B-136383, JUNE 27, 1958, 37 COMP. GEN. 861

B-136383: Jun 27, 1958

Additional Materials:

Contact:

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

 

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

WHICH WAS NOT A SELF-EXECUTING ACT NOR AN ACT WHICH OBLIGATED THE GOVERNMENT TO INCREASE THE AMOUNT OF ALL FEDERAL OBLIGATIONS. HAVE THE EFFECT OF CREATING AN ADDITIONAL OBLIGATION TO THE ONE ORIGINALLY INCURRED AND UNDER RULES OF APPROPRIATION CONSTRUCTION SUCH AMENDMENTS MAY ONLY BE DURING THE PERIOD FOR WHICH THE APPROPRIATION IS AVAILABLE FOR OBLIGATION. - THAT ARE UNOBLIGATED ON JUNE 30. TOGETHER WITH FUNDS WHICH ARE OBLIGATED ON JUNE 30. 1958 BUT SUBSEQUENTLY ARE RELEASED FROM OBLIGATION. THE SECTION PROVIDES THAT THE APPROPRIATION FOR ANY SUCH FISCAL YEAR SHALL NOT EXCEED $100 MILLION AND IS TO REMAIN AVAILABLE UNTIL JUNE 30. IF AND WHEN ANY SUCH OFFER IS ACCEPTED IN WRITING BY THE SPONSOR OR SPONSORS TO WHICH IT IS MADE.

B-136383, JUNE 27, 1958, 37 COMP. GEN. 861

APPROPRIATIONS - AVAILABILITY - AFTER EXPIRATION OF PERIOD OF AVAILABILITY - CONTRACT AMENDMENTS AMENDMENTS TO BE MADE, AFTER THE PERIOD FOR OBLIGATION OF FEDERAL AIRPORT APPROPRIATIONS HAS EXPIRED, TO GRANT AGREEMENTS TO INCREASE THE AMOUNT OF THE FEDERAL OBLIGATION BY NOT TO EXCEED 10 PERCENT AS PROVIDED BY THE ACT OF JULY 25, 1949, 49 U.S.C. 1111, WHICH WAS NOT A SELF-EXECUTING ACT NOR AN ACT WHICH OBLIGATED THE GOVERNMENT TO INCREASE THE AMOUNT OF ALL FEDERAL OBLIGATIONS, HAVE THE EFFECT OF CREATING AN ADDITIONAL OBLIGATION TO THE ONE ORIGINALLY INCURRED AND UNDER RULES OF APPROPRIATION CONSTRUCTION SUCH AMENDMENTS MAY ONLY BE DURING THE PERIOD FOR WHICH THE APPROPRIATION IS AVAILABLE FOR OBLIGATION; THEREFORE, UNOBLIGATED BALANCES IN APPROPRIATIONS WHICH EXPIRED ON JUNE 30, 1958, MAY NOT BE USED TO INCREASE THE MAXIMUM AMOUNTS ESTABLISHED IN GRANT AGREEMENTS BY AMENDMENTS MADE AFTER THAT DATE.

TO THE SECRETARY OF COMMERCE, JUNE 27, 1958:

YOUR LETTER OF JUNE 3, 1958, WITH ENCLOSURES, REQUESTS OUR DECISION AS TO WHETHER FUNDS APPROPRIATED FOR THE FEDERAL AIRPORT ACT, 60 STAT. 177, AS AMENDED, 49 U.S.C. 1101-1119--- AND ESTABLISHED IN THE ACCOUNT "137/81356 GRANTS-IN-AID FOR AIRPORTS, CIVIL AERONAUTICS ADMINISTRATION, 1947-1958"-- - THAT ARE UNOBLIGATED ON JUNE 30, 1958, TOGETHER WITH FUNDS WHICH ARE OBLIGATED ON JUNE 30, 1958 BUT SUBSEQUENTLY ARE RELEASED FROM OBLIGATION, MAY BE UTILIZED TO INCREASE THE MAXIMUM DOLLAR AMOUNTS SET OUT IN GRANT AGREEMENTS ENTERED INTO PRIOR TO JUNE 30, 1958, BY AMENDMENTS AFTER THAT DATE IN AN AMOUNT NOT TO EXCEED TEN PERCENT OF THE INITIAL MAXIMUM DOLLAR OBLIGATION.

