B-199216 L/M, JUL 21, 1980

B-199216 L/M, JUL 21, 1980

PRECIS-UNAVAILABLE

CHARLES E. BENNETT, HOUSE OF REPRESENTATIVES:

YOU HAVE REQUESTED THAT THE GENERAL ACCOUNTING OFFICE REVIEW THE LEGISLATIVE HISTORY OF THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING REVISION ACT OF 1979, PUB. L. NO. 96-41, 93 STAT 319 (TO BE CODIFIED AT 50 U.S.C. SEC. 98 ET SEQ.,), AND DETERMINE WHETHER THE EXECUTIVE BRANCH TREATMENT OF THE NATIONAL DEFENSE STOCKPILE TRANSACTION FUND (FUND) CREATED BY THAT ACT IS IN ACCORDANCE WITH THE ACT AND THE INTENT OF THE CONGRESS. IN YOUR LETTER, YOU STATE:

"*** AS ORIGINALLY ENVISIONED, THE FUND WOULD NOT AFFECT BUDGET AUTHORITY OR OUTLAY TOTALS IN ORDER TO GUARANTEE ITS INDEPENDENCE FROM THE BUDGETARY PRESSURES AND MANIPULATIONS THAT HAD ADVERSELY IMPACTED THE PROGRAM IN THE PAST. ***"

"HOWEVER, SUBSEQUENT TO PASSAGE *** THE OFFICE OF MANAGEMENT AND BUDGET REQUIRED THE PRESENTATION OF THE FUND AS A LINE ITEM IN THE GENERAL SERVICES ADMINISTRATION FY 1981 BUDGET. CONSEQUENTLY, THE FUND AFFECTS BOTH BUDGET AUTHORITY AND OUTLAY TOTALS AND AS A RESULT HAS BEEN SUBJECTED TO THE SAME INFLUENCES AS IN THE PAST."

AS IS OUR USUAL PRACTICE, WE REQUESTED THE VIEWS OF THE AGENCIES CONCERNED - IN THIS CASE, THE GENERAL SERVICES ADMINISTRATION (GSA) AND THE OFFICE OF MANAGEMENT AND BUDGET (OMB). IN ITS RESPONSE GSA ACKNOWLEDGED THAT THERE WAS SOME DISPUTE CONCERNING THE PROPER HANDLING OF THE FUND, THAT THE ISSUE WAS UNDER REVIEW, AND THAT, IF OMB AND THE DEPARTMENT OF THE TREASURY APPROVED, GSA WOULD BE WILLING TO MAKE THE CHANGES NECESSARY SO THAT PURCHASES FROM THE FUND WOULD NOT BE COUNTED AS BUDGET AUTHORITY OR OUTLAYS. OMB, ON THE OTHER HAND, TOOK THE POSITION THAT ADMINISTRATION TREATMENT OF THE FUND WAS CONSISTENT WITH THE LANGUAGE OF THE ACT.

AFTER REVIEWING THE ACT AND ITS LEGISLATIVE HISTORY, AND FOR THE REASONS INDICATED BELOW, WE CONCLUDE THAT THE MANNER IN WHICH THE EXECUTIVE BRANCH HAS HANDLED THE FUND IS FULLY IN ACCORD WITH THE LANGUAGE OF THE ACT AND THE REQUIREMENTS OF THE CONGRESSIONAL BUDGET ACT OF 1974. WE FURTHER CONCLUDE THAT THE DESIRE OF THE CONGRESS THAT STOCKPILE TRANSACTIONS BE IMMUNE FROM THE PRESSURES OF THE BUDGETARY PROCESS CAN BE ACCOMPLISHED ONLY BY AMENDING THE LANGUAGE OF THE ACT.

THE LEGISLATION

PUBLIC LAW 96-41 RESTRUCTURES THE NATION'S STRATEGIC STOCKPILE SYSTEM BY CREATING A SINGLE NATIONAL DEFENSE STOCKPILE. SECTION 9 OF THE ACT CREATES A SPECIAL FUND ACCOUNT FOR STOCKPILE TRANSACTIONS. THIS SECTION READS:

"SEC. 9. (A) THERE IS ESTABLISHED IN THE TREASURY OF THE UNITED STATES A SEPARATE FUND TO BE KNOWN AS THE NATIONAL DEFENSE STOCKPILE TRANSACTION FUND (HEREINAFTER IN THIS SECTION REFERRED TO AS THE 'FUND').

"(B)(1) ALL MONEYS RECEIVED FROM THE SALE OF MATERIALS IN THE STOCKPILE UNDER PARAGRAPHS (5) AND (6) OF SECTION 6(A) SHALL BE COVERED INTO THE FUND. SUCH MONEYS SHALL REMAIN IN THE FUND UNTIL APPROPRIATED OR UNTIL THE END OF THE THIRD FISCAL YEAR FOLLOWING THE FISCAL YEAR IN WHICH THEY ARE RECEIVED. ANY SUCH MONEYS REMAINING IN THE FUND AFTER THE END OF SUCH THIRD FISCAL YEAR THAT HAVE NOT BEEN APPROPRIATED SHALL BE TRANSFERRED TO MISCELLANEOUS RECEIPTS OF THE TREASURY. ANY OF SUCH MONEYS THAT ARE APPROPRIATED SHALL BE DISBURSED FROM THE FUND IN THE ORDER IN WHICH THEY WERE COVERED INTO THE FUND.

