B-143933, DECEMBER 2, 1960, 40 COMP. GEN. 332

B-143933: Dec 2, 1960

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WAS RECOGNIZED IN CONGRESSIONAL COMMITTEE REPORTS WHEN THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT. WAS ENACTED. IS NOT VIEWED AS LIMITING THE CLEAR STATUTORY AUTHORITY VESTED IN THE PRESIDENT AND THE HEADS OF DEPARTMENTS WITH APPROVAL OF THE PRESIDENT TO DETERMINE THE MOST APPROPRIATE BASIS FOR GRANTING SUCH ALLOWANCES ON A FLAT RATE BASIS WHEN SUCH BASIS WOULD BETTER SERVE THE INTERESTS OF THE UNITED STATES IS WITHIN THE AUTHORITY OF THE SECRETARY OF STATE. FOR MANY YEARS THE REGULATIONS HAVE PROVIDED FOR THE GRANTING OF QUARTERS ALLOWANCES UPON THE BASIS OF ACTUAL EXPENDITURES BUT SUBJECT TO A SPECIFIED MAXIMUM LIMITATION. EMPLOYEES OCCUPYING PERMANENT QUARTERS AT THE TIME THE NEW REGULATIONS BECOME EFFECTIVE WILL BE "FROZEN" AT THEIR CURRENT ALLOWANCE RATES.

B-143933, DECEMBER 2, 1960, 40 COMP. GEN. 332

CIVILIAN PERSONNEL - OVERSEAS - QUARTERS ALLOWANCES - ACTUAL EXPENSE V. FLAT RATE BASIS THE FACT THAT THE LONG-CONTINUED PRACTICE OF PROVIDING QUARTERS ALLOWANCES TO CIVILIANS STATIONED IN FOREIGN AREAS ON AN ACTUAL EXPENSE BASIS, BUT SUBJECT TO A SPECIFIED MAXIMUM LIMITATION, WAS RECOGNIZED IN CONGRESSIONAL COMMITTEE REPORTS WHEN THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT, 74 STAT. 792 ( PUBLIC LAW 86-707, APPROVED SEPTEMBER 6, 1960), WAS ENACTED, IS NOT VIEWED AS LIMITING THE CLEAR STATUTORY AUTHORITY VESTED IN THE PRESIDENT AND THE HEADS OF DEPARTMENTS WITH APPROVAL OF THE PRESIDENT TO DETERMINE THE MOST APPROPRIATE BASIS FOR GRANTING SUCH ALLOWANCES ON A FLAT RATE BASIS WHEN SUCH BASIS WOULD BETTER SERVE THE INTERESTS OF THE UNITED STATES IS WITHIN THE AUTHORITY OF THE SECRETARY OF STATE.

TO THE SECRETARY OF STATE, DECEMBER 2, 1960:

ON NOVEMBER 15, 1960, YOUR ACTING ASSISTANT SECRETARY FOR ADMINISTRATION REQUESTED OUR DECISION CONCERNING YOUR AUTHORITY TO PROMULGATE A REGULATION ESTABLISHING A NEW BASIS FOR THE GRANTING OF QUARTERS ALLOWANCES TO CIVILIANS STATIONED IN FOREIGN AREAS.

FOR MANY YEARS THE REGULATIONS HAVE PROVIDED FOR THE GRANTING OF QUARTERS ALLOWANCES UPON THE BASIS OF ACTUAL EXPENDITURES BUT SUBJECT TO A SPECIFIED MAXIMUM LIMITATION. IN GENERAL, THE PROPOSED NEW REGULATION WOULD AUTHORIZE, SUBJECT TO SPECIFIED CONDITIONS, THE PAYMENT OF A QUARTERS ALLOWANCE UPON A FLAT RATE BASIS WITHOUT REGARD TO THE ACTUAL EXPENDITURE OF AN EMPLOYEE FOR QUARTERS. IN THAT CONNECTION YOUR ACTING ASSISTANT SECRETARY SAYS THAT IN ORDER TO PREVENT WINDFALL INCREASES FOR SOME EMPLOYEES AND DECREASES FOR OTHERS, EMPLOYEES OCCUPYING PERMANENT QUARTERS AT THE TIME THE NEW REGULATIONS BECOME EFFECTIVE WILL BE "FROZEN" AT THEIR CURRENT ALLOWANCE RATES. THE FLAT RATES WILL APPLY ONLY TO EMPLOYEES LEASING THEIR QUARTERS AFTER THE REGULATIONS ARE CHANGED. THE NEW FLAT RATES WILL BE SET AT AN AMOUNT BELOW THE EXISTING ALLOWANCE CEILINGS. THIS IT IS SAID WILL ENSURE THAT NEW ARRIVALS WILL RECEIVE ABOUT WHAT THE ALLOWANCE PAYMENTS HAVE AVERAGED IN THE PAST AND THUS PREVENT AN INCREASE IN THE GOVERNMENT'S COSTS.

