B-130682, AUGUST 1, 1957, 37 COMP. GEN. 69

B-130682: Aug 1, 1957

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

FEDERAL RESERVE BANKS - SERVICES RENDERED TO THE TREASURY AND POST OFFICE DEPARTMENTS - REIMBURSEMENT THE RIGHT OF FEDERAL RESERVE BANKS TO REIMBURSEMENT FOR SERVICES PERFORMED FOR THE UNITED STATES AS FISCAL AGENTS IS EVIDENT FROM THE ANNUAL APPROPRIATIONS TO THE DEPARTMENT OF THE TREASURY FOR SUCH REIMBURSEMENT AND BY THE TREASURY'S ADMINISTRATIVE EXPENSES ACT OF JUNE 1. SERVICES RENDERED BY FEDERAL RESERVE BANKS IN PROCESSING POSTAL REMITTANCES RECEIVED DIRECTLY FROM POSTMASTERS ARE PRIMARILY PERFORMED FOR THE POST OFFICE DEPARTMENT RATHER THAN FOR THE DEPARTMENT OF THE TREASURY. IS LIMITED TO PAYMENT FOR SERVICES PERFORMED FOR THAT DEPARTMENT. IT IS THE RESPONSIBILITY OF THE POST OFFICE DEPARTMENT TO REIMBURSE THE FEDERAL RESERVE BANKS FOR SERVICES RENDERED TO IT.

B-130682, AUGUST 1, 1957, 37 COMP. GEN. 69

FEDERAL RESERVE BANKS - SERVICES RENDERED TO THE TREASURY AND POST OFFICE DEPARTMENTS - REIMBURSEMENT THE RIGHT OF FEDERAL RESERVE BANKS TO REIMBURSEMENT FOR SERVICES PERFORMED FOR THE UNITED STATES AS FISCAL AGENTS IS EVIDENT FROM THE ANNUAL APPROPRIATIONS TO THE DEPARTMENT OF THE TREASURY FOR SUCH REIMBURSEMENT AND BY THE TREASURY'S ADMINISTRATIVE EXPENSES ACT OF JUNE 1, 1955, 5 U.S.C. 258A. SERVICES RENDERED BY FEDERAL RESERVE BANKS IN PROCESSING POSTAL REMITTANCES RECEIVED DIRECTLY FROM POSTMASTERS ARE PRIMARILY PERFORMED FOR THE POST OFFICE DEPARTMENT RATHER THAN FOR THE DEPARTMENT OF THE TREASURY, AND THE ACT OF JUNE 1, 1955, 5 U.S.C. 258A, WHICH AUTHORIZES THE TREASURY DEPARTMENT TO REIMBURSE THE FEDERAL RESERVE BANKS FOR SERVICES, IS LIMITED TO PAYMENT FOR SERVICES PERFORMED FOR THAT DEPARTMENT, AND, THEREFORE, IT IS THE RESPONSIBILITY OF THE POST OFFICE DEPARTMENT TO REIMBURSE THE FEDERAL RESERVE BANKS FOR SERVICES RENDERED TO IT.

TO THE POSTMASTER GENERAL, AUGUST 1, 1957:

ON FEBRUARY 8, 1957, REFERENCE 800, THE DEPUTY POSTMASTER GENERAL PRESENTED THE QUESTION FOR DECISION AS TO WHETHER THE POST OFFICE DEPARTMENT IS LEGALLY OBLIGATED TO REIMBURSE FEDERAL RESERVE BANKS FOR SERVICES RENDERED IN PROCESSING POSTAL REMITTANCES FORWARDED BY POSTMASTERS DIRECTLY TO THE FEDERAL RESERVE BANKS.

THE RECORD SHOWS THAT THE SO-CALLED " DIRECT TO BANKS DEPOSIT PLAN" WAS INSTITUTED BY THE JOINT EFFORTS OF THE POST OFFICE DEPARTMENT, TREASURY DEPARTMENT, AND THE FEDERAL RESERVE BANKS. UNDER THE PLAN POSTAL REMITTANCES ARE FORWARDED BY POSTMASTERS DIRECTLY TO THE FEDERAL RESERVE BANKS IN THE ROUGH OR UNFINISHED STATE AND SUCH REMITTANCES ARE THEN SERVICED BY THE FEDERAL RESERVE BANKS IN ORDER TO CONVERT THE REMITTANCES INTO THE FINISHED FORM REQUIRED FOR DEPOSIT.

