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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 purch