"(2) MONEYS COVERED INTO THE FUND UNDER PARAGRAPH (1) SHALL BE AVAILABLE, WHEN APPROPRIATED THEREFOR, ONLY FOR THE ACQUISITION OF STRATEGIC AND CRITICAL MATERIALS UNDER SECTION 6(A)(1) OF THIS ACT (AND FOR TRANSPORTATION RELATED TO SUCH ACQUISITION).

"(3) IF SO PROVIDED IN APPROPRIATION ACTS, MONEYS IN THE FUND, WHEN APPROPRIATED, SHALL REMAIN AVAILABLE FOR A PERIOD OF FIVE FISCAL YEARS.

"(C) ALL MONEYS RECEIVED FROM THE SALE OF MATERIALS BEING ROTATED UNDER THE PROVISIONS OF SECTION 6(A)(4) OR DISPOSED OF UNDER SECTION 7(A) SHALL BE COVERED INTO THE FUND AND SHALL BE AVAILABLE ONLY FOR THE ACQUISITION OF REPLACEMENT MATERIALS." (93 STAT 323, TO BE CODIFIED AT 50 U.S.C. SEC. 98H).

FOR THE PURPOSES OF YOUR INQUIRY WE ARE NOT CONCERNED WITH SUBSECTION 9(C). IN A PREVIOUS DECISION WE CONCLUDED THAT THIS SUBSECTION CONSTITUTES A PERMANENT INDEFINITE APPROPRIATION OF RECEIPTS FROM ROTATION TRANSACTIONS OR SPECIAL DISPOSALS, TO BE USED FOR ACQUIRING REPLACEMENT MATERIALS FOR THE STOCKPILE. B-197118, JANUARY 14, 1980.

PARAGRAPH 9(B)(1) OF THE ACT PROVIDES THAT MONEYS RECEIVED FROM SALES OF STOCKPILE MATERIALS ARE TO BE DEPOSITED INTO THE FUND. THESE MONEYS ARE TO REMAIN IN THE FUND UNTIL APPROPRIATED OR, IF NOT APPROPRIATED BY THE END OF THE THIRD FISCAL YEAR AFTER THE YEAR OF DEPOSIT, TO BE TRANSFERRED TO MISCELLANEOUS RECEIPTS OF THE TREASURY.

PARAGRAPH 9(B)(2) PROVIDES THAT, WHEN APPROPRIATED, THESE MONEYS ARE TO BE AVAILABLE ONLY FOR THE ACQUISITION OF ADDITIONAL MATERIALS FOR THE STOCKPILE.

IT IS CLEAR THAT MONEYS DEPOSITED INTO THE FUND UNDER SUBSECTION 9(B) OF THE ACT CANNOT BE OBLIGATED OR DISBURSED UNLESS THEY ARE FIRST APPROPRIATED BY THE CONGRESS.

LEGISLATIVE HISTORY

THE PROPOSAL FOR A SEPARATE FUND FOR STOCKPILE TRANSACTIONS FIRST APPEARED IN H.R. 4895 AND S. 1198, COMPANION BILLS INTRODUCED IN THE 95TH CONGRESS. SECTION 4 OF THIS PROPOSED LEGISLATION WOULD HAVE AMENDED SECTION 9 OF THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT BY CREATING A FUND IN THE TREASURY TO BE CALLED THE STRATEGIC AND CRITICAL MATERIALS PROCUREMENT FUND. THE FUND WOULD HAVE RECEIVED THE PROCEEDS OF SALES OF STOCKPILE MATERIALS. AS DOES PUBLIC LAW 96-41, THE BILLS PROVIDED THAT "MONEYS COVERED INTO THE FUND SHALL BE AVAILABLE, WHEN APPROPRIATED" FOR THE ACQUISITION OF ADDITIONAL STOCKPILE MATERIALS.

IN DISCUSSING THIS PROPOSED FUND BEFORE THE HOUSE COMMITTEE ON ARMED SERVICES, YOU STATED:

"*** THIS IS NOT A BACK-DOOR SPENDING FUND, BECAUSE SPENDING HAS TO BE AUTHORIZED AND HAS TO BE APPROPRIATED. *** THIS FUND IS BEING CREATED PRIMARILY SO WE WON'T HAVE A FRESH THING IN THE BUDGET TO FIGHT ITS WAY AGAINST A LOT OF OTHER THINGS LIKE RELIEF AND THINGS LIKE THAT. IT WILL STAND ON ITS OWN.

"*** WE FEEL BY HAVING THIS FUND, EVEN THOUGH IT HAS TO BE APPROACHED BY THE AUTHORIZATION AND APPROPRIATIONS PROCESS, WE FEEL THAT WE WILL HAVE A BETTER CHANCE OF GETTING THE COMMODITIES WE NEED." (FULL COMMITTEE CONSIDERATION OF H.R. 4895, H.A.S.C. NO. 95-10, 95TH CONG. 1ST. SESS. 4 (1977).)

