B-221498.9, FEB 25, 1986

B-221498.9: Feb 25, 1986

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IN WHICH YOU STATE YOUR DISAGREEMENT WITH OUR DETERMINATION THAT THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985 (PUBLIC LAW 99-177) IS APPLICABLE TO THE FARM CREDIT ADMINISTRATION (FCA) SPECIAL FUND. WE AFFIRM OUR CONCLUSION THAT THE FCA SPECIAL FUND IS SUBJECT TO THE ACT. YOUR LETTER CITES THREE PRINCIPAL GROUNDS FOR YOUR CONCLUSION THAT THE FCA SPECIAL FUND IS NOT SUBJECT TO REDUCTION UNDER PUBLIC LAW 99 177. YOU STATE THAT THE FCA SPECIAL FUND IS ANALOGOUS TO A TRUST FUND. THAT IT IS THEREFORE EXEMPT UNDER SECTION 255(G)(1) OF THE ACT. WITH REGARD TO YOUR POSITION THAT THE FCA SPECIAL FUND IS A TRUST FUND EXEMPT UNDER THE ACT. WE NOTE THAT THERE IS NO GENERIC EXEMPTION UNDER THE ACT FOR PAYMENTS FROM TRUST FUNDS.

B-221498.9, FEB 25, 1986

PRECIS-UNAVAILABLE

MR. DONALD E. WILKINSON: ACTING CHAIRMAN, FARM CREDIT ADMINISTRATION 1501 FARM CREDIT DRIVE MCLEAN, VIRGINIA 22102-5090

THIS RESPONDS TO YOUR LETTER OF JANUARY 29, 1986, IN WHICH YOU STATE YOUR DISAGREEMENT WITH OUR DETERMINATION THAT THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985 (PUBLIC LAW 99-177) IS APPLICABLE TO THE FARM CREDIT ADMINISTRATION (FCA) SPECIAL FUND. FOR THE REASONS DISCUSSED BELOW, WE AFFIRM OUR CONCLUSION THAT THE FCA SPECIAL FUND IS SUBJECT TO THE ACT.

YOUR LETTER CITES THREE PRINCIPAL GROUNDS FOR YOUR CONCLUSION THAT THE FCA SPECIAL FUND IS NOT SUBJECT TO REDUCTION UNDER PUBLIC LAW 99 177. FIRST, YOU STATE THAT THE FCA SPECIAL FUND IS ANALOGOUS TO A TRUST FUND, AND THAT IT IS THEREFORE EXEMPT UNDER SECTION 255(G)(1) OF THE ACT. SECOND, YOU STATE THAT SEQUESTRATION WOULD VIOLATE THE FCA'S AUTHORIZING LEGISLATION, WHICH DIRECTS EXCESS ADMINISTRATIVE EXPENSE COLLECTIONS FROM MEMBER ORGANIZATIONS BACK TO THOSE ORGANIZATIONS AFTER THE END OF EACH FISCAL YEAR. THIRD, YOU CONCLUDE THAT A RECENT STATUTORY ADDITION TO FCA DUTIES MAKES SEQUESTRATION OF FCA FUNDS UNDER THE ACT "INAPPROPRIATE."

WITH REGARD TO YOUR POSITION THAT THE FCA SPECIAL FUND IS A TRUST FUND EXEMPT UNDER THE ACT, WE NOTE THAT THERE IS NO GENERIC EXEMPTION UNDER THE ACT FOR PAYMENTS FROM TRUST FUNDS. SECTION 255(G)(1) OF THE ACT, WHICH YOU CITE AS AUTHORITY FOR EXEMPTING TRUST FUNDS, EXEMPTS ONLY CERTAIN PAYMENTS INTO TRUST FUNDS. THE AUTHORITY TO MAKE PAYMENTS FROM TRUST FUNDS CONSTITUTES A BUDGETARY RESOURCE UNDER SECTION 251(A)(3)(F)(IV)(I) OF THE ACT, AND IS SUBJECT TO SEQUESTRATION UNLESS COVERED BY A SPECIFIC EXEMPTION, EXCEPTION, OR SPECIAL RULE. BECAUSE THE AUTHORITY TO MAKE PAYMENTS FROM THE FCA SPECIAL FUND DOES NOT FALL UNDER ANY GENERAL OR SPECIFIC EXEMPTION OR EXCEPTION IN THE ACT, SUCH PAYMENTS ARE SUBJECT TO SEQUESTRATION.

YOU ALSO CITE THE FARM CREDIT ACT OF 1971 IN SUPPORT OF YOUR VIEW THAT THE FCA SPECIAL FUND IS NOT SUBJECT TO SEQUESTRATION. SECTION 5.16(B) OF THAT ACT (12 U.S.C. SEC. 2250(B)) PROVIDES THAT ADMINISTRATIVE EXPENSE COLLECTIONS NOT USED BY THE END OF EACH FISCAL YEAR MAY BE REFUNDED TO MEMBER ORGANIZATIONS. YOU STATE THAT SEQUESTRATION OF FCA'S ADMINISTRATIVE EXPENSE FUNDS WOULD CONSTITUTE "ILLEGAL CONVERSION" OF SUCH COLLECTIONS INTO THE U.S. TREASURY. IN OUR VIEW, HOWEVER, THESE TWO ENACTMENTS ARE NOT IN CONFLICT. FIRST, SEQUESTERED FUNDS FROM TRUST OR SPECIAL FUNDS DO NOT GO INTO THE GENERAL FUND OF THE TREASURY, BUT STAY IN THE ACCOUNT IN QUESTION. SEE H.R. REP. NO. 433, 99TH CONG., 1ST SESS. 95 (1985). IN ADDITION, THE FARM CREDIT ACT PROVIDES THAT EXCESS COLLECTIONS MAY EITHER BE REFUNDED TO MEMBER ORGANIZATIONS OR "CREDITED IN THE SPECIAL FUND" TO SUCH ORGANIZATIONS TO PAY FOR FCA SERVICES IN FUTURE FISCAL YEARS. EXERCISE OF THE LATTER AUTHORITY WOULD APPEAR TO BE CONSISTENT WITH THE SEQUESTRATION REQUIREMENTS OF PUBLIC LAW 99-177.

FINALLY, IN RESPONSE TO YOUR CONCERN THAT SEQUESTRATION OF A PORTION OF FCA FUNDS UNDER THE ACT MIGHT CONFLICT WITH RECENTLY-ADDED STATUTORY DUTIES, WE NOTE THAT NOTHING IN THE LANGUAGE OR LEGISLATIVE HISTORY OF THE RECENTLY-ENACTED FARM CREDIT AMENDMENTS ACT OF 1985 (PUBLIC LAW 99 205) INDICATED AN INTENT TO REMOVE THE FCA SPECIAL FUND FROM THE SEQUESTRATION PROCESS OF PUBLIC LAW 99-177.

WE APPRECIATE HEARING YOUR VIEWS ON THE MATTER.