B-221498.50, OCT 7, 1986

B-221498.50, OCT 7, 1986

PRECIS-UNAVAILABLE

THE HONORABLE DALLAS L. PECK:

DIRECTOR, U.S. GEOLOGICAL SURVEY

RESTON, VIRGINIA 22092

THIS RESPONDS TO YOUR REQUEST OF JULY 11, 1986, THAT WE PROVIDE YOU WITH OUR VIEWS ON THE APPLICABILITY OF THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985 (PUBLIC LAW 99-177) TO TWO CATEGORIES OF NON- FEDERAL REIMBURSEMENTS OF THE U.S. GEOLOGICAL SURVEY (USGS). THE REIMBURSEMENTS IN QUESTION ARE STATE AND LOCAL MATCHING PAYMENTS UNDER FEDERAL/STATE COOPERATIVE PROGRAMS, AND PAYMENTS FROM FOREIGN GOVERNMENTS FOR SERVICES PROVIDED BY THE SURVEY. BOTH CATEGORIES OF REIMBURSEMENTS ARE CREDITED TO THE USGS "SURVEYS, INVESTIGATIONS, AND RESEARCH" ACCOUNT. AS DISCUSSED IN FURTHER DETAIL BELOW, WE CONCLUDE THAT, IN BOTH CASES, NON -FEDERAL REIMBURSEMENTS MUST BE INCLUDED WITHIN THE SEQUESTER BASE OF THE ACCOUNT. WE AGREE, HOWEVER, WITH YOUR VIEW THAT ADDITIONAL REDUCTIONS IN THE NON-FEDERAL PORTION OF FEDERAL/STATE COOPERATIVE PROGRAMS ARE UNNECESSARY, TO THE EXTENT THAT REDUCTIONS IN FUNDING FOR THE FEDERAL PORTION OF SUCH PROGRAMS HAVE AUTOMATICALLY REDUCED THE STATE-FUNDED PORTION BY AN AMOUNT EQUAL TO THE REQUIRED SEQUESTER.

AS A PRELIMINARY MATTER, WE NOTE THAT THE TWO CATEGORIES OF NON FEDERAL REIMBURSEMENTS IN QUESTION WERE INCLUDED IN THE SEQUESTER BASE FOR THE ACCOUNT IN QUESTION IN THE FISCAL YEAR 1986 SEQUESTRATION REPORT OF THE OFFICE OF MANAGEMENT AND BUDGET (OMB) AND THE CONGRESSIONAL BUDGET OFFICE (CBO). OUR JANUARY 21, 1986, REPORT (AND THE PRESIDENT'S FEBRUARY 1, 1986 ORDER, BASED ON OUR REPORT) DID NOT CHANGE THAT TREATMENT. /1/ THAT TREATMENT WAS RATIFIED BY THE CONGRESS THROUGH PUBLIC LAW 99-366, WHICH ENACTED THE REDUCTIONS SPECIFIED IN THE PRESIDENT'S FEBRUARY 1, 1986, ORDER. THUS, REGARDLESS OF THE APPLICABILITY OF PUBLIC LAW 99-177 IN FISCAL YEAR 1987 OR SUBSEQUENT FISCAL YEARS, THE LEVEL OF FISCAL YEAR 1986 REDUCTIONS IN THIS ACCOUNT IS MANDATED BY PUBLIC LAW 99-366.

FEDERAL/STATE COOPERATIVE PROGRAMS

THE USGS ADMINISTERS SEVERAL FEDERAL/STATE COOPERATIVE PROGRAMS, GENERALLY RELATING TO TOPOGRAPHIC MAPPING AND WATER RESOURCES INVESTIGATIONS. THESE PROGRAMS ARE CARRIED OUT BY USGS UNDER AUTHORITY PROVIDED IN ANNUAL APPROPRIATIONS ACTS "TO PROSECUTE PROJECTS IN COOPERATION WITH OTHER AGENCIES, FEDERAL, STATE, OR PRIVATE." SEE, E.G., DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS ACT, 1986, ENACTED BY CONTINUING APPROPRIATIONS RESOLUTION, 1986, PUB.L. 99-190, SEC. 101(D), 99 STAT. 1185, 1224, 1231 (1985). SUCH COOPERATIVE PROGRAMS ARE SUBJECT TO AN ANNUAL APPROPRIATIONS ACT RESTRICTION PROVIDING THAT THE USGS MAY NOT PAY MORE THAN ONE HALF THE COST OF SUCH PROJECTS. ID. SEE ALSO 43 U.S.C. SEC. 50.

