B-208886, FEB 8, 1983

B-208886: Feb 8, 1983

Additional Materials:

Contact:

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

 

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

WHICH IS AVAILABLE "TO BUY METAL TO MINT COINS. COSTS OF OUTSIDE FABRICATION ARE BORNE BY THE COINAGE METAL FUND. WE AGREE THAT LANGUAGE OF SECTION 5111 - "METAL TO MINT COINS" - IS BROAD ENOUGH TO SUPPORT THIS PRACTICE. 2. IT IS OUR OPINION THAT THE MINT MAY NOT CHARGE SUCH COSTS TO THE COINAGE METAL FUND. IS AN UNFUNDED ACCOUNT AVAILABLE TO THE SECRETARY OF THE TREASURY "TO BUY METAL TO MINT COINS." 31 U.S.C. 000 WORTH OF COPPER IS DELIVERED TO THE MINTS. IT IS PAID FOR BY CHECK. IN TREASURY ACCOUNTS THE METAL IS CARRIED AS 'CASH. ' SO THAT THERE IS NO CHANGE IN THE TREASURY'S BALANCE. WHEN THE METAL IS FORMED INTO NEWLY MINTED MINOR COIN. IS REDEPOSITED. THE DIFFERENCE BETWEEN THE NOMINAL VALUE OF THE COINS MINTED AND THE COST OF THE METAL IS DEPOSITED IN THE COINAGE PROFIT FUND. 31 U.S.C.

B-208886, FEB 8, 1983

DIGEST: 1. BUREAU OF MINT CURRENTLY USES UNFUNDED ACCOUNT AUTHORIZED BY 31 U.S.C. SEC. 5111, WHICH IS AVAILABLE "TO BUY METAL TO MINT COINS," TO PURCHASE COMMERCIALLY FABRICATED METALS SUITABLE FOR COINAGE. THUS, COSTS OF OUTSIDE FABRICATION ARE BORNE BY THE COINAGE METAL FUND. THE FUND HAS BEEN USED TO PURCHASE COIN STRIP OR BLANKS (WHICH INCLUDE IN THEIR PRICES THE COST OF FABRICATION) FROM OUTSIDE CONCERNS SINCE AT LEAST THE 1930'S. WE AGREE THAT LANGUAGE OF SECTION 5111 - "METAL TO MINT COINS" - IS BROAD ENOUGH TO SUPPORT THIS PRACTICE. 2. BUREAU OF MINT USES COINAGE METAL FUND AUTHORIZED BY 31 U.S.C. SEC. 5111 TO PURCHASE METALS SUITABLE FOR COINAGE. IT THEN USES ANNUAL APPROPRIATIONS TO FUND IN-HOUSE COSTS OF FABRICATING METALS INTO COIN STRIP OR BLANKS. BUREAU DESIRES TO START CHARGING THESE COSTS TO FUND INSTEAD OF APPROPRIATIONS AS IT ALREADY DOES IN EFFECT WITH REGARD TO FABRICATED METALS PURCHASED FROM PRIVATE CONTRACTORS. OUR READING OF SECTION 5111 TOGETHER WITH SECTION 5132, HOWEVER, LEADS US TO THE CONCLUSION THAT IN-HOUSE FABRICATION COSTS SHOULD CONTINUE TO BE PAID FROM APPROPRIATED FUNDS. 3. BUREAU OF THE MINT MAY NOT PAY THE SALARIES OF EMPLOYEES WHO FABRICATE RAW METAL INTO ROLLS OF COINAGE STRIP FROM THE COINAGE METAL FUND, 31 U.S.C. SEC. 5111. 31 U.S.C. SEC. 5132 PROVIDES THAT THE COSTS OF THE MINTS, OTHER THAN THOSE RELATING TO THE SALE OF NUMISMATIC ITEMS, SHALL BE PAID OUT OF APPROPRIATIONS.

PAYMENT OF INTERNAL FABRICATION COSTS WITH COINAGE METAL FUND:

THE ACTING TREASURER OF THE UNITED STATES HAS ASKED WHETHER THE BUREAU OF THE MINT MAY LEGALLY CHARGE THE COINAGE METAL FUND, PROVIDED FOR IN 31 U.S.C. SEC. 5111, FN1 WITH THE INTERNAL FABRICATION COSTS OF CONVERTING RAW METAL TO ROLLS OF COINAGE STRIP. FOR THE REASONS GIVEN BELOW, IT IS OUR OPINION THAT THE MINT MAY NOT CHARGE SUCH COSTS TO THE COINAGE METAL FUND.

