the United States to what the 
Supreme Court has termed "pure charity,"[Footnote 12] and can implement 
policy objectives by imposing conditions on the receipt or use of the 
money.[Footnote 13]

The Constitution does not provide detailed instructions on how Congress 
is to implement its appropriation power, but leaves it to Congress to 
do so by statute. Congress has in fact done this, and continues to do 
it, in two ways: through the annual budget and appropriations process 
and through a series of permanent "funding statutes." As one court has 
put it:

" [The Appropriations Clause] is not self-defining and Congress has 
plenary power to give meaning to the provision. The Congressionally 
chosen method of implementing the requirements of Article I, section 9, 
clause 7 is to be found in various statutory provisions."

Harrington v. Bush, 553 F.2d 190, 194-95 (D.C. Cir. 1977) (footnote 
omitted). See also, e.g., Walker v. Department of Housing & Urban 
Development, 912 F.2d 819, 829 (5th Cir. 1990). There were few 
statutory funding controls in the early years of the nation and abuses 
were commonplace. As early as 1809, one senator, citing a string of 
abuses, introduced a resolution to look into ways to prevent the 
improper expenditure of public funds.[Footnote 14] In 1816 and 1817, 
John C. Calhoun lamented the "great evil" of diverting public funds to 
uses other than those for which they were appropriated.[Footnote 15] 
Even as late as the post-Civil War years, the situation saw little 
improvement. "Funds were commingled. Obligations were made without 
appropriations. Unexpended balances from prior years were used to 
augment current appropriations."[Footnote 16]

The permanent funding statutes, found mostly in Title 31 of the United 
States Code, are designed to combat these and other abuses. They did 
not spring up overnight, but have evolved over the span of nearly more 
than two centuries. Nevertheless, when viewed as a whole, they form a 
logical pattern. We may regard them as pieces of a puzzle that fit 
together to form the larger picture of how Congress exercises its 
control "power of the purse." Some of the key statutory directives in 
this scheme, each of which is discussed elsewhere in this publication, 
are:

* A statute will not be construed as making an appropriation unless it 
expressly so states. 31 U.S.C. § 1301(d).

* Agencies may not spend, or commit themselves to spend, in advance of 
or in excess of appropriations. 31 U.S.C. § 1341 (Antideficiency Act).

* Appropriations may be used only for their intended purposes. 
31 U.S.C. § 1301(a) ("purpose statute").

* Appropriations made for a definite period of time may be used only 
for expenses properly incurred during that time. 31 U.S.C. § 1502(a) 
("bona fide needs" statute).

* Unless authorized by law, an agency may not keep money it receives 
from sources other than congressional appropriations, but must deposit 
the money in the Treasury. 31 U.S.C. § 3302(b) ("miscellaneous 
receipts" statute).

The second part of article I, section 9, clause 7 of the Constitution 
requires that--

"a regular Statement and Account of the Receipts and Expenditures of 
all public Money shall be published from time to time."

Implementation of this provision, as a logical corollary of the 
appropriation power, is also wholly within the congressional province, 
and the courts have so held.[Footnote 17] Washington Post Co. v. United 
States Department of State, 685 F.2d 698, 700 (D.C. Cir. 1982) ("the 
plenary authority of Congress in this area will be respected"), vacated 
as moot, 464 U.S. 979 (1983); United States v. Richardson, 418 U.S. 
166, 178 n.11 (1974) ("it is clear that Congress has plenary power to 
exact any reporting and accounting it considers appropriate in the 
public interest"); Harrington v. Bush, 553 F.2d at 195; Hart's Case, 16 
Ct. Cl. 459, 484 (1880), aff'd, Hart v. United States, 118 U.S. 62 
(1886) ("[a]uditing and accounting are but parts of a scheme for 
payment"). See also B-300192, n.10, Nov. 13, 2002.

The Constitution mentions appropriations in only one other place. 
Article I, section 8, clause 12 provides that Congress shall have power 
to "raise and support Armies, but no Appropriation of Money to that Use 
shall be for a longer Term than two Years."[Footnote 18] The 2-year 
limit in clause 12 has been strictly construed as applying essentially 
to appropriations for personnel and for operations and maintenance and 
not to other military appropriations such as weapon system procurement 
or military construction. See B-114578, Nov. 9, 1973; 40 Op. Att'y 
Gen. 555 (1948); 25 Op. Att'y Gen. 105 (1904). In any event, Congress 
has traditionally made appropriations for military personnel and 
operations and maintenance on a fiscal year basis.

Whenever one reflects upon the constitutional prerogatives of the 
legislature, it must be against the backdrop of a central theme 
underlying much of federal fiscal law and policy--the natural 
antithesis of executive flexibility and congressional control. Each 
objective is valid and necessary, but it is impossible to 
simultaneously maximize both. Either can be enhanced only at the 
expense of the other. Finding and maintaining a reasonable and proper 
balance is both the goal and the challenge of the legal process.

C. Historical Perspective:

1. Evolution of the Budget and Appropriations Process [Footnote 19]

The first general appropriation act, passed by Congress on 
September 29, 1789, appropriated a total of $639,000 and illustrates 
what was once a relatively uncomplicated process. We quote it in full 
(1 Stat. 95):

"Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled, That there be appropriated for 
the service of the present year, to be paid out of the monies which 
arise, either from the requisitions heretofore made upon the several 
states, or from the duties on impost and tonnage, the following sums, 
viz. A sum not exceeding two hundred and sixteen thousand dollars for 
defraying the expenses of the civil list, under the late and present 
government; a sum not exceeding one hundred and thirty-seven thousand 
dollars for defraying the expenses of the department of war; a sum not 
exceeding one hundred and ninety thousand dollars for discharging the 
warrants issued by the late board of treasury, and remaining 
unsatisfied; and a sum not exceeding ninety-six thousand dollars for 
paying the pensions to invalids."

As the size and scope of the federal government have grown, so has the 
complexity of the appropriations process.

In 1789, the House established the Ways and Means Committee to report 
on revenues and spending, only to disband it that same year following 
the creation of the Treasury Department. The House Ways and Means 
Committee was re-established to function permanently in 1795 and was 
recognized as a standing committee in 1802.

On the Senate side, the Finance Committee was established as a standing 
committee in 1816. Up until that time, the Senate had referred 
appropriation measures to temporary select committees. By 1834, 
jurisdiction over all Senate appropriation bills was consolidated in 
the Senate Finance Committee.

In the mid-nineteenth century, a move was begun to restrict 
appropriation acts to only those expenditures that had been previously 
authorized by law. The purpose was to avoid the delays caused when 
legislative items or "riders" were attached to appropriation bills. 
Rules were eventually passed by both houses of Congress to require, in 
general, prior legislative authorizations for the enactment of 
appropriations.

It was during this same period that the concept of a fiscal year 
separate and distinct from the calendar year came into 
existence.[Footnote 20]

Under the financial strains caused by the Civil War, appropriations 
committees first appeared in both the House and the Senate, diminishing 
the jurisdiction of the Ways and Means and Finance Committees, 
respectively. Years later, the need for major reforms was again 
accentuated by the burdens of another war. Following World War I, 
Congress passed the Budget and Accounting Act of 1921, Pub. L. No. 67-
13, 42 Stat. 20 (June 10, 1921).

Before 1921, departments and agencies generally made individual 
requests for appropriations. These submissions were compiled for 
congressional review in an uncoordinated "Book of Estimates." The 
Budget and Accounting Act enhanced budgetary efficiency and aided in 
the performance of constitutional checks and balances through the 
budget process. It required the President to submit a national budget 
each year and restricted the authority of the agencies to present their 
own proposals. See 31 U.S.C. §§ 1104, 1105. With this centralization of 
authority for the formulation of the executive branch budget in the 
President and the newly established Bureau of the Budget (now Office of 
Management and Budget), Congress also took steps to strengthen its 
oversight capability over fiscal matters by establishing the General 
Accounting Office.[Footnote 21]

The decades immediately following World War II saw growth in both the 
size and the complexity of the federal budget. It became apparent that 
the congressional role in the "budget and appropriations" process 
centered heavily on the appropriations phase and placed too little 
emphasis on the budgetary phase. In other words, Congress responded to 
the President's spending and revenue proposals only through the 
cumulative result of individual pieces of legislation reached through 
an agglomeration of separate actions. Congress did not look at the 
budget as a whole, nor did it examine or vote on overall spending or 
revenues. There was no process by which Congress could establish its 
own spending priorities. Thus, the impetus for a congressional budget 
process began in the early 1970s. It was not created in a single step; 
rather, it was created in stages--and for the most part new pieces did 
not replace but were added to existing processes. As William G. 
Dauster, former Chief Counsel on the Committee on the Budget, put it: 
"[t]he law governing the budget process resembles nothing so much as 
sediment. It has accumulated in several statutes, each layered upon the 
prior one… [t]his incremental growth has created something of a legal 
nettle." Budget Process Law Annotated, S. Print No. 102-22, at xxvii 
(1991).

The first major round of reforms came about with the Congressional 
Budget and Impoundment Control Act of 1974.[Footnote 22] Titles I 
though IX of the act are referred to as the Congressional Budget Act of 
1974, while Title X is referred to as the Impoundment Control Act of 
1974. One of the fundamental objectives of the Congressional Budget Act 
of 1974 was to establish a process through which Congress could 
systematically consider the total federal budget and determine 
priorities for allocating budget resources. The design of programs and 
the allocation of spending within each mission area would be left to 
the authorizing and appropriations committees. The focus was on overall 
fiscal policy and an allocation across priorities.[Footnote 23] The 
statute made several major changes in the budget and appropriations 
process. For example:

* It established a detailed calendar governing the various stages of 
the congressional budget and appropriations process. 2 U.S.C. § 631.

* It provided for congressional review of the President's budget, the 
establishment of target ceilings for federal expenditures through one 
or more concurrent resolutions, and the evaluation of spending bills 
against these targets. 2 U.S.C. §§ 632-642. Prior to this time, 
Congress had considered the President's budget only in the context of 
individual appropriation bills. To implement the new process, the law 
created Budget Committees in both the Senate and the House, and a 
Congressional Budget Office (CBO). 2 U.S.C. § 601. The law requires the 
CBO to prepare estimates of new budget authority, outlays, or revenue 
provided by bills or resolutions reported from committees of either 
house, or estimates of the costs that the government would incur in 
carrying out the provisions of the proposed legislation. 2 U.S.C. 
§ 602.

* Prompted by the growth of "backdoor spending,"[Footnote 24] it 
enhanced the role of the Appropriations Committees in reviewing 
proposals for contract authority, borrowing authority, and mandatory 
entitlements. 2 U.S.C. § 651.

The 1974 legislation also imposed limitations on the impounding of 
appropriated funds by the executive branch. 2 U.S.C. §§ 681-688.

The next piece of major legislation in the fiscal area was the Balanced 
Budget and Emergency Deficit Control Act of 1985, known as the Gramm-:

Rudman-Hollings Act (Gramm-Rudman).[Footnote 25] It was enacted to deal 
with a growing budget deficit (excess of total outlays over total 
receipts for a given fiscal year). 2 U.S.C. § 622(6). Gramm-Rudman 
established "maximum deficit amounts." Pub. L. No. 99-177, 
§ 201(a)(1). If the deficit exceeded these statutory limits, the 
President was required to issue a sequester order (a cancellation of 
budgetary resources) that would reduce all nonexempt spending by a 
uniform percentage. Id. § 252. In the spring of 1990, it became clear 
that the deficit was going to exceed Gramm-Rudman maximum deficit 
limits by a considerable amount. To respond to these large deficits, 
President George H.W. Bush and congressional leadership convened 
negotiations on the budget in May 1990. In November, the Omnibus Budget 
Reconciliation Act of 1990 was enacted, which represented the budget 
agreement negotiated between the Bush Administration and Congress. Pub. 
L. No. 101-508, 104 Stat. 1388 (Nov. 5, 1990). See S. Print No. 105-67, 
supra.

The Omnibus Budget Reconciliation Act of 1990 included the Budget 
Enforcement Act (1990 BEA),[Footnote 26] which provided a major 
overhaul of the Gramm-Rudman procedures. The law established maximum 
adjustable deficit amounts for each fiscal year through fiscal year 
1995, but in effect, it replaced the Gramm-Rudman-Hollings system of 
deficit limits with two different enforcement mechanisms. The 1990 BEA 
established annual caps on spending controllable through the 
appropriations process (discretionary spending) and a pay-as-you-go 
requirement for spending controllable through substantive legislation 
outside of the appropriations process (so-called direct or mandatory 
spending) and revenue legislation. The two types of spending were 
subject to different rules. If discretionary appropriations were 
enacted that exceeded the annual caps, the law provided mechanisms for 
making appropriate spending reductions, sequestrations of budget 
authority, similar to those provided for in Gramm-Rudman. 2 U.S.C. 
§ 903. For the second spending category, mandatory spending and 
receipts, the 1990 BEA required that all legislation within a session 
of Congress that increased mandatory spending or decreased receipts was 
to be fully offset or paid for by corresponding increases in receipts 
or decreases in spending so that it was deficit neutral. Failure to 
obtain budget neutrality for mandatory spending would trigger an 
offsetting sequestration among nonexempt mandatory accounts. 2 U.S.C. 
§ 902. This pay-as-you-go requirement was referred to as PAYGO, and 
legislation dealing with mandatory spending or receipts was often 
referred to as PAYGO legislation.

To determine compliance with the 1990 BEA requirements, the Act 
required the Office of Management and Budget (OMB) and CBO to estimate 
new budget authority and outlays provided by any new legislation 
through a process that came to be called "scorekeeping." 2 U.S.C. 
§§ 901, 902. CBO would transmit its estimates to OMB, which would 
report any discrepancies to both houses of Congress. The 1990 BEA, 
however, required that OMB's estimates be used to determine whether a 
sequestration was necessary. 2 U.S.C. §§ 902, 904. The statement of 
managers accompanying the conference report on the 1990 BEA instructed 
the House and Senate Budget Committees to work in consultation with OMB 
and CBO to develop scorekeeping guidelines. H.R. Rept. No. 101-964, at 
1172 (1990). The guidelines are printed in OMB Circular A-11, 
Preparation, Submission and Execution of the Budget, app. B (July 25, 
2003).

In 1993, the discretionary spending limits and the PAYGO rules were 
extended through fiscal year 1998. Pub. L. No. 103-66, 107 Stat. 683 
(Aug. 10, 1993). The 1997 Budget Enforcement Act (1997 BEA) again 
extended the discretionary spending caps and the PAYGO rules through 
2002. Pub. L. No. 105-33, title X, 111 Stat. 251, 701 (Aug. 5, 1997). 
Although the overall discretionary spending caps expired in 2002, 
additional caps on Highway and Mass Transit spending established under 
the Transportation Equity Act for the 21st Century (TEA-21)[Footnote 
27] continued through 2003, and another set of caps on conservation 
spending,[Footnote 28] established as part of the fiscal year 2001 
Interior Appropriations Act,[Footnote 29] were set through 2006. In 
addition, the sequestration procedures were to apply through 2006 to 
the conservation category. However, Pub. L. No. 107-312, 116 Stat. 2456 
(Dec. 2, 2002) eliminated the PAYGO sequestration requirement.

While most of the budget enforcement mechanisms in the 1990 BEA have 
expired, OMB uses the same scorekeeping rules developed for use with 
BEA for purposes of budget execution. OMB determines how much budget 
authority must be obligated for individual transactions. OMB interprets 
the scorekeeping guidelines to determine the cost that should be 
recognized and recorded as an obligation at the time the agency signs a 
contract or enters into a lease. "When an agency signs a contract, 
budgetary resources to measure the government's contribution to each of 
the terms of the contract are set aside (obligated). The 'total score' 
refers to the total amount of resources the government must obligate 
(set aside) for a given project." Letter from Franklin D. Raines, 
Director, Office of Management and Budget, to the Honorable William S. 
Cohen, Secretary of Defense, Re: Scoring DOD's Military Housing 
Privatization Initiatives, June 25, 1997.

In addition to the statutory spending caps, Congress, in fiscal year 
1994, began including overall limits on discretionary spending in the 
concurrent budget resolution that have become known as congressional 
caps. H.R. Con. Res. 64, 103rd Cong. § 12(b) (1993). Congress 
established these caps to manage its internal budget process, while the 
BEA statutory caps continued to govern for sequestration purposes. The 
congressional caps were enforceable in the Senate by a point of order 
that prohibited the consideration of a budget resolution that exceeded 
the limits for that fiscal year (the point of order could be waived or 
suspended by a three-fifths vote).[Footnote 30] Although the statutory 
1997 BEA limits expired at the end of fiscal year 2002, Congress 
continues to use the concurrent resolution on the budget to establish 
and enforce congressional budgetary limits. H.R. Con. Res. 95, 108th 
Cong. § 504 (2003).

2. GAO's Role in the Process:

As the budget and appropriations process has evolved over the course of 
the twentieth century, GAO's role with respect to it has also evolved. 
Title III of the Budget and Accounting Act of 1921,[Footnote 31] GAO's 
basic enabling statute, created two very different roles for the 
Comptroller General and the new agency.

First, he was to assume all the duties of the Comptroller of the 
Treasury and his six subordinate auditors, and to serve as the chief 
accounting officer of the government. To this end, the Comptroller 
General was given the authority to settle all claims by and against the 
government.[Footnote 32] In 1995, Congress transferred GAO's claim 
settlement authority to the executive branch.[Footnote 33]

Second, under the enabling statute the Comptroller General was given 
the authority to settle the accounts of the U.S. government, which 
includes the authority to issue legal decisions.[Footnote 34] The 
issuance of legal decisions is discussed in section E of this chapter.

The Comptroller General was also directed to investigate the receipt, 
disbursement, and application of public funds, reporting the results to 
Congress;[Footnote 35] and to make investigations and reports upon the 
request of either house of Congress or of any congressional committee 
with jurisdiction over revenue, appropriations, or 
expenditures.[Footnote 36] He was also directed to supply such 
information to the President when requested by the President.[Footnote 
37] The mandates in the 1921 legislation, together with a subsequent 
directive in the Legislative Reorganization Act of 1946 to make 
expenditure analyses of executive branch agencies with reports to the 
cognizant congressional committees,[Footnote 38] have played a large 
part in preparing Congress to consider the merits of the President's 
annual budget submission.

The Accounting and Auditing Act of 1950 authorized the Comptroller 
General to audit the financial transactions of most[Footnote 39] 
executive, legislative, and judicial agencies;[Footnote 40] and to 
prescribe, in consultation with the President and the Secretary of the 
Treasury, accounting principles, standards, and requirements for the 
executive agencies suitable to their needs.[Footnote 41]

The Legislative Reorganization Act of 1970 expanded the focus of GAO's 
audit activities to include program evaluations as well as financial 
audits.[Footnote 42]

The Congressional Budget and Impoundment Control Act of 1974 gave GAO a 
number of additional duties in the budgetary arena. It directs GAO, in 
cooperation with Treasury, the Office of Management and Budget, and the 
Congressional Budget Office, to "establish, maintain, and publish 
standard terms and classifications for fiscal, budget, and program 
information of the Government, including information on fiscal policy, 
receipts, expenditures, programs, projects, activities, and 
functions." Agencies are to use these terms and classifications in 
providing information to Congress.[Footnote 43] GAO published this 
information in A Glossary of Terms Used in the Federal Budget Process 
(Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993). The law 
gives GAO a variety of functions relating to obtaining, studying, and 
reporting to Congress fiscal, budget, and program information.[Footnote 
44] Finally, it gives the Comptroller General the responsibility to 
monitor and report to Congress on all proposed impoundments of budget 
authority by the executive branch.[Footnote 45]

The Federal Managers' Financial Integrity Act of 1982[Footnote 46] is a 
very brief law but one that has had substantial impact. It was intended 
to increase governmentwide emphasis on internal accounting and 
administrative controls. Agencies are to establish internal accounting 
and administrative control systems in accordance with standards 
prescribed by the Comptroller General (see U.S. General Accounting 
Office, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (Washington, D.C.: Nov. 9, 1999)), conduct annual 
reviews of their systems in accordance with Office of Management and 
Budget guidelines, and report the results of these reviews to the 
President and to Congress. OMB Circular No. A-123, Management 
Accountability and Control (June 21, 1995). The act has been beneficial 
in focusing management and employee attention on the importance of 
internal controls. More recently, however, Congress enacted a number of 
statutes to provide a framework for performance-based management and 
accountability.[Footnote 47] GAO monitors, and issues governmentwide 
reports on, the implementation of these statutes. See, e.g., U.S. 
General Accounting Office, Financial Management: FFMIA (Federal 
Financial Management Improvement Act) Implementation Necessary to 
Achieve Accountability, GAO-03-31 (Washington, D.C.: Oct. 1, 2002); 
Managing for Results: Status of the Government Performance and Results 
Act, GAO/T-GGD-95-193 (Washington, D.C.: June 27, 1995).

D. "Life Cycle" of an Appropriation:

An appropriate subtitle for this section might be "phases of the budget 
and appropriations process." An appropriation has phases roughly 
similar to the various stages in the existence of "man"--conception, 
birth, death, even an afterlife. The various phases in an 
appropriation's "life cycle" may be identified as follows:

* executive budget formulation and transmittal,

* congressional action,

* budget execution and control,

* audit and review, and:

* account closing.

1. Executive Budget Formulation and Transmittal:

The first step in the life cycle of an appropriation is the long and 
exhaustive administrative process of budget preparation and review, a 
process that may well take place several years before the budget for a 
particular fiscal year is ready to be submitted to Congress. The 
primary participants in the process at this stage are the agencies and 
individual organizational units, which review current operations, 
program objectives, and future plans, and the Office of Management and 
Budget (OMB),[Footnote 48] which is charged with broad oversight, 
supervision, and responsibility for coordinating and formulating a 
consolidated budget submission.

Throughout this preparation period, there is a continuous exchange of 
information among the various federal agencies, OMB, and the President, 
including revenue estimates and economic outlook projections from the 
Treasury Department, the Council of Economic Advisers, the 
Congressional Budget Office, and the Departments of Commerce and Labor.

The President's budget request must be submitted to Congress on or 
before the first Monday in February of each year, for use during the 
following fiscal year. 2 U.S.C. § 631.[Footnote 49] Numerous statutory 
provisions, the most important of which are 31 U.S.C. §§ 1104-1109, 
prescribe the content and nature of the materials and justifications 
that must be submitted with the President's budget request. Specific 
instructions and policy guidance are contained in OMB Circular No. 
A-11, Preparation, Submission and Execution of the Budget (July 25, 
2003).

2. Congressional Action:

a. Summary of Congressional Process:

In exercising the broad discretion granted by the Constitution, 
Congress can approve funding levels contained in the President's budget 
request, increase or decrease those levels, eliminate proposals, or add 
programs not requested by the administration.

In simpler times, appropriations were often made in the form of a 
single, consolidated appropriation act. The most recent regular 
consolidated appropriation act[Footnote 50] was the General 
Appropriation Act of 1951, Pub. L. No. 759, 64 Stat. 595 (Sept. 6, 
1950). Since that time, appropriations have generally been made in a 
series of regular appropriation acts plus one or more supplemental 
appropriation acts. Most regular appropriation acts are organized based 
on one or more major departments and a number of smaller agencies 
(corresponding to the jurisdiction of appropriations subcommittees), 
although a few are based solely on function. An agency may receive 
funds under more than one appropriation act. The individual structures 
are of course subject to change over time. At the present time, there 
are 13 regular appropriation acts, as follows:

* Departments of Commerce, Justice, State, the Judiciary, and related 
agencies;

* Department of Defense;

* Department of the Interior and related agencies;

* Departments of Labor, Health and Human Services, Education, and 
related agencies;

* Department of Homeland Security;

* Departments of Transportation, Treasury, and independent agencies;

* Departments of Veterans Affairs, Housing and Urban Development, and 
independent agencies;

* District of Columbia;

* Energy and Water Development;

* Foreign Operations, Export Financing, and related programs;

* Legislative Branch;

* Military Construction; and:

* Department of Agriculture, Rural Development, Food and Drug 
Administration, and related agencies.

Before considering individual appropriation measures, however, 
Congress must, under the Congressional Budget Act, first agree on 
governmentwide budget totals. A timetable for congressional action is 
set forth in 2 U.S.C. § 631, with further detail in sections 632-656. 
Key steps in that timetable are summarized below.[Footnote 51]

First Monday in February. On or before this date, the President submits 
to Congress the Administration's budget request for the fiscal year to 
start the following October 1. The deadline under the 1974 Budget Act 
had been the first Monday after January 3.[Footnote 52]

February 15. The Congressional Budget Office submits to the House and 
Senate Budget Committees its annual report required by 2 U.S.C. 
§ 602(e). The report contains the Congressional Budget Office's 
analysis of fiscal policy and budget priorities.

Within 6 weeks after President submits a budget request, or at such 
time as may be requested by the Committee on the Budget. Each 
congressional committee with legislative jurisdiction submits to the 
appropriate Budget Committee its views and estimates on spending and 
revenue levels for the following fiscal year on matters within its 
jurisdiction. 2 U.S.C. § 632(d), as amended. The House and Senate 
Budget Committees then hold hearings and prepare their respective 
versions of a concurrent resolution, which is intended to be the 
overall budget plan against which individual appropriation bills are to 
be evaluated.

April 15. Congress completes action on the concurrent resolution, which 
includes a breakdown of estimated new budget authority and outlays for 
each major budget function. 2 U.S.C. § 632(a). The conference report on 
the concurrent resolution allocates the totals among individual 
committees. 2 U.S.C. § 633(a). The resolution may also include 
"reconciliation directives"--directives to individual committees to 
recommend legislative changes in revenues or spending to meet the goals 
of the budget plan. 2 U.S.C. § 641(a).

June 10. House Appropriations Committee completes the process of 
reporting out the individual appropriation bills.

June 15. Congress completes action on any reconciliation legislation 
stemming from the concurrent resolution.

June 30. House of Representatives completes action on annual 
appropriation bills.

Of course, House of Representative consideration of the individual 
appropriation bills will have begun several months earlier. The first 
step is for each subcommittee of the House Appropriations Committee to 
study appropriation requests and evaluate the performance of the 
agencies within its jurisdiction. Typically, each subcommittee will 
conduct hearings at which federal officials give testimony concerning 
both the costs and achievements of the various programs administered by 
their agencies and provide detailed justifications for their funding 
requests. Eventually, each subcommittee reports a single appropriation 
bill for consideration by the entire committee and then the full House 
membership.

As individual appropriation bills are passed by the House, they are 
sent to the Senate. As in the House, each appropriation measure is 
first considered in subcommittee and then reported by the full 
Appropriations Committee to be voted upon by the full Senate. In the 
event of variations in the Senate and House versions of a particular 
appropriation bill, a conference committee, including representatives 
of both houses of Congress, is formed. It is the function of the 
conference committee to resolve all differences, but the full House and 
Senate (in that order) must also vote to approve the conference report.

Following either the Senate's passage of the House version of an 
appropriation measure, or the approval of a conference report by both 
bodies, the enrolled bill is then sent to the President for signature 
or veto. The Congressional Budget Act envisions completion of the 
process by October 1, the beginning of the new fiscal year.

b. Points of Order:

A number of requirements relevant to an understanding of appropriations 
law and the legislative process are found in rules of the Senate and 
the House of Representatives. For example, Rule XXI(2), Rules of the 
House of Representatives, prohibits appropriations for objects not 
previously authorized by law.[Footnote 53] A similar but more limited 
prohibition exists in Rule XVI, Standing Rules of the Senate.[Footnote 
54] Other examples are the prohibition against including general 
legislation in appropriation acts[Footnote 55] (Senate Rule XVI, House 
Rule XXI), and the prohibition against consideration by a conference 
committee of matters not committed to it by either House (Senate Rule 
XXVIII, House Rule XXII). The applicability of Senate and House rules 
is exclusively within the province of the particular House.[Footnote 
56]

In addition, rather than expressly prohibiting a given item, 
legislation may provide that it shall not be in order for the Senate or 
House to consider a bill or resolution containing that item. An 
important example from the Congressional Budget Act of 1974[Footnote 
57] is 2 U.S.C. § 651(a), which provides that it shall not be in order 
for either house to consider any bill, resolution, or amendment 
containing certain types of new spending authority, such as contract 
authority, unless that bill, resolution, or amendment also provides 
that the new authority is to be effective for any fiscal year only to 
the extent provided in appropriation acts.

The effect of these rules and of statutes like 2 U.S.C. § 651(a) is to 
subject the noncomplying bill to a "point of order." A point of order 
is a procedural objection raised on the House or Senate floor or in 
committees by a Member alleging a departure from a rule or statute 
governing the conduct of business. See U.S. General Accounting Office, 
A Glossary of Terms Used in the Federal Budget Process (Exposure 
Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993). It differs from 
an absolute prohibition in that (a) it is always possible that no one 
will raise it and (b) if raised, it may or may not be sustained. Also, 
some laws, like the Congressional Budget Act, authorize points of order 
to be raised, and some measures may be considered under special 
resolutions waiving points of order.[Footnote 58] If a point of order 
is raised and sustained, the offending provision is effectively killed 
and may be revived only if it is amended to cure the noncompliance.

The potential effect of a rule or statute subjecting a provision to a 
point of order is limited to the pre-enactment stage. If a point of 
order is not raised, or is raised and not sustained, the provision, if 
enacted, is no less valid. To restate, a rule or statute subjecting a 
given provision to a point of order has no effect or application once 
the legislation or appropriation has been enacted. 65 Comp. Gen. 524, 
527 (1986); 57 Comp. Gen. 34 (1977); 34 Comp. Gen. 278 (1954); 
B-173832, supra; B-123469, Apr. 14, 1955; B-87612, July 26, 1949.

3. Budget Execution and Control:

a. In General:

The body of enacted appropriation acts for a fiscal year, as amplified 
by legislative history and the relevant budget submissions, becomes the 
government's financial plan for that fiscal year. The "execution and 
control" phase refers generally to the period of time during which the 
budget authority made available by the appropriation acts remains 
available for obligation. An agency's task during this phase is to 
spend the money Congress has given it to carry out the objectives of 
its program legislation.

The Office of Management and Budget apportions or distributes budgeted 
amounts to the executive branch agencies, thereby making funds in 
appropriation accounts (administered by the Treasury Department) 
available for obligation. 31 U.S.C. §§ 1511-1516. The apportionment 
system through which budget authority is distributed by time periods 
(usually quarterly) or by activities is intended to achieve an 
effective and orderly use of available budget authority, and to reduce 
the need for supplemental or deficiency appropriations. Each agency 
then makes allotments pursuant to the OMB apportionments or other 
statutory authority. 31 U.S.C. §§ 1513(d), 1514. An allotment is a 
delegation of authority to agency officials that allows them to incur 
obligations within the scope and terms of the delegation.[Footnote 59] 
These concepts will be discussed further in Chapter 6. Further detail 
on the budget execution phase may also be found in U.S. General 
Accounting Office, A Glossary of Terms Used in the Federal Budget 
Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.: 
Jan. 1993), and OMB Circular No. A-11, Preparation, Submission and 
Execution of the Budget, pt. 4, Instructions on Budget Execution 
(July 25, 2003).

In addition, OMB exercises a leadership role in executive branch 
financial management. This role was strengthened and given a statutory 
foundation by the Chief Financial Officers Act of 1990, Pub. L. 
No. 101-576, 104 Stat. 2838 (Nov. 15, 1990). The Chief Financial 
Officers Act also enacted a new 31 U.S.C. ch. 9, which establishes a 
Chief Financial Officer in the cabinet departments and several other 
executive branch agencies to work with OMB and to develop and oversee 
financial management plans, programs, and activities within the agency.

b. Impoundment:

While an agency's basic mission is to carry out its programs with the 
funds Congress has appropriated, there is also the possibility that, 
for a variety of reasons, the full amount appropriated by Congress will 
not be expended or obligated by the administration. Under the 
Impoundment Control Act of 1974, an impoundment is an action or 
inaction by an officer or employee of the United States that delays or 
precludes the obligation or expenditure of budget authority provided by 
Congress. 2 U.S.C. §§ 682(1), 683.[Footnote 60] The act applies to 
"Salaries and Expenses" appropriations as well as program 
appropriations. 64 Comp. Gen. 370, 375-76 (1985).

There are two types of impoundment actions--deferrals and rescission 
proposals. A deferral is a postponement of budget authority in the 
sense that an agency temporarily withholds or delays obligation or 
expenditure. The President is required to submit a special message to 
Congress reporting any deferral of budget authority. Deferrals are 
authorized only to provide for contingencies, to achieve savings made 
possible by changes in requirements or greater efficiency of 
operations, or as otherwise specifically provided by law.[Footnote 61] 
A deferral may not be proposed for a period beyond the end of the 
fiscal year in which the special message reporting it is transmitted, 
although, for multiple year funds, nothing prevents a new deferral 
message covering the same funds in the following fiscal year. 2 U.S.C. 
§§ 682(1), 684.[Footnote 62]

A rescission involves the cancellation of budget authority previously 
provided by Congress (before that authority would otherwise expire), 
and can be accomplished only through legislation. The President must 
advise Congress of any proposed rescissions, again in a special 
message. The President is authorized to withhold budget authority that 
is the subject of a rescission proposal for a period of 45 days of 
continuous session following receipt of the proposal. Unless Congress 
acts to approve the proposed rescission within that time, the budget 
authority must be made available for obligation. 2 U.S.C. §§ 682(3), 
683, 688.[Footnote 63]

The Impoundment Control Act requires the Comptroller General to monitor 
the performance of the executive branch in reporting proposed 
impoundments to Congress. A copy of each special message reporting a 
proposed deferral or rescission must be delivered to the Comptroller 
General, who then must review each such message and present his views 
to the Senate and House of Representatives. 2 U.S.C. § 685(b). If the 
Comptroller General finds that the executive branch has established a 
reserve or deferred budget authority and failed to transmit the 
required special message to Congress, the Comptroller General so 
reports to Congress. 2 U.S.C. § 686(a); U.S. General Accounting Office, 
Impoundment Control: Deferrals of Budget Authority in GSA, GAO/OGC-94-
17 (Washington, D.C.: Nov. 5, 1993) (unreported impoundment of General 
Service Administration funds); Impoundment Control: Comments on 
Unreported Impoundment of DOD Budget Authority, GAO/OGC-92-11 
(Washington, D.C.: June 3, 1992) (unreported impoundment of V-22 Osprey 
funds). The Comptroller General also reports to Congress on any special 
message transmitted by the executive branch that has incorrectly 
classified a deferral or a rescission. 2 U.S.C. § 686(b). GAO will 
construe a deferral as a de facto rescission if the timing of the 
proposed deferral is such that "funds could be expected with reasonable 
certainty to lapse before they could be obligated, or would have to be 
obligated imprudently to avoid that consequence." 54 Comp. Gen. 453, 
462 (1974).

If, under the Impoundment Control Act, the executive branch is required 
to make budget authority available for obligation (if, for example, 
Congress does not pass a rescission bill) and fails to do so, the 
Comptroller General is authorized to bring a civil action in the U.S. 
District Court for the District of Columbia to require that the budget 
authority be made available. 2 U.S.C. § 687.

The expiration of budget authority or delays in obligating it resulting 
from ineffective or unwise program administration are not regarded as 
impoundments unless accompanied by or derived from an intention to 
withhold the budget authority. B-229326, Aug. 29, 1989. Similarly, an 
improper obligation, although it may violate several other statutes, is 
generally not an impoundment. 64 Comp. Gen. 359 (1985).

There is also a distinction between deferrals, which must be reported, 
and "programmatic" delays, which are not impoundments and are not 
reportable under the Impoundment Control Act. A programmatic delay is 
one in which operational factors unavoidably impede the obligation of 
budget authority, notwithstanding the agency's reasonable and good 
faith efforts to implement the program. B-290659, July 24, 2002; U.S. 
General Accounting Office, Impoundment Control: Deferral of DOD Budget 
Authority Not Reported, GAO/OGC-91-8 (Washington, D.C.: May 7, 1991); 
Impoundment Control: Deferrals of Budget Authority for Military 
Construction Not Reported, GAO/OGC-91-3 (Washington, D.C.: Feb. 5, 
1991). Since intent is a relevant factor, the determination requires a 
case-by-case evaluation of the agency's justification in light of all 
of the surrounding circumstances. A programmatic delay may become a 
reportable deferral if the programmatic basis ceases to exist.

Delays resulting from the following factors may be programmatic, 
depending on the facts and circumstances involved:

* conditions on availability for using funds not met (B-290659, supra);

* contract delays due to shipbuilding design modification, 
verification, or changes in scope (GAO/OGC-90-4);

* uncertainty as to the amount of budget authority that will ultimately 
be available for the program (B-203057, Sept. 15, 1981; B-207374, 
July 20, 1982, noting that the uncertainty is particularly relevant 
when it "arises in the context of continuing resolution funding, where 
Congress has not yet spoken definitively");

* time required to set up the program or to comply with statutory 
conditions on obligating the funds (B-96983, B-225110, Sept. 3, 1987);

* compliance with congressional committee directives (B-221412, 
Feb. 12, 1986);

* delay in receiving a contract proposal requested from contemplated 
sole source awardee (B-115398, Feb. 6, 1978);

* historically low loan application level (B-115398, Sept. 28, 1976);

* late receipt of complete loan applications (B-195437.3, Feb. 5, 
1988);

* delay in awarding grants pending issuance of necessary regulations 
(B-171630, May 10, 1976); and:

* administrative determination of allowability and accuracy of claims 
for grant payments (B-115398, Oct. 16, 1975).

Where the Department of Defense withheld military construction funds to 
improve program efficiency, not because of an unavoidable delay, and 
the Department did not take the necessary steps to implement the 
program while funds were temporarily unobligated, the withholding was 
an impoundment, not a programmatic delay. B-241514.2, Feb. 5, 1991.

4. Audit and Review:

a. Basic Responsibilities:

Every federal department or agency has the initial and fundamental 
responsibility to ensure that its application of public funds adheres 
to the terms of the pertinent authorization and appropriation acts, as 
well as any other relevant statutory provisions. This responsibility--
enhanced by the enactment of the Federal Managers' Financial Integrity 
Act and the creation of an Inspector General in many agencies--includes 
establishing and maintaining appropriate accounting and internal 
controls, one of which is an internal audit program. Ensuring the 
legality of proposed payments is also, under 31 U.S.C. § 3528, one of 
the basic responsibilities of agency certifying officers. The Chief 
Financial Officers Act of 1990 (Pub. L. No. 101-576, §§ 303, 304, 
104 Stat. 2838, 2849-53 (Nov. 15, 1990), codified at 31 U.S.C. § 3515 
and §§ 3521(e)-(h)) provides for the preparation and audit of financial 
statements for those agencies required to establish Chief Financial 
Officers. In addition, the Secretary of the Treasury, in coordination 
with the Director of the Office of Management and Budget, is required 
to annually prepare and submit to the President and Congress a 
financial statement for the executive branch of the government that has 
been audited by GAO. 31 U.S.C. § 331(e). GAO also regularly audits 
federal programs under the various authorities that we summarize in 
section C.2 of this chapter.

b. GAO Recommendations and Matters for Consideration:

In carrying out its various responsibilities to examine the financial, 
management, and program activities of federal agencies, and to evaluate 
the efficiency, effectiveness, and economy of agency operations, GAO 
reports to Congress both objective findings and recommendations for 
improvement. Recommendations are addressed to agency heads for action 
that the agency is authorized to take under existing law. Matters for 
consideration are addressed to Congress.

Under section 236 of the Legislative Reorganization Act of 1970, 
31 U.S.C. § 720(b), whenever GAO issues a report that contains 
recommendations to the head of a federal agency, the agency must submit 
a written statement of the actions taken with respect to the 
recommendations to (1) the Senate Committee on Governmental Affairs and 
the House Committee on Government Reform, not later than 60 days after 
the date of the report and (2) the Senate and House Appropriations 
Committees in connection with the agency's first request for 
appropriations submitted more than 60 days after the date of the 
report. As GAO pointed out in a letter to a private inquirer (B-207783, 
Apr. 1, 1983, nondecision letter), the law does not require the agency 
to comply with the recommendation, merely to report on the "actions 
taken," which can range from full compliance to zero. The theory is 
that, if the agency disagrees with the GAO recommendation, Congress 
will have both positions so that it can then take whatever action it 
might deem appropriate.

The term "agency" for purposes of 31 U.S.C. § 720 is broadly defined to 
include any department, agency, or instrumentality of the U.S. 
government, including wholly owned but not mixed-ownership government 
corporations, or the District of Columbia government. 31 U.S.C. 
§ 720(a). See also B-114831-O.M., July 28, 1975.

5. Account Closing:

Continuing our "life cycle" analogy, an appropriation "dies" in a sense 
at the end of its period of obligational availability. There is, 
however, an afterlife to the extent of any unexpended balances. 
Unexpended balances, both obligated and unobligated, retain a limited 
availability for five fiscal years following expiration of the period 
for which the source appropriation was made. At midnight on the last 
day of an appropriation's period of availability, the appropriation 
account expires and is no longer available for incurring new 
obligations. The expired appropriation remains available for 5 years 
for the purpose of paying obligations incurred prior to the account's 
expiration and adjusting obligations that were previously unrecorded or 
under recorded. 31 U.S.C. § 1553(a). After 5 years, the expired account 
is closed and the balances remaining are canceled. 31 U.S.C. § 1552(a). 
These concepts are discussed in Chapter 5.

E. The Role of the Accounting Officers: Legal Decisions:

1. A Capsule History:

Since the early days of the Republic, Congress, in exercising its 
oversight of the public purse, has utilized administrative officials 
for the settlement of public accounts and the review of federal 
expenditures.

a. Accounting Officers Prior to 1894:

Throughout most of the nineteenth century, the accounting 
officers[Footnote 64] consisted of a series of comptrollers and 
auditors. Starting in 1817 with two comptrollers and four auditors, the 
number increased until, for the second half of the century, there were 
three co-equal comptrollers (First Comptroller, Second Comptroller, 
Commissioner of Customs) and six auditors (First Auditor, Second 
Auditor, etc.), all officials of the Treasury Department. The 
jurisdiction of the comptrollers and auditors was divided generally 
along departmental lines, with the auditors examining accounts and 
submitting their settlements to the appropriate comptroller.

The practice of rendering written decisions goes back at least to 1817. 
However, very little of this material exists in published form. (Until 
sometime after the Civil War, the decisions were handwritten.)

There are no published decisions of the First Comptroller prior to the 
term of William Lawrence (1880-85). Lawrence published his decisions in 
a series of six annual volumes. After Lawrence's decisions, a gap of 
9 years followed until First Comptroller Robert Bowler published a 
single unnumbered volume of his 1893-94 decisions.[Footnote 65]

The decisions of the Second Comptroller and the Commissioner of Customs 
were never published. However, volumes of digests of decisions of the 
Second Comptroller were published starting in 1852. The first volume, 
unnumbered, saw three cumulative editions, the latest issued in 1869 
and including digests for the period 1817-69. Three additional volumes 
(designated volumes 2, 3, and 4) were published in 1884, 1893, and 1899 
(the latter being published several years after the office had ceased 
to exist), covering respectively, the periods 1869-84, 1884-93, and 
1893-94.[Footnote 66]

Thus, material available in permanent form from this period consists of 
Lawrence's six volumes, Bowler's single volume, and four volumes of 
Second Comptroller digests.

b. 1894-1921: Comptroller of the Treasury:

In 1894, Congress enacted the so-called Dockery Act, actually a part of 
the general appropriation act for 1895 (ch. 174, 28 Stat. 162, 205 
(July 31, 1894)), which consolidated the functions of the First and 
Second Comptrollers and the Commissioner of Customs into the newly 
created Comptroller of the Treasury. (The title was a reversion to one 
that had been used before 1817.) The six auditors remained, with 
different titles, but their settlements no longer had to be 
automatically submitted to the Comptroller.

The Dockery Act included a provision requiring the Comptroller of the 
Treasury to render decisions upon the request of an agency head or a 
disbursing officer. (Certifying officers did not exist back then.) 
Although this was to a large extent a codification of existing 
practice, it gave increased significance to the availability of the 
decisions. Accordingly, the first Comptroller of the Treasury (Robert 
Bowler, who had been First Comptroller when the Dockery Act passed) 
initiated the practice of publishing an annual volume of decisions "of 
such general character as will furnish precedents for the settlements 
of future accounts." 1 Comp. Dec. iv (1896) (Preface).

The Decisions of the Comptroller of the Treasury series consists of 27 
volumes covering the period 1894-1921.[Footnote 67] Comptroller of the 
Treasury decisions not included in the annual volumes exist in bound 
"manuscript volumes," which are now in the custody of the National 
Archives, and are thus, unavailable as a practical matter.

c. 1921 to the Present Time:

When the Budget and Accounting Act of 1921 created the General 
Accounting Office, the offices of the Comptroller of the Treasury and 
the six Auditors were abolished and their functions transferred to the 
Comptroller General. Among these functions was the issuance of legal 
decisions to agency officials concerning the availability and use of 
appropriated funds. Thus, the decisions GAO issues today reflect the 
continuing evolution of a body of administrative law on federal fiscal 
matters dating back to the Nation's infancy. We turn now to a brief 
description of this function under the stewardship of the Comptroller 
General.

2. Decisions of the Comptroller General:

a. General Information:

Certain federal officials are entitled by statute to receive GAO 
decisions. The Comptroller General renders decisions in advance of 
payment when requested by disbursing officers, certifying officers, or 
the head of any department or establishment of the federal government, 
who may be uncertain whether he or she has authority to make, or 
authorize the making of, particular payments. 31 U.S.C. § 3529. The 
Comptroller General also renders, for example, decisions to heads of 
agency components, including general counsels and inspectors general. 
See, e.g., B-291947, Aug. 15, 2003; B-285794, Dec. 5, 2000. The 
Comptroller General's decisions are logically known as "advance 
decisions."

Decisions are also provided to disbursing and certifying officers who 
request review of a settlement of their accounts. 31 U.S.C. §§ 3527, 
3528(b). In addition, the Comptroller General may, in his discretion, 
render decisions or legal opinions to other individuals or 
organizations, both inside and outside the government.

A decision regarding an account of the government is binding on the 
executive branch[Footnote 68] and on the Comptroller General 
himself,[Footnote 69] but is not binding on a private party who, if 
dissatisfied, retains whatever recourse to the courts he would 
otherwise have had. The Comptroller General has no power to enforce 
decisions. Ultimately, agency officials who act contrary to Comptroller 
General decisions may have to respond to congressional appropriations 
and program oversight committees.

There is no specific procedure for requesting a decision from the 
Comptroller General. A simple letter is usually sufficient. The request 
should, however, include all pertinent information or supporting 
material and should present any arguments the requestor wishes to have 
considered. GAO will also receive requests for decisions by e-mail. To 
submit a request by e-mail, refer to the "Legal Products" page of GAO's 
Web site, [Hyperlink, www.gao.gov], and follow the instructions 
provided therein.

A request for an advance decision submitted by a certifying officer 
will usually arise from "a voucher presented… for certification." 
31 U.S.C. § 3529(a)(2). At one time, GAO insisted that the original 
voucher accompany the request and occasionally declined to render the 
decision if this was not done. See, e.g., 21 Comp. Gen. 1128 (1942). 
The requirement was eliminated in B-223608, Dec. 19, 1988:

"Consistent with our current practice, submission of the original 
voucher need not accompany the request for an advance decision. 
Accordingly, in the future, the original voucher should be retained in 
the appropriate finance office. A photocopy accompanying the request 
for decision will be sufficient. Language to the contrary in prior 
decisions may be disregarded."

Even if no voucher is submitted, GAO will most likely render the 
decision notwithstanding the absence of a voucher if the question is of 
general interest and appears likely to recur. See, e.g., 55 Comp. 
Gen. 652 (1976); 53 Comp. Gen. 429 (1973); 53 Comp. Gen. 71 (1973); 
52 Comp. Gen. 83 (1972).

Often, requests for decisions will require factual development, and GAO 
will contact the agency as necessary to establish and document relevant 
facts. It is the usual practice of GAO to obtain the legal positions 
and views of the agency or agencies involved in the request for a 
decision or opinion.

An involved party or agency may request reconsideration of a decision. 
The standard applied is whether the request demonstrates error of fact 
or law (e.g., B-184062, July 6, 1976) or presents new information not 
considered in the earlier decision. B-271838.2, May 23, 1997. While the 
Comptroller General gives precedential weight to prior 
decisions,[Footnote 70] a decision may be modified or overruled by a 
subsequent decision. In overruling its decisions, GAO tries to follow 
the approach summarized by the Comptroller of the Treasury in a 1902 
decision:

"I regret exceedingly the necessity of overruling decisions of this 
office heretofore made for the guidance of heads of departments and the 
protection of paying officers, and fully appreciate that certainty in 
decisions is greatly to be desired in order that uniformity of practice 
may obtain in the expenditure of the public money, but when a decision 
is made not only wrong in principle but harmful in its workings, my 
pride of decision is not so strong that when my attention is directed 
to such decision I will not promptly overrule it. It is a very easy 
thing to be consistent, that is, to insist that the horse is 16 feet 
high, but not so easy to get right and keep right."

8 Comp. Dec. 695, 697 (1902).

GAO also entertains informal inquiries, via telephone and e-mail, 
regarding matters of appropriations law. To submit such an inquiry by 
e-mail, refer to the "Legal Products" page of GAO's Web site, 
[Hyperlink, www.gao.gov], and follow the instructions provided therein. 
Informal opinions expressed by GAO officers or employees may not 
represent the views of the Comptroller General or GAO and are in no 
way controlling on any subsequent formal or official determinations by 
the Comptroller General. 56 Comp. Gen. 768, 773-74 (1977); 31 Comp. 
Gen. 613 (1952); 29 Comp. Gen. 335 (1950); 12 Comp. Gen. 207 (1932); 4 
Comp. Gen. 1024 (1925).

b. Matters Not Considered:

There are a number of areas in which, as a matter of law or policy, the 
Comptroller General will generally decline to render a decision.

For example, as we discussed earlier in this chapter, effective 
June 30, 1996, Congress transferred claims settlement authority under 
31 U.S.C. § 3302 to the Director of the Office of Management and Budget 
(OMB). Congress gave the director of OMB the authority to delegate this 
function to such agency or agencies as he deemed appropriate. See, 
e.g., B-278805, July 21, 1999.

Other areas where the Comptroller General will decline to render 
decisions include questions concerning which the determination of 
another agency is by law "final and conclusive." Examples are 
determinations on the merits of a claim against another agency under 
the Federal Tort Claims Act (28 U.S.C. § 2672) or the Military 
Personnel and Civilian Employees' Claims Act of 1964 (31 U.S.C. 
§ 3721). Another example is a decision by the Secretary of Veterans 
Affairs on a claim for veterans' benefits (38 U.S.C. § 511). See 
56 Comp. Gen. 587, 591 (1977); B-266193, Feb. 23, 1996; B-226599.2, 
Nov. 3, 1988 (nondecision letter).

In addition, GAO has traditionally declined to render decisions in a 
number of areas that are specifically within the jurisdiction of some 
other agency and concerning which GAO would not be in the position to 
make authoritative determinations, even though the other agency's 
determination is not statutorily "final and conclusive." Thus, GAO will 
not "decide" whether a given action violates a provision of the 
Criminal Code (Title 18 of the United States Code) since this is within 
the jurisdiction of the Justice Department and the courts.[Footnote 71] 
If the use of public funds is an element of the alleged violation, the 
extent of GAO's involvement will be to determine if appropriated funds 
were in fact used and to refer the matter to the Justice Department if 
deemed appropriate or if requested to do so.[Footnote 72]

Other examples of areas where GAO has declined to render decisions are 
antitrust law,[Footnote 73] political activities of federal employees 
under the Hatch Act,[Footnote 74] and determinations as to what is or 
is not taxable under the Internal Revenue Code.[Footnote 75]

GAO avoids opining on an issue that is the subject of current 
litigation, unless the court expresses an interest in receiving GAO's 
opinion.[Footnote 76] GAO's policy with respect to issues that are the 
subject of agency administrative proceedings is generally similar to 
its litigation policy. See 69 Comp. Gen. 134 (1989) (declining to 
render an opinion on the propriety of an attorney's fee award being 
considered by the Equal Employment Opportunity Commission). See also 
B-259632, June 12, 1995.

Another long-standing GAO policy concerns the constitutionality of acts 
of Congress. As an agent of Congress, GAO recognizes that it is neither 
our role nor our province to opine on or adjudicate the 
constitutionality of duly enacted statutes. Such laws come to GAO with 
a heavy presumption in favor of their constitutionality and, like the 
courts, GAO will construe statutes narrowly to avoid constitutional 
issues.[Footnote 77] Immigration & Naturalization Service v. St. Cyr, 
533 U.S. 289, 299, n.12 (2001); B-300192, Nov. 13, 2002 (regarding a 
provision in the fiscal year 2003 Continuing Resolution, Pub. L. No. 
107-229, § 117, 116 Stat. 1465, 1468 (Sept. 30, 2002), prohibiting the 
use of appropriations to acquire private sector printing and 
specifically prohibiting the use of appropriations to pay for printing 
the President's Budget other than through the Government Printing 
Office: "Given our authority to settle and audit the accounts of the 
government…, we will apply laws as we find them absent a controlling 
opinion that such laws are unconstitutional"). GAO will, however, 
express its opinion, upon the request of a Member or committee of 
Congress, on the constitutionality of a bill prior to enactment. E.g., 
B-360241, Mar. 18, 2003; B-300192, supra; B-228805, Sept. 28, 1987.

c. Research Aids:

Between July 1921 and September 1994, decisions that the General 
Counsel determined had wide applicability were published annually in 
hardbound volumes entitled Decisions of the Comptroller General. All 
other decisions, after GAO had distributed copies to the requester and 
other interested parties, were filed at GAO and available publicly upon 
request. There is no legal distinction between a decision published in 
Decisions of the Comptroller General and an unpublished decision. 
28 Comp. Gen. 69 (1948). Since 1994, all decisions have been posted to 
the GAO Internet Web site, [Hyperlink, www.gao.gov]. The decisions are 
available at the GAO Web site only for a period of 60 days. After 60 
days, the Government Printing Office (GPO) posts GAO's decision to its 
GPO Access WAIS system, an archival system. Researchers can access the 
GPO system through GAO's Web site. The GPO system includes GAO 
decisions issued since January 1996. GAO's Office of General Counsel 
will assist researchers who have difficulty locating a copy of GAO 
decisions.

Some of the computerized legal research systems (e.g., Lexis, Westlaw) 
carry Comptroller General decisions. Researchers might also find 
decisions available through the Air Force's Federal Legal Information 
Through Electronics (FLITE) Web site. GAO's procurement decisions are 
published commercially, and some of the commercial "newsletter" 
services include summaries of other GAO issuances, including 
appropriations law decisions.

d. Note on Citations:

Decisions of the Comptroller General published in the Decisions of the 
Comptroller General volumes are cited by volume, page number on which 
the decision begins, and the year. For example: 31 Comp. Gen. 350 
(1952). Unpublished decisions before 1994 and all decisions thereafter 
are cited by file number and date. For example: B-193282, Dec. 21, 
1978. The present file numbering system ("B-numbers") has been in use 
since January 1939. From 1924 through 1938, file numbers had an "A" 
prefix.[Footnote 78]

3. Other Relevant Authorities:

a. GAO Materials:

GAO expresses its positions in many forms. Most of the GAO materials 
cited in this publication are decisions of the Comptroller General. 
While these constitute the most significant body of GAO positions on 
legal issues, the editors have also included, as appropriate, citations 
to the following items:

1. Legal opinions to Congress--GAO prepares legal opinions at the 
request of congressional committees or individual Members of Congress. 
Congressional opinions are prepared in letter rather than decision 
format, but have the same weight and effect as decisions. The citation 
form is identical to that for decisions. As a practical matter, except 
where specifically identified in the text, the reader will not be able 
to distinguish between a decision and a congressional opinion based on 
the form of the citation.

2. Office memoranda--Legal questions are frequently presented by other 
divisions or offices within GAO. The response is in the form of an 
internal memorandum, formerly signed by the Comptroller General, but 
now, for the most part, signed by the General Counsel or someone on the 
General Counsel's staff. The citation is the same as for an unpublished 
decision, except that the suffix "O.M." (Office Memorandum) has 
traditionally been added. More recent material tends to omit the 
suffix, in which case our practice in this publication is to identify 
the citation as a memorandum to avoid confusion with decisions. Office 
memoranda are usually not cited in decisions. Technically, an office 
memorandum is not a decision of the Comptroller General as provided in 
31 U.S.C. § 3529, does not have the same legal or precedential effect, 
and should never be cited as a decision. See, e.g., A-10786, May 23, 
1927. Instead, office memoranda represent the views of the General 
Counsel or members of the General Counsel's staff. Notwithstanding 
these limitations, we have included selected citations to GAO office 
memoranda, particularly where they provide guidance in the absence of 
formal decisions on a given point or contain useful research or 
discussion.

3. Audit reports--A GAO audit report is cited by its title, date of 
issuance, and a numerical designation. Up to the mid-1970s, the same 
file numbering system was used as in decisions ("B-numbers"). From the 
mid-1970s until October 2000, the designation for an audit report 
consisted of the initials of the issuing division, the fiscal year, and 
the report number, although a "B-number" was also assigned. Now the 
designation includes only the fiscal year and the report number. 
Reports are numbered sequentially within each fiscal year.

Several audit reports are cited throughout this publication either as 
authority for some legal proposition or to provide sources of 
additional information to supplement the discussion in the text. To 
prevent confusion stemming from different citation formats used over 
the years, our practice in this publication is to always identify an 
audit report as a "GAO report" in the text, in addition to the 
citation.

As required by 31 U.S.C. § 719(g), GAO issues monthly and annual lists 
of reports. In addition, GAO occasionally prepares bibliographies of 
reports and decisions in a given subject area (food, land use, etc.). 
The lists and GAO reports can be found at GAO's Web site, [Hyperlink, 
www.gao.gov].

In addition to the reports themselves, GAO publishes a number of 
pamphlets and other documents relating to its audit function. See, 
e.g., U.S. General Accounting Office, Government Auditing Standards, 
GAO-03-673G (Washington, D.C.: June 2003) (known as the "Yellow Book"). 
References to any of these will be fully described in the text where 
they occur.

4. Nondecision letters--On occasion, GAO may issue letters, signed by 
some subordinate official on the General Counsel's staff, usually to an 
individual or organization who has requested information or who has 
requested a legal opinion, but is not entitled by law to a formal 
decision. Their purpose is basically to convey information rather than 
resolve a legal issue. Several of these are cited in this publication, 
either because they offer a particularly clear statement of some policy 
or position, or to supplement the material found in the decisions. Each 
is identified parenthetically. The citation form is otherwise identical 
to an unpublished decision. As with the office memoranda, these are not 
decisions of the Comptroller General and do not have the same legal or 
precedential effect.

5. Circular letters--A circular letter is a letter addressed simply to 
the "Heads of Federal Departments and Agencies" or to "Federal 
Certifying and Disbursing Officers." Circular letters, although not 
common, are used for a variety of purposes and may emanate from a 
particular division within GAO or directly from the Comptroller 
General. Circular letters that announce significant changes in 
pertinent legal requirements or GAO audit policy or procedures are 
occasionally cited in this publication. They are identified as such and 
often, but not always, bear file designations similar to unpublished 
decisions. See B-275605, Mar. 17, 1997 (announcing changes resulting 
from the transfer of claims settlement and other related functions).

6. GAO's Policy and Procedures Manual for Guidance of Federal Agencies-
-Originally published in 1957 as a large loose-leaf volume, this was, 
for many years, the official medium through which the Comptroller 
General issued accounting principles and standards and related material 
for the development of accounting systems and internal auditing 
programs, uniform procedures, and regulations governing GAO's 
relationship with other federal agencies and private parties. Of the 
eight original titles of the volume, only three remain in effect. The 
title of particular relevance for federal appropriations law is Title 
7, "Fiscal Procedures." It is an important complement to this manual. 
Researchers can access Title 7 on GAO's Web site, [Hyperlink, 
www.gao.gov].

7. A Glossary of Terms Used in the Federal Budget Process (Exposure 
Draft), GAO/AFMD-2.1.1 (Jan. 1993)--This publication contains standard 
definitions of fiscal and budgetary terms. It is published by GAO as 
required by 31 U.S.C. § 1112(c), and is updated periodically. 
Definitions used throughout Principles of Federal Appropriations Law 
are based on the Glossary unless otherwise noted.

b. Non-GAO Materials:

As we have emphasized, the primary focus of this publication is the 
issuance of GAO, particularly legal decisions and opinions. Manifestly, 
however, various non-GAO authorities require inclusion.

References to legislative materials should be readily recognizable. 
Citations to the United States Code are to the edition or its 
supplements current as of the time of publication, unless specified 
otherwise. We specify the year only when referring to an obsolete 
edition of the Code. Section numbers and even title numbers may change 
over the years as a result of amendments or recodifications. For 
convenience and (we hope) clarity, we have generally used current 
citations even though the referenced decision may have used an older 
obsolete citation. Where the difference is significant, it will be 
noted in the text.

We have also included relevant decisions and opinions of other 
administrative agencies, although our research in these areas has not 
been exhaustive. For example, we have included some relevant opinions 
of the Attorney General. The Attorney General renders legal opinions 
pursuant to various provisions of law. E.g., 28 U.S.C. §§ 511-513. 
There are two series of published opinions. Those signed by the 
Attorney General are called "formal opinions," and are published in 
volumes entitled Official Opinions of the Attorneys General of the 
United States Advising the President and Heads of Departments in 
Relation to Their Official Duties (cited "Op. Att'y Gen."). The series 
started in 1852 and now numbers 43 volumes. They are published at 
irregular intervals.

The second series consists of selected opinions by the Justice 
Department's Office of Legal Counsel (OLC), which prepares and issues 
legal opinions under delegation from the Attorney General. Commencing 
in 1977, volumes 1-20 of the Opinions of the Office of Legal Counsel 
have thus far been published. Logically enough, they are cited "Op. 
Off. Legal Counsel." Given the lengthy intervals in recent decades 
between volumes of the "formal" Attorney General opinions, these are 
now included in the OLC volumes as well. We have used a parallel 
citation format to identify this latter group. Example: 43 Op. Att'y 
Gen. 224, 4A Op. Off. Legal Counsel 16 (1980).

A Treasury Department publication cited a number of times is the 
Treasury Financial Manual (TFM), Volume I. This, also issued in loose-
leaf form, is the Treasury Department's detailed procedural guidance on 
fiscal matters (central accounting and reporting, receipts, 
disbursements, etc.). The TFM is indispensable for finance personnel.

c. Note on Title 31 Recodification:

Many of the key statutes of general applicability that govern the use 
of appropriated funds are found in Title 31 of the United States Code 
(U.S.C.). Title 31 was recodified on September 13, 1982 (Pub. L. 
No. 97-258, 96 Stat. 877). A recodification is intended as a--

"compilation, restatement, and revision of the general and permanent 
laws of the United States which conforms to the understood policy, 
intent, and purpose of the Congress in the original enactments, with 
such amendments and corrections as will remove ambiguities, 
contradictions, and other imperfections both of substance and of form…."

2 U.S.C. § 285b(1). Enactment of a recodification transforms the title 
into "positive law." A recodified title is legal evidence of the law, 
and resorting to the Statutes at Large for evidentiary purposes is no 
longer necessary.

The recodification of Title 31 is essentially a restatement in updated 
form. It is not supposed to make any substantive change in the law. 
This point is made in the statute itself (Pub. L. No. 97-258, § 4(a), 
96 Stat. 1067, 31 U.S.C. note preceding § 101) and in the accompanying 
report of the House Judiciary Committee (H.R. Rep. No. 97-651, at 3 
(1982)). In addition, the courts will not read a substantive change 
into a recodification in the absence of evidence that Congress intended 
a substantive change. E.g., Keene Corp. v. United States, 508 U.S. 200, 
209 (1993); United States v. Thompson, 319 F.2d 665, 669 (2nd Cir. 
1963).

[End of section]

Chapter 2: The Legal Framework:

A. Appropriations and Related Terminology: 

1. Introduction: 

2. Concept and Types of Budget Authority: 

a. Appropriations: 

b. Contract Authority: 

c. Borrowing Authority: 

d. Monetary Credits: 

e. Offsetting Receipts: 

f. Loan and Loan Guarantee Authority: 

3. Some Related Concepts: 

a. Spending Authority: 

b. Entitlement Authority: 

4. Types of Appropriations: 

a. Classification Based on Duration: 

b. Classification Based on Presence or Absence of Monetary Limit: 

c. Classification Based on Permanency: 

d. Classification Based on Availability for New Obligations: 

e. Reappropriation: 

B. Some Basic Concepts: 

1. What Constitutes an Appropriation: 

2. Specific versus General Appropriations: 

a. General Rule: 

b. Two Appropriations Available for Same Purpose: 

3. Transfer and Reprogramming: 

a. Transfer: 

b. Reprogramming: 

4. General Provisions: When Construed as Permanent Legislation: 

C. Relationship of Appropriations to Other Types of Legislation: 

1. Distinction between Authorization and Appropriation: 

2. Specific Problem Areas and the Resolution of Conflicts: 

a. Introduction: 

b. Variations in Amount: 

(1) Appropriation exceeds authorization: 

(2) Appropriation less than authorization: 

(3) Earmarks in authorization act: 

c. Variations in Purpose: 

d. Period of Availability: 

e. Authorization Enacted After Appropriation: 

f. Two Statutes Enacted on Same Day: 

g. Ratification by Appropriation: 

h. Repeal by Implication: 

i. Lack of Authorization: 

D. Statutory Interpretation: Determining Congressional Intent: 

1. The Goal of Statutory Construction: 

2. The "Plain Meaning" Rule: 

a. In General: 

b. The Plain Meaning Rule versus Legislative History: 

3. The Limits of Literalism: Errors in Statutes and "Absurd 
Consequences": 

a. Errors in Statutes: 

(1) Drafting errors: 

(2) Error in amount appropriated: 

b. Avoiding "Absurd Consequences": 

4. Statutory Aids to Construction: 

a. Definitions, Effective Dates, and Severability Clauses: 

b. The Dictionary Act: 

c. Effect of Codification: 

5. Canons of Statutory Construction: 

a. Construe the Statute as a Whole: 

b. Give Effect to All the Language: No "Surplusage": 

c. Apply the Common Meaning of Words: 

d. Give a Common Construction to the Same or Similar Words: 

e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not 
Controlling: 

f. Avoid Constructions That Pose Constitutional Problems: 

6. Legislative History: 

a. Uses and Limitations: 

b. Components and Their Relative Weight: 

(1) Committee reports: 

(2) Floor debates: 

(3) Hearings: 

c. Post-enactment Statements: 

d. Development of the Statutory Language: 

7. Presumptions and "Clear Statement" Rules: 

a. Presumption in Favor of Judicial Review: 

b. Presumption against Retroactivity: 

c. Federalism Presumptions: 

d. Presumption against Waiver of Sovereign Immunity: 

Chapter 2: The Legal Framework:

A. Appropriations and Related Terminology:

1. Introduction:

The reader will find it useful to have a basic understanding of certain 
appropriations law terminology that will be routinely encountered 
throughout this publication. Some of our discussion will draw upon 
definitions that have been enacted into law for application in various 
budgetary contexts. Other definitions are drawn from custom and usage 
in the budget and appropriations process, in conjunction with 
administrative and judicial decisions.

In addition, 31 U.S.C. § 1112(c), previously noted in Chapter 1, 
requires the Comptroller General, in cooperation with the Treasury 
Department, Office of Management and Budget, and Congressional Budget 
Office, to maintain and publish standard terms and classifications for 
"fiscal, budget, and program information," giving particular 
consideration to the needs of the congressional budget, appropriations, 
and revenue committees. Federal agencies are required by 31 U.S.C. 
§ 1112(d) to use this standard terminology when providing information 
to Congress.

The terminology developed pursuant to this authority is published in a 
GAO booklet entitled A Glossary of Terms Used in the Federal Budget 
Process (Exposure Draft), GAO/AFMD-2.1.1 (Washington, D.C.: Jan. 1993) 
[hereinafter Glossary]. Unless otherwise noted, the terminology used 
throughout this publication is based on the Glossary.[Footnote 79] The 
following sections present some of the more important terminology in 
the budget and appropriations process. Many other terms will be defined 
in the chapters that deal specifically with them.

2. Concept and Types of Budget Authority:

Congress finances federal programs and activities by providing "budget 
authority." Budget authority is a general term referring to various 
forms of authority provided by law to enter into financial obligations 
that will result in immediate or future outlays of government funds. As 
defined by the Congressional Budget Act, "budget authority" includes:

"(i) provisions of law that make funds available for obligation and 
expenditure (other than borrowing authority), including the authority 
to obligate and expend the proceeds of offsetting receipts and 
collections;

"(ii) borrowing authority, which means authority granted to a Federal 
entity to borrow and obligate and expend the borrowed funds, including 
through the issuance of promissory notes or other monetary credits;

"(iii) contract authority, which means the making of funds available 
for obligation but not for expenditure; and:

"(iv) offsetting receipts and collections as negative budget authority, 
and the reduction thereof as positive budget authority.

"The term includes the cost for direct loan and loan guarantee 
programs, as those terms are defined by [the Omnibus Budget 
Reconciliation Act of 1990, Pub. L. No. 101-508, § 13201(a)]." 
[Footnote 80]

a. Appropriations:

Appropriations are the most common form of budget authority. As we have 
seen in Chapter 1 in our discussion of the congressional "power of the 
purse," the Constitution prohibits the withdrawal of money from the 
Treasury unless authorized in the form of an appropriation enacted by 
Congress.[Footnote 81] Thus, funds paid out of the United States 
Treasury must be accounted for by charging them to an appropriation 
provided by or derived from an act of Congress.

The term "appropriation" may be defined as:

"Authority given to federal agencies to incur obligations and to make 
payments from Treasury for specified purposes."[Footnote 82]

While other forms of budget authority may authorize the incurring of 
obligations, the authority to incur obligations by itself is not 
sufficient to authorize payments from the Treasury. See, e.g., National 
Ass'n of Regional Councils v. Costle, 564 F.2d 583, 586 (D.C. Cir. 
1977); New York Airways, Inc. v. United States, 369 F.2d 743 (Ct. Cl. 
1966). Thus, at some point if obligations are paid, they are paid by 
and from an appropriation. Section B.1 of this chapter discusses in 
more detail precisely what types of statutes constitute appropriations.

Appropriations do not represent cash actually set aside in the 
Treasury. They represent legal authority granted by Congress to incur 
obligations and to make disbursements for the purposes, during the time 
periods, and up to the amount limitations specified in the 
appropriation acts. See United States ex rel. Becker v. Westinghouse 
Savannah River Co., 305 F.3d 284 (4th Cir. 2002).

Appropriations are identified on financial documents by means of 
"account symbols," which are assigned by the Treasury Department, based 
on the number and types of appropriations an agency receives and other 
types of funds it may control. An appropriation account symbol is a 
group of numbers, or a combination of numbers and letters, which 
identifies the agency responsible for the account, the period of 
availability of the appropriation, and the specific fund 
classification. Detailed information on reading and identifying account 
symbols is contained in the Treasury Financial Manual (I TFM 2-1500). 
Specific accounts for each agency are listed in a publication entitled 
Federal Account Symbols and Titles, issued quarterly as a supplement to 
the TFM.

b. Contract Authority:

Contract authority is a form of budget authority that permits 
obligations to be incurred in advance of appropriations. Glossary at 
22. It is to be distinguished from the inherent authority to enter into 
contracts possessed by every government agency, but which depends on 
the availability of funds.

Contract authority itself is not an appropriation; it provides the 
authority to enter into binding contracts but not the funds to make 
payments under them. Therefore, contract authority must be funded (or, 
in other words, the funds needed to liquidate obligations under the 
contracts must be provided) by a subsequent appropriation (called a 
"liquidating appropriation") or by the use of receipts or offsetting 
collections authorized for that purpose. See PCL Construction Service, 
Inc. v. United States, 41 Fed. Cl. 242 (1998); National Ass'n of 
Regional Councils v. Costle, 564 F.2d 583, 586 (D.C. Cir. 1977); 
B-300167, Nov. 15, 2002; B-228732, Feb. 18, 1988.

Contract authority may be provided in appropriation acts (e.g., 
B-174839, Mar. 20, 1984) or, more commonly, in other types of 
legislation (e.g., B-228732, Feb. 18, 1988). Either way, the authority 
must be specific. 31 U.S.C. § 1301(d). As we noted in Chapter 1, one of 
the objectives of the Congressional Budget and Impoundment Control Act 
of 1974 was to provide increased control by the appropriations process 
over various forms of so-called "backdoor spending" such as contract 
authority. To this end, legislation providing new contract authority 
will be subject to a point of order in either the Senate or the House 
of Representatives unless it also provides that the new authority will 
be effective for any fiscal year only to such extent or in such amounts 
as are provided in advance in appropriation acts. 2 U.S.C. § 651(a).

Contract authority has a "period of availability" analogous to that for 
an appropriation. Unless otherwise specified, if it appears in an 
appropriation act in connection with a particular appropriation, its 
period of availability will be the same as that for the appropriation. 
If it appears in an appropriation act without reference to a particular 
appropriation, its period of availability, again unless otherwise 
specified, will be the fiscal year covered by the appropriation act. 
32 Comp. Gen. 29, 31 (1952); B-76061, May 14, 1948. See Cray Research, 
Inc. v. United States, 44 Fed. Cl. 327, 331 n.4 (1999); Costle, 
564 F.2d at 587-88. This period of availability refers to the time 
period during which the contracts must be entered into.

As noted above, appropriations constitute budget authority. An 
appropriation to liquidate contract authority, however, is not new 
budget authority, since contract authority itself constitutes new 
budget authority. This treatment is necessary to avoid counting the 
amounts twice. B-171630, Aug. 14, 1975.

Since the contracts entered into pursuant to contract authority 
constitute obligations binding on the United States, Congress has 
little practical choice but to make the necessary liquidating 
appropriations. B-228732, Feb. 18, 1988; B-226887, Sept. 17, 1987. As 
the Supreme Court has put it:

"The expectation is that appropriations will be automatically 
forthcoming to meet these contractual commitments. This mechanism 
considerably reduces whatever discretion Congress might have exercised 
in the course of making annual appropriations."

Train v. City of New York, 420 U.S. 35, 39 n.2 (1975). A failure or 
refusal by Congress to make the necessary appropriation would not 
defeat the obligation, and the party entitled to payment would most 
likely be able to recover in a lawsuit. E.g., B-211190, Apr. 5, 1983.

c. Borrowing Authority:

"Borrowing authority" is authority that permits agencies to incur 
obligations and make payments to liquidate the obligations out of 
borrowed moneys.[Footnote 83] Borrowing authority may consist of 
(a) authority to borrow from the Treasury (authority to borrow funds 
from the Treasury that are realized from the sale of public debt 
securities), (b) authority to borrow directly from the public 
(authority to sell agency debt securities), (c) authority to borrow 
from (sell agency debt securities to) the Federal Financing Bank, or 
(d) some combination of the above.

Borrowing from the Treasury is the most common form and is also known 
as "public debt financing." As a general proposition, GAO has 
traditionally expressed a preference for financing through direct 
appropriations on the grounds that the appropriations process provides 
enhanced congressional control. E.g., B-301397, Sept. 4, 2003; 
B-141869, July 26, 1961. The Congressional Budget Act met this concern 
to an extent by requiring generally that new borrowing authority, as 
with new contract authority, be limited to the extent or amounts 
provided in appropriation acts. 2 U.S.C. § 651(a). GAO has recommended 
that borrowing authority be provided only to those accounts that can 
generate enough revenue in the form of collections from nonfederal 
sources to repay their debt. U.S. General Accounting Office, Budget 
Issues: Budgeting for Federal Capital, GAO/AIMD-97-5 (Washington, D.C.: 
Nov. 12, 1996); Budget Issues: Agency Authority to Borrow Should Be 
Granted More Selectively, GAO/AFMD-89-4 (Washington, D.C.: Sept. 15, 
1989).[Footnote 84] On occasion, however, GAO has recommended borrowing 
authority when supplemental appropriations might otherwise be 
necessary. See U.S. General Accounting Office, Aviation Insurance: 
Federal Insurance Program Needs Improvements to Ensure Success, GAO/
RCED-94-151 (Washington, D.C.: July 15, 1994).

d. Monetary Credits:

A type of borrowing authority specified in the expanded definition of 
budget authority contained in the Omnibus Budget Reconciliation Act of 
1990 is monetary credits. The monetary credit is a relatively uncommon 
concept in government transactions. At the present time, it exists 
mostly in a handful of statutes authorizing the government to use 
monetary credits to acquire property such as land or mineral rights. 
Examples are the Rattlesnake National Recreation Area and Wilderness 
Act of 1980, discussed in 62 Comp. Gen. 102 (1982), and the Cranberry 
Wilderness Act, discussed in B-211306, Apr. 9, 1984.[Footnote 85]

Under the monetary credit procedure, the government does not issue a 
check in payment for the acquired property. Instead, it gives the 
seller "credits" in dollar amounts reflecting the purchase price. The 
holder may then use these credits to offset or reduce amounts it owes 
the government in other transactions that may, depending on the terms 
of the governing legislation, be related or unrelated to the original 
transaction. The statute may use the term "monetary credit" (as in the 
Cranberry legislation) or some other designation such as "bidding 
rights" (as in the Rattlesnake Act). Where this procedure is 
authorized, the acquiring agency does not need to have appropriations 
or other funds available to cover the purchase price because no cash 
disbursement is made. An analogous device authorized for use by the 
Commodity Credit Corporation is "commodity certificates."[Footnote 86]

The inclusion of monetary credits as budget authority has the effect of 
making them subject to the appropriation controls of the Congressional 
Budget Act, such as the requirements of 2 U.S.C. § 651.

e. Offsetting Receipts:

The federal government receives money from numerous sources and in 
numerous contexts. For budgetary purposes, collections are classified 
in two major categories, governmental receipts and offsetting 
collections.[Footnote 87]

Governmental receipts or budget receipts are collections resulting from 
the government's exercise of its sovereign or regulatory powers. 
Examples are tax receipts, customs duties, and court fines. Collections 
in this category are deposited in receipt accounts and are compared 
against total outlays for purposes of calculating the budget surplus or 
deficit.

Offsetting collections are collections resulting from business-type or 
market-oriented activities, such as the sale of goods or services to 
the public, and intragovernmental transactions. Their budgetary 
treatment differs from governmental receipts in that they are offset 
against (deducted from or "netted against") budget authority in 
determining total outlays. Offsetting collections are also divided into 
two major categories.[Footnote 88]

First is offsetting collections credited to appropriation or fund 
accounts. These are collections which, under specific statutory 
authority, may be deposited in an appropriation or fund account under 
the control of the receiving agency and which are then available for 
obligation by the agency subject to the purpose and time limitations of 
the receiving account.

Second is offsetting receipts. Offsetting receipts are offsetting 
collections that are deposited in a receipt account.[Footnote 89] For 
budgetary purposes, these amounts are deducted from budget authority by 
function or subfunction and by agency.[Footnote 90]

The Balanced Budget and Emergency Deficit Control Act of 1985, Pub. L. 
No. 99-177, 99 Stat. 1038 (Dec. 12, 1985), first addressed the 
budgetary treatment of offsetting receipts by adding the authority "to 
collect offsetting receipts" to the definition of budget authority. The 
expanded definition in the Omnibus Budget Reconciliation Act of 1990, 
Pub. L. No. 101-508, 104 Stat. 1388 (Nov. 5, 1990), is more explicit. 
The authority to obligate and expend the proceeds of offsetting 
receipts and collections is treated as negative budget authority. In 
addition, the reduction of offsetting receipts or collections (e.g., 
legislation authorizing an agency to forego certain collections) is 
treated as positive budget authority.[Footnote 91]

f. Loan and Loan Guarantee Authority:

A loan guarantee is any guarantee, insurance, or other pledge with 
respect to the payment of all or a part of the principal or interest on 
any debt obligation of a nonfederal borrower to a nonfederal 
lender.[Footnote 92] The government does not know whether or to what 
extent it may be required to honor the guarantee until there has been a 
default. Loan guarantees are contingent liabilities that may not be 
recorded as obligations until the contingency occurs. See 64 Comp. 
Gen. 282, 289 (1985); B-290600, July 10, 2002. See also Chapter 11.

Prior to legislation enacted in November 1990, loan guarantees were 
expressly excluded from the definition of budget authority. Budget 
authority was created only when an appropriation to liquidate loan 
guarantee authority was made.

Statutory reform of the budgetary treatment of federal credit programs 
came about in two stages. First, the Balanced Budget and Emergency 
Deficit Control Act of 1985 added a definition of "credit authority" to 
the Congressional Budget Act, specifically, "authority to incur direct 
loan obligations or to incur primary loan guarantee commitments." 
2 U.S.C. § 622(10).[Footnote 93] Any bill, resolution, or conference 
report providing new credit authority will be subject to a point of 
order unless the new authority is limited to the extent or amounts 
provided in advance in appropriation acts. 2 U.S.C. § 651(a).[Footnote 
94]

The second stage was the Federal Credit Reform Act of 1990,[Footnote 
95] effective starting with fiscal year 1992. Under this legislation, 
the "cost" of loan and loan guarantee programs is budget authority. 
Cost means the estimated long-term cost to the government of a loan or 
loan guarantee (defaults, delinquencies, interest subsidies, etc.), 
calculated on a net present value basis, excluding administrative 
costs. Except for entitlement programs (the statute notes the 
guaranteed student loan program and the veterans' home loan guaranty 
program as examples) and certain Commodity Credit Corporation programs, 
new loan guarantee commitments may be made only to the extent budget 
authority to cover their costs is provided in advance or other 
treatment is specified in appropriation acts. Appropriations of budget 
authority are to be made to "credit program accounts," and the programs 
administered from revolving nonbudgetary "financing accounts."

The Federal Credit Reform Act reflects the thrust of proposals by GAO, 
the Office of Management and Budget, the Congressional Budget Office, 
and the Senate Budget Committee. See U.S. General Accounting Office, 
Credit Reform: U.S. Needs Better Method for Estimating Cost of Foreign 
Loans and Guarantees, GAO/NSIAD/GGD-95-31 (Washington, D.C.: Dec. 19, 
1994); Credit Reform: Case-by-Case Assessment Advisable in Evaluating 
Coverage and Compliance, GAO/AIMD-94-57 (Washington, D.C.: July 28, 
1994). See also U.S. General Accounting Office, Budget Issues: 
Budgetary Treatment of Federal Credit Programs, GAO/AFMD-89-42 
(Washington, D.C.: Apr. 10, 1989) (discussion of the "net present 
value" approach to calculating costs).

3. Some Related Concepts:

a. Spending Authority:

The Congressional Budget Act of 1974 introduced the concept of 
"spending authority." The term is a collective designation for 
authority provided in laws other than appropriation acts to obligate 
the United States to make payments. It includes, to the extent budget 
authority is not provided in advance in appropriation acts, permanent 
appropriations (such as authority to spend offsetting collections), the 
nonappropriation forms of budget authority described above (e.g., 
contract authority, borrowing authority, and authority to forego 
collection of offsetting receipts), entitlement authority, and any 
other authority to make payments. 2 U.S.C. § 651(c)(2). The different 
forms of spending authority are subject to varying controls in the 
budget and appropriations process. See Chapter 1, sections C and D. For 
example, as noted previously, proposed legislation providing new 
contract authority or new borrowing authority will be subject to a 
point of order unless it limits the new authority to such extent or 
amounts as provided in appropriation acts.

Further information on spending authority may be found in two 1987 GAO 
companion reports--one a summary presentation[Footnote 96] and the 
other a detailed inventory[Footnote 97]--as well as in more recent 
updates.[Footnote 98]

b. Entitlement Authority:

Entitlement authority is statutory authority, whether temporary or 
permanent,

"to make payments (including loans and grants), the budget authority 
for which is not provided for in advance by appropriation Acts, to any 
person or government if, under the provisions of the law containing 
that authority, the United States is obligated to make such payments to 
persons or governments who meet the requirements established by that 
law."[Footnote 99]

Entitlement authority is treated as spending authority during 
congressional consideration of the budget. In order to make 
entitlements subject to the reconciliation process, the Congressional 
Budget Act provides that proposed legislation providing new entitlement 
authority to become effective prior to the start of the next fiscal 
year will be subject to a point of order. 2 U.S.C. § 651(b)(1). 
Entitlement legislation, which would require new budget authority in 
excess of the allocation made pursuant to the most recent budget 
resolution, must be referred to the appropriations committees. Id. 
§ 651(b)(2).

4. Types of Appropriations:

Appropriations are classified in different ways for different purposes. 
Some are discussed elsewhere in this publication.[Footnote 100] The 
following classifications, although phrased in terms of appropriations, 
apply equally to the broader concept of budget authority.

a. Classification Based on Duration[Footnote 101]

1. One-year appropriation: An appropriation that is available for 
obligation only during a specific fiscal year. This is the most common 
type of appropriation. It is also known as a "fiscal year" or "annual" 
appropriation.

2. Multiple year appropriation: An appropriation that is available for 
obligation for a definite period of time in excess of one fiscal year.

3. No-year appropriation: An appropriation that is available for 
obligation for an indefinite period. A no-year appropriation is usually 
identified by appropriation language such as "to remain available until 
expended."

b. Classification Based on Presence or Absence of Monetary 
Limit[Footnote 102]

1. Definite appropriation: An appropriation of a specific amount of 
money.

2. Indefinite appropriation: An appropriation of an unspecified amount 
of money. An indefinite appropriation may appropriate all or part of 
the receipts from certain sources, the specific amount of which is 
determinable only at some future date, or it may appropriate "such sums 
as may be necessary" for a given purpose.

c. Classification Based on Permanency[Footnote 103]

1. Current appropriation: An appropriation made by Congress in, or 
immediately prior to, the fiscal year or years during which it is 
available for obligation.

2. Permanent appropriation: A "standing" appropriation which, once 
made, is always available for specified purposes and does not require 
repeated action by Congress to authorize its use.[Footnote 104] 
Legislation authorizing an agency to retain and use offsetting receipts 
tends to be permanent; if so, it is a form of permanent appropriation.

d. Classification Based on Availability for New Obligations[Footnote 
105]

1. Current or unexpired appropriation: An appropriation that is 
available for incurring new obligations.

2. Expired appropriation: An appropriation that is no longer available 
to incur new obligations, although it may still be available for the 
recording and/or payment (liquidation) of obligations properly incurred 
before the period of availability expired.

3. Canceled appropriation: An appropriation whose account is closed, 
and is no longer available for obligation or expenditure for any 
purpose.

An appropriation may combine characteristics from more than one of the 
above groupings. For example, a "permanent indefinite" appropriation is 
open ended as to both period of availability and amount. Examples are 
31 U.S.C. § 1304 (payment of certain judgments against the United 
States) and 31 U.S.C. § 1322(b)(2) (refunding amounts erroneously 
collected and deposited in the Treasury).

e. Reappropriation:

The term "reappropriation" means congressional action to continue the 
availability, whether for the same or different purposes, of all or 
part of the unobligated portion of budget authority that has expired or 
would otherwise expire. Reappropriations are counted as budget 
authority in the first year for which the availability is 
extended.[Footnote 106]

B. Some Basic Concepts:

1. What Constitutes an Appropriation:

The starting point is 31 U.S.C. § 1301(d), which provides:

"A law may be construed to make an appropriation out of the Treasury or 
to authorize making a contract for the payment of money in excess of an 
appropriation only if the law specifically states that an appropriation 
is made or that such a contract may be made."

Thus, the rule is that the making of an appropriation must be expressly 
stated. An appropriation cannot be inferred or made by implication. 
E.g., 50 Comp. Gen. 863 (1971).

Regular annual and supplemental appropriation acts present no problems 
in this respect as they will be apparent on their face. They, as 
required by 1 U.S.C. § 105, bear the title "An Act making 
appropriations … ." There are situations in which statutes other than 
regular appropriation acts may be construed as making appropriations, 
however. See, e.g., 31 U.S.C. § 1304(a) ("necessary amounts are 
appropriated to pay final judgments, awards, compromise settlements"); 
31 U.S.C. § 1324 ("necessary amounts are appropriated to the Secretary 
of Treasury for refunding internal revenue collections").

An appropriation is a form of budget authority that makes funds 
available to an agency to incur obligations and make 
expenditures.[Footnote 107] 2 U.S.C. § 622(2)(A)(i). See also 
31 U.S.C. § 701(2)(C) ("authority making amounts available for 
obligation or expenditure"). Consequently, while the authority must be 
expressly stated, it is not necessary that the statute actually use the 
word "appropriation." If the statute contains a specific direction to 
pay and a designation of the funds to be used, such as a direction to 
make a specified payment or class of payments "out of any money in the 
Treasury not otherwise appropriated," then this amounts to an 
appropriation. 63 Comp. Gen. 331 (1984); 13 Comp. Gen. 77 (1933). See 
also 34 Comp. Gen. 590 (1955).

For example, a private relief act that directs the Secretary of the 
Treasury to pay, out of any money in the Treasury not otherwise 
appropriated, a specified sum of money to a named individual 
constitutes an appropriation. 23 Comp. Dec. 167, 170 (1916). Another 
example is B-160998, Apr. 13, 1978, concerning section 11 of the 
Federal Fire Prevention and Control Act of 1974,[Footnote 108] which 
authorizes the Secretary of the Treasury to reimburse local fire 
departments or districts for costs incurred in fighting fires on 
federal property. Since the statute directed the Secretary to make 
payments "from any moneys in the Treasury not otherwise appropriated" 
(i.e., it contained both the specific direction to pay and a 
designation of the funds to be used), the Comptroller General concluded 
that section 11 constituted a permanent indefinite appropriation.

Both elements of the test must be present. Thus, a direction to pay 
without a designation of the source of funds is not an appropriation. 
For example, a private relief act that contains merely an authorization 
and direction to pay but no designation of the funds to be used does 
not make an appropriation. 21 Comp. Dec. 867 (1915); B-26414, Jan. 7, 
1944.[Footnote 109] Similarly, public legislation enacted in 1978 
authorized the U.S. Treasury to make an annual prepayment to Guam and 
the Virgin Islands of the amount estimated to be collected over the 
course of the year for certain taxes, duties, and fees. While it was 
apparent that the prepayment at least for the first year would have to 
come from the general fund of the Treasury, the legislation was silent 
as to the source of the funds for the prepayments, both for the first 
year and for subsequent years. It was concluded that while the statute 
may have established a permanent authorization, it was not sufficient 
under 31 U.S.C. § 1301(d) to constitute an actual appropriation. 
B-114808, Aug. 7, 1979. (Congress subsequently made the necessary 
appropriation in Pub. L. No. 96-126, 93 Stat. 954, 966 (Nov. 27, 
1979).)

The designation of a source of funds without a specific direction to 
pay is also not an appropriation. 67 Comp. Gen. 332 (1988).

Thus far, we have been talking about the authority to make 
disbursements from the general fund of the Treasury. There is a 
separate line of decisions establishing the proposition that statutes, 
which authorize the collection of fees and their deposit into a 
particular fund, and, which make the fund available for expenditure for 
a specified purpose, constitute continuing or permanent appropriations; 
that is, the money is available for obligation or expenditure without 
further action by Congress. Often it is argued that a law making moneys 
available from some source other than the general fund of the Treasury 
is not an appropriation. This view is wrong. Statutes establishing 
revolving funds and various special deposit funds and making amounts in 
those funds available for obligation and expenditure are permanent 
appropriations. The reason is that, under 31 U.S.C. § 3302(b), all 
money received for the use of the United States must be deposited in 
the general fund of the Treasury absent statutory authority for some 
other disposition. B-271894, July 24, 1997. Once the money is in the 
Treasury, it can be withdrawn only if Congress appropriates 
it.[Footnote 110] Therefore, the authority for an agency to obligate or 
expend collections without further congressional action amounts to a 
continuing appropriation or permanent appropriation of the collections. 
E.g., United Biscuit Co. v. Wirtz, 359 F.2d 206, 212 (D.C. Cir. 1965), 
cert. denied, 384 U.S. 971 (1966); 69 Comp. Gen. 260, 262 (1990); 
73 Comp. Gen. 321 (1994).

Cases involving the "special fund" principle fall into two categories. 
In the first group, the question is whether a particular statute 
authorizing the deposit and expenditure of a class of receipts makes 
those funds available for the specified purpose or purposes without 
further congressional action. These cases, in other words, raise the 
basic question of whether the statute may be regarded as an 
appropriation. Cases answering this question in the affirmative include 
59 Comp. Gen. 215 (1980) (mobile home inspection fees collected by the 
Secretary of Housing and Urban Development); B-228777, Aug. 26, 1988 
(licensing revenues received by the Commission on the Bicentennial); 
B-204078.2, May 6, 1988, and B-257525, Nov. 30, 1994 (Panama Canal 
Revolving Fund); B-197118, Jan. 14, 1980 (National Defense Stockpile 
Transaction Fund); and B-90476, June 14, 1950. See also 1 Comp. 
Gen. 704 (1922) (revolving fund created in appropriation act remains 
available beyond end of fiscal year where not specified otherwise).

The second group of cases involves the applicability of statutory 
restrictions or other provisions that by their terms apply to 
"appropriated funds" or exemptions that apply to "nonappropriated 
funds." For example, fees collected from federal credit unions and 
deposited in a revolving fund for administrative and supervisory 
expenses have been regarded as appropriated funds for various purposes. 
63 Comp. Gen. 31 (1983), aff'd upon reconsideration, B-210657, May 25, 
1984 (payment of relocation expenses); 35 Comp. Gen. 615 (1956) 
(restrictions on reimbursement for certain telephone calls made from 
private residences). Other situations applying the "special fund as 
appropriation" principle are summarized below:

* Various funds held to constitute appropriated funds for purposes of 
GAO's bid protest jurisdiction:[Footnote 111] 65 Comp. Gen. 25 (1985) 
(funds received by National Park Service for visitor reservation 
services); 64 Comp. Gen. 756 (1985) (Tennessee Valley Authority power 
program funds); 57 Comp. Gen. 311 (1978) (commissary surcharges).

* Applicability of other procurement laws: United Biscuit Co., supra 
(Armed Services Procurement Act applicable to military commissary 
purchases); B-217281-O.M., Mar. 27, 1985 (federal procurement 
regulations applicable to Pension Benefit Guaranty Corporation 
revolving funds); B-275669.2, July 30, 1997 (American Battle Monuments 
Commission must comply with the Federal Acquisition Regulations and 
Federal Property and Administrative Services Act).

* User fee toll charges collected by the Saint Lawrence Seaway 
Development Corporation are appropriated funds. However, many of the 
restrictions on the use of appropriated funds will nevertheless be 
inapplicable by virtue of the Corporation's organic legislation and its 
status as a corporation. B-193573, Jan. 8, 1979, modified and aff'd, 
B-193573, Dec. 19, 1979; B-217578, Oct. 16, 1986. The December 1979 
decision noted that the capitalization of a government corporation, 
whether a lump-sum appropriation in the form of capital stock or the 
authority to borrow through the issuance of long-term bonds to the U.S. 
Treasury, consists of appropriated funds.

* User fees collected under the Tobacco Inspection Act are appropriated 
funds and as such are subject to restrictions on payment of employee 
health benefits. 63 Comp. Gen. 285 (1984).

* Customs Service duty collections are appropriations authorized to be 
used for administration and collection costs. B-241488, Mar. 13, 1991.

* The Prison Industries Fund is an appropriated fund subject to the 
General Services Administration's surplus property regulations. 
60 Comp. Gen. 323 (1981).

Other cases in this category are 50 Comp. Gen. 323 (1970); 35 Comp. 
Gen. 436 (1956); B-191761, Sept. 22, 1978; and B-67175, July 16, 1947. 
In each of the special fund cases cited above, the authority to make 
payments from the fund involved was clear from the governing 
legislation.

Finally, the cases cited above generally involve statutes that specify 
the fund to which the collections are to be deposited. This is not 
essential, however. A statute that clearly makes receipts available for 
obligation or expenditure without further congressional action will be 
construed as authorizing the establishment of such a fund as a 
necessary implementation procedure. 59 Comp. Gen. 215 (42 U.S.C. 
§ 5419); B-226520, Apr. 3, 1987 (nondecision letter) (26 U.S.C. 
§ 7475). See also 13 Comp. Dec. 700 (1907).

Two recent court decisions held that revolving funds do not constitute 
"appropriations" for purposes of determining whether those courts have 
jurisdiction over claims against the United States under the Tucker Act 
(28 U.S.C. § 1491). These decisions--Core Concepts of Florida, Inc. v. 
United States, 327 F.3d 1331 (Fed. Cir. 2003), petition for cert. 
filed, 72 U.S.L.W. 3148 (Aug. 18, 2003), and AINS, Inc. v. United 
States, 56 Fed. Cl. 522 (2002)--concluded that GAO's view of revolving 
funds as continuing or permanent appropriations does not apply to 
issues of Tucker Act jurisdiction.[Footnote 112] The Court of Appeals 
for the Federal Circuit, the Court of Federal Claims, and their 
predecessors traditionally hold that Tucker Act jurisdiction does not 
extend to "nonappropriated fund instrumentalities" that receive no 
traditional general revenue appropriations derived from the general 
fund of the Treasury.[Footnote 113] Core Concepts and AINS dealt only 
with the issue of Tucker Act jurisdiction in this context and have no 
bearing on the status of revolving funds in the broader appropriations 
law context discussed above.[Footnote 114]

2. Specific versus General Appropriations:

a. General Rule:

An appropriation for a specific object is available for that object to 
the exclusion of a more general appropriation, which might otherwise be 
considered available for the same object, and the exhaustion of the 
specific appropriation does not authorize charging any excess payment 
to the more general appropriation, unless there is something in the 
general appropriation to make it available in addition to the specific 
appropriation.[Footnote 115] In other words, if an agency has a 
specific appropriation for a particular item, and also has a general 
appropriation broad enough to cover the same item, it does not have an 
option as to which to use. It must use the specific appropriation. Were 
this not the case, agencies could evade or exceed congressionally 
established spending limits.

The cases illustrating this rule are legion.[Footnote 116] Generally, 
the fact patterns and the specific statutes involved are of secondary 
importance. The point is that the agency does not have an option. If a 
specific appropriation exists for a particular item, then that 
appropriation must be used and it is improper to charge the more 
general appropriation (or any other appropriation) or to use it as a 
"back-up." A few cases are summarized as examples:

* A State Department appropriation for "publication of consular and 
commercial reports" could not be used to purchase books in view of a 
specific appropriation for "books and maps." 1 Comp. Dec. 126 (1894). 
The Comptroller of the Treasury referred to the rule as having been 
well established "from time immemorial." Id. at 127.

* The existence of a specific appropriation for the expenses of 
repairing the U.S. courthouse and jail in Nome, Alaska, precludes the 
charging of such expenses to more general appropriations such as 
"Miscellaneous expenses, U.S. Courts" or "Support of prisoners, U.S. 
Courts." 4 Comp. Gen. 476 (1924).

* A specific appropriation for the construction of an additional wing 
on the Navy Department Building could not be supplemented by a more 
general appropriation to build a larger wing desired because of 
increased needs. 20 Comp. Gen. 272 (1940). See B-235086, Apr. 24, 1991 
(a specific appropriation for the construction and acquisition of a 
building precludes the Forest Service from using a more general 
appropriation to pay for such a purchase). See also B-278121, Nov. 7, 
1997.

* Appropriations of the District of Columbia Health Department could 
not be used to buy penicillin to be used for Civil Defense purposes 
because the District had received a specific appropriation for "all 
expenses necessary for the Office of Civil Defense." 31 Comp. Gen. 491 
(1952).

Further, the fact that an appropriation for a specific purpose is 
included as an earmark in a general appropriation does not deprive it 
of its character as an appropriation for the particular purpose 
designated, and where such specific appropriation is available for the 
expenses necessarily incident to its principal purpose, such incidental 
expenses may not be charged to the more general appropriation. 20 Comp. 
Gen. 739 (1941). In the cited decision, a general appropriation for the 
Geological Survey contained the provision "including not to exceed 
$45,000 for the purchase and exchange … of … passenger-carrying 
vehicles." It was held that the costs of transportation incident to the 
delivery of the purchased vehicles were chargeable to the specific 
$45,000 appropriation and not to the more general portion of the 
appropriation. Similarly, a general appropriation for the Library of 
Congress contained the provision, "$9,619,000 is to remain available 
until expended for the acquisition of books, periodicals, newspapers 
and all other materials… ." The Comptroller General held that the 
$9,619,000 was an earmark requiring the Library to set aside that money 
to purchase books and other library materials. The earmark barred the 
Library from transferring or using those funds for another purpose. 
B-278121, supra. In deciding the proper appropriation to charge for 
administrative costs for Oil Pollution Act claims, the Comptroller 
General stated, "As a general rule, an appropriation for a specific 
object is available for that object to the exclusion of a more general 
appropriation which might otherwise be considered for the same object." 
B-289209, supra (citing 65 Comp. Gen. 881 (1986)); B-290005, July 1, 
2002.

The rule has also been applied to expenditures by a government 
corporation from corporate funds for an object for which the 
corporation had received a specific appropriation, where the reason for 
using corporate funds was to avoid a restriction applicable to the 
specific appropriation. B-142011, June 19, 1969.

Of course, the rule that the specific governs over the general is not 
peculiar to appropriation law. It is a general principle of statutory 
construction and applies equally to provisions other than appropriation 
statutes. E.g., 62 Comp. Gen. 617 (1983); B-277905, Mar. 17, 1998; 
B-152722, Aug. 16, 1965. However, another principle of statutory 
construction is that two statutes should be construed harmoniously so 
as to give maximum effect to both wherever possible. In dealing with 
nonappropriation statutes, the relationship between the two principles 
has been stated as follows:

"Where there is a seeming conflict between a general provision and a 
specific provision and the general provision is broad enough to include 
the subject to which the specific provision relates, the specific 
provision should be regarded as an exception to the general provision 
so that both may be given effect, the general applying only where the 
specific provision is inapplicable."

B-163375, Sept. 2, 1971. See also B-255979, Oct. 30, 1995.

As stated before, however, in the appropriations context, this does not 
mean that a general appropriation is available when the specific 
appropriation has been exhausted. Using the more general appropriation 
would be an unauthorized transfer (discussed later in this chapter) and 
would improperly augment the specific appropriation (discussed in 
Chapter 6).

b. Two Appropriations Available for Same Purpose:

Although rare, there are situations in which either of two 
appropriations can be construed as available for a particular object, 
but neither can reasonably be called the more specific of the two. The 
rule in this situation is this: Where two appropriations are available 
for the same purpose, the agency may select which one to charge for the 
expenditure in question. Once that election has been made, the agency 
must continue to use the same appropriation for that purpose unless the 
agency at the beginning of the fiscal year informs the Congress of its 
intent to change for the next fiscal year. See U.S. General Accounting 
Office, Unsubstantiated DOE Travel Payments, GAO/RCED-96-58R 
(Washington, D.C.: Dec. 28, 1995). Of course, where statutory language 
clearly demonstrates congressional intent to make one appropriation 
available to supplement or increase a different appropriation for the 
same type of work, both appropriations are available. See B-272191, 
Nov. 4, 1997 (Army permitted to use Operations and Maintenance (O&M) 
funds for property maintenance and repair work in Germany even though 
Real Property Maintenance, Defense (RPM,D) funds were available for the 
same work because Congress said the O&M funds were "in addition to the 
funds specifically appropriated for real property maintenance under the 
heading [RPM,D]").

3. Transfer and Reprogramming:

For a variety of reasons, agencies have a legitimate need for a certain 
amount of flexibility to deviate from their budget estimates. Two ways 
to shift money are transfer and reprogramming. While the two concepts 
are related in this broad sense, they are nevertheless different.

a. Transfer:

Transfer is the shifting of funds between appropriations.[Footnote 117] 
For example, if an agency receives one appropriation for Operations and 
Maintenance and another for Capital Expenditures, a shifting of funds 
from either one to the other is a transfer.

The basic rule with respect to transfer is simple: Transfer is 
prohibited without statutory authority. The rule applies equally to 
(1) transfers from one agency to another,[Footnote 118] (2) transfers 
from one account to another within the same agency,[Footnote 119] and 
(3) transfers to an interagency or intra-agency working fund.[Footnote 
120] In each instance, statutory authority is required. An agency's 
erroneous characterization of a proposed transfer as a "reprogramming" 
is irrelevant. See B-202362, Mar. 24, 1981. Moreover, informal 
congressional approval of an unauthorized transfer of funds between 
appropriation accounts does not have the force and effect of law. 
B-248284.2, Sept. 1, 1992.

The rule applies even though the transfer is intended as a temporary 
expedient (for example, to alleviate a temporary exhaustion of funds) 
and the agency contemplates reimbursement. Thus, without statutory 
authority, an agency cannot "borrow" from another account or another 
agency. 36 Comp. Gen. 386 (1956); 13 Comp. Gen. 344 (1934); B-290011, 
Mar. 25, 2002. An exception to this proposition is 31 U.S.C. § 1534, 
under which an agency may temporarily charge one appropriation for an 
expenditure benefiting another appropriation of the same agency, as 
long as amounts are available in both appropriations and the accounts 
are adjusted to reimburse the appropriation initially charged during or 
as of the close of the same fiscal year. This statute was intended to 
facilitate "common service" activities. For example, an agency 
procuring equipment to be used jointly by several bureaus or offices 
within the agency funded under separate appropriations may initially 
charge the entire cost to a single appropriation and later apportion 
the cost among the appropriations of the benefiting components. See 
generally S. Rep. No. 89-1284 (1966).

The prohibition against transfer is codified in 31 U.S.C. § 1532, the 
first sentence of which provides:

"An amount available under law may be withdrawn from one appropriation 
account and credited to another or to a working fund only when 
authorized by law."

In addition to the express prohibition of 31 U.S.C. § 1532, an 
unauthorized transfer would violate 31 U.S.C. § 1301(a) (which 
prohibits the use of appropriations for other than their intended 
purpose); would constitute an unauthorized augmentation of the 
receiving appropriation; and could, if the transfer led to 
overobligating the receiving appropriation, result in an Antideficiency 
Act (31 U.S.C. § 1341) violation as well. E.g., B-286929, Apr. 25, 
2001; B-248284.2, Sept. 1, 1992; B-222009-O.M., Mar. 3, 1986; 15 Op. 
Off. Legal Counsel 74 (1991).