THE LETTER OF FEBRUARY 8, 1957, REFERS TO THE PROVISIONS IN 12 U.S.C. 391, WHICH PERMIT THE SECRETARY OF THE TREASURY TO DESIGNATE THE FEDERAL RESERVE BANKS TO ACT AS FISCAL AGENTS OF THE UNITED STATES AND STATES THAT SINCE NO PROVISION IS INCLUDED THEREIN SPECIFICALLY REQUIRING REIMBURSEMENT THERE SHOULD BE CONSIDERED THE POSSIBILITY OF VIEWING THE SERVICES AS BEING RENDERED BY THE FEDERAL RESERVE BANKS AS PART OF THEIR ACTUAL DUTIES WITHOUT REQUIRING REIMBURSEMENT. ALSO, ATTENTION IS DIRECTED TO THE PROVISIONS IN 5 U.S.C. 258A (B) WHICH AUTHORIZE THE SECRETARY OF THE TREASURY TO MAKE " EXPENDITURES TO REIMBURSE FEDERAL RESERVE BANKS AND BRANCHES FOR NECESSARY EXPENSES FOR SERVICES PERFORMED AS GOVERNMENT DEPOSITARIES AND AS FISCAL AGENTS OF THE UNITED STATES.' THE OPINION IS EXPRESSED THAT THIS STATUTE CONTEMPLATES THAT ALL EXPENSES INCURRED BY THE FEDERAL RESERVE BANKS FOR ACTING AS FISCAL AGENTS FOR THE UNITED STATES SHOULD BE PAID BY THE TREASURY DEPARTMENT; THAT THESE EXPENSES CONSTITUTE NORMAL OBLIGATIONS OF THE TREASURY DEPARTMENT; AND THAT ITS FUNDS ARE MADE SPECIFICALLY AVAILABLE TO PAY THEREFOR. ON MAY 29, 1957, YOUR DEPARTMENT SUPPLEMENTED THE VIEWS EXPRESSED IN YOUR LETTER OF FEBRUARY 8 AND REITERATED THE CONTENTION CONCERNING THE EFFECT OF 5 U.S.C. 258A (B), CONTENDING, IN EFFECT, THAT THESE PROVISIONS IMPOSE THE OBLIGATION OF REIMBURSING THE FEDERAL RESERVE BANKS UPON THE TREASURY DEPARTMENT. OTHER ARGUMENTS ARE OFFERED GENERALLY IN SUPPORT OF THE POST OFFICE DEPARTMENT'S POSITION THAT IF REIMBURSEMENT IS REQUIRED SUCH REIMBURSEMENT IS THE RESPONSIBILITY OF THE TREASURY DEPARTMENT.

IN ORDER TO ADVISE YOU CONCERNING THE QUESTION RAISED IN THE LETTER OF FEBRUARY 8, 1957, RESOLUTION OF THE FOLLOWING BASIC ISSUES IS NECESSARY: (1) WHETHER THE FEDERAL RESERVE BANKS ARE ENTITLED TO REIMBURSEMENT FOR SERVICES RENDERED THE UNITED STATES AS FISCAL AGENTS, (2) WHETHER THE FUNCTION BEING PERFORMED BY THE FEDERAL RESERVE BANKS IN PROCESSING THE POSTAL REMITTANCES FROM THE ROUGH TO FINISHED STATE IS ONE WHICH THE RESPONSIBILITY OF THE POST OFFICE DEPARTMENT OR THE TREASURY DEPARTMENT, AND (3) WHETHER THE PROVISIONS IN 5 U.S.C. 258A (B) ARE TO BE REGARDED AS IMPOSING UPON THE TREASURY DEPARTMENT AS A MATTER OF LAW THE OBLIGATION OF REIMBURSING THE FEDERAL RESERVE BANKS FOR SERVICES PERFORMED AS FISCAL AGENTS FOR ALL DEPARTMENTS AND AGENCIES.

