B-228791, Dec 15, 1987, 67 Comp.Gen. 142

B-228791, Dec 15, 1987, 67 Comp.Gen. 142

APPROPRIATIONS/FINANCIAL MANAGEMENT - Claims Against Government - Claim Settlement - Permanent/Indefinite Appropriation - Purpose Availability APPROPRIATIONS/FINANCIAL MANAGEMENT - Claims Against Government - Torts - Government Liability Based on broad statutory definition, Federal Retirement Thrift Investment Board should be regarded as federal agency for purposes of Federal Tort Claims Act (FTCA). Administrative FTCA settlements of $2,500 or less are payable from Thrift Savings Fund. Administrative settlements greater that $2,500, plus judgments and settlements of lawsuits under the FTCA, are payable from permanent judgment appropriation (31 U.S.C. Sec. 1304) to the extent they represent personal injury or physical property damage. However, liability resulting from program losses, even though tortious in nature, should be governed by statutory provisions on liability and bonding of fiduciaries.

Matter of: Executive Director, Federal Retirement Thrift Investment Board

This responds to your letter of August 12, 1987, requesting guidance on the applicability of the Federal Tort Claims Act (FTCA) to the Federal Retirement Thrift Investment Board (Board). Your primary question in whether the permanent, indefinite appropriation established by 31 U.S.C. Sec. 1304 would be available "for payment of legitimate personal injury or physical property damage claims made against the Board." In general, the answer is yes. In presenting this answer, however, we assume the Board is not referring to claims involving losses from the Thrift Savings Fund or the payment of benefits.

Background: The Board and the Thrift Savings Fund

The Federal Employee's Retirement System Act of 1986 (FERSA), /1/ as its title implies, substantially revised the retirement system for federal employees. One element of the new system is the Thrift Savings Plan, under which the employee and employing agency make contributions to a fund in the Treasury known as the Thrift Savings Fund. The funds are invested, and the individual's account, consisting of contributions adjusted to reflect earnings or losses resulting from the investments, is payable under various options upon retirement. /2/

The Thrift Savings Plan is administered by the Federal Retirement Thrift Investment Board, which is "in the Executive branch of the Government." U.S.C.A. Sec. 8472(a). The Board consists of five members appointed by the President for fixed terms of office, with (except for the members first appointed) the advice and consent of the Senate. The Board appoints an Executive Director who in turn is authorized to appoint additional necessary personnel. Id. Secs. 8476(d)(3). /3/

Applicability of the FTCA

The FTCA, 28 U.S.C. Sec. 1346(b), 2671-80, makes the United States liable, subject to a number of exceptions, for damages resulting from the tortious conduct of a federal employee acting within the scope of his or her employment. Agencies are authorized to settle or compromise claims administratively, with awards in excess of $25,000 requiring the prior written approval of the Attorney General. Id. Sec. 2672. If the claim cannot be resolved administratively, the claimant may bring a civil action. the Attorney General is expressly authorized to settle or compromise FTCA lawsuits. Id. Sec. 2677.

The FTCA applies to each federal agency, defined in 28 U.S.C. Sec. 2671 to include-- the executive departments, the military departments, independent establishments of the United States, and corportation primarily acting as instrumentalities or agencies of the United States, but does not include any contractor with the United States.

It has been our view that this definition, in light of its legislative history, should be broadly construed as covering all agencies not specifically excluded 35 Comp.Gen. 511 (1956). The courts have also broadly applied the definition. See, e.g., Freeling v. Federal Deposit Insurance Corp., 221 F. Supp. 955 (W.D. Okla. 1962), aff'd per curiam, 326 F.2d 971 (10th Cir. 1963)(holding that the Federal Deposit Insurance Corporation is a federal agency for FTCA purposes).

As noted above, FERSA places the Board in the executive branch. While the statute does not explicitly designate the Board as an "agency" or "instrumentality" of the United States, the legislative history does use the term "agency." E.g., H. R. Conf. Rep. No. 99-606, p. 138 (1986). Based on our review of FERSA and given the broad remedial purposes of the FTCA, we think the Board should be considered a federal agency within the scope of 28 U.S.C. Sec. 2671. However, we suggest that the Board also consult with the Department of Justice in view of that Department's role in approving certain administrative settlements and representing the United States in litigation.