Some agencies have limited transfer authority either in permanent 
legislation or in appropriation act provisions. Such authority will 
commonly set a percentage limit on the amount that may be transferred 
from a given appropriation and/or the amount by which the receiving 
appropriation may be augmented. A transfer pursuant to such authority 
is, of course, entirely proper. B-290659, Oct. 31, 2002; B-167637, 
Oct. 11, 1973. An example is 7 U.S.C. § 2257, which authorizes 
transfers between Department of Agriculture appropriations. The amount 
to be transferred may not exceed 7 percent of the "donor" 
appropriation, and the receiving appropriation may not be augmented by 
more than 7 percent except in extraordinary emergencies. Cases 
construing this provision include 33 Comp. Gen. 214; B-218812, Jan. 23, 
1987; B-123498, Apr. 11, 1955; and B-218812-O.M., July 30, 1985. See 
also B-279886, Apr. 28, 1998 (noting 5 percent limit on transfer in 
Department of Justice appropriation).

If an agency has transfer authority of this type, its exercise is not 
precluded by the fact that the amount of the receiving appropriation 
had been reduced from the agency's budget request. B-151157, June 27, 
1963. Also, the transfer statute is an independent grant of authority 
and, unless expressly provided otherwise, the percentage limitations do 
not apply to transfers under any separate transfer authority the agency 
may have. B-239031, June 22, 1990.

Another type of transfer authority is illustrated by 31 U.S.C. § 1531, 
which authorizes the transfer of unexpended balances incident to 
executive branch reorganizations, but only for purposes for which the 
appropriation was originally available. Cases discussing this authority 
include 31 Comp. Gen. 342 (1952) and B-92288 et al., Aug. 13, 1971.

Statutory transfer authority does not require any particular "magic 
words." Of course the word "transfer" will help, but it is not 
necessary as long as the words that are used make it clear that 
transfer is being authorized. B-213345, Sept. 26, 1986; B-217093, 
supra; B-182398, Mar. 29, 1976 (letter to Senator Laxalt), modified on 
other grounds by 64 Comp. Gen. 370 (1985).

Some transfer statutes have included requirements for approval by one 
or more congressional committees. In light of the Supreme Court's 
decision in Immigration & Naturalization Service v. Chadha, 462 U.S. 
919 (1983), such "legislative veto" provisions are no longer valid. 
Whether the transfer authority to which the veto provision is attached 
remains valid depends on whether it can be regarded as severable from 
the approval requirement. This in turn depends on an evaluation, in 
light of legislative history and other surrounding circumstances, of 
whether Congress would have enacted the substantive authority without 
the veto provision. See, e.g., 15 Op. Off. Legal Counsel 49 (1991) (the 
Justice Department Office of Legal Counsel (OLC) concluded that an 
unconstitutional legislative veto provision of the Selective Service 
Act was severable from the statute's grant of authority to the 
President to obtain expedited delivery of military contracts); 6 Op. 
Off. Legal Counsel 520 (1982) (OLC concluded that a Treasury Department 
transfer provision was severable and therefore survived a legislative 
veto provision).

The precise parameters of transfer authority will, of course, depend on 
the terms of the statute which grants it. The analytical starting point 
is the second sentence of 31 U.S.C. § 1532:

"Except as specifically provided by law, an amount authorized to be 
withdrawn and credited [to another appropriation account or to a 
working fund] is available for the same purpose and subject to the same 
limitations provided by the law appropriating the amount."

In a 2001 decision, the Comptroller General found that funds withdrawn 
from other agencies' appropriations and credited to the Library of 
Congress FEDLINK[Footnote 121] revolving fund retained their time 
character and did not assume the time character of the FEDLINK 
revolving fund. B-288142, Sept. 6, 2001. The Library of Congress 
proposed retaining in the fund amounts of fiscal year money advanced by 
other agencies in earlier fiscal years when orders were placed and, to 
the extent the advances were not needed to cover the costs of the 
orders, applying the excess amounts to new orders placed in subsequent 
fiscal years. The Library pointed out that the law establishing the 
revolving fund made amounts in the fund available without fiscal year 
limitation. The Comptroller General concluded that "amounts withdrawn 
from a fiscal year appropriation and credited to a no year revolving 
fund, such as the FEDLINK revolving fund, are available for obligation 
only during the fiscal year of availability of the appropriation from 
which the amount was withdrawn." Id. The Comptroller General noted that 
section 1532 is a significant control feature protecting Congress's 
constitutional prerogatives of the purse. Placing time limits on the 
availability of appropriations is a fundamental means of congressional 
control because it permits Congress to periodically review a given 
agency's programs and activities. Given the significance of time 
restrictions in preserving congressional powers of the purse, GAO looks 
for clear legislative expressions of congressional intent before 
interpreting legislation to override time limitations that Congress, 
through the appropriations process, has imposed on an agency's use of 
funds. The Comptroller General rejected the Library's view that the 
language in the FEDLINK statute overrode the time limitation imposed on 
funds transferred into FEDLINK because, until the Library had earned 
those amounts by performing the services ordered from the Library, 
these transferred amounts were not a part of the corpus of FEDLINK. Id.

The FEDLINK decision references a situation that GAO addressed in 1944 
with regard to a no-year revolving fund called the Navy Procurement 
Fund. 23 Comp. Gen. 668 (1944). The Navy incorrectly believed that 
because the revolving fund was not subject to fiscal year limitation, 
advances to the fund made from annual appropriations were available 
until expended. A number of other GAO decisions, several predating the 
enactment of 31 U.S.C. § 1532, have made essentially the same point--
that, except to the extent the statute authorizing a transfer provides 
otherwise, transferred funds are available for purposes permissible 
under the donor appropriation and are subject to the same limitations 
and restrictions applicable to the donor appropriation. An example of 
this is the Economy Act, 31 U.S.C. § 1535.[Footnote 122]

Restrictions applicable to the receiving account but not to the donor 
account may or may not apply. Where transfers are intended to 
accomplish a purpose of the source appropriation (Economy Act 
transactions, for example), transferred funds have been held not 
subject to such restrictions. E.g., 21 Comp. Gen. 254 (1941); 18 Comp. 
Gen. 489 (1938); B-35677, July 27, 1943; B-131580-O.M., June 4, 1957. 
However, for transfers intended to permit a limited augmentation of the 
receiving account (7 U.S.C. § 2257, for example), this principle is 
arguably inapplicable in view of the fundamentally different purpose of 
the transfer.

As noted above, in the context of working funds, the prohibition 
against transfer applies not only to interagency funds, but to the 
consolidation of all or parts of different appropriations of the same 
agency into a single fund as well. In a few instances, the "pooling" of 
portions of agency unit appropriations has been found authorized where 
necessary to implement a particular statute. In B-195775, Sept. 10, 
1979, the Comptroller General approved the transfer of portions of unit 
appropriations to an agencywide pool to be used to fund the Merit Pay 
System established by the Civil Service Reform Act of 1978. The 
transfers, while not explicitly authorized in the statute, were seen as 
necessary to implement the law and carry out the legislative purpose. 
Following this decision, the Comptroller General held in 60 Comp. 
Gen. 686 (1981) that the Treasury Department could pool portions of 
appropriations made to several separate bureaus to fund an Executive 
Development Program also authorized by the Civil Service Reform Act. 
However, pooling that would alter the purposes for which funds were 
appropriated is an impermissible transfer unless authorized by statute. 
E.g., B-209790-O.M., Mar. 12, 1985. It is also impermissible to 
transfer more than the cost of the goods or services provided to an 
ordering agency. 70 Comp. Gen. 592, 595 (1991).

The reappropriation of an unexpended balance for a different purpose is 
a form of transfer. Such funds cease to be available for the purposes 
of the original appropriation. 18 Comp. Gen. 564 (1938); A-79180, 
July 30, 1936. Cf. 31 U.S.C. § 1301(b) (reappropriation for different 
purpose to be accounted for as a new appropriation). If the 
reappropriation is of an amount "not to exceed" a specified sum, and 
the full amount is not needed for the new purpose, the balance not 
needed reverts to the source appropriation. 18 Comp. Gen. at 565.

The prohibition against transfer would not apply to "transfers" of an 
agency's administrative allocations within a lump-sum appropriation 
since the allocations are not legally binding.[Footnote 123] This is a 
reprogramming, which we discuss below. Thus, where the then Department 
of Health, Education, and Welfare received a lump-sum appropriation 
covering several grant programs, it could set aside a portion of each 
program's allocation for a single fund to be used for "cross-cutting" 
grants intended to serve more than one target population, as long as 
the grants were for projects within the scope or purpose of the lump-
sum appropriation. B-157356, Aug. 17, 1978.

b. Reprogramming:

In 1985, the Deputy Secretary of Defense made the following statement:

"The defense budget does not exist in a vacuum. There are forces at 
work to play havoc with even the best of budget estimates. The economy 
may vary in terms of inflation; political realities may bring external 
forces to bear; fact-of-life or programmatic changes may occur. The 
very nature of the lengthy and overlapping cycles of the budget process 
poses continual threats to the integrity of budget estimates. 
Reprogramming procedures permit us to respond to these unforeseen 
changes and still meet our defense requirements."[Footnote 124]

The thrust of this statement, while made from the perspective of the 
Defense Department, applies at least to some extent to all agencies.

Reprogramming is the utilization of funds in an appropriation account 
for purposes other than those contemplated at the time of 
appropriation.[Footnote 125] In other words, it is the shifting of 
funds from one object to another within an appropriation. The term 
"reprogramming" appears to have come into use in the mid-1950s although 
the practice, under different names, predates that time.[Footnote 126]

The authority to reprogram is implicit in an agency's responsibility to 
manage its funds; no statutory authority is necessary. See Lincoln v. 
Vigil, 508 U.S. 182, 192 (1993) ("After all, the very point of a lump-
sum appropriation is to give an agency the capacity to adapt to 
changing circumstances and meet its statutory responsibilities in what 
it sees as the most effective or desirable way."). See also 4B Op. Off. 
Legal Counsel 701 (1980) (discussing the Attorney General's authority 
to reprogram to avoid deficiencies); B-196854.3, Mar. 19, 1984 
(Congress is "implicitly conferring the authority to reprogram" by 
enacting lump-sum appropriations). Indeed, reprogramming is usually a 
nonstatutory arrangement. This means that there is no general statutory 
provision either authorizing or prohibiting it, and it has evolved 
largely in the form of informal (i.e., nonstatutory) agreements between 
various agencies and their congressional oversight committees. These 
informal arrangements do not have the force and effect of law. 
Blackhawk Heating & Plumbing Co. v. United States, 622 F.2d 539, 548 
(Ct. Cl. 1980). See also 56 Comp. Gen. 201 (1976), holding that the 
Navy's failure to complete a form required by Defense Department 
reprogramming regulations was not sufficient to support a claim for 
proposal preparation costs by an unsuccessful bidder upon cancellation 
of the proposal.

Thus, as a matter of law, an agency is free to reprogram unobligated 
funds as long as the expenditures are within the general purpose of the 
appropriation and are not in violation of any other specific limitation 
or otherwise prohibited. E.g., B-123469, May 9, 1955; B-279338, Jan. 4, 
1999. This is true even though the agency may already have 
administratively allotted the funds to a particular object. 20 Comp. 
Gen. 631 (1941). In some situations, the agency's discretion may rise 
to the level of a duty. E.g., Blackhawk Heating & Plumbing, 622 F.2d at 
552 n.9 (satisfaction of obligations under a settlement agreement).

There are at present no reprogramming guidelines applicable to all 
agencies. As one might expect, reprogramming policies, procedures, and 
practices vary considerably among agencies.[Footnote 127] In view of 
the nature of its activities and appropriation structure, the Defense 
Department has detailed and sophisticated procedures.[Footnote 128]

In some cases, Congress has attempted to regulate reprogramming by 
statute, and of course any applicable statutory provisions control. 
B-283599.2, Sept. 29, 1999; B-279886, Apr. 28, 1998; B-164912-O.M., 
supra. For example, a provision in the fiscal year 2002 Defense 
Department appropriation act prohibits the use of funds to prepare or 
present a reprogramming request to the Appropriations Committees "where 
the item for which reprogramming is requested has been denied by the 
Congress."[Footnote 129] The Comptroller General has construed this 
provision as prohibiting a reprogramming request that would have the 
effect of restoring funds which had been specifically deleted in the 
legislative process; that is, the provision is not limited to the 
denial of an entire project. See U.S. General Accounting Office, 
Legality of the Navy's Expenditures for Project Sanguine During Fiscal 
Year 1974, LCD-75-315 (Washington, D.C.: Jan. 20, 1975).

Under Defense's arrangement as reflected in its written instructions, 
reprogramming procedures apply to funding shifts between program 
elements, but not to shifts within a program element. Thus, the denial 
of a request to reprogram funds from one program element to another 
does not preclude a military department from shifting available funds 
within the element. 65 Comp. Gen. 360 (1986). The level at which 
reprogramming procedures and restrictions will apply depends on 
applicable legislation, if any, and the arrangements an agency has 
worked out with its respective committees.

In the absence of a statutory provision such as the Defense provision 
noted above, a reprogramming that has the effect of restoring funds 
deleted in the legislative process has been held not legally 
objectionable. B-195269, Oct. 15, 1979.

Reprogramming frequently involves some form of notification to the 
appropriations and/or legislative committees. In a few cases, the 
notification process is prescribed by statute. However, in most cases, 
the committee review process is nonstatutory and derives from 
instructions in committee reports, hearings, or other correspondence. 
Sometimes, in addition to notification, reprogramming arrangements also 
provide for committee approval. As in the case of transfer, under the 
Supreme Court's decision in Immigration & Naturalization Service v. 
Chadha, 462 U.S. 919 (1983), statutory committee approval or veto 
provisions are no longer permissible. However, an agency may continue 
to observe committee approval procedures as part of its informal 
arrangements, although they would not be legally binding. B-196854.3, 
supra.

In sum, reprogramming procedures provide an element of congressional 
control over spending flexibility short of resort to the full 
legislative process. They are for the most part nonbinding, and 
compliance is largely a matter of "keeping faith" with the pertinent 
committees.

4. General Provisions: When Construed as Permanent Legislation:

Appropriation acts, in addition to making appropriations, frequently 
contain a variety of provisions either restricting the availability of 
the appropriations or making them available for some particular use. 
Such provisions come in two forms: (a) "provisos" attached directly to 
the appropriating language and (b) general provisions. A general 
provision may apply solely to the act in which it is contained ("No 
part of any appropriation contained in this Act shall be used …"), or 
it may have general applicability ("No part of any appropriation 
contained in this or any other Act shall be used …").[Footnote 130] 
General provisions may be phrased in the form of restrictions or 
positive authority.

Provisions of this type are no less effective merely because they are 
contained in appropriation acts. It is settled that Congress may 
repeal, amend, or suspend a statute by means of an appropriation bill, 
so long as its intention to do so is clear. Robertson v. Seattle 
Audubon Society, 503 U.S. 429, 440 (1992); McHugh v. Rubin, 220 F.3d 
53, 57 (2nd Cir. 2000); see also United States v. Dickerson, 310 U.S. 
554 (1940); Cella v. United States, 208 F.2d 783, 790 (7th Cir. 1953), 
cert. denied, 347 U.S. 1016 (1954); NLRB v. Thompson Products, Inc., 
141 F.2d 794, 797 (9th Cir. 1944); B-300009, July 1, 2003; 41 Op. Att'y 
Gen. 274, 276 (1956).

Congress likewise can enact general or permanent legislation in 
appropriation acts, but again its intent to do so must be clear. This 
point was made as follows in Building & Construction Trades Department, 
AFL-CIO v. Martin, 961 F.2d 269, 273 (D.C. Cir.), cert. denied, 
506 U.S. 915 (1992):

"While appropriations are 'Acts of Congress' which can substantively 
change existing law, there is a very strong presumption that they do 
not … and that when they do, the change is only intended for one fiscal 
year."

In Atlantic Fish Spotters Ass'n v. Evans, 321 F.3d 220, 224 (1st Cir. 
2003), the court cautioned:

"Congress may create permanent, substantive law through an 
appropriations bill only if it is clear about its intentions. Put 
another way, Congress cannot rebut the presumption against permanence 
by sounding an uncertain trumpet."

As noted in Chapter 1, rules of both the Senate and the House of 
Representatives prohibit "legislating" in appropriation acts. However, 
this merely subjects the provision to a point of order and does not 
affect the validity of the legislation if the point of order is not 
raised, or is raised and not sustained. Thus, once a given provision 
has been enacted into law, the question of whether it is "general 
legislation" or merely a restriction on the use of an appropriation, 
that is, whether it might have been subject to a point of order, is 
academic.

This section deals with the question of when provisos or general 
provisions appearing in appropriation acts can be construed as 
permanent legislation.

Since an appropriation act is made for a particular fiscal year, the 
starting presumption is that everything contained in the act is 
effective only for the fiscal year covered. Thus, the rule is: A 
provision contained in an annual appropriation act is not to be 
construed to be permanent legislation unless the language used therein 
or the nature of the provision makes it clear that Congress intended it 
to be permanent. The presumption can be overcome if the provision uses 
language indicating futurity or if the provision is of a general 
character bearing no relation to the object of the appropriation. 
65 Comp. Gen. 588 (1986); 62 Comp. Gen. 54 (1982); 36 Comp. Gen. 434 
(1956); 32 Comp. Gen. 11 (1952); 24 Comp. Gen. 436 (1944); 10 Comp. 
Gen. 120 (1930); 5 Comp. Gen. 810 (1926); 7 Comp. Dec. 838 (1901).

In analyzing a particular provision, the starting point in ascertaining 
Congress's intent is, as it must be, the language of the statute. The 
question to ask is whether the provision uses "words of futurity." The 
most common word of futurity is "hereafter" and provisions using this 
term have often been construed as permanent. For specific examples, see 
Cella v. United States, 208 F.2d at 790; 70 Comp. Gen. 351 (1991); 
26 Comp. Gen. 354, 357 (1946); 2 Comp. Gen. 535 (1923); 11 Comp. 
Dec. 800 (1905); B-108245, Mar. 19, 1952; B-100983, Feb. 8, 1951; 
B-76782, June 10, 1948. However, use of the word hereafter may not 
guarantee that an appropriation act provision will be found to 
constitute permanent law. Thus, in Auburn Housing Authority v. 
Martinez, 277 F.3d 138 (2nd Cir. 2002), the court declined to give 
permanent effect to a provision that included the word hereafter. The 
court acknowledged that hereafter generally denoted futurity, but held 
that this was not sufficient to establish permanence in the 
circumstances of that case. To read hereafter as giving permanence to 
one provision would have resulted in repealing another provision 
enacted in the same act.[Footnote 131] The court concluded that this 
result was not what Congress had intended.

As Auburn Housing Authority indicates, mere use of the word hereafter 
may not be adequate as an indication of future effect to establish 
permanence. Other facts such as the precise location of the word 
hereafter and the sense in which it is used are also important. 
Moreover, the use of the word hereafter may not be sufficient, for 
example, if it appears only in an exception clause and not in the 
operative portion of the provision, B-228838, Sept. 16, 1987, or if it 
is used in a way that does not necessarily connote futurity beyond the 
end of the fiscal year. Williams v. United States, 240 F.3d 1019, 1063 
(Fed. Cir. 2001).

Words of futurity other than hereafter have also been deemed 
sufficient. Thus, there is no significant difference in meaning between 
hereafter and "after the date of approval of this act." 65 Comp. Gen. 
at 589; 36 Comp. Gen. at 436; B-209583, Jan. 18, 1983. Using a specific 
date rather than a general reference to the date of enactment produces 
the same result. B-287488, June 19, 2001; B-57539, May 3, 1946. 
"Henceforth" may also do the job. B-209583, supra. So may specific 
references to future fiscal years. B-208354, Aug. 10, 1982. On the 
other hand, the word "hereinafter" was not considered synonymous with 
hereafter by the First Circuit Court of Appeals and was not deemed to 
establish a permanent provision. Atlantic Fish Spotters Ass'n, supra. 
Rather, the court held that hereinafter is universally understood to 
refer only to what follows in the same writing (i.e., statute). 321 
F.3d at 225-26.

In 24 Comp. Gen. 436, the Comptroller General viewed the words "at any 
time" as words of futurity in a provision which authorized reduced 
transportation rates to military personnel who were "given furloughs at 
any time." In that decision, however, the conclusion of permanence was 
further supported by the fact that Congress appropriated funds to carry 
out the provision in the following year as well and did not repeat the 
provision but merely referred to it.

The words "or any other act" in a provision addressing funds 
appropriated in or made available by "this or any other act" are not 
words of futurity. They merely refer to any other appropriation act for 
the same fiscal year. Williams v. United States, 240 F.3d at 1063; 
65 Comp. Gen. 588; B-230110, Apr. 11, 1988; B-228838, supra; B-145492, 
Sept. 21, 1976.[Footnote 132] See also A-88073, Aug. 19, 1937 ("this or 
any other appropriation"). Similarly, the words "notwithstanding any 
other provision of law" are not words of futurity and, standing alone, 
offer no indication as to the duration of the provision. B-271412, 
June 13, 1996; B-208705, Sept. 14, 1982.

The words "this or any other act" may be used in conjunction with other 
language that makes the result, one way or the other, indisputable. The 
provision is clearly not permanent if the phrase "during the current 
fiscal year" is added. Norcross v. United States, 142 Ct. Cl. 763 
(1958). Addition of the phrase "with respect to any fiscal year" makes 
the provision permanent. B-230110, supra.

If words of futurity indicate permanence, it follows that a proviso or 
general provision that does not contain words of futurity will 
generally not be construed as permanent. 65 Comp. Gen. 588; 32 Comp. 
Gen. 11; 20 Comp. Gen. 322 (1940); 10 Comp. Gen. 120; 5 Comp. Gen. 810; 
3 Comp. Gen. 319 (1923); B-209583, supra; B-208705, supra; B-66513, 
May 26, 1947; A-18614, May 25, 1927. The courts have applied the same 
analysis. See United States v. Vulte, 233 U.S. 509, 514 (1914); 
Minis v. United States, 40 U.S. (15 Pet.) 423 (1841); Bristol-Myers 
Squibb Company v. Royce Laboratories, Inc., 69 F.3d 1130, 1136 (Fed. 
Cir. 1995); United States v. International Business Machines Corp., 892 
F.2d 1006, 1009 (Fed. Cir. 1989); NLRB v. Thompson Products, Inc., 
supra; City of Hialeah v. United States Housing Authority, 340 F. Supp. 
885 (S.D. Fla. 1971).

In particular, the absence of the word hereafter is viewed as telling 
evidence that Congress did not intend a provision to be permanent. 
E.g., Building & Construction Trades Department, 961 F.2d at 273; 
International Business Machines Corp., supra; Department of Justice, 
Office of Legal Counsel Memorandum for James S. Gilliland, General 
Counsel, Department of Agriculture, Severability and Duration of 
Appropriations Rider Concerning Frozen Poultry Regulations, June 4, 
1996. For example, the court in Building & Construction Trades 
Department concluded that the absence of the word hereafter in an 
appropriation provision was more significant than the inclusion of 
other language that might have indicated permanence.

As the preceding paragraphs indicate, the language of the statute is 
the crucial determinant. However, other factors may also be taken into 
consideration. Thus, the repeated inclusion of a provision in annual 
appropriation acts indicates that it is not considered or intended by 
Congress to be permanent. 32 Comp. Gen. 11; 10 Comp. Gen. 120; 
B-270723, Apr. 15, 1996; A-89279, Oct. 26, 1937; 41 Op. Att'y Gen. at 
279-80. However, where adequate words of futurity exist, the repetition 
of a provision in the following year's appropriation act has been 
viewed simply as an "excess of caution." 36 Comp. Gen. at 436. This 
factor is of limited usefulness, since the failure to repeat in 
subsequent appropriation acts a provision that does not contain words 
of futurity can also be viewed as an indication that Congress did not 
consider it to be permanent and simply did not want it to continue. See 
18 Comp. Gen. 37 (1938); A-88073, supra. Thus, if the provision does 
not contain words of futurity, then repetition or nonrepetition lead to 
the same result--that the provision is not permanent. If the provision 
does contain words of futurity, then nonrepetition indicates permanence 
but repetition, although it suggests nonpermanence, is inconclusive.

The inclusion of a provision in the United States Code is relevant as 
an indication of permanence but is not controlling. 36 Comp. Gen. 434; 
24 Comp. Gen. 436. Failure to include a provision in the Code would 
appear to be of no significance. A reference by the codifiers to the 
failure to reenact a provision suggests nonpermanence. 41 Op. Att'y 
Gen. at 280-81.

Legislative history is also relevant, but has been used for the most 
part to support a conclusion based on the presence or absence of words 
of futurity. See Cella v. United States, 208 F.2d at 790 n.1; NLRB v. 
Thompson Products, 141 F.2d at 798; 65 Comp. Gen. 588; B-277719, 
Aug. 20, 1997; B-209583, supra; B-208705, supra; B-108245, supra; 
B-57539, supra. In B-192973, Oct. 11, 1978, a general provision 
requiring the submission of a report "annually to the Congress" was 
held not permanent in view of conflicting expressions of congressional 
intent. Legislative history by itself has not been used to find 
futurity where it is missing in the statutory language. See Building & 
Construction Trades Department, 961 F.2d at 274.

The degree of relationship between a given provision and the object of 
the appropriation act in which it appears or the appropriating language 
to which it is appended is a factor to be considered. If the provision 
bears no direct relationship to the appropriation act in which it 
appears, this is an indication of permanence. For example, a provision 
prohibiting the retroactive application of an energy tax credit 
provision in the Internal Revenue Code was found sufficiently unrelated 
to the rest of the act in which it appeared, a supplemental 
appropriations act, to support a conclusion of permanence. B-214058, 
Feb. 1, 1984. See also 62 Comp. Gen. at 56; 32 Comp. Gen. 11; 26 Comp. 
Gen. at 357; B-37032, supra; A-88073, supra. The closer the 
relationship, the less likely it is that the provision will be viewed 
as permanent. A determination under rules of the Senate that a proviso 
is germane to the subject matter of the appropriation bill will negate 
an argument that the proviso is sufficiently unrelated as to suggest 
permanence. B-208705, supra.

The phrasing of a provision as positive authorization rather than a 
restriction on the use of an appropriation is an indication of 
permanence, but usually has been considered in conjunction with a 
finding of adequate words of futurity. 36 Comp. Gen. 434; 24 Comp. 
Gen. 436. An early decision, 17 Comp. Dec. 146 (1910), held a proviso 
to be permanent based solely on the fact that it was not phrased as a 
restriction on the use of the appropriation to which it was attached, 
but this decision seems inconsistent with the weight of authority and 
certainly with the Supreme Court's decision in Minis v. United States, 
cited above.

Finally, a provision may be construed as permanent if construing it as 
temporary would render the provision meaningless or produce an absurd 
result. 65 Comp. Gen. 352 (1986); 62 Comp. Gen. 54; B-200923, Oct. 1, 
1982. These decisions dealt with a general provision designed to 
prohibit cost-of-living pay increases for federal judges "except as may 
be specifically authorized by Act of Congress hereafter enacted." Pub. 
L. No. 97-92, § 140, 95 Stat. 1183, 1200 (Dec. 15, 1981). The provision 
appeared in a fiscal year 1982 continuing resolution, which expired on 
September 30, 1982. The next applicable pay increase would have been 
effective October 1, 1982. Thus, if the provision were not construed as 
permanent, it would have been meaningless "since it would have been 
enacted to prevent increases during a period when no increases were 
authorized to be made." 62 Comp. Gen. at 56-57.[Footnote 133] 
Similarly, a provision was held permanent in 9 Comp. Gen. 248 (1929) 
although it contained no words of futurity, because it was to become 
effective on the last day of the fiscal year and an alternative 
construction would have rendered it effective for only 1 day, clearly 
not the legislative intent. See also 65 Comp. Gen. at 590; B-214058, 
supra; B-270723, supra.

In sum, the six additional factors mentioned above are all relevant 
indicia of whether a given provision should be construed as permanent. 
However, the presence or absence of words of futurity remains the 
crucial factor, and the additional factors have been used for the most 
part to support a conclusion based primarily on this presence or 
absence. Four of the factors--occurrence or nonoccurrence in subsequent 
appropriation acts, inclusion in United States Code, legislative 
history, and phrasing as positive authorization--have never been used 
as the sole basis for finding permanence in a provision without words 
of futurity. The two remaining factors--relationship to rest of statute 
and meaningless or absurd result--can be used to find permanence in the 
absence of words of futurity, but the conclusion is almost invariably 
supported by at least one of the other factors, such as legislative 
history.

C. Relationship of Appropriations to Other Types of Legislation:

"As usual, this court has been dealt the difficult hand which results 
when Congress does not get its 'Act[s]' together."

American Federation of Government Employees, Local 1945 v. Cheney, 
CV92-PT-2453-E, (N.D. Ala., Dec. 21, 1992) (Propst, J.), Slip Op at 8.

1. Distinction between Authorization and Appropriation:

Appropriation acts must be distinguished from two other types of 
legislation: "enabling" or "organic" legislation and "appropriation 
authorization" legislation. Enabling or organic legislation is 
legislation that creates an agency, establishes a program, or 
prescribes a function, such as the Department of Education Organization 
Act or the Federal Water Pollution Control Act. While the organic 
legislation may provide the necessary authority to conduct the program 
or activity, it, with relatively rare exceptions, does not provide any 
money.

Appropriation authorization legislation, as the name implies, is 
legislation which authorizes the appropriation of funds to implement 
the organic legislation. It may be included as part of the organic 
legislation or it may be separate. As a general proposition, it too 
does not give the agency any actual money to spend. With certain 
exceptions (discussed in section B.1 of this chapter), only the 
appropriation act itself permits the withdrawal of funds from the 
Treasury. The principle has been stated as follows:

"The mere authorization of an appropriation does not authorize 
expenditures on the faith thereof or the making of contracts obligating 
the money authorized to be appropriated."

16 Comp. Gen. 1007, 1008 (1937). Restated, an authorization of 
appropriations does not constitute an appropriation of public funds, 
but contemplates subsequent legislation by Congress actually 
appropriating the funds. 35 Comp. Gen. 306 (1955); 27 Comp. Dec. 923 
(1921).[Footnote 134]

Like the organic legislation, authorization legislation is considered 
and reported by the committees with legislative jurisdiction over the 
particular subject matter, whereas the appropriation bills are 
exclusively within the jurisdiction of the appropriations committees.

There is no general requirement, either constitutional or statutory, 
that an appropriation act be preceded by a specific authorization act. 
E.g., 71 Comp. Gen. 378, 380 (1992). The existence of a statute 
(organic legislation) imposing substantive functions upon an agency 
that require funding for their performance is itself sufficient 
authorization for the necessary appropriations. B-173832, July 16, 
1976; B-173832, Aug. 1, 1975; B-111810, Mar. 8, 1974. However, 
statutory requirements for authorizations do exist in a number of 
specific situations. An example is section 660 of the Department of 
Energy Organization Act, 42 U.S.C. § 7270 ("Appropriations to carry out 
the provisions of this chapter shall be subject to annual 
authorization"). Another example is 10 U.S.C. § 114(a), which provides 
that no funds may be appropriated for military construction, military 
procurement, and certain related research and development "unless funds 
therefor have been specifically authorized by law."

In addition, rules of the House of Representatives prohibit 
appropriations for expenditures not previously authorized by law. See 
Rule XXI(2), Rules of the House of Representatives. The effect of this 
Rule is to subject the offending appropriation to a point of order. A 
more limited provision exists in Rule XVI, Standing Rules of the 
Senate.

The majority of appropriations today are preceded by some form of 
authorization although, as noted, it is not statutorily required in all 
cases.

Authorizations take many different forms, depending in part on whether 
they are contained in the organic legislation or are separate. 
Authorizations contained in organic legislation may be "definite" 
(setting dollar limits either in the aggregate or for specific fiscal 
years) or "indefinite" (authorizing "such sums as may be necessary to 
carry out the provisions of this act"). An indefinite authorization 
serves little purpose other than to comply with House Rule XXI. 
Appropriation authorizations enacted as separate legislation resemble 
appropriation acts in structure, for example, the annual Department of 
Defense Authorization Acts.

An authorization act is basically a directive to Congress itself, which 
Congress is free to follow or alter (up or down) in the subsequent 
appropriation act. A statutory requirement for prior authorization is 
also essentially a congressional mandate to itself. Thus, for example, 
if Congress appropriates money to the Defense Department in violation 
of 10 U.S.C. § 114, there are no practical consequences. The 
appropriation is just as valid, and just as available for obligation, 
as if section 114 had been satisfied or did not exist.

In sum, the typical sequence is: (1) organic legislation; 
(2) authorization of appropriations, if not contained in the organic 
legislation; and (3) the appropriation act. While this may be the 
"normal" sequence, there are deviations and variations, and it is not 
always possible to neatly label a given piece of legislation. Consider, 
for example, the following:

"The Secretary of the Treasury is authorized and directed to pay to the 
Secretary of the Interior … for the benefit of the Coushatta Tribe of 
Louisiana … out of any money in the Treasury not otherwise 
appropriated, the sum of $1,300,000."[Footnote 135]

This is the first section of a law enacted to settle land claims by the 
Coushatta Tribe against the United States and to prescribe the use and 
distribution of the settlement funds. Applying the test described above 
in section B.1, it is certainly an appropriation--it contains a 
specific direction to pay and designates the funds to be used--but, in 
a technical sense, it is not an appropriation act. Also, it contains 
its own authorization. Thus, we have an authorization and an 
appropriation combined in a statute that is neither an authorization 
act (in the sense described above) nor an appropriation act. General 
classifications may be useful and perhaps essential, but they should 
not be expected to cover all situations.

2. Specific Problem Areas and the Resolution of Conflicts:

a. Introduction:

Appropriation acts, as we have seen, do not exist in a vacuum. They are 
enacted against the backdrop of program legislation and, in many cases, 
specific authorization acts. This section deals with two broad but 
closely related issues. First, what precisely can Congress do in an 
appropriation act? Is it limited to essentially "rubber stamping" what 
has previously been authorized? Second, what does an agency do when 
faced with what it perceives to be an inconsistency between an 
appropriation act and some other statute?

The remaining portions of this section raise these issues in a number 
of specific contexts. In this introduction, we present four important 
principles. The resolution of problems in the relationship of 
appropriation acts to other statutes will almost invariably lie in the 
application of one or more of these principles.

First, as a general proposition, appropriations made to carry out 
authorizing laws "are made on the basis that the authorization acts in 
effect constitute an adjudication or legislative determination of the 
subject matter." B-151157, June 27, 1963. Thus, except as specified 
otherwise in the appropriation act, appropriations to carry out 
enabling or authorizing laws must be expended in strict accord with the 
original authorization both as to the amount of funds to be expended 
and the nature of the work authorized. 36 Comp. Gen. 240, 242 (1956); 
B-258000, Aug. 31, 1994; B-220682, Feb. 21, 1986; B-204874, July 28, 
1982; B-151157, supra; B-125404, Aug. 31, 1956. While it is true that 
one Congress cannot bind a future Congress, nor can it bind subsequent 
action by the same Congress, an authorization act is more than an 
academic exercise and its requirements must be followed unless changed 
by subsequent legislation.

Second, Congress is free to amend or repeal prior legislation as long 
as it does so directly and explicitly and does not violate the 
Constitution. It is also possible for one statute to implicitly amend 
or repeal a prior statute, but it is firmly established that "repeal by 
implication" is disfavored, and statutes will be construed to avoid 
this result whenever reasonably possible. E.g., Tennessee Valley 
Authority v. Hill, 437 U.S. 153, 189-90 (1978); Morton v. Mancari, 
417 U.S. 535, 549 (1974); Posadas v. National City Bank of New York, 
296 U.S. 497, 503 (1936); 72 Comp. Gen. 295, 297 (1993); 68 Comp. 
Gen. 19, 22-23 (1988); 64 Comp. Gen. 143, 145 (1984); 58 Comp. 
Gen. 687, 691-92 (1979); B-290011, Mar. 25, 2002; B-261589, Mar. 6, 
1996; B-258163, Sept. 29, 1994; B-236057, May 9, 1990. Repeals by 
implication are particularly disfavored in the appropriations context. 
Robertson v. Seattle Audubon Society, 503 U.S. 429, 440 (1992).

A repeal by implication will be found only where "the intention of the 
legislature to repeal [is] clear and manifest." Posadas, 296 U.S. at 
503; B-290011, supra; B-236057, supra. The principle that implied 
repeals are disfavored applies with special weight when it is asserted 
that a general statute repeals a more specific statute. 72 Comp. 
Gen. at 297 and cases cited.

A corollary to the "cardinal rule" against repeal by implication, or 
perhaps another way of saying the same thing, is the rule of 
construction that statutes should be construed harmoniously so as to 
give maximum effect to both wherever possible. E.g., Posadas, 296 U.S. 
at 503; Strawser v. Atkins, 290 F.3d 720 (4th Cir.), cert. denied, 
537 U.S. 1045 (2002); 53 Comp. Gen. 853, 856 (1974); B-290011, supra; 
B-208593.6, Dec. 22, 1988. See B-258000, supra, for an example of 
harmonizing ambiguous appropriation and authorization provisions in 
order to effectuate congressional intent.

Third, if two statutes are in irreconcilable conflict, the more recent 
statute, as the latest expression of Congress, governs. As one court 
concluded in a statement illustrating the eloquence of simplicity, 
"[t]he statutes are thus in conflict, the earlier permitting and the 
later prohibiting," so the later statute supersedes the earlier. 
Eisenberg v. Corning, 179 F.2d 275, 277 (D.C. Cir. 1949). In a sense, 
the "last in time" rule is yet another way of expressing the repeal by 
implication principle. We state it separately to highlight its 
narrowness: it applies only when the two statutes cannot be reconciled 
in any reasonable manner, and then only to the extent of the conflict. 
E.g., Posadas, 296 U.S. at 503; B-203900, Feb. 2, 1989; B-226389, 
Nov. 14, 1988; B-214172, July 10, 1984, aff'd upon reconsideration, 
64 Comp. Gen. 282 (1985).

We will see later in this section that while the last in time rule can 
be stated with eloquent simplicity, its application is not always so 
simple.

The fourth principle we state in two parts:

First, despite the occasional comment to the contrary in judicial 
decisions (a few of which we will note later), Congress can and does 
"legislate" in appropriation acts. E.g., Preterm, Inc. v. Dukakis, 
591 F.2d 121 (1st Cir.), cert. denied, 441 U.S. 952 (1979); Friends of 
the Earth v. Armstrong, 485 F.2d 1 (10th Cir. 1973), cert. denied, 
414 U.S. 1171 (1974); Eisenberg v. Corning, supra; Tayloe v. Kjaer, 
171 F.2d 343 (D.C. Cir. 1948). See also the Dickerson, Cella, and 
Thompson Products cases cited above in section B.4, and the discussion 
of the congressional power of the purse in Chapter 2, section B. It may 
well be that the device is "unusual and frowned upon." Preterm, 
591 F.2d at 131; Building & Construction Trades Department, AFL-CIO v. 
Martin, 961 F.2d 269, 273 (D.C. Cir.), cert. denied, 506 U.S. 915 
(1992) ("While appropriations are 'Acts of Congress' which can 
substantively change existing law, there is a very strong presumption 
that they do not … and that when they do, the change is only intended 
for one fiscal year."). It also may well be that the appropriation act 
will be narrowly construed when it is in apparent conflict with 
authorizing legislation. Calloway v. District of Columbia, 216 F.3d 1, 
9 (D.C. Cir. 2000); Donovan v. Carolina Stalite Co., 734 F.2d 1547, 
1558 (D.C. Cir. 1984). Nevertheless, appropriation acts are, like any 
other statute, passed by both Houses of Congress and either signed by 
the President or enacted over a presidential veto. As such, and subject 
of course to constitutional strictures, they are "just as effective a 
way to legislate as are ordinary bills relating to a particular 
subject." Friends of the Earth, 485 F.2d at 9; Envirocare of Utah 
Inc. v. United States, 44 Fed. Cl. 474, 482 (1999).

Second, legislative history is not legislation. As useful and important 
as legislative history may be in resolving ambiguities and determining 
congressional intent, it is the language of the appropriation act, and 
not the language of its legislative history, that is enacted into law. 
E.g., Shannon v. United States, 512 U.S. 573, 583 (1994) (declining to 
give effect to "legislative history that is in no way anchored in the 
text of the statute."). As the Supreme Court stated in a case 
previously cited, which we will discuss in more detail later:

"Expressions of committees dealing with requests for appropriations 
cannot be equated with statutes enacted by Congress … ."

Tennessee Valley Authority v. Hill, 437 U.S. at 191; see also 
Lincoln v. Vigil, 508 U.S. 182, 192 (1993); Thompson v. Cherokee Nation 
of Oklahoma, 334 F.3d 1075 (Fed. Cir. 2003).

These, then, are the "guiding principles" that will be applied in 
various combinations and configurations to analyze and resolve the 
problem areas identified in the remainder of this section. For the most 
part, our subsequent discussion will merely note the applicable 
principle(s). A useful supplemental reference on many of the topics we 
discuss is Louis Fisher, The Authorization-Appropriation Process in 
Congress: Formal Rules and Informal Practices, 29 Cath. U.L. Rev. 51 
(1979).

b. Variations in Amount:

(1) Appropriation exceeds authorization:

Generally speaking, Congress is free to appropriate more money for a 
given object than the amount previously authorized. As the Comptroller 
General stated in a brief letter to a Member of Congress:

"While legislation providing for an appropriation of funds in excess of 
the amount contained in a related authorization act apparently would be 
subject to a point of order under rule 21 of the Rules of the House of 
Representatives, there would be no basis on which we could question 
otherwise proper expenditures of funds actually appropriated."

B-123469, Apr. 14, 1955.

The governing principle was stated as follows in 36 Comp. Gen. 240, 242 
(1956):

"It is fundamental … that one Congress cannot bind a future Congress 
and that the Congress has full power to make an appropriation in excess 
of a cost limitation contained in the original authorization act. This 
authority is exercised as an incident to the power of the Congress to 
appropriate and regulate expenditures of the public money."

If we are dealing with a line-item appropriation or a specific earmark 
in a lump-sum appropriation, the quoted statement would appear beyond 
dispute. However, complications arise where the authorization for a 
given item is specific and a subsequent lump-sum appropriation includes 
a higher amount for that item specified only in legislative history and 
not in the appropriation act itself. In this situation, the rule that 
one Congress cannot bind a future Congress or later action by the same 
Congress must be modified somewhat by the rule against repeal by 
implication. The line of demarcation, however, is not precisely 
defined.

In 36 Comp. Gen. 240, Congress had authorized the construction of two 
bridges across the Potomac River "at a cost not to exceed" $7 million. 
A subsequent appropriation act made a lump-sum appropriation that 
included funds for the bridge construction (specified in legislative 
history but not in the appropriation act itself) in excess of the 
amount authorized. The decision concluded that the appropriation, as 
the latest expression of Congress on the matter, was available for 
expenditure. Similarly, it was held in B-148736, Sept. 15, 1977, that 
the National Park Service could expend its lump-sum appropriation for 
planning and construction of parks even though the expenditures for 
specific parks would exceed amounts authorized to be appropriated for 
those parks.

Both of these cases were distinguished in 64 Comp. Gen. 282 (1985), 
which affirmed a prior decision, B-214172, July 10, 1984. Authorizing 
legislation for the Small Business Administration (SBA) provided 
specific funding levels for certain SBA programs. SBA's 1984 
appropriation act contained a lump-sum appropriation for the programs 
which, according to the conference report, included amounts in excess 
of the funding levels specified in the authorization. Relying in part 
on Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978), GAO 
concluded that the two statutes were not in conflict, that the 
appropriation did not implicitly repeal or amend the authorizations, 
and that the spending levels in the authorization were controlling. The 
two prior cases were distinguished as being limited in scope and 
dealing with different factual situations. 64 Comp. Gen. at 285. For 
example, it was clear in the prior cases that Congress was knowingly 
providing funds in excess of the authorization ceilings. In contrast, 
the SBA appropriation made explicit reference to the authorizing 
statute, thus suggesting that Congress did not intend that the 
appropriation be inconsistent with the authorized spending levels. Id. 
at 286-87.

(2) Appropriation less than authorization:

Congress is free to appropriate less than an amount authorized either 
in an authorization act or in program legislation, again, as in the 
case of exceeding an authorization, at least where it does so directly. 
E.g., 53 Comp. Gen. 695 (1974). This includes the failure to fund a 
program at all, that is, not to appropriate any funds. United States v. 
Dickerson, 310 U.S. 554 (1940).

A case in point is City of Los Angeles v. Adams, 556 F.2d 40 (D.C. Cir. 
1977). The Airport and Airway Development Act of 1970 authorized 
airport development grants "in aggregate amounts not less than" 
specified dollar amounts for specified fiscal years, and provided an 
apportionment formula. Pub. L. No. 91-258, title I, 84 Stat. 219 
(May 21, 1970). Subsequent appropriation acts included specific 
limitations on the aggregate amounts to be available for the grants, 
less than the amounts authorized. The court concluded that both laws 
could be given effect by limiting the amounts available to those 
specified in the appropriation acts, but requiring that they be 
distributed in accordance with the formula of the authorizing 
legislation. In holding the appropriation limits controlling, the court 
said:

"According to its own rules, Congress is not supposed to use 
appropriations measures as vehicles for the amendment of general laws, 
including revision of expenditure authorization… . Where Congress 
chooses to do so, however, we are bound to follow Congress's last word 
on the matter even in an appropriations law."

Id. at 48-49.

Relying on City of Los Angeles v. Adams, the court in Ramah Navajo 
School Board, Inc. v. Babbitt, 87 F.3d 1338 (D.C. Cir. 1996), held 
that, while appropriations in amounts less than envisioned in 
authorization acts control, an agency must still adhere as much as 
possible to the authorizing statute in distributing such funds:

"[I]t is clear that the Congress responsible for the ISDA [Indian Self-
Determination Act] did not intend, in the case of insufficient funding, 
for the numerous detailed provisions of the Act to be shunted aside by 
a Secretary exercising total discretion in allocation of the funds. 
Nor, as the legislative history shows, did the 1995 Congress which 
appropriated insufficient funds intend for its shortfall to eviscerate 
the substantive provisions of the earlier Act."

87 F.3d at 1349 (emphasis in original).

Where the amount authorized to be appropriated is mandatory rather than 
discretionary, Congress can still appropriate less, or can suspend or 
repeal the authorizing legislation, as long as the intent to suspend or 
repeal the authorization is clear. The power is considerably 
diminished, however, with respect to entitlements that have already 
vested. The distinction is made clear in the following passage from the 
Supreme Court's decision in United States v. Larionoff, 431 U.S. 864, 
879 (1977):

"No one disputes that Congress may prospectively reduce the pay of 
members of the Armed Forces, even if that reduction deprived members of 
benefits they had expected to be able to earn… . It is quite a 
different matter, however, for Congress to deprive a service member of 
pay due for services already performed, but still owing. In that case, 
the congressional action would appear in a different constitutional 
light."

Several earlier cases provide concrete illustrations of what Congress 
can and cannot do in an appropriation act to reduce or eliminate a 
nonvested mandatory authorization. In United States v. Fisher, 109 U.S. 
143 (1883), permanent legislation set the salaries of certain 
territorial judges. Congress subsequently appropriated a lesser amount, 
"in full compensation" for that particular year. The Court held that 
Congress had the power to reduce the salaries, and had effectively done 
so. "It is impossible that both acts should stand. No ingenuity can 
reconcile them. The later act must therefore prevail… ." Id. at 146. 
See also United States v. Mitchell, 109 U.S. 146 (1883). In the 
Dickerson case cited above, the Court found a mandatory authorization 
effectively suspended by a provision in an appropriation act 
prohibiting the use of funds for the payment in question 
"notwithstanding the applicable portions of" the authorizing 
legislation.

In the cases in the preceding paragraph, the "reduction by 
appropriation" was effective because the intent of the congressional 
action was unmistakable. The mere failure to appropriate sufficient 
funds is not enough. In United States v. Langston, 118 U.S. 389 (1886), 
for example, the Court refused to find a repeal by implication in 
"subsequent enactments which merely appropriated a less amount … and 
which contained no words that expressly, or by clear implication, 
modified or repealed the previous law." Id. at 394. A similar holding 
is United States v. Vulte, 233 U.S. 509 (1914). A failure to 
appropriate in this type of situation will prevent administrative 
agencies from making payment, but, as in Langston and Vulte, is 
unlikely to prevent recovery by way of a lawsuit. See also Wetsel-
Oviatt Lumber Co., Inc. v. United States, 38 Fed. Cl. 563, 570-571 
(1997); New York Airways, Inc. v. United States, 369 F.2d 743 (Ct. Cl. 
1966); Gibney v. United States, 114 Ct. Cl. 38 (1949).

Thus, appropriating less than the amount of a nonvested mandatory 
authorization, including not appropriating any funds for it, will be 
effective under the "last in time" rule as long as the intent to 
suspend or repeal the authorization is clear. However, by virtue of the 
rule against repeal by implication, a mere failure to appropriate 
sufficient funds will not be construed as amending or repealing prior 
authorizing legislation.

Another complication arises when an authorization act creates what 
would otherwise be an entitlement to funds, but then makes that 
entitlement "subject to the availability of appropriations." A case in 
point is the Indian Self-Determination and Education Assistance Act, 
25 U.S.C. §§ 450-450n. The complex provisions of the Act in effect 
guarantee Indian tribes a certain level of reimbursement for their 
costs in administering federal programs. However, the Act makes this 
guarantee subject to the availability of appropriations and further 
provides that the Secretary of the Interior is not required to reduce 
program funding for other tribes or tribal organizations in order to 
satisfy this guarantee. See 25 U.S.C. § 450j-1(a) and (b). These 
provisions have spawned much litigation, including the Ramah Navajo 
School Board case, discussed previously.

The courts have agreed that the "subject to the availability of 
appropriations" language conditions the Act's entitlement, so that the 
reimbursement amounts intended by the Act must be reduced where 
Congress has clearly appropriated insufficient funds to meet them in 
full. See in addition to Ramah: Thompson v. Cherokee Nation of 
Oklahoma, 334 F.3d 1075 (Fed. Cir. 2003) (Cherokee Nation II); Cherokee 
Nation of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002) 
(Cherokee Nation I); Shoshone-Bannock Tribes of the Fort Hall 
Reservation v. Thompson, 279 F.3d 660 (9th Cir. 2002); and Babbitt v. 
Oglala Sioux Tribal Public Safety Department, 194 F.3d 1374 (Fed. Cir. 
1999), cert. denied, 530 U.S. 1203 (2000). However, the courts differ 
on whether Congress did or did not provide insufficient funds for 
particular fiscal years. Compare Cherokee Nation II with Cherokee 
Nation I and Shoshone-Bannock.

(3) Earmarks in authorization act:

In Chapter 6, section B, we set forth the various types of language 
Congress uses in appropriation acts when it wants to "earmark" a 
portion of a lump-sum appropriation as either a maximum or a minimum to 
be spent on some particular object. These same types of earmarking 
language can be used in authorization acts.

A number of cases have considered the question of whether there is a 
conflict when an authorization establishes a minimum earmark ("not less 
than," "shall be available only"), and the related appropriation is a 
lump-sum appropriation which does not expressly mention the earmark. Is 
the agency in this situation required to observe the earmark? Applying 
the principle that an appropriation must be expended in accordance with 
the related authorization unless the appropriation act provides 
otherwise, GAO has concluded that the agency must observe the earmark. 
64 Comp. Gen. 388 (1985); B-220682, Feb. 21, 1986 ("an earmark in an 
authorization act must be followed where a lump sum is appropriated 
pursuant to the authorization"); B-207343, Aug. 18, 1982; B-193282, 
Dec. 21, 1978. See also B-131935, Mar. 17, 1986. This result applies 
even though following the earmark will drastically reduce the amount of 
funds available for nonearmarked programs funded under the same 
appropriation. 64 Comp. Gen. at 391. (These cases can also be viewed as 
another application of the rule against repeal by implication.)

If Congress expressly appropriates an amount at variance with a 
previously enacted authorization earmark, the appropriation will 
control under the last in time rule. For example, in 53 Comp. Gen. 695 
(1974), an authorization act had expressly earmarked $18 million for 
the United Nations International Children's Emergency Fund (UNICEF) for 
specific fiscal years. A subsequent appropriation act provided a lump 
sum, out of which only $15 million was earmarked for UNICEF. The 
Comptroller General concluded that the $15 million specified in the 
appropriation act was controlling and represented the maximum available 
for UNICEF for that fiscal year.

c. Variations in Purpose:

As noted previously, it is only the appropriation, and not the 
authorization by itself, that permits the incurring of obligations and 
the making of expenditures. It follows that an authorization does not, 
as a general proposition, expand the scope of availability of 
appropriations beyond what is permissible under the terms of the 
appropriation act. The authorized purpose must be implemented either by 
a specific appropriation or by inclusion in a broader lump-sum 
appropriation. Thus, an appropriation made for specific purposes is not 
available for related but more extended purposes contained in the 
authorization act but not included in the appropriation. 19 Comp. 
Gen. 961 (1940). See also 37 Comp. Gen. 732 (1958); 35 Comp. Gen. 306 
(1955); 26 Comp. Gen. 452 (1947).

In addition to simply failing to appropriate funds for an authorized 
purpose, Congress can expressly restrict the use of an appropriation 
for a purpose or purposes included in the authorization. E.g., B-24341, 
Apr. 1, 1942 ("whatever may have been the intention of the original 
enabling act it must give way to the express provisions of the later 
act which appropriated funds but limited their use").

Similarly, by express provision in an appropriation act, Congress can 
expand authorized purposes. In 67 Comp. Gen. 401 (1988), for example, 
an appropriation expressly included two mandatory earmarks for projects 
beyond the scope of the related authorization. Noting that "the 
appropriation language provides its own expanded authorization for 
these programs," GAO concluded that the agency was required to reserve 
funds for the two mandatory earmarks before committing the balance of 
the appropriation for discretionary expenditures.

Except to the extent Congress expressly expands or limits authorized 
purposes in the appropriation act, the appropriation must be used in 
accordance with the authorization act in terms of purpose. Thus, in 
B-125404, Aug. 31, 1956, it was held that an appropriation to construct 
a bridge across the Potomac River pursuant to a statute authorizing 
construction of the bridge and prescribing its location was not 
available to construct the bridge at a slightly different location even 
though the planners favored the alternate location. Similarly, in 
B-193307, Feb. 6, 1979, the Flood Control Act of 1970 authorized 
construction of a dam and reservoir for the Ellicott Creek project in 
New York. Subsequently, legislation was proposed to authorize channel 
construction instead of the dam and reservoir, but was not enacted. A 
continuing resolution made a lump-sum appropriation for flood control 
projects "authorized by law." The Comptroller General found that the 
appropriation did not repeal the prior authorization, and that 
therefore, the funds could not properly be used for the alternative 
channel construction.

d. Period of Availability:

An authorization of appropriations, like an appropriation itself, may 
authorize appropriations to be made on a multiple year or no-year, as 
well as fiscal year, basis. The question we address here is the extent 
to which the period of availability specified in an authorization or 
enabling act is controlling. Congress can, in an appropriation act, 
enact a different period of availability than that specified in the 
authorization. The implications for an appropriation of language in the 
authorization of that appropriation specifying a period of availability 
for the appropriation being authorized is a matter of statutory 
construction.

Thus, an appropriation of funds "to remain available until expended" 
(no-year) was found controlling over a provision in the authorizing 
legislation that authorized appropriations on a 2-year basis. B-182101, 
Oct. 16, 1974. See also B-149372, B-158195, Apr. 29, 1969 (2-year 
appropriation of presidential transition funds held controlling 
notwithstanding provision in Presidential Transition Act of 1963, which 
authorized services and facilities to former President and Vice 
President only for 6 months after expiration of term of office). In a 
1982 decision, 61 Comp. Gen. 532, GAO reconciled an authorization act 
and an appropriation act by finding the appropriation to be a no-year 
appropriation, except to the extent the related authorization specified 
a lesser period of availability. The authorization act had authorized 
funds to be appropriated for a particular project "for fiscal year 
1978." The fiscal year 1978 funds for that project were included in a 
larger lump sum appropriated "as authorized by law, to remain available 
until expended." In reconciling the two statutes, GAO concluded that 
funds for the project in question from the lump-sum appropriation were 
available for obligation only during fiscal year 1978.

Until 1971, the test GAO applied in cases like these was whether the 
appropriation language specifically referred to the authorization. If 
it did, then GAO considered the provisions of the authorization act--
including any multiple year or no-year authorizations--to be 
incorporated by reference into the provisions of the appropriation act. 
This was regarded as sufficient to overcome 31 U.S.C. § 1301(c), which 
presumes that an appropriation is for one fiscal year unless the 
appropriation states otherwise, and to overcome the presumption of 
fiscal year availability derived from the enacting clause of the 
appropriation act. If the appropriation language did not specifically 
refer to the authorization act, the appropriation was held to be 
available only for the fiscal year covered by the appropriation act. 
45 Comp. Gen. 508 (1966); 45 Comp. Gen. 236 (1965); B-147196, Apr. 5, 
1965; B-127518, May 10, 1956; B-37398, Oct. 26, 1943. The reference had 
to be specific; the phrase "as authorized by law" was not enough. 
B-127518, May 10, 1956.

By 1971, however, Congress was enacting (and continues to enact) a 
general provision in all appropriation acts: "[n]o part of any 
appropriation contained in this Act shall remain available for 
obligation beyond the current fiscal year unless expressly so provided 
herein." Now, if an appropriation act contains the provision quoted in 
the preceding paragraph, it will not be sufficient for an appropriation 
contained in that act to merely incorporate a multiple year or no-year 
authorization by reference. The effect of this general provision is to 
require the appropriation language to expressly provide for 
availability beyond one year in order to overcome the enacting clause. 
50 Comp. Gen. 857 (1971).

The general provision resulted from the efforts of the House Committee 
on Appropriations in connection with the 1964 foreign aid 
appropriations bill. In its report on that bill, the Committee first 
described then-existing practice:

"The custom and practice of the Committee on Appropriations has been to 
recommend appropriations on an annual basis unless there is some valid 
reason to make the item available for longer than a one-year period. 
The most common technique in the latter instances is to add the words 
'to remain available until expended' to the appropriation paragraph.

"In numerous instances, … the Congress has in the underlying enabling 
legislation authorized appropriations therefor to be made on an 
'available until expended' basis. When he submits the budget, the 
President generally includes the phrase 'to remain available until 
expended' in the proposed appropriation language if that is what the 
Executive wishes to propose. The Committee either concurs or drops the 
phrase from the appropriation language."

H.R. Rep. No. 88-1040, at 55 (1963). The Committee then noted a 
situation in the 1963 appropriation that had apparently generated some 
disagreement. The President had requested certain refugee assistance 
funds to remain available until expended. The report goes on to state:

"The Committee thought the funds should be on a 1-year basis, thus the 
phrase 'to remain available until expended' was not in the bill as 
reported. The final law also failed to include the phrase or any other 
express language of similar import. Thus Congress took affirmative 
action to limit the availability to the fiscal year 1963 only."

Id. at 56. The Committee then quoted what is now 31 U.S.C. § 1301(c), 
and stated:

"The above quoted 31 U.S.C. [§ 1301(c)] seems clearly to govern and, in 
respect to the instant class of appropriation, to require the act 
making the appropriation to expressly provide for availability longer 
than 1 year if the enacting clause limiting the appropriations in the 
law to a given fiscal year is to be overcome as to any specific 
appropriation therein made. And it accords with the rule of reason and 
ancient practice to retain control of such an elementary matter wholly 
within the terms of the law making the appropriation. The two hang 
together. But in view of the question in the present case and the 
possibility of similar questions in a number of others, consideration 
may have to be given to revising the provisions of 31 U.S.C. 
[§ 1301(c)] to make its scope and meaning crystal clear and perhaps 
update it as may otherwise appear desirable."

Id. (emphasis in original).

Section 1301(c) was not amended, but soon after the above discussion 
appeared, appropriation acts started including the general provision 
stating that "[n]o part of any appropriation contained in this Act 
shall remain available for obligation beyond the current fiscal year 
unless expressly so provided herein." This added another ingredient to 
the recipe that had not been present in the earlier decisions, although 
it took several years before the new general provision began appearing 
in almost all appropriation acts.

When the issue arose again in a 1971 case, GAO considered the new 
appropriation act provision and the 1963 comments of the House 
Appropriations Committee. In that decision, GAO noted that "it seems 
evident that the purpose [of the new general provision] is to overcome 
the effect of our decisions … regarding the requirements of 31 U.S.C. 
[§ 1301(c)]," and further noted the apparent link between the 
discussion in House Report 1040 and the appearance of the new 
provision. 50 Comp. Gen. at 859. See also 58 Comp. Gen. 321 (1979); 
B-207792, Aug. 24, 1982. Thus, the appropriation act will have to 
expressly repeat the multiple year or no-year language of the 
authorization, or at least expressly refer to the specific section of 
the authorizing statute in which it appears.

Changes in the law from year to year may produce additional 
complications. For example, the National Historic Preservation Act, 
Pub. L. No. 89-665, § 103(b), 80 Stat. 915, 916 (Oct. 15, 1966) 
(authorization), provided that funds appropriated and apportioned to 
states would remain available for obligation for three fiscal years, 
after which time any unobligated balances would be reapportioned. This 
amounted to a no-year authorization. For several years, appropriations 
to fund the program were made on a no-year basis, thus permitting 
implementation of the authorization provision. Starting with fiscal 
year 1978, however, the appropriation act was changed and the funds 
were made available for two fiscal years. See Pub. L. No. 95-74, 
91 Stat. 289 (July 26, 1977). This raised the question of whether the 
appropriation act had the effect of overriding the apparently 
conflicting authorizing language, or if it meant merely that 
reapportionment could occur after two fiscal years instead of three, 
thus effectively remaining a no-year appropriation.

GAO concluded that the literal language and plain meaning of the 
appropriation act must govern. In addition to the explicit 
appropriation language, the appropriation acts contained the general 
provision restricting availability to the current fiscal year unless 
expressly provided otherwise therein. Therefore, any funds not 
obligated by the end of the 2-year period would expire and could not be 
reapportioned. B-151087, Feb. 17, 1982; B-151087, Sept. 15, 1981.

For purposes of the rule of 50 Comp. Gen. 857 and its progeny, it makes 
no difference whether the authorization is in an annual authorization 
of appropriations act or in permanent enabling legislation. It also 
appears to make no difference whether the authorization merely 
authorizes the longer period of availability or directs it. See, for 
example, 58 Comp. Gen. 321, supra, in which the general provision 
restricting availability to the current fiscal year, as the later 
expression of congressional intent, was held to override 25 U.S.C. 
§ 13a, which provides that the unobligated balances of certain Indian 
assistance appropriations "shall remain available for obligation and 
expenditure" for a second fiscal year. See also 71 Comp. Gen. 39, 40 
(1991); B-249087, June 25, 1992. Similarly, in Dabney v. Reagan, No. 82 
Civ. 2231-CSH (S.D. N.Y. June 6, 1985), the court held that a 2-year 
period of availability specified in appropriation acts would override a 
"mandatory" no-year authorization contained in the Solar Energy and 
Energy Conservation Bank Act.

e. Authorization Enacted After Appropriation:

Our discussion thus far has, for the most part, been in the context of 
the normal sequence--that is, the authorization act is passed before 
the appropriation act. Sometimes, however, consideration of the 
authorization act is delayed and it is not enacted until after the 
appropriation act. Determining the relationship between the two acts 
involves application of the same general principles we have been 
applying when the acts are enacted in the normal sequence.

The first step is to attempt to construe the statutes together in some 
reasonable fashion. To the extent this can be done, there is no real 
conflict, and the reversed sequence will in many cases make no 
difference. Earlier, for example, we discussed the rule that a specific 
earmark in an authorization act must be followed when the related 
appropriation is an unspecified lump sum. In two of the cases cited for 
that proposition--B-220682, Feb. 21, 1986, and B-193282, Dec. 21, 1978-
-the appropriation act had been enacted prior to the authorization, a 
factor that did not affect the outcome.

In B-193282, for example, the 1979 Justice Department authorization act 
authorized a lump-sum appropriation to the Immigration and 
Naturalization Service (INS) and provided that $2 million "shall be 
available" for the investigation and prosecution of certain cases 
involving alleged Nazi war criminals. The 1979 appropriation act made a 
lump-sum appropriation to the INS but contained no specific mention of 
the Nazi war criminal item. The appropriation act was enacted on 
October 10, 1978, but the authorization act was not enacted until 
November. In response to a question as to the effect of the 
authorization provision on the appropriation, the Comptroller General 
advised that the two statutes could be construed harmoniously, and that 
the $2 million earmarked in the authorization act could be spent only 
for the purpose specified. It was further noted that the $2 million 
represented a minimum but not a maximum. B-193282, supra, amplified by 
B-193282, Jan. 25, 1979. This is the same result that would have been 
reached if the normal sequence had been followed.

Similarly, in B-226389, Nov. 14, 1988, a provision in the 1987 Defense 
Appropriation Act prohibited the Navy from including certain provisions 
in ship maintenance contracts. The 1987 authorization act, enacted 
after the appropriation, amended a provision in Title 10 of the United 
States Code to require the prohibited provisions. Application of the 
last in time rule would have negated the appropriation act provision. 
However, it was possible to give effect to both provisions by 
construing the appropriation restriction as a temporary exemption from 
the permanent legislation in the authorization act. Again, this is the 
same result that would have been reached if the authorization act were 
enacted first.

If the authorization and appropriation cannot be reasonably reconciled, 
the last in time rule will apply just as it would under the normal 
sequence, except here the result will be different because the 
authorization is the later of the two. A 1989 case will illustrate. The 
1989 Treasury Department appropriation act contained a provision 
prohibiting placing certain components of the Department under the 
oversight of the Treasury Inspector General. A month later, Congress 
enacted legislation placing those components under the Inspector 
General's jurisdiction and transferring their internal audit staffs to 
the Inspector General "notwithstanding any other provision of law." But 
for the "notwithstanding" clause, it might have been possible to use 
the same approach as in B-226389 and find the appropriation restriction 
a temporary exemption from the new permanent legislation. In view of 
that clause, however, GAO found that the two provisions could not be 
reconciled, and concluded that the Inspector General legislation, as 
the later enactment, superseded the appropriation act provision. 
B-203900, Feb. 2, 1989.

Two other examples of invoking the last in time rule can be found in 
dueling Defense Department authorization and appropriation act 
provisions. In one case, the Defense appropriations act for 1992 
directed the Defense Department to extend a contract relating to the 
Civilian Heath and Medical Program for Uniformed Services (CHAMPUS) 
program for another year. However, the defense authorization act for 
1992 countermanded that mandate and permitted the Defense Department to 
award a new contract. In B-247119, Mar. 2, 1992, the Comptroller 
General had little difficulty concluding that the two provisions were 
irreconcilably in conflict. Indeed, the legislative history 
demonstrated that the drafters of the appropriation and authorization 
acts sought to trump each other on this point as their two bills 
proceeded through Congress. The more difficult issue was how to apply 
the last in time rule to the case. The complication was that, while 
Congress had completed action on the authorization bill first (1 day 
before the appropriation bill), the President acted in the opposite 
order--signing the appropriation bill into law 9 days before he signed 
the authorization bill. Noting that the date on which the President 
signs a bill is clearly the date it becomes law, the Comptroller 
General held that the authorization act was the later in time, and 
thus, its provisions controlled.

The other case involved competing provisions in the Defense 
authorization and appropriation acts for fiscal year 1993. Section 
351(a) of the authorization act (Pub. L. No. 102-484, 106 Stat. 2377), 
which the President signed into law on October 23, 1992, required the 
use of competitive procedures before Defense took action to consolidate 
certain maintenance activities at a single depot. Section 9152 of the 
appropriation act (Pub. L. No. 102-396, 106 Stat. 1943), which the 
President had signed several weeks earlier on October 6, provided that, 
notwithstanding section 351(a) of the authorization act, no funds could 
be used to prevent or delay the depot consolidation. In the ensuing 
litigation, the court ultimately determined that the two provisions 
could be reconciled. American Federation of Government Employees, Local 
1945 v. Cheney, CV92-PT-2453-E (N.D. Ala., Dec. 21, 1992). However, 
citing B-247119 among other sources, the court added that if the 
provisions were irreconcilable, the later in time would prevail. In 
this connection, the court noted that the tension between the two 
provisions apparently stemmed from efforts by individual Members of 
Congress to protect federal facilities within their districts and 
observed:

"There is perhaps even more reason to apply the more objective 
standards of 'last enacted prevails' and/or the requirement of a 'clear 
manifestation of intent to repeal' when the legislation is more 
significantly influenced by individual Congressmen than by the 'intent' 
of Congress."

AFGE, Local 1945, Slip Op. at 24.

Just as with any other application of the last in time rule, the later 
enactment prevails only to the extent of the irreconcilable conflict. 
B-61178, Oct. 21, 1946 (specific limitations in appropriation act not 
superseded by after-enacted authorization absent indication that 
authorization was intended to alter provisions of prior appropriation).

Sometimes, application of the standard principles fails to produce a 
simple answer. For example, Congress appropriated $75 million for 
fiscal year 1979 for urban formula grants "as authorized by the Urban 
Mass Transportation Act of 1964." When the appropriation was enacted, 
legislation was pending--and was enacted 3 months after the 
appropriation--repealing the existing formula and replacing it with a 
new and somewhat broader formula. The new formula provision specified 
that it was to be applicable to "sums appropriated pursuant to 
subparagraph (b) of this paragraph." On the one hand, since the 
original formula had been repealed, it could no longer control the use 
of the appropriation. Yet on the other hand, funds appropriated 3 
months prior to passage of the new formula could not be said to have 
been appropriated "pursuant to" the new act. Hence, neither formula was 
clearly applicable to the $75 million. The Comptroller General 
concluded that the $75 million earmarked for the grant program had to 
be honored and that it should be distributed in accordance with those 
portions of the new formula that were "consistent with the terms of the 
appropriation," that is, the funds should be used in accordance with 
those elements of the new formula that had also been reflected in the 
original formula. B-175155, July 25, 1979.

f. Two Statutes Enacted on Same Day:

The Supreme Court has said that the doctrine against repeal by 
implication is even more forceful "where the one act follows close upon 
the other, at the same session of the Legislature." Morf v. Bingaman, 
298 U.S. 407, 414 (1936); see also Auburn Housing Authority v. 
Martinez, 277 F.3d 138, 145 (2nd Cir. 2002); B-277905, Mar. 17, 1998. 
This being the case, the doctrine reaches perhaps its strongest point, 
and the "last in time" rule is correspondingly at its weakest, when 
both statutes are enacted on the same day. Except in the very rare case 
in which the intent of one statute to affect the other is particularly 
manifest, it makes little sense to apply a last in time concept where 
the time involved is a matter of hours, or as in one case (B-79243, 
Sept. 28, 1948), 7 minutes. Thus, the starting point is the 
presumption--applicable in all cases but even stronger in this 
situation--that Congress intended both statutes to stand together. 
67 Comp. Gen. 332, 335 (1988); B-204078.2, May 6, 1988.

When there is an apparent conflict between an appropriation act and 
another statute enacted on the same day, the approach is to make every 
effort to reconcile the statutes so as to give maximum effect to both. 
In some cases, it will be found that there is no real conflict. In 
67 Comp. Gen. 332, for example, one statute authorized certain 
Commodity Credit Corporation appropriations to be made in the form of 
current, indefinite appropriations, while the appropriation act, 
enacted on the same day, made line-item appropriations. There was no 
conflict because the authorization provision was a directive to 
Congress itself that Congress was free to disregard, subject to a 
possible point of order, when making the actual appropriation. 
Similarly, there was no inconsistency between an appropriation act 
provision, which required that Panama Canal Commission appropriations 
be spent only in conformance with the Panama Canal Treaty of 1977 and 
its implementing legislation, and an authorization act provision, 
enacted on the same day, requiring prior specific authorizations. 
B-204078.2, supra.

In other cases, applying traditional rules of statutory construction 
will produce reconciliation. For example, if one statute can be said to 
be more specific than the other, they can be reconciled by applying the 
more specific provision first, with the broader statute then applying 
to any remaining situations. See B-231662, Sept. 1, 1988; B-79243, 
supra.

Legislative history may also help. In B-207186, Feb. 10, 1989, for 
example, authorizing legislation extended the life of the Solar Energy 
and Energy Conservation Bank to March 15, 1988. The 1988 appropriation, 
enacted on the same day, made a 2-year appropriation for the Bank. Not 
only were there no indications of any intent for the appropriation to 
have the effect of extending the Bank's life, there were specific 
indications to the contrary. Thus, GAO regarded the appropriation as 
available, in theory for the full 2-year period, except that the 
authority for anyone to obligate the appropriation would cease when the 
Bank went out of existence.

The most extreme situation, and one in which the last in time rule by 
definition cannot possibly apply, is two conflicting provisions in the 
same statute. Even here, the approaches outlined above will usually 
prove successful. See, e.g., B-211306, June 6, 1983. We have found only 
one case, 26 Comp. Dec. 534 (1920), in which two provisions in the same 
act were found irreconcilable. One provision in an appropriation act 
appropriated funds to the Army for the purchase of land; another 
provision a few pages later in the same act expressly prohibited the 
use of Army appropriations for the purchase of land. The Comptroller of 
the Treasury concluded, in a very brief decision, that the prohibition 
nullified the appropriation. The advantage of this result, although not 
stated this way in the decision, is that Congress would ultimately have 
to resolve the conflict and it is easier to make expenditures that have 
been deferred than to recoup money after it has been spent.

The fact that two allegedly conflicting provisions were contained in 
the same statute influenced the court to reconcile them in Auburn 
Housing Authority, supra. The funding restriction provision used the 
word "hereafter," which, as the court acknowledged, ordinarily connotes 
permanence. However, the court nonetheless held that this provision 
applied only for the duration of the fiscal year and did not constitute 
an implied repeal of the other provision. The opinion observed in this 
regard:

"Given the unique circumstances of this case, the court is not 
convinced that the mere presence of the word 'hereafter' in section 226 
clearly demonstrates Congress's intent to repeal section 519(n). This 
could be a different case if sections 226 and 519(n) appeared in 
separate statutes, but that is not the question we consider in the 
instant appeal."

277 F.3d at 146.

g. Ratification by Appropriation:

"Ratification by appropriation" is the doctrine by which Congress can, 
by the appropriation of funds, confer legitimacy on an agency action 
that was questionable when it was taken. Clearly Congress may ratify 
that which it could have authorized. Swayne & Hoyt, Ltd. v. United 
States, 300 U.S. 297, 301-02 (1937). It is also settled that Congress 
may manifest its ratification by the appropriation of funds. Greene v. 
McElroy, 360 U.S. 474, 504-06 (1959); Ex Parte Endo, 323 U.S. 283, 303 
n.24 (1944); Brooks v. Dewar, 313 U.S. 354, 360-61 (1941).

Having said this, however, we must also emphasize that "ratification by 
appropriation is not favored and will not be accepted where prior 
knowledge of the specific disputed action cannot be demonstrated 
clearly." District of Columbia Federation of Civic Ass'ns v. Airis, 
391 F.2d 478, 482 (D.C. Cir. 1968); Associated Electric Cooperative, 
Inc. v. Morton, 507 F.2d 1167, 1174 (D.C. Cir. 1974), cert. denied, 
423 U.S. 830 (1975); American Legion v. Derwinski, 827 F. Supp. 805, 
809 (D.D.C. 1993), aff'd, 54 F.3d 789 (D.C. Cir. 1995), cert. denied, 
516 U.S. 1041 (1996).

Thus, a simple lump-sum appropriation, without more, will generally not 
afford sufficient basis to find a ratification by appropriation. Endo, 
323 U.S. at 303 n.24; Airis, 391 F.2d at 481-82; Wade v. Lewis, 561 F. 
Supp. 913, 944 (N.D. Ill. 1983); B-213771, July 10, 1984. The 
appropriation "must plainly show a purpose to bestow the precise 
authority which is claimed." Endo, 323 U.S. at 303 n.24. Accord: 
Schism v. United States, 316 F.3d 1259, 1289-1290 (Fed. Cir. 2002), 
cert. denied, ___ U.S. ___, 123 S. Ct. 2246 (2003) ("ratification 
ordinarily cannot occur in the appropriations context unless the 
appropriations bill itself expressly allocates funds for a specific 
agency or activity"); A-1 Cigarette Vending, Inc. v. United States, 
49 Fed. Cl. 345, 354 (2001), aff'd sub nom. 304 F.3d 1349 (Fed. Cir. 
2002), cert. denied sub nom. ___ U.S. ___, 123 S. Ct. 1570 (2003) 
("[S]imply because the lack of an appropriation demonstrates a lack of 
authority does not mean that an appropriation by itself will create 
such authority… . [A] general appropriation of funds for an overall 
program is not sufficient to bestow authority upon a particular aspect 
of an agency's program.").

Some courts have used language which, when taken out of context, 
implies that appropriations cannot serve to ratify prior agency action. 
E.g., Concerned Residents of Buck Hill Falls v. Grant, 537 F.2d 29, 35 
n.12 (3rd Cir. 1976); University of the District of Columbia Faculty 
Ass'n v. Board of Trustees of the University of the District of 
Columbia, 994 F. Supp. 1, 10 (D.D.C. 1998). Nevertheless, while the 
doctrine may not be favored, it does exist. The courts demonstrate 
their reluctance to apply this doctrine by giving extra scrutiny to 
alleged ratifications by appropriation. Their reluctance to find such 
ratifications probably stems from a more general judicial aversion to 
interpreting appropriation acts as changing substantive law. Thus, the 
court observed in Thomas v. Network Solutions, Inc., 2 F. Supp. 2d 22, 
32 at n.12 (D.D.C. 1998), aff'd, 176 F.3d 500 (D.C. Cir. 1999), cert. 
denied, 528 U.S. 1115 (2000) (citations omitted):

" [I]t is well recognized that Congress does not normally perform 
legislative functions--such as ratification--through appropriations 
bills… . This does not mean that Congress cannot effect a ratification 
through an appropriations bill, but it does mean that Congress must be 
especially clear about its intention to do so."

We turn now to some specific situations in which the doctrine of 
ratification by appropriation has been accepted or rejected.

Presidential reorganizations have generated perhaps the largest number 
of cases. Generally, when the President has created a new agency or has 
transferred a function from one agency to another, and Congress 
subsequently appropriates funds to the new agency or to the old agency 
for the new function, the courts have found that the appropriation 
ratified the presidential action. Fleming v. Mohawk Wrecking & Lumber 
Co., 331 U.S. 111, 116 (1947); Isbrandtsen-Moller Co. v. United States, 
300 U.S. 139, 147 (1937). The transfer to the Equal Employment 
Opportunity Commission (EEOC) in 1978 of enforcement responsibility for 
the Age Discrimination in Employment Act and the Equal Pay Act produced 
a minor flood of litigation. The cases were complicated by the 
existence of a legislative veto issue, with the ratification issue 
having to be faced only if the reorganization authority were found 
severable from the legislative veto. Although the courts were not 
uniform, a clear majority found that the subsequent appropriation of 
funds to the EEOC ratified the transfer. EEOC v. Dayton Power & Light 
Co., 605 F. Supp. 13 (S.D. Ohio 1984); EEOC v. Delaware Dept. of Health 
& Social Services, 595 F. Supp. 568 (D. Del. 1984); EEOC v. New York, 
590 F. Supp. 37 (N.D. N.Y. 1984); EEOC v. Radio Montgomery, Inc., 588 
F. Supp. 567 (W.D. Va. 1984); EEOC v. City of Memphis, 581 F. Supp. 179 
(W.D. Tenn. 1983); Muller Optical Co. v. EEOC, 574 F. Supp. 946 (W.D. 
Tenn. 1983), aff'd on other grounds, 743 F.2d 380 (6th Cir. 1984). 
Contra EEOC v. Martin Industries, 581 F. Supp. 1029 (N.D. Ala.), appeal 
dismissed, 469 U.S. 806 (1984); EEOC v. Allstate Insurance Co., 570 F. 
Supp. 1224 (S.D. Miss. 1983), appeal dismissed, 467 U.S. 1232 (1984). 
Congress resolved any doubt by enacting legislation in 1984 to 
expressly ratify all prior reorganization plans implemented pursuant to 
any reorganization statute.[Footnote 136]

Another group of cases that has refused to find ratification by 
appropriation concern proposed construction projects funded under lump-
sum appropriations where the effect would be either to expand the scope 
of a prior congressional authorization or to supply an authorization 
required by statute but not obtained. Libby Rod & Gun Club v. Poteat, 
594 F.2d 742 (9th Cir. 1979); National Wildlife Federation v. Andrus, 
440 F. Supp. 1245 (D.D.C. 1977); Atchison, Topeka & Santa Fe Railway 
Co v. Callaway, 382 F. Supp. 610 (D.D.C. 1974); B-223725, June 9, 1987.

A few additional cases in which ratification by appropriation was found 
are summarized below:

* The Tennessee Valley Authority (TVA) had asserted the authority to 
construct power plants. TVA's position was based on an interpretation 
of its enabling legislation that the court found consistent with the 
purpose of the legislation although the legislation itself was 
ambiguous. The appropriation of funds to TVA for power plant 
construction ratified TVA's position. Young v. Tennessee Valley 
Authority, 606 F.2d 143 (6th Cir. 1979), cert. denied, 445 U.S. 942 
(1980).

* The authority of the Postmaster General to conduct a mail 
transportation experiment was ratified by the appropriation of funds to 
the former Post Office Department under circumstances showing that 
Congress was fully aware of the experiment. The court noted that 
existing statutory authority was broad enough to encompass the 
experiment and that nothing prohibited it. Atchison, Topeka & Santa Fe 
Railway Co. v. Summerfield, 229 F.2d 777 (D.C. Cir. 1955), cert. 
denied, 351 U.S. 926 (1956).

* The authority of the Department of Justice to retain private counsel 
to defend federal officials in limited circumstances, while not 
explicitly provided by statute, is regarded as ratified by the specific 
appropriation of funds for that purpose. 2 Op. Off. Legal Counsel 66 
(1978).

* Another Office of Legal Counsel opinion described instances in which 
Congress has ratified by appropriation the use of United States combat 
forces. The opinion concludes on this point:

"In sum, basic principles of constitutional law--and, in particular, 
the fact that Congress may express approval through the appropriations 
process--and historical practice in the war powers area, as well as the 
bulk of the case law and a substantial body of scholarly opinion, 
support the conclusion that Congress can authorize hostilities through 
its use of the appropriations power. Although it might be the case that 
general funding statutes do not necessarily constitute congressional 
approval for conducting hostilities, this objection loses its force 
when the appropriations measure is directly and conspicuously focused 
on specific military action."[Footnote 137]

Note that in all of the cases in which ratification by appropriation 
was approved, the agency had at least an arguable legal basis for its 
action. See also Airis, 391 F.2d at 481 n.20; B-232482, June 4, 1990. 
The doctrine has not been used to excuse violations of law. Also, when 
an agency action is constitutionally suspect, the courts will require 
that congressional action be particularly explicit. Greene v. McElroy, 
360 U.S. at 506-07; Martin Industries, 581 F. Supp. at 1033-37; Muller 
Optical Co., 574 F. Supp. at 954.

In B-285725, Sept. 29, 2000, the Comptroller General condensed the 
foregoing principles into this test for ratification by appropriation:

"To conclude that Congress through the appropriations process has 
ratified agency action, three factors generally must be present. First, 
the agency takes the action pursuant to at least arguable authority; 
second, the Congress has specific knowledge of the facts; and third, 
the appropriation of funds clearly bestows the claimed authority."

The opinion in B-285725 rejected an assertion by the District of 
Columbia government that Congress had ratified certain funding 
practices that otherwise violated the Antideficiency Act, 31 U.S.C. 
§ 1341. Specifically, it held that information contained in the 
District's budget justifications and said to constitute notice to 
Congress (1) lacked clarity and precision, (2) did not create any 
awareness that could be imputed to Congress as a whole, and (3) was not 
reflected in any legislative language that could reasonably be viewed 
as authorizing the practices in question.

h. Repeal by Implication:

We have on several occasions referred to the rule against repeal by 
implication. The leading case in the appropriations context is 
Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978) (hereafter 
TVA v. Hill). In that case, Congress had authorized construction of the 
Tellico Dam and Reservoir Project on the Little Tennessee River, and 
had appropriated initial funds for that purpose. Subsequently, Congress 
passed the Endangered Species Act of 1973, 16 U.S.C. §§ 1531 et seq. 
Under the provisions of that Act, the Secretary of the Interior 
declared the "snail darter," a 3-inch fish, to be an endangered 
species. It was eventually determined that the Little Tennessee River 
was the snail darter's critical habitat and that completion of the dam 
would result in extinction of the species. Consequently, environmental 
groups and others brought an action to halt further construction of the 
Tellico Project. In its decision, the Supreme Court held in favor of 
the plaintiffs, notwithstanding the fact that construction was well 
under way and that, even after the Secretary of the Interior's actions 
regarding the snail darter, Congress had continued to make yearly 
appropriations for the completion of the dam project.

The appropriation involved was a lump-sum appropriation that included 
funds for the Tellico Dam but made no specific reference to it. 
However, passages in the reports of the appropriations committees 
indicated that those committees intended the funds to be available 
notwithstanding the Endangered Species Act. The Court held that this 
was not enough. The doctrine against repeal by implication, the Court 
said, applies with even greater force when the claimed repeal rests 
solely on an appropriation act:

"When voting on appropriations measures, legislators are entitled to 
operate under the assumption that the funds will be devoted to purposes 
which are lawful and not for any purpose forbidden."

Id. at 190. Noting that "[e]xpressions of committees dealing with 
requests for appropriations cannot be equated with statutes enacted by 
Congress" (id. at 191), the Court held that the unspecified inclusion 
of the Tellico Dam funds in a lump-sum appropriation was not sufficient 
to constitute a repeal by implication of the Endangered Species Act 
insofar as it related to that project.[Footnote 138] In other words, 
the doctrine of ratification by appropriation we discussed in the 
preceding section does not apply, at least when the appropriation is an 
otherwise unspecified lump sum, where the effect would be to change an 
existing statutory requirement.

TVA v. Hill is important because it is a clear and forceful statement 
from the Supreme Court. In terms of the legal principle involved, 
however, the Court was breaking little new ground. A body of case law 
from the lower courts had already laid the legal foundation. One group 
of cases, for example, had established the proposition that the 
appropriation of funds does not excuse noncompliance with the National 
Environmental Policy Act. Environmental Defense Fund v. Froehlke, 
473 F.2d 346 (8th Cir. 1972); Committee for Nuclear Responsibility v. 
Seaborg, 463 F.2d 783 (D.C. Cir. 1971); National Audubon Society v. 
Andrus, 442 F. Supp. 42 (D.D.C. 1977); Environmental Defense Fund v. 
Corps of Engineers, 325 F. Supp. 749 (E.D. Ark. 1971). Cases supporting 
the general proposition of TVA v. Hill in other contexts were also not 
uncommon. See Associated Electric Cooperative, Inc. v. Morton, 507 F.2d 
1167 (D.C. Cir.), cert. denied, 423 U.S. 830 (1974); District of 
Columbia Federation of Civic Ass'ns v. Airis, 391 F.2d 478 (D.C. Cir. 
1968); Maiatico v. United States, 302 F.2d 880 (D.C. Cir. 1962).

Some subsequent cases applying the concept of TVA v. Hill (although not 
all citing that case) include Donovan v. Carolina Stalite Co., 734 F.2d 
1547 (D.C. Cir. 1984); 64 Comp. Gen. 282 (1985); B-208593.6, Dec. 22, 
1988; B-213771, July 10, 1984; B-204874, July 28, 1982; and B-193307, 
Feb. 6, 1979. In B-204874, for example, the Comptroller General advised 
that the otherwise unrestricted appropriation of coal trespass receipts 
to the Bureau of Land Management did not implicitly amend or repeal the 
provisions of the Federal Land Policy and Management Act prescribing 
the use of such funds.

In reading the cases, one will encounter the occasional sweeping 
statement such as "appropriations acts cannot change existing law," 
National Audubon Society v. Andrus, 442 F. Supp. at 45. Such statements 
can be misleading, and should be read in the context of the facts of 
the particular case. It is clear from TVA v. Hill, together with its 
ancestors and its progeny, that Congress cannot legislate by 
legislative history. It seems equally clear that the appropriation of 
funds, without more, is not sufficient to overcome a statutory 
requirement. If, however, instead of an unrestricted lump sum, the 
appropriation in TVA v. Hill had provided a specific line-item 
appropriation for the Tellico project, together with the words 
"notwithstanding the provisions of the Endangered Species Act," it is 
difficult to see how a court could fail to give effect to the express 
mandate of the appropriation.

Thus, the message is not that Congress cannot legislate in an 
appropriation act. It can, and we have previously cited a body of case 
law to that effect. The real message is that, if Congress wants to use 
an appropriation act as the vehicle for suspending, modifying, or 
repealing a provision of existing law, it must do so advisedly, 
speaking directly and explicitly to the issue.

The Supreme Court conveyed this message succinctly in Robertson v. 
Seattle Audubon Society, 503 U.S. 429, 440 (1992) (citations omitted), 
holding that--

"[A]lthough repeals by implication are especially disfavored in the 
appropriations context, Congress nonetheless may amend substantive law 
in an appropriations statute, as long as it does so clearly."

In Robertson, the Court found an implied repeal by appropriation act to 
be clear and explicit.

Subsequent judicial decisions, of course, apply the Robertson approach 
to alleged implied repeals by appropriation. Since the issue is one of 
basic statutory construction, the courts naturally reach different 
results depending on the particular statutory language involved. For 
example, Pontarelli v. United States Department of the Treasury, 
285 F.3d 216 (3rd Cir. 2002), held that an annual appropriation 
restriction enacted for many years stating that "[n]one of the funds 
appropriated herein shall be available to investigate or act upon 
applications for relief from Federal firearms disabilities under 
18 U.S.C. § 925(c)" clearly superseded the provision in Title 18 of the 
United States Code. Pontarelli cites many other decisions that reached 
the same conclusion with respect to this particular appropriation 
language. Another case finding a clear implied repeal by appropriation 
is Bald Eagle Ridge Protection Ass'n, Inc. v. Mallory, 119 F. Supp. 2d 
473 (M.D. Pa. 2000), aff'd, 275 F.3d 33 (3rd 2001).

Examples of cases that reconciled the appropriation and other statutory 
provisions, and thus found no implied repeal include: Strawser v. 
Atkins, 290 F.3d 720 (4th Cir.), cert. denied, 537 U.S. 1045 (2002); 
Auburn Housing Authority v. Martinez, 277 F.3d 138 (2nd Cir. 2002); 
Firebaugh Canal Co. v. United States, 203 F.3d 568 (9th Cir. 2000); 
Ramey v. Stevedoring Services of America, 134 F.3d 954 (9th Cir. 1998); 
Environmental Defense Center v. Babbitt, 73 F.3d 867 (9th Cir. 1995).

Still other cases hold that appropriation restrictions alleged to be 
permanent in superseding other laws were effective only for a fiscal 
year. E.g., Auburn Housing Authority, supra; Building & Construction 
Trades Department, AFL-CIO v. Martin, 961 F.2d 269, 273 (D.C. Cir.), 
cert. denied, 506 U.S. 915 (1992). In a related context, the court in 
Williams v. United States, 240 F.3d 1019 (Fed. Cir. 2001), cert. 
denied, 535 U.S. 911 (2002), disagreed with a series of Comptroller 
General decisions and held that appropriation language enacted in 1982 
that required specific congressional authorization for pay raises for 
judges was not permanent legislation but expired at the end of fiscal 
year 1982.

i. Lack of Authorization:

As we have previously noted, there is no general statutory requirement 
that appropriations be preceded by specific authorizations, although 
they are required in some instances. Where authorizations are not 
required by law, Congress may, subject to a possible point of order, 
appropriate funds for a program or object that has not been previously 
authorized or which exceeds the scope of a prior authorization, in 
which event the enacted appropriation, in effect, carries its own 
authorization and is available to the agency for obligation and 
expenditure. E.g., 67 Comp. Gen. 401 (1988); B-219727, July 30, 1985; 
B-173832, Aug. 1, 1975.

It has also been held that, as a general proposition, the appropriation 
of funds for a program whose funding authorization has expired, or is 
due to expire during the period of availability of the appropriation, 
provides sufficient legal basis to continue the program during that 
period of availability, absent indication of contrary congressional 
intent. 65 Comp. Gen. 524 (1986); 65 Comp. Gen. 318, 320-21 (1986); 
55 Comp. Gen. 289 (1975); B-131935, Mar. 17, 1986; B-137063, Mar. 21, 
1966. The result in these cases follows in part from the fact that the 
total absence of appropriations authorization legislation would not 
have precluded the making of valid appropriations for the programs. 
E.g., B-202992, May 15, 1981. In addition, as noted, the result is 
premised on the conclusion, derived either from legislative history or 
at least the absence of legislative history to the contrary, that 
Congress did not intend for the programs to terminate.[Footnote 139]

There are limits on how far this principle can be taken, depending on 
the particular circumstances. One illustration is B-207186, Feb. 10, 
1989. A 1988 continuing resolution provided funds for the Solar Bank, 
to remain available until September 30, 1989. Legislation enacted on 
the same day provided for the Bank to terminate on March 15, 1988. 
Based in part on legislative history indicating the intent to terminate 
the Bank on the specified sunset date, GAO distinguished prior 
decisions in which appropriations were found to authorize program 
continuation and concluded that the appropriation did not authorize 
continuation of the Solar Bank beyond March 15, 1988.

The Comptroller General's decision in 71 Comp. Gen. 378 (1992) provides 
another variant. Section 8 of the Civil Rights Commission's authorizing 
act stated that "the provisions of this Act shall terminate on 
September 30, 1991." While Congress was actively working on 
reauthorization legislation for the Commission toward the end of fiscal 
year 1991, this legislation was not enacted until after September 30, 
1991. Nevertheless, Congress had enacted a continuing resolution for 
the early part of fiscal year 1992 that specifically included funding 
for the Commission. The Comptroller General first observed that the 
line of cases discussed above permitting programs to continue after 
expiration of their authorization did not apply. Unlike the mere 
authorization lapse in those cases, the statute here provided that the 
Commission would "terminate" on September 30. The Comptroller General 
also distinguished the Solar Bank case, discussed above, since the 
provision for termination of the Commission was enacted long before the 
continuing resolution that provided for the Commission's funding after 
September 30. In the final analysis, the decision held that the funding 
provision for the Commission was irreconcilable with the section 8 
termination provision and effectively suspended the operation of 
section 8. In reaching this conclusion, the decision noted the clear 
intent of Congress that the Commission continue to operate without 
interruption after September 30, 1991.

A device Congress has used on occasion to avoid this type of problem is 
an "automatic extension" provision under which funding authorization is 
automatically extended for a specified time period if Congress has not 
enacted new authorizing legislation before it expires. An example is 
discussed in B-214456, May 14, 1984.

Questions concerning the effect of appropriations on expired or about-
to-expire authorizations have tended to arise more frequently in the 
context of continuing resolutions. The topic is discussed further, 
including several of the cases cited above, in Chapter 8.

Where specific authorization is statutorily required, the case may 
become more difficult. In Libby Rod & Gun Club v. Poteat, 594 F.2d 742 
(9th Cir. 1979), the court held that a lump-sum appropriation available 
for dam construction was not, by itself, sufficient to authorize a 
construction project for which specific authorization had not been 
obtained as required by 33 U.S.C. § 401. The court suggested that 
TVA v. Hill and similar cases do not "mandate the conclusion that 
courts can never construe appropriations as congressional 
authorization," although it was not necessary to further address that 
issue in view of the specific requirement in that case. Poteat, 
594 F.2d at 745-46. The result would presumably have been different if 
Congress had made a specific appropriation "notwithstanding the 
provisions of 33 U.S.C. § 401." It should be apparent that the 
doctrines of repeal by implication and ratification by appropriation 
are relevant in analyzing issues of this type.

D. Statutory Interpretation: Determining Congressional Intent:

"[T]his is a case for applying the canon of construction of the wag who 
said, when the legislative history is doubtful, go to the statute."

Greenwood v. United States, 350 U.S. 366, 374 (1956) (Frankfurter, J.).

1. The Goal of Statutory Construction[Footnote 140]

As we have noted elsewhere, an appropriation can be made only by means 
of a statute. In addition to providing funds, the typical appropriation 
act includes a variety of general provisions. Anyone who works with 
appropriations matters will also have frequent need to consult 
authorizing and program legislation. It should thus be apparent that 
the interpretation of statutes is of critical importance to 
appropriations law.[Footnote 141]

The objective of this section is to provide a brief overview, designed 
primarily for those who do not work extensively with legislative 
materials. The cases we cite are but a sampling, selected for 
illustrative purposes or for a particularly good judicial statement of 
a point. The literature in the area is voluminous, and readers who need 
more than we can provide are encouraged to consult one of the 
established treatises such as Sutherland's Statutes and Statutory 
Construction (hereafter "Sutherland").[Footnote 142]

The goal of statutory construction is simply stated: to determine and 
give effect to the intent of the enacting legislature. Philbrook v. 
Glodgett, 421 U.S. 707, 713 (1975); United States v. American Trucking 
Ass'ns, Inc., 310 U.S. 534, 542 (1940); 55 Comp. Gen. 307, 317 (1975); 
38 Comp. Gen. 229 (1958). While the goal may be simple, the means of 
achieving it are complex and often controversial. The primary vehicle 
for determining legislative intent is the language of the statute 
itself. There is an established body of principles, known as "canons" 
of construction, that are designed to aid in arriving at the best 
interpretation of statutory language. The statute's legislative history 
also is usually consulted to aid in the effort.

At this point, it is important to recognize that the concept of 
"legislative intent" is in many cases a fiction. Where not clear from 
the statutory language itself, it is often impossible to ascribe an 
intent to Congress as a whole.[Footnote 143] As we will note later, a 
committee report represents the views of that committee. Statements by 
an individual legislator represent the views of that individual. Either 
may, but do not necessarily or inherently, reflect a broader 
congressional perception.

Even interpretive aids that rely on the statutory language itself do 
not provide hard and fast rules that can pinpoint congressional intent 
with scientific precision. One problem is that, more often than not, a 
statute has no obvious meaning that precisely answers a particular 
issue in dispute before the courts, the Comptroller General, or another 
decision maker. If the answers were that obvious, most of the cases 
discussed in this section would never have arisen.

The reality is that there probably is (and was) no actual 
"congressional intent" with respect to most specific issues that find 
their way to the courts, GAO, or other forums. In all likelihood, 
Congress did not affirmatively consider these specific issues for 
purposes of forming an intent about them. Necessarily, Congress writes 
laws in fairly general terms that convey broad concepts, principles, 
and policies. It leaves administering agencies and courts to fill in 
the gaps. Indeed, Congress sometimes deliberately leaves issues 
ambiguous because it lacks a sufficient consensus to resolve them in 
the law.

To point out the challenges in statutory interpretation, however, is by 
no means to denigrate the process. Applying the complex maze of 
interpretive aids, imperfect as they may be, serves the essential 
purpose of providing a common basis for problem solving and determining 
what the law is.

This in turn is important for two reasons. First, everyone has surely 
heard the familiar statement that our government is a government of 
laws and not of men.[Footnote 144] This means that you have a right to 
have your conduct governed and judged in accordance with identifiable 
principles and standards, not by the whim of the decision maker. The 
law should be reasonably predictable. A lawyer's advice that a proposed 
action is or is not permissible amounts to a reasoned and informed 
judgment as to what a court is likely to do if the action is 
challenged. While this can never be an absolute guarantee, it once 
again must be based on identifiable principles and standards. Conceding 
its weaknesses, the law of statutory construction represents an 
organized approach for doing this.

Second, predictability is important in the enactment of statutes as 
well. Congress legislates against the background of the rules and 
principles that make up the law of statutory construction, and must be 
able to anticipate how the courts will apply them in interpreting the 
statutes it enacts.[Footnote 145]

2. The "Plain Meaning" Rule:

"The Court's task is to construe not English but congressional 
English."

Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 95 (1959) 
(Frankfurter, J., dissenting).

a. In General:

By far the most important rule of statutory construction is this: You 
start with the language of the statute. Countless judicial decisions 
reiterate this rule. E.g., Hartford Underwriters Insurance Co. v. Union 
Planters Bank, N.A., 530 U.S. 1 (2000); Robinson v. Shell Oil Co., 
519 U.S. 337 (1997); Connecticut National Bank v. Germain, 503 U.S. 249 
(1992); Mallard v. United States District Court for the Southern 
District of Iowa, 490 U.S. 296, 300 (1989). The primary vehicle for 
Congress to express its intent is the words it enacts into law. As 
stated in an early Supreme Court decision:

"The law as it passed is the will of the majority of both houses, and 
the only mode in which that will is spoken is in the act itself; and we 
must gather their intention from the language there used … ."

Aldridge v. Williams, 44 U.S. (3 How.) 9, 24 (1845). A somewhat better 
known statement is from United States v. American Trucking Ass'ns, 
310 U.S. 534, 543 (1940):

"There is, of course, no more persuasive evidence of the purpose of a 
statute than the words by which the legislature undertook to give 
expression to its wishes."

If the meaning is clear from the language of the statute, there is no 
need to resort to legislative history or any other extraneous source. 
As the Supreme Court observed in Connecticut National Bank v. Germain:

"[I]n interpreting a statute a court should always turn first to one, 
cardinal canon before all others. We have stated time and again that 
courts must presume that a legislature says in a statute what it means 
and means in a statute what it says there… . When the words of a 
statute are unambiguous, then, this first canon is also the last: 
judicial inquiry is complete."

503 U.S. at 253-254 (citations and quotation marks omitted). See also 
Hartford Underwriters Insurance Co., supra; Robinson v. Shell Oil Co., 
519 U.S. 337 (1997); Mallard, 490 U.S. 296; United States v. Ron Pair 
Enterprises, Inc., 489 U.S. 235, 241 (1989); Tennessee Valley 
Authority v. Hill, 437 U.S. 153, 184 n.29 (1978); 56 Comp. Gen. 943 
(1977); B-287158, Oct. 10, 2002; B-290021, July 15, 2002; B-288173, 
June 13, 2002; B-288658, Nov. 30, 2001.

This is the so-called "plain meaning" rule. If the meaning is "plain," 
that's the end of the inquiry and you apply that meaning. The unanimous 
opinion in Robinson v. Shell Oil Co. stated the rule as follows:

"Our first step in interpreting a statute is to determine whether the 
language at issue has a plain and unambiguous meaning with regard to 
the particular dispute in the case. Our inquiry must cease if the 
statutory language and 'the statutory scheme is coherent and 
consistent.'…:

"The plainness or ambiguity of statutory language is determined by 
reference to the language itself, the specific context in which that 
language is used, and the broader context of the statute as a whole."

519 U.S. at 340-341 (citations omitted).

The plain meaning rule thus embodies the universal view that 
interpretations of a statute should be anchored in, and flow from, the 
statute's text. Its application to a particular statutory provision 
turns on subjective judgments over which reasonable and intelligent 
people will differ.

An example of this is Smith v. United States, 508 U.S. 223 (1993), in 
which the Justices agreed that the case should be resolved on the basis 
of the statute's plain meaning, but reached sharply divergent 
conclusions as to what that plain meaning was. In Smith, the defendant 
had traded his gun for illegal drugs. He was convicted under a statute 
that provided enhanced penalties for the "use" of a firearm "during and 
in relation to … [a] drug trafficking crime." The majority affirmed his 
conviction, reasoning that exchanging a firearm for drugs constituted a 
"use" of the firearm within the plain meaning of the statute--that is, 
use in the sense of employ. Three Justices dissented, contending 
vehemently that the plain meaning of the statute covered only the use 
of a firearm for its intended purpose as a weapon.[Footnote 146]

b. The Plain Meaning Rule versus Legislative History:

The extent to which sources outside the statute itself, particularly 
legislative history, should be consulted to help shed light on the 
statutory scheme has been the subject of much controversy in recent 
decades. One school of thought, most closely identified with Supreme 
Court Justice Antonin Scalia, holds that resort to legislative history 
is never appropriate. This approach is sometimes viewed as a variant of 
the plain meaning rule.[Footnote 147] A more widely expressed statement 
of the plain meaning rule is that legislative history can be consulted 
but only if it has first been determined that the statutory language is 
"ambiguous"--that is, that there is no plain meaning.

As a practical matter, however, courts generally examine the 
legislative history as an integral part of statutory construction. 
Thus, Sutherland observes:

"[I]t has been said, usually a court looks into the legislative history 
to clear up some statutory ambiguity… but such ambiguity is not the 
sine qua non for judicial inquiry into legislative history … the plain 
meaning rule is not to be used to thwart or distort the intent of 
Congress by excluding from consideration enlightening material from the 
legislative files… ."

2A Sutherland, § 48:01, at 412-413 (citations and quotation marks 
omitted).

In other words, like all "rules" of statutory construction, the plain 
meaning rule is "rather an axiom of experience than a rule of law, and 
does not preclude consideration of persuasive evidence if it exists." 
Boston Sand & Gravel Co. v. United States, 278 U.S. 41, 48 (1928) 
(Holmes, J.), quoted in Watt v. Alaska, 451 U.S. 259, 266 (1981). In 
another often-quoted statement, the Supreme Court said:

"When aid to construction of the meaning of words, as used in the 
statute, is available, there certainly can be no 'rule of law' which 
forbids its use, however clear the words may appear on 'superficial 
examination.'"

United States v. American Trucking Ass'ns, Inc., 310 U.S. 534, 543-44 
(1940), as quoted in Train v. Colorado Public Interest Research Group, 
Inc., 426 U.S. 1, 10 (1976) (footnotes omitted).

Indeed, the Supreme Court, like other courts, routinely consults the 
legislative history even if the statutory language seems 
unambiguous.[Footnote 148] One example is Conroy v. Aniskoff, 507 U.S. 
511 (1993), in which the Court found the relevant statute to be 
"unambiguous, unequivocal, and unlimited." Id. at 514. Nevertheless, 
Justice Stevens, writing for the Court, examined the legislative 
history in detail to confirm that its literal reading of the statute 
was not absurd, illogical, or contrary to congressional intent. Justice 
Scalia, however, wrote a spirited concurring opinion that described the 
inquiry into the legislative history as "a waste of research time and 
ink" as well as a "disruptive lesson in the law." Id. at 519.

3. The Limits of Literalism: Errors in Statutes and "Absurd 
Consequences":

"There is no surer way to misread any document than to read it 
literally."

