B-202975(1),L/M, NOV 3, 1981

B-202975(1),L/M: Nov 3, 1981

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WHICH ARE RECIPIENTS OF FEDERAL GRANT FUNDS. HAVE EXPENDED ANY OF THESE FUNDS IN VIOLATION OF AN APPROPRIATION RESTRICTION PROHIBITING THEIR USE FOR LOBBYING ACTIVITIES. COMMUNITY REDEVELOPMENT AGENCY THE CRA WAS ESTABLISHED BY THE CITY OF LOS ANGELES TO REVITALIZE PARTS OF THE CITY. IT IS GOVERNED BY A BOARD OF COMMISSIONERS APPOINTED BY THE MAYOR AND CONFIRMED BY THE CITY COUNCIL. ITS PRIMARY SOURCE OF FUNDING STEMS FROM A REAL PROPERTY TAX INCREMENT THAT REPRESENTS THE DIFFERENCE BETWEEN CURRENT PROPERTY TAXES AND THE PROPERTY TAXES THAT WERE IN EFFECT WHEN PARCELS WERE DESIGNATED FOR REDEVELOPMENT SEVERAL YEARS AGO. FEDERAL FUNDING IS DERIVED FROM GRANTS FROM THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND THE URBAN MASS TRANSIT ADMINISTRATION OF THE DEPARTMENT OF TRANSPORTATION.

B-202975(1),L/M, NOV 3, 1981

DIGEST: 1. REPRESENTATIVE BOBBI FIEDLER REQUESTED GAO TO DETERMINE IF TWO LOS ANGELES BASED FEDERAL GRANT FUND RECIPIENTS, THE LOS ANGELES DOWNTOWN PEOPLE MOVER AUTHORITY (DPMA) AND THE LOS ANGELES COMMUNITY REDEVELOPMENT AGENCY (CRA), HAD USED THEIR FEDERAL FUNDS TO HIRE LAW FIRMS TO LOBBY FOR A CONTINUATION OF FEDERAL FUNDING FOR THEIR PROGRAMS IN VIOLATION OF ANTILOBBYING STATUTORY RESTRICTIONS. GAO EXAMINATION REVEALED THAT CPA USED NONFEDERAL FUNDS TO HIRE A LAW FIRM FOR ITS PROGRAM WHILE DPMA USED FEDERAL FUNDS TO HIRE A LAW FIRM THAT DID NOT ENGAGE IN LOBBYING. HENCE, NO VIOLATION OF THE ANTILOBBYING APPROPRIATION RESTRICTION OCCURRED INCIDENT TO THE LAW FIRMS' CONTRACTS. 2. REPRESENTATIVE BOBBI FIEDLER REQUESTED GAO TO RULE ON WHETHER A NEWSLETTER PREPARED AND DISSEMINATED BY THE LOS ANGELES DOWNTOWN PEOPLE MOVER AUTHORITY (DPMA), A SUBGRANTEE OF THE URBAN MASS TRANSPORTATION ADMINISTRATION, VIOLATED THE SECTION 607(A) APPROPRIATION RESTRICTION IN THE TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT APPROPRIATION ACT THAT RESTRICTS THE USE OF FEDERAL FUNDS FOR LOBBYING. WE CONCLUDED THAT FEDERAL FUNDS HAD APPARENTLY BEEN USED IN VIOLATION OF SECTION 607(A), SINCE THE NEWSLETTER CONSTITUTED LOBBYING BY ENCOURAGING MEMBERS OF THE PUBLIC TO CONTACT MEMBERS OF CONGRESS AND URGE SUPPORT FOR A CONTINUATION OF FEDERAL FUNDING FOR THE PEOPLE MOVER PROGRAM.

BOBBI FIEDLER, HOUSE OF REPRESENTATIVES:

WE REFER TO YOUR LETTERS OF APRIL 15, AND MAY 19, 1981, REQUESTING THIS OFFICE TO DETERMINE WHETHER THE LOS ANGELES COMMUNITY REDEVELOPMENT AGENCY (CRA) AND THE LOS ANGELES DOWNTOWN PEOPLE MOVER AUTHORITY (DPMA), WHICH ARE RECIPIENTS OF FEDERAL GRANT FUNDS, HAVE EXPENDED ANY OF THESE FUNDS IN VIOLATION OF AN APPROPRIATION RESTRICTION PROHIBITING THEIR USE FOR LOBBYING ACTIVITIES. YOU ALSO ASKED US TO INVESTIGATE WHETHER CRA OR DPMA HAD USED FEDERAL FUNDS TO RETAIN THE SERVICES OF LAW FIRMS FOR THE PURPOSE OF ENGAGING IN EFFORTS TO INFLUENCE APPROPRIATION MEASURES AND OTHER LEGISLATION PENDING BEFORE THE CONGRESS.