1. TREATMENT OF STATE MATCHING PAYMENTS AS OFFSETTING COLLECTIONS.

STATE AND LOCAL MATCHING PAYMENTS TO THE USGS FOR COOPERATIVE PROGRAMS ADMINISTERED BY THE SURVEY HAVE TRADITIONALLY BEEN COUNTED IN THE BUDGET AS OFFSETTING COLLECTIONS FROM NON-FEDERAL SOURCES. BASED ON THAT BUDGETARY TREATMENT, ALL THREE AGENCIES RESPONSIBLE FOR ADMINISTERING PUBLIC LAW 99-177 IN FISCAL YEAR 1986 CONSIDERED THOSE COLLECTIONS TO BE A BUDGETARY RESOURCE OF THE SURVEY, SUBJECT TO REDUCTION. YOUR PRINCIPAL QUESTION TO US IS WHETHER STATE AND LOCAL MATCHING PAYMENTS ARE PROPERLY CONSIDERED OFFSETTING COLLECTIONS OF THE FEDERAL GOVERNMENT.

OFFSETTING COLLECTIONS ARE THOSE COLLECTIONS RECEIVED BY FEDERAL AGENCIES IN THE COURSE OF CARRYING OUT THEIR PROGRAMS. SUCH COLLECTIONS ARE FREQUENTLY FROM TRANSACTIONS WITH THE PUBLIC OF A BUSINESS-TYPE OR MARKET- ORIENTED NATURE. SEE A GLOSSARY OF TERMS USED IN THE FEDERAL BUDGET PROCESS, GAO/PAD-81-27 (MARCH 1981), P. 47. COLLECTIONS CREDITED TO APPROPRIATION OR FUND ACCOUNTS ARE OFFSETTING COLLECTIONS THAT MAY BE USED FOR FEDERAL PROGRAMS WITHOUT ADDITIONAL APPROPRIATIONS ACTION BY THE CONGRESS. THEY ARE CONSIDERED TO BE A TYPE OF SPENDING AUTHORITY, SUBJECT TO REDUCTION UNDER PUBLIC LAW 99 177.

IN THE CASE OF COOPERATIVE PROGRAMS SUCH AS THOSE CARRIED OUT BY THE USGS, THE OVERALL COOPERATIVE PROGRAM IS CONSIDERED TO BE A PROGRAM OF THE FEDERAL GOVERNMENT. CONSEQUENTLY, MATCHING PAYMENTS BY STATE AND LOCAL GOVERNMENTS IN FURTHERANCE OF THOSE PROGRAMS ARE TREATED AS COLLECTIONS AUGMENTING THE AMOUNTS ANNUALLY APPROPRIATED TO THE USGS FOR SUCH PROGRAMS. IN OUR VIEW, THIS IS CONSISTENT WITH THE TREATMENT OF A NUMBER OF OTHER FEDERAL PROGRAMS IN WHICH SERVICES PROVIDED TO THE PUBLIC (OR TO STATES) ARE SUPPORTED IN LARGE MEASURE BY PAYMENTS FROM THOSE RECEIVING THE SERVICE.

WE RECOGNIZE THAT AN ARGUMENT MAY BE MADE THAT THE STATE-FUNDED PORTIONS OF COOPERATIVE USGS PROGRAMS ARE DIFFERENT FROM OTHER TYPES OF PROGRAMS OF FEDERAL AGENCIES PARTIALLY FUNDED THROUGH OFFSETTING COLLECTIONS. UNDER THIS VIEW, THE STATE-FUNDED PORTION OF THE PROGRAM WOULD BE CONSIDERED TO BE A STATE, AND NOT A FEDERAL ACTIVITY. UNLESS THE OFFICE OF MANAGEMENT AND BUDGET WERE TO RECLASSIFY THE BUDGETARY TREATMENT OF SUCH ACTIVITIES ON SUCH A BASIS, HOWEVER, WE CANNOT CONCLUDE THAT THE CURRENT TREATMENT OF SUCH FUNDS AS OFFSETTING COLLECTION IS CORRECT. THUS, BECAUSE WE DO NOT DISAGREE WITH THE CURRENT BUDGETARY TREATMENT OF AMOUNTS PAID BY STATE AND LOCAL GOVERNMENTS IN SUPPORT OF USGS COOPERATIVE PROGRAMS, WE SEE NO BASIS FOR CHANGING OUR OPINION THAT THE STATE-SUPPORTED PORTION OF USGS COOPERATIVE PROGRAMS IS SUBJECT TO REDUCTION.