Guiseppi v. Walling, 144 F.2d 608, 624 (2nd Cir. 1944) (Learned Hand, 
J.).

Even the strictest adherence to the plain meaning rule does not justify 
application of the literal terms of a statute in all cases. There are 
two well-established exceptions. The first is that statutory language 
will not be enforced literally when that language is the product of an 
obvious drafting error. In such cases, courts (and other decision 
makers) will, in effect, rewrite the statute to correct the error and 
conform the statute to the obvious intent.

The second exception is the frequently cited canon of construction that 
statutory language will not be interpreted literally if doing so would 
produce an "absurd consequence" or "absurd result," that is, one that 
the legislature, presumably, could not have intended.

a. Errors in Statutes:

(1) Drafting errors:

A statute may occasionally contain what is clearly a technical or 
typographical error which, if read literally, could alter the meaning 
of the statute or render execution effectively impossible. In such a 
case, if the legislative intent is clear, the intent will be given 
effect over the erroneous language. One recent example is Chickasaw 
Nation v. United States, 534 U.S. 84 (2001). The decision turned on the 
effect of a parenthetical reference to the Tax Code that had been 
included in the Indian Gaming Regulatory Act. After examining the 
structure and language of the Indian Gaming Regulatory Act as a whole, 
as well as its legislative history, the Court concluded that the 
parenthetical reference was "simply a drafting mistake"--specifically, 
the failure to delete a cross-reference from an earlier version of the 
bill--and declined to give it any effect. Chickasaw Nation, 534 U.S. at 
91.

In a number of other cases, courts have followed the same approach by 
correcting obvious printing or typographical errors. See United States 
National Bank of Oregon v. Independent Insurance Agents of America, 
Inc., 508 U.S. 439 (1993); Ronson Patents Corp. v. Sparklets Devices, 
Inc., 102 F. Supp. 123 (E.D. Mo. 1951); Fleming v. Salem Box Co., 38 F. 
Supp. 997 (D. Ore. 1940); Neely v. State of Arkansas, 877 S.W.2d 589 
(Ark.1994); Pressman v. State Tax Commission, 102 A.2d 821 (Md. 1954); 
Johnson v. United States Gypsum Co., 229 S.W.2d 671 (Ark. 1950); 
Baca v. Board of Commissioners of Bernalillo County, 62 P. 979 (N.M. 
1900).[Footnote 149]

Comptroller General decisions have likewise repaired obvious drafting 
errors. In one situation, a supplemental appropriation act provided 
funds to pay certain claims and judgments as set forth in Senate 
Document 94-163. Examination of the documents made it clear that the 
reference should have been to Senate Document 94-164, as Senate 
Document 94-163 concerned a wholly unrelated subject. The manifest 
congressional intent was held controlling, and the appropriation was 
available to pay the items specified in Senate Document 94-164. 
B-158642-O.M., June 8, 1976. The same principle had been applied in a 
very early decision in which an 1894 appropriation provided funds for 
certain payments in connection with an election held on "November 
fifth," 1890. The election had in fact been held on November 4. 
Recognizing the "evident intention of Congress," the decision held that 
the appropriation was available to make the specified payments. 1 Comp. 
Dec. 1 (1894). See also 11 Comp. Dec. 719 (1905); 8 Comp. Dec. 205 
(1901); 1 Comp. Dec. 316 (1895).

Other decisions follow the same approach. See, e.g., 64 Comp. Gen. 221 
(1985) (erroneous use of the word "title" instead of "subchapter"); 
B-261579, Nov. 1, 1995 (mistaken cross-reference to the wrong section 
of another law); B-127507, Dec. 10, 1962 (printing error causing the 
statute to refer to "section 12" of a certain township for inclusion in 
a national forest, rather than "section 13").

The Justice Department's Office of Legal Counsel applied Comptroller 
General decisions in an opinion dated May 21, 1996, that addressed an 
obvious problem with the application of an appropriations act.[Footnote 
150] The act required the United States Information Agency to move an 
office to south Florida "not later than April 1, 1996," and made funds 
available for that purpose. However, the act was not signed into law 
until April 26, 1996. Recognizing that the act could not be implemented 
as written, the opinion concluded that the funds remained available to 
finance the move after April 1.

(2) Error in amount appropriated:

A 1979 decision illustrates one situation in which the above rule will 
not apply. A 1979 appropriation act contained an appropriation of $36 
million for the Inspector General of the Department of Health, 
Education, and Welfare. The bills as passed by both Houses and the 
various committee reports specified an appropriation of only $35 
million. While it seemed apparent that the $36 million was the result 
of a typographical error, it was held that the language of the enrolled 
act signed by the President must control and that the full $36 million 
had been appropriated. The Comptroller General did, however, inform the 
Appropriations Committees. 58 Comp. Gen. 358 (1979). See also 2 Comp. 
Dec. 629 (1896); 1 Bowler, First Comp. Dec. 114 (1894).

However, if the amount appropriated is a total derived from adding up 
specific sums enumerated in the appropriation act, then the amount 
appropriated will be the amount obtained by the correct addition, 
notwithstanding the specification of an erroneous total in the 
appropriation act. 31 U.S.C. § 1302; 2 Comp. Gen. 592 (1923).

b. Avoiding "Absurd Consequences":

Departures from strict adherence to the statutory text go beyond cases 
involving drafting and typographical errors. In fact, it is more common 
to find cases in which the courts do not question that Congress meant 
to choose the words it did, but conclude that it could not have meant 
them to apply literally in a particular context. The generally accepted 
principle here is that the literal language of a statute will not be 
followed if it would produce a result demonstrably inconsistent with 
clearly expressed congressional intent.

The case probably most frequently cited for this proposition is Church 
of the Holy Trinity v. United States, 143 U.S. 457 (1892), which gives 
several interesting examples. One of those examples is United States v. 
Kirby, 74 U.S. (7 Wall.) 482 (1868), in which the Court held that a 
statute making it a criminal offense to knowingly and willfully 
obstruct or retard a driver or carrier of the mails did not apply to a 
sheriff arresting a mail carrier who had been indicted for murder. 
Another is an old English ruling that a statute making it a felony to 
break out of jail did not apply to a prisoner who broke out because the 
jail was on fire. Holy Trinity, 143 U.S. at 460-61. An example from 
early administrative decisions might be 24 Comp. Dec. 775 (1918), 
holding that an appropriation for "messenger boys" was available to 
hire "messenger girls."[Footnote 151]

In cases decided after Holy Trinity, the Court has emphasized that 
departures from the plain meaning rule are justified only in "rare and 
exceptional circumstances," such as the illustrations used in Holy 
Trinity. Crooks v. Harrelson, 282 U.S. 55, 60 (1930). See also United 
States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242 (1989); 
Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982); 
Tennessee Valley Authority v. Hill, 437 U.S. 153, 187 n.33 (1978) 
(citing Crooks v. Harrelson with approval; hereafter TVA v. Hill).

This exception to the plain meaning rule is also sometimes phrased in 
terms of avoiding absurd consequences. E.g., United States v. Ryan, 
284 U.S. 167, 175 (1931). As the dissenting opinion in TVA v. Hill 
points out (437 U.S. at 204 n.14), there is a bit of confusion in this 
respect in that Crooks--again, cited with approval by the majority in 
TVA v. Hill--explicitly states that avoiding absurd consequences is not 
enough, although the Court has used the absurd consequence formulation 
in post-Crooks cases such as Ryan. In any event, as a comparison of the 
majority and dissenting opinions in TVA v. Hill will demonstrate, the 
absurd consequences test is not always easy to apply in that what 
strikes one person as absurd may be good law to another.

The case of United States v. Singleton, 144 F.3d 1343 (10th Cir. 1998), 
vacated on reh'g en banc, 165 F.3d 1297, cert. denied, 527 U.S. 1024 
(1999), provides another illustration of this point. Ms. Singleton was 
convicted of various crimes following testimony against her by a 
witness who had received a plea bargain in exchange for his testimony. 
She maintained that her conviction was tainted because the plea bargain 
constituted a violation of 18 U.S.C. § 201(c)(2), which provides in 
part:

"Whoever … directly or indirectly … promises anything of value to any 
person, … because of the testimony under oath or affirmation given or 
to be given by such person as a witness upon trial … before any court … 
shall be fined under this title or imprisoned for not more than two 
years, or both."

A three judge panel of the Tenth Circuit agreed and reversed her 
conviction. They held that the word "whoever" by its plain terms 
applied to the federal prosecutor and, just as plainly, the plea 
bargain promised something of value because of testimony to be given as 
a witness upon trial.

The full Tenth Circuit vacated the panel's ruling and reinstated the 
conviction. The majority held that the panel's construction of the 
statute was "patently absurd" and contradicted long-standing 
prosecutorial practice. 165 F.3d at 1300. The three original panel 
members remained unconvinced and dissented. Far from being "absurd," 
they viewed their construction as a "straight-forward interpretation" 
of the statute that honored important constitutional values. One such 
value, they said, was "the proper role of the judiciary as the law-
interpreting, rather than lawmaking, branch of the federal government." 
Id. at 1309.

While the absurd consequences rule must be invoked with care, it does 
have useful applications. The Comptroller General invoked this rule in 
holding that an appropriation act proviso requiring competition in the 
award of certain grants did not apply to community development block 
grants, which were allocated by a statutory formula. B-285794, Dec. 5, 
2000 ("Without an affirmative expression of such intent, we are 
unwilling to read the language of the questioned proviso in a way that 
would clearly produce unreasonable and impractical consequences."). See 
also B-260759, May 2, 1995 (rejecting a literal reading of a statutory 
provision that would defeat its purpose and produce anomalous results).

4. Statutory Aids to Construction:

The remainder of this section discusses various sources to assist in 
determining the meaning of statutory language, plain or otherwise. We 
start with sources that are contained in the statute being construed or 
in other statutes that provide interpretive guidance for general 
application. The main advantage of these statutory aids is that, as 
laws themselves, they carry authoritative weight. Their main 
disadvantage is that, while useful on occasion, they have limited scope 
and address relatively few issues of interpretation.

a. Definitions, Effective Dates, and Severability Clauses:

Statutes frequently contain their own set of definitions for terms that 
they use. Obviously, these definitions take precedence over other 
sources to the extent that they apply.

A statute may also contain an effective date provision that sets forth 
a date (or dates) when it will become operative. These provisions are 
most frequently used when Congress intends to delay or phase in the 
effectiveness of a statute in whole or in part. The general rule, even 
absent an effective date provision, is that statutes take effect on the 
date of their enactment and apply prospectively. See, e.g., B-300866, 
May 30, 2003, and authorities cited. Therefore, effective date 
provisions are unnecessary if the normal rule is intended. (Later in 
this chapter we will discuss more complicated issues concerning the 
retroactive application of statutes.)

Another provision sometimes included is a so-called "severability" 
clause. The purpose of this provision is to set forth congressional 
intent in the unhappy event that part of a statute is held to be 
unconstitutional. The clause states whether or not the remainder of the 
statute should be "severed" from the unconstitutional part and continue 
to be operative. Again, the general rule is that statutes will be 
considered severable absent a provision to the contrary or some other 
clear indication of congressional intent that the whole statute should 
fall if part of it is declared unconstitutional. Thus, the clause is 
unnecessary in the usual case. However, the absence of a severability 
clause will not create a presumption against severability. See, e.g., 
New York v. United States, 505 U.S. 144, 186-187 (1992).

b. The Dictionary Act:

Chapter 1 of Title 1 of the United States Code, §§ 1-8, commonly known 
as the "Dictionary Act," provides certain rules of construction and 
definitions that apply generally to federal statutes. For example, 
section 1 provides in part:

"In determining the meaning of any Act of Congress, unless the context 
indicates otherwise--

"the words 'person' and 'whoever' include corporations, companies, 
associations, firms, partnerships, societies, and joint stock 
companies, as well as individuals … ."

Occasionally, the courts use the Dictionary Act to resolve questions of 
interpretation. E.g., United States v. Reid, 206 F. Supp. 2d 132 (D. 
Mass. 2002) (an aircraft is not a "vehicle" for purposes of the USA 
PATRIOT Act); United States v. Belgarde, 148 F. Supp. 2d 1104 (D. 
Mont.), aff'd, 300 F.3d 1177 (9th Cir. 2001) (a government agency, 
which the defendant was charged with burglarizing, is not a "person" 
for purposes of the Major Crimes Act). Courts also hold on occasion 
that the Dictionary Act does not apply. See Rowland v. California Men's 
Colony, 506 U.S. 194 (1993) (context refutes application of the Title 
1, United States Code, definition of "person").

c. Effect of Codification:

Congress regularly passes laws that "codify," or enact into positive 
law, the contents of various titles of the United States Code. The 
effect of such codifications is to make that United States Code title 
the official evidence of the statutory language it contains.[Footnote 
152] Codification acts typically delete obsolete provisions and make 
other technical and clarifying changes to the statutes they codify. 
Codification acts usually include language stating that they should not 
be construed as making substantive changes in the laws they replace. 
See, e.g., Pub. L. No. 97-258, § 4(a), 96 Stat. 877, 1067 (1982) 
(codifying Title 31 of the United States Code); 69 Comp. Gen. 691 
(1990).[Footnote 153]

5. Canons of Statutory Construction:

As discussed previously, under the plain meaning rule--the overriding 
principle of statutory construction--the meaning of a statute must be 
anchored in its text. Over the years, courts have developed a host of 
conventions or guidelines for ascertaining the meaning of statutory 
text that are usually referred to as "canons" of construction. They 
range from broad principles that apply in virtually every case (such as 
the canon that statutes are construed as a whole) to narrow rules that 
apply in limited contexts.

Like all other aids to construing statutes, the canons represent rules 
of thumb that are often useful but do not lend themselves to 
mechanistic application or slavish adherence. As the Supreme Court 
observed in Chickasaw Nation v. United States:

"[C]anons are not mandatory rules. They are guides that need not be 
conclusive… . They are designed to help judges determine the 
Legislature's intent as embodied in particular statutory language. And 
other circumstances evidencing congressional intent can overcome their 
force."

534 U.S. 84, 94 (2001) (citations and quotation marks omitted).

One problem with the canons is that they often appear to contradict 
each other. In a frequently cited law review article, Professor Karl 
Llewellyn presented an analysis demonstrating that for many canons, 
there was an offsetting canon to the opposite effect.[Footnote 154]

Recognizing their limitations, this section will briefly describe some 
of the more frequently invoked canons.

a. Construe the Statute as a Whole:

We start with one canon that virtually always applies and is rarely if 
ever contradicted. As Sutherland puts it:

"A statute is passed as a whole and not in parts or sections and is 
animated by one general purpose and intent. Consequently, each part or 
section should be construed in connection with every other part or 
section so as to produce a harmonious whole."

2A Sutherland, § 46:05 at 154.

Like all other courts, the Supreme Court follows this venerable canon. 
E.g., United States v. Cleveland Indians Baseball Co., 532 U.S. 200, 
217 (2001) ("it is, of course, true that statutory construction 'is a 
holistic endeavor' and that the meaning of a provision is 'clarified by 
the remainder of the statutory scheme'"); FDA v. Brown & Williamson 
Tobacco Corp., 529 U.S. 120 (2000); Gustafson v. Alloyd Co., Inc., 
513 U.S. 561, 569 (1995) ("the Act is to be interpreted as a 
symmetrical and coherent regulatory scheme, one in which the operative 
words have a consistent meaning throughout"); Brown v. Gardner, 
513 U.S. 115, 118 (1994) ("[a]mbiguity is a creature not of 
definitional possibilities but of statutory context").

The Court elaborated on this canon in FDA v. Brown & Williamson Tobacco 
Corp., noting as well that the "holistic" approach may embrace more 
than a single statute:

"[A] reviewing court should not confine itself to examining a 
particular statutory provision in isolation. The meaning--or ambiguity-
-of certain words or phrases may only become evident when placed in 
context… . It is a fundamental canon of statutory construction that the 
words of a statute must be read in their context and with a view to 
their place in the overall statutory scheme… . A court must therefore 
interpret the statute as a symmetrical and coherent regulatory scheme, 
… and fit, if possible, all parts into an harmonious whole… . 
Similarly, the meaning of one statute may be affected by other Acts, 
particularly where Congress has spoken subsequently and more 
specifically to the topic at hand."

529 U.S. at 132-133 (citations and quotation marks omitted).

Comptroller General decisions, of course, also follow this canon:

"In interpreting provisions of a statute, we follow the settled rule of 
statutory construction that provisions with unambiguous language and 
specific directions may not be construed in any manner that will alter 
or extend their plain meaning… . However, if giving effect to the plain 
meaning of words in a statute leads to an absurd result which is 
clearly unintended and at variance with the policy of the legislation 
as a whole, the purpose of the statute rather than its literal words 
will be followed… . Consequently, statutory phrases and individual 
words cannot be viewed in isolation."

B-287158, Oct. 10, 2002 (citations omitted).[Footnote 155]

The following decisions illustrate applications of the "whole statute" 
rule:

* B-290125.2, B-290125.3, Dec. 18, 2002 (redacted): Viewed in 
isolation, the phrase "notwithstanding any other provision of law" 
might be read as exempting a procurement from GAO's bid protest 
jurisdiction under the Competition in Contracting Act. However, when 
the statute is read as a whole, as it must be, it does not exempt the 
procurement from the Act.

* B-286661, Jan. 19, 2001: The Department of Energy's interpretation of 
the statutory phrase "expenses of privatization" conflicts with the 
plain meaning of the statute as a whole as well as the legislative 
history.

* B-261522, Sept. 29, 1995: The statute as a whole supports the Social 
Security Administration's contention that it can use wage data 
collected by the Internal Revenue Service in certifying wages to the 
Secretary of the Treasury.

b. Give Effect to All the Language: No "Surplusage":

Closely related to the "whole statute" canon is the canon that all 
words of a statute should be given effect, if possible. The theory is 
that all of the words have meaning since Congress does not include 
unnecessary language, or "surplusage."

The courts and the Comptroller General regularly invoke the "no 
surplusage" canon. Some examples follow:

* Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 216 (1995): Words in a 
statute will not be treated as "utterly without effect" even if the 
consequence of giving them effect is to render the statute 
unconstitutional.

* Ratzlaf v. United States, 510 U.S. 135, 140-141 (1994): The no 
surplusage canon applies with even greater weight when the arguably 
surplus words are part of the elements of a crime. In this case, the 
Court declined to treat as surplusage the word "willfully" in a statute 
that subjected to criminal penalties anyone willfully violating certain 
prohibitions.

* 70 Comp. Gen. 351 (1991): Appropriation act language stating that 
none of the funds provided in this or any other act shall hereafter be 
used for certain purposes constitutes permanent legislation. The 
argument that the word hereafter should be construed only to mean that 
the provision took effect on the date of its enactment is unpersuasive. 
Since statutes generally take effect on their date of enactment, this 
construction would inappropriately render the word hereafter 
superfluous.

* B-261522, Sept. 29, 1995: The Social Security Act requires the Social 
Security Administration to calculate employee wage data "in accordance 
with such reports" of wages filed by employers with the Internal 
Revenue Service (IRS). The "such reports" language cannot be read as 
referring only to a particular report that the IRS no longer requires 
since this would render the language meaningless, contrary to 
established maxims of statutory construction.

Although frequently invoked, the no surplusage canon is less absolute 
than the "whole statute" canon. One important caveat, previously 
discussed, is that words in a statute will be treated as surplus and 
disregarded if they were included in error. E.g., Chickasaw Nation v. 
United States, 534 U.S. 84, 94 (2001) (emphasis in original):

"The canon requiring a court to give effect to each word 'if possible' 
is sometimes offset by the canon that permits a court to reject words 
'as surplusage' if 'inadvertently inserted or if repugnant to the rest 
of the statute …'"

c. Apply the Common Meaning of Words:

When words used in a statute are not specifically defined, they are 
generally given their "plain" or ordinary meaning rather than some 
obscure usage. E.g., Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187 
(1995); Federal Deposit Insurance Corp. v. Meyer, 510 U.S. 471, 476 
(1994); Mallard v. United States, 490 U.S. 296, 301 (1989); 70 Comp. 
Gen. 705 (1991); 38 Comp. Gen. 812 (1959); B-261193, Aug. 25, 1995.

One commonsense way to determine the plain meaning of a word is to 
consult a dictionary. E.g., Mallard, 490 U.S. at 301; American Mining 
Congress v. EPA, 824 F.2d 1177, 1183-84 & n.7 (D.C. Cir. 1987). Thus, 
the Comptroller General relied on the dictionary in B-251189, Apr. 8, 
1993, to hold that business suits did not constitute "uniforms," which 
would have permitted the use of appropriated funds for their purchase. 
See also B-261522, Sept. 29, 1995.

As a perusal of any dictionary will show, words often have more than 
one meaning.[Footnote 156] The plain meaning will be the ordinary, 
everyday meaning. E.g., Mallard, 490 U.S. at 301; 38 Comp. Gen. 812 
(1959). If a word has more than one ordinary meaning and the context of 
the statute does not make it clear which is being used, there may well 
be no plain meaning for purposes of that statute. See Smith v. United 
States, 508 U.S. 223 (1993), discussed previously.

d. Give a Common Construction to the Same or Similar Words:

When Congress uses the same term in more than one place in the same 
statute, it is presumed that Congress intends for the same meaning to 
apply absent evidence to the contrary. E.g., United States v. Cleveland 
Indians Baseball Club, 532 U.S. 200, 213 (2001); Ratzlaf v. United 
States, 510 U.S. 135 (1994). The Comptroller General stated the 
principle as follows in 29 Comp. Gen. 143, 145 (1949), a case involving 
the term "pay and allowances":

"[I]t is a settled rule of statutory construction that it is reasonable 
to assume that words used in one place in a legislative enactment have 
the same meaning in every other place in the statute and that 
consequently other sections in which the same phrase is used may be 
resorted to as an aid in determining the meaning thereof; and, if the 
meaning of the phrase is clear in one part of the statute and in others 
doubtful or obscure, it is in the latter case given the same 
construction as in the former."

A corollary to this principle is that when Congress uses a different 
term, it intends a different meaning. E.g., 56 Comp. Gen. 655, 658 
(1977) (term "taking line" presumed to have different meaning than 
"taking area," which had been used in several other sections in the 
same statute).

Several different canons of construction revolve around these seemingly 
straightforward notions. Before discussing some of them, it is 
important to note once more that these canons, like most others, may or 
may not make sense to apply in particular settings. Indeed, the basic 
canon that the same words have the same meaning in a statute is itself 
subject to exceptions. In Cleveland Indians Baseball Club, the Court 
cautioned:

"Although we generally presume that identical words used in different 
parts of the same act are intended to have the same meaning, … the 
presumption is not rigid, and the meaning [of the same words] well may 
vary with the purposes of the law."

532 U.S. at 213 (citations and quotation marks omitted). To drive the 
point home, the Court quoted the following admonition from a law review 
article:

"The tendency to assume that a word which appears in two or more legal 
rules, and so in connection with more than one purpose, has and should 
have precisely the same scope in all of them … has all the tenacity of 
original sin and must constantly be guarded against."

Id. Of course, all bets are off if the statute clearly uses the same 
word differently in different places. See Robinson v. Shell Oil Co., 
519 U.S. 337, 343 (1997) ("[o]nce it is established that the term 
'employees' includes former employees in some sections, but not in 
others, the term standing alone is necessarily ambiguous").

Two canons are frequently applied to the use of similar--but not 
identical--words in a statute when they are part of the same phrase. 
These canons are known as "ejusdem generis," or "of the same kind," and 
"noscitur a sociis," loosely meaning that words are known by the 
company they keep.

In Washington State Department of Social and Health Services v. 
Guardianship Estate of Keffeler, 537 U.S. 371 (2003), the issue was 
whether the state's retention of Social Security Act benefits to cover 
some of its costs for providing foster care violated a provision of the 
Act that shielded benefits from "execution, levy, attachment, 
garnishment, or other legal process." The Court noted that, under the 
two canons--

"'where general words follow specific words in a statutory 
enumeration, the general words are construed to embrace only objects 
similar in nature to those objects enumerated by the preceding specific 
words.'"

537 U.S. at 379, quoting Circuit City Stores, Inc. v. Adams, 532 U.S. 
105, 114-115 (2001). Applying the canons, the Court held that the 
state's receipt of the Social Security benefits as a "representative 
payee" did not constitute "other legal process" within the Act's 
meaning. It reasoned that, based on the accompanying terms, "other 
legal process" required at a minimum the use of some judicial or quasi-
judicial process.

Gustafson v. Alloyd Co., 513 U.S. 561, 573-74 (1995), concerned the 
scope of statute that defined the term "prospectus" to mean--

"any prospectus, notice, circular, advertisement, letter, or 
communication, written or by radio or television, which offers any 
security for sale or confirms the sale of any security."

Applying noscitur a sociis to the list of items in section 12(2), the 
Court held that the definition of "prospectus" connoted some sort of 
public offering of a security and, therefore, did not extend to private 
sales agreements.

The Court also invoked the noscitur canon in Gutierrez v. Ada, 528 U.S. 
250, 254-255 (2000), to construe the term "any election":

"The reference to 'any election' is preceded by two references to 
gubernatorial election and followed by four. With 'any election' so 
surrounded, what could it refer to except an election for Governor and 
Lieutenant Governor, the subject of such relentless repetition? To ask 
the question is merely to apply an interpretive rule as familiar 
outside the law as it is within, for words and people are known by 
their companions."

Another familiar canon dealing with word patterns in statutes is 
"expressio unius est exclusio alterius," meaning that the expression of 
one thing is the exclusion of another. Sutherland describes this canon 
as simply embodying the commonsense notion that when people say one 
thing, they generally do not mean something else. 2A Sutherland, 
§ 45:14. As usual, care must be used in applying this canon. See 
Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003); United States v. 
Vonn, 535 U.S. 55 (2002). The Court observed in Vonn:

"At best, as we have said before, the canon that expressing one item of 
a commonly associated group or series excludes another left unmentioned 
is only a guide, whose fallibility can be shown by contrary indications 
that adopting a particular rule or statute was probably not meant to 
signal any exclusion of its common relatives."

537 U.S. at 65 (citations omitted).

e. Punctuation, Grammar, Titles, and Preambles Are Relevant but Not 
Controlling:

Punctuation, grammar, titles, and preambles are part of the statutory 
text. As such, they are fair game for consideration in construing 
statutes. However, as discussed below, they carry less weight than the 
substantive terms of the statute. The common principle that applies to 
these sources is that they can be consulted to help resolve ambiguities 
in the substantive text, but they cannot be used to introduce ambiguity 
that does not otherwise exist.

Punctuation and Grammar. Punctuation may be taken into consideration 
when no better evidence exists. For example, whether an "except" clause 
is or is not set off by a comma may help determine whether the 
exception applies to the entire provision or just to the portion 
immediately preceding the "except" clause. E.g., B-218812, Jan. 23, 
1987. Punctuation was a relevant factor in the majority opinion in 
United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241-42 
(1989). A number of additional cases, which we do not repeat here, are 
cited in Justice O'Connor's dissenting opinion, 489 U.S. at 249.

On the other hand, punctuation or the lack of it should never be the 
controlling factor. As the Supreme Court stated in United States 
National Bank of Oregon v. Independent Insurance Agents of America, 
Inc., 508 U.S. 439, 454 (1993), "a purported plain-meaning analysis 
based only on punctuation is necessarily incomplete and runs the risk 
of distorting a statute's true meaning." In that case, the Court 
disregarded an interpretation based on the placement of quotation marks 
in a statute, finding that all other evidence in the statute pointed to 
a different interpretation.

Likewise, a statute's grammatical structure is useful but not 
conclusive. In Arcadia, Ohio v. Ohio Power Co., 498 U.S. 73 (1991), the 
Court devoted considerable attention to the placement of the word "or" 
in a series of clauses. It questioned the interpretation proffered by 
one of the parties that would have given the language an awkward 
effect, noting: "In casual conversation, perhaps, such absentminded 
duplication and omission are possible, but Congress is not presumed to 
draft its laws that way." Arcadia, Ohio, 498 U.S. at 79. By contrast, 
in Nobelman v. American Savings Bank, 508 U.S. 324, 330 (1993), the 
Court rejected an interpretation, noting: "We acknowledge that this 
reading of the clause is quite sensible as a matter of grammar. But it 
is not compelled."

Titles and Headings. The title of a statute is relevant in determining 
its scope and purpose. By "title" in this context we mean the line on 
the slip law immediately following the words "An Act," as distinguished 
from the statute's "popular name," if any. For example, Public Law 97-
177, 96 Stat. 85 (May 21, 1982), is "An Act [t]o require the Federal 
Government to pay interest on overdue payments, and for other purposes" 
(title); section 1 says that the act may be cited as the "Prompt 
Payment Act" (popular name). A public law may or may not have a popular 
name; it always has a title.

The title of an act may not be used to change the plain meaning of the 
enacting clauses. It is evidence of the act's scope and purpose, 
however, and may legitimately be taken into consideration to resolve 
ambiguities. E.g., Lapina v. Williams, 232 U.S. 78, 92 (1914); White v. 
United States, 191 U.S. 545, 550 (1903); Church of the Holy Trinity v. 
United States, 143 U.S. 457, 462-63 (1892); United States v. Fisher, 
6 U.S. (2 Cranch) 358, 386 (1805); 36 Comp. Gen. 389 (1956); 19 Comp. 
Gen. 739, 742 (1940). To illustrate, in Church of the Holy Trinity, the 
Court used the title of the statute in question, "An act to prohibit 
the importation and migration of foreigners and aliens under contract 
or agreement to perform labor in the United States," as support for its 
conclusion that the statute was not intended to apply to professional 
persons, specifically in that case, ministers and pastors.[Footnote 
157]

The same considerations apply to a statute's popular name and to the 
headings, or titles, of particular sections of the statute. See 
Immigration & Naturalization Service v. St. Cyr, 533 U.S. 289, 308-309 
(2001); Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206, 
212 (1998). In St. Cyr, the Supreme Court concluded that a section 
entitled "Elimination of Custody Review by Habeas Corpus" did not, in 
fact, eliminate habeas corpus jurisdiction. It found that the 
substantive terms of the section were less definitive than the title.

Preambles. Federal statutes often include an introductory "preamble" or 
"purpose" section before the substantive provisions in which Congress 
sets forth findings, purposes, or policies that prompted it to adopt 
the legislation. Such preambles have no legally binding effect. 
However, they may provide indications of congressional intent 
underlying the law. Sutherland states with respect to preambles:

"[T]he settled principle of law is that the preamble cannot control the 
enacting part of the statute in cases where the enacting part is 
expressed in clear, unambiguous terms. In case any doubt arises in the 
enacted part, the preamble may be resorted to to help discover the 
intention of the law maker."

2A Sutherland, § 47:04 at 221-222.[Footnote 158]

f. Avoid Constructions That Pose Constitutional Problems:

It is well settled that courts will attempt to avoid a construction of 
a statute that would render the statute unconstitutional. E.g., Edward 
J. DeBartolo Corp. v. Florida Gulf Coast Building & Construction Trades 
Council, 485 U.S. 568, 575 (1988) and the host of precedents it cites 
in observing:

"[W]here an otherwise acceptable construction of a statute would raise 
serious constitutional problems, the Court will construe the statute to 
avoid such problems unless such construction is plainly contrary to the 
intent of Congress… . This cardinal principle … has for so long been 
applied by this Court that it is beyond debate… . [T]he elementary rule 
is that every reasonable construction must be resorted to, in order to 
save a statute from unconstitutionality. This approach not only 
reflects the prudential concern that constitutional issues not be 
needlessly confronted, but also recognizes that Congress, like this 
Court, is bound by and swears an oath to uphold the Constitution. The 
courts will therefore not lightly assume that Congress intended to 
infringe constitutionally protected liberties or usurp power 
constitutionally forbidden it." (Citations and quotation marks 
omitted.)

As the Court put it in Immigration & Naturalization Service v. St. Cyr, 
533 U.S. 289, 300 (2001), where an alternative to a constitutionally 
problematic interpretation "is fairly possible, … we are obligated to 
construe the statute to avoid such problems." (Citations and quotation 
marks omitted.)

Two cases arising under the Federal Advisory Committee Act (known as 
"FACA"), 5 U.S.C. App. §§ 1 et seq., illustrate the lengths to which 
courts will go to avoid constitutional problems. In Public Citizen v. 
United States Department of Justice, 491 U.S. 440 (1989), the Court 
held that the Justice Department did not "utilize" within the meaning 
of FACA an American Bar Association committee that reported to the 
Department on federal judicial nominees and rated their qualifications. 
Taking its lead from Public Citizen, the Court of Appeals for the 
District of Columbia Circuit held in Association of American 
Physicians & Surgeons, Inc. v. Clinton, 997 F.2d 898 (D.C. Cir. 1993), 
that the First Lady was a full-time officer or employee of the federal 
government within the meaning of the Act. Therefore, a task force she 
chaired was exempt from FACA under a provision of the Act that excluded 
"any committee which is composed wholly of full-time officers or 
employees of the Federal Government." The constitutional issue in both 
Public Citizen and Association of American Physicians & Surgeons was 
whether application of FACA to the advisory committees involved in 
those cases would violate separation of powers by infringing upon the 
President's ability to obtain advice in the performance of his 
constitutional responsibilities.[Footnote 159]

However, there are outer limits to interpretations designed to avoid 
constitutional problems. See Pennsylvania Department of Corrections v. 
Yeskey, 524 U.S. 206, 212 (1998) ("[t]hat doctrine [of avoidance] 
enters in only 'where a statute is susceptible of two constructions'"); 
Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 216 (1995) ("[t]o avoid 
a constitutional question by holding that Congress enacted, and the 
President approved, a blank sheet of paper would indeed constitute 
'disingenuous evasion'").

6. Legislative History:

a. Uses and Limitations:

The term "legislative history" refers to, and is comprised of, the body 
of congressionally generated written documents relating to a bill from 
the time of introduction to the time of enactment. As we will discuss, 
there are at least two basic ways to use legislative history. One is to 
examine the documents that make up the legislative history in order to 
determine what they say about the meaning and intent of the 
legislation. The other is to examine the evolution of the bill's 
language through the legislative process. Changes made to a bill during 
its consideration are often instructive in determining its final 
meaning.

Legislative history is always relevant in the sense that it is never 
"wrong" to look at it. Thus, as previously noted, most cases purporting 
to apply the plain meaning rule also review legislative history--if for 
no other reason than to establish that nothing in that history 
contradicts the court's view of what the plain meaning is. The converse 
of the plain meaning rule is that it is legitimate and proper to resort 
to legislative history when the meaning of the statutory language is 
not plain on its face. Again, we start with an early Supreme Court 
passage, this one a famous statement by Chief Justice John Marshall:

"Where the mind labours to discover the design of the legislature, it 
seizes every thing from which aid can be derived … ."

United States v. Fisher, 6 U.S. (2 Cranch) 358, 386 (1805). See also 
United States v. Donruss Co., 393 U.S. 297, 302-03 (1969); Caminetti v. 
United States, 242 U.S. 470, 490 (1917) (legislative history "may aid 
the courts in reaching the true meaning of the legislature in cases of 
doubtful interpretation").

It is entirely proper to use legislative history to seek guidance on 
the purpose of a statute (to see, for example, what kinds of problems 
Congress wanted to address), or to confirm the apparent plain meaning, 
or to resolve ambiguities. A classic example of the latter is a statute 
using the words "science" or "scientific." Either term, without more, 
does not tell you whether the statute applies to the social sciences as 
well as the physical sciences. E.g., American Kennel Club, Inc. v. 
Hoey, 148 F.2d 920, 922 (2nd Cir. 1945); B-181142, Aug. 5, 1974 (GAO 
recommended that the term "science and technology" in a bill be defined 
to avoid this ambiguity). If the statute does not include a definition, 
you would look next to the legislative history.

The use becomes improper when the line is crossed from using 
legislative history to resolve things that are not clear in the 
statutory language to using it to rewrite the statute. E.g., Shannon v. 
United States, 512 U.S. 573, 583 (1994) (declining to give effect to "a 
single passage of legislative history that is in no way anchored in the 
text of the statute"); Ratzlaf v. United States, 510 U.S. 135, 147-148 
(1994) (declining to "resort to legislative history to cloud a 
statutory text that is clear"). The Comptroller General put it this 
way:

"[A]s a general proposition, there is a distinction to be made between 
utilizing legislative history for the purpose of illuminating the 
intent underlying language used in a statute and resorting to that 
history for the purpose of writing into the law that which is not 
there."

55 Comp. Gen. 307, 325 (1975).

A recent Comptroller General decision illustrates this point. An 
appropriation rider sponsored by Senator McCain prohibited the Air 
Force from using funds to lease certain aircraft "under any contract 
entered into under any procurement procedures other than pursuant to" 
the Competition in Contracting Act (CICA), Pub. L. No. 98-369, 98 Stat. 
1175 (July 18, 1984), classified generally to 41 U.S.C. §§ 251 et seq. 
In a floor statement on the bill, Senator McCain said that his language 
would require "full and open competition" for the aircraft and preclude 
a "sole source" award. However, CICA clearly does not require full and 
open competition or prohibit sole-source awards. Therefore, the 
Comptroller General upheld the Air Force's award of a sole-source 
contract:

"Since section 8147, by its plain terms, only requires compliance with 
CICA, and does not provide that competitive procedures must be used for 
the Boeing transport/VIP aircraft procurement, we find no basis for 
reading such a requirement into the provision."

B-291805, Mar. 26, 2003.

b. Components and Their Relative Weight:

In discussing legislative history, we will first consider use of the 
explanatory documents that go into it. These documents fall generally 
into three categories: committee reports, floor debates, and hearings. 
For probative purposes, they bear an established relationship to one 
another. Let us emphasize before proceeding, however, that listing 
items of legislative history in an "order of persuasiveness" is merely 
a guideline. The evidentiary value of any piece of legislative history 
depends on its relationship to other available legislative history and, 
most importantly, to the language of the statute.

(1) Committee reports:

The most authoritative single source of legislative history is the 
conference report. E.g., United States v. Commonwealth Energy System & 
Subsidiary Cos., 235 F.3d 11, 16 (1st Cir. 2000); Resolution Trust 
Corp. v. Gallagher, 10 F.3d 416, 421 (7th Cir. 1993); Squillacote v. 
United States, 739 F.2d 1208, 1218 (7th Cir. 1984); B-142011, Apr. 30, 
1971. See also Bay View, Inc. v. United States, 278 F.3d 1259, 1264 
(Fed. Cir. 2001), cert. denied, 537 U.S. 826 (2002). This is especially 
true if the statutory language in question was drafted by the 
conference committee. The reason the conference report occupies the 
highest rung on the ladder is that it must be voted on and adopted by 
both houses of Congress and thus is the only legislative history 
document that can be said to reflect the will of both houses. 
Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 94 (1959) 
(Frankfurter, J., dissenting).

Next in sequence are the reports of the legislative committees that 
considered the bill and reported it out to their respective houses. The 
Supreme Court has consistently been willing to rely on committee 
reports when otherwise appropriate. E.g., Demore v. Hyung Joon Kim, 
___ U.S. ___, 123 S. Ct. 1708, 1714-1716 (2003); Lorillard Tobacco 
Co. v. Reilly, 533 U.S. 525, 543-544 (2001); Duplex Printing Press 
Co. v. Deering, 254 U.S. 443, 474 (1921); United States v. St. Paul, 
Minneapolis & Manitoba Railway Co., 247 U.S. 310, 318 (1918); Lapina v. 
Williams, 232 U.S. 78, 90 (1914).

However, material in committee reports, even a conference report, will 
ordinarily not be used to controvert clear statutory language. 
Squillacote, 739 F.2d at 1218; Hart v. United States, 585 F.2d 1025 
(Ct. Cl. 1978); B-278121, Nov. 7, 1997; B-33911, B-62187, July 15, 
1948.

The following excerpt from a colloquy between Senators Armstrong and 
Dole demonstrates why committee reports must be used with caution:

"Mr. ARMSTRONG. Mr. President, did members of the Finance Committee 
vote on the committee report?

"Mr. DOLE. No.

"Mr. ARMSTRONG. Mr. President, the reason I raise the issue is not 
perhaps apparent on the surface… . The report itself is not considered 
by the Committee on Finance. It was not subject to amendment by the 
Committee on Finance. It is not subject to amendment now by the Senate.

"I only wish the record to reflect that this is not statutory language. 
It is not before us. If there were matter within this report which was 
disagreed to by the Senator from Colorado or even by a majority of all 
Senators, there would be no way for us to change the report. I could 
not offer an amendment tonight to amend the committee report.

"… [F]or any jurist, administrator, bureaucrat, tax practitioner, or 
others who might chance upon the written record of this proceeding, let 
me just make the point that this is not the law, it was not voted on, 
it is not subject to amendment, and we should discipline ourselves to 
the task of expressing congressional intent in the statute."[Footnote 
160]

Notwithstanding the imperfections of the system, in those cases where 
there is a need to resort to legislative history, committee reports 
remain generally recognized as the best source. In this regard, 
Sutherland observes:

"Increasingly, courts have turned to reports of standing committees for 
aid in interpretation. This movement has coincided with an improvement 
in the preparation of reports by standing committees and their 
counsel."

2A Sutherland, § 48:06 at 445.

(2) Floor debates:

Proceeding downward on the ladder, after committee reports come floor 
debates. Statements made in the course of floor debates have 
traditionally been regarded as suspect in that they are "expressive of 
the views and motives of individual members." Duplex Printing Press 
Co. v. Deering, 254 U.S. 443, 474 (1921). In addition--

"[I]t is impossible to determine with certainty what construction was 
put upon an act by the members of a legislative body that passed it by 
resorting to the speeches of individual members thereof. Those who did 
not speak may not have agreed with those who did, and those who spoke 
might differ from each other… "

United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 318 
(1897). Some of the earlier cases, such as Trans-Missouri Freight, 
indicate that floor debates should never be taken into consideration. 
Under the more modern view, however, they may be considered, the real 
question being the weight they should receive in various circumstances.

Floor debates are less authoritative than committee reports. Garcia v. 
United States, 469 U.S. 70, 76 (1984); Zuber v. Allen, 396 U.S. 168, 
186 (1969); United States v. O'Brien, 391 U.S. 367, 385 (1968); United 
States v. United Automobile Workers, 352 U.S. 567, 585 (1957); Bay 
View, Inc. v. United States, 278 F.3d 1259, 1264 (Fed. Cir. 2001), 
cert. denied, 537 U.S. 826 (2002). It follows that they will not be 
regarded as persuasive if they conflict with explicit statements in 
more authoritative portions of legislative history such as committee 
reports. United States v. Wrightwood Dairy Co., 315 U.S. 110, 125 
(1942); B-114829, June 27, 1975. Conversely, they will carry more 
weight if they are mutually reenforcing. National Data Corp. & 
Subsidiaries v. United States, 50 Fed. Cl. 24, 32, n.14 (2001), aff'd, 
291 F.3d 1381 (Fed. Cir.), cert. denied, 537 U.S. 1045 (2002).[Footnote 
161]

Debates will carry considerably more weight when they are the only 
available legislative history as, for example, in the case of a post-
report floor amendment. Northeast Bancorp, Inc. v. Board of Governors 
of the Federal Reserve System, 472 U.S. 159, 169-70 (1985); Preterm, 
Inc. v. Dukakis, 591 F.2d 121, 128 (1st Cir.), cert. denied, 441 U.S. 
952 (1979). Indeed, the Preterm court suggested that "heated and 
lengthy debates" in which "the views expressed were those of a wide 
spectrum" of Members might be more valuable in discerning congressional 
intent than committee reports, "which represent merely the views of 
[the committee's] members and may never have come to the attention of 
Congress as a whole." Preterm, 591 F.2d at 133.

The weight to be given statements made in floor debates varies with the 
identity of the speaker. Thus, statements by legislators in charge of a 
bill, such as the pertinent committee chairperson, have been regarded 
as "in the nature of a supplementary report" and receive somewhat more 
weight. United States v. St. Paul, Minneapolis & Manitoba Railway Co., 
247 U.S. 310, 318 (1918). See also McCaughn v. Hershey Chocolate Co., 
283 U.S. 488, 493-94 (1931) (statements by Members "who were not in 
charge of the bill" were "without weight"); Duplex v. Deering, 254 U.S. 
at 474-75; NLRB v. Thompson Products, Inc., 141 F.2d 794, 798 (9th Cir. 
1944). The Supreme Court's statement in St. Paul Railway Co. gave rise 
to the entirely legitimate practice of "making" legislative history by 
preparing questions and answers in advance, to be presented on the 
floor and answered by the Member in charge of the bill.[Footnote 162]

Statements by the sponsor of a bill are also entitled to somewhat more 
weight. E.g., Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S. 
384, 394-95 (1951); Ex Parte Kawato, 317 U.S. 69, 77 (1942); Bedroc 
Limited v. United States, 50 F. Supp.2d 1001, 1006 (D. Nev. 1999), 
aff'd, 314 F.3d 1080 (9th Cir. 2002). However, they are not 
controlling. Chrysler Corp. v. Brown, 441 U.S. 281, 311 (1979).

Statements by the opponents of a bill expressing their "fears and 
doubts" generally receive little, if any, weight. Shell Oil Co. v. Iowa 
Department of Revenue, 488 U.S. 19, 29 (1988); Schwegmann, 341 U.S. at 
394. However, even the statements of opponents may be "relevant and 
useful," although not authoritative, in certain circumstances, such as 
where the supporters of a bill make no response to opponents' 
criticisms. Arizona v. California, 373 U.S. 546, 583 n.85 (1963); 
Parlane Sportswear Co. v. Weinberger, 513 F.2d 835, 837 (1st Cir. 
1975); Bentley v. Arlee Home Fashions, Inc., 861 F. Supp. 65, 67 (E.D. 
Ark. 1994).

Where Senate and House floor debates suggest conflicting 
interpretations and there is no more authoritative source of 
legislative history available, it is legitimate to give weight to such 
factors as which house originated the provision in question and which 
house has the more detailed and "clear cut" history. Steiner v. 
Mitchell, 350 U.S. 247, 254 (1956); 49 Comp. Gen. 411 (1970).

(3) Hearings:

Hearings occupy the bottom rung on the ladder. They are valuable for 
many reasons: they help define the problem Congress is addressing; they 
present opposing viewpoints for Congress to consider; and they provide 
the opportunity for public participation in the lawmaking process. As 
legislative history, however, they are the least persuasive form. The 
reason is that they reflect only the personal opinion and motives of 
the witness. It is more often than not impossible to attribute these 
opinions and motives to anyone in Congress, let alone Congress as a 
whole, unless more authoritative forms of legislative history expressly 
adopt them. As one court has stated, an isolated excerpt from the 
statement of a witness at hearings "is not entitled to consideration in 
determining legislative intent." Pacific Insurance Co. v. United 
States, 188 F.2d 571, 572 (9th Cir. 1951). "It would indeed be absurd," 
said another court, "to suppose that the testimony of a witness by 
itself could be used to interpret an act of Congress." SEC v. Collier, 
76 F.2d 939, 941 (2nd Cir. 1935).

There is one significant exception. Testimony by the government agency 
that recommended the bill or amendment in question, and which often 
helped draft it, is entitled to special weight. Shapiro v. United 
States, 335 U.S. 1, 12 n.13 (1948); SEC v. Collier, 76 F.2d at 941.

Also, testimony at hearings can be more valuable as legislative history 
if it can be demonstrated that the language of a bill was revised in 
direct response to that testimony. Relevant factors include the 
presence or absence of statements in more authoritative history linking 
the change to the testimony; the proximity in time of the change to the 
testimony; and the precise language of the change as compared to what 
was offered in the testimony. See Premachandra v. Mitts, 753 F.2d 635, 
640-41 (8th Cir. 1985). See also Allen v. State Board of Elections, 
393 U.S. 544, 566-68 (1969); SEC v. Collier, 76 F.2d at 940, 941.

c. Post-enactment Statements:

Observers of the often difficult task of discerning congressional 
intent occasionally ask, isn't there an easier way to do this? Why 
don't you just call the sponsor or the committee and ask what they had 
in mind? The answer is that post-enactment statements have virtually no 
weight in determining prior congressional intent. The objective of 
statutory construction is to ascertain a collective intent, not an 
individual's intent or, worse yet, an individual's characterization of 
the collective intent. It is impossible to demonstrate that the 
substance of a post hoc statement reflects the intent of the pre-
enactment Congress, unless it can be corroborated by pre-enactment 
statements, in which event it would be unnecessary. Or, as the Supreme 
Court has said:

"Since such statements cannot possibly have informed the vote of the 
legislators who earlier enacted the law, there is no more basis for 
considering them than there is to conduct postenactment polls of the 
original legislators."

Pittston Coal Group v. Sebben, 488 U.S. 105, 118-19 (1988). See also 
Gustafson v. Alloyd Co., 513 U.S. 561, 580 (1995) ("If legislative 
history is to be considered, it is preferable to consult the documents 
prepared by Congress when deliberating."); 2A Sutherland, § 48:04 (to 
be considered legislative history, material should be generally 
available to legislators and relied on by them in passing the bill).

In expressing their unwillingness to consider post-enactment 
statements, courts have not viewed the identity of the speaker 
(sponsor, committee, committee chairman, etc.) or the form of the 
statement (report, floor statement, letter, affidavit, etc.) to be 
relevant. There are numerous cases in which the courts, and 
particularly the Supreme Court, have expressed the unwillingness to 
give weight to post-enactment statements. See, e.g., Bread Political 
Action Committee v. Federal Election Commission, 455 U.S. 577, 582 n.3 
(1982); Quern v. Mandley, 436 U.S. 725, 736 n.10 (1978); Regional Rail 
Reorganization Act Cases, 419 U.S. 102, 132 (1974); United States v. 
Southwestern Cable Co., 392 U.S. 157, 170 (1968); Haynes v. United 
States, 390 U.S. 85, 87 n.4 (1968). See also General Instrument 
Corp. v. FCC, 213 F.3d 724, 733 (D.C. Cir. 2000) (referring to post-
enactment statements as "legislative future" rather than legislative 
history); Cavallo v. Utica-Watertown Health Insurance Co., 3 F. Supp. 
2d 223, 230 (N.D. N.Y. 1998).

Courts have not found expressions of intent concerning previously 
enacted legislation that are made in committee reports or floor 
statements during the consideration of subsequent legislation to be 
relevant either. E.g., O'Gilvie v. United States, 519 U.S. 79, 90 
(1996) ("the view of a later Congress cannot control the interpretation 
of an earlier enacted statute"); Huffman v. Office of Personnel 
Management, 263 F.3d 1341, 1354 (Fed. Cir. 2001) (post-enactment 
statements made in the legislative history of the 1994 amendments have 
no bearing in determining the legislative intent of the drafters of the 
1978 and 1989 legislation).

GAO naturally follows the principle that post-enactment statements do 
not constitute legislative history. E.g., 72 Comp. Gen. 317 (1993); 
54 Comp. Gen. 819, 822 (1975). Likewise, the Office of Legal Counsel 
has virtually conceded that presidential signing statements fall within 
the realm of post-enactment statements that carry no weight as 
legislative history. See 17 Op. Off. Legal Counsel 131 (1993).[Footnote 
163]

As with all other principles relating to statutory interpretation, the 
rule against consideration of post-enactment statements is not 
absolute. Even post-enactment material may be taken into consideration, 
despite its very limited value, when there is absolutely nothing else. 
See B-169491, June 16, 1980.

d. Development of the Statutory Language:

As previously noted, examination of legislative history includes not 
only what the drafters of a bill said about it, but also what they did 
to it as the bill progressed through the enactment process. Changes 
made to a bill may provide insight into what the final language means. 
For example, the deletion from the final version of language that was 
in the original bill may suggest an intent to reject what was covered 
by that language. See generally 2A Sutherland, § 48:04. The same is 
true of language offered in an amendment that was defeated. Id., 
§ 48:18.

The courts consider the evolution of legislative language in different 
contexts. See, for example:

* Chickasaw Nation v. United States, 534 U.S. 84, 91 (2001): The 
original Senate bill applied both to taxation and to reporting and 
withholding. The final version applied only to reporting and 
withholding, thereby suggesting that a cross-reference to another law 
dealing with taxation was left in by error.

* Landgraf v. USI Film Products, 511 U.S. 244, 255-256 (1994): The 
President vetoed a 1990 version of a civil rights bill in part because 
he objected to the bill's broad retroactivity provisions. This 
indicates that the absence of comparable retroactivity provisions in 
the version of the bill enacted in 1991 was not an oversight, but 
rather part of a political compromise.

See also Resolution Trust Corp. v. Gallagher, 10 F.3d 416 423 (7th Cir. 
1993); Davis v. United States, 46 Fed. Cl. 421 (2000).

As always, care must be exercised when interpreting language changes in 
a bill, particularly when the accompanying documents do not discuss 
them. Unless the legislative history explains the reason for the 
omission or deletion or the reason is clear from the context, drawing 
conclusions is inherently speculative. Perhaps Congress did not want 
that particular provision; perhaps Congress felt it was already covered 
in the same or other legislation. Absent an explanation, the effect of 
such an omission or deletion is inconclusive. Fox v. Standard Oil Co., 
294 U.S. 87, 96 (1935); Southern Packaging & Storage Co. v. United 
States, 588 F. Supp. 532, 549 (D.S.C. 1984); 63 Comp. Gen. 498, 501-02 
(1984); 63 Comp. Gen. 470, 472 (1984).

7. Presumptions and "Clear Statement" Rules:

In a perhaps growing number of specific areas, courts apply extra 
scrutiny in construing statutes that they regard as departing from 
traditional norms of legislation. In these areas, the courts require a 
greater than usual showing that Congress did, in fact, mean to depart 
from the norm. Typically, the courts will raise the bar by imposing a 
"presumption" that must be overcome in order to establish that Congress 
intended the departure. Alternatively but to the same effect, courts 
sometimes require a "clear statement" by Congress that it intended the 
departure.

Such presumptions and clear statement rules have been described as 
"substantive canons" as opposed to "linguistic canons" since, rather 
than aiding in the interpretation of statutory language per se, they 
are designed to protect "substantive values drawn from the common law, 
federal statutes, or the United States Constitution."[Footnote 164] A 
few examples are given below.

a. Presumption in Favor of Judicial Review:

There is a "strong presumption" in favor of judicial review of 
administrative actions. E.g., Demore v. Hyung Joon Kim, ___ U.S. ___, 
123 S. Ct. 1708 (2003); Immigration & Naturalization Service v. St. 
Cyr, 533 U.S. 289 (2001); McNary v. Haitian Refugee Center, Inc., 
498 U.S. 479 (1991); Bowen v. Michigan Academy of Family Physicians, 
476 U.S. 667 (1986). In Bowen, the Court stated the presumption as 
follows:

"We begin with the strong presumption that Congress intends judicial 
review of administrative action. From the beginning, 'our cases [have 
established] that judicial review of a final agency action by an 
aggrieved person will not be cut off unless there is persuasive reason 
to believe that such was the purpose of Congress.'"

476 U.S. at 670, quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 
140 (1967).

The Court in Bowen went on to note that the presumption of 
reviewability can be rebutted:

"Subject to constitutional constraints, Congress can, of course, make 
exceptions to the historic practice whereby courts review agency 
action. The presumption of judicial review is, after all, a 
presumption, and like all presumptions used in interpreting statutes, 
may be overcome by, inter alia, specific language or specific 
legislative history that is a reliable indicator of congressional 
intent or a specific congressional intent to preclude judicial review 
that is fairly discernable in the detail of the legislative scheme."

Id. at 672-673 (quotation marks omitted).

Later decisions indicate that a particularly strong showing is required 
to establish a congressional intent to preclude judicial review of 
constitutional claims through habeas corpus petitions. See Demore and 
St. Cyr, supra. Thus, the Court observed in St. Cyr, 533 U.S. at 299:

"Implications from statutory text or legislative history are not 
sufficient to repeal habeas jurisdiction; instead, Congress must 
articulate specific and unambiguous statutory directives to effect 
repeal."

Finally, it is important to note one area in which the usual 
presumption in favor of judicial review becomes a presumption against 
judicial review: exercises of discretion by the President. In 
Franklin v. Massachusetts, 505 U.S. 788 (1992), the Supreme Court held 
that the President is not an "agency" for purposes of the 
Administrative Procedure Act (APA); therefore, presidential actions are 
not subject to judicial review under the APA. The Court recognized that 
the general definition of "agency" in the APA (5 U.S.C. § 551(1)) 
covered "each authority of the Government of the United States" and 
that the President was not explicitly excluded from this definition. 
However, the Court held:

"Out of respect for the separation of powers and the unique 
constitutional position of the President, we find that textual silence 
is not enough to subject the President to the provisions of the APA. We 
would require an express statement by Congress before assuming it 
intended the President's performance of his statutory duties to be 
reviewed for abuse of discretion."

505 U.S. at 800-801 (emphasis supplied).

Several subsequent cases have followed and extended Franklin. See 
Dalton v. Specter, 511 U.S. 462 (1994); Tulare County v. Bush, 185 F. 
Supp. 2d 18 (D.D.C. 2001), aff'd, 306 F.3d 1138 (D.C. Cir. 2002), reh'g 
en banc denied, 317 F.3d 227 (D.C. Cir.), cert. denied, ____ U.S. ___, 
71 U.S.L.Week 3724 (Oct. 6, 2003).[Footnote 165]

b. Presumption against Retroactivity:

As noted previously, statutes and amendments to statutes generally are 
construed to apply prospectively only (that is, from their date of 
enactment or other effective date if one is specified). However, while 
Congress generally has the power to enact retroactive statutes, 
[Footnote 166] the Supreme Court has held:

"Retroactivity is not favored in the law. Thus, congressional 
enactments … will not be construed to have retroactive effect unless 
their language requires this result."

Bowen v. Georgetown University Hospital, 488 U.S. 204, 208 (1988).

The Court reaffirmed the presumption against retroactivity of statutes 
in several recent decisions. E.g., Immigration & Naturalization 
Service v. St. Cyr, 533 U.S. 289 (2001); Martin v. Hadix, 527 U.S. 343 
(1999); Lindh v. Murphy, 521 U.S. 320 (1997); Landgraf v. USI Film 
Products, 511 U.S. 244 (1994). In Landgraf, the Court elaborated on the 
policies supporting the presumption against retroactivity:

"Because it accords with widely held intuitions about how statutes 
ordinarily operate, a presumption against retroactivity will generally 
coincide with legislative and public expectations. Requiring clear 
intent assures that Congress itself has affirmatively considered the 
potential unfairness of retroactive application and determined that it 
is an acceptable price to pay for the countervailing benefits. Such a 
requirement allocates to Congress responsibility for fundamental policy 
judgments concerning the proper temporal reach of statutes, and has the 
additional virtue of giving legislators a predictable background rule 
against which to legislate."

511 U.S. at 272-273.

Landgraf also resolved the "apparent tension" between the presumption 
against retroactivity in its Bowen line of decisions and another 
decision, Bradley v. Richmond School Board, 416 U.S. 696 (1974), which 
held that when a law changes subsequent to the judgment of a lower 
court, an appellate court must apply the new law, that is, the law in 
effect when it renders its decision, unless applying the new law would 
produce "manifest injustice" or unless there is statutory direction or 
legislative history to the contrary.[Footnote 167] It affirmed that the 
presumption embraces statutes that have "genuinely" retroactive effect, 
by which it meant statutes that apply new standards "affecting 
substantive rights, liabilities, or duties" to conduct that occurred 
prior to their enactment. 511 U.S. at 277-278.[Footnote 168]

By way of summary, the Supreme Court in Landgraf set forth the 
following test for determining whether the presumption against 
retroactivity applies:

"When a case implicates a federal statute enacted after the events in 
suit, the court's first task is to determine whether Congress has 
expressly prescribed the statute's proper reach. If Congress has done 
so, of course, there is no need to resort to judicial default rules. 
When, however, the statute contains no such express command, the court 
must determine whether the new statute would have retroactive effect, 
i.e., whether it would impair rights a party possessed when he acted, 
increase a party's liability for past conduct, or impose new duties 
with respect to transactions already completed. If the statute would 
operate retroactively, our traditional presumption teaches that it does 
not govern absent clear congressional intent favoring such a result."

Id. at 280.

The Comptroller General also applies the traditional rule that statutes 
are not construed to apply retroactively unless a retroactive 
construction is required by their express language or by necessary 
implication or unless it is demonstrated that this is what Congress 
clearly intended. 64 Comp. Gen. 493 (1985); 38 Comp. Gen. 103 (1958); 
34 Comp. Gen. 404 (1955); 28 Comp. Gen. 162 (1948); 16 Comp. Gen. 1051 
(1937); 7 Comp. Gen. 266 (1927); 5 Comp. Gen. 381 (1925); 2 Comp. 
Gen. 267 (1922); 26 Comp. Dec. 40 (1919); B-205180, Nov. 27, 1981; 
B-191190, Feb. 13, 1980; B-162208, Aug. 28, 1967.

This rule was recently applied to a statute (Pub. L. No. 107-103, 
§ 605, 115 Stat. 976, 1000 (Dec. 27, 2001)) that authorized the United 
States Court of Appeals for Veterans Claims to reimburse its employees 
for a portion of their professional liability insurance payments. Since 
nothing in the statute or its legislative history indicated that the 
statute was to have retroactive effect, the Comptroller General held 
that the statute did not authorize reimbursement for insurance payments 
made prior to December 27, 2001. B-300866, May 30, 2003.

Another line of cases has dealt with a different aspect of 
retroactivity. GAO is reluctant to construe a statute to retroactively 
abolish or diminish rights that had accrued before its enactment unless 
this was clearly the legislative intent. For example, the Tax Reduction 
Act of 1975 authorized $50 "special payments" to certain taxpayers. 
Legislation in 1977 abolished the special payments as of its date of 
enactment. GAO held in B-190751, Apr. 11, 1978, that payments could be 
made where payment vouchers were validly issued before the cutoff date 
but lost in the mail. Similarly, payments could be made to eligible 
claimants whose claims had been erroneously denied before the cutoff 
but were later found valid. B-190751, Sept. 26, 1980.

c. Federalism Presumptions:

Under the Constitution's Supremacy Clause (U.S. Const. art. VI, cl. 2), 
Congress, when acting within the scope of its own assigned 
constitutional authority, can preempt state and local laws. As the 
Court noted in Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 
604 (1991), "[t]he ways in which federal law may pre-empt state law are 
well established and in the first instance turn on congressional 
intent." Specifically, Congress may preempt either by an explicit 
statutory provision or by establishing a federal statutory scheme that 
is so pervasive as to leave no room for supplementation by the states. 
In either event, however, the Court stated:

"When considering pre-emption, 'we start with the assumption that the 
historic police powers of the States were not to be superseded by the 
Federal Act unless that was the clear and manifest purpose of 
Congress.'"

501 U.S. at 605, quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 
230 (1947).

The Court continues to apply the "clear and manifest purpose" test to 
preemption cases. See City of Columbus v. Ours Garage and Wrecker 
Service, Inc., 536 U.S. 424 (2002). In City of Columbus, the Court 
construed a statute that included an explicit preemption provision; the 
issue concerned its scope. Acknowledging that the language could be 
read to preempt safety regulation by local governments, the Court 
refused to find preemption:

"[R]eading [the statute's] set of exceptions in combination, and with a 
view to the basic tenets of our federal system pivotal in Mortier, we 
conclude that the statute does not provide the requisite 'clear and 
manifest indication that Congress sought to supplant local 
authority.'"

536 U.S. at 434.

There also is a presumption against construing federal statutes to 
abrogate the immunity from suit that states enjoy under the Eleventh 
Amendment to the United States Constitution. Congress must make its 
intent to abrogate such immunity "unmistakably clear in the language of 
the statute." See Nevada Department of Human Resources v. Hibbs, ___ 
U.S. ___, 123 S. Ct. 1972, 1976 (2003); Hoffman v. Connecticut 
Department of Income Maintenance, 492 U.S. 96, 101 (1989) and cases 
cited. The necessary unmistakable intent to preempt was supplied by the 
express language of the statute in Hibbs, but such intent was found 
lacking in Hoffman.

Finally, the Court fashioned a "plain statement" rule based on 
federalism principles in considering whether the federal Age 
Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621 et seq., 
superseded a state constitutional provision for the mandatory 
retirement of judges at age 70. Gregory v. Ashcroft, 501 U.S. 452 
(1991). The Act's definition of "employer" included state and local 
governments;[Footnote 169] however, its definition of "employee" 
excluded an "appointee at the policymaking level." The Court held that 
this exclusion covered judges and, therefore, they were not subject to 
the Act. Recognizing that the Act's language was at best ambiguous on 
this point, the Court reasoned:

"'[A]ppointee at the policymaking level,' particularly in the context 
of the other exceptions that surround it, is an odd way for Congress to 
exclude judges; a plain statement that judges are not 'employees' would 
seem the most efficient phrasing. But in this case we are not looking 
for a plain statement that judges are excluded. We will not read the 
ADEA to cover state judges unless Congress has made it clear that 
judges are included."

501 U.S. at 467 (emphasis in original).

d. Presumption against Waiver of Sovereign Immunity:

There is a strong presumption against waiver of the federal 
government's immunity from suit. The courts have repeatedly held that 
waivers of sovereign immunity must be "unequivocally expressed." E.g., 
United States v. Nordic Village, Inc., 503 U.S. 30 (1992); Shoshone 
Indian Tribe of the Wind River Reservation, Wyoming v. United States, 
51 Fed. Cl. 60 (2001) and cases cited. Legislative history does not 
help for this purpose. The relevant statutory language in Nordic 
Village was ambiguous and could have been read, evidently with the 
support of the legislative history, to impose monetary liability on the 
United States. The Court rejected such a reading, applying instead the 
same approach as described above in its federalism jurisprudence:

"[L]egislative history has no bearing on the ambiguity point. As in the 
Eleventh Amendment context, see Hoffman, supra, … the 'unequivocal 
expression' of elimination of sovereign immunity that we insist upon is 
an expression in statutory text. If clarity does not exist there, it 
cannot be supplied by a committee report."

503 U.S. at 37.

[End of section]

Chapter 3: Agency Regulations and Administrative Discretion:

A. Agency Regulations: 

1. The Administrative Procedure Act: 

a. The Informal Rulemaking Process: 

b. Informal Rulemaking: When Required: 

c. Additional Requirements for Rulemaking: 

2. Regulations May Not Exceed Statutory Authority: 

3. "Force and Effect of Law": 

4. Waiver of Regulations: 

5. Amendment of Regulations: 

6. Retroactivity: 

B. Agency Administrative Interpretations: 

1. Interpretation of Statutes: 

2. Interpretation of Agency's Own Regulations: 

C. Administrative Discretion: 

1. Introduction: 

2. Discretion Is Not Unlimited: 

3. Failure or Refusal to Exercise Discretion: 

4. Regulations May Limit Discretion: 

5. Insufficient Funds: 

Chapter 3: Agency Regulations and Administrative Discretion:

This chapter deals with certain topics in administrative law that, 
strictly speaking, are not "appropriations law" or "fiscal law." 
Nevertheless, the material covered is so pervasive in all areas of 
federal law, appropriations law included, that a brief treatment in 
this publication is warranted. We caution that it is not our purpose to 
present an administrative law treatise, but rather to highlight some 
important "crosscutting" principles that appear in various contexts in 
many other chapters. The case citations should be viewed as an 
illustrative sampling.

A. Agency Regulations:

As a conceptual starting point, agency regulations fall into three 
broad categories. First, every agency head has the authority, largely 
inherent but also authorized generally by 5 U.S.C. § 301,[Footnote 170] 
to issue regulations to govern the internal affairs of the agency. 
Regulations in this category may include such subjects as conflicts of 
interest, employee travel, and delegations to organizational 
components. This statute is nothing more than a grant of authority for 
what are called "housekeeping" regulations. Chrysler Corp. v. Brown, 
441 U.S. 281, 309 (1979); Smith v. Cromer, 159 F.3d 875, 878 (4th Cir. 
1998), cert. denied, 528 U.S. 826 (1999); NLRB v. Capitol Fish Co., 
294 F.2d 868, 875 (5th Cir. 1961). It confers "administrative power 
only." United States v. George, 228 U.S. 14, 20 (1913); 54 Comp. Gen. 
624, 626 (1975). Thus, the statute merely grants agencies authority to 
issue regulations that govern their own internal affairs; it does not 
authorize rulemaking that creates substantive legal rights. Schism v. 
United States, 316 F.3d 1259, 1278-1284 (Fed. Cir. 2002), cert. denied, 
___ U.S. ___, 123 S. Ct. 2246 (2003).

Second, agencies also have inherent authority to issue procedural rules 
to govern their internal processes as well as "interpretive" rules that 
express the agency's policy positions or views in a way that does not 
bind outside parties or the agency itself. See Richard J. Pierce, Jr., 
Administrative Law Treatise § 6.2 at 306 (4th ed. 2000), citing 
Skidmore v. Swift & Co., 323 U.S. 134 (1944) and other cases.

The third category consists of so-called "legislative" or "statutory" 
regulations. Regulations in this category, which can only be issued 
pursuant to a specific statutory grant of authority, create rights and 
obligations and address other substantive matters in ways that have the 
force and effect of law. [Footnote 171] In effect, these regulations 
constitute the exercise of authority delegated to the agency by law to 
further "legislate" by fleshing out the underlying statute that the 
agency is charged with implementing. As discussed in section B of this 
chapter, the scope and specificity of such a congressional delegation 
of legislative authority to an agency will often determine how much 
deference the courts will accord to the agency's regulations and to the 
agency's interpretation of the laws it implements.

It is not unusual for Congress to grant agencies statutory authority to 
issue such regulations. When Congress enacts a new program statute, it 
typically does not prescribe every detail of the statute's 
implementation but leaves it to the administering agency to "fill in 
the gaps" by regulation. Chevron, Inc. v. Natural Resources Defense 
Council, 467 U.S. 837, 843-844 (1984); Morton v. Ruiz, 415 U.S. 199, 
231 (1974). There are many reasons for this. It is often not possible 
to foresee in advance every detail that ought to be covered. In other 
cases, there may be a need for flexibility in implementation that is 
simply not practical to detail in the legislation. In many cases, 
Congress prefers to legislate a policy in terms of broad standards, 
leaving the details of implementation to the agency with program 
expertise. Finally, it is much easier for an agency to amend a 
regulation to reflect changing circumstances than it would be for 
Congress to have to go back and amend the basic legislation. Thus, 
agency legislative regulations have become an increasingly vital 
element of federal law.

1. The Administrative Procedure Act:

The key statute governing the issuance of agency regulations is the 
Administrative Procedure Act (APA), originally enacted in 1946 and now 
codified in Title 5 of the United States Code, primarily sections 551-
559 (administrative procedure) and 701-706 (judicial review).[Footnote 
172] The APA deals with two broad categories of administrative action: 
rulemaking and adjudication. Our concern here is solely with the 
rulemaking portions.

a. The Informal Rulemaking Process:

The APA uses the term "rule" rather than "regulation." In the context 
of the APA, the issuance of a regulation is called "rulemaking." The 
term "rule" is given a very broad definition in 5 U.S.C. § 551(4):

"'[R]ule' means the whole or a part of an agency statement of general 
or particular applicability and future effect designed to implement, 
interpret, or prescribe law or policy or describing the organization, 
procedure, or practice requirements of an agency …."

It is apparent from this definition that a great many agency issuances, 
regardless of what the agency chooses to call them, are rules.

The APA prescribes two types of rulemaking, which have come to be known 
as "formal" and "informal." Formal rulemaking under the APA involves a 
trial-type hearing (witnesses, depositions, transcript, etc.) and is 
governed by 5 U.S.C. §§ 556 and 557. This more rigorous, and today 
relatively uncommon, procedure is required only where the governing 
statute requires that the proceeding be "on the record." 5 U.S.C. 
§ 553(c); United States v. Florida East Coast Railway Co., 410 U.S. 224 
(1973).

Most agency regulations are the product of informal rulemaking--the 
notice and comment procedures prescribed by 5 U.S.C. § 553. The first 
step in this process is the publication of a proposed regulation in the 
Federal Register. The Federal Register is a daily publication printed 
and distributed by the Government Printing Office. 44 U.S.C. 
§ 1504.[Footnote 173] Publication of a document in the Federal Register 
constitutes legal notice of its contents. 44 U.S.C. § 1507; Federal 
Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947); 63 Comp. Gen. 293 
(1984); B-242329.2, Mar. 12, 1991.[Footnote 174]

The agency then allows a period of time during which interested parties 
may participate in the process, usually by submitting written comments, 
although oral presentations are sometimes permitted. Next, the agency 
considers and evaluates the comments submitted, and determines the 
content of the final regulation, which is also published in the Federal 
Register, generally at least 30 days prior to its effective date. 
5 U.S.C. §§ 553(b)-(d).

The agency is also required to publish a "concise general statement" of 
the basis and purpose of the regulation. 5 U.S.C. § 553(c). This is 
commonly known as the preamble, the substance of which appears in the 
Federal Register under the heading "Supplementary Information."

The preamble is extremely important since it is the primary means for a 
reviewing court to evaluate compliance with section 553. The courts 
have cautioned not to read the terms "concise" and "general" too 
literally. Automotive Parts & Accessories Ass'n v. Boyd, 407 F.2d 330, 
338 (D.C. Cir. 1968). Rather, the preamble must be adequate--

"to respond in a reasoned manner to the comments received, to explain 
how the agency resolved any significant problems raised by the 
comments, and to show how that resolution led the agency to the 
ultimate rule."

Rodway v. Department of Agriculture, 514 F.2d 809, 817 (D.C. Cir. 
1975). See also Home Box Office, Inc. v. FCC, 567 F.2d 9, 36 (D.C. 
Cir.), cert. denied, 434 U.S. 829 (1977); Automotive Parts, 407 F.2d at 
338. As one court stated, "the agencies do not have quite the 
prerogative of obscurantism reserved to the legislatures." United 
States v. Nova Scotia Food Products Corp., 568 F.2d 240, 252 (2nd Cir. 
1977). The preamble does not have to address every item included in the 
comments. Id.; Automotive Parts, 407 F.2d at 338. However, Professor 
Pierce cautions that, over time, the courts have come to focus 
increasing scrutiny on the preamble as the venue for agencies to 
demonstrate that their regulations are not "arbitrary and capricious":

"No court today would uphold a major agency rule that incorporates only 
a 'concise and general statement of basis and purpose.' To have any 
reasonable prospect of obtaining judicial affirmance of a major rule, 
an agency must set forth the basis and purpose of the rule in a 
detailed statement, often several hundred pages long, in which the 
agency refers to the evidentiary basis for all factual predicates, 
explains its method of reasoning from factual predicates to the 
expected effects of the rule, relates the factual predicates and 
expected effects of the rule to each of the statutory goals or purposes 
the agency is required to further or to consider, responds to all major 
criticisms contained in the comments on its proposed rule, and explains 
why it has rejected at least some of the most plausible alternatives to 
the rule it has adopted. Failure to fulfill one of these judicially 
prescribed requirements of a 'concise general statement of basis and 
purpose' has become the most frequent basis for reversal of agency 
rules."

Richard J. Pierce, Jr., Administrative Law Treatise, § 7.4 at 442 
(4th ed. 2000) (citations omitted).

As discussed later in this section, Congress and the President also 
have increasingly imposed requirements governing the development of 
agency regulations that must be addressed in the preamble.

The preamble normally accompanies publication of the final regulation, 
although this is not required as long as it is sufficiently close in 
time to make clear that it is in fact contemporaneous and not a "post 
hoc rationalization." Action on Smoking & Health v. Civil Aeronautics 
Board, 713 F.2d 795, 799 (D.C. Cir. 1983); Tabor v. Joint Board for 
Enrollment of Actuaries, 566 F.2d 705, 711 n. 14 (D.C. Cir. 1977).

Apart from questions of judicial review, the preamble serves another 
highly important function. It provides, as its title in the Federal 
Register indicates, useful supplementary information. Viewed from this 
perspective, the preamble serves much the same purpose with respect to 
a regulation as legislative history does with respect to a statute.
[Footnote 175]

Codifications of agency regulations are issued in bound and permanent 
form in the Code of Federal Regulations. The "C.F.R." is supplemented 
or republished at least once a year. 44 U.S.C. § 1510. Unfortunately, 
with rare exceptions, the preamble does not accompany the regulations 
into the C.F.R., but is found only in the original Federal Register 
issuance. The C.F.R. does, however, give the appropriate Federal 
Register citation. Regulations on the use of the Federal Register and 
the C.F.R. are found in 1 C.F.R. ch. I.

Agencies may supplement the APA procedures, but are not required to 
unless directed by statute. The Supreme Court has admonished that a 
court should:

"not stray beyond the judicial province to explore the procedural 
format or to impose upon the agency its own notion of which procedures 
are 'best' or most likely to further some vague, undefined public 
good."

Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense 
Council, Inc., 435 U.S. 519, 549 (1978). The Court repeated its caution 
the following year in Chrysler Corp. v. Brown, 441 U.S. 281, 312-13 
(1979).

The Court of Appeals for the District of Columbia Circuit, in Home Box 
Office, Inc. v. FCC, provided the following summary of the APA's 
informal rulemaking requirements:

"The APA sets out three procedural requirements: notice of the proposed 
rulemaking, an opportunity for interested persons to comment, and 'a 
concise general statement of (the) basis and purpose' of the rules 
ultimately adopted…. As interpreted by recent decisions of this court, 
these procedural requirements are intended to assist judicial review as 
well as to provide fair treatment for persons affected by a rule…. To 
this end there must be an exchange of views, information and criticism 
between interested persons and the agency…. Consequently, the notice 
required by the APA, or information subsequently supplied to the 
public, must disclose in detail the thinking that has animated the form 
of a proposed rule and the data upon which that rule is based…. 
Moreover, a dialogue is a two-way street: the opportunity to comment is 
meaningless unless the agency responds to significant points raised by 
the public…."

567 F.2d at 35-36 (emphasis added).

In the Negotiated Rulemaking Act of 1990, Pub. L. No. 101-648, 
104 Stat. 4969 (Nov. 29, 1990), codified at 5 U.S.C. §§ 561-570a, 
Congress enacted a framework for agencies to consult with interested 
parties in the development of regulations.[Footnote 176] Under this 
legislation, a proposed regulation is drafted by a committee composed 
of representatives of the agency and other interested parties. An 
agency may use this procedure if it determines, among other things, 
that there are a limited number of identifiable interests that will be 
significantly affected by the regulation, and that there is a 
reasonable likelihood that a committee can reach a consensus without 
unreasonably delaying the rulemaking process. Once the proposed 
regulation is developed in this manner, it remains subject to the APA's 
notice and comment requirements. The negotiated rulemaking procedure is 
optional; an agency's decision to use or not use it is not subject to 
judicial review. Furthermore, use of the procedure does not entitle the 
regulation to any greater deference than it would otherwise receive. 5 
U.S.C. § 570; see also Center for Law & Education v. United States 
Department of Education, 209 F. Supp. 2d 102, 106-107 (D.D.C. 2002).

Whatever form they take, consultations with interested parties in the 
development of regulations cannot undercut the notice and comment 
procedures of the APA. The Comptroller General has found that an 
agreement to issue, with specified content, a regulation otherwise 
subject to the APA not only violates the APA but is invalid as contrary 
to public policy. B-212529, May 31, 1984. In effect, a promise to issue 
a regulation with specified content amounts to a promise to disregard 
any adverse public comments received, clearly a violation of the APA. 
Likewise, in USA Group Loan Services, Inc. v. Riley, 82 F.3d 708, 714 
(7th Cir. 1996), the court held that agreements reached between 
interested parties and agency officials through consultations pursuant 
to the Negotiated Rulemaking Act are not legally binding, since to 
enforce them would "extinguish notice and comment rulemaking."

b. Informal Rulemaking: When Required:

A great many things are required by one statute or another to be 
published in the Federal Register. One example is "substantive rules of 
general applicability adopted as authorized by law, and statements of 
general policy or interpretations of general applicability formulated 
and adopted by the agency." 5 U.S.C. § 552(a)(1)(D). Privacy Act 
notices are another example. 5 U.S.C. § 552a(e)(4). Other items 
required or authorized to be published in the Federal Register are 
specified in 44 U.S.C. § 1505. However, the mere requirement to publish 
something in the Federal Register is not, by itself, a requirement to 
use APA procedures.

As a starting point, anything that falls within the definition of a 
"rule" in 5 U.S.C. § 551(4) and for which formal rulemaking is not 
required, is subject to the informal rulemaking procedures of 5 U.S.C. 
§ 553 unless exempt. This statement is not as encompassing as it may 
seem, since section 553 itself provides several very significant 
exemptions. These exemptions, according to a line of decisions by the 
U.S. Court of Appeals for the District of Columbia Circuit, will be 
"narrowly construed and only reluctantly countenanced." Utility Solid 
Waste Activities Group v. EPA, 236 F.3d 749, 754 (D.C. Cir. 2001); 
Asiana Airlines v. Federal Aviation Administration, 134 F.3d 393, 396-
397 (D.C. Cir. 1998); Tennessee Gas Pipeline Co. v. Federal Energy 
Regulatory Commission, 969 F.2d 1141, 1144 (D.C. Cir. 1992); New Jersey 
Department of Environmental Protection v. EPA, 626 F.2d 1038, 1045 
(D.C. Cir. 1980).[Footnote 177] Be that as it may, they appear in the 
statute and cannot be disregarded. For example, section 553 does not 
apply to matters "relating to agency management or personnel or to 
public property, loans, grants, benefits, or contracts." 5 U.S.C. 
§ 553(a)(2).

Several agencies have published in the Federal Register a statement 
committing themselves to follow APA procedures with respect to matters 
that would otherwise be exempt from APA rulemaking. To the extent an 
agency has done this, it has voluntarily waived the benefit of the 
exemption and must follow the APA. E.g., Flagstaff Medical Center, 
Inc. v. Sullivan, 962 F.2d 879, 886 (9th Cir. 1992); Alcaraz v. 
Block, 746 F.2d 593 (9th Cir. 1984); Humana of South Carolina, Inc. v. 
Califano, 590 F.2d 1070 (D.C. Cir. 1978); Rodway v. Department of 
Agriculture, 514 F.2d 809 (D.C. Cir. 1975); Abbs v. Sullivan, 756 F. 
Supp. 1172, 1188 (W.D. Wis. 1990); Herron v. Heckler, 576 F. Supp. 218 
(N.D. Cal. 1983); Ngou v. Schweiker, 535 F. Supp. 1214 (D. D.C. 1982); 
B-202568, Sept. 11, 1981.[Footnote 178] If an agency has not waived its 
exemption with respect to the specified matters, it need not follow the 
APA. California v. EPA, 689 F.2d 217 (D.C. Cir. 1982); City of Grand 
Rapids v. Richardson, 429 F. Supp. 1087 (W.D. Mich. 1977).[Footnote 
179]

Another significant exemption, found in 5 U.S.C. § 553(b), is for 
"interpretative rules, general statements of policy, or rules of agency 
organization, procedure, or practice." Again, much litigation has 
ensued over whether a given regulation is "substantive" or 
"legislative," in which event section 553 applies, or whether it is 
"interpretative," in which event it does not. See, e.g., ANR Pipeline 
Co. v. Federal Energy Regulatory Commission, 205 F.3d 403 (D.C. Cir. 
2000); Caruso v. Blockbuster-Sony Music Entertainment Centre at the 
Waterfront, 193 F.3d 730 (3rd Cir. 1999); Paralyzed Veterans of 
America v. District of Columbia Arena L.P., 117 F.3d 579 (D.C. Cir. 
1997), cert. denied, 523 U.S. 1003 (1998); Hoctor v. Department of 
Agriculture, 82 F.3d 165 (7th Cir. 1996); Health Insurance Association 
of America, Inc. v. Shalala, 23 F.3d 412 (D.C. Cir. 1994), cert. 
denied, 513 U.S. 1147 (1995); American Mining Congress v. Mine Safety & 
Health Administration, 995 F.2d 1106 (D.C. Cir. 1993).

The agency's own characterization of a regulation is the "starting 
point" for the analysis. Professionals & Patients for Customized 
Care v. Shalala, 56 F.3d 592, 596 (5th Cir. 1995); Metropolitan School 
District of Wayne Township, Marion County, Indiana v. Davila, 969 F.2d 
485, 489 (7th Cir. 1992), cert. denied, 507 U.S. 949 (1993). However, 
the agency's characterization, while relevant, is not controlling. 
E.g., Davila; General Motors Corp. v. Ruckelshaus, 742 F.2d 1561 (D.C. 
Cir. 1984), cert. denied, 471 U.S. 1074 (1985); American Frozen Food 
Institute, Inc. v. United States, 855 F. Supp. 388, 396 (C.I.T. 1994) 
("The court must focus on the intended legal effect of the rule 
adopted, not the stated intent of the agency, to determine whether a 
rule is legislative or interpretive.").

The case law is not entirely consistent in the criteria used to 
determine whether a regulation is legislative or interpretive. 
Professor Pierce points to the District of Columbia Circuit's decision 
in American Mining Congress, cited above, as an exemplary opinion that 
has been followed in several other circuits. Based largely on American 
Mining Congress, he recommends a test consisting of the following four 
questions:

"(1) whether in the absence of the rule there would not be an adequate 
legislative basis for enforcement action or other agency action to 
confer benefits or ensure the performance of duties;

(2) whether the legislative rule the agency is claiming to interpret is 
too vague or open-ended to support the interpretative rule;

(3) whether the agency had explicitly invoked its legislative 
authority; or:

(4) whether the rule effectively amends a prior legislative rule."

If the answer to any of these questions is yes, the rule is legislative 
rather than interpretative. Richard J. Pierce, Administrative Law 
Treatise, § 6.4 at 345 (4th ed. 2000).[Footnote 180]

While contests over the applicability of 5 U.S.C. § 553 frequently 
center on whether a regulation is legislative or interpretive, they can 
arise in many other contexts as well. Agency issuances may be called 
many things besides regulations: manuals, handbooks, instruction 
memoranda, etc. For purposes of determining applicability of the APA, 
the test is the substance and effect of the document rather than what 
the agency chooses to call it. E.g., Guardian Federal Savings & Loan 
Ass'n v. Federal Savings & Loan Insurance Corp., 589 F.2d 658, 666 
(D.C. Cir. 1978); Herron v. Heckler, 576 F. Supp. at 230; Saint Francis 
Memorial Hospital v. Weinberger, 413 F. Supp. 323, 327 (N.D. Cal. 
1976). As we will discuss later in this section and in section B of 
this chapter, a functional analysis of the nature of these varied 
agency issuances not only dictates whether APA rulemaking procedures 
apply to them, but also determines their legal effects on the agency 
and outside parties as well as the extent to which courts will defer to 
any statutory interpretations that they embody.

A regulation that is subject to 5 U.S.C. § 553, but which is issued in 
violation of the required procedures (including a nonexistent or 
inadequate preamble), stands an excellent chance of being invalidated. 
If so, the court may simply declare the regulation invalid, or "void." 
E.g., Chemical Manufacturers Ass'n v. EPA, 28 F.3d 1259 (D.C. Cir. 
1994); W.C. v. Bowen, 807 F.2d 1502 (9th Cir. 1987); National 
Nutritional Foods Ass'n v. Mathews, 557 F.2d 325, 338 (2nd Cir. 1977). 
In the alternative, the court may "vacate" the regulation and remand it 
to the agency for further proceedings in compliance with the APA, the 
extent of the further proceedings depending on the degree of 
noncompliance. E.g., Tabor v. Joint Board for Enrollment of Actuaries, 
566 F.2d 705, 712 (D.C. Cir. 1977); Rodway v. Department of 
Agriculture, 514 F.2d 809, 817 (D.C. Cir. 1975); Detroit Edison Co. v. 
EPA, 496 F.2d 244, 249 (6th Cir. 1974).

Increasingly, however, courts decline to vacate defective regulations 
on remand if they conclude that the agency can fairly readily correct 
the deficiency or if other considerations militate against nullifying 
the regulation. E.g., Idaho Farm Bureau Federation v. Babbitt, 58 F.3d 
1392 (9th Cir. 1995); American Medical Ass'n v. Reno, 57 F.3d 1129 
(D.C. Cir. 1995); Allied Signal, Inc. v. United States Nuclear 
Regulatory Commission, 988 F.2d 146 (D.C. Cir. 1993); Independent 
United States Tanker Owners Committee v. Dole, 809 F.2d 847 (D.C. 
Cir.), cert. denied, 484 U.S. 819 (1987).[Footnote 181] Finally, a 
court may sever the invalid portions of a regulation on remand and 
leave intact the portions of the regulation that are not affected by 
the reversal. E.g., Davis County Solid Waste Management v. EPA, 
108 F.3d 1454 (D.C. Cir. 1997).

c. Additional Requirements for Rulemaking:

Within the context of APA rulemaking, Congress and the President have 
imposed a series of requirements that, in effect, regulate the 
regulators. For the most part, these requirements do not limit or 
otherwise affect the application of the APA.[Footnote 182] Rather, they 
seek primarily to ensure that certain consequences of agency 
regulations--such as costs, benefits, and other impacts--are fully 
considered and explained as part of the normal APA rulemaking process.

The following are examples of some of these statutory requirements:

* The National Environmental Policy Act, 42 U.S.C. §§ 4321 et seq., 
requires agencies to prepare an environmental impact statement for 
"major Federal actions [including regulations] significantly affecting 
the quality of the human environment..."

* The Paperwork Reduction Act, 44 U.S.C. §§ 3501 et seq., generally 
requires agencies to provide 60 days advance notice and obtain approval 
from the Office of Management and Budget's Office of Information and 
Regulatory Affairs for regulations that involve the collection of 
information (including recordkeeping requirements) from 10 or more 
nonfederal persons. The Act requires the agency to demonstrate that the 
collection of information is needed for performance of the agency's 
functions and is not unnecessarily duplicative or burdensome.

* The Regulatory Flexibility Act, 5 U.S.C. §§ 601-612, requires 
agencies to conduct a "regulatory flexibility analysis" of proposed 
regulations that would have a significant economic impact on a 
substantial number of "small entities," for example, small businesses. 
The analysis must consider, among other things, alternative ways of 
accomplishing the objective of the regulation in a way that would 
minimize its impact on small entities.[Footnote 183]

* Title II of the Unfunded Mandates Reform Act, 2 U.S.C. §§ 1531-1538, 
generally requires agencies to prepare a written assessment of the 
impact of a regulation containing a federal mandate that may impose 
costs in excess of $100 million per year on state, local, or tribal 
governments, or on the private sector.

* The so-called "Congressional Review Act" (CRA), 5 U.S.C. §§ 801-808, 
requires agencies to submit a report on each final rule to Congress and 
to the Comptroller General before the rule takes effect.[Footnote 184] 
The report is to include: a copy of the rule; a copy of any cost-
benefit analysis of the rule; an explanation of any actions the agency 
has taken with respect to the Regulatory Flexibility Act and the 
Unfunded Mandates Reform Act, discussed above; and any actions the 
agency has taken with respect to other relevant statutes or relevant 
executive orders (some of which are mentioned hereafter). The Act 
defines "major rules" as, among other things, those having an annual 
economic impact of $100 million or more. 5 U.S.C. § 804(2). In the case 
of major rules, the agency generally must delay the effective date of 
the rule for 60 days pending congressional review. The Comptroller 
General must report to Congress on the agency's compliance with 
applicable procedural requirements with respect to each major rule. The 
CRA further provides expedited procedures whereby Congress may reject a 
rule submitted to it by enactment of a joint resolution of 
disapproval.[Footnote 185]

Like Congress, Presidents have also imposed additional requirements 
governing various aspects of the rulemaking process, primarily by the 
use of executive orders. The following list is illustrative but by no 
means exhaustive:[Footnote 186]

* Executive Order No. 12630 ("Governmental Actions and Interference 
with Constitutionally Protected Property Rights") prescribes policies 
and procedures to ensure that actions potentially impacting property 
rights in a manner requiring compensation under the Fifth Amendment are 
undertaken on a well-reasoned basis. 53 Fed. Reg. 8859 (Mar. 15, 1988), 
5 U.S.C. § 601 note.

* Executive Order No. 12866 ("Regulatory Planning and Review") 
establishes a number of procedural and analytical requirements 
governing agency rulemaking, including review of certain rules by the 
Office of Management and Budget's Office of Information and Regulatory 
Affairs. 58 Fed. Reg. 51735 (Sept. 30, 1993), as amended by Exec. Order 
No. 13258, 67 Fed. Reg. 9385 (Feb. 28, 2002), 5 U.S.C. § 601 note.

* Executive Order No. 12988 ("Civil Justice Reform") promotes clear 
drafting of rules with respect to a number of legal issues in order to 
avoid burdening the courts with litigation over unnecessary 
ambiguities. For example, section 3(b)(2) of the order requires that 
rules specify in clear language what, if any, preemptive and 
retroactive effects the rules should be given. It also requires that 
rules provide a clear legal standard of conduct for affected parties. 
61 Fed. Reg. 4729 (Feb. 7, 1996), 28 U.S.C. § 519 note.

* Executive Order No. 13132 ("Federalism") sets policies and procedural 
requirements for regulations (and other agency actions) that have 
significant implications in relation to state and local governments. 64 
Fed. Reg. 43255 (Aug. 10, 1999), 5 U.S.C. § 601 note.

* Executive Order No. 13272 ("Proper Consideration of Small Entities in 
Agency Rulemaking") establishes policies and procedures to facilitate 
compliance with the Regulatory Flexibility Act, discussed above. 
67 Fed. Reg. 53461 (Aug. 16, 2002), 5 U.S.C. § 601 note.

2. Regulations May Not Exceed Statutory Authority:

It is a fundamental proposition that agency regulations are bound by 
the limits of the agency's statutory and organic authority. An often 
quoted statement of the principle appears in the Supreme Court's 
decision in Manhattan General Equipment Co. v. Commissioner of Internal 
Revenue, 297 U.S. 129, 134 (1936):

"The power of an administrative officer or board to administer a 
federal statute and to prescribe rules and regulations to that end is 
not the power to make law--for no such power can be delegated by 
Congress--but the power to adopt regulations to carry into effect the 
will of Congress as expressed by the statute. A regulation which does 
not do this, but operates to create a rule out of harmony with the 
statute, is a mere nullity."

This truism is reflected in a host of subsequent judicial and 
administrative decisions. E.g., Health Insurance Ass'n of America, 
Inc. v. Shalala, 23 F.3d 412, 416 (D.C. Cir. 1994); Killip v. Office of 
Personnel Management, 991 F.2d 1564, 1569 (Fed. Cir. 1993), and cases 
cited. Thus, as the Killip court put it:

"Though an agency may promulgate rules or regulations pursuant to 
authority granted by Congress, no such rule or regulation can confer on 
the agency any greater authority than that conferred under the 
governing statute."[Footnote 187]

To take an example of particular relevance to this publication, an 
agency may not expend public funds or incur a liability to do so based 
on a regulation, unless the regulation is implementing authority given 
to the agency by law. A regulation purporting to create a liability on 
the part of the government not supported by statutory authority is 
invalid and not binding on the government. Atchison, Topeka & Santa Fe 
Railroad Co. v. United States, 55 Ct. Cl. 339 (1920); Holland-America 
Line v. United States, 53 Ct. Cl. 522 (1918), rev'd on other grounds, 
254 U.S. 148 (1920); Illinois Central Railroad Co. v. United States, 
52 Ct. Cl. 53 (1917). See also B-201054, Apr. 27, 1981, discussed 
below. In other words, the authority to obligate or expend public funds 
cannot be created by regulation; Congress must confer that basic 
authority. See also Harris v. Lynn, 555 F.2d 1357 (8th Cir.), cert. 
denied, 434 U.S. 927 (1977) (agency cannot extend benefits by 
regulation to a class of persons not included within the authorizing 
statute); Tullock v. State Highway Commission of Missouri, 507 F.2d 
712, 716-17 (8th Cir. 1974); Pender Peanut Corp. v. United States, 
20 Cl. Ct. 447, 455 (1990) (monetary penalty not authorized by statute 
cannot be imposed by regulation).

Further illustrations may be found in the following decisions of the 
Comptroller General:

* Where the program statute provided that federal grants "shall be" a 
specified percentage of project construction costs, the grantor agency 
could not issue regulations providing a mechanism for reducing the 
grants below the specified percentage. 53 Comp. Gen. 547 (1974).

* Where a statute provided that administrative costs could not exceed a 
specified percentage of funds distributed to states under an allotment 
formula, the administering agency could not amend its regulations to 
relieve states of liability for over expenditures or to raise the 
ceiling. B-178564, July 19, 1977, aff'd 57 Comp. Gen. 163 (1977).

* Absent a clear statutory basis, an agency may not issue regulations 
establishing procedures to accept government liability or to forgive 
indebtedness based on what it deems to be fair or equitable. B-201054, 
supra. See also B-118653, July 15, 1969.

See also B-288266, Jan. 27, 2003 (agencies should not incur obligations 
for food and light refreshments in reliance on a General Services 
Administration (GSA) travel regulation for which GSA has no authority); 
62 Comp. Gen. 116 (1983); 56 Comp. Gen. 943 (1977); B-201706, Mar. 17, 
1981.

3. "Force and Effect of Law":

A very long line of decisions holds that legislative or statutory 
regulations that are otherwise valid (i.e., within the bounds of the 
agency's statutory authority) have the force and effect of law. E.g., 
53 Comp. Gen. 364 (1973); 43 Comp. Gen. 31 (1963); 37 Comp. Gen. 820 
(1958); 33 Comp. Gen. 174 (1953); 31 Comp. Gen. 193 (1951); 22 Comp. 
Gen. 895 (1943); 15 Comp. Gen. 869 (1936); 2 Comp. Gen. 342 (1922); 
21 Comp. Dec. 482 (1915); B-248439 et al., Oct. 22, 1992. The thrust of 
these decisions is that the regulations are binding on all concerned, 
the issuing agency included, and that the agency cannot waive their 
application on an ad hoc or situational basis.

In Chrysler Corp. v. Brown, 441 U.S. 281 (1979), the Supreme Court 
provided detailed instruction as to when an agency regulation is 
entitled to the force and effect of law. The regulation "must have 
certain substantive characteristics and be the product of certain 
procedural requisites." 441 U.S. at 301. Specifically, the Court listed 
three tests that must be met:

* The regulation must be a substantive or legislative regulation 
affecting individual rights or obligations. Regulations that are 
interpretative only generally will not qualify.[Footnote 188]

* The regulation must be issued pursuant to, and subject to any 
limitations of, a statutory grant of authority. For purposes of this 
test, 5 U.S.C. § 301 does not constitute a sufficient grant of 
authority. 441 U.S. at 309-11.

* The regulation must be issued in compliance with any procedural 
requirements imposed by Congress. This generally means the APA, unless 
the regulation falls within one of the exemptions previously 
discussed.[Footnote 189]

A regulation that meets these three tests will be given the force and 
effect of law. A regulation with the force and effect of law is 
"binding on courts in a manner akin to statutes" (Chrysler Corp., 
441 U.S. at 308); it has the same legal effect "as if [it] had been 
enacted by Congress directly" (Federal Crop Insurance Corp. v. Merrill, 
332 U.S. 380, 385 (1947)); it "is as binding on a court as if it were 
part of the statute" (Joseph v. United States Civil Service Commission, 
554 F.2d at 1153); it is "as binding on the courts as any statute 
enacted by Congress" (Production Tool Corp. v. Employment & Training 
Administration, 688 F.2d at 1165). See also Stinson v. United States, 
508 U.S. 36, 40-42 (1993).

This is strong language. It cautions a reviewing court (or reviewing 
administrative agency) not to substitute its own judgment for that of 
the agency, and not to invalidate a regulation merely because it would 
have interpreted the law differently. A regulation with the force and 
effect of law is controlling, subject to the "arbitrary and capricious" 
standard of the APA (5 U.S.C. § 706). Batterton v. Francis, 432 U.S. 
416, 425-26 (1977); Georgia Pacific Corp. v. Occupational Safety & 
Health Administration, 25 F.3d 999, 1003-1004 (11th Cir. 1994); 
Metropolitan School District of Wayne Township, Marion County, 
Indiana v. Davila, 969 F.2d 485, 490 (7th Cir. 1992); Guardian Federal 
Savings & Loan Ass'n v. Federal Savings & Loan Insurance Corp., 
589 F.2d 658, 664-65 (D.C. Cir. 1978).

A regulation will generally be found arbitrary and capricious--

"if the agency has relied on factors which Congress has not intended it 
to consider, entirely failed to consider an important aspect of the 
problem, offered an explanation for its decision that runs counter to 
the evidence before the agency, or is so implausible that it could not 
be ascribed to a difference in view or the product of agency 
expertise."

Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile 
Insurance Co., 463 U.S. 29, 43 (1983).

For cases applying the Chrysler standards in determining that various 
regulations do or do not have the force and effect of law, see Qwest 
Communications International, Inc. v. FCC, 229 F.3d 1172, 1180 (D.C. 
Cir. 2000); United States v. Alameda Gateway Ltd., 213 F.3d 1161, 1168 
(9th Cir. 2000); Horner v. Jeffrey, 823 F.2d 1521 (Fed. Cir. 1987); St. 
Mary's Hospital, Inc. v. Harris, 604 F.2d 407 (5th Cir. 1979); 
Intermountain Forest Industry Ass'n v. Lyng, 683 F. Supp. 1330 (D. Wyo. 
1988).

4. Waiver of Regulations:

When you ask whether an agency can waive a regulation, you are really 
asking to what extent an agency is bound by its own regulations. If a 
given regulation binds the issuing agency, then the agency should not 
be able to grant ad hoc waivers, unless the governing statute has given 
it that authority and the agency has built it into the regulation.

As discussed previously, a legislative regulation with the force and 
effect of law that was issued in compliance with the Administrative 
Procedure Act (APA) and the statute it implements clearly binds the 
issuing agency. The courts treat such a regulation essentially the same 
as a statute; thus, the agency cannot waive the regulation any more 
than it could waive the statute. See section A.3 of this chapter and 
cases cited. The underlying philosophy--still valid--was expressed as 
follows in a 1958 GAO decision:

"Regulations must contain a guide or standard alike to all individuals 
similarly situated, so that anyone interested may determine his own 
rights or exemptions thereunder. The administrative agency may not 
exercise discretion to enforce them against some and to refuse to 
enforce them against others."

37 Comp. Gen. 820, 821 (1958); see also B-243283.2, Sept. 27, 
1991.[Footnote 190]

Sometimes legislative regulations or the statutes they implement do 
explicitly authorize "waivers" in certain circumstances. Here, of 
course, the waiver authority is an integral part of the underlying 
statutory or regulatory scheme. Accordingly, courts give effect to such 
waiver provisions and, indeed, they may even hold that an agency's 
failure to consider or permit waiver is an abuse of discretion. 
However, the courts usually accord considerable deference to agency 
decisions on whether or not to grant discretionary waivers. For 
illustrative cases, see People of the State of New York & Public 
Service Commission of the State of New York v. FCC, 267 F.3d 91 
(2nd Cir. 2001); BellSouth Corporation v. FCC, 162 F.3d 1215 (D.C. Cir. 
1999); Rauenhorst v. United States Department of Transportation, 
95 F.3d 715 (8th Cir. 1996).

While duly promulgated legislative regulations are almost 
always[Footnote 191] held to be binding absent a statutory or 
regulatory provision for waiver, the results are much less definitive 
when one enters the realm of "nonlegislative" regulations and other 
agency issuances. As discussed previously, these may include 
regulations that were published in the Federal Register under APA 
procedures but which are classified as interpretative. They also 
include a variety of non-Federal Register documents, such as manuals, 
handbooks, and internal agency products, some of which may not amount 
to "regulations" in any obvious sense.

As a general proposition, nonlegislative regulations and other agency 
products do not impose legally binding obligations on the agencies that 
issue them any more than they impose legally enforceable rights or 
obligations on parties outside of the agency. This makes sense since, 
at least conceptually, nonlegislative products--in contrast to 
legislative regulations--by definition do not carry the force and 
effect of law. See generally Pierce, Administrative Law Treatise §§ 6.1 
and 6.6.

Nonlegislative regulations are particularly open to waiver where the 
regulations are for the primary benefit of the agency and failure to 
follow them would not adversely affect private parties. See, e.g., 
60 Comp. Gen. 208, 210 (1981) (an agency could waive its internal 
guidelines prescribing the specific evidence required to demonstrate a 
grantee's financial responsibility when the agency was otherwise 
satisfied that the government's interests were adequately protected). 
An interesting variation occurred in Health Systems Agency of Oklahoma, 
Inc. v. Norman, 589 F.2d 486 (10th Cir. 1978). An application for 
designation as a health systems agency was submitted to the then 
Department of Health, Education, and Welfare (HEW) 55 minutes past the 
deadline announced in the Federal Register, because the applicant's 
representative overslept. HEW refused to accept the application. 
Finding that the deadline was not statutory, that its purpose was the 
orderly transaction of business, and that internal HEW guidelines 
permitted some discretion in waiving the deadline, the court held HEW's 
refusal to be an abuse of discretion.

On the other hand, there is a substantial body of case law holding that 
agencies are bound by certain nonlegislative rules. The most 
significant line of cases here--United States ex rel. Accardi v. 
Shaughnessy, 347 U.S. 260 (1954), and its progeny--are discussed later 
in this chapter.[Footnote 192] These cases generally hold that agencies 
are bound by procedural requirements that they voluntarily impose on 
themselves when noncompliance with those requirements could prejudice 
individuals who are facing potential adverse action by the agency.

Beyond the Accardi line of cases, courts seem to assess the binding 
effect (if any) of nonlegislative pronouncements more generally in 
terms of whether the pronouncement amounts to a "regulation" by which 
the agency "intends" to be bound. Thorpe v. Housing Authority of 
Durham, 393 U.S. 268 (1969); New England Tank Industries of New 
Hampshire, Inc. v. United States, 861 F.2d 685 (Fed. Cir. 1988); 
Fairington Apartments of Lafayette v. United States, 7 Cl. Ct. 647 
(1985).[Footnote 193] Intent to be bound is ascertained by examining 
"the provision's language, its context, and any available extrinsic 
evidence." Chiron Corp. & PerSeptive Biosystems, Inc. v. National 
Transportation Safety Board, 198 F.3d 935, 944 (D.C. Cir. 1999); Doe v. 
Hampton, 566 F.2d 265, 281 (D.C. Cir. 1977). The Comptroller General 
likewise has rejected a "form over substance" approach that turns on 
what an agency chooses to call its regulation. As stated in one GAO 
decision:

"That the Bureau's policy and procedure memoranda were never intended 
as 'regulations' is of no particular import since whether or not they 
are such must be determined by their operative nature."