OUR REVIEW OF THE ACCOUNTS OF THESE RECIPIENTS DISCLOSED NO VIOLATION OF FEDERAL STATUTES IN THE RETAINING OF THE LAW FIRMS. HOWEVER, DPMA APPARENTLY USED FEDERAL GRANT FUNDS IN VIOLATION OF AN APPROPRIATION ACT RESTRICTION TO PREPARE AND DISSEMINATE A NEWSLETTER ENCOURAGING READERS TO WRITE THEIR CONGRESSMEN AND SENATORS IN SUPPORT OF A CONTINUATION OF FEDERAL FUNDING FOR THE LOS ANGELES PEOPLE MOVER PROJECT.

COMMUNITY REDEVELOPMENT AGENCY

THE CRA WAS ESTABLISHED BY THE CITY OF LOS ANGELES TO REVITALIZE PARTS OF THE CITY. IT IS GOVERNED BY A BOARD OF COMMISSIONERS APPOINTED BY THE MAYOR AND CONFIRMED BY THE CITY COUNCIL. ITS PRIMARY SOURCE OF FUNDING STEMS FROM A REAL PROPERTY TAX INCREMENT THAT REPRESENTS THE DIFFERENCE BETWEEN CURRENT PROPERTY TAXES AND THE PROPERTY TAXES THAT WERE IN EFFECT WHEN PARCELS WERE DESIGNATED FOR REDEVELOPMENT SEVERAL YEARS AGO. OTHER FUNDING COMES FROM GRANTS FROM LOCAL, STATE AND FEDERAL GOVERNMENTS. FEDERAL FUNDING IS DERIVED FROM GRANTS FROM THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND THE URBAN MASS TRANSIT ADMINISTRATION OF THE DEPARTMENT OF TRANSPORTATION.

SHORTLY AFTER THE REAGAN ADMINISTRATION CAME TO POWER, IT BECAME APPARENT FROM MEDIA REPORTS THAT CONTINUED FEDERAL FUNDING FOR THE DOWNTOWN PEOPLE MOVER WAS IN JEOPARDY. CRA'S PLAN TO REBUILD THE DOWNTOWN PORTION OF THE CITY WAS IN PART BASED ON DPMA COMPLETING THE PEOPLE MOVER AS ORIGINALLY SCHEDULED. FEARING THAT THE PROGRAM MIGHT BE CANCELED, CRA OFFICIALS, WITH ITS BOARD'S APPROVAL, DECIDED TO RETAIN THE SERVICES OF A LAW FIRM. ON APRIL 23, 1981, A CONTRACT IN THE AMOUNT OF $18,000 WAS LET WITH THE FIRM OF MANATT, PHELPS, ROTHENBERG AND TUNNEY FOR "GENERAL FINANCIAL PLANNING" WITH THE PURPOSE OF DETERMINING ALTERNATIVE FINANCING ARRANGEMENTS FOR THE PEOPLE MOVER IF THE FEDERAL GOVERNMENT CEASED TO FUND THE PROJECT.

AN EXAMINATION OF CRA ACCOUNTING RECORDS AND THE CONTRACT DOCUMENT SUBSTANTIATE THE CLAIM OF CRA OFFICIALS THAT THE SOURCE OF THE ENTIRE $18,000 CONTRACT AMOUNT WAS DERIVED FROM THE LOCAL REAL PROPERTY TAX INCREMENT. SINCE NO FEDERAL FUNDS WERE INVOLVED, WE HAVE NO REASON TO QUESTION THE PROPRIETY OF THE EXPENDITURE.