Payment: Source of Funds

Administrative settlement of $2,500 or less are payable "by the hand of the Federal agency concerned out of appropriations available to that agency." 28 U.S.C. Sec. 2672. We have construed this as permitting the use of "any appropriation of that agency which is currently available for obligation at the time the claim is determined to be proper for payment and the use of which for such purpose is not specifically proscribed or limited." 38 Comp.Gen. 338, 340 (1958). As noted previously, the Thrift Savings Fund is permanently appropriated for specified purposes, one of which is the Board's administrative expenses. 5 U.S.C. Secs. 8437(c)(3), (d). Assuming the Board receives no further "temporary" direct appropriations (see note (3) above), administrative FTCA settlements of $2,500 or less would be payable from the Thrift Savings Fund as necessary administrative expenses.

With respect to larger administrative settlements and settlements of lawsuits, 28 U.S.C. Sec. 2672 further provides:

Payment of any award, compromise, or settlement in an amount in excess of $2,500 made pursuant to this section or made by the Attorney General in any amount pursuant to section 2677 of this title shall be paid in a manner similar to judgments and compromises in like causes and appropriations or funds available for the payment of such judgments and compromises are hereby made available for the payment of awards, compromises, or settlements under this chapter.

This means payment from the permanent judgment appropriation, unless payment is "otherwise provided for." 31 U.S.C. Secs. 1304(a)(1), (a)(3)(A). Payment is otherwise provided for if some appropriation or fund under the control of the agency involved is legally available to satisfy the judgment or award. E.g., B-211389, July 23, 1984.

We reviewed the legal status of the Board and the statutory requirements applicable to the Thrift Savings Fund. FERSA contains no provision addressing the payment of FTCA judgments or awards. The Board, while it operates much like similar private-sector (i.e., business-type) entities and oversees investment of a revolving fund, is not classified as a corporation. Contributions to the Fund, along with net earnings from the investment of those contributions, are held in trust for the individual employee. 5 U.S.C.A. Sec. 8437(g). Apart from certain specified administrative expenses, the Fund is to be used for the exclusive benefit of contributing employees and their beneficiaries. Id. Secs. 8437(e), (f). Based on our review, we conclude (as clarified below) that payment is not otherwise provided for.

Having said this, we caution that we are talking primarily about "physical torts," such as motor vehicle accidents and so-called "slip and- fall" cases, as opposed to program losses. We assume the phrasing of your question in terms of "physical" property damage claims was intended to reflect this distinction. Many program losses can be couched in terms of tort claims by attributing them to the negligence of agency employees. do not think Congress intended to expose to general fund of the Treasury to FERSA program losses or to the making of FERSA benefit payments. FERSA includes detailed provisions on fiduciary responsibilities and liability (5 U.S.C.A. Sec. 8477), requires the bonding of fiduciaries (id. Sec. 8478), and authorizes the purchase of insurance to cover the potential liability of FERSA fiduciaries (id. Sec. 8479(b)(2)). This statutory scheme, we think, should govern liability resulting from program losses.

We hope this is responsive to your concerns. Please feel free to call upon us if we can be of any further assistance.

/1/ Pub. L. No. 99-335 (June 6, 1986), 100 Stat. 517, 5 U.S.C.A. Secs. 8401-8479 (Supp. 1987).

/2/ Our summary is greatly oversimplified in order to set forth only that which is necessary to understand the issues. See generally 5 U.S.C.A. Secs. 8431-8440 (Supp. 1987).

/3/ For fiscal years 1986 and 1987, direct appropriations were authorized as "temporary alternative funding" for administrative expenses. Pub. L. No. 99-335, Sec. 701, as amended, 5 U.S.C.A. Sec. 8472 note. The 1987 appropriation is found in Pub. L. No. 99-591, 100 Stat. 3341-322 (October 30, 1986). Starting with fiscal year 1988, it appears that the Board will receive no further direct congressional appropriations.