43 Comp. Gen. 31, 34 (1963).

In assessing the binding nature of a nonlegislative regulation or other 
agency document, the language of the document itself is obviously an 
important starting point. Brock v. Cathedral Bluffs Shale Oil Co., 
796 F.2d 533, 537-38 (D.C. Cir. 1986); City of Williams v. Dombeck, 
151 F. Supp. 2d 9 (D.D.C. 2001). Other factors that may provide some 
indication of intent, although they are not dispositive, are whether 
the item has been published in the Federal Register (failure to do so 
suggests an intent that the item be nonbinding), and, more 
significantly, whether it has been published in the Code of Federal 
Regulations (under 44 U.S.C. § 1510, the C.F.R. is supposed to contain 
only documents with "legal effect"). Brock, 796 F.2d at 538-39.

For further reading on this interesting and still evolving topic of 
what agency products have binding effect, see: William R. Anderson, 
Informal Agency Advice--Graphing the Critical Analysis, 54 Admin. L. 
Rev. 595 (2002); Robert A. Anthony, "Interpretive" Rules, "Legislative" 
Rules and "Spurious" Rules: Lifting the Smog, 8 Admin. L. J. Am. U. 1 
(1994); Joshua I. Schwartz, The Irresistible Force Meets the Immovable 
Object: Estoppel Remedies for an Agency's Violation of Its Own 
Regulations or Other Misconduct, 44 Admin. L. Rev. 653 (1992); Peter 
Raven-Hansen, Regulatory Estoppel: When Agencies Break Their Own 
'Laws,' 64 Tex. L. Rev. 1 (1985); and Note, Violations by Agencies of 
Their Own Regulations, 87 Harv. L. Rev. 629 (1974).

5. Amendment of Regulations:

It has long been recognized that the authority to issue regulations 
includes the authority to amend or revoke those regulations, at least 
prospectively. E.g., 21 Comp. Dec. 482, 484 (1915). This commonsense 
proposition is reflected in the Administrative Procedure Act's (APA) 
definition of rulemaking as the "agency process for formulating, 
amending, or repealing a rule." 5 U.S.C. § 551(5). An amendment to a 
regulation, like the parent regulation itself, must of course remain 
within the bounds of the agency's statutory authority. B-221779, 
Mar. 24, 1986; B-202568, Sept. 11, 1981.

As the APA's definition of rulemaking makes clear, an amendment to a 
regulation is subject to the APA to the same extent as the parent 
regulation. Thus, if a regulation is required to follow the notice and 
comment procedures of 5 U.S.C. § 553, an amendment or repeal of that 
regulation must generally follow the same procedures. Utility Solid 
Waste Activities Group v. EPA, 236 F.3d 749 (D.C. Cir. 2001); Consumer 
Energy Council of America v. Federal Energy Regulatory Commission, 
673 F.2d 425, 446 (D.C. Cir. 1982), aff'd and cert. denied, 463 U.S. 
1216 (1983); Detroit Edison Co. v. EPA, 496 F.2d 244 (6th Cir. 1974); 
Citibank, Federal Savings Bank v. Federal Deposit Insurance Corp., 
836 F. Supp. 3, 7 (D.D.C. 1993); B-221779, supra.

If a regulation is subject to the APA's informal rulemaking 
requirements, an unpublished agency document that purports to amend 
that regulation is invalid. Utility Solid Waste Activities Group, 
236 F.3d at 754; Fiorentino v. United States, 607 F.2d 963, 968 (Ct. 
Cl. 1979), cert. denied, 444 U.S. 1083 (1980); 65 Comp. Gen. 439 
(1986); B-226499, Apr. 1, 1987.

It is possible to have a regulation subject to 5 U.S.C. § 553 with an 
amendment to that regulation that falls within one of the exemptions, 
in which event the amendment need not comply with the APA procedures. 
See Detroit Edison, 496 F.2d at 245, 249; B-202568, Sept. 11, 1981; 
5 Op. Off. Legal Counsel 104 (1981).

If a parent regulation is exempt from compliance with the APA but the 
agency has, without formally waiving the exemption, published it under 
APA procedures anyway, the voluntary compliance will not operate as a 
waiver. The agency may subsequently amend or repeal the regulation 
without following the APA. Baylor University Medical Center v. Heckler, 
758 F.2d 1052 (5th Cir. 1985); Malek-Marzban v. Immigration & 
Naturalization Service, 653 F.2d 113 (4th Cir. 1981); Washington 
Hospital Center v. Heckler, 581 F. Supp. 195 (D.D.C. 1984). Thus, in 
Malek-Marzban the Immigration and Naturalization Service (INS) had 
issued a regulation without advance notice and comment, citing the 
"foreign affairs" exception from APA rulemaking requirements in 5 
U.S.C. § 553(a)(1). The court held that the agency was not bound to 
follow APA rulemaking procedures in this case even though it had 
voluntarily used such procedures for past regulations that were 
likewise subject to the foreign affairs exception:

"We are not persuaded by the petitioners' argument that the INS is 
estopped from asserting the foreign affairs exception because it has 
routinely complied with the APA rulemaking requirements in the past. 
Voluntarily submitting a policy decision involving a foreign affairs 
function to rulemaking procedures is commendable, but it does not 
restrict an agency's prerogatives when circumstances require swift 
action."

653 F.2d at 116.[Footnote 194]

6. Retroactivity:

A number of decisions have pointed out that amendments to regulations 
should be prospective only. E.g., 35 Comp. Gen. 187 (1955); 32 Comp. 
Gen. 315 (1953); 2 Comp. Gen. 342 (1922); 21 Comp. Dec. 482 (1915). The 
theory is that amendments should not affect rights or reliance accruing 
under the old regulation. While these are still crucial concerns, the 
law is not quite that simple.

At the outset, it may be useful to understand the difference between 
"primary" and "secondary" retroactivity. Primary retroactivity changes 
the past legal consequences of past actions. Secondary retroactivity 
changes the future legal consequences of past actions. See generally 
Bowen v. Georgetown University Hospital, 488 U.S. 204, 219-20 (1988) 
(Justice Scalia, concurring).

To take a concrete illustration, when Individual Retirement Accounts 
(IRA) were first authorized, most people could take an income tax 
deduction for amounts deposited into an IRA, up to a statutory ceiling. 
A few years later, Congress changed the law to eliminate the deduction 
for persons covered by certain types of retirement plans. This is an 
example of secondary retroactivity. Persons affected by the amendment 
could no longer deduct IRA contributions in the future, but the 
deductions they had taken in the past were not affected. (A purely 
prospective amendment would have applied only to new IRAs opened on or 
after the effective date of the amendment.) If Congress had attempted 
to invalidate deductions taken prior to the amendment, this would have 
been primary retroactivity.

Although statutes are generally presumed to operate prospectively, 
Congress has the authority to make its laws retroactive (in both the 
primary and the secondary sense) subject, of course, to such 
constitutional limitations as due process, the impairment of contracts, 
and the prohibition against "ex post facto" laws.[Footnote 195] The 
same cannot be said of agency regulations.

There is no blanket prohibition on secondary retroactivity in agency 
regulations, subject to the "arbitrary or capricious" standard of the 
APA. See Bowen, 488 U.S. at 220; Celtronix Telemetry v. FCC, 272 F.3d 
585 (D.C. Cir. 2001), cert. denied, 536 U.S. 923 (2002); United States 
Airwaves, Inc. v. FCC, 232 F.3d 227 (D.C. Cir. 2000). With respect to 
primary retroactivity, however, the Bowen Court held that:

"[A] statutory grant of legislative rulemaking authority will not, as a 
general matter, be understood to encompass the power to promulgate 
retroactive rules unless that power is conveyed by Congress in express 
terms."

Id. at 208. See also Orrego v. 833 West Buena Joint Venture, 
943 F.2d 730, 736 (7th Cir. 1991).

The Bowen decision has been criticized, but it has never been 
overruled. See Richard J. Pierce, Jr., Administrative Law Treatise 
§ 6.7 (4th ed. 2000 & 2003 Supp.). Thus, agencies generally cannot 
engage in rulemaking that involves primary retroactivity without 
specific statutory authority. There may be some room for exceptions 
even from the strict proscription of the Bowen rule, based on a 
balancing of interests in a particular case. See Bowen, 488 U.S. at 
224-25; Citizens to Save Spencer County v. EPA, 600 F.2d 844, 879-81 
(D.C. Cir. 1979); Saint Francis Memorial Hospital v. Weinberger, 413 F. 
Supp. 323, 332-33 (N.D. Cal. 1976). Reduced stringency may also be 
appropriate in the case of a policy statement,[Footnote 196] or certain 
interpretative rules.[Footnote 197] Furthermore, rules that are held to 
merely clarify prior rules do not run afoul of the Bowen prohibition 
against retroactivity. See Clay v. Johnson, 264 F.3d 744 (7th Cir. 
2001).

The prohibition on retroactivity in rulemaking does not apply to 
adjudication. Bowen, 488 U.S. at 220-21 (concurring opinion). In the 
context of adjudication, retroactivity is measured against a standard 
of reasonableness and a balancing of interests. E.g., Laborers' 
International Union of North America, AFL-CIO v. Foster Wheeler Energy 
Corp., 26 F.3d 375 386-395 (3rd Cir.), cert. denied, 513 U.S. 946 
(1994); Tennessee Gas Pipeline Co. v. Federal Energy Regulatory 
Commission, 606 F.2d 1094, 1116 n.77 (D.C. Cir. 1979), cert. denied, 
445 U.S. 920 (1980) and 447 U.S. 922 (1980); NLRB v. Majestic Weaving 
Co., 355 F.2d 854 (2nd Cir. 1966); Shell Oil Co. v. Kleppe, 426 F. 
Supp. 894, 908 (D. Colo. 1977). As suggested above, the extent to which 
a balancing approach might justify exceptions from the Bowen rule with 
respect to regulations remains to be determined.

B. Agency Administrative Interpretations:

"There is more ado to interpret interpretations than to interpret the 
things, and more books upon books than upon all other subjects; we do 
nothing but comment upon one another."

Michel Eyquem, seigneur de Montaigne, Book iii, Chap. xiii, Of 
Experience.

"We begin our analysis with the language of the exemption itself which, 
at the critical part, is as clear as mud."

In re Whalen, 73 B.R. 986, 988 (C.D. Ill. 1987).

1. Interpretation of Statutes:

The interpretation of a statute, by regulation or otherwise, by the 
agency Congress has charged with the responsibility for administering 
it, is entitled to considerable weight. This principle is really a 
matter of common sense. An agency that works with a program from day to 
day develops an expertise that should not be lightly disregarded. Even 
when dealing with a new law, Congress does not entrust administration 
to a particular agency without reason, and this decision merits 
respect. This, in addition to fundamental fairness, is why GAO 
considers it important to obtain agency comments wherever possible 
before rendering a decision.[Footnote 198]

In the often-cited case of Udall v. Tallman, 380 U.S. 1, 16 (1965), the 
Supreme Court stated the principle this way:

"When faced with a problem of statutory construction, this Court shows 
great deference to the interpretation given the statute by the officers 
or agency charged with its administration."

In what is now recognized as one of the key cases in determining how 
much "deference" is due an agency interpretation, Chevron, Inc. v. 
Natural Resources Defense Council, 467 U.S. 837 (1984), the Court 
formulated its approach to deference in terms of two questions. The 
first question is "whether Congress has directly spoken to the precise 
question at issue." Id. at 842. If it has, the agency must of course 
comply with clear congressional intent, and regulations to the contrary 
will be invalidated. Thus, before you ever get to questions of 
deference, it must first be determined that the regulation is not 
contrary to the statute, a question of delegated authority rather than 
deference. "If a court, employing traditional tools of statutory 
construction, ascertains that Congress had an intention on the precise 
question at issue, that intention is the law and must be given effect." 
Id. at 843 n.9.

Once you cross this threshold, that is, once you determine that "the 
statute is silent or ambiguous with respect to the specific issue," the 
question becomes "whether the agency's answer is based on a permissible 
construction of the statute." Id. at 843. The Court went on to say:

"If Congress has explicitly left a gap for the agency to fill, there is 
an express delegation of authority to the agency to elucidate a 
specific provision of the statute by regulation. Such legislative 
regulations are given controlling weight unless they are arbitrary, 
capricious, or manifestly contrary to the statute. Sometimes the 
legislative delegation to an agency on a particular question is 
implicit rather than explicit. In such a case, a court may not 
substitute its own construction of a statutory provision for a 
reasonable interpretation made by the administrator of an agency."

Id. at 843-44 (footnotes omitted).

Reiterating the traditional deference concept, the Court then said that 
the proper standard of review is not whether the agency's construction 
is "inappropriate," but merely whether it is "a reasonable one." Id. at 
844-45.

When the agency's interpretation is in the form of a regulation with 
the force and effect of law, the deference, as we have seen, is at its 
highest.[Footnote 199] The agency's position is entitled to Chevron 
deference and should be upheld unless it is arbitrary or capricious. 
There should be no question of substitution of judgment. If the agency 
position can be said to be reasonable or to have a rational basis 
within the statutory grant of authority, it should stand, even though 
the reviewing body finds some other position preferable. See Yellow 
Transportation, Inc. v. Michigan, 537 U.S. 36 (2002); Shalala v. 
Illinois Council on Long Term Care, Inc., 529 U.S. 1, 20-21 (2000); 
American Telephone & Telegraph Corp. v. Iowa Utility Board, 525 U.S. 
366 (1999). Chevron deference is also given to authoritative agency 
positions in formal adjudication. See Immigration & Naturalization 
Service v. Aguirre-Aguirre, 526 U.S. 415 (1999) (holding that a Bureau 
of Indian Affairs statutory interpretation developed in case-by-case 
formal adjudication should be accorded Chevron deference). For an 
extensive list of Supreme Court cases giving Chevron deference to 
agency statutory interpretations found in rulemaking or formal 
adjudication, see United States v. Mead Corp., 533 U.S. 218, 231 at 
n.12 (2001).

When the agency's interpretation is in the form of an interpretative 
regulation, manual, handbook, etc.--anything short of a regulation with 
the force and effect of law or formal adjudication--the standard of 
review has traditionally been somewhat lessened, and it is here that 
the question of deference really comes into play. In the past, 
deference in this context has not been a fixed concept, but has been 
variable, depending on the interplay of several factors.[Footnote 
200]The Supreme Court explained the approach as follows in Skidmore v. 
Swift & Co., 323 U.S. 134, 140 (1944):

"We consider that the rulings, interpretations and opinions of the 
Administrator under this Act, while not controlling upon the courts by 
reason of their authority [i.e., the statements in question were not 
regulations with the force and effect of law], do constitute a body of 
experience and informed judgment to which courts and litigants may 
properly resort for guidance. The weight of such a judgment in a 
particular case will depend upon the thoroughness evident in its 
consideration, the validity of its reasoning, its consistency with 
earlier and later pronouncements, and all those factors which give it 
power to persuade, if lacking power to control."

Courts have found that the degree of weight to be given an agency 
administrative interpretation varies with several factors:

* The nature and degree of expertise possessed by the agency. 
Barnhart v. Walton, 535 U.S. 212 (2002); Batterton v. Francis, 432 U.S. 
at 425 n.9; NLRB v. Oklahoma Fixture Co., 332 F.3d 1284 (10th Cir. 
2003); Schuetz v. Banc One Mortgage Corp., 292 F.3d 1004, 1012 
(9th Cir. 2002); Herman v. Springfield Massachusetts Area, Local 497, 
American Postal Workers Union, AFL-CIO, 201 F.3d 1, 5 (1st Cir. 2000).

* The duration and consistency of the interpretation. Good Samaritan 
Hospital v. Shalala, 508 U.S. 402, 417 (1993); Chrysler Corp., 441 U.S. 
at 315; Batterton, 432 U.S. at 425 n.9; Skidmore, 323 U.S. at 140; 
Zeigler Coal Co. v. Director, Office of Workers' Compensation Programs, 
Department of Labor, 326 F.3d 894, 901 (7th Cir. 2003); Herman, 
201 F.3d at 5; United States v. Occidental Chemical Corp., 200 F.3d 
143, 151-52 (1999); Reich v. Gateway Press, 13 F.3d 685, 692-93 (1994); 
B-284610, Mar. 3, 2000. While consistency may not always be a virtue, 
inconsistency will not help your case in court. See Equal Employment 
Opportunity Commission v. Arabian American Oil Co., 499 U.S. 244 (1991) 
(superseded by statute); Immigration & Naturalization Service v. 
Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987).

* The soundness and thoroughness of reasoning underlying the position. 
Skidmore, 323 U.S. at 140; Arriaga v. Florida Pacific Farms, L.L.C., 
305 F.3d 1228, 1239 (11th Cir. 2002).

* Evidence (or lack thereof) of congressional awareness of, and 
acquiescence in, the administrative position. United States v. American 
Trucking Ass'n, 310 U.S. 534, 549-50 (1940); Helvering v. Winmill, 
305 U.S. 79, 82-3 (1938); Norwegian Nitrogen Products Co. v. United 
States, 288 U.S. 294, 313-15 (1933); Collins v. United States, 946 F.2d 
864 (Fed. Cir. 1991); Davis v. Director, Office of Workers' 
Compensation Programs, Department of Labor, 936 F.2d 1111, 1115-16 
(10th Cir. 1991); 41 Op. Att'y Gen. 57 (1950); B-114829-O.M., July 17, 
1974.

"[I]ncreasingly muddled" Supreme Court decisions on the scope of 
Chevron have left unclear the amount of deference due less formal 
pronouncements like interpretive rules and informal 
adjudications.[Footnote 201] In 2000, the Supreme Court appeared to 
resolve the issue of how much deference was due these less formal 
pronouncements. The Court distinguished less formal pronouncements that 
"lack the force of law" from statutory interpretations in legislative 
rules and formal adjudications, holding that actions other than orders 
that are issued through use of the notice and comment procedure are 
only entitled to Skidmore deference. Christensen v. Harris County, 
529 U.S. 576 (2000). However, the Supreme Court later retreated from 
this position in Mead Corp., 533 U.S. 218, holding that Chevron 
deference may extend to statutory interpretations beyond those 
contained in legislative rules and adjudications where there is "a 
comparable congressional intent" to give such interpretations the force 
of law.

More recent decisions further indicate that Chevron deference may 
extend beyond legislative rules and formal adjudications. Most notably, 
the Supreme Court observed in dicta in Barnhart v. Walton, 535 U.S. at 
222, that Mead Corp. "denied [any] suggestion" in Christensen that 
Chevron deference was limited to interpretations adopted through formal 
rulemaking. The Barnhart opinion went on to say that:

"In this case, the interstitial nature of the legal question, the 
related expertise of the Agency, the importance of the question to the 
administration of the statute, the complexity of that administration, 
and the careful consideration the Agency has given the question over a 
long period of time all indicate that Chevron provides the appropriate 
legal lens through which to view the legality of the Agency 
interpretation here at issue."

Id. at 222.[Footnote 202]

At least one court has viewed this passage from Barnhart as suggesting 
a merger between Chevron deference and the Skidmore approach of varying 
the deference an agency receives based on a number of factors. See 
Krzalic v. Republic Title Co., 314 F.3d 875, 878-79 (7th Cir. 2002), 
cert. denied, ___ U.S. ___, 123 S. Ct. 2641 (2003).

Circuit court decisions have added to the confusion. See James v. Von 
Zemenszky, 301 F.3d 1364 (Fed. Cir. 2002) (ignoring Barnhart factors 
because the agency statutory interpretation contained in a directive 
and handbook "f[e]ll within the class of informal agency 
interpretations that do not ordinarily merit Chevron deference"); 
Federal Election Commission v. National Rifle Ass'n, 254 F.3d 173 (D.C. 
Cir. 2001) (holding that Federal Election Committee (FEC) advisory 
opinions are entitled to Chevron deference); Matz v. Household 
International Tax Reduction Investment Plan, 265 F.3d 572 (7th Cir. 
2001) (holding that an Internal Revenue Service (IRS) statutory 
interpretation in an amicus brief, supported by an IRS Revenue Ruling 
and agency manual, was not entitled to Chevron deference); 
Klinedinst v. Swift Investments, Inc., 260 F.3d 1251 (11th Cir. 2001) 
(holding that a Department of Labor handbook was not due Chevron 
deference); Teambank v. McClure, 279 F.3d 614 (8th Cir. 2001) (holding 
that Office of the Controller of the Currency informal adjudications 
are due Chevron deference); In re Sealed Case, 223 F.3d 775 (D.C. Cir. 
2000) (holding that FEC's probable cause determinations are entitled to 
Chevron deference). As Professor Pierce notes:

"After Mead, it is possible to know only that legislative rules and 
formal adjudications are always entitled to Chevron deference, while 
less formal pronouncements like interpretative rules and informal 
adjudications may or may not be entitled to Chevron deference. The 
deference due a less formal pronouncement seems to depend on the 
results of judicial application of an apparently open-ended list of 
factors that arguably qualify as 'other indication[s] of a comparable 
congressional intent' to give a particular type of agency pronouncement 
the force of law."[Footnote 203]

For illustrations of how GAO has applied the deference principle in 
recent decisions, see:

* 69 Comp. Gen. 274 (1990) (holding that the Defense Personnel Support 
Center's long-standing interpretation of a Department of Defense 
appropriation act provision is entitled to deference).

* B-290744, Sept. 13, 2002 (declining to apply Chevron or Skidmore 
deference to the Federal Highway Administration's interpretation of a 
statute because the interpretation was not a reasonable construction of 
the statute).

* B-288658, Nov. 30, 2001 (finding that neither Chevron nor Skidmore 
deference was due a Department of Agriculture interpretation of a 
statute because the agency interpretation did not derive from a 
rulemaking or adjudication and generally lacked "persuasive weight").

* B-286800, Feb. 21, 2001 (finding that a Department of Defense 
interpretation of its regulation deserves great weight, that the 
agency's interpretation of its regulations was reasonable, and viewing 
as significant the fact that the agency was consistent in its 
interpretation).

* B-286661, Jan. 19, 2001 (declining to apply principle of deference to 
a Department of Energy statutory interpretation because it was not 
based on a reasonable interpretation of the statute).

* B-286026, June 12, 2001 (applying Chevron deference to Office of 
Personnel Management's guidance on the Government Employees Training 
Act).

* B-285066.2, Aug. 9, 2000 (applying Chevron deference to Department of 
Housing and Urban Development's interpretation of the Operation Safe 
Home appropriation as making funds available for gun buybacks).

In the past, an agency's litigating position was not accorded any 
deference unless that position was also expressed in the regulations, 
rulings, or administrative practice of the agency. Bowen v. Georgetown 
University Hospital, 488 U.S. 204, 212 (1988). Some recent cases, 
however, have given some deference to an agency's statutory 
interpretation developed only in the course of litigation. For example, 
in Brown v. United States, 327 F.3d 1198 (D.C. Cir. 2003), the court 
did not reach the question of whether an agency's statutory 
interpretation developed in the course of litigation was due Chevron 
deference, holding that the interpretation prevailed under Skidmore. 
See also Vernazza v. SEC, 327 F.3d 851 (9th Cir. 2003) (agency's 
statutory interpretation advanced in enforcement action is not entitled 
to Chevron deference, but is entitled to Skidmore deference); Chao v. 
Russell P. Le Frois Builder, Inc., 291 F.3d 219 (2nd Cir. 2002) 
(holding that the Secretary of Labor's statutory interpretation set 
forth only in litigation was not due Chevron deference, but merited 
Skidmore deference).

The deference principle does not apply to an agency's interpretation of 
a statute that is not part of its program or enabling legislation or is 
a statute of general applicability. See Adams v. SEC, 287 F.3d 183 
(D.C. Cir. 2002); Contractor's Sand & Gravel v. Federal Mine Safety & 
Health Commission, 199 F.3d 1335 (D.C. Cir. 2000); Association of 
Civilian Technicians v. Federal Labor Relations Authority, 200 F.3d 590 
(9th Cir. 2000).

As noted above, a regulation with the force and effect of law merits 
Chevron deference. In this connection, it is necessary to elaborate 
somewhat on one of the tests in Chrysler Corp. v. Brown, 441 U.S. 281 
(1979)--that the regulation be issued pursuant to a statutory grant of 
'legislative' (i.e., rulemaking) authority. How specific must the 
statutory delegation be? Chrysler itself provides somewhat conflicting 
signals. In one place, in the course of listing the three tests for 
determining if a regulation has the force and effect of law, the Court 
gives as an example the proxy rules of the Securities and Exchange 
Commission (SEC). Chrysler, 441 U.S. at 302-03. These are issued under 
the explicit delegation of 15 U.S.C. § 78n, which authorizes the SEC to 
issue proxy rules. Yet in another place, the Court said:

"This is not to say that any grant of legislative authority to a 
federal agency by Congress must be specific before regulations 
promulgated pursuant to it can be binding on courts in a manner akin to 
statutes. What is important is that the reviewing court reasonably be 
able to conclude that the grant of authority contemplates the 
regulations issued."

Chrysler, 441 U.S. at 308.

While a court is certainly more likely to find that Chevron deference 
is due when the delegation of authority is specific, courts have also 
found that more general delegations are entitled to Chevron deference. 
See United States v. Haggar Apparel Co., 526 U.S. 380 (1999) (holding 
that Chevron deference was due to a Customs Service regulation 
interpreting a statute that required the Court of International Trade 
to "reach the correct decision" in determining the proper 
classification of goods). A good example is the deference that courts 
have accorded to IRS regulations. The Secretary of the Treasury has 
general authority to "prescribe all needful rules and regulations" to 
administer the Internal Revenue Code. 26 U.S.C. § 7805. In addition, 
various other provisions of the Internal Revenue Code authorize the 
issuance of regulations dealing with specific topics. Regulations 
issued under the general authority of 26 U.S.C. § 7805--statutory 
though they may be--are not given the force and effect of law, and have 
often been accorded less deference than regulations issued under one of 
the more specific provisions. See United States v. Vogel Fertilizer 
Co., 455 U.S. 16, 24 (1982); Rowan Cos. v. United States, 452 U.S. 247, 
252-53 (1981); E. Norman Peterson Marital Trust v. Commissioner of 
Internal Revenue, 78 F.3d 795, 798 (2nd Cir. 1996); Nalle v. 
Commissioner of Internal Revenue, 997 F.2d 1134, 1138 (5th Cir. 1993); 
McDonald v. Commissioner of Internal Revenue, 764 F.2d 322, 328 
(5th Cir. 1985); Gerrard v. United States Office of Education, 656 F. 
Supp. 570, 574 n.4 (N.D. Cal. 1987); Lima Surgical Associates, Inc. v. 
United States, 20 Cl. Ct. 674, 679 n.8 (1990). In some recent cases, 
however, courts have given Chevron deference to IRS regulations issued 
through notice and comment rulemaking under the general authority of 
section 7805. Atlantic Mutual Insurance Co. v. Commissioner of Internal 
Revenue, 523 U.S. 382 (1998); Kikalos v. Commissioner of Internal 
Revenue, 190 F.3d 791 (7th Cir. 1999); Redlark v. Commissioner of 
Internal Revenue, 141 F.3d 936 (9th Cir. 1998); Bankers Life & Casualty 
Co. v. United States, 142 F.3d 973 (7th Cir. 1998); Tate & Lyle, 
Inc. v. Commissioner of Internal Revenue, 87 F.3d 99 (3rd Cir. 1996).

We began this chapter by noting the increasing role of agency 
regulations in the overall scheme of federal law. We conclude this 
discussion with the observation that this enhanced role makes continued 
litigation on the issues we have outlined inevitable. The proliferation 
and complexity of case law perhaps lends credence to Professor Davis's 
mild cynicism:

"Unquestionably one of the most important factors in each decision on 
what weight to give an interpretative rule is the degree of judicial 
agreement or disagreement with the rule."[Footnote 204]

2. Interpretation of Agency's Own Regulations:

The principle of giving considerable deference to the administering 
agency's interpretation of a statute applies at least with equal force 
to an agency's interpretation of its own regulations. The Udall v. 
Tallman Court, after making the statement quoted at the beginning of 
this section, went on to state that "[w]hen the construction of an 
administrative regulation rather than a statute is in issue, deference 
is even more clearly in order." Udall v. Tallman, 380 U.S. 1, 16 
(1965).

Perhaps the strongest statement is found in a 1945 Supreme Court 
decision, Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 413-14:

"Since this involves an interpretation of an administrative regulation 
a court must necessarily look to the administrative construction of the 
regulation if the meaning of the words used is in doubt. The intention 
of Congress or the principles of the Constitution in some situations 
may be relevant in the first instance in choosing between various 
constructions. But the ultimate criterion is the administrative 
interpretation, which becomes of controlling weight unless it is 
plainly erroneous or inconsistent with the regulation."[Footnote 205]

A good illustration of how all of this can work is found in B-222666, 
Jan. 11, 1988. The Defense Security Assistance Agency (DSAA) is 
responsible for issuing instructions and procedures for Foreign 
Military Sales (FMS) transactions. These appear in the Security 
Assistance Management Manual. A disagreement arose between DSAA and an 
Army operating command as to whether certain "reports of discrepancy," 
representing charges for nonreceipt by customers, should be charged to 
the FMS trust fund (which would effectively pass the losses on to all 
FMS customers) or to Army appropriated funds. DSAA took the latter 
position. GAO reviewed the regulation in question, and found it far 
from clear on this point. The decision noted that "both of the 
conflicting interpretations in this case appear to have merit, and both 
derive support from portions of the regulation." However, while the 
regulation may have been complex, the solution to the problem was 
fairly simple. DSAA wrote the regulation and GAO, citing the standard 
from the Bowles case, could not conclude that DSAA's position was 
plainly erroneous or inconsistent with the regulation. Therefore, 
DSAA's interpretation must prevail. See Shalala v. Guernsey Memorial 
Hospital, 514 U.S. 87 (1995); Thomas Jefferson University v. Shalala, 
512 U.S. 504 (1994); Stinson v. United States, 508 U.S. 36 (1993); 
Williams v. United States, 503 U.S. 193 (1992); Immigration & 
Naturalization Service v. Stanisic, 395 U.S. 62, 72 (1969); Navarro-
Miranda v. Ashcroft, 330 F.3d 672 (5th Cir. 2003); Tozzi v. Department 
of Health & Human Services, 271 F.3d 301 (D.C. Cir. 2001); Legal 
Environmental Assistance Foundation v. EPA, 276 F.3d 1253 (11th Cir. 
2001); 72 Comp. Gen. 241 (1993); 57 Comp. Gen. 347 (1978); 56 Comp. 
Gen. 160 (1976); B-279250 (May 26, 1998). See also McLean Hospital 
Corp. v. United States, 26 Cl. Ct. 1144 (1992) (holding that an agency 
interpretation of a regulation is not entitled to deference when it 
violates the plain meaning of the regulation).

Just as with the interpretation of statutes, inconsistency in the 
application of a regulation will significantly diminish the deference 
courts are likely to give the agency's position. E.g., Western States 
Petroleum Ass'n v. EPA, 87 F.3d 280 (9th Cir. 1996); Murphy v. United 
States, 22 Cl. Ct. 147, 154 (1990).

Several recent court decisions have held that agency interpretations of 
regulations are subject to some degree of deference even if they derive 
from "mere litigating positions" rather than formal rules or 
adjudications. See Auer v. Robbins, 519 U.S. 452 (1997); Bigelow v. 
Department of Defense, 217 F.3d 875 (D.C. Cir. 2000), cert. denied, 
532 U.S. 971 (2001); National Wildlife Federation v. Browner, 127 F.3d 
1126 (D.C. Cir. 1997); Bradberry v. Director, Office of Workers' 
Compensation, Department of Labor, 117 F.3d 1361 (11th Cir. 1997). In 
this context, some courts have begun to refer to "Auer deference." See 
Christensen v. Harris County, 529 U.S. 576, 577 (2000); Moore v. Hannon 
Food Service, 317 F.3d 489, 494-95 (5th Cir. 2003); League of 
Wilderness Defenders/Blue Mountain Biodiversity Project v. Forsgren, 
309 F.3d 1181, 1189 (9th Cir. 2002); Drake v. Federal Aviation 
Administration, 291 F.3d 59, 68 (D.C. Cir. 2002). See also Wells Fargo 
Bank of Texas v. James, 321 F.3d 488, 494 (5th Cir. 2003) ("Auer v. 
Robbins offer[s] the standard to be used where an agency interprets its 
own regulation."). In order to warrant Auer deference, the text of a 
regulation must fairly support the agency's interpretation. See 
Christiansen, 529 U.S. at 577; Drake, 291 F.3d at 68; Wells Fargo Bank 
of Texas v. James, 321 F.3d at 494; Ashtabula County Medical Center v. 
Thompson, 191 F. Supp. 2d 884, 888 (N.D. Ohio 2002). Thus, Auer will 
not apply if the plain and unambiguous language of the regulation is at 
odds with the agency's interpretation. In such a case, the agency's 
"interpretation" really amounts to a de facto amendment of the 
regulation.

In limited contexts, some recent court decisions have suggested that a 
somewhat lesser degree of deference than that in Bowles applies to 
agency interpretations of their regulations. For example, a series of 
decisions have applied a lesser degree of deference to ambiguous agency 
regulations. See Director, Office of Workers' Compensation Programs, 
Department of Labor v. Greenwich Collieries, 512 U.S. 267 (1994); 
Mission Group Kansas, Inc. v. Riley, 146 F.3d 775 (10th Cir. 1998). 
Another line of circuit court decisions accords less deference to 
agency interpretations of regulations that impose penalties. See Walker 
Stone Co. v. Secretary of Labor, 156 F.3d 1076 (10th Cir. 1998); 
Stillwater Mining Co. v. Federal Mine Safety & Health Review 
Commission, 142 F.3d 1179 (9th Cir. 1998); United States v. Chrysler 
Corp., 158 F.3d 1350 (D.C. Cir. 1998); United States v. Apex Oil Co., 
132 F.3d 1287 (9th Cir. 1997).

C. Administrative Discretion:

"[S]ome play must be allowed to the joints if the machine is to work."

Tyson & Brother v. Banton, 273 U.S. 418, 446 (1927) (Justice Holmes, 
dissenting).

1. Introduction:

Throughout this publication, the reader will encounter frequent 
references to administrative discretion. The concept of discretion 
implies choice or freedom of judgment, and appears in a variety of 
contexts. There are many things an agency does every day that involve 
making choices and exercising discretion.

One type of discretion commonly occurs in the context of purpose 
availability. A decision may conclude that an appropriation is legally 
available for a particular expenditure if the agency, in its 
discretion, determines that the expenditure is a suitable means of 
accomplishing an authorized end.

To put this another way, there is often more than one way to do 
something, and reasonable minds may differ as to which way is the best. 
The thing to keep in mind from the legal perspective is that if a given 
choice is within the actor's legitimate range of discretion, then, 
whatever else it may be, it is not illegal. For example, as we will see 
in Chapter 4, an agency has discretionary authority to provide 
refreshments at award ceremonies under the Government Employees 
Incentive Awards Act, 31 U.S.C. §§ 4501-4507. Agency A may choose to do 
so while agency B chooses not to. Under this type of discretion, agency 
B's reasons are irrelevant. It may simply not want to spend the money. 
As a matter of law, both agencies are correct.

Another type of discretion is implicit in all of the preceding 
discussions of agency regulations. This type occurs when Congress 
charges an agency with responsibility for implementing a program or 
statute, but leaves much of the detail to the agency. In the course of 
carrying out the program or statute, the agency may be required to make 
various decisions, some of which may be expressly committed to agency 
discretion by the governing statute. Subject to certain fundamental 
concepts of administrative law, the agency is free to make those 
decisions in accordance with the sound exercise of discretion. See 
Chevron, Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-
844, 865-66 (1984).

Under the Administrative Procedure Act (APA), action that is "committed 
to agency discretion by law" is not subject to judicial review. 
5 U.S.C. § 701(a)(2). As the Supreme Court has pointed out, this is a 
"very narrow exception" applicable in "rare instances" where, quoting 
from the APA's legislative history, "statutes are drawn in such broad 
terms that in a given case there is no law to apply." Citizens to 
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410 (1971). As 
noted, the "no law to apply" exception is uncommon, and most exercises 
of discretion will be found reviewable at least to some 
extent.[Footnote 206] See Drake v. Federal Aviation Administration, 
291 F.3d 59 (D.C. Cir. 2002); Fox Television Stations, Inc. v. FCC, 
280 F.3d 1027 (D.C. Cir. 2002); City of Los Angeles v. Department of 
Commerce, 307 F.3d 859 (9th Cir. 2002); Diebold v. United States, 
947 F.2d 787 (6th Cir. 1992).

This being said, however, the presumption of reviewability is at its 
strongest in constitutional and habeas corpus matters. As Professor 
Pierce has noted, Overton Park is the "high water mark of the Court's 
presumption of reviewability" and "[s]ubsequent decisions have both 
weakened the presumption where it continues to exist and narrowed the 
scope of the presumption."[Footnote 207] For demonstrations of the 
weakening of the presumption of reviewability, see:

* Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 
(2000) (debating whether there is a "presumption in favor of 
preenforcement review" or a presumption against preclusion of all 
review);

* Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) (holding that a 
comprehensive administrative review procedure under the Federal Mine 
Safety and Health Amendments Act revealed a congressional intent to 
preclude judicial review);

* Dalton v. Specter, 511 U.S. 462 (1994) ("where, as here, a statute 
commits decisionmaking to the President's discretion, judicial review 
of his decision is not available");

* Lincoln v. Vigil, 508 U.S. 182 (1993) (holding that allocation of 
funds under a lump-sum appropriation is traditionally committed to 
agency discretion and, therefore, not subject to judicial review under 
the APA absent more specific restrictions);

* Lopez v. Federal Aviation Administration, 318 F.3d 242 (D.C. Cir. 
2003) and Steenholdt v. Federal Aviation Administration, 314 F.3d 633 
(D.C. Cir. 2003) (holding that the Federal Aviation Administration's 
(FAA) rescission or nonrenewal of designation of individuals to inspect 
aircraft is committed to agency discretion by law and nonreviewable 
under a statute that allows FAA to rescind such a designation "at any 
time for any reason the Administrator considers appropriate").

At this point, we should emphasize that these introductory comments are 
largely oversimplified; they are intended merely to lay a foundation 
for a discussion of the principles that follow.

2. Discretion Is Not Unlimited:

To say that an agency has freedom of choice in a given matter does not 
mean that there are no limits to that freedom. Discretion is not 
unbridled license. The decisions have frequently pointed out that 
discretion means legal discretion, not unlimited discretion. The point 
was stated as follows in 18 Comp. Gen. 285, 292 (1938):

"Generally, the Congress in making appropriations leaves largely to 
administrative discretion the choice of ways and means to accomplish 
the objects of the appropriation, but, of course, administrative 
discretion may not transcend the statutes, nor be exercised in conflict 
with law, nor for the accomplishment of purposes unauthorized by the 
appropriation …."

See also 72 Comp. Gen. 310, 311 (1993); 35 Comp. Gen. 615, 618 (1956); 
4 Comp. Gen. 19, 20 (1924); 7 Comp. Dec. 31 (1900); 5 Comp. Dec. 151 
(1898); B-253338, Nov. 23, 1993; B-130288, Feb. 27, 1957; B-49169, 
May 5, 1945; A-24916, Nov. 5, 1928.

In Lincoln v. Vigil, 508 U.S. 182 (1993), the Supreme Court concluded 
that, absent statutory elaboration, decisions about how to allocate 
funds within a lump-sum appropriation are committed to agency 
discretion by law. The Court noted that "the very point of a lump-sum 
appropriation is to give an agency the capacity to adapt to changing 
circumstances and meet its statutory responsibilities in what it sees 
as the most effective or desirable way." Id. at 191. Therefore, the 
Court held that judicial review of the agency's decision to discontinue 
a program that had been previously funded through a lump-sum 
appropriation was precluded. (See Chapter 6 for a more detailed 
discussion of the availability of appropriations.) See also 55 Comp. 
Gen. 307 (1975); B-278121, Nov. 7, 1997.

Discretion must be exercised before the obligation is incurred. 
Approval after the fact is merely a condoning of what has already been 
done and does not constitute the exercise of discretion. 22 Comp. 
Gen. 1083 (1943); 14 Comp. Gen. 698 (1935); A-57964, Jan. 30, 1935. 
(This point should not be confused with an agency's occasional ability 
to ratify an otherwise unauthorized act. See, for example, the 
discussion of quantum meruit claims in Chapter 12 in Volume III of the 
second edition of Principles of Federal Appropriations Law.)

One way to illustrate the concept of "legal discretion" is to visualize 
a person standing in the center of a circle. The circumference of the 
circle represents the limits of discretion, imposed either by law or by 
the difficult to define but nonetheless real concept of "public 
policy."[Footnote 208] The person is free to move in any direction, to 
stay near the center or to venture close to the perimeter, even to 
brush against it, but must stay within the circle. If our actor crosses 
the line of the circumference, he has exceeded or, to use the legal 
term, "abused" his discretion.

When GAO is performing its audit function, it may criticize a 
particular exercise of discretion as ill-conceived, inefficient, or 
perhaps wasteful. From the legal standpoint, however, there is no 
illegal expenditure as long as the actor remains within the circle. We 
may also note that the size of the circle may vary. For example, as we 
will see in Chapter 14 (Volume III of the third edition of Principles 
of Federal Appropriations Law), government corporations frequently have 
a broader range of discretion than noncorporate agencies.

When Congress wishes to confer discretion unrestrained by other law, 
its practice has been to include the words "notwithstanding the 
provisions of any other law" or similar language. 14 Comp. Gen. 578 
(1935). Even this is not totally unfettered, however. For example, even 
this broad authority would not, at least as a general proposition, be 
sufficient to permit violation of the criminal laws. Also, agency power 
to act is always bound by the Constitution. Short of an amendment to 
the Constitution itself, no statute, however explicit, can be construed 
to authorize constitutional violations.

In addition, depending on the context and circumstances, federal laws 
of general applicability may be found to remain applicable. See 
District of Columbia Federation of Civic Ass'ns v. Volpe, 459 F.2d 
1231, 1265 (D.C. Cir. 1971), cert. denied, 405 U.S. 1030 (1972) 
(provision of Federal-Aid Highway Act directing construction of a 
bridge "notwithstanding any other provision of law" did not render 
inapplicable certain federal statutes regarding protection of historic 
sites); B-290125.2, B-290125.3, Dec. 18, 2002 (finding that statutory 
directions governing certain aspects of an agency procurement 
"notwithstanding any other provision of law" do not override GAO's bid 
protest jurisdiction under the Competition in Contracting Act).

An example of a statute permitting action without regard to other laws 
is 50 U.S.C. § 1431, under which the President may authorize an agency 
with national defense functions to enter into or modify contracts 
"without regard to other provisions of law relating to the making, 
performance, amendment, or modification of contracts, whenever he deems 
that such action would facilitate the national defense." Provisions of 
this type are not self-executing but contemplate specific 
administrative determinations in advance of the proposed action. In 
other words, the "other provisions of law" continue to apply unless and 
until waived by an authorized official. 35 Comp. Gen. 545 (1956). See 
also 22 Comp. Gen. 400 (1942).

3. Failure or Refusal to Exercise Discretion:

Where a particular action or decision is committed to agency discretion 
by law, the agency is under a legal duty to actually exercise that 
discretion. In one line of cases, the principle has evolved that the 
failure or refusal to exercise discretion committed by law to the 
agency is itself an abuse of discretion. As the following cases 
demonstrate, the fact of exercising discretion and the particular 
results of that exercise are two very different things.

We start with a Supreme Court decision, Work v. United States ex rel. 
Rives, 267 U.S. 175 (1925). That case involved section 5 of the Dent 
Act, ch. 94, 40 Stat. 1272, 1274 (Mar. 2, 1919), under which Congress 
authorized the Secretary of the Interior to compensate a class of 
people who incurred losses in furnishing supplies or services to the 
government during World War I. The Secretary's determinations on 
particular claims were to be final and conclusive. The statute "was a 
gratuity based on equitable and moral considerations" (id. at 181), 
vesting the Secretary with the ultimate power to determine which losses 
should be compensated.

The plaintiff in Rives had sought mandamus to compel the Secretary to 
consider and allow a claim for a specific loss incurred as a result of 
the plaintiff's obtaining a release from a contract to buy land. The 
Secretary had previously denied the claim because he had interpreted 
the statute as not embracing money spent on real estate. In holding 
that the Secretary had done all that was required by law, the Court 
cited and distinguished a line of cases--

"in which a relator in mandamus has successfully sought to compel 
action by an officer who has discretion concededly conferred on him by 
law. The relator [plaintiff] in such cases does not ask for a decision 
any particular way but only that it be made one way or the other."

Id. at 184.

The Secretary had made a decision on the claim, had articulated reasons 
for it, and had not exceeded the bounds of his statutory authority. 
That was enough. A court could compel the Secretary to actually 
exercise his discretion, that is, to act on a claim one way or the 
other, but could not compel him to exercise that discretion to achieve 
a particular result.

In Simpkins v. Davidson, 302 F. Supp. 456 (S.D. N.Y. 1969), the 
plaintiff sued to compel the Small Business Administration (SBA) to 
make a loan to him. The court found that the plaintiff was entitled to 
submit an application, and to have the SBA consider that application 
and reach a decision on whether or not to grant the loan. However, he 
had no right to the loan itself, and the court could not compel the SBA 
to exercise its discretion to achieve a specific result. A very similar 
case on this point is Dubrow v. Small Business Administration, 345 F. 
Supp. 4 (C.D. Cal. 1972). See also B-226121-O.M., Feb. 9, 1988, citing 
and applying these cases.

Another case involved a provision of the Farm and Rural Development Act 
that authorized the Secretary of Agriculture to forgo foreclosure on 
certain delinquent loans. The plaintiffs were a group of farmers who 
alleged that the Secretary had refused to consider their requests. The 
district court held that the Secretary was required to consider the 
requests. Matzke v. Block, 542 F. Supp. 1107 (D. Kans. 1982). "When 
discretion is vested in an administrative agency, the refusal to 
exercise that discretion is itself an abuse of discretion." Id. at 
1115. The Court of Appeals for the Tenth Circuit affirmed that portion 
of the decision in Matzke v. Block, 732 F.2d 799 (10th Cir. 1984), 
stating at page 801:

"The word 'may,' the Secretary 'may' permit deferral, is, in our view, 
a reference to the discretion of the Secretary to grant the deferral 
upon a showing by a borrower. It does not mean as the Secretary argues 
that he has the discretion whether or not to implement the Act at all 
and not to consider any 'requests' under the statutory standards."

The Comptroller General applied these principles in 62 Comp. Gen. 641 
(1983). The Military Personnel and Civilian Employees' Claims Act of 
1964, 31 U.S.C. § 3721, gives agencies discretionary authority to 
consider and settle certain employee personal property claims. An 
agency asked whether it had discretion to adopt a policy of refusing 
all claims submitted to it under the Act. No, the concept of 
administrative discretion does not extend that far, replied the 
Comptroller. While GAO would not purport to tell another agency which 
claims it should or should not consider--that part was discretionary--
the decision noted that "a blanket refusal to consider all claims is, 
in our opinion, not the exercise of discretion" (id. at 643), and held 
"that an agency has the duty to actually exercise its discretion and 
that this duty is not satisfied by a policy of refusing to consider all 
claims" (id. at 645). Thus, for example, an agency would be within its 
discretion to make and announce a policy decision not to consider 
claims of certain types, such as claims for stolen cash, or to impose 
monetary ceilings on certain types of property, or to establish a 
minimum amount for the filing of claims. What it cannot do is disregard 
the statute in its entirety.

Additional cases illustrating this concept are California v. Settle, 
708 F.2d 1380 (9th Cir. 1983); Rockbridge v. Lincoln, 449 F.2d 567 
(9th Cir. 1971); and Jacoby v. Schuman, 568 F. Supp. 843 (E.D. Mo. 
1983).

Several other cases, however, have suggested that the refusal of an 
agency to consider the exercise of its discretion will be subject to 
judicial review only where that refusal stems from a legal error by the 
agency (e.g., the agency wrongly concludes that it lacks jurisdiction 
or authority to exercise discretion) or where its refusal to exercise 
discretion can be tied to a statutory or constitutional violation. See 
Immigration & Naturalization Service v. St. Cyr, 533 U.S. 289, 307 
(2001); Gutierrez-Chavez v. Immigration & Naturalization Service, 
298 F.3d 824 (9th Cir. 2002); Byrd v. Moore, 252 F. Supp. 2d 293 (W.D. 
N.C. 2003).

4. Regulations May Limit Discretion:

By issuing regulations, an agency may voluntarily (and perhaps even 
inadvertently) limit its own discretion. A number of cases have held 
that an agency must comply with its own regulations, even if the action 
is discretionary by statute.

The leading case is United States ex rel. Accardi v. Shaughnessy, 
347 U.S. 260 (1954). The Attorney General had been given statutory 
discretion to suspend the deportation of aliens under certain 
circumstances, and had, by regulation, given this discretion to the 
Board of Immigration Appeals. The Supreme Court held that, regardless 
of what the situation would have been if the regulations did not exist, 
the Board was required under the regulations to exercise its own 
judgment, and it was improper for the Attorney General to attempt to 
influence that judgment, in this case, by issuing a list of "unsavory 
characters" he wanted to have deported. "In short, as long as the 
regulations remain operative, the Attorney General denies himself the 
right to sidestep the Board or dictate its decision in any manner." Id. 
at 267. Of course, the Attorney General could always amend his 
regulations, but an amendment could operate prospectively only.

Awards under the Government Employees Incentive Awards Act, 5 U.S.C. 
§§ 4501-4507, as we will discuss in Chapter 4, are wholly 
discretionary. In a 1982 decision, GAO reviewed Army regulations which 
provided that "awards will be granted" if certain specified criteria 
were met, and noted that the Army had circumscribed its own discretion 
by committing itself to make an award if those conditions were met. 
B-202039, May 7, 1982. Reviewing Air Force regulations under similar 
legislation applicable to military personnel, the Court of Claims noted 
in Griffin v. United States, 215 Ct. Cl. 710, 714 (1978):

"Thus, we think that the Secretary may have originally had uncontrolled 
and unreviewable discretion … but as he published procedures and 
guidelines, as he received responsive suggestions, as he implemented 
them and through his subordinates passed upon compensation claims, we 
think by his choices he surrendered some of his discretion, and the 
legal possibility of abuse of discretion came into the picture."

Another group of cases in this category are those, previously noted in 
section A.1 of this chapter, in which an agency has waived an exemption 
from the APA and was held bound by that waiver.

For additional authority on the proposition that an agency can, by 
regulation, restrict otherwise discretionary action, see United 
States v. Nixon, 418 U.S. 683 (1974); Vitarelli v. Seaton, 359 U.S. 535 
(1959); Service v. Dulles, 354 U.S. 363 (1957); United States v. 
Morgan, 193 F.3d 252 (4th Cir. 1999); Clarry v. United States, 85 F.3d 
1041 (2nd Cir. 1996); Waldron v. Immigration & Naturalization Service, 
17 F.3d 511, 519 (2nd Cir. 1994); Montilla v. Immigration & 
Naturalization Service, 926 F.2d 162 (2nd Cir. 1991); 67 Comp. Gen. 471 
(1988).

Recent case law has recognized a number of limits, caveats, and nuances 
to the Accardi doctrine. While there are occasional exceptions, the 
doctrine generally will not be applied to bind an agency by its 
informal rules, policies, or other issuances that the court concludes 
are intended to provide internal guidance rather than to confer rights 
or benefits on the public. See Farrell v. Department of the Interior, 
314 F.3d 584, 591 (Fed. Cir. 2002) (holding that agency statement that 
was not formally promulgated is not binding on the agency unless the 
agency intended to be bound by it). Even if a court concludes that a 
rule, or policy document, is binding on the agency under Accardi, the 
court may not invalidate the agency action if it concludes that the 
departure from the rule was nonprejudicial or "harmless error." See 
Wilkinson v. Legal Services Corp., 27 F. Supp. 2d 32 (D.D.C. 1998). In 
addition, the courts are very reluctant to apply Accardi to criminal 
proceedings or exercises of prosecutorial-type discretion such as an 
agency decision not to initiate an enforcement action. See Carranza v. 
Immigration & Naturalization Service, 277 F.3d 65, 68 (1st Cir. 2002); 
United States v. Lee, 274 F.3d 485 (8th Cir. 2001); United States v. 
Shakir, 113 F. Supp. 2d 1182 (M.D. Tenn. 2000); United States v. 
Briscoe, 69 F. Supp. 2d 738, 747 (D. V.I. 1999), aff'd, 234 F.3d 1266 
(3rd Cir. 2000); Nichols v. Reno, 931 F. Supp. 748 (D. Colo. 1996); 
Walker v. Reno, 925 F. Supp. 124 (N.D. N.Y. 1995).

5. Insufficient Funds:

Congress occasionally legislates in such a manner as to restrict its 
own subsequent funding options. An example is contract authority, 
described in Chapter 2. Another example is entitlement legislation not 
contingent upon the availability of appropriations. A well-known 
example here is social security benefits. Where legislation creates, or 
authorizes the administrative creation of, binding legal obligations 
without regard to the availability of appropriations, a funding 
shortfall may delay actual payment but does not authorize the 
administering agency to alter or reduce the "entitlement."

In the far more typical situation, however, Congress merely enacts a 
program and authorizes appropriations. For any number of reasons--
budgetary constraints, changes in political climate, etc.--the actual 
funding may fall short of original expectations. What is an agency to 
do when it finds that it does not have enough money to accommodate an 
entire class of beneficiaries? Obviously, it can ask Congress for more. 
However, as any program administrator knows, asking and getting are two 
different things. If the agency cannot get additional funding and the 
program legislation fails to provide guidance, there is solid authority 
for the proposition that the agency may, within its discretion, 
establish reasonable classifications, priorities, and/or eligibility 
requirements, as long as it does so on a rational and consistent 
basis.[Footnote 209]

The concept was explained by the Supreme Court in Morton v. Ruiz, 
415 U.S. 199, 230-31 (1974), a case involving an assistance program 
administered by the Bureau of Indian Affairs (BIA):

"[I]t does not necessarily follow that the Secretary is without power 
to create reasonable classifications and eligibility requirements in 
order to allocate the limited funds available to him for this purpose. 
[Citations omitted.] Thus, if there were only enough funds appropriated 
to provide meaningfully for 10,000 needy Indian beneficiaries and the 
entire class of eligible beneficiaries numbered 20,000, it would be 
incumbent upon the BIA to develop an eligibility standard to deal with 
this problem, and the standard, if rational and proper, might leave 
some of the class otherwise encompassed by the appropriation without 
benefits. But in such a case the agency must, at a minimum, let the 
standard be generally known so as to assure that it is being applied 
consistently and so as to avoid both the reality and the appearance of 
arbitrary denial of benefits to potential beneficiaries."

In Suwannee River Finance, Inc. v. United States, 7 Cl. Ct. 556 (1985), 
the plaintiff sued for construction differential subsidy payments under 
the Merchant Marine Act, administered by the Maritime Administration 
(MarAd). In response to a sudden and severe budget reduction, MarAd had 
cut off all subsidies for nonessential changes after a specified date, 
and had notified the plaintiff to that effect. Noting that "[a]fter 
this budget cut, MarAd obviously could no longer be as generous in 
paying subsidies as it had been before," the court held MarAd's 
approach to be "a logical, effective and time-honored method for 
allocating the burdens of shrinking resources" and well within its 
administrative discretion. Id. at 561.

Another illustration is Ramah Navajo School Board v. Babbitt, 87 F.3d 
1338 (D.C. Cir. 1996), concerning the Secretary of the Interior's 
allocation of funds to Indian tribes where an appropriations shortfall 
prevented the full allocation contemplated by the authorizing statute. 
The court held that the Secretary's determination of how to allocate 
funds in the face of a funding shortfall was subject to judicial 
review, reversing the district court's opinion that had relied on 
Lincoln v. Vigil, and that the Secretary had exceeded his statutory 
authority. For additional case law on this point, see Cherokee Nation 
of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002); Shoshone-
Bannock Tribes of the Fort Hall Reservation v. Secretary, Department of 
Health & Human Services, 279 F.3d 660 (9th Cir. 2002); Babbitt v. 
Oglala Sioux Tribal Public Safety Department, 194 F.3d 1374 (Fed. Cir. 
1999).

An illustration from the Comptroller General's decisions is B-202568, 
Sept. 11, 1981. Due to a severe drought in the summer of 1980, the 
Small Business Administration (SBA) found that its appropriation was 
not sufficient to meet demand under the SBA's disaster loan program. 
Rather than treating applicants on a "first come, first served" basis, 
SBA amended its regulations to impose several new restrictions, 
including a ceiling of 60 percent of actual physical loss. GAO reviewed 
SBA's actions and found them completely within the agency's 
administrative discretion.

In a 1958 case, Congress had, by statute, directed the Interior 
Department to transfer $2.5 million from one appropriation to another. 
Congress had apparently been under the impression that the "donor" 
account contained a sufficient unobligated balance. The donor account 
in fact had ample funds if both obligated and unobligated funds were 
counted, but had an unobligated balance of only $1.3 million. The 
Interior Department was in an impossible position. It could not 
liquidate obligations in both accounts. If it transferred the full $2.5 
million, some valid obligations under the donor appropriation would 
have to wait; if it transferred only the unobligated balance, it could 
not satisfy the entire obligation under the receiving account. First, 
GAO advised that the transfer would not violate the Antideficiency Act 
(31 U.S.C. § 1341) since it was not only authorized but directed by 
statute. As to which obligation should be liquidated first--that is, 
which could be paid immediately and which would have to await a 
supplemental appropriation--the best answer GAO could give was that 
"the question is primarily for determination administratively." In 
other words, there was no legally mandated priority, and all the agency 
could do was use its best judgment. GAO added, however, that it might 
be a good idea to first seek some form of congressional clarification. 
38 Comp. Gen. 93 (1958).

An early case, 22 Comp. Dec. 37 (1915), considered the concept of 
prorating. Congress had appropriated a specific sum for the payment of 
a designated class of claims against the Interior Department. When all 
claims were filed and determined, the total amount of the allowed 
claims exceeded the amount of the appropriation. The question was 
whether the amount appropriated could be prorated among the claimants.

The Comptroller of the Treasury declined to approve the prorating, 
concluding that "action should be suspended until Congress shall 
declare its wishes by directing a pro rata payment …or by appropriating 
the additional amount necessary to full payment." Id. at 40. If the 
decision was saying merely that the agency should attempt to secure 
additional funds--or at least explore the possibility--before taking 
administrative action that would reduce payments to individual 
claimants, then it is consistent with the more recent case law and 
remains valid to that extent. If, however, it was suggesting that the 
agency lacked authority to prorate without specific congressional 
sanction, then it is clearly superseded by Morton v. Ruiz and the other 
cases previously cited. There is no apparent reason why prorating 
should not be one of the discretionary options available to the agency 
along with the other options discussed in the various cases. It has one 
advantage in that each claimant will receive at least something.

A conceptually related situation is a funding shortfall in an 
appropriation used to fund a number of programs. Again, the agency must 
allocate its available funds in some reasonable fashion. Mandatory 
programs take precedence over discretionary ones.[Footnote 210] Within 
the group of mandatory programs, more specific requirements should be 
funded first, such as those with specific time schedules, with 
remaining funds then applied to the more general requirements. 
B-159993, Sept. 1, 1977; B-177806, Feb. 24, 1978 (nondecision letter). 
These principles apply equally, of course, to the allocation of funds 
between mandatory and nonmandatory expenditures within a single-program 
appropriation. E.g., 61 Comp. Gen. 661, 664 (1982).

Other cases recognizing an agency's discretion in coping with funding 
shortfalls are City of Los Angeles v. Adams, 556 F.2d 40, 49-50 (D.C. 
Cir. 1977), and McCarey v. McNamara, 390 F.2d 601 (3rd Cir. 1968).

[End of section]

Chapter 4: Availability of Appropriations: Purpose:

A. General Principles: 

1. Introduction: 31 U.S.C. § 1301(a): 

2. Determining Authorized Purposes: 

a. Statement of Purpose: 

b. Specific Purpose Stated in Appropriation Act: 

3. New or Additional Duties: 

4. Termination of Program: 

a. Termination Desired: 

b. Reauthorization Pending: 

B. The "Necessary Expense" Doctrine: 

1. The Theory: 

a. Relationship to the Appropriation: 

b. Expenditure Otherwise Prohibited: 

c. Expenditure Otherwise Provided For: 

2. General Operating Expenses: 

a. Training: 

b. Travel: 

c. Postage Expenses: 

d. Books and Periodicals: 

e. Miscellaneous Items Incident to the Federal Workplace: 

C. Specific Purpose Authorities and Limitations: 

1. Introduction: 

2. Attendance at Meetings and Conventions: 

a. Government Employees: 

(1) Statutory framework: 

(2) Inability to attend: 

(3) Federally sponsored meetings: 

(4) Rental of space in District of Columbia: 

(5) Military personnel: 

b. Nongovernment Personnel: 

(1) 31 U.S.C. § 1345: 

(2) Invitational travel: 

(3) Use of grant funds: 

3. Attorney's Fees: 

a. Introduction: 

b. Hiring of Attorneys by Government Agencies: 

c. Suits Against Government Officers and Employees: 

d. Suits Unrelated to Federal Employees: 

e. Claims by Federal Employees: 

(1) Discrimination proceedings: 

(2) Other employee claims: 

f. Criminal Justice Act: 

(1) Types of actions covered: 

(2) Miscellaneous cases: 

g. Equal Access to Justice Act: 

h. Contract Matters: 

(1) Bid protests: 

(2) Contract disputes: 

i. Public Participation in Administrative Proceedings: Funding of 
Intervenors: 

4. Compensation Restrictions: 

a. Dual Compensation: 

b. Employment of Aliens: 

c. Forfeiture of Annuities and Retired Pay: 

(1) General principles: 

(2) The Alger Hiss case: 

(3) Types of offenses covered: 

(4) Related statutory provisions: 

5. Entertainment--Recreation--Morale and Welfare: 

a. Introduction: 

(1) Application of the rule: 

(2) What is entertainment? 

b. Food for Government Employees: 

(1) Working at official duty station under unusual conditions: 

(2) Government Employees Training Act: 

(3) Award ceremonies: 

(4) Cafeterias and lunch facilities: 

c. Entertainment for Government Employees Other Than Food: 

(1) Miscellaneous cases: 

(2) Cultural awareness programs: 

d. Entertainment of Nongovernment Personnel: 

e. Recreational and Welfare Facilities for Government Personnel: 

(1) The rules: older cases and modern trends: 

(2) Child care: 

f. Reception and Representation Funds: 

6. Fines and Penalties: 

7. Firefighting and Other Municipal Services: 

a. Firefighting Services: Availability of Appropriations: 

b. Federal Fire Prevention and Control Act of 1974: 

c. Other Municipal Services: 

8. Gifts and Awards: 

a. Gifts: 

b. Contests: 

(1) Entry fees: 

(2) Government-sponsored contests: 

c. Awards: 

9. Guard Services: Anti-Pinkerton Act: 

a. Evolution of the Law Prior to 57 Comp. Gen. 524: 

b. 57 Comp. Gen. 524 and the Present State of the Law: 

10. Insurance: 

a. The Self-Insurance Rule: 

b. Exceptions to the Rule: 

(1) Departments and agencies generally: 

(2) Government corporations: 

c. Specific Areas of Concern: 

(1) Property owned by government contractors: 

(2) Use of motor vehicles: 

(3) Losses in shipment: 

(4) Bonding of government personnel: 

11. Lobbying and Related Matters: 

a. Introduction: 

b. Penal Statutes: 

c. Appropriation Act Restrictions: 

(1) Origin and general considerations: 

(2) Self-aggrandizement: 

(3) Covert propaganda: 

(4) Pending legislation: overview: 

(5) Cases involving "grassroots" lobbying violations: 

(6) Pending legislation: cases in which no violation was found: 

(7) Pending legislation: Providing assistance to private lobbying 
groups: 

(8) Promotion of legislative proposals: Prohibited activity short of 
grass roots lobbying: 

(9) Dissemination of political or misleading information: 

d. Lobbying with Grant Funds: 

e. Informational Activities: 

f. Advertising and the Employment of Publicity Experts: 

(1) Commercial advertising: 

(2) Advertising of government programs, products, or services: 

(3) Publicity experts: 

12. Membership Fees: 

a. 5 U.S.C. § 5946: 

b. Attorneys: 

13. Personal Expenses and Furnishings: 

a. Introduction: 

b. Business or Calling Cards: 

c. Health, Medical Care and Treatment: 

(1) Medical care: 

(2) Purchase of health-related items: 

(3) The Rehabilitation Act: 

d. Office Furnishings (Decorative Items): 

e. Personal Qualification Expenses: 

f. Photographs: 

g. Seasonal Greeting Cards and Decorations: 

(1) Greeting cards: 

(2) Seasonal decorations: 

h. Traditional Ceremonies: 

i. Wearing Apparel: 

j. Miscellaneous Personal Expenses: 

(1) Commuting and parking: 

(2) Flexiplace: 

(3) Miscellaneous employee expenses: 

14. Rewards: 

a. Rewards to Informers: 

(1) Reward as "necessary expense": 

(2) Payments to informers: Internal Revenue Service: 

(3) Payments to informers: Customs Service: 

b. Missing Government Employees: 

c. Lost or Missing Government Property: 

d. Contractual Basis: 

e. Rewards to Government Employees: 

15. State and Local Taxes: 

a. Introduction: 

b. Tax on Business Transactions Where the Federal Government Is a 
Party: 

(1) General principles: 

(2) Public utilities: 

c. Property-Related Taxes: 

d. Taxes Paid by Federal Employees: 

(1) Parking taxes: 

(2) Hotel and meal taxes: 

(3) Tolls: 

(4) State and local income withholding taxes: 

(5) Possessory interest taxes: 

(6) Occupational license fees: 

e. Refund and Recovery of Tax Improperly Paid: 

16. Telephone Services: 

a. Telephone Service to Private Residences: 

(1) The statutory prohibition and its major exception: 

(2) Funds to which the statute applies: 

(3) What is a private residence? 

(4) Application of the general rule: 

(5) Exceptions: 

b. Long-distance Calls: 

c. Mobile or Cellular Phones: 

Chapter 4: Availability of Appropriations: Purpose:

A. General Principles:

1. Introduction: 31 U.S.C. § 1301(a):

This chapter introduces the concept of the "availability" of 
appropriations. The decisions are often stated in terms of whether 
appropriated funds are or are not "legally available" for a given 
obligation or expenditure. This is simply another way of saying that a 
given item is or is not a legal expenditure. Whether appropriated funds 
are legally available for something depends on three things:

1. the purpose of the obligation or expenditure must be authorized;

2. the obligation must occur within the time limits applicable to the 
appropriation; and:

3. the obligation and expenditure must be within the amounts Congress 
has established.

Thus, there are three elements to the concept of availability: purpose, 
time, and amount. All three must be observed for the obligation or 
expenditure to be legal. Availability as to time and amount will be 
covered in Chapters 5 and 6. This chapter discusses availability as to 
purpose.

One of the fundamental statutes dealing with the use of appropriated 
funds is 31 U.S.C. § 1301(a):

"Appropriations shall be applied only to the objects for which the 
appropriations were made except as otherwise provided by law."

Simple, concise, and direct, this statute was originally enacted in 
1809 (ch. 28, § 1, 2 Stat. 535, (Mar. 3, 1809)) and is one of the 
cornerstones of congressional control over the federal purse. Because 
money cannot be paid from the Treasury except under an appropriation 
(U.S. Const. art. I, § 9, cl. 7), and because an appropriation must be 
derived from an act of Congress, it is for Congress to determine the 
purposes for which an appropriation may be used. Simply stated, 
31 U.S.C. § 1301(a) says that public funds may be used only for the 
purpose or purposes for which they were appropriated. It prohibits 
charging authorized items to the wrong appropriation, and unauthorized 
items to any appropriation. Anything less would render congressional 
control largely meaningless. An earlier Treasury Comptroller was of the 
opinion that the statute did not make any new law, but merely codified 
what was already required under the Appropriations Clause of the 
Constitution. 4 Lawrence, First Comp. Dec. 137, 142 (1883).

Administrative applications of the purpose statute can be traced back 
almost to the time the statute was enacted. See, for example, 36 Comp. 
Gen. 621, 622 (1957), which quotes part of a decision dated February 
21, 1821. In an 1898 decision captioned "Misapplication of 
Appropriations," the Comptroller of the Treasury talked about 31 U.S.C. 
§ 1301(a) in these terms:

"It is difficult to see how a legislative prohibition could be 
expressed in stronger terms. The law is plain, and any disbursing 
officer disregards it at his peril."

4 Comp. Dec. 569, 570 (1898).

The starting point in applying 31 U.S.C. § 1301(a) is that, absent a 
clear indication to the contrary, the common meaning of the words in 
the appropriation act and the program legislation it funds governs the 
purposes to which the appropriation may be applied. To illustrate, the 
Comptroller General held in 41 Comp. Gen. 255 (1961) that an 
appropriation available for the "replacement" of state roads damaged by 
nearby federal dam construction could be used only to restore those 
roads to their former condition, not for improvements such as widening. 
Similarly, funds provided for the modification of existing dams for 
safety purposes could not be used to construct a new dam, even as part 
of an overall safety strategy. B-215782, Apr. 7, 1986.

If a proposed use of funds is inconsistent with the statutory language, 
the expenditure is improper, even if it would result in substantial 
savings or other benefits to the government. Thus, while the Federal 
Aviation Administration (FAA) could construct its own roads needed for 
access to FAA facilities, it could not contribute a share for the 
improvement of county-owned roads, even though the latter undertaking 
would have been much less expensive. B-143536, Aug. 15, 1960. See also 
39 Comp. Gen. 388 (1959).

The limitation in 31 U.S.C. § 1301(a) applies to revolving funds. GAO 
has held that revolving funds are appropriations, and, accordingly, 
that the legal principles governing appropriations also apply to 
revolving funds. See B-247348, June 22, 1992; B-240914, Aug. 14, 1991. 
See also 63 Comp. Gen. 110, 112 (1983), and decisions cited therein.

The concept of purpose permeates much of this publication. Thus, many 
of the rules discussed in Chapter 2 relate to purpose. For example:

* A specific appropriation must be used to the exclusion of a more 
general appropriation that might otherwise have been viewed as 
available for the particular item. Chapter 2, section B.2.

* Transfer between appropriations is prohibited without specific 
statutory authority, even where reimbursement is contemplated. Chapter 
2, section B.3.

It follows that deliberately charging the wrong appropriation for 
purposes of expediency or administrative convenience, with the 
expectation of rectifying the situation by a subsequent transfer from 
the right appropriation, violates 31 U.S.C. § 1301(a). 36 Comp. 
Gen. 386 (1956); 26 Comp. Gen. 902, 906 (1947); 19 Comp. Gen. 395 
(1939); 14 Comp. Gen. 103 (1934); B-248284.2, Sept. 1, 1992; B-104135, 
Aug. 2, 1951; B-97772, May 18, 1951.[Footnote 211] The fact that the 
expenditure would be authorized under some other appropriation is 
irrelevant. Charging the "wrong" appropriation, unless authorized by 
some statute such as 31 U.S.C. § 1534, violates the purpose statute. 
For several examples, see U.S. General Accounting Office, Improper 
Accounting for Costs of Architect of the Capitol Projects, PLrd-81-4 
(Washington, D.C.: Apr. 13, 1981).

The transfer rule illustrates the close relationship between 31 U.S.C. 
§ 1301(a) and statutes relating to amount such as the Antideficiency 
Act, 31 U.S.C. § 1341. An unauthorized transfer violates 31 U.S.C. 
§ 1301(a) because the transferred funds would be used for a purpose 
other than that for which they were originally appropriated. B-279886, 
Apr. 28, 1998; B-278121, Nov. 7, 1997; B-248284.2, Sept. 1, 1992. If 
the receiving appropriation is exceeded, the Antideficiency Act is also 
violated. Further, informal congressional approval of an unauthorized 
transfer of funds between appropriation accounts does not have the 
force and effect of law. B-278121 and B-248284.2, supra.

Although every violation of 31 U.S.C. § 1301(a) is not automatically a 
violation of the Antideficiency Act, and every violation of the 
Antideficiency Act is not automatically a violation of 31 U.S.C. 
§ 1301(a), cases frequently involve elements of both. Thus, an 
expenditure in excess of an available appropriation violates both 
statutes. The reason the purpose statute is violated is that, unless 
the disbursing officer used personal funds, he or she must necessarily 
have used money appropriated for other purposes. 4 Comp. Dec. 314, 317 
(1897). The relationship between purpose violations and the 
Antideficiency Act is explored further in Chapter 6.

Brief mention should also be made of the axiom that an agency cannot do 
indirectly what it is not permitted to do directly. Thus, an agency 
cannot use the device of a contract, grant, or agreement to accomplish 
a purpose it could not do by direct expenditure. See 18 Comp. Gen. 285 
(1938) (contract stipulation to pay wages in excess of Davis-Bacon Act 
rates held unauthorized). See also B-259499, Aug. 22, 1995 (agreement 
to provide personal services to agency that is not authorized to 
contract for personal services is not authorized under the Economy 
Act).

Similarly, a grant of funds for unspecified purposes would be improper. 
55 Comp. Gen. 1059, 1062 (1976). Settlements cannot include benefits 
that the agency does not have authority to provide. See B-247348, 
June 22, 1992 (broad authority to provide remedies for claims arising 
under Title VII of the Civil Rights Act does not permit an agency to 
provide unauthorized benefits). See also B-239592, Aug. 23, 1991.

2. Determining Authorized Purposes:

a. Statement of Purpose:

Where does one look to find the authorized purposes of an 
appropriation? The first place, of course, is the appropriation act 
itself and its legislative history. If the appropriation is general, it 
may also be necessary to consult the legislation authorizing the 
appropriation, if any, and the underlying program or organic 
legislation, together with their legislative histories.

The actual language of the appropriation act is always of paramount 
importance in determining the purpose of an appropriation. Every 
appropriation has one or more purposes in the sense that Congress does 
not provide money for an agency to do with as it pleases, although 
purposes are stated with varying degrees of specificity. One end of the 
spectrum is illustrated by this old private relief act:

"[T]he Secretary of the Treasury …is hereby, authorized and directed to 
pay to George H. Lott, a citizen of Mississippi, the sum of one hundred 
forty-eight dollars …."

Act of March 23, 1896, ch. 71, 29 Stat. 711.

This is one extreme. There is no need to look beyond the language of 
the appropriation; it was available to pay $148 to George H. Lott, and 
for absolutely nothing else. Language this specific leaves no room for 
administrative discretion. For example, the Comptroller General has 
held that language of this type does not authorize reimbursement to an 
agency where the agency erroneously paid the individual before the 
private act had been passed. In this situation, the purpose for which 
the appropriation was made had ceased to exist. B-151114, Aug. 26, 
1964.

At the other extreme, smaller agencies may receive only one 
appropriation. The purpose of the appropriation will be to enable the 
agency to carry out all of its various authorized functions. For 
example, the Consumer Product Safety Commission receives but a single 
appropriation "for necessary expenses of the Consumer Product Safety 
Commission."[Footnote 212] To determine permissible expenditures under 
this type of appropriation, it would be necessary to examine all of the 
agency's substantive legislation, in conjunction with the "necessary 
expense" doctrine discussed later in this chapter.

Between the two extremes are many variations. A common form of 
appropriation funds a single program. For example, the Interior 
Department receives a separate appropriation to carry out the Payments 
in Lieu of Taxes Act (PILT), 31 U.S.C. § 6901-6904.[Footnote 213] While 
the appropriation is specific in the sense that it is limited to PILT 
payments and associated administrative expenses, it is nevertheless 
necessary to look beyond the appropriation language and examine the 
PILT statute to determine authorized expenditures.

Once the purposes have been determined by examining the various pieces 
of legislation, 31 U.S.C. § 1301(a) comes into play to restrict the use 
of the appropriation to these purposes only, together with one final 
generic category of payments--payments authorized under general 
legislation applicable to all or a defined group of agencies and not 
requiring specific appropriations. For example, legislation enacted in 
1982 amended 12 U.S.C. § 1770 to authorize federal agencies to provide 
various services, including telephone service, to employee credit 
unions. Pub. L. No. 97-320, § 515, 96 Stat. 1469, 1530 (Oct. 15, 1982). 
Prior to this legislation, an agency would have violated 31 U.S.C. 
§ 1301(a) by providing telephone service to a credit union, even on a 
reimbursable basis, because this was not an authorized purpose under 
any agency appropriation. 60 Comp. Gen. 653 (1981). The 1982 amendment 
made the providing of special services to credit unions an authorized 
agency function, and hence an authorized purpose, which it could fund 
from unrestricted general operating appropriations. 66 Comp. Gen. 356 
(1987). Similarly, a recently enacted statute gives agencies the 
discretion to use appropriated funds to pay the expenses their 
employees incur for obtaining professional credentials. 5 U.S.C. 
§ 5757(a). See also B-289219, Oct. 29, 2002. Prior to this legislation, 
agencies could not use appropriated funds to pay fees incurred by their 
employees in obtaining professional credentials. See, e.g., 47 Comp. 
Gen. 116 (1967). Other examples are interest payments under the Prompt 
Payment Act (31 U.S.C. §§ 3901-3907) and administrative settlements 
less than $2,500 under the Federal Tort Claims Act (28 U.S.C. §§ 2671 
et seq.).

b. Specific Purpose Stated in Appropriation Act:

Where an appropriation specifies the purpose for which the funds are to 
be used, 31 U.S.C. § 1301(a) applies in its purest form to restrict the 
use of the funds to the specified purpose. For example, an 
appropriation for topographical surveys in the United States was not 
available for topographical surveys in Puerto Rico. 5 Comp. Dec. 493 
(1899). Similarly, an appropriation to install an electrical generating 
plant in the customhouse building in Baltimore could not be used to 
install the plant in a nearby post office building, even though the 
plant would serve both buildings and thereby reduce operating expenses. 
11 Comp. Dec. 724 (1905). An appropriation for the extension and 
remodeling of the State Department building was not available to 
construct a pneumatic tube delivery system between the State Department 
and the White House. 42 Comp. Gen. 226 (1962). In another example 
involving a line-item appropriation for a grant project, because the 
funds were made available for a specific grantee in a specific amount 
to accomplish a specific purpose, the agency could not grant less than 
Congress has directed by using some of the appropriation to pay its 
administrative costs. 72 Comp. Gen. 317 (1993); 69 Comp. Gen. 660, 662 
(1990). And, as noted previously, an appropriation for the 
"replacement" of state roads could not be used to make improvements on 
them. 41 Comp. Gen. 255 (1961).

It is well settled, but warrants repeating, that even an expenditure 
that may be reasonably related to a general appropriation may not be 
paid out of that appropriation where the expenditure falls specifically 
within the scope of another appropriation. 63 Comp. Gen. 422 (1984); 
B-300325, Dec. 13, 2002; B-290005, July 1, 2002. It is also well 
settled that when two appropriations are available for the same 
purpose, the agency must select which to use, and that once it has made 
an election, the agency must continue to use the same appropriation for 
that purpose unless the agency, at the beginning of the fiscal year, 
informs Congress of its intent to change for the next fiscal year. 
B-272191, Nov. 4, 1997. See also, 68 Comp. Gen. 337 (1989); 59 Comp. 
Gen. 518 (1980). An exception to this requirement is when Congress 
specifically authorizes the use of two appropriation accounts. 
B-272191, supra (statutory language makes clear that Congress intended 
that the "funds appropriated to the Secretary [of the Army] for 
operation and maintenance" in the fiscal year 1993 Defense 
Appropriations Act are "[i]n addition to …the funds specifically 
appropriated for real property maintenance under the heading [RPM,D]" 
in that appropriation act).

The following cases will further illustrate the interpretation and 
application of appropriation acts denoting a specific purpose to which 
the funds are to be dedicated. In each of the examples, the 
appropriation in question was the U.S. Forest Service's appropriation 
for the construction and maintenance of "Forest Roads and Trails."

In 37 Comp. Gen. 472 (1958), the Forest Service sought to construct 
airstrips on land in or adjacent to national forests. The issue was the 
extent to which the costs could be charged to the Roads and Trails 
appropriation as opposed to other Forest Service appropriations such as 
"Forest Protection and Utilization." At hearings before the 
appropriations committees, Forest Service officials had announced their 
intent to charge most of the landing fields to the Roads and Trails 
appropriation. The appropriation act in question provided that 
"appropriations available to the Forest Service for the current fiscal 
year shall be available for" construction of the landing fields up to a 
specified dollar amount, but the item was not mentioned in any of the 
individual appropriations. GAO concluded that the proposal to 
indiscriminately charge the landing fields to Roads and Trails would 
violate 31 U.S.C. § 1301(a). The Roads and Trails appropriation could 
be used for only those landing fields that were directly connected with 
and necessary to accomplishing the purposes of that appropriation. 
Landing fields not directly connected with the purposes of the Roads 
and Trails appropriation, for example, airstrips needed to assist in 
firefighting in remote areas, had to be charged to the appropriation to 
which they were related, such as Forest Protection and Utilization. The 
mere mention of intent at the hearings was not sufficient to alter the 
availability of the appropriations.

Later, in 53 Comp Gen. 328 (1973), the Comptroller General held that 
the Forest Roads and Trails appropriation could not be charged with the 
expense of closing roads or trails and returning them to their natural 
state, such activity being neither "construction" nor "maintenance."

Again, in B-164497(3), Feb. 6, 1979, GAO decided that the Forest 
Service could not use the Roads and Trails appropriation to maintain a 
part of a federally constructed scenic highway on Forest Service land 
in West Virginia, although the state was prevented from maintaining it 
because the scenic highway was closed to commercial traffic. The Roads 
and Trails account was improper to charge with the maintenance because 
the term "forest road" was statutorily defined as a service or access 
road "necessary for the protection, administration, and utilization of 
the [national forest] system and the use and development of its 
resources." The highway, a scenic parkway reserved exclusively for 
recreational and passenger travel through a national forest, was not 
the type of forest road the appropriation was available to maintain. 
The decision further noted, however, that the Forest Protection and 
Utilization appropriation was somewhat broader and could be used for 
the contemplated maintenance.

A 1955 case illustrates a type of expenditure that could properly be 
charged to the Roads and Trails account. Construction of a timber 
access road on a national forest uncovered a site of old Indian ruins. 
Since the road construction itself was properly chargeable to the Roads 
and Trails appropriation, the Forest Service could use the same 
appropriation to pay the cost of archaeological and exploratory work 
necessary to obtain and preserve historical data from the ruins before 
they were destroyed by the construction. (Rerouting was apparently not 
possible.) B-125309, Dec. 6, 1955.[Footnote 214]

In any case, an appropriation serves as a limitation, or more 
accurately, a series of limitations relating to time and amount in 
addition to purpose. In some situations, an appropriation is 
simultaneously a grant of authority. For example, 5 U.S.C. § 3109 
authorizes agencies to procure the services of experts and consultants, 
but only "[w]hen authorized by an appropriation or other statute." In 
contrast with the statute authorizing services for credit unions noted 
earlier, 5 U.S.C. § 3109 by itself does not authorize an agency to 
spend general operating appropriations to hire consultants. Unless an 
agency has received this authority somewhere in its permanent 
legislation, the hiring of consultants under section 3109 is an 
authorized purpose only if it is specified in the agency's 
appropriation act.

3. New or Additional Duties:

Appropriation acts tend to be bunched at certain times of the year 
while substantive legislation may be enacted any time. A frequently 
recurring situation is where a statute is passed imposing new duties on 
an agency but not providing any additional appropriations. The question 
is whether implementation of the new statute must wait until additional 
funds are appropriated, or whether the agency can use its existing 
appropriations to carry out the new function, either pending receipt of 
further funding through the normal budget process or in the absence of 
additional appropriations (assuming in either case the absence of 
contrary congressional intent).

The rule is that existing agency appropriations that generally cover 
the type of expenditures involved are available to defray the expenses 
of new or additional duties imposed by proper legal authority. The test 
for availability is whether the duties imposed by the new law bear a 
sufficient relationship to the purposes for which the previously 
enacted appropriation was made so as to justify the use of that 
appropriation for the new duties.

For example, in the earliest published decision cited for the rule, the 
Comptroller General held that the Securities and Exchange Commission 
could use its general operating appropriation for fiscal year 1936 to 
perform additional duties imposed on it by the later enacted Public 
Utility Holding Company Act of 1935 (49 Stat. 803 (Aug. 26, 1935)). 
15 Comp. Gen. 167 (1935).

Similarly, the Interior Department could use its 1979 "Departmental 
Management" appropriation to begin performing duties imposed by the 
Public Utilities Regulatory Policies Act of 1978,[Footnote 215] and to 
provide reimbursable support costs for the Endangered Species Committee 
and Review Board created by the Endangered Species Act Amendments of 
1978.[Footnote 216] Both statutes were enacted after the Interior 
Department's 1979 appropriation. B-195007, July 15, 1980.

The rule has also been applied to additional duties imposed by 
executive order. 32 Comp. Gen. 347 (1953); 30 Comp. Gen. 258 (1951). 
Additional cases are 30 Comp. Gen. 205 (1950); B-290011, Mar. 25, 2002; 
B-211306, June 6, 1983; B-153694, Oct. 23, 1964.

A variation occurred in 54 Comp. Gen. 1093 (1975). The unexpended 
balance of a Commerce Department appropriation, which had been used to 
administer a loan guarantee program and to make collateral protection 
payments under the Trade Expansion Act of 1962, 19 U.S.C. §§ 1901-1920 
(1970), was transferred to a similar but new program by the Trade Act 
of 1974.[Footnote 217] The 1974 statute repealed the earlier 
provisions. This meant that the transferred funds could no longer be 
used for expenses under the 1962 act--including payments on guarantee 
commitments--even though that was the purpose for which they were 
originally appropriated, unless the expenditures could also be viewed 
as relating to the Commerce Department's functions under the 1974 act. 
Applying the rationale of the later-imposed duty cases, the Comptroller 
General concluded that the purposes of the two programs were 
sufficiently related so that the Commerce Department could continue to 
use the transferred funds to make collateral protection payments and to 
honor guarantees made under the 1962 act.

A related question is the extent to which an agency may use current 
appropriations for preliminary administrative expenses in preparation 
for implementing a new law, prior to the receipt of substantive 
appropriations for the new program. Again, the appropriation is 
available provided it is sufficiently broad to embrace expenditures of 
the type contemplated. Thus, the National Science Foundation could use 
its fiscal year 1967 appropriations for preliminary expenses of 
implementing the National Sea Grant College and Program Act of 
1966,[Footnote 218] enacted after the appropriation, since the purposes 
of the new act were basically similar to the purposes of the 
appropriation. 46 Comp. Gen. 604 (1967). The preliminary tasks in that 
case included such things as development of policies and plans, 
issuance of internal instructions, and the establishment of 
organizational units to administer the new program.

Similarly, the Bureau of Land Management could use current 
appropriations to determine fair market value and to initiate 
negotiations with owners in connection with the acquisition of mineral 
interests under the Cranberry Wilderness Act,[Footnote 219] even though 
actual acquisitions could not be made until funding was provided in 
appropriation acts. B-211306, June 6, 1983. See also B-153694, Oct. 23, 
1964; B-153694, Sept. 2, 1964.

Where Congress has not made a specific appropriation available to fund 
additional or new duties and an existing appropriation is used based 
upon a determination that the new duties bear a sufficient relationship 
to the purpose for which the existing appropriation was made, the 
agency may not reimburse the existing appropriation that was used once 
the new appropriation is available. 30 Comp. Gen. 258 (1951); B-290011, 
supra. The shifting of money from one appropriation to another in the 
absence of statutory authority is prohibited by 31 U.S.C. 
§ 1532.[Footnote 220] Compare B-300673, July 3, 2003, where GAO 
concluded that the Chief Administrative Officer (CAO) for the House of 
Representatives was allowed to use the CAO fiscal year 2003 Salaries 
and Expenses appropriation to reimburse the House of Representatives 
Child Care Center revolving fund for certain payments incurred by the 
Center at the beginning of fiscal year 2003 during a period covered by 
a continuing resolution, before enactment of the fiscal year 2003 
appropriation. In this case, CAO's fiscal year 2003 appropriation 
expressly directed that it cover the Center director's salary and 
employees' training costs for fiscal year 2003 and thereafter. Under 
the plain meaning of the appropriation language, the CAO appropriation 
was the proper one to charge for all expenses incurred in fiscal year 
2003.

4. Termination of Program:

a. Termination Desired:

If Congress appropriates money to implement a program, can the agency 
use that money to terminate the program? (Expenses of terminating a 
program could include such things as contract termination costs and 
personnel reduction-in-force expenses.) If implementation of the 
program is mandatory, the answer is no. In 1973, for example, the 
administration attempted to terminate certain programs funded by the 
Office of Economic Opportunity (OEO), relying in part on the fact that 
it had not requested any funds for OEO for 1974. The programs in 
question were funded under a multiple year authorization that directed 
that the programs be carried out during the fiscal years covered by the 
authorization. The U.S. District Court for the District of Columbia 
held that funds appropriated to carry out the programs could not be 
used to terminate them. Local 2677, American Federation of Government 
Employees v. Phillips, 358 F. Supp. 60 (D.D.C. 1973). The court cited 
31 U.S.C. § 1301(a) as one basis for its holding. Id. at 76 n.17. See 
also 63 Comp. Gen. 75, 78 (1983).

Where the program is nonmandatory, the agency has more discretion, but 
there are still limits. In B-115398, Aug. 1, 1977, the Comptroller 
General advised that the Air Force could terminate B-1 bomber 
production, which had been funded under a lump-sum appropriation and 
was not mandated by any statute. Later cases have stated the rule that 
an agency may use funds appropriated for a program to terminate that 
program where (1) the program is nonmandatory and (2) the termination 
would not result in curtailment of the overall program to such an 
extent that it would no longer be consistent with the scheme of 
applicable program legislation. 61 Comp. Gen. 482 (1982) (Department of 
Energy could use funds appropriated for fossil energy research and 
development to terminate certain fossil energy programs); B-203074, 
Aug. 6, 1981. Several years earlier, GAO had held that the closing of 
all Public Health Service hospitals would exceed the Surgeon General's 
discretionary authority because a major portion of the Public Health 
Service Act would effectively be inoperable without the Public Health 
Service hospital system. B-156510, Feb. 23, 1971; B-156510, June 7, 
1965.

The concepts are further illustrated in a series of cases involving the 
Clinch River Nuclear Breeder Reactor. In 1977, the administration 
proposed using funds appropriated for the design, development, 
construction, and operation of the reactor to terminate the project. 
Construction of a breeder reactor had been authorized, but not 
explicitly mandated, by statute. As contemplated by the program 
legislation, the Energy Research and Development Administration, the 
predecessor of the Department of Energy, had submitted program criteria 
for congressional approval. GAO reviewed the statutory scheme, found 
that the approved program criteria were "as much a part of [the 
authorizing statute] as if they were explicitly stated in the statutory 
language itself," and concluded that use of program funds for 
termination was unauthorized. B-115398, June 23, 1977.[Footnote 221] 
Two subsequent opinions reached the same conclusion, supported further 
by a provision in a 1978 supplemental appropriation act that 
specifically earmarked funds for the reactor. B-164105, Mar. 10, 1978; 
B-164105, Dec. 5, 1977.

By 1983 the situation had changed. Congressional support for the 
reactor had eroded considerably, no funds were designated for it for 
fiscal year 1984, and it became apparent that further funding for the 
project was unlikely. In light of these circumstances, GAO revisited 
the termination question and concluded that the Department of Energy 
now had a legal basis to use 1983 funds to terminate the project in 
accordance with the project justification data that provided for 
termination in the event of insufficient funds to permit effective 
continuation. 63 Comp. Gen. 75 (1983).

b. Reauthorization Pending:

Another variation occurs when an entity's enabling legislation is set 
to expire and Congress shows signs of extending or reauthorizing the 
entity, but has not yet provided funds or authority to continue. For 
example, the U.S. Advisory Commission on Intergovernmental Relations 
(ACIR) was statutorily authorized to give continuing attention to 
intergovernmental problems. In 1995, ACIR was statutorily terminated 
effective September 30, 1996. About 2 months before ACIR was to 
terminate, Congress enacted legislation giving ACIR a new 
responsibility to provide research and a report under a contract with 
the National Gambling Impact Study Commission. Although Congress 
continued ACIR's existence beyond fiscal year 1996 for the limited 
purpose of providing research for the Gambling Commission, Congress 
appropriated no funds for fiscal year 1997. ACIR had separate statutory 
authority, 42 U.S.C. § 4279, to receive and expend unrestricted 
contributions made to ACIR from state governments. In B-274855, 
Jan. 23, 1997, GAO held that this statute constituted an appropriation 
(a permanent, indefinite appropriation[Footnote 222]) separate from 
ACIR's annually enacted fiscal year appropriation, and that from 
October 1, 1996, until such time as ACIR was awarded the research 
contract, ACIR could use its unconditional state government 
contributions.

Another situation may occur when an entity's authorizing legislation is 
set to terminate and Congress provides an appropriation but does not 
reauthorize the entity until months later. In 71 Comp. Gen. 378 (1992), 
the U.S. Commission on Civil Rights was set to terminate by operation 
of law on September 30, 1991. The Commission was not reauthorized until 
November 26, 1991. However, during the interim and prior to the 
expiration date, Congress provided the Commission with appropriations 
for fiscal year 1992. Once a termination or sunset provision for an 
entity becomes effective, the agency ceases to exist and no new 
obligations may be incurred after the termination date.[Footnote 223] 
However, when Congress desires to extend, amend, suspend, or repeal a 
statute, it can accomplish its purpose by including the requisite 
language in an appropriations or other act of Congress. After viewing 
the legislative actions, in their entirety, on the Commission's 
reauthorization and appropriation bills, GAO determined that Congress 
clearly intended for the Commission to continue to operate after 
September 30, 1991. GAO held that the specific appropriation provided 
to the Commission served to suspend its termination until the 
Commission was reauthorized.

B. The "Necessary Expense" Doctrine:

1. The Theory:

The preceding discussion establishes the primacy of 31 U.S.C. § 1301(a) 
in any discussion of purpose availability. The next point to emphasize 
is that 31 U.S.C. § 1301(a) does not require, nor would it be 
reasonably possible, that every item of expenditure be specified in the 
appropriation act. While the statute is strict, it is applied with 
reason.

The spending agency has reasonable discretion in determining how to 
carry out the objects of the appropriation. This concept, known as the 
"necessary expense doctrine," has been around almost as long as the 
statute itself. An early statement of the rule is contained in 6 Comp. 
Gen. 619, 621 (1927):

"It is a well-settled rule of statutory construction that where an 
appropriation is made for a particular object, by implication it 
confers authority to incur expenses which are necessary or proper or 
incident to the proper execution of the object, unless there is another 
appropriation which makes more specific provision for such 
expenditures, or unless they are prohibited by law, or unless it is 
manifestly evident from various precedent appropriation acts that 
Congress has specifically legislated for certain expenses of the 
Government creating the implication that such expenditures should not 
be incurred except by its express authority."

The necessary expense rule is really a combination of two slightly 
different but closely related concepts:

1. An appropriation made for a specific object is available for 
expenses necessarily incident to accomplishing that object unless 
prohibited by law or otherwise provided for. For example, an 
appropriation to erect a monument at the birthplace of George 
Washington could be used to construct an iron fence around the monument 
where administratively deemed necessary to protect the monument. 
2 Comp. Dec. 492 (1896). Likewise, an appropriation to purchase bison 
for consumption covers the slaughtering and processing of the bison as 
well as the actual purchase. B-288658, Nov. 30, 2001.

2. Appropriations, even for broad categories such as salaries, 
frequently use the term "necessary expenses." As used in this context, 
the term refers to "current or running expenses of a miscellaneous 
character arising out of and directly related to the agency's work." 
38 Comp. Gen. 758, 762 (1959); 4 Comp. Gen. 1063, 1065 (1925).

Although the theory is identical in both situations, the difference is 
that expenditures in the second category relate to somewhat broader 
objects.

The Comptroller General has never established a precise formula for 
determining the application of the necessary expense rule. In view of 
the vast differences among agencies, any such formula would almost 
certainly be unworkable. Rather, the determination must be made 
essentially on a case-by-case basis.

In addition to recognizing the differences among agencies when applying 
the necessary expense rule, we act to maintain a vigorous body of case 
law responsive to the changing needs of government. In this regard, our 
decisions indicate a willingness to consider changes in societal 
expectations regarding what constitutes a necessary expense. This 
flexibility is evident, for example, in our analysis of whether an 
expenditure constitutes a personal or an official expense. As will be 
discussed more fully later in the chapter, use of appropriations for 
such an expenditure is determined by continually weighing the benefit 
to the agency, such as the recruitment and retention of a dynamic 
workforce and other considerations enabling efficient, effective, and 
responsible government. We recognize, however, that these factors can 
change over time. B-286026, June 12, 2001 (overruling GAO's earlier 
decisions based on reassessment of the training opportunities afforded 
by examination review courses); B-280759, Nov. 5, 1998 (overruling 
GAO's earlier decisions on the purchase of business cards). See also 
71 Comp. Gen. 527 (1992) (eldercare is not a typical employee benefit 
provided to the nonfederal workforce and not one that the federal 
workforce should expect); B-288266, Jan. 27, 2003 (GAO explained it 
remained "willing to reexamine our case law" regarding light 
refreshments if it is shown to frustrate efficient, effective, and 
responsible government).

When applying the necessary expense rule, an expenditure can be 
justified after meeting a three-part test:

1. The expenditure must bear a logical relationship to the 
appropriation sought to be charged. In other words, it must make a 
direct contribution to carrying out either a specific appropriation or 
an authorized agency function for which more general appropriations are 
available.

2. The expenditure must not be prohibited by law.

3. The expenditure must not be otherwise provided for, that is, it must 
not be an item that falls within the scope of some other appropriation 
or statutory funding scheme.

E.g., 63 Comp. Gen. 422, 427-28 (1984); B-240365.2, Mar. 14, 1996; 
B-230304, Mar. 18, 1988.

a. Relationship to the Appropriation:

The first test--the relationship of the expenditure to the 
appropriation--is the one that generates by far the lion's share of 
questions. On the one hand, the rule does not require that a given 
expenditure be "necessary" in the strict sense that the object of the 
appropriation could not possibly be fulfilled without it. Thus, the 
expenditure does not have to be the only way to accomplish a given 
object, nor does it have to reflect GAO's perception of the best way to 
do it. Yet on the other hand, it has to be more than merely desirable 
or even important. E.g., 34 Comp. Gen. 599 (1955); B-42439, July 8, 
1944. An expenditure cannot be justified merely because some agency 
official thinks it is a good idea, nor can it be justified simply 
because it is a practice engaged in by private business. See B-288266, 
Jan. 27, 2003.

The important thing is not the significance of the proposed expenditure 
itself or its value to the government or to some social purpose in 
abstract terms, but the extent to which it will contribute to 
accomplishing the purposes of the appropriation the agency wishes to 
charge. For example, the Forest Service can use its appropriation for 
"Forest Protection and Utilization" to buy plastic litterbags for use 
in a national forest. 50 Comp. Gen. 534 (1971). See also 72 Comp. 
Gen. 73 (1992) (the Environmental Protection Agency (EPA) can purchase 
buttons promoting indoor air quality for its conference since the 
message conveyed is related to EPA's mission); 71 Comp. Gen. 28 (1991) 
(the Internal Revenue Service (IRS) can cover cost of its employees 
filing electronic tax returns because it trains employees); B-257488, 
Nov. 6, 1995 (the Food and Drug Administration is permitted to purchase 
"No Red Tape" buttons to promote employee efficiency and effectiveness 
and thereby the agency's purpose). However, operating appropriations of 
the Equal Employment Opportunity Commission (EEOC) are not available to 
pay IRS the taxes due on judgment proceeds recovered by EEOC in an 
enforcement action. While the payment would further a purpose of the 
IRS, it would not contribute to fulfilling the purposes of the EEOC 
appropriation. 65 Comp. Gen. 800 (1986).[Footnote 224] See also 70 
Comp. Gen. 248 (1991) (purchasing T-shirts for Combined Federal 
Campaign (CFC) contributors is not permitted because T-shirts are not 
essential to achieving the authorized purpose of CFC).

If the basic test is the relationship of the expenditure to the 
appropriation sought to be charged, it should be apparent that the 
"necessary expense" concept is a relative one. As stated in 65 Comp. 
Gen. 738, 740 (1986):

"We have dealt with the concept of 'necessary expenses' in a vast 
number of decisions over the decades. If one lesson emerges, it is that 
the concept is a relative one: it is measured not by reference to an 
expenditure in a vacuum, but by assessing the relationship of the 
expenditure to the specific appropriation to be charged or, in the case 
of several programs funded by a lump-sum appropriation, to the specific 
program to be served. It should thus be apparent that an item that can 
be justified under one program or appropriation might be entirely 
inappropriate under another, depending on the circumstances and 
statutory authorities involved."

The evident difficulty in stating a precise rule emphasizes the role 
and importance of agency discretion. It is in the first instance up to 
the administrative agency to determine that a given item is reasonably 
necessary to accomplishing an authorized purpose. Once the agency makes 
this determination, GAO will normally not substitute its own judgment 
for that of the agency. In other words, the agency's administrative 
determination of necessity will be given considerable deference.

Generally, the interpretation of a statute by the agency that Congress 
has charged with the responsibility for administering it is entitled to 
considerable weight. This discretion, however, is not without limits. 
The agency's interpretation must be reasonable and must be based on a 
permissible construction of the statute. United States v. Mead Corp., 
533 U.S. 218, 226-238 (2001); Chevron, Inc. v. Natural Resources 
Defense Council, 467 U.S. 837 (1984). See also B-286661, Jan. 19, 2001 
(expansive definition exceeds the bounds of the Privatization Act and 
violates the requirement of 31 U.S.C. § 1301(a)).

The standard GAO uses in evaluating purpose availability is summarized 
in the following passage from B-223608, Dec. 19, 1988:

"When we review an expenditure with reference to its availability for 
the purpose at issue, the question is not whether we would have 
exercised that discretion in the same manner. Rather, the question is 
whether the expenditure falls within the agency's legitimate range of 
discretion, or whether its relationship to an authorized purpose or 
function is so attenuated as to take it beyond that range."

A decision on a "necessary expense" question therefore involves 
(1) analyzing the agency's appropriations and other statutory authority 
to determine whether the purpose is authorized and (2) evaluating the 
adequacy of the administrative justification, to decide whether the 
agency has properly exercised, or exceeded, its discretion.

The role of discretion in purpose availability is further complicated 
by the fact that not all federal establishments have the same range of 
discretion. For example, a government corporation with the authority to 
determine the character and necessity of its expenditures has, by 
virtue of its legal status, a broader measure of discretion than a 
"regular" agency. But even this discretion is not unlimited and is 
bound at least by considerations of sound public policy. See 14 Comp. 
Gen. 755 (1935), aff'd upon reconsideration, A-60467, June 24, 1936.

Two decisions involving the Bonneville Power Administration (BPA) will 
illustrate. In 1951, the Interior Department asked whether funds 
appropriated to BPA could be used to enter into a contract to conduct a 
survey to determine the feasibility of "artificial nucleation and cloud 
modification" (artificial rainmaking in English) for a portion of the 
Columbia River drainage basin. If the amount of rainfall during the dry 
season could be significantly increased by this method, the amount of 
marketable power for the region would be enhanced. Naturally, BPA did 
not have an appropriation specifically available for rainmaking. 
However, in view of BPA's statutory role in the sale and disposition of 
electric power in the region, GAO concluded that the expenditure was 
authorized. B-104463, July 23, 1951.

The Interior Department then asked whether, assuming the survey results 
were favorable, BPA could contract with the rainmakers. GAO thought 
this was going too far and questioned whether BPA's statutory authority 
to encourage the widest possible use of electric energy really 
contemplated artificial rainmaking. GAO emphasized that the expenditure 
would be improper for a department or agency with the "ordinary 
authority usually granted" to federal agencies. However, the 
legislative history of BPA's enabling statute indicated that Congress 
intended that it have a degree of freedom similar to public 
corporations and that it be largely free from "the requirements and 
restrictions ordinarily applicable to the conduct of Government 
business." Therefore, while the Comptroller General expressly refused 
to "approve" the rainmaking contract, he felt compelled to hold that 
BPA's funds were legally available for it. B-105397, Sept. 21, 1951.

For the typical federal department or agency, the range of discretion 
will be essentially the same, with variations in the kinds of things 
justifiable under the necessary expense umbrella stemming from program 
differences. For example, necessary expenses for an agency with law 
enforcement responsibilities may include items directly related to that 
authority, which would be inappropriate for agencies without law 
enforcement functions. Thus, the Immigration and Naturalization Service 
could use its Salaries and Expenses appropriation to purchase and 
install lights, automatic warning devices, and observation towers along 
the boundary between the United States and Mexico. 29 Comp. Gen. 419 
(1950). See also 7 Comp. Dec. 712 (1901). Similarly, in B-204486, 
Jan. 19, 1982, the Federal Bureau of Investigation could buy insurance 
on an undercover business not so much to insure the property, but to 
enhance the credibility of the operation.

The procurement of evidence is also authorized as a necessary expense 
for an agency with law enforcement responsibilities. For example, 
Forest Service appropriations could be used to pay towing and storage 
charges for a truck seized as evidence of criminal activities in a 
national forest. B-186365, Mar. 8, 1977. See also 27 Comp. Gen. 516 
(1948); 26 Comp. Dec. 780, 783 (1920); B-56866, Apr. 22, 1946. Also, 
the Customs Service could use its operating appropriations to cover the 
cost of extending its psychological assessment and referral services to 
its employees' family members adversely affected by work-related 
incidents arising from law enforcement activities involving death or 
serious injury to its employee in the line of duty. B-270446, Feb. 11, 
1997.

Cases involving fairs and expositions provide further illustration. For 
the most part, when Congress desires federal participation in fairs or 
expositions, it has been authorized by specific legislation. See, e.g., 
B-160493, Jan. 16, 1967 (legislation authorized federal participation 
in HemisFair 1968 in San Antonio). For another example, United States 
participation in the 1927 International Exposition in Seville, Spain, 
was specifically authorized by statute. See 10 Comp. Gen. 563, 564 
(1931).