ON THE FIRST QUESTION THERE SEEMS LITTLE DOUBT THAT THE FEDERAL RESERVE BANKS WHEN RENDERING SERVICES TO THE UNITED STATES OTHER THAN THOSE INCIDENT TO REGULAR BANKING OPERATIONS ARE ENTITLED TO REIMBURSEMENT FOR SUCH SERVICES. WHILE IT IS TRUE THAT PROVISIONS IN 12 U.S.C. 391 AUTHORIZING THE FEDERAL RESERVE BANKS SO TO ACT AS FISCAL AGENTS DO NOT PROVIDE SPECIFICALLY FOR REIMBURSEMENT FOR THESE SERVICES, RECOGNITION OF THE RIGHT OF THE BANKS TO SUCH REIMBURSEMENT IS PLAINLY EVIDENT FROM THE ANNUAL APPROPRIATIONS TO THE TREASURY DEPARTMENT, PROVIDING FOR SUCH REIMBURSEMENT PRIOR TO THE ACT OF JUNE 1, 1955, 5 U.S.C. 258A AND FROM THE LATTER ACT ITSELF. SEE ALSO THE PROVISIONS IN 15 U.S.C. 635 CONCERNING THE RIGHT OF SUCH BANKS TO REIMBURSEMENT FOR SERVICES RENDERED THE SMALL BUSINESS ADMINISTRATION. THE FOLLOWING STATEMENT APPEARS IN AN OFFICIAL PUBLICATION ENTITLED " THE FEDERAL RESERVE SYSTEM--- ITS PURPOSES AND FUNCTIONS" ON PAGE 36, CONCERNING FISCAL AGENCY FUNCTIONS:

THE FEDERAL RESERVE BANKS ARE REIMBURSED BY THE UNITED STATES TREASURY AND OTHER GOVERNMENT AGENCIES FOR MUCH OF THE EXPENSES INCURRED IN THE PERFORMANCE OF FISCAL AGENCY FUNCTIONS.

THEREFORE, THERE IS NO DOUBT THAT THE FEDERAL RESERVE BANKS ARE ENTITLED TO REIMBURSEMENT FOR SERVICES RENDERED AS FISCAL AGENTS AND THAT SUCH REIMBURSEMENT IS NOT MADE EXCLUSIVELY BY THE TREASURY DEPARTMENT.

THE SECOND QUESTION INVOLVES A DETERMINATION AS TO WHETHER THE SERVICES BEING PERFORMED BY THE FEDERAL RESERVE BANKS ARE THOSE WHICH ARE THE PRIMARY RESPONSIBILITY OF THE POST OFFICE DEPARTMENT OR WHETHER SUCH SERVICES ARE ORDINARILY FOR PERFORMANCE BY THE TREASURY DEPARTMENT. THE FACTS OF RECORD INDICATE THAT THE " DIRECT TO BANK DEPOSIT PLAN" WAS INSTALLED BY THE POST OFFICE DEPARTMENT FOR THE PURPOSE OF ELIMINATING THE REPEATED HANDLING AND COUNTING OF POSTAL RECEIPTS WITHIN THE POST OFFICE DEPARTMENT PRIOR TO THE DEPOSIT IN THE FINISHED FORM WITH THE TREASURY DEPARTMENT AND/OR THEIR DESIGNATED DEPOSITARIES. UNDER THE PLAN THE FEDERAL RESERVE BANKS ARE RECEIVING THE POSTAL RECEIPTS DIRECTLY IN THE ROUGH RATHER THAN FINISHED FORM AND THE SERVICES WHICH THEY PERFORM ARE FOR THE PURPOSE OF CONVERTING SUCH REMITTANCES INTO THE FINISHED CONDITION. PURSUANT TO THE GENERAL AUTHORITY VESTED IN THE SECRETARY OF THE TREASURY (5 U.S.C. 242), TREASURY DEPARTMENT CIRCULAR 176, AS REVISED, 31 CFR 202, WAS PROMULGATED TO PROVIDE FOR THE MANNER IN WHICH DEPOSITORS OF PUBLIC MONEYS SHALL DEPOSIT FUNDS INTO THE TREASURY. UNDER THESE REGULATIONS THE OBLIGATION TO DEPOSIT PUBLIC MONEYS INTO THE TREASURY OR DESIGNATED DEPOSITARIES IN THE REQUIRED MANNER IS THAT OF THE DEPOSITING DEPARTMENT OR AGENCY. SINCE THE SERVICES PERFORMED BY THE FEDERAL RESERVE BANKS IN PROCESSING THE UNFINISHED POSTAL REMITTANCES ARE FOR THE PURPOSE OF MEETING THE REQUIREMENTS OF TREASURY CIRCULAR 176 WITH RESPECT TO THE DEPOSIT OF PUBLIC MONEYS THE RESPONSIBILITY FOR THE PAYMENT OF SUCH SERVICES IS THAT OF THE POST OFFICE DEPARTMENT, IN THE ABSENCE OF A LAW OR REGULATION WHICH SHIFTS THE BURDEN OF COMPENSATION FOR THESE SERVICES PERFORMED BY THE FEDERAL RESERVE BANKS FOR THE POST OFFICE DEPARTMENT TO THE TREASURY DEPARTMENT. PRIOR TO THE ADOPTION OF THE " DIRECT TO BANKS DEPOSIT PLAN" THE SERVICE IN QUESTION WAS PERFORMED BY YOUR DEPARTMENT ADMINISTRATIVELY, THE COSTS BEING BORNE BY THE ANNUAL APPROPRIATIONS TO THE DEPARTMENT.