PRIOR TO ENACTMENT OF THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT, PUBLIC LAW 86-707, APPROVED SEPTEMBER 6, 1960, 74 STAT. 792, THE AUTHORITY TO GRANT QUARTERS ALLOWANCES WAS CONTAINED IN SECTION 901 OF THE FOREIGN SERVICE ACT OF 1946, AS AMENDED, 22 U.S.C. 1131, AND THE ACT OF JUNE 26, 1930, 46 STAT. 818, 5 U.S.C. 118A. SECTION 901 OF THE FOREIGN SERVICE ACT OF 1946, PRIOR TO THE AMENDMENT MADE BY PUBLIC LAW 86-707 IS, IN PART, AS FOLLOWS:

IN ACCORDANCE WITH SUCH REGULATIONS AS THE PRESIDENT MAY PRESCRIBE AND NOTWITHSTANDING THE PROVISIONS OF SECTION 70 OF TITLE 5, THE SECRETARY IS AUTHORIZED TO GRANT TO ANY OFFICER OR EMPLOYEE OF THE SERVICE WHO IS A CITIZEN OF THE UNITED STATES---

(1) ALLOWANCES, WHEREVER GOVERNMENT OWNED OR RENTED QUARTERS ARE NOT AVAILABLE, FOR LIVING QUARTERS, HEAT, LIGHT, FUEL, GAS, AND ELECTRICITY, *

THE ACT OF JUNE 26, 1930, PRIOR TO ITS AMENDMENT BY PUBLIC LAW 86 707 IS, IN PART, AS FOLLOWS:

UNDER SUCH REGULATIONS AS THE HEADS OF THE RESPECTIVE DEPARTMENTS CONCERNED MAY PRESCRIBE AND THE PRESIDENT APPROVE, CIVILIAN OFFICERS AND EMPLOYEES OF THE GOVERNMENT HAVING PERMANENT STATION IN A FOREIGN COUNTRY MAY BE FURNISHED, WITHOUT COST TO THEM, LIVING QUARTERS, INCLUDING HEAT, FUEL, AND LIGHT, IN GOVERNMENT-OWNED OR RENTED BUILDINGS AND, WHERE SUCH QUARTERS ARE NOT AVAILABLE, MAY BE GRANTED AN ALLOWANCE FOR LIVING QUARTERS, INCLUDING HEAT, FUEL AND LIGHT * * *.

SECTION 211 OF PUBLIC LAW 86-707 IS, IN PART, AS FOLLOWS:

SEC. 211. WHENEVER GOVERNMENT-OWNED OR GOVERNMENT-RENTED QUARTERS ARE NOT PROVIDED WITHOUT CHARGE FOR AN EMPLOYEE IN A FOREIGN AREA, ONE OR MORE OF THE FOLLOWING QUARTERS ALLOWANCES MAY BE GRANTED TO SUCH EMPLOYEE WHERE APPLICABLE:

(2) A LIVING QUARTERS ALLOWANCE FOR RENT, HEAT, LIGHT, FUEL, GAS, ELECTRICITY, AND WATER, * * *.

SENATE REPORT NO. 1647, JUNE 22, 1960, STATES ON PAGE 2 THAT THE BILL ( H.R. 7758 ENACTED AS PUBLIC LAW 86-707) CONTINUES FOR ALL AGENCIES THE PRESENT AUTHORITY TO PROVIDE OVERSEAS QUARTERS OR GRANT ALLOWANCES IN LIEU OF GOVERNMENT QUARTERS. A SIMILAR STATEMENT APPEARS ON PAGE 11 OF HOUSE REPORT NO. 902, AUGUST 14, 1959.

SECTION 203 OF THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT PROVIDES THAT THE ALLOWANCES AUTHORIZED BY TITLE II SHALL BE PAID IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE PRESIDENT. HOWEVER, THE PRESIDENT HAS NOT YET ISSUED AN EXECUTIVE ORDER PROMULGATING REGULATIONS UNDER SUCH TITLE OR DELEGATING THE REGULATORY AUTHORITY VESTED IN HIM UNDER SUCH TITLE TO SOME OTHER OFFICER. HENCE, PAYMENT OF QUARTERS ALLOWANCES WOULD, FOR THE TIME BEING, CONTINUE TO BE MADE UNDER LAWS IN EFFECT IMMEDIATELY PRIOR TO THE ENACTMENT OF THE OVERSEAS DIFFERENTIAL AND ALLOWANCES ACT AND UNDER REGULATIONS ISSUED UNDER THE AUTHORITY OF SUCH LAWS. SEE SECTION 522 OF THAT ACT, 74 STAT. 802 ( PUBLIC LAW 86-707).

UNDER THE ACT OF JUNE 26, 1930, AND SECTION 901 OF THE FOREIGN SERVICE ACT OF 1946, AS WELL AS UNDER SECTION 211 OF PUBLIC LAW 86-707, 74 STAT. 793, THE PRESIDENT AND IN THE CASE OF THE 1930 ACT THE HEADS OF THE DEPARTMENTS WITH APPROVAL OF THE PRESIDENT ARE VESTED WITH THE DISCRETION TO DETERMINE THE BASIS FOR GRANTING QUARTERS ALLOWANCES.