However, specific statutory authority is not essential. If 
participation is directly connected with and is in furtherance of the 
purposes for which a particular appropriation has been made, and an 
appropriate administrative determination is made to that effect, the 
appropriation is available for the expenditure. B-290900, Mar. 18, 2003 
(Bureau of Land Management (BLM) may use its appropriated funds to pay 
its share of the cost to produce a brochure that educates the public 
regarding lighthouse preservation because the brochure supports BLM in 
meeting its responsibility under its lighthouse preservation program); 
B-286457, Jan. 29, 2001 (demolition of old air traffic control tower 
that would obstruct the view from the new one is directly connected 
with and in furtherance of the construction of a new tower such that 
the demolition expenses are covered by Federal Aviation Administrations 
appropriation act for tower construction); B-280440, Feb. 26, 1999 
(Immigration and Naturalization Service's (INS) Salaries and Expenses 
appropriation is available to purchase medals to be worn by uniformed 
employees of the Border Patrol division of INS to commemorate the 
division's 75th anniversary). See also 16 Comp. Gen. 53 (1936); 
10 Comp. Gen. 282 (1930); 7 Comp. Gen. 357 (1927); 4 Comp. Gen. 457 
(1924).[Footnote 225] Authority to disseminate information will 
generally provide adequate justification. E.g., 7 Comp. Gen. 357; 
4 Comp. Gen. 457. In addition, an agency may use appropriated funds to 
provide prizes to individuals to further the collection of information 
necessary to accomplish the agency's statutory mandate.[Footnote 226] 
See, e.g., 70 Comp. Gen. 720 (1991); B-286536, Nov. 17, 2000; B-230062, 
Dec. 22, 1988.

In the absence of either statutory authority or an adequate 
justification under the necessary expense doctrine, the expenditure, 
like any other expenditure, is illegal. Thus, the Department of Housing 
and Urban Development (HUD) had no authority to finance participation 
at a trade exhibition in the Soviet Union where HUD's primary purpose 
was to enhance business opportunities for American companies. 68 Comp. 
Gen. 226 (1989); B-229732, Dec. 22, 1988. Regardless of whether it may 
or may not have been a good idea, commercial trade promotion is not one 
of the purposes for which Congress appropriates money to HUD.

No discussion would be complete without some mention of the "marauding 
woodpecker" case. It appears that in 1951, marauding woodpeckers were 
causing considerable damage to government-owned transmission lines and 
the Southwestern Power Administration, Interior Department (Interior) 
wanted to buy guns with which to shoot the woodpeckers. Interior first 
went to the Army, but the Army advised that the types of guns and 
ammunition desired were not available, so Interior next came to GAO. 
The Comptroller General held that, if administratively determined to be 
necessary to protect the transmission lines, Interior could buy the 
guns and ammunition from the Southwestern Power Administration's 
construction appropriation. The views of the woodpeckers were not 
solicited. B-105977, Dec. 3, 1951. Actually, this was not a totally 
novel issue. Several years earlier, GAO had approved the use of an 
Interior Department "maintenance of range improvements" appropriation 
for the control of coyotes, rodents, and other "predatory animals." 
A-82570, Dec. 30, 1936. See also A-82570, B-120739, Aug. 21, 
1957.[Footnote 227]

b. Expenditure Otherwise Prohibited:

The second test under the necessary expense doctrine is that the 
expenditure must not be prohibited by law. As a general proposition, 
neither a necessary expense rationale nor the "necessary expense" 
language in an appropriation act can be used to overcome a statutory 
prohibition. E.g., B-277905, Mar. 17, 1998 (expenditure for 
installation and maintenance of water pipelines to support a military 
base golf course not permissible because such expenditure is 
specifically prohibited by 10 U.S.C. § 2246, which prohibit the use of 
appropriated funds to "equip, operate, or maintain" a golf course); 
B-247348, June 22, 1992 (detail of Government Printing Office employee 
to Library of Congress not permissible because 44 U.S.C. § 316 
prohibits details for "duties not pertaining to the work of public 
printing and binding"). In 38 Comp. Gen. 758 (1959) and 4 Comp. 
Gen. 1063 (1925), the Comptroller General held that the necessary 
expense language did not overcome the prohibition in 41 U.S.C. § 12 
against contracting for public buildings or public improvements in 
excess of appropriations for the specific purpose. In large measure, 
this is little more than an application of the rule against repeal by 
implication discussed in Chapter 2, section C.2.h.

There are exceptions where applying the rule would make it impossible 
to carry out a specific appropriation. A very small group of cases 
stands for the proposition that, where a specific appropriation is made 
for a specific purpose, an expenditure that is "absolutely essential" 
to accomplishing the specific object may be incurred even though the 
expenditure would otherwise be prohibited. In order for this exception 
to apply, the expenditure must literally be absolutely essential in the 
sense that the object of the appropriation could not be accomplished 
without it. Also, the rule would not apply to the use of a more general 
appropriation.

For example, in 2 Comp. Gen. 133 (1922), modifying 2 Comp. Gen. 14 
(1922), an appropriation to provide airmail service between New York, 
Chicago, and San Francisco was held available to construct hangars and 
related facilities at a landing field in Chicago notwithstanding the 
requirement for a specific appropriation in 41 U.S.C. § 12. The reason 
was that it would have been impossible to provide the service, and 
hence, to accomplish the purpose of the appropriation, without erecting 
the facilities. See also 17 Comp. Gen. 636 (1938) and 22 Comp. Dec. 317 
(1916). (The 1938 decision cites the rule but the decision itself is an 
ordinary necessary expense case.)

An 1899 case, 6 Comp. Dec. 75, provides another good illustration of 
the concept. The building housing the Department of Justice (Justice) 
had become unsafe and overcrowded. Congress enacted legislation to 
authorize and fund the construction of a new building. The statute 
specifically provided that the new building be constructed on the site 
of the old building, but did not address the question of how Justice 
would function during the construction period. The obvious solution was 
to rent another building until the new one was ready, but 40 U.S.C. 
§ 34 prohibited the rental of space in the District of Columbia except 
under an appropriation specifically available for that purpose, and 
Justice had no such appropriation. On the grounds that any other result 
would be absurd, the Comptroller of the Treasury held that Justice 
could rent interim space notwithstanding the statutory prohibition. 
While the decision was not couched in terms of the expenditure being 
"absolutely essential," it said basically the same thing. Since Justice 
could not cease to function during the construction period, the 
appropriation for construction of the new building could not be 
fulfilled without the expenditure for interim space.

c. Expenditure Otherwise Provided For:

The third test is that an expenditure cannot be authorized under a 
necessary expense theory if it is otherwise provided for under a more 
specific appropriation or statutory funding mechanism. It is well 
settled that even an expenditure that may be reasonably related to a 
general appropriation may not be paid out of that appropriation where 
the expenditure falls specifically within the scope of another 
appropriation. See, e.g., B-291241, Oct. 8, 2002; B-290005, July 1, 
2002; B-289209, May 31, 2002.

The fact that the more specific appropriation may be exhausted is 
immaterial. Thus, in B-139510, May 13, 1959, the Navy could not use its 
shipbuilding appropriation to deepen a channel in the Singing River 
near Pascagoula, Mississippi, to permit submarines then under 
construction to move to deeper water. The reason was that this was a 
function for which funds were traditionally appropriated to the Corps 
of Engineers, not the Navy. The fact that appropriations had not been 
made in this particular instance was irrelevant.

Similarly, the Navy could not use appropriations made for the 
construction or procurement of vessels and aircraft to provide housing 
for civilian employees engaged in defense production activities because 
funds for that purpose were otherwise available. 20 Comp. Gen. 102 
(1940).

In another case, Federal Prison Industries could use its revolving fund 
to build industrial facilities incident to a federal prison, or to 
build a residential camp for prisoners employed in federal public works 
projects, but could not use that fund to construct other prison 
facilities because such construction was statutorily provided for 
elsewhere. B-230304, Mar. 18, 1988.

In these cases, the existence of a more specific source of funds, or a 
more specific statutory mechanism for getting them, is the governing 
factor and overrides the "necessary expense" considerations.

2. General Operating Expenses:

An illustration of how the necessary expense concept works common to 
all agencies is the range of expenditures permissible under general 
operating appropriations. All agencies, regardless of program 
differences, have certain things in common. Specifically, they all have 
employees, occupy space in buildings, and maintain an office 
environment. To support these functions, they incur a variety of 
administrative expenditures. Some are specifically authorized by 
statute; others flow logically from the requirements of maintaining a 
workforce.

All agencies receive general operating appropriations for these 
administrative expenses. Depending largely on the size of the agency, 
they may be separate lump-sum appropriations or may be combined with 
program funds. The most common (but not the only) form of general 
operating appropriation is entitled "Salaries and Expenses (S&E)." 
Although an S&E appropriation may contain earmarks, for the most part 
it does not specify the types of "expenses" for which it is available. 
Employee salaries, together with related items such as agency 
contributions to health insurance and retirement, of course, comprise 
the bulk of an S&E appropriation. This section summarizes some of the 
other items chargeable to S&E funds as necessary expenses of running 
the agency that are not covered elsewhere in this chapter.

a. Training:

Training of government employees is governed by the Government 
Employees Training Act, 5 U.S.C. chapter 41, aspects of which are 
discussed in several places in this chapter. The authority of the 
Government Employees Training Act is broad, but it is not unlimited. 
For example, tryouts for the U.S. Olympic Shooting Team do not 
constitute training under the Act. 68 Comp. Gen. 721 (1989). Nor do 
routine meetings, however formally structured, qualify as training. 
68 Comp. Gen. 606 (1989). See also 68 Comp. Gen. 604 (1989); B-272280, 
May 29, 1997 (examination expenses that substitute for a college course 
are covered where the skipped course is part of an approved training 
program for which the agency would otherwise pay).

For an entity not covered by the definition of "agency" in the Act, the 
authority to conduct training is limited. The particular training 
program must be (1) necessary to carry out the purpose for which the 
appropriation is made, (2) for a period of brief duration, and 
(3) special in nature. 36 Comp. Gen. 621 (1957) (including extensive 
citations to earlier decisions). See also 68 Comp. Gen. 127 (1988).

Training of nonfederal personnel, where necessary to the implementation 
of a federal program, is a straightforward "necessary expense" question 
under the relevant program appropriation. E.g., 18 Comp. Gen. 842 
(1939).

In B-148826, July 23, 1962, the Comptroller General held that the 
Defense Department could pay $1 each to students participating in a 
civil defense training course as consideration for a release from 
liability.

b. Travel:

Reimbursement for travel expenses incurred on official travel is now 
authorized by statute. E.g., 5 U.S.C. § 5702. However, even before the 
legislation was enacted, expenses incurred on authorized official 
travel were reimbursable as a necessary expense. 4 Comp. Dec. 475 
(1898).

Of course there are limits, and expenses are reimbursable only to the 
extent authorized by statute and implementing regulations. Thus, in an 
early case, expenses of a groom and valet incurred by an Army officer 
in Belgium could not be regarded as necessary travel expenses and 
therefore could not be reimbursed from Army appropriations. 21 Comp. 
Dec. 627 (1915).

Senior-level officials frequently travel for political purposes. As the 
Justice Department has pointed out, it is often impossible to neatly 
categorize travel as either purely business or purely political. To the 
extent it is possible to distinguish, appropriated funds should not be 
used for political travel. 6 Op. Off. Legal Counsel 214 (1982). GAO has 
conducted occasional reviews in this area, and has commented on the 
lack of legally binding guidelines against which to evaluate particular 
expenditures. E.g., U.S. General Accounting Office, Review of White 
House and Executive Agency Expenditures for Selected Travel, 
Entertainment, and Personnel Costs, AFMD-81-36 (Washington, D.C.: 
Mar. 6, 1981); Review of the Propriety of White House and Executive 
Agency Expenditures for Selected Travel, Entertainment, and Personnel 
Costs, FGMSD-81-13 (Washington, D.C.: Oct. 20, 1980).

Finally, there are situations in which expenses of congressional travel 
may be charged to the appropriations of other agencies. Under 31 U.S.C. 
§ 1108(g):

"Amounts available under law are available for field examinations of 
appropriation estimates. The use of the amounts is subject only to 
regulations prescribed by the appropriate standing committees of 
Congress."

Thus, travel expenses of congressional committee members and staff 
incident to "field examinations" of appropriation requests may be 
charged to the agency whose programs and budget are being examined. 
B-214611, Apr. 17, 1984; B-129650, Jan. 2, 1957. Before the above 
provision was enacted as permanent legislation, similar provisions had 
appeared for many years in various appropriation acts. See 6 Comp. 
Gen. 836 (1927); 23 Comp. Dec. 493 (1917).

Travel expenses of congressional spouses (Members and staff) may not be 
paid from appropriated funds. B-204877, Nov. 27, 1981.

Federal employees may retain promotional travel benefits, including 
frequent flyer miles or upgrades, when the benefits are earned as a 
result of official travel and if the promotional item is obtained under 
the same terms as those offered the general public and at no additional 
cost to the government. Pub. L. No. 107-107, div. A, title XI, § 1116, 
115 Stat. 1012, 1241 (Dec. 28, 2001).

c. Postage Expenses:

Agencies are required to reimburse the Postal Service for mail sent by 
or to them as penalty mail.[Footnote 228] Reimbursement is to be made 
"out of any appropriations or funds available to them." 39 U.S.C. 
§ 3206(a). This statute amounts to an exception to the general purpose 
statute, 31 U.S.C. § 1301(a), in that the expenditure may be charged to 
any appropriation available to the agency. Penalty mail costs do not 
have to be charged to the particular bureau or activity that generated 
the cost. 33 Comp. Gen. 206 (1953). By virtue of this statutory 
authority, the use of appropriations for one component of an agency to 
pay penalty mail costs of another component funded under a separate 
appropriation does not constitute an unauthorized transfer of 
appropriations. 33 Comp. Gen. 216 (1953). The same principle applies to 
reimbursement for registry fees. 36 Comp. Gen. 239 (1956).

d. Books and Periodicals:

Expenditures for books and periodicals are evaluated under the 
necessary expense rule. Thus, the American Battle Monuments Commission 
could use its Salaries and Expenses (S&E) appropriation to buy books on 
military leaders to help it decide what people and events to 
memorialize. 27 Comp. Gen. 746 (1948).[Footnote 229]

The National Science Foundation could subscribe to a publication called 
"Supervisory Management" to be used as training material in a 
supervisory training program under the Government Employees Training 
Act. If determined necessary to the course, the subscription could be 
paid from the Foundations S&E appropriation. 39 Comp. Gen. 320 (1959). 
Similarly, the Interior Department's Mining Enforcement and Safety 
Administration could subscribe to the "Federal Employees News Digest" 
if determined to be necessary in carrying out the agency's statutory 
functions. 55 Comp. Gen. 1076 (1976).

Subsequently, when the Federal Employees News Digest came under some 
criticism, it became necessary to explain that a decision such as 
55 Comp. Gen. 1076 is neither an endorsement of a particular 
publication nor an exhortation for agencies to buy it. It is merely a 
determination that the purchase is legally authorized. B-185591, 
Feb. 7, 1985.

In B-171856, Mar. 3, 1971, the Interior Department was permitted to 
purchase newspapers to send to a number of Inuit families in Alaska. 
Members of the families had been transported to Washington state to 
help in fighting a huge fire, and the newspapers were seen as necessary 
to keep the families advised of the status of the operation and also as 
a measure to encourage future volunteerism.

e. Miscellaneous Items Incident to the Federal Workplace:

We have viewed certain civic, charitable, and similar community support 
activities involving limited use of agency resources and employee time 
as permissible expenses. For instance, agencies may spend their 
appropriations, within reason, to cooperate with government-sanctioned 
charitable fund-raising campaigns, including such things as permitting 
solicitation during working hours, preparing campaign instructions, and 
distributing campaign materials. 67 Comp. Gen. 254 (1988) (Combined 
Federal Campaign). See also B-155667, Jan. 21, 1965; B-154456, Aug. 11, 
1964; B-119740, July 29, 1954. Similarly, some use of employee time and 
agency equipment can occur to carry out limited National Guard and 
Reserve functions or to assist with adopt-a-school programs. 71 Comp. 
Gen. 469 (1992); B-277678, Jan. 4, 1999. This authority, however, does 
not extend to giving T-shirts to Combined Federal Campaign 
contributors. 70 Comp. Gen. 248 (1991).

An agency may use its general operating appropriations to fund limited 
amounts of promotional material in support of the United States savings 
bond campaign. B-225006, June 1, 1987.

Support that agencies are authorized by law to provide to federal 
credit unions may, if administratively determined to be necessary, 
include automatic teller machines. 66 Comp. Gen. 356 (1987). The 
justification was adequate in that case because the facility in 
question operated on three shifts 7 days a week and the credit union 
could not remain open to accommodate workers on all shifts.

The Salaries and Expenses appropriation of the Internal Revenue Service 
(IRS) could be used to procure credit bureau reports if 
administratively determined to be necessary in connection with 
investigating applicants for employment with IRS. B-117975, Dec. 29, 
1953.

IRS was authorized to undertake employee counseling and referral 
programs related to eldercare. The expenditure was justified under 
5 U.S.C. § 7901, which authorized "preventative programs related to 
health." 71 Comp. Gen. 527 (1992). Similar mental health referrals are 
discussed at length in section C.13 of this chapter addressing personal 
expenses.

Outplacement assistance to employees may be regarded as a legitimate 
matter of agency personnel administration if the expenditures are found 
to benefit the agency and are reasonable in amount. 68 Comp. Gen. 127 
(1988); B-272040, Oct. 29, 1997. The Government Employees Training Act 
authorizes training in preparation for placement in another federal 
agency under conditions specified in the statute. 5 U.S.C. § 4103(b).

Otherwise unrestricted operating appropriations are available to 
protect a government official who has been threatened or is otherwise 
in danger, if the agency determines that the risk impairs the 
official's ability to carry out his or her duties and hence adversely 
affects the efficient functioning of the agency. For example, the U.S. 
Customs Service may use appropriated funds to purchase home and 
automobile security devices for agents stationed in Puerto Rico and the 
U.S. Virgin Islands where they are needed as a result of the agent's 
law enforcement activities. B-251710, July 7, 1993. See also 71 Comp. 
Gen. 4 (1991). Also, certain officials, specified in 18 U.S.C. 
§ 3056(a), are entitled to Secret Service protection. 54 Comp. Gen. 624 
(1975), modified by 55 Comp. Gen. 578 (1975).

Payment of an honorarium to an invited guest speaker (other than a 
government employee) is permissible under a necessary expense 
rationale. See A-69906, Mar. 16, 1936 (payment of an honorarium by an 
agency of the District of Columbia government was found to be an 
allowable administrative expense). See also B-20517, Sept. 24, 1941.

Fees for the notarization of documents are properly payable from 
appropriated funds where no government notary is available. B-33846, 
Apr. 27, 1943.

An agency's appropriations are not available to reimburse the Civil 
Service Retirement Fund for losses due to overpayments to a retired 
employee resulting from the agency's erroneous processing of 
information. 54 Comp. Gen. 205 (1974).

The Federal Reserve Board could not match employee contributions to an 
employee savings plan established by the Board. B-174174, Sept. 24, 
1971.

C. Specific Purpose Authorities and Limitations:

1. Introduction:

This section will explore a number of specific topics concerning 
purpose availability. Sections C.2 through C.16 cover areas that have 
generated considerable activity over the years and require a somewhat 
detailed presentation. While our topic selection is designed to 
highlight certain restrictions, our objective is to describe what is 
authorized as well as what is unauthorized. Most of the topics are a 
mixture of both.

Restrictions on the purposes for which appropriated funds may be spent 
come from a variety of sources. Some may stem from the Constitution 
itself. An example is the prohibition on paying certain state and local 
taxes, discussed in section C.15. Others are found in permanent 
legislation, such as the restrictions on residential and long distance 
telephone service discussed in section C.16.

A common source of purpose restrictions is the appropriation act 
itself. Restrictions are often included as provisos to the 
appropriating language or as general provisions or "riders." For 
example, B-202716, Oct. 29, 1981, construes an appropriation act 
restriction prohibiting the use of Legal Services Corporation funds for 
the representation of illegal aliens. Another example is the 
restriction on "publicity and propaganda" expenditures found in some 
appropriation acts, discussed in section C.11.

Finally, a number of restrictions have evolved from decisions of the 
Comptroller General and his predecessor, the Comptroller of the 
Treasury. An example is the government's policy on self-insurance, 
section C.10. The restrictions that have evolved administratively 
usually date back to the nineteenth century, are firmly embedded in 
appropriations law, and for the most part have been recognized by 
Congress at least implicitly by the practice of legislating the 
occasional exception.

Purpose restrictions will commonly prohibit the use of funds for an 
item except "under specific statutory authority," or except under "an 
appropriation specifically available therefore," or similar language. 
The "specific authority" needed to create an exception in these 
situations need not be found in the appropriation act itself, but may 
be contained in authorizing or enabling legislation as long as it is 
clearly applicable to the appropriation sought to be charged. 23 Comp. 
Gen. 859 (1944); 16 Comp. Gen. 773 (1937).

2. Attendance at Meetings and Conventions:

Meetings have become a way of life in contemporary American society and 
the federal bureaucracy is no exception. It seems that there are 
meetings on just about everything. Quite often they can be very useful. 
They can also be expensive. It is no surprise that lots of meetings are 
held in places like Honolulu and San Francisco. This section will 
explore when appropriated funds may be used to send people, government 
employees and others, to meetings. Congress has passed a number of 
statutes in this area and the cases usually involve the interpretation 
and application of the various statutory provisions. For purposes of 
this discussion, the term "meeting" includes other designations such as 
conference, congress, convention, seminar, symposium, and workshop; 
what the particular gathering is called is irrelevant.

a. Government Employees:

(1) Statutory framework:

To understand the law in this area, it is necessary to understand the 
interrelationship of several statutes. Listed in the order of their 
enactment, they are: 5 U.S.C. § 5946, 31 U.S.C. § 1345, 5 U.S.C. 
§ 4109, and 5 U.S.C. § 4110. This interrelationship is best seen by 
outlining the statutory evolution.

The first piece of legislation was enacted in 1912. As relevant here, 
section 8 of the Act of June 26, 1912 (Pub. L. No. 201, ch. 182, 
37 Stat. 139, 184), prohibited the payment, without specific statutory 
authority, of the expenses of attendance of an individual at meetings 
or conventions of members of a society or association. With exceptions 
to be noted below, this statute is now found at 5 U.S.C. § 5946. For 
the most part, it has always been viewed as applying to attendance by 
federal employees at nonfederally sponsored meetings. See, e.g., 
B-140912, Nov. 24, 1959.

There were many early cases under the 1912 statute. Since the 
prohibition is directed at meetings of a "society or association," 
other types of meetings were not covered. Thus, the Federal Power 
Commission could, if determined to be in the furtherance of authorized 
activities, send a representative to the World Power Conference (in 
Basle, Switzerland) since it was not a meeting of a "society or 
association." 5 Comp. Gen. 834 (1926). Similarly, the statute did not 
prohibit travel by U.S. Attorneys "to attend a conference of attorneys 
not banded together into a society or association, but called together 
for one meeting only for conference in a matter bearing directly on 
their official duties." 1 Comp. Gen. 546 (1922).

However, if a given gathering was viewed as a meeting or convention of 
a society or association, the expenses were consistently disallowed. 
E.g., 16 Comp. Gen. 252 (1936); 5 Comp. Gen. 599 (1926), aff'd, 5 Comp. 
Gen. 746 (1926); 3 Comp. Gen. 883 (1924). GAO often told agencies in 
those days that if they thought attendance would be in the interest of 
the government, they should present the matter to Congress. E.g., 
5 Comp. Gen. at 747. In fact Congress granted specific authority to a 
number of agencies (for an example, see B-136324, Aug. 1, 1958), and 
later, as will be seen below, enacted general legislation that renders 
5 U.S.C. § 5946, as it relates to attendance at meetings, of very 
limited applicability.

The next congressional venture in this field was Public Resolution No. 
2, 74th Congress, ch. 4, 49 Stat. 19 (Feb. 2, 1935), aimed primarily at 
restricting the use of appropriated funds to pay expenses of 
nongovernment persons at conventions. This statute, now codified at 
31 U.S.C. § 1345, provides in relevant part:

"Except as specifically provided by law, an appropriation may not be 
used for travel, transportation, and subsistence expenses for a 
meeting. This section does not prohibit--

"(1) an agency from paying the expenses of an officer or employee of 
the United States Government carrying out an official duty;..."

Significantly, 31 U.S.C. § 1345 does not apply to government employees 
in the discharge of official duties. Thus, as of 1935, attendance by 
private parties at government expense was prohibited by 31 U.S.C. 
§ 1345; attendance by government employees was prohibited by the 1912 
statute for meetings of a society or association (regardless of the 
relationship to official duties), and by 31 U.S.C. § 1345 for other 
types of meetings unless attendance was in the discharge of official 
duties.

The next relevant legislative action came in 1958 with two provisions 
of the Government Employees Training Act, Pub. L. No. 85-507, 72 Stat. 
327 (July 7, 1958). Section 10 of the Act, 5 U.S.C. § 4109, authorizes 
payment of certain expenses in connection with authorized training. 
Section 19(b) of the Act, 5 U.S.C. § 4110, makes travel appropriations 
available for expenses of attendance at meetings, "which are concerned 
with the functions or activities for which the appropriation is made or 
which will contribute to improved conduct, supervision, or management 
of the functions or activities." When Title 5 of the United States Code 
was recodified in 1966, qualifying language was added to 5 U.S.C. 
§ 5946 to make it clear that the requirement for specific statutory 
authority no longer applied to the extent payment was authorized by 
5 U.S.C. § 4109 or § 4110. See 38 Comp. Gen. 800 (1959).

With this statutory framework as background, it is now possible to 
attempt to state some rules.

A government employee may attend a nongovernment-sponsored meeting at 
government expense (1) if it is part of an authorized training program 
under 5 U.S.C. § 4109 or (2) if it is related to agency functions or 
management under 5 U.S.C. § 4110.

For example, the Labor Department could use its Salaries and Expenses 
appropriation to pay the attendance fees of its Director of Personnel 
at a conference of the American Society of Training Directors since the 
meeting qualified under the broad authority of 5 U.S.C. § 4110. 
38 Comp. Gen. 26 (1958). The expenses of attendance may not be paid if 
the employing agency refuses to authorize attendance, even if 
authorization would have been permissible under the statute. B-164372, 
June 12, 1968. (This was sort of an odd case. An employee wanted to 
attend a conference in Tokyo, Japan. The agency refused authorization 
because the employee had announced his intention to resign after the 
conference. The employee went anyway, and for some reason filed a claim 
for his expenses. GAO said no.) Where attendance is authorized, the 
fact that the sponsor is a profit-making organization is immaterial. 
B-161777, July 11, 1967.

The express inclusion of "management" in 5 U.S.C. § 4110 is 
significant. Before the Government Employees Training Act, GAO had 
strictly construed grants of statutory authority for attendance at 
meetings as excluding meetings concerning general problems such as 
management that are common to all agencies. 37 Comp. Gen. 335 (1957). 
This type of meeting is now expressly authorized.

If neither 5 U.S.C. § 4109 nor 5 U.S.C. § 4110 applies and the meeting 
is a meeting of a "society or association," then it is subject to the 
prohibition of 5 U.S.C. § 5946.

The continuing viability of 5 U.S.C. § 5946 requires further 
elaboration. GAO held in 38 Comp. Gen. 800 (1959) that the Government 
Employees Training Act repealed section 5946 by implication to the 
extent that the two statutes were incompatible. While this is true, 
some of the language in that decision has generated some confusion. The 
decision stated that the restriction in section 5946 "is inapplicable 
so far as agencies and personnel covered by the Government Employees 
Training Act are concerned," and that those agencies no longer need to 
obtain specific appropriation provisions to authorize attendance at 
meetings. Of course this statement is based on the premise that an 
agency is not likely to seek, nor is Congress likely to grant, specific 
appropriation authority for an agency to send its employees to meetings 
which have nothing to do with agency business. Thus, it is not accurate 
to say that section 5946 simply no longer applies to civilian employees 
of the government. It does apply, except that its scope is considerably 
reduced by virtue of the broad authority of the Government Employees 
Training Act. If attendance cannot be authorized under either of the 
Acts provisions, 5 U.S.C. § 5946 still applies. This relationship is 
correctly stated in 55 Comp. Gen. 1332, 1335-36 (1976). For cases where 
expenses were disallowed because they could not be justified under 
these standards, see B-202028, May 14, 1981; B-195045, Feb. 8, 1980; 
and B-166560, May 27, 1969.

It is also possible for 31 U.S.C. § 1345 to apply to government 
employees, although it would be the rare case. As noted above, 
31 U.S.C. § 1345 does not apply to government employees in the 
discharge of official duties. A number of earlier cases will be found 
that cite the statute in passing for this proposition. E.g., 27 Comp. 
Gen. 627 (1948); 26 Comp. Gen. 53 (1946); 22 Comp. Gen. 315 (1942); 
B-117137, Sept. 25, 1953; B-87691, Aug. 2, 1949; B-80621, Oct. 8, 1948; 
B-77404, June 29, 1948; B-77613, June 23, 1948; B-13888, Dec. 10, 
1940.[Footnote 230]

Since the exception for government employees in 31 U.S.C. § 1345 is 
limited to the discharge of official duties, the statutory prohibition 
applies to government employees to the extent that a given meeting is 
not part of the discharge of official duties. If a meeting is not part 
of authorized training under 5 U.S.C. § 4109 and cannot qualify as 
related to agency functions under 5 U.S.C. § 4110, it would certainly 
not be within the exception in 31 U.S.C. § 1345 for the discharge of 
official duties. If the meeting is a meeting of a "society or 
association," it is, as noted above, subject to 5 U.S.C. § 5946. If the 
meeting is not a meeting of a society or association and is not within 
the exception for the discharge of official duties, 31 U.S.C. § 1345 
would apply. An example of a situation in which this rationale might 
apply is B-195045, Feb. 8, 1980, in which attendance expenses at an 
executive board meeting of the Combined Federal Campaign were 
disallowed. (The case was decided on the basis of regulations and prior 
decisions.)

(2) Inability to attend:

If an employee is scheduled to participate in a meeting or conference 
and is unable to attend, the government may be liable for attendance 
fees in certain situations. Two cases will illustrate.

In B-159059, June 28, 1966, an Interior Department employee had been 
accepted to attend an energy seminar. The seminar announcement provided 
a cutoff date for cancellation of reservations but permitted 
substitutions. Due to the press of other necessary work, the employee 
did not attend the seminar, nor did he send a substitute or request 
cancellation before the cutoff date. GAO found that the sponsors 
acceptance of the employees application, which had been duly approved 
(in this particular case, the applicant was also the approving 
official), obligated the government to pay the seminar fee subject to 
timely cancellation. Since the agency failed to give timely notice of 
cancellation, it was liable for the seminar fee.

In another 1966 case, a Defense Department employee was scheduled to 
attend a training seminar in New York but a severe snowstorm prevented 
him from leaving Washington. (By Washington standards, this could have 
been 2 inches.) Since the employee's nonattendance was in no way 
attributable to the organization conducting the seminar, GAO concluded 
(citing B-159059) that the seminar fee should be paid. GAO rejected a 
contention that the government's obligation should be excused on the 
grounds of impossibility (the employee's nonattendance resulted from 
natural forces) since the arrangement permitted substitution of 
personnel. B-159820, Sept. 30, 1966.

(3) Federally sponsored meetings:

Federally sponsored meetings for employees (intra-agency or 
interagency), such as management or planning seminars, are not 
prohibited by 5 U.S.C. § 5946 since they are not meetings of a "society 
or association," nor are they prohibited by 31 U.S.C. § 1345 because 
they concern the discharge of official duties. The authority for this 
type of meeting is essentially a "necessary expense" question.

An increasingly common type of agency meeting is the "retreat type" 
conference. In this situation, some agency official with authority to 
do so determines that the participants should get away from their 
normal work environment and its associated interruptions such as 
telephones. Frequently, they need to get just far enough away to 
justify the payment of per diem allowances. While this type of meeting 
may be criticized as extravagant, it is within the agency's 
administrative discretion under the necessary expense rule and 
therefore not illegal. See B-193137, July 23, 1979.

Agency meetings at or near the participant's normal duty station may 
present special problems with respect to reimbursement for meals. In 
many cases, meals or snacks will be unauthorized even though there is 
nothing improper about conducting the meeting itself. This area is 
discussed in detail in this chapter, section C.5.

(4) Rental of space in District of Columbia:

Originally enacted in 1877 (Act of March 2, 1877, ch. 106, 19 Stat. 
370), 40 U.S.C. § 8141 now provides:

"A contract shall not be made for the rent of a building, or part of a 
building, to be used for the purposes of the Federal Government in the 
District of Columbia until Congress enacts an appropriation for the 
rent. This section is deemed to be notice to all contractors or lessors 
of the building or a part of a building."

The statute does not prohibit the procurement of short-term conference 
facilities if otherwise proper. 54 Comp. Gen. 1055 (1975). In rendering 
this decision, which overruled several earlier cases, the Comptroller 
General relied heavily on the Federal Property Management Regulations, 
in which the General Services Administration construed the procurement 
of short-term conference facilities as a service contract rather than a 
rental contract.

However, the statute does prohibit the procurement of lodging 
accommodations in the District of Columbia in connection with a meeting 
or conference without specific statutory authority. 56 Comp. Gen. 572 
(1977), modified and aff'd, B-159633, Sept. 10, 1974; 49 Comp. Gen. 305 
(1969).[Footnote 231] In 56 Comp. Gen. 572, GAO approved payment to the 
hotel of the difference between full per diem and the reduced per diem 
actually paid to the participating employees. This is because the 
agency could, without violating the statute, have paid full per diem to 
the employees if they had made the arrangements themselves on an 
individual basis. Thus, the difference represented a cost the agency 
would have properly incurred had it not procured the accommodations 
directly.

(5) Military personnel:

Attendance at meetings by military personnel is governed by 37 U.S.C. 
§ 412:

"Appropriations of the Department of Defense that are available for 
travel may not, without the approval of the Secretary concerned or his 
designee, be used for expenses incident to attendance of a member of an 
armed force under that department at a meeting of a technical, 
scientific, professional, or similar organization."

This statute, designed to provide a broad exception for the Defense 
Department from 5 U.S.C. § 5946, originated as an appropriation act 
rider in the mid-1940s and was enacted as permanent legislation by 
section 605 of the Department of Defense Appropriation Act for 1954, 
67 Stat. 349 (Aug. 1, 1953).

The Government Employees Training Act, enacted in 1958 and discussed 
above, applies to civilian employees of the military departments but 
not to members of the uniformed services. 38 Comp. Gen. 312 (1958). 
Accordingly, the Comptroller General held in 1959 that the 
administrative approval specified in 37 U.S.C. § 412 was no longer 
required for civilian employees covered by the Government Employees 
Training Act. However, the requirement of 37 U.S.C. § 412 remains 
applicable to members of the uniformed services. 38 Comp. Gen. 800 
(1959). See also 55 Comp. Gen. 1332, 1335 (1976). The recodification of 
Title 37 of the United States Code in 1962 recognized this distinction 
and reworded the statute to its present form so it would apply only to 
members of the armed forces.

The administrative approval required by the statute is a prerequisite 
to the availability of the appropriation, and has the effect of 
removing the appropriation from the prohibition of 5 U.S.C. § 5946 to 
the extent of such approval. 34 Comp. Gen. 573, 575 (1955). Oral 
approval, if satisfactorily established by the record, is sufficient to 
meet the requirement of the statute. B-140082, Aug. 19, 1959. However, 
where implementing departmental regulations establish more stringent 
requirements, such as advance approval in writing, the regulations will 
control. B-139173, June 2, 1959.

The administrative approval requirement of 37 U.S.C. § 412 does not 
apply to meetings sponsored by a federal department or agency. 50 Comp. 
Gen. 527 (1971).

b. Nongovernment Personnel:

(1) 31 U.S.C. § 1345:

Quoted previously, 31 U.S.C. § 1345 prohibits the payment of travel, 
transportation, or subsistence expenses of private parties at meetings 
without specific statutory authority.

The Comptroller General set the tone for GAO's approach to 31 U.S.C. 
§ 1345 in two cases decided shortly after the statute was enacted. In 
14 Comp. Gen. 638 (1935), the Comptroller held that the Federal Housing 
Administration (FHA) could not pay the travel and lodging expenses for 
attendance at meetings of private citizens who were cooperating with 
the FHA in a campaign to encourage the repair and modernization of real 
estate. GAO had no difficulty in finding that the statute barred 
payment:

"There seems very little if any room for doubt as to the reasonable 
meaning and legal effect of [31 U.S.C. § 1345]. Simply stated, it is 
that no convention or other form of assemblage or gathering may be 
lodged, fed, conveyed, or furnished transportation at Government 
expense unless authority therefor is specifically granted by law."

Id. at 640 (explanatory language provided).

A few months later, relying on 14 Comp. Gen. 638, the Comptroller 
General held similarly that 31 U.S.C. § 1345 prohibited the American 
Battle Monuments Commission from providing transportation and 
refreshments for private individuals at monument dedication ceremonies 
in Europe. 14 Comp. Gen. 851 (1935). Other early decisions applying the 
statutory prohibition are 15 Comp. Gen. 1081 (1936); B-53554, Nov. 6, 
1945; B-27441, Aug. 25, 1942; and A-66869, Jan. 31, 1936.

Some more recent cases in which GAO found expenditures prohibited by 
31 U.S.C. § 1345 are summarized below:

* The Environmental Protection Agency (EPA) could not pay the 
transportation and lodging expenses of state officials attending a 
National Solid Waste Management Association Convention. B-166506, 
July 15, 1975, aff'd, 55 Comp. Gen. 750 (1976).

* The Mine Safety and Health Administration, Department of Labor, could 
not pay travel and subsistence expenses of miners and mine operators 
attending safety and health training seminars. B-193644, July 2, 1979.

* Maritime Administration could not pay transportation and subsistence 
expenses of nonfederal participants in a 2-week seminar for general 
publication maritime writers. B-168627, May 26, 1970.

* Navy could not pay for a dinner and cocktail party for nongovernment 
minority group leaders. B-176806-O.M., Sept. 18, 1972.

* National Highway Traffic Safety Administration could not pay travel 
and lodging expenses of state officials at a workshop on odometer 
fraud. 62 Comp. Gen. 531 (1983).

GAO has not attempted to define precisely what types of gatherings are 
within the scope of the statutory prohibition. The determination is 
made on a case-by-case basis. The statutory language is broad and could 
presumably be construed to cover any situation where two or more 
persons are gathered together in one place. However, GAO has never 
adopted such a rigid view. For example, in 45 Comp. Gen. 476 (1966), a 
certifying officer of the Department of Agriculture asked whether he 
could "properly certify for payment a voucher covering payment for 
rental of a chartered bus for the transportation of female guests from 
Albuquerque to Grants, New Mexico, and return, for purposes of 
providing social and recreational services to Job Corps enrollees." 
(This is what the case says. The editors are not making it up.) The 
Comptroller General found that this was simply not the kind of 
"meeting" 31 U.S.C. § 1345 was intended to prohibit. Further, there was 
statutory authority for providing "recreational services" for the 
enrollees. Therefore, the expenditure was not illegal. The decision 
does not specify precisely what "social and recreational services" the 
women were bused in to provide. See also 72 Comp. Gen. 229 (1993) (the 
Department of Defense (DOD) may pay for travel expenses from the United 
States to Germany for recruiters from public schools to attend job 
fairs for teachers at DOD Dependent schools (DODDS) because job fairs 
and one-on-one interviews between recruiters and DODDS teachers are not 
the type of "meeting" covered by section 1345).

As noted, the prohibition of 31 U.S.C. § 1345 can be overcome by 
specific statutory authority. An example of such authority is language 
in an appropriation act making the appropriation available for 
"expenses of attendance at meetings" or similar language.[Footnote 232] 
See 72 Comp. Gen. 146 (1993); 34 Comp. Gen. 321 (1955); 24 Comp. Gen. 
86 (1944); 17 Comp. Gen. 838 (1938); 16 Comp. Gen. 839 (1937); 
B-117137, Sept. 25, 1953. (This is the same language used before 
enactment of the Government Employees Training Act to grant exceptions 
from 5 U.S.C. § 5946.)

In one case, less-than-specific authority was found adequate. In 
35 Comp. Gen. 129 (1955), GAO considered a statute that (1) provided 
for a "White House Conference on Education," (2) specified that the 
conference be broadly representative of educators and other interested 
persons from all parts of the United States, and (3) authorized 
appropriations necessary for the "administration" of the act. The 
decision held this sufficient to make the ensuing appropriations 
available for the travel costs of the invitees. While the decision does 
not mention 31 U.S.C. § 1345, the distinction is readily apparent. 
Here, holding the conference was more than merely a legitimate means of 
implementing the enabling statute; it was the very purpose of the 
statute and hence the only means. See also 35 Comp. Gen. 198 (1955) 
(discussing other funding issues under the same legislation). A more 
recent case applying 35 Comp. Gen. 129 to a similar situation is 
B-242880, Mar. 27, 1991 (Commission on Interstate Child Support could 
pay lodging costs for core nonfederal invitees at a statutorily 
mandated National Conference on Interstate Child Support where the core 
invitees were essential to assist the Commission in its statutory 
duties).

However, general statutory authority to disseminate information to the 
public, or to promote or encourage cooperation with the private sector, 
or to provide technical assistance or education to specified segments 
of the private sector, is not sufficiently specific to overcome 
31 U.S.C. § 1345. See 62 Comp. Gen. 531 (1983); B-193644, July 2, 1979; 
B-166506, July 15, 1975; B-168627, May 26, 1970.

A distinction must be drawn between the authority to sponsor a meeting 
and the authority to pay the types of expenses prohibited by 31 U.S.C. 
§ 1345. An agency may be able to do the former but not the latter. 
Thus, in B-166506, July 15, 1975, GAO pointed out that EPA could hold a 
solid waste management convention as a legitimate means of implementing 
its functions under the Solid Waste Disposal Act. What it could not do 
without more specific statutory authority was pay the travel and 
lodging expenses of the state participants. Sponsoring the meeting 
itself is essentially a "necessary expense" question. See also 62 Comp. 
Gen. 531 (1983); B-239856, Apr. 29, 1991. Cf. 45 Comp. Gen. 333 (1965); 
B-147552, Nov. 29, 1961.

Thus, depending on the agency's statutory authority, it may be 
authorized to incur such expenses as renting conference facilities, 
financing the participation of its own employees, bringing in guest 
speakers, both federal and nonfederal, and preparing and disseminating 
literature. The prohibition of 31 U.S.C. § 1345 comes into play only 
when the agency purports to pay the travel, transportation, or 
subsistence expenses of nonfederal attendees.

Another thing the agency may be able to do is permit the use of 
government facilities for the meeting. For example, in B-168627, 
May 26, 1970, while the Maritime Administration could not pick up the 
tab for the participation of nongovernment persons at a seminar, it 
could permit the seminar to be held at the U.S. Merchant Marine 
Academy. The rule, stated in that decision, is that an agency has 
authority to grant to a private individual or business a "revocable 
license" to use government property, subject to termination at any time 
at the will of the government, provided that such use does not injure 
the property in question and serves some purpose useful or beneficial 
to the government.

(2) Invitational travel:

Another statute we should note is 5 U.S.C. § 5703, which provides:

"An employee serving intermittently in the Government service as an 
expert or consultant …or serving without pay or at $1 a year, may be 
allowed travel or transportation expenses, under this subchapter, while 
away from his home or regular place of business and at the place of 
employment or service."

This statute originated as an appropriation act rider in 1945 and was 
enacted as permanent legislation the following year as section 5 of the 
Administrative Expenses Act of 1946, Pub. L. No. 600, ch. 744, 60 Stat. 
806 (Aug. 2, 1946). To the extent it authorizes payment in the so-
called "invitational travel" situation--a private party called upon by 
the government to confer or advise on government business--it 
represents a limited exception to 31 U.S.C. § 1345.

Even before 5 U.S.C. § 5703 was enacted, GAO had recognized that a 
private individual "invited" by the government to confer on official 
business was entitled to reimbursement of travel expenses if specified 
in the request and justified as a necessary expense. 8 Comp. Gen. 465 
(1929); 4 Comp. Gen. 281 (1924); A-41751, Apr. 15, 1932.

The enactment of 31 U.S.C. § 1345 in 1935 did not change this. Thus, 
the Comptroller General recognized in 15 Comp. Gen. 91, 92 (1935) that 
while the statute might prohibit the payment of expenses of private 
individuals called together as a group, it would not apply to 
"individuals called to Washington or elsewhere for consultation as 
individuals." See also A-81080, Oct. 27, 1936. Viewed in this light, 
the 1946 enactment of 5 U.S.C. § 5703 in large measure merely gave 
express congressional sanction to a rule that had already developed in 
the decisions.

Although GAO did not directly address the relationship between 5 U.S.C. 
§ 5703 and 31 U.S.C. § 1345 until 1976 (55 Comp. Gen. 750 (1976), 
discussed below), the relevant principles were established in several 
earlier cases. In one of GAO's earliest decisions under 5 U.S.C. 
§ 5703, the Comptroller General held that persons who are not 
government officers or employees may, "when requested by a proper 
officer to travel for the purpose of conferring upon official 
Government matters," be regarded as persons serving without pay and 
therefore entitled to travel expenses under 5 U.S.C. § 5703. 27 Comp. 
Gen. 183, 184 (1947). See also 39 Comp. Gen. 55 (1959). Thus, the rule 
of 8 Comp. Gen. 465 now had a statutory basis. A critical prerequisite 
is this: in order to qualify under 5 U.S.C. § 5703, the individual must 
be performing a direct service for the government. 37 Comp. Gen. 349 
(1957).

Once the proposition of 27 Comp. Gen. 183 is accepted, it is but a 
short step to recognizing that a private individual called upon to 
advise on government business may be called upon to do so in the form 
of making a presentation at a meeting or conference. See, for example, 
B-111310, Sept. 4, 1952, and 33 Comp. Gen. 39 (1953), in which payment 
under 5 U.S.C. § 5703 was authorized. The statute could not reasonably 
be limited to "one-on-one" consultations. As stated in B-196088, 
Nov. 1, 1979:

"It is not unusual for the Government to invite an individual with a 
particular expertise to attend a meeting and to share the benefit of 
his views without compensation other than by way of reimbursement for 
his travel and transportation expenses."

Thus, travel expenses of private individuals "invited" to participate 
in meetings sponsored by the National Center for Productivity and 
Quality of Working Life were properly paid under 5 U.S.C. § 5703. 
B-192734, Nov. 24, 1978. Similarly, the Internal Revenue Service could 
invoke 5 U.S.C. § 5703 to buy lunches for guest speakers invited to 
participate in a ceremony observing National Black History Month since 
the ceremony was an authorized part of the agency's formal program to 
advance equal opportunity objectives. 60 Comp. Gen. 303 (1981).

There is a limit to this rationale and a point at which 5 U.S.C. § 5703 
collides head-on with 31 U.S.C. § 1345. This point was discussed in 
55 Comp. Gen. 750, supra, and reiterated in B-193644, July 2, 1979. In 
1976, 55 Comp. Gen. 750 affirmed B-166506, July 15, 1975, and held that 
31 U.S.C. § 1345 prohibited the Environmental Protection Agency (EPA) 
from paying travel and lodging expenses of state officials at a solid 
waste management convention; B-193644 reached the same result for 
safety and training seminars for miners and mine operators. In both 
cases, the Comptroller General rejected the suggestion that the 
expenses could somehow be authorized under the "invitational travel" 
statute. In neither case were the attendees providing a direct service 
for the government, even though in both cases the government may have 
derived some incidental benefit in terms of enhancement of program 
objectives. The following passage illustrates the "collision point":

"We thus do not believe that [5 U.S.C. § 5703] was ever intended to 
establish the proposition that anyone may be deemed a person serving 
without compensation merely because he or she is attending a meeting or 
convention, the subject matter of which is related to the official 
business of some Federal department or agency…. We believe that being 
called upon to confer with agency staff on official business is 
different from attending a meeting or convention in which a department 
or agency is also interested."

55 Comp. Gen. at 752-53 (explanatory information provided). Thus, 
5 U.S.C. § 5703 permits an agency to invite a private individual (or 
more than one) to a meeting or conference at government expense, if 
that individual is legitimately performing a direct service for the 
government such as making a presentation or advising in an area of 
expertise. Invitational travel also encompasses private individuals 
whose travel is a necessary incident to the service that provides a 
direct benefit to the government. B-259620, Feb. 29, 1996 (cross-
cultural training for spouses of Federal Aviation Administration 
employees living abroad directly benefits the agency). See also 
71 Comp. Gen. 9 (1991); 71 Comp. Gen. 6 (1991). However, 5 U.S.C. 
§ 5703 is not a device for circumventing 31 U.S.C. § 1345. The "direct 
service" test is not met merely because the agency is interested in the 
subject matter of the conference or because the conference will enhance 
the agency's program objectives. B-251921, Apr. 14, 1993 (EPA cannot 
pay for participants who are not federal employees to attend a United 
Nations-sponsored conference on women's contributions to solving 
environmental problems because EPA does not benefit directly from their 
attendance). In a somewhat unique set of circumstances, however, GAO 
held that the invitational travel statute permits a private individual, 
appointed by the government, to travel to participate in a state 
conference at government expense if the information imparted by the 
conference provides a direct service to the government. See B-260896, 
Oct. 17, 1996 (DOD may pay for nongovernment school board members 
appointed by DOD pursuant to 20 U.S.C. § 241(h) (authorizing assistance 
for local education agencies in areas affected by federal agencies, 
since repealed) to travel to participate in state school board 
conferences and workshops because the knowledge and information derived 
from participation provides a direct service for the government).

(3) Use of grant funds:

One of the principles of grant law is that, where a grant is made for 
an authorized grant purpose, the grant funds in the hands of the 
grantee are not subject generally to many of the restrictions 
applicable to the direct expenditure of appropriations, unless there is 
a special condition of the grant to the contrary. B-153417, Feb. 17, 
1964. One of those restrictions, which does not apply to grant funds in 
the hands of a grantee, is 31 U.S.C. § 1345.

For example, the American Law Institute could use funds provided by the 
Environmental Protection Agency in the form of a statutorily authorized 
training grant to defray transportation and subsistence expenses of law 
students and practicing environmental lawyers at an environmental law 
seminar. 55 Comp. Gen. 750 (1976). For this result to apply, the grant 
must be made for an authorized grant purpose and there must be no 
provision to the contrary in the grant agreement. Once these conditions 
are met, the grantee's use of the funds is not impaired by 31 U.S.C. 
§ 1345. However, an agency may not use the grant mechanism for the sole 
purpose of circumventing 31 U.S.C. § 1345, that is, to do indirectly 
that which it could not do directly. In other words, if an agency makes 
a grant for an authorized purpose, and the grantee sponsors a meeting 
or conference as a means of implementing that purpose, the grantee's 
use of the funds will not be restrained by 31 U.S.C. § 1345. However, 
unless otherwise authorized, the agency could not make the grant for 
the purpose of sponsoring the conference and thereby permitting 
payments it could not make by direct expenditure.

Depending on the precise statutory authority involved, there may be 
situations in which sponsoring or helping to sponsor a conference is 
itself an authorized grant purpose. One example is B-83261, Feb. 10, 
1949 (grant to American Cancer Society under Public Health Service 
Act).

The treatment of grant funds described above does not apply to 
procurement contracts. 62 Comp. Gen. 531 (1983). See also B-262110, 
Mar. 19, 1997.

3. Attorney's Fees:

a. Introduction:

Questions on the availability of appropriated funds to pay attorney's 
fees arise in many contexts. Attorney's fees awarded by courts are 
discussed in Chapter 14 (Volume III of the second edition of Principles 
of Federal Appropriations Law). This section deals with administrative 
payments.

Traditionally, the United States has followed what has come to be known 
as the "American Rule," that each party in litigation or administrative 
proceedings is personally responsible for his or her own attorney's 
fees. In other words, in the absence of statutory authority to the 
contrary, the losing party may not be forced to pay the winner's 
attorney. E.g., Buckhannon Board & Care Home, Inc. v. West Virginia 
Department Of Health & Human Resources, 532 U.S. 598, 602 (2001); 
Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240 (1975).

One application of the American Rule is that a claimant who prosecutes 
an administrative claim against the United States is not entitled to 
reimbursement of legal fees unless authorized by statute. E.g., 
57 Comp. Gen. 554 (1978); 49 Comp. Gen. 44 (1969); 37 Comp. Gen. 485, 
487 (1958); B-189045, Jan. 26, 1979. To illustrate, a vendor who 
successfully filed a claim for the payment of goods sold and delivered 
to a Navy vessel was not entitled to reimbursement of attorney's fees. 
B-187877, Apr. 14, 1977. Similarly nonreimbursable were legal fees 
incurred incident to prosecuting a claim for damages for breach of an 
oral agreement. B-188607, July 19, 1977. "Fairness" and "decency," 
however appealing, do not compensate for the lack of statutory 
authority. 67 Comp. Gen. 574, 576 (1988); 57 Comp. Gen. 856, 861 
(1978).

Payments to attorneys also arise in a number of situations that are, 
strictly speaking, not applications of the American Rule, that is, 
which do not involve payment of fees to a "prevailing party." The 
approach in these cases is to look first for statutory authority and if 
express statutory authority does not exist, apply the various 
principles discussed throughout this publication, such as the necessary 
expense doctrine.

For example, a private attorney sought reimbursement for out-of-pocket 
expenses he incurred incident to a "special proceeding" initiated by 
the Nuclear Regulatory Commission (NRC) to investigate charges of 
misconduct raised by the attorney against NRC staff members and by the 
staff members against the attorney. There was no statutory authority to 
reimburse the attorney, nor could the payment be justified as a 
necessary expense since it was not reasonably necessary to carrying out 
NRC functions. Therefore, payment was unauthorized. B-192784, Jan. 10, 
1979. In another case, the Small Business Administration (SBA) could 
not reimburse a bank for legal fees the bank incurred in protecting its 
interest in an SBA-guaranteed loan since SBA neither contracted with 
the attorney nor did it benefit from his services. B-187950, Apr. 26, 
1977.

The Justice Department has held that legal fees incurred by a Cabinet 
nominee in connection with Senate confirmation hearings, for services 
rendered before the nominating administration took office, could be 
paid either from Presidential Transition Act appropriations or from 
private sources. 5 Op. Off. Legal Counsel 126 (1981).

The remainder of this section will discuss the situations that have 
been most commonly addressed in decisions of the Comptroller General.

b. Hiring of Attorneys by Government Agencies:

During the first century of the Republic, government agencies who 
needed lawyers either as counsellors or litigators simply went out and 
hired them. Not only was this system expensive (payments from the 
public treasury are not conducive to reduced fees), it resulted in 
inconsistencies in the government's legal position. Congress remedied 
the situation in 1870 by creating the Department of Justice, headed by 
the Attorney General. Act of June 22, 1870, ch. 150, 16 Stat. 162.

To ensure that the objectives of the 1870 legislation would be 
achieved, Congress included section 17, which (a) prohibited executive 
agencies from employing attorneys at the expense of the United States 
and (b) prohibited payments to attorneys, except those employed by the 
Justice Department, unless the Attorney General certified that the 
services could not be performed by the Justice Department. The two 
parts of section 17 subsequently became Revised Statutes §§ 189 and 
365.

As the federal government grew in size and complexity, it became 
apparent that the need for centralization of legal services within the 
Justice Department related primarily to the specialty of litigation. 
Thus, with congressional approval, federal agencies regularly employed 
attorneys to serve as legal advisers. (The term "Attorney-Adviser" is 
still commonly used to designate staff attorneys in many government 
agencies.) When Title 5 of the United States Code was recodified in 
1966, the successors of R.S. §§ 189 and 365 were combined into the new 
5 U.S.C. § 3106. This statute, reflecting the evolved state of the law, 
prohibits agencies, unless otherwise authorized by law, from employing 
attorneys "for the conduct of litigation in which the United States, an 
agency, or employee thereof is a party, or is interested." The agencies 
are required to refer such matters to the Justice Department.[Footnote 
233] Thus, agencies routinely employ attorneys to provide legal 
services other than litigation, but may not employ attorneys as 
litigators unless they have statutory authority to conduct their own 
litigation or unless that authority has been delegated to them by the 
Attorney General.

Normally, in view of the existence of the Justice Department and the 
agency's own staff attorneys, the need for a federal agency to retain 
private counsel should rarely occur. Indeed, GAO has found it 
unauthorized for an agency to retain private counsel to provide legal 
opinions on matters within the Justice Department's jurisdiction under 
statutes such as 28 U.S.C. §§ 511-514. 16 Comp. Gen. 1089 (1937). In 
limited situations, the Comptroller General has held that the retention 
of private attorneys as experts or consultants under 5 U.S.C. § 3109 is 
authorized. For example, in B-192406, Oct. 12, 1978, GAO concluded that 
the then Civil Service Commission could hire a private law firm under 
5 U.S.C. § 3109 to serve as "special counsel" to the Chairman to 
investigate alleged merit system abuses, since the matter was not 
covered by 5 U.S.C. § 3106 nor otherwise under the jurisdiction of the 
Justice Department. Similarly, the Navajo and Hopi Indian Relocation 
Commission could retain a private attorney under 5 U.S.C. § 3109 as an 
independent contractor to handle matters beyond the Justice 
Department's jurisdiction, where the workload was insufficient to 
justify hiring a full-time attorney. B-114868.18, Feb. 10, 1978.

For similar holdings, see Boyle v. United States, 309 F.2d 399 (Ct. Cl. 
1962) (retired government patent lawyer retained on part-time basis); 
61 Comp. Gen. 69 (1981) (United States Advisory Commission on Public 
Diplomacy could hire law firm to provide legal analysis of its 
authority and independence); B-210518, Jan. 18, 1984 (Environmental 
Protection Agency could retain private counsel to provide independent 
analysis of issues relating to congressional contempt citation of 
Administrator). See also B133381, July 22, 1977; B-141529, July 15, 
1963.

In B-289701, Feb. 27, 2002, GAO faced an unusual situation. A 
presidential appointee to the Civil Rights Commission had been 
prevented from taking his seat on the Commission when the appointee 
whose position he was to assume refused to give up her seat, arguing 
that her term had not expired. The Justice Department filed suit on 
behalf of the new appointee. The Commission retained private legal 
counsel to defend the previous appointee and argue her case before the 
court. Justice, citing 28 U.S.C. § 516,[Footnote 234] challenged the 
Commission's right to intervene in the litigation. Justice objected 
that neither the Commission nor its officers in their official capacity 
have a right to appear in litigation without the permission of the 
Attorney General, which had not been granted. The district court 
overrode those objections, and ruled in favor of the previous appointee 
(and the Commission). At this point, after the district court had acted 
but before the appeal was completed, GAO was asked whether appropriated 
funds were available to pay for outside counsel. GAO agreed with 
Justice--the Commission had no authority to use appropriated funds to 
retain counsel in order to intervene in the court case in opposition to 
Justice. In its decision, the appellate court overturned the district 
court's order and held in favor of the new appointee. United States v. 
Wilson, 290 F.3d 347 (D.C. Cir. 2002). However, the circuit court did 
not address whether the Commission had authority to intervene. Id. at 
352. The court explained: "As the United States has not raised this 
issue on appeal, …we do not decide whether this intervention was 
permissible." Id. The effect of this was to let stand the district 
court's order granting Commission intervention.

Agencies may have specific authority to retain special counsel in 
addition to the lawyers on the regular payroll. For example, 
appropriations for the Federal Communications Commission have 
traditionally included "special counsel fees." The Comptroller General 
has construed this authority as permitting contractual arrangements 
with former employees as retired annuitants to perform functions for 
which they were uniquely qualified. Since the appropriation provision 
constitutes independent authority, the contracts are not subject to the 
salary limitations of 5 U.S.C. § 3109. 53 Comp. Gen. 702 (1974); 
B-180708, Jan. 30, 1976. However, the authority is limited to services 
of the legal profession and does not embrace "counsel" in a broader 
sense. B-180708, July 22, 1975.

In B-290005, July 1, 2002, GAO reported that the Interior Department's 
Fish and Wildlife Service (FWS) had contracted with outside lawyers to 
obtain legal services in connection with various issues of personnel, 
labor law, and discrimination allegations. By law, the Solicitor of the 
Interior Department is solely responsible for the legal work of the 
Interior Department, including the FWS. 43 U.S.C. § 1455. The Solicitor 
receives a separate annual appropriation to fund that work. FWS had not 
obtained the Solicitor's approval for the legal services contracts, and 
the Solicitor had not exercised any supervisory control over them. GAO 
concluded that (1) FWS had no authority to contract for legal services; 
(2) FWS's use of its fiscal year 2001 resource management appropriation 
for this purpose constituted a violation of the purpose statute, 
31 U.S.C. § 1301(a); and (3) FWS had violated the Antideficiency Act, 
31 U.S.C. § 1341(a).

c. Suits Against Government Officers and Employees:

At one time, government employees were considered largely immune from 
being sued for actions they took while performing their official 
duties. This is no longer true. For a variety of reasons, it is no 
longer uncommon for a government employee to be sued in his individual 
capacity for something he did (or failed to do) while performing his 
job. For example, the Supreme Court held in 1978 that an executive 
official has only a "qualified immunity" for so-called "constitutional 
torts" (alleged violations of constitutional rights). Butz v. Economou, 
438 U.S. 478 (1978). In any event, regardless of whether the employee 
ultimately wins or loses, he has to defend the suit and therefore will 
need professional legal representation.

As a general proposition, GAO considers the hiring of an attorney to be 
a matter between the attorney and the client, and this is no less true 
when the client is a government officer or employee. E.g., 55 Comp. 
Gen. 1418, 1419 (1976); B-242891, Sept. 13, 1991. However, the 
decisions have long recognized another principle as well: Where an 
officer of the United States is sued because of some official act done 
in the discharge of an official duty, the expense of defending the suit 
should be borne by the United States. E.g., 70 Comp. Gen. 647, 649 
(1991); 6 Comp. Gen. 214 (1926). This section will discuss when 
appropriated funds may be used for attorney's fees to defend a 
government officer or employee.

Generally, when a present or former employee is sued for actions 
performed as part of his official duties, his defense is provided by 
the Justice Department. In order for a given case to be eligible for 
Justice Department representation, the Justice Department must 
determine that the employee's action, which gave rise to the suit, was 
performed within the scope of federal employment, and that providing 
representation is in the interest of the United States.

The role of the Justice Department derives from a number of statutory 
provisions: 28 U.S.C. §§ 515-519, 543, and 547. See also Exec. Order 
No. 6166, § 5 (1933). These provisions establish the Justice Department 
as the government's litigator,[Footnote 235] which for the most part 
means representation by Justice Department attorneys.[Footnote 236] To 
reinforce these provisions, 5 U.S.C. § 3106, previously noted, 
prohibits executive or military agencies from employing attorneys for 
the conduct of litigation in which the United States or one of its 
agencies or employees is a party or is interested. The agencies must 
refer such matters to the Justice Department. The Justice Department 
has also issued implementing regulations, found at 28 C.F.R. §§ 50.15 
and 50.16.[Footnote 237] This statutory and regulatory scheme is 
designed to encourage employees to vigorously carry out their duties by 
assuring them of an adequate defense at no cost if they should be sued 
in the course of executing their responsibilities. Cf. Bontkowski v. 
Smith, 305 F.3d 757, 760 (7th Cir. 2002) ("It would be absurd to 
require law enforcement officers to defend at their own expense against 
likely groundless spite suits by the people whom they have arrested or 
investigated.").

However, the Attorney General's decision to provide or not provide 
counsel to an individual employee sued for official actions is 
discretionary and not subject to judicial review. E.g., Turner v. 
Schultz, 187 F. Supp. 2d 1288, 1292-97 (D. Colo. 2002); Falkowski v. 
Equal Employment Opportunity Commission, 783 F.2d 252 (D.C. Cir.), 
cert. denied, 478 U.S. 1014 (1986). Cf. Hall v. Clinton, 143 F. Supp. 
2d 1, 4 (D.D.C. 2001) (Justice Department decision to represent a 
party--as opposed to withholding representation--might be reviewable). 
The Attorney General may take into consideration "how blameworthy or 
litigation-prone the employee seeking representation may be." 
Falkowski, 783 F.2d at 254.

In addition, the Comptroller General has recognized that the statutes 
cited above authorize the Justice Department to retain private counsel, 
payable from Justice Department appropriations, if determined necessary 
and in the interest of the United States. E.g., 56 Comp. Gen. 615, 623 
(1977); B-22494, Jan. 10, 1942. For example, the Justice Department 
generally will not provide representation if the employee is the target 
of a criminal investigation,[Footnote 238] but may authorize private 
counsel at Justice Department expense if a decision to seek an 
indictment has not yet been made. The Justice Department may also 
authorize private counsel if it perceives a conflict of interest 
between the legal or factual positions of different government 
defendants in the same case. 28 C.F.R. §§ 50.15 and 50.16. See 2 Op. 
Off. Legal Counsel 66 (1978); 56 Comp. Gen. 615, 621-624 (1977);
[Footnote 239] B-150136, B-130441, May 19, 1978; B-130441, May 8, 1978; 
B-130441, Apr. 12, 1978.

Thus, an employee who learns that he is being sued should first explore 
the possibility of obtaining representation through the Justice 
Department. Procedures for requesting representation are found in 28 
C.F.R. § 50.15(a). The importance of this step must be emphasized. If 
the employee fails to immediately seek Justice Department 
representation, he may find, as discussed below, that he is stuck 
footing the bill for his attorney's fees even in cases where the 
expense might otherwise have been paid by the government.

If Justice Department representation is unavailable, there are limited 
situations in which appropriations of the employing agency may be 
available to retain private counsel. Generally, before an agency can 
consider using its own funds, Justice Department representation must 
first have been sought and must be appropriate but unavailable, and 
representation must be in the interest of the United States. E.g., 
B-251141, supra. The employee's personal interest in the outcome does 
not automatically preempt a legitimate government interest. The two may 
exist side-by-side.

One case, 53 Comp. Gen. 301 (1973), dealt with suits against federal 
judges and other judicial officers.[Footnote 240] The suits arise in a 
variety of contexts, often involving collateral attacks on the judges 
rulings in original actions. While many of the suits are frivolous, 
some sort of defense, even if only a pro forma submission, is almost 
always necessary. In many cases, such as actions where no personal 
relief is sought against the judicial officer, or in potential conflict 
of interest situations, the Justice Department has determined that it 
cannot or will not provide representation. The Comptroller General held 
that judiciary appropriations are available to pay the costs of 
litigation, including "minimal fees" to private attorneys, if 
determined to be in the best interest of the United States and 
necessary to carry out the purposes of the appropriation. However, the 
Comptroller General added that (1) the Justice Department must have 
declined representation, although individual requests are not required 
for cases falling within the Attorney General's stated policy; (2) the 
determination of necessity cannot be made by the individual defendant 
but must be made by the Administrative Office of the U.S. Courts; and 
(3) the Administrative Office should make full disclosure to the 
appropriate congressional committees. Under similar circumstances, 
appropriations for the public defender service are available to defend 
federal public defenders appointed under the Criminal Justice Act who 
are sued for actions taken within the scope of their duties. Id. at 
306.

Nine years after GAO's ruling in 53 Comp. Gen. 301, a statute was added 
to Title 28 of the United States Code authorizing the Administrative 
Office of the United States Courts to pay the costs (including attorney 
fees) of defending a Chief Justice, justice, judge, officer, or 
employee of any United States court who is "sued in his official 
capacity, or is otherwise required to defend acts taken or omissions 
made in his official capacity, and the services of an attorney for the 
Government are not reasonably available pursuant to chapter 31 of this 
title." Pub. L. No. 97-164, title I, § 116(a), 96 Stat. 25, 32 (Apr. 2, 
1982), codified at 28 U.S.C. § 463. This statute was intended to 
address those situations where the Justice Department declines to 
provide representation to a judicial officer or employee on grounds of 
conflict of interest or other ethical reasons. McBryde v. United 
States, 299 F.3d 1357, 1362-63, 1366 (Fed. Cir. 2002) (quoting S. Rep. 
No. 97-275, at 16). Generally speaking, this provision does not 
authorize reimbursement where the judicial officer or employee was 
engaged in "offensive" rather than "defensive" litigation. Id. at 1365-
1367. Regulations issued by the Administrative Office to implement 
28 U.S.C. § 463 provide that the decision to reimburse expenses 
associated with legal representation by private counsel "will be guided 
by the opinion of the Comptroller General in 53 Comp. Gen. 301." 
McBryde v. United States, 50 Fed. Cl. 261, 266 (2001), citing The Guide 
to Judiciary Policies and Procedures, vol. I, ch. XI, pt. D, § 3C 
(reissued April 2001).

In 55 Comp. Gen. 408 (1975), the U.S. Attorney had agreed to defend a 
former Small Business Administration (SBA) employee who was sued for 
acts performed within the scope of his employment. The U.S. Attorney 
later withdrew from the case even though the government's interest in 
defending the former employee continued. In order to protect his own 
interests, the employee retained the services of a private attorney. 
Since the Justice Department had determined that it was in the interest 
of the United States to defend the employee and had undertaken to 
provide him with legal representation, the Comptroller General held 
that SBA could reimburse the employee for legal fees incurred as a 
result of his obtaining private counsel when representation by the 
United States subsequently became unavailable. See also B-251141, supra 
("In limited circumstances, where Justice determines that 
representation of a federal employee is appropriate but is unable to 
provide representation, agency appropriations may be used to pay for 
legal work that Justice determines to be in the government's 
interest.").

While 53 Comp. Gen. 301 and 55 Comp. Gen. 408 are widely viewed as 
establishing the concept that, in appropriate circumstances, agency 
appropriations may be available to pay private attorney's fees to 
defend an employee, several later cases established some of the limits 
on the concept.

If the employee fails to request Justice Department representation in a 
timely fashion, the employee may be forced to bear the expense of any 
private legal fees incurred. In B-195314, June 23, 1980, an employee of 
the Internal Revenue Service (IRS) was sued for improper disclosure of 
confidential information. The employee requested Justice Department 
representation, but not until after she had hired a private attorney to 
file an answer in order to avoid a default judgment. The Justice 
Department agreed to provide representation, but declined to pay the 
private legal fees since the case was not within either of the 
situations permitted under the Justice Department regulations. Since 
the facts could not support a finding that Justice Department 
representation was appropriate but unavailable, IRS appropriations 
could not be used either. The need to take prompt action to avoid a 
default judgment makes no difference since the regulations expressly 
provide for provisional representation on the basis of telephone 
contact.

If the actions giving rise to the suit are not within the scope of the 
employee's official duties, even though related, there is no 
entitlement to government representation and hence no legal basis to 
reimburse attorney's fees. For example, in 57 Comp. Gen. 444 (1978), a 
Department of Agriculture employee was sued for libel by his supervisor 
because of allegations contained in letters the employee had written to 
various public officials. At the employee's insistence, Agriculture 
wrote to the Justice Department to request representation. However, 
Agriculture concluded that, while some of the employee's actions had 
been within the scope of his official duties, others--such as writing 
letters to the President and to a Senator--were not. Before the Justice 
Department reached its decision, the employee retained private counsel 
and was successful in having the suit dismissed. Subsequently, the 
Justice Department determined that the employee would not have been 
eligible for representation since Agriculture had been unwilling to say 
that all of the employee's actions were within the scope of his 
official duties. On this basis, GAO found no entitlement to government 
representation and disallowed the employee's claim for reimbursement of 
his legal fees.

Similarly, GAO denied a claim for legal fees where an Army Reserve 
member on inactive duty was arrested by the Federal Bureau of 
Investigation (FBI), charged with larceny of government property, and 
the charge was later dismissed. The government property involved 
consisted of service weapons and ammunition. The member had been 
authorized to retain weapons and ammunition in his personal possession, 
although it is not clear from the decision how this authority justified 
the possession of seven guns and over 100,000 rounds of ammunition, 
which is what the FBI found. In any event, the member's actions did not 
result from the performance of required official duties but were at 
best permissible under existing regulations. Therefore, there was no 
entitlement to either government-furnished or government-financed 
representation. B-185612, Aug. 12, 1976.

A related situation is where an employee incurs legal fees defending 
against a fine. In section C.6 of this chapter on Fines and Penalties, 
a distinction is drawn between an action that is a necessary part of an 
employee's official duties and an action which, although taken in the 
course of performing official duties, is not a necessary part of them. 
By logical application of this reasoning, where the fine itself is not 
reimbursable, related legal fees are similarly nonreimbursable. Thus, 
in 57 Comp. Gen. 270 (1978), the Comptroller General held that the 
employing agency could not pay legal fees incurred by one of its 
employees defending against a reckless driving charge, where the 
Justice Department had declined to provide representation or to 
authorize retention of private counsel. See also B-192880, Feb. 27, 
1979 (nondecision letter); 15 Op. Off. Legal Counsel 57, 63 (1991).

In 70 Comp. Gen. 647, supra, the Smithsonian Institution used federal 
funds to provide legal services to an Interior Department employee (on 
detail at the Smithsonian) who became the subject of federal civil and 
criminal investigations. After a big-game hunt in China, some hunters 
and the Interior Department employee (whom the hunters had paid to 
serve as their game advisor) were charged with violating the Endangered 
Species Act. The Interior Department employee was also charged with 
conflicts of interest in his financial arrangements. GAO held that the 
Smithsonian lacked authority to use appropriated funds to pay the 
employee's attorney. Id. at 652. GAO explained:

"Our cases do not support and were not intended to allow agencies to 
pursue their own litigative policies. Instead, they recognize the 
availability of agency appropriations, where otherwise proper and 
necessary, for uses consistent with the litigative policies established 
for the United States by the Attorney General…. To allow the use of 
appropriated funds [to defend a government employee against a federal 
criminal investigation and prosecution] would seriously undermine the 
litigative posture of the Attorney General [and contradict] the clearly 
expressed intent of the Congress to centralize control of government 
litigation under the Attorney General, and to restrict the availability 
of appropriations in order to reinforce that policy."

Id. at 650-651 (citation omitted).

Sometimes, agencies chafe under the maxim (noted above) that agency 
appropriations are available, where otherwise proper and necessary, for 
uses consistent with the litigative policies established for the United 
States by the Attorney General. The decision in 73 Comp. Gen. 90 (1994) 
offers a case in point. The United States Information Agency (USIA) was 
caught up in a sex discrimination class action. The Justice Department 
was defending the lawsuit, and required USIA to support its effort by 
providing a secure suite of offices, office supplies and equipment, and 
four to six attorneys, the same number of paralegal/document 
specialists, along with other support staff, all on a full-time basis. 
Normally, USIA's General Counsel staff included only eight attorneys. 
For its part, the Justice Department dedicated two full-time attorneys 
and one full-time paralegal to the task force. Justice refused to allow 
USIA to contract-out for the additional staff, insisting instead that 
USIA hire them under temporary appointments. Id. at 90-91.

USIA asked GAO to require Justice to reimburse USIA for its expenses, 
which USIA estimated at $4.6 million over fiscal years 1992, 1993, and 
1994. Since Justice gets annual appropriations to cover litigative 
expenses, USIA argued, Justice's annual appropriations had been 
improperly augmented. 73 Comp. Gen. at 91-92.

GAO replied, "[T]here is no legal or equitable requirement that 
litigation support costs be shared equally, or even proportionately, 
between Justice and its client agencies." Id. at 94. The expenses at 
issue represented "no more than the cost to USIA of gathering and 
presenting to Justice the facts and agency perspectives necessary to 
allow Justice to represent USIA in court, a typical example of agency 
support for Justice litigators." Id. GAO explained:

"The limitations on the use of agency appropriations to provide 
litigative services originated as part of the provisions that created 
the Justice Department and invested it with general responsibility to 
act as the government's litigator…These provisions were intended to 
reinforce Justice's control of the conduct of litigation involving the 
United States, not to bar agencies from using their appropriations to 
assist in the defense of litigation. Our cases 'recognize the 
availability of agency appropriations, where otherwise proper and 
necessary, for uses consistent with the litigative policies established 
for the United States by the Attorney General.'"

Id. at 93-94, quoting 70 Comp. Gen. at 650-51 (citing 39 Comp. Gen. 643 
at 646-47 (1960)).

Of course, every rule has its exceptions. In B-289288, July 3, 2002, a 
Department of Defense Dependents Schools (DODDS) employee, who worked 
at a DODDS school in Japan, had been arrested, charged, and eventually 
convicted of criminal violations of Japanese law involving the 
importation and possession of marijuana. Under 10 U.S.C. § 1037, local 
counsel was retained to defend the employee in the Japanese courts. 
Read together, the plain terms of section 1037 and the regulations 
implementing it required DOD to provide legal services to persons 
"employed by or accompanying [U.S.] armed forces in an area outside the 
United States," even when the matter is unrelated to and wholly beyond 
the scope of the employee's official duties. 10 U.S.C. § 1037(a). 
Funding is to come from "[a]ppropriations available to the military 
department concerned …for the pay of persons under its jurisdiction." 
10 U.S.C. § 1037(c). The statute leaves no role for the Justice 
Department in these matters.

Questions over reimbursement of legal fees also arise in a number of 
nonjudicial contexts. In B-193712, May 24, 1979, GAO concluded that the 
Central Intelligence Agency (CIA) could reimburse a staff psychiatrist, 
who had been directed to prepare a psychological profile of Daniel 
Ellsberg as part of his official duties, for the cost of legal 
representation before congressional investigating committees and 
professional organizations. While the Justice Department regulations 
authorize representation at congressional proceedings on the same basis 
as in lawsuits (28 C.F.R. § 50.15(a)), this is not an area within 
Justice Department's exclusive representation authority. Therefore, 
while it may be desirable to first request Justice Department 
representation, failure to do so in this case did not preclude the use 
of CIA appropriations, based on an administrative determination that 
the psychiatrist's activities were necessary to carry out authorized 
CIA functions. As in the judicial context, payment is generally 
unauthorized where it is not in furtherance of an official agency 
interest. See U.S. General Accounting Office, Postal Service: Board of 
Governors Contract for Legal Services, GAO/GGD-87-12 (Washington, D.C.: 
Feb. 10, 1987) (questioning propriety of payment of legal fees of Board 
member incident to congressional investigation of prenomination 
activities).

The Justice Department will not provide representation in 
administrative disciplinary proceedings because of the potential 
conflict in the event the employee later sues the government. In one 
case, GAO concluded that the Nuclear Regulatory Commission (NRC) could 
retain private counsel to represent two NRC staff members at a 
disciplinary proceeding where the agency determined that the employees 
had been acting within the scope of their authority. B-127945, Apr. 5, 
1979. See also B-192784, Jan. 10, 1979.

In another case, however, 58 Comp. Gen. 613 (1979), the Securities and 
Exchange Commission (SEC) could not reimburse the legal fees of an SEC 
employee at a disciplinary hearing even though the proceeding was 
ultimately resolved in the employee's favor. The distinction is that in 
the NRC case, the misconduct charge had been raised and pursued by a 
third party, whereas in the SEC case, while the charge was initially 
raised by an outside party, it was pursued based on the SEC's 
independent determination to investigate the allegation. The point of 
this distinction is that, once the agency determines to investigate the 
employee, its interests and those of the employee are no longer 
"aligned." E.g., B-245648.2, July 24, 1992 (even though the 
administrative investigation was precipitated by a congressional 
subcommittee, since the IRS conducted it, IRS's interests were no 
longer aligned with those of its employee, and the attorney fees 
incurred by the employee as a result of the investigation could not be 
reimbursed); B-245712.3, May 20, 1992 (Department of Agriculture 
employee, subject to an Inspector General investigation instigated by a 
third party, may not be reimbursed for the attorney fees he incurred 
since the agency, having decided to investigate the employee, no longer 
had a common interest with him). In other words, the interests of the 
agency and employee have diverged and it is no longer possible to 
justify providing representation to the employee as a necessary and 
appropriate expense of the agency. Also, the determination to provide 
legal representation must be made at the outset of the proceedings and 
not at the end based on the outcome. GAO reached the same result in 
70 Comp. Gen. 628 (1991) (Forest Service investigative report leading 
to criminal trial ending in acquittal on all charges), and in B-212487, 
Apr. 17, 1984 (Inspector General misconduct investigation).

An agency may use its appropriated funds to provide legal 
representation for an employee brought before the Merit Systems 
Protection Board (MSPB) on a complaint by the MSPB Special Counsel, if 
the agency determines that the employee's conduct was in furtherance of 
or incident to carrying out his or her official duties, and that 
providing representation would be in the government's interest. 
67 Comp. Gen. 37 (1987); 61 Comp. Gen. 515 (1982). Of course, this 
principle is not limited to cases pending before MSPB. See, e.g., 
B-251141, supra (federal criminal investigation). If the agency makes 
the required determinations, the expenditure is viewed as a "necessary 
expense" of the agency or function. While the necessary expense theory 
is the legal basis, the underlying policy is expressed in the following 
excerpt:

"Surely federal employees must be answerable for illegal conduct. Yet 
it can be in the interest of neither the government as a whole nor the 
taxpayers we serve to have employees afraid to function out of fear of 
being bankrupted by a lawsuit arising out of the good faith performance 
of their jobs."

67 Comp. Gen. at 37-38. Similarly, see, for example, 15 Op. Off. Legal 
Counsel, supra, at 62-63.

Appropriated funds may not be used to pay legal fees incurred by an 
"alleged discriminating official" in a discrimination complaint. 
61 Comp. Gen. 411 (1982); B-201183, Feb. 1, 1985.

Government-financed legal counsel was also held improper at a grievance 
hearing where the legal liability of the employee was not an issue and 
the purpose of the hearing was solely to develop facts. 55 Comp. 
Gen. 1418.

Where reimbursement of legal fees under the above principles is 
authorized, it is a discretionary payment and not a legal entitlement 
of the employee. The agency's responsibilities and discretion are 
summarized in the following paragraph from 67 Comp. Gen. at 38:

"[I]t should be understood that payment in this type of case is not a 
legal liability on the part of the agency, but is essentially a 
discretionary payment. As such, an agency is not required to pay the 
entire amount of the fees actually charged in any given case. The 
controlling concept under fee-shifting statutes is a 'reasonable' 
attorney's fee, and there is a vast body of judicial precedent applying 
this concept under statutes such as the Back Pay Act and Title VII of 
the Civil Rights Act. This body of precedent is available to provide 
guidance to agencies in evaluating the reasonableness of claims. Also, 
since payment is discretionary, an agency is free to formulate 
administrative policies with respect to treatment of claims of this 
type. Of course, any such policies should be applied fairly and 
consistently."

The preceding cases have all involved legal fees incurred for 
representation of the employee. A different situation occurred in 
59 Comp. Gen. 489 (1980). In 1969, local police raided a Chicago 
apartment housing members of the Black Panther Party. The raid erupted 
into violence and two of the occupants were killed. Subsequently, the 
surviving occupants and the estates of the deceased sued state law 
enforcement officials and several agents of the Federal Bureau of 
Investigation (FBI), alleging violations of civil rights and the 
Illinois wrongful death statute. The Justice Department represented the 
federal defendants, who were being sued in their individual capacities.

As the litigation progressed, a possibility emerged that the court 
might grant the plaintiffs an award of attorney's fees, in part against 
the FBI agents. The Justice Department asked whether FBI appropriations 
would be available to reimburse such an award. In the past, the 
Comptroller General has at times declined to render decisions on 
questions that are premature and essentially hypothetical. Here, 
however, in view of the legal strategy proposed by the Justice 
Department (the case also involved issues raising the potential 
liability of the United States), it was important to know if the fees 
could be reimbursed because if they could not, it might be necessary 
for the defendants to retain private counsel to represent their 
interests. The Comptroller General resolved the question by applying 
the necessary expense doctrine. If the FBI made an administrative 
determination, supported by substantial evidence, that the actions 
giving rise to the award constituted officially authorized conduct and 
were taken as a necessary part of the defendant's official duties, it 
could reimburse the award from its Salaries and Expenses appropriation.

d. Suits Unrelated to Federal Employees:

Finally, the concept of using agency appropriations for legal fees when 
Justice Department representation is unavailable has arisen in a couple 
of contexts that are unrelated to suits against government employees. 
Under 25 U.S.C. § 175, the U.S. Attorneys will generally represent 
Indian tribes, and under 25 U.S.C. § 13, the Bureau of Indian Affairs 
may spend money appropriated for the benefit of Indians for general and 
incidental expenses relating to the administration of Indian affairs. 
Construing these provisions, the Comptroller General has held that the 
Bureau of Indian Affairs could use appropriated funds to pay legal fees 
incurred by Indian tribes in judicial litigation, including 
intervention actions and cases where the tribe is the plaintiff, when 
conflict of interest makes Justice Department representation 
unavailable. However, the Bureau must first give the Justice Department 
the option of providing or declining to provide representation. The 
Bureau may also use appropriated funds for legal fees of Indian tribes 
in administrative proceedings in which the Justice Department does not 
participate. 56 Comp. Gen. 123 (1976).

The courts have recognized that this authority carries with it 
substantial discretion. For example, in Hopi Tribe v. United States, 55 
Fed. Cl. 81 (2002), suit was brought to recover legal fees and expenses 
incurred in litigation pursuant to the Navajo-Hopi Settlement Act of 
1974. The court held that, under 25 U.S.C. §§ 13, 175, Justice and the 
Bureau both have broad discretion in determining whether to provide 
legal services or reimbursement for the costs of obtaining them 
elsewhere. Among other things, the court explained that because 
Congress appropriates lump sums to Justice and the Bureau for these 
purposes, the question of how best to use those sums is committed to 
agency discretion. Hopi Tribe, 55 Fed. Cl. at 97-98, quoting Lincoln v. 
Vigil, 508 U.S. 182, 192-195 (1993), quoting both 55 Comp. Gen. 307, 
319 (1975), and Principles of Federal:

Appropriations Law, at 6-159 (2nd Ed. 1992). See also discussion in 
Chapter 6.[Footnote 241]

e. Claims by Federal Employees:

(1) Discrimination proceedings:

Title VII of the Civil Rights Act of 1964, made applicable to the 
federal government by the Equal Employment Opportunity Amendments of 
1972, broadly prohibits employment discrimination based on race, color, 
religion, sex, or national origin. Two statutory provisions are 
relevant to the awarding of attorney's fees. Judicial awards, covered 
in Chapter 14 (Volume III of the second edition of the Principles of 
Federal Appropriations Law), are governed by 42 U.S.C. § 2000e-5(k), 
which authorizes courts to award reasonable attorney's fees to 
nonfederal prevailing parties. In addition, 42 U.S.C. § 2000e-16(b) 
directs the former Civil Service Commission to enforce Title VII in the 
federal government "through appropriate remedies …as will effectuate 
the policies of this section." The enforcement function was transferred 
to the Equal Employment Opportunity Commission (EEOC) in 1978.

The concept of administrative fee awards developed largely as the 
result of a series of court decisions. First, the courts held that a 
court can award attorney's fees to include compensation for services 
performed in related administrative proceedings as well as the lawsuit 
itself. Parker v. Califano, 561 F.2d 320 (D.C. Cir. 1977); Johnson v. 
United States, 554 F.2d 632 (4th Cir. 1977). Then, the District Court 
for the District of Columbia held that Title VII authorized the 
administrative awarding of attorney's fees. Patton v. Andrus, 459 F. 
Supp. 1189 (D.D.C. 1978); Smith v. Califano, 446 F. Supp. 530 (D.D.C. 
1978). However, this view was not unanimous. The court in Noble v. 
Claytor, 448 F. Supp. 1242 (D.D.C. 1978), held that there was no 
authority for administrative awards and that only the court could award 
fees.

GAO was initially inclined toward the view expressed in the Noble 
decision. See B-167015, Apr. 7, 1978. However, GAO reconsidered its 
position and subsequently announced that it would not object to the 
issuance of regulations by the EEOC to include the awarding of 
attorney's fees at the administrative level. B-193144, Nov. 3, 1978; 
B-167015, Sept. 12, 1978; B-167015, May 16, 1978 (all nondecision 
letters).

EEOC issued interim regulations on April 9, 1980 (45 Fed. Reg. 24130), 
and subsequently finalized them. The regulations, found at 29 C.F.R. 
§ 1613.271, provide for awards of reasonable attorney's fees both by 
EEOC and by the agencies themselves. With the issuance of these 
regulations, federal agencies now have the requisite authority. 
B-199291, June 19, 1981; B-195544, May 7, 1980 (nondecision letter).

Attorney's fees awarded under the EEOC regulations are payable from the 
employing agency's operating appropriations and not from the permanent 
judgment appropriation established by 31 U.S.C. § 1304.[Footnote 242] 
64 Comp. Gen. 349, 354 (1985); B-199291, supra. Cf. B-257334, June 30, 
1995 (except as specifically provided by law, the permanent judgment 
appropriation is not available to pay administrative awards, including 
administrative settlements for compensatory damages under Title VII).

GAO will not review awards of, nor consider claims for, attorney's fees 
under Title VII. 69 Comp. Gen. 134 (1989); 61 Comp. Gen. 326 (1982); 
B-259632, June 12, 1995.

Title VII is not the only statute prohibiting discrimination in federal 
employment. Discrimination based on age or handicap is prohibited, 
respectively, by the Age Discrimination in Employment Act, 29 U.S.C. 
§§ 621 et seq., and the Rehabilitation Act of 1973, 29 U.S.C. §§ 701 et 
seq. The EEOC has enforcement responsibility for federal employment 
under these statutes as well as Title VII.[Footnote 243]

Initially, GAO had held that the EEOC could provide by regulation for 
the awarding of attorney's fees at the administrative level under the 
Age Discrimination in Employment Act and the Rehabilitation Act, just 
as in the Title VII situation. 59 Comp. Gen. 728 (1980). Subsequently, 
the courts held that the Age Discrimination in Employment Act did not 
authorize fees at the administrative level, and GAO partially overruled 
59 Comp. Gen. 728 in 64 Comp. Gen. 349 (1985). However, that portion of 
59 Comp. Gen. 728 dealing with the Rehabilitation Act remains valid. 
See also B-204156, Sept. 13, 1982. This treatment is consistent with 
the EEOC regulations, which authorize administrative fee awards under 
Title VII and the Rehabilitation Act, but not the Age Discrimination in 
Employment Act. See 29 C.F.R. § 1614.501(e) (formerly codified at 
§ 1613.271(d)).

The situation may become more complicated where an employee alleges 
discrimination on more than one ground. In 69 Comp. Gen. 469 (1990), an 
agency settled a complaint in which the employee had alleged both age 
and sex discrimination. Based on the agency's assertion that the result 
would have been the same if the employee had pursued only the sex 
discrimination charge, GAO concluded that the agency was not required 
to "apportion" the attorney's fee claim between the two charges and 
that the entire fee claim could be paid.

(2) Other employee claims:

Prior to October 1978, there was no authority to award attorney's fees 
to federal employees in connection with claims, grievances, or 
administrative proceedings involving back pay, adverse personnel 
actions, or other personnel matters. During this time period, GAO 
consistently denied claims for attorney's fees based on the general 
rule barring the payment of legal fees in the absence of statutory 
authority. E.g., 52 Comp. Gen. 859 (1973) (administrative grievance 
proceeding); B-167461, Aug. 9, 1978 (unfair labor practice proceeding); 
B-184200, Apr. 13, 1976 (reduction in grade); B-183038, May 9, 1975 
(improper removal for disciplinary reasons).

In October 1978, the Civil Service Reform Act added two attorney's fee 
provisions as part of its general overhaul of the system.

First, it authorized the Merit Systems Protection Board to require the 
employing agency to pay reasonable attorney's fees if the employee is 
the prevailing party and the Board determines that the fee award is 
"warranted in the interest of justice." 5 U.S.C. § 7701(g). Fees 
awarded under this provision are payable directly to the attorney, not 
the party. Jensen v. Department of Transportation, 858 F.2d 721 (Fed. 
Cir. 1988).[Footnote 244]

Second, it added an attorney's fee provision to the Back Pay Act, 
5 U.S.C. § 5596. Now, if an employee, based on a timely appeal or an 
administrative determination, including grievance or unfair labor 
practice proceedings, is found by "appropriate authority"[Footnote 245] 
to have suffered a loss or reduction of pay as a result of an 
"unjustified or unwarranted personnel action," the employee is entitled 
to recover reasonable attorney's fees in addition to back pay. Id. 
§ 5596(b). See generally B-258290, June 26, 1995; B-231813, Aug. 22, 
1989.

Regulations to implement the Back Pay Act are issued by the Office of 
Personnel Management and are found at 5 C.F.R. pt. 550, subpt. H. Under 
the regulations, fees may be awarded only if the "appropriate 
authority" determines that payment is in the interest of justice, 
applying standards established by the Merit Systems Protection Board 
under 5 U.S.C. § 7701. 5 C.F.R. § 550.807(c)(1). The standards are set 
forth in Allen v. United States Postal Service, 2 M.S.P.R. 420 (1980), 
and discussed in Sterner v. Department of the Army, 711 F.2d 1563 (Fed. 
Cir. 1983), and in 62 Comp. Gen. 464. For "[a] review of the case law," 
see Abramson v. United States, 45 Fed. Cl. 149, 151-152 (1999).

GAO will not review decisions awarding or declining to award, nor 
consider claims for, fees under 5 U.S.C. § 7701. B-257593, Aug. 15, 
1994 (GAO has no authority to review any MSPB decision, citing, among 
others, 61 Comp. Gen. 578 (1982)--disavowing authority to review fee 
awards under section 7701); 63 Comp. Gen. at 174; 61 Comp. Gen. 290 
(1982). The Back Pay Act regulations provide for review of fee 
determinations only "if provided for by statute or regulation." 5 
C.F.R. § 550.8067(g) (formerly at 5 C.F.R. § 550.06(g)). Thus, absent 
some statute or regulation to the contrary, GAO will similarly decline 
to review fee determinations under 5 U.S.C. § 5596 where the 
"appropriate authority" is someone other than the Comptroller General. 
61 Comp. Gen. 290.

While GAO will not "review" such matters, it may provide its opinion on 
them, when requested by the agency or the accountable officer. For 
example, in B-253507, Jan. 11, 1994, the National Archives and Records 
Administration (NARA) asked GAO if it could pay attorney fees as part 
of an administrative settlement, even though NARA had not determined 
that an unjustified or unwarranted personnel action had occurred. NARA 
argued that because the employee could have appealed to the Merit 
Systems Protection Board and possibly obtained attorney fees (as 
discussed in the following paragraph), NARA had implied authority to 
award attorney fees as part of its settlement. GAO disagreed. NARA had 
no statutory authority to pay attorney fees under the facts and laws 
applicable to the case. The fact that the employee could have appealed 
and might have won did not authorize NARA and the employee to behave as 
if the employee actually had appealed and won. Id. See also B-258290, 
supra (advance decision, pursuant to 31 U.S.C. § 3529, disapproved 
payment of attorney fees and other amounts arising from a grievance 
hearing wherein the agency declined to find an unjustified or 
unwarranted personnel action); B-257893, June 1, 1995 (certifying 
officer granted relief from liability, pursuant to 31 U.S.C. 
§ 3528(b)(1)(B), for the erroneous payment, which was the subject of 
B-253507, supra).

Under a provision added in 1989, if an employee, former employee, or 
applicant for employment is the prevailing party before the Merit 
Systems Protection Board (MSPB), and MSPB's decision is based on a 
finding of a "prohibited personnel practice" (defined in 5 U.S.C. 
§ 2302), "the agency involved shall be liable" to the complainant for 
reasonable attorney's fees. The same liability applies with respect to 
appeals from the Board, regardless of the basis of the decision. 
5 U.S.C. § 1221(g), added by the Whistleblower Protection Act of 1989, 
Pub. L. No. 101-12, 103 Stat. 16, 30 (Apr. 10, 1989).

Employee claims outside the scope of the Back Pay Act or the MSPB 
authority remain subject to the general rule prohibiting fee awards 
except under specific statutory authority. Thus, administrative claims 
for attorney's fees were denied in the following situations:

* Applicant for employment with Nuclear Regulatory Commission 
successfully challenged adverse information in security investigation 
file. B-194507, Aug. 20, 1979.

* Nuclear Regulatory Commission employee detailed in violation of the 
Whistleblower Protection Act (WPA), supra, as retaliation for the 
disclosure of government illegality, waste, and corruption. Although 
WPA does provide for attorney fees in certain circumstances, employee 
used agency grievance procedures not subject to WPA. 72 Comp. Gen. 289 
(1993).

* Employee obtained continuance in divorce proceedings. Continuance was 
necessitated by temporary duty assignment. B-197950, Sept. 30, 1980. 
Cf. 70 Comp. Gen. 329 (1991) (legal fees incurred to search title, 
prepare abstracts, conveyances and other documents required in the 
chain of conveying property interest from seller to buyer that are 
normally reimbursable under Federal Travel Regulations (FTR), ¶ 26.2c, 
but may not be reimbursed here as original court order was part of a 
divorce settlement; modification of divorce order constituted 
continuation of a litigated matter; litigation costs may not be 
reimbursed under the FTR); B-242154, Mar. 28, 1991 (FTR does not allow 
reimbursement of litigation costs, even though employee "sustained a 
loss that he would not have sustained had he not transferred in the 
interest of the government").

* A military member's legal fees incident to custody proceedings, and 
medical insurance expenses for his adopted children are not "qualifying 
adoption expenses" under section 638 of the National Defense 
Authorization Act for Fiscal Years 1988 and 1989, Pub. L. No. 100-180, 
§ 638, 101 Stat. 1019, 1106-1108 (Dec. 4, 1987), as amended, and may 
not be reimbursed (but legal fees incident to the actual petition and 
order of adoption, as well as the amendment of birth certificates for 
the member's adopted children are reimbursable from agency funds under 
the Act). B-235606, Feb. 7, 1991.

* Former employee successfully prosecuted administrative patent 
interference action against National Aeronautics and Space 
Administration. B-193272, Aug. 21, 1981.

* Fees incurred incident to prosecution of claim for relocation 
expenses. 68 Comp. Gen. 456 (1989); B-186763, Mar. 28, 1977.

* Employee, selling residence incident to transfer of duty station, 
incurred legal fees in excess of customary range of charges for 
services rendered. B-200207, Sept. 29, 1981 (legal fees within 
customary range of charges are reimbursable; see cases cited). 
Similarly, see B-252531, Aug. 13, 1993 (attorney fees claimed were 
duplicative of attorney fees already paid as part of the services 
provided by the relocation service company).

* Administrative grievance proceeding involving neither an appeal to 
the Merit Systems Protection Board nor a reduction or denial of pay or 
allowances. B-253507 n.5, supra; 68 Comp. Gen. 366 (1989); 61 Comp. 
Gen. 411 (1982).

The same rule applies to expert witness expenses incurred by an 
employee. They are reimbursable only under specific statutory 
authority. In 67 Comp. Gen. 574 (1988), a Department of Energy employee 
had requested an administrative hearing incident to a security 
clearance. The agency, due to the sudden unavailability of its witness, 
was forced to reschedule the hearing. The employee's witness, a 
clinical psychologist, was unable to reschedule his patients to fill 
the now freed-up time slot, and charged the employee for the 3 hours he 
had set aside to testify. GAO found no authority to reimburse the 
employee.

f. Criminal Justice Act:

The Criminal Justice Act (CJA), 18 U.S.C. § 3006A, was originally 
enacted in 1964 and substantially amended on several subsequent 
occasions. Reflecting a series of Supreme Court decisions on the right 
of a criminal defendant to counsel, the CJA establishes a system of 
government-financed counsel for indigent defendants in federal criminal 
cases. In general, any person charged with a felony or misdemeanor, 
including juvenile delinquency, and who is "financially unable to 
obtain adequate representation" is eligible for counsel under the CJA. 
Counsel is to be provided at every stage of the proceeding, from the 
first appearance before a magistrate through appeal, including 
appropriate ancillary matters. As the Supreme Court has expanded the 
right to counsel to encompass every meaningful stage at which 
significant rights may be affected (see, e.g., Miranda v. Arizona, 384 
U.S. 436 (1966)), the right to counsel under the CJA has similarly 
expanded.

The lawyers, who are court-appointed, may be private attorneys 
appointed on an individual basis or members of a Federal Public 
Defender Organization or Community Defender Organization established 
and funded under the Act. The attorneys are paid at rates of 
compensation specified in the statute. Appropriations are made to the 
Judiciary to carry out the Act CJA and payments are supervised by the 
Administrative Office of the United States Courts.

(1) Types of actions covered:

Originally, GAO had held that the Criminal Justice Act (CJA) did not 
apply to probation revocation proceedings. 45 Comp. Gen. 780 (1966). 
Subsequently, following the Supreme Court's holding in Mempa v. Rhay, 
389 U.S. 128 (1967), GAO modified the 1966 decision to recognize the 
applicability of the Act to probation proceedings coupled with deferred 
sentencing. However, GAO continued to hold the Act inapplicable to a 
"simple" probation revocation proceeding (one not involving deferred 
sentencing). 50 Comp. Gen. 128 (1970). Two months after the issuance of 
50 Comp. Gen. 128, Congress passed Public Law 91-447, substantially 
amending the CJA. Pub. L. No. 91-447, 84 Stat. 916 (Oct. 14, 1970). One 
of the changes made by these amendments was to expressly cover 
probation proceedings. The legislative history of Public Law 91-447 
indicates that it was intended to recognize Mempa v. Rhay. H.R. Rep. 
No. 91-1546, at 7 (1970). GAO has not had occasion to issue any further 
decisions on probation proceedings.

Another change made by the 1970 amendments was to add parole revocation 
proceedings, with counsel to be provided at the discretion of the court 
or magistrate. Subsequent legislation made appointment of counsel 
mandatory, and the Comptroller General held that appropriations under 
the CJA are available to provide counsel for indigents at parole 
revocation and parole termination proceedings under the Parole 
Commission and Reorganization Act. B-156932, June 16, 1977.

Representation may be provided, at the discretion of the court or 
magistrate, to an indigent prosecuting a writ of habeas corpus 
(28 U.S.C. §§ 2241, 2254, 2255). 18 U.S.C. § 3006A(a)(2). This 
authority does not extend to civil rights actions brought by indigent 
prisoners under 42 U.S.C. § 1983. 53 Comp. Gen. 638 (1974); B-139703, 
June 19, 1975.

In 51 Comp. Gen. 769 (1972), GAO held that the CJA applied to 
prosecutions brought in the name of the United States in the District 
of Columbia Superior Court and Court of Appeals. In 1974, Congress 
passed the District of Columbia Criminal Justice Act (Pub. L. No. 93-
412, 88 Stat. 1089 (Sept. 3, 1974)), which established a parallel 
criminal justice system for the District of Columbia patterned after 
18 U.S.C. § 3006A. With the enactment of this legislation, the CJA was 
amended to remove the District of Columbia courts from its coverage. 
GAO considered the D.C. statute in 61 Comp. Gen. 507 (1982) and 
construed it to include sentencing. The result should apply equally to 
the federal statute inasmuch as the language being construed is 
virtually identical in both laws.

(2) Miscellaneous cases:

When a court appoints an attorney under the Criminal Justice Act (CJA), 
the government's contractual obligation, and hence the obligation of 
appropriations, occurs at the time of the appointment and not when the 
court reviews the voucher for payment, even though the exact amount of 
the obligation is not determinable until the voucher is approved. Where 
fiscal year appropriations are involved, the Administrative Office of 
the U.S. Courts must record the obligation based on an estimate, and 
the payment is chargeable to the fiscal year in which the appointment 
was made. 50 Comp. Gen. 589 (1971).

In B-283599, Sept. 15, 1999, the Executive Officer of the District of 
Columbia Courts told GAO that he anticipated fiscal year 1999 
appropriations for CJA claims would be exhausted on September 10, 1999. 
How, he asked, should the courts respond to CJA claims received during 
the remainder of fiscal year 1999? Should the courts suspend approving 
CJA vouchers in order to avoid violating the Antideficiency Act? GAO 
said, "No." CJA representation is a mandatory expense. An 
overobligation entirely attributable to a mandatory spending program, 
like CJA, would be an overobligation authorized by law and, therefore, 
not a violation of the Antideficiency Act. See 31 U.S.C. 
§§ 1341(a)(1)(A) and (B). However, this did not mean that the vouchers 
could be paid immediately on approval. A legally available funding 
source would still be required before any authorized overobligations 
could be liquidated. Fortunately, GAO noted, a bill then pending in 
Congress would provide funds for this purpose. B-283599, supra. See 
also U.S. General Accounting Office, D.C. Courts: Planning and 
Budgeting Difficulties During Fiscal Year 1998, GAO/AIMD/OGC-99-226, at 
11-13 (Washington, D.C.: Sept. 16, 1999). (For a full discussion of the 
law governing federal obligations, see Chapter 7.)

An attorney appointed and paid under the CJA does not thereby enter 
into an employer-employee relationship with the United States for 
purposes of the dual compensation laws. 44 Comp. Gen. 605 (1965). (This 
decision predated the 1970 amendments to the CJA, which created the 
Federal Public Defender Organizations, and would presumably not apply 
to full-time salaried attorneys employed by such organizations.)

An attorney regularly employed by the federal government who is 
appointed by a court to represent an indigent defendant, in either 
federal or state cases, may not be excused from official duty without 
loss of pay or charge to annual leave. 61 Comp. Gen. 652 (1982); 
44 Comp. Gen. 643 (1965).

An attorney appointed under the CJA is expected to use his or her usual 
secretarial resources. As a general proposition, secretarial and other 
overhead expenses are reflected in the statutory fee and are not 
separately reimbursable. However, there may be exceptional situations, 
and if the attorney can demonstrate to the court that extraordinary 
stenographic or other secretarial-type expenses are necessary, they may 
be reimbursed from Criminal Justice Act appropriations. 53 Comp. 
Gen. 638 (1974).

g. Equal Access to Justice Act:

A significant diminution of the American Rule occurred in 1980 with the 
enactment of the Equal Access to Justice Act (EAJA), which authorizes 
the awarding of attorney's fees and expenses in a number of 
administrative and judicial situations where fee-shifting had not been 
previously authorized. This section describes the authority for 
administrative awards.

The administrative portion of the EAJA is found in 5 U.S.C. § 504. 
There are four key elements to the statute:

1. The administrative proceeding generating the fee request must be an 
"adversary adjudication," defined as an adjudication under the 
Administrative Procedure Act in which the position of the United States 
is represented by counsel or otherwise. 5 U.S.C. §§ 504(a)(1), 
(b)(1)(C). The definition excludes adjudications to fix or establish a 
rate or to grant or renew a license, but proceedings involving the 
suspension, annulment, withdrawal, limitation, amendment, 
modification, or conditioning of a license are covered if they 
otherwise qualify.[Footnote 246] (Application in the context of 
government procurement is discussed separately later.)