2. EFFECT OF SEQUESTRATION

YOUR LETTER ALSO NOTES THAT DIRECT REDUCTIONS IN THE FEDERAL PORTION OF FEDERAL/STATE COOPERATIVE PROGRAMS AUTOMATICALLY RESULT IN MATCHING REDUCTIONS IN THE NON-FEDERAL PORTION OF SUCH PROGRAMS, BECAUSE OF THE 50- 50 FUNDING MECHANISM PROVIDED BY LAW. YOU THEREFORE QUESTION WHETHER PUBLIC LAW 99-177 REQUIRES AN ADDITIONAL 4.3 PERCENT REDUCTION IN THE NON- FEDERAL PORTION OF THOSE PROGRAMS. YOU STATE THE VIEW THAT SUCH ADDITIONAL REDUCTIONS WOULD APPEAR TO VIOLATE THE APPROPRIATIONS ACT REQUIREMENT THAT FEDERAL FUNDING OF COOPERATIVE PROGRAMS NOT EXCEED 50 PERCENT OF THE OVERALL COST OF SUCH PROGRAMS.

IT IS OUR VIEW THAT THE EFFECT OF SEQUESTRATION ON THE STATE-FUNDED PORTION OF USGS COOPERATIVE PROGRAMS IS TO ESTABLISH AN OBLIGATION LIMITATION FOR SUCH PROGRAMS. THIS IS CONSISTENT WITH THE TREATMENT OF OTHER TYPES OF INDEFINITE SPENDING AUTHORITY. SEE, E.G., H.R. REP. NO. 433, 99TH CONG., 1ST SESS. 95 (1985). THUS, SO LONG AS EXPENDITURES FOR THE STATE-FUNDED PORTION OF COOPERATIVE PROGRAMS DO NOT EXCEED THE AMOUNT USED TO ESTIMATE THE BASE SUBJECT TO SEQUESTER, LESS THE REQUIRED REDUCTION (I.E. $51,701,000, ACCORDING TO THE INFORMATION PROVIDED IN YOUR LETTER), NO FURTHER ACTION IS NECESSARY TO IMPLEMENT REDUCTIONS. IF, AS YOU INDICATE, REDUCTIONS IN THE FEDERALLY-FUNDED PORTION OF THE COOPERATIVE PROGRAM HAVE RESULTED IN COMPARABLE REDUCTIONS IN THE STATE- FUNDED PORTION, NO ADDITIONAL REDUCTIONS WOULD BE NECESSARY IN ORDER TO COMPLY WITH THE OBLIGATION LIMITATION IMPOSED BY PUBLIC LAW 99-177.

USGS SERVICES PROVIDED TO FOREIGN GOVERNMENTS

YOUR SECOND QUESTION IS WHETHER REIMBURSEMENTS FROM FOREIGN GOVERNMENTS FOR SERVICES PROVIDED BY THE USGS ARE PROPERLY CLASSIFIED AS NON-FEDERAL COLLECTIONS FOR PURPOSES OF PUBLIC LAW 99-177. YOU STATE THE VIEW THAT SUCH REIMBURSEMENTS SHOULD BE TREATED AS FEDERAL COLLECTIONS, AS THEY ARE MADE UNDER AGREEMENTS ARRANGED THROUGH THE DEPARTMENT OF STATE OR THE AGENCY FOR INTERNATIONAL DEVELOPMENT. YOU FURTHER STATES THAT REDUCTIONS IN EXPENDITURES FINANCED FROM SUCH REIMBURSEMENTS WOULD RESULT IN THE USGS ACCEPTING FUNDS FROM A FOREIGN GOVERNMENT AND NOT USING THOSE FUNDS FOR THE PURPOSES INTENDED.

THE SERVICES IN QUESTION ARE PROVIDED UNDER AUTHORITY OF SECTION 607 OF THE FOREIGN ASSISTANCE ACT OF 1966, AS AMENDED (22 U.S.C. SEC. 2357). THAT PROVISION AUTHORIZES ANY AGENCY OF THE FEDERAL GOVERNMENT TO FURNISH SERVICES AND COMMODITIES TO FRIENDLY COUNTRIES ON AN ADVANCE OF-FUNDS OR REIMBURSEMENT BASIS, WHEN SUCH ASSISTANCE IS DETERMINED BY THE PRESIDENT TO BE CONSISTENT WITH AND IN FURTHERANCE OF THE PURPOSES OF THE ACT. AMOUNTS ADVANCED OR REIMBURSED BY FOREIGN GOVERNMENTS UNDER SECTION 607 ARE TO BE CREDITED TO THE APPLICABLE APPROPRIATION OF THE AGENCY CONCERNED, AND ARE AVAILABLE FOR THE SAME PURPOSES AS THAT APPROPRIATION.

