B-244093, Jul 19, 1991

B-244093, Jul 19, 1991

APPROPRIATIONS/FINANCIAL MANAGEMENT - Appropriation Availability - Purpose availability - Stocks - Purchases APPROPRIATIONS/FINANCIAL MANAGEMENT - Budget Process - Funding - Securities - Proceeds DIGEST: The Farms for the Future Act of 1990 directs the Secretary of the Treasury to purchase stock offered by the Secretary of Agriculture and designates proceeds from the sale of securities issued under chapter 31 of Title 31 as a source of funds.

Honorable Patrick Leahy

Chairman, Committee on Agriculture, Nutrition, and Forestry

United States Senate:

This responds to your request by letter of May 7, 1991, for our views concerning implementation of the "Farms for the Future Act of 1990" with respect to the State of Vermont. The Act requires the Secretary of Agriculture to enter into an agreement, "not later than December 30, 1990," to establish a pilot project in the State of Vermont. understand that the Secretary of Agriculture has not yet entered into such an agreement. Officials at the Department of Agriculture contend that no appropriations are currently available to provide assistance to Vermont and that entering into an agreement to establish a pilot project would violate the Antideficiency Act.

You state that, in your view, funds are available to establish the program for Vermont and that implementation of the program with respect to Vermont would not violate the Antideficiency Act. Although the matter is not free from doubt, for the following reasons we agree.

The Farms for the Future Act requires the Secretary of Agriculture, acting through the Farmers Home Administration, to establish and implement a program to provide federal guarantees and interest rate assistance for loans made by lending institutions to state trust funds. Pub.L. No. 101- 624, Sec. 1466(a)(1), 104 Stat. 3617. Under the program, the Secretary must provide assistance to any "eligible State" that establishes a trust fund. Pub.L. No. 101-624, Sec. 1466(e), 104 Stat. 3618. The State of Vermont is an "eligible State" under the Act. Pub.L. No. 101-624 Sec. 1465(c)(3), 104 Stat. 3616. Other states are only eligible "at the option of the Secretary of Agriculture and subject to appropriations" Id.

We understand that officials at the Department of Agriculture contend that the entire program is "subject to appropriations." We disagree. The structure of section 1465(c)(3) clearly indicates that Congress did not intend for the phrase "subject to appropriations" to apply to Vermont. Congress had intended for assistance to Vermont to be "subject to appropriations," it would not have set Vermont apart from the other states.

A review of the legislative history of the Act supports this conclusion. The conference report shows that the definition of "eligible State" in the Act is the result of a compromise between the proposed House and Senate bills. Under the original Senate bill, the program was not subject to appropriations. S. 2830, 101st Cong., 2d Sess. Secs. 1263-70 (1990). Instead, the bill contained a funding mechanism which required the Secretary of Agriculture to issue stock to the Secretary of the Treasury "for the purpose of obtaining funds" to run the program. S. 2830, Sec. 1264; see, also, H.R. Rep. No. 357, 101st Cong., 2d Sess. 517 (1990).

The House bill, on the other hand, made the entire program "subject to the availability of appropriations." H.R. 3950, 101st Cong., 2d Sess. Sec. 1618(b)(2) (1990). It did not include the funding mechanism proposed by the Senate. Neither bill set Vermont apart from the other states in the definition of "eligible State."

The law, as finally enacted, combined the House and Senate proposals. The Act retained the funding mechanism proposed by the Senate but made assistance to any state other than Vermont specifically "subject to appropriations." Pub.L. No. 101-624, Secs. 1466(c) and 1465(c)(3).

In addition, the conference report clearly indicates that Congress intended to make "the pilot State (Vermont) eligible for direct spending assistance and the other eligible states eligible for assistance subject to appropriations." H.R. Conf. Rep. No. 915, 101st Cong. 2d Session 957 (1990). (The term "direct spending" means budget authority provided by law other than appropriation Acts. See 2 U.S.C. Sec. Sec. 900(c)(8).) such, Congress apparently intended that the Secretary of Agriculture use the funding mechanism established by the Act to obtain funds to provide assistance to Vermont and did not intend for such assistance to be subject to appropriations.