2. The party seeking fees must be a "prevailing party other than the 
United States." 5 U.S.C. § 504(a)(1). The meaning of "prevailing party" 
is to be determined by reference to case law under other fee-shifting 
statutes.[Footnote 247] Of course before you can be a "prevailing 
party" you must first be a "party," and the law prescribes financial 
and other eligibility criteria. 5 U.S.C. § 504(b)(1)(B).

3. The law is not self-executing. The party must, within 30 days after 
final disposition of the adversary adjudication, submit an application 
to the agency showing that it is a prevailing party and meets the 
eligibility criteria, documenting the amount sought, and alleging that 
the position of the United States was not "substantially justified." 
5 U.S.C. § 504(a)(2). If the United States appeals the underlying 
merits, action on the application must be deferred until final 
resolution of the appeal. Id.

4. If the above criteria are met, the fee award is mandatory unless the 
agency adjudicative officer finds that "the position of the agency was 
substantially justified or that special circumstances make an award 
unjust." 5 U.S.C. § 504(a)(1).[Footnote 248] Substantial justification 
or lack thereof is to be determined "on the basis of the administrative 
record as a whole, which is made in the adversary adjudication." Id. 
The "position of the agency" includes the agency's action or failure to 
act which generated the adjudication as well as the agency's position 
in the adjudication itself. 5 U.S.C. § 504(b)(1)(E). A party who 
"unreasonably protracts" the proceedings risks reduction of the award. 
5 U.S.C. § 504(a)(3).

The award includes "fees and other expenses." "Fees" means a reasonable 
attorney's fee, generally capped at $125 per hour unless the agency 
determines by regulation that cost-of-living increases or other special 
factors justify a higher rate.[Footnote 249] "Other expenses" include 
such items as expert witness expenses and the necessary cost of 
studies, analyses, engineering reports, etc. 5 U.S.C. § 504(b)(1)(A).

The statute requires agencies to establish, by regulation, uniform 
procedures for administering the statute, in consultation with the 
Administrative Conference of the United States (ACUS). 5 U.S.C. 
§ 504(c)(1). In 1986, ACUS has published a set of nonbinding model 
rules., found at 51 Fed. Reg. 16659 (May 6, 1986) (formerly codified in 
1 C.F.R. pt. 315). Among other things, the supplementary information 
statement for those rules, found at 51 Fed. Reg. 16659 (May 6, 1986), 
advised agencies that the statutory requirement to consult with ACUS 
will be met by simply notifying ACUS of the publication of proposed 
regulations, or by sending ACUS a pre-publication draft for review and 
comment. Id. There's only one problem: ACUS was terminated in 1995 when 
its annual appropriation stipulated that funds for it were "available 
[only] for the purposes of [its] prompt and orderly termination." 
Treasury, Postal Service, and General Government Appropriations Act, 
1996, Pub. L. No. 104-52, title IV, 109 Stat. 468, 480 (Nov. 19, 1995), 
codified at 5 U.S.C. § 591 (note preceding section). Although ACUS is 
now history, someone forgot to fix the statute. Compare 5 U.S.C. 
§ 504(c)(1) (requiring agencies to consult ACUS) and 5 U.S.C. § 593-595 
(establishing ACUS).

Payment of administrative EAJA awards is addressed in 5 U.S.C. 
§ 504(d):

"Fees and other expenses awarded under this subsection shall be paid by 
any agency over which the party prevails from any funds made available 
to the agency by appropriation or otherwise."[Footnote 250]

As with judicial awards under 28 U.S.C. § 2412(d), 5 U.S.C. § 504 
awards are payable from agency operating appropriations with no need 
for specific, line-item, or "earmarked" appropriations.[Footnote 251]

The obligation of the agency's appropriations occurs when the agency 
issues its decision on the fee application. 62 Comp. Gen. 692, 699 
(1983). This determines the fiscal year to be charged. Sometimes, the 
logic of this rule eludes an agency that is otherwise striving to be 
prudent and responsible in the management of its legal responsibilities 
and fiscal obligations. In B-255772, Aug. 22, 1995, the Justice 
Department and the National Endowment for the Arts (NEA) sought GAO's 
guidance regarding whether the NEA could pay an EAJA attorney fee 
settlement using unobligated NEA appropriations from previous fiscal 
years. For several years, NEA had realized that a then pending case 
would eventually require NEA to pay EAJA attorney fees from its 
appropriations pursuant to 28 U.S.C. § 2412(d)(4). In anticipation of 
this, NEA began setting aside a portion of its annual appropriations 
across several fiscal years so that, when the time to pay finally 
arrived, NEA would have funds adequate to meet its obligations without 
adversely affecting other NEA operations. However, when the settlement 
was finally completed, questions arose about whether the funds NEA set 
aside could legally be used for this purpose. Of course, they could 
not. As a general principle, "[a] court or administrative award creates 
a new right in the successful claimant, giving rise to new government 
liability." B-255772, quoting 63 Comp. Gen. 308, 310 (1984). NEA had no 
obligation to pay the claims until the settlement agreement was final. 
In the absence of appropriate statutory authority, the funds NEA had 
set aside in previous fiscal years had expired, and were not legally 
available to liquidate the obligation of a later fiscal year--the year 
in which the settlement agreement became final. Id. See also B-257061, 
July 19, 1995 (except as otherwise provided by law, (a) FAA must use 
appropriations available at time of award to pay attorney fees from a 
Title VII discrimination complaint, and (b) had FAA set aside 
appropriations in a prior fiscal year, when the complaint was filed, 
they would not have been available for this purpose).

Section 504 permits fee awards to intervenors who otherwise meet the 
statutory criteria. 62 Comp. Gen. at 693. As noted in that decision, 
the Administrative Conference expressed the same position in the 
preamble to an earlier version of the model rules, although commenting 
further that intervenors would rarely be in a position to actually 
receive awards. Id. at 693-94. A specific appropriation act restriction 
on compensating intervenors will override the more general authority of 
5 U.S.C. § 504. 62 Comp. Gen. 692; Electrical District No. 1 v. Federal 
Energy Regulatory Commission, 813 F.2d 1246 (D.C. Cir. 1987); Business 
& Professional People for the Public Interest v. Nuclear Regulatory 
Commission, 793 F.2d 1366 (D.C. Cir. 1986) (court agreed with result in 
62 Comp. Gen. 692, implicitly accepting premise that EAJA itself could 
apply to intervenors).

We previously reviewed statutory authorities for awarding attorney's 
fees in a variety of matters involving federal employees. Initially, 
the law in this area, especially with respect to EAJA, appeared 
unsettled. The Court of Appeals for the Federal Circuit has held that 
5 U.S.C. § 504 does not authorize the Merit Systems Protection Board 
(MSPB) to award attorney's fees in cases involving employee selection 
or tenure. Gavette v. Office of Personnel Management, 808 F.2d 1456 
(Fed. Cir. 1986); Olsen v. Department of Commerce, Census Bureau, 
735 F.2d 558 (Fed. Cir. 1984). This is was because the definition of 
"adversary adjudication" in section 504 refers to 5 U.S.C. § 554 (part 
of the Administrative Procedure Act), which expressly excludes "the 
selection or tenure of an employee." This was consistent with an 
earlier decision of the District of Columbia Circuit. Hoska v. 
Department of the Army, 694 F.2d 270 (D.C. Cir. 1982). However, the 
court in Miller v. United States, 753 F.2d 270 (3rd Cir. 1985), reached 
a contrary result.

A review of the case law since Gavette suggests that it and its progeny 
may have quietly assumed the prevailing position in the 
circuits.[Footnote 252] Despite the passage of nearly two decades, the 
conflict does not appear to have been expressly addressed by the 
Supreme Court, and at least one commentator has concluded, "The Federal 
Circuit's decision in Gavette resolve[d] the conflicts among the lower 
courts." Nancy A. Streeff, Note, Gavette v. Office of Personnel 
Management: The Right To Attorney Fees Under The Equal Access To 
Justice Act, 36 Am. U. L. Rev. 1013, 1025 (1987).

Prior to Gavette, the MSPB had taken the position that the existence of 
other fee-shifting statutes made EAJA inapplicable. Social Security 
Administration v. Goodman, 28 M.S.P.R. 120, 126 (1985). However, in 
view of the implication of Gavette that EAJA might apply in cases not 
involving employee selection or tenure, the MSPB reopened the Goodman 
appeal, found that fees could be awarded in that case under 5 U.S.C. 
§ 7701, and declined to comment further on the applicability of EAJA. 
Social Security Administration v. Goodman, 33 M.S.P.R. 325, 326-27 n.1 
(1987). See also, e.g., NLRB v. Boyce, 51 M.S.P.R. 295, 300 n.4 (1991).

GAO held in 68 Comp. Gen. 366 (1989) that EAJA did not authorize a fee 
award to an employee who prevailed in an agency grievance proceeding 
that did not meet the standard of an "adversary adjudication." See also 
72 Comp. Gen. 289 (1993) (attorney fee provision of the Whistleblower 
Protection Act does not apply where employee uses informal agency 
grievance procedure). (This being the case, it was irrelevant whether 
or not the grievance involved selection or tenure.)

Where a MSPB decision is appealed to the courts, including a decision 
involving selection or tenure, the majority view is that EAJA permits 
the court to award fees for the judicial proceedings, the relevant 
standard now being a "civil action" under 28 U.S.C. § 2412(d) rather 
than an "adversary adjudication" under 5 U.S.C. § 504. See Maritime 
Management, Inc. v. United States, 242 F.3d 1326, 1336 (11th Cir. 2001) 
(fees disallowed for bid protest proceedings before GAO, but allowed in 
associated civil action). See also Brewer v. American Battle Monuments 
Commission, 814 F.2d 1564 (Fed. Cir. 1987); Gavette, 808 F.2d at 1462-
65; Miller, 753 F.2d at 274-75; Olsen, 735 F.2d at 561. Here, however, 
the Hoska case is in disagreement.

To the extent EAJA is inapplicable either to the MSPB or to a court 
reviewing a MSPB action, all is not necessarily lost to the fee 
applicant because EAJA is not exclusive in these situations. The MSPB 
and the courts both may award fees under the Back Pay Act in 
appropriate cases, and the MSPB additionally has 5 U.S.C. § 7701. Thus, 
for example, Hoska, while finding EAJA inapplicable, awarded fees under 
the Back Pay Act.

h. Contract Matters:

(1) Bid protests:

Prior to 1984, attorney's fees incurred by a bidder for a government 
contract in pursuing a bid protest with GAO were not compensable. 
57 Comp. Gen. 125, 127 (1977); B-197174, Aug. 25, 1980; B-192910, 
Apr. 11, 1979. The question arose again upon enactment of the Equal 
Access to Justice Act (EAJA) in 1980. However, since a bid protest at 
GAO is not an adversary adjudication governed by the Administrative 
Procedure Act, EAJA was equally unavailing. Maritime Management, 
Inc. v. United States, 242 F.3d 1326, 1336 (11th Cir. 2001) (fees 
disallowed for bid protest proceedings before GAO). See also 63 Comp. 
Gen. 541 (1984); 62 Comp. Gen. 86 (1982); B-251668, May 13, 1993; 
B-211105.2, Jan. 19, 1984.

Under the Competition in Contracting Act of 1984, as amended, 31 U.S.C. 
§ 3554(c)(1), GAO may recommend that a protester be reimbursed the 
costs of filing and pursuing a protest, including reasonable attorney's 
fees, where it finds that a solicitation or the award of a contract 
does not comply with statute or regulation. This is to relieve parties 
with valid claims of the burden of vindicating the public interests 
that Congress seeks to promote. 68 Comp. Gen. 506, 508 (1989). The 
costs and fees are payable from the contracting agency's procurement 
appropriations. 31 U.S.C. § 3554(c)(2) (contracting agency "shall …pay 
the costs promptly").

GAO's approach under 31 U.S.C. § 3554(c) is to recommend that the 
contracting agency pay the protest costs and allow the protester and 
agency to negotiate the appropriate amount. If the parties cannot 
agree, GAO will determine the amount. 4 C.F.R. §§ 21.8(d), (e), and (f) 
(formerly at 4 C.F.R. §§ 21.6(d) and (e)). A protester seeking to 
recover the costs of pursuing its protest must submit sufficient 
evidence to support its monetary claim; the amount claimed may be 
recovered to the extent that the claim is adequately documented and is 
shown to be reasonable. B-240327.3, Dec. 30, 1994. See, e.g., B-291657, 
Feb. 11, 2003.

GAO's bid protest authority is not exclusive. A protester may also seek 
resolution with the contracting agency, file a bid protest at the Court 
of Federal Claims after having its protest denied at GAO, or go 
directly to the Court of Federal Claims in lieu of filing a protest at 
GAO. 31 U.S.C. § 3556. Once a case is in court, 31 U.S.C. § 3554(c) is 
out of the picture, and the court may consider a fee application under 
the judicial portion of EAJA. E.g., Essex Electro Engineers, Inc. v. 
United States, 757 F.2d 247 (Fed. Cir. 1985); Laboratory Supply Corp. 
of America v. United States, 5 Cl. Ct. 28 (1984).

Bid protest disputes often give rise to significant operational delays. 
Sometimes, rather than litigate the bid protest and then correct the 
flaws in its procurement, an agency will try to "buy off" a bid 
protester with a monetary settlement. This practice is known as 
"Fedmail." Typically, the payment is for bid protest preparation 
expenses, including legal fees. In U.S. General Accounting Office, ADP 
Bid Protests: Better Disclosure and Accountability of Settlements 
Needed, GAO/GGD-90-13 (Washington, D.C.: Mar. 30, 1990), at 31, GAO 
indicated that it would question the propriety of Fedmail payments, if 
and when it came across them. 71 Comp. Gen. 340, 342 (1992). In 
71 Comp. Gen. 340, a Fedmail arrangement went sour when the disbursing 
officers of the Defense Supply Service-Washington refused to make 
payment under the agreement. This was inopportune, to say the least, as 
the parties had already secured dismissal of the protest from the 
General Services Administration Board of Contract Appeals 
(GSBCA)[Footnote 253] pursuant to their Fedmail agreement. The GSBCA 
did not know about the Fedmail agreement when it ordered the dismissal. 
Once it learned of it, GSBCA declined to modify its dismissal order. 
Consequently, the agency asked GAO to issue an advance decision 
authorizing the payment. However, as it had threatened in GAO/GGD-90-
13, GAO objected to the payment as improper and without legal 
authority:

"We do not believe that in making appropriations available to an agency 
for the procurement of goods and services, Congress intended those 
funds to be available to allow the agency to obtain the withdrawal of a 
meritorious protest without taking appropriate corrective action. In 
addition, …[w]e are not aware of any statute that would permit the Army 
to pay attorney fees in the circumstances of this case."

71 Comp. Gen. at 342.

(2) Contract disputes:

Under the original (1980) version of the Equal Access to Justice Act 
(EAJA), the Court of Appeals for the Federal Circuit held that (1) a 
court, reviewing a decision of an agency board of contract appeals, 
could, under the judicial portion of EAJA, make a fee award covering 
services before both the board and the court, but that (2) boards of 
contract appeals were not authorized to independently make EAJA fee 
awards. Fidelity Construction Co. v. United States, 700 F.2d 1379 (Fed. 
Cir.), cert. denied, 464 U.S. 826 (1983).

The 1985 EAJA amendments legislatively overturned Fidelity to the 
extent it held 5 U.S.C. § 504 inapplicable to boards of contract 
appeals. E.g., Ardestani v. Immigration & Naturalization Service, 502 
U.S. 129, 138 (1991); Dantran, Inc. v. Department of Labor, 246 F.3d 
36, 45 (1st Cir. 2001); Texas Instruments, Inc. v. United States, 
991 F.2d 760, 767 (Fed. Cir. 1993). Specifically, the law amended the 
definition of "adversary adjudication" to expressly include appeals to 
boards of contract appeals under the Contract Disputes Act. The 1985 
amendments also added language to 28 U.S.C. § 2412(d) to make it clear 
that fee awards are authorized when a contractor appeals a contracting 
officers decision directly to a court instead of to a board of contract 
appeals, as authorized by the Contract Disputes Act. (As noted in the 
preceding paragraph, appeals to court from board decisions were already 
covered.) The fees recovered under this authority are limited to 
services provided after the contracting officers decision and do not 
include services provided in order to argue the matter before the 
contracting officer. See Levernier Construction, Inc. v. United States, 
947 F.2d 497, 500-503 (Fed. Cir. 1991).

i. Public Participation in Administrative Proceedings: Funding of 
Intervenors:

A number of regulatory agencies conduct administrative proceedings and 
take actions that have a direct public impact. A prime example is 
licensing. An important concern has been that the agency may not 
receive a balanced presentation of viewpoints. The reason is that the 
industries being regulated usually have adequate resources to ensure 
representation of their interests, while lack of resources may preclude 
participation by various nonindustry "public interest" 
representatives.

The Comptroller General has considered questions of intervenor funding. 
An "intervenor" in this context means someone who is not a direct party 
to the proceedings. Stated briefly, the rule is that an agency may use 
its appropriations to fund intervenor participation, including 
attorney's fees, if--

1. intervenor participation is authorized, either expressly by statute 
or by necessary implication derived from a regulatory or licensing 
function;

2. the agency determines that the participation is reasonably necessary 
to a full and fair determination of the issues before it; and:

3. the intervenor could not otherwise afford to participate.

This is essentially an application of the "necessary expense" doctrine 
discussed previously in this chapter. Thus, intervenor funding does not 
require express statutory authority, but it must relate to 
accomplishing the objectives of the appropriation sought to be charged, 
and of course must not be otherwise prohibited. The agency must have 
authority to encourage or accept intervenor participation in connection 
with an authorized function for which its appropriations are available. 
In this sense, it may be said that intervenor funding must have a 
statutory foundation.

Historically the concept of intervenor funding emerged in the early 
1970s. In 1970, the Federal Trade Commission (FTC) held that an 
indigent respondent in an FTC hearing was entitled to government-
furnished counsel. American Chinchilla Corp., 1970 Trade Reg. Rep. ¶ 
19059. Following the Chinchilla case, the FTC asked whether it could 
pay certain related expenses for the indigent respondent, such as 
transcript costs and attorney's expenses. It also asked whether it 
could pay the same expenses when incurred by an indigent intervenor 
rather than the respondent.

In the first of the intervenor cases, B-139703, July 24, 1972, GAO 
answered "yes" to both questions. Noting that FTC had statutory 
authority to grant intervention "upon good cause shown," the 
Comptroller General responded to the intervenor question as follows:

"Thus, if the Commission determines it necessary to allow a person to 
intervene in order to properly dispose of a matter before it, the 
Commission has the authority to do so. As in the case of an indigent 
respondent, and for the same reasons, appropriated funds of the 
Commission would be available to assure proper case preparation."

A few years later, the Nuclear Regulatory Commission asked whether it 
was authorized to provide financial assistance to participants in its 
adjudicatory and rulemaking proceedings. Finding that NRC had statutory 
authority to admit intervenors, the Comptroller General applied the 
"necessary expense" rationale of B-139703, and answered "yes." B-92288, 
Feb. 19, 1976.

In this decision, GAO explained why the "American rule" as set forth in 
Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240 
(1975),[Footnote 254] does not apply to bar the payment of attorney's 
fees. The distinction is that the American rule limits the power of a 
court or an agency to require an unwilling defendant to pay the 
attorney's fees of a prevailing plaintiff or intervenor. In cases like 
B-139703 and B-92288, an administrative body, exercising its rulemaking 
function, is attempting to encourage public participation in its 
proceedings. It does this by willingly assuming representation costs 
for intervenors who would otherwise be financially unable to 
participate, in order to obtain their input for a balanced rulemaking 
effort. Only by obtaining a balanced view can the agency perform its 
function of protecting the public interest.

Next, in a letter to the Chairman of the Oversight and Investigations 
Subcommittee of the House Committee on Interstate and Foreign Commerce, 
GAO advised that the rationale of B-92288, supra, applied equally to 
nine agencies under the Subcommittees jurisdiction. The nine were: 
Federal Communications Commission, Federal Trade Commission, Federal 
Power Commission, Interstate Commerce Commission, Consumer Product 
Safety Commission, Securities and Exchange Commission, Food and Drug 
Administration, Environmental Protection Agency, and National Highway 
Traffic Safety Administration. B-180224, May 10, 1976.

GAO pointed out in the same letter that there were several possible 
ways of providing assistance to qualifying participants:

1. Provision of funds directly to participants.

2. Modification of agency procedural rules so as to ease the financial 
burdens of public participation.

3. Provision of technical assistance by agency staff. (However, this 
cannot include assigning staff members to participants to help them 
with their advocacy positions.)

4. Provision of legal assistance by agency staff, but again not as 
advocates.

5. Creation of an independent public counsel. (However, the public 
counsel cannot be beyond the agency's jurisdiction and control.)

6. Creation of a consumer assistance office, as long as it remains 
under the agency's jurisdiction and control and does not act as an 
advocate.

In subsequent decisions and opinions, GAO examined aspects of the 
programs of several specific agencies. In each case, GAO consistently 
applied the rationale of the earlier decisions. The cases are:

* Environmental Protection Agency: 59 Comp. Gen. 424 (1980); B-180224, 
Apr. 5, 1977;

* Federal Communications Commission: B-139703, Sept. 22, 1976;

* Food and Drug Administration: 56 Comp. Gen. 111 (1976);

* Nuclear Regulatory Commission: 59 Comp. Gen. 228 (1980); and:

* Economic Regulatory Administration (a component of the Department of 
Energy): B-192213-O.M., Aug. 29, 1978; U.S. General Accounting Office, 
Department of Energy's Procedures in Funding Intervenors in Proceedings 
before the Economic Regulatory Administration, EMD-78-111 (Washington, 
D.C.: Oct. 2, 1978).

While the decisions have consistently upheld the legality of intervenor 
funding under the necessary expense theory, GAO has nevertheless 
emphasized the desirability of an agency's seeking specific statutory 
authority to embark on a public participation program. E.g., B-180224, 
supra; B-92288, supra. Congress has acted in several instances, 
authorizing intervenor funding in some cases and prohibiting it in 
others.

For example, the Environmental Protection Agency has intervenor funding 
authority under the Toxic Substances Control Act, 15 U.S.C. § 2605(c), 
and the Consumer Product Safety Commission has such authority under the 
Consumer Product Safety Act, 15 U.S.C. § 2056(c). Similarly, from 1975 
until recently, the Federal Trade Commission was given specific 
authority to fund intervenor participation in 1975 by the Magnuson-Moss 
Warranty-Federal Trade Commission Improvement Act, formerly, 15 U.S.C. 
§ 57a(h).[Footnote 255] Under this legislation, payments for legal 
services could not exceed the costs actually incurred, even though the 
participant used "house counsel" whose rate of pay was lower than 
prevailing rates. 57 Comp. Gen. 610 (1978).

Restrictions in appropriation acts have prohibited intervenor funding 
programs for several agencies. For example, a provision in the Nuclear 
Regulatory Commissions (NRC) 1981 appropriation prohibited the use of 
funds for the expenses of intervenors. The Comptroller General 
construed this restriction as prohibiting the NRC from adopting a "cost 
reduction program" of providing transcripts and other documents free to 
intervenors. B-200585, Dec. 3, 1980. However, NRC could reduce the 
number of copies of documents required to be filed. Id. Also, NRC could 
decide to provide free transcripts to all parties, intervenors 
included, without violating the restriction. B-200585, May 11, 1981. 
Other cases construing the NRC restriction, or successor versions, are 
Business & Professional People for the Public Interest v. Nuclear 
Regulatory Commission, 793 F.2d 1366 (D.C. Cir. 1986); 67 Comp. 
Gen. 553 (1988); and 62 Comp. Gen. 692 (1983).

Appropriation act restrictions have also prohibited intervenor funding 
by the Economic Regulatory Administration and the Federal Energy 
Regulatory Commission (FERC). A case involving the FERC prohibition is 
Electrical District No. 1 v. Federal Energy Regulatory Commission, 
813 F.2d 1246 (D.C. Cir. 1987). In addition, the conference committee 
on the 1980 appropriation for the National Highway Traffic Safety 
Administration and the former Civil Aeronautics Board directed that no 
funds be allocated by these agencies for intervenor funding 
programs.[Footnote 256]

A restriction contained solely in legislative history and not carried 
into the statutory language itself is not legally binding on the 
agency. The history of the NRC prohibition will illustrate this. For 
fiscal year 1980, the prohibition was expressed in committee reports 
but not in the appropriation act itself. Accordingly, GAO told NRC 
that, while it would be well advised to postpone its program, the 
restriction was not legally binding. 59 Comp. Gen. 228 (1980). For 
fiscal year 1981, the prohibition was written into NRC's appropriation 
act. Similarly, the restriction noted above for the transportation 
agencies later "graduated" to a general provision in the 
statute.[Footnote 257]

One court has disagreed with the GAO decisions. Greene County Planning 
Board v. Federal Power Commission (Greene County IV), 559 F.2d 1227 
(2nd Cir.), cert. denied, 434 U.S. 1086 (1976).[Footnote 258] There, 
after several years of litigation, the plaintiff Board had finally 
prevailed in its attempt to compel relocation of a proposed high 
kilovolt power line through a scenic portion of the county. The only 
question remaining was the ability of the Federal Power Commission 
(FPC) to reimburse the plaintiff's attorney's fees. (Though not 
"indigent," the counsel fees had drained a disproportionate amount of 
the county's resources.) The FPC had denied reimbursement on the 
grounds that the Board was protecting its own, not the public, interest 
and because it thought it lacked authority to reimburse the fees. After 
first concluding that the issue should be remanded to the FPC so that 
it could determine the propriety of reimbursement in accordance with 
the Comptroller General's decisions, the Second Circuit Court of 
Appeals granted a rehearing en banc. On rehearing, the majority opinion 
held that the FPC lacked authority to reimburse the attorney's fees. 
Greene County IV, 559 F.2d at 1238.

Subsequently, both GAO and the Justice Departments Office of Legal 
Counsel took the position that Greene County IV applied only to the 
former FPC, and not to other federal agencies or even to the agencies 
that succeeded to the FPC's responsibilities. 59 Comp. Gen. 228; 2 Op. 
Off. Legal Counsel 60 (1978). In addition, the U.S. District Court for 
the District of Columbia has likewise determined that Greene County IV 
does not extend generally to all agencies. Chamber of Commerce v. 
United States Department of Agriculture, 459 F. Supp. 216 (D.D.C. 
1978), upholding the authority of the Department of Agriculture to fund 
a consumer study on the impact of certain proposed rules.

Thus, to determine whether a given agency has intervenor funding 
authority, it is necessary first to examine the legislation, including 
appropriation acts, applicable to that agency, as well as pertinent 
judicial decisions. In the absence of statutory direction one way or 
the other, and if there are no judicial decisions on point, it is then 
appropriate to apply the necessary expense rationale of the GAO 
decisions.

The later decisions somewhat refined the standards expressed in the 
earlier cases. For example, in order to constitute a "necessary 
expense," the participation does not have to be absolutely 
indispensable in the sense that the issues could not be decided without 
it. It is sufficient for the agency to determine that a particular 
expenditure for participation can reasonably be expected to contribute 
substantially to a full and fair determination of the issues. 56 Comp. 
Gen. 111. This is consistent with the application of the necessary 
expense doctrine in other contexts as discussed throughout this 
chapter. Assuming the requisite statutory basis for intervention 
exists, the determination of necessity must be made by the 
administering agency itself, not by GAO. Id. See also B-92288, supra.

The standard of the participant's financial status was discussed in 
59 Comp. Gen. 424 (1980). While the participant need not be literally 
indigent, the authority to fund intervenor participation extends only 
to individuals and organizations which could not afford to participate 
without the assistance. In making this determination, the agency should 
consider the income and expense statements, as well as the net assets, 
of an applicant. An applicant does not qualify for assistance merely 
because it cannot afford to participate in all activities it desires. 
The applicant is expected to choose those activities it considers most 
significant and to allocate its resources accordingly.

Some of the earlier cases held that advance funding was prohibited by 
31 U.S.C. § 3324. 56 Comp. Gen. 111; B-139703, Sept. 22, 1976. However, 
in view of the Federal Grant and Cooperative Agreement Act of 1977, an 
agency with statutory authority to extend financial assistance in the 
form of grants may be able to utilize advance funding in its public 
participation program. A 1980 decision, 59 Comp. Gen. 424, applied this 
concept to the program of the Environmental Protection Agency.

The decisions have all dealt with participation in the agency's own 
proceedings. There would generally be no authority to fund intervenor 
participation in someone else's proceedings, for example, participation 
by a state agency in a state utility ratemaking proceeding. B-178278, 
Apr. 27, 1973 (nondecision letter).

Finally, the GAO decisions in no way imply that an agency is compelled 
to fund intervenor participation. They hold merely that, if the various 
standards are met, an agency has the authority to do so if it wishes. 
See B-92288, supra.

A summary and discussion of intervenor funding through early 1981 may 
be found in U.S. General Accounting Office, Review of Programs for 
Reimbursement for Public Participation in Federal Rulemaking 
Proceedings, PAD-81-30 (Washington, D.C.: Mar. 4, 1981). See also 
Rollee H. Efros, "Payment of Intervenors Expenses in Agency Regulatory 
Proceedings," Cases in Accountability: The Work of the GAO (Washington, 
D.C.: Westview Press,1979), pp. 171-181.

4. Compensation Restrictions:

"If an officer is not satisfied with what the law gives him for his 
services, he may resign."

Embry v. United States, 100 U.S. 680, 685 (1879), quoted in Lincoln v. 
United States, 418 F. Supp. 1094, 1095 (N.D. Cal. 1976).

As a general proposition, restrictions on the compensation of federal 
employees are regarded as matters of personnel law that are now under 
the jurisdiction of the Office of Personnel Management.[Footnote 259] 
However, compensation restrictions may also be viewed as limits on the 
"purpose availability" of appropriations. We specifically treat three 
compensation-related topics in this chapter--the restrictions on dual 
compensation, the restrictions on employing aliens, and the statutes 
concerning forfeiture of retirement annuities and retired pay--as 
illustrations of the different ways in which Congress may exercise its 
constitutional role of controlling the public purse by prescribing the 
purposes for which appropriated funds may be used. The provision on 
aliens is a restriction appearing in annual appropriation acts. The 
dual compensation and forfeiture statutes are permanent provisions 
found in the United States Code; while not phrased in terms of 
appropriation restrictions, the effect is the same.

a. Dual Compensation:

Section 5536 of title 5 of the United States Code prohibits a civilian 
employee or member of the uniformed services whose pay is fixed by 
statute or regulation from receiving additional pay from public money 
for any other service or duty, unless authorized by law.[Footnote 260] 
This is a purpose restriction on how an agency may spend its 
appropriation. For instance, GAO found that paying the actual cost of 
personal cell phone use for government business is permitted but not at 
a flat rate because an established fee per day is equivalent to an 
allowance in addition to salary, and, therefore, is prohibited by 
5 U.S.C. § 5536. B-287524, Oct. 22, 2001. GAO has also held in several 
cases that the provision of free food while on duty violates the 
prohibition against dual compensation. See, e.g., 42 Comp. Gen. 149, 
151 (1962); B-272985, Dec. 30, 1996.

b. Employment of Aliens:

For many years, with minor variations from year to year, various 
appropriation acts have included provisions restricting the federal 
employment of aliens. The typical prohibition, with exceptions to be 
noted below, bars the use of appropriated funds to pay compensation to 
any officer or employee of the United States whose post of duty is in 
the continental United States unless that person is a U.S. citizen. In 
more recent years, the prohibition has appeared as a general provision 
in the Treasury, Postal Service, and General Government appropriation 
acts, applicable to funds contained "in this or any other 
act."[Footnote 261] A recurring general provision in the Defense 
Department appropriation act exempts Defense Department personnel from 
the alien restriction.[Footnote 262]

The prohibition applies to all appropriated funds unless expressly 
provided otherwise. Therefore, it applies to the special deposit 
accounts established by statute for the Senate and House restaurants 
since these accounts amount to permanent indefinite appropriations. 
50 Comp. Gen. 323 (1970). It also applies to working capital funds. 
B-161976, Aug. 10, 1967.[Footnote 263]

There are a number of statutory exceptions to the restriction on 
compensating aliens. As noted, one significant exemption is for Defense 
Department personnel. See B-188507, Dec. 16, 1977; B-110831, Aug. 4, 
1952. Others are 42 U.S.C. § 2473(c)(10) (National Aeronautics and 
Space Administration, permanent legislation); 2 U.S.C. § 169 (Library 
of Congress, found in annual appropriation acts); 22 U.S.C. 
§ 1474(1) (permanent authority for specific, activities within the 
United States Information Agency); and 22 U.S.C. § 2672 (permanent 
authority for specific activities within the State Department). Since 
appropriation act exceptions may appear, disappear, or vary from time 
to time, it is important to scrutinize the relevant appropriation act 
for any given year. Absent an applicable exception, the general 
prohibition will apply. For an illustration of the complexities that 
may arise when the provisions vary from year to year, see 57 Comp. 
Gen. 172 (1977). GAO has supported enactment of the general restriction 
as permanent legislation. B-130733, Mar. 6, 1957.

In addition to the agencywide exemptions noted above, the alien 
restriction itself contains a number of exceptions. Several of these 
are summarized below.

Declaration of intention exception. The prohibition does not apply to a 
person in the federal service on the date of enactment of the 
appropriation act containing the prohibition who is actually residing 
in the United States, is eligible for citizenship, and has filed a 
declaration of intention to become a citizen. The employee must have 
filed the declaration prior to the date of enactment. Subsequent filing 
will not cure the disqualification. 17 Comp. Gen. 1104 (1938). A 
declaration timely filed but which had become void by operation of law 
due to lapse of time has also been held insufficient. B-138854, Apr. 1, 
1959.

Specific country exceptions. The statute typically exempts nationals of 
certain specified countries. The countries specified in any given 
appropriation act change from time to time according to the political 
climate. Dual citizenship will not negate the exception as long as one 
of the countries is within the exception, even where the individual has 
entered the United States from the nonexempt country. B-194929, 
June 20, 1979.

Allied country exception. The prohibition does not apply to nationals 
of "countries allied with the United States in the current defense 
effort." GAO will not decide whether a country meets this test. The 
determination is the responsibility of the employing agency, perhaps 
with the assistance of the State Department. GAO will not question a 
determination based on reasonable grounds. 35 Comp. Gen. 216 (1955); 
B-151064, Mar. 25, 1963; B-146142, June 22, 1961; B-139667, June 22, 
1959. The reason for GAO's position is that "it is not the 
responsibility nor the proper province of the accounting officers to 
initially determine political facts." B-107288, Feb. 14, 1952; 
B-107579, Feb. 14, 1952.

Given the facts and circumstances at the time, GAO ventured an 
assertion in the more obvious cases. For instance, GAO has said that 
Britain meets the test. 73 Comp. Gen. 319 (1994). We have also opined 
that Canada and Japan meet the test. B-188852, July 19, 1977; B-133877, 
Oct. 16, 1957; B-113780, Mar. 4, 1953. Even in these cases, the 
determination, strictly speaking, is up to the employing agency.

Allegiance exception. The prohibition does not apply to a person who 
"owes allegiance to the United States." This means "absolute and 
permanent allegiance" as distinguished from "qualified and temporary 
allegiance." 17 Comp. Gen. 1047 (1938); B-119760, Apr. 27, 1954. The 
exemption was apparently prompted by a concern for noncitizen 
inhabitants of U.S. territorial possessions; for example, "Filipinos in 
the service of the United States on March 28, 1938." 17 Comp. Gen. at 
1048.

The allegiance exception includes a clause to the effect that a signed 
affidavit will be regarded as prima facie evidence of allegiance. This 
clause has been construed to apply to noncitizen nationals, that is, 
noncitizen inhabitants of U.S. territorial possessions and not to 
resident aliens. Yuen v. Internal Revenue Service, 497 F. Supp. 1023 
(S.D.N.Y. 1980), aff'd, 649 F.2d 163 (2nd Cir. 1981). The district 
court opinion includes an exhaustive review of legislative history.

Emergency exception. The prohibition does not apply to "temporary 
employment in the field service …as a result of emergencies." The term 
"emergency" in this context means "flood, fire, or other catastrophe." 
B-146142, June 22, 1961. See also 73 Comp. Gen. 319 (1994).

An alien appointed in contravention of the statutory prohibition may 
not retain compensation already paid. 35 Comp. Gen. 216 (1955); 
18 Comp. Gen. 815 (1939). (The statute expressly gives the United 
States the right to recover.) If there is no statutory bar--for 
example, if the employment would have qualified under the "allied 
country" exception but the agency failed to make the required 
determination--the alien may be paid as a "de facto employee." Earlier 
decisions distinguished between appointments "void ab initio" and those 
that are merely "voidable." E.g., 37 Comp. Gen. 483 (1958); 35 Comp. 
Gen. 216 (1955); B-188852, July 19, 1977; B-178882, Aug. 29, 1973. The 
distinction proved confusing and GAO has moved away from it. The 
current rule is stated in 58 Comp. Gen. 734 (1979).

As a final note, the Supreme Court in 1976 invalidated a Civil Service 
Commission regulation requiring citizenship as a prerequisite to 
federal employment. Hampton v. Mow Sun Wong, 426 U.S. 88 (1976). The 
Court did not, however, invalidate the appropriation act restrictions. 
See B-188507, Dec. 16, 1977. The Yuen litigation cited earlier 
specifically upheld the restriction against a charge of violation of 
the Equal Protection clause.

c. Forfeiture of Annuities and Retired Pay:

(1) General principles:

Under 5 U.S.C. § 8312 (the so-called "Hiss Act"), a civilian employee 
of the United States or a member of the uniformed services who is 
convicted of certain criminal offenses relating to the national 
security will forfeit his or her retirement annuity or retired pay. 
Further, the annuity or retired pay may not be paid to the convicted 
employees survivors or beneficiaries. The offenses that will result in 
forfeiture are specified in the statute. Examples are: gathering or 
delivering defense information to aid a foreign government; gathering, 
transmitting, or losing defense information; disclosure of classified 
information; espionage; sabotage; treason; rebellion or insurrection; 
seditious conspiracy; advocating the overthrow of the government; 
enlistment to serve in an armed force against the United States; and 
certain violations of the Atomic Energy Act. In addition, perjury by 
falsely denying the commission of one of the specified offenses is 
itself an offense for purposes of forfeiture.

An employee for purposes of 5 U.S.C. § 8312 includes a Member of 
Congress and an individual employed by the government of the District 
of Columbia. 5 U.S.C. § 8311(1). The specific types of retirement 
annuities and retired pay subject to forfeiture are enumerated in 
5 U.S.C. §§ 8311(2) and (3).

Since 5 U.S.C. § 8312 imposes a forfeiture, it is penal in nature. 
Therefore, it must be strictly construed. GAO will not construe the 
statute as applicable to situations that are not expressly covered by 
its terms. 35 Comp. Gen. 302 (1955).

In the absence of an authoritative judicial decision to the contrary, 
the effective date of a conviction for stoppage of retired pay should 
be determined in a manner which will result in the least expenditure of 
public funds. Thus, the date a guilty verdict is returned should be 
considered the date of conviction rather than a later date when the 
judgment is ordered executed, and retired pay should be stopped the 
following day. 39 Comp. Gen. 741 (1960). Using the cited decision to 
illustrate: the jury returned a guilty verdict on December 2, 1959; 
judgment was entered on January 29, 1960; the date of conviction is 
December 2, 1959, and retired pay should be stopped effective December 
3.

In the absence of an authoritative judicial decision to the contrary, a 
plea of "nolo contendere" should be regarded as a conviction for 
purposes of 5 U.S.C. § 8312. 41 Comp. Gen. 62 (1961).

(2) The Alger Hiss case:

The event that, more than any other single incident, gave rise to the 
original enactment of 5 U.S.C. § 8312, was the case of Alger Hiss. A 
former State Department employee, Hiss was convicted in 1950 of perjury 
stemming from testimony before a grand jury investigating alleged 
espionage violations. When Hiss was released from prison after serving 
his sentence, considerable public and congressional attention was 
directed at the fact that he was still entitled to receive his 
government pension. Given the political climate of the times, the 
result was the enactment of 5 U.S.C. § 8312 in 1954 (Pub. L. No. 769, 
ch. 1214, 68 Stat. 1142 (Sept. 1, 1954)).

Hiss applied for his pension in 1967 and the then Civil Service 
Commission denied the application based on 5 U.S.C. § 8312. He 
subsequently sued for restoration of his forfeited pension. In Hiss v. 
Hampton, 338 F. Supp. 1141 (D.D.C. 1972), the court, finding that the 
statute had been aimed more at punishing Alger Hiss than regulating the 
federal service, held 5 U.S.C. § 8312 to be an ex post facto law and 
therefore unconstitutional as it had been applied to Hiss for conduct 
which occurred prior to the date of its enactment. Therefore, the court 
ordered the Civil Service Commission to pay Hiss his annuity 
retroactively with interest.

The Hiss case gave rise to two GAO decisions--52 Comp. Gen. 175 (1972), 
aff'd, B-115505, Dec. 21, 1972--holding that the interest payable to 
Hiss, as with the annuity itself, must be paid from the Civil Service 
Retirement Fund rather than the permanent judgment appropriation, 
31 U.S.C. § 1304. The court case and decisions are summarized in 
B-115505, May 15, 1973.

(3) Types of offenses covered:

Under the original version of 5 U.S.C. § 8312, forfeiture was not 
strictly limited to national security offenses. An employee could lose 
his or her retirement annuity or retired pay simply by committing a 
felony "in the exercise of his authority, influence, power, or 
privileges as an officer or employee of the Government." There were 
numerous examples of forfeitures for such infractions as falsifying a 
travel voucher or using a government-owned vehicle for personal 
purposes.[Footnote 264]

Recognizing that in many cases the punishment was too severe for the 
offense, especially in cases where the offense occurred after many 
years of government service, Congress amended the statute in 1961 (Pub. 
L. No. 87-299, 75 Stat. 640 (Sept. 26, 1961)) to limit it to offenses 
relating to national security and to "retroactively remove therefrom 
those provisions of the statute which prohibited payment of annuities 
and retired pay to persons who commit offenses, acts or omissions which 
do not involve the security of the United States." 41 Comp. Gen. 399, 
400 (1961). Thus, numerous offenses which would have caused forfeiture 
before 1961 no longer do. See, e.g., B-155823, Sept. 15, 1965 
(conspiracy to embezzle government funds); B-155558, Nov. 25, 1964 
(false statement). Of course, to the extent that the pre-1961 decisions 
establish principles apart from the specific offenses involved, such as 
the general principles noted above, they remain valid.

The original 1954 enactment of 5 U.S.C. § 8312 did not expressly cover 
offenses under the Uniform Code of Military Justice (UCMJ), and this 
omission generated many GAO decisions prior to the 1961 amendment. 
E.g., 40 Comp. Gen. 601 (1961); 38 Comp. Gen. 310 (1958); 35 Comp. 
Gen. 302 (1955). The UCMJ decisions came to an abrupt halt with the 
enactment of the 1961 amendment. The current version of 5 U.S.C. § 8312 
expressly covers UCMJ offenses, again limited to national security 
violations. Now, a conviction under the UCMJ will produce a forfeiture 
if the offense involves certain UCMJ articles specified in the statute, 
or if it involves any other article of the UCMJ where the charges and 
specifications describe a violation of certain of the United States 
Code offenses, and if the "executed sentence" includes death, 
dishonorable discharge, or dismissal from the service.

(4) Related statutory provisions:

When a forfeiture is invoked under 5 U.S.C. § 8312, the individual is 
entitled to a refund of his contribution toward the annuity less any 
amounts already paid out or refunded. 5 U.S.C. § 8316.

Forfeiture may not be invoked where an individual is convicted of an 
offense "as a result of proper compliance with orders issued, in a 
confidential relationship, by an agency or other authority" of the 
United States government or the District of Columbia government. 
5 U.S.C. § 8320.

If a payment of annuity or retired pay is made in violation of 5 U.S.C. 
§ 8312 "in due course and without fraud, collusion, or gross 
negligence," the relevant accountable officer will not be held 
responsible. 5 U.S.C. § 8321.

In addition to 5 U.S.C. § 8312, retirement annuities or retired pay may 
be forfeited for willful absence from the United States to avoid 
prosecution for a section 8312 offense (5 U.S.C. § 8313); refusal to 
testify in national security matters (5 U.S.C. § 8314);[Footnote 265] 
or knowingly falsifying certain national security-related aspects of a 
federal or District of Columbia employment application (5 U.S.C. 
§ 8315).

5. Entertainment--Recreation--Morale and Welfare:

a. Introduction:

The concept to be explored in this section is the rule that 
appropriated funds may not be used for entertainment except when 
specifically authorized by statute and also authorized or approved by 
proper administrative officers. E.g., 69 Comp. Gen. 197 (1990); 
43 Comp. Gen. 305 (1963). The basis for the rule is that entertainment 
is essentially a personal expense even where it occurs in some 
business-related context. Except where specifically appropriated for, 
entertainment cannot normally be said to be necessary to carry out the 
purposes of an appropriation.

The reader will readily note the sharp distinction between government 
practice and corporate practice in this regard. "Entertainment" as a 
business-related expense is an established practice in the corporate 
sector. No one questions that it can be equally business-related for a 
government agency. The difference--and the policy underlying the rule 
for the government--is summarized in the following passage from 
B-223678, June 5, 1989:

"The theory is not so much that these items can never be business-
related, because sometimes they clearly are. Rather, what the decisions 
are really saying is that, because public confidence in the integrity 
of those who spend the taxpayers' money is essential, certain items 
which may appear frivolous or wasteful--however legitimate they may in 
fact be in a specific context--should, if they are to be charged to 
public funds, be authorized specifically by the Congress."

Another way of expressing this idea is found in the following passage 
from B-288266, Jan. 27, 2003:

"[R]eference to 'common business practice' is not in itself an adequate 
justification for spending public money on food or, for that matter, 
other objects. An expenditure of public funds must be anchored in 
existing law, not the practices and conventions of the private 
sector."

(1) Application of the rule:

As a general proposition, the rule applies to all federal departments 
and agencies operating with appropriated funds. For example, in 1977 it 
was held applicable to the Alaska Railroad. B-124195-O.M., Aug. 8, 
1977.

The question in B-170938, Oct. 30, 1972, was whether the entertainment 
prohibition applied to the revolving fund of the National Credit Union 
Administration. The fund is derived from fees collected from federal 
credit unions and not from direct appropriations from the Treasury. 
Nevertheless, the authority to retain and use the collections 
constitutes a continuing appropriation since, but for that authority, 
the fees would have to be deposited in the Treasury and Congress would 
have to make annual appropriations for the agency's expenses. 
Therefore, the revolving fund could not be used for entertainment.

There are three situations in which the rule has not been applied. The 
first is certain government corporations. For example, the Corporation 
for Public Broadcasting, since it was established as a private 
nonprofit corporation and is not an agency or establishment of the U.S. 
government (notwithstanding that it receives appropriations), could use 
its funds to hold a reception in the Cannon House Office Building. 
B-131935, July 16, 1975.

The rule has also been held not to apply to government corporations 
that are classed as government agencies but which have statutory 
authority to determine the character and necessity of their 
expenditures. B-127949, May 18, 1956 (Saint Lawrence Seaway Development 
Corporation); B-35062, July 28, 1943. There are limits, however. See, 
e.g., B-45702, Nov. 22, 1944, disallowing the cost of a "luncheon 
meeting" of government employees.

The second exception is donated funds where the recipient agency has 
statutory authority to accept and retain the gift. The availability of 
donated funds for entertainment is discussed further, with case 
citations, in Chapter 6.

The third exception, infrequently applied, is for certain commissions 
with statutory authority to procure supplies, services, or property, 
and to make contracts, without regard to the laws and procedures 
applicable to federal agencies, and to exercise those powers that are 
necessary to enable the commission to carry out the purposes for which 
it was established efficiently and in the public interest. B-138969, 
Apr. 16, 1959 (Lincoln Sesquicentennial Commission); B-138925, 
Apr. 15, 1959 (Civil War Centennial Commission); B-129102, Oct. 2, 1956 
(Woodrow Wilson Foundation).

(2) What is entertainment?

The Comptroller General has not attempted a precise definition of the 
term "entertainment." In one decision, GAO noted that one court had 
defined the term as "a source or means of amusement, a diverting 
performance, especially a public performance, as a concert, drama, or 
the like." Another court said that entertainment "denotes that which 
serves for amusement and amusement is defined as a pleasurable 
occupation of the senses, or that which furnishes it, as dancing, 
sports, or music." 58 Comp. Gen. 202, 205 (1979),[Footnote 266] 
overruled on other grounds, 60 Comp. Gen. 303 (1981).

For purposes of this discussion, the term entertainment, as used in 
decisions of the Comptroller General and Comptroller of the Treasury, 
is an "umbrella" term that includes: food and drink, either as formal 
meals or as snacks or refreshments; receptions, banquets, and the like; 
music, live or recorded; live artistic performances; and recreational 
facilities. Our treatment includes one other category that, even though 
not entertainment as such, is closely related to the entertainment 
cases: facilities for the welfare or morale of employees.

Earlier decisions from time to time had occasion to address the 
components of entertainment. Can it include liquor? Responding to an 
inquiry from the Navy, a Comptroller of the Treasury, obviously not a 
teetotaler, said: "Entertainments …without wines, liquors or cigars, 
would be like the play of Hamlet with the melancholy Dane entirely left 
out of the lines." 14 Comp. Dec. 344, 346 (1907).[Footnote 267]

In a 1941 decision (B-20085, Sept. 10, 1941), the Coordinator of Inter-
American Affairs asked whether authorized entertainment could include 
such items as cocktail parties, banquets and dinners, theater 
attendance, and sightseeing parties. The Comptroller General, 
recognizing that an appropriation for entertainment conferred 
considerable discretion, replied, in effect, "all of the above."

That's entertainment.

b. Food for Government Employees:

It may be stated as a general rule that appropriated funds are not 
available to pay subsistence or to provide free food to government 
employees at their official duty stations ("at headquarters") unless 
specifically authorized by statute. In addition to the obvious reason 
that food is a personal expense and government salaries are presumed 
adequate to enable employees to eat regularly,[Footnote 268] furnishing 
free food might violate 5 U.S.C. § 5536, which prohibits an employee 
from receiving compensation in addition to the pay and allowances fixed 
by law. See, e.g., 68 Comp. Gen. 46, 48 (1988); 42 Comp. Gen. 149, 151 
(1962); B-272985, Dec. 30, 1996; see also the dual compensation 
discussion in this chapter, section C.4.a.

The "free food" rule applies to snacks and refreshments as well as 
meals. For example, in 47 Comp. Gen. 657 (1968), the Comptroller 
General held that Internal Revenue Service appropriations were not 
available to serve coffee to either employees or private individuals at 
meetings. Similarly prohibited was the purchase of coffeemakers and 
cups. Although serving coffee or refreshments at meetings may be 
desirable, it generally is not considered a "necessary expense" in the 
context of appropriations availability. See also B-233807, Aug. 27, 
1990; B-159633, May 20, 1974.

The question of food for government employees arises in many contexts 
and there are certain well-defined exceptions. For example, the 
government may pay for the meals of civilian and military personnel in 
travel status because there is specific statutory authority to do 
so.[Footnote 269] The rule and exception are illustrated by 65 Comp. 
Gen. 16 (1985), in which the question was whether the National Oceanic 
and Atmospheric Administration could provide in-flight meals, at 
government expense, to persons on extended flights on government 
aircraft engaged in weather research. The answer was yes for government 
personnel in travel status, no for anyone else, including government 
employees not in official travel status. See also B-256938, Sept. 21, 
1995 (because the aircraft and its airbase were determined to be a U.S. 
Customs aircraft pilot's permanent duty station, the pilot could be 
reimbursed only for meals purchased incident to duties performed away 
from the aircraft outside the limits of his official duty station).

While feeding employees may not be regarded as a "necessary expense" as 
a general proposition, it may qualify when the agency is carrying out 
some particular statutory function where the necessary relationship can 
be established. Thus, in B-201186, Mar. 4, 1982, it was a permissible 
implementation of a statutory accident prevention program for the 
Marine Corps to set up rest stations on highways leading to a Marine 
base to serve coffee and doughnuts to Marines returning from certain 
holiday weekends. Another example is 65 Comp. Gen. 738 (1986) 
(refreshments at awards ceremonies), discussed later in this section. A 
related example is B-235163.11, Feb. 13, 1996, in which GAO determined 
that appropriated funds could be used to pay for the dinner of a 
nonfederal award recipient and her spouse at a National Science 
Foundation awards ceremony because of the statutory nature of the 
award. Exceptions of this type illustrate the relativity of the 
necessary expense doctrine pointed out earlier in our general 
discussion.

We turn now to a discussion of the rule and its exceptions in several 
other contexts.

(1) Working at official duty station under unusual conditions:

The well-settled rule is that, except in extreme emergencies that are 
explained below, the government may not furnish free food (the 
decisions sometimes get technical and use terms like "per diem" or 
"subsistence") to employees at their official duty station, even when 
they are working under unusual circumstances.[Footnote 270]

An early illustration is 16 Comp. Gen. 158 (1936), in which the expense 
of meals was denied to an Internal Revenue investigator who was 
required to maintain a 24-hour surveillance. The reason payment was 
denied is that the investigator would presumably have eaten (and 
incurred the expense of) three meals a day even if he had not been 
required to work the 24-hour shift. A similar example is B-272985, 
Dec. 30, 1996, in which the expense of meals was denied to a Central 
Intelligence Agency (CIA) security detail while providing 24-hour 
security to the Director or Deputy Director of the CIA.

Payment was also denied in 42 Comp. Gen. 149 (1962), where a postal 
official had bought carry-out restaurant food for postal employees 
conducting an internal election who were required to remain on duty 
beyond regular working hours.[Footnote 271]

Similarly, the general rule was applied to deny reimbursement for food 
in the following situations:

* Federal mediators required to conduct mediation sessions after 
regular hours. B-169235, Apr. 6, 1970; B-141142, Dec. 15, 1959.

* District of Columbia police officers involved in clean-up work after 
a fire in a municipal building. B-118638.104, Feb. 5, 1979.

* Geological Survey inspectors at offshore oil rigs who had little 
alternative than to buy lunch from private caterers at excessive 
prices. B-194798, Jan. 23, 1980. See also B-202104, July 2, 1981 
(Secret Service agents on 24-hour-a-day assignment required to buy 
meals at high cost hotels).

* Law enforcement personnel retained at staging area for security 
purposes prior to being dispatched to execute search warrants. 
B-234813, Nov. 9, 1989.

* Air Force enlisted personnel assigned to a security detail at an off-
base social event. B-232112, Mar. 8, 1990.

An exception was permitted in 53 Comp. Gen. 71 (1973). In that case, 
the unauthorized occupation of a building in which the Bureau of Indian 
Affairs was located necessitated the assembling of a cadre of General 
Services Administration special police, who unexpectedly spent the 
whole night there in alert status until relieved the following morning. 
Agency officials purchased and brought in sandwiches and coffee for the 
cadre. GAO concluded that it would not question the agency's 
determination that the expenditure was incidental to the protection of 
government property during an extreme emergency involving danger to 
human life and the destruction of federal property, and approved 
reimbursement. The decision emphasized, however, that it was an 
exception and that the rule still stands.

A similar exception was permitted in B-189003, July 5, 1977, where 
agents of the Federal Bureau of Investigation (FBI) had been forced to 
remain at their duty stations within the office during a severe 
blizzard in Buffalo, New York. The area was in a state of emergency and 
was later declared a national disaster area. GAO agreed with the 
agency's determination that the situation presented a danger to human 
life of Buffalo citizens and that it was imperative for FBI employees 
to maintain the essential functions of the office during the emergency.

The rationale of 53 Comp. Gen. 71 and B-189003 was applied in B-232487, 
Jan. 26, 1989, for government employees required to work continually 
for a 24-hour period to evacuate and secure an area threatened by the 
derailment of a train carrying toxic liquids.

The exception, however, is limited. The requirement to remain on duty 
for a 24-hour period, standing alone, is not enough. In B-185159, 
Dec. 10, 1975, for example, the cost of meals was denied to Treasury 
Department agents required to work over 24 hours investigating a 
bombing of federal offices. The Comptroller General pointed out that 
dangerous conditions alone are not enough. Under the exception 
established in 53 Comp. Gen. 71, it is necessary to find that the 
situation involves imminent danger to human life or the destruction of 
federal property. Also, in that case, the agents were only 
investigating a dangerous situation that had already occurred and there 
was no suggestion that any further bombings were imminent. A similar 
case is B-217261, Apr. 1, 1985, involving a Customs Service official 
required to remain in a motel room for several days on a surveillance 
assignment. See also 16 Comp. Gen. 158 (1936); B-202104, July 2, 1981.

Short of the emergency situation described in B-189003, July 5, 1977, 
inclement weather is not enough to support an exception. There are 
numerous cases in which employees have spent the night in motels rather 
than returning home in a snowstorm, in order to be able to get to work 
the following day. Reimbursement for meals has consistently been 
denied. 68 Comp. Gen. 46 (1988); 64 Comp. Gen. 70 (1984); B-226403, 
May 19, 1987; B-200779, Aug. 12, 1981; B-188985, Aug. 23, 1977. It 
makes no difference that the employee was directed by his or her 
supervisor to rent the room (B-226403 and B-188985),[Footnote 272] or 
that the federal government in Washington was shut down (68 Comp. 
Gen. 46).[Footnote 273]

Naturally, statutory authority will overcome the prohibition. Thus, 
where the Veterans Administration (VA) had statutory authority to 
accept uncompensated services and to contract for related "necessary 
services," the VA could, upon an administrative determination of 
necessity, contract with local restaurants for meals to be furnished 
without charge to uncompensated volunteer workers at VA outpatient 
clinics when their scheduled assignment extended over a meal period. 
B-145430, May 9, 1961. Similarly, in B-241708, Sept. 27, 1991, the 
Comptroller General determined that because the Bureau of Indian 
Affairs (BIA) hired emergency firefighters under special statutory 
authority, 43 U.S.C. § 1469, BIA's practice of furnishing hot meals and 
snack lunches for emergency firefighters was legally permissible. There 
is also authority to make subsistence payments to law enforcement 
officials and members of their immediate families when threats to their 
lives force them to occupy temporary accommodations. 5 U.S.C. 
§ 5706a.[Footnote 274]

(2) Government Employees Training Act:

The Government Employees Training Act (Training Act) authorizes 
agencies to "pay …for all or a part of the necessary expenses of 
training," 5 U.S.C. § 4109, and to pay "for expenses of attendance at 
meetings which are concerned with the functions or activities for which 
the appropriation is made," 5 U.S.C. § 4110, regardless of whether the 
event is held within the employees' official duty station. The 
Comptroller General has interpreted and applied the Training Act to 
accommodate the day-to-day realities of governmental operations within 
the limits imposed by the statutes and has determined that the Training 
Act permits agencies to pay for the costs of meals and refreshments at 
meetings and training events under specific circumstances, which are 
outlined below. B-288266, Jan. 27, 2003; B-233807, Aug. 27, 1990.

(a) Attendance at meetings and conferences:

In section C.2 of this chapter, we discuss when appropriated funds may 
be used to finance the attendance of government employees at meetings 
and conferences. This section addresses when the government may pay for 
meals at meetings and conferences when attendance is authorized under 
the principles and statutes set forth in section C.2. As the reader 
will discover from the discussion that follows, there are many 
authorities available to planners of meetings and conferences for this 
purpose, and planners should become familiar with them. For day-to-day 
routine business meetings, our case law has consistently held that the 
Training Act does not provide authority to use appropriations to supply 
food items. As our case law demonstrates, agencies appear to struggle 
with this rule. In this regard, our case law is not static nor 
inflexible. As recent history demonstrates, GAO is willing to reexamine 
its case law and to revise, to the extent permitted by law, rules that 
agency officials believe frustrate efficient, effective, and 
responsible government. B-288266, Jan. 27, 2003. Any revision, of 
course, must be founded on sound legal reasoning, and must include 
appropriate controls to prevent abuses and ensure public confidence in 
the integrity of those who spend the taxpayers money.

For meetings sponsored by nongovernment organizations, the attendee 
will commonly be charged a fee, usually but not necessarily called a 
registration fee. If a single fee is charged covering both attendance 
and meals and no separate charge is made for meals, the government may 
pay the full fee, assuming of course that funds are otherwise available 
for the cost of attendance. 38 Comp. Gen. 134 (1958); B-249351, May 11, 
1993; B-233807, Aug. 27, 1990; B-66978, Aug. 25, 1947. The same is true 
for an evening social event where the cost is a mandatory nonseparable 
element of the registration fee. 66 Comp. Gen. 350 (1987).

If a separate charge is made for meals, the government may pay for the 
meals if there is a showing that (1) the meals are incidental to the 
meeting; (2) attendance of the employee at the meals is necessary to 
full participation in the business of the conference; and (3) the 
employee is not free to take the meals elsewhere without being absent 
from essential formal discussions, lectures, or speeches concerning the 
purpose of the conference. B-233807, Aug. 27, 1990; B-160579, Apr. 26, 
1978; B-166560, Feb. 3, 1970. Absent such a showing, the government may 
not pay for the meals. B-154912, Aug. 26, 1964; B-152924, Dec. 18, 
1963; B-95413, June 7, 1950; B-88258, Sept. 19, 1949. As an examination 
of the cited cases will reveal, these rules apply regardless of whether 
the conference takes place within the employees duty station area or 
someplace else.

Where the government is authorized to pay for meals under the above 
principles, the employee normally cannot be reimbursed for purchasing 
alternate meals. See B-193504, Aug. 9, 1979; B-186820, Feb. 23, 1978. 
Personal taste is irrelevant. Thus, an employee who, for example, 
loathes broccoli will either have to eat it anyway, pay for a 
substitute meal from his or her own pocket, or go without. For an 
employee on travel or temporary duty status, which is where this rule 
usually manifests itself, per diem is reduced by the value of the meals 
provided. E.g., 60 Comp. Gen. 181, 183-84 (1981). The rule will not 
apply, however, where the employee is unable to eat the meal provided 
(and cannot arrange for an acceptable substitute) because of bona fide 
medical or religious reasons. B-231703, Oct. 31, 1989 (per diem not 
required to be reduced where employee, an Orthodox Jew who could not 
obtain kosher meals at conference, purchased substitute meals 
elsewhere).

The above rules will not apply to day-to-day routine agency-sponsored 
meetings. GAO has described "day-to-day" business meetings as meetings 
that involve discussions of the internal procedures or operations of 
the agency. See 68 Comp. Gen. 604, 605 (1989). Meetings or conferences 
that are not routine involve topical matters of general interest that 
might appeal to governmental and nongovernmental participants. Id. 
Attendance at routine agency-sponsored meetings will generally be 
subject to the prohibition on furnishing free food to employees at 
their official duty stations. Thus the cost of meals could not be 
provided at a conference of field examiners of the National Credit 
Union Administration. B-180806, Aug. 21, 1974. Use of appropriated 
funds was prohibited for coffee breaks at a management seminar, 
B-159633, May 20, 1974; meals served during "working sessions" at 
Department of Labor business meetings, B-168774, Jan. 23, 1970; and 
meals at monthly luncheon meetings for officials of law enforcement 
agencies, B-198882, Mar. 25, 1981. Appropriated funds also could not be 
used for meals at quarterly managers meetings of the U.S. Army Corps of 
Engineers, 72 Comp. Gen. 178 (1993), and meals and refreshments served 
to government employees attending Federal Communication Commission 
radio spectrum auctions. B-260692, Jan. 2, 1996. See also 47 Comp. 
Gen. 657 (1968); B-45702, Nov. 22, 1944.

In B-137999, Dec. 16, 1958, the commissioners of the Outdoor Recreation 
Resources Review Commission had statutory authority to be reimbursed 
for actual subsistence expenses. This was held to include the cost of 
lunches during meetings at a Washington hotel. However, the cost of 
lunches for staff members of the Commission could not be paid.

Merely calling the cost of meals a "registration fee" will not avoid 
the prohibition. In a 1975 case, the cost of meals was disallowed for 
Army employees at an Army-sponsored "Operations and Maintenance 
Seminar." The charge had been termed a registration fee but covered 
only luncheons, dinner, and coffee breaks. B-182527, Feb. 12, 1975. See 
also B-195045, Feb. 8, 1980.

In B-187150, Oct. 14, 1976, grant funds provided to the government of 
the District of Columbia under the Social Security Act for personnel 
training and administrative expenses could not be used to pay for a 
luncheon at a 4-hour conference of officials of the D.C. Department of 
Human Resources. The conference could not be reasonably characterized 
as training and did not qualify as an allowable administrative cost 
under the program regulations.

While 5 U.S.C. § 4110 does not apply to a routine business meeting, in 
B-281063, Dec. 1, 1999, the Nuclear Regulatory Commission (NRC) could 
pay an all-inclusive facility rental fee for a meeting to discuss 
internal matters, even though the fee resulted in food being served to 
NRC employees at their official duty stations. Because the fee would 
have remained the same for NRC whether or not it accepted and its 
employees ate the food, the harm that the general rule is meant to 
prevent (i.e., expenditure of federal funds on personal items) was not 
present.

In January 2000, the General Services Administration (GSA) published an 
amendment to the Federal Travel Regulations to address "conference 
planning." 41 C.F.R. pts. 301-11 and 301-74, 65 Fed. Reg. 1326 
(Jan. 10, 2000). The amendment defined "conference" as "[a] meeting, 
retreat, seminar, symposium or event that involves attendee travel." 
The amendment included a provision permitting agencies to pay for light 
refreshments for agency employees at conferences. 41 C.F.R. § 301-
74.11. In agency guidance explaining the regulation, GSA advised 
agencies that they could use appropriated funds to pay for refreshments 
for nontravelers at some conferences. In particular, GSA advised that 
if the majority of the attendees were in travel status, the agency 
could fund refreshments for all attendees.

In a 2003 decision, GAO explained that GSA's statutory basis for the 
light refreshment provision is 5 U.S.C. § 5702, which addresses the 
subsistence expenses of federal employees "when traveling on official 
business away from the employees designated post of duty"; therefore, 
while Congress has authorized GSA to prescribe regulations necessary 
for the administration of travel and subsistence expenses, GSA's 
authority does not extend to employees who are not in travel status. 
B-288266, Jan. 27, 2003.[Footnote 275] Accordingly, GAO held that the 
light refreshment provision of the travel regulation applies only to 
federal employees who are in travel status. Id.[Footnote 276] The 
decision also clarified that although section 4110 generally applies 
only to meetings sponsored by nongovernmental organizations, the 
Comptroller General extended section 4110 to a government-sponsored 
meeting, regardless of whether an employee is in travel status or not, 
as long as the meeting satisfies the same conditions as required for 
nongovernment-sponsored meetings and the government-sponsored meeting 
is not an internal day-to-day business meeting.

In response to this decision, GSA agreed that its authority extended 
only to employees in travel status and in its guidance would refer 
agencies to GAO decisions holding that section 4110 of the Training Act 
authorizes agencies to provide light refreshments to nontravelers at a 
government-sponsored meeting as long as the meeting meets the 
requirements of section 4110 and is not a "day-to-day" or "routine" 
business meeting. Letter from Raymond J. McNamara, General Counsel, 
GSA, to Anthony H. Gamboa, General Counsel, GAO, undated, received by 
GAO June 9, 2003.

In 1980, the President's Committee on Employment of the Handicapped 
held its annual meeting in the Washington Hilton Hotel. The affair was 
to last 3 days and included a luncheon and two banquets. There was no 
registration fee for the meeting but there were charges for the meals. 
GAO's Equal Employment Opportunity Office planned to send three 
employees to the meeting and asked whether the agency could pick up the 
tab for the meals. The three employees were to make a presentation at 
the meeting and it seemed clear that attendance was authorized under 
5 U.S.C. § 4110. Also, if a registration fee were involved, the prior 
decisions noted above would presumably have answered the question. The 
Comptroller General reviewed the precedents such as B-160579, Apr. 26, 
1978, and B-166560, Feb. 3, 1970, and took the logical step of applying 
them to the situation at hand. Thus, GAO could pay for the meals if 
administrative determinations were made that (1) the meals were 
incidental to the meeting; (2) attendance at the meals was necessary 
for full participation at the meeting; and (3) the employees would miss 
essential formal discussions, lectures, or speeches concerning the 
purpose of the meeting if they took their meals elsewhere. B-198471, 
May 1, 1980.[Footnote 277]

This decision, so it seems, became perceived as the loophole through 
which the lunch wagon could be driven. So apparently compelling is the 
quest for free food that it became necessary to issue several 
additional decisions to clarify B-198471 and to explain precisely what 
the rationale of that decision does and does not authorize.

In 64 Comp. Gen. 406 (1985), the Comptroller General held that the cost 
of meals could not be reimbursed for employees attending monthly 
meetings of the Federal Executive Association within their duty station 
area. The meetings were essentially luncheon meetings at which 
representatives of various government agencies could discuss matters of 
mutual interest. The decision stated:

"What distinguishes [B-198471] …is that the President's annual meeting 
was a 3-day affair with meals clearly incidental to the overall 
meeting, while in [the cases in which reimbursement has been denied] 
the only meetings which took place were the ones which took place 
during a luncheon meal…. In order to meet the three-part test [of 
B-198471], a meal must be part of a formal meeting or conference that 
includes not only functions such as speeches or business carried out 
during a seating at a meal but also includes substantial functions that 
take place separate from the meal. [W]e are unwilling to conclude that 
a meeting which lasts no longer than the meal during which it is 
conducted qualifies for reimbursement."

Id. at 408 (explanatory information provided).

A similar case the following year, 65 Comp. Gen. 508 (1986), reiterated 
that the above-quoted test of 64 Comp. Gen. 406 must precede the 
application of the three-part test of B-198471. The three-part test, 
and hence the authority to reimburse, relates to a meal that is 
incident to a meeting, not a meeting that is incident to a meal. 
65 Comp. Gen. at 510; 64 Comp. Gen. at 408. See also B-249249, Dec. 17, 
1992.

Two 1989 decisions, 68 Comp. Gen. 604 and 68 Comp. Gen. 606, defined 
the rules further, holding that 5 U.S.C. § 4110 and B-198471 do not 
apply to purely internal business meetings or conferences sponsored by 
government agencies. See also 72 Comp. Gen. 178 (1993); B-247563, 
Dec. 11, 1996; B-270199, Aug. 6, 1996; and B-260692, Jan. 2, 1996. 
Noting that this result is consistent with the legislative history of 
5 U.S.C. § 4110 as summarized in prior decisions,[Footnote 278] both 
decisions stated:

"We think …that there is a clear distinction between the payment of 
meals incidental to formal conferences or meetings, typically 
externally organized or sponsored, involving topical matters of general 
interest to governmental and nongovernmental participants, and internal 
business or informational meetings primarily involving the day-to-day 
operations of government. With respect to the latter, 5 U.S.C. § 4110 
has little bearing …."

68 Comp. Gen. at 605 and 608. One of the decisions went a step further 
and commented that the claim in 65 Comp. Gen. 508 "should have been 
summarily rejected based on the application of the general rule." 
68 Comp. Gen. at 609. Naturally, if the meeting or conference does not 
have the necessary connection with official agency business, the cost 
of meals may not be paid regardless of who sponsors the meeting or 
where it is held. Thus, a registration fee consisting primarily of the 
cost of a luncheon was disallowed for three Community Services 
Administration employees attending a Federal Executive Board meeting at 
which Combined Federal Campaign (CFC) awards were to be presented. 
B-195045, Feb. 8, 1980.[Footnote 279] Similarly, an employee of the 
Department of Housing and Urban Development could not be reimbursed for 
meals incident to meetings of a local business association. B-166560, 
May 27, 1969.

In a 1981 case, the Internal Revenue Service bought tickets for several 
of its agents to attend the Fourth Annual Awards and Scholarship Dinner 
of the National Association of Black Accountants. The purposes of 
attending the banquet were to establish contacts for recruitment 
purposes and to demonstrate the commitment of the IRS to its equal 
employment opportunity program. However, attendance could not be 
authorized under either 5 U.S.C. § 4109 or 5 U.S.C. § 4110, and the 
expenditure was therefore prohibited by 5 U.S.C. § 5946. B-202028, 
May 14, 1981.

However, in B-249249, Dec. 17, 1992, the Comptroller General held that 
the Federal Bureau of Investigation (FBI) could reimburse an FBI agent 
for the cost of a retirement banquet. The agent represented the FBI at 
the banquet honoring a local police chief and presented him with a 
plaque and commendation letter from the FBI Director. "The agent's 
attendance at the function was in furtherance of the agency's functions 
or activities for which its appropriations were made and the meal was 
incidental to the retirement ceremony." The Department of Justice, 
Office of Legal Counsel, applying this decision, stated that "[w]e 
believe that the Comptroller General's holding was correct and would be 
applicable to an employee of a United States Attorney's Office 
attending the same kind of event under like circumstances." 17 Op. Off. 
Legal Counsel 70 (1993). The Office of Legal Counsel cautioned, 
however, that the application of the ruling should be carefully limited 
to where the nature of the ceremonial event "provides good reason to 
believe that the official or employee's attendance advances the offices 
authorized functions." Id.

Before we depart the topic of meals at meeting and conferences, two 
cases involving a different twist--payment for meals not eaten--deserve 
mention. In B-208729, May 24, 1983, the Army Missile Command sponsored 
a luncheon to commemorate Dr. Martin Luther King, Jr., that was open to 
both government employees and members of the local community. Attendees 
were to be charged a fee for the lunch. In order to secure the 
necessary services, the Army contracted with a caterer (in this case 
the local Officers Club), guaranteeing a minimum revenue based on the 
anticipated number of guests. Bad weather on the day of the luncheon 
resulted in reduced attendance. Under the circumstances, GAO approved 
payment of the guaranteed minimum as a program expense.

GAO similarly approved payment of a guaranteed minimum balance in 
B-230382, Dec. 22, 1989, this time involving the Army's "World-Wide 
Audio Visual Conference." As in B-208729, attendees were charged for 
the meal but attendance was less than expected. This case had two 
additional complications. First, the official who made the arrangements 
lacked the authority to do so. Payment could therefore be authorized 
only on a quantum meruit basis. Second, the arrangements also included 
a buffet, open bar, and several coffee breaks. Payment for these items 
could not be authorized, even under the quantum meruit concept, since 
they would not have been authorized had proper procurement procedures 
been followed.

(b) Training:

Under the Government Employees Training Act (Training Act), an agency 
may pay, or reimburse an employee for, necessary expenses incident to 
an authorized training program. 5 U.S.C. § 4109. This applies whether 
the training is held through a nongovernment facility or by the federal 
government itself. 5 U.S.C. § 4105; B-258442, Apr. 19, 1995; B-244473, 
Jan. 13, 1992. The event, however, must comply with the Training Act's 
definition of "training" in 5 U.S.C. § 4101(4). 72 Comp. Gen. 178 
(1993). As with meetings, an agency may pay for the costs of meals and 
refreshments when they are included as an incidental and nonseparable 
portion of a training registration or attendance fee. 66 Comp. 
Gen. 350, 1987; B-288266, Jan. 27, 2003. If the cost of the food is not 
included in a registration or attendance fee, the Comptroller General 
has held that the government can provide meals or refreshments under 
this authority if the agency determines that providing meals or 
refreshments is necessary to achieve the objectives of the training 
program. 48 Comp. Gen. 185 (1968); 39 Comp. Gen. 119 (1959); B-247966, 
June 16, 1993; B244473, Jan. 13, 1992; B-193955, Sept. 14, 1979. The 
government may also furnish meals to nongovernment speakers as an 
expense of conducting the training. 48 Comp. Gen. 185.

In 50 Comp. Gen. 610 (1971), the Training Act was held to authorize the 
procurement of catering services for a Department of Agriculture 
training conference where government facilities were deemed inadequate 
in view of the nature of the program.

The fact that an agency characterizes its meeting as "training" is not 
controlling. In other words, for purposes of authorizing the government 
to feed participants, something does not become training simply because 
it is called training. In B-168774, Sept. 2, 1970, headquarters 
employees of the then Department of Health, Education, and Welfare met 
with consultants in a nearby hotel at what the agency termed a 
"research training conference." However, the conference consisted of 
little more than "working sessions" and included no employee training 
as defined in the Training Act. Therefore, the cost of meals could not 
be paid. See also 72 Comp. Gen. 178 (1993); 68 Comp. Gen. 606 (1989); 
B-247563, Dec. 11, 1996; B-208527, Sept. 20, 1983; B-187150, Oct. 14, 
1976; B-140912, Nov. 24, 1959.

In 65 Comp. Gen. 143 (1985), GAO held that a Social Security 
Administration employee who had been invited as a guest speaker at the 
opening day luncheon of a legitimate agency training conference in the 
vicinity of her duty station could be reimbursed for the cost of the 
meal. The decision unfortunately confuses 5 U.S.C. §§ 4109 and 4110 by 
analyzing the case under section 4110 yet concluding that reimbursement 
is authorized "as a necessary training expense," which is the standard 
under section 4109.

(3) Award ceremonies:

General operating appropriations may be used to provide refreshments at 
award ceremonies under the Government Employees' Incentive Awards Act, 
5 U.S.C. §§ 4501-4506. 65 Comp. Gen. 738 (1986); B-271551, Mar. 4, 
1997. This Act authorizes an agency to use its operating appropriations 
to cover the "necessary expense for the honorary recognition of" the 
employee or employees receiving the awards. 5 U.S.C. § 4503. The Act 
also directs the Office of Personnel Management to prescribe 
regulations and instructions to govern agency awards programs. 5 U.S.C. 
§ 4506.

In 65 Comp. Gen. 738, the Social Security Administration asked whether 
it could use operating appropriations, apart from its limited 
entertainment appropriation, to provide refreshments at its annual 
awards ceremony. GAO observed that the Incentive Awards Act (5 U.S.C. 
§ 4503) authorizes agencies to "pay a cash award to, and incur 
necessary expense for the honorary recognition of" employees. The 
decision reasoned that the concept of a necessary expense is, within 
limits, a relative one based on the relationship of the expenditure to 
the particular appropriation or program involved. Thus, while the 
necessary relationship does not exist with respect to an agency's day-
to-day operations, the agency would be within its legitimate discretion 
to determine that refreshments would materially enhance the 
effectiveness of a ceremonial function, specifically in this case an 
awards ceremony which is a valid component of the agency's statutorily 
authorized awards program.

The decision essentially followed B-167835, Nov. 18, 1969, which had 
concluded that the Incentive Awards Act authorized the National 
Aeronautics and Space Administration to fund part of the cost of a 
banquet at which the President was to present the Medal of Freedom to 
the Apollo 11 astronauts. What made the fuller treatment in 65 Comp. 
Gen. 738 necessary was that a 1974 decision, B-114827, Oct. 2, 1974, 
had found the cost of refreshments at an awards ceremony under the 
Incentive Awards Act payable only from specific entertainment 
appropriations. The 1986 case partially modified B-114827 to the extent 
it had held that an entertainment appropriation was the only available 
funding source. Finally, 65 Comp. Gen. 738 distinguished 43 Comp. 
Gen. 305 (1963), which had disallowed the cost of refreshments at an 
awards ceremony for persons who were not federal employees (and 
therefore not authorized under the Incentive Awards Act nor governed by 
the "necessary expense" language of that statute).

GAO has emphasized that the purpose of awards ceremonies is to foster 
public recognition of employees' meritorious performance and allow 
other employees to honor and congratulate their colleagues. 65 Comp. 
Gen. at 740. In B-247563, Dec. 11, 1996, the Comptroller General 
determined that the Department of Veterans Affairs Medical Center's use 
of appropriated funds for a breakfast at which the Medical Center 
Director presented awards was improper because there was no public 
recognition of the award recipients. The record indicated that (1) only 
those employees specifically recognized and the Medical Center Director 
participated in the event and (2) the employees' contributions were not 
otherwise publicized within the Medical Center community.

In this same decision, however, the Comptroller General did not find 
unauthorized the Medical Center's use of its appropriation to purchase 
light refreshments for an annual picnic and Valentine's Day Dance, at 
which the agency presented performance award certificates and years of 
service awards. The Comptroller General found that the Medical Center 
publicly recognized employees' accomplishments at both events but 
cautioned that where an agency combines awards receptions with social 
events, "the expenditures should be subject to greater scrutiny than 
expenditures made in connection with more traditional awards 
ceremonies." B-247563, supra.

Recent Comptroller General decisions have permitted appropriated funds 
to be used to provide meals as well as refreshments at awards 
ceremonies. For example, in B-270327, Mar. 12, 1997, the Defense 
Reutilization and Marketing Service (DRMS) was permitted to pay 
luncheon expenses not to exceed $20 per employee at worldwide DRMS 
award ceremonies. The Comptroller General explained that Office of 
Personnel Management (OPM) regulations purposely leave it up to the 
agencies to design their award programs, and that "we must respect and 
defer to OPM's regulatory decisions and the implicit delegation of 
authority to agencies to make implementing decisions vis-à-vis their 
incentive awards programs so long as such decisions are consistent with 
the essential requirements of the Act." Id. The Comptroller General 
found that the $20 per person maximum did not offend any OPM regulatory 
guidance or express provisions of the Government Employees' Incentive 
Awards Act. Id. See also B-288536, Nov. 19, 2001 (Bureau of Indian 
Affairs was permitted to pay for the cost of a buffet luncheon at an 
incentive awards ceremony).

The Government Employees' Incentive Awards Act does not apply to 
members of the armed forces. However, the uniformed services have 
similar authority, including the identical "necessary expense" 
language, in 10 U.S.C. § 1124. Therefore, 65 Comp. Gen. 738 applies 
equally to award ceremonies conducted under the authority of 10 U.S.C. 
§ 1124. 65 Comp. Gen. at 739 n.2.

(4) Cafeterias and lunch facilities:

The government has no general responsibility to provide luncheon 
facilities for its employees. 10 Comp. Gen. 140 (1930).[Footnote 280] 
However, plans for the construction of a new government building may 
include provision for a lunch room or cafeteria, in which event the 
appropriation for construction of the building will be available for 
the lunch facility. 9 Comp. Gen. 217 (1929).

An agency may subsidize the operation of an employees' cafeteria if the 
expenditure is administratively determined to be necessary to the 
efficiency of operations and a significant factor in the hiring and 
retaining of employees and in promoting employee morale. B-216943, 
Mar. 21, 1985; B-169141, Nov. 17, 1970; B169141, Mar. 23, 1970. See 
also B-204214, Jan. 8, 1982 (temporarily providing paper napkins in new 
government cafeteria); U.S. General Accounting Office, Benefits GSA 
Provides by Operating Cafeterias in Washington, D.C., Federal 
Buildings, LCD-78-316 (Washington, D.C.: May 5, 1978).

The purchase of equipment for use in other than an established 
cafeteria may also be authorized in certain circumstances. In B-173149, 
Aug. 10, 1971, GAO approved the purchase of a set of stainless steel 
cooking utensils for use by air traffic controllers to prepare food at 
a flight service station. There were no other readily accessible eating 
facilities and the employees were required to remain at their post of 
duty for a full 8-hour shift. Similar cases are:

* B-180272, July 23, 1974: purchase of a sink and refrigerator to 
provide lunch facilities for the Occupational Safety and Health Review 
Commission where there was no government cafeteria on the premises.

* B-210433, Apr. 15, 1983: purchase of microwave oven by Navy facility 
to replace nonworking stove. Facility was in operation 7 days a week, 
some employees had to remain at their duty stations for 24-hour shifts, 
and there were no readily accessible eating facilities in the area 
during nights and weekends.

* B-276601, June 26, 1997: purchase of a refrigerator for personal food 
items of Central Intelligence Agency (CIA) employees. CIA headquarters 
facility was relatively distant from private eating establishments, the 
CIA did not permit delivery service to enter the facility due to 
security concerns, and the cafeteria served only breakfast and lunch.

c. Entertainment for Government Employees Other Than Food:

(1) Miscellaneous cases:

There have been relatively few cases in this area, probably because 
there are few situations in which entertainment for government 
employees could conceivably be authorized.

An early decision held that 10 U.S.C. § 4302, which authorizes training 
for Army enlisted personnel "to increase their military efficiency and 
to enable them to return to civilian life better equipped for 
industrial, commercial, and business occupations," did not include 
sending faculty members and students of the Army Music School to grand 
opera and symphony concerts. 4 Comp. Gen. 169 (1924). Another decision 
found it improper to hire a boat and crew to send federal employees 
stationed in the Middle East on a recreational trip to the Red Sea. 
B-126374, Feb. 14, 1956.

A 1970 decision deserves brief mention although its application will be 
extremely limited. Legislation in 1966 established the Wolf Trap Farm 
Park in Fairfax County, Virginia, as a park for the performing arts and 
directed the Interior Department to operate and maintain it. A 
certifying officer of the National Park Service asked whether he could 
certify a voucher for symphony, ballet, and theater tickets for Wolf 
Trap's Artistic Director. The Comptroller General held that such 
payments could be made if an appropriate Park Service official 
determined that attendance was necessary for the performance of the 
Artistic Directors official duties. The justification was that the 
Artistic Director attended these functions not as personal 
entertainment but so that he could review the performances to determine 
which cultural and theatrical events were appropriate for booking at 
Wolf Trap. B-168149, Feb. 3, 1970. As noted, this case would seem to 
have little precedent value except for the Artistic Director at Wolf 
Trap.

(2) Cultural awareness programs:

One area that has generated several decisions, and a change in GAO's 
position, has been equal employment opportunity special emphasis or 
cultural awareness programs. There are many areas in which the law 
undergoes refinement from time to time but remains essentially 
unchanged. There are other areas in which the law has changed to 
reflect changes in American society. This is one of those latter areas.

The issue first arose in 58 Comp. Gen. 202 (1979). In that case, the 
Bureau of Mines, Interior Department, in conjunction with the Equal 
Employment Opportunity Commission, sponsored a program of live 
entertainment for National Hispanic Heritage Week. The program 
consisted of such items as a lecture and demonstration of South 
American folk music, a concert, a slide presentation, and an exhibit of 
Hispanic art and ceramics. The decision concluded that, while the 
Bureau's Spanish-Speaking Program was a legitimate component of the 
agency's overall Equal Employment Opportunity (EEO) program, 
appropriated funds could not be used to procure entertainment. This 
holding was followed in two more cases, B-194433, July 18, 1979, and 
B-199387, Aug. 22, 1980.

In 1981, however, GAO reconsidered its position. The Internal Revenue 
Service asked whether it could certify a voucher covering payments for 
a performance by an African dance troupe and lunches for guest speakers 
at a ceremony observing National Black History Month. The Comptroller 
General held the expenditure proper in 60 Comp. Gen. 303 (1981). The 
decision stated:

"[W]e now take the view that we will consider a live artistic 
performance as an authorized part of an agency's EEO effort if, as in 
this case, it is part of a formal program determined by the agency to 
be intended to advance EEO objectives, and consists of a number of 
different types of presentations designed to promote EEO training 
objectives of making the audience aware of the culture or ethnic 
history being celebrated."

Id. at 306. Further, the lunches for the guest speakers could be paid 
under 5 U.S.C. § 5703 if they were in fact away from their homes or 
regular places of business. The prior inconsistent decisions--58 Comp. 
Gen. 202, B-194433, and B-199387--were overruled.

It should be emphasized that the prior decisions were overruled only to 
the extent inconsistent with the new holding. Two specific elements of 
58 Comp. Gen. 202 were not involved in the 1981 decision and remain 
valid. First, use of appropriated funds to serve meals or refreshments 
remains:

improper except under specific statutory authority. 58 Comp. Gen. at 
206.[Footnote 281] Second, 58 Comp. Gen. 202 found the purchase of 
commercial insurance on art objects improper. Id. at 207. This portion 
also remains valid. The Comptroller General also determined that 
transportation costs of an employee participating in a cultural program 
are not authorized unless the employee is participating in the program 
as a performer or making some other type of direct contribution to the 
EEO event. B-243862, July 28, 1992.

The decision at 60 Comp. Gen. 303 was expanded in B-199387, Mar. 23, 
1982, to include small "samples" of ethnic foods prepared and served 
during a formal ethnic awareness program as part of the agency's equal 
employment opportunity program. In the particular program being 
considered, the attendees were to pay for their own lunches, with the 
ethnic food samples of minimal proportion provided as a separate event. 
Thus, the samples could be distinguished from meals or refreshments, 
which remain unauthorized. (The decision did not specify how many 
"samples" an individual might consume in order to develop a fuller 
appreciation.)

In 1999, the Comptroller General clarified that 60 Comp. Gen. 303 does 
not require that a program or event have specific advance written 
approval in a formal agency issuance to be considered a formal Equal 
Employment Opportunity program for which funds are available. "What is 
required is that the agency through an authorized official determines 
that the planned performance advances EEO objectives." B-278805, 
July 21, 1999.

Although 60 Comp. Gen. 303 was not cast in precisely these terms, it is 
another example of the "theory of relativity" in purpose availability 
to which we have alluded in various places in this chapter. Equality in 
all aspects of federal employment is now a legal mandate. An agency is 
certainly within its discretion to determine that fostering racial and 
ethnic awareness is a valid--perhaps indispensable--means of advancing 
this objective. This being the case, it is not at all far-fetched to 
conclude that certain expenditures that might be wholly inappropriate 
in other contexts could reasonably relate to this purpose. Thus, hiring 
an African dance troupe could not be justified to further an objective 
of, for example, conducting a financial audit or constructing a 
building or procuring a tank, but the relationship changes when the 
objective is promoting cultural awareness.

Once the concept of the preceding paragraph is understood, it should be 
apparent why, in 64 Comp. Gen. 802 (1985), GAO distinguished the 
cultural awareness cases and concluded that the Army could not use 
appropriated funds to provide free meals for handicapped employees 
attending a luncheon in honor of National Employ the Handicapped Week. 
This is not to say that an agency's EEO program should not embrace the 
handicapped--on the contrary, it can, should, and is required to--but 
merely that "[u]nlike ethnic and cultural minorities, handicapped 
persons do not possess a common cultural heritage" within the intended 
scope of the cultural awareness cases. Id. at 804 (quoting from the 
request for decision).

d. Entertainment of Nongovernment Personnel:

Just as the entertainment of government personnel is generally 
unauthorized, the entertainment of nongovernment personnel is equally 
impermissible. The basic rule is the same regardless of who is being 
fed or entertained: Appropriated funds are not available for 
entertainment, including free food, except under specific statutory 
authority.

Two of the most frequently cited decisions for this proposition are 
5 Comp. Gen. 455 (1925) and 26 Comp. Gen. 281 (1946). In 5 Comp. 
Gen. 455, expenditures by two Army officers for entertaining officials 
of foreign governments while making arrangements for an around-the-
world flight were disallowed. In 26 Comp. Gen. 281, appropriations were 
held unavailable for dinners and luncheons for "distinguished guests" 
given by a commissioner of the Philippine War Damage Commission. Other 
early decisions on point are: 5 Comp. Gen. 1018 (1926); B-85555, June 
6, 1949; and A-10221, Oct. 8, 1925. A limited exception was recognized 
in B-22307, Dec. 23, 1941, to permit entertainment of officials of 
foreign governments incident to the gathering of intelligence for 
national security.

As with the cases dealing with government employees, a large proportion 
of the decisions tend to involve food. In 43 Comp. Gen. 305 (1963), 
funds were not available to furnish food or refreshments at 
"recognition ceremonies" for volunteers at Veterans Administration 
field stations. The ceremonies had been designed as an inducement to 
the volunteers to continue rendering service. Naturally, the situation 
would be permissible under specific statutory authority. B-152331, 
Nov. 19, 1975. Other examples are 26 Comp. Gen. 281, cited above; 
B-236763, Jan. 10, 1990, disallowing costs for refreshments for college 
students at recruiting functions, unless the costs were included in a 
lump-sum bill with other room facility charges; and B-138081, Jan. 13, 
1959, disallowing the cost of a breakfast meeting with Canadian 
officials called at the initiative of the Chairman of the Securities 
and Exchange Commission.

Several more recent decisions illustrate the continued application of 
the rule and some of the exceptions permitted by statute. In 68 Comp. 
Gen. 226 (1989), the Department of Housing and Urban Development (HUD) 
used its research and technology appropriations for entertainment 
expenses incident to a trade show it sponsored in the Soviet Union. 
Since HUD had no authority to sponsor the show, the related 
expenditures were improper. The decision further pointed out that, even 
if the trade show itself had been authorized, the research and 
technology appropriations still would not have been available for 
entertainment, although HUD could then have used its "official 
reception and representation" funds. See also 65 Comp. Gen. 16 (1985) 
(free in-flight meals during weather research flight unauthorized for 
nongovernment personnel).

In 57 Comp. Gen. 806 (1978), the Comptroller General held that 
appropriations available to the judiciary for jury expenses could not 
be used to buy coffee and refreshments for jurors during recesses in 
trial proceedings. The situation was analogized to the cases 
prohibiting the purchase of food from appropriated funds for employees 
working under unusual conditions. The decision noted that statutory 
authority existed to pay actual subsistence expenses for jurors under 
sequestration, not an issue in the case at hand. The relevant 
appropriation language was subsequently amended to provide for 
refreshments, and the authority was made permanent in 1989.[Footnote 
282]

In a 1979 decision, appropriations of the Equal Employment Opportunity 
Commission were found not available to host a reception for Hispanic 
leaders in conjunction with a planning conference. B-193661, Jan. 19, 
1979. The case fell squarely within the general rule. So did B-205292, 
June 2, 1982, involving a Fourth of July fireworks display by a Navy 
station, justified as a community relations measure. While good 
community relations may be desirable for all government agencies, 
fireworks are not necessary to the operation and maintenance of the 
Navy.

The propriety of using appropriated funds to furnish luncheons to 
public school officials in conjunction with Marine Corps recruiting 
programs was considered in B-162642, Aug. 9, 1976. A statute authorized 
reimbursement of necessary expenses incurred by recruiters, and 
applicable regulations permitted the reimbursement to include small 
amounts spent for occasional lunches, snacks, or nonalcoholic 
beverages. GAO, however, did not consider a planned luncheon involving 
a formal presentation with a guest speaker as within the intended scope 
of the statute or regulations. Since the statute and regulations were 
broadly worded, payment in that case was authorized. The decision 
cautioned, however, against incurring similar expenses in the future 
unless the regulations were first revised to provide adequate 
guidelines and limitations.

The National Park Service has authority to provide for "interpretive 
demonstrations" at Park Service sites. 16 U.S.C. § 1a-2(g). GAO 
reviewed this authority and its legislative history in 68 Comp. 
Gen. 544 (1989), concluding that it could properly include some level 
of entertainment, as long as it was sufficiently related to the 
significance of the particular site. Thus, there was no objection to 
the 1988 Railroaders Festival at the Golden Spike National Historic 
Site, which included musical entertainment by a band specializing in 
railroad and nineteenth century western American music. (Golden Spike 
is the site of the completion of the first U.S. transcontinental 
railroad in 1869.) Similarly within this authority was the decoration 
of a historic ranch house at the Grant-Kohrs Ranch National Historic 
Site to "interpret" how the ranch celebrated Christmas during the 
frontier era. B-226781, Jan. 11, 1988. However, an "open house" with 
refreshments and a visit by Santa Claus had "too indirect and 
conjectural a bearing" on the Park Services mission and was therefore 
unauthorized. Id.

GAO considered whether the National Science Foundation (NSF) could use 
appropriated funds to pay for dinner-related expenses for a nonfederal 
award recipient and her spouse pursuant to a statutorily established 
award called the Alan T. Waterman Award in B-235163.11, Feb. 13, 1996. 
GAO concluded that NSF could use appropriated funds for the dinner-
related expenses because the dinner at which the awards were presented 
was the necessary vehicle to accomplish the statutory objectives of the 
Waterman Award.

No discussion of entertainment would be complete without B-182357, 
Dec. 9, 1975. The Foreign Assistance Act of 1961, as amended, 22 U.S.C. 
§§ 2151 et seq. (1970), authorized funds for an informational program 
to give foreign military trainees a greater exposure to American 
culture. To implement the program, the Department of Defense set up a 
program whereby officers would serve as escorts for foreign military 
trainees to impart to them an active appreciation of American values 
and ideals. The case involved a voucher submitted by a civilian 
employee of the Navy for expenses incurred as escort officer for a 
group of twelve senior foreign naval officers being trained in the 
United States. The voucher included visits to a variety of restaurants, 
night clubs, and bars. One of the items was a visit to the Boston 
Playboy Club. The claimant justified the visit as "symbolic of the 
United States" and "one of the most enjoyable experiences" the trainees 
had during their stay in America. Apparently to get more symbolism, the 
party returned for a second visit. In reviewing the case, the 
Comptroller General noted that, under the statutory program, the funds 
could have been given directly to the trainees to be spent as they 
desired, and the agency would therefore have considerable discretion in 
spending the money for the trainees. In addition, the regulations 
provided "no guidance whatsoever" on the limits of the program. 
Somewhat reluctantly, the Comptroller General was forced to conclude 
that "the lack of adequate guidance to the escort officer leaves us no 
alternative but to allow him credit for the expenses incurred."

e. Recreational and Welfare Facilities for Government Personnel:

(1) The rules: older cases and modern trends:

The basic rule for recreational facilities--which, as we shall see, has 
become more flexible--was established in early decisions: 
Appropriations are not available unless the expenditure is authorized 
by express statutory provision or by necessary implication. Thus, in 
18 Comp. Gen. 147 (1938), appropriations for a river and harbor project 
on Midway Island were held not available to provide recreational 
facilities such as athletic facilities and motion pictures for the 
working force. Similarly, in 27 Comp. Gen. 679 (1948), the Comptroller 
General advised that Navy appropriations were not available to hire 
full-time or part-time employees to develop and supervise recreational 
programs for civilian employees of the Navy. The reason in both cases 
was that the expenditure would have at best only an indirect bearing on 
the purposes for which the appropriations were made.

Other early decisions applying the general rule are B-49169, May 5, 
1945 (rental of motion picture by Bonneville Power Administration); 
B-37344, Oct. 14, 1943 (footballs and basketballs for employees in 
Forest Service camps); and A-55035, May 19, 1934 (billiard tables for 
Tennessee Valley Authority employees). In B-49169, the Comptroller 
General pointed out that the Administrators authority to make such 
expenditures as he "may find necessary" does not mean anything he may 
approve, regardless of its nature, but the expenditures must bear a 
direct relationship to the purposes to be accomplished under the 
particular legislation.

It follows that, as a general proposition, appropriated funds may not 
be used to underwrite travel to or participation in sports or 
recreational events since this is not the performance of public 
business. 42 Comp. Gen. 233 (1962). For example, in 73 Comp. Gen. 169 
(1994), appropriated funds were not available to the Department of 
Energy to pay the registration fees of employees participating in 
competitive fitness promotion, team activities, and sporting events. 
GAO concluded that these activities were not an essential part of a 
statutorily authorized physical fitness program and therefore were 
"generally personal, rather than official," with costs to be "borne by 
the participating employees, not by the taxpayers." Id. at 170. See 
also B-247563.3, Apr. 5, 1996 (Department of Veterans Affairs 
appropriations not available for registration fees for athletic contest 
"virtually indistinguishable" from contest in 73 Comp. Gen. 169). 
Similarly, in B-262008, Oct. 23, 1996, GAO found that the Army Corps of 
Engineers could not use appropriated funds to pay an entrance fee for 
Corps employees in a "Corporate Cup Run" sponsored by the American Lung 
Association. The fact that the employees were to participate as an 
agency-sponsored team, rather than as individuals, did not change the 
result. GAO cited the "absence of any justification to show that 
participation of employees in the run--a competitive athletic event--in 
any way supports the mission of the Corps."

Of course, the particular circumstances may warrant an exception. Thus, 
appropriations for "student athletic and related activities" at the 
Federal Law Enforcement Training Center may be used to provide limited 
off-site busing to shopping centers, recreational facilities, and 
places of worship in the nearest town several miles away. The students-
-government employees in travel status--must live at the Center for 
several weeks, most do not have cars, and there is no public 
transportation to the nearest town. B-214638, Aug. 13, 1984.

One area in which recreational and welfare expenditures have been 
permitted with some regularity is where employees are located at a 
remote site, where such facilities would not otherwise be available. 
Expenditures were permitted in the following cases:

* Purchase of ping pong paddles and balls by the Corps of Engineers to 
equip a recreation room on a seagoing dredge. B-61076, Feb. 25, 1947.

* Transportation of musical instruments, billiard and ping pong tables, 
and baseball equipment, obtained from surplus military stock, to 
isolated Weather Bureau installations in the Arctic. B-144237, Nov. 7, 
1960.

* Purchase of playground equipment for children of employees living in 
a government-owned housing facility in connection with the operation of 
a dam on the Rio Grande River in an isolated area. 41 Comp. Gen. 264 
(1961). The agency in that case had statutory authority to provide 
recreational facilities for employees and the question was whether that 
authority extended to employees families as well. It did.

* Use of an appropriation of the Federal Aviation Administration (FAA) 
for construction of "quarters and related accommodations" to provide 
tennis courts and playground facilities in an isolated sector of the 
Panama Canal Zone. B-173009, July 20, 1971.

* Purchase of a television set and antenna for use by the crew on a 
ship owned by the Environmental Protection Agency. The ship was used to 
gather and evaluate water samples from the Great Lakes, and cruises 
lasted for up to 15 days. The alternative would have been to extend the 
length of the cruises to permit more frequent docking. 54 Comp. 
Gen. 1075 (1975).

* Provision of television services for National Weather Service 
employees on a remote island in the Bering Sea. The agency was 
authorized to furnish recreational facilities by the Fur Seal Act of 
1966, but the statute also required that the employees be charged a 
reasonable fee. B-186798, Sept. 16, 1976.

* Use of government vehicles to transport FAA employees on temporary 
duty at a remote duty location permissible under applicable Federal 
Travel Regulations, subject to "reasonable limitations and safeguards." 
B-254296, Nov. 23, 1993. The employees were on temporary duty 
assignments at a remote Alaskan station.

In recent decades, the role of certain "employee welfare" activities in 
employee morale and productivity has been increasingly recognized. See 
71 Comp. Gen. 527, 529 (1992) (GAO has "accepted the retention of 
employees and promotion of employee morale, generally, as a 
justification for paying some expenses that, in many circumstances, 
would be viewed as personal in nature..."). In some instances, the 
recognition has been accompanied by statutory authority. For example, 
the Defense Department has specific authority to use appropriated funds 
for welfare and recreation. This authority originated in general 
provisions contained in annual appropriation acts, was made permanent 
in 1983,[Footnote 283] and is now codified at 10 U.S.C. § 2241. See 
also 10 U.S.C. § 2494 (Department of Defense funds available for 
morale, welfare, and recreation programs under certain circumstances 
"may be treated as nonappropriated funds and expended in accordance 
with laws applicable to the expenditure of nonappropriated 
funds.").[Footnote 284] On the other hand, there are limits to 
congressional support for recreational funding. Congress has found it 
necessary to enact a specific statutory prohibition on the use of 
Defense appropriated funds to "equip, operate, or maintain" a golf 
course that is neither outside the United States nor at a "remote and 
isolated location" within the United States. 10 U.S.C. § 2246. (Note 
that this statute does not restrict the use of nonappropriated funds 
for golf courses.) GAO interpreted section 2246 in B-277905, Mar. 17, 
1998, involving installation of irrigation pipelines for a golf course 
at Fort Sam Houston, Texas. GAO concluded that the explicit statutory 
prohibition of 10 U.S.C. § 2246 was not overcome by other statutes 
encouraging agency cooperation with state and local water conservation 
efforts, finding that "a statute that is clear and unambiguous on its 
face should be construed to mean what it says."

The civilian agencies generally do not have statutory authority 
comparable to that of the Department of Defense, and decisions must be 
made, for the most part, under 31 U.S.C. § 1301(a) and the necessary 
expense doctrine. Even here, however, the rather strict rule of the 
early decisions has undergone some liberalization, even in nonremote 
locations. While the general rule expressed in 18 Comp. Gen. 147 and 
27 Comp. Gen. 679 remains as a bar to indiscriminate expenditures, it 
may now be said that an agency has reasonable discretion to spend its 
money for employee welfare purposes if the expenditure can be said to 
enhance employee morale and to be a significant factor in hiring and 
retention. The test remains one of necessity, but it is evaluated in 
terms of the agency's legitimate interest in the welfare, morale, and 
productivity of its employees. Determinations must be made on a case-
by-case basis.

A good illustration of this evolution is the treatment of programmed 
"incentive music" (sometimes called "Muzak"[Footnote 285] or, by its 
detractors, "elevator music"). When GAO first visited the issue, it 
concluded that an agency could not, within its legitimate range of 
discretion, find this to be a necessary expense. B-86148, Nov. 8, 1950. 
The issue arose again 20 years later when the Bureau of the Public 
Debt, Treasury Department, asked if it could use its Salaries and 
Expenses appropriation to provide programmed incentive music for its 
employees. The system had been installed by a previous tenant and the 
speakers were located in central work areas rather than in private 
offices. The Bureau pointed out that private concerns had found that 
such music enhanced employee morale by "creating a pleasantly 
stimulating and efficient atmosphere during the workday" and helped to 
minimize employee boredom. GAO had rejected similar arguments in the 
1950 decision. This time, GAO concurred, accepting the Bureau's 
justification that the expenditure would improve employee morale and 
increase productivity. 51 Comp. Gen. 797 (1972), overruling B-86148. In 
terms of the legal principle involved, whether GAO agreed with the 
justification or not was irrelevant; all that matters is that the 
determination is now viewed as a proper exercise of agency discretion.

Another example of a permissible expenditure in this area is the 
subsidization of employee cafeterias, previously discussed. Still 
another is parking facilities, discussed later in the section on 
personal expenses. Two items covered in the section on health and 
medical care--physical fitness activities and smoking cessation 
programs--further illustrate evolving trends in the area of employee 
welfare and morale. A final example is our next topic, child care.

(2) Child care[Footnote 286]

Like the cultural awareness programs previously discussed, child care 
is another example of evolution in the law to accommodate a changing 
society. Prior to 1985, there was no express statutory authority for 
using appropriated funds to support child care services in federal 
buildings for federal employees.