IN REPORTING H.R. 4895, THE HOUSE COMMITTEE ON ARMED SERVICES STATED:

"*** THE PROPOSED BILL WOULD REQUIRE THAT ALL MONEYS RECEIVED FROM SALES OF MATERIALS FROM THE STOCKPILE, AFTER THE DATE OF ENACTMENT, BE COVERED INTO THE SEPARATE FUND. MONEYS CONTAINED IN THE FUND WOULD BE AVAILABLE ONLY WHEN APPROPRIATED FOR THE PROCUREMENT, TRANSPORTATION, MAINTENANCE, ROTATION, STORAGE, REFINING, OR PROCESSING OF STRATEGIC AND CRITICAL MATERIALS." (H.R. REPT. NO. 95-104, 95TH CONG., 1ST SESS. 5 (1977).)

AFTER DISCUSSING SOME OF THE PURPOSES FOR A SEPARATE FUND, THE COMMITTEE ADDED:

"THE CHAIRMAN OF THE HOUSE COMMITTEE ON THE BUDGET ADVISED THE COMMITTEE THAT THE BILL CONFORMS FULLY TO THE REQUIREMENTS OF THE CONGRESSIONAL BUDGET ACT AND THAT UNDER ESTABLISHED BUDGETARY PROCEDURES, RECEIPTS FROM THE SALE OF EXCESS MATERIALS FROM THE STOCKPILE WOULD BE ACCOUNTED FOR IN FUNCTIONAL CATEGORY 050 (NATIONAL DEFENSE)." (ID. AT 4-5)

IN A FOOTNOTE THE COMMITTEE EXPLAINED THE BUDGETARY EFFECT OF THE FUND, AS FOLLOWS:

"ALL RECEIPTS GENERATED BY THE OPERATIONS OF THE U. S. GOVERNMENT ARE CLASSIFIED EITHER AS TO SOURCE *** OR AS OFFSETTING RECEIPTS BY TYPE. *** THE OFFSETTING RECEIPTS ACCOUNTED FOR BY TYPE ARE GENERATED THROUGH TRANSACTIONS FROM INTRA-GOVERNMENT OPERATIONS AND THE PUBLIC. THE OFFSETTING RECEIPTS ARE ACCOUNTED FOR, IN A BOOKKEEPING SENSE, IN THE MAJOR FUNCTION IN THE FEDERAL BUDGET WHERE THEY OCCUR AND ARE USED TO OFFSET THE EXPENDITURES OF THE PARTICULAR FUNCTION. CURRENTLY, THE RECEIPTS GENERATED THROUGH THE SALE OF EXCESS MATERIALS FROM THE STOCKPILE ARE CONSIDERED OFFSETTING RECEIPTS TO THE U.S. TREASURY AND ACCOUNTED FOR IN THE NATIONAL DEFENSE FUNCTION. THE ESTABLISHMENT OF A SPECIAL FUND TO COVER THE RECEIPTS GENERATED THROUGH THE SALE OF EXCESS MATERIAL WOULD NOT CHANGE THE ACCOUNTING OF THESE OFFSETTING RECEIPTS IN THE NATIONAL DEFENSE FUNCTION."

SENATOR CHILES, THE SENATE SPONSOR OF THE BILL, DESCRIBED THE FUND TO THE SENATE AS FOLLOWS:

"*** THE MONEY IN THIS SPECIAL FUND WOULD BE SUBJECT TO THE NORMAL CONGRESSIONAL AUTHORIZATION AND APPROPRIATION PROCESSES." (123 CONG. REC. S 5282 (DAILY ED. MARCH 31, 1977).)

H.R. 4895 WAS PASSED BY THE HOUSE. HOWEVER, THE LEGISLATION WAS NOT ENACTED BY THE SENATE IN THE 95TH CONGRESS.

IN THE 96TH CONGRESS, YOU INTRODUCED H.R. 2154, THE BILL WHICH EVENTUALLY BECAME PUBLIC LAW 96-41. IN REPORTING THE BILL, THE HOUSE COMMITTEE ON ARMED SERVICES STATED AS FOLLOWS:

"SECTION 9; THE COMMITTEE IS MINDFUL THAT THE ONLY OBJECTIVE OF THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT IS TO ENSURE AN ADEQUATE SUPPLY OF MATERIALS FOR THE SECURITY OF THE NATION IN A TIME OF NATIONAL EMERGENCY. THIS SECTION WILL ASSIST IN MEETING THAT OBJECTIVE THROUGH THE ESTABLISHMENT, IN THE TREASURY, OF A SEPARATE FUND TO BE KNOWN AS THE "NATIONAL DEFENSE STOCKPILE TRANSACTION FUND." THE PURPOSE OF THIS FUND IS TWOFOLD: FIRST, IT EARMARKS RECEIPTS FROM STOCKPILE SALES FOR USE IN PURCHASING OTHER NECESSARY STOCKPILE MATERIALS; AND SECOND, IT PROVIDES A READY REFERENCE FOR ANALYSIS OF THE SCOPE AND STATUS OF STOCKPILE ACTIVITY.

