A-85980, MAY 17, 1937, 16 COMP. GEN. 1007

A-85980: May 17, 1937

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APPROPRIATIONS AND APPROPRIATION AUTHORIZATIONS DISTINGUISHED - OBLIGATION OF FUNDS PRIOR TO APPROPRIATION MADE THE MERE AUTHORIZATION OF AN APPROPRIATION BY ACT OF CONGRESS IS NOT THE APPROPRIATION OF PUBLIC MONEYS AND DOES NOT AUTHORIZE EXPENDITURES ON THE FAITH THEREOF OR THE MAKING OF CONTRACTS OBLIGATING THE MONEY AUTHORIZED TO BE APPROPRIATED. LOAN CONTRACTS BETWEEN PROSPECTIVE BORROWERS AND THE RURAL ELECTRIFICATION ADMINISTRATION OBLIGATING FISCAL YEAR FUNDS MAY NOT BE ENTERED INTO PRIOR TO APPROPRIATION MADE BUT THERE IS NO OBJECTION AFTER APPROPRIATION MADE TO THE EXECUTION OF SUCH CONTRACTS PRIOR TO THE BEGINNING OF THE FISCAL YEAR. NOTWITHSTANDING THE FUNDS ARE NOT AVAILABLE FOR EXPENDITURE UNTIL THE BEGINNING OF THE FISCAL YEAR.

A-85980, MAY 17, 1937, 16 COMP. GEN. 1007

APPROPRIATIONS AND APPROPRIATION AUTHORIZATIONS DISTINGUISHED - OBLIGATION OF FUNDS PRIOR TO APPROPRIATION MADE THE MERE AUTHORIZATION OF AN APPROPRIATION BY ACT OF CONGRESS IS NOT THE APPROPRIATION OF PUBLIC MONEYS AND DOES NOT AUTHORIZE EXPENDITURES ON THE FAITH THEREOF OR THE MAKING OF CONTRACTS OBLIGATING THE MONEY AUTHORIZED TO BE APPROPRIATED. LOAN CONTRACTS BETWEEN PROSPECTIVE BORROWERS AND THE RURAL ELECTRIFICATION ADMINISTRATION OBLIGATING FISCAL YEAR FUNDS MAY NOT BE ENTERED INTO PRIOR TO APPROPRIATION MADE BUT THERE IS NO OBJECTION AFTER APPROPRIATION MADE TO THE EXECUTION OF SUCH CONTRACTS PRIOR TO THE BEGINNING OF THE FISCAL YEAR, NOTWITHSTANDING THE FUNDS ARE NOT AVAILABLE FOR EXPENDITURE UNTIL THE BEGINNING OF THE FISCAL YEAR.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, RURAL ELECTRIFICATION ADMINISTRATION, MAY 17, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 3, 1937, AS FOLLOWS:

IN ORDER TO INSURE CONTINUITY TO THE PROGRAM OF THE RURAL ELECTRIFICATION ADMINISTRATION AS DEFINED IN THE RURAL ELECTRIFICATION ACT OF 1936, IT WILL BE NECESSARY FOR ME TO ENTER INTO LOAN CONTRACTS WITH PROSPECTIVE BORROWERS PRIOR TO JULY 1, 1937, OBLIGATING FUNDS TO BE MADE AVAILABLE IN THE FORTHCOMING FISCAL YEAR. I SHALL APPRECIATE AN OPINION FROM YOU AS TO MY RIGHT TO EXECUTE SUCH AGREEMENTS. YOU WILL READILY APPRECIATE THE NECESSITY FOR SUCH ACTION, AS THERE IS NECESSARILY A CONSIDERABLE TIME LAG BETWEEN THE EXECUTION OF A LOAN CONTRACT AND THE FIRST DISBURSEMENT OF FUNDS THEREUNDER. IF LOAN CONTRACTS BINDING FUNDS APPROPRIATED FOR FISCAL (YEAR) 1938 COULD NOT BE EXECUTED UNTIL JULY 1, 1937, IT WOULD MEAN THAT NO MONEY COULD BE ADVANCED TO THE BORROWERS UNTIL MUCH LATER, WHICH WOULD RESULT IN AT LEAST A PARTIAL STANDSTILL OF ACTIVITY DURING THE INTERVENING PERIOD. I MAY SAY THAT I DO NOT PROPOSE TO ENTER INTO SUCH CONTRACTS UNTIL THE APPROPRIATION IN QUESTION IS ACTUALLY AUTHORIZED BY LAW.