Times have changed and the federal government, as an employer, is not 
immune from the changes. The number of single-parent families in 
America has increased dramatically, as has the number of two-parent 
families in which both parents work, out of either economic necessity, 
personal choice, or some combination of factors. The inevitable result 
is a heightened awareness of the need for child care.[Footnote 287]

GAO's first written discussion of the authority to spend appropriated 
funds to provide child care services for government employees, B-39772-
O.M., July 30, 1976, was not a decision to another agency but an 
internal memorandum from the General Counsel analyzing GAO's own 
authority. GAO was considering establishing a day care center in its 
own building, to be funded and operated by employees. GAO's 
administrative officials wanted to know what kinds of support the 
agency could or could not provide without statutory authority, which, 
at the time, did not exist.

The General Counsel analyzed the questions from the perspective of 
purpose availability, and concluded that the Comptroller General could 
allocate space in the GAO building for a day care center, could use 
GAO's appropriations to renovate the space and buy equipment, and could 
assume part or all of the rent payable to the General Services 
Administration for the space.

However, before any of these things could be done, the Comptroller 
General, as the agency head, would first have to determine that the 
expenditure would materially contribute to recruiting or retaining 
staff or maintaining employee morale and hence efficiency and 
productivity. Because of the lack of statutory authority, the 
memorandum cautioned that GAO should disclose any substantial capital 
expenditures for renovation in its budget presentation and to the 
Appropriations Committees if it chose to take such action. See also 
B-205342, Dec. 8, 1981 (nondecision letter), reiterating the general 
conclusion of the 1976 memorandum. As it turned out, GAO did not 
establish a day care center until after the enactment of 40 U.S.C. 
§ 590 (formerly 40 U.S.C. § 490b), discussed below.

Prior to the enactment of more general legislation in 1985, some 
agencies had authority to provide day care facilities under agency-
specific legislation. For example, legislation authorized the then 
Department of Health, Education, and Welfare to donate space for day 
care centers.[Footnote 288] In 57 Comp. Gen. 357 (1978), the 
Comptroller General held that the use of the term "donate" gave the 
agency discretion to provide the space without charge, or to lease 
space in other buildings for that purpose if suitable space was not 
available in buildings the agency already occupied. Also, as we have 
seen, the Defense Department has specific authority to use operation 
and maintenance appropriations for welfare expenditures.

In 1985, Congress enacted former 40 U.S.C. § 490b, now recodified at 
40 U.S.C. § 590, which authorizes, but does not require, federal 
agencies to provide space and services for child care centers. The term 
"services" is defined as including "lighting, heating, cooling, 
electricity, office furniture, office machines and equipment, classroom 
furnishings and equipment, kitchen appliances, playground equipment, 
telephone service (including installation of lines and equipment . . 
.), and security systems …." Id. § 590(c)(1).[Footnote 289] The space 
and services may be provided with or without charge.

The Comptroller General's first construction of this statute came in 
response to an arbitration panel award that included a union day care 
proposal for the children of civilian employees. Council 214, American 
Federation of Government Employees, AFL-CIO, 15 F.L.R.A. 151 (1984), 
aff'd sub nom. Department of Air Force v. Federal Labor Relations 
Authority, 775 F.2d 727 (6th Cir. 1985). The Federal Labor Relations 
Authority directed the Air Force to incorporate the award in its 
collective bargaining agreement,[Footnote 290] and the Air Force in 
turn asked GAO whether, under former 40 U.S.C. § 490b, it had authority 
to use its appropriations to implement the award. The resulting 
decision, 67 Comp. Gen. 443 (1988), reached the following conclusions:

* The Air Force can, either with or without charge, allot space in 
government buildings under its control for child care facilities for 
civilian employees, and can provide the services outlined in the 
statute.

* The Air Force can use its appropriations to renovate, modify, or 
expand the space allotted to make it suitable for use as a child care 
facility.

* The Air Force can expand existing child care facilities for military 
personnel to accommodate the children of civilian employees.

The decision also concluded that any reimbursements received from a 
child care center (which, as noted, are optional) must be deposited in 
the Treasury as miscellaneous receipts.

In 70 Comp. Gen. 210 (1991), GAO concluded that former 40 U.S.C. § 490b 
did not preclude the General Services Administration from leasing space 
or constructing buildings for child care facilities if there is 
insufficient space available in existing federal buildings. The 
authority in section 490b to use existing space was not exclusive. (The 
1988 decision to the Air Force, 67 Comp. Gen. 443, had expressed a 
contrary view and was overruled to that extent.) In 73 Comp. Gen. 336 
(1994), GAO approved the use of appropriated funds by the Forest 
Service to pay a consultant for services rendered to a Forest Service-
supported child care center on Forest Service premises. Citing former 
section 490b and a recurring appropriation act provision that permitted 
payment of expenses (predecessor to 40 U.S.C. § 590(d)(2), discussed 
below), GAO concluded that Forest Service funds were available to pay 
"start-up/support costs" for the day care facility, including 
consultant services.

In 1998, Congress made permanent a recurring appropriation act 
provision authorizing reimbursement of "travel, transportation, and 
subsistence expenses incurred for training classes, conferences, or 
other meetings" in connection with the provision of child care 
services. Pub. L. No. 105-277, div. A, § 101(h) (title VI, § 603), 
112 Stat. 2681-480, 2681-513 (Oct. 21, 1998). This statute is now 
codified at 40 U.S.C. § 590(d)(2).

Similarly, in 2001, Congress made permanent another recurring provision 
that made appropriated funds available "to improve the affordability of 
child care for lower income Federal employees." Pub. L. No. 107-67, 
§ 630, 115 Stat. 514, 552-53 (Nov. 12, 2001). This statute is now 
codified at 40 U.S.C. § 590(g). Office of Personnel Management 
regulations governing agency use of appropriated funds for child care 
costs for lower income employees are at 5 C.F.R. pt. 792, subpt. B, 68 
Fed. Reg. 14127, 14129 (Mar. 24, 2003) (Interim Rule).

In late 1989, Congress enacted new child care legislation for the armed 
forces, including the authority to use fees collected from parents. 
Military Child Care Act of 1989, title XV of the National Defense 
Authorization Act for Fiscal Years 1990 and 1991, Pub. L. No. 101-189, 
103 Stat. 1352, 1589 (Nov. 29, 1989), formerly codified at 10 U.S.C. 
§ 103 note. This provision was revised and recodified by Pub. L. 
No. 104-106, § 568, 110 Stat. 186, 329-336 (Feb. 10, 1996), which added 
new legislation governing Department of Defense child care programs. 
10 U.S.C. § 1791 et seq.[Footnote 291] Section 1791 expresses the 
policy of Congress that:

"[T]he amount of appropriated funds available during a fiscal year for 
operating expenses for military child development centers and programs 
shall be not less than the amount of child care fee receipts that are 
estimated to be received by the Department of Defense during that 
fiscal year."[Footnote 292]

In 71 Comp. Gen. 527 (1992), GAO addressed the analogous issue of the 
use of appropriated funds to provide "eldercare" facilities for adult 
relatives of federal employees, as well as related counseling services. 
In response to a request for a decision from the Internal Revenue 
Service (IRS), GAO concluded that eldercare was not a necessary expense 
for which IRS's appropriations were available. GAO pointed out that 
Congress had provided specific authority for child care in former 
40 U.S.C. § 490b and, since eldercare was not a "typical benefit 
offered the American workforce," similar benefits were available to 
federal workers only pursuant to specific legislation. It was "for the 
Congress to decide whether agency appropriations [could] be used to 
support eldercare centers." IRS's appropriations, therefore, were not 
available for costs associated with eldercare facilities. IRS's 
appropriated funds were available, however, "to implement a resource 
and referral service on eldercare issues" under the authority of 
5 U.S.C. § 7901, which authorizes "preventive programs related to 
health." Id. at 530.

f. Reception and Representation Funds:

Implicit in all of our discussion of entertainment is the point that 
otherwise improper expenditures may be authorized under specific 
statutory authority. Congress has long recognized that many agencies 
have a legitimate need for items that otherwise would be prohibited as 
entertainment, and has responded by making limited amounts available 
for official entertainment to those agencies that can justify the need. 
Entertainment appropriations originated from the need to permit 
officials of agencies whose activities involve substantial contact with 
foreign officials to reciprocate for courtesies extended to them by 
foreign officials. For example, the State Department would find it 
difficult to accomplish its mission if it could not spend any money 
entertaining foreign officials. In fact, some of the early 
entertainment appropriations were limited to entertaining non-U.S. 
citizens, and some could only be spent overseas. An example of the 
latter type is discussed in B-46169, Dec. 21, 1944. Restrictions of 
this nature have become increasingly uncommon.

Entertainment appropriations may take various forms. Some agencies have 
their own well-established structures that may include permanent 
legislation. For example, the State Department has permanent 
authorization to pay for official entertainment. 22 U.S.C. § 4085. See 
also 22 U.S.C. § 2671, which authorizes expenditures for "unforeseen 
emergencies" that may include official entertainment in certain 
contexts. The authority of 22 U.S.C. § 4085 is implemented by means of 
annual appropriations under the heading "Representation 
Allowances."[Footnote 293] State Department representation allowances 
have been found available for rental of formal evening wear by embassy 
officials accompanying the Ambassador to the United Kingdom in 
presenting his credentials to the Queen, 68 Comp. Gen. 638 (1989); 
hiring extra waiters and busboys to serve at official functions at 
foreign posts, 64 Comp. Gen. 138 (1984); meals for certain embassy 
officials at Rotary Club meetings in Tanzania, if approved by the local 
Chief of Mission, B-232165, June 14, 1989; and reimbursement of 
Ambassador and Deputy Chief of Mission for cost of renting formal 
morning dress required by protocol for official occasions, B-256936, 
June 22, 1995. A fact sheet reviewing expenditures at selected overseas 
posts is U.S. General Accounting Office, Representational Funds: State 
Department Expenditures at Selected Posts, GAO/NSIAD-87-73FS 
(Washington, D.C.: Feb. 3, 1987).

The Defense Department also has its own structure. Under 10 U.S.C. 
§ 127, the Secretary of Defense, or of a military department, within 
the limitations of appropriations made for that purpose, may use funds 
to "provide for any emergency or extraordinary expense which cannot be 
anticipated or classified." See Official Representation Funds, DOD 
Directive 7250.13 (Sept. 10, 2002). When so provided in an 
appropriation, the official may spend the funds "for any purpose he 
determines to be proper." 10 U.S.C. § 127(a). See 72 Comp. Gen. 279 
(1993) (certifying officer processing voucher under 10 U.S.C. § 127 is 
responsible only for errors made in his own processing of the voucher, 
and not for the Defense Attache's prior certification as to the 
propriety of the payment). Annual Operation and Maintenance 
appropriations include amounts for "emergencies and extraordinary 
expenses."[Footnote 294] Although the title is not particularly 
revealing, it has long been understood that official representation 
expenses are charged to this account. See U.S. General Accounting 
Office, Internal Controls: Defenses Use of Emergency and Extraordinary 
Funds, GAO/AFMD-86-44 (Washington, D.C.: June 4, 1986); DOD Use of 
Official Representation Funds to Entertain Foreign Dignitaries, GAO/ID-
83-7 (Washington, D.C.: Dec. 29, 1982); 69 Comp. Gen. 242 (1990) 
(reception for newly assigned commander at U.S. Army School of the 
Americas).

With these two major exceptions, most agencies follow a similar pattern 
and receive their entertainment funds, if they receive them at all, 
simply as part of their annual appropriations. The appropriation may 
specify that it will be available for "entertainment." See, e.g., 
B-20085, Sept. 10, 1941. Far more commonly, however, the term used in 
the appropriation is "official reception and representation (R&R)." 
This has come to be the technical "appropriations language" for 
entertainment.

While we cannot guarantee that one does not exist somewhere, we have 
not found a congressional definition of the term "official R&R." Absent 
a definition, we found it instructive to review agency justifications 
to see what sort of authority Congress thought it was conferring. The 
term seems to have originated--or at least became more widespread--in 
the early 1960s. We identified the first appearance of the term for a 
number of agencies, and selected two, the Departments of Agriculture 
and Interior, as illustrative. Both agencies first received "official 
R&R" funds in their appropriations for fiscal year 1963.[Footnote 295]

The Agriculture Department explained that the Secretary frequently 
finds it necessary to provide a luncheon or similar courtesy to various 
individuals and small groups in the conduct of official business, to 
promote effective working relationships with farm, trade, industry, and 
other groups that are directly related to accomplishing the Agriculture 
Departments work. Such official courtesies benefit the government, and 
the Secretary and Under Secretary of Agriculture should not be required 
to bear these expenses from their own personal funds as was then the 
case. In conclusion, the justification observed that "[i]t is unseemly 
that the hospitality should always be left to the visitor." [Footnote 
296] Similarly, the Interior Department explained that its request for 
"not to exceed $2,000 for official reception and representation 
expenses" was intended to provide authority to use appropriated funds 
for expenses incurred by the Interior Secretary "in fulfilling the 
courtesy and social responsibilities directly associated with his 
official duties," in situations much like those the Agriculture 
Department had noted. Such official expenses, the justification 
asserted, "rightly should be borne by the Government rather than be 
financed from personal funds."[Footnote 297]

One point that is clear from these excerpts is that an R&R 
appropriation, whatever its origins may have been, is not limited to 
the entertainment of foreign nationals, unless of course the 
appropriation language so provides. The experience of the former 
Department of Health, Education, and Welfare (HEW) provides further 
evidence that, absent some indication to the contrary, Congress does 
not intend that an "official R&R" appropriation be limited to 
entertaining foreign nationals. The Secretary of HEW first received an 
entertainment appropriation in HEW's fiscal year 1960 appropriation 
act, but it was limited to certain foreign visitors.[Footnote 298] The 
language was changed to "official reception and representation" in 
HEW's fiscal year 1964 appropriation.[Footnote 299] The conference 
report on the 1964 appropriation explained that the change was intended 
to expand the scope of the appropriation to include U.S. citizens as 
well as foreign visitors.[Footnote 300]

It is clear that R&R appropriations have traditionally been sought, 
justified, and granted in the context of an agency's need to interact 
with various nongovernment individuals or organizations. Precisely who 
these individuals or organizations might be will vary with the agency. 
Of course, the fact that the thrust of the appropriation is the 
entertainment of nongovernment persons does not mean that government 
persons are precluded. For example, it has long been recognized that 
persons from other agencies (and by necessary implication members of 
the host agency as well) may be included incident to an authorized 
entertainment function for nongovernment persons. E.g., B-84184, 
Mar. 17, 1949.

An agency has wide discretion in the use of its R&R appropriation. 
61 Comp. Gen. 260, 266 (1982); B-212634, Oct. 12, 1983. As a general 
proposition, "official agency events, typically characterized by a 
mixed ceremonial, social and/or business purpose, and hosted in a 
formal sense by high level agency officials" and relating to a function 
of the agency will not be questioned. B-223678, June 5, 1989. 
Accordingly, R&R funds have been found available for the following:

* Holiday party for government officials and their spouses or guests, 
held by Secretary of the Interior at the Custis-Lee Mansion. 61 Comp. 
Gen. 260 (1982), aff'd upon reconsideration, B-206173(2), Aug. 3, 1982.

* Party for various government officials and their families or guests 
held on July 4 by Secretary of Interior to celebrate Independence Day. 
B-212634, Oct. 12, 1983.

* Luncheon incident to "graduation ceremony" for Latin American 
students being trained by the Bureau of Labor Statistics. B-84184, 
Mar. 17, 1949.

* Entertainment of British war workers visiting various American cities 
as guests of the British Ministry of Information. B-46169, Aug. 18, 
1945.[Footnote 301]

* Cost of food and entertainment provided by General Services 
Administration at grand opening of a government cafeteria "to the 
extent that the grand opening otherwise qualifies as an official 
reception." B-250450, May 3, 1993.

* Cost of meals at "representational" interagency briefings for 
executive branch employees personally hosted by Director of the Trade 
and Development Program of the United States Agency for International 
Development. 72 Comp. Gen. 310 (1993).

In a case previously noted in our coverage of award ceremonies, the 
Veterans Administration could not use its general appropriations to 
provide refreshments at an awards ceremony for volunteers, but it could 
use its R&R appropriation. 43 Comp. Gen. 305 (1963). An agency may also 
use its R&R funds, although it is not required to, for refreshments at 
award ceremonies under the Government Employees' Incentive Awards Act, 
5 U.S.C. §§ 4501-4506. 65 Comp. Gen. 738, 741 n.5 (1986).

A case relied on in B-223678 was B-122515, Feb. 23, 1955, in which the 
Comptroller General held that a "representation allowance" similar to 
the State Department appropriation discussed above could be used to 
purchase printed invitation cards and envelopes in connection with an 
official function at an overseas mission. In 42 Comp. Gen. 19 (1962) 
and in B-131611, May 24, 1957, however, a similar appropriation to the 
Foreign Agricultural Service was not available for printed invitations 
because an executive order provided that the Foreign Agricultural 
Service was to be governed by State Department regulations, and the 
applicable State Department regulations prohibited the use of 
representation allowances for printing cards.

Notwithstanding the discretion it confers, an R&R appropriation is not 
intended to permit government officials to feed themselves and one 
another incident to the normal day-to-day performance of their jobs. 
Thus, GAO has held that R&R funds may not be used to provide food or 
refreshments at intra-government work sessions or routine business 
meetings, even if held outside of normal working hours. B-223678, June 
5, 1989. See also B-250884, Mar. 18, 1993 (the cost of meals provided 
to government employees during interagency working meetings improperly 
charged to R&R funds).

A final but significant limitation on the use of representation funds 
stems from the appropriation language itself--R&R appropriations are 
made for the expenses of official reception and representation 
activities. There must be some connection with official agency 
business. Thus, it would be improper to use representation funds for a 
social function hosted and attended by private parties, such as a 
breakfast for Cabinet wives. 61 Comp. Gen. 260 (1982), aff'd upon 
reconsideration, B-206173(2), Aug. 3, 1982. Similarly, R&R funds may 
not be used for entertainment incident to an activity which is itself 
unauthorized. 68 Comp. Gen. 226 (1989) (entertainment incident to trade 
show in Soviet Union which agency had no authority to sponsor). The 
impropriety of the underlying activity necessarily "taints" the 
entertainment expenditures.

6. Fines and Penalties:

As a general proposition, no authority exists for the federal 
government to use appropriated funds to pay fines or penalties incurred 
as a result of its activities or those of its employees.

In the most common situation, a fine is assessed against an individual 
employee for some action he or she took in the course of performing 
official duties. The cases frequently involve traffic violations. The 
rule is that appropriated funds are not available to pay the fine or 
reimburse the employee. The theory is that, while an employee may have 
certain discretion as to precisely how to perform a given task, the 
range of permissible discretion does not include violating the law. If 
the employee chooses to violate the law, he is acting beyond the scope 
of his authority and must bear any resulting liability as his personal 
responsibility.

The earliest case stating the rule appears to be B-58378, July 31, 
1946. Holding that a government employee ticketed for parking a 
government vehicle in a "no parking" zone could not be reimbursed, the 
Comptroller General stated:

"[T]here is not known to this office any authority to use appropriated 
moneys for payment of the amount of a fine imposed by a court on a 
Government employee for an offense committed by him while in the 
performance of, but not as a part of, his official duty. Such fine is 
imposed on the employee personally and payment thereof is his personal 
responsibility."

The rule applies to forfeitures of collateral as well as fines. 
B-102829, May 8, 1951.

The first published decision stating the rule, and the case most often 
cited, is 31 Comp. Gen. 246 (1952). A government employee double-parked 
a government vehicle to make a delivery. While the employee was inside 
the building, the inner vehicle drove away, leaving the government 
vehicle unattended in the middle of the street, whereupon it was 
ticketed. Citing B-58378 and B-102829, the Comptroller General held 
that the employee could not be reimbursed from appropriated funds for 
the amount of the fine.[Footnote 302]

GAO has applied the rule even in a case where the employee could 
establish that the speedometer on the government vehicle was 
inaccurate. B-173660, Nov. 18, 1971. While at first glance this might 
seem like a harsh and unfair result, it in fact was not, at least in 
that particular case. In that case, the employee was ticketed for 
driving at 85 m.p.h. The speedometer at the time read a mere 73 m.p.h. 
Conceding the established inaccuracy of the speedometer, the employee 
nevertheless, by observing other vehicles on the road and applying 
common sense, should have suspected that he was driving at an excessive 
rate of speed.

Further, in a case involving a possessory interest tax, a tax on the 
rental interest in government owned property, B-251228, July 20, 1993, 
the Forest Service was not permitted to pay penalties and interest 
assessed against an employee for a delay in payment of the tax due 
while the employee occupied government-owned quarters. The penalties 
and interest were considered to be personal liabilities of the employee 
and not the federal government.

The very statement of the rule as quoted above from B-58378 suggests 
that there may be situations in which reimbursement is permissible. The 
exception occurred in 44 Comp. Gen. 312 (1964). In connection with the 
case of Sam Giancana v. J. Edgar Hoover, 322 F.2d 789 (7th Cir. 1963), 
an agent of the Federal Bureau of Investigation (FBI) was ordered by 
the court to answer certain questions. Based on Justice Department 
regulations and specific instructions from the Attorney General, the 
FBI agent refused to testify and was fined for contempt of court. The 
contempt order was upheld in Sam Giancana v. Marlin W. Johnson, 
335 F.2d 372 (7th Cir. 1964). Finding that the employee had incurred 
the fine by reason of his compliance with Department regulations and 
instructions and that he was without fault or negligence, GAO held that 
the FBI could reimburse the agent from its Salaries and Expenses 
appropriation under the "necessary expense" doctrine.[Footnote 303]

Subsequently, some people thought that 31 Comp. Gen. 246 and 44 Comp. 
Gen. 312 appeared inconsistent, and GAO has discussed the two lines of 
reasoning in several later decisions. The distinction is this: in 
31 Comp. Gen. 246, the offense was committed while performing official 
duties but it was not a necessary part of those duties. The employee 
could have made the delivery without parking illegally. The fine in 
44 Comp. Gen. 312 was "necessarily incurred" in the sense that the 
employee was following his agency's regulations and the instructions of 
his agency head. Thus, the actions that gave rise to the contempt fine 
could be viewed as a necessary part of the employee's official duties, 
although certainly not in the sense that it would have been physically 
impossible for the employee to have done anything else.

Applying these concepts, the Comptroller General held in B-205438, 
Nov. 12, 1981, that the Federal Mediation and Conciliation Service 
could reimburse a former employee for a contempt fine levied against 
him for refusal to testify, pursuant to agency regulations and 
instructions, on matters discussed at a mediation session at which he 
was present while employed by the agency.

Reimbursement was denied, however, in B-186680, Oct. 4, 1976. There, a 
Justice Department attorney was fined for contempt for missing a court-
imposed deadline. The attorney had been working under a number of tight 
deadlines and argued that it was impossible to meet them all. However, 
he had not been acting in compliance with regulations or instructions, 
had exercised his own judgment in missing the deadline in question, and 
the record did not support a determination that he was without fault or 
negligence in the matter. Therefore, the case was governed by 31 Comp. 
Gen. 246 rather than 44 Comp. Gen. 312.

Reading all of these cases together, it seems fair to state that the 
mere fact of compliance with instructions will not by itself be 
sufficient to authorize reimbursement. There must be some legitimate 
government interest to protect. Thus, it would not be sufficient to 
instruct an employee to refuse to testify where the purpose is to avoid 
embarrassment or to avoid the disclosure of government wrongdoing. 
Similarly, it would follow that the prohibition against reimbursement 
of traffic fines could not be circumvented merely because some 
supervisor instructed a subordinate to park illegally.

The two lines of cases were discussed in the specific context of 
traffic violations in B-107081, Jan. 22, 1980, a response to a Member 
of Congress. Summarizing the rules discussed above, the Comptroller 
General pointed out that they applied equally to law enforcement 
personnel. However, the Comptroller General alluded to one situation in 
which reimbursement might be authorized--a parking fine incurred by a 
law enforcement official as a necessary part of an official 
investigation. An example might be parking an unmarked undercover 
vehicle during a surveillance where there was no other feasible 
alternative. Compare 38 Comp. Gen. 258 (1958) concerning the 
reimbursement of parking meter fees.

Another situation in which a fine was held reimbursable is illustrated 
in 57 Comp. Gen. 476 (1978). Forest Service employees had loaded logs 
on a truck to transport them from Virginia to West Virginia. In 
Virginia, the driver was fined for improper loading (overweight on rear 
axle). The employees had loaded the logs in a forest and there was no 
way for them to have checked the weight. The fine did not result from 
any negligent or intentional act on the part of the driver. Under these 
circumstances, the Comptroller General found that the fine was not for 
any personal wrongdoing by the employee but was, in effect, a citation 
against the United States. Therefore, Forest Service appropriations 
were available to reimburse the fine. This situation is distinguishable 
from the case of an overweight fine levied against a commercial 
carrier, which is not reimbursable. 35 Comp. Gen. 317 (1955).

Similar reasoning applies with respect to penalties in the form of 
liquidated damages assessed against a government employee who fails to 
either use or cancel airline reservations in accordance with the 
carrier's applicable tariff. If the charges are unavoidable in the 
conduct of official travel or are incurred for reasons beyond the 
traveler's control and acceptable to the agency concerned, they may be 
reimbursed from the agency's travel appropriations. However, if the 
charges are not unavoidable in the performance of official business nor 
incurred for reasons beyond the employee's control and acceptable to 
the agency, they are personal to the employee and may not be 
reimbursed. 41 Comp. Gen. 806 (1962).

In 70 Comp. Gen. 153 (1990), GAO recognized that the government may 
reimburse an employee for the payment of a fine or penalty where the 
government has agreed to do so by contract. In this case, the Selective 
Service System had leased vehicles under a contract with a commercial 
vendor in the District of Columbia. The government had agreed to "hold 
[the] lessor harmless" for any fine or penalty imposed on the vehicles. 
One of the vehicles received a ticket for failure to have a current 
safety inspection sticker. Although the lessor was arguably responsible 
for the ticket, the government employee had paid the ticket and was 
seeking reimbursement. GAO therein stated that:

"[T]he government's immunity from state or municipal fines is 
inapplicable when the legal incidence of the fine is not imposed 
directly on the government but, instead, is imposed on the lessor, and 
the fine is merely a measure of damages for the government's failure to 
comply with the terms of its agreement and against which the government 
has agreed to indemnify the lessor."

The case was returned to the Selective Service System to make a 
determination as to whether, under D.C. law, the lessor was liable for 
the ticket. For further discussion of the concept of "legal incidence" 
and the government's immunity, see section C.7.c in this chapter.

The cases discussed so far have all involved fines levied against 
individual employees. Questions may also arise over the liability of a 
federal agency for a fine or civil penalty. The question is essentially 
one of sovereign immunity. In order for a federal agency to be liable 
for a fine or penalty, there must be an express statutory waiver of 
sovereign immunity. E.g., United States Department of Energy v. Ohio, 
503 U.S. 607 (1992).

For example, the Clean Air Act provides for the administrative 
imposition of civil penalties for violation of state or local air 
quality standards. The statute directs the federal government to comply 
with these standards and makes government agencies liable for the civil 
penalties to the same extent as nongovernmental entities. In view of 
this express waiver of sovereign immunity, the Comptroller General held 
that agency operating appropriations are available, under the 
"necessary expense" theory, to pay administratively imposed civil 
penalties under the Clean Air Act. B-191747, June 6, 1978. If the 
penalty is imposed by court action, it may be paid from the permanent 
judgment appropriation, 31 U.S.C. § 1304. However, if there is no 
legitimate dispute over the basis for liability or the amount of the 
penalty, an agency may not avoid use of its own appropriations by the 
simple device of refusing to pay and forcing the state or local 
authority to sue. 58 Comp. Gen. 667 (1979).

Absent the requisite statutory waiver of sovereign immunity, the 
agency's appropriations would not be available to pay a fine or 
penalty. For example, in 65 Comp. Gen. 61 (1985), appropriated funds 
were not available to pay a "fee," which was clearly in the nature of a 
penalty, imposed by a city of Boston ordinance for equipment 
malfunctions resulting in the transmission of false fire alarms. See 
also B-227388, Sept. 3, 1987 (no authority to pay false alarm fines 
imposed by municipality).

What about a penalty assessed by one federal agency against another? In 
B-161457, May 9, 1978, the Comptroller General held that, absent a 
statute specifically so providing, an agency's appropriations are not 
available to pay penalties assessed by the Internal Revenue Service for 
late filing or underpayment of employment taxes. The reason is that 
this would constitute a use of the funds for a purpose other than that 
for which they were appropriated. Also, in B-260532, May 9, 1995, the 
Comptroller General held that there was no authority for the Government 
Printing Office to directly charge other federal agencies interest for 
payments that the Government Printing Office considered to be "late."

7. Firefighting and Other Municipal Services:

a. Firefighting Services: Availability of Appropriations:

A frequent subject of inquiry has been the authority of the federal 
government to voluntarily contract, or to pay involuntary assessments, 
for firefighting services rendered by local governments to federal 
property and buildings. The general rule is: If the political 
subdivision rendering the service is required by law to extinguish 
fires within its boundaries, then the United States cannot make 
additional payments in any form to underwrite that legal 
responsibility. The earliest published decision containing a detailed 
discussion of the rule and its rationale is 24 Comp. Gen. 599 (1945).

The rule proceeds from the premise that firefighting is a governmental 
rather than a proprietary or business function. Where a local 
firefighting organization (city or county fire department, fire 
protection district, etc.) is required by local law to cover a 
particular territorial area and to respond to fires without direct 
charge to the property owners, this duty extends to federal as well as 
nonfederal property within that territorial area. A charge to 
appropriated funds under these circumstances would amount to a tax or a 
payment in lieu of taxes and would, absent specific statutory 
authority, violate the government's constitutional immunity from 
taxation. B-243004, Sept. 5, 1991. It follows that the government may 
not contract for firefighting services that it would be legally 
entitled to receive in any event,[Footnote 304] nor may it reimburse a 
political subdivision for the additional costs incurred in fighting a 
federal fire.[Footnote 305] See 53 Comp. Gen. 410 (1973) and cases 
cited therein. In addition to the taxation problem, use of appropriated 
funds for this purpose would violate the purpose statute at 31 U.S.C. 
§ 1301(a). 32 Comp. Gen. 91 (1952).

Limited reimbursement authority now exists by virtue of the Federal 
Fire Prevention and Control Act of 1974, codified at 15 U.S.C. § 2210, 
discussed later in this section. The present discussion concerns the 
availability of appropriations apart from that limited authority.

In applying the rule, it is irrelevant that a city cannot regulate 
building and fire codes for structures on a military establishment 
within the city limits. 24 Comp. Gen. 599 (1945). Also, the rule 
applies equally when the fire protection is provided by a volunteer 
fire department performing the mandatory governmental function for a 
political subdivision. The fact that the firefighters are unpaid does 
not affect the local government unit's legal duty to render the 
service. 26 Comp. Gen. 382 (1946); B-47142, Apr. 3, 1970.

In 53 Comp. Gen. 410 (1973), GAO denied a claim by the St. Louis 
Community Fire Protection District (CFPD) and several surrounding fire 
districts and departments for equipment losses and supplemental payroll 
expenses incurred in fighting a massive fire at the St. Louis Federal 
Records Center. The St. Louis CFPD could not be reimbursed because the 
Records Center was within its territorial responsibility. The 
surrounding fire districts were also under a duty to respond to the 
alarm because they had entered into mutual aid agreements with the St. 
Louis CFPD that had the effect of extending their own areas of 
responsibility.

In some rural areas, firefighting services may be unavailable or very 
limited. In such areas, the government may have to provide its own fire 
protection. The Comptroller General had stated, in 32 Comp. Gen. 91 
(1952), that an agency could not enter into "mutual aid agreements" to 
extend that service to the general community beyond the boundaries of 
government property, even where the local inhabitants were 
predominantly government employees and where the additional protection 
could be accomplished without additional expense. Later, Congress 
enacted legislation specifically authorizing reciprocal agreements for 
mutual aid. 42 U.S.C. §§ 1856-1856d. This statutory authority is 
limited to mutual aid agreements and does not authorize an agency to 
enter into an agreement to reimburse a political subdivision for 
services unilaterally provided to the government. 35 Comp. Gen. 311, 
313 (1955); B-243004, Sept. 5, 1991; B-126228, Jan. 6, 1956; B-40387-
O.M., June 24, 1966. An agency participating in a mutual aid agreement 
under this authority may contribute, on a basis comparable to other 
participants, to a common fund to be used for training and equipment 
incident to responding to fires and related emergencies such as 
hazardous waste accidents. B-222821, Apr. 6, 1987.

If the government may not contract for or reimburse fire protection 
services which a local entity is legally required to provide, it 
follows that the government may not pay a "service charge" for fire 
protection provided by a municipality with respect to federal property 
within the city limits, at least where the assessment for fire 
protection is normally included in the city's property tax. In 49 Comp. 
Gen. 284 (1969), the city of New London, Connecticut, sought to charge 
the government on a direct cost-related basis for fire protection 
afforded the United States Coast Guard Academy. Fire protection was 
included in the city's real estate tax and the service charge was to 
apply only to tax-exempt property. In view of the city's duty to 
provide fire protection to the Academy, the Comptroller General found 
the proposed charge to be an unconstitutional tax on the government. 
See also B-160936, Mar. 13, 1967. However, a flat-fee service charge 
levied by a utility district for extinguishing a fire in a postal 
vehicle was held permissible where the utility district was under no 
legal obligation to provide the service. B-123294, May 2, 1955.

In B-168024, Dec. 13, 1973, a city was required to provide fire 
protection to all property within its boundaries, but was given the 
option under state law of financing the fire protection by service 
charges rather than from general tax revenues. In these circumstances, 
it was held that the United States could pay a valid service charge, 
although the charge in that particular case was held to be a tax and 
therefore invalid because it was based on the value of the property 
rather than the quantum of services provided. The decision contains a 
useful discussion of the distinction between a service charge and a 
tax.[Footnote 306]

Similarly, in B-243004, Sept. 5, 1991, a service charge was imposed on 
the Bureau of Reclamation for fire protection on federal property where 
the city was not required to provide such services. If the charge for 
firefighting services bears a reasonable relationship to the quantum of 
services provided and is charged proportionately against all who use 
the services, it need not be considered a tax but a fee for services 
that the United States may pay. In this case, however, the method used 
to compute the charge was found not to bear any particular relationship 
to the services rendered, and hence, was not payable.

Because the rule is predicated on the existence of state laws requiring 
political subdivisions to provide firefighting services, it would not 
apply in instances where there is no entitlement to service. Thus, 
reimbursement was allowed in 3 Comp. Gen. 979 (1924) where a fire unit 
had no legal duty to respond to an emergency call outside its district. 
It was further noted that there was no violation of the prohibition on 
accepting voluntary services now found in 31 U.S.C. § 1342 (part of the 
Antideficiency Act). Similarly, a contractual agreement for fire 
protection with the nearest fire district may be proper where the 
federal property in question is not served by any fire district. 
35 Comp. Gen. 311 (1955). Under the same theory, the Comptroller 
General held that the Bureau of Indian Affairs could make a financial 
contribution to the "Community Fire Truck," a volunteer firefighting 
organization which otherwise would have been under no obligation to 
respond to fires at an Indian school outside the limits of the city 
served by the organization. 34 Comp. Gen. 195 (1954). See also 
B-163089, Feb. 8, 1968; B-123294, May 2, 1955. However, there is no 
authority to pay for fire services rendered without a preexisting legal 
obligation if such services were necessary to protect adjoining state 
or privately owned property as to which such a legal duty existed. 
30 Comp. Gen. 376 (1951).

A variation occurred in B-116333-O.M., Oct. 15, 1953, in which it was 
held permissible to reimburse a private firefighting enterprise for 
repair and maintenance service to hydrants and fire alarm boxes on a 
government-owned and -operated housing facility, irrespective of the 
duty of the municipality.

In the analysis of legal duty to provide protection, it is irrelevant 
that the government may have engaged in an activity causing the fire. 
32 Comp. Gen. 401 (1953); B-167709, Sept. 9, 1969; B-147731, Dec. 28, 
1961; B-6400, Aug. 28, 1940.[Footnote 307] Similarly, there is no 
estoppel created by the fact that the United States operated its own 
fire protection at a given installation for a period of time. If the 
legal duty to provide protection exists, the United States is entitled 
to claim protection at any time its own service becomes obsolete, 
undesirable, or uneconomical. B-129013, Sept. 20, 1956; B-126228, 
Jan. 6, 1956.

An exception to the general rule may exist in the case of a "federal 
enclave." This term usually describes large tracts of land held under 
exclusive federal jurisdiction. In 45 Comp. Gen. 1 (1965), the 
Comptroller General held that, despite locally available protection, a 
federal enclave could provide its own fire protection on a contract 
basis. Further, adjacent land under federal control but not part of the 
federal enclave could be protected under the same contractual 
arrangement. However, an additional factor in 45 Comp. Gen. 1 was that 
legitimate doubt existed as to whether the fire district was under a 
legal obligation under state law to provide services to the federal 
property involved, and the district had petitioned the state government 
to redraw its boundaries to exclude the federal property. The effect of 
this factor is unclear, and since that time, no case has been decided 
in which a federal enclave was involved. Note that the threatened 
exclusion of the federal property was based on a legitimate doubt as to 
whether protection was required by state law. If protection is 
required, exclusion would be improper. See B-129013, Sept. 20, 1956. 
Cf. B-192641, May 2, 1979 (nondecision letter) (questioning a 
redistricting to exclude federal property that was not a federal 
enclave).

A 1981 decision addressed the authority of the Bureau of Land 
Management to contract with rural fire districts in Oregon and 
Washington for fire protection and firefighting services for federally 
owned timberlands in those states. The Comptroller General reviewed the 
principles and precedents established over the years and concluded 
that, since the fire districts were legally required to protect the 
federal tracts, the Bureau could not enter into the desired contracts 
without specific statutory authority. However, Bureau installations 
with a federally maintained firefighting capacity could enter into 
mutual aid agreements under 42 U.S.C. § 1856, discussed above. 60 Comp. 
Gen. 637 (1981).

b. Federal Fire Prevention and Control Act of 1974:

In light of the huge losses suffered by local fire districts in the 
1973 St. Louis Records Center fire, the need for some legislative 
action became apparent. The result was section 11 of the Federal Fire 
Prevention and Control Act of 1974, Pub. L. No. 93-498, 88 Stat. 1535, 
1543 (Oct. 29, 1974), codified at 15 U.S.C. § 2210. This provision 
allows a fire service fighting a fire on federal property to file a 
claim for the direct expenses and direct losses incurred. The claim is 
filed with the United States Fire Administration, Federal Emergency 
Management Agency (FEMA).[Footnote 308] The amount allowable is the 
amount by which the additional firefighting costs, over and above the 
claimant's normal operating costs, exceed the total of any payments 
made by the United States to the claimant or its parent jurisdiction 
for the support of fire services on the property in question, including 
taxes and payments in lieu of taxes.

FEMA, upon determining the amount allowable, must forward it to the 
Treasury Department for payment. The Comptroller General has determined 
that section 11 constitutes a permanent indefinite appropriation for 
the payment of these claims. B-160998, Apr. 13, 1978. Disputes under 
section 11 may be adjudicated in the United States Claims Court. FEMA 
has issued implementing regulations at 44 C.F.R. pt. 151.[Footnote 309]

Notwithstanding this authority, the decisions discussed previously in 
this section remain significant for several reasons. First, they define 
the extent to which an agency may use its own appropriations apart from 
section 11. Second, they define the extent to which an agency may 
contract for fire protection services. Finally, section 11 provides 
that payment shall be subject to reimbursement by the federal agency 
under whose jurisdiction the fire occurred, "from any appropriations 
which may be available or which may be made available for the purpose." 
Although no decision has been rendered on this point, it would seem 
that the existing body of decisions provides a starting point in 
determining the extent to which an agency's operating appropriations 
"may be available" to make this reimbursement.

c. Other Municipal Services:

The principles involved in the firefighting cases are relevant to other 
municipal services as well.

The closest analogy is police protection. Like fire protection, police 
protection is a mandatory governmental function. Thus a municipality 
may not levy direct charges against the United States for ordinary 
police protective services provided within its area of jurisdiction. 
49 Comp. Gen. 284, 286-87 (1969); B-187733, Oct. 27, 1977. However, the 
United States may pay on a quantum meruit basis for police services 
over and above the ordinary level, where the city is not required to 
provide such extraordinary services and where the same charge would be 
imposed on nonfederal users in like circumstances. Examples are: extra 
police for special events such as football games at the Coast Guard 
Academy (49 Comp. Gen. at 287) and special police details at 
Bicentennial ceremonies (B-187733, Oct. 27, 1977).

The same principles have been applied to emergency ambulance services 
required to be furnished by a municipality. 49 Comp. Gen. at 286. 
However, contracts with state or local governments or private entities 
for ambulance services have been held permissible where there was no 
requirement for the political subdivision involved to provide ambulance 
services without direct charge. 51 Comp. Gen. 444 (1972), modifying 
B-172945, June 22, 1971; B-198032, June 3, 1981. Another example is the 
maintenance of public highways. See B-199205, Apr. 27, 1981.

A charge for services rendered by a state or local government to the 
United States is to be distinguished from a tax; the former may be paid 
while the latter may not. E.g., 20 Comp. Gen. 748 (1941). While this 
distinction does not apply to mandatory governmental functions such as 
police and fire protection, it has frequently been cited in connection 
with such things as water and sewer services. As a general proposition, 
a charge for water and/or sewer services is a permissible service 
charge rather than a tax if it is based on the quantum of direct 
services actually furnished. A federal agency may generally pay service 
charges such as those for municipal sewer service, so long as the 
charges represent the fair and reasonable value received by the United 
States for the services. GAO has also held that, in the context of 
utility services, where rates are established by a legislative body, 
such rates are controlling unless they are manifestly unjust, 
unreasonable, or discriminatory. 73 Comp. Gen. 1 (1993). (In that 1993 
case, GAO questioned discounts built into the city's fee structure that 
were not afforded to the federal agency, and held that the sewer charge 
may be paid only to the extent that the city makes and documents a 
nondiscriminatory assessment for the reasonable value of sewer services 
rendered.) See 31 Comp. Gen. 405 (1952) (assessment for water/sewer 
services levied on citywide basis rather than quantum of service 
rendered held a tax); 29 Comp. Gen. 120 (1949) (sewer service charge 
held payable on quantum meruit basis); 20 Comp. Gen. 206 (1940) (water 
charge held to be a tax where it was levied as a flat charge rather 
than on the basis of actual water consumption). See also 49 Comp. 
Gen. 284 (1969); B-243004, Sept. 5, 1991; B-168024, Dec. 13, 1973; 
B-105117, Mar. 16, 1953.

Also, in 70 Comp. Gen. 687 (1991), GAO held that the Forest Service may 
pay county landfill user fees as a reasonable service charge, analogous 
to other utility services provided the government, since the charge was 
based on levels of service provided and appeared nondiscriminatory.

A reasonable charge based on the quantum of direct services actually 
furnished need not be considered a tax even though the services in 
question are provided to the taxpayers of the political subdivision 
without a direct charge, provided of course that the political 
subdivision is not required by law to furnish the service without 
direct charge. Such a charge may be paid if it is applied equally to 
all tax-exempt property, but not if it applies only to federal tax-
exempt property. 50 Comp. Gen. 343 (1970).

A sewer service charge which is otherwise proper may be paid in advance 
if required by local law, notwithstanding 31 U.S.C. § 3324. 73 Comp. 
Gen. 1 (1993). The government's liability would also include late 
payment penalties to the extent required by local law. 39 Comp. 
Gen. 285 (1959).

GAO has applied the same principles to charges for 9-1-1 emergency 
services. In a series of cases, GAO examined 9-1-1 charges in several 
states and found that they amounted to a tax and therefore could not be 
assessed against the United States or its agencies. 66 Comp. Gen. 385 
(1987) (Florida); 65 Comp. Gen. 879 (1986) (Maryland); 64 Comp. 
Gen. 655 (1985) (Texas); B-300737, June 27, 2003 (Alabama); B-230691, 
May 12, 1988 (Tennessee); B-239608, Dec. 14, 1990 (nondecision letter) 
(Rhode Island). One decision stated:

"In our view, telephone access to police, fire and other municipal 
services, is intrinsically connected to the services themselves. The 
fact that 9-1-1 service is more technologically sophisticated than 
normal telephone access does not change its essential character."

66 Comp. Gen. at 386. In each case, the charges were included in 
telephone bills, with the telephone company acting as collection agent 
for the relevant governmental authority. As noted in 66 Comp. Gen. 385, 
387, a 9-1-1 fee might be properly payable if a telephone company 
installed and operated the system itself and, as with directory 
assistance for example, offered the service as a component of its 
regular communications services. However, in none of the situations 
examined was this the case.

Several characteristics of the systems support the conclusion of 
nonliability: the service is provided by a local government or quasi-
governmental unit; public funding of the service requires legal 
authority such as an ordinance or referendum; and the charge is not 
related to actual levels of service but is based on a flat rate per 
telephone line. 65 Comp. Gen. at 881. It is irrelevant that the 9-1-1 
charge is called a "service charge" (B-230691) or a "service fee" 
(64 Comp. Gen. 655), or that state law provides that the charge shall 
not be construed as a tax (B-230691), or that the local government has 
threatened to cut off access (66 Comp. Gen. 385). The same analysis 
produced the same result in B-227388, Sept. 3, 1987, in which a 
municipality tried to charge a federal agency a registration fee for 
9-1-1 services.

The distinction between "vendor taxes" and "vendee taxes" discussed 
later in this chapter, that is, the applicability or nonapplicability 
to the government depending on the "legal incidence" of the tax, 
applies as well to 9-1-1 charges. When the legal incidence of a tax 
falls directly on the federal government as the "vendee," the tax is 
not payable unless expressly authorized by Congress. 64 Comp. Gen. 655, 
656-57 (1985). On the other hand, if the legal incidence of the tax 
falls directly on a business enterprise (the "vendor"), which is 
supplying the federal government as a customer with goods or services, 
immunity does not apply. 61 Comp. Gen. 257 (1982). Thus, in B-238410, 
Sept. 7, 1990, GAO considered the Arizona 9-1-1 statute, found that it 
was a vendor tax and, distinguishing the prior 9-1-1 decisions, 
concluded that it could be assessed against the federal government.

A final group of cases involves the installation of traffic signals. At 
one point, GAO took the position, subsequently modified, that 
appropriated funds could not be used to pay for or contribute to the 
installation of traffic signals on public roads or highways, regardless 
of the resulting benefit to the government. Traffic control, so the 
reasoning went, is a municipal service financed by tax revenues the 
same as police or firefighting services, for which payment by a federal 
agency is not permissible. 51 Comp. Gen. 135 (1971); 36 Comp. Gen. 286 
(1956).

A different situation was presented in 55 Comp. Gen. 1437 (1976). 
There, a state highway bisected an Army installation and the Army 
wanted to install a traffic light to regulate traffic at the 
intersection of the state highway and a road on the Army facility. 
Local authorities had agreed to repair and maintain the light if the 
Army would purchase and install it. Since the light would be located on 
federal property and would be for the primary benefit of the federal 
facility, even though it would regulate traffic on the state highway as 
well, GAO distinguished the prior cases and concluded that the Army 
could use its appropriations for the proposed expenditure.

In 1982, GAO modified the prior decisions and held that traffic signals 
at or near a federal facility, where the federal facility is the 
primary beneficiary and benefit to the general public is incidental, 
should be governed by the same tests applicable to other municipal 
services. If the state or local government is legally required to 
provide the service to all residents free of charge, the federal agency 
may not pay. If, however, the service is not legally required and the 
charge does not discriminate against the United States--that is, any 
other resident would be subject to a similar charge--then the 
appropriations of the benefiting agency may be used. 61 Comp. Gen. 501 
(1982).

Does the primary benefit shift where the federal agency is leasing the 
property from a private owner? GAO said no in 65 Comp. Gen. 847 (1986), 
but the lease in that case was to continue for at least another 6 
years. Compare 71 Comp. Gen. 4 (1991). The answer would presumably be 
different if the agency was about to vacate, but the decision does not 
purport to address precisely where the line should be drawn.

8. Gifts and Awards:

a. Gifts:

An agency frequently wants to use gifts to attract attention to the 
agency or to specific programs. For example, gifts can be used as 
recruiting tools, to commemorate an event, or to inform the public or 
agency employees about the agency. Appropriated funds may not be used 
for personal gifts, unless, of course, there is specific statutory 
authority. 68 Comp. Gen. 226 (1989). To state the rule in this manner 
is to make it appear rather obvious. If, for example, a General Counsel 
decided it would be a nice gesture and improve employee morale to give 
each lawyer in the agency a Thanksgiving turkey, few would argue that 
the expense should be borne by the agency's appropriations. 
Appropriated funds could not be used because the appropriation was not 
made for this purpose (assuming, of course, that the agency has not 
received an appropriation for Thanksgiving turkeys) and because giving 
turkeys to lawyers is not reasonably necessary to carry out the mission 
at least of any agency that now exists. Most cases, however, are not 
quite this obvious or simple.

The cases generally involve the application of the necessary expense 
doctrine, and, as with any necessary expense analysis, the result turns 
on whether the item will directly further the agency's mission. 
Occasionally, an item that would typically be viewed as a personal gift 
may, in other circumstances, help advance an agency's mission. In 
making the analysis, it makes no difference whether the "gift items" 
are given to federal employees or to others. The connection is either 
there or, far more commonly, it is not. In each of the cases in which 
funds have been found unavailable, there was a certain logic to the 
agency's justification, and the amount of the expenditure in many cases 
was small. The problem is that, in most cases, were the justification 
put forward by the agency deemed sufficient, there would be no stopping 
point. If a free ashtray might generate positive feelings about an 
agency or program or enhance motivation, so would a new car or an 
infusion of cash into the bank account. The rule prohibiting the use of 
appropriated funds for personal gifts reflects the clear potential for 
abuse. Because a necessary expense analysis is, of course, case 
specific, it is impossible to draw a rational line identifying those 
gift items that are acceptable and those that are not. That certainly 
is evident from the discussion that follows. It is important that 
anyone confronting a "gift" issue scrutinize the case law carefully to 
appreciate distinctions that may not be apparent at first read.

In 53 Comp. Gen. 770 (1974), a certifying officer for the Small 
Business Administration (SBA) asked GAO to rule on the propriety of an 
expenditure for decorative ashtrays that were distributed to federal 
employee participants of a conference sponsored by that agency. By 
passing out ashtrays, the agency intended that they would generate 
conversation concerning the conference and thereby further SBA's 
objectives by serving as a reminder of the purposes of the conference. 
The decision held that the justification given by the agency was not 
sufficient because the recipients of the ashtrays were federal 
officials who were already charged by law to cooperate with the 
objectives of SBA. Thus, there was no necessity that ashtrays be given 
away. The ashtrays were properly designated as personal gifts.

Contrast the SBA decision, however, with a 1993 Veterans Affairs 
decision. In B-247563.2, May 12, 1993, GAO approved the distribution by 
the Department of Veterans Affairs (VA) of imprinted book matches and 
imprinted jar grip openers at the Oklahoma State Fair for recruiting 
purposes and to provide veterans with a number to call to obtain 
information. VA's appropriation explicitly authorized it to create 
exhibits and other material to accomplish its mission. This case stated 
the general rule regarding the use of appropriated funds to purchase 
gifts:

"Under the 'necessary expense rule,' an agency may not purchase items 
in the nature of gifts or souvenirs unless there is a direct link 
between the items and the purpose of the appropriation charged. Stated 
differently, in order to justify purchasing novelty items or personal 
gifts with appropriated funds, an agency must demonstrate that the 
items will directly further its mission."

Applying this rule to the VA's matches and jar openers, GAO concluded 
that it was "entirely appropriate for the [VA] to attempt to attract 
the attention of those attending the event," and that the means chosen 
were "appropriate for the objective to be accomplished."

In this section, we provide a short discussion of decisions in which we 
concluded that the item at issue was a gift. We follow that with a 
discussion of decisions in which we found that items ordinarily 
considered to be gifts were connected to carrying out the agency's 
mission. The discussion, of course, does not identify all of our gift 
decisions and, while we provide our holdings, the discussion does not 
substitute for a full analysis of these decisions. We encourage the 
reader to use the discussion as a tool for honing his or her research.

In 54 Comp. Gen. 976 (1975), specially made key chains, which were 
distributed to educators who attended seminars sponsored by the Forest 
Service, were determined to be personal gifts despite the Department of 
Agricultures claim that their distribution would generate future 
responses from participants. That decision stated:

"The appropriation …proposed to be charged with payment for the items 
in question is available for '…expenses necessary for forest protection 
and utilization….' Since the appropriation is not specifically 
available for giving key chains to individuals, in order to qualify as 
a legitimate expenditure it must be demonstrated that the acquisition 
and distribution of such items constituted a necessary expense of the 
Forest Service."

The decision concluded that the key chains were not necessary to 
implement the appropriation and were, therefore, improper expenditures.

This line of reasoning was also used in 57 Comp. Gen. 385 (1978). There 
it was held that novelty plastic garbage cans containing candy in the 
shape of solid waste, which were distributed by the Environmental 
Protection Agency to attendees at an exposition, were personal gifts. 
The agency's argument that the candy was used to attract people to its 
exhibit on the Resource Conservation and Recovery Act and therefore to 
promote solid waste management was not sufficient to justify the 
expenditure.

In B-195247, Aug. 29, 1979, the Comptroller General held that an 
expenditure of appropriated funds for the cost of jackets and sweaters 
as holiday gifts to corpsmen at a Job Corps Center with the intent of 
increasing morale and enhancing program support was unauthorized. It 
was determined that these were not a necessary and proper use of 
appropriated funds and therefore were personal gifts.

The following cases are additional illustrations of expenditures that 
were found to be in the nature of personal gifts and therefore 
improper:

* T-shirts stamped with Combined Federal Campaign logo to be given to 
employees contributing a certain amount. 70 Comp. Gen. 248 (1991).

* Winter caps purchased by National Oceanographic and Atmospheric 
Administration to be given to volunteer participants in weather 
observation program to create "esprit de corps" and enhance motivation. 
B-201488, Feb. 25, 1981.

* Photographs taken at the dedication of the Klondike Gold Rush Visitor 
Center to be sent by the National Park Service as "mementos" to persons 
attending the ceremony. B-195896, Oct. 22, 1979.

* "Sun Day" buttons procured by the General Services Administration 
(GSA) and given out to members of the public to show GSA's support of 
certain energy policies. B-192423, Aug. 21, 1978.

* Agricultural products developed in Department of Agriculture research 
programs (gift boxes of convenience foods, leather products, 
paperweights of flowers imbedded in plastic) to be given to foreign 
visitors and other official dignitaries. B-151668, June 30, 1970.

* Cuff links and bracelets to be given to foreign visitors by the 
Commerce Department to promote tourism to the United States. B-151668, 
Dec. 5, 1963; B-151668, June 28, 1963 (same case).

* Baseball caps purchased by the Department of Energy to be given to 
nonemployees for personnel recruitment purposes. B-260260, Dec. 28, 
1995.

* Pens, scissors, and shoe laces purchased by the then Veterans 
Administration (VA) to be given to potential employees for recruiting 
purposes, which were nothing more than "favorable reminders of VA" and 
did not facilitate VA's acquisition of information necessary to its 
recruiting efforts. B-247563.3, Apr. 5, 1996.

* Gift certificates to local restaurants and silk plants distributed by 
the then Veterans Administration in celebration of women's Equality 
Week, where there was no evidence of how these items advanced the 
agency's celebration. Id.

In these cases, while we gave considerable weight to the agency's 
administrative determination of necessity, it was not controlling. See, 
e.g., B-151668, Dec. 5, 1963.

What follows is a discussion of some expenditures that resemble 
personal gifts, but which we approved because they were found necessary 
to carry out the purposes of the agency's appropriation. For example, 
in B-193769, Jan. 24, 1979, it was held that the purchase and 
distribution of pieces of lava rocks to visitors of the Capulin 
Mountain National Monument was a necessary and proper use of the 
Interior Department's appropriated funds. The appropriation in question 
was for "expenses necessary for the management, operation, and 
maintenance of areas and facilities administered by the National Park 
Service …." The distribution of the rocks furthered the objectives of 
the appropriation because it was effective in preserving the Monument 
by discouraging visitors from removing lava rock elsewhere in the 
Monument. Thus, the rocks were not considered to be personal gifts.

Similarly, GAO concluded in B-230062, Dec. 22, 1988, that the Army 
could use its appropriations to give away framed recruiting posters as 
"prizes" in drawings at national conventions of student organizations. 
The students had to fill out cards to enter the drawings, and the cards 
would provide leads for potential recruits. Also, the Army is 
authorized to advertise its recruitment program, and posters are a 
legitimate form of advertising.

Another case in which GAO found adequate justification is 68 Comp. 
Gen. 583 (1989), concluding that the U.S. Mint may give complimentary 
specimens of commemorative coins and medals to customers whose orders 
have been mishandled. Since customers who do not receive what they paid 
for may be disinclined to place further orders, the goodwill gesture of 
giving complimentary copies to these customers would directly 
contribute to the success of the Mint's commemorative sales program.

In another case involving buttons, 72 Comp. Gen. 73 (1992), GAO 
responded to a request from the Comptroller of the Environmental 
Protection Agency for an opinion on the availability of appropriated 
funds to acquire buttons and magnets inscribed with messages related to 
indoor air quality, concluding that appropriated funds were available 
for such items. GAO discussed and distinguished cases such as 53 Comp. 
Gen. 770 (SBA decorative ashtrays) and 54 Comp. Gen. 976 (key chains 
for participants at Forest Service seminars), above, noting that the 
buttons and magnets, "unlike a container of candy, a key chain, or an 
ice scraper," had "no real use other than to convey a message." 
72 Comp. Gen. at 74. Also key was the "direct link between the items 
and an authorized agency function," which involved conveying a message 
to increase public awareness of indoor air quality. Id.

In yet another "button" case, B-257488, Nov. 6, 1995, GAO concluded 
that the Food and Drug Administration could use appropriated funds to 
purchase "No Red Tape" buttons for employees to wear at work. GAO noted 
that the buttons had "no intrinsic value" to the recipients and served 
solely to assist the achievement of agency objectives. The agency had 
demonstrated "the requisite nexus between its appropriation's purpose 
and the 'No Red Tape' buttons. The message [was] clearly informational 
and directed at the promotion of an internal agency management 
objective."

In B-280440, Feb. 26, 1999, GAO approved a plan by the Immigration and 
Naturalization Service to purchase medals to be worn by uniformed 
employees of the Border Patrol to commemorate the Border Patrol's 75th 
anniversary. Citing the FDA "No Red Tape" button case, B-257488, above, 
GAO noted first that the medals would not be gifts, but rather part of 
a Border Patrol agent's uniform. Additionally, GAO observed that, "The 
medals convey as well as serve an institutional purpose--i.e., 
reminding the public and agency staff of the Border Patrol's …history 
and mission and promoting the stability and longevity of the agency."

In a case involving GAO's own appropriations, GAO cited several of the 
above cases in support of GAO's distribution of GAO-logo coffee mugs to 
new employees and highlighter pens and post-it notes to potential 
recruits. B-287241, Aug. 21, 2001 (nondecision letter). The mugs, pens, 
and note pads had all been imprinted with a new GAO logo, 
"Accountability, Integrity and Reliability," and had already been 
supplied to current GAO staff as part of a larger campaign to instill 
GAO's priorities. Some items were provided to new employees as part of 
an orientation package to educate them in GAO's priorities. The pens 
and pads, along with other materials about GAO, were provided to 
potential recruits to inform them of GAO's priorities. Id.

b. Contests:

(1) Entry fees:

The Comptroller General has held that payment of an entry fee to enter 
agency publications in a contest sponsored by a private organization is 
improper and cannot be justified as a necessary expense, at least where 
the prize is a monetary award to be given to the editors of the winning 
publications. B-164467, June 14, 1968.

However, payment of a contest entry fee may be permissible where the 
prize is awarded to the agency and not to the individuals and where 
there is sufficient justification that the expense will further the 
objects of the appropriation. B-172556, Dec. 29, 1971. The Comptroller 
General pointed out in that decision that whether appropriated funds 
may be used to enter a contest will depend on the nature of the 
contest, the nature of the prizes and to whom they are awarded, and the 
sufficiency of the administrative justification.

Thus, the Bureau of Mines could use its appropriations to enter an 
educational film it produced in an industrial film festival where entry 
was made in the Bureau's name, awards would be made to the Bureau and 
not to any individuals, and there was adequate justification that entry 
would further the Bureau's function of promoting mine safety. B-164467, 
Aug. 9, 1971.

In recent years, the issue of the use of appropriated funds to pay 
contest entry fees has come up in the context of athletic contests. See 
section C.5.e of this chapter, "Recreational and Welfare Facilities for 
Government Personnel." In each case, funds were found not to be 
available for the entry fee in question. See, e.g., 73 Comp. Gen. 169 
(1994) (Department of Energy employees participating in competitive 
fitness promotion, team activities, and sporting events); B-247563.3, 
Apr. 5, 1996 (Department of Veterans Affairs payment of "sponsor fee" 
at a local "Corporate Challenge" in which employees participated); 
B-262008, Oct. 23, 1996 (Army Corps of Engineers employees 
participating in a "Corporate Cup Run" sponsored by the American Lung 
Association).

(2) Government-sponsored contests:

In an early case, the Navy wanted to use its appropriation for naval 
aviation to sponsor a competition for the design of amphibious landing 
gear for Navy aircraft. Cash prizes would be awarded for the two most 
successful designs. The Comptroller General ruled, however, that the 
proposed expenditure was unauthorized because the prizes were not 
related to the reasonable value of the services of the successful 
contestants and because the appropriation contemplated that the design 
and development work would be performed by Navy personnel. 5 Comp. 
Gen. 640 (1926). See also B-247563.3, Apr. 5, 1996 (Department of 
Veterans Affairs purchase of restaurant gift certificates and a silk 
plant "for distribution as prizes during women's Equality Week" not 
permissible).

While 5 Comp. Gen. 640 may be said to express a general rule, later 
decisions have permitted agencies to, in effect, sponsor contests and 
competitions where artistic design was involved. Thus, in A-13559, Apr. 
5, 1926, the Arlington Memorial Bridge Commission wanted to invite 
several firms to submit designs for a portion of the Arlington Memorial 
Bridge. Each design accepted by the Commission would be purchased for 
$2,000, estimated to approximate the reasonable cost of preparing a 
design. Since the $2,000 was reasonably related to the cost of 
producing a design, GAO viewed the proposal as amounting to a direct 
purchase of the satisfactory designs and distinguished 5 Comp. Gen. 640 
on that basis. A significant factor was that the bridge was intended 
not merely as a functional device to cross the river but "as a memorial 
in which artistic features are a major, if not the primary, 
consideration."

This decision was followed in 9 Comp. Gen. 63 (1929), holding that the 
Marine Corps could offer a set sum of $1,000 for an acceptable original 
design for a service medal. The Comptroller General stated:

"Competition in the purchase of supplies or articles for Government use 
in its most common form is for the purpose of securing specified 
supplies or articles at the lowest possible price. Where, however, the 
purpose is the selection of the most suitable and artistic design …, 
the primary value of the subject being in its design, the ordinary 
procedure may be reversed and the amount to be expended fixed in 
advance at a sum considered to be the reasonable value of the services 
solicited and the bidders requested to submit the best design which 
they can furnish for that sum."

Id. at 65.

The concept of A-13559 was followed and applied in several later 
decisions. See 19 Comp. Gen. 287, 288 (1939) (design of advertising 
literature for savings bonds); 18 Comp. Gen. 862 (1939) (plaster models 
for Thomas Jefferson Memorial); 14 Comp. Gen. 852 (1935) (bronze 
tablets and memorials for Boulder Dam); A-37686, Aug. 1, 1931 (monument 
at Harrodsburg, Kentucky, as first permanent settlement west of the 
Allegheny Mountains); A-35929, Apr. 3, 1931 (ornamental sculptured 
granite columns for the Arlington Memorial Bridge).

Thus, a prize competition per se is generally unauthorized in 
accordance with 5 Comp. Gen. 640. However, the procedure in A-13559 and 
its progeny is permissible where artistic features are the major 
consideration, and the amount awarded is related to the reasonable cost 
of producing the design.

Apart from the artistic design line of cases, an agency may be 
authorized to sponsor a contest under the necessary expense theory, if 
the expenditure bears a reasonable relationship to carrying out some 
authorized activity. For example, in B-158831, June 8, 1966, prizes 
were awarded to enrollees at a Job Corps Conservation Center in a 
contest to suggest a name for the Center newspaper. GAO held the 
expenditure permissible because the enabling legislation authorized the 
providing of "recreational services" for the enrollees, and the contest 
was viewed as a permissible exercise of administrative discretion in 
implementing the statutory objective.

In another case, the National Park Service sponsored a cross-country 
ski race in a national park and awarded trophies to the winners. The 
cost of the trophies could not be charged to appropriations for 
management, operation, and maintenance of the national park system. 
However, the Park Service also received appropriations for recreational 
programs in national parks, and the trophies could properly have been 
charged to that account. B-214833, Aug. 22, 1984. See also B-230062, 
Dec. 22, 1988.

GAO concluded in 70 Comp. Gen. 720 (1991) that the National Oceanic and 
Atmospheric Administration (NOAA) could pay cash prizes to certain 
fortunate fisherman returning "fish tags" to the government. The 
National Marine Fisheries Service issued such "fish tags," displaying 
questions about the circumstances under which the fish in question was 
caught, a return address, and the word "reward." When returned by 
fishermen, the fish tags provided information on the history and 
migration rates of the tagged fish. The fishermen were paid a reward of 
$5.00 for the return of each fish tag. GAO concluded that the agency 
was "statutorily required to conduct research supporting fishery 
management" and therefore was required to "obtain information from the 
public." Since the fish tag awards facilitated acquisition of the 
needed information, the cost of the awards was reasonably necessary to 
the agency's accomplishment of an authorized purpose. Id. at 722. In 
this decision, GAO also considered an NOAA proposal to expand its 
reward program to include the alternative of participating in an annual 
drawing for a limited number of large cash prizes. This alternative was 
also approved. Id. at 723.

In B-286536, Nov. 17, 2000, GAO considered a proposal by the General 
Services Administration's Public Buildings Service (PBS) to use 
appropriated funds to pay for prizes in a drawing held in connection 
with customer satisfaction surveys. In order to develop customer 
satisfaction information, PBS distributed such customer surveys to 
employees of tenant-agencies in buildings it managed. PBS proposed the 
use of the Federal Buildings Fund to provide prizes to survey 
recipients whose names PBS chose in a drawing. Citing 70 Comp. Gen. 720 
and B-230062, above, GAO observed that it had concluded in several 
instances that "agencies may use appropriated funds to provide prizes 
to individuals to further the collection of information necessary to 
the accomplishment of the agency's statutory mandate." This case 
differed in that PBS proposed to make awards to federal employees, 
rather than to the general public as in the cited cases. This was not 
determinative, however, since the federal employees would not be 
receiving prizes for what they already were required to do, and 
therefore they were "akin to the general public." There was "a direct 
connection between the purpose of the Fund and the use of prizes to 
increase the response rate to customer satisfaction surveys." 
Therefore, GAO had no objection to PBS's use of the Federal Buildings 
Fund for this purpose.

c. Awards:

A number of early decisions established the proposition that, absent 
specific statutory authority, appropriations could not be used to 
purchase such items as medals, trophies, or insignia for the purpose of 
making awards. The rationale follows that of the gift cases. The 
prohibition was applied in 5 Comp. Gen. 344 (1925) (medals for winners 
of athletic events) and 15 Comp. Gen. 278 (1935) (annual trophies for 
Naval Reserve bases for efficiency). In 10 Comp. Gen. 453 (1931), the 
Comptroller General held that a general appropriation could be used to 
design and procure medals of honor for air mail flyers where the 
awarding of the medals had been authorized in virtually concurrent 
legislation. The general appropriation was viewed as available to carry 
out the specifically expressed intent of Congress and the express 
authorization obviated any need for a more specific appropriation.

The rule was restated in 45 Comp. Gen. 199 (1965) and viewed as 
prohibiting the purchase of a plaque to present to a state to recognize 
50 years of achievement in forestry. While the voucher in that case was 
paid because the plaque had already been presented, the decision stated 
that payment was for that instance only and that congressional 
authority should be sought if similar awards were considered desirable 
in the future. A more recent case applying the prohibition is B-223447, 
Oct. 10, 1986.

As with the gift cases, an occasional exception will be found based on 
an adequate justification under the necessary expense doctrine. One 
example, prompted perhaps by wartime considerations, is B-31094, 
Jan. 11, 1943, approving the purchase of medals or other inexpensive 
insignia (but not cash payments) to be awarded to civil defense 
volunteers for heroism or distinguished service.

Similarly, the Comptroller General held in 17 Comp. Gen. 674 (1938) 
that an appropriation, one of whose purposes was "accident prevention," 
was available to purchase medals and insignia (but not to make monetary 
awards) to recognize mail truck drivers with safe driving records. 
There was sufficient discretion under the appropriation to determine 
the forms "accident prevention" should take. However, the discretion in 
recognizing safe job performance does not extend to distributing 
"awards" of merchandise selected from a catalogue. B-223608, Dec. 19, 
1988.[Footnote 310] The same decision disapproved the distribution of 
ice scrapers imprinted with a safety message, based on the lack of 
adequate justification.

The prohibition does not apply to a government corporation with the 
authority to determine the character and necessity of its expenditures. 
64 Comp. Gen. 124 (1984). (The expenditure in the case cited was to be 
made from donated funds.)

Several statutes now authorize the making of awards in various 
contexts. Perhaps the most important is the Government Employees' 
Incentive:

Awards Act, enacted in 1954 [Footnote 311]and now found at 5 U.S.C. 
§§ 4501-4506. The Act authorizes an agency to pay a cash award to an 
employee who by his or her "suggestion, invention, superior 
accomplishment, or other personal effort contributes to the efficiency, 
economy, or other improvement of Government operations or achieves a 
significant reduction in paper work" or performs a special act or 
service in the public interest related to his or her official 
employment. 5 U.S.C. § 4503. The agency may also incur "necessary 
expenses" in connection with an incentive award. Id. Awards and related 
expenses under the Act are paid from appropriations available to the 
activity or activities benefited. The Office of Personnel Management is 
authorized to prescribe implementing regulations. 5 U.S.C. § 4506. 
OPM's regulations are found in 5 C.F.R. pt. 451. See also Awards, 
Department of Defense Civilian Personnel Manual, DOD 1400.25-M, 
subchapter 451 (Dec. 1996). A provision added in 1990, 5 U.S.C. 
§ 4505a, authorizes cash awards for employees with fully successful 
performance ratings.[Footnote 312]

The Incentive Awards Act applies to civilian agencies, civilian 
employees of the various armed services, the District of Columbia 
government, and specified legislative branch agencies. 5 U.S.C. § 4501. 
Within the judicial branch, it applies to the United States Sentencing 
Commission. Id.[Footnote 313] While it does not apply to members of the 
armed forces, the Defense Department has very similar authority for 
military personnel in 10 U.S.C. § 1124.

GAO has issued a number of decisions interpreting the Government 
Employees' Incentive Awards Act. Thus, where an award is based on a 
suggestion resulting in monetary savings, the savings must be to 
government rather than nongovernment funds. 36 Comp. Gen. 822 (1957). 
Applying this principle, GAO found that a suggestion for changes in 
procedures that would decrease administrative expenses of state 
employment security offices would effect a savings to an appropriation 
for unemployment service administration grants to the states. 
Therefore, the appropriation was available to make an award to the 
employee who made the suggestion. 38 Comp. Gen. 815 (1959). An agency 
may make an award to an employee on detail from another agency. 
33 Comp. Gen. 577 (1954). An agency may also make an award to one of 
its employees for service to a Federal Executive Board. B-240316, 
Mar. 15, 1991. See also 70 Comp. Gen. 16 (1990).

An interesting situation occurred in B-192334, Sept. 28, 1978. There, 
an employee made a suggestion that resulted in monetary savings to his 
own agency, but the savings would be offset by increased costs to other 
agencies. The decision concluded that, if the agency wanted to make an 
award on the basis of tangible benefits, it must measure tangible 
benefits to the government, that is, it must deduct the increased costs 
to other agencies from its own savings. However, the agency could view 
the suggestion as a contribution to efficiency or improved operations 
and make a monetary award based on intangible benefits.

As noted, the Act authorizes an agency to incur "necessary expenses" 
incident to its awards program. Thus, an agency may pay travel and 
miscellaneous expenses to bring recipients to Washington D.C. to 
participate in award ceremonies. 70 Comp. Gen. 440 (1991). These 
expenses are not chargeable against the statutory award ceiling. 
32 Comp. Gen. 134 (1952). The agency may also pay travel expenses for 
the recipients spouse. 69 Comp. Gen. 38 (1989), overruling 54 Comp. 
Gen. 1054 (1975); B-235163.11, Feb. 13, 1996. Travel and miscellaneous 
expenses may also be paid to a surviving spouse to receive an award on 
behalf of a deceased recipient. B-111642, May 31, 1957. Where a 
recipient has a disability and cannot travel unattended, the travel and 
miscellaneous expenses of an attendant, whether or not a family member, 
may be paid. 55 Comp. Gen. 800 (1976).

The Act does not authorize "necessary expenses" incident to the receipt 
of an award from a nonfederal organization. 40 Comp. Gen. 706 (1961). 
See, e.g., B-258216, July 27, 1995 (agency's payment for airline 
tickets for mother and brother of a deceased employee to attend 
nongovernmental awards ceremony honoring deceased employee not 
authorized). However, in limited situations where an award from a 
nonfederal organization is closely related to the recipients official 
duties, it may be possible to pay certain related expenses on other 
grounds. See 55 Comp. Gen. 1332 (1976).

As previously discussed in our section on entertainment, the 
Comptroller General has held that the "necessary expense" language of 
the Government Employees' Incentive Awards Act may include refreshments 
at an agency's awards ceremony. 65 Comp. Gen. 738 (1986). See also 
B-167835, Nov. 18, 1969. A 1990 decision applied the rationale of 
65 Comp. Gen. 738 and held that an agency could pay a fee, which 
included a luncheon, for attendance at a Federal Executive Board 
regional award ceremony by agency employees who had been selected for 
awards and their supervisors. 70 Comp. Gen. 16 (1990). See also 
B-288536, Nov. 19, 2001 (buffet-style luncheon provided Bureau of 
Indian Affairs (BIA) employees attending awards ceremony); B-270199, 
Aug. 6, 1996 (cake at a Pension Benefit Guaranty Corporation awards 
ceremony); B-235163.11, Feb. 13, 1996 (National Science Foundation 
annual awards dinner).

In B-247563.4, Dec. 11, 1996, however, the Comptroller General ruled 
that the Government Employees' Incentive Awards Act does not authorize 
refreshments "in connection with an event or function designed to 
achieve other objectives simply because the agency distributes awards 
as part of the event or function." The purpose of authorized 
refreshments is to "facilitate public recognition of awards recipients" 
and this purpose would not be served where, as in this case, the awards 
recipients and the donor were the only participants in the event.

GAO explored the range of agency discretion in providing refreshments 
in connection with awards ceremonies in B-270327, Mar. 12, 1997. This 
case arose when the Defense Reutilization and Marketing Service (DRMS), 
in recognition of excellent agency performance, designated a worldwide 
"celebration day," on which it hosted luncheons for all DRMS employees 
and provided each employee a specially designed "Bucks Bunny" and "Reut 
Rabbit" T-shirt, as well as 4 hours of administrative leave. DRMS 
guidance authorized each DRMS location to spend up to $20 per person 
for accommodations and "incidental refreshments" in connection with the 
awards ceremonies. GAO considered the DRMS awards program in light of 
OPM's regulations implementing the Incentive Awards Act at 5 C.F.R. 
pt. 451, which, the decision concluded, "purposely leave it up to the 
agencies to design their award programs and make their own award 
decisions." GAO concluded that it was required to "respect and defer" 
to OPM's regulatory decisions and implicit delegation of authority to 
agencies to make implementing decisions so long as such decisions were 
consistent with essential requirements of the Act. Although GAO 
observed that the coverage of the "celebration day" was "broader than 
[it had] typically encountered in … prior decisions," it concluded that 
"unless arbitrary and capricious, differences in degree do not 
invalidate the decisions made." The submitted vouchers were approved. 
See also B-288536, supra (BIA buffet).

Awards under the Act may take forms other than cash. Thus, in 55 Comp. 
Gen. 346 (1975), the Comptroller General held that the Army Criminal 
Investigation Command could award marble paperweights and walnut 
plaques to Command employees, including those who had died in the line 
of duty, if the awards conformed to the Act and applicable regulations. 
In situations not covered by the statute (e.g., presentations to 
nongovernment persons to recognize cooperation and enhance community 
relations), however, such awards would be personal gifts and therefore 
improper. Similarly authorized as "honorary" awards are desk medallions 
(B-184306, Aug. 27, 1980); telephones of nominal value (67 Comp. 
Gen. 349 (1988)); $50 jackets bearing agency insignia (B-243025, May 2, 
1991); coffee mugs and pens (B-257488, Nov. 6, 1995); tickets to local 
sporting events or amusement parks (B-256399, June 27, 1994); and meals 
or gift certificates for meals (B-271511, Mar. 4, 1997). Administrative 
leave can also be awarded if and to the extent authorized in Office of 
Personnel Managements (OPM) implementing regulations. 5 U.S.C. 
§ 4502(e)(2).[Footnote 314] See also B-208766, Dec. 7, 1982. Whether 
the award is monetary or nonmonetary, the act or service prompting it 
must be related to official employment. 70 Comp. Gen. 248 (1991) (the 
Government Employees' Incentive Awards Act does not authorize giving T-
shirts to Combined Federal Campaign contributors). See also 71 Comp. 
Gen. 145 (1992) (contractor in 70 Comp. Gen. 248 not entitled to 
payment for shirts provided to government).

The Act does not authorize cash awards based merely on length of 
service or upon retirement. However, honorary noncash awards are 
permissible. For example, the Department of Agriculture wanted to 
present to retiring members of its Office of Inspector General engraved 
plastic holders containing their credentials. GAO found this authorized 
by the Act. 46 Comp. Gen. 662 (1967). The use of incentive awards for 
good sick leave records is inappropriate. 67 Comp. Gen. 349 (1988), 
cited in National Association of Government Employees Local R1-109, 
53 F.L.R.A. 271, Aug. 15, 1997.

The making of an award--and therefore the refusal to make an award--
under the Government Employees' Incentive Awards Act is discretionary. 
Rosano v. United States, 9 Cl. Ct. 137, 144-45 (1985), aff'd, 800 F.2d 
1126 (Fed. Cir. 1986), cert. denied, 480 U.S. 907 (1987). As such, it 
is reviewable only for abuse of discretion. E.g., Shaller v. United 
States, 202 Ct. Cl. 571, cert. denied, 414 U.S. 1092 (1973). A labor 
relations arbitrator may order an agency to prepare and submit an award 
recommendation, but cannot order the agency to actually make the award. 
56 Comp. Gen. 57 (1976).

In B-202039, Apr. 3, 1981, aff'd upon reconsideration, B-202039, May 7, 
1982, two employees filed a claim where their agency had given them a 
cash award several years after implementing their suggestion. They 
claimed interest on the award, lost imputed investment earnings, an 
inflation adjustment, and compensation for higher income taxes paid as 
a result of the delay. The claim was denied. In the May 1982 decision, 
GAO pointed out that an agency's own regulations can have the effect of 
limiting the discretion it would otherwise have under the statute. See 
also Griffin v. United States, 215 Ct. Cl. 710 (1978). Thus, agency 
regulations can commit the agency to making an award if it adopts a 
suggestion. However, this does not create an entitlement to interest.

Finally, the Government Employees' Incentive Awards Act is limited to 
government employees. Since no similar authority exists for persons 
other than government employees, an award may not be made to a 
nongovernment employee who submits a suggestion resulting in savings to 
the government. B-160419, July 28, 1967. The limitation to government 
employees is also noted in two internal GAO memoranda. B-224071-O.M., 
Aug. 3, 1987 (GAO appropriations not available for cash awards to 
contract security guards); B-176600-O.M., Aug. 18, 1978 
(appropriations of agencies funding the Joint Financial Management 
Improvement Program not available to make cash awards to other than 
federal employees).

In addition to the Government Employees' Incentive Awards Act, several 
other statutes authorize various types of awards. Some examples are:

* 5 U.S.C. § 5384: authorizes lump-sum cash performance awards to 
members of the Senior Executive Service. Some representative decisions 
are 68 Comp. Gen. 337 (1989), 64 Comp. Gen. 114 (1984), and 62 Comp. 
Gen. 675 (1983).

* 10 U.S.C. § 1125 and 14 U.S.C. § 503: authorize the Defense 
Department and the Coast Guard, respectively, to award trophies and 
badges for certain accomplishments. See 71 Comp. Gen. 346 (1992) (Air 
Force purchase of belt buckles as awards for participants in 
"Peacekeeper Challenge" competition permissible under 10 U.S.C. 
§ 1125). The Coast Guard statute includes cash prizes. The statutes 
have been narrowly construed as limited essentially to proficiency in 
arms and related skills. 68 Comp. Gen. 343 (1989) (Coast Guard); 
27 Comp. Gen. 637 (1948) (discussing predecessor of 10 U.S.C. § 1125).

* 5 U.S.C. §§ 4511-4513: Inspector General of an agency may make cash 
awards to employees whose disclosure of fraud, waste, or mismanagement 
results in cost savings for the agency. For an agency without an 
Inspector General, the agency head is to designate an official to make 
the awards. The President may make the awards where the cost savings 
accrue to the government as a whole. GAO reviews under this legislation 
indicate that the authority has been used sparingly, but that actual or 
projected cost savings appear reasonable in those cases where awards 
have been made.[Footnote 315]

9. Guard Services: Anti-Pinkerton Act:

a. Evolution of the Law Prior to 57 Comp. Gen. 524:

On July 6, 1892, in Homestead, Pennsylvania, a riot occurred between 
striking employees of the Carnegie, Phipps & Company steel mill and 
approximately 200 Pinkerton guards. The company had brought in the 
Pinkerton force ostensibly to protect company property. As the 
Pinkertons were being transported down the Monongahela River, the 
strikers sighted them and began firing on them. The strikers were 
heavily armed, and even had a cannon on the riverbank. The violence 
escalated to the point where the strikers spread oil on the water and 
ignited it. Several of the Pinkerton men were killed and several of the 
strikers were indicted for murder. The riot received national 
attention.

The then-common practice of employing armed Pinkerton guards as 
strikebreakers in labor disputes became an emotionally charged issue. 
The Homestead riot, together with other similar although less dramatic 
incidents, made it clear that the use of these guards provoked 
violence. Although Congress was reluctant to legislate against their 
use in the private sector, some congressional action became inevitable. 
The result was the law that came to be known as the Anti-Pinkerton Act. 
Originally enacted as part of the Sundry Civil Appropriation Act of 
August 5, 1892, 27 Stat. 368, it was made permanent the following year 
by the Act of March 3, 1893, ch. 208, 27 Stat. 591. Now found at 
5 U.S.C. § 3108, the Act provides:

"An individual employed by the Pinkerton Detective Agency, or similar 
organization, may not be employed by the Government of the United 
States or the Government of the District of Columbia."

As we will see, the statute has little impact today. Nevertheless, it 
remains on the books and could become relevant, albeit only in unusual 
circumstances. Therefore, it may be useful to briefly record the 
administrative interpretations of the law.

Although the Anti-Pinkerton Act was never the subject of any judicial 
decisions until the late 1970s, it was the subject of numerous 
decisions of the Comptroller General and the Comptroller of the 
Treasury. Several principles evolved through the decisions.

1. The Act applies to contracts with "detective agencies" as firms or 
corporations as well as to contracts with or appointments of individual 
employees of such agencies. 8 Comp. Gen. 89 (1928); A-12194, Feb. 23, 
1926.

2. The Act prohibits the employment of a detective agency or its 
employees, regardless of the character of the services to be performed. 
The fact that such services are not to be of a "detective" nature is 
immaterial. Thus, detectives or detective agencies within the scope of 
the Act may not be employed in any capacity. 51 Comp. Gen. 494 (1972); 
26 Comp. Gen. 303 (1946).

3. The statutory prohibition applies only to direct employment. It does 
not extend to subcontracts entered into with independent contractors of 
the United States. 26 Comp. Gen. 303. The legislative history of the 
original 1892 statute made it clear that Congress did not intend to 
reach subcontracts. However, the Act does apply to a contract under the 
Small Business Administration (SBA) set-aside program since the 
contract is a prime contract vis-à-vis SBA even though it may be a 
subcontract vis-à-vis the actual employing agency. 55 Comp. Gen. 1472 
(1976).

4. Although the Comptroller General never defined "detective agency" 
for purposes of the Anti-Pinkerton Act, the decisions drew a 
distinction between detective agencies and protective agencies and held 
that the Act did not forbid contracts with the latter. 38 Comp. 
Gen. 881 (1959); 26 Comp. Gen. 303 (1946); B-32894, Mar. 29, 1943. 
Thus, the government could employ a protective agency, but could not 
employ a detective agency to do protective work. An important test 
became whether the organization was empowered to do general 
investigative work.

5. In determining whether a given firm is within the statutory 
prohibition, GAO considers the nature of the functions it may perform 
as well as the functions it in fact performs. Two factors are relevant 
here--the firm's authority under its corporate charter and its powers 
under licensing arrangements in the states in which it does business. 
If a firm is chartered as a detective agency and licensed as a 
detective agency, then the fact that it does not actually engage in 
detective work will not permit it to escape the statutory prohibition. 
Since virtually every corporation inserts in its charter an "omnibus" 
clause ("engage in any lawful act or activity for which corporations 
may be organized in this state" or similar language), an omnibus clause 
alone will not make a company a detective agency. Rather, specific 
charter authorization is needed. 41 Comp. Gen. 819 (1962); B-146293, 
July 14, 1961.

6. The government may employ a wholly owned subsidiary of a detective 
agency if the subsidiary itself is not a detective agency, even if the 
subsidiary was organized primarily or solely to avoid the Anti-
Pinkerton Act. As long as there is prima facie separation of corporate 
affairs, the Act does not compel the government to "pierce the 
corporate veil." 44 Comp. Gen. 564 (1965); 41 Comp. Gen. 819 (1962); 
B-167723, Sept. 12, 1969.

7. A telephone listing alone is not sufficient evidence that a given 
firm is a "detective agency" for purposes of 5 U.S.C. § 3108, although 
the fact of such a listing should prompt further inquiry by the 
procuring agency. 55 Comp. Gen. 1472 (1976); B-181684, Mar. 17, 1975; 
B-176307(1), Mar. 21, 1973; B-177137, Feb. 12, 1973.

8. Corrections to charters and licenses may be made prior to contract 
award to avoid Anti-Pinkerton Act violations. Post-award corrections, 
while perhaps relevant to future procurements, do not, absent 
compelling circumstances, retroactively expunge ineligibility existing 
at the time of the award. 56 Comp. Gen. 225 (1977); B-172587, June 21, 
1971; B-161770, Nov. 21, 1967; B-160538, Nov. 15, 1967; B-156424, 
July 22, 1965.

These principles were discussed and applied in many decisions over the 
years. For example, a contract for guard services was found to violate 
the Act where the contractor was expressly chartered and licensed as a 
detective agency. 55 Comp. Gen. 1472, aff'd upon reconsideration, 
56 Comp. Gen. 225. Similarly, a contract with a sole proprietorship was 
invalid where the owner was also the president of a corporation 
chartered and licensed as a detective agency. B-186347, B-185495, 
Oct. 14, 1976, aff'd upon reconsideration, B-186347, B-185495, Mar. 7, 
1977.

By the 1970s, the Anti-Pinkerton Act had become a hindrance to the 
government's guard service contracting activities. The federal 
government is a major consumer of guard services, and it was the rare 
solicitation that did not generate a squabble over who was or was not 
subject to the Act. Many companies, including Pinkerton itself, were 
forced to form subsidiaries in order to compete for government 
business.

b. 57 Comp. Gen. 524 and the Present State of the Law:

The first reported judicial decision dealing with the Anti-Pinkerton 
Act was United States ex rel. Weinberger v. Equifax, 557 F.2d 456 (5th 
Cir. 1977), cert. denied, 434 U.S. 1035 (1978). The issue in that case 
was whether the Act applied to a credit reporting company. The 
Comptroller General, in B-139965, Jan. 10, 1975, had already held that 
it did not. The court reached the same result, although on different 
reasoning. Relying heavily on the Act's legislative history, the court 
held:

"In light of the purpose of the Act and its legislative history, we 
conclude that an organization is not 'similar' to the (quondam) 
Pinkerton Detective Agency unless it offers quasi-military armed forces 
for hire."

557 F.2d at 463.

In a June 1978 circular letter to department and agency heads, 
published at 57 Comp. Gen. 524 (1978), the Comptroller General 
announced that GAO would follow the Equifax interpretation in the 
future. Therefore, the statutory prohibition will now be applied only 
if an organization can be said to offer quasi-military armed forces for 
hire. The Comptroller General declined, as did the Fifth Circuit, to 
attempt a definition of a quasi-military armed force but noted that, 
whatever it might mean, "it seems clear that a company which provides 
guard or protective services does not thereby become a 'quasi-military 
armed force,' even if the individual guards are armed." 57 Comp. Gen. 
at 525. It follows that whether that company also provides 
investigative or detective services is no longer relevant. The first 
decision applying this new standard was 57 Comp. Gen. 480 (1978).

Prior to the Equifax decision, GAO had gone on record as favoring 
repeal of the Anti-Pinkerton Act. See, e.g., 56 Comp. Gen. 225, 230 
(1977). In light of the Equifax case and 57 Comp. Gen. 524, the case 
for repeal is considerably lessened. The statute is no longer a major 
impediment to legitimate guard service contracting, and certainly most 
would agree that the government should not deal with an organization 
that offers quasi-military armed forces for hire.

With the issuance of 57 Comp. Gen. 524 and 57 Comp. Gen. 480, GAO 
reviewed the prior decisions under the Anti-Pinkerton Act and 
designated them as either overruled or modified. If the result in the 
earlier case would have remained the same under the new standard, the 
decision was only "modified." If the new standard would have produced a 
different result, the earlier decision was "overruled." This is 
important because 57 Comp. Gen. 524 did not simply throw out all of the 
old rules. What it did is eliminate the "protective versus 
investigative" distinction and adopt the Equifax standard as the 
definition of a proscribed entity. Thus, an organization will no longer 
violate the Act by providing general investigative services; it will 
violate the Act only if it "offers quasi-military armed forces for 
hire." 57 Comp. Gen. at 525. If a given organization were found to 
offer quasi-military armed forces for hire--an event that is viewed as 
unlikely although not impossible--the rules in the earlier decisions 
would still be applicable even though the decisions themselves have 
been technically overruled or modified. Thus, the pre-1978 principles 
set forth previously in this discussion remain applicable, but the 
focal point is now whether the organization in question offers quasi-
military armed forces for hire, not merely whether it provides general 
detective or investigative services. For purposes of guard service 
contracting, the burden of proof rests with the party alleging the 
violation. E.g., B-216534, Jan. 22, 1985.

10. Insurance:

a. The Self-Insurance Rule:

One frequently hears that the government is a self-insurer. This is not 
completely true. There are many situations in which the government buys 
or pays for insurance. Among the more well-known examples are the 
Federal Employees' Health Benefits Program and Federal Employees' Group 
Life Insurance. As another example, the federal government is required 
by statute to pay half of the costs incurred by "qualified employees" 
for professional liability insurance. See Pub. L. No. 106-58, title VI, 
§ 642(a), 113 Stat. 430, 477 (Sept. 29, 1999), and discussion later in 
this chapter in section C.13.j; B-300866, May 30, 2003. Also, the 
government frequently pays for insurance indirectly through contracts, 
grants, and leases. E.g., B-72120, Jan. 14, 1948 (lease). A 
comprehensive treatment may be found in a report of the Comptroller 
General. U.S. General Accounting Office, Survey of the Application of 
the Government's Policy on Self-Insurance, B-168106 (Washington, D.C.: 
June 14, 1972). Another useful report, although more limited in scope, 
is U.S. General Accounting Office, Extending the Government's Policy of 
Self-Insurance in Certain Instances Could Result in Great Savings, 
PSAD-75-105 (Washington, D.C.: Aug. 26, 1975).

However, the government is essentially a self-insurer in certain 
important areas, primarily loss or damage to government property and 
the liability of government employees insofar as the government is 
legally responsible or would ultimately bear the loss. The rule to be 
discussed in this section may be stated thus: In the absence of express 
statutory authority to the contrary, appropriated funds are not 
available for the purchase of insurance to cover loss or damage to 
government property or the liability of government employees.

The rationale for the rule is aptly summarized in the following two 
passages from early decisions:

"The basic principle of fire, tornado, or other similar insurance is 
the lessening of the burden of individual losses by wider distribution 
thereof, and it is difficult to conceive of a person, corporation, or 
legal entity better prepared to carry insurance or sustain a loss than 
the United States Government."

19 Comp. Gen. 798, 800 (1940).

"The magnitude of [the government's] resources obviously makes it more 
advantageous for the Government to carry its own risks than to shift 
them to private insurers at rates sufficient to cover all losses, to 
pay their operating expenses, including agency or broker's commissions, 
and to leave such insurers a profit."

19 Comp. Gen. 211, 214 (1939).

The rule and its evolution are also summarized in B-158766, Feb. 3, 
1977.

The "self-insurance rule" dates back to the nineteenth century and has 
been stated and applied in numerous decisions of the Comptroller 
General and the Comptroller of the Treasury. In one early decision, 
13 Comp. Dec. 779 (1907), the question was whether an appropriation for 
the education of natives in Alaska could be used to buy insurance to 
cover desks en route to Alaska which had been purchased from that 
appropriation. The Comptroller of the Treasury held that the insurance 
could not be considered a necessary expense incident to accomplishing 
the purpose of the appropriation unless it somehow operated either to 
preserve and maintain the property for use or to preserve the 
appropriation that was used to buy it. It did not do the first because 
insurance does not provide any added means to actually protect the 
property (life insurance does not keep you alive) but merely transfers 
the risk of loss. Neither could it "preserve the appropriation" because 
any recoveries would have to be deposited into the general fund 
(miscellaneous receipts) of the Treasury. Therefore the appropriation 
was not available to purchase the insurance.

The following year, the Comptroller held that appropriations for the 
construction and maintenance of target ranges for the National Guard 
(then called "organized militias") could not be used to insure 
buildings acquired for use in target practice. 14 Comp. Dec. 836 
(1908). The decision closely followed the reasoning of 13 Comp. 
Dec. 779--the insurance would not actually protect the property from 
loss nor would it preserve the appropriation because any proceeds could 
not be retained by the agency but would have to be paid into the 
Treasury. Thus, the object of the appropriation "can be as readily 
accomplished without insurance as with it." 14 Comp. Dec. at 840.

Citing these and several other decisions, the Comptroller held 
similarly in 23 Comp. Dec. 269 (1916) that an appropriation for the 
construction and operation of a railroad in Alaska was not available to 
pay premiums for insurance on buildings constructed as part of the 
project.

A slightly different situation was presented in 24 Comp. Dec. 569 
(1918). The Lincoln Farm Association had donated to the United States a 
memorial hall enclosing the log cabin in which Abraham Lincoln was 
born, together with a $50,000 endowment fund to preserve and maintain 
the property. The question was whether the fund could be used to buy 
fire insurance on the property. The Comptroller noted that the funds 
were not appropriated funds in the strict sense, but were nevertheless 
"government funds" in that legal title was in the United States. 
Therefore, the self-insurance rule applied. Recalling the reasoning of 
the earlier decisions, the Comptroller apparently could not resist 
commenting "[i]t should be remembered that fire insurance does not tend 
to protect or preserve a building from fire." Id. at 570.

The Comptroller General continued to apply the rule. In a 1927 case, a 
contracting officer attempted to agree to indemnify a contractor 
against loss or damage by casualty on buildings under construction. 
Since the appropriation would not have been available to insure the 
buildings directly, the contracting officer could not agree to do so by 
contract. The stipulation to indemnify was held to exceed the 
contracting officer's authority and therefore imposed no legal 
liability against the appropriation. 7 Comp. Gen. 105 (1927). Boiler 
inspection insurance was found improper in 11 Comp. Gen. 59 (1931).

A more recent decision applying the self-insurance rule is 55 Comp. 
Gen. 1196 (1976). There, the National Aeronautics and Space 
Administration (NASA) loaned certain property associated with the 
Apollo Moon Mission to the Air Force for exhibition. As a condition of 
the loan, NASA required the Air Force to purchase commercial insurance 
against loss or damage to its property. The Comptroller General found 
that the self-insurance rule applied to the loan of property from one 
federal agency to another, and that commercial coverage should not have 
been procured. Since the insurance had already been purchased and had 
apparently been procured and issued in good faith, the voucher could be 
paid. However, the decision cautioned against similar purchases in the 
future. See also B-237654, Feb. 21, 1991.

As noted at the outset, the self-insurance rule applies to tort 
liability as well as property damage. This was established in a 1940 
decision to the Federal Housing Administration, 19 Comp. Gen. 798. In 
holding that insurance could not be procured against possible tort 
liability, the Comptroller General noted that the self-insurance rule 
"relates to the risk and not to the nature of the risk." Id. at 800. 
Since the 1946 enactment of the Federal Tort Claims Act, now codified 
at 28 U.S.C. §§ 2671 et seq., the issue has become largely moot. 
However, questions still arise concerning the operation of motor 
vehicles, and these are discussed later in this section. Conceptually 
related is 65 Comp. Gen. 790 (1986), holding that an agency may not use 
its appropriations to insure against loss or damage to employee-owned 
hand tools. If the agency wishes to afford a measure of protection to 
employees who use their own tools, it may consider loss or damage 
claims under the Military Personnel and Civilian Employees' Claims Act 
of 1964, 31 U.S.C. § 3721. (This provision was amended in 1994 to 
permit agencies to pay for losses sustained by government personnel 
forced to evacuate a foreign country. Pub. L. No. 103-236, § 172, 
108 Stat. 382 (Apr. 30, 1994).)

Another type of insurance which may not be paid for from appropriated 
funds is flight insurance. If a federal employee traveling by air on 
official business wishes to buy flight insurance, it is considered a 
personal expense and not reimbursable. 47 Comp. Gen. 319 (1967); 
40 Comp. Gen. 11 (1960). Similarly nonreimbursable is trip cancellation 
insurance. 58 Comp. Gen. 710 (1979).

Insurance on household goods placed in storage incident to a permanent 
change of duty station may not be reimbursed to the employee unless the 
insurance is required by the storage company as a condition of 
accepting the goods for storage or is otherwise required by law. 
28 Comp. Gen. 679 (1949).

Many of the decisions in this area include a statement to the effect 
that the government's practice of self-insurance "is one of policy and 
not of positive law." E.g., 21 Comp. Gen. 928, 931 (1942). While the 
statement is true, as it has been carried from decision to decision the 
word "positive" has occasionally been omitted and this has caused some 
confusion. All the statement means is that the rule is not mandated by 
statute, but has evolved administratively from the policy 
considerations summarized above. See also 71 Comp. Gen. 4 (1991) 
(policy against using appropriated funds to make permanent improvements 
to private property).

b. Exceptions to the Rule:

(1) Departments and agencies generally:

Exceptions to the self-insurance rule may of course be authorized by 
statute. The absence of an express prohibition on insurance is not 
enough to authorize it; rather, specific statutory authority is 
required. 19 Comp. Gen. 798, 800 (1940); 14 Comp. Dec. 836, 839 (1908). 
Although legislation in this area has been minimal, Congress has 
occasionally authorized the procurement of insurance in some instances 
and prohibited it in others. By this pattern, congressional recognition 
of the rule may be inferred.

Also, the existence of statutory authority to buy insurance does not 
necessarily mean it has to be exercised. In one case, the Comptroller 
General recommended against the purchase of insurance although 
recognizing that it was statutorily authorized in that instance. 
19 Comp. Gen. 211 (1939).

Moreover, because the rule is not mandated by statute but rather has 
evolved administratively from policy considerations, there are 
nonstatutory exceptions in the limited number of cases where the 
underlying policy considerations do not apply. The standards for 
exception were summarized in B-151876, Apr. 24, 1964, as follows:

1. where the economy sought by self-insurance would be defeated;

2. where sound business practice indicates that a savings can be 
effected; or:

3. where services or benefits not otherwise available can be obtained 
by purchasing insurance.

See also B-290162, Oct. 22, 2002; B-244473.2, May 13, 1993.

Two World War II cases provide early illustrations of this approach. In 
B-35379, July 17, 1943, the procurement of airplane hull insurance by 
the Civil Aeronautics Administration was approved. It was determined 
that the Administration did not have in its employ, and was unable at 
the time to recruit, the number of qualified personnel that would be 
required to appraise damage and arrange for and supervise immediate 
repairs in connection with the War Training Service and that commercial 
insurance coverage could provide such services. Also, in B-59941, Oct. 
8, 1946, the purchase of pressure vessel insurance including essential 
inspection services from commercial sources was permissible because of 
the necessity and economy brought on by wartime conditions.

In 37 Comp. Gen. 511 (1958), GAO considered a provision in a 
shipbuilding contract, which required the contractor to procure 
builder's risk insurance, including war risk insurance that was 
obtainable mainly from the government. Under the contract, title vested 
in the United States to the extent work was completed, but the risk of 
loss remained in the shipbuilder until the completed vessel was 
delivered to and accepted by the government. The government would end 
up paying part of the premiums because their cost was included in the 
bid price. GAO approved the arrangement, finding that it did not 
improperly transfer the contractors risk to the government.

A more recent example is provided in B-290162, Oct. 22, 2002. The 
Architect of the Capitol asked whether appropriated funds could be used 
for the purchase of "wrap-up" insurance for the construction of the 
Capitol Visitor Center. Wrap-up insurance would cover both the 
government's risk and the risks of contractors, designers, and 
consultants in constructing the Visitor Center. GAO held that wrap-up 
insurance could be purchased if it were shown that purchasing wrap-up 
insurance (1) is reasonably necessary or incident to the construction 
of the Visitor Center and (2) would otherwise satisfy the standards for 
exception (discussed above), that is, the use of wrap-up insurance 
would result in a savings or that a benefit, not otherwise obtainable, 
would be gained through the use of wrap-up insurance.

Exceptions may be based on the funding arrangement of a particular 
agency or program. For example, the rule prohibiting the purchase of 
insurance did not apply to the Panama Canal Commission because the 
Commission operated on a self-sustaining basis, deriving its operating 
funds from outside sources. The vast resources available to the 
government, upon which the self-insurance rule is founded, were not 
intended to be available to the Commission. B-217769, July 6, 1987 
(holding that the Commission could purchase "full scope" catastrophic 
insurance coverage if administratively determined to be necessary). 
Similarly, GAO held in B-287209, June 3, 2002, that the rule 
prohibiting the purchase of insurance to cover loss of property or tort 
claims does not apply to the District of Columbia, since the United 
States resources are not available to cover such loss sustained by the 
District. The fact that an agency's initial appropriation was placed in 
an interest-earning trust fund was found not sufficient to warrant an 
exception where the government's resources were nevertheless available 
to it. B-236022, Jan. 29, 1991 (John C. Stennis Center for Public 
Service Training and Development).

The Comptroller General has held that the self-insurance rule does not 
apply to privately owned property temporarily entrusted to the 
government. 17 Comp. Gen. 55 (1937) (historical items loaned to the 
government for exhibition purposes); 8 Comp. Gen. 19 (1928) (corporate 
books and records produced by subpoena for a federal grand jury); 
B-126535-O.M., Feb. 1, 1956 (airplane models loaned by manufacturer). 
Compare 25 Comp. Dec. 358 (1918), disallowing a claim for insurance 
premiums by West Publishing Company for law books loaned to a federal 
employee, where correspondence from the claimant made it clear that it 
was loaning the books to the employee personally and not to the 
government.

However, insurance may be purchased on loaned private property only 
where the owner requires insurance coverage as part of the transaction. 
If the owner does not require insurance, private insurance is not a 
necessary expense and the government should self-insure. 63 Comp. 
Gen. 110 (1983) (works of art temporarily loaned by the Corcoran 
Gallery to the President's Commission on Executive Exchange); 42 Comp. 
Gen. 392 (1963) (school classrooms used for civil service 
examinations).

Foreign art treasures are frequently loaned to the United States for 
exhibition purposes. While insurance may be purchased by virtue of 
17 Comp. Gen. 55, its extremely high cost has been a disincentive. To 
remedy this situation, in 1975 Congress passed the Arts and Artifacts 
Indemnity Act, 20 U.S.C. §§ 971-977. This statute authorizes the 
Federal Council on the Arts and Humanities to enter into agreements to 
indemnify against loss or damage to works of art and other materials 
while on exhibition under specified circumstances and within specified 
limits. Claims under the Act require specific appropriations for 
payment, but the agreements are backed by the full faith and credit of 
the United States. The Act constitutes authority to incur obligations 
in advance of appropriations and the agreements would therefore not 
violate the Antideficiency Act. See B-115398.01, Apr. 19, 1977 
(nondecision letter).

Since nonappropriated fund activities are by definition not financed 
from public funds, they are not governed by the self-insurance rule. 
Whether the rule should or should not be followed would generally be 
within the discretion of the activity or its parent agency. Thus, it is 
within the discretion of the Department of Defense to establish the 
rule by regulation for its nonappropriated fund activities. B-137896, 
Dec. 4, 1958.

Finally, it is important to keep in mind that the self-insurance rule 
is aimed at insurance whose purpose is to protect the United States 
from risk of financial loss. Applying the rule from this perspective, 
GAO found that it would not preclude the Federal Bureau of 
Investigation (FBI) from purchasing insurance in connection with 
certain of its undercover operations. The objective in these instances 
was not to protect the government against risk of loss, but to maintain 
the security of the operation itself, for example, by creating the 
appearance of normality for FBI-run undercover proprietary 
corporations. Thus, the FBI could treat the expenditure purely as a 
"necessary expense" question. B-204486, Jan. 19, 1982. For additional 
exceptions, see 59 Comp. Gen. 369 (1980) and B-197583, Jan. 19, 1981.

(2) Government corporations:

In an early case, the Comptroller of the Treasury indicated that the 
self-insurance rule would not apply to a wholly owned government 
corporation and suggested that it would generally take an act of 
Congress to apply the prohibition to a corporations funds. 23 Comp. 
Dec. 297 (1916).