THE COMMITTEE ALSO BELIEVES THAT PLACING MONEYS RECEIVED FROM THE SALE OF STOCKPILE MATERIALS INTO THE SEPARATE FUND, RATHER THAN IN THE GENERAL TREASURY, WILL ACCOMPLISH SEVERAL BENEFICIAL OBJECTIVES.

FIRST, IT WILL ENCOURAGE THE MAINTENANCE OF A BALANCED STOCKPILE. SINCE MONEYS IN THE FUND CAN ONLY BE USED FOR STOCKPILE PURPOSES, THE ACQUISITION OF NEEDED MATERIALS WILL BE EXPEDITED RATHER THAN LEAVING MONEYS IN THE FUND AS UNEXPENDED BALANCES.

SECOND, IT WILL DISCOURAGE THE USE OF THE STOCKPILE FOR PURPOSES OTHER THAN THAT INTENDED BY THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT; I.E., USE FOR NATIONAL SECURITY ONLY.

THIRD, IT WILL IMPROVE THE MANAGEMENT OF THE STOCKPILE THROUGH AN ASSURED SOURCE OF FUNDS FOR FUTURE MATERIALS ACQUISITION.

"THE CONGRESSIONAL BUDGET OFFICE ADVISED THE COMMITTEE THAT THE CREATION OF THE SPECIAL FUND WILL NOT AFFECT TOTAL BUDGET AUTHORITY OR OUTLAYS, OR CHANGE ANY BUDGET FUNCTION OR SUBFUNCTION TOTALS." (H.R. REPT. NO. 96-46, 96TH CONG., 1ST SESS. 7-8 (1979).)

ON THE HOUSE FLOOR, YOU DESCRIBED THE NEED FOR AND THE EXPECTED OPERATION OF THE FUND:

"THE OBJECTIVE OF THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT WAS TO ENSURE AN ADEQUATE SUPPLY OF CRITICAL MATERIALS FOR THE SECURITY OF THE NATION. SECTION 9 OF THIS BILL IS INTENDED TO ASSIST IN MEETING THAT OBJECTIVE. I BELIEVE THAT PLACING MONEYS RECEIVED FROM THE SALE OF STOCKPILE MATERIALS INTO A SEPARATE FUND, RATHER THAN IN THE GENERAL TREASURY, WILL ENCOURAGE THE MAINTENANCE OF A BALANCED STOCKPILE. SINCE MONEYS IN THE FUND CAN ONLY BE USED FOR STOCKPILE PURPOSES, THE ACQUISITION OF NEEDED MATERIALS WILL BE EXPEDITED RATHER THAN LEAVING MONEYS IN THE FUND AS UNEXPENDED BALANCES. THESE FUNDS WOULD ONLY BE AVAILABLE BY AUTHORIZING AND APPROPRIATING LEGISLATION DULY ENACTED." (125 CONG. REC. H 1432 (DAILY ED. 1979).)

IN REPORTING H.R. 2154, THE SENATE COMMITTEE ON ARMED SERVICES ADDED THE PROVISION TO SECTION 9 THAT MONEYS IN THE FUND MUST BE TRANSFERRED TO MISCELLANEOUS RECEIPTS OF THE TREASURY UNLESS APPROPRIATED BY THE CONGRESS WITHIN 3 FISCAL YEARS.

IN EXPLAINING THE PURPOSE OF THE FUND TO THE SENATE, SENATOR HART, CHAIRMAN OF THE SUBCOMMITTEE ON MILITARY CONSTRUCTION AND STOCKPILES, STATED:

"ONE OF THE BILL'S KEY FEATURES IS TO EMPHASIZE THAT THE STOCKPILES ARE FOR NATIONAL DEFENSE PURPOSES ONLY AND ARE NOT TO BE USED FOR ECONOMIC OR BUDGETARY REASONS. THE ESTABLISHMENT OF A NATIONAL DEFENSE STOCKPILE TRANSACTION FUND IS INTENDED TO INSULATE THE STOCKPILE ACTIVITY FROM POTENTIAL BUDGETARY ABUSES. ALL PROCEEDS FROM THE SALE OF EXCESS STOCKPILE MATERIALS WILL GO INTO THE FUND AND THESE MONEYS WILL BE AVAILABLE ONLY FOR THE ACQUISITION OF NEEDED MATERIALS. IN THE ONLY AMENDMENT TO THE HOUSE BILL, THE ARMED SERVICES COMMITTEE RECOMMENDS THAT MONEYS REMAINING IN THE FUND MORE THAN 3 YEARS WILL REVERT TO THE TREASURY AS MISCELLANEOUS RECEIPTS." (125 CONG. REC. S 7545 (DAILY ED. 1979).)

SENATOR MUSKIE THEN EXPRESSED HIS GENERAL OPPOSITION TO THE CREATION OF SPECIAL FUNDS IN THE TREASURY, AND REQUESTED SENATOR HART TO JUSTIFY THE NEED FOR THIS SPECIAL FUND. THE FOLLOWING COLLOQUY OCCURRED.

