B-239249.2 May 21, 1991

B-239249.2 May 21, 1991

Mr. Fred Schneider Senate Disbursing Office Room 127 Hart Senate Office Building Washington, D.C. 20510

Dear Mr. Schneider:

You requested our views on the proper handling of claims presented on checks canceled by the Secretary of the Treasury under section 1003 of the Competitive Equality Banking Act of 1987, Pub. L. No. 100-85, 101 Stat. 659 (1987)(the Act). You were particularly concerned about which appropriation to charge for the replacement checks issued to cover the obligations represented by the canceled checks, and whether the accounts of disbursing officers would show double payments for replacement checks.

As you know, Section 1003 of the Act enacted a new section 3334 of Title 31 of the U.S. Code, which provides, in part:

"(b) Checks issued before effective date.--(1) Not later than 18 months after the effective date of this section, the Secretary shall identify and cancel all Treasury checks issued before such effective date that have not been paid in accordance with section 3328 of this title. /1/

"(2) The proceeds from checks canceled pursuant to paragraph (1) shall be applied to eliminate the balances in accounts that represent uncollectible accounts receivable and other costs associated with the payment of checks and check claims by the Department of the Treasury on behalf of all payment certifying agencies. Any remaining proceeds shall be deposited to the miscellaneous receipts of the Treasury.

(c) No effect on underlying obligation.--Nothing in this section shall be construed to affect the underlying obligation of the United States, or any agency thereof, for which a Treasury check was issued."

It is clear from its language that the statute contemplates that the underlying obligation of the United States is to remain unaffected. We interpret this to mean that the government's debt to the payee must be paid so long as the underlying claim remains otherwise enforceable. In our recent decision B-239249, Apr. 15, 1991, we stated that although the law mandating the mass cancellation of pre-effective date checks diverts the funds originally obligated for another use, only the specific moneys supporting the checks are shifted. Therefore, we concluded that the appropriation originally charged for the canceled checks can be charged to support a claim on such a check, assuming that appropriation account is still available.

The availability of appropriation accounts disbursed by the Secretary of the Senate and the Clerk of the House are governed by 2 U.S.C. Sec. 102a. Under the statute, unexpended balances of congressional appropriations more than two fiscal years old must be withdrawn and are no longer available for obligation. See 67 Comp.Gen. 119 (1987); B-213771.3. Sept. 17, 1986. Thereafter, unpaid obligations chargeable to the withdrawn balances must be liquidated from appropriations currently available for the same purpose. Thus, for canceled checks originally issued to liquidate obligations incurred in fiscal year 1989, the fiscal year 1989 appropriation, to the extent it has not been exhausted, may be charged for replacement checks. For canceled checks representing obligations incurred in fiscal year 1988 or earlier, the original appropriation has been withdrawn and replacement checks must be charged to appropriations currently available for the same purpose.

We conclude that no double payment violation occurs when a pre-effective date check is canceled under the Act, a claim on that check is submitted by the original payee (or holder), and a replacement check is issued. As we noted above, the original pre-effective date check is canceled and the funds supporting that obligation are by law applied to another purpose. The "charge" against the original appropriation to support that check no longer exists since the funds have been shifted to be used elsewhere. Thus, as a matter of law, the original pre-effective date check was never "paid" and issuing a replacement check does not result in a double payment.

Nevertheless, as we stated in our April 15 decision, in order to avoid the appearance of a double payment, it should be noted in the accounts that the first check was canceled and the second check was issued pursuant to Public Law 100-86. We trust the foregoing is helpful to you.

Gary Kepplinger, Associate General Counsel

1. Under authority contained in the Act, the Secretary of the Treasury designated October 1, 1989 as the effective date of the Act, and October 1, 1990 as the date for canceling checks that had not been paid.