I BELIEVE THAT MY RIGHT TO EXECUTE SUCH LOAN AGREEMENTS AS SUGGESTED ABOVE CAN BE JUSTIFIED ON TWO OR MORE GROUNDS. FIRST, THE RURAL ELECTRIFICATION ACT CONTEMPLATES A CONTINUING POLICY AND SPECIFICALLY AUTHORIZES THE EXECUTION OF LOAN CONTRACTS BY THE ADMINISTRATOR. HENCE, THE LIMITATIONS OF SECTIONS 3679 AND 3732 OF THE REVISED STATUTES WOULD HAVE NO APPLICATION. IN THIS CONNECTION YOUR ATTENTION IS DIRECTED TO A DECISION OF THE COMPTROLLER OF THE TREASURY APPEARING IN 3 C.T. 437, WHEREIN IT WAS STATED:

"IT WILL BE SEEN THAT SECTION 3732 LIMITS THE POWER OF THE EXECUTIVE DEPARTMENTS, IN MAKING CONTRACTS BINDING UPON THE GOVERNMENT, TO TWO CASES. FIRST, WHERE THE CONTRACT IS EXPRESSLY AUTHORIZED BY LAW, AND SECOND, WHERE THERE IS AN APPROPRIATION SUFFICIENT TO COVER THE AMOUNT CONTRACTED FOR. WHERE THE POWER IS GIVEN TO MAKE A CONTRACT FOR THE WHOLE PROJECT, HAVING IN VIEW FUTURE APPROPRIATIONS, SUCH APPROPRIATIONS MADE SUBSEQUENTLY TO THE FISCAL YEAR IN WHICH THE CONTRACT WAS MADE, AND IN PURSUANCE OF THE CONTRACT, COULD BE USED IN PAYING FOR THE WORK CONTEMPLATED BY SUCH CONTRACT, IF THE SAME WERE SO DRAWN AS TO INDICATE THAT SUCH PURPOSE WAS IN CONTEMPLATION AT THE TIME THE CONTRACT WAS ENTERED INTO.'

FURTHERMORE, IT HAS BEEN RECOGNIZED THAT APPROPRIATIONS ACTUALLY AUTHORIZED BY LAW BUT NOT AS YET AVAILABLE MAY BE OBLIGATED BY THE EXECUTIVE OFFICER CHARGED WITH THEIR EXPENDITURE. ONE OF THE CLEAREST EXPRESSIONS OF THIS RULE IS FOUND IN THE DECISION OF THE COMPTROLLER GENERAL OF MAY 10, 1923, 2 C.G. 739. THE FACTS THEREIN INVOLVED APPEAR TO HAVE BEEN ADEQUATELY SUMMARIZED IN THE HEADNOTE WHICH READS AS FOLLOWS:

"THE APPROPRIATION FOR PAVING PORTIONS OF STREETS AND ALLEYS ADJOINING THE OSAGE TRIBAL PROPERTY WITHIN THE INCORPORATED TOWN OF PAWHUSKA, OKLA., BEING EMBRACED WITHIN AN ORDINARY APPROPRIATION ACT, IS NOT AVAILABLE FOR EXPENDITURE PRIOR TO JULY 1, 1923, BUT CONTRACTS OBLIGATING THAT APPROPRIATION FOR PAYMENT TO BE MADE ON OR AFTER JULY 1, 1923, MAY BE ENTERED INTO AT ANY TIME AFTER THE DATE OF THE ACT CONTAINING THE APPROPRIATION, I.E., ACT OF JANUARY 24, 1923, 42 STAT., 1196.'

THERE ARE TO BE NOTED YOUR PROPOSAL TO ENTER INTO LOAN CONTRACTS WITH PROSPECTIVE BORROWERS PRIOR TO JULY 1, 1937, OBLIGATING FUNDS TO BE MADE AVAILABLE IN THE FISCAL YEAR 1938, AND YOUR STATEMENT THAT YOU DO NOT PROPOSE TO ENTER INTO SUCH CONTRACT UNTIL THE APPROPRIATION IN QUESTION IS ACTUALLY AUTHORIZED BY LAW. ALSO, YOU SUGGEST THAT APPROPRIATIONS ACTUALLY AUTHORIZED BY LAW, BUT NOT YET AVAILABLE, MAY BE OBLIGATED BY THE EXECUTIVE OFFICER CHARGED WITH THEIR EXPENDITURE. THESE STATEMENTS SUGGEST THE POSSIBILITY OF SOME ADMINISTRATIVE CONFUSION AS TO THE DISTINCTION BETWEEN AN AUTHORIZATION ACT, AND AN APPROPRIATION ACT. THE RURAL ELECTRIFICATION ACT OF 1936 APPROVED MAY 20, 1936, 49 STAT. 1363, ET SEQ., PROVIDES, SECTION 3 (B), THAT:

THERE IS HEREBY AUTHORIZED TO BE APPROPRIATED, OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, FOR THE FISCAL YEAR ENDING JUNE 30, 1938, AND FOR EACH OF THE EIGHT YEARS THEREAFTER, THE SUM OF $40,000,000 FOR THE PURPOSES OF THIS ACT AS HEREINAFTER PROVIDED.