"MR. HART.

"I ANTICIPATE A GREAT DEAL OF ACTIVITY IN THE STOCKPILE OVER THE NEXT DECADE, BOTH DISPOSALS AND ACQUISITIONS. BY ESTABLISHING A SEPARATE FUND WITHIN THE TREASURY FOR THESE TRANSACTIONS, WE WILL HAVE A CONTINUING ACCOUNTABILITY OF THE STOCKPILE AND COMPLETE AUDITABILITY OF ALL ACTIONS. VISIBILITY OF THE STOCKPILE IS A MAJOR GOAL OF THE LEGISLATION. "I WOULD ALSO STRESS THAT THE LEGISLATION BEFORE US PROVIDES THAT STOCKPILE ACQUISITIONS MUST BE AUTHORIZED. THAT IS CURRENTLY NOT REQUIRED. AND, AS MY GOOD FRIEND HAS NOTED, FUNDS FOR ALL ACQUISITIONS WOULD HAVE TO BE APPROPRIATED.

"MR. MUSKIE.

"IN THIS CASE, I RECOGNIZE THE URGENCY AND PRIORITY OF MANAGING THIS STRATEGIC STOCKPILE CLEARLY AND CAREFULLY AND IN A MANNER THAT MEETS OUR NATIONAL NEEDS. I ALSO RECOGNIZE THAT BY REQUIRING AUTHORIZATION OF ALL STOCKPILE ACQUISITIONS AND DISPOSALS, AND BY REQUIRING APPROPRIATIONS FOR STOCKPILE ACQUISITIONS, THE CONGRESS MAINTAINS A GRIP ON THE FUND TO BE ESTABLISHED BY THIS LEGISLATION." (ID. AT 7546).

THE SENATE PASSED THE BILL AS AMENDED BY THE COMMITTEE ON ARMED SERVICES. THE HOUSE AGREED TO THE SENATE AMENDMENT.

THIS HISTORY REVEALS TWO PURPOSES THE CONGRESS WAS SEEKING IN ENACTING PUBLIC LAW 96-41. FIRST THE LEGISLATION WAS DESIGNED TO MAINTAIN AND EXTEND CONGRESSIONAL CONTROL OVER STOCKPILE TRANSACTIONS BY REQUIRING BOTH AUTHORIZING AND APPROPRIATING LEGISLATION BEFORE MONEYS COULD BE DISBURSED FROM THE FUND. AT THE SAME TIME THE CONGRESS ATTEMPTED TO EXPEDITE THE ACQUISITION OF NEW MATERIALS AND TO INSULATE STOCKPILE TRANSACTIONS FROM BUDGETARY PRESSURES BY CREATING THE SPECIAL FUND.

HOWEVER, AS WE SHALL INDICATE BELOW, CONGRESS' INCLUSION IN THE ACT OF THE REQUIREMENT FOR ANNUAL AUTHORIZATION AND APPROPRIATION BEFORE MONEYS IN THE FUND CAN BE SPENT MAKES IT NECESSARY THAT THE FUND BE SUBJECT TO THE NORMAL BUDGETARY PROCESS.

EXECUTIVE BRANCH ACTION

FOLLOWING THE ENACTMENT OF PUBLIC LAW 96-41, THE DEPARTMENT OF THE TREASURY ESTABLISHED A SPECIAL FUND RECEIPT ACCOUNT BEARING THE TITLE "NATIONAL DEFENSE STOCKPILE TRANSACTION FUND" AND THE SYMBOL 5245. THIS ACCOUNT HAS BEEN CREDITED WITH RECEIPTS FROM THE SALES OF STOCKPILE MATERIALS. THE FUNDS IN THIS ACCOUNT WILL NOT BE AVAILABLE FOR EXPENDITURE UNTIL THEY ARE APPROPRIATED BY THE CONGRESS.

WE HAVE BEEN TOLD INFORMALLY BY THE BUREAU OF GOVERNMENT FINANCIAL OPERATIONS, DEPARTMENT OF THE TREASURY, THAT WHEN THE CONGRESS APPROPRIATES MONEY FOR THE ACQUISITION OF REPLACEMENT MATERIALS FOR THE STOCKPILE A SPECIAL FUND EXPENDITURE ACCOUNT WILL BE ESTABLISHED, AND THE AMOUNT OF THE APPROPRIATION WILL BE TRANSFERRED FROM THE RECEIPT ACCOUNT TO THE EXPENDITURE ACCOUNT. THE FUNDS TRANSFERRED TO THE EXPENDITURE ACCOUNT WILL BE AVAILABLE TO ACQUIRE STOCKPILE MATERIALS IN ACCORDANCE WITH THE TERMS OF THE AUTHORIZING AND APPROPRIATIONS ACTS.