Nevertheless, we understand that the Department of Treasury is concerned that the Act fails to designate a source of funds for the Secretary of the Treasury to use to purchase the stock issued by the Secretary of Agriculture. A designation of a source of funds is necessary since, if a statute does not make an appropriation in express terms, it will be interpreted as making an appropriation only if it contains both a specific direction to pay and a designation of funds to be used. B-160998, Apr. 13, 1978.

Here, section 1466 establishes a funding mechanism to be used to fund the program. The Secretary of Agriculture is required to--

"make and issue stock, in the same manner as notes are issued under section 309(c) or 309A(d) of the Consolidated Farm and Rural Development Act (7 U.S.C. Secs. 1929(c) or 1929a(d)), to the Secretary of the Treasury for the purpose of obtaining Funds from the Secretary of the Treasury that are necessary for discharging the obligations of the Secretary of Agriculture under this chapter."

Pub.L. No. 101-624, Sec. 1466(c), 1043 Stat. 3617.

Thus, the Secretary of Agriculture must issue stock to the Secretary of the Treasury to obtain the funds necessary to discharge obligations incurred to provide assistance to eligible states. Likewise, section 1466(d) directs the Secretary of the Treasury to purchase the stock from the Secretary of Agriculture on the day offered. Pub.L. No. 101 624, Sec. 1466(d), 104 Stat. 3617. Unlike the Secretary of Agriculture's authority to issue the stock, however, the Secretary of the Treasury's authority to purchase the stock does not specifically refer to sections 309(c) or 309A(d) of the Consolidated Farm and Rural Development Act.

The fact that section 1466(d) does not specifically incorporate sections 309(c) and 309A(d) is a critical distinction since those sections authorize and direct the Secretary of the Treasury to "use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of Title 31" to purchase notes issued under those sections. Congress routinely uses this language to provide the Secretary of the Treasury with a source of funds to carry out a variety of financial transactions. See, e.g., 7 U.S.C. Sec. 903; 12 U.S.C. Sec. 635b; 15 U.S.C. Sec. 1848; 16 U.S.C. Sec. 838k.

The question before us, therefore, is whether Congress intended, by referencing sections 309c and 309A(d) in subsection (c), to authorize the Secretary of the Treasury to use as a public debt transaction the proceeds from the sale of securities to purchase the stock offered by the Secretary of Agriculture. In this regard, the first principle of statutory construction is to determine, and effectuate, Congress's intent. NLRB v. Food and Commercial Workers, 484 U.S. 112, 123 (1987). Moreover, section 1466(d) cannot be read in isolation. It must be read in the context of the whole Act. See Richards v. U.S., 369 U.S. 1, 7 (1962).

Following these guidelines, we interpret the language authorizing the Secretary of Agriculture to "make and issue stock, in the same manner as notes are issued" under the Consolidated Farm and Rural Development Act as sufficiently broad to encompass the entire financial transaction between the Secretaries of Agriculture and the Treasury. As we stated earlier, the words, structure and history of the Farms for the Future Act support the conclusion that Congress intended to provide the Secretary of Agriculture with direct spending authority to establish a pilot project in Vermont. Furthermore, Congress intended for the Secretary of the Treasury to provide the funding. See Pub.L. No. 101-624, Sec. 1466(c). therefore think sections 1466(c) and 1466(d) are best read together as authorizing the Secretary of the Treasury to use proceeds from the sale of securities to purchase the stock issued by the Secretary of Agriculture to fund the Vermont pilot project.

Having concluded that the Farms for the Future Act establishes a source of funds for an agreement with Vermont to establish a pilot project, it follows that the Secretary would not violate the Antideficiency Act by entering into such an agreement.

I hope that you find this analysis useful. As agreed with your staff, we will release a copy of this letter five days from today, unless you release it earlier.