THE THIRD QUESTION CONCERNS THE CONTENTION THAT THE PROVISIONS IN 5 U.S.C. 258A (B) OBLIGATE THE TREASURY DEPARTMENT FOR ALL COSTS OF REIMBURSING THE FEDERAL RESERVE BANKS FOR SERVICES PERFORMED EVEN THOUGH APPROPRIATIONS ARE NOT PROVIDED THEREFOR IN THESE PROVISIONS. THE LEGISLATIVE HISTORY OF THESE PROVISIONS OF LAW, SPECIFICALLY SENATE REPORT 273, 84TH CONGRESS, SHOWS THAT THE PURPOSE OF THE ACT IS TO PROVIDE BASIC LEGISLATIVE AUTHORITY FOR CERTAIN AUTHORIZATION PROVISIONS WHICH WERE INCLUDED FROM YEAR TO YEAR IN THE TREASURY DEPARTMENT APPROPRIATION ACTS AND TO AVOID POSSIBLE POINTS OF ORDER BEING RAISED AGAINST THESE PROVISIONS. THIS ACT IS A SUBSTANTIVE AUTHORIZATION TO THE SECRETARY OF THE TREASURY TO MAKE EXPENDITURES TO REIMBURSE THE FEDERAL RESERVE BANKS BUT IN VIEW OF THE LEGISLATIVE HISTORY, ITS APPLICATION IS REGARDED AS LIMITED TO THE PAYMENT FOR THOSE SERVICES RENDERED BY THE BANKS FOR THE TREASURY DEPARTMENT FOR WHICH FUNDS ARE SPECIFICALLY PROVIDED IN THE TREASURY DEPARTMENT APPROPRIATIONS. THEREFORE, IN THE LIGHT OF THE ABOVE WE CANNOT AGREE THAT THIS STATUTE IMPOSES UPON THE TREASURY DEPARTMENT THE OBLIGATION OF REIMBURSING FEDERAL RESERVE BANKS FOR SERVICES PERFORMED FOR OTHER DEPARTMENTS AND AGENCIES.

SUMMARIZING, WE FIND (1) THAT THE FEDERAL RESERVE BANKS ARE ENTITLED TO REIMBURSEMENT FOR SERVICES RENDERED THE UNITED STATES AS FISCAL AGENTS; (2) THAT THE SERVICES PERFORMED BY THE BANKS ARE THE PRIME RESPONSIBILITY OF THE POST OFFICE DEPARTMENT; AND (3) THAT THE PROVISIONS IN 5 U.S.C. 258A (B) DO NOT REQUIRE THE TREASURY DEPARTMENT TO REIMBURSE THE FEDERAL RESERVE BANKS FOR SERVICES PERFORMED FOR THE POST OFFICE DEPARTMENT AS FISCAL AGENTS. THEREFORE, WE ARE OF THE OPINION THAT IT IS THE RESPONSIBILITY OF THE POST OFFICE DEPARTMENT TO REIMBURSE THE BANKS FOR THE SERVICES RENDERED.

YOUR DEPARTMENT'S LETTER OF FEBRUARY 8, 1957, RAISES A COLLATERAL QUESTION CONCERNING THE PROVISIONS IN 26 U.S.C. 6802 (1) REQUIRING CERTAIN POSTMASTERS TO SELL INTERNAL REVENUE STAMPS WITHOUT REIMBURSEMENT FROM THE TREASURY DEPARTMENT. THE LETTER REQUESTS ADVICE, IN THE EVENT WE DECIDE THAT THE POST OFFICE DEPARTMENT IS OBLIGATED TO REIMBURSE THE FEDERAL RESERVE BANKS, WHETHER THE TREASURY DEPARTMENT IS OBLIGATED TO REIMBURSE YOUR DEPARTMENT FOR THE SERVICES RENDERED IN SELLING INTERNAL REVENUE STAMPS. THE ISSUE RAISED HERE IS NOT GERMANE TO THE MAIN QUESTION. ANY REIMBURSEMENT BY THE POST OFFICE DEPARTMENT FOR THESE SERVICES, SPECIFICALLY SET OUT BY LAW TO BE PERFORMED BY THE POST OFFICE DEPARTMENT, MUST BE SO PROVIDED FOR BY LAW.