THE MANNER IN WHICH THESE ACCOUNTS ARE BEING ESTABLISHED IN THE TREASURY IS CONSISTENT WITH THE LANGUAGE OF PUBLIC LAW 96-41. IT ALSO COMPLIES WITH THE REQUIREMENTS SET FORTH IN "TREASURY DEPARTMENT - GENERAL ACCOUNTING OFFICE JOINT REGULATION NO. 3"; CHAPTER 1500, PART 2 OF THE TREASURY FISCAL REQUIREMENTS MANUAL; AND TITLE 7 OF THE GENERAL ACCOUNTING OFFICE MANUAL FOR THE GUIDANCE OF FEDERAL AGENCIES.

FROM THE STANDPOINT OF THE BUDGET, MONEYS DEPOSITED INTO THE FUND SPECIAL RECEIPT ACCOUNT ARE CLASSIFIED AS "OFFSETTING RECEIPTS." THESE ARE DEFINED AS COLLECTIONS WHICH ARISE AS THE RESULT OF BUSINESS-TYPE TRANSACTIONS WITH THE PUBLIC OR AS A RESULT OF PAYMENTS BETWEEN AGENCIES, BUT WHICH ARE NOT AVAILABLE FOR OBLIGATION WITHOUT FURTHER ACTION BY THE CONGRESS.

OFFSETTING RECEIPTS ARE CREDITED TO SPECIAL RECEIPT ACCOUNTS, BUT ARE NOT OFFSET AGAINST BUDGET AUTHORITY OR OUTLAYS AT THE ACCOUNT LEVEL. RATHER THEY ARE DEDUCTED FROM TOTAL AGENCY BUDGET AUTHORITY AND OUTLAYS. SEE GENERALLY, COMPTROLLER GENERAL OF THE UNITED STATES, TERMS USED IN THE BUDGETARY PROCESS 20-21 (PAD-77-9, 1977); OMB CIRCULAR NO. A-11, SEC. 21.2(H), AT 25 (1980).

BECAUSE THESE RECEIPTS ARE NOT OFFSET AT THE ACCOUNT LEVEL, THE FULL AMOUNT OF ANY NEW BUDGET AUTHORITY BEING REQUESTED FOR THAT ACCOUNT, AND THE FULL AMOUNT OF ANY ANTICIPATED EXPENDITURES, MUST BE COUNTED IN THE BUDGET PROCESS. THUS, USING THE FUND AS AN EXAMPLE, THE ANTICIPATED $263 MILLION IN RECEIPTS FROM THE SALE OF STOCKPILE ITEMS FOR FISCAL YEAR 1981 ARE NOT OFFSET AGAINST THE FUND, BUT RATHER AGAINST BUDGET AUTHORITY AND OUTLAYS FOR GSA AS A WHOLE. SEE BUDGET OF THE UNITED STATES, FISCAL YEAR 1981 (BUDGET), AT 517. SINCE THERE IS NO OFFSET AT THE ACCOUNT LEVEL, THE FULL AMOUNT OF ANTICIPATED PROGRAM COSTS FOR STOCKPILE ACQUISITIONS, $169 MILLION, MUST COME FROM APPROPRIATIONS, AND MUST BE COUNTED AS BUDGET AUTHORITY AND OUTLAYS WITH REGARD TO THE FUND. SEE, BUDGET OF THE UNITED STATES, FISCAL YEAR 1981, APPENDIX (APPENDIX), AT 894.

ON THE OTHER HAND, IF THE COLLECTIONS WERE OFFSET AT THE ACCOUNT LEVEL, THEY WOULD REDUCE THE AMOUNT OF NEW BUDGET AUTHORITY AND OUTLAYS THAT WOULD BE COUNTED IN THE BUDGET PROCESS. USING THE WILLIAM LANGER JEWEL BEARING PLANT REVOLVING FUND AS AN EXAMPLE, THE EXPECTED $2.5 MILLION IN SALES REVENUES ARE OFFSET DIRECTLY AGAINST THE ACCOUNT. SEE APPENDIX, AT 896. THEREFORE, ALTHOUGH IT IS ANTICIPATED THAT THERE WILL BE TOTAL PROGRAM COSTS OF $2.5 MILLION, THESE ARE COMPLETELY OFFSET BY THE COLLECTIONS AND THE NET NEW BUDGET AUTHORITY AND OUTLAYS ARE COUNTED AS ZERO. SEE ID.

IN ORDER FOR COLLECTIONS TO BE OFFSET AGAINST BUDGET AUTHORITY AND OUTLAYS AT THE ACCOUNT LEVEL, THEY MUST BE CLASSIFIED AS "OFFSETTING COLLECTIONS CREDITED TO APPROPRIATION OR FUND ACCOUNTS." HOWEVER, THIS CLASSIFICATION CAN ONLY BE USED WHEN THERE IS SPECIFIC STATUTORY AUTHORITY TO OBLIGATE AND EXPEND THESE COLLECTIONS WITHOUT FURTHER ACTION OF THE CONGRESS. SEE BUDGET, AT 365; OMB CIRCULAR A-11, SEC. 21.2(H) AT 26 (1980). THIS CLASSIFICATION AND BUDGET HANDLING WOULD BE APPROPRIATE FOR REVOLVING FUND ACCOUNTS, OR WHERE THERE IS A PERMANENT INDEFINITE APPROPRIATION OF THE RECEIPTS FROM A CERTAIN ACTIVITY. THIS CLASSIFICATION CANNOT BE APPLIED TO MONEYS DEPOSITED INTO THE FUND UNDER THE AUTHORITY OF SUBSECTION 9(B) OF PUBLIC LAW 96-41.