DOWNTOWN PEOPLE MOVER AUTHORITY

THE DPMA WAS ESTABLISHED BY THE CITY OF LOS ANGELES AROUND MAY 1980 AND GIVEN THE MISSION OF CONSTRUCTING A DOWNTOWN TRANSPORTATION SYSTEM. IT IS GOVERNED BY A BOARD OF COMMISSIONERS APPOINTED BY THE MAYOR AND CONFIRMED BY THE CITY COUNCIL. THE FEDERAL GOVERNMENT FUNDS ABOUT EIGHTY PERCENT OF DPMA'S BUDGET PRIMARILY THROUGH URBAN MASS TRANSPORTATION ADMINISTRATION (UMTA) GRANTS, WHICH ARE CHANNELED THROUGH THE CITY OF LOS ANGELES. FEDERAL FUNDS ARE GIVEN DIRECTLY TO THE AGENCY. THE REMAINING TWENTY PERCENT COMES FROM STATE AND LOCAL GOVERNMENTS.

NOT LONG AFTER DPMA WAS ESTABLISHED, IT LET A CONTRACT WITH THE LAW FIRM OF LAWLER, FELIX AND HALL FOR GENERAL LEGAL SERVICES FOR THE AUTHORITY. THIS FIRM HAS SERVED AS DPMA'S GENERAL COUNSEL UNTIL THE PRESENT DATE. APRIL 1981, AT ABOUT THE SAME TIME CRA LET ITS CONTRACT WITH THE MANATT LAW FIRM, DPMA EXTENDED ITS CONTRACT WITH THE LAWLER LAW FIRM FOR THE PERIOD APRIL 30 TO JUNE 30, 1981 AT THE COST OF $79,000. THE AUTHORITY STATES THAT THESE FUNDS PROBABLY WERE DERIVED FROM FEDERAL SOURCES.

OUR REVIEW OF THE CONTRACT PERFORMANCE REVEALS THAT THE LAWLER FIRM HAS PERFORMED SUCH TASKS AS THE PREPARATION OF PROCUREMENT REGULATIONS FOR THE AUTHORITY AND REGULATIONS ESTABLISHING A CODE OF ETHICS FOR DPMA BOARD MEMBERS. THE RECORD OF BILLINGS UNDER THE CONTRACT DID NOT DISCLOSE ANY ENTRIES THAT COULD BE CONSTRUED AS LOBBYING ACTIVITIES. THE CONTRACT AND ITS AMENDMENTS CONTAINED NO PROVISIONS THAT WOULD SUGGEST THE LAWLER FIRM WAS OBLIGATED TO PERFORM LOBBYING OR SIMILAR DUTIES. UNDER PROVISIONS OF FEDERAL PROCUREMENT REGULATIONS GOVERNING GRANTS TO STATE AND LOCAL GOVERNMENT AGENCIES CONTAINED IN 41 CFR SEC. 1-15.711-16, LEGAL EXPENSES REQUIRED FOR THE ADMINISTRATION OF THE GRANT PROGRAM ARE ALLOWABLE AS ONE OF THE GRANT'S COSTS. ACCORDINGLY, WE FOUND NO EVIDENCE THAT DPMA HAD IMPROPERLY EXPENDED FEDERAL FUNDS FOR LOBBYING IN CONNECTION WITH THE LAWLER LAW FIRM CONTRACT. (A SUMMARY OF OUR INVESTIGATION INTO THE PROPRIETY OF THE TWO CONTRACTS WITH LAW FIRMS, PREPARED BY THE GAO LOS ANGELES REGIONAL OFFICE, IS ENCLOSED FOR YOUR INFORMATION.)

WE FOUND, HOWEVER, THAT DPMA'S USE OF FEDERAL FUNDS TO PREPARE AND DISSEMINATE A NEWSLETTER IN APRIL AND MAY 1981, A COPY OF WHICH YOU FORWARDED TO US, WAS IMPROPER. DPMA BEGAN ITS NEWSLETTER WITH HEADLINES WARNING THAT CONGRESS WAS ABOUT TO ACT ON PEOPLE MOVER FUNDING. THE ARTICLE POINTED OUT THAT THE ADMINISTRATION HAD RECOMMENDED TO CONGRESS THAT FEDERAL TRANSIT GRANTS TO LOCAL COMMUNITIES BE REDUCED AS A PART OF ITS PROGRAM TO TRIM THE FEDERAL BUDGET. IT ALSO STATED THAT PLANNING OF THE PEOPLE MOVER PROJECT HAD BEEN PREDICATED ON THE FEDERAL GOVERNMENT'S LONG TERM FUNDING COMMITMENT. WHILE THE FEDERAL GOVERNMENT HAD INVESTED BILLIONS OF DOLLARS FOR TRANSIT SYSTEMS IN OTHER CITIES TO WHICH LOS ANGELES TAXPAYERS HAD CONTRIBUTED, THE ARTICLE ASSERTED THAT THE PEOPLE MOVER WOULD REPRESENT THE FIRST TIME TAX DOLLARS WOULD RETURN TO LOS ANGELES FOR A TRANSIT PROJECT. THE NEWSLETTERS' IMPLICATION IS THAT THE READERS SHOULD SUPPORT FULL FEDERAL FUNDING OF THE PEOPLE MOVER PROJECT:

"LOCAL COMMUNITY SUPPORT FOR PEOPLE MOVER REMAINS STRONG"

"RESPONDING TO RECOMMENDATIONS OF OMB THAT FEDERAL FUNDS BE ELIMINATED FOR DOWNTOWN PEOPLE MOVERS, A BROAD CROSS SECTION OF COMMUNITY LEADERS ARE SENDING LETTERS AND TELEGRAMS TO PRESIDENT REAGAN, TRANSPORTATION SECRETARY LEWIS, AND CONGRESS URGING THAT THE FEDERAL GOVERNMENT NOT RENEGE ON PREVIOUS COMMITMENTS OF THE FORD AND CARTER ADMINISTRATIONS TO PROVIDE FEDERAL FUNDS FOR THE PEOPLE MOVER. JOINING MEMBERS OF THE BUSINESS COMMUNITY WAS THE LOS ANGELES COUNTY TRANSPORTATION COMMISSION WHICH SAID IN ITS MESSAGE TO THE PRESIDENT:

"'THE DOWNTOWN PEOPLE MOVER IS AN INTEGRAL PART OF A TRANSPORTATION PROGRAM FOR ALL OF LOS ANGELES COUNTY INVOLVING A VARIETY OF TRANSPORTATION MODES (AUMODES (AUTO, CAR POOL, BUS AND TRAIN), EACH SERVING THE NEEDS FOR WHICH IT IS BEST SUITED. DOWNTOWN LOS ANGELES IS EXPERIENCING A BUILDING BOOM WHICH MAKES HIGH CAPACITY CIRCULATION WITH MINIMAL OPERATING COSTS ESSENTIAL. IN FACT, MANY OF THE BUILDINGS CURRENTLY BEING CONSTRUCTED WERE DESIGNED WITH THE PEOPLE MOVER IN MIND.

"'LOS ANGELES WAS FIRST SELECTED AS A PEOPLE MOVER SITE BY THE FORD ADMINISTRATION IN 1976 AND FEDERAL, STATE AND LOCAL AGENCIES HAVE COOPERATED OVER THE LAST FOUR YEARS TO BRING THE PROJECT TO THE POINT OF CONSTRUCTION. THE LOCAL BUSINESS COMMUNITY HAS AGREED TO CONTRIBUTE TO THE COST OF THE PEOPLE MOVER OPERATIONS THROUGH BENEFIT ASSESSMENTS, A MAJOR BREAKTHROUGH IN TRANSIT FINANCING AND A TANGIBLE DEMONSTRATION OF THEIR COMMITMENT TO THE PROJECT.

"'WE URGE CONTINUATION OF THE FEDERAL GOVERNMENT'S SUPPORT FOR THIS PROJECT SO THAT IT CAN MOVE AHEAD IN A TIMELY FASHION.'"

THE NEWSLETTER WENT ON TO URGE READERS TO COMMUNICATE WITH THEIR ELECTED REPRESENTATIVES IN CONGRESS AND EXPRESS THEIR VIEWS:

"PENDING CONGRESSIONAL ACTION ON TRANSIT FUNDING HAS PROMPTED NUMEROUS INDIVIDUALS AND INTEREST GROUPS TO EXPRESS THEIR VIEWS. SHOULD READERS WISH TO COMMUNICATE WITH THEIR ELECTED REPRESENTATIVES IN CONGRESS ON FEDERAL FUNDING FOR THE PEOPLE MOVER THEY SHOULD WRITE TO THEIR OWN REPRESENTATIVE AND/OR THE FOLLOWING: CALIFORNIA SENATORS: S. I. HAYAKAWA, AND ALAN CRANSTON; CALIFORNIA CONGRESSMEN: EDWARD R. ROYBALL, JULIAN DIXON, VIC FAZIO, BARRY GOLDWATER, JR.; CHAIRMAN OF KEY COMMITTEES: SENATE APPROPRIATIONS: MARK O. HATFIELD (R-OR); TRANSPORTATION SUBCOMMITTEE: MARK ANDREWS (R-ND); HOUSE APPROPRIATIONS: JAMIE L. WHITTEN (D-MS); TRANSPORTATION SUBCOMMITTEE: ADAM BENJAMIN (D-IN). LETTERS, MAILGRAMS AND TELEGRAMS SHOULD BE ADDRESSED:

HONORABLE UNITED STATES SENATE WASHINGTON, D. C. 20510

HONORABLE U. S. HOUSE OF REPRESENTATIVES WASHINGTON, D. C. 20515"

"FINAL CONGRESSIONAL ACTION IS EXPECTED WITHIN 45 DAYS."

THE ABOVE-QUOTED NEWSLETTER PASSAGES CLEARLY EVIDENCE AN ATTEMPT ON THE PART OF THE DPMA TO URGE THE PUBLIC TO CONTRACT MEMBERS OF CONGRESS IN AN EFFORT TO INFLUENCE FEDERAL APPROPRIATIONS LEGISLATION IN SUPPORT OF THE PEOPLE MOVER.

ANTI-LOBBYING STATUTES

YOU HAVE CITED TWO ANTI-LOBBYING STATUTES THAT YOU BELIEVE MAY BE RELEVANT IN THIS SITUATION. THE FIRST IS 18 U.S.C. SEC. 1913 (1976) AND THE SECOND IS SECTION 607(A) OF THE TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT APPROPRIATIONS BILL OF 1981 AS INCORPORATED BY REFERENCE IN THE LAW CONTINUING APPROPRIATIONS FOR FISCAL YEAR 1981, PUB.L. NO. 96-536, DECEMBER 16, 1980, 94 STAT. 3166.

THE PROVISIONS OF 18 U.S.C. SEC. 1913 READ AS FOLLOWS:

"NO PART OF THE MONEY APPROPRIATED BY ANY ENACTMENT OF CONGRESS SHALL, IN THE ABSENCE OF EXPRESS AUTHORIZATION BY CONGRESS, BE USED DIRECTLY OR INDIRECTLY TO PAY FOR ANY PERSONAL SERVICE, ADVERTISEMENT, TELEGRAM, TELEPHONE, LETTER, PRINTED OR WRITTEN MATTER, OR OTHER DEVICE, INTENDED OR DESIGNED TO INFLUENCE IN ANY MANNER A MEMBER OF CONGRESS, TO FAVOR OR OPPOSE, BY VOTE OR OTHERWISE, ANY LEGISLATION OR APPROPRIATION BY CONGRESS, WHETHER BEFORE OR AFTER THE INTRODUCTION OF ANY BILL OR RESOLUTION PROPOSING SUCH LEGISLATION OR APPROPRIATION; BUT THIS SHALL NOT PREVENT OFFICERS OR EMPLOYEES OF THE UNITED STATES OR OF ITS DEPARTMENTS OR AGENCIES FROM COMMUNICATING TO MEMBERS OF CONGRESS ON THE REQUEST OF ANY MEMBER OR TO CONGRESS, THROUGH THE PROPER OFFICIAL CHANNELS, REQUESTS FOR LEGISLATION OR APPROPRIATIONS WHICH THEY DEEM NECESSARY FOR THE EFFICIENT CONDUCT OF THE PUBLIC BUSINESS."

"WHOEVER, BEING AN OFFICER OR EMPLOYEE OF THE UNITED STATES OR OF ANY DEPARTMENT OR AGENCY THEREOF, VIOLATES OR ATTEMPTS TO VIOLATE THIS SECTION, SHALL BE FINED NOT MORE THAN $500 OR IMPRISONED NOT MORE THAN ONE YEAR, OR BOTH; AND AFTER NOTICE AND HEARING BY THE SUPERIOR OFFICER VESTED WITH THE POWER OF REMOVING HIM, SHALL BE REMOVED FROM OFFICE OR EMPLOYMENT."