THE COINAGE METAL FUND, ORIGINALLY ESTABLISHED IN 1873, IS AN UNFUNDED ACCOUNT AVAILABLE TO THE SECRETARY OF THE TREASURY "TO BUY METAL TO MINT COINS." 31 U.S.C. SEC. 5111. THE FUND OPERATES ON A REVOLVING BASIS, AS EXPLAINED IN HOUSE REPORT NO. 1873, WHICH ACCOMPANIED THE ACT OF JUNE 30, 1954:

"*** WHEN $200,000 WORTH OF COPPER IS DELIVERED TO THE MINTS, IT IS PAID FOR BY CHECK, THUS DECREASING THE CHECKING CREDIT AND SUBSTITUTING IN THE ACCOUNTS OF THE TREASURY $200,000 WORTH OF COPPER FOR THE CASH EXPENDED. IN TREASURY ACCOUNTS THE METAL IS CARRIED AS 'CASH,' SO THAT THERE IS NO CHANGE IN THE TREASURY'S BALANCE. WHEN THE METAL IS FORMED INTO NEWLY MINTED MINOR COIN, THE COST OF THE COPPER, $200,000, IS REDEPOSITED, THEREBY REPLENISHING THE AMOUNT OF CHECKING CREDIT."

THE DIFFERENCE BETWEEN THE NOMINAL VALUE OF THE COINS MINTED AND THE COST OF THE METAL IS DEPOSITED IN THE COINAGE PROFIT FUND. 31 U.S.C. SEC. 5111.

A LEGAL MEMORANDUM WHICH ACCOMPANIED THE SUBMISSION NOTES THAT THE MINT HAS CONSISTENTLY PAID FOR IN-HOUSE FABRICATION COSTS WITH APPROPRIATED FUNDS, WHILE THE COINAGE METAL FUND HAS BEEN USED, SINCE AT LEAST THE 1930'S, TO PURCHASE COIN STRIP OR BLANKS (INCLUDING COSTS OF FABRICATION) FROM OUTSIDE CONCERNS. THE MEMORANDUM ARGUES THAT 31 U.S.C. SEC. 5111 PERMITS THE PAYMENT OF OUTSIDE FABRICATION COSTS:

"*** AS THE STATUTE (PRIOR TO THE 1982 RECODIFICATION OF TITLE 31) ALLOWS THE 'PURCHASE OF METAL FOR COINAGE' IT CAN BE SAID TO CONTEMPLATE PROCURING METAL IN A FORM SUITABLE FOR COINAGE. IN TODAY'S CONTEXT, THIS IMPLIES METALS IN AN ALLOYED, PLATED OR CLAD FORM. METAL IN A PROCESSED FORM IS MORE VALUABLE THAN RAW METAL, THUS, THE MONEY EXPENDED TO FABRICATE STRIP INCREASES THE VALUE OF THE ASSET. CHARGING FABRICATION COSTS TO THE COINAGE METAL FUND IS THEREFORE CONSISTENT WITH THE EXCHANGE OF ASSETS CONCEPT. ***"

WE AGREE THAT ALTHOUGH THE MINT IS INDIRECTLY PAYING THE COSTS OF OUTSIDE FABRICATION WHEN IT PURCHASES PROCESSED METAL SINCE THESE COSTS HAVE BEEN INCORPORATED INTO THE PRICE OF THE PROCESSED METAL, THE COINAGE METAL FUND MAY BE USED FOR SUCH PURCHASES SINCE IT IS AVAILABLE TO BUY METAL IN WHATEVER FORM IT IS PROCURED.

THE BUREAU OF THE MINT SUGGESTS THAT, FOR CONSISTENCY, IT WOULD LIKE TO BEGIN PAYING ITS IN-HOUSE FABRICATION COSTS FROM THE COINAGE METAL FUND. WE DO NOT, HOWEVER, AGREE WITH THE BUREAU OF THE MINT THAT THERE IS NO STATUTORY BASIS FOR TREATING IN-HOUSE FABRICATION COSTS DIFFERENTLY FROM OUTSIDE FABRICATION COSTS, AND THUS WE CANNOT CONCLUDE THAT IN-HOUSE FABRICATION COSTS MAY ALSO BE PAID FROM THE COINAGE METAL FUND.

THE COINAGE METAL FUND IS AVAILABLE ONLY "TO BUY METAL TO MINT COINS." 31 U.S.C. SEC. 5111. IN OUR VIEW, THIS DOES INCLUDE THE PURCHASE OF MACHINERY OR THE SALARIES AND OTHER EXPENSES WHICH ARE REQUIRED FOR THE MINT TO FABRICATE METALS.

FURTHERMORE, 31 U.S.C. SEC. 5132 EXPLICITLY PROVIDES THAT:

"(A)(1) EXCEPT AS PROVIDED IN THIS CHAPTER, THE SECRETARY OF THE TREASURY SHALL DEPOSIT IN THE TREASURY AS MISCELLANEOUS RECEIPTS AMOUNTS THE SECRETARY RECEIVES FROM THE OPERATIONS OF THE BUREAU OF THE MINT. HOWEVER, AMOUNTS FROM NUMISMATIC ITEMS SHALL BE REIMBURSED TO THE CURRENT APPROPRIATION USED TO PAY THE COST OF PREPARING AND SELLING THE ITEMS. THE SECRETARY MAY NOT USE AMOUNTS THE SECRETARY RECEIVES FROM PROFITS ON MINTING COINS OR FROM CHARGES ON GOLD OR SILVER BULLION UNDER SECTION 5122 OF THIS TITLE TO PAY OFFICERS AND EMPLOYEES. THE SECRETARY SHALL PAY THE COSTS OF THE MINTS AND ASSAY OFFICES NOT PROVIDED FOR IN THIS SUBSECTION OUT OF APPROPRIATIONS."