THE FEDERAL AIRPORT ACT PROVIDES A PROGRAM FOR FEDERAL AID FOR PUBLIC AIRPORT DEVELOPMENT BY MEANS OF GRANTS OF FEDERAL FUNDS ON A MATCHING BASIS TO CERTAIN QUALIFIED SPONSORS UP TO VARYING MAXIMUM PERCENTAGES OF THE ALLOWABLE PROJECT COSTS. SECTION 5 (B) OF THE ACT, 49 U.S.C. 1104 (B), AUTHORIZES ANNUAL APPROPRIATIONS OVER A PERIOD OF TWELVE YEARS, BEGINNING WITH THE FISCAL YEAR ENDING JUNE 30, 1947. THE SECTION PROVIDES THAT THE APPROPRIATION FOR ANY SUCH FISCAL YEAR SHALL NOT EXCEED $100 MILLION AND IS TO REMAIN AVAILABLE UNTIL JUNE 30, 1958, UNLESS SOONER EXPENDED. SECTION 12 OF THE ORIGINAL ACT, 60 STAT. 177, 49 U.S.C. 1111, RELATING TO GRANT AGREEMENTS BETWEEN THE UNITED STATES AND SPONSORS OF PROJECTS PROVIDES IN MATERIAL PART:

* * * EACH SUCH OFFER SHALL STATE A DEFINITE AMOUNT AS THE MAXIMUM OBLIGATION OF THE UNITED STATES PAYABLE FROM FUNDS APPROPRIATED UNDER AUTHORITY OF THIS ACT, AND SHALL STIPULATE AUTHORITY OF THIS ACT, AND STIPULATE THE OBLIGATIONS TO BE ASSUMED BY THE SPONSOR OR SPONSORS OF THE PROJECT. IF AND WHEN ANY SUCH OFFER IS ACCEPTED IN WRITING BY THE SPONSOR OR SPONSORS TO WHICH IT IS MADE, SUCH OFFER AND ACCEPTANCE SHALL COMPRISE A GRANT AGREEMENT CONSTITUTING AN OBLIGATION OF THE UNITED STATES AND OF THE SPONSOR OR SPONSORS SO ACCEPTING, AND THEREAFTER THE AMOUNT STATED IN THE ACCEPTED OFFER AS THE MAXIMUM OBLIGATION OF THE UNITED STATES UNDER SUCH GRANT AGREEMENT SHALL NOT BE INCREASED. * * *

THE ACT APPROVED JULY 25, 1949, 63 STAT. 478, 49 U.S.C. 1111, AMENDED THE LAST ABOVE-QUOTED SENTENCE OF THE PROVISION BY PROVIDING THAT THE OBLIGATION OF THE UNITED STATES UNDER A GRANT AGREEMENT SHALL NOT BE INCREASED "BY MORE THAN 10 PERCENTUM.'

YOU STATE IT HAS BEEN THE EXPERIENCE OF THE CIVIL AERONAUTICS ADMINISTRATION IN ADMINISTERING THE PROGRAM THAT IN SOME CASES THE FEDERAL SHARE OF THE ALLOWABLE PROJECT COSTS HAS BEEN LESS THAN THE MAXIMUM OBLIGATION EXPRESSED IN THE AGREEMENT, AND THAT THE FUNDS THUS RELEASED FROM THE OBLIGATION HAVE BEEN AVAILABLE FOR OTHER PROJECTS. IN OTHER CASES, THE FEDERAL SHARE OF THE ALLOWABLE PROJECT COST EXCEEDED THE MAXIMUM OBLIGATION. YOU POINT OUT THAT IN THE LATTER SITUATION THE SPONSOR HAD TO ABSORB ALL OF SUCH OVERRUN UNTIL ENACTMENT OF THE CITED ACT OF JUNE 25, 1949, WHEREIN THE ADMINISTRATION WAS GIVEN AUTHORITY TO INCREASE THE MAXIMUM OBLIGATION OF THE UNITED STATES IN AN AMOUNT NOT IN EXCESS OF 10 PERCENT.

