Funding of Judgment

The Department of Justice requested that GAO advise the Department of Agriculture on the correct appropriation to charge the expenses of Farmers Home Administration's (FmHA) compliance with an order of the United States District Court. The order required FmHA to take the steps necessary to correct structural defects in the defendant's house, and provided a remedy for injuries resulting from what the Court found to be the FmHA failure to perform its duty under the law to service real property held as security for rural home loans. The Department of Justice advised that no appeal would be taken from the court order. The sole issue was which appropriation to charge for expenses incurred in repairing the house. The District Court believed that FmHA should pay the costs from funds appropriated to carry out the Housing Act of 1949. FmHA contended that it was not authorized under the Act to pay the costs of carrying out the repair order because the house in question was completed before the date specified in the statute, and because the Act does not make an exception for court ordered repairs. GAO agreed with FmHA that the Act does not provide the necessary authority to make the repairs required by the court order. The Act was enacted in October 1972, and authorizes repairs to only newly constructed houses beginning in April 1976. The house in this case was completed in 1971, and does not fall within the coverage of the provisions. However, the Act does not apply where the FmHA is correcting defects on a house financed under the rural home loan program authorized under the Housing Act of 1949, pursuant to a court order, as is the case here. GAO believed that FmHA could and should fund its expenses under the order from appropriations made for that program for fiscal year 1980 by the enactment of P.L. 96-108. It was held that under the specific facts and circumstances of this case, funds appropriated to meet the administrative expenses of the program may be used to comply with the court order because the necessity for expending these funds arose as a result of the conduct of the rural home loan program.