THIS SECTION BY ITS TERMS IS APPLICABLE ONLY TO OFFICERS AND EMPLOYEES OF THE UNITED STATES GOVERNMENT AND THEREFORE DOES NOT COVER EMPLOYEES OF FEDERAL GRANT RECIPIENTS SUCH AS CRA AND DPMA. MOREOVER, THE ENFORCEMENT OF THIS SECTION IS PRIMARILY THE RESPONSIBILITY OF THE DEPARTMENT OF JUSTICE, SINCE IT CONTAINS FINE AND IMPRISONMENT PROVISIONS.

SINCE THE EARLY 1970'S EACH OF THE ANNUAL TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS ACTS HAVE CONTAINED A GENERAL PROVISION PROHIBITING THE USE OF APPROPRIATED FUNDS TO INFLUENCE LEGISLATION, USUALLY DESIGNATED AS SECTION 607(A). FOR FISCAL YEAR 1981, THAT SECTION WAS INCORPORATED BY REFERENCE IN THE LAW CONTINUING APPROPRIATIONS, PUB.L. NO. 96-536, CITED ABOVE, BECAUSE NO TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT APPROPRIATION ACT WAS ENACTED IN 1981. THIS SECTION PROVIDES AS FOLLOWS:

"NO PART OF ANY APPROPRIATION CONTAINED IN THIS OR ANY OTHER ACT, OR OF THE FUNDS AVAILABLE FOR EXPENDITURE BY ANY CORPORATION OR AGENCY, SHALL BE USED FOR PUBLICITY OR PROPAGANDA PURPOSES DESIGNED TO SUPPORT OR DEFEAT LEGISLATION PENDING BEFORE CONGRESS."

THIS PROHIBITION APPLIES TO THE USE OF ANY APPROPRIATION "CONTAINED IN THIS OR ANY OTHER ACT." THUS, IT IS APPLICABLE TO THE USE OF APPROPRIATED FUNDS BY ANY FEDERAL AGENCY OR DEPARTMENT. FEDERAL AGENCIES AND DEPARTMENTS ARE RESPONSIBLE FOR INSURING THAT FEDERAL FUNDS MADE AVAILABLE TO GRANTEES ARE NOT USED CONTRARY TO THIS RESTRICTION. THIS IS GENERALLY ACCOMPLISHED BY PROVISIONS IN GRANT DOCUMENTS AND BY REGULATIONS PROMULGATED BY THE GRANTING AGENCY GOVERNING THE USE OF APPROPRIATED FUNDS BY GRANT RECIPIENTS WHICH SPECIFICALLY REFERENCE APPLICABLE RESTRICTIONS. WE HAVE LONG HELD THAT THE PROHIBITION OF THIS SECTION APPLIES PRIMARILY TO EXPENDITURES OF APPROPRIATED FUNDS INVOLVING APPEALS ADDRESSED TO MEMBERS OF THE PUBLIC SUGGESTING THAT THEY CONTACT MEMBERS OF CONGRESS TO INDICATE SUPPORT OF OR OPPOSITION TO PENDING LEGISLATION, OR TO URGE MEMBERS OF CONGRESS TO VOTE IN A PARTICULAR MANNER. SEE, E.G., B-128938, JULY 12, 1976. THE MATERIAL CONTAINED IN THE DPMA NEWSLETTER QUOTED ABOVE CONTAINED ALL THE ESSENTIAL ELEMENTS OF A VIOLATION. BY MEANS OF THE NEWSLETTER, DPMA WAS ENGAGING IN LOBBYING BY REQUESTING MEMBERS OF THE PUBLIC TO COMMUNICATE WITH MEMBERS OF THE CALIFORNIA CONGRESSIONAL DELEGATION AND CERTAIN CONGRESSIONAL LEADERS AND TO URGE SUPPORT FOR A CONTINUATION OF FEDERAL FUNDING FOR THE PEOPLE MOVER PROJECT, WHICH WAS SCHEDULED TO BE ACTED ON BY THE CONGRESS. WHILE THE NEWSLETTER EXHORTS THE READER TO COMMUNICATE HIS OR HER "VIEWS" REGARDING PEOPLE MOVER FUNDING, IT IS ABUNDANTLY CLEAR THAT THE AUTHORITY SUPPORTS CONTINUATION OF FEDERAL FUNDING AND THAT VIEW IS THE ONE IT HOPES WILL BE EXPRESSED. INDEED, ALTERNATIVE VIEWS ARE NEITHER MENTIONED NOR DISCUSSED IN THE NEWSLETTER. SUCH NEUTRAL WORDING AS "VIEWS" OR "FEELINGS" WILL NOT EXCULPATE MATERIAL THAT WOULD OTHERWISE CONSTITUTE A VIOLATION. SEE B-128938, SUPRA.