YOU FURTHER STATE THAT WHILE IS IS NOT POSSIBLE AT THIS TIME TO CITE A SPECIFIC EXAMPLE OF A GRANT AGREEMENT WHERE THERE WILL BE AFTER JUNE 30, 1958, EITHER AN UNDERRUN RESULTING IN A SURPLUS OR AN OVERRUN RESULTING IN A DEFICIENCY, EXPERIENCE INDICATES THAT THERE WILL BE A NUMBER OF EXAMPLES OF EACH TYPE. IN SUPPORT OF THE PROPOSED UTILIZATION OF THE UNOBLIGATED APPROPRIATION BALANCE AFTER JUNE 30, 1958, YOU REFER TO THE STATEMENTS CONTAINED IN HOUSE REPORT NO. 1006, 81ST CONGRESS, ON S. 1280, WHICH BECAME THE ACT OF JUNE 25, 1949, RECOGNIZING A MARGIN OF ERROR IN ENGINEERING COST ESTIMATES AS THE BASIS FOR PERMITTING THE MAXIMUM OBLIGATION OF THE UNITED STATES UNDER A GRANT AGREEMENT TO BE INCREASED BY NOT MORE THAN 10 PERCENTUM. ALSO, THERE IS CITED THE CASE OF UNITED STATES V. ANDERSON, 194 U.S. 394, WHEREIN THERE WAS APPLIED THE DOCTRINE OF ,RELATION BACK" AND SUGGESTING IT CAN THEREFROM BE ARGUED THAT AN AMENDMENT TO A GRANT AGREEMENT EXECUTED AFTER JUNE 30, 1958, INCREASING THE MAXIMUM OBLIGATION OF THE UNITED STATES BY NOT MORE THAN 10 PERCENT, DATES BACK TO THE DATE OF EXECUTION OF THE ORIGINAL AGREEMENT AND, THEREFORE, FUNDS ARE NOT IN FACT OBLIGATED AFTER JUNE 30, 1958.

SECTION 1 OF THE ACT OF JULY 6, 1949, 63 STAT. 407, 31 U.S.C. 712A, PROVIDES:

EXCEPT AS OTHERWISE PROVIDED BY LAW, ALL BALANCES OF APPROPRIATIONS CONTAINED IN THE ANNUAL APPROPRIATION BILLS AND MADE SPECIFICALLY FOR THE SERVICE OF ANY FISCAL YEAR SHALL ONLY BE APPLIED TO THE PAYMENT OF EXPENSES PROPERLY INCURRED DURING THAT YEAR, OR TO THE FULFILLMENT OF CONTRACTS PROPERLY MADE WITHIN THAT YEAR. AND SECTION 1311 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 68 STAT. 830, 31 U.S.C., SUPP. V, 200, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

SEC 1311. (A) AFTER THE DATE OF ENACTMENT HEREOF NO AMOUNT SHALL BE RECORDED AS AN OBLIGATION OF THE GOVERNMENT OF THE UNITED STATES UNLESS IT IS SUPPORTED BY DOCUMENTARY EVIDENCE OF---

(1) A BINDING AGREEMENT IN WRITING BETWEEN THE PARTIES THERETO, INCLUDING GOVERNMENT AGENCIES, IN A MANNER AND FORM AND FOR A PURPOSE AUTHORIZED BY LAW, EXECUTED BEFORE THE EXPIRATION OF THE PERIOD OF AVAILABILITY FOR OBLIGATION OF THE APPROPRIATION OR FUND CONCERNED FOR SPECIFIC GOODS TO BE DELIVERED, REAL PROPERTY TO BE PURCHASED OR LEASED, OR WORK OR SERVICES TO BE PERFORMED; OR

(5) A GRANT OR SUBSIDY PAYABLE (I) FROM APPROPRIATIONS MADE FOR PAYMENT OF OR CONTRIBUTIONS TOWARD, SUMS REQUIRED TO BE PAID IN SPECIFIC AMOUNTS FIXED BY LAW OR IN ACCORD WITH FORMULAE PRESCRIBED BY LAW, OR (II) PURSUANT TO AGREEMENT AUTHORIZED BY, OR PLANS APPROVED IN ACCORD WITH AND AUTHORIZED BY, LAW; OR

(8) ANY OTHER LEGAL LIABILITY OF THE UNITED STATES AGAINST AN APPROPRIATION OR FUND LEGALLY AVAILABLE THEREFOR.

THE APPROPRIATION HERE INVOLVED IS A MULTIPLE YEAR APPROPRIATION AVAILABLE FOR INCURRING OBLIGATIONS FOR A DEFINITE PERIOD IN EXCESS OF ONE YEAR. THE APPROPRIATION IS BY ITS TERMS MADE AVAILABLE UNTIL JUNE 30, 1958, UNLESS SOONER EXPENDED, AND THE GENERAL RULE IS THAT THE AVAILABILITY PERIOD RELATES TO THE AUTHORITY TO OBLIGATE THE APPROPRIATION. SEE 16 COMP. GEN. 205, 18 ID. 969; 23 ID. 862. THUS, THE EXPIRATION AVAILABILITY DATE FOR OBLIGATING THE APPROPRIATION IS JUNE 30, 1958.