The Comptroller General followed this approach in 21 Comp. Gen. 928 
(1942), noting that the rule "has not been observed strictly in cases 
involving insurance of property of government corporations." Id. at 
931. The decision held that, while the funds of the Virgin Islands 
Company were subject to various statutory restrictions on the use of 
public funds, they could be used to insure the Company's property.

The Federal Housing Administration is treated as a corporation for many 
purposes although it is not chartered as one. See 53 Comp. Gen. 337 
(1973). In 16 Comp. Gen. 453 (1936), the Comptroller General held that 
the Administration could purchase hazard insurance on acquired property 
based on a determination of necessity, but in 19 Comp. Gen. 798 (1940), 
declined to extend that ruling to cover insurance against possible tort 
liability. See also 55 Comp. Gen. 1321 (1976) (former Federal Home Loan 
Bank Board, although technically not a corporation, could nevertheless 
insure its new office building since the Board's authority to cover 
losses by assessments against member banks made the rationale of self-
insurance rule inapplicable).

c. Specific Areas of Concern:

(1) Property owned by government contractors:

The cases previously discussed in which insurance was prohibited 
involved property to which the government held legal title. Questions 
also arise concerning property to which the government holds less than 
legal title, and property owned by government contractors.

A contractor will normally procure a variety of insurance as a matter 
of sound business practice. This may include hazard insurance on its 
property, liability insurance, and workers' compensation insurance. The 
premiums are part of the contractors' overhead and will be reflected in 
its bid price. When this is done, the government is paying at least a 
part of the insurance cost indirectly. Since the risks covered are not 
the risks of the government, there is no objection to this "indirect 
payment" nor, if administratively determined to be necessary, to the 
inclusion of an insurance stipulation in the contract. 39 Comp. 
Gen. 793 (1960); 18 Comp. Gen. 285, 298 (1938).

Similarly differentiating between the government's risk and the 
contractor's risk, the Comptroller General has applied the self-
insurance rule where the government holds "equitable title" under a 
lease-purchase agreement. 35 Comp. Gen. 393 (1956); 35 Comp. Gen. 391 
(1956). In both decisions, the Comptroller General held that, although 
the government could reimburse the lessor for the cost of insuring 
against its own (the lessors) risk, it could not require the lessor to 
carry insurance for the benefit of the government.

(2) Use of motor vehicles:

As noted previously, the self-insurance rule applies to tort liability 
as well as property damage. 19 Comp. Gen. 798 (1940). At present, the 
Federal Tort Claims Act, 28 U.S.C. §§ 2671 et seq., provides the 
exclusive remedy for claims against the United States resulting from 
the negligent operation of motor vehicles by government employees 
within the scope of their employment. Thus, insurance questions have 
become largely moot. Nevertheless, the self-insurance rule has been 
involved in several situations involving the operation of motor 
vehicles.

A 1966 decision, 45 Comp. Gen. 542, involved Internal Revenue Service 
(IRS) employees classified as "high mileage drivers." They were 
assigned government-owned cars for official use and, when warranted, 
could drive the cars home at the close of the workday so that they 
could proceed directly to an assignment from home the next morning. The 
Treasury Department asked whether IRS appropriations were available to 
reimburse the employees for having their commercial liability insurance 
extended to cover the government vehicles. Applying the self-insurance 
rule, and noting further that the travel would most likely be 
considered within the scope of employment for purposes of the Federal 
Tort Claims Act, the Comptroller General concluded that the funds could 
not be so used. GAO similarly denied the claims of six Navy members for 
reimbursement of extra collision insurance they purchased on rented 
trucks. They were authorized to rent trucks to perform their official 
duties and were even directed to obtain extra collision insurance. 
Nonetheless, GAO denied reimbursement because the insurance had been 
purchased in violation of the Joint Federal Travel Regulation, vol. I, 
para. U3415C2a, which prohibits the purchase of optional extra 
collision insurance. B-256669, Aug. 31, 1994. See also B-261141, 
Nov. 9, 1995. Collision damage waiver coverage on commercial rental 
vehicles is discussed in the section entitled "Damage to Commercial 
Rental Vehicles" in Chapter 12 (Volume III of the second edition of 
Principles of Federal Appropriations Law).

In B-127343, Dec. 15, 1976, the Comptroller General concluded that the 
Federal Tort Claims Act applied to Senate employees operating Senate-
owned vehicles within the scope of their employment. Therefore, the 
purchase of commercial insurance would be neither necessary nor 
desirable.

In 1972, the Veterans Administration (VA) asked whether it could use 
its appropriations to provide liability insurance coverage for disabled 
veteran patients being given VA-conducted driver training. Since the 
trainees were not government employees, they would not be covered by 
the Federal Tort Claims Act. Since the risk was not that of the 
government, the self-insurance rule was not applicable. Therefore, VA 
could procure the liability insurance upon administrative 
determinations that (1) the driver training was a necessary part of a 
given patient's medical rehabilitation and (2) that the insurance 
coverage was necessary to its success. B-175086, May 16, 1972.

The Federal Tort Claims Act does not apply to claims arising in foreign 
countries and the rules are a bit different for driving overseas. 
Originally, notwithstanding the nonavailability of the Federal Tort 
Claims Act, the Comptroller General had prohibited the purchase of 
insurance for government-owned vehicles operated in foreign countries. 
39 Comp. Gen. 145 (1959). Instances of specific statutory authority for 
the State Department and the Foreign Agricultural Service were viewed 
as precluding insurance in other situations without similar legislative 
sanction.

However, GAO reviewed and revised its position in 1976. In 55 Comp. 
Gen. 1343 (1976), the Comptroller General held that the General 
Services Administration (GSA) could provide by regulation for the 
purchase of liability insurance on government-owned vehicles operated 
regularly or intermittently in foreign countries, where required by 
local law or necessitated by legal procedures that could pose extreme 
difficulties in case of an accident (such as arrest of the driver and/
or impoundment of the vehicle). The decision also concluded that GSA 
could amend its regulations to permit reimbursement of federal 
employees for the cost of "trip insurance" on both government-owned and 
privately owned vehicles in foreign countries where liability insurance 
is a legal or practical necessity. The decision was extended in 
55 Comp. Gen. 1397 (1976) to cover the cost of required insurance on 
vehicles leased commercially in foreign countries on a long-term basis.

Some confusion may result from the statement in 55 Comp. Gen. 1343, 
1347, that "39 Comp. Gen. 145 (1959), 19 Comp. Gen. 798 (1940), and 
similar decisions" are overruled "to the extent that they are 
inconsistent with this decision." Since 39 Comp. Gen. 145 prohibited 
insurance on government-owned vehicles in foreign countries, it is 
properly viewed as overruled by 55 Comp. Gen. 1343. However, 19 Comp. 
Gen. 798 and "similar decisions" remain valid insofar as they assert 
the general applicability of the self-insurance rule to tort liability 
and to motor vehicle usage in the United States. They should be viewed 
as modified to the extent that they no longer preclude purchase of 
insurance in the foreign country situations dealt with in 55 Comp. 
Gen. 1343 and 55 Comp. Gen. 1397.

(3) Losses in shipment:

Early decisions had applied the self-insurance rule to the risk of 
damage or loss of valuable government property while in shipment. Thus, 
marine insurance could not be purchased for shipment of a box of 
silverware. 4 Comp. Gen. 690 (1925). Nor could it be purchased to cover 
shipment of $5,000 in silver dollars from San Francisco to Samoa. 
22 Comp. Dec. 674 (1916), aff'd upon reconsideration, 23 Comp. Dec. 297 
(1916).

In 1937, Congress enacted the Government Losses in Shipment Act, 
40 U.S.C. §§ 721-729. The Act provides a fund for the payment of claims 
resulting from the loss or damage in shipment of government-owned 
"valuables" as defined in the Act. The Act also prohibits the purchase 
of insurance except as specifically authorized by the Secretary of the 
Treasury. The Secretary may give such an authorization when he finds 
the risk of loss in shipment cannot adequately be guarded against by 
the facilities of the United States or adequate replacement cannot be 
provided for. See S. Rep. No. 75-738, at 5 (1937). If a given risk is 
beyond the scope of the Act, for example, if the items in question are 
not within the definition of "valuables" or if the particular movement 
does not qualify as "shipment," then the self-insurance rule and its 
exceptions would still apply. See, e.g., 17 Comp. Gen. 419 (1937); 
B-244473.2, May 13, 1993.

(4) Bonding of government personnel:

Prior to 1972, the federal government frequently required the surety 
bonding of officers and employees who handled money or other valuables. 
In 1972, Congress enacted legislation, now found at 31 U.S.C. § 9302, 
to expressly prohibit the government from requiring or obtaining surety 
bonds for its civilian employees or military personnel in connection 
with the performance of their official duties. The reasons for this 
legislation parallel the policy considerations behind the self-
insurance rule. Indeed, the objective of the legislation was to 
substitute the principle of self-insurance for the practice of 
obtaining surety bonds on federal employees where the risk insured 
against is a loss of government funds or property in which the United 
States is the insured.[Footnote 316] 56 Comp. Gen. 788, 790 (1977). 
Although 31 U.S.C. § 9302 does not define "officer" or "employee," the 
definitions in Title 5 of the United States Code are available for 
guidance. B-236022, Jan. 29, 1991.

Under the former system, the surety bonds were for the protection of 
the government, not the bonded employee. If a loss occurred and the 
government collected on the bond, the surety could attempt to recover 
against the individual employee. Thus, the elimination of bonding in no 
way affects the personal liability of federal employees, and 31 U.S.C. 
§ 9302 specifies this. This principle has been noted several times in 
connection with the liability of accountable officers and the cases are 
cited in Chapter 9.

In 56 Comp. Gen. 788 (1977), the Comptroller General held that, by 
virtue of 31 U.S.C. § 9302, the United States became a self-insurer of 
restitution, reparation, and support moneys collected by probation 
officers under court order. The decision noted that the same result 
applied to litigation funds paid into the registry of the court (funds 
paid into the registry by a litigant pending distribution by the court 
to the successful party).

However, if an agency requires an employee to serve as a notary public 
and state law requires bonding of notaries, the employee's expense in 
obtaining the surety bond may be reimbursed notwithstanding 31 U.S.C. 
§ 9302. The bond in such a situation is neither required by nor 
obtained by the federal government. It is required by the state and 
obtained by the employee. Also, the risk involved is not one in which 
the United States is the insured. B-185909, June 16, 1976.

Similarly, if a federal court designates a state court employee to 
perform certain functions in connection with the arrest and detention 
of federal offenders, 31 U.S.C. § 9302 does not preclude the 
Administrative Office of the United States Courts from requiring that 
the state employee be bonded since the statute applies only to federal 
employees. 52 Comp. Gen. 549 (1973).

11. Lobbying and Related Matters:

a. Introduction:

Lobbying--attempting to influence legislators--is nothing new. The term 
itself derives from the practice of advocates of a particular measure 
lying in wait in the corridors or "lobby" of the Capitol Building, 
there to collar passing members of Congress.

Generally speaking, there are two types of lobbying. "Direct lobbying," 
as the term implies, means direct contact with the legislators, either 
in person or by various means of written or oral communication. 
"Indirect" or "grassroots" lobbying is different. There, the lobbyist 
contacts third parties, either members of special interest groups or 
the general public, and urges them to contact their legislators to 
support or oppose something. Of course, the term "lobbying" can also 
refer to attempts to influence decision makers other than legislators.

There is nothing inherently evil about lobbying. A House select 
committee investigating lobbying in 1950 put it this way:

"Every democratic society worthy of the name must have some lawful 
means by which individuals and groups can lay their needs before 
government. One of the central purposes of government is that people 
should be able to reach it; the central purpose of what we call 
'lobbying' is that they should be able to reach it with maximum impact 
and possibility of success. This is, fundamentally, what lobbying is 
about."[Footnote 317]

Nevertheless, because of the obvious potential for abuse, there are 
legal restrictions on lobbying. This section will explore some of them. 
Because the focus of this publication is on the use of appropriated 
funds, coverage is limited for the most part to lobbying by government 
officials and does not include lobbying by private organizations. 
Restrictions on lobbying by government officials derive from two 
sources: penal statutes and provisions in appropriation acts.

b. Penal Statutes:

Originally enacted in 1919, 18 U.S.C. § 1913 provided for criminal 
sanctions. In late 2002, however, the statute was amended to omit the 
criminal sanctions and significantly expand the scope of the lobbying 
restriction.[Footnote 318] The statute, commonly referred to as the 
Anti-Lobbying Act, now provides:

"No part of the money appropriated by any enactment of Congress shall, 
in the absence of express authorization by Congress, be used directly 
or indirectly to pay for any personal service, advertisement, telegram, 
telephone, letter, printed or written matter, or other device, intended 
or designed to influence in any manner a Member of Congress, a 
jurisdiction, or an official of any government, to favor, adopt, or 
oppose, by vote or otherwise, any legislation, law, ratification, 
policy, or appropriation, whether before or after the introduction of 
any bill, measure, or resolution proposing such legislation, law, 
ratification, policy, or appropriation; but this shall not prevent 
officers or employees of the United States or of its departments or 
agencies from communicating to any such Member or official, at his 
request, or to Congress or such official, through the proper official 
channels, requests for any legislation, law, ratification, policy, or 
appropriations which they deem necessary for the efficient conduct of 
the public business, or from making any communication whose prohibition 
by this section might, in the opinion of the Attorney General, violate 
the Constitution or interfere with the conduct of foreign policy, 
counter-intelligence, intelligence, or national security activities."

The statute is now punishable by civil penalties ranging between 
$10,000 and $100,000 per expenditure. Section 1913 actually 
incorporates the civil penalties contained in another lobbying statute, 
31 U.S.C. § 1352. Section 1352(a) prohibits recipients of federal 
contracts, grants, or loans from using such funds to lobby in 
connection with the awarding of such contracts, grants, or loans. A 
thorough discussion of 31 U.S.C. § 1352, also known as the Byrd 
Amendment, is found in the subsequent section on lobbying with grant 
funds in this chapter, section C.11.d.

Prior to the 2002 amendment, 18 U.S.C. § 1913 only prohibited the use 
of appropriated funds for lobbying aimed at the most basic legislative 
activities of Congress. The amended statute expands the prohibition to 
a broader scope of legislative activities conducted at all levels of 
government, not just the federal level.

To date there has been no case law interpreting the expanded and 
decriminalized 18 U.S.C. § 1913. The following discussion of the 
statute, while based upon section 1913 before it was amended in 2002, 
nevertheless provides a solid foundation for interpreting the statute 
as the basic framework of the lobbying restriction was not altered.

The context in which the original section 1913 was enacted is reflected 
in the following passage from the floor debate on the 1919 legislation:

"The bill also contains a provision which …will prohibit a practice 
that has been indulged in so often, without regard to what 
administration is in power--the practice of a bureau chief or the head 
of a department writing letters throughout the country, sending 
telegrams throughout the country, for this organization, for this man, 
for that company to write his Congressman, to wire his Congressman, in 
behalf of this or that legislation. [Applause.] The gentleman from 
Kentucky …during the closing days of the last Congress was greatly 
worried because he had on his desk thousands upon thousands of 
telegrams that had been started right here in Washington by some 
official wiring out for people to wire Congressman Sherley …Now, it was 
never the intention of Congress to appropriate money for this purpose, 
and [§ 1913] will absolutely put a stop to that sort of thing. 
[Applause.]" [Footnote 319]

Since 18 U.S.C. § 1913 was a criminal statute, its enforcement was the 
responsibility of the Justice Department and the courts. Although the 
statute no longer contains criminal sanctions, the Justice Department 
continues to have enforcement responsibilities. The enforcement 
mechanism for 18 U.S.C. § 1913 is derived from 31 U.S.C. § 1352(c), 
which provides that violations are to be handled in accordance with the 
administrative process for adjudicating civil liability for false 
claims. Under this process, provided for under the Program Fraud Civil 
Remedies Act of 1986, 31 U.S.C. § 3801-3812, no alleged violation is 
subject to adjudication unless approved by the Justice Department. 
31 U.S.C. § 3803(b)(2). The Justice Department is also responsible for 
the judicial enforcement of any civil penalty imposed. 31 U.S.C. 
§ 3806.

Where GAO has determined that appropriated funds were used, it would 
refer those matters to the Justice Department in appropriate cases. 
E.g., B-192658, Sept. 1, 1978; B-164497(5), Mar. 10, 1977. Generally, 
GAO would refer matters to the Justice Department if asked to do so by 
a Member of Congress or where available information provided reasonable 
cause to suspect that a violation may have occurred. B-145883, Apr. 27, 
1962.

In addition, since a violation of section 1913 is by definition an 
improper use of appropriated funds, such a violation could form the 
basis of a GAO exception or disallowance.[Footnote 320]As a practical 
matter, however, this option is often not viable. GAO's real 
"enforcement" tool is to report any unlawful activities to Congress in 
furtherance of Congress's oversight of executive branch 
activities.[Footnote 321]

The Justice Department has construed section 1913 as applying to large-
scale "grassroots" lobbying campaigns of telegrams, letters, and other 
forms of communication designed to generate citizen contacts with 
Congress on behalf of an administration position with respect to 
pending legislation, but not to direct communications between executive 
branch officials and Congress. More recently, the Justice Department 
emphasized that section 1913 does not apply to (1) public speeches, 
appearances, or writings, so that officials are free to publicly 
advance administration positions, even to the point of calling on the 
public to encourage Members of Congress to support such positions, or 
(2) the lobbying activities of the President, his aides and assistants 
within the Executive Office of the President, the Vice President, 
cabinet members, and other Senate-confirmed officials appointed by the 
President. See Memorandum for the Attorney General and the Deputy 
Attorney General from Walter Dellinger, Assistant Attorney General, 
Department of Justice, Office of Legal Counsel, Apr. 14, 1995; 13 Op. 
Off. Legal Counsel 300 (1989).

In evaluating particular fact situations to determine possible 
violations of section 1913, GAO has applied the Justice Department's 
interpretation of that statute. Thus, GAO found that referral to the 
Justice Department was not warranted in the following situations:

* Various judicial branch activities including direct contacts with 
legislators by federal judges, legislative liaison activities by the 
Judicial Conference of the United States, and some grassroots lobbying 
that did not involve the use of federal funds. 63 Comp. Gen. 624 
(1984).

* Providing to a private lobbying group a copy of congressional 
testimony by the Secretary of State supporting the administration's 
Central American policies. 66 Comp. Gen. 707 (1987). The answer would 
have been different if the State Department had used appropriated funds 
to develop material for the lobbying group rather than simply providing 
existing and readily available material. Id. at 712. See also 
"Providing assistance to private lobbying groups" later in this 
chapter, section C.11.c, and B-229069.2, Aug. 1, 1988.

* Contacts with congressional staff members and a briefing for the 
House Foreign Affairs Committee by State Department officials designed 
to generate opposition for a legislative measure perceived as 
inconsistent with administration nuclear nonproliferation policy. 
B-217896, July 25, 1985.

* Speeches and written materials by the Chairman of the Federal Trade 
Commission expressing opposition to the Postal Service's "monopoly" 
status for letter class mail. None of the materials exhorted members of 
the public to contact their legislators. B-229257, June 10, 
1988.[Footnote 322]

* Written materials prepared and disseminated by the Small Business 
Administration (SBA), none of which included grassroots lobbying, 
designed to support an administration proposal to transfer SBA to the 
Commerce Department. B-223098, B-223098.2, Oct. 10, 1986.

* Transmission of information by the Consumer Product Safety Commission 
to a private company advising of scheduled congressional hearings on 
legislation relevant to a problem the company was facing. B-229275-
O.M., Nov. 17, 1987. The memorandum stated:

"We believe it is within the statutory authority of a regulatory agency 
to advise a regulated company that a remedy it seeks can only be 
obtained through legislation and that such legislative remedy may be 
initiated by a particular Congressional Committee."

* Congressional briefings by Department of Energy officials designed to 
influence views on nuclear weapons testing legislation. A planned media 
campaign to further that objective would have been more questionable, 
but it was not carried out. U.S. General Accounting Office, Nuclear 
Test Lobbying: DOE Regulations for Contractors Need Reevaluation, GAO/
RCED-88-25BR (Washington, D.C.: Oct. 9, 1987).

* Memorandum written by Commissioner of Commodity Futures Trading 
Commission, urging individuals and organizations to "make [their] 
position known to the co-sponsors of this [b]ill," constituted 
grassroots lobbying. However, no referral was made since the 
Commissioner was a presidential appointee confirmed by the Senate and 
the amount spent on the memorandum was not substantial. B-270875, July 
5, 1996.

* Letter sent by Deputy Secretary of Energy to thousands of individuals 
and organizations addressing the administration's energy policies and 
legislative proposals was not grassroots lobbying as recipients were 
encouraged to contact the Deputy Secretary, not their elected 
representatives. Moreover, the Deputy Secretary's activities were not 
restricted by section 1913 since he was a Senate-confirmed presidential 
appointee. B-270875, July 5, 1996.

* Environmental Protection Agency distribution of fact sheets to 
various organizations setting forth the adverse effects of pending 
legislation on the environment, was not grassroots lobbying as none of 
the material contained direct appeals for people to contact Members of 
Congress. B-270875, July 5, 1996.

Numerous additional examples may be found in our discussion of "pending 
legislation" appropriation restrictions later in this chapter, in 
section C.11.c.

GAO found the following situations sufficiently questionable to warrant 
referral to Justice:[Footnote 323]

* An article written by a Commerce Department official and published in 
Business America, a Commerce Department publication, explicitly urging 
readers to contact their elected representatives in Congress to support 
certain amendments to the Export Administration Act. B-212235(1), 
Nov. 17, 1983. Under the Justice Department's more recent 
interpretations of section 1913, this case would not have warranted 
referral since officials are free to publicly advance administration 
positions.

* Campaign by Air Force and Defense Department to use contractors' 
lobbyists and subcontractor network to lobby Congress in support of 
C-5B aircraft procurement. U.S. General Accounting Office, Improper 
Lobbying Activities by the Department of Defense on the Proposed 
Procurement of the C-5B Aircraft, GAO/AFMD-82-123 (Washington, D.C.: 
Sept. 29, 1982).

As of early 1995, the Justice Department reported that there had been 
no prosecutions under section 1913.[Footnote 324] See Memorandum for 
the Attorney General and the Deputy Attorney General from Walter 
Dellinger, Assistant Attorney General, Department of Justice, Office of 
Legal Counsel, Apr. 14, 1995. To our knowledge, Justice initiated no 
prosecutions between 1995 and 2002 when section 1913 was amended.

As noted earlier, there has been no judicial activity under the amended 
version of 18 U.S.C. § 1913. The only judicial activity addressing the 
pre-amendment version was the issue of whether the statute created a 
private right of action. The answer was no. National Treasury Employees 
Union v. Campbell, 482 F. Supp. 1122 (D.D.C. 1980), aff'd, 654 F.2d 784 
(D.C. Cir. 1981), overruling National Association for Community 
Development v. Hodgson, 356 F. Supp. 1399 (D.D.C. 1973); Grassley v. 
Legal Services Corp., 535 F. Supp. 818 (S.D. Iowa 1982); American 
Trucking Assn's, Inc. v. Department of Transportation, 492 F. Supp. 566 
(D.D.C. 1980).

One other statute with penal sanctions deserves brief mention--the 
Lobbying Disclosure Act of 1995, Pub. L. No. 104-65, 109 Stat. 691 
(Dec. 19, 1995), codified largely at 2 U.S.C. § 1601-1612. This statute 
does not apply to the legislative activities of government agencies, 
but rather to organizations that lobby certain federal officials in the 
legislative and executive branches. These organizations are required to 
register with the Secretary of the Senate and the Clerk of the House of 
Representatives and to semiannually report expenditures and certain 
other information related to their lobbying efforts. 2 U.S.C. § 1603(a) 
and § 1604.[Footnote 325] This statute repealed the 1946 Federal 
Regulation of Lobbying Act, which GAO criticized for resulting in 
comparatively few lobbyists registering with Congress. See U.S. General 
Accounting Office, Federal Lobbying: Comments on the Adequacy of 
Federal Lobbying Laws, GAO/T-GGD-93-49 (Washington, D.C.: Sept. 30, 
1993).

c. Appropriation Act Restrictions:

(1) Origin and general considerations:

In 1949, a House Resolution created a Select Committee on Lobbying 
Activities to review the operation of the Federal Regulation of 
Lobbying Act and to investigate all lobbying activities both by the 
private sector and by federal agencies. The Committee held extensive 
hearings and issued several reports. In its final report, the Committee 
had this to say about lobbying by government agencies:

"The existing law in this field, unlike the law governing lobbying by 
private interests, is not directed toward obtaining information of such 
activities, but is prohibitory in concept and character. It forbids the 
use of appropriated funds for certain types of lobbying activities and 
is specifically a part of the Criminal Code. Enacted in 1919, it is not 
a recent or in any sense a novel piece of legislation. Its validity has 
never been challenged and we consider it sound law….

"It is our conclusion that the long-established criminal statute 
referred to above should be retained intact and that Congress, through 
the proper exercise of its powers to appropriate funds and to 
investigate conditions and practices of the executive branch, as well 
as through its financial watch dog, the General Accounting Office, can 
and should remain vigilant against any improper use of appropriated 
funds and any invasion of the legislative prerogatives and 
responsibilities of the Congress."[Footnote 326]

When the Select Committee referred to the "proper exercise" of the 
congressional power to appropriate funds, it of course had in mind the 
use of that power to restrict the use of funds for activities 
considered undesirable. While the use of appropriation act restrictions 
to control lobbying had some earlier precedent, the practice began in 
earnest shortly after the issuance of the Select Committee's final 
report with some fiscal year 1952 appropriations, and has continued 
ever since.

The most common form of appropriation act restriction prohibits the use 
of funds for "publicity or propaganda." There are several variations of 
the provision, with varying degrees of specificity. As of 2003, in 
addition to two governmentwide publicity or propaganda restrictions, 
approximately half of the regular annual appropriation acts include 
some version. The simplest version of the statute, and the most 
general, is this:

"No part of any appropriation contained in this Act shall be used for 
publicity or propaganda purposes not authorized by the 
Congress."[Footnote 327]

It prohibits expenditures for all unauthorized publicity or propaganda. 
Unfortunately, as with most of the publicity and propaganda statutes 
over the years, there is no definition of either term. Thus, the 
statutes have been applied through administrative interpretation.

In construing and applying a publicity or propaganda provision, it is 
necessary to achieve a delicate balance between competing interests. On 
the one hand, every agency has a legitimate interest in communicating 
with the public and with the Congress regarding its functions, 
policies, and activities. The Select Committee recognized this, quoting 
in its Interim Report from the report of the Hoover Commission:

"Apart from his responsibility as spokesman, the department head has 
another obligation in a democracy: to keep the public informed about 
the activities of his agency. How far to go and what media to use in 
this effort present touchy issues of personal and administrative 
integrity. But of the basic obligation there can be little 
doubt."[Footnote 328]

In addition, the courts have indicated that it is not illegal for 
government agencies to spend money to advocate their positions, even on 
controversial issues. See Joyner v. Whiting, 477 F.2d 456, 461 
(4th Cir. 1973); Donaggio v. Arlington County, Virginia, 880 F. Supp. 
446, 454-56 (E.D. Va. 1995); Arrington v. Taylor, 380 F. Supp. 1348, 
1364 (M.D. N.C. 1974).[Footnote 329]

Yet on the other hand, the statute has to mean something. As the court 
said in National Association for Community Development v. Hodgson, 
356 F. Supp. 1399 (D.D.C. 1973) in reference to 18 U.S.C. § 1913, 
"[o]bviously, Congress intended to remedy some problem or further some 
cause, otherwise they would not have bothered enacting the statute." 
Id. at 1403. As long as the law exists, there has to be a point beyond 
which government action violates it. Testifying before the Select 
Committee on March 30, 1950, former Assistant Comptroller General Frank 
Weitzel made the following remarks:

"[I]f you set up an organization in the executive branch for the 
benefit of the three blind mice they would come up here with a budget 
program and prospectus which would convince any Member of Congress that 
that was one of the most important organizations in the executive 
branch….

"And no doubt by that time there would also be some private 
organizations with branches which would parallel your Federal agency, 
which would be devoted to the propagation and dissemination of 
information about the three blind mice…."[Footnote 330]

In evaluating whether a given action violates a publicity or propaganda 
provision, GAO will rely heavily on the agency's administrative 
justification. In other words, the agency gets the benefit of any 
legitimate doubt. GAO will not accept the agency's justification where 
it is clear that the action falls into one of a very few specific 
categories. Before discussing what those categories are, two threshold 
issues must be noted.

First, it must be determined whether the agency in question is subject 
to a publicity or propaganda restriction. The existence and precise 
terms of the restriction can change over time. Therefore, it is always 
necessary to check the relevant appropriation acts for the year in 
which the questioned obligation or expenditure was made in order to 
determine what, if any, agency-specific or governmentwide restrictions 
exist.

Second, a violation must be predicated on the use of public funds 
(either direct appropriations or funds which, although not direct 
appropriations, are treated as appropriated funds). If appropriated 
funds are not involved, there is no violation no matter how blatant the 
conduct may be. 56 Comp. Gen. 889 (1977) (involving a newsletter 
concerning the Clinch River Breeder Reactor Project containing material 
that would have been illegal had it been financed in any way with 
appropriated funds).

(2) Self-aggrandizement:

As noted above, the broadest form of the publicity and propaganda 
restriction prohibits the use of appropriated funds "for publicity or 
propaganda purposes not authorized by the Congress." A fiscal year 2003 
governmentwide variation limits the restriction to activities "within 
the United States."[Footnote 331]

The Comptroller General first had occasion to construe this provision 
in 31 Comp. Gen. 311 (1952). The National Labor Relations Board asked 
whether the activities of its Division of Information amounted to a 
violation. Reviewing the statute's scant legislative history, the 
Comptroller General concluded that it was intended "to prevent 
publicity of a nature tending to emphasize the importance of the agency 
or activity in question." Id. at 313. Therefore, the prohibition would 
not apply to the "dissemination to the general public, or to particular 
inquirers, of information reasonably necessary to the proper 
administration of the laws" for which an agency is responsible. Id. at 
314. Based on this interpretation, GAO concluded that the activities of 
the Board's Division of Information were not improper. The only thing 
GAO found that might be questionable, the decision noted, were certain 
press releases reporting speeches of members of the Board.

Thus, 31 Comp. Gen. 311 established the important proposition that the 
statute does not prohibit an agency's legitimate informational 
activities. See also B-284226.2, Aug. 17, 2000; B-223098, B-223098.2, 
Oct. 10, 1986; B-177704, Feb. 7, 1973; U.S. General Accounting Office, 
Military Activities: Display of Equipment at the Former Philadelphia 
Naval Base in July 2000, GAO-01-77R (Washington, D.C.: Oct. 18, 2000); 
U.S. Attorneys: Laws, Rules, and Policies Governing Political 
Activities, GAO/GGD-00-171 (Washington, D.C.: July 24, 2000). It is 
geared at activities whose obvious purpose is "self-aggrandizement" or 
"puffery."

GAO's approach to this statute is basically the same as its approach to 
the other appropriation act lobbying restrictions to be discussed in 
detail later. The statute does not provide adequate guidelines to 
distinguish the legitimate from the proscribed. Thus, without further 
clarification from Congress or the courts, GAO is reluctant to find a 
violation where the agency can provide a reasonable justification for 
its activities.

In a 1973 case, B-178528, July 27, 1973, the Republican National 
Committee financed a mass mailing of copies of editorials from British 
newspapers in praise of the President. The editorials were transmitted 
with a letter prepared by a member of the White House staff, on State 
Department letterhead stationery, and signed by the Ambassador to Great 
Britain. GAO again noted the extreme difficulty in distinguishing 
between disseminating information to explain or defend administration 
policies, which is permissible, and similar activities designed for 
purely political or partisan purposes. (See also B-194776, June 4, 
1979.) In addition, a legitimate function of a foreign legation is to 
communicate information on press reaction in the host country to 
policies of the United States. Thus, GAO was unable to conclude that 
there was any violation of the publicity and propaganda law. In any 
event, the use of appropriated funds was limited to the cost of one 
piece of paper and the time it took the Ambassador to think about it 
and sign his name.

Other cases in which GAO found no violation are B-284226.2, supra 
(Housing and Urban Development report "Losing Ground" and accompanying 
letter providing information to agency constituents about the impact of 
program reductions being proposed in Congress); B-212069, Oct. 6, 1983 
(press release by Director of Office of Personnel Management 
excoriating certain Members of Congress who wanted to delay a civil 
service measure the administration supported); and B-161686, June 30, 
1967 (State Department publications on Vietnam War). In none of these 
cases were the documents designed to glorify the issuing agency or 
official.

Similarly, GAO concluded that the Census Bureau did not violate this 
restriction when its employees participated in a symposium. The 
symposium was to attract thousands of African-Americans, a population 
the Bureau characterized as "hard-to-count" and therefore targeted in 
its outreach activities. The Bureau's participation in the symposium 
was limited to responding to questions about the census and giving away 
promotional items and was therefore legitimate informational activity, 
not puffery or self-aggrandizement. See U.S. General Accounting Office, 
Census Bureau Participation in Los Angeles Symposium, August 2000, GAO-
01-124R (Washington, D.C.: Oct. 24, 2000).

GAO did find a violation in B-136762, Aug. 18, 1958. The Deputy 
Assistant Secretary of Defense for Military Assistance Programs 
attended a meeting of the Aircraft Industries Association and made a 
speech "clearly designed to enlist the aid of the Aircraft Industries 
Association in publicizing and selling the Mutual Security program to 
the American public through the various media available to the 
Association." Reviewing the text of the speech, GAO found that it went 
far beyond any legitimate purpose of informing the public and that it 
therefore violated the publicity and propaganda restriction. However, 
the officer had been authorized to attend the meeting as related to the 
performance of official duty and would have been entitled to per diem 
for the full day even if he had not made the speech. Therefore, since 
the government incurred no additional expense by virtue of the speech, 
GAO declined to seek recovery either from the officer himself or from 
the accountable officers who had made the payment.

Some agencies have authority to disseminate material that is 
promotional rather than purely informational. For example, the Commerce 
Department is charged with promoting commerce. In so doing, it entered 
into a contract with the Advertising Council to undertake a national 
multimedia campaign to enhance public understanding of the American 
economic system. Finding that this was a reasonable means of 
implementing its function and that the campaign did not "aggrandize" 
the Commerce Department, GAO found nothing illegal. B-184648, Dec. 3, 
1975.

If an agency does not have promotional authority, the scope of its 
permissible activities is correspondingly more restricted. For example, 
GAO found the publicity and propaganda law violated when a presidential 
advisory committee, whose sole function was to advise the President and 
which had no promotional role, set up and implemented a public affairs 
program that included the hiring of a "publicity expert." B-222758, 
June 25, 1986.

See section C.11.f of this chapter for further discussion of agency 
promotional authorities and the employment of publicity experts.

(3) Covert propaganda:

Another type of activity that GAO has construed as prohibited by the 
"publicity or propaganda not authorized by Congress" statute is "covert 
propaganda," defined as "materials such as editorials or other articles 
prepared by an agency or its contractors at the behest of the agency 
and circulated as the ostensible position of parties outside the 
agency." B-229257, June 10, 1988. A critical element of the violation 
is concealment of the agency's role in sponsoring the material. Id.

In a 1986 case, the Small Business Administration (SBA) prepared 
"suggested editorials" and distributed them to newspapers. The 
editorials urged support of an administration proposal to merge SBA 
with the Department of Commerce. The editorials were clearly 
"propaganda." This, however, was not enough to violate the law. The 
problem was that they were misleading as to their origin. The plan 
presumably was for a newspaper to print the editorial as its own 
without identifying it as an SBA document. This, the Comptroller 
General concluded, went beyond the range of acceptable public 
information activities and therefore violated the publicity and 
propaganda law. B-223098, B-223098.2, Oct. 10, 1986.

A similar holding is 66 Comp. Gen. 707 (1987), involving newspaper 
articles and editorials in support of Central American policy. The 
materials were prepared by paid consultants at government request, and 
published as the work of nongovernmental parties. The decision also 
found that media visits by Nicaraguan opposition leaders, arranged by 
government officials but with that fact concealed, constituted another 
form of "covert propaganda." See also B-129874, Sept. 11, 1978 ("canned 
editorials" and sample letters to the editor in support of Consumer 
Protection Agency legislation, had they been prepared, would have 
violated the law).

In B-229257, supra, the Federal Trade Commission (FTC) prepared a 
variety of materials critical of the Postal Services "monopoly" on 
letter class mail, for distribution at a National Press Club breakfast 
that the Postmaster General was to attend. While the material was 
unquestionably propaganda, it did not violate the law because it 
identified the FTC as the source.

(4) Pending legislation: overview:

The version of the appropriations act restriction that the Comptroller 
General has had the most frequent occasion to apply is the version 
prohibiting publicity and propaganda designed to influence pending 
legislation.

For over 30 years, from the early 1950s to fiscal year 1984, the 
following provision was enacted every year:

"No part of any appropriation contained in this or any other Act …shall 
be used for publicity or propaganda purposes designed to support or 
defeat legislation pending before Congress."[Footnote 332]

As long as this version was in effect, it applied, by virtue of the 
"this or any other act" language, to all government agencies regardless 
of which appropriation act provided their funds. For fiscal year 1984, 
the "this or any other act" provision fell victim to a point of order 
and was dropped. See 64 Comp. Gen. 281 (1985). For some time after 
that, no governmentwide provision existed. However, another change in 
course occurred and since fiscal year 1997,[Footnote 333] the following 
governmentwide "pending legislation" provision has been in place:

"No part of any funds appropriated in this or any other Act shall be 
used by an agency of the executive branch, other than for normal and 
recognized executive-legislative relationships, for publicity or 
propaganda purposes, and for the preparation, distribution or use of 
any kit, pamphlet, booklet, publication, radio, television or film 
presentation designed to support or defeat legislation pending before 
the Congress, except in presentation to the Congress itself."[Footnote 
334]

Although the governmentwide provision currently in place is more 
detailed than the prior governmentwide restriction, we have concluded 
that the language currently used has the same legal effect. See 
B-270875, supra.

During the time when there was no governmentwide restriction, 
restrictions aimed at curtailing the influencing of pending legislation 
appeared in individual appropriation acts in various forms. Many of 
these continue to appear in individual appropriation acts along with 
the governmentwide restriction.[Footnote 335] A sampling of fiscal year 
2003 appropriation acts provisions provided below reveals a variety of 
versions, many of which do not include the terms publicity and 
propaganda:

* "None of the funds made available by this Act shall be used in any 
way, directly or indirectly, to influence congressional action on any 
legislation or appropriation matters pending before the 
Congress."[Footnote 336]

* " …[No] part of this appropriation shall be used for publicity or 
propaganda purposes or implementation of any policy including boycott 
designed to support or defeat legislation pending before Congress or 
any State legislature."[Footnote 337]

* "None of the funds in this Act shall …be used …to pay for any 
personal service, advertisement, telegraph …or other device, intended 
or designed to influence in any manner a Member of Congress or of a 
State legislature to favor or oppose by vote or otherwise, any 
legislation or appropriation by Congress or a State legislature after 
the introduction of any bill or resolution in Congress proposing such 
legislation or appropriation, or after the introduction of any bill or 
resolution in a State legislature proposing such legislation or 
appropriation."[Footnote 338]

* "No part of any appropriation contained in this Act shall be used, 
other than for normal and recognized executive-legislative 
relationships, for publicity or propaganda purposes, for the 
preparation, distribution, or use of any kit, pamphlet, booklet, 
publication, radio, television, or video presentation designed to 
support or defeat legislation pending before the Congress or any State 
legislature, except in presentation to the Congress or any State 
legislature itself."[Footnote 339]

If a given policy or activity is affected by pending or proposed 
legislation, any discussion of that policy or activity by officials 
will necessarily refer to such legislation, either explicitly or by 
implication, and will presumably be either in support of or in 
opposition to it. Thus, an interpretation of a pending legislation 
statute that strictly prohibited expenditures of public funds for 
dissemination of views on pending legislation would preclude virtually 
any comment by officials on agency or administration policy or 
activities. Absent a compelling indication of congressional intent, GAO 
has been unwilling to adopt this approach. See, e.g., B-270875, supra; 
U.S. General Accounting Office, Department Of Education: Compliance 
with the Federal Advisory Committee Act and Lobbying Restrictions, GAO/
GGD/OGC-00-18 (Washington, D.C.: Dec. 30, 1999).

The Comptroller General has construed the "pending legislation" 
provisions as applying primarily to indirect or "grassroots" lobbying 
and not to direct contact with Members of Congress. In other words, the 
statute prohibits appeals to members of the public suggesting that they 
in turn contact their elected representatives to indicate support of or 
opposition to pending legislation, thereby expressly or implicitly 
urging the legislators to vote in a particular manner. GAO and the 
Justice Department have interpreted the traditional prohibition 
("publicity or propaganda purposes designed to support or defeat 
pending legislation") to require an overt appeal to the public. 
B-270875, July 5, 1996.

GAO concluded in a 1984 study that further statutory restraints on 
executive branch lobbying did not appear necessary. GAO did recommend, 
however, that the restriction on "grassroots" lobbying be enacted into 
permanent law. See U.S. General Accounting Office, No Strong Indication 
That Restrictions on Executive Branch Lobbying Should Be Expanded, GAO/
GGD-84-46 (Washington, D.C.: Mar. 20, 1984). See also U.S. General 
Accounting Office, H.R. 3078, The Federal Agency Anti-Lobbying Act, 
GAO/T-OGC-96-18 (Washington, D.C.: May 15, 1996); B-206391, B-217896, 
Oct. 30, 1985; B-206391, July 2, 1982. (Each of these documents 
comments on proposed legislation that was not enacted.)

Before proceeding to the specific cases, certain threshold concerns 
should be noted. As noted earlier in the discussion of the simple 
publicity and propaganda restriction, the discussion that follows 
interprets the pending legislation provisions in existence at that 
time. The particular agencies involved may or may not still be subject 
to the same restriction. Or a different version of the restriction may 
apply that could produce different results. As we have noted, 
governmentwide restrictions have gone in and out of congressional 
favor. Therefore, it is critical to check the current appropriations 
acts to determine what restrictions are applicable.

The appropriation act restrictions, unless specified to the contrary, 
require pending legislation. Of course, this would include 
appropriation acts and proposed presidential budgets. B-178648, 
Sept. 21, 1973.

Finally, unless a particular provision specifically includes lobbying 
at the state level, the legislation must be pending before the U.S. 
Congress, not a state legislature. E.g., B-193545, Mar. 13, 1979; 
B-193545, Jan. 25, 1979. See also U.S. General Accounting Office, 
Highway Safety: NHTSA's Activities Concerning State Motorcycle Helmet 
Laws, GAO/RCED-97-185R (Washington, D.C.: June 25, 1997).[Footnote 340]

(5) Cases involving "grassroots" lobbying violations:

A bill was introduced in the 86th Congress to prohibit the Post Office 
Department from transporting first class mail by aircraft on a space-
available basis. The Post Office Department opposed the bill and 
embarked on a campaign to defeat it. Among the tactics used were 
letters to postal patrons and "canned" editorials asking the public to 
contact Members of Congress to urge opposition to the bill. GAO found 
that this activity violated the anti-lobbying statute. B-116331, 
May 29, 1961.

Another violation resulted from the use of a kit entitled "Battle of 
the Budget 1973." The White House at the time was opposed to 15 bills 
then pending in Congress that it felt would exceed the administration's 
1974 budget. White House staff writers assembled a package of materials 
that were distributed to executive branch officials in an effort to 
defeat the bills. The kit included statements that people should be 
urged to write their representatives in Congress to support the 
administration's opposition to the 15 bills. This, the Comptroller 
General held, violated the publicity and propaganda statute. B-178448, 
Apr. 30, 1973.

Administration budget battles with Congress produced another violation 
in B-178648, Sept. 21, 1973. This case involved prerecorded news 
releases provided to radio stations by executive branch agencies. GAO 
reviewed over 1,000 of these releases and while most were proper, GAO 
found several that violated the law. Examples of the violations are as 
follows:

* "If the President's position of resisting higher taxes resulting from 
big spending is to be upheld, the people need to be heard. The voice of 
America can reach Capitol Hill and can be a positive persuader."

* "If we are going to have economic stability and fiscal 
responsibility, we must all support the President's budget program--and 
let Congress know we support it."

The next two examples illustrate important points:

* "If we don't slow down Federal spending …we face a 15-percent 
increase in income taxes and more inflation. I don't think any American 
wants this. But, in the final analysis the responsibility rests with 
the voters and the taxpayers. They must let the Congress know how they 
feel on this critical issue."

Here, the listener is urged merely to make his or her "views" known to 
Congress. This is nevertheless a violation if the context makes it 
clear, as in the example, what those "views" are supposed to be.

* "All those unneeded new bills headed for the Presidents desk from 
Congress--all the unworthy Federal programs and projects--are guns 
pointed at the heads of American taxpayers…. Right now, Congress is 
getting all kinds of letters from special interest groups. Those groups 
are pleading their own selfish causes. I think Congress should hear 
from all Americans on what the President is trying to do whatever their 
views may be. And I say that regardless of whether those who contact 
their Congressmen happen to be in agreement with me."

The purported disclaimer in the last sentence does not cure the obvious 
violation.

But see B-239856, Apr. 29, 1991, discussed further below, where the 
official's disclaimer statement factored into our finding that the 
statements made did not constitute prohibited lobbying. Despite the 
fact that the official's statement on its face was an exhortation for 
her audience to contact Members of Congress, we concluded that her 
comment was a good faith response to an audience members question and 
was more of a "civics lesson." Furthermore, audience members recalled 
that the official made explicit "disclaimers" to the effect that she 
could not advise audience members to take particular actions in support 
of her agency.

A clear violation occurred in B-128938, July 12, 1976. The 
Environmental Protection Agency, as part of an authorized public 
information program, contracted with a nonprofit organization to 
publish a newsletter in California entitled "Water Quality Awareness." 
One of the articles discussed a pending bill that environmentalists 
opposed. The article went on to name the California representatives on 
the House committee that was considering the bill and exhorted readers 
to "[c]ontact your representatives and make sure they are aware of your 
feelings concerning this important legislation." As with some of the 
violations in B-178648, the context of the article left no doubt what 
those "feelings" were supposed to be. The fact that EPA did not publish 
the article directly did not matter since an agency has a duty to 
insure that its appropriations are not used to violate a statutory 
prohibition. See also B-202975(1), Nov. 3, 1981; U.S. General 
Accounting Office, Alleged Lobbying Activities: Office for Substance 
Abuse Prevention, GAO/Hrd-93-100 (Washington, D.C.: May 4, 1993) 
(grantee violated statutory restriction by using grant funds to 
encourage grassroots lobbying).[Footnote 341]

In B-285298, May 22, 2000, the White House engaged in extensive 
outreach efforts to business, labor, environmental, and other groups in 
order to achieve enactment of legislation establishing permanent normal 
trade relations for China. After reviewing hundreds of documents we 
identified one e-mail communication that constituted grassroots 
lobbying. The e-mail, sent by an Agriculture employee serving on the 
interagency working group established by the White House, went to two 
major farmers' organizations. The e-mail forwarded an attached message 
from a Commerce employee (also serving on the working group) reporting 
that a certain Member of the House of Representatives had not heard 
from any of the farmers in his district on the issue of trade with 
China. The forwarding e-mail stated: "We need to work on this ASAP. 
[The Member] needs to hear from the farmers in his district." The fact 
that the House Member was already planning on supporting the 
legislation did not impact our conclusion that the e-mail on its face 
directly appealed to large farm organizations to contact a Member of 
Congress to support the legislation.

Two other cases in which violations were found are B-212235(1), 
Nov. 17, 1983, and U.S. General Accounting Office, Improper Lobbying 
Activities by the Department of Defense on the Proposed Procurement of 
the C-5B Aircraft, GAO/AFMD-82-123 (Washington, D.C.: Sept. 29, 1982), 
both of which are summarized in our previous discussion of 18 U.S.C. 
§ 1913.

It is not necessary for a statement to explicitly refer to the 
particular piece of pending legislation. Thus, a lobbying campaign 
using appropriated funds urging the public to write to Members of 
Congress to support a strong merchant marine at a time when cargo 
preference legislation is pending violates the law. B-192746-O.M., 
Mar. 7, 1979. The fact that an article did not refer to specific 
pending legislation was, however, a factor in our determination that 
the agency did not engage in prohibited grass roots lobbying. GAO/HRD-
93-100.

(6) Pending legislation: cases in which no violation was found:

As indicated above, GAO has consistently taken the position that the 
pending legislation statute does not prohibit direct communication, 
solicited or unsolicited, between agency officials and Members of 
Congress. This is true even where the contact is an obvious attempt to 
influence legislation. Thus, GAO concluded that the pending legislation 
statute was not violated in the following cases:

* Contacts with Members of Congress by federal judges and legislative 
liaison activities by the Judicial Conference of the United States. 
63 Comp. Gen. 624 (1984).

* Visits to Members of Congress by National War College students as 
part of a seminar on the legislative process. B-209584, Jan. 11, 1983.

* Director of the Office of Management and Budget's letter to all 
Members of the House of Representatives urging opposition to a 
disapproval resolution on a Presidential Reorganization Plan. B-192658, 
Sept. 1, 1978.

See also B-200250, Nov. 18, 1980 (agency sent position paper to Members 
of Congress opposing particular piece of pending legislation); 
B-164497(5), Mar. 10, 1977 (entertainment in form of dinners for 
Members of Congress); B-114823, Dec. 23, 1974 (personal visits to 
Capitol Hill by agency officials during floor debate on authorizing 
legislation, at request of congressional proponents of the 
legislation); B-164786, Nov. 4, 1969 (cruises with Members of Congress 
on presidential yacht, paid for from entertainment appropriation); 
B-145883, Oct. 10, 1967 (unsolicited letter to Members of Congress from 
agency head urging support for continuation of agency programs); 
B-93353, Sept. 28, 1962 (telegram sent by agency head to all Members of 
Congress).

A government contractor lobbying with its own corporate (i.e., 
nonfederal) funds would generally not violate the appropriation act 
restriction. However, applicable contract cost principles may restrict 
or prohibit reimbursement. See, e.g., Federal Acquisition Regulation, 
48 C.F.R. § 31.205-22; B-218952, Aug. 21, 1985; U.S. General Accounting 
Office, Nuclear Test Lobbying: DOE Regulations for Contractors Need 
Reevaluation, GAO/RCED-88-25BR (Washington, D.C.: Oct. 9, 1987). In 
addition, there may be legislation applicable to contractor 
lobbying.[Footnote 342]

Also as indicated above, an agency will not violate the pending 
legislation statute by disseminating material to the public that is 
essentially expository in nature. Even if the material is promotional, 
there is no violation, at least of the pending legislation statute, as 
long as it is not a clear appeal to members of the public to contact 
their elected representatives.[Footnote 343] Again, several cases will 
illustrate.

For example, the Department of Transportation (Transportation) set up 
displays on U.S. Capitol grounds of passenger cars equipped with 
passive restraint systems (airbags). Transportation employees at the 
displays distributed brochures, explained the devices, and answered 
questions from Members of Congress and the public. All this was done 
while legislation was pending to prohibit mandatory enforcement of the 
airbag standard. Considering the timing and location of the displays, 
one would have to be pretty stupid not to see this as an obvious 
lobbying ploy, that did not make it illegal since there was no evidence 
that Transportation urged members of the public to contact their 
elected representatives. Thus, since it was not illegal for 
Transportation to advocate the use of airbags or to communicate with 
Congress directly, there was no violation. B-139052, Apr. 29, 1980. The 
apparent intent alone is not enough; it must be translated into action.

The Office for Substance Abuse Prevention (OSAP) published "Prevention 
Pipeline" as part of its statutory duties to act as a clearinghouse for 
drug and alcohol abuse material and to educate the public. OSAP 
included in the publication items submitted to it with the following 
disclaimer: "Publication of information and products does not imply 
endorsement by OSAP or the Federal Government." One item that was 
submitted to and published by OSAP informed readers of an "activist's 
guide" for communities developed by an organization that lobbied for 
legislation requiring warning labels on alcoholic beverages. While the 
item went on to describe the guide as helping people with writing to 
U.S. Senators to urge support of legislation, it did not make any 
reference to the specific legislation that was pending before Congress 
at the time, nor did it expressly endorse the idea of writing to 
Members of Congress in support of legislation. U.S. General Accounting 
Office, Alleged Lobbying Activities: Office for Substance Abuse 
Prevention, GAO/HRD-93-100 (Washington, D.C.: May 4, 1993).

Similarly, the statute was not violated by the following actions:

* Speech by Secretary of the Air Force urging defense contractors to 
direct their advertising toward convincing the public of the need for a 
strong defense rather than promoting particular weapon systems 
manufactured by their companies. Speech did not refer to legislation 
nor urge anyone to contact Congress. B-216239, Jan. 22, 1985.

* Bumper stickers purchased by the Department of Transportation and 
affixed to government vehicles urging compliance with 55 mph speed 
limit. B-212252, July 15, 1983.

* Various trips by the District of Columbia Police Chief during which 
he made speeches supporting the administration's law enforcement 
policy. B-118638, Aug. 2, 1974.

* Statements by cabinet members, distributed to news media, which 
discussed pending legislation but were limited to an exposition of the 
administration's views. B-178648, Dec. 27, 1973.

* Mailings by the National Credit Union Administration to federally 
chartered credit unions consisting of reprints from the Congressional 
Record giving only one side of a controversial legislative issue. 
B-139458, Jan. 26, 1972.

* Statements by Deputy Assistant Secretary for the Mining Safety and 
Health Administration (MSHA) before mining industry executives 
concerning agency's opposition to legislative proposal to merge MSHA 
with OSHA did not include urging anyone to contact Members of Congress. 
U.S. General Accounting Office, MSHA Lobbying, GAO/HEHS-96-9R 
(Washington, D.C.: Oct. 19, 1995).

* Remarks made by Secretary of Education in meetings with members of 
education organizations and presidents of education associations 
included factual presentation of budget proposals relating to education 
but not requests for lobbying assistance. U.S. General Accounting 
Office, Department Of Education: Compliance With the Federal Advisory 
Committee Act and Lobbying Restrictions, GAO/GGD/OGC-00-18 
(Washington, D.C.: Dec. 23, 1999).

* Housing and Urban Development report and the letter transmitting 
report to agency constituencies criticized proposed budget cuts as 
having "devastating impact on families and communities nationwide" but 
did not contain any express appeals that members of the public contact 
their congressional representatives. B-284226.2, Aug. 17, 2000.

See also B-270875, July 5, 1996 (Labor Department publications entitled 
"America's Job Fax," supporting President's employment legislation); 
B-147578, Nov. 8, 1962 (White House Regional Conferences); B-150038, 
Nov. 2, 1962 (Department of Agriculture press release); B-148206, 
Mar. 20, 1962 (radio and television announcements by Commerce 
Department supporting foreign trade legislation).

(7) Pending legislation: Providing assistance to private lobbying 
groups:

Another type of "lobbying" activity GAO has found improper is the use 
of appropriated funds to provide assistance to private lobbying groups. 
This is largely an outgrowth of the concept that an agency should not 
be able to do indirectly that which it cannot do directly.

In 1977, the Office of the Special Assistant to the President for 
Consumer Affairs and the Office of Consumer Affairs within the then 
Department of Health, Education and Welfare (HEW) mounted an active 
campaign to obtain passage of legislation to establish a Consumer 
Protection Agency. As part of the campaign, the Special Assistant had 
instructed the Office of Consumer Affairs to informally clear its 
efforts with certain "public interest lobby members." In addition, two 
of the consumer lobby groups asked HEW to provide material illustrating 
situations where a Consumer Protection Agency could have had an impact 
had it been in existence. Before implementing the campaign, however, 
the Office of Consumer Affairs sought advice from the HEW General 
Counsel, who advised against certain elements of the plan, including 
the two items mentioned.

Since, pursuant to the HEW General Counsel's advice, the more egregious 
elements of the plan were not carried out, the Comptroller General 
concluded that no laws were violated. However, the Comptroller General 
pointed out that the publicity and propaganda statute would prohibit 
the use of appropriated funds to develop propaganda material to be 
given to private lobbying organizations to be used in their efforts to 
lobby Congress. An important distinction must be made. There would be 
nothing wrong with servicing requests for information from outside 
groups, lobbyists included, by providing such items as stock education 
materials or position papers from agency files, since this material 
would presumably be available in any event under the Freedom of 
Information Act. The improper use of appropriated funds arises when an 
agency assigns personnel or otherwise provides administrative support 
to prepare material not otherwise in existence to be given to a private 
lobbying organization. B-129874, Sept. 11, 1978. See also 66 Comp. 
Gen. 707, 712 (1987), drawing the same distinction in the context of 
18 U.S.C. § 1913.

In another example, the Maritime Administration ("MarAd") had become 
intimately involved with the National Maritime Council, a trade 
association of ship operators and builders. MarAd staff performed the 
administrative functions of the Council at MarAd headquarters and 
regional offices. In 1977, at a time when cargo preference legislation 
was pending in Congress, the Council, with MarAd's active assistance, 
undertook an extensive advertising campaign in national magazines and 
on television advocating a strong U.S. merchant marine. Some of the 
advertisements encouraged members of the public to contact their 
elected representatives to urge them to support a strong merchant 
fleet. Reviewing the situation, GAO concluded that MarAd had violated 
the publicity and propaganda statute by expending appropriated funds to 
provide administrative support to the Council in the form of staff 
time, supplies, and facilities, when it knew the Council was attempting 
to influence legislation pending before Congress. See B-192746O.M., 
Mar. 7, 1979; U.S. General Accounting Office, The Maritime 
Administration And The National Maritime Council--Was Their 
Relationship Appropriate? CED-79-91 (Washington, D.C.: May 18, 1979).

In B-133332, Mar. 28, 1977, the Smithsonian Institution had prepared an 
exhibit entitled "The Tallgrass Prairie: An American Landscape" and 
displayed it at a premiere showing for the benefit of the Tallgrass 
Prairie Foundation, a nonprofit organization. While appropriated funds 
were used to prepare the exhibit, none were used for the premiere 
showing itself since, under the Smithsonian's traveling exhibit 
program, administrative costs are paid by the host organization. The 
problem arose because the Tallgrass Prairie Foundation shared a large 
part of its membership with a lobbying organization known as "Save the 
Tallgrass Prairie, Inc." (There is no cause that does not have its 
lobbyists.) In addition, a leading member of both organizations had 
actually created the exhibit under contract with the Smithsonian. 
However, the exhibit itself was noncontroversial and the Foundation had 
an independent legal existence. Thus, since no lobbying took place at 
the premiere showing, and since any lobbying by "Save the Tallgrass" or 
by the exhibits creator could not be imputed to the Foundation or to 
the Smithsonian, GAO concluded that the Smithsonian had not used its 
appropriations for any improper indirect lobbying.[Footnote 344]

(8) Promotion of legislative proposals: Prohibited activity short of 
grass roots lobbying:

Since 1977, the following restriction has been included in every 
Interior Department appropriations act:

"No part of any appropriation contained in this Act shall be available 
for any activity or the publication or distribution of literature that 
in any way tends to promote public support or opposition to any 
legislative proposal on which congressional action is not 
complete."[Footnote 345]

The Committee report accompanying what ultimately became the Interior 
restriction explained the Committee's concern over "certain public 
information activities being promoted by [some agencies] that tend to 
promote pending legislative proposals to set aside certain areas in 
Alaska for national parks, wildlife refuges, national forest and other 
withdrawals." The Committee referred to the colorful brochures printed 
and actively distributed by these agencies, extolling the benefits of 
such proposals, which as a result tended to promote certain legislative 
goals of these agencies. The Committee considered these activities to 
be, at a minimum, violations of the intent of 18 U.S.C. § 1913. At the 
same time the Committee cautioned that the language "should not be 
construed as an impediment on the agencies ability to respond to public 
information inquiries."[Footnote 346]

The Interior restriction has been interpreted to prohibit both 
grassroots lobbying activity, proscribed by both 18 U.S.C. § 1913 and 
the pending legislation restriction, and activity that falls short of 
such activity. In describing the prohibited activity as that which "in 
any way tends to promote public support or opposition (emphasis added)" 
to legislation, the restriction is designed to cover particularly 
egregious examples of lobbying even though the material or activity 
stops short of explicitly soliciting a member of the public to contact 
his or her member of Congress in support or opposition of pending 
legislation. See 59 Comp. Gen. 115 (1979); B-284226.2, Aug. 17, 2000.

We have found a number of instances where agencies covered by the 
Interior provision avoided grassroots lobbying but went beyond 
appropriate information dissemination and violated the Interior 
restriction:

* A mass mailing by the National Endowment for the Arts (NEA) of an 
information package supporting the Livable Cities Program implicitly 
advocated support of the appropriation for that NEA program. Although 
the literature did not directly exhort readers to lobby Congress, its 
tenor was clearly designed to promote public support for the program 
and the mailing was timed to reach the public just before House 
reconsideration of a prior refusal to fund the program. 59 Comp. 
Gen. 115 (1979).

* Remarks made by a Fish and Wildlife Service employee at a press 
conference called to generate opposition to a pending amendment to the 
Clean Water Act and timed to coincide with the congressional 
committee's active consideration, tended to promote public opposition 
to the legislative proposal. While the official did not urge members of 
the public to contact their Members of Congress, he stated, "we cannot 
afford to roll back protection" for wetlands, which he believed the 
legislation would do. B-262234, Dec. 21, 1995.

* Forest Service officials waged an aggressive campaign to promote 
public support for a budget proposal seeking to change the way certain 
Forest Service payments to states are calculated. Briefing packages, 
used by officials in talking to local public officials likely to be 
concerned about funding, were highly supportive of the proposal, 
emphasizing the benefits of re-forming Forest Service payments to 
states. Based on the response of some local officials, who indicated 
they would contact their congressional representatives, the briefing 
efforts were clearly:

* successful at promoting support for the payment proposal. B-281637, 
May 14, 1999.[Footnote 347]

In analyzing whether a violation has occurred, a variety of factors 
must be considered, including the timing, setting, audience, content, 
and the reasonably anticipated effect of the questioned activity. See 
U.S. General Accounting Office, H.R. 3078, The Federal Agency Anti-
Lobbying Act, GAO/T-OGC-96-18 (May 15, 1996).[Footnote 348]

Intent can also be an important factor to consider when presented with 
a particularly close case. As we have noted, "there is a very thin line 
between the provision of legitimate information in response to public 
inquiries and the provision of information in response to the same 
requests which tends to promote public support or opposition to pending 
legislative proposals." 59 Comp. Gen. 115 (1979). Navigating this thin 
line may be difficult for agencies, which cannot always prevent or even 
anticipate public response.

In B-239856, Apr. 29, 1991, GAO relied on the demonstrated intent of 
the National Endowment for the Arts (NEA) officials engaging in the 
questioned activities, in concluding that the agency had not violated 
the Interior restriction. One aspect of this decision involved an NEA 
official's remarks at an arts conference. In response to a question 
from the audience concerning what the audience could do to support NEA, 
the official responded that they could contact their congressional 
representatives. GAO's investigation concluded that there was no intent 
to promote. The official's response was incidental to her presentation 
and not part of any plan to generate action on the part of her 
audience. The official's answer was viewed as more of a civics lesson, 
informational in nature, rather than an exhortation to contact 
Congress.

(9) Dissemination of political or misleading information:

Generally speaking, funds appropriated to carry out a particular 
program would not be available for political purposes, that is, for a 
propaganda effort designed to aid a political party or candidate. See 
B-147578, Nov. 8, 1962. If for no other reason, such an expenditure 
would be improper as a use of funds for other than their intended 
purpose in violation of 31 U.S.C. § 1301(a). However, the publicity and 
propaganda statute does not provide adequate guidelines to distinguish 
between legitimate and purely political activities and is therefore 
applicable to "political" activities only to the extent that the 
activities would otherwise constitute a violation. See B-130961, 
Oct. 26, 1972.

In more general terms, it is always difficult to find that conduct is 
so purely political as to constitute a purpose violation. As stated in 
B-144323, Nov. 4, 1960:

"[The question is] whether in any particular case a speech or a release 
by a cabinet officer can be said to be so completely devoid of any 
connection with official functions or so political in nature that it is 
not in furtherance of the purpose for which Government funds were 
appropriated, thereby making the use of such funds …unauthorized. This 
is extremely difficult to determine in most cases as the lines 
separating the nonpolitical from the political cannot be precisely 
drawn.

"…As a practical matter, even if we were to conclude that the use of 
appropriated funds for any given speech or its release was 
unauthorized, the amount involved would be small, and difficult to 
ascertain; and the results of any corrective action might well be more 
technical than real."

Apart from considerations of whether any particular law has been 
violated, GAO has taken the position that the government should not 
disseminate misleading information. On occasion, the Comptroller 
General has characterized publications as propaganda and attacked them 
from an audit perspective.

In 1976, the former Energy Research and Development Administration 
(ERDA) published a pamphlet entitled "Shedding Light On Facts About 
Nuclear Energy." Ostensibly created as part of an employee motivational 
program, ERDA printed copies of the pamphlet far in excess of any 
legitimate program needs, and inundated the state of California with 
them in the months preceding a nuclear safeguards initiative vote in 
that state. The pamphlet had a strong pro-nuclear bias and urged the 
reader to "Let your voice be heard." On the legal side, the pamphlet 
did not violate any anti-lobbying statute because applicable 
restrictions did not extend to lobbying at the state level. B-130961-
O.M., Sept. 10, 1976. However, GAO's review of the pamphlet found it to 
be oversimplified and misleading. GAO characterized it as propaganda 
not suitable for distribution to anyone, employees or otherwise, and 
recommended that ERDA cease further distribution and recover and 
destroy any undistributed copies. See U.S. General Accounting Office, 
Evaluation Of the Publication and Distribution Of "Shedding Light On 
Facts About Nuclear Energy," EMD-76-12 (Washington, D.C.: Sept. 30, 
1976).

In a later report, GAO reviewed a number of publications related to the 
Clinch River Breeder Reactor Project, a cooperative government/industry 
demonstration project, and found several of them to be oversimplified 
and distorted propaganda, and as such questionable for distribution to 
the public. However, the publications were produced by the private 
sector components of the Project and paid for with utility industry 
contributions and not with federal funds. While GAO was thus powerless 
to recommend termination of the offending publications, it nevertheless 
recommended that the Department of Energy work with the private sector 
components in an effort to eliminate this kind of material, or at the 
very least insure that such publications include a prominently 
displayed disclaimer statement making it clear that the material was 
not government approved. U.S. General Accounting Office, Problems With 
Publications Related To The Clinch River Breeder Reactor Project, EMD-
77-74 (Washington, D.C.: Jan. 6, 1978).

d. Lobbying with Grant Funds:

The use of grant funds by a federal grantee for lobbying presents 
somewhat more complicated issues. On the one hand, there is the 
principle, noted in various contexts throughout this publication, that 
an agency should not be able to do indirectly what it cannot do 
directly. Thus, if an agency cannot make a direct expenditure of 
appropriated funds for certain types of lobbying, it should not be able 
to circumvent this restriction by the simple device of passing the 
funds through to a grantee. Yet on the other hand, there is the 
seemingly countervailing rule that where a grant is made for an 
authorized grant purpose, grant funds in the hands of the grantee 
largely lose their identity as federal funds and are no longer subject 
to many of the restrictions on the direct expenditure of 
appropriations. See B-289801, Dec. 30, 2002 (holding that when the 
Department of Education makes grant awards during the period of 
availability of the funds to be used, Education's grant awards are in 
compliance with the bona fide needs rule even when appropriations 
available for only one fiscal year are used to fund multiyear grants).

In some instances, Congress has dealt with the problem by legislation. 
For example, legislation, commonly known as the Byrd Amendment and 
codified at 31 U.S.C. § 1352, imposes limited governmentwide 
restrictions. Subsection 1352(a)(1) provides:

"None of the funds appropriated by any Act may be expended by the 
recipient of a Federal contract, grant, loan, or cooperative agreement 
to pay any person for influencing or attempting to influence an officer 
or employee of any agency, a Member of Congress, an officer or employee 
of Congress, or an employee of a Member of Congress in connection with 
any Federal action described in paragraph (2) of this subsection."

The actions identified in paragraph (2) are the awarding of any federal 
contract; the making of any federal grant or loan; the entering into of 
any cooperative agreement; and the extension, continuation, renewal, 
amendment, or modification of any federal contract, grant, loan, or 
cooperative agreement. The law includes detailed disclosure 
requirements and civil penalties. Subsection (d)(1)(C) stresses that 
section 1352 should not be construed as permitting any expenditure 
prohibited by any other provision of law. Thus, section 1352 
supplements other anti-lobbying statutes; it does not supersede them.

Subsection (b)(6) of 31 U.S.C. § 1352 directs the Office of Management 
and Budget (OMB) to issue guidance for agency implementation. OMB 
published interim final guidance entitled "Governmentwide Guidance for 
New Restrictions on Lobbying" on December 20, 1989 (54 Fed. Reg. 
52306), supplemented on June 15, 1990 (55 Fed. Reg. 24540), and amended 
on January 15, 1992 (57 Fed. Reg. 1772) and January 19, 1996 (61 Fed. 
Reg. 1412). An interim final rule for grants was issued jointly by OMB 
and 29 grantor agencies as a common rule on February 26, 1990 (55 Fed. 
Reg. 6736). For contracts, see subpart 3.8 of the Federal Acquisition 
Regulations.

GAO has addressed the application of the Byrd Amendment to federal 
contractors in the context of bid protests but has not had occasion to 
apply it to federal grant recipients. See 71 Comp. Gen. 281 (1992) 
(communication between bidder's "regularly employed" employee and 
government engineer was not an attempt to influence procuring agency in 
connection with a federal contract and therefore did not violate the 
Byrd Amendment); 71 Comp. Gen. 81 (1991) (Byrd Amendment does not 
require disclosure of reasonable compensation to regularly employed 
employees); 69 Comp. Gen. 604 (1990) (contractor lobbying activity was 
not directed at award of current contract and therefore was not 
required to be disclosed under the Byrd Amendment); B-246304.8 and 
B-246304.9, May 4, 1993 (bidder's lobbying to have legislation changed, 
regardless of how funded, did not violate the Byrd Amendment).

More recently, the Lobbying Disclosure Act of 1995,[Footnote 349] as 
amended, 2 U.S.C. §§ 1601 et seq., provides that organizations 
described in section 501(c)(4) of the Internal Revenue Code[Footnote 
350] which engage in lobbying activities are not eligible to receive 
federal grants. 2 U.S.C. § 1611. The Act, at 2 U.S.C. § 1602(7), 
defines "lobbying activities" to mean:

"[L]obbying contacts and efforts in support of such contacts, including 
preparation and planning activities, research and other background work 
that is intended, at the time it is performed, for use in contacts, and 
coordination with the lobbying activities of others."

The Act, at 2 U.S.C. § 1602(8), further defines "lobbying contact" to 
mean communications with covered federal officials. As such, the Act 
does not prevent "grassroots" lobbying activities by federal grants 
recipients as that term is discussed earlier in this chapter in section 
C.11.c.[Footnote 351]

Another example is the legislation governing the Legal Services 
Corporation. Under the Legal Services Corporation Act, recipients of 
funds, both contractors and grantees, may not use the funds directly or 
indirectly to attempt to influence the passage or defeat of 
legislation. The prohibition covers legislation at the state and local 
level as well as federal legislation. The statute permits three 
exceptions: (1) recipients may testify before and otherwise communicate 
with legislative bodies upon request, (2) they may initiate contact 
with legislative bodies to express the views of the Corporation on 
legislation directly affecting the Corporation, and (3) they may engage 
in certain otherwise prohibited lobbying activities when necessary to 
the proper representation of an eligible client. 42 U.S.C. 
§ 2996f(a)(5).[Footnote 352] For a general discussion of these 
provisions, see B-129874-O.M., Oct. 30, 1978. See also B-202569, 
Apr. 27, 1981; Regional Management Corp. v. Legal Services Corp., 
186 F.3d 457 (4th Cir. 1999) (generally discussing 42 U.S.C. 
§ 2996f(a)(5) as part of finding that there is no private right of 
action to challenge the Legal Services Corporation's decision that its 
grantee did not violate anti-lobbying provision).

Three 1981 cases illustrate the application of the Legal Services 
Corporation statute. In one case, the Board of Aldermen for the City of 
Nashua, New Hampshire, was considering a resolution to authorize a 
"food stamp workfare" demonstration project. An attorney employed by 
the New Hampshire Legal Assistance group, a Legal Services Corporation 
grantee, wrote to members of the Board urging them to reject the 
resolution. Since the letter was not related to the representation of 
any specific client or group of clients but rather had been self-
initiated by the attorney, the use of federal funds to prepare and 
distribute the letter was illegal. B-201928, Mar. 5, 1981.

In the second case, 60 Comp. Gen. 423 (1981), the Corporation and its 
grantees conducted a lobbying campaign to drum up support for the 
Corporation's reauthorization and appropriation legislation. The 
Corporation argued that the actions were permissible under the 
exception authorizing contact with legislative bodies on legislation 
directly affecting the Corporation. While recognizing that the statute 
permitted direct self-initiated contact in these circumstances, GAO 
reviewed the legislative history and concluded that the exception did 
not permit grassroots lobbying either by the Corporation itself or by 
its grantees.

In the third case, the Managing Attorney of a Legal Services 
Corporation (LSC) grantee made a mass mailing of a form letter to local 
attorneys. The letter solicited their support for continuation of the 
LSC program and urged them to contact a local Congressman opposed to 
reauthorization of the LSC to try to persuade him to change his vote. 
This too constituted impermissible grassroots lobbying. B-202787, 
Dec. 29, 1981.[Footnote 353]

GAO also found the statute was violated when a grantee used LSC grant 
funds to oppose the confirmation of Judge Robert Bork to the United 
States Supreme Court. The finding was based largely on LSC regulations 
that broadly define "legislation" to include action on appointments. 
B-230743, June 29, 1990.

Another provision in the LSC enabling legislation prohibits both the 
Corporation and its grantees from contributing or making available 
"corporate funds or program personnel or equipment for use in 
advocating or opposing any ballot measures, initiatives, or 
referendums." 42 U.S.C. § 2996e(d)(4). The Corporation and one of its 
grantees violated this one by providing funds and personnel for a 
campaign to defeat a ballot measure in California. 62 Comp. Gen. 654 
(1983).

In addition to the LSC's enabling legislation, appropriation acts 
providing funds for the Corporation also include restrictions. 
Beginning in 1978, the Corporation's appropriations contained a 
restriction that prohibited the use of Corporation funds for publicity 
or propaganda designed to support or defeat legislation pending before 
Congress or any state legislature. While serving largely to reemphasize 
the prohibitions contained in the Corporation's enabling legislation, 
the restriction made it clear that the exception for the proper 
representation of eligible clients did not extend to grass roots 
lobbying. See 60 Comp. Gen. 423 (1981); B-163762, Nov. 24, 1980.

Since 1996 the LSC's appropriations have gone beyond restricting 
grantee use of federal funds for lobbying activities to a broader 
prohibition of the Corporation's providing funds to any grantee "that 
attempts to influence the passage or defeat of any legislation, 
constitutional amendment, referendum, initiative, or any similar 
procedure of the Congress or a State or local legislative body."
[Footnote 354]

In 2001, the Supreme Court struck down a restriction contained in the 
Corporation's 1996 appropriation on the use of the Corporation's funds 
for lobbying purposes. Legal Services Corp. v. Velazquez, 531 U.S. 533 
(2001). The Court found that provisions, which sought to restrict 
efforts toward welfare reform, were unconstitutional. See also Legal 
Aid Society of Hawaii v. Legal Services Corp., 145 F.3d 1017 (9th 
Cir.), cert. denied, 525 U.S. 1015 (1998) for additional background on 
appropriation act restrictions.

Still another example of legislation expressly applicable to grantees 
is discussed in B-202787(1), (May 1, 1981). The appropriation act 
providing funds for the Community Services Administration (CSA) 
contained a provision which prohibited the use of funds "to pay the 
salary or expenses of any grant or contract recipient …to engage in any 
activity designed to influence legislation or appropriations pending 
before the Congress." GAO found this provision violated when a local 
community action agency used grant funds for a mass mailing of a letter 
to members of the public urging them to write to their Congressmen to 
oppose abolition of the agency. In addition, CSA had issued a 
regulation purporting to exempt CSA grantees from the appropriation act 
restriction. Finding that CSA had exceeded its authority, the 
Comptroller General recommended that CSA rescind its ruling. The 
Justice Department also found the CSA regulations invalid, construing 
the statute as constituting "an unqualified prohibition against 
lobbying by federal grantees" and not merely a restriction on 
grassroots lobbying. 5 Op. Off. Legal Counsel 180 (1981).

The provision discussed in the preceding paragraph was also violated 
when a university, using grant funds received from the Department of 
Education, encouraged students to write to Members of Congress to urge 
their opposition to proposed cuts in student financial aid programs. 
U.S. General Accounting Office, Improper Use of Federal Student Aid 
Funds for Lobbying Activities, GAO/HRD-82-108 (Washington, D.C.: 
Aug. 13, 1982).

An almost identical, subsequent provision was violated when a grantee 
of the Office of Substance Abuse Prevention used grant funds to host a 
conference used as a forum for grassroots lobbying. Another grantee did 
not violate the provision, however, because its lobbying efforts 
related to a state legislature matter. U.S. General Accounting Office, 
Alleged Lobbying Activities: Office for Substance Abuse Prevention, 
GAO/HRD-93-100 (Washington, D.C.: May 4, 1993). The fiscal year 2003 
Labor, Health and Human Services, and Education, and Related Agencies 
appropriation act contains a version of this restriction, which has 
been expanded to prohibit such lobbying activities at the state level. 
Pub. L. No. 108-7, § 503(b), 117 Stat. 11, 343 (Feb. 20, 2003).

The question of lobbying with grant funds becomes more difficult when 
the situation is not covered by statute and applicable appropriation 
act restrictions do not expressly cover grantees. Until late in 1981, 
the question of whether appropriation act restrictions, silent as to 
grantees, applied to grantee expenditures had not been definitively 
addressed in a decision of the Comptroller General. An early case held 
that telegrams to Members of Congress by state agencies funded by Labor 
Department grants constituted an improper use of federal funds where 
they were clearly designed to influence pending legislation. B-76695, 
June 8, 1948. This case pre-dated appropriation act restrictions and 
was decided under 18 U.S.C. § 1913.[Footnote 355] The concept of 
applying the prohibition to grantee expenditures would arguably be the 
same under the appropriation act restrictions. In a 1977 letter, GAO 
noted the principle that funds in the hands of a grantee largely lose 
their identity as federal funds and said that the applicability of the 
publicity and propaganda statute was therefore "questionable." 
B-158371, Nov. 11, 1977 (nondecision letter). A 1978 letter to a Member 
of the Senate said that the issue should be addressed on a case-by-case 
basis. B-129874, Aug. 15, 1978.

In B-128938, July 12, 1976, GAO said that an agency has a 
responsibility to insure that its appropriations are not used to 
violate the anti-lobbying statute. While the case involved expenditures 
by a contractor, the principle would seemingly apply as well to a 
grantee.

Finally, in B-202975(1), Nov. 3, 1981, the Comptroller General resolved 
the uncertainty, applied the concept of B-128938, and concluded that:

"Federal agencies and departments are responsible for insuring that 
Federal funds made available to grantees are not used contrary to [the 
publicity and propaganda] restriction."

The case involved the Los Angeles Downtown People Mover Authority, a 
grantee of the Urban Mass Transportation Administration (UMTA), 
Department of Transportation. Fearing that its funding was in jeopardy, 
the Authority prepared and distributed a newsletter urging readers to 
write to their elected representatives in Congress to support continued 
funding for the People Mover project. The Comptroller General found 
that this newsletter, to the extent it involved UMTA grant funds, 
violated the anti-lobbying statute.

Similarly, in 1996, GAO determined that the state of Nevada improperly 
used grant funds in violation of a broad provision found in the annual 
Energy and Water Development appropriation acts prohibiting the use of 
federal funds to influence legislation and other lobbying 
activities.[Footnote 356] See U.S. General Accounting Office, Nuclear 
Waste: Nevada's Use of Nuclear Waste Grant Funds, GAO/RCED-96-72 
(Washington, D.C.: Mar. 20, 1996). GAO concluded that the production of 
a videotape advancing the state's opposition to a nuclear waste 
repository at Yucca Mountain was an indirect attempt to influence a 
matter pending before Congress.

In our preceding discussion of lobbying by government agencies, we 
noted that appropriation act restrictions may be limited to lobbying 
the United States Congress or may also apply to lobbying at the state 
and local level where expressly provided. The same principle applies 
with respect to lobbying with grant funds. B-214455, Oct. 24, 1984; 
B-206466, Sept. 13, 1982.

e. Informational Activities:

As we have noted previously, a government agency has a legitimate 
interest in informing the public about its programs and activities. 
Just how far it can go depends on the nature of its statutory 
authority. Certainly there is no need for statutory authority for an 
agency to issue a press release describing a recent speech by the 
agency head, or for the agency head or some other official to 
participate in a radio, television, or magazine interview. Activities 
of this type are limited only by applicable restrictions on the use of 
public funds such as the anti-lobbying statutes previously discussed.

A 1983 decision illustrates another form of information dissemination 
that is permissible without the need for specific statutory support. 
Military chaplains are required to hold religious services for the 
commands to which they are assigned. 10 U.S.C. § 3547. Publicizing such 
information as the schedule of services and the names and telephone 
numbers of installation chaplains is an appropriate extension of this 
duty. Thus, GAO advised the Army that it could procure and distribute 
calendars on which this information was printed. 62 Comp. Gen. 566 
(1983). Applying a similar rationale, the decision also held that 
information on the Community Services program, which provides various 
social services for military personnel and their families, could be 
included. See also B-290900, Mar. 18, 2003 (approving the Bureau of 
Land Management's use of appropriated funds to pay its share of the 
costs of disseminating information under a cooperative agreement); 
B-280440, Feb. 26, 1999 (allowing the Border Patrol's use of 
appropriated funds to purchase uniform medals that, in part, served to 
advance "knowledge and appreciation for the agency's history and 
mission").

Some agencies have specific authority to disseminate information. Such 
authority will permit a broader range of activities and gives the 
agency discretion to choose the appropriate means, the selection being 
governed by the necessary expense doctrine.

The agency may use common devices such as buttons or magnets (e.g., 
72 Comp. Gen. 73 (1992)), newsletters (e.g., B-128938, July 12, 1976) 
or conferences or seminars (e.g., B-166506, July 15, 1975). In one 
case, the Comptroller General approved a much less conventional means. 
Shortly after World War II, the Labor Department wanted to publicize 
its employment services for veterans. It did this by discharging 
balloons from a float in a parade. Attached to the balloons were 
mimeographed messages asking employers to list their available jobs. 
Since the Department was charged by statute with publishing information 
on the program, the cost of the balloons was permissible. B-62501, 
Jan. 7, 1947. Other pertinent cases are 32 Comp. Gen. 487 (1953) 
(publication of Public Health Service research reports in scientific 
journals); 32 Comp. Gen. 360 (1953) (the recording of Office of Price 
Stabilization forum discussions to be used at similar meetings in other 
regions); B-89294, Aug. 6, 1963 (use of motion picture by United States 
Information Agency); B-15278, May 15, 1942 (photographs); A-82749, 
Jan. 7, 1937 (radio broadcasts).

Conversely, in 18 Comp. Gen. 978 (1939), radio broadcasts by the 
Veterans Administration were held to violate 31 U.S.C. § 1301(a) 
because the agency did not have statutory authority to disseminate 
information about its activities. However, in 1958, Congress gave the 
then-named Veterans Administration the authority to "provide for the 
preparation, shipment, installation, and display of exhibits, 
photographic displays, moving pictures, and other visual educational 
information and descriptive material."[Footnote 357] The Comptroller 
General found that this authority, now codified in 38 U.S.C. § 703(d), 
permitted the Department of Veterans Affairs to use its medical care 
appropriation for the rental of booth space at the Oklahoma State Fair 
and for the purchase of imprinted book matches and imprinted jar grip 
openers to be distributed at the fair for recruiting purposes and to 
provide veterans with a number to call to obtain information. 
B-247563.2, May 12, 1993. The Bureau of Printing and Engraving also 
needed statutory authority to publish a 100-year history to commemorate 
its centennial because the Bureau is essentially an "industrial and 
service" establishment and lacked authority to disseminate information. 
43 Comp. Gen. 564 (1964).

f. Advertising and the Employment of Publicity Experts:

(1) Commercial advertising:

Suppose you opened this publication and found on the inside front cover 
a full-page advertisement for somebody's soap or underwear or aluminum 
siding or the local pool parlor. We assume most readers would find this 
offensive. There is in fact a long-standing policy against involving 
the government in commercial advertising. In the case of government 
publications, the policy is codified in section 13 of the Government 
Printing and Binding Regulations issued by the Joint Committee on 
Printing (1990 reprint):

"No Government publication or other Government printed matter, prepared 
or produced with either appropriated or nonappropriated funds or 
identified with an activity of the Government, shall contain any 
advertisement inserted by or for any private individual, firm, or 
corporation; or contain material which implies in any manner that the 
Government endorses or favors any specific commercial product, 
commodity, or service."

S. Pub. No. 101-9 at 13 (1990). An explanatory paragraph included in 
the regulations summarizes many of the reasons for this prohibition. 
Advertising would be unfair to competitors in that it would, regardless 
of intent, unavoidably create the impression of government endorsement. 
It would also be unfair to nongovernment publications that compete for 
advertising dollars and need those dollars to stay in business. 
Acceptance of advertising could also pose ethical, if not legal, 
problems. (Imagine, for example, lobbyists scrambling to purchase 
advertising space in the Congressional Record.)

A different situation was presented in 67 Comp. Gen. 90 (1987). The 
United States Information Agency (USIA) was authorized to accept 
donations of radio programs from private syndicators for broadcast over 
the Voice of America. Some donations were conditioned on the inclusion 
of commercial advertising. GAO noted that, in the case of public 
broadcast stations (which are supported by the Corporation for Public 
Broadcasting), commercial advertising is expressly prohibited by 
47 U.S.C. § 399b(b). However, there was no comparable statute 
applicable to USIA. Therefore, the conditional donations were not 
subject to any legal prohibition. In view of the traditional policy 
against commercial advertising, GAO suggested that USIA first consult 
the appropriate congressional committees.

(2) Advertising of government programs, products, or services:

Even the casual viewer of commercial television will note that the 
government is heavily "into" advertising. From the ever-present 
"Smokey:

Bear" reminding us that only we can prevent wildfires[Footnote 358] to 
Vince and Larry, the Crash Test Dummies, and the recruitment efforts of 
the U.S. Army and its message "An Army of One," the government has 
sponsored a variety of campaigns designed to either encourage or 
discourage various behaviors. Whether an agency's appropriations are 
available for advertising, like any other expenditure, depends on the 
agency's statutory authority.

Whether to advertise and, if so, how far to go with it[Footnote 359] 
are determined by the precise terms of the agency's program authority 
in conjunction with the necessary expense doctrine and general 
restrictions on the use of public funds such as the various anti-
lobbying statutes. See B-251887, July 22, 1993 (Forest Service may pay 
for newspaper advertisements informing the public of activities in the 
national forests because these activities are within the Service's 
statutory authority and the advertisements are reasonable ways of 
disseminating information related to the purposes of the Service's 
appropriation); B-229732, Dec. 22, 1988 (Department of Housing and 
Urban Development had no authority to incur promotional expenses at a 
trade show in the Soviet Union when the purpose of the show was to 
enhance the potential for sale of American products and services in the 
Soviet Union, a purpose unrelated to HUD's mission).

As noted previously, some agencies have express promotional authority. 
For example, the Department of Energy may promote energy conservation. 
See B-139965, Apr. 16, 1979 (nondecision letter). Similarly, the United 
States Postal Service has statutory authority to advertise its 
philatelic services to encourage stamp collecting. B-114874.30, Mar. 3, 
1976 (nondecision letter).

As with the dissemination of information, where promotional authority 
exists, agencies have reasonable discretion, subject to "necessary 
expense" considerations, in selecting appropriate means. Thus, the Navy 
could exercise its statutory authorization to promote safety and 
accident prevention by procuring book matches with safety slogans 
printed on the covers and distributing them without charge at naval 
installations. B-104443, Aug. 31, 1951. Another example is B-184648, 
Dec. 3, 1975.

Activities of the United States Mint furnish additional illustrations. 
In B-206273, Sept. 2, 1983, GAO considered the Mint's promotional 
authority under legislation authorizing coins to commemorate the 1984 
Los Angeles Summer Olympics. GAO concluded that the Mint could stage 
media events and receptions, and could give away occasional sample 
coins at these events, if (1) the expenditures were deemed necessary to 
further the statutory objectives, (2) a reasonable relationship were 
found to exist between a given expenditure and a marketing benefit for 
the program, and (3) promotional expenses were recouped from sales 
proceeds. In 68 Comp. Gen. 583 (1989), GAO applied the same standards 
to the commemorative coin program generally.[Footnote 360] Subsequent 
Mint legislation expressly authorizes marketing, promotion, and 
advertising. See, e.g., 31 U.S.C. § 5136.

The line between promotion and information dissemination is 
occasionally thin, but the concepts are nevertheless different. Thus, 
an agency may be authorized to disseminate information but not to 
promote. If so, its "advertising" must be tailored accordingly. For 
example, the Federal Housing Administration could disseminate authentic 
information on available benefits or related procedures under a loan 
insurance program, but could not use its funds for an advertising 
campaign to create demand. 14 Comp. Gen. 638 (1935). Similarly, when 
the United States Metric Board was first created, it could provide 
information, assistance, and coordination for voluntary conversion to 
metrics but could not advocate metric conversion. See U.S. General 
Accounting Office, Getting A Better Understanding of the Metric System-
-Implications If Adopted by the United States, CED-78-128 (Washington, 
D.C.: Oct. 20, 1978); B-140339, June 19, 1979.

(3) Publicity experts:

A statute originally enacted in 1913, now found at 5 U.S.C. § 3107, 
provides:

"Appropriated funds may not be used to pay a publicity expert unless 
specifically appropriated for that purpose."

GAO has had little occasion to interpret or apply 5 U.S.C. § 3107 and, 
from the earliest cases, has consistently noted certain difficulties in 
enforcing the statute. In GAO's first substantive discussion of 
5 U.S.C. § 3107, the Comptroller General stated "[i]n its present form, 
the statute is ineffective." A-61553, May 10, 1935. The early 
cases[Footnote 361] identified three problem areas, summarized in 
B-181254(2), Feb. 28, 1975.

First, the prohibition is against compensating any "publicity expert," 
but the statute does not define the term "publicity expert" nor does it 
provide criteria for determining who is one. Traditionally, persons 
employed for or engaged in so-called publicity work have not been 
appointed as "publicity experts" but under some other designation, and 
often have other duties as well. Everyone who prepares a press release 
is not a "publicity expert." Testifying before the House Select 
Committee on Lobbying Activities in 1950, Assistant Comptroller General 
Weitzel said:

"I might mention one of the great difficulties in enforcing that 
language is it is very, very rare, if ever, the case that a man is on 
the pay roll as publicity experts [sic]. He can be called almost 
anything else, and usually and frequently will have other duties, so 
that that in itself, is a very difficult statute to enforce."[Footnote 
362]

Second, employees engaged in so-called publicity work are normally 
assigned to their duties by their supervisors. It would be harsh, in 
the absence of much more definitive legislative or judicial guidance, 
to withhold the compensation of an employee who is merely doing his or 
her assigned job. Some thought was given in the 1930s and early 1940s 
to amending the statute to cure this problem, but the legislation was 
not enacted. See B-181254(2), supra; B-26689, May 4, 1943; A-82332, 
Dec. 15, 1936.

Third, the effective implementation of the duties of some agencies 
requires the acquisition and dissemination of information, although 
agencies normally do not receive specific appropriations for the 
required personnel.

Based on these considerations, GAO does not view 5 U.S.C. § 3107 as 
prohibiting an agency's legitimate informational functions or 
legitimate promotional functions where authorized by law. The apparent 
intent of the statute is to prohibit publicity activity "for the 
purpose of reflecting credit upon an activity, or upon the officials 
charged with its administration, rather than for the purpose of 
furthering the work which the law has imposed upon it." A-82332, 
Dec. 15, 1936. See also B-181254(2), supra. In this sense, 5 U.S.C. 
§ 3107 is closely related to the prohibition on self-aggrandizement 
previously discussed, although the focus is different in that, to 
violate 5 U.S.C. § 3107, the activity must be performed by a "publicity 
expert."

In the only two cases in the 1970s with any substantial discussion of 
5 U.S.C. § 3107, GAO considered a mass media campaign by the Federal 
Energy Administration (FEA), now part of the Department of Energy, to 
educate the American public on the need for and means of energy 
conservation. Based on the considerations discussed above and on the 
FEA's statutory authority to disseminate information and to promote 
energy conservation, GAO found no basis on which to assess a violation 
of 5 U.S.C. § 3107. B-181254(2), supra; B-139965, Apr. 16, 1979 
(nondecision letter). In both cases GAO stressed its view that the 
statute is not intended to interfere with the dissemination of 
information that an agency is required or authorized by statute to 
disseminate, or with promotional activities authorized by law.

The only case in the 1980s to apply 5 U.S.C. § 3107 is B-222758, 
June 25, 1986. The Chemical Warfare Review Commission, a presidential 
advisory committee, hired a public affairs consultant. The Commission's 
functions were solely advisory; it had no authority to engage in 
promotional activities or to maintain a public affairs program. In view 
of the consultant's duties, job title, and reputation, GAO found that 
he was a "publicity expert." As such, and given the nature of the 
Commission's functions and its lack of statutory authority, the hiring 
was held to violate 5 U.S.C. § 3107.

12. Membership Fees:

a. 5 U.S.C. § 5946:

Appropriated funds may not be used to pay membership fees of an 
employee of the United States or the District of Columbia in a society 
or association. 5 U.S.C. § 5946. The prohibition does not apply if an 
appropriation is expressly available for that purpose, or if the fee is 
authorized under the Government Employees Training Act. Under the 
Training Act, membership fees may be paid if the fee is a necessary 
cost directly related to the training or a condition precedent to 
undergoing the training. 5 U.S.C. § 4109(b).

The rule that has evolved under 5 U.S.C. § 5946 is that membership fees 
for individuals may not be paid, regardless of the resulting benefit to 
the agency. An agency may, however, purchase a membership in its own 
name upon an administrative determination that the expenditure would 
further the authorized activities of the agency, and this determination 
is not affected by any incidental benefits that may accrue to 
individual employees.[Footnote 363]

In 24 Comp. Gen. 814 (1945), the Veterans Administration (VA) asked 
whether it could pay membership fees for VA facilities in the American 
Hospital Association. Facility membership would enable individual 
employees to apply for personal membership at reduced rates. The 
Comptroller General responded that the facility memberships were 
permissible if administratively determined necessary to accomplish the 
objectives of the appropriation to be charged. The indirect benefit to 
individual officials would not operate to invalidate the agency 
membership. However, the expenditure would be improper if its purpose 
was merely to enable the officials to obtain the reduced rates for 
personal memberships. VA could not, of course, pay for the individual 
memberships.

Similarly, GAO advised the Environmental Protection Agency (EPA) that 
it could not pay the membership fees for its employees in professional 
organizations (such as the National Environment Research Center and the 
National Solid Waste Management Association), notwithstanding the 
allegation that the benefits of membership would accrue more to the 
agency than to the individuals. EPA could, however, purchase a 
membership in its own name if it justified the expenditure as being of 
direct benefit to the agency and sufficiently related to carrying out 
the purposes of its appropriation. 53 Comp. Gen. 429 (1973).[Footnote 
364]

In another 1973 decision, the Comptroller General held that the Justice 
Department could not reimburse an electronics engineer employed by the 
Bureau of Narcotics and Dangerous Drugs for membership in the Institute 
of Electrical and Electronic Engineers. The Justice Department had 
argued that the government benefited from the membership by virtue of 
reduced subscription rates to Institute publications and because the 
membership contributed to employee development. These factors were not 
sufficient to overcome the prohibition of 5 U.S.C. § 5946. Once again, 
GAO pointed out that the Bureau could become a member of the Institute 
in its own name if membership was administratively determined to be 
necessary. 52 Comp. Gen. 495 (1973). To the same effect is B-205768, 
Mar. 2, 1982 (Federal Mediation and Conciliation Service can purchase 
agency membership in Association of Labor Related Agencies upon making 
appropriate administrative determinations).

In another case, the Comptroller General held that the National Oceanic 
and Atmospheric Administration could not pay the membership fee of one 
of its employees in Federally Employed Women, Inc., notwithstanding the 
employee's designation as the agency's regional representative. The 
mere fact that membership may be job-related does not overcome the 
statutory prohibition. B-198720, June 23, 1980. See also 19 Comp. 
Dec. 650 (1913) (Army could not pay for Adjutant General's membership 
in International Association of Chiefs of Police). Similarly, the fact 
that membership may result in savings to the government, such as 
reduced travel rates for members, does not overcome the prohibition 
against individual memberships. 3 Comp. Gen. 963 (1924).

As noted, an agency may purchase membership in its own name in a 
society or association since 5 U.S.C. § 5946 prohibits only memberships 
for individual employees. The distinction, however, is not a 
distinction in name only. An expenditure for an agency membership must 
be justified on a "necessary expense" theory. To do this, the 
membership must provide benefits to the agency itself. For example, in 
31 Comp. Gen. 398 (1952), the Economic Stabilization Agency was 
permitted to become a member of a credit association because members 
could purchase credit reports at reduced cost and the procurement of 
credit reports was determined to be necessary to the enforcement of the 
Defense Production Act. In 33 Comp. Gen. 126 (1953), the Office of 
Technical Services, Commerce Department, was permitted to purchase 
membership in the American Management Association. The appropriation 
involved was an appropriation under the Mutual Security Act to conduct 
programs including technical assistance to Europe, and the membership 
benefit to the agency was the procurement of Association publications 
for foreign trainees and foreign productivity centers. See also 
70 Comp. Gen. 190 (1991) (prohibition in 5 U.S.C. § 5946 does not 
prohibit an agency from using appropriated funds to purchase access for 
its employees to a private fitness center's exercise facilities as part 
of the agency's health service program as authorized by 5 U.S.C. 
§ 7901); B-241706, June 19, 1991 (Public Health Service may reimburse 
physicians for annual medical staff dues since hospital privileges are 
essential to the performance of the agency's business); B-236763, 
Jan. 10, 1990 (GAO may pay fees for agency membership in certain 
professional organizations and designate appropriate GAO employees to 
attend functions for recruitment purposes).

Citing 31 Comp. Gen. 398 and 33 Comp. Gen. 126, the Comptroller General 
held in 57 Comp. Gen. 526 (1978), that the Department of Housing and 
Urban Development could purchase, in the name of the Department, air 
travel club memberships to obtain discount air fares to Hawaii. 
Similarly, the General Services Administration could join a shippers 
association to obtain the benefit of volume transportation rates. 
B-159783, May 4, 1972.

GAO has also approved membership by the Federal Law Enforcement Center 
in the local Chamber of Commerce, B-213535, July 26, 1984, and by a 
naval installation in the local Rotary Club, 61 Comp. Gen. 542 (1982). 
In the latter decision, however, GAO cautioned that the result was 
based on the specific justification presented, and that the decision 
should not be taken to mean that "every military installation or 
regional Government office can use appropriated funds to join the 
Rotary, Kiwanis, Lions, and similar organizations." Id. at 544.

The acquisition of needed publications for the agency is sufficient 
benefit to justify purchase of an agency membership. 20 Comp. Gen. 497 
(1941) (membership of Naval Academy in American Council on Education); 
A-30185, Feb. 5, 1930 (membership of Phoenix Indian School in National 
Education Association). See also 33 Comp. Gen. 126 (1953). Compare 
52 Comp. Gen. 495 (1973), holding that acquisition of publications is 
not sufficient to justify an individual, as opposed to agency, 
membership.

A variation occurred in 19 Comp. Gen. 937 (1940). The Cleveland office 
of the Securities and Exchange Commission (SEC) desired access to a law 
library maintained by the Cleveland Law Library Association. Access was 
available only to persons who were stockholders in the Association. The 
alternative to the SEC would have been the purchase of its own library 
at a much greater cost. Under the circumstances, GAO advised that 
5 U.S.C. § 5946 did not prohibit the stock purchases or the payment of 
stockholders assessments. GAO further noted, however, that a preferable 
alternative would be a contract with the Association for a flat-rate 
service charge.

Where there is no demonstrable benefit to the agency, the membership 
expense is improper. Thus, in 32 Comp. Gen. 15 (1952), the cost of 
membership fees for the New York Ordnance District of the Army in the 
Society for Advancement of Management was disallowed. The membership 
was in actuality four separate memberships for four individuals and the 
primary purpose was to enhance the knowledge of those individuals.

Since the benefit to the agency must be in terms of furthering the 
purposes for which its appropriation was made, a benefit to the United 
States as a whole rather than the individual agency may not be 
sufficient. In 5 Comp. Gen. 645 (1926), the former Veterans Bureau 
owned herds of livestock and wanted to have them registered. Reduced 
registration costs could be obtained by joining certain livestock 
associations. The benefit of registration would be a higher price if 
the agency sold the livestock. However, sales proceeds would have to be 
deposited in the Treasury as miscellaneous receipts and would thus not 
benefit the agency's appropriations. Membership was therefore improper. 
(The agency's appropriation language was subsequently changed and the 
membership was approved in A-38236, Mar. 30, 1932.)

Several of the decisions have pointed out that an agency may accept a 
gratuitous membership without violating the Antideficiency Act. 
31 Comp. Gen. 398, 399 (1952); A-38236, Mar. 30, 1932, quoted in 
24 Comp. Gen. 814, 815 (1945).

In addition, payment of a membership fee at the beginning of the period 
of membership does not violate the prohibition on advance payments 
found in 31 U.S.C. § 3324. For example, in B-221569, June 2, 1986, the 
Coast Guard could properly use its funds to pay the membership fees in 
certain unspecified private organizations (not physical fitness 
facilities) at the beginning of the membership period. The advance 
payment prohibition was not applicable since the agency got the benefit 
of what it purchased upon payment. What was being purchased was a 
"membership," and the membership was received upon payment. Compare 
B-288013, Dec. 11, 2001, holding that agency payments of membership 
fees to a private fitness center at the beginning of each option year, 
under a contract for providing fitness facilities and services for 
government employees, before it is known how many and when agency 
employees use the contractor's facilities and services, would violate 
the advance payment provision in 31 U.S.C. § 3324. There is a fuller 
discussion of the advance payment provision in Chapter 5, section C.

The evolution of the statutory law on membership fees produced a 
somewhat anomalous result in some of the early cases. Section 5946 of 
Title 5 of the United States Code originally prohibited--and still 
prohibits--not only membership fees but also the expenses of attending 
meetings. In the early decades of the statute, some agencies received 
specific authority to pay the expenses of attendance at meetings, but 
many did not. Thus, as the individual versus agency membership 
distinction developed, some of the decisions were forced to conclude 
that an agency could purchase a membership in an association but that 
nobody could attend the meetings since attending meetings could not be 
done by "the agency" but only through an individual. See, e.g., 
24 Comp. Gen. 814, 815 (1945); A-30185, Feb. 5, 1930. Two provisions of 
the Government Employees Training Act, 5 U.S.C. §§ 4109 and 4110, now 
permit attendance at meetings and conferences in certain situations. 
Thus, as a general proposition, if an organization is closely enough 
related to an agency's official functions to justify agency membership, 
it is presumably closely enough related to justify sending a 
representative to its meetings. See also section C.2 of this chapter, 
entitled "Attendance at Meetings and Conventions."

As noted above, the prohibition in 5 U.S.C. § 5946 against individual 
memberships does not apply if the fee is authorized by the Government 
Employees Training Act. An illustration is 61 Comp. Gen. 162 (1981), 
holding that the Defense Department could pay the licensing fees of 
Methods Time Measurement instructors for the Army Management 
Engineering Training Agency. The instructors had to be trained and 
certified--hence the fee--before they could train others. Further, the 
fee was not a matter of "personal qualification" since the 
certifications would be restricted to the training of Defense 
Department personnel and would be of no personal use to the instructors 
apart from their Defense Department jobs. For more on the issue of 
personal qualification see section C.13.e of this chapter.

Compare that case with the decision in B-286026, June 12, 2001, in 
which the Pension Benefit Guaranty Corporation (PBGC) asked whether it 
could use appropriated funds to pay, as training costs, fees for 
actuary accreditation. PBGC employs a number of actuaries to calculate 
pension benefits. Although actuaries do not need a professional license 
for employment, as part of a collective bargaining agreement PBGC 
proposed to use training funds to send actuaries to the examination 
review courses, provide on-the-job study time, and pay for the 
accreditation examinations. PBGC determined that this course of study 
and testing would enhance the ability of the PBGC actuaries to carry 
out their assignments. PBGC has the discretion under the Government 
Employees Training Act to determine that the review courses constitute 
appropriate training for its actuaries. Accordingly, GAO agreed that 
PBGC has authority, under 5 U.S.C. § 4109(a), to use appropriated funds 
for review courses and on-the-job study time. However, there was no 
authority to pay the cost of the accreditation examination itself, 
since a licensing accreditation examination does not fall within the 
Government Employees Training Act's definition of training. In the 
absence of statutory authority, an agency may not pay the costs of its 
employees taking licensing examinations since professional 
accreditation is personal to the employee and should be paid with 
personal funds. Here, the actuarial accreditation belongs to the 
employee personally and would remain so irrespective of whether the 
employee remains with the federal government. This case predated 
enactment of 5 U.S.C. § 5757, which gave agencies the discretionary 
authority to reimburse employees for expenses incurred in obtaining 
professional credentials, including the costs of examinations. This 
authority is discussed in more detail in this chapter in the next 
section on attorneys' expenses related to admission to the bar, and in 
section C.13.e of this chapter on professional qualification expenses.

Another example of the inapplicability of 5 U.S.C. § 5946 when the 
membership fee is authorized under the Government Employees Training 
Act is B-223447, Oct. 10, 1986, approving certain individual 
memberships for employees of the U.S. Army Corps of Engineers in the 
Toastmasters International organization as a source of public speaking 
training. The organization required membership in order to obtain the 
training. Because the Government Employees Training Act does not apply 
to active duty members of the uniformed services (68 Comp. Gen. 127 
(1988)), the Act's exception to 5 U.S.C. § 5946, and cases applying the 
Act or the exce