UNDER THE CONGRESSIONAL BUDGET ACT OF 1974, THE EXECUTIVE BRANCH IS REQUIRED TO INCLUDE IN THE BUDGET ALL NEW BUDGET AUTHORITY AND OUTLAYS FOR THE ENTIRE GOVERNMENT AND ALL NEW BUDGET AUTHORITY AND OUTLAYS FOR EACH FUNCTIONAL CATEGORY. 31 U.S.C. SECS. 11(D), 1322(A).

THE TERMS "BUDGET AUTHORITY" AND "OUTLAYS" ARE DEFINED IN SECTION 3 OF THE CONGRESSIONAL BUDGET ACT:

"(1) THE TERMS 'BUDGET OUTLAYS' AND 'OUTLAYS' MEAN, WITH RESPECT TO ANY FISCAL YEAR, EXPENDITURES AND NET LENDING OF FUNDS UNDER BUDGET AUTHORITY DURING SUCH YEAR.

"(2) THE TERM BUDGET AUTHORITY MEANS AUTHORITY PROVIDED BY LAW TO ENTER INTO OBLIGATIONS WHICH WILL RESULT IN IMMEDIATE OR FUTURE OUTLAYS INVOLVING GOVERNMENT FUNDS ***." (31 U.S.C. SEC. 1302(A)(1),(2)).

PUBLIC LAW 96-41 DOES NOT BY ITSELF PROVIDE AUTHORITY TO INCUR OBLIGATIONS WITH MONEYS FROM THE FUND. IN FACT, SECTION 5 OF THE ACT SPECIFIES THAT NO FUNDS MAY BE OBLIGATED TO ACQUIRE MATERIAL FOR THE STOCKPILE UNLESS FUNDS FOR THE ACQUISITION HAVE BEEN AUTHORIZED BY LAW. FURTHER, AS WE HAVE ALREADY STATED, UNDER SUBSECTION 9(B) FUNDS CANNOT BE OBLIGATED OR DISBURSED UNLESS THEY ARE FIRST APPROPRIATED BY THE CONGRESS. SEE B-197118, JANUARY 14, 1980.

IT FOLLOWS THAT BUDGET AUTHORITY FOR STOCKPILE ACQUISITIONS MUST BE PROVIDED BY AUTHORIZING AND APPROPRIATION ACTS. EACH YEAR'S APPROPRIATION WILL PROVIDE AUTHORITY TO ENTER INTO OBLIGATIONS AND THUS CREATE NEW BUDGET AUTHORITY. UNDER THE CONGRESSIONAL BUDGET ACT, IT IS NOT ONLY PROPER, BUT REQUIRED, THAT THE EXECUTIVE BRANCH DESIGNATE REQUESTED APPROPRIATIONS FROM THE FUND AS NEW BUDGET AUTHORITY, AND EXPECTED EXPENDITURES UNDER THIS BUDGET AUTHORITY AS OUTLAYS.

MOREOVER, AS EXPLAINED ABOVE, BECAUSE UNDER PUBLIC LAW 96-41 MONEYS DEPOSITED IN THE FUND MUST BE CLASSIFIED AS OFFSETTING RECEIPTS AND THUS CANNOT BE DEDUCTED FROM BUDGET AUTHORITY OR OUTLAYS AT THE ACCOUNT LEVEL, THE FULL AMOUNT OF THE REQUESTED APPROPRIATION MUST BE COUNTED IN CONSIDERING THE BUDGET.

RECOMMENDATIONS

IN YOUR LETTER, YOU ASKED THAT WE IDENTIFY THE ALTERNATIVES AVAILABLE TO EFFECTUATE CONGRESSIONAL INTENT, SHOULD WE DETERMINE THAT EXECUTIVE BRANCH ACTIONS ARE LEGAL. YOU SPECIFICALLY REQUESTED THAT WE 1) IDENTIFY IMPEDIMENTS IN PUBLIC LAW 96-41 TO EFFECTUATING CONGRESSIONAL INTENT, 2) DETERMINE WHETHER CONGRESSIONAL INTENT CAN BE ACCOMPLISHED WITHIN THE EXISTING LEGISLATION, 3) RECOMMEND LEGISLATIVE MODIFICATIONS THAT WOULD ENSURE THE ATTAINMENT OF CONGRESSIONAL INTENT.

FIRST, AS WE EXPLAINED ABOVE, THE IMPEDIMENTS TO ATTAINING THE CONGRESSIONAL OBJECTIVE OF IMMUNIZING THE STOCKPILE FROM BUDGETARY PRESSURES ARE THE PROVISIONS OF PUBLIC LAW 96-41 WHICH REQUIRE AUTHORIZATION AND APPROPRIATION OF MONEYS FROM THE FUND BEFORE THEY CAN BE OBLIGATED. SO LONG AS MONEYS IN THE FUND CANNOT BE SPENT WITHOUT BEING APPROPRIATED, DEPOSITS TO THE FUND CANNOT BE OFFSET AT THE ACCOUNT LEVEL, REQUESTS FOR APPROPRIATIONS MUST BE INCLUDED IN THE BUDGET AS BUDGET AUTHORITY, AND PROPOSED EXPENDITURES MUST BE COUNTED AS OUTLAYS.