IT HAS BEEN HELD THAT AN APPROPRIATION IS OBLIGATED*G*TED WHEN A DEFINITE COMMITMENT IS MADE OR A LEGAL LIABILITY INCURRED TO PAY FUNDS FROM SUCH APPROPRIATION. 18 COMP. GEN. 363. MOREOVER, UNDER THE PROVISIONS OF 31 U.S.C. 712A, QUOTED ABOVE, IN ORDER TO JUSTIFY CHARGING AN APPROPRIATION AFTER ITS PERIOD OF AVAILABILITY FOR OBLIGATING PURPOSES HAS EXPIRED, IT IS REQUISITE THAT SOME ACTION CREATING A DEFINITE LIABILITY AGAINST THE APPROPRIATION MUST HAVE BEEN TAKEN WHILE IT WAS AVAILABLE FOR THE INCURRING OF OBLIGATIONS. SEE 27 COMP. GEN. 711, 714.

UNDER THE TERMS OF THE BASIC ACT, THE EXECUTION OF A GRANT AGREEMENT GAVE RISE TO A DEFINITE AND MAXIMUM OBLIGATION OF THE UNITED STATES FOR THE PAYMENT OF ALLOWABLE PROJECT COSTS. THE ACT OF JULY 25, 1949, DOES NOT PROVIDE FOR INCREASING THE AMOUNT OF ALL GOVERNMENT OBLIGATIONS UNDER SUCH GRANT AGREEMENTS BY 10 PERCENT AND IT CREATED NO LEGAL LIABILITY AGAINST THE GOVERNMENT THEREFOR. IT IS NOT SELF-EXECUTING BUT MERELY PERMITS THE CIVIL AERONAUTICS ADMINISTRATION, WHERE PROPER, TO AMEND THE GRANT AGREEMENT SO AS TO INCREASE THE MAXIMUM FEDERAL OBLIGATION BY NOT MORE THAN 10 PERCENT. SUCH AMENDMENT OF A GRANT AGREEMENT HAS THE EFFECT OF CREATING AN ADDITIONAL OBLIGATION TO THE LIABILITY ORIGINALLY INCURRED FOR THE PAYMENT OF PROJECT COSTS AND, MEASURED BY THE FOREGOING RULES, MAY BE ACCOMPLISHED ONLY DURING THE PERIOD FOR WHICH THE APPROPRIATION IS AVAILABLE FOR OBLIGATION.

REGARDING APPLICATION OF THE DOCTRINE OF "RELATION BACK" TO THE SITUATION HERE UNDER CONSIDERATION, THE COURTS HAVE HELD THAT WHEN IT IS INVOKED, IT MUST BE BASED ON SOME ANTECEDENT LAWFUL RIGHT. THE SPONSORS, HAVING NO LEGAL RIGHT UNDER THE ORIGINAL GRANT AGREEMENT OR OTHERWISE TO COMPEL THE EXECUTION OF AN AMENDMENT UNDER THE ACT JULY 25, 1949, TO ALLOW AN INCREASE IN THE MAXIMUM AMOUNTS PAYABLE UNDER THE GRANT AGREEMENT, AN ESSENTIAL ELEMENT OF THE DOCTRINE IS LACKING AND, THEREFORE, IT HAS NO APPLICATION HERE. SEE WINDY V. NORTH STAR FARMERS MUT. INS. CO., 43 N.W.2D 99, 102; WILLETT V. JORDAN, 35 P. (2D) 1025.

IN VIEW OF THE FOREGOING, WE CONCLUDE THAT THE UNOBLIGATED BALANCE OF FUNDS IN THE APPROPRIATION "137/81356" ON JUNE 30, 1958, MAY NOT LEGALLY BE USED TO INCREASE THE MAXIMUM DOLLAR AMOUNTS SET OUT IN GRANT AGREEMENTS BY AMENDMENTS EXECUTED AFTER THAT DATE.

THE ANSWER, SET OUT ABOVE, TO THE GENERAL QUESTION RENDERS UNNECESSARY CONSIDERATION OF THE SUBSIDIARY QUESTION POSED BY YOU.