B-250212 April 15, 1993

B-250212: Apr 15, 1993

Additional Materials:

Contact:

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

 

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

Knollenberg: This is in response to your predecessor's letter regarding the claim of your constituent Arthur J. Not only were the checks canceled. The underlying claim against the government is barred by 31 U.S.C. Sec. 3702(c) to provide that: "Any claims on account of a Treasury check shall be barred unless it is presented to the agency that authorized the issuance of such check within one year after the date of issuance of the check or the effective date of this subsection. Whichever is later.". For which a Treasury check was issued." 31 U.S.C. Carron's checks were issued in 1966 and 1971. (The effective date of the Act was October 1. The proceeds of the canceled checks were to be applied to eliminate the balances in certain Treasury accounts. 31 U.S.C.

B-250212 April 15, 1993

The Honorable Joe Knollenberg House of Representatives

Dear Mr. Knollenberg:

This is in response to your predecessor's letter regarding the claim of your constituent Arthur J. Carron. Mr. Carron has three checks in his possession dated October 18, 1966, January 29, 1971 and April 1, 1971, for which he now claims payment. He advises that the checks had been held by his wife. Unfortunately, as explained in further detail below, not only were the checks canceled, the underlying claim against the government is barred by 31 U.S.C. Sec. 3702(b).

The Competitive Equality Banking Act of 1989 (Act) established new time limits on the payability of government checks. Pub. L. No. 100-86, 101 Stat. 659 (1987). The law amended 31 U.S.C. Sec. 3702(c) to provide that:

"Any claims on account of a Treasury check shall be barred unless it is presented to the agency that authorized the issuance of such check within one year after the date of issuance of the check or the effective date of this subsection, whichever is later."

However, the law also states that:

"Nothing in this subsection affects the underlying obligation of the United States, or any agency thereof, for which a Treasury check was issued."

31 U.S.C. Sec 3702(c)(2).

Mr. Carron's checks were issued in 1966 and 1971. The Act requires the Department of the Treasury, not later than 18 months after the effective date of the Act, to cancel checks issued before October 1, 1989. 31 U.S.C. Sec. 3334(b)(1). (The effective date of the Act was October 1, 1989. See 53 Fed. Reg. 10366, Feb. 8, 1988.) The proceeds of the canceled checks were to be applied to eliminate the balances in certain Treasury accounts. 31 U.S.C. Sec. 3334(b)(2). Thus, on April 1, 1991, the Treasury began a mass cancellation of all pre-effective date checks. Presumably, Mr. Carron's checks were canceled and they may no longer be paid.

Nevertheless, the statute provides that the cancellation does not affect the underlying obligation. Although the specific moneys backing the canceled checks are, by law, diverted to another use, the underlying obligation for which the checks were issued is unaffected. B-239249, Apr. 15, 1991. For claims submitted under such obligations, the original appropriations charged, to the extent they are available under the account closing procedures, can be used to support reissued checks. Id. See also Pub. L. No. 101-510, Sec. 1405, 104 Stat. 1675 (1990). For those appropriation accounts that are closed, the law allows current appropriations made for the same general purpose to be charged subject to a 1 percent limitation. Id.

Unfortunately, although an underlying claim is preserved by the statute, the provision does not "resurrect claims that are otherwise unenforceable." B-239249, Apr. 15, 1991 (note 2); B-244431, Oct. 8, 1991. Under 31 U.S.C. Sec. 3702(b), a claim against the government which is not presented to the GAO, or the agency whose activities gave rise to the claim, within 6 years after the claim accrues is barred. This provision barring old claims makes Mr. Carron's claims, which accrued in 1966 and 1971, otherwise unenforceable. Of course, private relief legislation could be introduced on Mr. Carron's behalf.

I trust the foregoing is responsive to your constituent's claim. If we can be of further assistance, please contact Gary Kepplinger, Associate General Counsel, at 202-512-5624.

Sincerely yours,

James F. Hinchman General Counsel