THE STOCKPILE CAN BE MADE IMMUNE FROM BUDGETARY PRESSURES ONLY BY MAKING THE REVENUES FROM THE SALE OF MATERIALS AVAILABLE FOR EXPENDITURE WITHOUT FURTHER ACTION OF THE CONGRESS.

SECOND, IN OUR OPINION CONGRESSIONAL INTENT THAT THE STOCKPILE BE IMMUNE FROM BUDGETARY PRESSURES CANNOT BE ATTAINED UNDER THE PRESENT LANGUAGE OF PUBLIC LAW 96-41.

THIRD, THE CONGRESSIONAL OBJECTIVE THAT THE STOCKPILE NOT BE SUBJECT TO BUDGETARY PRESSURES CAN BE ATTAINED BY THE FOLLOWING MODIFICATIONS TO PUBLIC LAW 96-41:

FIRST AMEND SECTION 9(B) SO THAT MONEYS DEPOSITED IN THE FUND ARE AUTOMATICALLY AVAILABLE FOR OBLIGATION, BUT SUBJECT TO SPENDING LIMITATIONS PROVIDED IN ANNUAL AUTHORIZATION AND APPROPRIATION ACTS.

UNDER SUCH A PROVISION RECEIPTS DEPOSITED INTO THE FUND WILL BE DEDUCTED FROM OUTLAYS AT THE ACCOUNT LEVEL. FURTHER, BECAUSE THERE WILL BE NO NEED FOR APPROPRIATIONS, AND BECAUSE APPROPRIATION LIMITATIONS ARE NOT COUNTED AS BUDGET AUTHORITY, THERE WILL BE NO NEW BUDGET AUTHORITY BEING CREATED. THE PROVISION WILL MAINTAIN FULL CONGRESSIONAL OVERSIGHT OF THE ACCOUNT THROUGH THE SETTING OF SPENDING LIMITS IN ANNUAL AUTHORIZATION AND APPROPRIATION ACTS. WE RECOMMEND THE FOLLOWING LANGUAGE:

"(B)(1) ALL MONEYS RECEIVED FROM THE SALE OF MATERIALS IN THE STOCKPILE UNDER PARAGRAPHS (5) AND (6) OF SECTION 6(A) SHALL BE COVERED INTO THE FUND.

"(2) MONEYS COVERED INTO THE FUND UNDER PARAGRAPH (1) SHALL BE IMMEDIATELY AVAILABLE ONLY FOR THE ACQUISITION OF STRATEGIC AND CRITICAL MATERIALS UNDER SECTION 6(A)(1) OF THIS ACT (AND FOR TRANSPORTATION RELATED TO SUCH ACQUISITION), EXCEPT TO THE EXTENT LIMITED IN ANNUAL AUTHORIZATION AND APPROPRIATION ACTS."

SECOND AMEND SECTION 5(A) TO REMOVE THE REQUIREMENT THAT FUNDS BE AUTHORIZED BEFORE THEY CAN BE OBLIGATED TO ACQUIRE MATERIALS FOR THE STOCKPILE.

DIGEST

MANNER IN WHICH EXECUTIVE BRANCH HAS HANDLED NATIONAL DEFENSE STOCKPILE TRANSACTION FUND IS IN ACCORD WITH LANGUAGE OF PUBLIC LAW 96 41 AND CONGRESSIONAL BUDGET ACT OF 1974. MONEYS DEPOSITED IN NATIONAL DEFENSE STOCKPILE TRANSACTION FUND UNDER AUTHORITY OF SUBSECTION 9(B) OF PUBLIC LAW 96-41 ARE NOT AVAILABLE FOR OBLIGATION OR EXPENDITURE UNLESS APPROPRIATED. THESE MONEYS ARE PROPERLY HELD IN SPECIAL RECEIPTS ACCOUNT IN THE TREASURY FROM WHICH THEY CANNOT BE DISBURSED UNTIL THEY ARE APPROPRIATED. MONEYS DEPOSITED IN NATIONAL DEFENSE STOCKPILE TRANSACTION FUND UNDER AUTHORITY OF SUBSECTION 9(B) OF PUBLIC LAW 96-41 ARE PROPERLY CLASSIFIED AS "OFFSETTING RECEIPTS." OFFSETTING RECEIPTS ARE NOT DEDUCTED FROM BUDGET AUTHORITY OR OUTLAYS AT ACCOUNT LEVEL. THEREFORE FULL AMOUNT OF REQUESTED APPROPRIATION MUST BE COUNTED AS BUDGET AUTHORITY, AND FULL AMOUNT OF EXPECTED EXPENDITURES MUST BE COUNTED AS OUTLAYS.