THIS PROVISION IS AN AUTHORIZATION FOR APPROPRIATIONS NOT ONLY FOR THE FISCAL YEAR 1938, BUT FOR THE 8 SUCCEEDING FISCAL YEARS, BUT IT IS NOT AN APPROPRIATION OF THE DESIGNATED AMOUNTS, WHICH MUST SEVERALLY AWAIT FURTHER SPECIFIC ACTS OF CONGRESS ACTUALLY APPROPRIATING THE SPECIFIED AMOUNTS.

THE MERE AUTHORIZATION OF AN APPROPRIATION DOES NOT AUTHORIZE EXPENDITURES ON THE FAITH THEREOF OR THE MAKING OF CONTRACTS OBLIGATING THE MONEY AUTHORIZED TO BE APPROPRIATED. THE ACT OF JUNE 30, 1906, PARAGRAPH 9, 34 STAT. 764, U.S.C. ANNOTATED, TITLE 31, SECTION 627, IS AS FOLLOWS:

NO ACT OF CONGRESS SHALL BE CONSTRUED TO MAKE AN APPROPRIATION OUT OF THE TREASURY OF THE UNITED STATES, OR TO AUTHORIZE THE EXECUTION OF A CONTRACT INVOLVING THE PAYMENT OF MONEY IN EXCESS OF APPROPRIATIONS MADE BY LAW, UNLESS SUCH ACT SHALL IN SPECIFIC TERMS DECLARE AN APPROPRIATION TO BE MADE OR THAT A CONTRACT MAY BE EXECUTED.

CLEARLY SAID SECTION AND SECTION 3732, REVISED STATUTES, REFERRED TO IN YOUR LETTER PROHIBIT ANY UNDERTAKING TO ENTER INTO CONTRACTS OBLIGATING GOVERNMENT FUNDS WHICH HAVE NOT BEEN APPROPRIATED AT THE TIME OF SUCH ATTEMPTED OBLIGATION--- IN THE ABSENCE OF A STATUTE SPECIFICALLY SO PROVIDING, SUCH AS THE PROVISION IN THE ACT OF MARCH 5, 1928, 45 STAT. 162, 177--- AND NO STATUTE NOT EXPRESSLY MAKING AN APPROPRIATION--- NO MATTER HOW BROAD ITS TERMS--- MAY BE SO CONSTRUED. THEREFORE, ANY UNDERTAKING TO ENTER INTO LOAN CONTRACTS CHARGING GOVERNMENT MONEYS UPON THE MERE AUTHORIZATION OF THE APPROPRIATION, AND PRIOR TO THE ACTUAL APPROPRIATION OF THE MONEY SOUGHT TO BE CHARGED WOULD BE IN CONTRAVENTION OF LAW AND UNAUTHORIZED, AND YOU ARE SO ADVISED.

THERE IS FOR CONSIDERATION, HOWEVER, AS YOU SUGGEST, THE CLEAR INTENT OF THE ELECTRIFICATION ACT THAT THE PROGRAM INAUGURATED THEREUNDER SHALL CONSTITUTE A CONTINUING POLICY, AND THE POSSIBILITY THAT UNCERTAINTY OR LACK OF ASSURANCE ON THE PART OF PROSPECTIVE BORROWERS THAT THEY WILL BE ABLE TO OBTAIN FUNDS DURING THE COMING FISCAL YEAR WILL RESULT IN RETARDATION OF ACTIVITIES CONTEMPLATED BY THE STATUTE. FOR THAT REASON, IF AND WHEN AN APPROPRIATION OF MONEYS FOR EXPENDITURE UNDER THE ACT FOR THE FISCAL YEAR 1938 SHALL HAVE BEEN MADE, EVEN THOUGH THE FUNDS SO APPROPRIATED WILL NOT BE AVAILABLE FOR EXPENDITURE UNTIL JULY 1, 1937, THERE WOULD BE NO LEGAL OBJECTION TO YOUR ENTERING INTO OTHERWISE PROPER LOAN CONTRACTS FOR THE SAID FISCAL YEAR PRIOR TO THE BEGINNING THEREOF, BUT, OF COURSE, NO EXPENDITURES CAN BE MADE THEREUNDER PRIOR TO JULY 1, 1937. 2 COMP. GEN. 739, CITED IN YOUR LETTER.