PRIOR TO THE 1982 RECODIFICATION, 31 U.S.C. SEC. 369 PROVIDED THAT:

"THE MONEY ARISING FROM ALL CHARGES AND DEDUCTIONS ON AND FROM GOLD AND SILVER BULLION AND FROM ALL OTHER SOURCES, EXCEPT THE MONEY DERIVED FROM THE MANUFACTURE AND SALE OF MEDALS, PROOF COINS, AND UNCIRCULATED COINS AND AS OTHERWISE PROVIDED BY AND PURSUANT TO THIS CHAPTER SHALL FROM TIME TO TIME BE COVERED INTO THE TREASURY, AND NO PART OF SUCH DEDUCTIONS, OR PROFIT ON SILVER OR MINOR COINAGE, SHALL BE EXPENDED IN SALARIES OR WAGES. THE MONEY ARISING FROM THE MANUFACTURE AND SALE OF MEDALS, PROOF COINS, AND UNCIRCULATED COINS SHALL BE REIMBURSED TO THE APPROPRIATION THEN CURRENT AND CHARGEABLE FOR THE COST OF MANUFACTURE AND SALE OF MEDALS, PROOF COINS, AND UNCIRCULATED COINS. THERE ARE AUTHORIZED TO BE APPROPRIATED FOR FISCAL YEAR 1982 NOT TO EXCEED $54,706,000 FOR ALL EXPENDITURES (SALARIES AND EXPENSES) OF THE MINTS AND ASSAY OFFICES NOT HEREIN OTHERWISE PROVIDED FOR."

THE MINT'S LEGAL COUNSEL ARGUES THAT "THE DIRECTION THAT NO 'PROFIT' CAN BE USED TO PAY SALARY AND WAGES RECOGNIZES THAT CERTAIN RECOVERY OF COSTS FROM REVENUE PRODUCED BY THE SALE OF COINAGE WILL BE MADE." WE DISAGREE WITH THE INFERENCE THAT SALARIES AND WAGES ARE AMOUNG THE COSTS WHICH MAY BE RECOVERED BY REVENUE PRODUCED BY THE SALE OF COINS. THE COINAGE PROFIT FUND IS CREDITED WITH "THE AMOUNT BY WHICH THE NOMINAL VALUE OF THE COINS MINTED FROM THE METAL EXCEEDS THE COST OF THE METAL." 31 U.S.C. SEC. 5111(B). ONLY THE COST OF THE METAL (PLUS THE WASTE INCURRED IN MINTING COINS AND THE COST OF DISTRIBUTING THE COINS) MAY BE RECOVERED FROM REVENUE PRODUCED BY THE SALE OF COINAGE. THE INTENT THAT THE COSTS OF FABRICATION, INCLUDING SALARIES AND WAGES, BE PAID FROM NEITHER THE COINAGE METAL NOR THE COINAGE PROFIT FUNDS IS MADE EVEN CLEARER IN THE FINAL SENTENCE OF SEC. 5132: "THE SECRETARY SHALL PAY THE COSTS OF THE MINTS AND ASSAY OFFICES NOT PROVIDED FOR IN THIS SUBSECTION OUT OF APPROPRIATIONS." SINCE THE ONLY COSTS OF THE MINTS AND ASSAY OFFICES PROVIDED FOR IN THE INDICATED SUBSECTION ARE THOSE RELATING TO NUMISMATIC ITEMS, IT IS EVIDENT THAT CONGRESS INTENDED THAT FABRICATION COSTS BE PAID FROM APPROPRIATED FUNDS.

IT IS ACCORDINGLY OUR VIEW THAT THE BUREAU OF THE MINT IS NOT AUTHORIZED BY LAW TO CHARGE THE COINAGE METAL FUND WITH THE INTERNAL FABRICATION COSTS OF CONVERTING RAW METAL TO ROLLS OF COINAGE STRIP.

FN1 THE SUBMISSION CITES 31 U.S.C. SEC. 340 AND 31 U.S.C. SEC. 369. THESE SECTION NUMBERS WERE CHANGED IN THE GENERAL RECODIFICATION OF TITLE 31 OF THE U.S.C. ON SEPTEMBER 13, 1982, PUB.L. NO. 97-258, 97TH CONG.ALL TITLE 31 CITATIONS IN THIS DECISION REFER TO THE NEWLY DESIGNATED SECTION NUMBERS.