THE FEDERAL GOVERNMENT PROVIDES DPMA WITH APPROXIMATELY EIGHTY PERCENT OF ITS FUNDING REQUIREMENTS. THESE FUNDS ARE PROVIDED AS GRANTS BY THE URBAN MASS TRANSPORTATION ADMINISTRATION (UMTA) FOR PLANNING AND CONSTRUCTION OF THE PEOPLE MOVER AND ARE CHANNELED THROUGH THE CITY OF LOS ANGELES. THE GENERAL MANAGER OF THE AUTHORITY ACKNOWLEDGED TO GAO AUDITORS THAT FEDERAL FUNDS WERE PROBABLY INVOLVED IN THE PUBLICATION AND DISSEMINATION OF THE NEWSLETTER. HE DEFENDED THIS ACTION ON THE BASIS THAT UMTA REQUIRES THAT GRANTEES KEEP THE PUBLIC INFORMED CONCERNING MATTERS AFFECTING THE PROJECT. MOREOVER, THE GENERAL MANAGER STATES THAT HE BELIEVED THE NEWSLETTER WAS WORDED SO THAT IT WOULD NOT BE CONSIDERED AS LOBBYING. EXPLAINED ABOVE, WE HAVE CONCLUDED THAT THE NEWSLETTER MATERIAL DID INDEED CONSTITUTE LOBBYING, WHICH APPARENTLY WAS PAID FOR IN PART BY FEDERAL FUNDS DERIVED FROM AN UMTA GRANT. ACCORDINGLY, SECTION 607(A), RESTRICTING THE USE OF APPROPRIATIONS FOR LOBBYING, APPEARS TO HAVE BEEN VIOLATED.

UMTA IS RESPONSIBLE FOR INSURING THAT FUNDS IT PROVIDES TO GRANT RECIPIENTS ARE EXPENDED IN ACCORDANCE WITH LAW. IN THIS CONNECTION, FEDERAL PROCUREMENT REGULATIONS GOVERNING ADMINISTRATION OF GRANTS AND CONTRACTS WITH STATE AND LOCAL GOVERNMENT AGENCIES PROVIDE IN 41 CFR 1 15.701-1 AND 41 CFR 1-5.703-1(C) THAT GRANTEE EXPENDITURES PROHIBITED BY FEDERAL LAWS, SUCH AS SECTION 607(A), ARE NOT ALLOWABLE PROGRAM COSTS. ACCORDINGLY, WE ARE BY SEPARATE LETTER ADVISING THE ADMINISTRATOR OF UMTA OF THIS APPARENT ILLEGAL EXPENDITURE. WHILE APPROPRIATED FUNDS WERE APPARENTLY EXPENDED BY DPMA ON THE PREPARATION AND DISSEMINATION OF THE NEWSLETTER, THE AMOUNT INVOLVED IN THE VIOLATION WOULD APPEAR TO HAVE BEEN RELATIVELY SMALL AND TO HAVE BEEN COMMINGLED WITH PROPER EXPENDITURES. VIEW OF THE SMALL AMOUNT APPARENTLY INVOLVED AND THE DIFFICULTY IN DETERMINING THE EXACT AMOUNT EXPENDED ILLEGALLY, WE ARE NOT INSISTING THAT THE ADMINISTRATOR RECOVER THE FUNDS IF HE DETERMINES THAT IT WOULD NOT BE COST EFFECTIVE TO DO SO. HOWEVER, WE ARE REQUESTING THE ADMINISTRATOR TO TAKE APPROPRIATE ACTION TO INSURE THAT FUTURE VIOLATIONS OF THE LOBBYING RESTRICTION DO NOT OCCUR.