THE SOLE DOUBT CONCERNING THE MATTER ARISES FROM THE FACT THAT THE APPLICABLE REGULATIONS FOR MANY YEARS HAVE PROVIDED THAT QUARTERS ALLOWANCES WOULD BE PAID UPON AN ACTUAL EXPENSE BASIS BUT NOT TO EXCEED A SPECIFIED MAXIMUM. THE FACT THAT CONGRESS RECOGNIZED THAT PRACTICE AT THE TIME OF ITS CONSIDERATION OF THE LEGISLATION ENACTED AS PUBLIC LAW 86-707, IS EVIDENCED CLEARLY BY THE STATEMENT APPEARING ON PAGE 2 OF S. REPT. NO. 1647, JUNE 22, 1960, TO THE EFFECT THAT THE QUARTERS ALLOWANCE PRESENTLY IS PAID AS A REIMBURSEMENT OF ALLOWABLE COSTS INCURRED UP TO ESTABLISHING CEILINGS.

DOES THE LONG CONTINUED PRACTICE AND CONGRESSIONAL RECOGNITION OF THAT PRACTICE HAVE THE EFFECT OF LIMITING THE AUTHORITY OF THE PRESIDENT OR THE HEADS OF THE DEPARTMENTS WITH THE APPROVAL OF THE PRESIDENT--- SO FAR AS CONCERNS THE ACT OF JUNE 26, 1930--- TO SELECT SOME DIFFERENT BASIS FOR THE GRANTING OF QUARTERS ALLOWANCES? WE DO NOT CONSIDER THAT IT NECESSARILY DOES. THE LANGUAGE OF THE STATUTES IS CLEAR. THEY LEAVE TO THE PRESIDENT AND THE DEPARTMENT HEADS THE AUTHORITY TO DETERMINE THE MOST APPROPRIATE BASIS FOR THE GRANTING OF QUARTERS ALLOWANCES. THE STATEMENT IN THE SENATE REPORT MERELY POINTS OUT THE BASES FOR THE GRANTING OF QUARTERS ALLOWANCES THAT WERE IN EFFECT AT THAT TIME; AND WE DO NOT VIEW IT AS A LIMITATION UPON THE AUTHORITY OF THE PRESIDENT OR THE HEADS OF THE DEPARTMENTS WITH THE APPROVAL OF THE PRESIDENT TO PROVIDE A DIFFERENT BASIS IF THEY CONSIDERED THAT A DIFFERENT BASIS WOULD BETTER SERVE THE INTERESTS OF THE GOVERNMENT. THIS VIEW IS SUPPORTED BY THE FACT THAT FROM JULY 1, 1931, TO THE EFFECTIVE DATE OF REGULATIONS PROMULGATED BY THE DEPARTMENT OF STATE UNDER EXECUTIVE ORDER NO. 10011 OF OCTOBER 22, 1948, THE ACT OF JUNE 26, 1930, AND REGULATIONS ISSUED BY THE DIRECTOR, BUREAU OF THE BUDGET, WITH THE APPROVAL OF THE PRESIDENT, CONSTITUTED THE AUTHORITY FOR PAYMENT OF QUARTERS ALLOWANCES TO PERSONNEL (INCLUDING FOREIGN SERVICE PERSONNEL) STATIONED IN FOREIGN COUNTRIES. UNDER THOSE REGULATIONS PAYMENT OF THE QUARTERS ALLOWANCE WAS AUTHORIZED TO BE MADE UPON A FLAT RATE BASIS.

THE ACTING ASSISTANT SECRETARY'S LETTER STATES THAT IN THE ADMINISTRATION OF THE PRESENT SYSTEM THE DEPARTMENT HAS BEEN CONCERNED ABOUT THE WORLDWIDE TENDENCY FOR RENTAL RATES CHARGED AMERICANS TO SPIRAL UPWARDS. THIS HAS BEEN ATTRIBUTED PARTIALLY TO THE LACK OF INCENTIVE UNDER THE PRESENT SYSTEM FOR EMPLOYEES TO LOOK FOR AND OBTAIN QUARTERS COSTING LESS THAN THE MAXIMUM ALLOWANCE. THE PROPOSED REGULATION IS DESIGNED TO PROVIDE SUCH INCENTIVE BUT AT THE SAME TIME TO GUARD AGAINST EMPLOYEES OCCUPYING SUBSTANDARD QUARTERS TO SAVE SUBSTANTIAL AMOUNTS OF THEIR ALLOWANCE. WHILE WE DO NOT KNOW WHETHER THE PROPOSED REGULATION WILL PRODUCE THE DESIRED RESULTS, OUR OPINION IS THAT IT IS WITHIN YOUR AUTHORITY TO PROMULGATE A REGULATION AUTHORIZING PAYMENT OF A QUARTERS ALLOWANCE ON A FLAT RATE BASIS.