ALTHOUGH SERVICES BY USGS TO FOREIGN GOVERNMENTS ARE PROVIDED UNDER AGREEMENTS ARRANGED THROUGH THE DEPARTMENT OF STATE OR THE AGENCY FOR INTERNATIONAL DEVELOPMENT, SUCH SERVICES ARE NOT CONSIDERED TO BE PROGRAMS OF THE DEPARTMENT OF STATE OR AID FOR PURPOSES OF THE BUDGET, AND NEITHER EXPENDITURES NOR REIMBURSEMENTS FOR SUCH SERVICES ARE INCLUDED IN THE BUDGET TOTALS OF THOSE TWO AGENCIES. IN OUR VIEW, THIS BUDGETARY TREATMENT IS CORRECT: THE AUTHORITY TO PROVIDE SUCH SERVICES, AND THE FUNDING THEREFOR, ARE PROVIDED TO THE PERFORMING AGENCY, AND NOT TO THE AGENCY RESPONSIBLE FOR ARRANGING FOR SUCH SERVICES. THUS, WE AGREE THAT THE FUNDS RECEIVED BY USGS FROM FOREIGN GOVERNMENTS IN ADVANCE OF OR IN REIMBURSEMENT FOR SUCH SERVICES SHOULD BE CONSIDERED TO BE NON-FEDERAL COLLECTIONS CREDITED TO THE APPROPRIATE ACCOUNT OF THE USGS.

FINALLY, WE DO NOT AGREE THAT INCLUDING ADVANCES OR REIMBURSEMENTS FROM FOREIGN GOVERNMENTS WITHIN THE SEQUESTER BASE FOR THE USGS "SURVEYS, INVESTIGATIONS, AND RESEARCH" ACCOUNT WOULD NECESSARILY RESULT IN THE USGS ACCEPTING FUNDS FROM A FOREIGN GOVERNMENT WITHOUT USING THOSE FUNDS FOR THE PURPOSES INTENDED. PUBLIC LAW 99-177 SPECIFIES THAT, IN THE CASE OF BUDGETARY RESOURCES THAT ARE NOT PROVIDED THROUGH ANNUAL APPROPRIATION ACTS, UNIFORM REDUCTIONS ARE TO BE MADE IN EACH "BUDGET ACCOUNT ACTIVITY," AS IDENTIFIED IN THE PROGRAM AND FINANCING SCHEDULES CONTAINED IN THE APPENDIX TO THE PRESIDENT'S BUDGET. SEE SEC. 252(A)(1)(B)(II). IN THE CASE OF THE USGS "SURVEYS, INVESTIGATIONS, AND RESEARCH" ACCOUNT, THE PROGRAM AND FINANCING SCHEDULE OF THE APPENDIX TO THE PRESIDENT'S BUDGET LISTS A SINGLE BUDGET ACCOUNT ACTIVITY FOR THE OVERALL USGS "REIMBURSABLE PROGRAM." CONSEQUENTLY, REDUCTIONS UNDER PUBLIC LAW 99-177 NEED NOT BE UNIFORM AMONG THE VARIOUS ACTIVITIES THAT MAKE UP THE USGS REIMBURSABLE PROGRAM, SO LONG AS THE OVERALL PROGRAM IS REDUCED BY 4.3 PERCENT. /2/ THUS, SERVICES TO FOREIGN GOVERNMENTS ARE NOT REQUIRED TO BE REDUCED, SO LONG AS REDUCTIONS FOREGONE ARE MADE UP THROUGH REDUCTIONS AMONG OTHER ACTIVITIES WITHIN THE SURVEY'S REIMBURSABLE PROGRAM.

WE HOPE THAT THE FOREGOING IS OF ASSISTANCE TO YOU.

/1/ ALL THREE AGENCIES CONSIDERED THE SEQUESTRABLE BASE FOR THE ACCOUNT TO INCLUDE THE AUTHORITY OF THE SURVEY TO EXPEND $82,385,000 IN NON- FEDERAL REIMBURSEMENTS. WE UNDERSTAND FROM YOUR SUBMISSION THAT THIS AMOUNT INCLUDES AN ESTIMATED $54,024,000 FROM STATE AND LOCAL MATCHING PAYMENTS UNDER FEDERAL/STATE COOPERATIVE PROGRAMS, $9,400,000 FROM REIMBURSEMENTS FOR SERVICES PROVIDED TO FOREIGN GOVERNMENTS (ALL FROM SAUDI ARABIA), AND $18,961,000 FROM A VARIETY OF OTHER SOURCES (PRINCIPALLY RECEIPTS FROM SALES OF MAPS AND PHOTOS, AND UNMATCHED STATE PAYMENTS).

/2/ THIS IS NOT APPLICABLE TO THE AGENCY'S COOPERATIVE PROGRAMS, WHICH, AS DESCRIBED EARLIER, ARE AUTHORIZED IN ANNUAL APPROPRIATION ACTS.